EXHIBIT 10.14
NETSELECT, INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of August 21, 1998 (the
"Agreement"), is entered into between NetSelect, Inc., a Delaware corporation
---------
(the "Company"), and each of those persons and entities, severally and not
-------
jointly, whose names are set forth on the Schedule of Purchasers attached hereto
as Exhibit A (which persons and entities are hereinafter collectively referred
---------
to as "Purchasers" and each individually as a "Purchaser"). Capitalized terms
---------- ---------
used in this Agreement but not otherwise defined shall have the meanings given
to them in Section 6 hereof.
WHEREAS, Purchasers wish to purchase from the Company, and the Company
wishes to sell to Purchasers, an aggregate of One Million Six Hundred Sixty Four
Thousand Forty Nine (1,664,049) shares of a new series of preferred stock, $.001
par value per share, of the Company, to be designated "Cumulative Convertible
Series F Preferred Stock" (the "Series F Preferred Stock"), such Series F
------------------------
Preferred Stock to have the rights, preferences, privileges, and restrictions as
set forth in the Amended and Restated Certificate of Incorporation substantially
in the form attached as Exhibit B hereto (the "Restated Certificate");
--------- --------------------
WHEREAS, certain of the Purchasers wish to purchase from the Company, and
the Company wishes to sell to such Purchasers, an aggregate of One Million Six
Hundred Seventy Three Thousand Nine Hundred Ninety One (1,673,991) additional
shares of its Class A Common Stock (the "Common Stock" and, together with the
------------
Series F Preferred Stock, the "Purchased Securities"); and
--------------------
WHEREAS, Purchasers 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. Agreement to Purchase and Sell Stock; Closing.
---------------------------------------------
1.1 Agreement to Purchase and Sell Stock. The Company agrees to sell
-------------------------------------
to each Purchaser at the Closing, and each Purchaser agrees, severally and not
jointly, to purchase from the Company at the Closing, the Purchased Securities
at a purchase price per share as set forth beside such Purchaser's name on
Exhibit A.
---------
1.2 Closing. The purchase and sale of the Purchased Securities will
-------
take place at the offices of Fenwick & West LLP, Two Palo Alto Square, Palo
Alto, California, at 10:00 a.m. Pacific Time, on August 21, 1998 or at such
other time and place as the Company and Purchasers mutually agree upon (which
time and place are referred to in this Agreement as the "Closing"). At the
-------
Closing, the Company will deliver to each Purchaser certificates representing
the number of shares of Series F Preferred Stock and Common Stock that such
Purchaser has agreed to purchase hereunder as shown on Exhibit A against
---------
delivery to the Company by such Purchaser of the full purchase price of such
Purchased Securities, paid by check payable to the Company, wire transfer of
funds to the Company or conversion of principal and interest related to
promissory notes that were issued to the Purchasers by the Company on July 20,
1998.
1.3 Additional Closing(s).
---------------------
(a) Conditions of Additional Closing(s). At any time and from
------------------------------------
time to time during the ninety (90) day period immediately following the Closing
(the "Additional Closing Period"), subject to the satisfaction of the conditions
-------------------------
set forth in Section 1.4 below the Company may, at one or more additional
closings (each an "Additional Closing"), without obtaining the signature,
------------------
consent or permission of any of the Purchasers, offer and sell to other
purchasers ("New Purchasers"), at a price of $24.00 per share, up to that number
--------------
of shares of Series F Preferred Stock that is equal to the total number of
shares of Series F Preferred Stock authorized by the Restated Certificate less
the number of shares of Series F Preferred Stock actually issued and sold by the
Company at the Closing. New Purchasers may include persons or entities who are
already Purchasers under this Agreement.
(b) Amendments. The Company and the New Purchasers purchasing
----------
Series F Preferred Stock at each Additional Closing will execute counterpart
signature pages to this Agreement and the NetSelect Stockholders' Agreement (as
defined in Section 5.1(j)) and such New Purchasers will, upon delivery to the
Company of such signature pages, become parties to, and bound by, this Agreement
and the NetSelect Stockholders' Agreement, each to the same extent as if they
had been Purchasers at the Closing. Immediately after each Additional Closing,
Exhibit A to this Agreement will be amended to list the New Purchasers
---------
purchasing shares of Series F Preferred Stock hereunder and the number of shares
of Series F Preferred Stock purchased by each of them under this Agreement at
each such Additional Closing. The Company will promptly furnish to each
Purchaser copies of the amendments to Exhibit A referred to in the preceding
---------
sentence.
(c) Status of New Purchasers. Upon the completion of each
------------------------
Additional Closing as provided in this Section 1.3, each New Purchaser will be
deemed to be a "Purchaser" for all purposes of this Agreement and the NetSelect
Stockholders' Agreement.
1.4 KP Adjustment. To the extent that the number of equivalent
-------------
shares of capital stock of the Company referenced on Schedule 2.7a under the
column "Buy Back Shares" are not repurchased by October 31, 1998, the Company
shall promptly sell to the KP Entities (as such term is defined in the NetSelect
Stockholders Agreement attached hereto as Exhibit E) such number of shares of
---------
Common Stock, at a purchase price of $0.001 per share and calculated on a fully-
diluted basis, in an amount equal to 15% of the equivalent shares of capital
stock of the Company that were not so repurchased.
2. Representations and Warranties of the Company. Except as set forth on
---------------------------------------------
the Disclosure Schedule separately delivered to the Purchasers, the Company
represents and warrants as of the Closing Date as follows:
2.1 Organization and Qualification. Each of the Company and its
------------------------------
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. Each of the Company and
its Subsidiaries is qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect on the Company.
2
2.2 Due Authorization. The execution and delivery of this Agreement
-----------------
and the NetSelect Stockholders' Agreement by the Company, the issuance and sale
of the Purchased Securities by the Company and compliance by the Company with
all the provisions of this Agreement, the NetSelect Stockholders' Agreement, the
Voting Agreement and the Restated Certificate (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. This Agreement, the Voting
Agreement and the NetSelect Stockholders' Agreement have been duly executed and
delivered by the Company and constitute valid and binding agreements of the
Company, enforceable against the Company 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 each 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 NetSelect
----------
L.L.C. ("NS LLC"), in each case as in effect on the date of this Agreement.
------
2.3 Subsidiaries. Schedule 2.3 sets forth for each Subsidiary of 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, and (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 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 capital stock or ownership interests of each
Subsidiary have been duly authorized and are validly issued, fully paid, and
nonassessable. Neither of the Company nor any of 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; Undisclosed Liabilities; Changes.
------------------------------------------------------
(a) The Company has delivered to each Purchaser true and complete
copies of its unaudited consolidated balance sheet of the Company dated May 31,
1998, its unaudited statement of operations and its unaudited statement of cash
flows for the five months ended May 31, 1998 and for its fiscal year ended
December 31, 1997 (all such financial statements being collectively referred to
herein as the "Financial Statements"). The Financial Statements have been
--------------------
prepared in accordance with generally accepted accounting principles
consistently followed (except as indicated in the notes thereto and, subject to
normal year-end adjustments, none of which are expected to be material in
amount) throughout the periods involved and fairly present the financial
condition, results of operations and cash flows of the Company and its
Subsidiaries as of their respective dates.
(b) Except as set forth in the Financial Statements, to the
Company's knowledge, neither the Company nor any of its Subsidiaries has any
material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to May 31, 1998, and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in the Financial Statements, which in both cases individually or in
the aggregate are not material to the financial condition or operating results
of the Company and its Subsidiaries taken as a whole.
3
(c) Since May 31, 1998, the Company and its Subsidiaries have
operated their respective businesses only in the ordinary course and, to the
knowledge of the Company, no event has occurred which has had or is reasonably
likely to have a Material Adverse Effect on the Company.
Without limiting the foregoing, since May 31, 1998 there has not
been:
(i) any damage, destruction or loss to any of the material
assets or properties of the Company or any of its Subsidiaries;
(ii) any declaration, setting aside or payment of any
dividend or distribution or capital return in respect of any shares of the
Company's capital stock or any redemption, purchase or other acquisition by the
Company or any of its Subsidiaries of any shares of the Company's capital stock,
except as contemplated by employee stock plans or the Voting Agreement (as
defined below);
(iii) any sale, assignment, transfer, lease or other
disposition or agreement to sell, assign, transfer, lease or otherwise dispose
of any of the assets of the Company or any of its Subsidiaries outside the
normal course of business;
(iv) any acquisition (by merger, consolidation, or
acquisition of stock or assets) by the Company or any of its Subsidiaries of any
corporation, partnership or other business organization or division thereof;
(v) any incurrence by the Company or any of its Subsidiaries
of any indebtedness for borrowed money or any assumption, granting, guarantee or
endorsement, or other accommodation arrangement making the Company or any of its
Subsidiaries responsible for the indebtedness for borrowed money of any person
or entity (other than another Subsidiary);
(vi) any material change in any method of accounting or
accounting practice used by the Company or any of its Subsidiaries, other than
such changes required by generally accepted accounting principles;
(vii) (A) any employment, deferred compensation, severance
or similar agreement entered into or amended by the Company or any of its
Subsidiaries, (B) increase in the compensation payable or to become payable by
it to any of its directors or officers, or (C) any increase in the coverage or
benefits available under any severance pay, termination pay, vacation pay,
company awards, salary continuation or disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or other
employee benefit plan, payment or arrangement made to, for or with such
directors, officers, employees, agents or representatives, other than, in the
case of (B) and (C) above, normal increases in the ordinary course of business
consistent with past practice and that in the aggregate have not resulted in a
material increase in the benefits or compensation expense of the Company or any
of its Subsidiaries;
(viii) any writing down, in accordance with generally
accepted accounting principles and consistent with past practice, of the value
of any material accounts receivable or any revaluation by the Company or any of
its Subsidiaries of any of its material assets or any cancellation or writing
off as worthless and uncollectible of any debt, note or account
4
receivable by the Company or any of its Subsidiaries, excluding write-offs and
writedowns in the aggregate of less than $50,000;
(ix) any material transaction with a Related Party (other
than compensation for services rendered in the ordinary course of business); or
(x) any agreement to take any actions specified in this
Section 2.4(c), except for this Agreement and the transactions contemplated
hereby.
2.5 Litigation. There is no action, suit, investigation or proceeding
----------
pending or, to the 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
---------------------------------------------
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 is reasonably likely to have a Material Adverse Effect on the
Company. None of (i) the execution and delivery of this Agreement, the Voting
Agreement, the NetSelect Stockholders' Agreement and the issuance of Purchased
Securities and (ii) the fulfillment of and compliance with the terms and
provisions hereof and thereof and of the Purchased Securities shall conflict
with or result in a breach of, or require a consent, approval or other action
under, 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 except those which have been obtained before the Closing. 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
material default under any of their respective material contracts or agreements,
or under any instrument by which the Company or any of its Subsidiaries is bound
(including those listed in the Disclosure Schedule).
2.7 Capitalization. (a) As of the date of this Agreement prior to the
--------------
issuance of the Purchased Securities, 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 370,852 shares are 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 Stock,
--------------------
the "Common Stock"), of which 116,470 shares are issued and outstanding; and
------------
(iii) 10,000,000 shares of Preferred Stock, par value $0.001 per share, of which
1,647,059 shares have been designated and issued as Series A Preferred Stock
(the "Series A Preferred Stock"), 352,941 shares have been designated and issued
------------------------
as Series B Preferred Stock (the "Series B Preferred Stock"), 614,374 shares
------------------------
have been designated and issued as Series C Preferred Stock (the "Series C
--------
Preferred Stock"), 681,201 shares have been designated and issued as Series D
---------------
Preferred Stock (the "Series D Preferred Stock"), 325,000 shares have been
------------------------
designated and issued as Series E Preferred Stock (the "Series E Preferred
------------------
Stock") and 2,100,000 shares have been designated as Series F Preferred Stock,
-----
none of which have been issued (the "Series F Preferred Stock" and together with
------------------------
the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, Series D Preferred Stock and the Series E Preferred Stock, the
"Preferred Stock"). All shares of Preferred Stock that have been issued are
---------------
still outstanding. Except
5
as set forth on the Disclosure Schedule or in the NetSelect Stockholders'
Agreement, there are no 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 Disclosure Schedule sets forth the names of the holders of
securities of the Company, the numbers of such securities held by such holders,
the expiration dates of such securities, their vesting schedules (if any) and
their exercise price (if any). Except for rights of first refusal held by the
Company to purchase shares of its stock issued under the Company's 1996 Stock
Incentive Plan, no shares of the Company's outstanding capital stock, or stock
issuable upon exercise or exchange of any outstanding options, warrants or
rights, or other stock issuable by the Company, are subject to any preemptive
rights, rights of first refusal or other rights to purchase such stock (whether
in favor of the Company or any other person), pursuant to any agreement or
commitment of the Company. The only registration rights granted by the Company
are contained in the NetSelect Stockholders' Agreement and that certain Stock
and Interest Purchase Agreement dated as of November 26, 1996 among the Company,
NS LLC and InfoTouch Corporation, a Delaware corporation.
2.8 Status of Purchased Securities. The Purchased Securities have
------------------------------
been duly authorized by all necessary corporate action on the part of the
Company and, upon payment therefor as provided in Section 1 hereof, the
Purchased Securities shall be, and the shares of Class A Common Stock issuable
upon conversion of the Series F Preferred Stock, upon such conversion and
issuance shall be, validly issued and outstanding, fully paid and nonassessable
(the Purchased Securities and such shares of Class A Common Stock issuable upon
conversion of the Series F Preferred Stock are collectively referred to herein
as the "Securities"). The shares of Series A Common Stock issuable upon
----------
conversion of the shares of Series F Preferred Stock have been validly reserved
for issuance.
2.9 Laws and Regulations. The Company and each of its Subsidiaries
--------------------
are in compliance in all material respects with all applicable federal, state,
local and foreign laws and regulations and have obtained all permits, licenses,
franchises, and similar documentation, including without limitation 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 knowledge
of the Company, threatened against the Company or any of its Subsidiaries.
2.10 Title to Properties; Insurance. The Company owns its properties
------------------------------
and assets free and clear of all mortgages, deeds of trust, liens, encumbrances,
security interests and claims except for statutory liens for the payment of
current taxes that are not yet delinquent and liens, encumbrances and security
interests which arise in the ordinary course of business and which do not affect
material properties and assets of the Company. With respect to the property and
assets it leases, the Company and each of its Subsidiaries is in compliance with
such leases and, to the best of the Company's knowledge, the Company and each of
its Subsidiaries holds valid leasehold interests in such assets free of any
liens, encumbrances, security interests or claims of any party other than the
lessors of such property and assets. Each of the Company and its Subsidiaries
maintains insurance with respect to their properties and business against such
casualties and contingencies, of such types (including, without limitation,
errors and omissions coverage), on such terms and in such amounts
6
(including deductibles, co-insurance and self-insurance, if adequate reserves
are maintained with respect thereto) as is customary in the case of similarly
situated entities engaged in the same or a similar business. The Company has
obtained a policy of directors' and officers' insurance in the amount of
$2,000,000.
2.11 Governmental Consents, etc. The Company 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 this Agreement and the
NetSelect Stockholders' Agreement, the valid offer, issue, sale or delivery of
the Purchased Securities, or the performance by the Company of its obligations
in respect thereof, except for any filings required to effect any registration
pursuant to the NetSelect Stockholders' Agreement and any state or federal
securities filings.
2.12 Taxes. The Company and each of its Subsidiaries have filed 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).
2.13 ERISA. The Company does not have any Employee Pension Benefit
-----
Plan as defined in Section 3 of the Employee Retirement Income Security Act of
1974, as amended.
2.14 Patents and Trademarks. Set forth in Schedule 2.14 is a true 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
------------------------------
right to use under the agreements or upon the terms described in Schedule 2.14,
-------------
all of the Intellectual Property Rights. To the 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. 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.
2.15 Material Contracts and Obligations. Schedule 2.15 sets forth 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) any agreement
relating to the Intellectual Property Rights having a value in excess of
$50,000, (b) all employment and consulting agreements which require future
annual cash payments in excess of $125,000, and all employee benefit, bonus,
pension, profit-sharing, stock option, securities purchase and similar plans and
arrangements, (c) all data content provider agreements, including, but not
limited to, master listings service agreements (and indication
7
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 with suppliers or vendors which require future
payments in excess of $125,000 not already covered by (a) through (f) above, (h)
all agreements or commitments which restrict the ability of the Company or any
Subsidiary or Affiliate or employee to engage in any business or line of
business in any location, (i) all agreements or commitments relating to
Indebtedness or Guarantees of the Company or any Subsidiary and (j) any other
agreement or commitment which requires future payments by or to the Company or
any Subsidiary in excess of $125,000 or which is otherwise material to the
Company or any of its Subsidiaries. The Company has delivered or made available
to each 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 knowledge of the Company.
2.16 Labor Matters. Neither 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. There
is no labor strike, slow-down or stoppage pending or, to the Company's
knowledge, threatened by the employees.
2.17 Books and Records. All the books, records and accounts of 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. The Company has previously delivered to the
each 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.
2.18 Brokers. Neither the Company nor any Subsidiary has engaged any
-------
finder, broker or investment adviser, and has no obligation to pay any fees
relating thereto, in connection with the transactions contemplated hereby.
2.19 Holding Company Act and Investment Company Act. Neither the
----------------------------------------------
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 "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.
2.20 Costs of "Year 2000" Modifications. The Company represents and
----------------------------------
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
8
(through year 1999), the year 2000 and the twenty-first century, including leap
year calculations. To the 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.
2.21 Related Party Transactions. Except as set forth in the
--------------------------
Disclosure Schedule, no beneficial owner of 5% or more of the Company's or any
of its Subsidiaries' outstanding capital stock or officer or director of the
Company or any of its Subsidiaries or any spouse, parent, child or sibling of
any officer or director or any person or entity (other than the Company or a
Subsidiary) in which any such person or entity owns any beneficial interest
(collectively, "Related Parties") has any interest in: (i) any contract,
---------------
arrangement or understanding with, or relating to, the business or operations
of, the Company or any of its Subsidiaries; (ii) any loan, arrangement,
understanding, agreement or contract for or relating to indebtedness of the
Company or any of its Subsidiaries; or (iii) any property (real, personal or
mixed), tangible or intangible, used in the business or operations of the
Company or any of its Subsidiaries; excluding any such contract, arrangement,
understanding or agreement constituting an employee compensation arrangement.
2.22 Accuracy of Information. None of the representations and
-----------------------
warranties of the Company contained herein or in the NetSelect Stockholders'
Agreement 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 in writing by the Company to the Purchasers in
connection with the transactions contemplated hereby, did not, in the aggregate
and to the 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 delivered to certain of the Purchasers dated August
18, 1998 were prepared by management of the Company using its reasonable
business judgment and 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.
3. Representations and Warranties of Purchaser. Each Purchaser represents
-------------------------------------------
and warrants as of the date hereof and as of the Closing, individually and not
jointly, as follows:
3.1 Organization and Qualification. Such Purchaser is 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. Such Purchaser has all necessary right, power
-----------------
and authority to enter into this Agreement and the NetSelect Stockholders'
Agreement, and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the NetSelect Stockholders'
Agreement by such Purchaser and the consummation by such Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on behalf of such Purchaser. This Agreement and the NetSelect
Stockholders' Agreement have been duly executed and delivered by such Purchaser
and constitute valid and binding agreements of such Purchaser enforceable in
accordance with their terms, except that (i) such
9
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.
3.3 Governmental Consents, etc. Except as obtained or made, such
--------------------------
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 this Agreement and the NetSelect Stockholders' Agreement and the valid offer,
issue, sale or delivery of the Purchased Securities, or the performance by such
Purchaser of its obligations in respect thereof.
3.4 Conflicting Agreements and Other Matters. Neither the execution
----------------------------------------
and delivery of this Agreement and the NetSelect Stockholders' Agreement nor the
performance by such Purchaser of its obligations hereunder 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 such Purchaser or any mortgage, agreement,
instrument, order, judgment, decree, statute, law, rule or regulation to which
such Purchaser or any of its properties are subject.
3.5 Acquisition for Investment. Such Purchaser is acquiring the
--------------------------
Securities 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 such Purchaser
has no present intention or plan to effect any distribution thereof. Such
Purchaser acknowledges that the Securities 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 Investment Experience. Such Purchaser understands that the
---------------------
purchase of the Purchased Securities involves substantial risk. Such Purchaser:
(i) has experience as an investor in securities of companies in the development
stage and acknowledges that such Purchaser is able to fend for itself, can bear
the economic risk of such Purchaser's investment in the Purchased Securities and
has such knowledge and experience in financial or business matters that such
Purchaser is capable of evaluating the merits and risks of this investment in
the Purchased Securities and protecting its own interests in connection with
this investment and/or (ii) has a preexisting personal or business relationship
with the Company and certain of its officers, directors or controlling persons
of a nature and duration that enables such Purchaser to be aware of the
character, business acumen and financial circumstance of such persons.
3.7 Accredited Purchaser. Such Purchaser is an "accredited investor"
--------------------
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act.
3.8 Brokers. Such 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.
-----------------
10
4.1 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.
4.2 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 F Preferred Stock
in accordance with the Restated Certificate.
4.3 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 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.
4.4 Insurance. 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 4.4.
------------
4.5 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 F Preferred Stock or Class
A Common Stock, and in the case of loss, theft or destruction, upon delivery of
an indemnity or bond satisfactory to the Company (which may include an
undertaking by the Purchasers so to indemnify the Company), or, in the case of
mutilation, upon surrender and cancellation thereof, the Company shall issue a
new agreement or certificate of like tenor for a number of shares of Series F
Preferred Stock or Class A Common Stock equal to the number of shares of such
stock represented by the lost, stolen, destroyed or mutilated certificate.
4.6 Related Party Transactions. Except for transactions contemplated
--------------------------
in the Voting Agreement and 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 material contract, arrangement or
transaction with a Related Party, other than compensation arrangements in the
ordinary course of business on arm's length terms.
4.7 Use of Proceeds. The Company will use that portion of the
---------------
proceeds obtained from the sale of shares of Purchased Securities above
$28,000,000 that is necessary to fulfill its obligations as set forth in Section
2.1 of the Voting Agreement (as defined below).
4.8 Merger of InfoTouch, Inc. and NS LLC. The Company shall use its
------------------------------------
best efforts to effect the InfoTouch Merger (as defined in the Voting Agreement)
by October 31, 1998. Prior to the consummation of the InfoTouch Merger, the
Company shall deliver a capitalization table
11
to the Purchasers setting forth the fully diluted capitalization of the Company
after giving effect to the InfoTouch Merger.
4.9 Merger of RealSelect, Inc. and the Company. The Company shall
------------------------------------------
use its reasonable best efforts to effect a merger of RealSelect, Inc. with the
Company by November 15, 1998 pursuant to terms that the Company's Board of
Directors believe are in the best interests of the Company (the "NAR Collapse").
------------
Prior to the consummation of the NAR Collapse, the Company shall deliver a
capitalization table to the Purchasers setting forth the fully diluted
capitalization of the Company after giving effect to the NAR Collapse.
4.10 Employee Agreements. The Company will use its best efforts to
-------------------
have each employee, consultant and officer of the Company and each of its
Subsidiaries execute an agreement with such entity regarding confidentiality and
proprietary information substantially in the form delivered to special counsel
for the Purchasers.
4.11 Audited Financial Statements. The Company shall use its best
----------------------------
efforts to deliver to the Purchasers audited consolidated financial statements
for its fiscal year ended December 31, 1997 by October 31, 1998.
4.12 Certain Issuances. The approval of Investors affiliated with
-----------------
Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxx shall be required prior to the issuance by the
Company of any securities to Cendant Corporation prior to the effectiveness of a
Registration Statement covering the Company's common stock for an initial public
offering.
4.13. Stock Option Agreements. On or before the earlier of (i) October
-----------------------
31, 1998 or (ii) the InfoTouch Merger, the Company shall enter into customary
stock option agreements with current holders of the Company's stock options,
which agreements shall reflect standard terms and conditions and contain a right
to repurchase unvested shares in favor of the Company. The Company shall require
all future grantees of Company stock options to execute standard and customary
stock option agreements, which agreements shall contain a right to repurchase
unvested shares in favor of the Company.
5. Conditions to Obligations at Closing.
------------------------------------
5.1 Conditions to Purchasers' Obligations at Closing. The obligations
------------------------------------------------
of each Purchaser under Section 1 of this Agreement are subject to the
fulfillment or waiver, on or before the Closing, of each of the following
conditions, the waiver of which shall not be effective against any Purchaser who
does not consent to such waiver, which consent may be given by written, oral or
telephone communication to the Company, its counsel or to special counsel to the
Purchasers:
(a) Representations and Warranties True. Each of the
-----------------------------------
representations and warranties of the Company contained in Section 2 shall be
true and correct on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.
(b) Performance. The Company shall have performed and complied
-----------
with all agreements, obligations and conditions contained in this Agreement that
are required to be
12
performed or complied with by it on or before the Closing and shall have
obtained all approvals, consents and qualifications necessary to complete the
purchase and sale described herein.
(c) Restated Certificate Effective. The Restated Certificate shall
------------------------------
have been duly adopted by the Company by all necessary corporate action of its
Board of Directors and stockholders, and shall have been duly filed with and
accepted by the Secretary of State of the State of Delaware.
(d) Compliance Certificate. The Company shall have delivered to each
----------------------
Purchaser at the Closing a certificate signed on its behalf by its President,
Chief Executive Officer, or Chief Financial Officer certifying that the
conditions specified in Sections 5.1(a), 5.1(b) and 5.1(c) have been fulfilled
and stating that there shall have been no material adverse change in the
business, affairs, prospects, operations, properties, assets or condition of the
Company not previously disclosed to the Purchasers in writing.
(e) Securities Exemptions. The offer and sale of the Purchased Shares
---------------------
to the Purchasers pursuant to this Agreement shall be exempt from the
registration requirements of the Securities Act, the qualification requirements
of the California Corporate Securities Law of 1968, as amended (the "Law") and
---
the registration and/or qualification requirements of all other applicable state
securities laws.
(f) Proceedings and Documents. All corporate and other proceedings in
-------------------------
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to each
Purchaser and to the Purchasers' special counsel.
(g) Board of Directors and Managers.
-------------------------------
(i) NetSelect. The directors of the Company as of the Closing
---------
shall be Xxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxx Xxxxxxx,
Xxxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxx and Xxxx Xxxxxxx, III.
(ii) RealSelect. The directors of RealSelect as of the Closing
----------
shall be Xxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxx Xxxxxxx,
Xxxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxx and Xxxxxx Xxxxx.
(iii) NetSelect, L.L.C. The managers of NS LLC as of the Closing
----------------
shall be Xxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxx Xxxxxxx,
Xxxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxx and Xxxx Xxxxxxx, III.
(h) No Material Change. There shall have been no material adverse
------------------
change in the business, affairs, prospects, operations, properties, assets or
condition of the Company since the date of this Agreement.
(i) Opinion of Company Counsel. Each Purchaser shall have received an
--------------------------
opinion from Fenwick & West, LLP, counsel for the Company, dated as of the date
of the Closing, in the form attached hereto as Exhibit D.
---------
13
(j) NetSelect Stockholders' Agreement. The Amended and Restated
---------------------------------
NetSelect Stockholders' Agreement in the form attached to this Agreement as
Exhibit E (the "NetSelect Stockholders' Agreement") shall have been executed and
--------- ---------------------------------
delivered by NetSelect and the holders of at least two-thirds (2/3) of the
Shares (as defined therein) held by the parties thereto (other than the
Purchasers and NetSelect).
(k) RealSelect Stockholders' Agreement. The Amendment No. 2 to the
----------------------------------
RealSelect Stockholders' Agreement in the form attached to this Agreement as
Exhibit F (the "RealSelect Stockholders' Agreement") shall have been executed
--------- ----------------------------------
and delivered by each party thereto.
(l) Voting Agreement. The Voting Agreement in the form attached to
----------------
this Agreement as Exhibit G (the "Voting Agreement") shall have been executed
--------- ----------------
and delivered by the holders agreeing to have repurchased at least 431,664
shares of the Company's Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and at least 440,000 shares of capital stock of
InfoTouch Corporation.
(m) Executed Consent and Waivers. Holders of (i) at least two-thirds
----------------------------
(2/3) of the voting power of Shares held by the Stockholders (as such terms are
defined in the NetSelect Stockholders' Agreement), (ii) at least two-thirds
(2/3) of the shares of outstanding Series A Preferred Stock and Series B
Preferred Stock (voting on an as-converted basis), (iii) at least two-thirds of
the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock (voting on an as-converted basis) and (iv) at least two-thirds (2/3) of
the shares of outstanding Series D Preferred Stock shall have executed and
delivered to the Company a Consent and Waiver in the form of Exhibit H hereto
---------
(the "Consent and Waiver").
------------------
(n) Increase in Stock Option Plan. The pool of shares of the
-----------------------------
Company's Class A Common Stock available for grant under the Company's 1996
Stock Incentive Plan shall have been increased to 2,000,000 shares.
(o) Xxxxx Employment Agreement. The Employment Agreement with Stuart
--------------------------
Xxxxx in the form attached to this Agreement as Exhibit I (the "Xxxxx Employment
--------- ----------------
Agreement") shall have been executed and delivered by the parties thereto.
---------
(p) Xxxxxxx Employment Agreement. The Employment Agreement with
----------------------------
Xxxxxxx Xxxxxxx in the form attached to this Agreement as Exhibit J (the
---------
"Xxxxxxx Employment Agreement") shall have been executed and delivered by the
-----------------------------
parties thereto.
5.2 Conditions to the Company's Obligations at Closing. The obligations of
--------------------------------------------------
the Company to each Purchaser under this Agreement are subject to the
fulfillment or waiver on or before the Closing of each of the following
conditions by such Purchaser:
(a) Representations and Warranties. The representations and warranties
------------------------------
of such Purchaser contained in Section 3 shall be true and correct on the date
of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
(b) Payment of Purchase Price. Each Purchaser shall have delivered to
-------------------------
the Company the purchase price specified for such Purchaser on Exhibit A in
---------
accordance with the provisions of Section 2.
14
(c) Restated Certificate Effective. The Restated Certificate shall
------------------------------
have been duly adopted by the Company by all necessary corporate action of its
Board of Directors and stockholders, and shall have been duly filed with and
accepted by the Secretary of State of the State of Delaware.
(d) Securities Exemptions. The offer and sale of the Purchased Shares
---------------------
to the Purchasers pursuant to this Agreement shall be exempt from the
registration requirements of the Securities Act, the qualification requirements
of the Law and the registration and/or qualification requirements of all other
applicable state securities laws.
(e) Proceedings and Documents. All corporate and other proceedings in
-------------------------
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Company and to the Company's legal counsel.
(f) Board of Directors and Managers.
-------------------------------
(i) NetSelect. The directors of the Company shall be Stuart
---------
Xxxxx, Xxxx Xxxxx, Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxx,
Xxxxxxx Xxxxxx, Xxx Xxxxxxx and Xxxx Xxxxxxx, III.
(ii) RealSelect. The directors of RealSelect shall be Stuart
----------
Xxxxx, Xxxx Xxxxx, Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxx,
Xxxxxx Xxxxxxx and Xxxxxx Xxxxx.
(iii) NetSelect, L.L.C. The managers of NS LLC shall be Stuart
----------------
Xxxxx, Xxxx Xxxxx, Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxx,
Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxx and Xxxx Xxxxxxx, III.
(g) NetSelect Stockholders' Agreement. The NetSelect Stockholders'
---------------------------------
Agreement shall have been executed and delivered by the holders of at least two-
thirds (2/3) of the Shares (as defined therein) held by the parties thereto
(other than the Purchasers).
(h) RealSelect Stockholders' Agreement. The RealSelect Stockholders'
----------------------------------
Agreement shall have been executed and delivered by each party thereto.
(i) Voting Agreement. The Voting Agreement shall have been executed
----------------
and delivered by the holders of at least 431,664 shares of the Company's Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and at
least 440,000 shares of capital stock of InfoTouch Corporation.
(j) Executed Consent and Waivers. Holders of (i) at least two-thirds
----------------------------
(2/3) of the voting power of Shares held by the Stockholders (as such terms are
defined in the NetSelect Stockholders' Agreement), (ii) at least two-thirds
(2/3) of the shares of outstanding Series A Preferred Stock and Series B
Preferred Stock (voting on an as-converted basis), (iii) at least two-thirds of
the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock (voting on an as-converted basis) and (iv) at least two-thirds (2/3) of
the shares of outstanding Series D Preferred Stock shall have executed and
delivered to the Company the Consent and Waiver.
15
(k) Increase in Stock Option Plan. The pool of shares of the
-----------------------------
Company's Class A Common Stock available for grant under the Company's 1996
Stock Incentive Plan shall have been increased to 2,000,000 shares.
(l) Xxxxx Employment Agreement. The Xxxxx Employment Agreement shall
--------------------------
have been executed and delivered by Xxxxxx Xxxxx.
(m) Xxxxxxx Employment Agreement. The Xxxxxxx Employment Agreement
----------------------------
shall have been executed and delivered by Xxxxxxx Xxxxxxx.
6. Interpretation.
--------------
6.1 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 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
16
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.
"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.
"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 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
17
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.
"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 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 (b) which could reasonably be
expected to 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.
"Person" shall mean any individual, firm, corporation, business trust,
------
partnership, limited liability company or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"Real Estate Business" shall mean any business associated with real
--------------------
estate (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 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 or Subsidiary of such
Person.
6.2 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.
7. Miscellaneous.
-------------
7.1 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
18
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.
7.2 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.
7.3 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, and no other
agreements exist between the Company and any of the parties hereto with respect
to the subject matter of this transaction, except: (i) the Amended and Restated
NetSelect, Inc. Stockholders' Agreement, dated as of the date hereof, (ii) the
Voting and Recapitalization Agreement dated as of the date hereof, (iii) the
Amendment No. 2 to the RealSelect, Inc. Stockholders' Agreement dated as of the
date hereof, (iv) the Amended and Restated NetSelect Stockholders Agreement
dated as of the date hereof, (v) the Closing Documents (as such terms is
defined in the legal opinion of Fenwick & West LLP dated as of the date hereof),
(vi) the Internet Cooperation and Licensing Agreement between the Company and
Xxxxxx Xxx, dated as of the date hereof, (vii) the consents, waivers and
approvals under existing agreements with the Company, (viii) all of the
Company's charter and formation documents; (ix) all documents and agreements
relating to the Loan Agreement dated as of July 20, 1998 between the Company,
NetSelect L.L.C., RealSelect and the Investors (as such term is defined
therein), (ix) the Agreement between the Company, NetSelect L.L.C., RealSelect,
REALTORS(R) Information Network, Inc., and the National Association of
REALTORS(R) dated as of the date hereof, and (x) any and all agreements and
documents entered into or dated prior to the closing of the NetSelect Series D
Preferred Stock financing.
7.4 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.
7.5 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 facsimile (with a confirmation copy to be sent by
first class mail) or sent by nationally recognized overnight courier service,
to, in the case of a Purchaser, as set forth below such Purchaser's name on
Exhibit A hereto, and in the case of the Company, as set forth below:
---------
THE COMPANY:
NetSelect, Inc.
0000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000
00
Xxxxxxxx Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
With a copy to:
Fenwick & West, LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile 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.
7.6 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), retroactively or prospectively,
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 Purchased
Securities (voting on an as-converted basis). 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 F Preferred Stock and (ii) the
Company. Any such actions or acts shall be binding on all Purchasers; provided,
however, that no amendment or waiver shall discriminate against any Purchaser
without the consent of such Purchaser and this Section 7.6 may only be amended
with the consent of all of the Purchasers.
7.7 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.
7.8 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 Securities. There are no
other intended third-party beneficiaries to this Agreement.
7.9 Expenses. The Company agrees to pay or reimburse each Purchaser
--------
for (i) all reasonable fees and expenses of one outside legal counsel for the
Purchasers in connection with the NetSelect Stockholders' Agreement and the
Restated Certificate and the consummation of all transactions contemplated
hereby and thereby through the Closing (the "Financing Transaction Fees") and
--------------------------
from the Closing through the NAR Collapse (the "Merger Transaction Fees"), (ii)
-----------------------
all costs, expenses and reasonable legal fees relating to any future amendments
or supplements to the NetSelect Stockholders' Agreement, this Agreement or the
Restated Certificate (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 each Purchaser
relating to the enforcement against the Company, of the NetSelect Stockholders'
Agreement or the Restated Certificate. The maximum amount of Financing
Transaction Fees payable by the Company under this
20
Section 7.9 and Section 6.12 of that certain Loan Agreement dated July 20, 1998
among the Company, NS LLC, RealSelect and the Purchasers shall in the aggregate
for all Purchasers not exceed $75,000.
7.10 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 Purchased Securities, regardless of any
investigation made by or on behalf of any party.
7.11 Transfer of Securities. Each Purchaser understands and agrees
----------------------
that the Purchased Securities (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. Each Purchaser acknowledges that, except as provided in this
Agreement and the NetSelect Stockholders' Agreement, each Purchaser has no right
to require the Company to register any of such shares. Each 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 AND A STOCKHOLDERS' AGREEMENT DATED AS OF
AUGUST 21, 1998, COPIES OF WHICH ARE ON FILE AT THE
OFFICES OF THE CORPORATION."
"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."
The second legend set forth in this Section 7.11 shall be removed by
the Company from any certificate evidencing Securities upon delivery to the
Company of an opinion by counsel, reasonably satisfactory to the Company, 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 the Company issued the
21
Securities. The Company shall waive the requirement of such a legal opinion for
customary transfers made pursuant to Rule 144 of the Exchange Act.
7.12 Governing Law. 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. 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.
7.13 Term. Except as otherwise provided in this Agreement, this
----
Agreement shall terminate when none of the shares of Series F Preferred Stock
remain outstanding.
7.14 Publicity. 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 statements with respect to the transactions
contemplated hereby as each may be advised is legally necessary upon advice of
its counsel.
22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
"COMPANY":
NETSELECT, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------------
Xxxxxx Xxxxx, Chief Executive Officer
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Xxxxxxx Xxxxxxx, President
23
COUNTERPART SIGNATURE PAGE TO
NETSELECT INC. STOCK PURCHASE AGREEMENT
DATED AS OF AUGUST 21, 1998
Xxxxxx Xxxxxxx Venture Partners III, L.P.
By: Xxxxxx Xxxxxxx Venture Partners III, L.L.C.
its General Partner
By: Xxxxxx Xxxxxxx Venture Capital III, Inc.
Institutional Managing Member
/s/ X. X. Loatetz
-------------------------------------------
X. X. Loatetz
Title: Vice President
Xxxxxx Xxxxxxx Venture Investors III, L.P.
By: Xxxxxx Xxxxxxx Venture Partners III, L.L.C.
its General Partner
By: Xxxxxx Xxxxxxx Venture Capital III, Inc.
its Institutional Managing Member
/s/ X. X. Loatetz
-------------------------------------------
X. X. Loatetz
Title: Vice President
The Xxxxxx Xxxxxxx Venture Partners Entrepreneur Fund, L.P.
By: Xxxxxx Xxxxxxx Venture Partners III, L.L.C.
its General Partner
By: Xxxxxx Xxxxxxx Venture Capital III, Inc.
its Institutional Managing Member
/s/ X. X. Loatetz
-------------------------------------------
X. X. Loatetz
Title: Vice President
"PURCHASERS": "PURCHASERS":
Name: Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxx VIII, L.P. Name: KPCB VIII Founders Fund, L.P.
----------------------------------------------- -------------------------------------------
By: KPCB VIII Associates, L.P., By: KPCB VIII Associates, L.P.,
its General Partner its General Partner
By: /s/ Xxxxxxx X. [ILLEGIBLE] By: /s/ Xxxxxxx X. [ILLEGIBLE]
----------------------------------------------- -------------------------------------------
Printed Name: Xxxxxxx X. [ILLEGIBLE] Printed Name: Xxxxxxx X. [ILLEGIBLE]
--------------------------------------- ----------------------------------
Address: Address:
--------------------------------------------- ----------------------------------------
----------------------------------------------------- ------------------------------------------------
----------------------------------------------------- ------------------------------------------------
Facsimile: Facsimile:
------------------------------------------- --------------------------------------
"PURCHASERS": "PURCHASERS":
Name: KPCB Information Sciences Ziabatsu Fund II, L.P. Name: Intuit, Inc.
----------------------------------------------- ------------------------------------------
By: KPCB Associates, L.P., By: /s/ Xxxxxxx Xxxxx
its General Partner ------------------------------------------
By: /s/ Xxxxxxx X. [ILLEGIBLE] Printed Name: Xxxxxxx Xxxxx
----------------------------------------------- ----------------------------------
Printed Name: Xxxxxxx X. [ILLEGIBLE] Address:
--------------------------------------- ----------------------------------------
Address:
--------------------------------------------- ------------------------------------------------
----------------------------------------------------- ------------------------------------------------
----------------------------------------------------- ------------------------------------------------
Facsimile: Facsimile:
------------------------------------------- --------------------------------------
"PURCHASERS": "PURCHASERS":
Name: Whitney Equity Partners, L.P. Name:
----------------------------------------------- ------------------------------------------
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxxx X. [ILLEGIBLE]
----------------------------------------------- ------------------------------------------
Printed Name: Xxxxxxx X. Xxxxxx Printed Name: Xxxxxxxx X. [ILLEGIBLE]
--------------------------------------- General Partner
----------------------------------
Address: Address:
--------------------------------------------- ----------------------------------------
----------------------------------------------------- ------------------------------------------------
----------------------------------------------------- ------------------------------------------------
Facsimile: Facsimile:
------------------------------------------- --------------------------------------
"PURCHASERS": "PURCHASERS":
Name: Broadview Partners Group Name: Ingleside Interests
----------------------------------------------- ------------------------------------------
By: /s/ Xxxxx Xxxxxx By: /s/ Xxx X. Xxxxxxx
----------------------------------------------- Managing Partner
------------------------------------------
Printed Name: Xxxxx Xxxxxx Printed Name: Xxx X. Xxxxxxx
--------------------------------------- ----------------------------------
Address: Address:
--------------------------------------------- ----------------------------------------
----------------------------------------------------- ------------------------------------------------
----------------------------------------------------- ------------------------------------------------
Facsimile: Facsimile:
------------------------------------------- --------------------------------------
"PURCHASERS": "PURCHASERS":
Name: UBS Capital II LLC Name: GE Capital
----------------------------------------------- ------------------------------------------
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxx Xxxxx
----------------------------------------------- ------------------------------------------
Printed Name: Xxxxxx Xxxxxx Printed Name: Xxxxx Xxxxx
--------------------------------------- ----------------------------------
Address: Address:
--------------------------------------------- ----------------------------------------
----------------------------------------------------- ------------------------------------------------
----------------------------------------------------- ------------------------------------------------
Facsimile: Facsimile:
------------------------------------------- --------------------------------------
"PURCHASERS": "PURCHASERS":
Name: Xxxxxx Xxxxxxx Xxxx Xxxxxx Equity Funding, Inc. Name: Xxx Interactive Media
----------------------------------------------- ------------------------------------------
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx, Xx.
----------------------------------------------- ------------------------------------------
Printed Name: Xxxxx Xxxxxx Printed Name: Xxxxxxx X. Xxxxxx, Xx.
--------------------------------------- ----------------------------------
Title: Vice President
---------------------------------------
Address: Address:
--------------------------------------------- ----------------------------------------
----------------------------------------------------- ------------------------------------------------
----------------------------------------------------- ------------------------------------------------
Facsimile: Facsimile:
------------------------------------------- --------------------------------------
"PURCHASERS":
Name: Xxxxxx Xxx
-----------------------------------------------
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Printed Name: Xxxxxxx X. Xxxxxx
---------------------------------------
Address:
---------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
Facsimile:
-------------------------------------------
24
List of Exhibits:
----------------
A Schedule of Purchasers
B Restated Certificate
C Schedule of Exceptions
D Fenwick & West Opinion
E NetSelect Stockholders' Agreement
F RealSelect Stockholders' Agreement
G Voting Agreement
H Consent and Waiver
I Xxxxx Employment Agreement
J Xxxxxxx Employment Agreement
25
