Exhibit 10.11
OPTION AGREEMENT
THIS AGREEMENT is made as of this 22nd day of November, 1996, by and
between Insurance Information Exchange, L.L.C. a Delaware limited liability
corporation ("Buyer"), and Hussein A. Enan individually and including his
successors, assignees and heirs (referred to herein as "Shareholder"). Except
as otherwise indicated, capitalized terms used herein are defined in Section 8
hereof.
W I T N E S S E T H:
WHEREAS, the Shareholder owns of record and beneficially 637,500 shares of
issued and outstanding Class A Common stock of InsWeb Corporation, a Delaware
corporation ("Company"); and
WHEREAS, Buyer desires to purchase from the Shareholder, and the
Shareholder desires to sell to Buyer, an option to purchase 106,074 shares of
the issued and outstanding Class A Common stock of the Company;
NOW, THEREFORE, in consideration of the premises and of the covenants,
agreements, representations and warranties hereinafter set forth and other good
and valuable consideration had and received by each of the parties hereto, the
parties hereto hereby agree as follows:
Section 1 SALE AND PURCHASE OF OPTION
1A. SALE AND PURCHASE. Upon and subject to the terms and conditions set
forth in this Agreement, at the "Closing" (as defined in Section 2A hereof) the
Shareholder shall sell to Buyer, and Buyer shall purchase from the Shareholder,
for the "Purchase Price" (as defined in Section 1B hereof), an option to
purchase 106,074 shares of Class A Common stock of the Company (such shares
obtained pursuant to the exercise of the Option are hereinafter called in the
aggregate the "Shares" and singly a "Share").
1B. PURCHASE PRICE. The aggregate purchase price for the Option (the
"Purchase Price") shall be $7.00 dollars per Share for an aggregate Purchase
Price of $742,518 payable at Closing.
1C. IRREVOCABLE PROXY. As part of the purchase of the Option,
Shareholder grants to Buyer an irrevocable proxy coupled with an interest
entitling the Buyer to vote all of the Shares on all matters, which proxy shall
be effective immediately upon Closing and continuing until the expiration of the
Option.
Section 2 THE CLOSING AND EXERCISE RIGHT
2A. CLOSING. The "Closing" shall be and mean the time at which the
Shareholder executes and delivers this Option Agreement, against payment of the
Purchase Price as provided in Section 1B hereof. The Closing shall take place
at the offices of the Company at
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9:30 a.m. (local time) on November 22, 1996, or at such other time and place
as the parties may agree.
2B. EXERCISE OF OPTIONS. Buyer shall have the irrevocable right to
exercise the Option and acquire all right, title and interest in the Shares free
and clear of any lien, encumbrance, charge or restriction by providing to
Shareholder written notice of its desire to exercise the Option any time between
January 5, 1997 and January 15, 1997 and tendering full payment to Shareholder
for the Shares at the price of $39.75 per Share for an aggregate exercise price
of $4,216,441.50 ("Exercise Price") on or before January 15, 1997. Shareholder
shall deliver to Buyer immediately upon payment of the Exercise Price one or
more stock certificates duly issued in the name of the Buyer representing in the
aggregate the Shares, or in the name of Shareholder and fully endorsed to
Insurance Information Exchange L.L.C., or bearing duly executed stock powers to
Insurance Information Exchange L.L.C., accompanied by such supporting documents
as may, in the sole determination of Buyer's counsel, be necessary to pass to
Buyer and to evidence properly such passage to Buyer of, full right to the
Shares, free and clear of any lien, encumbrance, charge, equity or restriction
whatsoever.
Section 3 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Unless at the Closing each of the following conditions is either
satisfied, or waived by Buyer in writing, the Buyer shall not be obligated to
purchase the Option:
3A. REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 5 hereof will be true and correct except to the extent of
changes caused by the transactions expressly contemplated herein.
3B. ABSENCE OF ADVERSE PROCEEDINGS. No claim, investigation, proceeding
or litigation, either administrative or judicial, shall be pending or to the
best knowledge or belief of the Shareholder threatened against the Buyer, the
Shareholder, or the Company, for the purpose of enjoining or preventing the
consummation of the Agreement or otherwise claiming that this Agreement, or the
consummation thereof, is improper, or which might materially and adversely
affect the right of Buyer to exercise the Option or retain the Shares.
3C. NO ADVERSE CHANGES. There shall have been no material adverse
change in the operations of the business of the Company or material
deterioration of or damage to the assets of the Company.
3D. THIRD PARTY CONSENTS. Any and all consents, approvals and
authorizations that may be required from lenders and others for the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby shall have been obtained in form and substance satisfactory
to Buyer in the exercise of its reasonable judgment.
3E. PROCEEDINGS. All corporate and other proceedings of the Company
taken or required to be taken in connection with the transactions contemplated
hereby to be consummated at or prior to the Closings and all documents incident
thereto will be satisfactory in form and substance to the Buyer and its counsel
in the exercise of their reasonable judgment.
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Section 4 CONDITIONS PRECEDENT TO THE SHAREHOLDER'S OBLIGATIONS
Unless, at or before the Closing, each of the following conditions is
either satisfied, or waived in writing by the Shareholder, the Shareholder shall
not be obligated to sell the Option:
4A. REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Section 6 hereof will be true and correct except to the extent of
changes caused by the transactions expressly contemplated herein.
4B. ABSENCE OF ADVERSE PROCEEDINGS. No claim, investigation, proceeding
or litigation, either administrative or judicial, shall be pending or to the
best knowledge and belief of the Buyer threatened against the Shareholder, the
Company or the Buyer, for the purpose of enjoining or preventing the
consummation of this Agreement or showing the consummation thereof is improper.
4C. PROCEEDINGS. All corporate or other proceedings of the Buyer taken
or required to be taken in connection with the transactions contemplated hereby
to be consummated at or prior to Closing and all documents incident thereto will
be satisfactory in form and substance to the Shareholder and their counsel in
the exercise of their reasonable judgment.
Section 5 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder represents and warrants to the Buyer, to the best of his
knowledge and belief, as follows:
5A. CAPITALIZATION. The authorized capital stock of the Company
consists of 5,000,000 shares of Common Stock, of which 969,500 shares are issued
and outstanding, and 2,000,000 shares of Preferred Stock, 176,471 shares of
which have been designated Series C Preferred Stock and are issued and
outstanding. All issued and outstanding shares of the Company's capital stock
will have been duly authorized and validly issued, will be fully paid and
nonassessable and free of liens and encumbrances and will have been issued in
compliance with all applicable federal and state securities laws. The Company
has reserved 176,471 shares of Common Stock for issuance upon conversion of the
Series A Preferred Shares. Except as set forth on SCHEDULE 5A, there are no
preemptive rights, voting agreements, options or warrants or other conversion
privileges or rights currently outstanding to purchase any of the authorized but
unissued capital stock of the Company. There are 265,647 shares of Common Stock
reserved for issuance under the Company's 1995 Stock Option Plan, pursuant to
which options for the purchase of a total of 130,000 shares were outstanding on
January 30, 1996.
5B. BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement to which the Shareholder is
a party.
5C. OWNERSHIP OF SHARES. The Shareholder is the sole owner of record
and sole beneficial owner of all the Shares; and the Shareholder has the full
right, power and authority to
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grant the Option and to sell and transfer the Shares hereto to Buyer upon
exercise of the Option, free and clear of any lien, encumbrance, option,
charge, equity or restriction whatsoever.
5H. VALID OBLIGATION. The execution and delivery of this Agreement and
the consummation by the Shareholder of the transactions contemplated hereby
constitute the valid and binding obligation of the Shareholder, enforceable in
accordance with its terms except as may be limited by bankruptcy, other similar
laws and by the general principles of equity.
Section 6 REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to the Shareholder to enter into this Agreement,
the Buyer represents and warrants to the Shareholder that as of closing 6A
through 6D are true and in the event that the Option is exercised, then 6F
through 6J are true.
6A. NO BREACH OR CONFLICT. Neither the execution of this Agreement by
Buyer nor the performance of its obligations hereunder, nor any action by it
contemplated by this Agreement, conflicts with, constitutes grounds for
termination of, or constitutes a default under or conflicts with the Buyer's
certificate of incorporation or bylaws.
6B. CLOSING DATE. The representations and warranties of Buyer contained
in this Section 6 and elsewhere in this Agreement and all information contained
in any exhibit, schedule or attachment hereto or in any writing delivered by, or
on behalf of Buyer to the Shareholder, his counsel or agent will be true and
correct in all material respects on the date of the Closing as though then made.
6C. ORGANIZATION. The Buyer is a limited liability corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the full corporate power and authority to own its properties
and carry on its business.
6D. AUTHORIZATION. The execution, delivery and performance of this
Agreement have been duly authorized by all requisite corporate action of the
Buyer. The Buyer has all requisite corporate authority to perform all of its
obligations under this Agreement. This Agreement constitutes valid and binding
obligations of the Buyer, subject to the effect of bankruptcy, insolvency,
reorganizations and other similar laws relating to or affecting the rights of
creditors generally, the terms of this Agreement, as well as limitations imposed
by general principles of equity.
6E. BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement to which the Buyer is a
party.
6F. EXPERIENCE. Buyer has substantial experience in evaluating and
investing in private placement transactions so that Buyer is capable of
evaluating the merits and risks of Buyer's investment in the Company. Buyer, by
reason of its business or financial experience or the business or financial
experience of its professional advisors who are unaffiliated with and who are
not compensated by the Company or any affiliate or selling agent of the Company,
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directly or indirectly, has the capacity to protect its own interests in
conjunction with the purchase of the Shares hereunder, provided that the
foregoing does not limit the right of the Buyer to rely upon the
representations and warranties of the Company set forth in Section 5.
6G. INVESTMENT. Buyer is acquiring the Shares for investment for
Buyer's own account, not as a nominee or agent, and not with the view to, or for
resale in connection with, any distribution thereof. Buyer understands that the
Shares have not been, and will not be, registered under the Securities Act by
reason of specific exemption from the registration provisions of the Securities
Act which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of Buyer's representations expressed herein.
If Buyer is not an individual, Buyer has not been formed for the specific
purpose of acquiring the Shares.
6H. RULE 144. Buyer acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. Buyer is aware of the provisions
of Rule 144 promulgated under the Securities Act which permit limited resale of
shares purchased in a private placement subject to the satisfaction of certain
conditions, including (except as limited by Rule 144(k)), among other things,
the existence of a public market for the Shares, the availability of certain
current public information about the Company, the resale occurring not less than
two years after a party has purchased and paid for the security to be sold, the
sale being effected through a "broker's transaction" or in transactions directly
with a "market maker" (as provided by Rule 144(f)) and the number of Shares
being sold during any three-month period not exceeding specified limitations.
6I. NO PUBLIC MARKET. Buyer understands that no public market now
exists for any of the securities issued by the Company, that the Company has
made no assurances that a public market will ever exist for the Shares, and
that, even if such a public market exists at some future time, the Company may
not then be satisfying the current public information requirements of Rule 144.
6J. ACCESS TO DATA. Buyer and its representatives have met with
representatives of the Company and thereby have had the opportunity to ask
questions of, and receive answers from, such representatives concerning the
Company and the terms and conditions of this transaction, as well as to obtain
any information requested by Buyer. Buyer believes that any questions raised by
Buyer or its representatives concerning the transaction have been answered to
the satisfaction of Buyer and its representatives. Buyer's decision to purchase
the Shares is based in part on the answers to such questions as Buyer and its
representatives have raised concerning the transaction and on its own evaluation
of the risks and merits of the purchase and the Company's proposed business
activities, provided that the foregoing does not limit the right of the Buyer to
rely upon the representations and warranties of the Company set forth in
Section 5.
Section 7 COVENANTS
7A. SHAREHOLDER'S RESTRICTIVE COVENANT. As an important and substantial
value which Buyer will receive in exchange for the consideration paid to the
Shareholder upon the exercise of the Option and as a necessary element of
protection for the value of the ongoing business, goodwill and trade secrets of
the Company for a period of five (5) years from the
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exercise of the Option the Shareholder agrees that he shall not (i) directly
or indirectly compete with the Company or develop or market any insurance
information or insurance processing system or network, which may include but
not be limited to insurance rating or insurance accounting functions, on the
Internet or any intranet or local or wide area network or have an interest in
or be associated with any entity which competes with the Company or develops
or markets such software within any county of California or within any state
in the United States or Canada in which the Company either currently does
business or proposes to do business or (ii) solicit any customer of Company
located in the United States or Canada to use services or products which are
competing with those offered by the Company. The Shareholder agrees that a
monetary remedy for a breach of the agreement set forth in this Section 7A
will be inadequate, impracticable and extremely difficult to prove, and
further agree that such a breach would cause Buyer irreparable harm, and that
Buyer will be entitled to temporary and permanent injunctive relief without
the necessity of proving actual damages upon a judicial determination that
the Buyer has a reasonable likelihood of success on the merits of its claim.
The Shareholder and the Company agree that Buyer shall be entitled to such
injunctive relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions. If any provision of this Section 7A
is invalid in part, it shall be curtailed, as to time, scope and location, to
the minimum extent required for its validity under the laws of the State of
Texas and shall be binding and enforceable with respect to the Shareholder as
so curtailed. The Shareholder agrees, based upon his past experience in the
insurance business that the restrictions imposed herein are reasonable as to
duration, area and scope, are necessary for the protection of the value of
the business of Company, of its market position, intellectual property,
business and good will and are not unduly restrictive of the Shareholder's
rights as an individual.
Section 8 MISCELLANEOUS
8A. REMEDIES. Each party to this Agreement will have the rights and
remedies set forth in this Agreement, and all rights and remedies which such
parties have been granted at any time under any other agreement or contract and
all of the rights which such parties have under any law. Any Person having any
rights under any provision of this Agreement will be entitled to enforce such
rights specifically, to recover damages by reason of any breach of any provision
of the Agreement and to exercise all other rights granted by law.
8B. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and indemnity provisions contained herein or made in writing by any
party in connection herewith shall survive the execution and delivery of this
Agreement, regardless of any investigation made by the Buyer or the Shareholder
or on their behalf.
8C. ENTIRE AGREEMENT. This Agreement (together with the exhibits and
schedules hereto) contains all of the terms and conditions agreed upon by the
parties hereto with reference to the subject matter hereof with regard to such
subject matter. No other agreements not specifically referred to herein, oral
or otherwise, shall be deemed to exist or to bind any of the parties hereto with
regard to such subject matter. No officer or employee of any party has any
authority to make any representation or promise not contained in this Agreement,
and each of the
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parties hereto agrees that it has not executed this Agreement in reliance
upon any such representation or promise.
8D. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
8E. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one and
the same Agreement.
8F. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
8G. GOVERNING LAW. With the exception of Section 7A where the parties
have specifically chosen and intend to apply Texas Law, all questions concerning
the construction, validity and interpretation of this Agreement and the exhibits
and schedules hereto will be governed by the internal law, and not the law of
conflicts, of California.
8H. NOTICE. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally or
mailed by certified or registered mail, return receipt requested and postage
prepaid, to the recipient. Such notices, demands, and other communications will
be sent to the Shareholder at:
and to the Buyer at the address indicated below:
Xx. Xxxxxxx A. Enan
000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
AMS Service, Inc.
000 Xxxxxxxxxx Xxxx
Tower 0, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: General Counsel
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
8I. ENFORCEMENT. In the event suit is brought to enforce or interpret
any part of this Agreement or the rights or obligations of any party to this
Agreement, the prevailing party shall be entitled to recover as an element of
such party's costs of suit, and not as damages, a reasonable attorney's fee to
be fixed by the court. The prevailing party shall be the party who is
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entitled to recover his costs of suit whether or not the suit proceeds to
final judgment. A party not entitled to cover his costs shall not recover
attorney's fees.
8J. AMENDMENT. This Agreement may not be changed, amended, terminated
or superseded orally, nor may any of the provisions hereof be waived orally, but
only by an instrument in writing, signed in each case by Shareholder and an
authorized officer of Buyer.
8K. CONFIDENTIALITY. It is understood and agreed between the parties
hereto that the parties are best served by keeping the financial terms of this
Agreement confidential and each party hereby agrees that it will use its
reasonable efforts to not, through its agents, officers, directors, employees,
or by any other means, disclose to any third parties the financial terms of this
Agreement; excepting only to counsel, accountants or other agents necessary to
consummate the transactions contemplated herein or with the written consent of
the other party, for a period of thirty-six (36) months following the Closing
except (A) to the extent that such information is required in response to any
summons or subpoena or in connection with any litigation, (B) to the extent that
such information is believed to be required in order to comply with any law,
order, regulation or ruling applicable to such party disclosing such
information, (C) to the extent that such information subsequently becomes known
to the party disclosing such information through any Person other than a Person
whom the disclosing party knows to be acting in violation of his or its
obligations to the nondisclosing party and (D) to obtain additional financing or
investment in the Company but only pursuant to a written confidentiality
agreement with such third party.
8L. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party shall issue any
press releases and public announcements relating to the subject matter of this
Agreement without the prior written approval of the Buyer and the Shareholder;
provided, however, that any party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing party
will use its best efforts to advise the other parties prior to making the
disclosure).
8M. EXPENSES. Shareholder and the Buyer shall each bear its own costs
and expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby.
8N. CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of interest or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
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IN WITNESS WHEREOF, the parties hereto have caused this Option Purchase
Agreement to be duly executed and delivered on the date set forth below but
intending for all purposes to evidence a formation agreed to and effective as of
the date first written above.
BUYER:
Insurance Information Exchange, LLC
By: /s/ Xxxxx Xxxxxx
----------------------------
Xxxxx Xxxxxx, President
Date:
--------------------------
SHAREHOLDER:
Hussein A. Enan
By: /s/ Hussein A. Enan
----------------------------
Signature
Date:
--------------------------
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