EXHIBIT 10.02.3
AMENDMENT NO. 2 TO OPERATING AGREEMENT
This Amendment No. 2 to Operating Agreement (the "Amendment") is dated as
---------
of May 28, 1999 and is entered into by and between RealSelect, Inc., a Delaware
corporation ("RealSelect" or "Operator") and Realtors(R) Information Network,
Inc., an Illinois corporation ("RIN").
---
BACKGROUND
----------
A. RIN and Operator are parties to an Operating Agreement dated as of
November 26, 1996, as amended by that certain First Amendment of Operating
Agreement dated as of December 27, 1996 (such agreement as amended, the
"Operating Agreement").
--------------------
B. RIN and Operator desire to amend the Operating Agreement in certain
respects, as set forth below.
AGREEMENT
---------
THE PARTIES AGREE AS FOLLOWS:
1. Amendment of Section 6.4. Section 6.4 of the Operating Agreement is
------------------------
amended to provide in full as set forth on Exhibit 1 attached hereto.
2. No Other Changes. Except as set forth in this Amendment, the other
----------------
provisions of the Operating Agreement shall continue unaffected and shall remain
in full force and effect.
3. Miscellaneous.
-------------
3.1 Binding Agreement; Entire Agreement; Successors and Assigns.
-----------------------------------------------------------
This Amendment shall be binding upon the parties, and their respective
successors and assigns. This Amendment (together with the Operating Agreement)
constitutes the entire contract between the parties relative to the subject
matter hereof and supersedes any previous communications or agreements between
the parties concerning the subject matter hereof. Nothing in this Amendment,
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 Amendment.
3.2 Governing Law. This Amendment shall be governed in all respects
-------------
by the laws of the State of California, as applied to contracts entered into and
to be performed entirely within the State of California. Any dispute arising
out of or relating to this Amendment shall be resolved in the manner provided in
the Operating Agreement for resolutions of disputes.
3.3 Amendment; Waiver. This Amendment 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 Amendment as to itself by means of a written instrument.
3.4 Counterparts. This Amendment 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.
3.5 Notices. Any notice or other communication required or permitted
-------
to be delivered to any party under this Amendment or the Operating Agreement
shall be given in the manner provided in Section 12.1 of the Operating
Agreement, 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 RIN:
REALTORS(R) Information Network, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: President and Chief Executive Officer
Fax No: (000) 000-0000
with a copy to:
National Association of REALTORS(R)
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Fax No: (000) 000-0000
if to RealSelect:
RealSelect, Inc.
000 X. Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attn: President
Facsimile: (000) 000-0000
with a copy to:
2
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Fax No: (000) 000-0000
[Remainder of page intentionally left blank]
3
IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 to
Operating Agreement as of the date first written above.
REALSELECT, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx, Ph.D.
Title: Chief Executive Officer
REALTORS(R) INFORMATION NETWORK, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: CEO
4
EXHIBIT 1
---------
6.4 Variable Payment. (a) Operator shall pay to the Data Content
----------------
Providers (in the aggregate) and to RIN an amount in respect of the indicated
calendar years during the term of this Agreement equal to the indicated
percentages of Operator's Revenues during such calendar year.
Aggregate Payments to Aggregate Payments
Calendar Year Data Content Providers Payment to RIN by Operator
------------------------------------------------------------------------------------------------------------
1997 10% None 10%
------------------------------------------------------------------------------------------------------------
1998 10% None 10%
------------------------------------------------------------------------------------------------------------
1999 Amount to be determined by Lesser of (i) 5% or (ii) the Lesser of (i) the sum of 5%
RIN difference between 12 1/2% plus the percentage of
and the percentage of Revenues paid to the Data
Revenues paid to the Data Content Providers or (ii) 12
Content Providers1 1/2%
------------------------------------------------------------------------------------------------------------
2000 and Amount to be determined by Lesser of (i) 5% or (ii) the Lesser of (i) the sum of 5%
thereafter RIN difference between 15% and plus the percentage of
the percentage of Revenues Revenues paid to the Data
paid to the Data Content Content Providers or (ii) 15%
Providers1
------------------------------------------------------------------------------------------------------------
Notwithstanding the foregoing, with respect to Operator's Revenues derived from
Operator's new homes site (xxxxxxxxxxx.xxx), Operator shall pay to RIN an amount
equal to 5% of such Revenues, and to Data Content Providers, nothing.
In the event that Operator's EBIT for a quarter is, or would be after
deducting the payments otherwise required to be made to RIN under this Section
-------
6.4(a), less than 10% of Operator's Revenues for such quarter, the amount
------
otherwise payable to RIN under this Section 6.4(a) shall be reduced (but not
--------------
more than an aggregate of 2% of Operators Revenues) until such condition does
not exist: provided, however, that if Operator's EBIT for the calendar year in
which any such reductions are made shall exceed 10% of Revenues, then the
reductions shall be restored, and the difference paid to RIN, to the extent that
Operator's EBIT, after such restored payments, shall equal or exceed 10% of
Operator's Revenues.
Such amount shall be payable in quarterly installment during each calendar
year within thirty days of the end of each calendar quarter based upon
Operator's Revenues during such quarter. As used in this Section 6.4, the term
-----------
"Revenues" shall mean the collected gross revenues of Operator and its
subsidiaries of which Operator owns directly, or indirectly through one or more
subsidiaries, a majority of the voting power (each, a "Majority Subsidiary"),
after deducting (i) sales commissions payable or paid to third parties related
to such revenues, (ii) collected gross revenues from the marketing of
information or data permitted to be so marketed by Data Content Providers under
the provisions of Section 5.7(g)(ii), and (iii) in the case of any such Majority
------------------
Subsidiaries,
5
any revenues attributable to a minority interest held by any Person other than
Operator or any other subsidiary. Also if Operator in the future sells any
products or services that have a significant related cost of sales, then the
excess of such cost of sales over the costs incurred on typical sales shall be
subtracted from Revenues related to these product or services. Such products
could include but not be limited to printing of property flyers for REALTORS(R)
and reselling of products or services produced by other companies.
(b) Within the limits set forth in Section 6.4(a), RIN shall
determine in good faith the aggregate percentage of Revenues to be distributed
to Data Content Providers under this Agreement. Operator shall propose the
method or methods for determining the individual amounts and manner of
distribution of payments under Section 6.4(a) to Data Content Providers, which
--------------
method or methods of determination and manner of distribution shall result in
the distribution to Data Content Providers of the aggregate amount of Revenues
determined by RIN within the limits of Section 6.4(a) to be available for
distribution. Any method(s) so proposed shall be subject to the approval of RIN,
which shall not be unreasonably withheld. In the event that Operator shall fail
to propose a method, or the method so proposed will not result in the
distribution of the aggregate amount determined to be available for
distribution, then RIN may develop the proposed method(s). In determining the
aggregate percentage of Revenues to be distributed to Data Content Providers and
evaluating any such method or methods so proposed by Operator or so developed by
RIN, RIN shall give consideration to (i) the revenues generated by Operator as a
result of the Real Property information provided by a Data Content Provider,
including home page sales and banner advertising, and (ii) whether such Data
Content Provider is providing such Real Property information on an exclusive
basis to Operator. The objectives of such determination shall be, among other
things, to create reasonable incentives to Data Content Providers to furnish
real property information to Operator, to promote actively the Domain Site to
such Data Content Providers' respective local communities, and to assist
Operator in selling Enhanced Real Property Ads, home pages and related services
to REALTORS(R). Furthermore, in determining the percentage of Revenues to be
available for distribution to Data Content Providers in the aggregate in 1998
and later years, RIN shall take into account competitive conditions concerning
the payment of fees to content providers and shall provide its determination
with respect to a given calendar year on or before the immediately preceding
October 1. It is understood by the parties that such proposals approvals and
determinations cannot be inconsistent with the contractual obligations
undertaken to Data Content Providers.
(c) Until the fifth anniversary of the date of this Agreement, it is
expected that RIN will use all of the payments, if any, received by it from
Operator pursuant to Section 6.4(a) (i) to support its activities under this
--------------
Agreement and (ii) to meet its obligations to NAR.
6
