Note Purchase Agreement - Quotesmith.com Inc. and Intuit Inc.
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement, dated as of June 23, 1999
(this "AGREEMENT"), is entered into by and between QUOTESMITH.COM, INC., a
Delaware corporation (the "COMPANY"), and INTUIT INC., a Delaware corporation
(the "PURCHASER").
RECITAL
On the terms and subject to the conditions set forth herein, Purchaser
is willing to purchase from the Company and the Company is willing to sell to
Purchaser a Promissory Note (the "NOTE") in the form attached hereto as Exhibit
A for an aggregate purchase price of $2,000,000.00.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the
representations, warranties and conditions set forth below, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. The Note.
(a) Issuance of the Note. In reliance upon the representations,
warranties and covenants of the parties set forth herein, the Company agrees to
issue, sell and deliver to the Purchaser, and the Purchaser agree to purchase
from the Company, the Note. The purchase price for the Note shall be payable in
immediately available funds.
(b) Terms of the Note. The terms and conditions of the Note are
set forth in the form of Note attached as Exhibit A hereto. Capitalized terms
not otherwise defined herein shall have the meaning set forth in the Note.
(c) Delivery. The Company will deliver to the Purchaser an
executed version of the Note against receipt by the Company of the purchase
price of $2,000,000.00 for such Note.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser that the statements contained in the
following paragraphs of this Section 2 are all true and correct as of the time
of issuance of the Note:
(a) Organization and Standing: Articles and Bylaws. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now conducted and proposed to be
conducted.
(b) Corporate Power. The Company has all requisite legal and
corporate power to enter into, execute and deliver this Agreement and the Note.
This Agreement is, and upon issuance the Note will be, a valid and binding
obligation of the Company, each of the Agreement and the Note (upon its
issuance) being enforceable against the Company in accordance with its
respective terms.
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(c) Authorization.
(1) Corporate Action. All corporate and legal action on the
part of the Company and its officers, directors and stockholders necessary for
the execution and delivery of this Agreement and the Note, the sale and issuance
of the Note and the performance of the Company's obligations hereunder and
thereunder have been taken.
(2) Valid Issuance. The Note, when issued in compliance with
the provisions of this Agreement, will be validly issued, fully paid and
nonassessable and will be free of any liens or encumbrances; provided, however,
that the Note may be subject to restrictions on transfer under state and/or
federal securities laws as set forth herein, and as may be required by future
changes in such laws.
(d) Financial Statements. With respect to the financial statements
of the Company (the "FINANCIAL STATEMENTS") which were included in the
Registration Statement on Form S-1 filed by the Company with the Securities and
Exchange Commission on May 26, 1999 (the "REGISTRATION STATEMENT"), such
Financial Statements fairly present the financial condition and operating
results of the Company as of the dates, and for the periods, indicated therein.
Except as set forth in the Financial Statements or as otherwise disclosed in the
prospectus portion of the Registration Statement, the Company has no material
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to March 31, 1999 or (ii) obligations
under contracts or commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
the Financial Statements, which, in the case of both the foregoing clauses (i)
and (ii), individually or in the aggregate, are not material to the financial
condition or operating results of the Company.
(e) No Materially Adverse Change. Since March 31, 1999, no
transaction, arrangement, event or other circumstance has occurred or existed
which (i) has had a material adverse effect on the business, assets, properties,
operations or condition (financial or otherwise) of the Company or (ii) is, as
of the date hereof, reasonably expected to result in any such effect.
(f) Government Consent, Etc. No consent, approval, order or
authorization of, or designation, registration, declaration or filing with, any
federal, state, local or provincial or other governmental authority on the part
of the Company is required in connection with the valid execution, delivery and
performance of this Agreement or the Note, or the offer, sale or issuance of the
Note, other than, if required, filings or qualifications under applicable blue
sky laws, which filings or qualifications, if required, will be timely filed or
obtained by the Company.
(g) Disclosure. The Registration Statement contains all
information which a reasonable investor would consider appropriate in deciding
whether to purchase the Note as well as all information which the Company
believes is reasonably necessary to enable the Purchaser to make such a
decision. When considered together with the Registration Statement, neither this
Agreement nor any other statement or certificate made or delivered in connection
with this Agreement and the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading.
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3. Representations and Warranties by the Purchaser. The Purchaser
represents and warrants to the Company as of the time of issuance of the Note as
follows:
(a) Investment Intent: Authority. This Agreement is made with the
Purchaser in reliance upon the Purchaser's representation to the Company, as
evidenced by Purchaser's execution of this Agreement, that Purchaser is
acquiring the Note for the Purchaser's own account, not as nominee or agent, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities Act
of 1933, as amended (the "SECURITIES ACT"). The Purchaser has the full right,
power, authority and capacity to enter into and perform this Agreement, and this
Agreement will constitute a valid and binding obligation upon the Purchaser,
except as the same may be limited by bankruptcy, insolvency, moratorium and
other laws of general application affecting the enforcement of creditors'
rights.
(b) Not Registered. The Purchaser understands and acknowledges
that the offering and sale of the Note pursuant to this Agreement will not be
registered under the Securities Act on the grounds that the offering and sale of
the Note are exempt from registration under the Securities Act, and that the
Company's reliance upon such exemption is predicated upon the Purchaser's
representations set forth in this Agreement. The Purchaser acknowledges and
understands that resale of the Note may be restricted indefinitely unless the
Note is subsequently registered under the Securities Act or an exemption from
such registration is available.
(c) No Transfer. Purchaser covenants that in no event will it
dispose of the Note other than in conjunction with an effective registration
statement under the Securities Act or pursuant to an exemption therefrom (e.g.,
Rule 144 promulgated under the Securities Act) or to an entity affiliated with
the Purchaser.
(d) Knowledge and Experience. Purchaser (i) has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of the Purchaser's prospective investment in the Note; (ii) has
the ability to bear the economic risks of the Purchaser's prospective
investment; (iii) has had all questions which have been asked by the Purchaser
satisfactorily answered by the Company; and (iv) has not been offered the Note
by any form of advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any such
media.
4. Miscellaneous.
(a) Waivers and Amendments. Any provision of this Agreement may be
amended, waived or modified upon the written consent of the Company and the
Purchaser.
(b) Governing Law. This Agreement and all actions arising out of
or in connection with this Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, without regard to the
conflicts of law provisions of the State of Illinois or of any other state.
(c) Entire Agreement. This Agreement, together with the form of
the Note
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attached hereto, constitutes the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
(d) Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent via overnight courier
service or mailed by certified or registered mail, postage prepaid, return
receipt requested, addressed or sent (a) if to the Purchaser, at the address of
the Purchaser set forth below such party's name on the signature page hereto, or
at such other address or number as the Purchaser shall have furnished to the
Company in writing, or (b) if to the Company, at 8205 South Cass Avenue, Suite
102, Darien, Illinois 60561, or at such other address or number as the Company
shall have furnished to the Purchaser in writing.
(e) Validity. If any provision of this Agreement or the Note shall
be judicially determined to be invalid, unlawful or unenforceable, the validity,
lawfulness and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.
(g) Disclosure. The Company shall not issue any press release or
make any other announcement regarding this Agreement or any of the terms hereof
without the prior written consent of the Purchaser; provided, however, that the
Company may disclose, in any amendment to the Registration Statement, such
information concerning the terms of this Agreement as may be required, in the
opinion of the Company's counsel, to satisfy the disclosure obligations of the
Company under the Securities Act so long as the Purchaser is given advance
notice of such disclosure and a reasonable advance opportunity to comment upon
and modify any such disclosure.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
date and year first written above.
THE COMPANY:
Quotesmith.com, Inc.,
a Delaware corporation
By: /s/ ROBERT S. BLAND
Its: Chairman, President and Chief Executive Officer
By: /s/ THOMAS A. MUNRO
Its: Secretary, Vice President and Chief Financial Officer
THE PURCHASER:
Intuit Inc.,
a Delaware corporation
By: /s/ KRISTEN BROWN
Kristen Brown
Vice President, Business Development
Address: Intuit Inc.
Attn: Kristen Brown
Vice President, Business Development
2535 Garcia Avenue
Mountain View, CA 94043
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EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
IT MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
PROMISSORY NOTE
$2,000,000.00 June , 1999
------------ Darien, Illinois
FOR VALUE RECEIVED, Quotesmith.com, Inc., a Delaware corporation (the
"COMPANY"), promises to pay to Intuit Inc., a Delaware corporation (the
"HOLDER"), or its registered assigns, the principal sum of $2,000,000.00, or
such lesser amount as shall then equal the outstanding principal amount hereof,
together with interest from the date of this Note on the unpaid principal
balance at a rate equal to twelve and one-half percent (12.5%) per annum. All
accrued and unpaid interest hereunder shall be payable in quarterly installments
commencing on the date which is three (3) months after the date hereof and
continuing every three (3) months thereafter. The interest rate shall be
computed on the basis of the actual number of days elapsed and a year of 365
days. All unpaid principal, together with the balance of accrued and unpaid
interest and any other amounts payable hereunder, shall be due and payable on
demand at any time after the earlier of (i) , 2000, [18 MONTHS FROM
THE DATE OF THIS NOTE] (ii) a Public Offering (defined below) or (iii) an Event
of Default (defined below). Moreover, promptly upon the Company's receipt of
the same, the Company shall prepay all unpaid principal, together with the
balance of accrued and unpaid interest and any other amounts payable hereunder,
to the extent of the net proceeds to the Company from any Financing (defined
below).
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms
have the following meanings:
(a) "FINANCING" shall mean any sale of the Company's equity
securities or any other securities which are exchangeable for the Company's
equity securities, excepting any such sale to one or more employees of the
Company pursuant to any stock option, stock purchase or other employee benefit
plan maintained by the Company.
(b) "OBLIGATIONS" shall mean all principal and accrued interest
due hereunder.
(c) "PUBLIC OFFERING" shall mean the closing of any sale of the
Company's common stock in a public offering registered under the Securities Act
of 1933, as amended (the "SECURITIES ACT").
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2. Events of Default. The occurrence of any of the following shall
constitute an "EVENT OF DEFAULT" under this Note:
(a) Failure to Pay. The Company shall fail to pay when due any
amount of principal or interest hereunder or any other amount payable by the
Company hereunder;
(b) Breach of Representation. Any representation or warranty of
the Company made in this Note or with respect to or in connection with the
issuance of this Note (including, without limitation, any representation or
warranty of the Company set forth in that certain Note Purchase Agreement
between the Company and the Holder with respect to this Note - the "NOTE
PURCHASE AGREEMENT") shall have been false in any respect when made.
(c) Breach of Covenant. Without limiting the foregoing, the
Company shall fail in any respect to perform or observe when required any
covenant, condition or agreement for performance or observance by the Company
where the same (i) is either set forth in this Note or in any document or
instrument entered into or delivered by the Company with respect to or in
connection with the issuance of this Note (including, without limitation, any
covenant, condition or agreement set forth in the Note Purchase Agreement) and,
(ii) if capable of being remedied in fifteen (15) or fewer days, has not been
remedied within fifteen (15) days after the Company's receipt of written notice
with respect thereto.
(d) Voluntary Bankruptcy or Insolvency Proceedings. The Company
shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part of its
property, (ii) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors, (iv) be dissolved or liquidated in full or in part, (v)
become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding
commenced against it, or (vii) take any action for the purpose of effecting any
of the foregoing; or
(e) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the assets thereof, or an involuntary
case or other proceedings seeking liquidation, reorganization or other relief
with respect to the Company or the debts thereof under any bankruptcy,
insolvency or other similar law now or hereafter in effect shall be commenced,
and such proceedings shall not have been stayed or dismissed within sixty (60)
days after commencement of the same.
3. Rights of Holder Upon Default. Upon the occurrence or existence of
any Event of Default and at any time thereafter during the continuance of such
Event of Default, the Holder may declare all outstanding Obligations payable by
the Company hereunder to be immediately due and payable without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived. In addition to the foregoing remedies, upon the occurrence or
existence of any
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Event of Default, the Holder may exercise any other right, power or remedy
granted to it or otherwise permitted to it by law, either by suit in equity or
by action at law, or both.
4. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 6 and 7 below, the rights and obligations of the Company
and the Holder of this Note shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
5. Waiver and Amendment. Any provision of this Note may be amended,
waived or modified upon the written consent of the Company and the Holder.
6. Transfer of this Note. This Note may not be transferred or
assigned in violation of any restrictive legend set forth hereon; provided,
however, that the Company acknowledges and agrees that any transfer or
assignment by the Holder of this Note to any affiliate of the Holder shall not
be deemed to be a violation of such legend and, notwithstanding any other
provision of this Note to the contrary, any such transfer or assignment shall be
permitted without the performance or observance of any requirements by the
Holder (except for notice to the Company). Each new Note issued upon transfer or
assignment of this Note shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with the Securities Act, unless in
the opinion of counsel for the Company such legend is not required in order to
ensure compliance with the Securities Act. Prior to presentation of this Note
for registration of transfer or assignment, the Company shall treat the
registered holder hereof as the owner and holder of this Note for the purpose of
receiving all payments of principal and interest hereon and for all other
purposes whatsoever, whether or not this Note shall be overdue, and the Company
shall not be affected by notice to the contrary.
7. Assignment by the Company. Neither this Note nor any of the
rights, interests or obligations hereunder may be assigned, by operation of law
or otherwise, in whole or in part, by the Company without the prior written
consent of the Holder.
8. Treatment of Note. To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report this Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
9. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier or personal delivery at the
principal executive offices of the Company, in the instance of the Company, or
the address of the Holder as set forth in the records maintained by the Company,
in the instance of the Holder. Any party hereto may by notice so given change
its address for future notice hereunder. Notice shall conclusively be deemed to
have been given when received.
10. Payment. Payment shall be made in lawful tender of the United
States.
11. Expenses; Waivers. If any action or other proceeding is instituted
to collect this Note, the Company shall pay all costs and expenses, including,
without limitation, reasonable attorneys' fees and costs, incurred by the Holder
or its transferees or assigns in connection with such action or other
proceeding. The Company hereby waives notice of default, presentment or demand
for payment,
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protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
12. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the State of Illinois, without regard to the conflicts of law
provisions of the State of Illinois or of any other state.
13. Validity. If any provision of this Note shall be judicially
determined to be invalid, unlawful or unenforceable, the validity, lawfulness
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
14. Excessive Interest. Notwithstanding any other provision herein to
the contrary, this Note is hereby expressly limited so that the interest rate
charged hereunder shall at no time exceed the maximum rate permitted by
applicable law. If, for any circumstance whatsoever, the interest rate charged
exceeds the maximum rate permitted by applicable law, the interest rate shall be
reduced to the maximum rate permitted, and if the Holder shall have received an
amount that would cause the interest rate charged to be in excess of the maximum
rate permitted, such amount that would be excessive interest shall be applied to
the reduction of the principal amount owing hereunder (without charge for
prepayment) and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal, such excess shall be refunded to the
Company.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
QUOTESMITH.COM, INC.,
a Delaware corporation
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