EXHIBIT 10.30
AGREEMENT
This Agreement (the "Agreement") is dated as of May 28, 1999 (the
"Agreement Date"), and is entered into by and among (i) NetSelect, Inc., a
Delaware corporation ("NetSelect"), (ii) RealSelect, Inc., a Delaware
corporation ("RealSelect"), (iii) Realtors Information Network, Inc., an
Illinois corporation ("RIN"), and (iv) the National Association of Realtors, an
Illinois not-for-profit corporation ("NAR").
BACKGROUND
A. RealSelect and RIN are parties to an Operating Agreement dated as of
November 26, 1996 (such agreement, as amended, referred to as the "Operating
Agreement"). RealSelect, RIN, the NAR, and NetSelect are parties to that certain
Agreement dated as of August 21, 1998 (the "August 1998 Agreement"). RIN and NAR
also executed a Waiver and Consent dated August 21, 1998 (the "Waiver and
Consent").
B. Pursuant to Section 6.3(b) of the Operating Agreement, RealSelect is
obligated to make certain payments to RIN of $1,000,000 (the "Free Operating
Cash Flow Amount"). Under Section 1(c) of the August 1998 Agreement, RealSelect
agreed to pay to RIN the remaining $200,000 of the Active Real Property Ads
Amount (as defined in the August 1998 Agreement) and all of the Free Operating
Cash Flow Amount (as defined in the August 1998 Agreement) no later than April
1, 1999 (together, the "Obligation"). As of the date of this Agreement, the
Obligation has not been paid.
C. Pursuant to the terms of Section 3.5 of that certain RealSelect, Inc.
Stockholders Agreement dated as of November 26, 1996 by and among RealSelect,
NetSelect, L.L.C. and RIN (as amended, the "RealSelect Stockholders Agreement"),
the NAR (as successor in interest to the rights of RIN under the RealSelect
Stockholders Agreement) has certain rights (the "Put Right") to require, upon
the announcement by NetSelect of a Qualified Public Offering of NetSelect Common
Stock (as defined in Section 4.2 of the RealSelect Stockholders Agreement), that
NetSelect issue shares of NetSelect Convertible Preferred Stock or NetSelect
Common Stock, as the case may be, in exchange for shares of RealSelect Common
Stock held by NAR. RIN and the NAR executed a Waiver and Consent dated August
21, 1998, in which RIN and the NAR agreed, among other things, on the number of
shares of NetSelect that RIN and/or NAR would be entitled to receive if
NetSelect and RealSelect had merged as of that date.
D. NetSelect intends to file a registration statement (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
relating to its IPO (as defined below).
E. The parties desire to settle certain prior obligations of NetSelect
and/or RealSelect to the NAR and/or RIN, and to issue to the NAR one share of
Series A Preferred Stock of NetSelect, on the terms and subject to the
conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. When used in this Agreement, the following terms shall have
the meanings set forth below.
"Amended NetSelect Restated Certificate" means the Amended and Restated
Certificate of Incorporation of NetSelect, in substantially the form attached
hereto as Exhibit B with such changes or additions thereto as NetSelect may
approve after the date of this Agreement which do not affect the interests of
RIN or the NAR in a manner differently from other stockholders of NetSelect.
"Closing Date" shall mean the closing of the IPO or, if later, a date no
later than two business days after the closing of the IPO on which the Amended
NetSelect Restated Certificate is filed with the Delaware Secretary of State.
"IPO" means the initial underwritten public offering of NetSelect's Common
Stock.
"RealSelect Bylaws" means the Bylaws of RealSelect as in effect on the date of
this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred" means the share of Series A Preferred Stock of
NetSelect that is authorized by the Amended NetSelect Restated Certificate.
Share and per share amounts in this Agreement give effect to the two-for-
one split of the NetSelect Common Stock effected earlier in 1999, and, to the
extent not issued by the record date for such event, shall be adjusted
appropriately for any stock split or reverse stock split of NetSelect stock that
may occur between the Agreement Date and the Closing Date.
2. Amendment of RealSelect Bylaws. The parties hereby approve an amendment to
Article III, Section 6 of the RealSelect Bylaws so that such section provides in
its entirety as set forth on Exhibit C.
3. Settlement of the Obligation. (i) On the Closing Date, NetSelect shall
issue to NAR one share of Series A Preferred, for a purchase price of $1.00
payable in cash, and (ii) effective as of the Agreement Date, NetSelect shall
issue to NAR 75,000 shares of NetSelect Common Stock (the "Shares") at a
purchase price of $8.00 per share for an aggregate purchase price of $600,000
(the "Purchase Price"). Payment of the purchase price for the Shares shall be by
cancellation of a portion of the Obligation equal to the Purchase Price.
NetSelect will pay the remaining $600,000 of the Obligation no later than five
business days following the Closing Date. NAR and RIN acknowledge and
agree that upon delivery of the Shares and payment of the remaining Obligation
as provided in the preceding sentence, the Obligation shall be deemed fully
satisfied. In connection with the issuance of the Shares, NAR and/or RIN, as the
case may be, agrees to execute and deliver to NetSelect a customary purchase
agreement with customary investment representations relating to the issuance of
the Shares, which agreement shall be in substantially the form of Exhibit A
attached hereto.
4. Put Right. Each of NAR and RIN agrees that on the Closing Date it hereby
exercises its Put Right to exchange all shares (and all rights to acquire
shares) of RealSelect that it owns or has rights to acquire for shares of
NetSelect Common Stock, except for one-half of one share of RealSelect Common
Stock issuable to NAR and/or RIN pursuant to Section 1(b) of the August 1998
Agreement (as so defined in the August 1998 Agreement, the "RealSelect Shares")
which, by virtue of the last sentence of Section 1(b) of the August 1998
Agreement, are not subject to the Put Right. If not theretofore issued, the
RealSelect Shares shall be issued on the Closing Date. Notwithstanding the
preceding sentence, if NetSelect and RealSelect complete a merger of the two
companies within twelve (12) months of the Agreement Date, then in connection
with the closing of such transaction such unexchanged RealSelect Shares shall
(pursuant to the Put Right) be converted into a total of 49,926 shares of
NetSelect Common Stock. NAR and RIN agree that the number of shares of NetSelect
Common Stock that NAR has the right to receive pursuant to exercise of its Put
Right pursuant to the RealSelect Stockholders Agreement and this Agreement is
1,566,906 shares of NetSelect Common Stock. NAR agrees that this Section 4
supersedes the provisions of Section 3.5 of the RealSelect Stockholders
Agreement, as applied to the IPO.
5. NetSelect Restated Certificate. NAR agrees to vote any shares of NetSelect
that it owns in favor of the Amended NetSelect Restated Certificate. NetSelect
agrees that its certificate of incorporation in effect immediately after the
Closing Date will include provisions relating to the Series A Preferred similar
in all respects to the provisions in the Amended NetSelect Restated Certificate
attached hereto as Exhibit B.
6. Cooperation; Further Actions. Each party agrees to take such further
actions, and execute such further agreements as the other party may reasonably
request in order to carry out the intent of the foregoing provisions.
7. Miscellaneous Provisions.
7.1 Third Party Beneficiary. No provision of this Agreement is intended to
confer upon any person other than the parties hereto (and their respective
successors and assigns) any rights or remedies hereunder.
7.2 Further Documents. The parties hereto shall execute and deliver any and all
documents or legal instruments necessary or desirable to carry out the
provisions of this Agreement.
7.3 Binding Agreement; Entire Agreement; Successors and Assigns. This Agreement
shall be binding upon the parties, and their respective successors and assigns.
This Agreement constitutes the entire contract between the parties relative to
the subject matter hereof. Any previous agreement between the parties concerning
the subject matter
hereof is superseded by this Agreement. Subject to the exceptions specifically
set forth in this Agreement, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective executors,
administrators, heirs, successors, and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
7.4 Governing Law; Consent to Jurisdiction. This Agreement shall be governed in
all respects by the laws of the State of Delaware, as applied to contracts
entered into and to be performed entirely within the State of Delaware. In any
action by NAR or RIN against NetSelect or RealSelect, the parties consent to the
exclusive jurisdiction and venue of the Federal and State Courts located in Los
Angeles, California for purposes of any proceeding arising out of or relating to
this Agreement, and agree that service of process in any such action may be made
by means of delivery of notices in the manner provided in this Agreement; and in
any action by NetSelect or RealSelect against RIN or NAR, the parties consent to
the exclusive jurisdiction and venue of the Federal and State Courts located in
Chicago, Illinois, for purposes of any proceeding arising out of or relating to
this Agreement, and agree that service of process in any such action may be made
by means of delivery of notices in the manner provided in this Agreement.
7.5 Amendment; Waiver. This Agreement or any provision hereof may be amended,
waived, discharged or altered in any manner, but any such change shall become
effective only if, when and to the extent it is reduced to a writing signed by
all of the parties. Any party may waive one or more of the provisions of this
Agreement as to itself by means of a written instrument.
7.6 No Continuing Waiver. No waiver of any default or breach of this Agreement
shall be determined a continuing waiver or a waiver of any other breach or
default hereunder.
7.7 Severability. If any provision of this Agreement is determined to be
invalid or unenforceable, it shall be enforced to the extent possible, and the
other provisions of this Agreement shall continue in effect.
7.8 Counterparts. This Agreement may be executed in any number of counterparts,
each of will shall be deemed an original, but all of which together shall
constitute one and the same instrument.
7.9 Expenses. All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such costs and expenses.
7.10 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered personally, one
business day after transmission by facsimile with confirmation of receipt, one
business day after deposit with a reputable national overnight courier service
for overnight delivery, or four days after deposit in the United States mail,
certified with return receipt requested, to the address or facsimile telephone
number set forth beneath the name of such party below (or to such other address
or facsimile telephone number as such party shall have specified in
a written notice given to the other parties hereto):
if to NAR or RIN:
at the address set forth below NAR's or RIN's signature, as the case may be, on
the signature page hereto;
if to NetSelect:
NetSelect, Inc.
000 X. Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date
first above written.
NETSELECT, INC.
REALSELECT, INC.
By: /s/ Xxxxxx Xxxxx
Name: Xxxxxx Xxxxx, Ph.D.
Title: Chief Executive Officer
REALTORS INFORMATION NETWORK, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: CEO
Address:
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: President and Chief Executive Officer
Fax No: (000) 000-0000
NATIONAL ASSOCIATION OF REALTORS(R)
By: /s/ Xxxxxxxx X. XxXxxxxxx
Name: Xxxxxxxx X. XxXxxxxxx
Title: Executive Vice President
Address:
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Fax No: (000) 000-0000
EXHIBIT A
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is dated as of May 28, 1999 (the
"Agreement Date") and is entered into by and among NetSelect, Inc. ("NetSelect"
or the "Company"), a Delaware corporation, and the National Association of
Realtors ("Purchaser").
BACKGROUND
A. Purchaser and NetSelect, among other parties, are parties to an Agreement
dated as of May 28, 1999 (the "May 1999 Agreement").
B. The Company desires to issue and sell to the Purchaser, and Purchaser
desires to purchase, one share of Series A Preferred Stock of NetSelect ("Series
A Preferred"), and 75,000 shares (the "Shares") of Common Stock of the Company
("Common Stock") (the Shares and the share of Series A Preferred referred to
collectively as the "Securities"), at the times and prices, and on the other
terms and conditions, set forth in this Agreement.
C. Capitalized terms not defined herein will have the meanings given to those
terms in the May 1999 Agreement.
AGREEMENT
The parties agree as follows:
1. Purchase Of Securities.
1.1 Purchase and Sale of Series A Preferred and the Shares. On the Closing Date
and subject to the terms and conditions of this Agreement, Purchaser shall
purchase from the Company, and the Company hereby sells to Purchaser, one share
of Series A Preferred at a purchase price of $1.00 per share payable in cash.
Effective as of the Agreement Date, Purchaser shall purchase from the Company,
and the Company shall sell to Purchaser, the Shares at a purchase price per
Share equal to 8.00 per Share, for an aggregate purchase price of $600,000 (the
"Purchase Price").
1.2 Closing; Payment of Purchase Price. The closing of the purchase and sale of
the Shares contemplated by this Agreement shall occur at a place and time
mutually agreeable to NetSelect and Purchaser, but in all events within five
business days of the Agreement Date. The Closing of the sale of the share of
Series A Preferred shall occur on the Closing Date. The Purchase Price for the
Shares shall be paid by means of cancellation of $600,000 of the Obligation.
1.3 Accredited Investor Requirements. Purchaser hereby represents to NetSelect
that Purchaser is an "accredited investor" as defined in Rule 501 of Regulation
D, being a corporation, not formed for the specific purpose of acquiring the
Shares, with total assets in excess of $5 million.
1.4 Deliveries by the Company. After its receipt of the entire Purchase Price
and all
the documents to be executed and delivered by Purchaser to the Company under
this Agreement, the Company will issue duly executed stock certificates
evidencing the Securities in the name of Purchaser, registered in Purchaser's
name.
2. Representations. Purchaser represents to NetSelect that the following
statements are true and correct in all respects:
2.1 Purchaser's Qualifications. Purchaser has a preexisting personal or
business relationship with the Company and/or certain of its officers and/or
directors of a nature and duration sufficient to make Purchaser aware of the
character, business acumen and general business and financial circumstances of
the Company and/or such officers and directors. By reason of Purchaser's
business or financial experience, Purchaser is capable of evaluating the merits
and risks of this investment, has the ability to protect Purchaser's own
interests in this transaction and is financially capable of bearing a total loss
of this investment.
No General Solicitation. At no time was Purchaser presented with or solicited by
any publicly issued or circulated newspaper, mail, radio, television or other
form of general advertising or solicitation in connection with the offer, sale
and purchase of the Restricted Securities.
Investment Representations.
The Purchaser is receiving the Securities for investment for the Purchaser's own
account, not as a nominee or agent, and not with a view to the public resale or
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Purchaser also represents that it has not been formed for the specific purpose
of acquiring the Securities.
The Purchaser has received or has had full access to all the information the
Purchaser considers necessary or appropriate to make an informed investment
decision with respect to the Securities receivable by the Purchaser pursuant to
the Agreement.
The Purchaser understands that the acquisition of the Securities involves
substantial risk. The Purchaser understands that the Securities, are
characterized as "restricted securities" under the Securities Act inasmuch as
they are being acquired from NetSelect in a transaction not involving a public
offering and that under the Securities Act and applicable regulations thereunder
such Securities may be resold without registration under the Securities Act only
in certain limited circumstances. The Purchaser understands that NetSelect is
under no obligation to register any of the Securities. The Purchaser understands
that no public market now exists for any of the Securities and that it is
uncertain whether a public market will ever exist therefor.
Without in any way limiting the representations set forth above or any other
provisions in any other agreements to which the Purchaser is a party or by which
the Purchaser or the Securities are bound, the Purchaser further agrees not to
make any disposition of all or any portion of the Securities unless and until:
there is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or the Purchaser shall have notified NetSelect
of the proposed disposition and shall have furnished NetSelect with a statement
of the circumstances surrounding the proposed disposition, and, if such
disposition is made within two years of the Closing Date or if the
securities proposed to be transferred cannot be transferred pursuant to Rule
144(k), at the expense of the Purchaser or its transferee, with an opinion of
counsel, reasonably satisfactory to NetSelect, that such disposition will not
require registration of such Securities under the Securities Act.
e. It is understood that the certificates evidencing the Securities may bear
the legends set forth below:
(1) The Shares represented hereby have not been registered under the
Securities Act of 1933, as amended (the "Act"), or under the securities laws of
certain states. These Shares are subject to restrictions on transferability and
resale and may not be transferred or resold except as permitted under the Act
and the applicable state securities laws, pursuant to registration or exemption
therefrom. investors should be aware that they may be required to bear the
financial risks of this investment for an indefinite period of time. The issuer
of these Shares may require an opinion of counsel in form and substance
satisfactory to the issuer to the effect that any proposed transfer or resale is
in compliance with the Act and any applicable state securities laws.
(2) Any legend required by any state securities laws, or any other
legend that NetSelect reasonably determines is necessary or advisable.
The legend set forth in clause (1) above shall be removed by NetSelect from any
certificate evidencing Shares if requested by the original holder thereof at any
time on or after the second anniversary of the Closing Date (provided that such
shares can be sold without restrictions pursuant to Rule 144(k)) or upon
delivery to NetSelect of an opinion by counsel, reasonably satisfactory to
NetSelect, that a registration statement under the Securities Act is at that
time in effect with respect to the legended security or that such security can
be freely transferred in a public sale without such a registration statement
being in effect and that such transfer will not jeopardize the exemption or
exemptions from registration pursuant to which NetSelect issued the Shares.
2.4 Refusal to Transfer. The Company will not be required to (i) transfer on
its books any Shares that have been sold or otherwise transferred in violation
of any of the provisions of this Agreement or (ii) treat as owner of such
Shares, or to accord the right to vote or pay dividends, to any purchaser or
other trustee to whom such Shares have been so transferred.
3. Further Representations and Warranties of Purchaser. Purchaser,
represents and warrants to the NetSelect that each of the following statements
is true and correct:
(i) Purchaser has all right, power and authority to enter into and perform
its obligations set forth in this Agreement in accordance with its terms;
(ii) the execution, delivery and performance of this Agreement (and the other
agreements contemplated hereby) by Purchaser has been authorized and approved by
all necessary corporate or other action of Purchaser;
(iii) the person executing this Agreement (and the other agreements
contemplated hereby) on behalf of Purchaser has the authority and power to
execute and deliver the Agreement (and the other agreements contemplated hereby)
on behalf of Purchaser; and this Agreement (and the other agreements
contemplated hereby) constitutes a valid and legally binding obligation of
Purchaser, enforceable agains t Purchaser in accordance with its terms.
4. Securities Law Matters. This Agreement does not constitute an offer to
sell or solicitation of an offer to buy any Shares in any jurisdiction where it
is unlawful to make
such offer or solicitation, and no issuance of Shares or offer or agreement to
do any of the foregoing, is made hereby that would be in violation of the
securities or "blue sky" laws of any jurisdiction.
THE SALE OF THE SHARES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND
THE ISSUANCE OF THE SHARES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE
OF SHARES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF
THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE
IS SO EXEMPT.
5. Miscellaneous.
5.1 Governing Law; Consent to Jurisdiction. This Agreement shall be governed in
all respects by the laws of the state of Delaware applicable to contracts
entered into and performed entirely within Delaware. In any action by Purchaser
against the Company, the parties consent to the exclusive jurisdiction and venue
of the Federal and State Courts located in Los Angeles, California for purposes
of any proceeding arising out of or relating to this Agreement, and agree that
service of process in any such action may be made by means of delivery of
notices in the manner provided in this Agreement; and in any action by the
Company against Purchaser, the parties consent to the exclusive jurisdiction and
venue of the Federal and State Courts located in Chicago, Illinois, for purposes
of any proceeding arising out of or relating to this Agreement, and agree that
service of process in any such action may be made by means of delivery of
notices in the manner provided in this Agreement.
5.2 Assignment. Neither this Agreement nor any obligation arising hereunder may
be assigned (voluntarily, by operation of law or otherwise), in whole or in
part, by Purchaser without the prior written consent of NetSelect. Improper
assignments are void. NetSelect may assign this Agreement in whole or in part
without the consent of Purchasers.
5.3 Successors and Assigns. This Agreement shall be binding upon, and inure to
the benefit, the parties and their respective successors and permitted assigns,
subject to paragraph 5.2 above.
5.4 Entire Agreement. This Agreement sets forth the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
or contemporaneous understandings, communications or agreements, whether written
or oral, regarding such subject matter.
5.5 Amendment. Any provision of this Agreement may be amended, waived or
modified, either retroactively or prospectively, only by a written instrument
signed by NetSelect and Purchaser.
5.6 Notices. All notices or other communications given under this Agreement
shall be in writing and shall be delivered in person, by first class mail, by
national overnight courier service, or facsimile, addressed as follows:
If to Purchaser:
To the address for the Purchaser set forth on the signature page hereto.
If to NetSelect or RealSelect:
000 Xxxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attn: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either party may change its address or addressee for the purpose of this
Agreement by notice. Notices or other communications shall be deemed given or
delivered upon receipt if delivered in person, four (4) days after deposit in
the mails, one (1) business day after deposit with a reputable overnight courier
service, or one (1) business day after transmission if delivered by facsimile
with confirmation of receipt.
5.7 Waiver. No waiver by either party of any breach or default by any other
shall be deemed a waiver of any other breach or default.
5.8 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law, or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in order that
the transactions be consummated as originally contemplated to the fullest extent
possible.
5.9 Counterparts. This Agreement may be executed in any number of counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by both parties and
delivered to the other party.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
written above.
NETSELECT, INC.
By: /s/ Xxxxxx Xxxxx
Name:
Title:
PURCHASER
NATIONAL ASSOCIATION OF
REALTORS(R) Address:
By: /s/ Xxxxxxxx X. XxXxxxxxx 000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Name: Xxxxxxxx X. XxXxxxxxx Attention: General Counsel
------------------------ Fax No: (000) 000-0000
Title: Executive Vice President
EXHIBIT B
Amended and Restated Certificate of Incorporation of
NetSelect, Inc.
EXHIBIT C
Article III, Section 6 of RealSelect Bylaws
SECTION 6. QUORUM, VOTING AND ADJOURNMENT. A majority of the total number of
directors or any committee thereof shall constitute a quorum for the transaction
of business. The affirmative vote by at least six-sevenths (6/7) of the entire
Board of Directors shall be required to approve the following actions: (i)
mergers, consolidations, reorganizations, or sales, leases or exchanges of all
or substantially all of the assets of the Corporation; and (ii) any change in
the business purpose of the Corporation. The affirmative vote by at least four-
sevenths (4/7) of the entire Board of Directors (including, in such four-
sevenths, at least one Director nominated by NAR) shall be required to approve
the following actions: (i) amendments of the Corporation's Certificate of
Incorporation or By-laws; (ii) approval of the annual budget of the Corporation
(which shall specify the issues addressed and conclusions reached); provided,
however, that in the event that an annual budget shall not be approved pursuant
to this Article III, Section 6, the last annual budget of the Corporation duly
approved by the Board, adjusted to the Consumer Price Index for urban consumers
(CPI-U) as of the date of the end of the last fiscal year, shall be the annual
budget of the Corporation until such time as the Board of Directors shall duly
approve a new annual budget; (iii) salary reviews, bonuses, and staff changes
for executive officers of the Corporation; (iv) investments, loans, mortgages,
pledges of corporate assets or other transactions not set forth in the annual
budget in which the amount involved exceeds $2,500,000; (v) incurrences,
assumptions, guarantees or cancellations of indebtedness for money borrowed or
other liabilities not set forth in the annual budget in which the amount exceeds
$2,500,000; (vi) approval of transactions with affiliates, stockholders,
employees, and relatives of affiliates, stockholders and employees, including
any employment or consulting agreements, that exceed $100,000 per annum,
provided, however, that no interested director shall vote on any such action;
(vii) the establishment of, and the appointment of members to, any committees of
the Board of Directors; (viii) issuance of any equity securities of the
Corporation, or any securities exchangeable or convertible into equity
securities or measured by earnings or profits of the Corporation,
or any redemption, repurchase or other acquisition for value of any equity
security of the Corporation by the Corporation, provided, however, the approval
of the NAR Director shall not be required for the issuance of equity securities
by the Corporation at a price per share that would establish an aggregate value
for such equity securities outstanding immediately prior to the consummation of
such issuance of at least fifteen million dollars ($15,000,000); (ix) a firmly
underwritten public offering of at least twenty percent (20%) of the shares of
the Corporation pursuant to an effective registration statement covering the
offer and sale of such shares with an aggregate offering price of at least
$7,000,000; and (x) declaration of dividends or other distributions to
stockholders; provided, however, that any declaration of dividends or
distributions to NetSelect shall require the prior approval of NetSelect, Inc.,
a Delaware corporation. Unless otherwise required by law or provided herein, the
affirmative vote of a majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board. In the absence of a quorum, a
majority of the directors present thereat may adjourn such meeting to another
time and place. Notice of such adjourned meeting need not be given if the time
and place of such adjourned meeting are announced at the meeting so adjourned.
