EXHIBIT 10.13
STOCK PURCHASE AGREEMENT
BETWEEN
NETSELECT, INC.
AND
GENERAL ELECTRIC CAPITAL CORPORATION
Dated as of December 31, 1997
TABLE OF CONTENTS
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Page
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1. Purchase and Sale of Series D Preferred Stock.................. 1
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1.1. Closing.................................................. 1
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1.2. Deliveries at Closing.................................... 1
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1.3. Definitions.............................................. 2
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2. Representations and Warranties of the Company.................. 2
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2.1. Organization and Qualification........................... 2
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2.2. Due Authorization........................................ 2
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2.3. Subsidiaries............................................. 2
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2.4. Financial Statements..................................... 3
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2.5. Litigation............................................... 3
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2.6. Conflicting Agreements and Charter Provisions............ 3
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2.7. Capitalization........................................... 3
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2.8. Status of Series D Preferred Stock....................... 4
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2.9. Laws and Regulations..................................... 4
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2.10. Use of Proceeds.......................................... 4
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2.11. Title to Properties; Insurance........................... 4
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2.12. Governmental Consents, etc. ............................. 5
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2.13. Taxes.................................................... 5
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2.14. ERISA.................................................... 5
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2.15. Possession of Franchises, Licenses, Etc. ................ 6
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2.16. Patents and Trademarks................................... 6
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2.17. Material Contracts and Obligations....................... 6
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2.18. Labor Matters............................................ 7
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2.19. Books and Records........................................ 7
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2.20. Brokers.................................................. 7
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2.21. Holding Company Act and Investment Company Act........... 7
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2.22. Accuracy of Information.................................. 8
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2.23. Costs of "Year 2000" Modifications....................... 8
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3. Representations and Warranties of Purchaser.................... 8
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3.1. Organization and Qualification........................... 8
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3.2. Due Authorization........................................ 8
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3.3. Governmental Consents, etc. ............................. 9
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3.4. Conflicting Agreements and Other Matters................. 9
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3.5. Acquisition for Investment............................... 9
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3.6. Accredited Investor...................................... 9
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3.7. Brokers.................................................. 9
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4. Certain Covenants.............................................. 9
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4.1. Dividends, Senior Securities............................. 9
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4.2. Sale of Assets; Merger; New Businesses................... 10
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4.3. Compliance with Laws..................................... 10
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4.4. Limitation on Agreements................................. 10
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TABLE OF CONTENTS
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4.5. Preservation of Franchises and Existence............... 10
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4.6. Insurance.............................................. 11
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4.7. Payment of Taxes and Other Charges..................... 11
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4.8. ERISA and Employee Matters............................. 11
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4.9. Financial Statements and Other Reports................. 12
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4.10. Inspection of Property................................. 13
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4.11. Board Membership....................................... 13
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4.12. Directors' and Officers' Insurance..................... 14
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4.13. Expenses............................................... 14
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4.14. Lost, Stolen, Damaged and Destroyed Stock Certificates. 14
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4.15. Related Party Transactions............................. 15
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4.16. Operations in Accordance with Business Plan............ 15
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4.17. Most Favored Nation Pricing............................ 15
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4.18. Stock Options.......................................... 15
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4.19. Management Compensation................................ 15
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4.20. Initial Public Offering................................ 15
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4.21. Provision of Advertising Space......................... 15
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4.22. Notice of Breach....................................... 15
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4.23. Restatement of Financial Statements.................... 16
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4.24. Update of Minutes...................................... 16
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4.25. Survival of Covenants.................................. 16
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5. Interpretation................................................. 16
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5.1. Definitions............................................ 16
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5.2. Accounting Principles.................................. 20
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6. Miscellaneous.................................................. 20
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6.1. Severability........................................... 20
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6.2. Specific Enforcement................................... 20
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6.3. Entire Agreement....................................... 20
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6.4. Counterparts........................................... 20
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6.5. Notices and other Communications....................... 21
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6.6. Amendments............................................. 21
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6.7. Cooperation............................................ 22
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6.8. Heirs, Successors and Assigns.......................... 22
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6.9. Expenses and Remedies.................................. 22
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6.10. Survival of Representations and Warranties............. 23
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6.11. Transfer of Securities................................. 23
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6.12. Governing Law.......................................... 24
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6.13. Term................................................... 24
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6.14. Publicity.............................................. 24
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THIS STOCK PURCHASE AGREEMENT, dated as of December 31, 1997 (this
"Agreement"), between NETSELECT, INC., a Delaware corporation (the "Company"),
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and GENERAL-ELECTRIC CAPITAL CORPORATION, a New York corporation ("Purchaser").
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WHEREAS, Purchaser wishes to purchase from the Company, and the Company
wishes to sell to Purchaser, shares of a new series of preferred stock, $.001
par value per share, of the Company, to be designated "Cumulative Convertible
Series D Preferred Stock" (the "Series D Preferred Stock"); and
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WHEREAS, Purchaser and the Company desire to provide for such purchase and
sale and to establish various rights and obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein set forth, the parties hereto agree as follows:
1. Purchase and Sale of Series D Preferred Stock.
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1.1. Closing. The closing of the transactions contemplated hereby
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(the "Closing") shall take place at the offices of Fried, Frank, Harris, Xxxxxxx
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& Xxxxxxxx, New York, New York, at 9:00 a.m. on January 12, 1998 (the "Closing
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Date").
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1.2. Deliveries at Closing. At the Closing:
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(i) Fenwick & West LLP, counsel to the Company, shall deliver to
Purchaser an opinion dated the Closing Date with respect to the
matters set forth in Exhibit A hereto;
(ii) the Stockholders Agreement, dated November 26, 1996, by and
among the Company and CDW Internet, L.L.C. ("CDW Internet"), Whitney
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Equity Partners, L.P. ("Whitney"), Xxxxx & Co. ("Xxxxx & Co."),
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InfoTouch Corporation ("InfoTouch"), Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx"),
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Xxxx X. Xxxxxxx, Xx. ("Xxxxxxx"), Xxxxxx X. Xxxx ("Xxxx")
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(collectively, the "Initial Stockholders"), as amended by Amendment
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No. 1, dated September 29, 1997, by and among the Company, the Initial
Stockholders, Ingleside Interests ("Ingleside"), Geocapital IV, L.P.
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("Geocapital") and Broadview Partners Group ("Broadview," together
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with Ingleside, Geocapital and Broadview, the "Subsequent
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Stockholders", and together with the Initial Stockholders, the
"Stockholders"), shall have been amended in accordance with the
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provisions set forth in Exhibit B hereto (as amended, the
"Stockholders' Agreement," together with this Agreement, the
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"Documents"), and the Company shall deliver a copy of the
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Stockholders' Agreement, as amended and executed, dated as of the date
hereof, to Purchaser;
(iii) the Certificate of Incorporation of the Company shall have
been amended and supplemented by a Certificate of Designation in the
form of Exhibit C setting forth the rights and preferences of the
Series D Preferred Stock (the "Certificate of Designation"), which
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shall have been filed with the Secretary
of State of the State of Delaware in accordance with Delaware General
Corporation Law;
(iv) the Company shall have delivered to Purchaser stock
certificates registered in name of Purchaser representing 681,201
shares of Series D Preferred Stock;
(v) Purchaser shall have paid to the Company $10,000,000 by wire
transfer of immediately available funds, representing the purchase
price for the Series D Preferred Stock; and
(vi) the Company shall have obtained any third-party consents
that are required or necessary in connection with this Agreement and
the transactions contemplated hereby.
1.3. Definitions. Capitalized terms used in this Agreement but not
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otherwise defined shall have the meanings given to them in Section 5 hereof.
2. Representations and Warranties of the Company.
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The Company represents and warrants as of the Closing Date as follows:
2.1. Organization and Qualification. Each of the Company and its
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Subsidiaries is duly organized and existing in good standing under the laws of
the jurisdiction `in which it is organized and has the power to own its property
and to carry on its business as now being conducted.
2.2. Due Authorization. The execution and delivery of the
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Documents by the Company, the issuance and sale of the Series D Preferred Stock
by the Company and compliance by the Company with all the provisions of the
Documents, and the Certificate of Designation (i) are within the corporate power
and authority of the Company and (ii) have been duly authorized by all requisite
corporate proceedings on the part of the Company. The Documents have been duly
executed and delivered by the Company and constitute valid and binding
agreements of the Company, enforceable in accordance with their terms, except
that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The Company has furnished to Purchaser true and correct copies
of the Certificates of Incorporation and By-Laws of the Company and RealSelect,
Inc. ("RealSelect") and the limited liability agreement of Net Select L.L.C., in
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each case as in effect on the date of this Agreement.
2.3. Subsidiaries. Schedules 2.3 sets forth for each Subsidiary of
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the Company (i) its name and jurisdiction of organization, (ii) the number of
shares of authorized capital stock of each class of its capital stock, (iii) the
number of issued and outstanding shares of each class of its capital stock, the
names of the holders thereof, and the number of shares held by each such holder
(or if such Subsidiary is not a corporation, the equity structure of such
Subsidiary and a list of its owners and their relative interests therein). All
of the issued and outstanding shares of
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capital stock or ownership interests of each Subsidiary have been duly
authorized and are validly issued, fully paid, and nonassessable. None of the
Company and its Subsidiaries control, directly or indirectly, or has any direct
or indirect equity participation in, any corporation, partnership, trust or
other business association which is not a subsidiary of the Company.
2.4. Financial Statements. The Company has delivered to Purchaser
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true and complete copies of the consolidated financial statements (including any
related schedules and/or notes) of the Company and its Subsidiaries set forth on
Schedule 2.4 (the "Financial Statements"). The Financial Statements have been
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prepared in accordance with generally accepted accounting principles
consistently followed (except as indicated in the notes thereto and, in the case
of unaudited financial statements, except for the absence of footnotes and
subject to normal year-end adjustments, none of which shall be material in
amount) throughout the periods involved and fairly present the financial
condition, results of operations, cash flows and changes in stockholders' equity
of the Company and its Subsidiaries as of their respective dates. Since
December 31, 1996, the Company and its Subsidiaries have operated their
respective businesses only in the ordinary course and, to the best knowledge of
the Company, no event has occurred which has had or is reasonably likely to have
a Material Adverse Effect.
2.5. Litigation. There is no action, suit, investigation or
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proceeding pending or, to the best knowledge of the Company, threatened against
the Company or any of its Subsidiaries or any of their respective properties or
assets by or before any court, arbitrator or Governmental Authority.
2.6. Conflicting Agreements and Charter Provisions. Neither the
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Company nor any of its Subsidiaries is a party to any organizational documents
or contract or agreement or subject to any organizational documents or judgment
or decree which has or is reasonably likely to have a Material Adverse Effect.
None of (i) the execution and delivery of the Documents and the issuance of
Series D Preferred Stock and (ii) the fulfillment of and compliance with the
terms and provisions hereof and thereof and of the Series D Preferred Stock
shall conflict with or result in a breach of the terms, conditions or provisions
of, or give rise to a right of termination under, or constitute a default under,
or result in any violation of, the organizational documents of the Company or
any Subsidiary or any mortgage, agreement, instrument, order, judgment, decree,
statute, law, rule or regulation to which the Company or any Subsidiary or any
of their respective properties is subject. Neither the Company nor any of its
Subsidiaries (i) is in default under any outstanding indenture or other debt
instrument or with respect to the payment of principal of or interest on any
outstanding obligation for borrowed money, or (ii) is in default under any of
their respective contracts or agreements, or under any instrument by which the
Company or any of its Subsidiaries is bound.
2.7. Capitalization. (a) As of the date of this Agreement prior to
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the issuance of the Series D Preferred Stock, the authorized capital stock of
the Company consists of: (i) 35,000,000 shares of Class A Common Stock, par
value $0.001 per share ("Class A Common Stock"), of which 236,470 shares are
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issued and outstanding; (ii) 10,000,000 shares of Class B Common Stock, par
value $0.001 per share ("Class B Common Stock," together with Class A Common
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Stock, the "Common Stock"), of which 116,470 shares are issued and outstanding;
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and (iii) 5,000,000 shares of Preferred Stock, par value $0.001 per share, of
which 1,647,059 shares have been designated and issued as Series A Convertible
Preferred Stock (the "Series A
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Preferred Stock"), 352,941 shares have been designated and issued as Series B
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Convertible Preferred Stock (the "Series B Preferred Stock") and 700,000 shares
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have been designated as Series C Convertible Preferred Stock (the "Series C
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Preferred Stock" and together with the Series A Preferred Stock and the Series B
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Preferred Stock, the "Preferred Stock"), of which 689,464 shares have been
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issued. All shares of Preferred Stock that have been issued are still
outstanding, and the Company does not have any commitment or obligation to issue
those shares of Series C Preferred Stock that have been designated but not
issued. As of the date of this Agreement, the Company anticipates that an
additional 29,382 shares of Class A Common Stock (and options to acquire 29,382
shares of Class A Common Stock) will be issued and outstanding shortly after the
Closing Date. Schedule 2.7 sets forth a list of all the outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, shares of any
class of capital stock of the Company or any Subsidiary, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound relating to the issuance or transfer of any
shares of capital stock or options, warrants or rights to purchase or acquire
any shares of capital stock of the Company or relating to the voting of any
shares of capital stock of the Company or a Subsidiary, the names of the holders
thereof, the numbers of such securities held by such holders, the expiration
dates of such securities, their vesting schedules and their exercise price.
2.8. Status of Series D Preferred Stock. The shares of Series D
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Preferred Stock have been duly authorized by all necessary corporate action on
the part of the Company and, upon payment therefor as provided in Article 1
hereof, the shares of Series D Preferred Stock shall be, and the shares of
Common Stock issuable upon conversion of the Series D Preferred Stock, upon such
conversion and issuance shall be, validly issued and outstanding, fully paid and
nonassessable. The shares of Common Stock issuable upon conversion of the
shares of Series D Preferred Stock have been validly reserved for issuance.
2.9. Laws and Regulations. The Company and each of its
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Subsidiaries are in compliance in all material respects with all applicable
federal, state, local and foreign laws and regulations and have obtained all
real estate licenses required or necessary for the conduct of the Real Estate
Business. There are no claims, notices, civil, criminal or administrative
actions, suits, hearings, investigations, inquiries or proceedings pending or,
to the best knowledge of the Company, threatened against the Company or any of
its Subsidiaries.
2.10. Use of Proceeds. The proceeds of the sale of the Series D
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Preferred Stock shall be used by the Company for the proposed acquisition of
certain companies listed in Schedule 2.10 and for the purpose of operating the
Real Estate Business, which includes, without limitation, operating, marketing
and selling those products and services described in the business plan (and
related documents) of RealSelect dated August 18, 1997, a copy of which has been
attached to Schedule 22(i).
2.11. Title to Properties; Insurance. (a) The Company and each of its
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Subsidiaries have good and valid title to, or, in the case of property leased by
any of them as lessee, a valid and subsisting leasehold interest in, their
respective properties and assets, free of all liens and encumbrances other than
those referred to in Schedule 2.11(a) except in each case for such defects in
title and such other liens and encumbrances which are disclosed in
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Schedule 2.11(a) or which do not in the aggregate materially detract from the
value to the Company and its Subsidiaries of their respective properties and
assets.
(b) As of the date hereof, the Company and its Subsidiaries carry
liability, property and casualty, automobile, and workers' compensation
insurance in scope, coverage and amounts as set forth on Schedule 2.11(b). Each
of the insurance policies is in full force and effect, and all premiums due and
payable have been paid. To the best knowledge of the Company, the insurance
coverage of the Company and its Subsidiaries is in an amount and of a scope
customary for companies of similar size engaged in the same or similar lines of
business, and the Company and each of its Subsidiaries are in compliance in all
material respects with the terms and conditions of such insurance policies.
Within the last three years, there have not been any claims, individually or in
the aggregate, that could lead to an increase in the premium of the insurance
policies or adversely affect the insurance coverage of the Company and its
Subsidiaries.
(c) All material properties and assets owned or utilized by the
Company or the Subsidiaries, including but not limited to software and computer
equipment and hardware, are in good operating condition and repair (except for
ordinary wear and tear), free from any defects, have been maintained consistent
with the standards generally followed in the industry and are sufficient to
carry on the business of the Company and the Subsidiaries as presently conducted
or proposed to be conducted.
2.12. Governmental Consents, etc. The Company is not required to
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obtain any consent, approval or authorization of, or to make any declaration or
filing with, any Governmental Authority as a condition to or in connection with
the valid execution, delivery and performance of the Documents, the valid offer,
issue, sale or delivery of the Series D Preferred Stock, or the performance by
the Company of its obligations in respect thereof, except for any filings
required to effect any registration pursuant to the Registration Rights
Agreement.
2.13. Taxes. The Company and each of its Subsidiaries have filed
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or caused to be filed all tax returns which are required to be filed and have
paid or caused to be paid all taxes as shown on said returns and on all
assessments received by them to the extent that such taxes have become due,
except taxes the validity or amount of which is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
set aside. The Company and its Subsidiaries have paid or caused to be paid, or
have established adequate reserves for all federal income tax liabilities and
state income tax liabilities now applicable to the Company or any of its
Subsidiaries for all fiscal years which have not been examined and reported on
by the taxing authorities (or closed by applicable statutes).
2.14. ERISA. No accumulated funding deficiency (as defined in
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Section 302 of ERISA and Section 412 of the Code), whether or not waived, exists
with respect to any Pension Plan (as defined in Section 11) (other than a
Multiemployer Plan (as defined below)). No liability to the PBGC has been, or is
reasonably likely to be, incurred with respect to any Pension Plan (other than a
Multiemployer Plan) by the Company, any of its Subsidiaries or any ERISA
Affiliate (as defined below). Neither the Company nor any of its Subsidiaries
and any ERISA Affiliate has incurred, or is reasonably likely to incur, any
withdrawal liability under Title IV of ERISA with respect to any Multiemployer
Plan and if the Company, its Subsidiaries and ERISA
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Affiliates, were to completely withdraw as of the date hereof from each
Multiemployer Plan in which they participate, the Company, its Subsidiaries and
its ERISA Affiliates would not incur any withdrawal liability under Title IV of
ERISA. Neither the Company nor any of its Subsidiaries has any obligation to
provide post-retirement health benefits to any employee or former employee. No
fiduciary of any employee benefit plan (as defined in Section 3(3) of ERISA)
maintained or contributed to by the Company or any of its subsidiaries, for the
benefit of their respective employees (each an "Employee Plan") has engaged or
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caused any Employee Plan to engage in any transaction prohibited by Section 4975
of the Code or Section 406 of ERISA which is reasonably likely to subject the
Company or any Subsidiary or any entity the Company or any Subsidiary has an
obligation to indemnify to any tax or penalty imposed under Section 4975 of the
Code or Section 502 of ERISA. Each Employee Plan has been maintained and
administered in compliance with all applicable law including ERISA and the Code
in all material respects. An "ERISA Affiliate" for purposes of this Section is
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any trade or business, whether or not incorporated, which, together with the
Company, is under common control, as described in Section 414(b) or (c) of the
Code, and the term "Multiemployer Plan" shall mean any Pension Plan which is a
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"multiemployer plan" (as such term is defined in Section 4001(a)(3) of ERISA).
2.15. Possession of Franchises, Licenses, Etc. The Company and its
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Subsidiaries possess all franchises, certificates, licenses, permits and other
authorizations from governmental or political subdivisions or regulatory
authorities and all patents, trademarks, service marks, trade names, copyrights,
licenses and other rights, free from burdensome restrictions, that are necessary
for the ownership, maintenance and operation by the Company and its Subsidiaries
of their respective properties and assets, and neither the Company nor any of
its Subsidiaries is in violation of any thereof in any material respect.
2.16. Patents and Trademarks. Set forth on Schedule 2.16 is a true
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and complete list of all patents, patent applications, trademarks, service
marks, trademark and service xxxx applications, trade names and copyrights
presently used by the Company or any Subsidiary or necessary for the conduct of
the business of the Company and its Subsidiaries as conducted and as proposed to
be conducted (the "Intellectual Property Rights"). The Company owns, or has the
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right to use under the agreements or upon the terms described on Schedule 2.16,
all of the Intellectual Property Rights. To the best knowledge of the Company,
the business conducted or proposed to be conducted by the Company and its
Subsidiaries does not infringe or violate any of the patents, trademarks,
service marks, trade names, copyrights, trade secrets or other proprietary
rights of any other person or entity, and neither the Company nor any Subsidiary
has received any charge, complaint, claim, demand or notice alleging any such
infringement or violation. Except as set forth on Schedule 2.16, to the
Company's knowledge, no other Person has any right to or interest in any
inventions, improvements, discoveries or other confidential information utilized
by the Company or any Subsidiary in its business.
2.17. Material Contracts and Obligations. Schedule 2.17 sets forth
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a list of the following agreements or commitments of any nature to which the
Company or any Subsidiary is a party or by which it is bound: (a) and any
agreement relating to the Intellectual Property Rights having a value in excess
of $5,000, (b) all employment and consulting agreements which require future
cash payments in excess of $100,000, and all employee benefit, bonus, pension,
profit-sharing, stock option, stock purchase and similar plans and arrangements,
(c) all data content
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provider agreements, including, but not limited to, master listings service
agreements (and indication of whether each such agreement offers the Company
exclusive listing rights), (d) all agreements with National Association of
Realtors or Realtor Information Network, Inc., (e) all agreements with third
parties under which such third parties agree to direct Internet traffic to the
Internet site operated by RealSelect, (f) all agreements with third parties
under which such third parties agree to pay the Company or any Subsidiary for
furnishing additional information about such third parties to visitors of the
Internet site operated by RealSelect, (g) all agreements between the Company and
any stockholder of the Company, (h) all agreements with suppliers or vendors
which require future payments in excess of $50,000 not already covered by (a)
through (g) above, (i) all agreements or commitments which restrict the ability
of the Company or any Subsidiary or Affiliate to engage in any business or line
of business in any location, (j) all agreements or commitments relating to
Indebtedness or Guarantees of the Company or any Subsidiary and (k) any other
agreement or commitment which requires future payments by or to the Company or
any Subsidiary in excess of $100,000 or which is otherwise material to the
Company or any of its Subsidiaries. The Company has delivered or made available
to the Purchaser copies of all of the foregoing agreements and commitments. All
of such agreements and commitments are valid, binding and in full force and
effect, except that, with respect to parties to such agreements and commitments
other than the Company and its Subsidiaries, this representation is made only to
the best knowledge of the Company. Attached to Schedule 2.17 is true and
complete copy of the traffic report of the Company and its Subsidiaries as of
November 30, 1997.
2.18. Labor Matters. Except as set forth in Schedule 2.18, neither
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the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement covering employees of the Company or its Subsidiaries nor does any
labor union or collective bargaining agent represent any of the employees of the
Company or its Subsidiaries. Except as set forth in Schedule 2.18, there is no
labor strike, slow-down or stoppage pending or, to the Company's knowledge,
threatened by the employees.
2.19. Books and Records. All the books, records and accounts of
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the Company and its Subsidiaries are in all material respects true and complete,
are maintained in accordance with good business practice and all laws applicable
to its business, and accurately present and reflect in all material respects all
of the transactions therein described, except as supplemented by the actions
required to be undertaken by the Company and its Subsidiaries pursuant to
Section 4.24. The Company has previously delivered to the Purchaser true and
complete texts of all of the minutes relating to meetings of the stockholders,
the Board and committees of the Board of the Company and each Subsidiary for the
past two years. The current members of the Board and officers of the Company
and its Subsidiaries, a list of which is set forth in Schedule 2.19, have been
duly elected.
2.20. Brokers. Neither the Company nor any Subsidiary has engaged any
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finder, broker or investment adviser, and has no obligation to pay any fees -in
relating thereto, in connection with the transactions contemplated hereby.
2.21. Holding Company Act and Investment Company Act. Neither the
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Company nor any Subsidiary is: (i) a "public utility company" or a "holding
company," or an "affiliate" or a "subsidiary company" of a "holding company," or
an "affiliate" of such a
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"subsidiary company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, or (ii) a "public utility," as defined in the
Federal Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any such "affiliated
person," as such terms are defined in the Investment Company Act of 1940, as
amended.
2.22. Accuracy of Information. None of the representations and
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warranties of the Company contained in the Documents contains any material
misstatement of fact or omits any material fact required to be stated herein or
therein or necessary to make the statements herein and therein not misleading.
The information (other than projections) which has been furnished by the Company
to Purchaser in connection with the transactions contemplated by the Documents,
did not, in the aggregate and to the best knowledge of the Company, as of the
date such information was furnished, contain any material misstatement of fact,
or omit any material fact required to be stated therein or necessary to make the
statements therein not misleading. The projections listed on Schedule 2.22 (i)
were prepared by management of the Company using its reasonable business
judgment and (ii) based upon the assumptions set forth in such projections,
represent as of the date of this Agreement the best estimate by management of
the Company as to the financial performance of the Company for the periods
indicated, but do not represent any guarantee or assurance of the future
financial results of the Company. The Company does not believe that such
projections are inaccurate or misleading in any material respect.
2.23. Costs of "Year 2000" Modifications. The Company represents and
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warrants that its computer system and software are able to accurately process
date data, including but not limited to, calculating comparing and sequencing
from, into and between the twentieth century (through year 1999), the year 2000
and the twenty-first century, including leap year calculations. To the best
knowledge of the Company, it is not aware of any inability on the part of any
service provider to timely remedy its own deficiencies in respect of the year
2000 problem.
3. Representations and Warranties of Purchaser. Purchaser represents
-------------------------------------------
and warrants as of the date hereof and as of each Closing as follows:
3.1. Organization and Qualification. Purchaser is a corporation duly
------------------------------
organized and existing in good standing under the laws of the jurisdiction of
its formation and has the power to own its property and to carry on its business
as now being conducted.
3.2. Due Authorization. Purchaser has all necessary right, power and
-----------------
authority to enter into the Documents and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of the Documents by
Purchaser and the consummation by Purchaser of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on behalf
of Purchaser. The Documents have been duly executed and delivered by Purchaser
and constitutes valid and binding agreements of Purchaser enforceable in
accordance with their terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and (ii) the remedy of
specific performance and injunctive and other forms of
8
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
3.3. Governmental Consents, etc. Except as obtained or made,
--------------------------
Purchaser is not required to obtain any consent, approval or authorization of,
or to make any declaration or filing with, any Governmental Authority as a
condition to or in connection with the valid execution, delivery and performance
of the Documents and the valid offer, issue, sale or delivery of the Series D
Preferred Stock, or the performance by Purchaser of its obligations in respect
thereof.
3.4. Conflicting Agreements and Other Matters. Neither the execution
----------------------------------------
and delivery of the Documents nor the performance by Purchaser of its
obligations hereunder shall conflict with, result in a breach of the terms,
conditions or provisions of, constitute a default under or require any consent,
approval or other action by or any notice to or filing with any court or
administrative or governmental body pursuant to, the organizational documents of
Purchaser or any of its Subsidiaries or any mortgage, agreement, instrument,
order, judgment, decree, statute, law, rule or regulation to which Purchaser or
any of its Subsidiaries or any of their respective properties are subject.
3.5. Acquisition for Investment. Purchaser is acquiring the Series D
--------------------------
Preferred Stock for its own account for the purpose of investment and not with a
view to or for sale in connection with any distribution thereof, and Purchaser
has no present intention or plan to effect any distribution thereof. Purchaser
acknowledges that the shares of Series D Preferred Stock and the shares of
Common Stock issuable upon conversion thereof have not been registered under the
Securities Act and may be sold or disposed of in the absence of such
registration only pursuant to an exemption from such registration.
3.6. Accredited Investor. Purchaser is an "accredited investor"
-------------------
within the meaning of Rule 501 promulgated under the Securities Act.
3.7. Brokers. Purchaser has not engaged any finder, broker or
-------
investment advisor, and has no obligation to pay any fees relating thereto, in
connection with the transaction contemplated hereby.
4. Certain Covenants.
-----------------
4.1. Dividends, Senior Securities. (a) Except with the prior written
----------------------------
consent of Purchaser, neither the Company nor any of its Subsidiaries shall pay,
declare or set aside any sums for the payment of, any dividends, or make any
distribution on, any shares of its capital stock or redeem, repurchase or
otherwise acquire any outstanding shares of its capital stock (other than any
nonvested shares of Common Stock purchased from employees pursuant to a stock
option plan approved by the Board).
(b) Except with the prior written consent of Purchaser, the Company
shall not issue any equity securities or any rights, options, warrants or other
securities which are exercisable for, exchangeable for or convertible into
shares of any class of capital stock ranking senior or on a parity as to
dividends or upon liquidation to the Series D Preferred Stock other than
issuances in accordance with Section 4.17; provided, however, no such consent
-------- -------
shall be required when (x) the issuance of any such senior securities for a
common equivalent value equal
9
to or greater than $17.60 per share and the Company raises an aggregate of at
least $15,000,000 from such issuance or (y) any such pari passu securities are
issued and the Company raises an aggregate of at least $5,000,000 from such
issuance.
(c) Except with the approval of the Board, the Company shall not
incur any capital expenditures beyond those provided in the annual capital
budget plan of the Company approved by the Board.
(d) Except with the approval of the Board, neither the Company nor
any of its Subsidiaries shall create, incur, assume or suffer to exist any
Guarantee or Lien other than Permitted Liens.
4.2. Sale of Assets; Merger; New Businesses. Except as between (i)
--------------------------------------
the Company and any wholly-owned Subsidiary of the Company, (ii) any wholly-
owned Subsidiaries of the Company and (iii) the Company and InfoTouch:
(a) the Company shall not, and shall not permit any of its
Subsidiaries to sell, lease, exchange or transfer any assets of the Company
and/or any of its Subsidiaries, except in the ordinary course of business
consistent with past practice or except with the prior approval of the Board.
(b) neither the Company nor any of its Subsidiaries shall merge with
or into or consolidate with any other Person except with the prior approval of
the Board.
(c) the Company shall not issue any equity securities or securities
convertible into, exchangeable for or exercisable for, equity securities of the
Company to any Person or Group (other than Purchaser and its Affiliates) if
giving effect to such issuance, such Person would beneficially own more than 10%
of the outstanding equity securities of the Company, except with the prior
approval of the Board.
(d) the Company shall not directly or indirectly through any
Subsidiary or joint venture engage in any line of business other than the Real
Estate Business except with the prior written consent of Purchaser prior to the
consummation of a Qualified Public Offering.
4.3. Compliance with Laws. The Company shall, and shall cause its
--------------------
Subsidiaries to, comply in all material respects with all applicable statutes,
rules, regulations and orders of all Governmental Authorities with respect to
the conduct of its business and the ownership of its properties, including,
without limitation, those relating to the environment and human health, equal
employment opportunity, employee safety, foreign corrupt practices and ERISA.
4.4. Limitation on Agreements. The Company shall not, and shall
------------------------
not permit any of its Subsidiaries to, enter into any agreement or any
amendment, modification, extension or supplement to any existing agreement,
which contractually prohibits the payment of dividends on the Series D Preferred
Stock in accordance with the Certificate of Designation.
4.5. Preservation of Franchises and Existence. The Company shall,
----------------------------------------
and shall cause each of its Subsidiaries (so long as they are conducting any
business) to, maintain its
10
corporate existence, and all material rights and franchises, in full force and
effect unless the Board determines that it is in the best interest of the
Company not to do so and such rights and franchises, as the case may be, are not
material to the business of the Company.
4.6. Insurance. (a) The Company shall, and shall cause each of its
---------
Subsidiaries to, effective as of the Closing, maintain with insurers believed by
the Company to be responsible such insurance, in such amounts and of such types
as are customarily carried under similar circumstances by companies of similar
size and engaged in the same or a similar business or having similar properties
similarly situated and in any event not less than the amounts set forth on
Schedule 4.6.
(b) The Company shall have, as soon as practicable and in any event
by January 31, 1998, obtained a "key man" insurance policy on the life of Xxxxxx
X. Xxxxx in the amount of $1,000,000 from a reputable insurer and shall deliver
a true and complete copy of such insurance policy to Purchaser, which shall
specify that the beneficiary thereof shall be Purchaser. The Company shall
maintain such insurance policy for so long as Xxxxxx X. Xxxxx remains as the
Chief Executive Officer of the Company or so long as Xxxxxx X. Xxxxx, in the
judgment of Purchaser, is essential to the success and prospects of the Company
and its Subsidiaries. The beneficiary of such insurance policy shall be
Purchaser.
4.7. Payment of Taxes and Other Charges. Except as otherwise
----------------------------------
permitted by law, the Company shall pay or discharge, and shall cause each of
its Subsidiaries to pay or discharge, before the same shall become delinquent,
(i) all taxes, assessments and other governmental charges or levies imposed upon
it or any of its properties or income (including, without limitation, such as
may arise under Section 4062, 4063 or 4064 of ERISA or any similar provision of
law) and (ii) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons which, in the case of either
clause (i) or clause (ii), if unpaid, might result in the creation of a material
lien upon any of its properties, provided, however, that the Company and its
Subsidiaries shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith pursuant to appropriate
proceedings.
4.8. ERISA and Employee Matters. Except as otherwise required by
--------------------------
law, neither the Company nor any of its Subsidiaries shall incur any material
liability with respect to retiree medical or death benefits or unfunded benefits
payable after termination of employment. All employee benefit plans and
arrangements maintained or contributed to by the Company, any of its
Subsidiaries or any ERISA Affiliate shall be maintained in material compliance
with all applicable laws, including any reporting requirements. With respect to
any plan maintained by or contributed to by the Company or any of its
Subsidiaries, neither the Company nor any of its Subsidiaries shall fail to make
any contribution due from it under the terms of such plan or as required by law.
Neither the Company nor any ERISA Affiliate shall permit a Pension Plan to incur
an accumulated funding deficiency (as such term is defined in Section 302 of
ERISA or Section 412 of the Code), whether or not waived, cause a lien or a
security interest to attach to any asset of the Company or any of its
Subsidiaries for the benefit of any Plan, or incur any liability which would be
material to the Company and its Subsidiaries taken as a whole under Title IV of
ERISA, including withdrawal liability (other than the payment of premiums, none
of which are overdue). Neither the Company nor any of its Subsidiaries, nor any
other Person
11
including any fiduciary, shall engage in any transaction prohibited by Section
406 of ERISA or Section 4975 of the Code which is reasonably likely to subject
the Company, any of its Subsidiaries or any entity that the Company or any of
its Subsidiaries has an obligation to indemnify, to any tax or penalty imposed
under Section 4975 of the Code or Section 502 of ERISA.
4.9. Financial Statements and Other Reports.
--------------------------------------
(i) The Company shall, as soon as practicable and in any event
within 30 days after the end of each month (other than the last month
of any quarterly period) in each fiscal year, furnish to Purchaser
unaudited consolidated and consolidating statements of net income and
unaudited consolidated statements of cash flows and changes in
consolidated stockholders' equity of the Company and its Subsidiaries
for the period from the beginning of the then current fiscal year to
the end of such month, and a consolidated balance sheet of the Company
and its Subsidiaries as of the end of such month, setting forth in
each case in comparative form figures for the corresponding month or
date in the preceding fiscal year and a comparison of such data with
the Company's budget for such month, all in reasonable detail and
certified by an authorized financial officer of the Company, subject
to changes resulting from year-end adjustments.
(ii) The Company shall, as soon as practicable and in any event
within 30 days after the end of each quarterly period (other than the
last quarterly period) in each fiscal year, furnish to Purchaser
unaudited consolidated and consolidating statements of net income and
unaudited consolidated statements of cash flows and changes in
stockholders' equity of the Company and its Subsidiaries for the
period from the beginning of the then current fiscal year to the end
of such quarterly period, and consolidated and consolidating balance
sheets of the Company and its Subsidiaries as of the end of such
quarterly period, setting forth in each case in comparative form
figures for the corresponding period or date in the preceding fiscal
year and a comparison of such data with the Company's budget for such
quarter, all in reasonable detail and certified by an authorized
financial officer of the Company, subject to changes resulting from
year-end adjustments.
(iii) The Company shall, as soon as practicable and in any
event within 90 days after the end of each fiscal year, furnish to
Purchaser audited consolidated and unaudited consolidating statements
of net income and audited consolidated statements of cash flows and
changes in stockholders' equity of the Company and its Subsidiaries
for such year, and audited consolidated and unaudited consolidating
balance sheets of the Company and its Subsidiaries as of the end of
such year. In addition, the Company shall furnish to Purchaser a
comparison of the foregoing data with the Company's budget for such
year.
(iv) If the Company becomes a reporting company pursuant to
Section 13 or Section 15(d) of the Exchange Act, it shall, promptly
upon transmission thereof, furnish to Purchaser copies of all such
financial statements,
12
proxy statements, notices and reports at the same time as it shall
file such documents with the Commission or send such documents to its
stockholders, and copies of all registration statements (without
exhibits), other than registration statements relating to employee
benefit or dividend reinvestment plans, and all such regular and
periodic reports as it shall file with the Commission.
(v) The Company shall prepare an annual capital and operating
budget for each calendar year which shall be submitted to and approved
by the Board of the Company not later than October 31 of the
immediately preceding calendar year.
(vi) The Company shall promptly furnish to Purchaser copies of
any compliance certificates furnished to lenders in respect of
Indebtedness of the Company and its Subsidiaries and, with reasonable
promptness, furnish to Purchaser such other financial and other data
of the Company and its Subsidiaries as Purchaser may reasonably
request.
(vii) The Company shall, as soon as practicable and in any
event within 20 Business Days after the end of each month, furnish to
Purchaser copies of the traffic report of the Company and its
Subsidiaries for the preceding month.
4.10. Inspection of Property. The Company shall permit
----------------------
representatives of Purchaser to visit and inspect any of the properties of the
Company and its Subsidiaries, to examine the corporate books and make copies or
extracts therefrom and to discuss the affairs, finances and accounts of the
Company and its Subsidiaries with the principal officers of the Company, all at
such reasonable times, upon reasonable notice and as reasonably often as
Purchaser may reasonably request without undue disruption of the business of the
Company or its Subsidiaries.
4.11. Board Membership. (a) The Company shall take all necessary
----------------
action such that from and after the Closing, the number of authorized directors
of the Company shall be no more than nine. Prior to or at the Closing, the
Company shall take all necessary action to cause the appointment of one nominee
of Purchaser as a member to the Board and the board of managers (the "LLC
---
Board") of Net Select, L.L.C. For so long as Purchaser owns at least 49% of the
-----
outstanding shares of Series D Preferred Stock (or the Class A Common Stock
issuable upon the conversion of the Series D Preferred Stock) purchased
hereunder, and prior to a Qualified Public Offering, the Company shall take all
necessary action to cause (i) prior to the occurrence of a Default Event, one
nominee, and (ii) after the occurrence of a Default Event and for so long as
such Default Event remains uncured, two nominees of Purchaser to be elected (so
long as there is a vacancy on the Board of the LLC Board, as the case may be, at
such time; provided that if there is no such vacancy at such time, the Company
-------- ----
will use its commercially reasonable efforts to create one such vacancy on the
Board or the LLC Board, as the case may be, as promptly as practicable); as (y)
director(s) of the Company and (z) member(s) of the LLC Board at each meeting of
stockholders or members, as applicable, for the election of directors or
managers, as applicable, or action by written consent in lieu thereof. In the
event of the death, resignation, removal or inability to serve of a nominee
designated by Purchaser, provided that
13
Purchaser still has the right to nominate directors hereunder, Purchaser shall
be entitled to designate a successor to such nominee.
(b) As soon as practicable after the Closing Date, but in no
event later than ten Business Days thereafter, the Company shall, prior to the
consummation of a Qualified Public Offering, cause the composition of the audit
and compensation committees of the Board to be in compliance with section 303 of
the New York Stock Exchange Listed Company Manual, as such section may be
amended from time to time. As long as Purchaser has the right to appoint one
member or one observer to the Board, Purchaser shall be entitled, subject to the
limitation in (c) below, to have one observer selected by Purchaser present at
all meetings of the audit and compensation committees of the Board and such
observer shall have the same access to information concerning the business and
operations of the Company and its Subsidiaries and at the same time as members
of the audit and compensation committees and shall be entitled to participate in
discussions and consult with members of the audit and compensation committees at
each such meeting, without voting.
(c) If Purchaser at any time for any reason elects not to
nominate a member to the Board or to cause such nominee to resign, Purchaser
shall be entitled to, before the consummation of a Qualified Public Offering,
have one observer selected by Purchaser present at all meetings (whether in
person, by telephone or video conference) of the Board in lieu of such member of
the Board and such observer shall have the same access to information concerning
the business and operations of the Company and its Subsidiaries and at the same
time as directors of the Company and shall be entitled to participate in
discussions and consult with the Board at each such meeting, without voting;
provided that (i) such observer enters into a customary confidentiality
agreement with the Company and (ii) the Board may choose to exclude such
observer if failure to do so may cause the Company to lose its attorney-client
privilege.
4.12. Directors' and Officers' Insurance. The Company shall
----------------------------------
obtain and cause to be maintained in effect, with financially sound insurers, a
policy of directors' and officers' liability insurance covering members of the
Board (and their respective successors) in an amount of at least $2,000,000.
4.13. Expenses. The Company shall pay the reasonable out-of-pocket
--------
expenses incurred by each nominee of Purchaser to the Board in connection with
performing his or her duties, including without limitation the reasonable out-
of-pocket expenses incurred by such person attending meetings of the Board or
any committee thereof or meetings of any Board or other similar managing body
(and any committee thereof) of any Subsidiary of the Company.
4.14. Lost, Stolen, Damaged and Destroyed Stock Certificates. Upon
------------------------------------------------------
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any certificate for shares of Series D Preferred Stock and in
the case of loss, theft or destruction, upon delivery of an indemnity or bond
satisfactory to the Company (which may be an undertaking by Purchaser so to
indemnify the Company), or, in the case of mutilation, upon surrender and
cancellation thereof, the Company shall issue a new certificate of like tenor
for a number of shares of Series D Preferred Stock equal to the number of shares
of such stock represented by the certificate lost, stolen, destroyed or
mutilated.
14
4.15. Related Party Transactions. Except with the written consent
--------------------------
of a majority of the disinterested directors of the Board, the Company shall
not, directly or indirectly, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into, amend or terminate any contract, arrangement
or transaction with a Related Party, other than compensation arrangements in the
ordinary course of business on arm's length terms.
4.16. Operations in Accordance with Business Plan. The business
-------------------------------------------
and operations of the Company and its Subsidiaries shall be conducted in all
material respects in accordance with the Company's annual business plan as
approved or modified by the Board.
4.17. Most Favored Nation Pricing. For a period of 90 days after
---------------------------
the Closing Date, the Company shall not enter into any financing arrangement
involving equity securities on terms that are more favorable to the investors
than those that are offered to Purchaser in the Documents unless the Company
issues to Purchaser, at no cost to Purchaser, such number of additional shares
of Series D Preferred Stock and otherwise amend the terms of the Documents so as
to make the price and other terms of the Documents at least as favorable to
Purchaser as other transaction.
4.18. Stock Options. Except with the prior written consent of the
-------------
Board, the Company shall not reserve additional shares of Common Stock for
issuance in connection with awards of options or restricted stock under the
Company's incentive compensation plan to directors, officers, employees and
consultants. As promptly as practicable after the Closing Date, the Company
shall reserve additional shares of Common Stock to cover any stock options that
have been awarded as of the Closing Date but for which shares of Common Stock
have not been reserved for by the Board.
4.19. Management Compensation. Except with the prior written
-----------------------
consent of the compensation committee of the Board, the Company shall not enter
into or amend, modify or extend the term of any compensation arrangements with
any officer of the Company or any of its Subsidiary or any Person whose annual
compensation exceeds $150,000.
4.20. Initial Public Offering. The Company shall not effect a
-----------------------
public offering under the Securities Act unless such offering constitutes a
Qualified Public Offering.
4.21. Provision of Advertising Space. Immediately after the
------------------------------
Closing Date, the Company shall enter into good-faith discussions with Purchaser
with respect to the provision of free advertising space on the Company's or a
Subsidiary's Internet site equal to at least 1.5 million displays per month for
three months after the Closing Date for Purchaser, its Affiliates or other
Persons designated by Purchaser or its Affiliates.
4.22. Notice of Breach. As promptly as practicable, and in any
----------------
event not later than five Business Days, after management of the Company becomes
aware of any breach by the Company of any provision of this Agreement, the
Company shall provide Purchaser with written notice specifying the nature of
such breach and any actions proposed to be taken by the Company to cure such
breach.
15
4.23. Restatement of Financial Statements. As promptly as
-----------------------------------
practicable, and in any event no later than March 31, 1998, the Company shall
have completed restating its financial statements in connection with certain
revenue recognition accounting issues.
4.24. Update of Minutes. As promptly as practicable, and in any
-----------------
event no later than January 31, 1998, the Company shall have completed updating
its minutes and those of its Subsidiaries.
4.25. Survival of Covenants. Notwithstanding anything to the
---------------------
contrary herein, Sections 4.l(a), 4.l(c), 4.l(d), 4.2(a), 4.2(b), 4.2(c),
4.2(d), 4.3, 4.5, 4.6, 4.7, 4.8, 4.15, 4.16, 4.17, 4.18 and 4.19 shall terminate
upon the consummation of a Qualified Public Offering.
5. Interpretation.
--------------
5.1. Definitions.
-----------
"Affiliate" and "Associate" shall have the respective meanings
--------- ---------
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
"Beneficial owner" has the meaning given to such term in Rule 13d-3
----------------
under the Exchange Act, and the terms "beneficially own" and "beneficial
ownership" shall have the correlative meanings.
"Board" means the Board of Directors of the Company.
-----
"Business Day" shall mean any day other than a Saturday, Sunday or a
------------
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Capitalized Lease" shall mean, with respect to any Person, any lease
-----------------
or any other agreement for the use of property which, in accordance with
generally accepted accounting principles, should be capitalized on the lessee's
or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and include,
-----------------------------
as of any date as of which the amount thereof is to be determined, the amount of
the liability capitalized or disclosed (or which should be disclosed in
accordance with generally accepted accounting principles) in a balance sheet of
such Person in respect of a Capitalized Lease of such Person.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Commission" shall mean the Securities and Exchange Commission or any
----------
other federal agency then administering the Securities Act and other federal
securities laws.
"Company" shall have the meaning specified in the first paragraph of
-------
this Agreement.
"Consolidated" or "consolidated", when used with reference to any
------------ ------------
financial term in this Agreement (but not when used with respect to any tax
return or tax liability), shall mean
16
the aggregate for two or more Persons of the amounts signified by such term for
all such Persons, with inter-company items eliminated and, with respect to
earnings, after eliminating the portion of earnings properly attributable to
minority interests, if any, in the capital stock of any such Person or
attributable to shares of preferred stock of any such Person not owned by any
other such Person.
"Default Event" shall mean the Company shall have breached in any
-------------
material respect any of the covenants set forth in this Agreement or any of the
provisions of the Certificate of Designation and such breach continues for 30
days after notice in writing by the Company to Purchaser.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
-------------
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at any time.
Reference to a particular section of the Exchange Act shall include reference to
the comparable section, if any, of any such successor federal statute.
"Fully Diluted" shall mean, when used with reference to any class or
-------------
chances of equity securities, at any date as of which the number of shares
thereof is to be determined, (i) all such equity securities outstanding at such
date and (ii) all equity securities issuable in respect of vested options or
warrants to purchase, or securities convertible into, exercisable for or
exchangeable for, such equity securities outstanding on such date.
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America in effect from time to time.
"Governmental Authority" shall mean any federal, state, local or
----------------------
foreign court, administrative agency, commission or other governmental or
regulatory body, agency, instrumentality or authority or any department or
subdivision thereof.
"Group" shall have the meaning ascribed to such term in Rule 13d-5
-----
under the Exchange Act.
"Guarantee" by any Person shall mean (without duplication on a
---------
consolidated basis) all obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection) of any
Person guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation or any property or assets constituting
security therefor, (ii) to advance or supply funds (x) for the purchase or
payment of such Indebtedness or obligation, (y) to maintain working capital or
other balance sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation, (iii) to lease
property or to purchase securities or other property or services primarily for
the purpose of assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of such Indebtedness or
obligation, or (iv) otherwise to assure the owner of the
17
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of any computations made under this Agreement, a
Guarantee in respect of any Indebtedness for borrowed money shall be deemed to
be Indebtedness equal to the principal amount of the Indebtedness for borrowed
money which has been guaranteed, and a Guarantee in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"Indebtedness" shall mean, with respect to any Person (without
------------
duplication on a consolidated basis), (i) all obligations of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person, (iv) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (other than accounts
payable to suppliers and similar accrued liabilities incurred in the ordinary
course of business and paid in a manner consistent with industry practice), (v)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any lien or security interest on property owned or acquired by such Person
whether or not the obligations secured thereby have been assumed, (vi) all
Capitalized Lease Obligations of such person, (vii) all Guarantees of such
person, (viii) all obligations (including but not limited to reimbursement
obligations) relating to the issuance of letters of credit for the account of
such person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot and
forward contracts and other agreements or arrangements designed to provide
protection against fluctuations in interest or currency exchange rates.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
----
deposit arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any effective
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing.
"Material Adverse Effect" with respect to any Person shall mean any
-----------------------
event or events, taken singly or in the aggregate, (a) as a result of which such
Person and its Subsidiaries, taken as a whole, would be unable (i) to continue
to operate their business in a manner consistent with the manner of operation of
such business as of the date of this Agreement or (ii) to effectuate their
proposed business strategy, or (b) which would have a material adverse effect on
the assets, liabilities, business, results of operations, financial condition or
prospects of such Person and its Subsidiaries, taken as a whole.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
----
successor thereto.
"Pension Plan" shall mean any multiemployer plan or single employer
------------
plan, as defined in Section 4001 of ERISA, that is subject to Title IV of ERISA,
that the Company, any Subsidiary or any ERISA Affiliate maintains or is or ever
has been obligated to contribute to for
18
the benefit of employees or former employees of the Company, any Subsidiary or
any ERISA Affiliate.
"Permitted Lien" shall mean (i) Liens for taxes, assessments or other
--------------
governmental charges not yet due or which are being contested in good faith and
by appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Company or such Subsidiary, as the case may be,
in accordance with GAAP; (ii) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business in respect of obligations which are not yet due or which are being
contested in good faith and by appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of the Company or such Subsidiary,
as the case may be, in accordance with GAAP; (iii) pledges or deposits in
connection with workmen's compensation, unemployment insurance and other social
security legislation; (iv) Liens or deposits to secure the performance of bids,
tenders, trade or government contracts (other than for borrowed money), leases,
licenses, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business;
(v) easements, right-of-way, zoning and similar restrictions and other similar
encumbrances or title defects incurred, or leases or subleases granted to
others, in the ordinary course of business, which do not interfere with or
adversely affect in any material respect the ordinary conduct of the business of
the Company and its Subsidiaries taken as a whole; (vi) Liens on assets of
corporations which became or become Subsidiaries of the Company, provided that
--------
such Liens exist at the time such corporations became or become Subsidiaries and
are not created in anticipation thereof.
"Person" shall mean any individual, firm, corporation, business trust,
------
partnership or other entity, and shall include any successor (by merger or
otherwise) of such entity.
"Qualified Public Offering" shall mean a public offering of Common
-------------------------
Stock under the Securities Act at a per share price of at least $22 yielding an
enterprise value for the Company of at least $135,000,000 and gross underwriting
proceeds of not less than $20,000,000. As used herein, "enterprise value" shall
mean (x) the product of the number of the Corporation's Common Stock Equivalents
outstanding (as defined in Section 4(k)(ii)(c) of the Certificate of
Designation) multiplied by such per share offering price, plus (y) the
outstanding amount of the Company's indebtedness for borrowed money.
the value of the Company's capital stock based on the offering price
of the Qualified Public Offering plus the outstanding amount of the Company's
indebtedness for borrowed money.
"Related Party" shall mean any management officer of the Company or
-------------
any of their respective Subsidiaries, any spouse, parent, child or sibling of
any management officer of the Company or any of their respective Subsidiaries,
and any Affiliate or Associate of any of the foregoing persons.
"Real Estate Business" shall mean any business associated with real
--------------------
state (residential and commercial) and classifieds and activities associated
therewith or incidental thereto, including but not limited to promotion (online,
T.V., radio, print, telecommunication), related information services,
advertising, financing information and services, marketing of
19
products and services to real estate and related professionals and companies,
financing transaction services, product and service transaction services, data
mining and other services generally performed by companies doing any of the
foregoing.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
--------------
any successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Subsidiary" of any Person means any corporation or other entity of
----------
which a majority of the voting power or the voting equity securities or equity
interests is owned, directly or indirectly, by such Person.
5.2. Accounting Principles. The character or amount of any asset,
---------------------
liability, capital account or reserve and of any item of income or expense
required to be determined pursuant to this Agreement, and any consolidation or
other accounting computation required to be made pursuant to this Agreement, and
the construction of any definition in this Agreement containing a financial
term, shall be determined or made, as the case may be, in accordance with United
States generally accepted accounting principles, to the extent applicable,
unless such principles are inconsistent with the express requirements of this
Agreement.
6. Miscellaneous.
-------------
6.1. Severability. If any term, provision, covenant or restriction
------------
of this Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement and such exhibits shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such which may be hereafter declared
invalid, void or unenforceable.
6.2. Specific Enforcement. Each of the parties hereto acknowledges
--------------------
and agrees that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to injunctive or other equitable relief to prevent
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
they may be entitled at law or equity.
6.3. Entire Agreement. This Agreement (including the Schedules and
----------------
documents set forth in the exhibits hereto) contains the entire understanding of
the parties with respect to the transactions contemplated hereby.
6.4. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
20
6.5. Notices and other Communications. All notices, consents,
--------------------------------
requests, instructions, approvals, financial statements, proxy statements,
reports and other communications provided for herein shall be given in writing
and delivered personally, by telecopy (with a confirmation copy to be sent by
first class mail) or sent by nationally recognized overnight courier service,
to:
THE COMPANY:
NetSelect, Inc.
0000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Telecopy No.: (000) 000-0000
With a copy to:
Xxxx X. Xxxxxxx, Esq.
Fenwick & West, LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
PURCHASER:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Equity Capital Group-NetSelect Account
Manager
Attention: Counsel
Telecopy No. (000) 000-0000 & (000) 000-0000
With a copy to:
Xxxxxx xx Xxxx, Esq.
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No. (000) 000-0000
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner.
6.6. Amendments. The Company may take any action herein
----------
prohibited, or omit to perform any act required to be performed by it
(including, without limitation, under Article 4 of this Agreement), if the
Company shall obtain the written consent or waiver of the registered holders of
not less than 66 2/3% of the outstanding shares of Series D Preferred Stock.
Any amendment to this Agreement shall require the written consent of (i) the
registered holders of not less than 66 2/3% of the outstanding shares of Series
D Preferred Stock and (ii) the Company.
21
6.7. Cooperation. Each of the parties hereto agrees to take, or
-----------
cause to be taken, all such further or other actions as shall reasonably be
necessary to make effective and consummate the transactions contemplated by this
Agreement.
6.8. Heirs, Successors and Assigns. Except as expressly provided
-----------------------------
otherwise in this Agreement, all covenants and agreements contained herein shall
bind and inure to the benefit of the parties hereto, their respective heirs,
successors and assigns, and to any transferee of any Series D Preferred Stock.
There are no other intended third-party beneficiaries to this Agreement.
6.9. Expenses and Remedies. (a) The Company agrees to pay or
---------------------
reimburse Purchaser for (i) all reasonable legal counsel, to Purchaser in
connection with the Documents and the Certificate of Designation and the
consummation of all transactions contemplated hereby and thereby (the
"Transaction Fees"), (ii) all costs, expenses and reasonable legal fees relating
----------------
to any future amendments or supplements to the Documents or the Series D
Preferred Stock (or any proposal by the Company for such amendment or
supplement) whether or not consummated or any waiver or consent with respect
thereto (or any proposal for such waiver or consent) whether or not consummated
and (iii) all costs, expenses and reasonable legal fees of Purchaser relating to
the enforcement against the Company, the Document or the Certificate of
Designation. The maximum amount of Transaction Fees payable by the Company
under this Section 6.9(a) shall in the aggregate not exceed $50,000.
(b) The Company agrees to indemnify and save harmless Purchaser and
its officers, directors, partners, employees, trustees and agents, and each
person who controls Purchaser within the meaning of the Securities Act or the
Exchange Act, from and against any and all costs, expenses (including, without
limitation, reasonable attorneys' fees, whether incurred in connection with a
claim against the Company or a third party claim), damages or other liabilities
(collectively, "Losses") resulting from any breach of any representation,
------
warranty, covenant or agreement set forth in this Agreement by the Company or
any legal, administrative or other proceedings brought by any third party
arising out of the transactions contemplated hereby and thereby (other than
Losses resulting, directly or indirectly, (i) from the breach by Purchaser of
any of its agreements contained herein or (ii) from the gross negligence or
willful misconduct of Purchaser or any of its respective officers, directors,
partners, employees or agents, or any person who controls Purchaser within the
meaning of the Securities Act or the Exchange Act); provided, however, that, if
-------- -------
and to the extent that such indemnification is unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
such indemnified liability which shall be permissible under applicable laws.
(c) Each party entitled to indemnification under this Section 6.9
(each, an "indemnified party") shall, promptly after the receipt of notice of
the commencement of any action against such `indemnified party in respect of
which indemnity may be sought from a party (each, an "indemnifying party") on
account of an indemnity agreement contained in this Section 6.9, notify the
indemnifying party in writing of the commencement thereof. The omission of any
indemnified party so to notify the indemnifying party of any such action shall
not relieve the indemnifying party from any liability which the indemnifying
party may have to such indemnified party except to the extent the indemnifying
party shall have been materially
22
prejudiced by the omission of such indemnified party so to notify the
indemnifying party, pursuant to this Section 6.9. In case any such action shall
be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that the indemnifying party may wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section 6.9 for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof nor for any settlement
thereof entered into without the consent of the indemnifying party; provided,
--------
however, that (i) if the indemnifying party shall elect not to assume the
-------
defense of such claim or action or (ii) if the indemnified party reasonably
determines (x) that there may be a conflict between the positions of the
indemnifying party and of the indemnified party in defending such claim or
action or (y) that there may be legal defenses available to such indemnified
party different from or in addition to those available to the indemnifying
party, then separate counsel for the indemnified party shall be entitled to
participate in and conduct the defense, in the case of (i) and (ii)(x), or such
different defenses, in the case of (ii)(y), and the indemnifying party shall be
liable for any reasonable legal or other expenses incurred by the indemnified
party in connection with the defense.
(d) In case any one or more of the covenants and/or agreements set
forth in this Agreement shall have been breached by the Company, Purchaser may
proceed to protect and enforce its rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Agreement.
6.10. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties contained herein or made in writing by any party
in connection herewith shall survive the execution and delivery of this
Agreement and the issuance and delivery of the shares of Series D Preferred
Stock, regardless of any investigation made by or on behalf of any party.
6.11. Transfer of Securities. (a) Purchaser understands and agrees
----------------------
that the shares of Series D Preferred Stock (and the shares of Common Stock
issuable upon conversion thereof) have not been registered under the Securities
Act or the securities laws of any state and that they may be sold or otherwise
disposed of only in one or more transactions registered under the Securities Act
and, where applicable, such laws or transactions as to which an exemption from
the registration requirements of the Securities Act and, where applicable, such
laws are available. Purchaser acknowledges that, except as provided in this
Agreement, Purchaser has no right to require the Company to register any of such
shares. Purchaser understands and agrees that each certificate representing any
of such shares shall bear the following legends:
"THE TRANSFER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE IS RESTRICTED BY A STOCK
PURCHASE AGREEMENT DATED AS OF DECEMBER 31, 1997,
A COPY OF WHICH IS ON FILE AT THE OFFICES OF THE
CORPORATION."
23
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS
AS CONFIRMED BY AN OPINION IN FORM AND FROM COUNSEL
REASONABLY ACCEPTABLE TO THE CORPORATION."
6.12. Governing Law. (a) This Agreement shall be governed by and
-------------
construed and enforced in accordance with the laws of the STATE of DELAWARE
without giving effect to conflict of laws principles. Each of the Parties
hereby waives any right it may have to a trial by jury in any litigation
directly or indirectly arising out of this Agreement.
(b) Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive Jurisdiction of the courts
of the State of Delaware and of the United States of America, in each case
located in the State of Delaware, for any action, proceeding or investigation in
any court or before any governmental authority ("Litigation") arising out of or
----------
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any Litigation relating thereto except in such courts), and
further agrees that service of any process, summons, notice or document by U.S.
registered mail to its respective address set forth in this Agreement shall be
effective service of process for any Litigation brought against it in any such
court. Each of the parties hereto hereby irrevocably and unconditionally waives
any objection to the laying of venue of any Litigation arising out of this
Agreement or the transactions contemplated hereby in the courts of the State of
Delaware or the United States of America, in each case located in the State of
Delaware, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such Litigation brought in any
such court has been brought in an inconvenient forum.
6.13. Term. Except as otherwise provided in this Agreement, this
----
Agreement shall terminate when none of the shares of Series D Preferred Stock
remain outstanding, except that Sections 5.1 and 6.9 shall survive the
termination of this Agreement.
6.14. Publicity. Each of the parties hereto agrees that, without
---------
the nor written consent of the other, it shall not (and it shall cause its
Subsidiaries, if any, not to) mention the name of any of the parties hereto
(including any Affiliate) or any of the trade marks or trade names of any of the
parties hereto or any of its Affiliates in any document or advertisement. Each
of the parties hereto agrees that it shall (and it shall cause its Subsidiaries,
if any, to) agree that it shall make no statement regarding the transactions
contemplated hereby which is inconsistent with any press release agreed to by
the parties hereto. Notwithstanding the foregoing, each of the parties hereto
may, in documents required to be filed by it with any regulatory body or
pursuant to any federal or state law (such as a proxy statement), make such
24
statements with respect to the transactions contemplated hereby as each may be
advised is legally necessary upon advice of its counsel.
25
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IN WITNESS WHEREOF, each of the parties hereto have caused this Stock
Purchase Agreement to be executed on its behalf as of the date first above
written.
NETSELECT, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: Region Operations Manager
