<PAGE>
As filed with the Securities and Exchange Commission on June 17, 1999
Registration No. 333-79689
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
HOMESTORE.COM, INC.
(Exact name of Registrant as specified in its charter)
Delaware 6531
(State or other (Primary Standard Industrial 95-4438337
jurisdiction of Classification Number) (I.R.S. Employer
incorporation or Identification No.)
organization)
225 West Hillcrest Drive, Suite 100
Thousand Oaks, California 91360
(805) 557-2300
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------
Stuart H. Wolff
Chairman of the Board and Chief Executive Officer
HomeStore.com, Inc.
225 West Hillcrest Drive, Suite 100
Thousand Oaks, California 91360
(805) 557-2300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
Copies to:
Gordon K. Davidson, Esq. Jeffrey D. Saper, Esq.
Laird H. Simons III, Esq. Kurt J. Berney, Esq.
Jeffrey R. Vetter, Esq. Anil P. Patel, Esq.
David A. Bell, Esq. WILSON SONSINI GOODRICH
Andrew J. Schultheis, Esq. & ROSATI, P.C.
FENWICK & WEST LLP 650 Page Mill Road
Two Palo Alto Square Palo Alto, California 94304
Palo Alto, California 94306 (650) 493-9300
(650) 494-0600
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
---------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Title of Each Class of Proposed Maximum
Securities to be Aggregate Offering Amount of
Registered Price(1) Registration Fee
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $0.001 par
value per share....... $100,000,000 $27,800(2)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Estimated pursuant to Rule 457(o) solely for the purpose of calculating
the amount of the registration fee.
(2) Previously paid.
---------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses to be paid by
HomeStore in connection with the sale of the shares of common stock being
registered hereby. All amounts are estimates except for the Securities and
Exchange Commission registration fee, the NASD filing fee and the Nasdaq
National Market filing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $ 27,800
NASD filing fee................................................. 10,500
Nasdaq National Market initial listing fee...................... 1,000
Accounting fees and expenses.................................... *
Legal fees and expenses......................................... *
Road show expenses.............................................. *
Printing and engraving expenses................................. *
Blue sky fees and expenses...................................... *
Transfer agent and registrar fees and expenses.................. *
Miscellaneous................................................... *
--------
Total......................................................... $
========
</TABLE>
- --------
* To be supplied by amendment.
Item 14. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the
"Securities Act").
As permitted by the Delaware General Corporation Law, the Registrant's
Certificate of Incorporation includes a provision that eliminates the personal
liability of its directors for monetary damages for breach of fiduciary duty
as a director, except for liability:
. for any breach of the director's duty of loyalty to the Registrant or
its stockholders,
. for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
. under section 174 of the Delaware General Corporation Law (regarding
unlawful dividends and stock purchases); or
. for any transaction from which the director derived an improper
personal benefit.
As permitted by the Delaware General Corporation Law, the Registrant's
Bylaws provide that:
. the Registrant is required to indemnify its directors and officers to
the fullest extent permitted by the Delaware General Corporation Law,
subject to certain very limited exceptions;
. the Registrant may indemnify its other employees and agents as set
forth in the Delaware General Corporation Law;
. the Registrant is required to advance expenses, as incurred, to its
directors and officers in connection with a legal proceeding to the
fullest extent permitted by the Delaware General Corporation Law,
subject to certain very limited exceptions; and
. the rights conferred in the Bylaws are not exclusive.
II-1
<PAGE>
The Registrant intends to enter into Indemnification Agreements with each
of its current directors and officers to give such directors and officers
additional contractual assurances regarding the scope of the indemnification
set forth in the Registrant's Certificate of Incorporation and to provide
additional procedural protections. At present, there is no pending litigation
or proceeding involving a director, officer or employee of the Registrant
regarding which indemnification is sought, nor is the Registrant aware of any
threatened litigation that may result in claims for indemnification.
Reference is also made to Section of the Underwriting Agreement, which
provides for the indemnification of officers, directors and controlling
persons of the Registrant against certain liabilities. The indemnification
provision in the Registrant's Certificate of Incorporation, Bylaws and the
Indemnity Agreements entered into between the Registrant and each of its
directors and officers may be sufficiently broad to permit indemnification of
the Registrant's directors and officers for liabilities arising under the
Securities Act.
The Registrant maintains directors' and officers' liability insurance and
expects to obtain a rider to such coverage for securities matters.
See also the undertakings set out in response to Item 17.
Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:
<TABLE>
<CAPTION>
Exhibit Document Number
---------------- ------
<S> <C>
Underwriting Agreement (draft dated June , 1999)............... 1.01
Registrant's Amended and Restated Certificate of Incorporation.... 3.01
Registrant's Amended and Restated Bylaws.......................... 3.03
Second Amended and Restated NetSelect Stockholders' Agreement..... 4.02.1
Form of Indemnity Agreement....................................... 10.01
</TABLE>
Item 15. Recent Sales of Unregistered Securities.
The following table sets forth information regarding all securities sold by
the Registrant in the past three years.
<TABLE>
<CAPTION>
Aggregate
Class of Date Title of Number of Purchase Form of
Purchaser of Sale Securities Securities (1) Price Consideration
- --------- --------- -------------------- ------------- ----------- ---------------------
Sales by (Pre-InfoTouch-
NetSelect Merger)
NetSelect, Inc.
<S> <C> <C> <C> <C> <C>
CDW Internet, L.L.C. ... 12/4/96 Class A Common Stock 472,940 236 Cash
CDW Internet, L.L.C. ... 12/4/96 Class B Common Stock 232,940 116 Cash
Allen & Co., CDW
Internet, L.L.C., J.H.
Whitney and Whitney 12/4/96-
Equity Partners........ 1/31/97 Series A Preferred 3,294,118 $ 4,677,648 Cash
Michael N. Flannery, 12/12/96- Series B Preferred 705,882 $ 2,336,469 Cash and
Daniel A. Koch and John 5/15/97 cancellation of
F. Petrick, Jr. ....... indebtedness
Jason Chapnik and Glen 3/31/97 Common Stock 58,764 -- -- Exchange of
Graff.................. shares in
connection with
TouchTech acquisition
Broadview Partners
Group, CDW Internet,
L.L.C., GeoCapital IV,
L.P., Ingleside
Interests and Daniel A. 9/29/97-
Koch................... 12/15/97 Series C Preferred 1,228,746 $ 4,497,210 Cash
General Electric Capital 1/12/98 Series D Preferred 1,362,402 $10,000,031 Cash
Corporation............
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Aggregate
Class of Date Title of Number of Purchase Form of
Purchaser of Sale Securities Securities (1) Price Consideration
- --------- -------- -------------------------------- ------------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Roger Scommegna......... 3/31/98 Common Stock 210,000 -- -- Exchange of
shares in
connection with
The Enterprise
of America
Acquisition
AOL Warrants............ 4/8/98 Warrant to purchase Common Stock 226,590 As part of
advertising
agreement
Charles Ingrum, Fred
White and R. Fred shares in
White, III............. 7/7/98 Series E Preferred 650,000 -- -- Exchange of
connection with
merger of
National New
Homes Co.,
Inc., a wholly-
owned
subsidiary, and
MultiSearch
Solutions, Inc.
9 investors............. 8/21/98 Common Stock 3,347,982 $10,579,623 Cash and
cancellation of
indebtedness
17 investors, including
the NAR................ 8/21/98 Series F Preferred 3,328,098 $39,937,176 Cash and
cancellation of
indebtedness
Equipment Lease
Warrants............... 1/11/99 Warrants to purchase 10,000 -- -- As partial
Series F Preferred consideration
for lease
<CAPTION>
Sales by InfoTouch, Inc.
<S> <C> <C> <C> <C> <C>
Daniel A. Koch.......... 11/25/96 Common Stock 25,934 $ 87,500 Cash
Michael S. Luther....... 11/25/96 Common Stock 25,934 $ 87,500 Cash
Nussbaum Family Trust... 11/25/96 Common Stock 14,820 $ 50,000 Cash
William Spazante........ 11/25/96 Common Stock 7,410 $ 25,000 Cash
Employee option
exercises, as a group.. 8/16/98 Common Stock 530,506 $ 594,039 Cash and
promissory notes
<CAPTION>
Sales made in connection
with
NetSelect-InfoTouch
merger:
<S> <C> <C> <C> <C> <C>
NetSelect Common Stock
Shareholders........... 2/4/99 Common Stock 4,992,978 -- -- Exchanged for
Common Stock
of pre-NetSelect-
InfoTouch
merger
NetSelect ("Old
NetSelect")
NetSelect Series A
Preferred
Shareholders........... 2/4/99 Series A Preferred 2,756,000 -- -- Exchanged for
Series A
Preferred of
Old NetSelect
NetSelect Series B
Preferred
Shareholders........... 2/4/99 Series B Preferred 380,676 -- -- Exchanged for
Series B
Preferred of
Old NetSelect
NetSelect Series C
Preferred
Shareholders........... 2/4/99 Series C Preferred 1,228,746 -- -- Exchanged for
Series C
Preferred of
Old NetSelect
NetSelect Series D
Preferred
Shareholders........... 2/4/99 Series D Preferred 1,362,402 -- -- Exchanged for
Series D
Preferred of
Old NetSelect
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Aggregate
Class of Date Title of Number of Purchase Form of
Purchaser of Sale Securities Securities (1) Price Consideration
- --------- --------- ------------------- ------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
NetSelect Series E
Preferred
Shareholders........... 2/4/99 Series E Preferred 650,000 -- -- Exchanged for
Series E
Preferred of
Old NetSelect
NetSelect Series F
Preferred
Shareholders........... 2/4/99 Series F Preferred 3,328,098 -- -- Exchanged for
Series F
Preferred of
Old NetSelect
<CAPTION>
Sales by (Post-
InfoTouch-NetSelect
Merger) NetSelect, Inc.
<S> <C> <C> <C> <C> <C>
Broker Gold
Shareholders, as a
group.................. 2/18/99 Common Stock 257,212 $2,012,032 Cash
Broker Gold
Shareholders, as a
group.................. 2/18/99 Series F Preferred 192,788 $1,507,968 Cash
Broker Gold Warrants.... Warrant to purchase 143,326 -- -- As partial
Common Stock consideration
for data content
agreements
ATGF II................. 4/9/99 Series G Preferred 150,762 $7,516,993 Cash
Litton Master Trust..... 4/9/99 Series G Preferred 22,500 $1,121,850 Cash
James Stableford........ 4/9/99 Series G Preferred 1,000 $ 49,860 Cash
Anthony Ciulla.......... 4/9/99 Series G Preferred 1,000 $ 49,860 Cash
Ralph H. Cechettini 1995
Trust.................. 4/9/99 Series G Preferred 6,000 $ 299,160 Cash
Pivotal Partners........ 4/9/99 Series G Preferred 14,000 $ 698,040 Cash
Marc Weiss.............. 4/9/99 Series G Preferred 5,000 $ 249,300 Cash
Dana Smith.............. 4/9/99 Series G Preferred 300 $ 14,958 Cash
Integral Capital
Partners IV, L.P....... 4/9/99 Series G Preferred 99,828 $4,977,424 Cash
Integral Capital
Partners IV MS Side
Fund, L.P.............. 4/9/99 Series G Preferred 453 $ 22,587 Cash
Cox Interactive Media... 4/9/99 Series G Preferred 40,112 $1,999,984 Cash
Employee option
exercises, as a group.. 2/12/99- Common Stock 1,909,216 $4,276,537 Cash and
4/30/99 promissory
notes
Gold Alliance Warrants.. 5/98-3/99 Warrant to purchase 83,752 -- -- As partial
Common Stock consideration
for data content
agreements
</TABLE>
- --------
(1) Each share of Series A, Series B, Series C, Series D, Series E, Series F
and Series G Preferred Stock will convert automatically into two shares of
common stock, respectively, upon the consummation of this offering.
(2) All sales of common stock made pursuant to the exercise of stock options
were made in reliance on Rule 701 under the Securities Act or on Section
4(2) of the Securities Act.
All other sales were made in reliance on Section 4(2) of the Securities Act
and/or Regulation D promulgated under the Securities Act. These sales were
made without general solicitation or advertising. Each purchaser was a
sophisticated investor with access to all relevant information necessary to
evaluate the investment and represented to the Registrant that the shares were
being acquired for investment.
II-4
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
(a) The following exhibits are filed herewith:
<TABLE>
<CAPTION>
Number Exhibit Title
------ -------------
<C> <S>
1.01 Form of Underwriting Agreement (draft dated June , 1999).(3)
2.01 Agreement and Plan of Merger dated December 31, 1998, between
NetSelect, Inc. and InfoTouch Corporation.
2.02 Agreement and Plan of Reorganization dated June 20, 1998, among
NetSelect, Inc., National New Homes Co., Inc., MultiSearch
Solutions, Inc., Fred White, and R. Fred White III.
2.03 Exchange Agreement dated March 31, 1998, among NetSelect, Inc.,
The Enterprise of America, Ltd., and Roger Scommegna.
2.04 Agreement and Plan of Reorganization/Merger between NetSelect,
Inc. and SpringStreet.com.(1)
3.01 Registrant's Amended and Restated Certificate of Incorporation
dated April 8, 1999.(1)
3.02 Registrant's Amended and Restated Certificate of Incorporation to
be filed immediately after the closing of this offering.(3)
3.03 Registrant's Amended (and Restated) Bylaws dated February 4,
1999.(1)
3.04 Registrant's Amended and Restated Bylaws to be filed immediately
after the closing of this offering.(3)
3.05.1 RealSelect, Inc.'s Certificate of Incorporation dated October 25,
1996.
3.05.2 RealSelect, Inc.'s Certificate of Amendment to Certificate of
Incorporation dated November 25, 1996.(1)
3.06 RealSelect, Inc.'s Bylaws dated November 26, 1996.
4.01 Form of Specimen Certificate for Registrant's common stock.(3)
4.02.1 NetSelect, Inc. Second Amended and Restated Stockholders Agreement
dated January 28, 1999.
4.02.2 Amendment No. 1 to NetSelect, Inc. Second Amended and Restated
Stockholders Agreement dated January 28, 1999.
5.01 Opinion of Fenwick & West LLP regarding legality of the securities
being registered.(3)
10.01 Form of Indemnity Agreement between Registrant and each of its
directors and executive officers.
10.02.01 Operating Agreement dated November 26, 1996, between REALTORS(R)
Information Network, Inc. and RealSelect, Inc.
10.02.1 Operating Agreement dated November 26, 1996, between REALTORS(R)
Information Network, Inc. and RealSelect, Inc.
10.02.2 First Amendment to Operating Agreement between REALTORS(R)
Information Network, Inc. and RealSelect, Inc. dated December 27,
1996.(1)
10.02.3 Amendment No. 2 to Operating Agreement between REALTORS(R)
Information Network, Inc. and RealSelect, Inc. dated May 28,
1999.(1)
10.03 Master Agreement dated November 26, 1996, among NetSelect, Inc.,
NetSelect, L.L.C., RealSelect, Inc., CDW Internet, L.L.C.,
Whitney Equity Partners, L.P., Allen & Co., InfoTouch
Corporation, and REALTORS(R) Information Network, Inc.(1)
10.04 Joint Ownership Agreement dated November 26, 1996, among the
National Association of REALTORS(R), NetSelect, L.L.C., and
NetSelect, Inc.
10.05 Trademark License dated November 26, 1996, between the National
Association of REALTORS(R) and RealSelect, Inc.
10.06 Stock and Interest Purchase Agreement (NetSelect Series A and B
Preferred) dated November 26, 1996, among NetSelect, Inc.,
NetSelect L.L.C., and InfoTouch Corporation.
10.07 GeoCapital IV, L.P. Subscription Agreement (NetSelect Series C
Preferred) dated September 29, 1997.
10.08 Broadview Partners Group Subscription Agreement (NetSelect Series
C Preferred) dated September 29, 1997.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Number Exhibit Title
------ -------------
<C> <S>
10.09 Ingleside Interests Subscription Agreement (NetSelect Series C
Preferred) dated September 29, 1997.
10.10 Daniel Koch Subscription Agreement (NetSelect Series C Preferred)
dated September 29, 1997.
10.11 Whitney Equity Partners Subscription Agreement (NetSelect Series C
Preferred) dated September 29, 1997.
10.12 CDW Internet Subscription Agreement (NetSelect Series C Preferred)
dated September 29, 1997.
10.13 NetSelect Series D Preferred Stock Purchase Agreement dated January
12, 1998.
10.14 NetSelect Series F Preferred Stock Purchase Agreement dated August
21, 1998.
10.15 NetSelect Series G Preferred Stock Purchase Agreement dated April
9, 1999.
10.16 NetSelect, Inc. 1996 Stock Incentive Plan.
10.17 NetSelect, Inc. 1999 Equity Incentive Plan.
10.18 HomeStore.com, Inc. 1999 Stock Incentive Plan.(3)
10.19 HomeStore.com, Inc. 1999 Employee Stock Purchase Plan.(3)
10.20 InfoTouch Corporation 1994 Stock Incentive Plan.(1)
10.21 Employment Agreement between NetSelect, Inc. and Stuart H. Wolff,
Ph.D.
10.22 Employment Agreement between NetSelect, Inc. and Richard Janssen.
10.23 Employment Agreement between NetSelect, Inc. and Michael A.
Buckman.
10.24.1 Office Lease dated September 18, 1998 between RealSelect, Inc. and
WHLNF Real Estate Limited Partnership for 225 West Hillcrest,
Suite 100, Thousand Oaks, California
10.24.2 First Amendment to Office Lease dated March 31, 1999 between
RealSelect, Inc. and WHLNF Real Estate Limited Partnership for 225
West Hillcrest, Suite 100, Thousand Oaks, California
10.25 401(k) Plan.(1)
10.26.1 Employment Agreement between NetSelect, Inc. and Peter Tafeen.(3)
10.26.2 Amendment to Employment Contract between NetSelect, Inc. and
Peter Tafeen.(3)
10.27 Employment Agreement between NetSelect, Inc. and John M. Giesecke.
10.28 Employment Agreement between NetSelect, Inc. and David Rosenblatt.
10.29 Agreement dated August 21, 1998 among RealSelect, RIN, the NAR,
NetSelect and NetSelect L.L.C.
10.30 Agreement among NetSelect, Inc., RealSelect, Inc., RIN and NAR
dated May 28, 1999.(1)
10.31 Second Amended and Restated Interactive Marketing Agreement among
RealSelect, Inc., NetSelect, Inc. and America Online, Inc. dated
[ ].(3)
10.32 Letter Agreement regarding rental site acquisition among the NAR,
RIN and RealSelect, Inc. dated May 17, 1999.(1)(2)
21.01 Subsidiaries of Registrant.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).(3)
23.02 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.03 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.04 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.05 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.06 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.07 Consent of Ernst & Young LLP, independent auditors
24.01 Power of Attorney (see page II-8).
27.01 Financial Data Schedule.
</TABLE>
- --------
Unless otherwise indicated, exhibits have previously been filed.
(1) Documents filed herewith.
(2) Certain information in these exhibits has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a
confidential treatment request under 17 C.F.R. Sections 200.80(b)(4),
200.83 and 230.46.
(3) To be supplied by amendment.
II-6
<PAGE>
(b) Financial Statement Schedules
Financial statement schedules are omitted because the information called
for is not required or is shown either in the financial statements or the
notes thereto.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Thousand Oaks, State of
California, on the 17th day of June, 1999.
HomeStore.com, Inc.
/s/ Stuart H. Wolff
By:__________________________________
Stuart H. Wolff
Chairman of the Board and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Stuart H. Wolff, Ph.D., John M.
Giesecke, Jr. and David M. Rosenblatt, and each of them, his or her true and
lawful attorneys-in-fact and agents with full power of substitution, for him
or her and in his or her name, place and stead, in any and all capacities, to
sign any and all amendments (including post-effective amendments) to this
Registration Statement, and to sign any registration statement for the same
offering covered by the Registration Statement that is to be effective upon
filing pursuant to Rule 462(b) promulgated under the Securities Act, and all
post-effective amendments thereto, and to file the same, with all exhibits
thereto and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his, her or their substitute or substitutes, may lawfully do or cause
to be done or by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on
the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
Principal Executive Officer:
<S> <C> <C>
/s/ Stuart H. Wolff Chairman of the Board, Chief June 17, 1999
____________________________________ Executive Officer and
Stuart H. Wolff Director
Principal Financial Officer and
Principal Accounting Officer:
/s/ John M. Giesecke, Jr. Chief Financial Officer and June 17, 1999
____________________________________ Secretary
John M. Giesecke, Jr.
Additional Directors:
/s/ Richard R. Janssen Director June 17, 1999
____________________________________
Richard R. Janssen
/s/ Michael C. Brooks Director June 17, 1999
____________________________________
Michael C. Brooks
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James G. Brown Director June 17, 1999
____________________________________
James G. Brown
/s/ L. John Doerr Director June 17, 1999
____________________________________
L. John Doerr
/s/ Joe F. Hanauer Director June 17, 1999
____________________________________
Joe F. Hanauer
/s/ William E. Kelvie Director June 17, 1999
____________________________________
William E. Kelvie
/s/ Kenneth K. Klein Director June 17, 1999
____________________________________
Kenneth K. Klein
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
------- -------------
<C> <S>
2.04 Agreement and Plan of Reorganization/Merger between NetSelect, Inc.
and SpringStreet.com
3.01 Registrant's Amended and Restated Certificate of Incorporation dated
February 2, 1999.
3.03 Registrant's Amended and Restated Bylaws dated February 4, 1999.
3.05.2 RealSelect, Inc.'s Certificate of Amendment to Certificate of
Incorporation dated November 25, 1996.
10.02.2 First Amendment of Operating Agreement between REALTORS(R)
Information Network, Inc. and RealSelect, Inc. dated December 27,
1996.
10.02.3 Amendment No. 2 to Operating Agreement between REALTORS(R)
Information Network, Inc. and RealSelect, Inc. dated May 28, 1999.
10.03 Master Agreement dated November 26, 1996, among NetSelect, Inc.,
NetSelect, L.L.C., RealSelect, Inc., CDW Internet, L.L.C., Whitney
Equity Partners, L.P., Allen & Co., InfoTouch Corporation, and
REALTORS(R) Information Network, Inc.
10.20 InfoTouch Corporation 1994 Stock Incentive Plan.
10.25 401(k) Plan.
10.30 Agreement among NetSelect, Inc., RealSelect, Inc., RIN and NAR dated
May 28, 1999
10.32 Letter Agreement regarding rental site acquisition among the NAR, RIN
and RealSelect, Inc. dated May 17, 1999.
</TABLE>
<PAGE>
EXHIBIT 2.04
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
NETSELECT, INC.,
AVENUE ACQUISITION CORPORATION
AND
SPRINGSTREET, INC.
Dated as of May 19, 1999
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TABLE OF CONTENTS
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ARTICLE 1. The Merger................................................................................................ 2
1.1 The Merger......................................................................................... 2
1.2 Effective Time..................................................................................... 2
1.3 Effect of the Merger............................................................................... 2
1.4 Articles of Incorporation; Bylaws.................................................................. 2
1.5 Directors and Officers............................................................................. 3
1.6 Merger Consideration............................................................................... 3
1.7 Dissenting Shares for Holders of Street Capital Stock.............................................. 6
1.8 Surrender of Certificates.......................................................................... 7
ARTICLE 2. Representations and Warranties of Street.................................................................. 9
2.1 Organization of Street............................................................................. 10
2.2 Street Capital Structure........................................................................... 10
2.3 Obligations With Respect to Capital Stock.......................................................... 12
2.4 Authority; Non-Contravention....................................................................... 12
2.5 Street Financial Statements........................................................................ 14
2.6 Absence of Certain Changes or Events............................................................... 14
2.7 Taxes.............................................................................................. 14
2.8 Title to Properties; Absence of Liens and Encumbrances............................................. 16
2.9 Intellectual Property.............................................................................. 17
2.10 Compliance; Permits; Restrictions.................................................................. 19
2.11 Litigation......................................................................................... 20
2.12 Brokers' and Finders' Fees......................................................................... 20
2.13 Interested Party Transactions...................................................................... 20
2.14 Employee Benefit Plans............................................................................. 21
2.15 Environmental Matters.............................................................................. 24
2.16 Year 2000 Compliance............................................................................... 25
2.17 Agreements, Contracts and Commitments.............................................................. 26
2.18 Board Approval..................................................................................... 27
2.19 Insurance.......................................................................................... 27
ARTICLE 3. Representations and Warranties of Select and Sub.......................................................... 28
3.1 Organization of Select............................................................................. 28
3.2 Select Capital Structure........................................................................... 28
3.3 Obligations With Respect to Capital Stock.......................................................... 29
3.4 Authority; Non-Contravention....................................................................... 30
3.5 Select Financial Statements........................................................................ 31
3.6 Absence of Certain Changes or Events............................................................... 31
3.7 Taxes.............................................................................................. 32
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3.8 Title to Properties; Absence of Liens and Encumbrances............................................. 33
3.9 Intellectual Property.............................................................................. 33
3.10 Compliance; Permits; Restrictions.................................................................. 35
3.11 Litigation......................................................................................... 36
3.12 Brokers' and Finders' Fees......................................................................... 36
3.13 Environmental Matters.............................................................................. 36
3.14 Year 2000 Compliance............................................................................... 37
3.15 Agreements, Contracts and Commitments.............................................................. 37
3.16 Employee Benefit Plans............................................................................. 37
3.17 Board Approval..................................................................................... 38
ARTICLE 4. Conduct Prior to the Effective Time....................................................................... 38
4.1 Conduct of Business of Street...................................................................... 38
4.2 Street Non-Solicitation............................................................................ 40
ARTICLE 5. Additional Agreements..................................................................................... 42
5.1 Fairness Hearing; Shareholder Approval............................................................. 42
5.2 Restrictions on Transfer........................................................................... 43
5.3 Access to Information.............................................................................. 44
5.4 Confidentiality.................................................................................... 44
5.5 Expenses........................................................................................... 45
5.6 Public Disclosure.................................................................................. 45
5.7 Consents........................................................................................... 45
5.8 FIRPTA Compliance.................................................................................. 45
5.9 Reasonable Efforts................................................................................. 45
5.10 Notification of Certain Matters.................................................................... 45
5.11 Directors' and Officers' Indemnification........................................................... 46
5.12 Cooperation of Independent Accountants............................................................. 46
5.13 Termination of 401(k) Plan......................................................................... 47
5.14 Information Supplied............................................................................... 47
ARTICLE 6. Conditions to the Merger.................................................................................. 48
6.1 Conditions to Obligations of Each Party to Effect the Merger....................................... 48
6.2 Conditions to Obligations of Select and Sub........................................................ 49
6.3 Conditions to the Obligations of Street............................................................ 50
ARTICLE 7. Survival of Representations and Warranties; Escrow........................................................ 51
7.1 Survival of Representations and Warranties......................................................... 51
7.2 Escrow Arrangements................................................................................ 51
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(continued)
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ARTICLE 8. Termination, Amendment and Waiver......................................................................... 58
8.1 Termination........................................................................................ 58
8.2 Effect of Termination.............................................................................. 60
8.3 Amendment.......................................................................................... 60
8.4 Extension; Waiver.................................................................................. 60
ARTICLE 9. General Provisions........................................................................................ 60
9.1 Notices............................................................................................ 60
9.2 Interpretation..................................................................................... 62
9.3 Counterparts....................................................................................... 62
9.4 Entire Agreement; Assignment....................................................................... 62
9.5 Severability....................................................................................... 62
9.6 Other Remedies..................................................................................... 62
9.7 Governing Law...................................................................................... 62
9.8 Rules of Construction.............................................................................. 63
9.9 Attorneys'Fees..................................................................................... 63
</TABLE>
Exhibit A Form of Non-Competition and Employment Agreement
Exhibit B Form of Restated Certificate of Incorporation
Exhibit C Form of Marcus & Millichap Letter Agreement Amendment
Exhibit D Street Schedules
Exhibit E Select Schedules
Exhibit F Schedules to Merger Agreement
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<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of May 19, 1999 by and among NetSelect, Inc., a Delaware
corporation ("Select"), Avenue Acquisition Corporation, a Delaware corporation
and a wholly-owned subsidiary of Select ("Sub"), SpringStreet, Inc., a
California corporation ("Street") and, with respect to Article 7 only, Jay Hoag,
as Securityholder Agent, and U.S. Bank Trust, N.A. as Escrow Agent.
RECITALS
A. The Boards of Directors of each of Select, Sub and Street believe it is
in the best interests of each company and the shareholders of each company that
Select acquire Street through the statutory merger of Sub with and into Street
(the "Merger") with Street being the surviving corporation in the Merger and, in
furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, all of the issued and
outstanding shares of capital stock of Street (other than Dissenting Shares, as
defined in Section 1.7(a) herein and any shares owned by Select) and all
options, warrants and other rights to acquire any shares of capital stock of
Street shall be converted into the right to receive shares of capital stock of
Select.
C. A portion of the shares of capital stock of Select otherwise issuable
by Select in connection with the Merger shall be placed in escrow and held by
the Escrow Agent pursuant to the escrow agreement set forth in Article 7 hereof
and the release of such shares shall be contingent upon certain events and
conditions as set forth in Article 7.
D. It is intended by the parties hereto that the Merger shall constitute a
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
E. As a material inducement for Select to consummate the Merger, certain
key employees of Street will enter into a non-competition and employment
agreement in the form attached hereto as Exhibit A (the "Non-Competition and
Employment Agreement") with Select, each of which shall become effective as of
the Effective Time (as defined herein).
F. Concurrent with the execution and delivery of this Agreement, as a
material inducement to Select to enter into this Agreement, certain shareholders
of Street are executing and delivering voting agreements (the "Shareholder
Support Agreements") to Select.
G. Street on the one hand, and Select and Sub on the other hand, desire to
make certain representations, warranties, covenants and other agreements in
connection with the Merger.
<PAGE>
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the parties agree as follows:
ARTICLE 1.
The Merger
The Merger. At the Effective Time (as defined in Section 1.2) and subject
to and upon the terms and conditions of this Agreement and the applicable
provisions of the California Corporations Code ("California Law") and the
Delaware General Corporation Law ("Delaware Law"), Sub shall be merged with and
into Street, the separate corporate existence of Sub shall cease and Street
shall continue as the surviving corporation. The surviving corporation after the
Merger is sometimes referred to hereinafter as the "Surviving Corporation."
Effective Time. Unless this Agreement is earlier terminated pursuant to
Section 8.1, the closing of the Merger (the "Closing") will take place as
promptly as practicable, but no later than two (2) business days following
satisfaction or waiver of the conditions set forth in Article 6, at the offices
of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California,
unless another place or time is agreed to in writing by Select and Street. The
date upon which the Closing actually occurs is herein referred to as the
"Closing Date." On the Closing Date, the parties hereto shall cause the Merger
to be consummated by filing an Agreement of Merger (the "Merger Agreement") and
any other required instruments with the Secretary of State of the State of
California and the Secretary of State of the State of Delaware, in accordance
with the relevant provisions of applicable law (the later of the time of
acceptance of such filing by the Secretary of State of the State of California
or the Secretary of State of the State of Delaware of such filing being referred
to herein as the "Effective Time").
Effect of the Merger. At the Effective Time, the effect of the Merger shall
be as provided in the applicable provisions of California Law and Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
Street and Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Street and Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
Articles of Incorporation; Bylaws.
(a) Unless otherwise determined by Select prior to the Effective
Time, at the Effective Time, the Certificate of Incorporation (with such changes
as may be required by California Law) of Sub as in effect immediately prior to
the Effective Time shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended in accordance with California Law and as
provided in such Articles of Incorporation; provided, however, that at the
Effective Time, Article I of the Articles of Incorporation of the Surviving
Corporation shall be amended and restated in its entirety to read as follows:
"The name of the corporation is SpringStreet, Inc."
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(b) Unless otherwise determined by Select prior to the Effective
Time, the Bylaws of Sub as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation at the Effective Time, until
thereafter amended in accordance with California Law and as provided in the
Articles of Incorporation of the Surviving Corporation and such Bylaws.
Directors and Officers. Unless otherwise determined by Select prior to the
Effective Time, the directors of Sub immediately prior to the Effective Time
shall be the directors of Surviving Corporation, each to hold the office of a
director of the Surviving Corporation in accordance with the provisions of
California Law and the Articles of Incorporation and Bylaws of the Surviving
Corporation until their successors are duly elected and qualified. The officers
of Street immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, each to hold office in accordance with the provisions of
the Bylaws of the Surviving Corporation.
1.6 Merger Consideration
(a) Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
"Common Exchange Ratio" shall mean a number equal to the quotient
obtained by dividing (x) the Net Consideration Share Number by (y) the Total
Outstanding Shares less the aggregate number of outstanding shares of Street
Series C Preferred Stock immediately prior to the Effective Time (with the
result rounded to four decimal places and .5 being rounded up).
"Consideration Shares" shall mean the number of shares of Select
Common Stock and Select Series H Preferred Stock issuable to the Street
Shareholders pursuant to Section 1.6(b) hereof.
"Escrow Amount" shall mean that number of shares of Select Common
Stock and Select Series H Preferred Stock equal to ten percent (10%) of the
number of shares of Select Common Stock and Select Series H Preferred Stock
otherwise issuable to the Street Shareholders pursuant to Section 1.6(b) hereof.
"Exchange Ratios" shall mean Common Exchange Ratio, Preferred Exchange
Ratio and Series C Exchange Ratio.
"GAAP" shall mean U.S. generally accepted accounting principles.
"Knowledge" shall mean, with respect to Street or Select, what is
within the actual knowledge of any of the officers of Street or Select, as the
case may be.
"Net Consideration Share Number" shall mean 1,538,963.
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"Material Adverse Effect" shall mean any change, event or effect that
is materially adverse to the consolidated business, assets (including intangible
assets), financial condition or results of operations of Street or Select, as
applicable.
"Preferred Exchange Ratio" shall mean a number equal to the quotient
of (x) the Common Exchange Ratio, divided by (y) 2 (with the result rounded to
four decimal places and .5 being rounded up).
"Select Common Stock" shall have the meaning ascribed to it in Section
3.2 hereof.
"Select Series H Preferred Stock" shall mean the Series H Preferred
Stock of Select with the rights, preferences, privileges and restrictions set
forth on Exhibit B hereto (the "Restated Certificate").
"Series C Exchange Ratio" shall mean .0623.
"Street Capital Stock" shall mean shares of Street Common Stock,
Street Preferred Stock and any shares of other capital stock of Street.
"Street Common Stock" shall mean shares of common stock of Street.
"Street Convertible Securities" shall mean the Street Options and
other rights (other than Street Preferred Stock) to acquire or receive shares of
Street Capital Stock.
"Street Options" shall mean all issued and outstanding options to
purchase or otherwise acquire Street Capital Stock (whether or not vested) held
by officers, employees or directors of or consultants to Street (other than
Street Preferred Stock).
"Street Preferred Stock" shall mean shares of Street Series A
Preferred Stock, Street Series B Preferred Stock, Street Series C Preferred
Stock and Street Series D Preferred Stock.
"Street Series A Preferred Stock" shall mean shares of Series A
Preferred Stock of Street.
"Street Series B Preferred Stock" shall mean shares of Series B
Preferred Stock of Street.
"Street Series C Preferred Stock" shall mean shares of Series C
Preferred Stock of Street.
"Street Series D Preferred Stock" shall mean shares of Series D
Preferred Stock of Street.
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<PAGE>
"Street Shareholders" shall mean holders of any shares of Street
Capital Stock immediately prior to the Effective Time.
"Total Outstanding Shares" shall mean the aggregate number of shares
of Street Common Stock outstanding immediately prior to the Effective Time,
including Street Common Stock issuable upon the exercise of Street Options plus
the aggregate number of shares of Street Common Stock issuable, with or without
the passage of time or satisfaction of other conditions, upon exercise of or
conversion of all Street Convertible Securities and Street Preferred Stock
outstanding immediately prior to the Effective Time.
(b) Effect on Street Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of Street or the Street
Shareholders, each share of Street Capital Stock issued and outstanding
immediately prior to the Effective Time (other than any Dissenting Shares, as
defined in Section 1.7 hereof and any shares owned by Select, Sub or Street or
any direct or indirect wholly owned subsidiary thereof) shall be canceled and
extinguished and shall be converted automatically into the right to receive,
upon surrender of the certificate representing such shares of Street Capital
Stock and upon the terms and subject to conditions set forth below and
throughout this Agreement, including, without limitation, Sections 1.6(f), (g)
and (h) hereof and the escrow provisions set forth in Article 7 and/or described
in Section 1.8(b) hereof, (i) in the case of each share of Street Common Stock,
a number of shares of Select Common Stock equal to the Common Exchange Ratio,
(ii) and the case of each share of Street Preferred Stock (other than Street
Series C Preferred Stock), a number of shares of Select Series H Preferred Stock
equal to the Preferred Exchange Ratio and (iii) in the case of each share of
Street Series C Preferred Stock, a number of shares of Select Series H Preferred
Stock equal to the Series C Exchange Ratio.
(c) Assumption of Street Options. At the Effective Time, each
outstanding Street Option issued pursuant to Street's 1997 Incentive Stock Plan
(the "Street Option Plan") or otherwise, whether vested or unvested, will be
assumed by Select in connection with the Merger. Each Street Option so assumed
by Select under this Agreement shall continue to have, and be subject to, the
same terms and conditions set forth in the Street Option Plan and/or as provided
in the respective option agreements immediately prior to the Effective Time
(including, without limitation, any vesting schedule or repurchase rights),
except that (i) each Street Option will be exercisable for that number of whole
shares of Select Common Stock equal to the product of the number of shares of
Street Common Stock that were issuable upon exercise of such Street Option
immediately prior to the Effective Time multiplied by the Common Stock Exchange
Ratio, rounded down to the nearest whole number of shares of Select Common Stock
and (ii) the per share exercise price for the shares of Select Common Stock
issuable upon exercise of such assumed Street Option will be equal to the
quotient determined by dividing the exercise price per share of Street Capital
Stock at which such Street Option was exercisable immediately prior to the
Effective Time by the Common Stock Exchange Ratio, rounded up to the nearest
whole cent.
(d) Option Status. It is the intention of the parties hereto that the
Street Options assumed by Select following the Closing pursuant to this Section
1.6 will, to the extent permitted by
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<PAGE>
applicable law, qualify as incentive stock options as defined in Section 422 of
the Code, to the extent any such Street Options qualified as incentive stock
options immediately prior to the Effective Time.
(e) Withholding Taxes. Any number of shares of Select Common Stock
and/or Select Series H Preferred Stock issuable pursuant to Section 1.6(b) shall
be subject to, and reduced by, the amount of any state, federal and foreign
withholding taxes incurred (and not previously paid by or on behalf of Street)
in connection with the acquisition of Street Capital Stock upon the exercise of
Street Options, the acceleration of vesting of any Street Capital Stock or
Street Options, or the payment of a bonus in the form of Street Capital Stock,
if any.
(f) Fractional Shares. No fractional share of Select Common Stock or
Select Series H Preferred Stock shall be issued in the Merger. In lieu thereof,
any fractional share shall be rounded to the nearest whole share of Select
Common Stock or Select Series H Preferred Stock (with .5 being rounded up).
(g) Cancellation of Select-owned and Street-owned Stock. At the
Effective Time, by virtue of the Merger and without any action on the part of
any of the parties hereto, each share of Street Capital Stock owned by Select,
Sub, Street or any direct or indirect wholly-owned subsidiary thereof
immediately prior to the Effective Time, shall be cancelled and extinguished
without any conversion thereof.
(h) Capital Stock of Sub. At the Effective Time, by virtue of the
Merger and without any action on the part of any of the parties hereto, each
share of capital stock of Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock of the Surviving Corporation.
Each stock certificate of Sub evidencing ownership of any such shares shall
continue to evidence ownership of such shares of capital stock of the Surviving
Corporation.
(a) Adjustment of the Exchange Ratios. In the event that, prior to
the Effective Time, any stock split, combination, reclassification or stock
dividend with respect to the Select Common Stock and/or Select Series H
Preferred Stock, any change or conversion of Select Common Stock and/or Select
Series H Preferred Stock into other securities or any other dividend or
distribution with respect to the Select Common Stock and/or Select Series H
Preferred Stock should occur or, if a record date with respect to any of the
foregoing should occur, appropriate and proportionate adjustments shall be made
to the Common Exchange Ratio, Preferred Exchange Ratio and Series C Exchange
Ratio, as the case may be, and thereafter all references to the affected
Exchange Ratio(s) shall be deemed to be as so adjusted.
Dissenting Shares for Holders of Street Capital Stock.
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares of Street Capital Stock held by a holder who has demanded and
perfected appraisal rights for such shares in accordance with California Law and
who, as of the Effective Time, has not effectively
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<PAGE>
withdrawn or lost such appraisal rights ("Dissenting Shares"), shall not be
converted into or represent a right to receive Select Common Stock and/or Select
Series H Preferred Stock, as the case may be, pursuant to Section 1.6, but the
holder thereof shall only be entitled to such rights as are granted by
California Law.
(b) Notwithstanding the provisions of subsection (a), if any holder
of shares of Street Capital Stock who demands appraisal of such shares under
California Law shall effectively withdraw or lose (through failure to perfect or
otherwise) the right to appraisal, then, as of the later of the Effective Time
and the occurrence of such event, such holder's shares shall automatically be
converted into and represent only the right to receive Select Common Stock
and/or Select Series H Preferred Stock, as the case may be, as provided in
Section 1.6 (and subject to the provisions of Section 7.2 hereof), without
interest thereon, upon surrender of the certificate representing such shares.
(c) Street shall give Select (i) prompt notice of any written demands
for appraisal of any shares of Street Capital Stock, withdrawals of such
demands, and any other instruments served pursuant to California Law and
received by Street and (ii) the opportunity to participate in all negotiations
and proceedings with respect to demands for appraisal under California Law.
Street shall not, except with the prior written consent of Select, voluntarily
make any payment with respect to any demands for appraisal of capital stock of
Street or offer to settle or settle any such demands.
Surrender of Certificates.
(d) Exchange Agent. The Secretary of Select shall serve as exchange
agent (the "Exchange Agent") in the Merger.
(e) Select to Provide Select Common Stock and Select Series H
Preferred Stock. Prior to the Closing, Select shall make available to the
Exchange Agent for exchange in accordance with this Article 1 the shares of
Select Common Stock and Select Series H Preferred Stock issuable to Street
Shareholders pursuant to Section 1.6 in exchange for outstanding shares of
Street Capital Stock, less the Escrow Amount which Select shall deposit into the
Escrow Fund (as defined in Section 7.2(a) hereof) on behalf of the Street
Shareholders. The portion of the Escrow Amount contributed on behalf of each
Street Shareholder shall be in proportion to the aggregate number of shares of
Select Common Stock and/or Select Series H Preferred Stock, as the case may be,
each such Street Shareholder would otherwise be entitled to receive in the
Merger (excluding any shares of Select Common Stock issuable upon exercise of
any assumed Street Options) by virtue of ownership of outstanding shares of
Street Capital Stock immediately prior to the Effective Time.
(f) Exchange Procedures. As soon as practicable following the Closing
Date, Select shall cause to be mailed to each Street Shareholder (i) a letter of
transmittal (which shall be in such form and contain such provisions as Select
may reasonably specify and shall specify that delivery shall be effected, and
risk of loss and title to the certificates (the "Certificates") which
immediately prior to the Effective Time represent outstanding shares of Street
Capital Stock whose shares are
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<PAGE>
converted into the right to receive such Street Shareholder's pro rata portion
of the Consideration Shares pursuant to Section 1.6, shall pass, only upon
delivery of the Certificates to the Exchange Agent at the Closing) and (ii)
instructions for use in effecting the surrender at the Closing of the
Certificates in exchange for certificates representing such Street Shareholder's
pro rata portion of the Consideration Shares. Upon surrender of a Certificate at
the Closing for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Select, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
the Street Shareholder shall be entitled to receive, and the Exchange Agent
shall promptly deliver in exchange therefor, a certificate bearing the legend
set forth in Section 5.2 hereof representing the number of whole shares equal to
the Consideration Shares (less the number of shares of Select Common Stock
and/or Select Series H Preferred Stock, as the case may be, to be deposited in
the Escrow Fund on such holder's behalf pursuant to Section 1.8(b) and Article 7
hereof) to which such holder is entitled pursuant to Section 1.6, and the
Certificate so surrendered shall forthwith be canceled. As soon as practicable
after the Closing Date, and subject to and in accordance with the provisions of
Article 7 hereof, Select shall cause to be distributed to the Escrow Agent (as
defined in Article 7) a certificate or certificates representing that number of
shares of Select Common Stock and Select Series H Preferred Stock equal to the
Escrow Amount which shares shall be registered in the name of the Escrow Agent.
Such shares shall be beneficially owned by the holders on whose behalf such
shares were deposited in the Escrow Fund and shall be available to compensate
Select as provided in Article 7. Until so surrendered, each outstanding
Certificate that, prior to the Effective Time, represented shares of Street
Capital Stock will be deemed from and after the Effective Time, for all
corporate purposes, other than the payment of dividends, to evidence the
ownership of the number of full shares of Select Common Stock and/or Select
Series H Preferred Stock, as the case may be, into which such shares of Street
Capital Stock shall have been so converted.
(g) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
Select Common Stock or the Select Series H Preferred Stock, as the case may be,
with a record date after the Effective Time will be paid to the holder of any
unsurrendered Certificate with respect to the shares of Select Common Stock
and/or Select Series H Preferred Stock represented thereby until the holder of
record of such Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Certificate, there shall be paid
to the record holder of the certificates representing whole shares of Select
Common Stock and/or Select Series H Preferred Stock, as the case may be, issued
in exchange therefor, plus the amount of dividends or other distributions
(without interest) with a record date after the Effective Time theretofore paid
with respect to such whole shares of Select Common Stock and/or Select Series H
Preferred Stock.
(h) Transfers of Ownership. If any certificate for shares of Select
Common Stock and/or Select Series H Preferred Stock is to be issued in a name
other than that in which the Certificate surrendered in exchange therefor is
registered, it will be a condition of the issuance thereof that the Certificate
so surrendered will be properly endorsed and otherwise in proper form for
transfer and that the person requesting such exchange will have paid to Select
or any agent
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<PAGE>
designated by it any transfer or other taxes required by reason of the issuance
of a certificate for shares of Select Common Stock and/or Select Series H
Preferred Stock, as the case may be, in any name other than that of the
registered holder of the Certificate surrendered.
(i) Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing shares of Street Capital Stock shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed certificates, upon the delivery by the holder thereof of an
affidavit of that fact by the holder thereof containing customary
indemnification provisions.
(j) No Liability. Notwithstanding anything to the contrary in this
Section 1.8, neither Select nor any party hereto shall be liable to a holder of
shares of Select capital stock and/or Street Capital Stock for any amount
properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(k) No Further Ownership Rights in Street Capital Stock. The shares
of Select Common Stock and Select Series H Preferred Stock issued in accordance
with the terms hereof shall be deemed to be full satisfaction of all rights
pertaining to shares of Street Capital Stock outstanding prior to the Effective
Time, and there shall be no further registration of transfers on the records of
Select of shares of Street Capital Stock that were outstanding prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
Select for any reason, they shall be canceled and exchanged as provided in this
Article 1.
(l) Tax Consequences. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section 368 of
the Code. The parties hereto adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Income Tax Regulations. Each party has consulted with its own tax advisers with
respect to the tax consequences of the Merger.
(m) Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Street, Select and Sub, the officers and directors of Street,
Select and Sub are fully authorized in the name of their respective corporations
or otherwise to take, and will take, all such lawful and necessary action.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF STREET
As of the date hereof and as of the Closing Date, Street represents and
warrants to Select and Sub, subject to the exceptions specifically disclosed in
writing in the disclosure letter and supplied
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<PAGE>
by Street to Select dated as of the date hereof and certified by a duly
authorized officer of Street (the "Street Schedules"), as follows:
Organization of Street.
(a) Street has no subsidiaries and Street owns no capital stock of,
or any equity interest of any nature in, any other entity, except for passive
investments in equity interests of public companies as part of the cash
management program of Street. Street has not agreed and is not obligated to
make, nor bound by any written, oral or other agreement, contract, subcontract,
lease, binding understanding, instrument, note, option, warranty, purchase
order, license, sublicense, insurance policy, benefit plan or legally binding
commitment or undertaking of any nature, as in effect as of the date hereof or
as may hereinafter be in effect ("Contract") under which Contract it may become
obligated to make, any future investment in or capital contribution to any other
entity. Street has not, at any time, been a general partner of any general
partnership, limited partnership or other entity.
(b) Street is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all necessary power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used; and (iii) to
perform its obligations under all Contracts by which it is bound.
(c) Street is qualified to do business as a foreign corporation, and
is in good standing, under the laws of all jurisdictions where the nature of its
business requires such qualification and where the failure to so qualify would
have a Material Adverse Effect (as defined in Section 1.6(a)) on Street.
(d) Street has delivered or made available to Select a true and
correct copy of the Articles of Incorporation and Bylaws of Street, each as
amended to date (collectively, the "Street Charter Documents"), and each such
instrument is in full force and effect. Street is not in violation of any of the
provisions of the Street Charter Documents.
(e) Street has delivered or made available to Select all proposed or
considered amendments to Street Charter Documents.
Street Capital Structure.
(a) The authorized capital stock of Street consists of: (i)
25,000,000 shares of Street Common Stock, of which 1,298,374 shares are
outstanding as of April 22, 1999; and (ii) 15,277,136 shares of Street Preferred
Stock, of which 14,554,062 shares are outstanding as of the date of this
Agreement. The Street Preferred Stock is designated as follows: (i) 3,750,000
shares of Street Series A Preferred Stock, all of which are outstanding as of
the date of this Agreement; (ii) 3,684,210 shares of Street Series B Preferred
Stock, all of which are outstanding as of the date of
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this Agreement; (iii) 4,689,080 shares of Street Series C Preferred Stock, all
of which are outstanding as of the date of this Agreement; and (iv) 3,153,846
shares of Street Series D Preferred Stock, 2,430,772 of which are outstanding as
of the date of this Agreement. All of the outstanding shares of capital stock of
Street have been duly authorized and validly issued, and are fully paid and
nonassessable. As of the date of this Agreement, there are no shares of Street
Common Stock held in treasury by Street. Upon consummation of the Merger, (A)
the shares of Select Common Stock and Select Series H Preferred Stock issued in
exchange for any shares of Street Capital Stock that are subject to a Contract
pursuant to which Street has the right to repurchase, redeem or otherwise
reacquire any shares of Street Capital Stock will, without any further act of
Select, Street or any other person, become subject to the restrictions,
conditions and other provisions contained in such Contract (subject to the
provisions thereof as in effect on the date hereof) and (B) Select will
automatically succeed to and become entitled to exercise Street's rights and
remedies under any such Contract.
(b) As of April 22, 1999: (i) 2,226,279 shares of Street Common Stock
are subject to issuance pursuant to outstanding options to purchase Street
Common Stock under the Street Option Plan or otherwise; and (ii) 150,347 shares
of Street Common Stock are reserved for future issuance under the Street Option
Plan. Part 2.2(b) of the Street Schedules sets forth the following information
with respect to each Street Option outstanding as of the date of this Agreement:
(i) the name and address of the optionee and optionee's position at Street; (ii)
the number of shares of Street Common Stock subject to such Street Option; (iii)
the exercise price of such Street Option; (iv) the date on which such Street
Option was granted; (v) the applicable vesting schedule; (vi) the date on which
such Street Option expires; and (vii) whether the exercisability of such option
will be accelerated in any way by the transactions contemplated by this
Agreement, and indicates the extent of any such acceleration. Street has made
available to Select accurate and complete copies of all stock option plans
pursuant to which Street has granted stock options that are currently
outstanding and the form of all stock option agreements evidencing such options.
All shares of Street Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, would be duly authorized, validly issued, fully paid
and nonassessable. Except as set forth in Part 2.2(b)(i) of the Street
Schedules, there are no commitments or agreements of any character to which
Street is bound obligating Street to accelerate the vesting of any Street Option
as a result of the Merger or the transactions contemplated by this Agreement.
(c) All outstanding shares of Street Capital Stock and all
outstanding Street Options have been issued and granted in compliance with (i)
all applicable securities laws and other applicable Legal Requirements (as
defined below) and (ii) all requirements set forth in applicable Contracts. For
the purposes of this Agreement, "Legal Requirements" means any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Entity (as defined
below).
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Obligations With Respect to Capital Stock.
Except as set forth Section 2.2(b) hereof and in Part 2.3 of the Street
Schedules, there are no equity securities, partnership interests or similar
ownership interests of any class of any Street equity security, or any
securities exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except for securities Street owns free and
clear of all claims and Encumbrances (as defined below), as of the date of this
Agreement, there are no equity securities, partnership interests or similar
ownership interests of any class of equity security of any subsidiary of Street,
or any security exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. For the purposes of this Agreement
"encumbrances" means any lien, pledge, hypothecation, charge, mortgage, security
interest, encumbrance, claim, infringement, interference, option, right of first
refusal, preemptive right, community property interest or restriction of any
nature (including any restriction on the voting of any security, any restriction
on the transfer of any security or other asset, any restriction on the receipt
of any income derived from any asset, any restriction on the use of any asset
and any restriction on the possession, exercise or transfer of any other
attribute of ownership of any asset). Except as set forth in Part 2.3 of the
Street Schedules or as set forth in Section 2.2 hereof, there are no
subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which Street is a party or by
which it is bound obligating Street to issue, deliver or sell, or cause to be
issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause
the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of Street or obligating
Street to grant, extend, accelerate the vesting of or enter into any such
subscription, option, warrant, equity security, call, right, commitment or
agreement. As of the date of this Agreement, except as contemplated by this
Agreement and as set forth in Part 2.3 of the Street Schedules, there are no
registration rights and there is, except for the Shareholder Support Agreements,
no voting trust, proxy, rights plan, antitakeover plan or other agreement or
understanding to which Street is a party or by which it is bound with respect to
any equity security of any class of Street.
Authority; Non-Contravention.
(a) Street has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Street, subject only to the approval and
adoption of this Agreement and the approval of the Merger by Street's
shareholders and the filing of the Merger Agreement pursuant to California Law.
The affirmative vote of the holders of (i) a majority of each series of Street
Preferred Stock, each voting separately as a single class, (ii) sixty percent
(60%) of Street Preferred Stock voting together as a single class, (iii) a
majority of Street Common Stock voting together as a single class and (iv) a
majority of Street Common Stock and
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Street Preferred Stock voting together as a single class, is required to approve
and adopt this Agreement and approve the Merger. The vote of the shares of
Street Capital Stock in accordance with the terms of the Shareholder Support
Agreements, is sufficient for Street Shareholders to approve and adopt this
Agreement and approve the Merger. This Agreement has been duly executed and
delivered by Street and, assuming due execution and delivery by Select and Sub,
constitutes a valid and binding obligation of Street, enforceable against Street
in accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws and general principles of equity. The
execution and delivery of this Agreement by Street does not, and the performance
of this Agreement by Street will not, (i) conflict with or violate the Street
Charter Documents, subject to obtaining the approval and adoption of this
Agreement and the approval of the Merger by Street's shareholders as
contemplated in Section 5.1, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Street or by which Street or
any of its respective properties is bound or affected, subject to compliance
with the requirements set forth in Section 2.4(b) below or (iii) result in any
material breach of or constitute a material default (or an event that with
notice or lapse of time or both would become a material default) under, or
impair Street's rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a material lien or Encumbrance on
any of the material properties or assets of Street or any of its subsidiaries
pursuant to, any material note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise, concession, or other instrument or obligation
to which Street or any of its subsidiaries is a party or by which Street or any
of its subsidiaries or its or any of their respective assets are bound or
affected. Part 2.4(b) of the Street Schedules lists all consents, waivers and
approvals under any of Street's or any of its subsidiaries' agreements,
contracts, licenses or leases required to be obtained in connection with the
consummation of the transactions contemplated hereby, which, if individually or
in the aggregate not obtained, would result in a material loss of benefits to
Street, Select or the Surviving Corporation as a result of the Merger.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality, foreign or domestic
("Governmental Entity"), is required to be obtained or made by Street in
connection with the execution and delivery of this Agreement or the consummation
of the Merger, except for (i) the filing of the Merger Agreement with the
Secretary of State of the State of California and the Secretary of State of the
State of Delaware, (ii) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable securities laws, including obtaining the California Permit (as
defined in Section 5.1(a)), (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal, foreign and state securities (or related) laws, and the
securities or antitrust laws of any foreign country, and (iv) such other
consents, authorizations, filings, approvals and registrations which if not
obtained or made would not be material to Select, Sub or Street or have a
material adverse effect on the ability of the parties hereto to consummate the
Merger.
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Street Financial Statements.
Part 2.5 of the Street Schedules sets forth Street's audited balance sheet
as of December 31, 1998 and the related audited statements of income and cash
flow for the period from Street's inception to December 31, 1998 (the "Street
Audited Financials") and Street's unaudited balance sheet as of March 31, 1999
(the "Street Current Balance Sheet") and the related unaudited statements of
income and cash flow for the three months then ended (the "Street Unaudited
Financials" and, together with the Street Audited Financials, the "Street
Financials"). The Street Financials are correct in all material respects and
have been prepared in accordance with GAAP, applied on a basis consistent
throughout the periods indicated and consistent with each other except as may be
indicated therein. The Street Financials present fairly the financial
condition, operating results and cash flows of Street as of the dates and during
the periods indicated therein, subject in the case of the Street Unaudited
Financials, to normal year-end adjustments, which will not be material in amount
or significance.
Absence of Certain Changes or Events.
Since the date of the Street Current Balance Sheet until the date hereof
there has not been: (i) any Material Adverse Effect on Street, (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of Street Capital Stock,
or any purchase, redemption or other acquisition by Street of any of Street's
capital stock or any options, warrants, calls or rights to acquire any such
shares or other securities except for repurchases from employees following their
termination pursuant to the terms of their pre-existing stock option or purchase
agreements, (iii) any split, combination or reclassification of any of Street
Capital Stock, (iv) any granting by Street of any increase in compensation or
fringe benefits, except for normal increases of cash compensation in the
ordinary course of business consistent with past practice, or any payment by
Street of any bonus, except for bonuses made in the ordinary course of business
consistent with past practice, or any granting by Street of any increase in
sever ance or termination pay or any entry by Street into any currently
effective employment, severance, termination or indemnification agreement or any
agreement the benefits of which are contingent or the terms of which are
materially altered upon the occurrence of a transaction involving Street of the
nature contemplated hereby, (v) entry by Street into any licensing or other
agreement with regard to the acquisition or disposition of any material
Intellectual Property (as defined in Section 2.9) other than licenses in the
ordinary course of business consistent with past practice, (vi) any material
change by Street in its accounting methods, principles or practices, except as
required by concurrent changes in GAAP or (vii) any revaluation by Street of any
of its assets, including, without limitation, writing down the value of
capitalized inventory or writing off notes or accounts receivable other than in
the ordinary course of business and consistent with past practice.
Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax" or
"Taxes" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges,
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duties, impositions and liabilities relating to taxes, including taxes based
upon or measured by gross receipts, income, profits, sales, use and occupation,
and value added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with all interest,
penalties and additions imposed with respect to such amounts and any obligations
under any agreements or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) Street has timely filed all federal, state, local and
foreign returns, estimates, information statements and reports ("Returns")
relating to Taxes required to be filed by Street with any Tax authority, except
such Returns which are not material to Street. Street has paid all Taxes shown
to be due on such Returns.
(ii) Street as of the Effective Time will have withheld
all federal and state income taxes, Taxes pursuant to the Federal Insurance
Contribution Act ("FICA"), Taxes pursuant to the Federal Unemployment Tax Act
("FUTA") and other Taxes required to be withheld.
(iii) Street has not been delinquent in the payment of any
Tax nor is there any material Tax deficiency outstanding, proposed or assessed
against Street, nor has Street executed any unexpired waiver of any statute of
limitations on or extending the period for the assessment or collection of any
material Tax.
(iv) No audit or other examination of any Return of Street
by any Tax authority is presently in progress, nor has Street been notified of
any request for such an audit or other examination.
(v) No adjustment relating to any Returns filed by Street
has been proposed in writing formally or informally by any Tax authority to
Street or any of its representatives.
(vi) Street has no liability for unpaid Taxes which has
not been accrued for or reserved on the Street Current Balance Sheet, whether
asserted or unasserted, contingent or otherwise, which is material to Street,
other than any liability for unpaid Taxes that may have accrued since the date
of the Street Current Balance Sheet in connection with the operation of the
business of Street in the ordinary course.
(vii) There is no contract, agreement, plan or arrangement
to which Street is a party as of the date of this Agreement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of Street that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to Sections 280G,
404 or 162(m) of the Code.
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(viii) Street has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by Street.
(ix) Street is not a party to or has any obligation under
any tax-sharing, tax indemnity or tax allocation agreement or arrangement.
(x) Except as may be required as a result of the Merger,
Street has not been and will not be required to include any adjustment in
taxable income for any Tax period (or portion thereof) pursuant to Section 481
or Section 263A of the Code or any comparable provision under state or foreign
Tax laws as a result of transactions, events or accounting methods employed
prior to the Closing.
(xi) None of Street's assets are tax-exempt use property
within the meaning of Section 168(h) of the Code.
(xii) Part 2.7 of Street Schedules lists (A) any foreign
Tax holidays, (B) any inter-Street transfer pricing agreements, or other
arrangements that have been established by Street with any Tax authority and (C)
any expatriate programs or policies affecting Street.
Title to Properties; Absence of Liens and Encumbrances.
(a) Part 2.8(a)(i) of the Street Schedules lists all real property
leases to which Street is a party as of the date of this Agreement and each
amendment thereto that is in effect as of the date of this Agreement. All such
current leases are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event of default (or event which with notice or
lapse of time, or both, would constitute a default) that would give rise to a
material claim. Other than the leaseholds created under the real property leases
identified in Part 2.8(a)(i) of the Street Schedules, Street owns no interest in
real property.
(b) Street has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("Liens"), except as reflected in
the Street Financials and except for liens for taxes not yet due and payable,
statutory liens and such Liens or other imperfections of title and encumbrances,
if any, which are not material in character, amount or extent, and which do not
materially detract from the value, or materially interfere with the present use,
of the property subject thereto or affected thereby.
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Intellectual Property.
For the purposes of this Agreement, the following terms have the following
definitions:
"Intellectual Property" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United
States, international and foreign patents and applications therefor
and all reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof; (ii) all inventions
(whether patentable or not), invention disclosures, improvements,
trade secrets, proprietary information, know how, technology,
technical data and customer lists, and all documentation relating to
any of the foregoing; (iii) all copyrights, copyrights registrations
and applications therefor, and all other rights corresponding thereto
throughout the world; (iv) all industrial designs and any
registrations and applications therefor throughout the world; (v) all
trade names, logos, URLs, common law trademarks and service marks,
trademark and service mark registrations and applications therefor
throughout the world; (vi) all databases and data collections and all
rights therein throughout the world; (vii) all moral and economic
rights of authors and inventors, however denominated, throughout the
world and (viii) any similar or equivalent rights to any of the
foregoing anywhere in the world.
"Street Intellectual Property" shall mean any Intellectual Property
that is owned by, or exclusively licensed to, Street.
"Registered Intellectual Property" means all United States,
international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or
other registrations or applications related to trademarks; (iii)
registered copyrights and applications for copyright registration; and
(iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document
issued, filed with, or recorded by any state, government or other
public legal authority.
"Street Registered Intellectual Property" means all of the Registered
Intellectual Property owned by, or filed in the name of, Street.
(a) No material Street Intellectual Property or product or service of
Street is subject to any proceeding or outstanding decree, order, judgment,
agreement or stipulation restricting in any manner the use, transfer, or
licensing thereof by Street, or which may affect the validity, use or
enforceability of such Street Intellectual Property.
(b) Part 2.9(b) of the Street Schedules is a complete and accurate
list of all Street Registered Intellectual Property as of the date hereof and
specifies, where applicable, the jurisdictions in which each such item of Street
Registered Intellectual Property has been issued or
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registered or in which an application for such issuance and registration has
been filed, including the respective registration or application numbers. Each
material item of Street Registered Intellectual Property is valid and
subsisting, all necessary registration, maintenance and renewal fees currently
due in connection with such Registered Intellectual Property have been made and
all necessary documents, recordations and certificates in connection with such
Registered Intellectual Property have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property.
(c) Street owns and has good and exclusive title to, or has license
(sufficient for the conduct of its business as currently conducted and as
currently proposed to be conducted) to, each material item of Street
Intellectual Property or other Intellectual Property used by Street free and
clear of any lien or encumbrance (excluding licenses and related restrictions);
and Street is the exclusive owner of all trademarks and trade names used in
connection with the operation or conduct of the business of Street, including
the sale of any products or the provision of any services by Street.
(d) Street owns exclusively, and has good title to, all copyrighted
works that are Street products or which Street otherwise expressly purports to
own.
(e) To the extent that any material Intellectual Property has been
developed or created by a third party for Street, Street has a written agreement
with such third party with respect thereto and Street thereby either (i) has
obtained ownership of, and is the exclusive owner of or (ii) has obtained a
license (sufficient for the conduct of its business as currently conducted and
as currently proposed to be conducted) to all such third party's Intellectual
Property in such work, material or invention by operation of law or by valid
assignment, to the fullest extent it is legally possible to do so.
(f) Street has not transferred ownership of, or granted any exclusive
license with respect to, any Intellectual Property that is or was material to
Street Intellectual Property, to any third party.
(g) The Street Schedules list all material contracts, licenses and
agreements to which Street is a party as of the date hereof (i) with respect to
Street Intellectual Property licensed or transferred to any third party (other
than end-user licenses in the ordinary course); or (ii) pursuant to which a
third party has licensed or transferred any material Intellectual Property to
Street.
(h) All material contracts, licenses and agreements relating to
Street Intellectual Property are in full force and effect. The consummation of
the transactions contemplated by this Agreement will neither violate nor result
in the breach, modification, cancellation, termination or suspension of such
contracts, licenses and agreements. Street is in material compliance with, and
has not materially breached any term any of such contracts, licenses and
agreements and, to the Knowledge of Street, all other parties to such contracts,
licenses and agreements are in compliance with, and have not materially breached
any term of, such contracts, licenses and agreements.
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Following the Closing Date, the Surviving Corporation will be permitted to
exercise all of Street's rights under such contracts, licenses and agreements to
the same extent Street would have been able to had the transactions contemplated
by this Agreement not occurred and without the payment of any additional amounts
or consideration other than ongoing fees, royalties or payments which Street
would otherwise be required to pay.
(i) The operation of the business of Street as such business
currently is conducted, including Street's design, development, manufacture,
marketing and sale of the products or services of Street (including with respect
to products and services currently under development) has not, does not and will
not infringe or misappropriate the Intellectual Property of any third party in
any respect adverse to such party (including, without limitation, United States
Patent Nos. 5,032,989 and 4,870,576) or constitute unfair competition or trade
practices under the laws of any jurisdiction.
(j) Street has not received notice from any third party that the
operation of the business of Street or any act, product or service of Street,
infringes or misappropriates the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(k) To the Knowledge of Street, no person has or is infringing or
misappropriating, in any respect materially adverse to Street, any Street
Intellectual Property.
(l) Street has taken reasonable steps to protect Street's rights in
Street's confidential information and trade secrets that it wishes to protect or
any trade secrets or confidential information of third parties provided to
Street, and, without limiting the foregoing, Street has and enforces a policy
requiring each employee and contractor to execute a proprietary
information/confidentiality and invention assignment agreement and all current
and former employees and contractors of Street have executed such an agreement,
except where the failure to do so is not reasonably expected to be material to
Street.
Compliance; Permits; Restrictions.
(a) Street is not in any material respect, in conflict with, or in
default or in violation of (i) any law, rule, regulation, order, judgment or
decree applicable to Street or by which Street or any of its respective
properties is bound or affected or (ii) any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Street is a party or by which Street or any of
its respective properties is bound or affected, except for conflicts, violations
and defaults that (individually or in the aggregate) would not cause Street to
lose any material benefit or incur any material liability. No investigation or
review by any Governmental Entity is pending or, to Street's Knowledge, has been
threatened against Street, nor, to Street's Knowledge, has any Governmental
Entity indicated an intention to conduct an investigation of Street. There is
no material agreement, judgment, injunction, order or decree binding upon Street
which has or would reasonably be expected to have the effect of prohibiting or
materially impairing
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any business practice of Street or Select, any acquisition of material property
by Street or the conduct of business by Street as currently conducted.
(b) Street holds, to the extent legally required, all permits,
licenses, variances, exemptions, orders and approvals from Governmental Entities
that are material to and required for the operation of the business of Street as
currently conducted (collectively, the "STREET PERMITS"). Street is in
compliance in all material respects with the terms of the Street Permits, except
where the failure to be in compliance with the terms of the Street Permits would
not be material to Street or Select.
Litigation.
Except as disclosed in Part 2.11 of the Street Schedules, there are no
claims, suits, actions or proceedings pending or, to the Knowledge of Street,
threatened against, relating to or affecting Street, before any court,
governmental department, commission, agency, instrumentality or authority, or
any arbitrator that seeks to restrain or enjoin the consummation of the
transactions contemplated by this Agreement or which would reasonably be
expected, either singularly or in the aggregate with all such claims, suits,
actions or proceedings, to be material and adverse to Street. No Governmental
Entity has at any time challenged or questioned in a writing delivered to Street
the legal right of Street to design, manufacture, offer or sell any of its
products or services in the present manner or style thereof. As of the date
hereof, to the Knowledge of Street, no event has occurred, and no claim, dispute
or other condition or circumstance exists, that will, or that would reasonably
be expected to, cause or provide a bona fide basis for a director or executive
officer of Street to seek indemnification from Street.
Brokers' and Finders' Fees.
Street has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
Interested Party Transactions.
Other than as set forth in Part 2.13 of the Street Schedules, no officer or
director of Street (nor, to the Knowledge of Street, any shareholder of Street
or any ancestor (up to once removed), sibling, descendant (up to once removed),
spouse, parent, subsidiary or other affiliate of any officer, director or
shareholder, or any trust, partnership or corporation in which any of such
persons has or has had an interest), has or has had, directly or indirectly, (i)
any material interest in any entity that furnished or sold, or furnishes or
sells, services, products or technology that Street furnishes or sells, or
proposes to furnish or sell, (ii) any material interest in any entity that
purchases from or sells or furnishes to Street any goods or services or (iii) a
material beneficial interest in any Contract other than employment or consulting
agreements with officers of Street and indemnification agreements with directors
and officers of Street, in each case previously provided or made available to
Select;
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provided, however, that ownership of no more than one percent (1%) of the
outstanding voting stock of a publicly traded corporation and no more than
percent (5%) of the outstanding equity of any other entity shall not be deemed a
material "interest in any entity" for purposes of this Section 2.13.
Employee Benefit Plans.
(a) Definitions. With the exception of the definition of "Affiliate"
set forth in Section 2.14(a)(i) below (which definition shall apply only to this
Section 2.14), for purposes of this Agreement, the following terms shall have
the meanings set forth below:
(i) "Affiliate" shall mean any other person or entity
under common control with Street within the meaning of Section 414(b), (c), (m)
or (o) of the Code and the regulations issued thereunder;
(ii) "Street Employee Plan" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or stock-
related awards, fringe benefits or other employee benefits or remuneration of
any kind, whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each "employee benefit plan," within the meaning
of Section 3(3) of ERISA which is or has been maintained, contributed to, or
required to be contributed to, by Street or any Affiliate for the benefit of any
Employee;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the United States Department of
Labor;
(v) "Employee" shall mean any current, former, or retired
employee, officer, or director of Street or any Affiliate;
(vi) "Employee Agreement" shall mean each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or similar agreement or contract between Street or any
Affiliate and any Employee or consultant;
(vii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of
1993, as amended;
(ix) "International Employee Plan" shall mean each Street
Employee Plan that has been adopted or maintained by Street, whether informally
or formally, for the benefit of Employees outside the United States;
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(x) "IRS" shall mean the Internal Revenue Service;
(xi) "Multiemployer Plan" shall mean any multiemployer
plan as defined in Section 4001(a)(3) of ERISA;
(xii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation; and
(xiii) "Pension Plan" shall mean each Street Employee Plan
which is an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA.
(b) Schedule. Part 2.14(b) of the Street Schedules contains an
accurate and complete list of each Street Employee Plan and each Employee
Agreement. Street does not have any plan or commitment to establish any new
Street Employee Plan, to modify any Street Employee Plan or Employee Agreement
(except to the extent required by law or to conform any such Street Employee
Plan or Employee Agreement to the requirements of any applicable law, in each
case as previously disclosed to Select in writing, or as required by this
Agreement), or to enter into any Street Employee Plan or Employee Agreement, nor
does it have any intention or commitment to do any of the foregoing.
(c) Documents. Street has provided or made available to Select: (i)
correct and complete copies of all documents embodying to each Street Employee
Plan and each Employee Agreement including all amendments thereto and written
interpretations thereof; (ii) the most recent annual actuarial valuations, if
any, prepared for each Street Employee Plan; (iii) the three (3) most recent
annual reports (Form Series 5500 and all schedules and financial statements
attached thereto), if any, required under ERISA or the Code in connection with
each Street Employee Plan or related trust; (iv) if Street Employee Plan is
funded, the most recent annual and periodic accounting of Street Employee Plan
assets; (v) the most recent summary plan description together with the summary
of material modifications thereto, if any, required under ERISA with respect to
each Street Employee Plan; (vi) all IRS determination, opinion, notification and
advisory letters, and rulings relating to Street Employee Plans and copies of
all applications and correspondence to or from the IRS or the DOL with respect
to any Street Employee Plan; (vii) all material written agreements and contracts
relating to each Street Employee Plan, including, but not limited to,
administrative service agreements, group annuity contracts and group insurance
contracts; (viii) all communications material to any Employee or Employees
relating to any Street Employee Plan and any proposed Street Employee Plans, in
each case, relating to any amendments, terminations, establishments, increases
or decreases in benefits, acceleration of payments or vesting schedules or other
events which would result in any material liability to Street; (ix) all COBRA
forms and related notices; and (x) all registration statements and prospectuses
prepared in connection with each Street Employee Plan.
(d) Employee Plan Compliance. (i) Street has performed in all
material respects all obligations required to be performed by it under, is not
in default or violation of, and has no
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Knowledge of any default or violation by any other party to each Street Employee
Plan, and each Street Employee Plan has been established and maintained in all
material respects in accordance with its terms and in compliance with all
applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA or the Code; (ii) each Street Employee Plan intended to qualify
under Section 401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code has either received a favorable determination letter
from the IRS with respect to each such Plan as to its qualified status under the
Code, including all amendments to the Code effected by the Tax Reform Act of
1986 and subsequent legislation, or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for such
a determination letter and make any amendments necessary to obtain a favorable
determination; (iii) no "prohibited transaction," within the meaning of Section
4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt
under Section 408 of ERISA or 4975 of the Code, has occurred with respect to any
Street Employee Plan; (iv) there are no actions, suits or claims pending, or, to
the Knowledge of Street, threatened or reasonably anticipated (other than
routine claims for benefits) against any Street Employee Plan or against the
assets of any Street Employee Plan; (v) each Street Employee Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Select, Street or any of its
Affiliates (other than ordinary administration expenses typically incurred in a
termination event); (vi) there are no audits, inquiries or proceedings pending
or, to the Knowledge of Street or any Affiliates, threatened by the IRS or DOL
with respect to any Street Employee Plan; and (vii) neither Street nor any
Affiliate is subject to any penalty or tax with respect to any Street Employee
Plan under Section 402(i) of ERISA or Sections 4975 through 4980 of the Code.
(e) Pension Plans. Street does not now, nor has it ever, maintained,
established, sponsored, participated in, or contributed to, any Pension Plan
which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Street contributed to or been
requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Street Employee Plan provides,
or has any liability to provide, retiree life insurance, retiree health or other
retiree employee welfare benefits to any person for any reason, except as may be
required by COBRA or other applicable statute, and Street has never represented,
promised or contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) or any other person that such
Employee(s) or other person would be provided with retiree life insurance,
retiree health or other retiree employee welfare benefit, except to the extent
required by statute.
(h) Neither Street nor any Affiliate has, prior to the Effective
Time, and in any material respect, violated any of the health care continuation
requirements of COBRA, the requirements of FMLA or any similar provisions of
state law applicable to its Employees.
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(i) Effect of Transaction. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any Street Employee Plan or Employee Agreement that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligation to
fund benefits with respect to any Employee.
(j) Employment Matters. Street: (i) is in compliance in all material
respects with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to Employees; (ii)
has withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to Employees; (iii) is not liable for any
arrears of wages or any taxes or any penalty for failure to comply with any of
the foregoing; and (iv) is not liable for any material payment to any trust or
other fund or to any governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for Employees (other than routine payments to be made in the normal
course of business and consistent with past practice). There are no pending,
threatened or reasonably anticipated claims or actions against Street under any
worker's compensation policy or long-term disability policy. To Street's
Knowledge, no employee of Street has violated any employment contract,
nondisclosure agreement or noncompetition agreement by which such employee is
bound due to such employee being employed by Street and disclosing to Street or
using trade secrets or proprietary information of any other person or entity.
(k) Labor. No work stoppage or labor strike against Street is
pending, threatened or reasonably anticipated. Street has no Knowledge of any
activities or proceedings of any labor union to organize any Employees. There
are no actions, suits, claims, labor disputes or grievances pending, or, to the
Knowledge of Street, threatened or reasonably anticipated relating to any labor,
safety or discrimination matters involving any Employee, including, without
limitation, charges of unfair labor practices or discrimination complaints,
which, if adversely determined, would, individually or in the aggregate, result
in any material liability to Street. Street has not engaged in any unfair labor
practices within the meaning of the National Labor Relations Act. Street is not
presently, nor has it been in the past, a party to, or bound by, any collective
bargaining agreement or union contract with respect to Employees and no
collective bargaining agreement is being negotiated by Street.
(l) International Employee Plan. Street does not now, nor has it ever
had the obligation to, maintain, establish, sponsor, participate in, or
contribute to any International Employee Plan.
Environmental Matters.
(a) Hazardous Material. Except as would not result in material
liability to Street, no underground storage tanks and no amount of any substance
that has been designated by any
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Governmental Entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum, urea-
formaldehyde and all substances listed as hazardous substances pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial supplies
(a "Hazardous Material") are present, as a result of the actions of Street or
any affiliate of Street, or, to Street's Knowledge, as a result of any actions
of any third party or otherwise, in, on or under any property, including the
land and the improvements, ground water and surface water thereof, that Street
or any of its subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not result in a
material liability to Street (in any individual case or in the aggregate) (i)
Street has not transported, stored, used, manufactured, disposed of, released or
exposed its employees or others to Hazardous Materials in violation of any law
in effect on or before the Closing Date and (ii) Street has not disposed of,
transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material (collectively
"Hazardous Materials Activities") in violation of any rule, regulation, treaty
or statute promulgated by any Governmental Entity in effect prior to or as of
the date hereof to prohibit, regulate or control Hazardous Materials or any
Hazardous Material Activity.
(c) Permits. Street holds all environmental approvals, permits,
licenses, clearances and consents (the "Street Environmental Permits") necessary
for the conduct of Street's and its subsidiaries' Hazardous Material Activities
and other businesses of Street and its subsidiaries as such activities and
businesses are currently being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to the
Knowledge of Street, no action, proceeding, revocation proceeding, amendment
procedure, writ or injunction has been threatened by any Governmental Entity
against Street or any of its subsidiaries in a writing delivered to Street
concerning any Street Environmental Permit, Hazardous Material or any Hazardous
Materials Activity of Street. Street has no Knowledge of any fact or
circumstance which would involve Street in any environmental litigation or
impose upon Street any material environmental liability.
Year 2000 Compliance.
Except as disclosed in Part 2.16 of the Street Schedules, Street's products
and internal systems have been designed to ensure date and time entry
recognition, calculations that accommodate same century and multi-century
formulas and date values, leap year recognition and calculations, and date data
interface values that reflect the century. Street's products and internal
systems manage and manipulate data involving dates and times, including single
century formulas
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multi-century formulas, and do not cause an abnormal ending scenario within the
application or generate incorrect values or invalid results involving such
dates.
Agreements, Contracts and Commitments.
Except as otherwise set forth in Part 2.17 of the Street Schedules, as of
the date hereof Street is not a party to or bound by:
(a) any employment or consulting agreement, contract or commitment
currently in force with any officer or director or higher level employee or
member of Street's Board of Directors, other than those that are terminable by
Street or any of its subsidiaries on no more than thirty (30) days' notice
without liability or financial obligation, except to the extent general
principles of wrongful termination law may limit Street's ability to terminate
employees at will;
(b) any agreement of indemnification or any guaranty by Street
currently in force other than any agreement of indemnification entered into in
connection with the sale or license of software products in the ordinary course
of business;
(c) any agreement, contract or commitment containing any covenant
currently in force limiting in any respect the right of Street to engage in any
line of business or to compete with any person or granting any exclusive
distribution rights;
(d) any agreement, contract or commitment currently in force relating
to the disposition or acquisition by Street after the date of this Agreement of
a material amount of assets not in the ordinary course of business or pursuant
to which Street has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise other than Street's
subsidiaries;
(e) any joint marketing or development agreement currently in force
under which Street or any of its subsidiaries have continuing material
obligations to jointly market any product, technology or service and which may
not be canceled without penalty upon notice of ninety (90) days or less, or any
material agreement pursuant to which Street has continuing material obligations
to jointly develop any intellectual property that will not be owned, in whole or
in part, by Street and which may not be canceled without penalty upon notice of
ninety (90) days or less;
(f) any agreement, contract or commitment currently in force to
provide source code to any third party for any product or technology that is
material to Street;
(g) any agreement or plan currently in force, including, without
limitation, any stock option plan, stock appreciation right plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement;
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(h) any agreement, contract or commitment currently in force to sell
or distribute any Street products, service or technology except agreements with
distributors or sales representatives in the normal course of business
cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided or made available to Select;
(i) any mortgages, indentures, guarantees, loans or credit agreements,
security agreements or other agreements or instruments currently in force
relating to the borrowing of money or extension of credit;
(j) any settlement agreement entered into within two (2) years prior
to the date of this Agreement; or
(k) any other agreement, contract or commitment that has a value of
$25,000 or more individually.
Neither Street, nor to Street's Knowledge any other party to a material
Contract, is in breach, violation or default under, and Street has not received
written notice that it has breached, violated or defaulted under, any of the
material terms or conditions of any material Contract to which Street is bound,
in such a manner as would permit any other party to cancel or terminate any such
material Contract, or would permit any other party to seek material damages or
other remedies (for any or all of such breaches, violations or defaults, in the
aggregate).
Board Approval.
The Board of Directors of Street has, as of the date of this Agreement, (i)
determined that the Merger is fair to, and in the best interests of Street and
the Street Shareholders, (ii) approved and deemed advisable, subject to
shareholder approval, this Agreement and the transactions contemplated hereby
and (iii) determined to recommend that the Street Shareholders approve and adopt
this Agreement and approve the Merger.
Insurance.
Street maintains insurance policies and fidelity bonds covering the assets,
business, equipment, properties, operations, employees, officers and directors
of Street (collectively, the "Insurance Policies") which are of the type and in
amounts customarily carried by persons conducting businesses similar to those of
Street. There is no material claim by Street pending under any of the material
Insurance Policies as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds.
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ARTICLE 3.
Representations and Warranties of Select and Sub
As of the date hereof and as of the Closing Date, Select and Sub represent
and warrant to Street, subject to the exceptions specifically disclosed in
writing in the disclosure letter and referencing a specific representation
supplied by Select and Sub to Street dated as of the date hereof and certified
by a duly authorized officer of Select (the "SELECT SCHEDULES"), as follows:
Organization of Select.
(a) Except as set forth on Part 3.1(a) of the Select Schedules, Select
does not own any capital stock of, or any equity interest of any nature in, any
other entity, except for passive investments in equity interests of public
companies as part of the cash management program of Select. Select has not
agreed and is not obligated to make, nor bound by any contract under which
contract it may become obligated to make, any future investment in or capital
contribution to any other entity. Select has not, at any time, been a general
partner of any general partnership, limited partnership or other entity.
(b) Select and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all necessary power and authority: (i)
to conduct its business in the manner in which its business is currently being
conducted; (ii) to own and use its assets in the manner in which its assets are
currently owned and used; and (iii) to perform its obligations under all
Contracts by which it is bound.
(c) Each of Select and its subsidiaries is qualified to do business as
a foreign corporation, and is in good standing, under the laws of all
jurisdictions where the nature of its business requires such qualification and
where the failure to so qualify would have a Material Adverse Effect on Select.
(d) Select has delivered or made available to Street a true and
correct copy of the Certificate of Incorporation and Bylaws of Select and
similar governing instruments of each of its subsidiaries, each as amended to
date (collectively, the "Select Charter Documents"), and each such instrument is
in full force and effect. Select is not in violation of any of the provisions
of Select Charter Documents.
(e) Select has delivered or made available to Street all proposed or
considered amendments to Select Charter Documents.
Select Capital Structure.
(a) The authorized capital stock of Select consists of: (i)
90,000,000 shares of Common Stock ("Select Common Stock"), of which 8,479,580
shares have been issued and are
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outstanding as of April 22, 1999; and (ii) 10,000,000 shares of Preferred Stock
("Select Preferred Stock"), of which 5,288,163 shares have been issued and are
outstanding as of the date of this Agreement. The Select Preferred Stock is
designated as follows: (i) 1,378,000 shares of Series A Preferred Stock, all of
which are outstanding as of the date of this Agreement.; (ii) 190,336 shares of
Series B Preferred Stock, all of which are outstanding as of the date of this
Agreement.; (iii) 614,374 shares of Series C Preferred Stock, all of which are
outstanding as of the date of this Agreement.; (iv) 681,201 shares of Series D
Preferred Stock, all of which are outstanding as of the date of this Agreement.;
(v) 325,000 shares of Series E Preferred Stock, all of which are outstanding as
of the date of this Agreement.; (vi) 2,100,000 shares of Series F Preferred
Stock, 1,758,297 of which are outstanding as of the date of this Agreement.; and
(vii) 340,955 shares of Series G Preferred Stock, all of which are outstanding
as of the date of this Agreement. All of the outstanding shares of Select Common
Stock and Select Preferred Stock have been duly authorized and validly issued,
and are fully paid and nonassessable. Part 3.2(b) of the Select Schedules sets
forth information regarding outstanding warrants and other outstanding rights to
purchase Select Common Stock and Select Preferred Stock.
(b) As of April 22, 1999: (i) 1,634,266 shares of Select Common Stock
are subject to issuance pursuant to outstanding options to purchase Common Stock
under Select's stock option plans; and (ii) 541,000 shares of Common Stock are
reserved for future issuance under Select's stock option plans. (Stock options
granted by Select pursuant to Select's stock option plans are referred to in
this Agreement as "Select Options"). Select has made available to Street
accurate and complete copies of all stock option plans pursuant to which Select
has granted stock options that are currently outstanding and the form of all
stock option agreements evidencing such options. All shares of Select Common
Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
would be duly authorized, validly issued, fully paid and nonassessable.
(c) All outstanding shares of Select Common Stock and Select Preferred
Stock, all outstanding Select Options, and all outstanding shares of capital
stock of each subsidiary of Select have been issued and granted in compliance
with (i) all applicable securities laws and other applicable Legal Requirements
and (ii) all requirements set forth in applicable Contracts.
Obligations With Respect to Capital Stock.
Except as set forth in Section 3.2 above and in Part 3.3 of the Select
Schedules, there are no equity securities, partnership interests or similar
ownership interests of any class of Select equity security, or any securities
exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued, reserved for
issuance or outstanding. Except for securities Select owns free and clear of
all claims and Encumbrances, directly or indirectly through one or more
subsidiaries, and except for shares of capital stock or other similar ownership
interests of certain subsidiaries of Select that are owned by certain nominee
equity holders as required by the applicable law of the jurisdiction of
organization of such subsidiaries (which shares or other interests do not
materially affect Select's control of such subsidiaries), there are no
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equity securities, partnership interests or similar ownership interests of any
class of equity security of any subsidiary of Select, or any security
exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued, reserved for
issuance or outstanding. Except as set forth in Section 3.2 above and in Part
3.3 of the Select Schedules, there are no subscriptions, options, warrants,
equity securities, partnership interests or similar ownership interests, calls,
rights (including preemptive rights), commitments or agreements of any character
to which Select or any of its subsidiaries is a party or by which it is bound
obligating Select or any of its subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or
cause the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of Select or any of its
subsidiaries or obligating Select or any of its subsidiaries to grant, extend,
accelerate the vesting of or enter into any such subscription, option, warrant,
equity security, call, right, commitment or agreement. As of the date of this
Agreement, except as contemplated by this Agreement and except as set forth in
Part 3.3 of the Select Schedules, there are no registration rights and there is
no voting trust, proxy, rights plan, antitakeover plan or other agreement or
understanding to which Select is a party or by which it is bound with respect to
any equity security of any class of Select or with respect to any equity
security, partnership interest or similar ownership interest of any class of any
of its subsidiaries.
Authority; Non-Contravention.
(a) Select has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Select and its subsidiaries, subject only to the
filing of the Merger Agreement and Restated Certificate (as defined below)
pursuant to California Law and Delaware Law, as applicable. This Agreement has
been duly executed and delivered by Select and Sub, assuming execution and
delivery by Street, constitutes a valid and binding obligation of Select and
Sub, enforceable against Select and Sub in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws and general
principles of equity. The execution and delivery of this Agreement by Select
and Sub do not, and the performance of this Agreement by Select and Sub will
not, (i) conflict with Select Charter Documents or the Charter Documents of its
subsidiaries, subject to obtaining the approval of the Select stockholders of
the Restated Certificate as required by the Select Charter Documents and
applicable law, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Select or any of its subsidiaries or by which
Select or any of its subsidiaries or any of their respective properties are
bound or affected, subject to compliance with the requirements set forth in
Section 3.4(b) below or (iii) result in any material breach of or constitute a
material default (or an event that with notice or lapse of time or both would
become a material default) under, or impair Select's rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a material lien or Encumbrance on any of the material properties or
assets of Select or any of its subsidiaries pursuant to, any material note,
bond, mortgage, indenture, contract, agreement, lease,
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license, permit, franchise, concession, or other instrument or obligation to
which Select or any of its subsidiaries is a party or by which Select or any of
its subsidiaries or its or any of their respective assets are bound or affected.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity, is required to be obtained
or made by Select or any of its subsidiaries in connection with the execution
and delivery of this Agreement or the consummation of the Merger, except for (i)
the filing of the Merger Agreement with the Secretary of State of the State of
California and the Secretary of State of the State of Delaware, (ii) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable federal, foreign and state
securities (or related) laws, the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act") and the securities or antitrust laws of any
foreign country and (iii) such other consents, authorizations, filings,
approvals and registrations which if not obtained or made would not be material
to Select or have a material adverse effect on the ability of the parties hereto
to consummate the Merger.
Select Financial Statements.
Part 3.5 of the Select Schedules sets forth Select's unaudited consolidated
balance sheet as of December 31, 1998 and the related consolidated unaudited
statements of operations and cash flow for the twelve month period ended
December 31, 1998 (the "Select Year-End Financials") and Select's unaudited
balance sheet as of March 31, 1999 (the "Select Current Balance Sheet") and the
related unaudited statements of operations and cash flow for the three months
then ended (together with the Select Year-End Financials, the "Select
Financials"). The Select Financials are correct in all material respects and
have been prepared in accordance with GAAP, applied on a basis consistent
throughout the periods indicated and consistent with each other except as may be
indicated therein. The Select Financials present fairly the financial
condition, operating results and cash flows of Select as of the dates and during
the periods indicated therein, subject to normal year-end adjustments, which
will not be material in amount or significance.
Absence of Certain Changes or Events.
Since the date of Select Current Balance Sheet until the date hereof there
has not been: (i) any Material Adverse Effect on Select , (ii) any declaration,
setting aside or payment of any dividend on, or other distribution (whether in
cash, stock or property) in respect of, any of Select's or any of its
subsidiaries' capital stock, or any purchase, redemption or other acquisition by
Select of any of Select's capital stock or any other securities of Select or its
subsidiaries or any options, warrants, calls or rights to acquire any such
shares or other securities except for repurchases from employees following their
termination pursuant to the terms of their pre-existing stock option or purchase
agreements, (iii) any split, combination or reclassification of any of Select's
or any of its subsidiaries' capital stock, (iv) any granting by Select or any of
its subsidiaries of any increase in compensation or fringe benefits, except for
normal increases of cash compensation in the ordinary course of business
consistent with past practice, or any payment by Select or any of its
subsidiaries
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of any bonus, except for bonuses made in the ordinary course of business
consistent with past practice, or any granting by Select or any of its
subsidiaries of any increase in severance or termination pay or any entry by
Select or any of its subsidiaries into any currently effective employment,
severance, termination or indemnification agreement or any agreement the
benefits of which are contingent or the terms of which are materially altered
upon the occurrence of a transaction involving Select of the nature contemplated
hereby, (v) any material change by Select in its accounting methods, principles
or practices, except as required by concurrent changes in GAAP or (vi) any
revaluation by Select or any of its subsidiaries of any of its assets,
including, without limitation, writing down the value of capitalized inventory
or writing off notes or accounts receivable other than in the ordinary course of
business.
Taxes.
(a) Tax Returns and Audits.
(i) Select and each of its subsidiaries have timely filed
all Returns relating to Taxes required to be filed by Select and each of its
subsidiaries with any Tax authority, except such Returns which are not material
to Select, and have paid all Taxes shown to be due on such Returns.
(ii) Select and each of its subsidiaries as of the
Effective Time will have withheld all federal and state income taxes, Taxes
pursuant to FICA, Taxes pursuant to the FUTA and other Taxes required to be
withheld.
(iii) Neither Select nor any of its subsidiaries has been
delinquent in the payment of any Tax nor is there any material Tax deficiency
outstanding, proposed or assessed against Select or any of its subsidiaries, nor
has Select or any of its subsidiaries executed any unexpired waiver of any
statute of limitations on or extending the period for the assessment or
collection of any material Tax.
(iv) No audit or other examination of any Return of Select
or any of its subsidiaries by any Tax authority is presently in progress, nor
has Select or any of its subsidiaries been notified of any request for such an
audit or other examination.
(v) No adjustment relating to any Returns filed by Select
or any of its subsidiaries has been proposed in writing formally or informally
by any Tax authority to Select or any of its subsidiaries or any representative
thereof.
(vi) Neither Select nor any of its subsidiaries has any
liability for unpaid Taxes which has not been accrued for or reserved on Select
Balance Sheet, whether asserted or unasserted, contingent or otherwise, which is
material to Select, other than any liability for unpaid Taxes that may have
accrued since the date of Select Balance Sheet in connection with the operation
of the business of Select and its subsidiaries in the ordinary course.
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(vii) There is no contract, agreement, plan or arrangement
to which Select is a party as of the date of this Agreement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of Select or any of its subsidiaries that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
(viii) Neither Select nor any of its subsidiaries has filed
any consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by Select.
(ix) Neither Select nor any of its subsidiaries is party
to or has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement.
(x) Except as may be required as a result of the Merger,
Select and its subsidiaries have not been and will not be required to include
any adjustment in Taxable income for any Tax period (or portion thereof)
pursuant to Section 481 or Section 263A of the Code or any comparable provision
under state or foreign Tax laws as a result of transactions, events or
accounting methods employed prior to the Closing.
(xi) None of Select's or its subsidiaries' assets are tax
exempt use property within the meaning of Section 168(h) of the Code.
Title to Properties; Absence of Liens and Encumbrances.
All of Select's and its subsidiaries' current leases with respect to
real property are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event of default (or event which with notice or
lapse of time, or both, would constitute a default) that would give rise to a
material claim. Other than the leaseholds created under real property leases,
and neither Select nor its subsidiaries owns any interest in real property.
(b) Select and each of its subsidiaries has good and valid title to,
or, in the case of leased properties and assets, valid leasehold interests in,
all of its tangible properties and assets, real, personal and mixed, used or
held for use in its business, free and clear of any Liens, except as reflected
in Select Financials and except for liens for taxes not yet due and payable,
statutory liens and such Liens or other imperfections of title and encumbrances,
if any, which are not material in character, amount or extent, and which do not
materially detract from the value, or materially interfere with the present use,
of the property subject thereto or affected thereby.
Intellectual Property. For the purposes of this Agreement, the following
terms have the following definitions:
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"Select Intellectual Property" means any Intellectual Property that is
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owned by, or exclusively licensed to, Select or its subsidiaries.
"Select Registered Intellectual Property" means all of the Registered
---------------------------------------
Intellectual Property owned by, or filed in the name of, Select or its
subsidiaries.
(a) No material Select Intellectual Property or product or service of
Select or its subsidiaries is subject to any proceeding or outstanding decree,
order, judgment, agreement, or stipulation restricting in any manner the use,
transfer, or licensing thereof by Select or its subsidiaries, or which would
affect the validity, use or enforceability of such Select Intellectual Property.
(b) Each material item of Select Registered Intellectual Property is
valid and subsisting, all necessary registration, maintenance and renewal fees
currently due in connection with such Registered Intellectual Property have been
made and all necessary documents, recordations and certificates in connection
with such Registered Intellectual Property have been filed with the relevant
patent, copyright, trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property.
(c) Select or its subsidiaries owns and has good and exclusive title
to, or has license (sufficient for the conduct of its business as currently
conducted and as currently proposed to be conducted) to, each material item of
Select Intellectual Property or Intellectual Property used by Select or its
subsidiaries free and clear of any lien or encumbrance (excluding licenses and
related restrictions); and Select or its subsidiaries is the exclusive owner of
all trademarks and trade names used in connection with the operation or conduct
of the business of Select or its subsidiaries, including the sale of any
products or the provision of any services by Select or its subsidiaries.
(d) To the extent that any material Intellectual Property has been
developed or created by a third party for Select or its subsidiaries, Select or
its subsidiaries has a written agreement with such third party with respect
thereto and Select or its subsidiaries thereby either (i) has obtained ownership
of, and is the exclusive owner of, or (ii) has obtained a license (sufficient
for the conduct of its business as currently conducted and as currently proposed
to be conducted) to all such third party's Intellectual Property in such work,
material or invention by operation of law or by valid assignment, to the fullest
extent it is legally possible to do so.
(e) The operation of the business of Select or its subsidiaries as
such business currently is conducted, including Select's or its subsidiaries'
design, development, manufacture, marketing and sale of the products or services
of Select (including with respect to products currently under development) has
not, does not and will not infringe or misappropriate the Intellectual Property
of any third party in any respect adverse to such party or constitute unfair
competition or trade practices under the laws of any jurisdiction.
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(f) Select and its subsidiaries have not received notice from any
third party that the operation of the business of Select or any act, product or
service of Select or its subsidiaries, infringes or misappropriates the
Intellectual Property of any third party or constitutes unfair competition or
trade practices under the laws of any jurisdiction.
(g) To the Knowledge of Select or its subsidiaries, no person has or
is infringing or misappropriating, in any respect materially adverse to Select
or its subsidiaries, any Select Intellectual Property.
(h) Select and its subsidiaries have taken reasonable steps to protect
Select's or its subsidiaries' rights in Select's or its subsidiaries'
confidential information and trade secrets that it wishes to protect or any
trade secrets or confidential information of third parties provided to Select or
its subsidiaries, and, without limiting the foregoing, Select or its
subsidiaries has and enforces a policy requiring each employee and contractor to
execute a proprietary information/confidentiality agreement substantially in the
form provided to Street and all current and former employees and contractors of
Select have executed such an agreement, except where the failure to do so is not
reasonably expected to be material to Select.
Compliance; Permits; Restrictions.
(a) Neither Select nor any of its subsidiaries is, in any material
respect, in conflict with, or in default or in violation of (i) any law, rule,
regulation, order, judgment or decree applicable to Select or any of its
subsidiaries or by which Select or any of its subsidiaries or any of their
respective properties is bound or affected, or (ii) any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Select or any of its subsidiaries is a
party or by which Select or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for conflicts, violations and
defaults that (individually or in the aggregate) would not cause Select or any
of its subsidiaries to lose any material benefit or incur any material
liability. No investigation or review by any Governmental Entity is pending or,
to Select's Knowledge, has been threatened against Select or any of its
subsidiaries, nor, to Select's Knowledge, has any Governmental Entity indicated
an intention to conduct an investigation of Select or any of its subsidiaries.
There is no material agreement, judgment, injunction, order or decree binding
upon Select or any of its subsidiaries which has or would reasonably be expected
to have the effect of prohibiting or materially impairing any business practice
of Select or any of its subsidiaries, any acquisition of material property by
Select or any of its subsidiaries or the conduct of business by Select as
currently conducted.
(b) Select and its subsidiaries hold, to the extent legally required,
all permits, licenses, variances, exemptions, orders and approvals from
Governmental Entities that are material to and required for the operation of the
business of Select as currently conducted (collectively, the "Select Permits").
Select and its subsidiaries are in compliance in all material respects with the
terms of Select Permits, except where the failure to be in compliance with the
terms of Select Permits would not be material to Select.
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Litigation.
Except as disclosed in Part 3.11 of the Select Schedules, there are no
claims, suits, actions or proceedings pending or, to the Knowledge of Select,
threatened against, relating to or affecting Select or any of its subsidiaries,
before any court, governmental department, commission, agency, instrumentality
or authority, or any arbitrator that seeks to restrain or enjoin the
consummation of the transactions contemplated by this Agreement or which would
reasonably be expected, either singularly or in the aggregate with all such
claims, suits, actions or proceedings, to be material and adverse to Select or
its subsidiaries. No Governmental Entity has at any time challenged or
questioned in a writing delivered to Select the legal right of Select to design,
manufacture, offer or sell any of its products or services in the present manner
or style thereof. As of the date hereof, to the Knowledge of Select, no event
has occurred, and no claim, dispute or other condition or circumstance exists,
that will, or that would reasonably be expected to, cause or provide a bona fide
basis for a director or executive officer of Select or its subsidiaries to seek
indemnification from Select.
Brokers' and Finders' Fees.
Neither Select nor its subsidiaries have incurred, nor will they incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
Environmental Matters.
(a) Hazardous Material. Except as would not result in material
liability to Select, no Hazardous Materials are present, as a result of the
actions of Select or any of its subsidiaries or any affiliate of Select, or, to
Select's Knowledge, as a result of any actions of any third party or otherwise,
in, on or under any property, including the land and the improvements, ground
water and surface water thereof, that Select or any of its subsidiaries has at
any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not result in a
material liability to Select (in any individual case or in the aggregate) (i)
neither Select nor any of its subsidiaries has transported, stored, used,
manufactured, disposed of, released or exposed its employees or others to
Hazardous Materials in violation of any law in effect on or before the Closing
Date and (ii) neither Select nor any of its subsidiaries has disposed of,
transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material in violation of any
rule, regulation, treaty or statute promulgated by any Governmental Entity in
effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
(c) Permits. Select and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the "Select
Environmental Permits") necessary for the
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conduct of Select's and its subsidiaries' Hazardous Material Activities and
other businesses of Select and its subsidiaries as such activities and
businesses are currently being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to Select's
Knowledge, no action, proceeding, revocation proceeding, amendment procedure,
writ or injunction has been threatened by any Governmental Entity against Select
or any of its subsidiaries in a writing delivered to Select concerning any
Select Environmental Permit, Hazardous Material or any Hazardous Materials
Activity of Select or any of its subsidiaries. Select is not aware of any fact
or circumstance which would involve Select or any of its subsidiaries in any
environmental litigation or impose upon Select any material environmental
liability.
Year 2000 Compliance.
Except as disclosed in Part 3.14 of the Select Schedules, Select's products
and internal systems have been designed to ensure date and time entry
recognition, calculations that accommodate same century and multi-century
formulas and date values, leap year recognition and calculations, and date data
interface values that reflect the century. Select's products and internal
systems manage and manipulate data involving dates and times, including single
century formulas and multi-century formulas, and do not cause an abnormal ending
scenario within the application or generate incorrect values or invalid results
involving such dates.
Agreements, Contracts and Commitments.
As of the date of this Agreement, neither Select nor any of its
subsidiaries, nor to Select's Knowledge any other party to a material Contract
of Select or its subsidiaries, is in breach, violation or default under, and
neither Select nor any of its subsidiaries has received written notice that such
entity has breached, violated or defaulted under, any of the material terms or
conditions of any material Contract of Select or its subsidiaries in such a
manner as would permit any other party to cancel or terminate any such material
Contract of Select or its subsidiaries, or would permit any other party to seek
material damages or other remedies (for any or all of such breaches, violations
or defaults, in the aggregate).
3.16 Employee Benefit Plans.
Part 3.16 of the Select Schedules contains an accurate and complete list of
each Select Employee Plan. "Select Employee Plan" means any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or stock-
related awards, fringe benefits or other employee benefits or remuneration of
any kind, whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each "employee benefit plan," within the meaning
of Section 3(3) of ERISA which is or has been maintained, contributed to, or
required to be contributed to, by Select.
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Board Approval.
The Board of Directors of Select has, as of the date of this Agreement,
approved the Merger and transactions contemplated hereby including without
limitation the issuance of shares of Select Common Stock and Select Series H
Preferred Stock in connection with the Merger and the Certificate Amendment.
ARTICLE 4.
Conduct Prior to the Effective Time
Conduct of Business of Street. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Street agrees to carry on Street's business in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted, to pay the debts and Taxes of Street when due, to pay or perform
other obligations when due, and, to the extent consistent with such business,
use all reasonable efforts consistent with past practice and policies to
preserve intact Street's present business organization, keep available the
services of Street's present officers and employees and preserve Street's
relationships with customers, suppliers, distributors, licensors, licensees and
others having business dealings with it, all with the goal of preserving
unimpaired Street's goodwill and ongoing business at the Effective Time. Except
as expressly contemplated by Section 4.1 of the Street Schedules or as otherwise
expressly provided in this Agreement, Street shall not, without the prior
written consent of Select:
(a) other than performing the Contracts listed in the Street Schedules
in accordance with their terms existing on the date hereof, make any expenditure
or enter into any transaction exceeding $50,000 or any commitment or transaction
of the type described in Section 2.17 hereof;
(b) sell, license or transfer to any person or entity of any rights to
any Street Intellectual Property or enter into any agreement with respect to the
Street Intellectual Property with any person or entity other than in the
ordinary course of business consistent with past practice;
(c) amend or change its Articles of Incorporation or Bylaws;
(d) revalue any of its assets, including without limitation writing
down the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business consistent with past practice;
(e) issue, sell, grant, contract to issue, grant or sell, or authorize
the issuance, delivery, sale or purchase of any shares of Street Capital Stock
or securities convertible into, or exercisable or exchangeable for, shares of
Street Capital Stock, or any securities, warrants, options or
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rights to purchase any of the foregoing, except for (i) issuances of Street
Capital Stock upon the exercise thereof or upon exercise or conversion of Street
Convertible Securities or Street Preferred Stock outstanding on the date of this
Agreement and (ii) issuances of Street Options in the ordinary course of
business consistent with past practice;
(f) declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any Street
Capital Stock, or split, combine or reclassify any shares of Street Capital
Stock, or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of Street Capital Stock, or repurchase,
redeem, or otherwise acquire, directly or indirectly, any shares of Street
Capital Stock (or options, warrants or other rights convertible into,
exercisable or exchangeable therefor), except for (i) repurchases of Street
Capital Stock upon the termination of service of any service providers of Street
in accordance with the standard terms set forth in the agreements governing such
repurchases, all of which agreements have been provided or made available to
Select, (ii) conversion of Street Preferred Stock and (iii) exercises or
conversion of Street Convertible Securities;
(g) grant any severance or termination pay (i) to any director or
officer or (ii) to any employee, except payments made pursuant to standard
written agreements outstanding as of the date hereof and disclosed on the Street
Schedules, or increase in the salary or other compensation payable or to become
payable by Street to any of its officers, directors, employees or advisors, or
declare, pay or make any commitment or obligation of any kind for the payment by
Street of a bonus or other additional salary or compensation to any such person,
or adopt or amend any employee benefit plan or enter into any employment
contract other than in the ordinary course of business consistent with past
practice;
(h) sell, lease, license or otherwise dispose of any of the assets or
properties of Street which are not Intellectual Property other than in the
ordinary course of business and consistent with past practices, including but
not limited to the performance of obligations under contractual arrangements
existing as of the date hereof set forth on the Street Schedules, or create any
security interest in such assets or properties;
(i) grant any loan to any person or entity except for accounts
receivable in the ordinary course of business consistent with past practice,
incur any indebtedness or guarantee any indebtedness except for accounts payable
incurred in the ordinary course of business consistent with past practice, issue
or sell any debt securities, guarantee any debt securities of others, purchase
any debt securities of others or amend the terms of any outstanding agreements
related to borrowed money, except for advances to employees for travel and
business expenses in the ordinary course of business consistent with past
practice;
(j) amend in any material respect or otherwise modify (or agree to do
so), or violate the terms of any of the Contracts set forth or described in the
Street Schedules or enter into any material Contract except in the ordinary
course of business consistent with past practice;
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(k) commence or settle any litigation;
(l) acquire or agree to acquire by merging or consolidating with, or
by purchasing any assets or equity securities or, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to Street's
business;
(m) pay, discharge or satisfy, in an amount in excess of $25,000 (in
any one case) or $50,000 (in the aggregate), any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction of liabilities in the ordinary course of
business and in a manner consistent with past practice;
(n) make or change any material election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, or consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes;
(o) take any action to accelerate the vesting schedule of any of the
outstanding Street Options or Street Capital Stock except as provided for in
each Street Employee Plan and each Employee Agreement which are in effect on the
date hereof and listed in Part 2.14(b) of the Street Schedules;
(p) terminate any employees other than for cause or encourage any
employees to resign from Street;
(q) enter into any contract, purchase order or other agreement
pursuant to which Street would be required to book any amounts due thereunder as
deferred revenue; or
(r) take or agree in writing or otherwise to take any of the actions
described in the preceding clauses (a) through (q) of this Section 4.1 or any
other action that would prevent Street from performing or cause Street not to
perform its covenants hereunder.
Street Non-Solicitation. Until the earlier of (i) the Effective Time or
(ii) the date of termination of this Agreement pursuant to the provisions of
Section 8.1 hereof, Street shall not (nor shall Street permit any of Street's
officers, directors, agents, representatives or affiliates to) directly or
indirectly, take any of the following actions with any party other than Select
and its designees: (a) solicit, encourage, initiate or participate in any
inquiry, negotiations or discussions or enter into any agreement with respect to
any offer or proposal to acquire any portion of Street's business and properties
or any shares of Street Capital Stock (whether or not outstanding except as
specifically permitted by Section 4.1(e) above) whether by merger, purchase of
assets, tender offer or otherwise, or effect any such transaction, (b) disclose
any information not customarily disclosed to such person concerning Street's
business, technologies, or properties, or afford to any person or entity access
to its properties, technologies, books or records, not customarily afforded such
access, (c) assist or
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cooperate with any person to make any proposal to purchase all or any part of
the Street Capital Stock or Street's assets or (d) solicit, negotiate or enter
into any agreement with any person providing for the acquisition of Street
(whether by way of merger, purchase of assets, tender offer or otherwise). In
the event Street shall receive, prior to the Effective Time or the termination
of this Agreement, any offer or proposal, directly or indirectly, of the type
referred to in clause (a) or (c) above, or any request for disclosure or access
pursuant to clause (b) above, Street shall immediately inform Select as to any
such offer or proposal, including information as to the identity of the offeror
or the party making such offer or proposal and the specific terms of such offer
or proposal, as the case may be. The parties hereto agree that irreparable
damage would occur in the event that the provisions of this Section 4.2 were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed by Street that Select shall be entitled to seek an
injunction or injunctions to prevent breaches of the provisions of this Section
4.2 and to enforce specifically the terms and provisions hereof in any court of
the United States or any state having jurisdiction, this being in addition to
any other remedy to which Select may be entitled at law or in equity. Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth in this Section 4.2 by any officer, director or employee of Street or
any investment banker, attorney or other advisor or representative of Street
shall be deemed to be a breach of this Section 4.2 by Street.
Conduct of Business of Select 4.4. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
and the Effective Time, Select agrees to use all reasonable efforts consistent
with past practice and policies to preserve intact Select's present business
organization, keep available the services of Select's present officers and
employees and preserve Select's relationships with customers, suppliers,
distributors, licensors, licensees and others having business dealings with it,
all with the goal of preserving unimpaired Select's goodwill and ongoing
business at the Effective Time. Unless otherwise expressly provided in this
Agreement, Street shall not, without the prior consent of Street:
(a) declare, accrue, set aside or pay any extraordinary dividend or
any other extraordinary distribution in respect of any shares of Select's
capital stock;
(b) issue, sell, grant, contract to issue, grant or sell, or authorize
the issuance, delivery, sale or purchase of any shares of Select capital stock
or securities convertible into, or exercisable or exchangeable for, shares of
Select capital stock, or any securities, warrants, options or rights to purchase
any of the foregoing, except for (i) issuances of Select capital stock upon the
exercise of any of the foregoing (including without limitation shares of Select
capital stock issued in connection with a possible combination of Select with
one or more of its subsidiaries before or in connection with an initial public
offering) or upon exercise or conversion of convertible or exchangeable
securities or the conversion of shares of Select Preferred Stock outstanding on
the date of this Agreement; (ii) issuances of options to purchase up to 600,000
shares of Select Common Stock to directors, officers, employees and consultants
of Select in the ordinary course of business consistent with past practice;
(iii) issuances of up to 400,000 shares of Select capital stock in
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mergers, reorganizations, strategic business relationships and similar
transactions; and (iv) issuances of Select capital stock in its initial public
offering; or
(c) take any action with respect to the Select Charter Documents, if
in such case, the action is intended to have the effect of being materially
adverse to the Street Shareholders as compared to the existing Select
stockholders.
In addition, in the event Select enters into negotiations to acquire any
company that is in the same line of business as Street, Select shall, subject to
confidentiality obligations imposed by contract or applicable law, consult with
Street regarding such acquisition.
ARTICLE 5.
Additional Agreements
Fairness Hearing; Shareholder Approval.
(a) As soon as reasonably practicable following the execution of this
Agreement, Select and Street shall prepare the necessary documents and Select
shall apply to obtain a permit (a "California Permit") from the Commissioner of
Corporations of the State of California (after a hearing before such Department)
pursuant to Section 25121 of the California Corporate Securities Law of 1968, so
that the issuance of Select Common Stock in the Merger shall be exempt from
registration under Section 3(a)(10) of the Securities Act of 1933, as amended
(the "Securities Act"). Street and Select will respond to any comments from the
California Department of Corporations and use their commercially reasonable
efforts to have the California Permit granted as soon as practical after such
filing. As promptly as practical after the date of this Agreement, Select and
Street shall prepare and make such filings as are required under applicable Blue
Sky laws relating to the transactions contemplated by this Agreement.
(b) As promptly as practicable after the receipt of a California
Permit, (i) Street shall submit this Agreement and the transactions contemplated
hereby, including without limitation the Merger, to the Street shareholders for
approval and adoption as provided by California Law and the Street Charter
Documents; and (ii) Street shall solicit the consent of the requisite holders of
Street Preferred Stock to validly approve the Rights Termination (as defined in
Section 6.2(i)). The materials submitted to the Street shareholders shall be
subject to review and approval by Select and include information regarding
Street, the terms of the Merger and this Agreement and the unanimous
recommendation of the Board of Directors of Street in favor of the Merger, this
Agreement and the transactions contemplated hereby.
(c) As promptly as practicable, Select shall submit the Certificate
Amendment to its stockholders for approval as provided by the Select Charter
Documents and applicable law.
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Restrictions on Transfer.
(a) All certificates representing Select Common Stock and Select
Series H Preferred Stock deliverable to any Street Shareholder pursuant to the
Merger Agreement and in connection with the Merger and any certificates
subsequently issued with respect thereto or in substitution therefor (including
any shares issued or issuable in respect of any such shares upon any stock split
stock dividend, recapitalization, conversion or similar event) shall be stamped
or otherwise imprinted with legends in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT. THE TRANSFER
RESTRICTIONS APPLICABLE TO THESE SHARES ARE BINDING ON
TRANSFEREES OF THESE SHARES.
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED DIRECTLY OR
INDIRECTLY FOR SUCH PERIOD OF TIME NOT TO EXCEED ONE HUNDRED
EIGHTY (180) DAYS FOLLOWING THE EFFECTIVE DATE OF ANY
REGISTRATION STATEMENT OF THE ISSUER FILED UNDER THE
SECURITIES ACT IN CONNECTION WITH THE INITIAL PUBLIC
OFFERING OF THE ISSUER'S COMMON STOCK.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT
TO A SHAREHOLDER'S AGREEMENT PURSUANT TO WHICH SUCH SHARES
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH A WRITTEN OPINION
OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND
SUBSTANCE, THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933. COPIES OF SUCH AGREEMENT
ARE AVAILABLE FROM THE ISSUER.
(b) The certificates evidencing the Consideration Shares shall also
bear any legend required by the Commissioner of Corporations of the State of
California or such as are required pursuant to any state, local or foreign law
governing such securities.
(c) The Consideration Shares will not be registered under the
Securities Act.
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(d) No Street Shareholder shall be permitted to sell or otherwise
dispose of any Consideration Shares received in the Merger, unless Select
receives an unqualified written opinion of counsel reasonably acceptable to it
stating that the proposed transfer of the Consideration Shares may be effected
without registration under the Securities Act, provided however that such
opinion may not rely on either (A) the exception provided by Section 3(a)(10) of
the Securities Act or (B) upon Rule 145 promulgated under the Securities Act
until one hundred eighty-one (181) days after the effective date of Select's
initial public offering.
(e) Each Street Shareholder agrees to, if requested by Select or an
underwriter of Select Common Stock (or other securities) in connection with
Select's initial registered public stock offering, enter into an agreement not
to sell or otherwise transfer or dispose of any Select Common Stock (or other
securities) of Select held by such holder during a period of time determined by
Select and its underwriters (not to exceed 180 days) following the effective
date of the registration statement of Select filed under the Securities Act
relating to such public offering. If requested by Street or an underwriter of
Select Common Stock (or other securities) of Select in connection with a Select
initial registered public offering, such agreement shall be in writing in a form
reasonably satisfactory to Select and such underwriter. Select may impose stop-
transfer instructions with respect to the Select Common Stock (or securities)
subject to the foregoing restriction until the end of said period.
(f) The restrictions imposed by this Section 5.2 shall terminate
(except for the restrictions contained in paragraph (d) above), without any
action by Select or the Street Shareholders, upon the date one hundred eighty-
one (181) days after the effective date of the initial public offering of Select
Common Stock.
Access to Information. Street and Select shall afford the other party and
its accountants, counsel and other representatives reasonable access during
normal business hours during the period prior to the Effective Time to (a) all
of Select and Street's properties, books, contracts, commitments and records, as
applicable, as reasonably requested by each party, (b) all other information
concerning the business, properties and personnel (subject to restrictions
imposed by applicable law) of Street or Select as applicable, as each party may
reasonably request and (c) all key employees of Street and Select, as reasonably
requested by each party. It is understood that for the purposes of the foregoing
sentence, a reasonable request on the part of Street shall be granted to access
that information, property and personnel as is necessary to evaluate the
investment decision being made by the Street Shareholders in connection with the
Merger. Each of Select and Street agree to provide to the other party and its
accountants, counsel and other representatives copies of internal financial
statements promptly upon request. No information or knowledge obtained in any
investigation pursuant to this Section 5.3 shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
Confidentiality. Each of the parties hereto hereby agrees that the
information obtained in any investigation pursuant to Section 5.3 hereof, or
pursuant to the negotiation and execution of this Agreement or the effectuation
of the transactions contemplated hereby, shall be governed by the
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terms of the Confidentiality Agreement, executed effective as of March 5, 1999,
between Street and Select.
Expenses. Whether or not the Merger is consummated, all fees and expenses
incurred in connection with the Merger including, without limitation, all legal,
accounting, financial advisory, consulting and all other fees and expenses of
third parties incurred by a party hereto in connection with the negotiation and
effectuation of the terms and conditions of this Agreement and the transactions
contemplated hereby or thereby, shall be the obligation of the respective party
incurring such fees and expenses.
Public Disclosure. Unless otherwise required by law, no disclosure
(whether or not in response to an inquiry) of the subject matter of this
Agreement shall be made by any party hereto unless approved by the other party
prior to release; provided, however, that such approval shall not be
unreasonably withheld.
Consents. Street shall use commercially reasonable efforts to obtain the
consents, waivers and approvals under any of the Contracts deemed appropriate or
necessary by Select in connection with the Merger, including all such consents,
waivers and approvals set forth in Street Schedules, so as to preserve all
rights of, and benefits to, Select thereunder.
Firpta Compliance. On the Closing Date, Street shall deliver to Select a
properly executed statement in a form reasonably acceptable to Select for
purposes of satisfying Select's obligations under Treasury Regulation Section
1.1445-2(c)(3).
Reasonable Efforts. Subject to the terms and conditions provided in this
Agreement, each of the parties hereto shall use commercially reasonable efforts
to take promptly, or cause to be taken, all actions, and to do promptly, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated hereby, to obtain all necessary waivers, consents and approvals and
to effect all necessary registrations and filings (including any filings or
registrations necessary to perfect Select's ownership of any Street Registered
Intellectual Property after the Merger) and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and make
effective the transactions contemplated by this Agreement for the purpose of
securing to the parties hereto the benefits contemplated by this Agreement.
Notification of Certain Matters. Street shall give prompt notice to Select
of (i) the occurrence or non-occurrence of any event, the occurrence or non-
occurrence of which would cause any representation or warranty of Street and
Select, respectively, contained in this Agreement to be untrue or inaccurate,
such that the condition set forth in Section 6.2(a) would not be satisfied and
(ii) any failure of Street or Select, as the case may be, to comply with or
satisfy in all material respects any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.10 shall not limit or otherwise affect
any remedies available to the party receiving such notice. No disclosure by
Street
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pursuant to this Section 5.10 shall be deemed to amend or supplement the Street
Schedules or prevent or cure any misrepresentation, breach of warranty or breach
of covenant.
Select shall give prompt notice to Street of (i) the occurrence or non-
occurrence of any event, the occurrence or non-occurrence of would cause any
representation or warranty of Select and Street, respectively, contained in this
Agreement to be untrue or inaccurate, such that the condition set forth in
Section 6.3(a) would not be satisfied and (ii) any failure of Select or Street,
as the case may be, to comply with or satisfy in all material respects any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.10 shall not limit or otherwise affect any remedies available to the
party receiving such notice. No disclosure by Select pursuant to this Section
5.10 shall be deemed to amend or supplement the Select Schedules or prevent or
cure any misrepresentation, breach of warranty or breach of covenant.
Directors' and Officers' Indemnification.
(a) From and after the Effective Time, Select will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of Street
pursuant to any indemnification agreements between Street and its directors and
officers as of the Effective Time. The Articles of Incorporation and Bylaws of
the Surviving Corporation will contain provisions with respect to exculpation
and indemnification that are at least as favorable to the directors and officers
of Street as those contained in the Articles of Incorporation and Bylaws of
Street as in effect on the date hereof, which provisions will not be amended,
repealed or otherwise modified for a period of three years from the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who, immediately prior to the Effective Time, were directors,
officers, employees or agents of Street, unless such modification is required by
law.
(b) This Section 5.11 shall survive the consummation of the Merger, is
intended to benefit Street, the Surviving Company and each indemnified party,
shall be binding, jointly and severally, on all successors and assigns of
Select, and shall be enforceable by the indemnified parties.
(c) Notwithstanding anything to the contrary in this Section 5.11,
Select shall not be liable for any amounts payable resulting from any claim or
action brought against Street's directors or officers by any officer or director
of Street or any of their affiliates to the extent any of the same result from
willful misconduct.
(d) Select shall have full recourse to the Escrow Fund to recover any
amounts payable by it pursuant to this Section 5.11.
5.12 Cooperation of Independent Accountants. Street shall use its best
efforts to cause its independent accountants, Ernst & Young LLP, to provide
assistance to Select and its affiliates and successors in connection with the
filing of any (i) registration statement under the Securities Act
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(and any amendments or supplements thereto), including but not limited to,
consenting to the inclusion of the Street Audited Financials in the registration
statement as required by Regulation S-X under the Securities Exchange Act of
1934, as amended ("Exchange Act"), and providing a "comfort letter" addressed to
the underwriters containing such representations as the underwriters may
reasonably request and (ii) periodic or current reports required to be filed by
Select pursuant to the Exchange Act.
5.13 Termination of 401(k) Plan.
Street agrees to take all necessary action to terminate its 401(k) plan
immediately prior to the Closing Date, unless Select, in its sole and absolute
discretion, agrees to sponsor and maintain such plans by providing Street with
written notice of such election at least three (3) days before the Effective
Time. Unless Select provides such notice to Street, Select shall receive from
Street evidence that Street's 401(k) plan has been terminated pursuant to
resolution Street's Board of Directors (the form and substance of such
resolutions shall be subject to review and approval of the Select and its
counsel), effective as of the day immediately preceding the Closing Date.
5.14 Information Supplied.
The information relating to Street and the Street shareholders included in
the proxy statement/information statement to be sent to the Street shareholders
and to the Select stockholders in connection with (i) the meeting or action by
written consent of the Street shareholders (the "Street Shareholder Action") to
consider the approval and adoption of this Agreement and approval of the Merger
and any other matters contemplated hereby and (ii) any meeting or action by
written consent of the Select stockholders (the "Select Stockholder Action") to
approve the Certificate Amendment, shall not on the date the proxy/information
statement is first mailed to the Street shareholders or Select stockholders, at
the effective time of the Street Shareholder Action, at the effective time of
the Select Stockholder Action or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not false and misleading; or omit
to state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies or consents for the
Street Shareholder Action or with respect to the Select Stockholder Action which
has become false or misleading.
The information relating to Select and the Select stockholders included in
the proxy/information statement to be sent to the Street shareholders and the
Select stockholders in connection with Street Shareholder Action and the Select
Stockholder Action, shall not on the date the proxy/information statement is
first mailed to the Street shareholders or Select stockholders, at the effective
time of the Street Shareholder Action, at the effective time of the Select
Stockholder Action or at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not false and misleading; or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the
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solicitation of proxies for the Street Shareholder Action or with respect to the
Select Stockholder Action which has become false or misleading.
ARTICLE 6.
Conditions to the Merger
Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Shareholder Approval. This Agreement and the transactions
contemplated hereby, including without limitation the Merger, shall have been
duly approved, by the requisite vote under applicable law and the Street Charter
Documents by the Street Shareholders. The Certificate Amendment and the issuance
of Select Common Stock and Select Series H Preferred Stock shall have been duly
approved, by the requisite vote under applicable law and the Select Charter
Documents by the Select stockholders.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal.
(c) Permits. All approvals from government authorities, including any
requisite Blue Sky approvals or HSR Act approvals, which are appropriate or
necessary for the consummation of the Merger, shall have been obtained.
(d) California Permit. The Commissioner of Corporations for the State
of California shall have approved the terms and conditions of the transactions
contemplated by this Agreement, and the fairness of such terms and conditions
pursuant to Section 25142 of the California Statute following a hearing for such
purpose, and shall have issued a Permit under Section 25121 of the California
Statute.
(e) Tax Opinions. Select and Street shall each have received written
opinions from their respective tax counsel (Wilson Sonsini Goodrich & Rosati,
Professional Corporation, and Latham & Watkins, respectively), in form and
substance reasonably satisfactory to them, to the effect that the Merger will
constitute a tax-free reorganization within the meaning of Section 368(a) of the
Code and such opinions shall not have been withdrawn. The parties to this
Agreement agree
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to make such reasonable representations as requested by such counsel for the
purpose of rendering such opinions.
Conditions to Obligations of Select and Sub. The obligation of Select and
Sub to consummate and effect this Agreement and the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Effective Time of
each of the following conditions, any of which may be waived, in writing,
exclusively by Select and Sub:
(a) Representations and Warranties. Each representation and warranty
of Street contained in this Agreement (i) shall have been true and correct as of
the date of this Agreement and (ii) shall be true and correct on and as of the
Closing Date with the same force and effect as if made on the Closing Date
except, (A) in each case, or in the aggregate, as does not constitute a Material
Adverse Effect on Street; provided, however, such Material Adverse Effect
qualification shall be inapplicable with respect to the representations and
warranties contained in the first two sentences of Section 2.2(a), the first
sentence of Section 2.2(b) and the first five sentences of Section 2.4(a) (which
representations and warranties shall have been, and shall be, true and correct
in all material respects) and (B) for those representations and warranties which
address matters only as of a particular date (which representations shall have
been true and correct (subject to the qualifications set forth in the preceding
clause (A)) as of such particular date) (it being understood that, for purposes
of determining the accuracy of such representations and warranties, any update
of or modification to the Street Schedules made or purported to have been made
after the execution of this Agreement shall be disregarded). Select shall have
received a certificate with respect to the foregoing signed on behalf of Street
by an authorized executive officer of Street.
(b) Agreements and Covenants. Street shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to the Closing
Date, and Select shall have received a certificate to such effect signed on
behalf of Street by an authorized executive officer of Street.
(c) No Material Adverse Effect. There shall not have occurred any
Material Adverse Effect on Street since the date of this Agreement.
(d) Legal Opinion. Select shall have received a legal opinion from
Latham & Watkins, legal counsel to Street, in form and substance mutually agreed
upon with legal counsel to Select.
(e) Non-Competition and Employment Agreements. Each of the employees
of Street listed as Group B Employees and four of seven of the employees of
Street listed as Group A Employees in the table set forth in Schedule 6.2(e)
shall have entered into the Non-Competition and Employment Agreement, and such
agreements shall be in full force and effect.
(f) Third Party Consents. The consents, waivers and approvals listed
in Schedule 6.2(f) shall have been obtained.
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(g) Limit on Dissenting Shareholders. No more than ten percent (10%)
of the shares of Street Capital Stock shall have the continued right to perfect
dissenter's rights under applicable law.
(h) Termination of Investor Rights Agreement. The Amended and
Restated Investor Rights Agreement, dated as of March 8, 1999, by and among
Street and certain holders of Street Preferred Stock listed on Exhibit A
thereto, shall have been validly terminated in its entirety, and the holders of
Street Preferred Stock shall have no further rights accruing to them thereunder
as of the Effective Time (the "Rights Termination").
(i) Letter Agreement Amendment. The Amendment to the Letter
Agreement, dated October 1, 1997, by and between Marcus & Millichap Real Estate
Investment Brokerage Company and SpringStreet, Inc, in substantially the form
attached hereto as Exhibit C, shall be in full force and effect.
(j) California Real Estate Broker Law Compliance. Street shall have
obtained a California real estate broker license in compliance with the Order to
Desist & Refrain (Case No. H-7694 SF filed April 21, 1999 with the California
Department of Real Estate) or otherwise have obtained permanent relief from such
order.
Conditions to the Obligations of Street. The obligations of Street to
consummate and effect this Agreement and the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Effective Time of each
of the following conditions, any of which may be waived, in writing, exclusively
by Street:
(a) Representations and Warranties. Each representation and warranty
of Select and Sub contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on the
Closing Date except, (A) in each case, or in the aggregate, as does not
constitute a Material Adverse Effect on Select; provided, however, such Material
Adverse Effect qualification shall be inapplicable with respect to the
representations and warranties contained in the first two sentences of Sections
3.2(a), the first sentence of Section 3.2(b) and the first three sentences of
Section 3.4(a) (which representations and warranties shall have been, and shall
be, true and correct in all material respects) and (B) for those representations
and warranties which address matters only as of a particular date (which
representations shall have been true and correct (subject to the qualifications
set forth in the preceding clause (A)) as of such particular date) (it being
understood that, for purposes of determining the accuracy of such
representations and warranties, any update of or modification to the Select
Schedules made or purported to have been made after the execution of this
Agreement shall be disregarded). Street shall have received a certificate with
respect to the foregoing signed on behalf of Select by an authorized executive
officer of Select.
(b) Agreements and Covenants. Select shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or
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complied with by them on or prior to the Closing Date, and Street shall have
received a certificate to such effect signed on behalf of Select by an
authorized executive officer of Select.
(c) No Material Adverse Effect. There shall not have occurred any
Material Adverse Effect on Select since the date of this Agreement.
(d) Legal Opinion. Street shall have received a legal opinion from
Wilson Sonsini Goodrich & Rosati, Professional Corporation, legal counsel to
Select, in form and substance mutually agreed upon with legal counsel to Select.
ARTICLE 7.
Survival of Representations and Warranties; Escrow
7.1 Survival of Representations and Warranties. All representations and
warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Merger and continue until 5:00 p.m., California
time, on the first anniversary of the Effective Time (the "Expiration Date").
7.2 Escrow Arrangements.
(a) Escrow Fund. At the Effective Time, the Street Shareholders will
be deemed to have received and deposited with the Escrow Agent (as defined
below) the Escrow Amount (plus any additional shares as may be issued upon any
stock split, stock dividend or recapitalization effected by Street after the
Effective Time) without any act of any Street Shareholder. As soon as
practicable after the Effective Time, the Escrow Amount, without any act of any
Street Shareholder, will be deposited with U.S. Bank Trust, N.A., (or other
institution acceptable to Street and the Securityholder Agent (as defined in
Section 7.2(g) below)) as Escrow Agent (the "Escrow Agent"), such deposit to
constitute an escrow fund (the "Escrow Fund") to be governed by the terms set
forth herein. The portion of the Escrow Amount contributed on behalf of each
Street Shareholder shall be in proportion to the aggregate Select Common Stock
and/or Select Series H Preferred Stock, as the case may be, which such holder
would otherwise be entitled under Section 1.6(b). The Escrow Fund shall be
available to compensate Select and its affiliates for any claims, losses,
liabilities, deficiencies, costs and expenses, including reasonable attorneys'
fees and expenses and expenses of investigation and defense, net of any benefits
or proceeds of insurance (hereinafter individually a "Loss" and collectively
"Losses") incurred by Select, its officers, directors, or affiliates (including
the Surviving Corporation) as a result of any inaccuracy or breach of a
representation or warranty of Street contained in Article 2 herein (as modified
by Street Schedules), or any failure by Street to perform or comply with any
covenant contained herein. Select and Street each acknowledge that such Losses,
if any, would relate to unresolved contingencies existing at the Effective Time,
which if resolved at the Effective Time would have led to a reduction in the
aggregate Merger consideration. Nothing herein shall limit the liability of
Street for any breach of any representation, warranty or
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covenant if the Merger does not close. Resort to the Escrow Fund shall be the
exclusive contractual remedy of Select for any breach by Street of any
representation or warranty if the Merger does close; provided, however, that
nothing herein shall limit any remedy for fraud. Select may not receive any
shares from the Escrow Fund unless and until Officer's Certificates (as defined
in paragraph (d) below) identifying Losses, the aggregate amount of which exceed
$100,000, have been delivered to the Escrow Agent as provided in paragraph (e);
in such case, Select may recover from the Escrow Fund the total of its Losses,
in excess of $100,000.
(b) Escrow Period; Distribution upon Termination of Escrow Periods.
Subject to the following requirements, the Escrow Fund shall be in existence
immediately following the Effective Time and shall terminate at 5:00 p.m.,
California time, on the Expiration Date (the "Escrow Period"); and, as soon as
practicable (no later than 5 business days), all Escrow Amounts remaining in the
Escrow Fund shall be distributed by the Escrow Agent to Select's transfer agent
for distribution to the former shareholders of Street as set forth in the last
two sentences of this Section 7.2(b); provided, however, that the Escrow Period
shall not terminate with respect to any Escrow Amount (or some portion thereof)
remaining in the Escrow Fund that is necessary in the reasonable judgment of
Select, subject to the objection of the Securityholder Agent and the subsequent
arbitration of the matter in the manner provided in Section 7.2(f) hereof, to
satisfy any unsatisfied claims concerning facts and circumstances existing prior
to the termination of such Escrow Period specified in any Officer's Certificate
delivered to the Escrow Agent prior to termination of such Escrow Period. As
soon as practicable (but no later than 5 business days) after all such claims
(if any) have been resolved, the Escrow Agent shall deliver to Select's transfer
agent for distribution to the former shareholders of Street the remaining Escrow
Amount not required to satisfy such claims. Deliveries of Escrow Amounts to the
former shareholders of Street pursuant to this Section 7.2(b) shall be made in
proportion to their respective original contributions to the Escrow Fund.
(c) Protection of Escrow Fund.
(i) The Escrow Agent shall hold and safeguard the Escrow
Fund during the Escrow Period, shall treat such fund as a trust fund in
accordance with the terms of this Agreement and not as the property of Street
and shall hold and dispose of the Escrow Fund only in accordance with the terms
hereof.
(ii) Any shares of Select Common Stock and/or Select Series
H Preferred Stock, as the case may be, or other equity securities issued or
distributed by Select (including shares issued upon a stock split) ("New
Shares") in respect of Select Common Stock and/or Select Series H Preferred
Stock, as the case may be, in the Escrow Fund which have not been released from
the Escrow Fund shall be added to the Escrow Fund and become a part thereof. New
Shares issued in respect of shares of Street Common Stock and/or Select Series H
Preferred Stock, as the case may be, which have been released from the Escrow
Fund shall not be added to the Escrow Fund but shall be distributed to the
recordholders thereof. Cash dividends on Select Common Stock and/or Select
Series H Preferred Stock, as the case may be, shall not be added to the Escrow
Fund but shall be distributed to the recordholders thereof.
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(iii) Each shareholder shall have voting rights with
respect to the shares of Select Common Stock and/or Select Series H Preferred
Stock, as the case may be, contributed to the Escrow Fund by such shareholder
(and on any voting securities added to the Escrow Fund in respect of such shares
of Select Common Stock and/or Select Series H Preferred Stock, as the case may
be).
(d) Claims Upon Escrow Fund.
(i) Upon receipt by the Escrow Agent at any time on or
before the last day of the Escrow Period of a certificate signed by any officer
of Select (an "OFFICER'S CERTIFICATE"): (A) stating that Select has paid or
properly accrued or reasonably anticipates that it will have to pay or accrue
Losses, and (B) specifying in reasonable detail the individual items of Losses
included in the amount so stated, the date each such item was paid or properly
accrued, or the basis for such anticipated liability, and the nature of the
misrepresentation, breach of warranty or covenant to which such item is related,
the Escrow Agent shall, subject to the provisions of Section 7.2(e) hereof,
deliver to Select out of the Escrow Fund, as promptly as practicable, a number
of shares of Select Common Stock and Select Series H Preferred Stock held in the
Escrow Fund, the aggregate number of which are equal in value to such Losses.
Delivery of shares of Select Common Stock and Select Series H Preferred Stock
from the Escrow Fund shall be made in proportion to the original number of such
shares contributed to the Escrow Fund.
(ii) The fair market value of the shares of Select Common
Stock and Select Series H Preferred Stock to be delivered to Select out of the
Escrow Fund pursuant to Section 7.2(d)(i) hereof shall be determined on the date
the Officer's Certificate is delivered to the Escrow Agent and shall be set
forth in the Officer's Certificate. For purposes of this 7.2(d)(ii), the fair
market value shall be the closing sale price of Select Common Stock (or such
other securities into which Select Common Stock may be reclassified or changed)
as reported on the principal national securities exchange on which the Select
Common Stock is listed or admitted to trading. If the Select Common Stock is not
listed or admitted to trading on a national securities exchange, the fair market
value of the Select Common Stock or Select Series H Preferred Stock (or such
other securities into which Select Common Stock and/or Select Series H Preferred
Stock may be reclassified or changed), as the case may be, shall be determined
in good faith by the Board of Directors of Select; provided, however, in the
event the Securityholder Agent objects to the fair market value of such shares
as determined by the Board of Directors of Select, the conflict shall be
resolved in accordance with Section 7.2(f) hereof.
(e) Objections to Claims. At the time of delivery of any Officer's
Certificate to the Escrow Agent, a duplicate copy of such certificate shall be
delivered to the Securityholder Agent and for a period of thirty (30) days after
such delivery, the Escrow Agent shall make no delivery to Select of any Escrow
Amounts pursuant to Section 7.2(d) hereof unless the Escrow Agent shall have
received written authorization from the Securityholder Agent to make such
delivery. After the expiration of such thirty (30) day period, the Escrow Agent
shall make delivery of shares of Select Common Stock and Select Series H
Preferred Stock from the Escrow Fund in accordance with
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Section 7.2(d) hereof, provided that no such payment or delivery may be made if
the Securityholder Agent shall object in a written statement to the claim made
in the Officer's Certificate, and such statement shall have been delivered to
the Escrow Agent prior to the expiration of such thirty (30) day period.
(f) Resolution of Conflicts; Arbitration.
(i) In case the Securityholder Agent shall so object in
writing to any claim or claims made in any Officer's Certificate, the
Securityholder Agent and Select shall attempt in good faith to agree upon the
rights of the respective parties with respect to each of such claims. If the
Securityholder Agent and Select should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties and shall be furnished to
the Escrow Agent. The Escrow Agent shall be entitled to rely on any such
memorandum and distribute shares of Select Common Stock and Select Series H
Preferred Stock from the Escrow Fund in accordance with the terms thereof.
(ii) If no such agreement can be reached after good faith
negotiation, either Select or the Securityholder Agent may demand arbitration of
the matter unless the amount of the damage or loss is at issue in pending
litigation with a third party, in which event arbitration shall not be commenced
until such amount is ascertained or both parties agree to arbitration; and in
either such event the matter shall be settled by arbitration conducted by three
arbitrators. Select and the Securityholder Agent shall each select one
arbitrator, and the two arbitrators so selected shall select a third arbitrator.
The arbitrators shall set a limited time period and establish procedures
designed to reduce the cost and time for discovery while allowing the parties an
opportunity, adequate in the sole judgment of the arbitrators, to discover
relevant information from the opposing parties about the subject matter of the
dispute. The arbitrators shall rule upon motions to compel or limit discovery
and shall have the authority to impose sanctions, including attorneys' fees and
costs, to the extent as a court of competent law or equity, should the
arbitrators determine that discovery was sought without substantial
justification or that discovery was refused or objected to without substantial
justification. The decision of a majority of the three arbitrators as to the
validity and amount of any claim in such Officer's Certificate shall be binding
and conclusive upon the parties to this Agreement, and notwithstanding anything
in Section 7.2(e) hereof, the Escrow Agent shall be entitled to act in
accordance with such decision and make or withhold payments out of the Escrow
Fund in accordance therewith. Such decision shall be written and shall be
supported by written findings of fact and conclusions which shall set forth the
award, judgment, decree or order awarded by the arbitrators.
(iii) Judgment upon any award rendered by the arbitrators
may be entered in any court having jurisdiction. Any such arbitration shall be
held in Santa Clara County, California under the rules then in effect of the
American Arbitration Association. For purposes of this Section 7.2(f), in any
arbitration hereunder in which any claim or the amount thereof stated in the
Officer's Certificate is at issue, Select shall be deemed to be the Non-
Prevailing Party in the event that the arbitrators award Select less than the
sum of one-half (1/2) of the disputed amount plus any
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<PAGE>
amounts not in dispute; otherwise, the former shareholders of Street as
represented by the Securityholder Agent shall be deemed to be the Non-Prevailing
Party. The Non-Prevailing Party to an arbitration shall pay its own expenses,
the fees of each arbitrator, the administrative costs of the arbitration and the
expenses, including without limitation, reasonable attorneys' fees and costs,
incurred by the other party to the arbitration.
(g) Securityholder Agent of the Shareholders; Power of Attorney.
(i) In the event that the Merger is approved, effective
upon such vote, and without further act of any shareholder, Jay Hoag shall be
appointed as agent and attorney-in-fact (the "Securityholder Agent") for each
shareholder of Street (except such shareholders, if any, as shall have perfected
their appraisal or dissenters' rights under California Law), for and on behalf
of shareholders of Street, to give and receive notices and communications, to
authorize delivery to Select of shares of Select Common Stock and Select Series
H Preferred Stock from the Escrow Fund in satisfaction of claims made by Select,
to object to such deliveries, to agree to, negotiate, enter into settlements and
compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to such claims, and to take all actions
necessary or appropriate in the judgment of Securityholder Agent for the
accomplishment of the foregoing. Such agency may be changed by the former
shareholders of Street from time to time upon not less than thirty (30) days
prior written notice to Select; provided that the Securityholder Agent may not
be removed unless holders of a two-thirds interest of the Escrow Fund agree to
such removal and to the identity of the substituted agent. Any vacancy in the
position of Securityholder Agent may be filled by approval of the holders of a
majority in interest of the Escrow Fund. No bond shall be required of the
Securityholder Agent, and the Securityholder Agent shall not receive
compensation for his or her services. Notices or communications to or from the
Securityholder Agent shall constitute notice to or from each of the shareholders
of Street.
(ii) The Securityholder Agent shall not be liable for any
act done or omitted hereunder as Securityholder Agent while acting in good faith
and in the exercise of reasonable judgment. The former shareholders of Street on
whose behalf the Escrow Amount was contributed to the Escrow Fund shall
severally indemnify the Securityholder Agent and hold the Securityholder Agent
harmless against any loss, liability or expense incurred without negligence or
bad faith on the part of the Securityholder Agent and arising out of or in
connection with the acceptance or administration of the Securityholder Agent's
duties hereunder, including the reasonable fees and expenses of any legal
counsel retained by the Securityholder Agent.
(h) Actions of the Securityholder Agent. A decision, act, consent or
instruction of the Securityholder Agent shall constitute a decision of all the
former shareholders of Street for whom a portion of the Escrow Amount otherwise
issuable to them are deposited in the Escrow Fund and shall be final, binding
and conclusive upon each of such former shareholders, and the Escrow Agent and
Select may rely upon any such decision, act, consent or instruction of the
Securityholder Agent as being the decision, act, consent or instruction of each
every such former shareholder of Street.
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<PAGE>
The Escrow Agent and Select are hereby relieved from any liability to any person
for any acts done by them in accordance with such decision, act, consent or
instruction of the Securityholder Agent.
(i) Third-Party Claims. In the event Select becomes aware of a third-
party claim which Select believes may result in a demand against the Escrow
Fund, Select shall notify the Securityholder Agent of such claim, and the
Securityholder Agent, as representative for the former shareholders of Street,
shall be entitled, at their expense, to participate in any defense of such
claim. Select shall have the right in its sole discretion to settle any such
claim; provided, however, that except with the consent of the Securityholder
Agent, no settlement of any such claim with third-party claimants shall alone be
determinative of the amount of any claim against the Escrow Fund. In the event
that the Securityholder Agent has consented to any such settlement, the
Securityholder Agent shall have no power or authority to object under any
provision of this Article 7 to the amount of any claim by Select against the
Escrow Fund with respect to such settlement.
(j) Escrow Agent's Duties.
(i) The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein, and as set
forth in any additional written escrow instructions which the Escrow Agent may
receive after the date of this Agreement which are signed by an officer of
Select and the Securityholder Agent, and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed to be
genuine and to have been signed or presented by the proper party or parties. The
Escrow Agent shall not be liable for any act done or omitted hereunder as Escrow
Agent while acting in good faith and in the exercise of reasonable judgment, and
any act done or omitted pursuant to the advice of counsel shall be conclusive
evidence of such good faith.
(ii) The Escrow Agent is hereby expressly authorized to
comply with and obey orders, judgments or decrees of any court of law,
notwithstanding any notices, warnings or other communications from any party or
any other person to the contrary. In case the Escrow Agent obeys or complies
with any such order, judgment or decree of any court, the Escrow Agent shall not
be liable to any of the parties hereto or to any other person by reason of such
compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
(iii) The Escrow Agent shall not be liable in any respect
on account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Agreement or any documents
or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the
expiration of any rights under any statute of limitations with respect to this
Agreement or any documents deposited with the Escrow Agent.
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<PAGE>
(v) In performing any duties under the Agreement, the
Escrow Agent shall not be liable to any party for damages, losses, or expenses,
except for gross negligence or willful misconduct on the part of the Escrow
Agent. The Escrow Agent shall not incur any such liability for (A) any act or
failure to act made or omitted in good faith, or (B) any action taken or omitted
in reliance upon any instrument, including any written statement or affidavit
provided for in this Agreement that the Escrow Agent shall in good faith believe
to be genuine, nor will the Escrow Agent be liable or responsible for forgeries,
fraud, impersonations, or determining the scope of any representative authority.
In addition, the Escrow Agent may consult with the legal counsel in connection
with Escrow Agent's duties under this Agreement and shall be fully protected in
any act taken, suffered, or permitted by him/her in good faith in accordance
with the advice of counsel. The Escrow Agent is not responsible for determining
and verifying the authority of any person acting or purporting to act on behalf
of any party to this Agreement.
(vi) If any controversy arises between the parties to
this Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it. The Escrow Agent
may hold all documents and shares of Select Common Stock and Select Series H
Preferred Stock and may wait for settlement of any such controversy by final
appropriate legal proceedings or other means as, in the Escrow Agent's
discretion, the Escrow Agent may be required, despite what may be set forth
elsewhere in this Agreement. In such event, the Escrow Agent will not be liable
for damage. Furthermore, the Escrow Agent may at its option, file an action of
interpleader requiring the parties to answer and litigate any claims and rights
among themselves. The Escrow Agent is authorized to deposit with the clerk of
the court all documents and shares of Select Common Stock and Select Series H
Preferred Stock held in escrow, except all cost, expenses, charges and
reasonable attorney fees incurred by the Escrow Agent due to the interpleader
action and which the parties jointly and severally agree to pay. Upon initiating
such action, the Escrow Agent shall be fully released and discharged of and from
all obligations and liability imposed by the terms of this Agreement.
(vii) Select and its successors and assigns agree to
indemnify and hold Escrow Agent harmless against any and all losses, claims,
damages, liabilities, and expenses, including reasonable costs of investigation,
counsel fees, and disbursements that may be imposed on Escrow Agent or incurred
by Escrow Agent in connection with the performance of his/her duties under this
Agreement, including but not limited to any litigation arising from this
Agreement or involving its subject matter; provided, however, it is understood
that one-half of any amounts paid by Select and its successors and assigns
pursuant to this paragraph to or on behalf of the Escrow Agent shall constitute
Losses reimbursable from the Escrow Fund.
(viii) The Escrow Agent may resign at any time upon giving
at least thirty (30) days written notice to Select and the Securityholder Agent;
provided, however, that no such resignation shall become effective until the
appointment of a successor escrow agent which shall be accomplished as follows:
Select and the Securityholder Agent shall use their best efforts to
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<PAGE>
mutually agree on a successor escrow agent within thirty (30) days after
receiving such notice. If Select and the Securityholder Agent fail to agree upon
a successor escrow agent within such time, the Escrow Agent shall have the right
to appoint a successor escrow agent authorized to do business in the State of
California. The successor escrow agent shall execute and deliver an instrument
accepting such appointment and it shall, without further acts, be vested with
all the estates, properties, rights, powers, and duties of the predecessor
escrow agent as if originally named as escrow agent. The Escrow Agent shall be
discharged from any further duties and liability under this Agreement.
(k) Fees. All fees of the Escrow Agent for performance of its duties
hereunder shall be paid by Select. It is understood that the fees and usual
charges agreed upon for services of the Escrow Agent shall be considered
compensation for ordinary services as contemplated by this Agreement. In the
event that the conditions of this Agreement are not promptly fulfilled, or if
the Escrow Agent renders any service not provided for in this Agreement, or if
the parties request a substantial modification of its terms, or if any
controversy arises, or if the Escrow Agent is made a party to, or intervenes in,
any litigation pertaining to this escrow or its subject matter, the Escrow Agent
shall be reasonably compensated for such extraordinary services and reimbursed
for all costs, attorney's fees, and expenses occasioned by such default, delay,
controversy or litigation. Select promises to pay these sums upon demand in
accordance with the Escrow Agent's standard fee schedule.
ARTICLE 8.
Termination, Amendment and Waiver
Termination. Except as provided in Section 8.2 below, this Agreement may be
terminated and the Merger abandoned at any time prior to the Effective Time:
(a) by mutual consent of Street and Select;
(b) by Select or Street if: (i) the Effective Time has not occurred
by August 15, 1999 (the "End Date"); provided, however, that the right to
terminate this Agreement under this Section 8.1(b)(i), shall not be available to
any party whose action (or whose shareholders' action) or failure to act (or
whose shareholders' failure to act) has been a principal cause of or resulted in
the failure of the Merger to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement; (ii) there shall be a
final nonappealable order of a federal or state court in effect preventing
consummation of the Merger; or (iii) there shall be any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
Merger by any Governmental Entity that would make consummation of the Merger
illegal;
(c) by Select if there shall be any action taken other than by Select
or at Select's behest, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable
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to the Merger by any Governmental Entity, which would: (i) prohibit Select's
ownership or operation of any portion of the business of Street or (ii) compel
Select to dispose of or hold separate all or a portion of the business or assets
of Street or Select as a result of the Merger;
(d) by Select, upon a breach of any representation, warranty,
covenant or agreement on the part of Street set forth in this Agreement, or if
any representation or warranty of Street shall have become untrue, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided that if such
inaccuracy in Street's representations and warranties or breach by Street is
curable by Street through the exercise of its commercially reasonable efforts,
then Select may not terminate this Agreement under this Section 8.1(d) prior to
the End Date, provided Street continues to exercise commercially reasonable
efforts to cure such breach (it being understood that Select may not terminate
this Agreement pursuant to this Section 8.1(d) if it shall have materially
breached this Agreement or if such breach by Street is cured prior to the End
Date);
(e) by Street, upon a breach of any representation, warranty,
covenant or agreement on the part of Select set forth in this Agreement, or if
any representation or warranty of Select shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided, that if such
inaccuracy in Select's representations and warranties or breach by Select is
curable by Select through the exercise of its commercially reasonable efforts,
then Street may not terminate this Agreement under this Section 8.1(e) prior to
the End Date, provided Select continues to exercise commercially reasonable
efforts to cure such breach (it being understood that Street may not terminate
this Agreement pursuant to this Section 8.1(e) if it shall have materially
breached this Agreement or if such breach by the Company is cured prior to the
End Date).
(f) by Street, on or after 5:00 p.m., California time, on the date
which is twenty-one (21) calendar days from but not including the date hereof,
if (i) the Select stockholders have not duly and validly approved the
Certificate Amendment and the issuance of Select Common Stock and Select Series
H Preferred Stock in accordance with the terms of the Select Charter Documents
and applicable law or (ii) Select stockholders have not executed Stockholder
Support Agreements in a form reasonably satisfactory to Street which, if the
shares of Select capital stock were voted in accordance with the terms of such
agreements, such vote would be sufficient to approve the Certificate Amendment
in accordance with the terms of the Select Charter Documents and applicable law.
(g) by Street, on or after 5:00 p.m., California time, on the next
day following the filing with the Securities and Exchange Commission of a
registration statement (as amended if applicable) on Form S-1 by Select (or its
subsidiaries) under the Securities Act which does not make reference to Street,
its business and the Merger.
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Where action is taken to terminate this Agreement pursuant to this Section
8.1, it shall be sufficient (and required) for such action to be authorized by
the Board of Directors (as applicable) of the party taking such action.
Effect of Termination. In the event of termination of this Agreement as
provided in Section 8.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Select, Street, or their
respective officers, directors or shareholders provided, however, that each
party shall remain liable for any breaches of this Agreement prior to its
termination; and provided, further, that the provisions of Sections 5.4, 5.5,
5.6, this Section 8.2 and Article 9 of this Agreement shall remain in full force
and effect and survive any termination of this Agreement.
Amendment. Subject to applicable law, this Agreement may be amended by the
parties hereto at any time by execution of an instrument in writing signed on
behalf of each of the parties hereto; provided, however, execution by the
Securityholder Agent and Escrow Agent shall only be required for amendments
relating to Article 7 hereof.
Extension; Waiver. At any time prior to the Effective Time, Select and
Street may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations of the other party hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 9.
General Provisions
Notices. Every notice, consent and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed given if
delivered personally or by commercial messenger or courier service, or mailed by
registered or certified mail (return receipt requested) or sent via facsimile
(with acknowledgment of complete transmission) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice), provided, however, that notices sent by mail will not be deemed
guaranteed received:
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(a) if to Select to:
NetSelect, Inc.
225 West Hillcrest Drive, Suite 100
Thousand Oaks, CA 91360
Attention: General Counsel
Telephone No.: (805) 557-2300
Facsimile No.: (805) 557-2689
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
Attention: Larry W. Sonsini, Esq.
Martin W. Korman, Esq.
Gil M. Labrucherie, Esq.
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
(b) if to Street or the Securityholder Agent, to:
SpringStreet, Inc.
375 Fremont Street, Suite 100
San Francisco, CA 94105-2324
Telephone No.: (415) 972-1133
Facsimile No.: (415) 972-0296
Attention: Chief Executive Officer
with a copy to:
Latham & Watkins
135 Commonwealth Drive
Menlo Park, CA 94025
Telephone No.: (650) 328-4600
Facsimile No.: (650) 463-2600
Attention: Peter Kerman, Esq.
Ora T. Fisher, Esq.
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(c) if to the Escrow Agent, to:
U.S. Bank Trust, N.A.
One California Street, Fourth Floor
San Francisco, CA 94111
Telephone No: (415) 273-4530
Facsimile No.: (415) 273-4593
Attention: Barbara Wise
Interpretation. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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 counterparts have been signed by each of the parties
and delivered to the other party, it being understood that all parties need not
sign the same counterpart.
Entire Agreement; Assignment. This Agreement, the Exhibits hereto, the
Street Schedules and the Select Schedules, and the documents and instruments and
other agreements among the parties hereto referenced herein: (a) constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings both written and oral, among
the parties with respect to the subject matter hereof; (b) are not intended to
confer upon any other person any rights or remedies hereunder; and (c) may not
be assigned unless agreed to by the other parties hereto, except that Select and
Sub may assign their respective rights and delegate their obligations hereunder
to majority-owned subsidiaries of Select provided that Select remains
contingently liable.
Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
Other Remedies. Except as otherwise provided herein, any and all remedies
herein expressly conferred upon a party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby, or by law or equity upon such
party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
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Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction
and venue of any federal or state court within the Northern District, State of
California, in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be served
upon them in any manner authorized by the laws of the State of California for
such persons and waives and covenants not to assert or plead any objection which
they might otherwise have to such jurisdiction, venue and such process.
Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
Attorneys' Fees. If any action or other proceeding relating to the
enforcement of any provision of this Agreement is brought by any party hereto,
the prevailing party shall be entitled to recover reasonable attorneys' fees,
costs and disbursements (in addition to any other relief to which the prevailing
party may be entitled).
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IN WITNESS WHEREOF, Select, Sub, Street, and with respect to Article 7
only, the Securityholder Agent and the Escrow Agent have caused this Agreement
to be signed by their duly authorized respective officers, all as of the date
first written above.
SPRINGSTREET, INC. NETSELECT, INC.
By: /s/ John H. Helm By: /s/ Stuart Wolff
-------------------------- ---------------------------
Title: President and CEO Title:
----------------------- ------------------------
AVENUE ACQUISITION CORPORATION
By: /s/ Stuart Wolff
--------------------------
Title:
-----------------------
SECURITYHOLDER AGENT ESCROW AGENT
U.S. Bank Trust, N.A.
/s/ Jay Hoag /s/ Barbara Wise
- ----------------------------- ------------------------------
Jay Hoag Barbara Wise
Vice President
***REORGANIZATION AGREEMENT***
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EXHIBIT 3.01
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NETSELECT, INC.
(Originally incorporated on July 29, 1993
under the name InfoTouch Corporation)
FIRST. The name of the Corporation is NetSelect, Inc.
-----
SECOND. The address of the Corporation's registered office in the State of
------
Delaware is 15 East North Street, City of Dover, County of Kent. The name of its
registered agent at such address is United Corporate Services, Inc.
THIRD. The purpose of the Corporation is to engage in any lawful act or
-----
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH. The Corporation is authorized to issue two classes of shares which
------
shall be designated as Common Stock, $0.001 par value per share, and Preferred
Stock, $0.001 par value per share. The total number of shares that the
Corporation is authorized to issue is 90,000,000 shares of Common Stock and
10,000,000 shares of Preferred Stock.
(a) The Preferred Stock shall be divided into series. The first
series shall consist of 1,378,000 shares and is designated "Series A Preferred
------------------
Stock" (hereinafter "Series A Preferred Stock"); the second series shall consist
- ----- ------------------------
of 190,336 shares and is designated "Series B Preferred Stock" (hereinafter,
"Series B Preferred Stock"); the third series shall consist of 614,374 shares
------------------------
and is designated "Series C Preferred Stock" (hereinafter, "Series C Preferred
------------------
Stock"); the fourth series shall consist of 681,201 shares and is designated
- -----
"Series D Preferred Stock" (hereinafter, "Series D Preferred Stock"); the fifth
------------------------
series shall consist of 325,000 shares and is designated "Series E Preferred
Stock" (hereinafter, "Series E Preferred Stock"); the sixth series shall consist
------------------------
of 2,100,000 shares and is designated "Series F Preferred Stock" (hereinafter,
"Series F Preferred Stock") and the seventh series shall consist of 340,955
- -------------------------
shares and is designated "Series G Preferred Stock" (hereinafter, "Series G
--------
Preferred Stock" and together with the Series A Preferred Stock, Series B
- ---------------
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock and Series F Preferred Stock, the "Convertible Preferred
---------------------
Stock"). The remaining shares of Preferred Stock may be issued from time to time
in one or more series. The Board of Directors of the Corporation (the "Board of
--------
Directors") is expressly authorized to provide for the issue of all or any of
- ---------
the remaining shares of the
<PAGE>
Preferred Stock in one or more series, to determine the designation of each such
series and to fix the number of shares and to determine or alter for each such
series, such voting powers, full or limited, or no voting powers, and such
designations, preferences, and relative, participating, optional, or other
rights and such qualifications, limitations, or restrictions thereof, as shall
be stated and expressed in the resolutions or resolutions adopted by the Board
of Directors providing for the issue of such shares and as may be permitted by
the General Corporation Law of the State of Delaware. The Board of Directors is
also expressly authorized to increase or decrease (but not below the number of
shares of such series then outstanding) the number of shares of any series
subsequent to the issue of shares of that series. In case the number of shares
of any such series shall be so decreased, the shares constituting such decrease
shall resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
FIFTH. The relative rights, preferences, privileges, and restrictions
-----
granted to or imposed upon the respective classes of the shares or the holders
thereof are as follows:
(1) Dividends.
---------
(a) The holders of Series D Preferred Stock, the Series F Preferred
Stock and Series G Preferred Stock (collectively, the "Senior Preferred Stock")
----------------------
shall be entitled to receive, when, as and if declared by the Board of Directors
and ratably on a pari passu basis, out of any funds and assets of the
Corporation, cumulative dividends in an amount equal to (A) with respect to each
share of Series D Preferred Stock, $0.9536 per annum (such amount to be
appropriately adjusted for stock splits, stock dividends, recapitalizations and
the like), (B) with respect to each share of Series F Preferred Stock, $1.56 per
annum (such amount to be appropriately adjusted for stock splits, stock
dividends, recapitalizations and the like), and (C) with respect to each share
of Series G Preferred Stock, $3.2409 per annum (such amount to be appropriately
adjusted for stock splits, stock dividends, recapitalizations and the like),
prior and in preference to the payment of any dividend on the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock or the Series
E Preferred Stock (collectively, the "Junior Preferred Stock") or the Common
----------------------
Stock (other than dividends payable solely in shares of Common Stock). Such
dividends shall accrue on each share of Senior Preferred Stock from the date on
which such share of Senior Preferred Stock is issued by the Corporation, and
shall accrue from day to day until either a Liquidation (as defined in Section
3(a) hereof) or a conversion as provided in Section 4 hereof, whether or not
earned or declared. No accumulation of dividends on the Senior Preferred Stock
shall bear any interest. Such dividends are payable as follows:
(i) In the event of a Liquidation, dividends are payable as
provided in Section 3(a);
(ii) In the event of a conversion as provided in Section 4
hereof that occurs prior to a Liquidation, dividends are payable upon the
earlier of (1) a subsequent Liquidation, or (2) any public offering of shares of
the Corporation's capital stock under the Securities Act of 1933, as amended
(the "Securities Act") (an "IPO"); provided, however, that such dividends will
-------------- ---
not be payable and shall be canceled if (x) the IPO closes on or prior to July
31, 1999, (y) the IPO closes on or after August 1, 1999 and on or prior to July
31, 2000 and yields an Enterprise Value (as defined below) for the Corporation
of at least $150,000,000, or (z) the IPO closes on or
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<PAGE>
after August 1, 2000 and yields an Enterprise Value (as defined below) for the
Corporation of at least $200,000,000. "Enterprise Value" shall mean (x) the
----------------
product of the number of the Corporation's Common Stock Equivalents Outstanding
(as defined in Section 4(i)(ii)(C) hereof) multiplied by the IPO per share
offering price plus (y) the outstanding amount of the Corporation's indebtedness
for borrowed money.
(b) After payment of any amounts due to the holders of Senior
Preferred Stock pursuant to Section 1(a) above, the holders of Junior Preferred
Stock shall be entitled to participate with the holders of the Common Stock
ratably on a pari passu basis in any dividends paid or set aside for payment
with respect to Common Stock (other than dividends payable solely in shares of
Common Stock) so that the holders of such Junior Preferred Stock shall receive
with respect to each share of Junior Preferred Stock an amount equal to (x) the
dividend payable with respect to each share of Common Stock multiplied by (y)
the number of shares (and fraction of a share, if any) of Common Stock into
which such share of Junior Preferred Stock is convertible as of the record date
for such dividend.
(c) Subject to the provisions of law and the rights of the
Convertible Preferred Stock set forth in Sections 1(a) and 1(b) above, dividends
may be paid on the Common Stock at such times and in such amounts as the Board
of Directors shall determine; provided, however, that in the case of dividends
-------- -------
or other distributions payable in stock of the Corporation, including
distributions pursuant to stock splits or divisions of capital stock of the
Corporation (other than a split or division of the Convertible Preferred Stock),
only shares of Common Stock shall be distributed with respect to Common Stock.
(2) Voting Rights.
-------------
(a) Except as otherwise provided by law or this Certificate of
Incorporation, at each annual or special meeting of stockholders, in the case of
any written consent of stockholders, and for all other purposes, each holder of
record of shares of Common Stock on the relevant record date shall rank equally
and be entitled to one (1) vote for each share of Common Stock standing in such
holder's name on the stock transfer records of the Corporation. Except as
otherwise provided herein or by law, the holders of Convertible Preferred Stock
shall have full voting rights and powers, and they shall be entitled to vote on
all matters as to which holders of Common Stock and Convertible Preferred Stock
shall be entitled to vote, and the Convertible Preferred Stock shall vote
together with the holders of Common Stock as one class. Each holder of shares of
Convertible Preferred Stock shall be entitled to the number of votes equal to
the number of shares of Common Stock into which such shares of Convertible
Preferred Stock could then be converted. Fractional votes shall not, however, be
permitted and any fractional voting rights resulting from the above formula
(after aggregating all shares into which shares of Convertible Preferred Stock
held by each holder could be converted) shall be rounded to the nearest whole
number (with one-half being rounded upward).
-3-
<PAGE>
(3) Rights on Liquidation.
---------------------
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation (any such event being hereinafter
referred to as a "Liquidation"), before any distribution of assets of the
-----------
Corporation shall be made to or set apart for the holders of Common Stock and
the Junior Preferred Stock, the holders of Series D Preferred Stock, Series F
Preferred Stock and Series G Preferred Stock shall be entitled to receive,
ratably on a pari passu basis, payment out of such assets of the Corporation in
an amount per share equal to the sum of (i) with respect to each share of Series
D Preferred Stock, (A) $14.67 (such amount to be appropriately adjusted for
stock splits, stock dividends, recapitalizations and the like), plus (B) any
accrued and unpaid dividends on such share, whether or not earned or declared,
to and including the date full payment of such amount shall be tendered to the
holders of the Series D Preferred Stock, (ii) with respect to each share of
Series F Preferred Stock, (A) $24.00 (such amount to be appropriately adjusted
for stock splits, stock dividends, recapitalizations and the like), plus (B) any
accrued and unpaid dividends on such share, whether or not earned or declared,
to and including the date full payment of such amount shall be tendered to the
holders of the Series F Preferred Stock and (iii) with respect to each share of
Series G Preferred Stock, (A) $49.86 (such amount to be appropriately adjusted
for stock splits, stock dividends, recapitalizations and the like), plus (B) any
accrued and unpaid dividends on such share, whether or not earned or declared,
to and including the date full payment of such amount shall be tendered to the
holders of the Series G Preferred Stock. The amount payable with respect to each
share of Series D Preferred Stock, Series F Preferred Stock and Series G
Preferred Stock pursuant to the above is referred to as the "Senior Preferred
----------------
Liquidation Preference" for such share. The Senior Preferred Liquidation
- ----------------------
Preference shall be payable on a pari passu basis, based on the full Senior
Preferred Liquidation Preference amounts payable. If the assets of the
Corporation available for distribution to the holders of Series D Preferred
Stock, Series F Preferred Stock and Series G Preferred Stock shall not be
sufficient to make in full the payments herein required, such assets shall be
distributed ratably among the holders of the Series D Preferred Stock, Series F
Preferred Stock and Series G Preferred Stock based upon the aggregate Senior
Preferred Liquidation Preference otherwise payable to holders of Series D
Preferred Stock, Series F Preferred Stock and Series G Preferred Stock.
(b) In the event of a Liquidation, before any distribution of assets
of the Corporation shall be made to or set apart for the holders of Common
Stock, and after any distribution of assets of the Corporation is made or assets
are set apart for the holders of Senior Preferred Stock pursuant to Section 3(a)
above, the holders of shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series E Preferred Stock shall be entitled
to receive, ratably on a pari passu basis, payment out of such assets of the
Corporation in an amount per share equal to the sum of (i) with respect to each
share of Series A Preferred Stock, (A) $2.83 (such amount to be appropriately
adjusted for stock splits, stock dividends, recapitalizations and the like),
plus (B) an amount equal to $0.18 per annum (such amount to be appropriately
adjusted for stock splits, stock dividends, recapitalizations and the like)
accruing on a quarterly basis on the last day of each calendar quarter for the
period from the date of issuance of such share to the date of Liquidation, plus
(C) any declared and unpaid dividends on such share; (ii) with respect to each
share of Series B Preferred Stock, the sum of (A) $6.19 (such amount to be
appropriately adjusted for
-4-
<PAGE>
stock splits, stock dividends, recapitalizations and the like), plus (B) an
amount equal to $0.40 per annum (such amount to be appropriately adjusted for
stock splits, stock dividends, recapitalizations and the like) accruing on a
quarterly basis on the last day of each calendar quarter for the period from the
date of issuance of such share to the date of Liquidation, plus (C) any declared
and unpaid dividends on such share; (iii) with respect to each share of Series C
Preferred Stock, (A) $7.32 (such amount to be appropriately adjusted for stock
splits, stock dividends, recapitalizations and the like), plus (B) an amount
equal to $0.4758 per annum (such amount to be appropriately adjusted for stock
splits, stock dividends, recapitalizations and the like) accruing on a quarterly
basis on the last day of each calendar quarter for the period from the date of
issuance of such share to the date of Liquidation, plus (C) any declared and
unpaid dividends on such share; and (iv) with respect to each share of Series E
Preferred Stock, (A) $14.67 (such amount to be appropriately adjusted for stock
splits, stock dividends, recapitalizations and the like), plus (B) if the Pre-
Liquidation Contingent Payment (as defined below) has not been paid and is not
payable to holders of Series E Preferred Stock, an amount equal to $0.95 per
annum (such amount to be appropriately adjusted for stock splits, stock
dividends, recapitalizations and the like) accruing on a quarterly basis on the
last day of each calendar quarter for the period from the date of issuance of
such share to the date of Liquidation; provided, however, that such amount
determined pursuant to this subparagraph (3)(b)(iv)(B) shall not exceed $3.79
(such amount to be appropriately adjusted for stock splits, stock dividends,
recapitalizations and the like), plus (C) any declared and unpaid dividends on
such share. If a Liquidation has not occurred by June 30, 2002, the holders of
Series E Preferred Stock shall be entitled to receive payment by June 30, 2002
out of the assets of the Corporation equal to the amount described in
subparagraph (3)(b)(iv)(B) above had a Liquidation occurred on June 30, 2002
(the "Pre-Liquidation Contingent Payment"). Notwithstanding anything herein to
the contrary, upon the payment of the Pre-Liquidation Contingent Payment to
holders of Series E Preferred Stock pursuant to the immediately preceding
sentence, no amount described in subparagraph (3)(b)(iv)(B) above shall
thereafter be included in any payment to holders of Series E Preferred Stock
upon any subsequent Liquidation. The amount payable with respect to each share
of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and Series E Preferred Stock is referred to as the "Junior Preferred Liquidation
----------------------------
Preference". If the assets of the Corporation available for distribution to
- ----------
such holders of Junior Preferred Stock shall not be sufficient to make in full
the payments herein required, such assets shall be distributed ratably among the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series E Preferred Stock on a pari passu basis, based upon
the aggregate Junior Preferred Liquidation Preference otherwise payable.
(c) If the assets of the Corporation available for distribution to
stockholders exceed the aggregate amount payable pursuant to paragraphs 3(a) and
3(b) above, the remainder of such assets shall be distributed ratably to the
holders of Common Stock, in accordance with the number of shares of Common Stock
held by each such holder.
(d) A merger or consolidation including the Corporation and a sale,
lease or transfer of all or substantially all of the assets of the Corporation
shall be deemed a Liquidation, unless in connection with such transaction, the
Convertible Preferred Stock remains unchanged or the holders of Convertible
Preferred Stock receive a stock having terms and conditions which are no less
favorable than the terms and conditions of the Convertible Preferred Stock;
provided, however, that any such event shall not be deemed a Liquidation if so
- -------- --------
determined by action of the
-5-
<PAGE>
holders of at least a majority of the shares of Convertible Preferred Stock at
the time outstanding, voting together as a single class.
(4) Conversion.
----------
(a) Optional Conversion.
-------------------
(i) The holder of any share or shares of Convertible Preferred
Stock shall have the right at any time, at such holder's option, to convert all
or a portion of the shares of Convertible Preferred Stock held by such holder
into shares of fully paid nonassessable shares of Common Stock. Each share of
Convertible Preferred Stock shall be convertible in accordance with Section 4(a)
hereof into the number of shares of Common Stock which results from dividing the
Original Issue Price for such series of Convertible Preferred Stock by the
conversion price for such series of Convertible Preferred Stock that is in
effect at the time of conversion (the "Conversion Price"). The initial
----------------
Conversion Price with respect to each share of Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock and Series F Preferred Stock shall be the Original Issue Price
(as hereinafter defined) for such series of Convertible Preferred Stock. The
"Original Issue Price" shall mean $2.83 per share for the Series A Preferred
- ---------------------
Stock, $6.19 per share for the Series B Preferred Stock, $7.32 per share for the
Series C Preferred Stock, $14.67 per share for the Series D Preferred Stock,
$14.67 per share for the Series E Preferred Stock, $24.00 per share for the
Series F Preferred Stock and $49.86 per share for the Series G Preferred Stock.
The Conversion Price for the Convertible Preferred Stock shall be subject to
adjustment from time to time as provided below. No fractional shares or scrip
representing fractional shares shall be issued upon the conversion of any
Convertible Preferred Stock. With respect to any fraction of a share of
Convertible Preferred Stock called for upon any conversion (after multiplying
the conversion rate in effect by the total number of Conversion Shares, as
defined below), the Corporation shall pay to the holder an amount in cash equal
to such fraction multiplied by the current market value of a share of Common
Stock, determined in good faith by the Board of Directors of the Corporation.
(ii) Such right of conversion shall be exercised by the holder
of shares of Convertible Preferred Stock by giving prior written notice to the
Corporation (the "Conversion Notice") that such holder elects to convert a
stated number of shares of Convertible Preferred Stock (the "Conversion Shares")
-----------------
into shares of Common Stock on the date specified in the Conversion Notice
(which date shall not be earlier than the date of the Conversion Notice), and by
surrender of the certificate or certificates representing such Conversion
Shares. The Conversion Notice shall also contain a statement of the name or
names (with addresses) in which the certificate or certificates for Common Stock
shall be issued. Promptly after the receipt of the Conversion Notice and
surrender of the Conversion Shares, the Corporation shall issue and deliver, or
cause to be delivered, to the holder of the Conversion Shares or his nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
issuable upon conversion of such Conversion Shares. Such conversion shall be
deemed to have been effected as of the close of business on the date specified
in the Conversion Notice, and the person or persons entitled to receive the
shares of Common Stock, issuable upon conversion shall be treated for all
-6-
<PAGE>
purposes as the holder or holders of record of such shares of Common Stock as of
the close of business on such date. With respect to any fraction of a share of
Convertible Preferred Stock called for upon any conversion, the Corporation
shall pay to the holder an amount in cash equal to such fraction multiplied by
the current market value of a share of Common Stock, determined in good faith by
the Board of Directors of the Corporation.
(b) Automatic Conversion. Notwithstanding any other provisions of
--------------------
this Section 4, the Corporation, by action of its Board of Directors, shall
have the right to require each share of Convertible Preferred Stock to convert
into shares of Common Stock as if it had been converted pursuant to Section 4(a)
above (adjusted appropriately for any prior events described in Sections 4(e),
4(f) or 4(g) below) upon the following events and each share shall upon such
action of the Board of Directors be deemed to have been immediately so
converted:
(i) If the Corporation shall effect an IPO at an offering
price per share of at least $49.86 per share (as adjusted for stock splits,
stock dividends and the like) that yields an Enterprise Value for the
Corporation of at least $300,000,000.
(ii) If the holders of more than two-thirds (2/3) of the
Convertible Preferred Stock (voting as a single class on an as-converted basis)
consent to such conversion; or
(iii) Upon the date that fewer than 100,000 shares of any series
of Convertible Preferred Stock remain outstanding, all outstanding shares of
such series shall be deemed automatically converted into the number of fully
paid and nonassessable shares of Common Stock into which such shares of
Convertible Preferred Stock are convertible on such date pursuant to Section
4(a) hereof.
(c) Stock Reserved. The Corporation shall at all times reserve and
--------------
keep available out of its authorized but unissued Common Stock, solely for
issuance upon the conversion of shares of Convertible Preferred Stock as herein
provided, such number of shares of Common Stock as shall from time to time be
issuable upon the conversion of all of the shares of Convertible Preferred Stock
at the time outstanding.
(d) Stock Transfer Taxes. The issue of stock certificates upon
--------------------
conversion of Convertible Preferred Stock shall be made without charge to the
converting holder for any tax in respect of such issue. The Corporation shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares in any name other than
that of the holder of any of the Convertible Preferred Stock converted, and the
Corporation shall not be required to issue or deliver any stock certificate
unless and until the person or persons requesting the issue thereof shall have
paid to the Corporation the amount of such tax or shall have established to the
satisfaction of the Corporation that such tax has been paid.
(e) Adjustments for Other Dividends and Distributions. If at any time
-------------------------------------------------
or from time to time after the date on which the first share of a series of
Convertible Preferred Stock is issued by the Corporation (each, an "Original
--------
Issue Date") the Corporation pays a dividend or makes another distribution to
- ----------
the holders of the Common Stock payable in securities of the Corporation other
than shares of Common Stock, then in each such event provision shall be
-7-
<PAGE>
made so that the holders of such series of Convertible Preferred Stock shall
receive upon conversion thereof, in addition to the number of shares of Common
Stock receivable upon conversion thereof, the amount of securities of the
Corporation which they would have received had such series of Convertible
Preferred Stock been converted into Common Stock on the date of such event (or
such record date, as applicable) and had such holders thereafter, during the
period from the date of such event (or such record date, as applicable) to and
including the conversion date, retained such securities receivable by them as
aforesaid during such period, subject to all other adjustments called for during
such period under this Section 4 with respect to the rights of the holders of
such series of Convertible Preferred Stock or with respect to such other
securities by their terms.
(f) Adjustment for Reclassification, Exchange and Substitution. If at
----------------------------------------------------------
any time or from time to time after an Original Issue Date the Common Stock
issuable upon the conversion of a series of Convertible Preferred Stock is
changed into the same or a different number of shares of any class or classes of
stock, whether by recapitalization, reclassification or otherwise (other than by
----- ----
a Common Stock Event (as hereinafter defined) or a stock dividend,
reorganization, merger or consolidation provided for elsewhere in this Section
4), then in any such event each holder of such series of Convertible Preferred
Stock shall have the right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable upon such
recapitalization, reclassification or other change by holders of the number of
shares of Common Stock into which such shares of Convertible Preferred Stock
could have been converted immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as provided herein
or with respect to such other securities or property by the terms thereof.
(g) Reorganizations, Mergers and Consolidations. If at any time or
-------------------------------------------
from time to time after an Original Issue Date there is a capital reorganization
of the Corporation (other than a recapitalization, subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Section 4)
or a merger or consolidation of the Corporation with or into another corporation
(except an event which is governed under Section 3), then, as a part of such
reorganization, merger or consolidation, provision shall be made so that such
holders of Convertible Preferred Stock shall be entitled to receive, upon
conversion of such series of Convertible Preferred Stock, the number of shares
of stock or other securities or property of the Corporation, or of such
successor corporation resulting from such reorganization, merger or
consolidation, to which a holder of Common Stock deliverable upon conversion
would have been entitled on such reorganization, merger or consolidation. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4 with respect to the rights of the holders of the
Convertible Preferred Stock after the reorganization, merger or consolidation to
the end that the provisions of this Section 4 (including adjustment of the
Conversion Price then in effect and number of shares issuable upon conversion of
such series of Convertible Preferred Stock) shall be applicable after that event
and be as nearly equivalent to the provisions hereof as may be practicable. This
paragraph 4(g) shall similarly apply to successive reorganizations, mergers and
consolidations.
-8-
<PAGE>
(h) Common Stock Event Adjustment. Upon the happening of a Common
-----------------------------
Stock Event, the Conversion Price of each series of Convertible Preferred Stock
shall, simultaneously with the happening of such Common Stock Event, be adjusted
by multiplying the Conversion Price of the respective Convertible Preferred
Stock in effect immediately prior to such Common Stock Event by a fraction, (i)
the numerator of which shall be the number of shares of Common Stock issued and
outstanding immediately prior to such Common Stock Event, and (ii) the
denominator of which shall be the number of shares of Common Stock issued and
outstanding immediately after such Common Stock Event, and the product so
obtained shall thereafter be the Conversion Price for each respective series of
Convertible Preferred Stock. The Conversion Price for the Convertible Preferred
Stock shall be readjusted in the same manner upon the happening of each
subsequent Common Stock Event. As used herein, the term "Common Stock Event"
------------------
shall mean (i) the issue by the Corporation of additional shares of Common Stock
as a dividend or other distribution on outstanding Common Stock, (ii) a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock, or (iii) a combination of the outstanding shares of
Common Stock into a smaller number of shares of Common Stock.
(i) Sale of Shares Below Conversion Price.
-------------------------------------
(i) Adjustment Formula. If at any time or from time to time
------------------
after the Original Issue Date of the Series D Preferred Stock, the Series F
Preferred Stock or the Series G Preferred Stock, the Corporation issues or
sells, or is deemed by the provisions of this Section 4 to have issued or sold,
Additional Shares of Common Stock (as hereinafter defined), otherwise than in
connection with a dividend or distribution as provided in Section 4(e), a
recapitalization, reclassification or other change as provided in Section 4(f),
or a reorganization, merger or consolidation as provided in Section 4(g) or a
Common Stock Event as provided in Section 4(h), for an Effective Price (as
hereinafter defined) that is less than the Conversion Price for the Series D
Preferred Stock, Series F Preferred Stock or Series G Preferred Stock in effect
immediately prior to such issue or sale, then, and in each such case, the
Conversion Price for the Series D Preferred Stock, Series F Preferred Stock or
Series G Preferred Stock (as the case may be) shall be reduced, as of the close
of business on the date of such issue or sale, to the price obtained by
multiplying such Conversion Price by a fraction:
(A) The numerator of which shall be the sum of (1) the
number of Common Stock Equivalents Outstanding (as hereinafter defined)
immediately prior to such issue or sale of Additional Shares of Common Stock
plus (2) the quotient obtained by dividing the Aggregate Consideration Received
(as hereinafter defined) by the Corporation for the total number of Additional
Shares of Common Stock so issued or sold (or deemed so issued and sold) by the
Conversion Price of such Convertible Preferred Stock in effect immediately prior
to such issue or sale; and
(B) The denominator of which shall be the sum of (1) the
number of Common Stock Equivalents Outstanding immediately prior to such issue
or sale plus (2) the number of Additional Shares of Common Stock so issued or
sold (or deemed so issued and sold).
-9-
<PAGE>
(ii) Certain Definitions. For the purpose of making any
-------------------
adjustment required under this Section 4(i):
(A) "Additional Shares of Common Stock" shall mean all
---------------------------------
shares of Common Stock issued or deemed to be issued by the Corporation, whether
or not subsequently reacquired or retired by the Corporation, other than: (1)
shares of Common Stock issued or issuable upon conversion of Convertible
Preferred Stock, (2) shares of Common Stock (or options, warrants or rights
therefor) issued to employees, officers, or directors of, or contractors,
consultants or advisers to, the Corporation or any Subsidiary pursuant to stock
purchase or stock option plans, stock bonuses or awards, warrants, contracts or
other arrangements that are approved by the Board of Directors and (3) warrants
to issue up to ten percent (10%) of the Corporation's common stock equivalents
outstanding of the date of this Amended and Restated Certificate of
Incorporation that are issued to the Corporation's strategic partners on or
after April 1, 1998.
(B) The "Aggregate Consideration Received" by the
--------------------------------
Corporation for any issue or sale (or deemed issue or sale) of securities shall
(1) to the extent it consists of cash, be computed at the net amount of cash
received by the Corporation after deduction of any underwriting or similar
commissions, compensation or concessions paid or allowed by the Corporation in
connection with such issue or sale and without deduction of any expenses payable
by the Corporation; (2) to the extent it consists of property other than cash,
be computed at the fair value of that property as determined in good faith by
the Board of Directors; and (3) if Additional Shares of Common Stock,
Convertible Securities or Rights or Options to purchase either Additional Shares
of Common Stock or Convertible Securities are issued or sold together with other
stock or securities or other assets of the Corporation for a consideration which
covers both, be computed as the portion of the consideration so received that
may be reasonably determined in good faith by the Board of Directors to be
allocable to such Additional Shares of Common Stock, Convertible Securities or
Rights or Options;
(C) "Common Stock Equivalents Outstanding" shall mean
------------------------------------
the number of shares of Common Stock that is equal to the sum of (1) all shares
of Common Stock of the Corporation that are outstanding at the time in question,
plus (2) all shares of Common Stock of the Corporation issuable upon conversion
of all shares of Convertible Preferred Stock or other Convertible Securities
that are outstanding at the time in question, plus (3) all shares of Common
Stock of the Corporation that are issuable upon the exercise of Rights or
Options that are outstanding at the time in question assuming the full
conversion or exchange into Common Stock of all such Rights or Options that are
Rights or Options to purchase or acquire Convertible Securities into or for
Common Stock;
(D) "Convertible Securities" shall mean stock or other
----------------------
securities convertible into or exchangeable for shares of Common Stock;
(E) The "Effective Price" of Additional Shares of
---------------
Common Stock shall mean the quotient determined by dividing the total number of
Additional Shares of Common Stock issued or sold, or deemed to have been issued
or sold, by the Corporation under
-10-
<PAGE>
this Section 4(i), into the Aggregate Consideration Received, or deemed to have
been received, by the Corporation under this Section 4(i), for the issue of such
Additional Shares of Common Stock; and
(F) "Rights or Options" shall mean warrants, options or
-----------------
other rights to purchase or acquire shares of Common Stock or Convertible
Securities.
(iii) Deemed Issuances. For the purpose of making any
----------------
adjustment to the Conversion Price of the Senior Preferred Stock required under
this Section 4(i), if the Corporation issues or sells any Rights or Options or
Convertible Securities and if the Effective Price of the shares of Common Stock
issuable upon exercise of such Rights or Options and/or the conversion or
exchange of Convertible Securities (computed without reference to any additional
or similar protective or antidilution clauses) is less than the Conversion Price
then in effect for a Senior Preferred Stock, then the Corporation shall be
deemed to have issued, at the time of the issuance of such Rights, Options or
Convertible Securities, that number of Additional Shares of Common Stock that is
equal to the maximum number of shares of Common Stock issuable upon exercise or
conversion of such Rights, Options or Convertible Securities upon their issuance
and to have received, as the Aggregate Consideration Received for the issuance
of such shares, an amount equal to the total amount of the consideration, if
any, received by the Corporation for the issuance of such Rights or Options or
Convertible Securities, plus, in the case of such Rights or Options, the minimum
amounts of consideration, if any, payable to the Corporation upon the exercise
in full of such Rights or Options, plus, in the case of Convertible Securities,
the minimum amounts of consideration, if any, payable to the Corporation (other
than by cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion or exchange thereof; provided that:
-------- ----
(A) if the minimum amounts of such consideration cannot
be ascertained, but are a function of antidilution or similar protective
clauses, then the Corporation shall be deemed to have received the minimum
amounts of consideration without reference to such clauses;
(B) if the minimum amount of consideration payable to the
Corporation upon the exercise of Rights or Options or the conversion or exchange
of Convertible Securities is reduced over time or upon the occurrence or non-
occurrence of specified events other than by reason of antidilution or similar
protective adjustments, then the Effective Price shall be recalculated using the
figure to which such minimum amount of consideration is reduced; and
(C) if the minimum amount of consideration payable to the
Corporation upon the exercise of such Rights or Options or the conversion or
exchange of Convertible Securities is subsequently increased, then the Effective
Price shall again be recalculated using the increased minimum amount of
consideration payable to the Corporation upon the exercise of such Rights or
Options or the conversion or exchange of such Convertible Securities.
-11-
<PAGE>
No further adjustment of the Conversion Price, adjusted upon the issuance of
such Rights or Options or Convertible Securities, shall be made as a result of
the actual issuance of shares of Common Stock on the exercise of any such Rights
or Options or the conversion or exchange of any such Convertible Securities. If
any such Rights or Options or the conversion rights represented by any such
Convertible Securities shall expire without having been fully exercised, then
the Conversion Price as adjusted upon the issuance of such Rights or Options or
Convertible Securities shall be readjusted to the Conversion Price which would
have been in effect had an adjustment been made on the basis that the only
shares of Common Stock so issued were the shares of Common Stock, if any, that
were actually issued or sold on the exercise of such Rights or Options or rights
of conversion or exchange of such Convertible Securities, and such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Corporation upon such exercise, plus the consideration, if any,
actually received by the Corporation for the granting of all such Rights or
Options, whether or not exercised, plus the consideration received for issuing
or selling all such Convertible Securities actually converted or exchanged, plus
the consideration, if any, actually received by the Corporation (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) on the conversion or exchange of such Convertible Securities,
provided that such readjustment shall not apply to prior conversions of Series D
Preferred Stock, Series F Preferred Stock or Series G Preferred Stock.
(j) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment pursuant to this Section 4, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of Convertible
Preferred Stock affected by such adjustment or readjustment a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of such holder, furnish or cause to be furnished
to such holder a like certificate setting forth the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of Convertible Preferred Stock owned by such
holder.
(k) Notices of Record Date. In the event of any taking by the
----------------------
Corporation of a record of the holders of any Class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any shares of
Common Stock or other securities, or any right to subscribe for, purchase or
otherwise acquire, or any option for the purchase of, any shares of stock of any
class or any other securities or property, or to receive any other right, the
Corporation shall mail to each holder of Convertible Preferred Stock at least
thirty (30) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution, or right.
(l) Notices. Any notice required by the provisions of this Section 4
-------
to be given to the holders of shares of Convertible Preferred Stock shall be
deemed given if deposited in the United States mail postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
Corporation.
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<PAGE>
(5) Convertible Preferred Stock Negative Covenants.
----------------------------------------------
In addition to any other rights provided by law, neither the Corporation
nor any subsidiary of the Corporation shall, without first obtaining the
affirmative vote or written consent of the holders of not less than a majority
of the then outstanding shares of Convertible Preferred Stock, voting as a
single class (unless such action would materially and adversely affect one class
or series in a manner differently from another class or series of Convertible
Preferred Stock, in which case the vote or written consent of holders of a
majority of the then outstanding shares of that series shall also be required):
(a) Amend or repeal any provision of, or add any provision to, the
Corporation's Certificate of Incorporation or By-laws or any subsidiary's
charter documents, if such action would adversely affect the preferences,
rights, privileges or powers of, or the restrictions provided for the benefit
of, Convertible Preferred Stock;
(b) Authorize any additional shares of any existing class or series
of capital stock, or authorize or issue any shares of any new class or series of
capital stock, with dividend, liquidation or voting rights superior to those of
any existing class or series of Convertible Preferred Stock;
(c) Recapitalize or reclassify any class or series of capital stock;
(d) In the case of the Corporation, pay or declare any dividend or
distribution on any shares of its capital stock (except dividends pursuant to
Section 1 above), or apply any of its assets to the redemption, retirement,
purchase or acquisition, directly or indirectly, through subsidiaries or
otherwise, of any shares of its capital stock, except for repurchases of shares
under the Company's employee benefit plans (provided that such repurchases are
effected at no higher than the original issuance price of such shares or the
then fair market value of such shares, such fair market value to be determined
by the Company's Board of Directors);
(e) Merge or consolidate with or into any other corporation or other
entity, where the Corporation's stockholders do not, immediately after the
transaction, hold at least a majority of the shares of the surviving or
acquiring entity, or sell or otherwise dispose of all or substantially all of
its assets;
(f) Provide for any voluntary dissolution, liquidation or winding up;
(g) Effect any material change in its business as such business was
proposed to be conducted or operated on the date this Amended and Restated
Certificate of Incorporation became effective; and
(h) Enter into any transaction with any employee, consultant, officer
or director of the Corporation or any subsidiary or holder of 5% or more of any
class or series of capital stock of the Corporation, or any member of their
respective immediate families or any corporation or other entity directly or
indirectly controlled by one or more of such employees, consultants, officers,
directors or 5% or greater stockholders or members of their immediate families,
on terms less favorable to the Corporation or the subsidiary than would obtain
in a transaction between unrelated parties.
-13-
<PAGE>
(6) Purchase Rights. If at any time the Corporation grants, issues or
---------------
sells any options, securities convertible into Common Stock or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of Common Stock (the "Purchase Rights"), then each holder of
---------------
Convertible Preferred Stock will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such
holder could have acquired if such holder had held the number of shares of
Common Stock acquirable upon conversion of such holder's Convertible Preferred
Stock immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of Common Stock are to be determined for the
grant, issue or sale of such Purchase Rights.
(7) Liability of Directors. The Corporation eliminates the personal
----------------------
liability of each member of its Board of Directors to the Corporation for
monetary damages for breach of fiduciary duty as a Director to the Corporation;
provided, however, that the foregoing shall not eliminate the liability of a
- -------- -------
Director (i) for any breach of such Director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware or (iv) for
any transaction from which such Director derived an improper personal benefit.
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<PAGE>
EXHIBIT 3.03
AMENDED
BY-LAWS
OF
NETSELECT, INC.
(a Delaware corporation)
(originally incorporated July 29, 1993 under the name InfoTouch Corporation)
(as amended February 4, 1999)
ARTICLE I
OFFICES
SECTION 1. OFFICES. The Corporation shall maintain its registered office in the
State of Delaware at 15 North East Street, in the City of Dover, in the County
of Kent, and its resident agent at such address is United Corporate Services,
Inc. The Corporation may also have offices in such other places in the United
States or elsewhere as the Board of Directors may, from time to time, appoint or
as the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the election of
directors and for such other business as may properly be conducted at such
meeting shall be held at such place, either within or without the State of
Delaware, and at such time and date as the Board of Directors shall determine by
resolution and set forth in the notice of the meeting. In the event that the
Board of Directors falls to so determine the time, date and place for the annual
meeting, it shall be held, beginning in March 1997, at the principal office of
the Corporation at 10 o'clock A.M. on the last Friday in March of each year.
SECTION 2. SPECIAL MEETINGS. Special meetings of stockholders, unless otherwise
prescribed by statute, may be called by the Chairman of the Board and shall be
called by the Chief Executive Officer or Secretary upon the direction of the
Board of Directors or the written request of not less than 10% in interest of
the stockholders entitled to vote thereat. Notice of each special meeting shall
be given in accordance with Section 3 of this Article II. Unless otherwise
permitted by law, business transacted at any special meeting of stockholders
shall be limited to the purpose stated in the notice.
SECTION 3. NOTICE OF MEETINGS. Whenever stockholders are required or permitted
to take any action at a meeting, a written notice of the meeting, which shall
state the place, date and time of the meeting, and, in the case of a special
meeting, the purposes for which the meeting is called, shall be mailed to or
delivered to each stockholder of record entitled to vote thereat. Such notice
shall be given not less than ten (10) days nor more than sixty (60) days before
the date of any such meeting.
SECTION 4. QUORUM. (a) At each meeting of the stockholders, except where
otherwise provided by law, the Certificate of Incorporation or these By-Laws,
the holders of record of a majority in voting power of the issued and
outstanding shares of stock of the Corporation entitled to vote at such meeting,
present in person or represented by
<PAGE>
proxy, shall be required to constitute a quorum for the transaction of business.
Where a separate vote by class or classes or one or more series of a class or
classes of stock is required by law or the Certificate of Incorporation for any
matter, the holders of a majority in voting power of the issued and outstanding
shares of each such class or classes or one or more series of a class or classes
entitled to vote, present in person or represented by proxy, shall be required
to constitute a quorum with respect to a vote on that matter, except that where
the unanimous affirmative vote or written consent of all of the holders of the
outstanding shares of a class or classes of stock is required by the Certificate
of Incorporation with respect to any matter, all of the holders of the
outstanding shares of such class or classes entitled to vote, present in person
or by proxy, shall be required to constitute a quorum with respect to a vote on
that matter. For purposes of these By-Laws, the term "total voting power" shall
mean, (a) in the case of matters which do not require a separate vote by class
or classes or one or more series of a class or classes of stock, the aggregate
number of votes which all of the shares of stock, excluding the votes of shares
of stock having such entitlement only upon the happening of a contingency, would
be entitled to cast on any such matter, if all such shares of stock were present
at a meeting of the Corporation's stockholders for the purpose of stockholder
action on such matter, and (b) in the case of matters which do require a
separate vote by class or classes or one or more series of a class or classes of
stock, the aggregate number of votes which all of the shares of such class or
classes or one or more series of a class or classes of stock, excluding the
votes of shares of stock having such entitlement only upon the happening of a
contingency, would be entitled to cast on any such matter, if all of the shares
of such class or classes or one or more series of a class or classes of stock
were present and voted at a meeting of the Corporation's stockholders for the
purpose of stockholder action on such matter.
(b) In the absence of a quorum at any annual or special meeting of
stockholders, a majority in total voting power of the shares of stock entitled
to vote, or in the case of matters requiring a separate vote by any class or
classes or one or more series of a class or classes of stock, a majority in
total voting power of the shares of each such class or classes or one of more
series of a class or classes entitled to vote, present in person or represented
by proxy or, in the absence of all such stockholders, any person entitled to
preside at or act as secretary of such meeting, shall have the power to adjourn
the meeting from time to time, if the date, time and place thereof are announced
at the meeting at which the adjournment is taken. At any such adjourned meeting
at which a quorum shall be present, any business may be transacted which might
have been transacted at the meeting as originally called. If the adjournment is
for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
SECTION 5. VOTING. (a) Except as otherwise provided by law or by the
Certificate of Incorporation or these By-Laws, at every meetings of the
stockholders, in the case of any written consent of stockholders, and for all
other purposes, each holder of record of shares of (x) Common Stock, par value
$.001 per share (the " Common Stock"), on the relevant record date shall be
entitled to one (1) vote for each share of Common Stock standing in such
person's name on the stock transfer records of the Corporation, and (y) each
share of Series A Convertible Preferred Stock, par value $0.001 per share (the
<PAGE>
"Series A Preferred Stock"), Series B Convertible Preferred Stock, par value
$0.001 per share (the "Series B Preferred Stock"), Series C Convertible
Preferred Stock, par value $0.001 per share (the "Series C Preferred Stock"),
Series D Convertible Preferred Stock, par value $0.001 per share (the "Series D
Preferred Stock"), Series E Convertible Preferred Stock, par value $0.001 per
share (the "Series E Preferred Stock"), and Series F Convertible Preferred
Stock, par value $0.001 per share (the "Series F Preferred Stock," and, together
with the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock, and the Series E Preferred Stock,
the "Preferred Stock"), shall be entitled to the number of votes equal to the
number of shares of Common Stock into which such shares of Preferred Stock could
be then converted.
(b) Unless otherwise provided in the Certificate of Incorporation, each
stockholder shall be entitled to one vote for each share of capital stock held
by such stockholder. Upon the request of not less than 10% in interest of the
stockholders entitled to vote at a meeting, voting shall be by written ballot.
Unless otherwise required by law, the vote of a majority of the outstanding
shares, present in person or represented by proxy and entitled to vote on the
subject matter, at a meeting at which a quorum is present shall constitute the
act of the stockholders.
(c) At all meetings of the stockholders at which a quorum is present, except as
otherwise provided by law or by the Certificate of Incorporation or these By-
Laws, all actions shall be decided by the affirmative vote of not less than 66-
2/3% of the total voting power of all of the issued and outstanding shares of
NetSelect Common Stock and the Preferred Stock, voting as a single class, at a
meeting at which a quorum is present, shall be required to constitute the act of
the stockholders on any actions permitted pursuant to the General Corporation
Law of Delaware.
SECTION 6. CHAIRMAN OF MEETINGS. The Chairman of the Board of Directors of the
Corporation, or, in his absence or disability, the Chief Executive Officer of
the Corporation, shall preside at all meetings of the stockholders.
SECTION 7. SECRETARY OF MEETING. The Secretary of the Corporation shall act as
Secretary at all meetings of the stockholders. In the absence or disability of
the Secretary, the Chairman of the Board of Directors or the Chief Executive
Officer shall appoint a person to act as Secretary at such meetings.
SECTION 8. ACTION WITHOUT MEETING. Unless otherwise provided by the Certificate
of Incorporation, any action required by law to be taken at any annual or
special meeting of stockholders, or any action which may be taken at such
meetings, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote were present and voted. Every
written consent shall bear the date of signature of each stockholder who signs
the consent. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
SECTION 9. ADJOURNMENT. At any meeting of stockholders of the Corporation, if
less than a quorum be present, a majority of the stockholders entitled to vote
thereat, present in person or by proxy, shall have the power to adjourn the
meeting from time to time without notice other than announcement at the meeting
until a quorum shall be
<PAGE>
present. Any business may be transacted at the adjourned meeting which might
have been transacted at the meeting originally noticed. If the adjournment is
for more than 30 days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation shall be managed
by or under the direction of its Board of Directors. The Board shall exercise
all of the powers and duties conferred by law except as provided by the
Certificate of Incorporation or these By-Laws.
SECTION 2. NUMBER AND TERM. The number of directors shall be fixed at that
number of directors who are entitled to be nominees pursuant to Section 2.1(a)
of that certain Second Amended and Restated NetSelect, Inc. Stockholders'
Agreement dated as of January __, 1999 by and among the Corporation and the
Stockholders (as such term is defined therein), as such agreement may be
amended. The Board of Directors shall be elected by the stockholders at their
annual meeting, and each director shall be elected to serve for the term of one
year and until his successor shall be elected and qualified or until his earlier
resignation or removal. Directors need not be stockholders.
SECTION 3. RESIGNATIONS. Any director may resign at any time. Such resignation
shall be made in writing, and shall take effect at the time specified therein,
and if no time is specified, at the time of its receipt by the Chief Executive
Officer or Secretary. The acceptance of a resignation shall not be necessary to
make it effective.
SECTION 4. REMOVAL. Any director or the entire Board of Directors may be
removed at any time by the affirmative vote of not less than 66-2/3% of the
total combined voting power of all of the issued and outstanding shares of
Common Stock and Preferred Stock, voting as a single class.
SECTION 5. MEETINGS. The newly elected directors shall hold their first meeting
to organize the Corporation, elect officers and transact any other business
which may properly come before the meeting. An annual organizational meeting of
the Board of Directors shall be held immediately after each annual meeting of
the stockholders, or at such time and place as may be noticed for the meeting.
Regular meetings of the Board may be held without notice at such places and
times as shall be determined from time to time by resolution of the directors;
provided however, that at least one regular meeting of the Board of Directors
shall be held every three months.
Special meetings of the Board shall be called by the Chief Executive Officer,
the Chairman or by the Secretary on the written request of any director with at
least two days' notice to each director and shall be held at such place as may
be determined by the directors or as shall be stated in the notice of the
meeting.
SECTION 6. QUORUM, VOTING AND ADJOURNMENT. A majority of the total number of
directors or any committee thereof shall constitute a quorum for the transaction
of business. Unless otherwise required by law, the affirmative vote by at least
66-2/3 of the entire Board of Directors shall be the act of the Board of
Directors. In the absence of a quorum, a majority of the directors present
thereat may adjourn such meeting to another time and place. Notice of such
adjourned meeting need not be given
<PAGE>
if the time and place of such adjourned meeting are announced at the meeting so
adjourned.
SECTION 7. COMMITTEES. The Board of Directors may, by resolution passed as
provided in Section 6 of this Article III, designate one or more committees,
including, but not limited to, an Executive Committee and an Audit Committee,
each such committee to consist of two or more of the directors of the
Corporation. The Board may designate one or more directors as alternate members
of any committee to replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority to amend the Certificate of Incorporation, adopt an agreement
of merger or consolidation, recommend to the stockholders the sale, lease, or
exchange of all or substantially all of the Corporation's properties and assets,
recommend to the stockholders a dissolution of the Corporation or a revocation
of a dissolution or to amend these By-Laws. No such committee shall have the
power or authority to declare a dividend, to authorize the issuance of stock of
the Corporation or to adopt a certificate of ownership and merger. All
committees of the Board shall keep minutes of their meetings and shall report
their proceedings to the Board when requested or required by the Board.
SECTION 8. ACTION WITHOUT A MEETING. Unless otherwise restricted by the
Certificate of Incorporation, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting if all members of the Board or any committee thereof, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or such committee, as the case may
be.
SECTION 9. COMPENSATION. The Board of Directors shall have the authority to fix
the compensation of directors for their services. A director may also serve the
Corporation in other capacities and receive compensation therefor.
SECTION 10. TELEPHONIC MEETING. Unless otherwise restricted by the Certificate
of Incorporation, members of the Board, or any committee designated by the
Board, may participate in a meeting by means of conference telephone or similar
communications equipment in which all persons participating in the meeting can
hear each other. Participation in a meeting by means of conference telephone or
similar communications equipment shall constitute the presence in person at such
meeting.
ARTICLE IV
OFFICERS
SECTION 1. The officers of the Corporation shall include a Chief Executive
Officer, Chief Operating Officer and a Secretary, each of whom shall be elected
by the Board of Directors and who shall hold office for a term of one year and
until their successors are elected and qualify or until their earlier
resignation or removal. In addition, the Board of Directors may elect one or
more Vice Presidents and a Chief Financial Officer, who shall
<PAGE>
hold their office for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Directors. The
initial officers shall be elected at the first meeting of the Board of Directors
and, thereafter, at the annual organizational meeting of the Board held after
each annual meeting of the stockholders. Any number of offices may be held by
the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such
other officers and agents as it deems advisable, who shall hold their respective
office for such terms and shall exercise and perform such powers and duties as
shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors shall,
if present, preside at all meetings of the Board and exercise and perform such
other powers and duties as may be from time to time assigned to him by the
Board.
SECTION 4. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be
subject to the supervision, control and annual review of the stockholders and
the Board of Directors have general supervision, direction and control of the
business and affairs of the Corporation. The Chief Executive Officer shall
preside at all meetings of the stockholders of the Corporation and, in the
absence of the Chairman of the Board, at all meetings of the Board.
SECTION 5. CHIEF OPERATING OFFICER. Subject to such supervisory powers, if any,
as may be given by the Board to the Chairman of the Board and the Chief
Executive Officer, the Chief Operating Officer shall, subject to the control of
the Board and the Chairman, have general supervision, direction and control of
the business and officers of the Corporation. The Chief Operating Officer shall
have such other powers and duties as may be from time to time prescribed to him
by the Board.
SECTION 6. PRESIDENT. Subject to such supervisory powers, if any, as may be
given by the Board to the Chairman of the Board and the Chief Executive Officer,
the President shall, subject to the control of the Board, have general
supervision, direction and control of the business and the officers of the
Corporation (other than the Chairman and Chief Executive Officer). The President
shall preside at all meetings of the stockholders of the Corporation in the
absence of the Chairman and the Chief Executive Officer, and, in the absence of
the Chairman and the Chief Executive Officer, at all meetings of the Board. The
President shall have the general powers and duties of management usually vested
in the office of president and general manager of a corporation, and shall have
such other powers and duties as may be prescribed by the Board.
SECTION 7. VICE PRESIDENT. In the absence or disability of the Chairman, the
Chief Executive Officer, the Chief Operating Officer and the President, the Vice
Presidents, if any, in order of their rank as fixed by the Board, or, if not
ranked, the Vice President designated by the Board shall perform all the duties
of such officer and when so acting shall have all the powers of, and be subject
to all the restrictions upon, such offices. The Vice Presidents shall have such
other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board, the Chief Executive Officer or
the President.
SECTION 8. SECRETARY. The Secretary shall be the Chief Administrative Officer
of the Corporation and shall: (a) cause minutes of all meetings of the
stockholders and directors to be recorded and kept; (b) cause all notices
required by these By-Laws or otherwise to be given properly; (c) see that the
minute books, stock books, and other
<PAGE>
nonfinancial books, records and papers of the Corporation are kept properly; and
(d) cause all reports, statements, returns, certificates and other documents to
be prepared and filed when and as required. The Secretary shall have such
further powers and perform such other duties as prescribed from time to time by
the Board.
SECTION 9. CORPORATE FUNDS AND CHECKS. The funds of the Corporation shall be
kept in such depositories as shall from time to time be prescribed by the Board
of Directors. All checks or other orders for the payment of money shall be
signed by the Chief Executive Officer, Chairman or the Chief Operating Officer
or such other person or agent as may from time to time be authorized and with
such countersignature, if any, as may be required by the Board of Directors.
SECTION 10. CONTRACTS AND OTHER DOCUMENTS. The Chief Executive Officer,
Chairman or Chief Operating Officer, or such other officer or officers as may
from time to time be authorized by the Board of Directors or any other committee
given specific authority in the premises by the Board of Directors during the
intervals between the meetings of the Board of Directors, shall have power to
sign and execute on behalf of the Corporation deeds, conveyances and contracts,
and any and all other documents requiring execution by the Corporation.
SECTION 11. OWNERSHIP OF STOCK OF ANOTHER CORPORATION. The Chief Executive
Officer, Chairman or the Chief Operating Officer, or such other officer or agent
as shall be authorized by the Board of Directors, shall have the power and
authority, on behalf of the Corporation, to attend and to vote at any meeting of
stockholders of any corporation in which the Corporation holds stock and may
exercise, on behalf of the Corporation, any and all of the rights and powers
incident to the ownership of such stock at any such meeting, including the
authority to execute and deliver proxies and consents on behalf of the
Corporation.
SECTION 12. DELEGATION OF DUTIES. In the absence, disability or refusal of any
officer to exercise and perform his duties, the Board of Directors may delegate
to another officer such powers or duties.
SECTION 13. RESIGNATION AND REMOVAL. Any officer of the Corporation may be
removed from office for or without cause at any time by the Board of Directors.
Any officer may resign at any time in the same manner prescribed under Section 3
of Article III of these By-Laws.
SECTION 14. VACANCIES. The Board of Directors shall have power to fill
vacancies occurring in any office.
ARTICLE V
STOCK
SECTION 1. CERTIFICATES OF STOCK. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by, or in the name of the
Corporation by, the Chairman of the Board, the Chief Executive Officer, the
Chief Operating Officer, or a Vice President and by the Secretary, certifying
the number and class of shares of stock in the Corporation owned by him. Any or
all of the signatures on the certificate may be a facsimile. The Board of
Directors shall have the power to appoint one or more transfer agents and/or
registrars for the transfer or registration of certificates of stock of any
class, and may require stock certificates to be countersigned or registered by
one or more of such transfer agents and/or registrars.
SECTION 2. TRANSFER OF SHARES. Shares of stock of the Corporation shall be
<PAGE>
transferable upon its books by the holders thereof, in person or by their duly
authorized attorneys or legal representatives, upon surrender to the Corporation
by delivery thereof to the person in charge of the stock and transfer books and
ledgers. Such certificates shall be cancelled and new certificates shall
thereupon be issued. A record shall be made of each transfer. Whenever any
transfer of shares shall be made for collateral security, and not absolutely, it
shall be so expressed in the entry of the transfer if, when the certificates are
presented, both the transferor and transferee request the Corporation to do so.
The Board shall have power and authority to make such rules and regulations as
it may deem necessary or proper concerning the issue, transfer and registration
of certificates for shares of stock of the Corporation.
SECTION 3. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. A new certificate
of stock may be issued in the place of any certificate previously issued by the
Corporation, alleged to have been lost, stolen or destroyed, and the Board of
Directors may, in their discretion, require the owner of such lost, stolen or
destroyed certificate, or his legal representative, to give the Corporation a
bond, in such sum as the Board may direct, not exceeding double the value of the
stock, in order to indemnify the Corporation against any claims that may be made
against it in connection therewith. A new certificate of stock may be issued in
the place of any certificate previously issued by the Corporation which has
become mutilated without the posting by the owner of any bond upon the surrender
by such owner of such mutilated certificate.
SECTION 4. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The stock ledger shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Delaware General Corporation Law (S) 219 or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
SECTION 5. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may at any regular or special meeting,
declare dividends upon the stock of the Corporation either (i) out of its
surplus, as defined in and computed in accordance with Delaware General
Corporation Law (S) 154 and (S) 244 or (ii) in case there shall be no such
surplus, out of its net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. Before the declaration of any
dividend, the Board of Directors may set apart, out of any funds of the
Corporation available for dividends, such sum or sums as from time to time in
their discretion may be deemed proper for working capital or as a reserve fund
to meet contingencies or for such other purposes as shall be deemed conducive to
the interests of the Corporation.
ARTICLE VI
NOTICE AND WAIVER OF NOTICE
SECTION 1. NOTICE. Whenever any written notice is required to be given by law,
the Certificate of Incorporation or these By-Laws, such notice, if mailed, shall
be deemed to be given when deposited in the United States mail, postage prepaid,
addressed to the person entitled to such notice at his address as it appears on
the books and records of the Corporation.
SECTION 2. WAIVER OF NOTICE. Whenever notice is required to be given by law,
the Certificate of Incorporation or these By-Laws, a written waiver thereof
signed by the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose
<PAGE>
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any meeting of the
stockholders, directors, or members of a committee of the Board need be
specified in any written waiver of notice.
ARTICLE VII
AMENDMENT OF BY-LAWS
SECTION 1. AMENDMENTS. These By-Laws may be amended or repealed, or new By-Laws
may be adopted by the affirmative vote of at least three-fifths (3/5) of the
entire Board of Directors.
ARTICLE VIII
SECTION 1. SEAL. The seal of the Corporation shall be circular in form and
shall have the name of the Corporation on the circumference and the jurisdiction
and year of incorporation in the center.
SECTION 2. FISCAL YEAR. The fiscal year of the Corporation shall end on
December 31 of each year, or such other twelve consecutive months as the Board
of Directors may designate.
SECTION 3. INDEMNIFICATION. Any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation), by reason of the fact that he
is or was a director, officer or employee of the Corporation, or is or was
serving at the request of the Corporation as a director, officer or employee of
another corporation, partnership, joint venture, trust or other enterprise,
shall be indemnified by the Corporation to the fullest extent permitted by law
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer or employee of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
<PAGE>
determine upon application that, despite the adjudication of liability but in
view, of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of Delaware,
or such other court shall deem proper.
Any indemnification pursuant to this Article VIII (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer or employee is
proper in the circumstances because he has met the applicable standard of
conduct set forth in this Article VIII. Such determination shall be made (i) by
a majority Note of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (ii) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (iii) by the stockholders.
SECTION 4. ADVANCE OF EXPENSES. Expenses (including attorneys' fees) incurred
by an officer, director, or employee in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking satisfactory to the Board of Directors
by or on behalf of such director, officer or employee to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article VIII.
SECTION 5. REMEDIES NOT EXCLUSIVE. The indemnification and advancement of
expenses provided by this Article VIII shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer or employee and shall inure to the
benefit of the heirs, executors and administrators of such a person.
SECTION 6. INSURANCE. The Corporation may purchase and maintain insurance, at
its expense, to protect itself and any director, officer or employee of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
Date of original Adoption: November 26, 1996
Date Amended: February 4, 1999
<PAGE>
EXHIBIT 3.05.2
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
REALSELECT, INC.
----------------------------------
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
----------------------------------
RealSelect, Inc., a Delaware corporation (the "Corporation"), does
hereby certify as follows:
FIRST: Article THIRD of the Corporation's Certificate of Incorporation is
-----
hereby amended to read in its entirety as set forth below:
THIRD: The sole purpose of the Corporation is to engage in the
operation of the REALTOR.COM domain site and real property advertising
programming for electronic display, and related businesses.
SECOND: Article TENTH of the Corporation's Certificate of Incorporation is
------
hereby amended to read in its entirety as set forth below:
TENTH: Approval by 6/7 of the board of Directors of the Corporation
shall be required on the following actions:
(i) mergers, consolidations, reorganizations, or sales,
leases or exchanges of all or substantially all of the
asset of the Corporation; and
(ii) any change in the business purpose of the Corporation.
THIRD: Article ELEVENTH of the Corporation's Certificate of Incorporation
-----
is hereby amended to read in its entirety as set forth below:
ELEVENTH: The affirmative vote of (i) Realtors(R) Information
--------
Network, Inc., an Illinois corporation, ("RIN") and (ii) not less than
a majority of the outstanding shares (not including the shares held by
RIN) entitled to vote on the subject matter, present in person or
represented by proxy at a meeting at which a quorum is present, shall
be required to approve any of the following actions: mergers or
sales, leases or exchanges of all or substantially all of the assets
of the Corporation, or the issuance by the Corporation of a number of
shares
<PAGE>
representing ten percent (10%) or more of the issued and outstanding
shares of capital stock of the Corporation as of November 26, 1996, or
any amendment of Article TENTH, this Article ELEVENTH or article
TWELFTH of this Certificate of Incorporation; provided, however, that
-------- -------
this Article ELEVENTH shall not be applicable to the
extent that the right of the National Association of REALTORS, an
Illinois not-for-profit organization, to designate nominees to the
Board of Directors of the Corporation ceases or is suspended pursuant
to that certain RealSelect, Inc. Stockholders Agreement, dated as of
November 26, 1996, by and among RIN, NetSelect, L.L.C., a Delaware
limited liability company, and the Corporation.
FOURTH: Article TWELFTH shall be added to the Corporation's Certificate of
------
Incorporation to read in its entirety as follows:
TWELFTH: No action to be taken by the stockholders may be taken
without a meeting unless it is approved by the written consent of all
of the stockholders entitled to vote thereon.
FIFTH: The foregoing amendments were duly adopted in accordance with
-----
Section 242 of the General Corporation Law of the State of Delaware.
2
<PAGE>
IN WITNESS WHEREOF, RealSelect, Inc. has caused this Certificate to be
duly executed in its corporate name this 25/th/ day of November, 1996.
REALSELECT, INC.
/s/ Stuart Wolff
__________________________________
Name: Stuart Wolff
Title: Chief Executive Officer
3
<PAGE>
EXHIBIT 10.02.2
First Amendment to Operating Agreement
This First Amendment to the Operating Agreement is entered into as of this
27/th/ day of December, 1996, between REALTORS(R) Information Network, Inc., an
Illinois corporation ("RIN") and RealSelect, Inc., a Delaware corporation
("RealSelect").
WITNESSETH:
WHEREAS, on December 4, 1996, RIN and RealSelect entered into an Operating
Agreement pursuant to which RealSelect was engaged to manage and operate the
business of soliciting, collecting and processing real estate information and
presenting it through electronic display; and
WHEREAS, Section 4.2(b) of that Operating Agreement provided RealSelect
with the use of certain Leased Equipment owned by RIN during the term of the
Operating Agreement;
WHEREAS, RIN desires to transfer ownership of the Leased Equipment to
RealSelect in accordance with the terms and conditions of this First Amendment
to the Operating Agreement ("Amendment");
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
hereinafter set forth, the parties hereby agree as follows:
1. In consideration of Ten dollars and other good and valuable
consideration, RIN hereby grants to RealSelect ownership of the
equipment identified in Schedule F of the Operating Agreement
("Equipment"). A copy of Schedule F is attached hereto and is hereby
incorporated by reference.
2. If the Operating Agreement should be terminated for any reason other
than RIN's bankruptcy or breach of the Operating Agreement any time
within a two year time period commencing the date of this Amendment,
RealSelect agrees that it will transfer ownership of the Equipment to
RIN. Such transfer of ownership shall take place within ten days
following termination of the Operating Agreement. RealSelect agrees
to allow RIN prompt and reasonable access to its facilities in order
for RIN to remove the Equipment.
3. RIN makes no warranties of any kind whatsoever with respect to the
Equipment and RealSelect hereby waives any and all warranties implied
by law including implied warranties of merchantability and fitness for
a particular purpose.
<PAGE>
4. This Amendment may be accepted and executed by the parties hereto by
facsimile transmission of their respective signatures.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first written above.
REALTORS(R) INFORMATION NETWORK, INC.
By: /s/ Robert Goldberg
----------------------------------
Name: Robert Goldberg
Title: President and CEO
RealSelect, Inc.
By: /s/ Richard Janssen
----------------------------------
Name: Richard R. Janssen
--------------------------------
Title: President
-------------------------------
2
<PAGE>
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.
<PAGE>
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.
430 North Michigan Avenue
Chicago, Illinois 60611-4087
Attention: President and Chief Executive Officer
Fax No: (312) 329-8539
with a copy to:
National Association of REALTORS(R)
430 North Michigan Avenue
Chicago, Illinois 60611-4087
Attention: General Counsel
Fax No: (312) 329-8256
if to RealSelect:
RealSelect, Inc.
225 W. Hillcrest Drive, Suite 100
Thousand Oaks, CA 91360
Attn: President
Facsimile: (805) 557-8200
with a copy to:
2
<PAGE>
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
Attention: Gordon K. Davidson, Esq.
Fax No: (650) 494-1417
[Remainder of page intentionally left blank]
3
<PAGE>
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/ Stuart Wolff
---------------------------------
Name: Stuart Wolff, Ph.D.
Title: Chief Executive Officer
REALTORS(R) INFORMATION NETWORK, INC.
By: /s/ Robert A. Goldberg
---------------------------------
Name: Robert A. Goldberg
Title: CEO
4
<PAGE>
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.
<TABLE>
<CAPTION>
Aggregate Payments to Aggregate Payments
Calendar Year Data Content Providers Payment to RIN by Operator
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing, with respect to Operator's Revenues derived from
Operator's new homes site (homebuilder.com), 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
<PAGE>
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
<PAGE>
EXHIBIT 10.03
MASTER AGREEMENT
THIS MASTER AGREEMENT (this "AGREEMENT") is entered into as of this
26th day of November, 1996, among (i) NetSelect, Inc., a Delaware corporation
("NetSelect"), (ii) NetSelect, L.L.C., a Delaware limited liability company
("NetSelect LLC"), (iii) RealSelect, Inc., a Delaware corporation
("RealSelect"), (iv) CDW Internet, L.L.C., a Delaware limited liability company
("CDW"), (v) Whitney Equity Partners, L.P., a Delaware limited partnership
("Whitney"), (vi) Allen & Co. ("Allen"; together with CDW and Whitney, referred
to herein as the "Partners"), (vii) InfoTouch Corporation, a Delaware
corporation ("InfoTouch"), and (viii) Realtors(R) Information Network, Inc., an
Illinois corporation ("RIN").
PRELIMINARY STATEMENT
InfoTouch and RIN are parties to a certain Distribution and Web Site
Development Agreement, dated as of February 1, 1996, relating to, among other
things, the creation, and display on the Internet, of "Real Property Ads" from
information provided by real property information content providers. The
Partners have expressed interest, through NetSelect, in acquiring the assets of
InfoTouch and entering, through RealSelect, into an operating agreement with RIN
for the purpose of, among other things, the electronic display of real property
information. The parties desire to set forth the elements of the closing of the
transactions required in order to accomplish that objective as well as to
memorialize certain other agreements in connection with such transactions.
NOW, THEREFORE, the parties hereby agree as follows:
1. When used in this Agreement, the following terms shall have the
respective meanings set forth below:
"Joint Ownership Agreement" shall mean that certain Joint Ownership
Agreement dated as of the date hereof, among NAR, NetSelect and NetSelect
LLC.
"Infotouch Investors" shall mean Daniel A. Koch, Michael N. Flannery
and John F. Petric, Jr..
"LLC Agreement" shall mean that certain Limited Liability Company
Agreement dated as of the date hereof, between NetSelect and InfoTouch.
"NAR" shall mean the National Association of REALTORS(R), an Illinois
not for-profit corporation.
"NetSelect Class A Common Stock" shall mean shares of the Class A
Common Stock, $.001 par value per share, of NetSelect.
"NetSelect Class B Common Stock" shall mean shares of the Class B
Common Stock, $.001 par value per share, of NetSelect.
<PAGE>
"NetSelect Series A Preferred Stock" shall mean shares of the Series A
Convertible Preferred Stock, $.001 par value per share, of NetSelect.
"NetSelect Series B Preferred Stock" shall mean shares of the Series B
Convertible Preferred Stock, $.001 par value per share, of NetSelect.
"NetSelect Stockholders Agreement" shall mean that certain
Stockholders Agreement dated as of the date hereof, among NetSelect, the
Partners and InfoTouch.
"Operating Agreement" shall mean that certain Operating Agreement
dated as of the date hereof, between RealSelect, as operator, and RIN.
"Reach Agreement" shall mean that certain letter agreement dated March
26, 1996, between REACH Networks, Inc. and RIN.
"RealSelect Common Stock" shall mean shares of the Common Stock, $.001
par value per share, of RealSelect.
"RealSelect Stockholders Agreement" shall mean that certain
Stockholders Agreement dated as of the date hereof, among RealSelect,
NetSelect LLC and RIN.
"RIN Subscription Agreement" shall mean that certain Subscription and
Capital Contribution Agreement dated as of the date hereof.
"Settlement Agreement and Release" shall mean the Settlement Agreement
and Release dated as of the date hereof, between InfoTouch and RIN.
"Stock and Interest Purchase Agreement" shall mean that certain Stock
and Interest Purchase Agreement dated as of the date hereof, among
NetSelect and NetSelect LLC, as sellers, and InfoTouch, as purchaser.
"Trademark License" shall mean that certain Trademark License dated as
of the date hereof, between NAR, as licensor, and RealSelect, as licensee.
2. Subject to the conditions set forth in Section 4 hereof, on the
date hereof, (a) NetSelect and NetSelect LLC shall consummate the transactions
contemplated by the Stock and Interest Purchase Agreement in exchange for the
issuance to InfoTouch of the number of units of NetSelect LLC interests
specified in Annex A to the Stock and Interest Purchase Agreement, (b) the
Partners shall have paid, by wire transfer of immediately available funds, to
NetSelect the respective consideration described in Exhibit A hereto as being
paid as of the Closing for the issuance of the number of shares of NetSelect
Series A Preferred Stock described in said Exhibit as being issued to them as of
the Closing, (c) NetSelect shall have made a capital contribution to NetSelect
LLC in the amount of $2,600,000.00, and NetSelect LLC shall have made a capital
contribution to RealSelect in the amount of $2,350,000.00, (d) RealSelect and
RIN shall have entered into the Operating Agreement and (e) RealSelect shall
have issued to RIN the number of shares of RealSelect Common Stock specified in
Exhibit A in exchange for its
-2-
<PAGE>
entrance into the Operating Agreement, the payment of the sum of $10 and other
good and valuable consideration as provided in the RIN Subscription Agreement.
3. As an inducement to the other parties to enter into this Agreement
and to consummate the transactions contemplated hereby, each party hereby
covenants, represents and warrants to such other parties as follows:
(a) Such party is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, with
adequate power and authority to enter into this Agreement and the other
agreements contemplated hereby to which it will be a party.
(b) This Agreement and each other agreement to which such party will
be a party has been duly authorized, executed and delivered by such party
and, assuming due authorization, execution and delivery by the other
parties hereto or thereto, constitutes a valid, legal and binding
agreement, enforceable against such party in accordance with its terms,
except to the extent that the enforceability of remedies therein provided
may be limited under generally applicable laws relating to specific
performance, bankruptcy and creditors' rights.
(c) No approval consent or withholding of objections is or will be
required from any federal, state or local governmental authority or
instrumentality with respect to the entry into or performance by such party
of this Agreement or any other agreement contemplated hereby to which it
will be a party, except such as have already been obtained.
(d) The entry into and performance by such party of this Agreement and
each other agreement to which such party will be a party will not: (i)
violate any judgment, order, law or regulation applicable to such party or
any provision of such party's organizational documents, or (ii) to the best
of the knowledge of such party, result in any breach of, constitute a
default under or result in the creation of any lien, charge, security
interest or other encumbrance upon the assets of NetSelect or RealSelect
under any other agreement binding upon such party.
(e) Except as disclosed in Schedule M to the Operating Agreement or in
writing with respect to RIN, there are no suits or proceedings pending or,
to the best of such party's knowledge, threatened in court or before any
regulatory commission, board or other administrative or governmental agency
against or affecting such party, which if adversely decided would have a
material adverse effect on the ability of such party to fulfill its
obligations under this Agreement or any of the other agreements
contemplated hereby to which such party is a party.
4. The parties' respective obligations under this Agreement are
subject to the satisfaction or waiver of the following conditions:
-3-
<PAGE>
(a) InfoTouch and RIN shall enter into the Settlement Agreement and
Release.
(b) NetSelect, NetSelect LLC and InfoTouch shall enter into, and shall
consummate, the transactions contemplated by the Stock and Interest
Purchase Agreement.
(c) NetSelect LLC and RealSelect shall enter into a certain Software
License Agreement dated as of the date hereof, which agreement provides for
the license by NetSelect LLC to RealSelect of certain software acquired by
NetSelect LLC from InfoTouch.
(d) NetSelect and NAR shall enter into the Trademark License, and
NetSelect, NetSelect LLC and NAR shall enter into the Joint Ownership
Agreement.
(e) RIN and RealSelect shall enter into the RIN Subscription
Agreement.
(f) RealSelect and RIN shall enter into the Operating Agreement.
(g) NetSelect, the Partners and InfoTouch shall enter into the
NetSelect Stockholders Agreement.
(h) NetSelect and InfoTouch shall enter into the LLC Agreement.
(i) RealSelect, NetSelect LLC and RIN shall enter into the RealSelect
Stockholders Agreement.
(j) NAR shall deliver to RealSelect a letter dated November __, 1996,
with respect to certain promotional activities to be undertaken or
supported by NAR for the benefit of RealSelect.
(k) RIN shall deliver a letter to RealSelect acknowledging RIN's
continuing responsibility for any claims related to its discontinued
desktop services mentioned in several of the Existing Content Providers'
Data Content Provider Agreements (as such terms are defined in the
Operating Agreement).
(l) NetSelect shall enter into employment agreements with each of
Stuart Wolff and Richard Janssen.
(m) NetSelect shall have:
(i) In effect a certificate of incorporation, as amended, in
substantially the form contained in Exhibit B and shall have adopted
By-laws in the form contained in said Exhibit;
(ii) authorized (1) the issuance of the shares of NetSelect Class
A Common Stock, NetSelect Class B Common Stock, NetSelect Series A
Preferred
-4-
<PAGE>
Stock and NetSelect Series B Preferred Stock in the respective
numbers, and to the respective persons, set forth in Exhibit A and (2)
the execution, delivery and performance of the Stock and Interest
Purchase Agreement and the NetSelect Stockholders Agreement; and
(iii) elected the persons set forth under the subheading
"NetSelect" in Exhibit C as the initial directors and officers, as set
forth in said Exhibit.
Each of the parties shall receive (1) a photocopy of the certificate of
incorporation, as amended, of NetSelect, certified by the Secretary of
State of Delaware and (2) copies of the NetSelect By-laws and NetSelect
Board resolutions authorizing the actions referred to in clauses (ii) and
(iii) above, certified by the Secretary of NetSelect as being in full force
and effect on the date hereof.
(n) NetSelect LLC shall have:
(i) in effect a certificate of formation in substantially the
form contained in Exhibit D;
(ii) authorized (1) the issuance of the membership interests
described in Annex A to the LLC Agreement in the respective amounts,
and to the respective persons, set forth therein and (2) the
execution, delivery and performance of the Stock and Interest
Acquisition Agreement and the RealSelect Stockholders Agreement; and
(iii) elected the persons set forth under the subheading
"NetSelect LLC" in Exhibit C as the initial managers and officers, as
set forth in said Exhibit.
Each of the parties shall receive (1) a photocopy of the certificate of
formation of NetSelect LLC, certified by the Secretary of State of Delaware
and (2) copies of the NetSelect LLC resolutions authorizing the actions
referred to in clauses (ii) and (iii) above, certified by the Secretary of
NetSelect LLC as being in full force and effect on the date hereof.
(o) RealSelect shall have:
(i) in effect a certificate of incorporation, as amended, in
substantially the form contained in Exhibit E and shall have adopted
By-laws in the form contained in said Exhibit;
(ii) authorized (1) the issuance of the shares of its Common
Stock in the respective numbers, and to the respective persons, set
forth in Exhibit A and (2) the execution, delivery and performance of
the RealSelect Stockholders Agreement and the Operating Agreement; and
-5-
<PAGE>
(iii) elected the persons set forth under the subheading
"RealSelect" in Exhibit C as the initial directors and officers, as
set forth in said Exhibit.
Each of the parties shall receive (1) a photocopy of the certificate of
incorporation, as amended, of RealSelect, certified by the Secretary of
State of Delaware and (2) copies of the RealSelect By-laws and RealSelect
Board resolutions authorizing the actions referred to in clauses (ii) and
(iii) above; certified by the Secretary of RealSelect as being in full
force and effect on the date hereof
(p) The persons indicated on Exhibit A under the subheading
"NetSelect" shall have paid the amounts indicated opposite their names on
such Exhibit to be payable as of the Closing to NetSelect by wire transfer
of funds to Account No. 0351368733 (ABA No. 021000021) at Chase Manhattan
Bank, New York, New York, in exchange for the shares of capital stock of
NetSelect to be issued as of the Closing indicated opposite their names on
said Exhibit.
5.(a) On or before December 12, 1996, the InfoTouch Investors
shall pay the sum of $1,450,000.00 to NetSelect by wire transfer of funds to
Account No. 0351368733 (ABA No. 021000021) at Chase Manhattan Bank, New York,
New York, plus the discharge of $150,000 in debt owed to such InfoTouch
Investors (the "Assumed InfoTouch Debt"), in exchange for the issuance to them
of 242,017 shares of NetSelect Series B Preferred Stock.
(b) On or before February 1, 1997, the following parties shall
pay the following sums to NetSelect by wire transfer of funds to Account No.
0351368733 (ABA No. 021000021) at Chase Manhattan Bank, New York, New York, in
exchange for the issuance by NetSelect of the indicated number of shares of its
capital stock:
<TABLE>
<S> <C>
Allen $466,667 164,706 shares of NetSelect Series A Preferred Stock
CDW Internet 666,667 231,294 shares of NetSelect Series A Preferred Stock
Whitney 933,333 329,411 shares of NetSelect Series A Preferred Stock
InfoTouch 733,333 110,924 shares of NetSelect Series B Preferred Stock.
Investors
</TABLE>
(c) RIN is a third party beneficiary of the subscription
agreements executed by Allen, CDW Internet and Whitney with NetSelect, and the
subscription agreement(s) to be executed by the InfoTouch Investors with
NetSelect. The subscription agreements with Allen, CDW Internet and Whitney may
not be amended or terminated, and the provisions thereof may not be waived,
without the express written consent of RIN; and the subscription agreement(s) to
be executed with the InfoTouch Investors will provide that it (they) may not be
amended or terminated, or the provisions thereof waived, without the prior
written consent of RIN. In the event that the capital contributions specified in
such subscription agreements shall not be paid to NetSelect in accordance with
their terms, RIN shall have the right to enforce the payment thereof and shall
be entitled to collect its reasonable expenses (including reasonable attorneys'
fees and expenses) in any such enforcement action from the defaulting
subscriber.
-6-
<PAGE>
6.(a) On the date hereof, (i) NetSelect shall transfer through or
at the direction of NetSelect LLC, the sum of $2,350,000.00 to RealSelect and
(ii) RealSelect shall pay (x) the sum of $1,500,000.00 to RIN by wire transfer
of funds to Account No. 4447255 (ABA No. 071000152) at The Northern Trust
Company, Chicago, Illinois and (y) the sum of $650,000.00 to Booz-Allen,
Hamilton, Inc. ("BAH") pursuant to the terms of that certain Agreement dated as
of November 16, 1996, between RealSelect and BAH, by wire transfer of funds to
Account No. 01079857 (ABA No. 031000011) at CoreStates Bank, Philadelphia,
Pennsylvania.
(b) Upon receipt of the funds and the Assumed InfoTouch Debt
described in Sections 5(a) and (b) above, NetSelect shall transfer the same to
NetSelect LLC; and upon such receipt from NetSelect, NetSelect LLC shall
transfer $3,250,000 plus the Assumed InfoTouch Debt to RealSelect. All such
transfers made by NetSelect LLC to RealSelect shall be treated as additional
contributions to the capital of RealSelect without the issuance of any
additional shares.
(c) On or before March 4, 1997, RealSelect shall pay to RIN the
sum of $1,000,000.00; provided, however, if RIN shall have voluntarily filed, or
shall be the involuntary subject of, a petition for bankruptcy, then such
payment need not be made.
7.(a) RealSelect shall indemnify and hold RIN and its
shareholders, directors, officers, agents, employees and affiliates harmless
from and against any and all claims, demands, actions, losses, liabilities,
costs, expenses (including reasonable legal fees and expenses), suits and
proceedings of any nature whatsoever arising from, or relating to, or in any
manner connected with the Reach Agreement.
(b) RealSelect shall undertake to resolve, litigate or otherwise
deal with any claims made or raised by REACH Networks, Inc. in respect of the
Reach Agreement; and RIN shall cooperate in all such efforts. In the event that
such efforts result in a settlement of such claims, or a judgment is obtained by
REACH Networks, Inc. for the payment of money, the payment of such settlement or
judgment, as the case may be, shall be funded as follows: RealSelect shall pay
the first $350,000; the next $1,000,000 above the first $350,000 shall be paid
by NetSelect LLC; and any remaining amount shall be paid by RealSelect.
8. RIN shall request the Board of Directors of NAR to consider,
at the meeting of the NAR Board of Directors scheduled to be held on February
10, 1997 in San Antonio, Texas, (i) an amendment to the By-laws of RIN to
provide that RIN may not, without the approval of its shareholder (NAR),
voluntarily file a petition for bankruptcy under applicable state or federal law
and (ii) that so long as RIN is able to commence making payments on its debt to
NAR and such outstanding principal amount owed to NAR does not increase, that
NAR will not place RIN into bankruptcy for the purpose of recovering all or any
portion of the debt owed by RIN to NAR.
9. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given and
effective (a) upon receipt, if delivered in person, by cable or by telegram, (b)
one business day after deposit prepaid with a national overnight express
delivery service (e.g., Federal Express or Airborne) or (c) three
-7-
<PAGE>
business days after deposit in the United States mail (registered or certified
mail postage prepaid, return receipt requested), to a party at its address set
forth in Exhibit F.
10. This Agreement may be amended or modified only by a written
instrument so stating and executed by the parties.
11. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies under or by reason of this Agreement. Notwithstanding the
foregoing, the rights and responsibilities of the parties hereto under this
Agreement may not be assigned without the prior written consent of the other
parties hereto.
13. The rights and obligations of the parties shall be construed
under and governed by the internal laws (without application of the conflicts of
laws provisions thereof) of the State of Delaware.
14. No provision in this Agreement shall be deemed waived by course
of conduct, unless such waiver is in writing signed by each party hereto and
stating specifically that it was intended to modify this Agreement.
15. Wherever possible, each provision hereof shall be interpreted in
such manner as to be effective and valid under applicable law, but in case any
one or more of the provisions contained herein shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such provision shall be
ineffective to the extent, but only to the extent, of such invalidity,
illegality or unenforceability without invalidating the remainder of such
invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
16. This Agreement and the agreements referred to herein and therein
and the Exhibits attached hereto constitute the entire agreement between the
parties governing the matters addressed herein. No prior agreement or
representation, whether oral or written, shall have any force or effect thereon.
* * * *
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day and year first above written.
NETSELECT, INC.
By: /s/ Stuart Wolff
----------------------------------------------
Name:
Title:
REALSELECT, INC.
By: /s/ Stuart Wolff
----------------------------------------------
Name:
Title:
CDW INTERNET, L.L.C.
By: /s/ Stuart Wolff
----------------------------------------------
Name:
Title:
WHITNEY EQUITY PARTNERS, L.P.
By: /s/ Michael C. Brooks
---------------------------------------------
Name:
Title:
ALLEN & CO.
By: /s/ (illegible)
---------------------------------------------
Name:
Title:
-9-
<PAGE>
INFOTOUCH CORPORATION
By: /s/ Richard Janssen
----------------------------------------------
Name:
Title:
REALTORS(R) INFORMATION NETWORK, INC.
By: /s/ (illegible)
----------------------------------------------
Name:
Title:
NETSELECT L.L.C.
By: /s/ Stuart Wolff
----------------------------------------------
Name:
Title:
-10-
<PAGE>
EXHIBIT A
NetSelect and RealSelect Stockholders
-------------------------------------
NetSelect
<TABLE>
<CAPTION>
======================================================================================================================
NetSelect NetSelect NetSelect NetSelect
NAME AND ADDRESS DATE Class A Class B Series A Series B Aggregate
Common Common Preferred Preferred Consideration
Stock Stock Stock Stock
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Allen & Co. Closing: 0 0 247,059 0 700,00
c/o NetSelect, Inc. 02/01/97 0 0 164,706 0 466,667
Suite 106
5655 Lindero Canyon Road
Westlake Village, CA 91362
Attn: Stuart Wolff, Ph.D.
- ----------------------------------------------------------------------------------------------------------------------
CDW Internet, L.L.C. Closing: * * 176,471 0 500,000
c/o NetSelect, Inc. 02/01/97 231,294 666,667
Suite 106
5655 Lindero Canyon Road
Westlake Village, CA 91362
Attn: Stuart Wolff, Ph.D
- ----------------------------------------------------------------------------------------------------------------------
Whitney Equity Partners, L.P. Closing: 0 0 494,118 0 1,400,000
177 Broad Street 02/01/97 0 0 329,411 0 933,333
Stamford, Connecticut 06901
Attn: Daniel J. O'Brien, Esq.
- ----------------------------------------------------------------------------------------------------------------------
InfoTouch Investors 12/12/96 0 0 0 242,017 1,600,000
c/o NetSelect, Inc. 02/01/97 0 0 0 110,924 733,333
Suite 106
5655 Lindero Canyon Road
Westlake Village, CA 91362
Attn: Richard Janssen
======================================================================================================================
</TABLE>
* CDW Internet, L.L.C. also owns 236,470 shares of NetSelect Class A Common
Stock and 116,470 shares of NetSelect Class B Common Stock, which shares were
acquired prior to the Closing.
RealSelect
<TABLE>
<CAPTION>
Number of Shares of
Name and Address RealSelect Common Stock
- ---------------------------------------------- -----------------------
<S> <C>
NetSelect, Inc. 85
Suite 106
5655 Lindero Canyon Road
Westlake Village, California 91362
Attn: Stuart Wolff, Ph.D.
REALTORS(R) Information Network, Inc. 15
430 North Michigan Avenue
Chicago, Illinois 60611-4087
Attn: President and Chief Executive Officer
</TABLE>
A-1
<PAGE>
EXHIBIT B
NetSelect Corporate Documents
-----------------------------
B-1
<PAGE>
EXHIBIT C
Directors and Officers
----------------------
<TABLE>
<S> <C> <C>
NetSelect:
Directors:
Michael Brooks Stuart Wolff, Ph.D.
Dort Cameron, III Richard Janssen
Officers:
Chairman and Chief Executive Officer Stuart Wolff, Ph.D.
President and Chief Operating Officer Richard Janssen
Vice President and Chief Financial Officer Bill Spazante
Senior Vice President Sales Perry Morton
Vice President Marketing Liesl Pike
Netselect LLC:
Managers:
Michael Brooks Joe Hanauer
Dort Cameron, III John Petric
Stuart Wolff, Ph.D. Daniel Koch
Richard Janssen
Officers:
Chairman and Chief Executive Officer Stuart Wolff, Ph.D.
President and Chief Operating Officer Richard Janssen
Vice President and Chief Financial Officer Bill Spazante
Senior Vice President Sales Perry Morton
Vice President Marketing Liesl Pike
Vice President of Technology Philip Dawley
Realselect:
Directors:
Michael Brooks Joe Hanauer
Dort Cameron, III Dennis Cronk
Stuart Wolff, Ph.D. Luther Nusbaum
Richard Janssen
Officers:
Chairman and Chief Executive Officer Stuart Wolff, Ph.D.
President and Chief Operating Officer Richard Janssen
Vice President and Chief Financial Officer Bill Spazante
Senior Vice President Sales Perry Morton
Vice President Marketing Liesl Pike
Vice President of Technology Philip Dawley
Vice President REALTOR(R) Sales Robin Janssen
</TABLE>
C-1
<PAGE>
EXHIBIT D
NetSelect LLC Documents
-----------------------
D-1
<PAGE>
EXHIBIT E
RealSelect Corporate Documents
------------------------------
E-1
<PAGE>
EXHIBIT F
Addresses for Notices
---------------------
If to Allen, to:
Allen & Co.
c/o NetSelect, Inc.
Suite 106
5655 Lindero Canyon Road
Westlake Village, California 91362
Attn: Stuart Wolff, Ph.D.
If to CDW, to:
CDW Internet, L.L. C.
c/o NetSelect, Inc.
Suite 106
5655 Lindero Canyon Road
Westlake Village, California 91362
Attn: Stuart Wolff, Ph.D.
If to InfoTouch, to:
InfoTouch Corporation
Suite 106
5655 Lindero Canyon Road
Westlake Village, California 91362
Attn: Richard Janssen
If to NetSelect, to:
NetSelect, Inc.
Suite 106
5655 Lindero Canyon Road
Westlake Village, California 91362
Attn: Stuart Wolff, Ph.D.
If to NetSelect LLC, to:
NetSelect, L.L.C.
c/o NetSelect, Inc.
Suite 106
5655 Lindero Canyon Road
Westlake Village, California 91362
Attn: Stuart Wolff, Ph.D.
F-1
<PAGE>
If to RealSelect, to:
RealSelect, Inc.
Suite 106
5655 Lindero Canyon Road
Westlake Village, California 91362
Attn: Stuart Wolff, Ph.D.
If to RIN, to:
REALTORS(R) Information Network, Inc.
430 North Michigan Avenue
Chicago, Illinois 60611-4087
Attn: President and Chief Executive Officer
If to Whitney, to:
Whitney Equity Partners, L.P.
177 Broad Street
Stamford, Connecticut 06901
Attn: Daniel J. O'Brien, Esq.
F-2
<PAGE>
EXHIBIT 10.20
INFOTOUCH CORPORATION
1994 STOCK INCENTIVE PLAN
ARTICLE 1
General Purpose of Plan
The name of this plan is the InfoTouch Corporation 1994 Stock Incentive Plan
(the "Plan"). The purpose of the Plan is to enable InfoTouch Corporation (the
"Corporation") and any Parent or any Subsidiary to obtain and retain the
services of the types of employees, consultants, officers and Directors who will
contribute to the Corporation's long range success and to provide incentives
which are linked directly to increases in share value which will inure to the
benefit of all shareholders of the Corporation.
ARTICLE 2
Definitions
For purposes of the Plan, the following terms shall be defined as set forth
below:
"Administrator" shall have the meaning as set forth in Article 3.
"Board" means the Board of Directors of the Corporation.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.
"Committee" means a committee of at least two Directors appointed by the
Board to administer the Plan.
"Corporation" means InfoTouch Corporation, a corporation organized under
the laws of the State of Delaware (or any successor corporation).
"Date of Grant" means the date on which the Administrator adopts a
resolution expressly granting a Stock Option to a Participant.
"Director" means a member of the Board.
"Disability" means permanent and total disability as defined by the
Administrator.
"Eligible Person" means an employee, former employee, officer, consultant
or Director of the Corporation, any Parent or any Subsidiary.
<PAGE>
"Exercise Price" shall have the meaning set forth in Section 6.2(d) of the
Plan.
"Fair Market Value" per share at any date shall mean (i) if the Stock is
listed on an exchange or exchanges, or admitted for trading in a market system
which provides last sale data under Rule 11Aa3-1 of the General Rules and
Regulations of the Securities and Exchange Commission under the Securities and
Exchange Act of 1934, as amended (a "Market System"), the last reported sales
price per share on the last business day prior to such date on the principal
exchange on which it is traded, or in such a Market System, as applicable, or if
no sale was made on such day on such principal exchange or in such a Market
System, as applicable, the last reported sales price per share on the most
recent day prior to such date on which a sale was reported on such exchange or
such Market System, as applicable; or (ii) if the Common Stock is not then
traded on an exchange or in such a Market System, the average of the closing bid
and asked prices per share for the Common Stock in the over-the-counter market
as quoted on NASDAQ on the day prior to such date; or (iii) if the Common Stock
is not listed on an exchange or quoted on NASDAQ, an amount determined in good
faith by the Administrator.
"Incentive Stock Option" means a Stock Option intended to qualify as an
"incentive stock option" as that term is defined in Section 422 of the Code.
"Non-Statutory Option" means a Stock Option intended to not qualify as an
Incentive Stock Option.
"Option Holder" means an Eligible Person who has been granted a Stock
Option pursuant to the Plan.
"Parent" means any present or future corporation which would be a "parent
corporation" as that term is defined in Section 424 of the Code.
"Participant" means any Eligible Person selected by the Administrator,
pursuant to the Administrator's authority in Article 3, to receive grants of
Stock Options.
"Plan" means the InfoTouch Corporation 1994 Stock Incentive Plan, as the
same may be amended or supplemented from time to time.
"Retirement" means retirement from active employment with the Corporation
or any Parent or Subsidiary as defined by the Administrator.
-2-
<PAGE>
"Special Terminating Event" with respect to a Participant shall mean the
death, Disability or Retirement of that Participant.
"Stock" means the Common Stock, par value $0.01 per share, of the
Corporation.
"Stock Option" or "Option" means any option to purchase shares of Stock
granted pursuant to Article 6.
"Stock Option Agreement" shall have the meaning set forth in Section 6.2 of
the Plan.
"Subsidiary" means any present or future corporation which would be a
"subsidiary corporation" as that term is defined in Section 424 of the Code.
"Ten Percent Shareholder" means a person who on the Date of Grant owns,
either directly or through attribution as provided in Section 424(d) of the
Code, Stock possessing more than 10% of the total combined voting power of all
classes of stock of his or her employer corporation or of any Parent or
Subsidiary.
ARTICLE 3
Administration
Section 3.1 The Administrator.
-----------------
(a) Administrator. The Plan shall be administered by either (i) the Board;
-------------
or (ii) the Committee (the group that administers the Plan is referred to as
the "Administrator").
(b) Powers in General. The Administrator shall have the power and
-----------------
authority to grant Stock Options to Eligible Persons, pursuant to the terms of
the Plan.
(c) Specific Powers. In particular, the Administrator shall have the
---------------
authority: (i) to construe and interpret the Plan and apply its provisions; (ii)
to promulgate, amend and rescind rules and regulations relating to the
administration of the Plan; (iii) to authorize any person to execute, on behalf
of the Corporation, any instrument required to carry out the purposes of the
Plan; (iv) to determine when Stock Options are to be granted under the Plan; (v)
from time to time to select, subject to the limitations set forth in this Plan,
those Eligible Persons to whom Stock Options shall be granted; (vi) to determine
the number of shares of Stock to be made subject to each Stock Option; (vii) to
prescribe the terms and conditions of each Stock Option, including, without
limitation, the exercise price and medium of payment, to
-3-
<PAGE>
determine whether the Stock Option is to be an Incentive Stock Option or a Non-
Statutory Option and to specify the provisions of the Stock Option Agreement
relating to such Stock Option; (viii) to amend any outstanding Stock Options for
the purpose of modifying the time or manner of vesting, or the Exercise Price,
as the case may be, thereunder or otherwise, subject to applicable legal
restrictions and to the consent of the other party to such agreement; (ix) to
determine when a consultant's relationship with the Corporation is sufficient to
constitute the equivalent of employment with the Corporation for purposes of the
Plan; (x) to determine the duration and purpose of leaves of absences which may
be granted to a Participant without constituting termination of their employment
for purposes of the Plan; and (xi) to make any and all other determinations
which it determines to be necessary or advisable for administration of the Plan.
(d) Decisions Final. All decisions made by the Administrator pursuant to
---------------
the provisions of the Plan shall be final and binding on the Corporation and the
Participants.
(e) The Committee. The Board may, in its sole and absolute discretion,
-------------
from time to time delegate any or all of its duties and authority with respect
to the Plan to a Committee of not less than two Directors to be appointed by and
to serve at the pleasure of the Board. Once appointed, the Committee shall
continue to serve until otherwise directed by the Board. From time to time, the
Board may increase or decrease (to not less than two members) the size of the
Committee, add additional members to, remove members (with or without cause)
from, appoint new members in substitution therefor, and fill vacancies, however
caused, in the Committee. The Committee shall act pursuant to a vote of the
majority of its members or, in the case of a committee comprised of two
Directors, the unanimous vote of its members, whether present or not, or by the
written consent of the majority of its members or, in the case of a committee
comprised of two Directors, the unanimous written consent of its members, and
minutes shall be kept of all of its meetings and copies thereof shall be
provided to the Board. Subject to the limitations prescribed by the Plan and
the Board, the Committee may establish and follow such rules and regulations for
the conduct of its business as it may determine to be advisable.
-4-
<PAGE>
ARTICLE 4
Stock Subject to Plan
Section 4.1 Stock Subject to the Plan. Subject to adjustment as
-------------------------
provided in Article 7, the total number of shares of Stock reserved and
available for issuance under the Plan shall be 300,000 shares. Shares reserved
hereunder may consist, in whole or in part, of authorized and unissued shares or
treasury shares.
Section 4.2 Unexercised Stock Options; Reacquired Shares. To the extent
--------------------------------------------
that any Stock Options expire or are otherwise terminated without being
exercised, the shares underlying such Stock Options (and shares related thereto)
shall again be available for issuance in connection with future Stock Options
under the Plan. Shares acquired by the Corporation upon exercise of Stock
Options pursuant to Section 6.2(f) shall not increase the number of shares
available for issuance under the Plan.
ARTICLE 5
Eligibility
Officers, employees, former employees, bona fide consultants and Directors
---- ----
of the Corporation, any Parent or any Subsidiary, who are responsible for or
contribute to the management, growth or profitability of the business of the
Corporation, any Parent or any Subsidiary, shall be eligible to be granted Stock
Options hereunder, subject to limitations set forth in this Plan; provided,
however, that only officers and employees shall be eligible to be granted
Incentive Stock Options hereunder.
ARTICLE 6
Stock Options
Section 6.1 General. Stock Options granted under the Plan may be either
-------
Incentive Stock Options or Non-Statutory Options. Any Stock Option granted
under the Plan shall be in such form as the Administrator may from time to time
approve, and the provisions of Stock Option grants need not be the same with
respect to each Option Holder or each Stock Option granted.
Section 6.2 Terms and Conditions of Stock Options. Each Stock Option
-------------------------------------
granted pursuant to the Plan shall be evidenced by a written Stock Option
Agreement between the Corporation and the Option Holder, which Agreement shall
comply with and be subject to the following terms and conditions:
-5-
<PAGE>
(a) Consultant's or Employee's Agreement. Each employee receiving a Stock
------------------------------------
Option under the Plan shall agree to remain in the employ of and to render
services to the Corporation, any Subsidiary or any Parent, as the Board may from
time to time direct, for a period of one year from the date the option is
granted, but such agreement shall not obligate the Corporation, any Subsidiary
or any Parent to continue to employ the optionee for any period whatsoever. The
sole remedy of the Corporation for breach of this employment agreement by the
Option Holder shall be cancellation of the Stock Option granted to the employee.
Each consultant receiving a Stock Option under the Plan shall agree to render
services to the Corporation, any Subsidiary or any Parent, in accordance with
the terms of such consultant's engagement by the Corporation for the term of
such engagement. The Corporation, in addition to such other remedies as it may
have pursuant to the terms of the Corporation's engagement of the consultant,
may cancel the Stock Option granted to the consultant upon any default by the
consultant pursuant to the terms of such consultant's engagement.
(b) Number of Shares. Each Stock Option Agreement shall state the number
----------------
of shares of Stock to which the Stock Option relates.
(c) Type of Option. Each Stock Option Agreement shall identify the portion
--------------
(if any) of the Stock Option which constitutes an Incentive Stock Option.
(d) Exercise Price. Each Stock Option Agreement shall state the price at
--------------
which shares subject to the Stock Option may be purchased (the
"Exercise Price"), which shall with respect to Incentive Stock Options
be not less than 100% of the Fair Market Value of the shares of Stock
on the Date of Grant. In the case of Non-Statutory Options, the
Exercise Price shall be determined in the sole discretion of the
Administrator; provided, however, that the Exercise Price shall be no
less than 85% of the Fair Market Value of the shares of Stock on the
Date of Grant of the Non-Statutory Option. In the case of either an
Incentive Stock Option or a Non-Statutory Option granted to a Ten
Percent Shareholder, the Exercise Price shall not be less than 110% of
such Fair Market Value.
(e) Value of Shares. The Fair Market Value of the shares of Stock
---------------
(determined as of the Date of Grant) with respect to which Incentive Stock
Options are first
-6-
<PAGE>
exercisable by an Option Holder under this Plan and all other incentive option
plans of the Corporation and any Parent or Subsidiary in any calendar year shall
not, for such year, in the aggregate, exceed $100,000; but this Section 6.2(e)
shall not affect the right of the Administrator to accelerate or otherwise alter
the time of vesting of any Options granted as Incentive Stock Options, even, if
as a result thereof, some of such Options cease being Incentive Stock Options.
(f) Medium and Time of Payment. The Exercise Price shall be paid in full,
--------------------------
at the time of exercise, in cash or cash equivalents or, with the approval of
the Administrator, in shares of Stock which have been held by the Option Holder
for a period of at least six calendar months preceding the date of surrender and
which have a Fair Market Value equal to the Exercise Price, or in a combination
of cash and such shares, and may be effected in whole or in part (i) with monies
received from the Corporation at the time of exercise as a compensatory cash
payment; or (ii) to the extent that the Exercise Price exceeds the par value of
the shares so purchased, with monies borrowed from the Corporation in accordance
with Section 9.5.
(g) Term and Exercise of Stock Options. Stock Options shall be exercisable
----------------------------------
over the exercise period at the times the Administrator may determine, as
reflected in the related Stock Option Agreements. The Stock Option Agreements
shall provide that Option Holders shall have the right to exercise the Stock
Options at the rate of at least 20% per year over 5 years from the Date of Grant
of such Stock Options; provided, however, that the Administrator reserves the
right to provide for alternate vesting schedules for senior executives of the
Corporation. The exercise period of any Stock Option shall be determined by the
Administrator, but shall not exceed ten years from the Date of Grant of the
Stock Option. In the case of an Incentive Stock Option granted to a Ten Percent
Shareholder, the exercise period shall be determined by the Administrator, but
shall not exceed five years from the Date of Grant of the Stock Option. The
exercise period shall be subject to earlier termination upon the occurrence of
either a Special Terminating Event, as provided in Section 9.6, or the
Termination of Employment, as provided in Section 9.7. A Stock Option may be
exercised, as to any or all full shares of Stock as to which the Stock Option
has become exercisable, by giving written notice of such exercise to the
Corporation.
-7-
<PAGE>
ARTICLE 7
Adjustments
Section 7.1 Effect of Certain Changes.
-------------------------
(a) Stock Dividends, Splits, Etc.. If there is any change in the number of
-----------------------------
outstanding shares of Stock through the declaration of Stock dividends or
through a recapitalization resulting in Stock splits, or combinations or
exchanges of the outstanding shares, (i) the number of shares of Stock available
for Stock Options, (ii) the number of shares covered by outstanding Stock
Options, and (iii) the Exercise Price of any Stock Option in effect prior to
such change, shall be proportionately adjusted by the Administrator to reflect
any increase or decrease in the number of issued shares of Stock; provided,
however, that any fractional shares resulting from the adjustment shall be
eliminated.
(b) Liquidating Event. In the event of the proposed dissolution or
-----------------
liquidation of the Corporation, or in the event of any corporate separation or
division, including, but not limited to, a split-up, split-off or spin-off
(each, a "Liquidating Event"), the Administrator may provide that the holder of
any Stock Option then exercisable shall have the right to exercise such Stock
Option (at the price provided in the Stock Option Agreement) subsequent to the
Liquidating Event, and for the balance of its term, solely for the kind and
amount of shares of Stock and other securities, property, cash or any
combination thereof receivable upon such Liquidating Event by a holder of the
number of shares of Stock for or with respect to which such Stock Option might
have been exercised immediately prior to such Liquidating Event; or the
Administrator may provide, in the alternative, that each Stock Option granted
under the Plan shall terminate as of a date to be fixed by the Board; provided,
however, that not less than 30 days written notice of the date so fixed shall be
given to each Option Holder and if such notice is given, each Option Holder
shall have the right, during the period of 30 days preceding such termination,
to exercise the Stock Option as to all or any part of the shares of Stock
covered thereby, without regard to any installment or vesting provisions in his
or her Stock Option Agreement, on the condition, however, that the Liquidating
Event actually occurs; and if the Liquidating Event actually occurs, such
exercise shall be deemed effective (and, if applicable, the Option Holder shall
be deemed a shareholder with respect to the Stock Options exercised) immediately
preceding the occurrence of the Liquidating Event, or the date of record
-8-
<PAGE>
for shareholders entitled to share in such Liquidating Event, if a record date
is set.
(c) Merger or Consolidation. In the case of any capital reorganization,
-----------------------
any reclassification of the Common Stock (other than a change in par value or
recapitalization described in Section 7.1(a) of the Plan), or the consolidation
of the Corporation with, or a sale of substantially all of the assets of the
Corporation to (which sale is followed by a liquidation or dissolution of the
Corporation), or merger of the Corporation with another person (a
"Reorganization Event"), the Administrator shall be obligated to determine
whether the Reorganization Event shall constitute a "Liquidity Event," and to
deliver to Option Holders at least 15 days prior to such Reorganization Event a
notice which shall (i) indicate whether the Reorganization Event is a Liquidity
Event, (ii) indicate whether the Liquidity Event shall result in the
acceleration of the vesting provisions of this Option, and (iii) advise the
Option Holder of his or her rights pursuant to the Stock Option Agreement. If
the Reorganization Event is determined to be a Liquidity Event, in its sole and
absolute discretion, the surviving corporation may, but shall not be obligated
to, (i) tender stock options to the Option Holder with respect to the surviving
corporation which shall contain terms and provisions that substantially preserve
the rights and benefits of this Stock Option, and (ii) in the event that no
stock options have been tendered by the surviving corporation pursuant to the
terms of item (i) immediately above, the Option Holder shall have the right
exercisable during a ten-day period ending on the fifth day prior to the
Reorganization Event to exercise his or her Stock Options in whole or in part,
and if so determined by the Administrator, without regard to any installment
provisions under his or her Stock Option Agreement, on the condition, however,
that the Reorganization Event is actually effected; and if the Reorganization
Event is actually effected, such exercise shall be deemed effective (and, if
applicable, the Option Holder shall be deemed a shareholder with respect to the
Stock Options exercised) immediately preceding the effective time of the
Reorganization Event (or on the date of record for shareholders entitled to
share in the securities or property distributed in the Reorganization Event, if
a record date is set). If the Reorganization Event is not determined to be a
Liquidity Event, the Option Holder shall thereafter be entitled upon exercise of
the Stock Option to purchase the kind and number of shares of stock or other
securities or property of the surviving corporation receivable upon such event
by a holder of the number of shares of the Common Stock which the Option
entitles the Option Holder to purchase from the Corporation immediately prior to
such event, and in any
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<PAGE>
such case, appropriate adjustment shall be made in the application of the
provisions set forth in this Plan with respect to the Option Holder's rights and
interests thereafter, to the end that the provisions set forth in the Stock
Option Agreement (including the specified changes and other adjustments to the
Exercise Price) shall thereafter be applicable in relation to any shares or
other property thereafter purchasable upon exercise of the Stock Option.
(d) Where Corporation Survives. Section 7.1(c) shall not apply to a merger
--------------------------
or consolidation in which the Corporation is the surviving corporation unless
shares of Stock are converted into or exchanged for securities other than
publicly-traded common stock, cash (excluding cash in payment for actual shares)
or any other thing of value. Notwithstanding the preceding sentence, in case of
any consolidation or merger of another corporation into the Corporation in which
the Corporation is the surviving corporation and in which there is a
reclassification or change (including a change to the right to receive an amount
of money payable by cash or cash equivalent or other property) of the shares of
Stock (other than a change in par value, or from par value to no par value, or
as a result of a subdivision or combination, but including any change in such
shares into two or more classes or series of shares), the Administrator may
provide that the holder of each Stock Option then exercisable shall have the
right to exercise such Stock Option solely for the kind and amount of shares of
Stock and other securities (including those of any new direct or indirect Parent
of the Corporation), property, cash or any combination thereof receivable upon
such reclassification change, consolidation or merger by the holder of the
number of shares of Stock for which such Stock Option might have been exercised.
(e) Surviving Corporation Defined. The determination as to which party to
-----------------------------
a merger or consolidation is the "surviving corporation" shall be made on the
basis of the relative equity interests of the shareholders in the corporation
existing after the merger or consolidation, as follows: if immediately following
any merger or consolidation the holders of outstanding voting securities of the
Corporation immediately prior to the merger or consolidation own equity
securities possessing more than 50% of the voting power of the corporation
existing following the merger or consolidation, then for purposes of this Plan,
the Corporation shall be the surviving corporation. In all other cases, the
Corporation shall not be the surviving corporation. In making the determination
of ownership by the shareholders of a corporation immediately after the merger
or consolidation, of equity securities pursuant to this Section
-10-
<PAGE>
7.1(e), equity securities which the shareholders owned immediately before the
merger or consolidation as shareholders of another party to the transaction
shall be disregarded. Further, for purposes of this Section 7.1(e) only,
outstanding voting securities of a corporation shall be calculated by assuming
the conversion of all equity securities convertible (immediately or at some
future time) into shares entitled to vote.
(f) Par Value Changes. In the event of a change in the Stock of the
-----------------
Corporation as presently constituted which is limited to a change of all of its
authorized shares with par value, into the same number of shares without par
value, or a change in the par value, the shares resulting from any such change
shall be "Stock" within the meaning of the Plan.
(g) Decision of Administrator Final. To the extent that the foregoing
-------------------------------
adjustments relate to Stock or securities of the Corporation, such adjustments
shall be made by the Administrator, whose determination in that respect shall be
final, binding and conclusive; provided, however, that each Incentive Stock
Option granted pursuant to the Plan shall not be adjusted without the prior
consent of the holder thereof in a manner that causes such Stock Option to fail
to continue to qualify as an Incentive Stock Option.
(h) No Other Rights. Except as hereinbefore expressly provided in this
---------------
Article 7, no Option Holder shall have any rights by reason of any subdivision
or consolidation of shares of Stock or the payment of any dividend or any other
increase or decrease in the number of shares of Stock of any class or by reason
of any liquidating event, merger, or consolidation of assets or stock of another
corporation, or any other issue by the Corporation of shares of Stock of any
class, or securities convertible into shares of Stock of any class; and except
as provided in this Article 7, none of the foregoing events shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Stock subject to Stock Options. The grant of a Stock Option
pursuant to the Plan shall not affect in any way the right or power of the
Corporation to make adjustments, reclassifications, reorganizations or changes
of its capital or business structures or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or part of its business or assets.
(i) No Rights as Shareholder. Except as specifically provided in this
------------------------
Article 7, an Option Holder or a transferee of a Stock Option shall have no
rights as a shareholder with respect to any shares covered by the Stock Options
until the date of the issuance of a Stock certificate to him or her for
-11-
<PAGE>
such shares, and no adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
of other rights for which the record date is prior to the date such Stock
certificate is issued, except as provided in Section 7.1(b) or 7.1(c).
ARTICLE 8
Amendment and Termination
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the rights of a
Participant under any Stock Option theretofore granted without such
Participant's consent, or which without the approval of the shareholders would:
(a) except as provided in Article 7, materially increase the total number
of shares of Stock reserved for the purposes of the Plan;
(b) materially increase the benefits accruing to Participants or Eligible
Persons under the Plan; or
(c) materially modify the requirements for eligibility under the Plan.
The Administrator may amend the terms of any award theretofore granted,
prospectively or retroactively, but, subject to Article 3, no such amendment
shall impair the rights of any holder without his or her consent.
ARTICLE 9
General Provisions
Section 9.1 General Restrictions.
--------------------
(a) No View to Distribute. The Administrator may require each person
---------------------
acquiring shares of Stock pursuant to the Plan to represent to and agree with
the Corporation in writing that such person is acquiring the shares without a
view towards distribution thereof. The certificates may include any legend
which the Administrator deems appropriate to reflect any restrictions on
transfer.
(b) Legends. All certificates for shares of Stock delivered under the Plan
-------
shall be subject to such stop transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed and any applicable federal or state securities
laws, and the
-12-
<PAGE>
Administrator may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.
Section 9.2 Other Compensation Arrangements. Nothing contained in this
-------------------------------
Plan shall prevent the Board from adopting other or additional compensation
arrangements, subject to shareholder approval if such approval is required; and
such arrangements may be either generally applicable or applicable only in
specific cases.
Section 9.3 Withholding Taxes. Each Participant shall, no later than
-----------------
the date as of which the value derived from a Stock Option first becomes
includable in the gross income of the Participant for income tax purposes, pay
to the Corporation, or make arrangements satisfactory to the Administrator
regarding payment of, any federal, state or local taxes of any kind required by
law to be withheld with respect to the Stock Option or its exercise. The
obligations of the Corporation under the Plan shall be conditioned upon such
payment or arrangements and the Participant shall, to the extent permitted by
law, have the right to request that the Corporation deduct any such taxes from
any payment of any kind otherwise due to the Participant.
Section 9.4 Indemnification. In addition to such other rights of
---------------
indemnification as they may have as Directors or members of the Committee, and
to the extent allowed by applicable law, the Administrators shall be indemnified
by the Corporation against the reasonable expenses, including attorney's fees,
actually incurred in connection with any action, suit or proceeding or in
connection with any appeal therein, to which they or any one of them may be
party by reason of any action taken or failure to act under or in connection
with the Plan or any option granted under the Plan, and against all amounts paid
by them in settlement thereof (provided that the settlement has been approved by
the Corporation, which approval shall not be unreasonably withheld) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such Administrator did not act in good faith and in a
manner which such person reasonably believed to be in the best interests of the
Corporation, and in the case of a criminal proceeding, had no reason to believe
that the conduct complained of was unlawful; provided, however, that within 60
days after institution of any such action, suit or proceeding, such
Administrator shall, in writing, offer the Corporation the opportunity at its
own expense to handle and defend such action, suit or proceeding.
-13-
<PAGE>
Section 9.5 Loans. The Corporation may make loans to Option Holders as
-----
the Administrator, in its discretion, may determine in connection with the
exercise of outstanding Stock Options granted under the Plan. Such loans shall
(i) be evidenced by promissory notes entered into by the holders in favor of the
Corporation; (ii) be subject to the terms and conditions set forth in this
Section 9.5 and such other terms and conditions, not inconsistent with the Plan,
as the Administrator shall determine; and (iii) bear interest, if any, at such
rate as the Administrator shall determine. In no event may the principal amount
of any such loan exceed the Exercise Price less the par value of the shares of
Stock covered by the Stock Option, or portion thereof, exercised by the Option
Holder. The initial term of the loan, the schedule of payments of principal and
interest under the loan, the extent to which the loan is to be with or without
recourse against the holder with respect to principal and applicable interest
and the conditions upon which the loan will become payable in the event of the
holder's termination of employment shall be determined by the Administrator;
provided, however, that the term of the loan, including extensions, shall not
exceed 10 years. Unless the Administrator determines otherwise, when a loan
shall have been made, shares of Stock having a Fair Market Value at least equal
to the principal amount of the loan shall be pledged by the holder to the
Corporation as security for payment of the unpaid balance of the loan and such
pledge shall be evidenced by a pledge agreement, the terms of which shall be
determined by the Administrator, in its discretion; provided, however, that each
loan shall comply with all applicable laws, regulations and rules of the Board
of Governors of the Federal Reserve System and any other governmental agency
having jurisdiction.
Section 9.6 Special Terminating Events. If a Special Terminating Event
--------------------------
occurs, all Stock Options theretofore granted to such Option Holder may, unless
earlier terminated in accordance with their terms, be exercised by the Option
Holder or by his or her estate or by a person who acquired the right to exercise
such Stock Option by bequest or inheritance or otherwise by reason of the death
or Disability of the Option Holder, at any time within one year after the date
of the Special Terminating Event. Notwithstanding the foregoing, an Incentive
Stock Option shall only be exercisable at any time within three months after the
date of Retirement or termination of employment of an Option Holder.
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<PAGE>
Section 9.7 Termination of Employment. Except as provided in this
-------------------------
Section 9.7, no Stock Option may be exercised unless the Option Holder is then a
Director of the Corporation, or in the employ of the Corporation or any Parent
or Subsidiary, or rendering services as a consultant to the Corporation or any
Parent or Subsidiary, and unless he or she has remained continuously so employed
or engaged since the Date of Grant. If the employment or services of an Option
Holder shall terminate (other than by reason of a Special Terminating Event),
all Stock Options previously granted to the Option Holder which are exercisable
at the time of such termination may be exercised for the period ending ninety
days after such termination, unless otherwise provided in the Stock Option
Agreement; provided, however, that no Stock Option may be exercised following
the date of its expiration. Nothing in the Plan or in any Stock Option granted
pursuant to the Plan shall confer upon an employee any right to continue in the
employ of the Corporation or any Parent or Subsidiary or interfere in any way
with the right of the Corporation or any Parent or Subsidiary to terminate such
employment at any time.
Section 9.8 Transfer of Stock Options. Each Stock Option Agreement
-------------------------
shall provide that the Stock Option shall not be transferable by the Option
Holder other than by will or the laws of descent and distribution, and Stock
Options may be exercised, during the lifetime of the Option Holder, only by the
Option Holder or by his or her guardian or legal representative.
Section 9.9 Regulatory Matters. Each Stock Option Agreement shall
------------------
provide that no shares shall be purchased or sold thereunder unless and until
(i) any then applicable requirements of state or federal laws and regulatory
agencies shall have been fully complied with to the satisfaction of the
Corporation and its counsel, and (ii) if required to do so by the Corporation,
the Option Holder shall have executed and delivered to the Corporation a letter
of investment intent in such form and containing such provisions as the
Administrator may require.
Section 9.10 Recapitalizations. Each Stock Option Agreement shall contain
-----------------
provisions which reflect those provisions set forth in Article 7.
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<PAGE>
Section 9.11 Delivery. Upon exercise of a Stock Option granted under
--------
this Plan, the Corporation shall issue Stock or pay any amounts due within a
reasonable period of time thereafter. Subject to any statutory obligations the
Corporation may otherwise have, for purposes of this Plan, thirty days shall be
considered a reasonable period of time.
Section 9.12 Other Provisions. The Stock Option Agreements authorized
----------------
under the Plan may contain such other provisions not inconsistent with this
Plan, including, without limitation, restrictions upon the exercise of the Stock
Options, as the Administrator may deem advisable.
ARTICLE 10
Effective Date of Plan
The Plan shall become effective on the date on which the Plan is adopted by
the Board, subject to approval by the Corporation's shareholders, which approval
must be obtained within one year from the date the Plan is adopted by the Board.
ARTICLE 11
Term of Plan
No Stock Option shall be granted pursuant to the Plan on or after March 15,
2004, but Stock Options theretofore granted may extend beyond that date.
Article 12
Information to Option Holders
The Corporation will cause a report to be sent to each Option Holder not
later than 120 days after the end of each fiscal year. Such report shall
consist of the financial statements of the Corporation for such fiscal year and
shall include such other information as is provided by the Corporation to its
shareholders.
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<PAGE>
EXHIBIT 10.25
STANDARDIZED
ADOPTION AGREEMENT
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING
PLAN AND TRUST ACCOUNT
Sponsored By
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
The Employer named below hereby establishes a Cash or Deferred Profit-Sharing
Plan for eligible Employees as provided in this Adoption Agreement and the
accompanying Basic Prototype Plan and Trust Account Basic Plan Document #01.
1. EMPLOYER INFORMATION
Employer's Name: RealSelect, Inc.
Address: 5655 Lindero Canyon Road, Suite 120
Westlake Village, CA 91362
Telephone Number: (818) 865-3570
Tax I.D. Number: 77-0442995
Form of Business:
[_] Sole Proprietor [_] Partnership [_] S Corporation
[X] Corporation [_] Other
Name of Individual Authorized to Issue Instructions to the Trustee:
N/A
Name of Plan: RealSelect, Inc.
401(K) RETIREMENT PLAN
Three Digit Plan Number for Annual Return/Report: 001
2. EFFECTIVE DATE
(a) This is a new Plan having an effective date of JANUARY 1, 1998.
---------------
(b) This is an amended Plan.
The effective date of the original Plan was _______________.
The effective date of the amended Plan is _________________.
(c) If different from above, the Effective Date for the Plan's Elective
Deferral provisions shall be SEPTEMBER 1, 1998.
-----------------
3. DEFINITIONS
(a) "Compensation" The computation period shall be the:
[X] (i) Plan Year.
[_] (ii) Employer's Taxable Year.
[_] (iii) Calendar Year.
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<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #001
Compensation shall be determined on the basis of the following definition:
[_] (iv) Code Section 6041 and 6051 Compensation,
[X] (v) Code Section 3401(a) Compensation, or
[_] (vi) Code Section 415 Compensation.
Compensation [X] shall [ ] shall not include Employer contributions made
pursuant to a Salary Savings Agreement which are not includable in the
gross income of the Employee for the reasons indicated in the definition of
Compensation at 1.12 of the Basic Plan Document #01.
For purposes of the Plan, Compensation shall be limited to $__________, the
maximum amount which will be considered for Plan purposes. [If an amount is
specified, it will limit the amount of contributions allowed on behalf of
higher compensated Employees. Completion of this section is not intended to
coordinate with the Code Section 401(a)(17) definition of Compensation.]
(b) "Entry Date"
[_] (i) The first day of the Plan Year during which an Employee meets
the eligibility requirements.
[_] (ii) The earlier of the first day of the Plan Year or the first day
of the seventh month of the Plan Year coinciding with or
following the date on which an Employee meets the eligibility
requirements.
[_] (iii) The first day of the month coinciding with or following the
date on which an Employee meets the eligibility requirements.
[X] (iv) The first day of the Plan Year, or the first day of the fourth
month, or the first day of the seventh month or the first day
of the tenth month, of the Plan Year coinciding with or
following the date on which an Employee meets the eligibility
requirements.
[_] (v) Immediately after an Employee meets the eligibility
requirements.
(c) "Hours of Service" Shall be determined on the basis of the method selected
below. Only one method may be selected. The method selected shall be
applied to all Employees covered under the Plan as follows:
[X] (i) On the basis of actual hours for which an Employee is paid or
entitled to payment.
[_] (ii) On the basis of days worked.
An Employee shall be credited with ten (10) Hours of Service if
under paragraph 1.42 of the Basic Plan Document #01 such
Employee would be credited with at least one (1) Hour of
Service during the day.
[_] (iii) On the basis of weeks worked.
An Employee shall be credited with forty-five (45) Hours of
Service if under paragraph 1.42 of the Basic Plan Document #01
such Employee would be credited with at least one (1) Hour of
Service during the week.
[_] (iv) On the basis of semi-monthly payroll periods.
An Employee shall be credited with ninety-five (95) Hours of
Service if under paragraph 1.42 of the Basic Plan Document #01
such Employee would be credited with at least one (1) Hour of
Service during the semi-monthly payroll period.
[_] (v) On the basis of months worked.
An Employee shall be credited with one-hundred-ninety (190)
Hours of Service if under paragraph 1.42 of the Basic Plan
Document #01 such Employee would
2
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #001
be credited with at least one (1) Hour of Service during the
month.
(d) "Limitation Year" The same 12-consecutive month period as the Plan Year.
(e) "Net Profit"
[X] (i) Not applicable, profits will not be required for any
contributions.
[_] (ii) As defined in paragraph 1.49 of the Basic Plan Document #01.
[_] (iii) Shall be defined as:
___________________________
(f) "Plan Year" The 12-consecutive month period commencing on January 1 and
---------
ending on December 31.
-----------
If applicable, the Plan Year will be a short Plan Year commencing on
_______ and ending on _______. Thereafter, the Plan Year shall end on the
date last specified above.
(g) "Qualified Early Retirement Age" For purposes of making distributions under
the provisions of a Qualified Domestic Relations Order, the Plan's
Qualified Early Retirement Age with regard to the Participant against whom
the order is entered [X] shall [_] shall not be the date the order is
determined to be qualified. If "shall" is elected, this will only allow
payout to the alternate payee(s).
(h) "Qualified Joint and Survivor Annuity" The safe-harbor provisions of
paragraph 8.7 of the Basic Plan Document #01 [X] are [_] are not
applicable. If not applicable, the survivor annuity shall be ______% (50%,
66-2/3%, 75% or 100%) of the annuity payable during the lives of the
Participant and Spouse. If no answer is specified, 50% will be used.
(i) "Taxable Wage Base"
[X] (i) Not Applicable - Plan is not integrated with Social Security.
[_] (ii) The maximum earnings considered wages for such Plan Year under
Code Section 3121(a).
(j) "Valuation Date(s)" Participant Accounts will be adjusted daily to reflect
all allocations at Article V of the Basic Plan Document.
(k) "Year of Service"
(i) For Eligibility Purposes: The 12-consecutive month period during
which an Employee is credited with 1 (not more than 1,000) Hour of
---
Service.
(ii) For Allocation Accrual Purposes: For Participants employed on the
last day of the Plan Year a Year of Service is not required to
receive an allocation. For Participants who terminate employment
prior to the last day of the Plan Year refer to Section 8 ALLOCATIONS
TO TERMINATED EMPLOYEES.
(iv) For Vesting Purposes: The 12-consecutive month period during which an
Employee is credited with 1000 (not more than 1,000) Hours of
----
Service.
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Prototype Cash or
Deferred Profit-
Sharing Plan #001
4. ELIGIBILITY REQUIREMENTS
(a) Service and Age:
[X] (i) For Elective Deferrals, or Employer Contributions [unless
specified otherwise at (ii) below]:
[X] (1) The Plan shall have no service requirement.
[X] (2) The Plan shall have no age requirement.
[_] (3) The Plan shall cover only Employees having
completed at least _ [not more than one (1)]
Years of service.
[_] (4) The Plan shall cover only Employees having
attained age _ (not more than 21).
[_] (ii) For contributions [not covered at (i) above] specify the
Service and/or Age requirements below:
Type of Service Age
Contribution Requirement Requirement
------------ ----------- -----------
(1) Employer Matching _________ __
(2) Qualified Non-Elective _________ __
(3) Discretionary Profit-Sharing _________ __
Not more than two (2) years and not more than age 21 may be
specified.
NOTE: If the eligibility period selected is or includes a fractional year,
an Employee will not be required to complete any specified number of
Hours of Service to receive credit for such period. If the
eligibility period exceeds one (1) Year of Service, the vesting
provisions at Section 12 herein must be completed to provide a 100%
vested and nonforfeitable benefit upon participation.
(b) Classification:
The Plan shall cover all Employees who have met the age and Service
requirements with the following exceptions:
[X] (i) No exceptions.
[_] (ii) The Plan shall exclude Employees included in a unit of
Employees covered by a collective bargaining agreement
between the Employer and Employee Representatives, if
retirement benefits were the subject of good faith
bargaining. For this purpose, the term "Employee
Representative" does not include any organization more
than half of whose members are Employees who are owners,
officers, or executives of the Employer.
[_] (iii) The Plan shall exclude Employees who are nonresident
aliens and who receive no earned income from the Employer
which constitutes income from sources within the United
States.
(c) Employees on Effective Date:
[X] (i) Not Applicable. All Employees will be required to satisfy
both the age and Service requirements specified above.
[_] (ii) Employees employed on the Plan's original Effective Date
do not have to satisfy the Service requirements specified
above.
[_] (iii) Employees employed on the Plan's original Effective Date
do not have to satisfy the age requirements specified
above.
[_] (iv) Employees do not have to meet the age and Service
requirements specified above on an Effective Date chosen
at the discretion of the Employer.
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<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #001
5. RETIREMENT AGES
(a) Normal Retirement Age:
If the Employer imposes a requirement that Employees retire upon
reaching a specified age, the Normal Retirement Age selected below
may not exceed the Employer imposed mandatory retirement age.
[X] (i) Normal Retirement Age shall be 65 (not to exceed age
--
65).
[_] (ii) Normal Retirement Age shall be (not to exceed age 65) or
the (not to exceed the 5th) the later of attaining age
anniversary of the first day of the first Plan Year in
which the Participant commenced participation in the
Plan.
(b) Early Retirement Age:
[_] (i) Not Applicable.
[X] (ii) The Plan shall have an Early Retirement Age of 55
(not less than 55) and completion of 5 Years of
---
Service.
6. EMPLOYEE CONTRIBUTIONS
[X] (a) Participants shall be permitted to make Elective Deferrals in
any amount from 1 % up to 15 % of their Compensation.
-- --
[_] (b) Participants shall be permitted to make after tax Voluntary
Contributions in any amount from ___% up to ___ % of their
Compensation.
(c) Participants shall be permitted to amend their deferral
agreements to change the contribution percentage:
[X] (i) On the first day of the next quarter.
[_] (ii) Upon 30 days notice to the Employer.
[_] (iii) On the first day of the Plan Year and the
first day of the seventh month of the Plan
Year.
[_] (iv) On the Plan Entry Date.
(d) Participants [ ] may [X] may not have Elective Deferrals
recharacterized as Voluntary Contributions to satisfy the
Average Deferral Percentage Test.
7. EMPLOYER CONTRIBUTIONS AND ALLOCATION THEREOF
NOTE: The Employer shall make contributions to the Plan in accordance with
the formula or formulas selected below. The Employer's contribution
shall be subject to the limitations contained in Articles III and X.
For this purpose, a contribution for a Plan Year shall be limited for
the Limitation Year which ends with or within such Plan Year. Also,
the integrated allocation formulas below are for Plan Years beginning
in 1989 and later. The Employer's allocation for earlier years shall
be as specified in its Plan prior to amendment for the Tax Reform Act
of 1986.
(a) Profits Requirement:
(i) Current or Accumulated Net Profits are required for:
Yes No
--- --
[_] [X] (A) Matching Contributions.
[_] [X] (B) Qualified Non-Elective Contributions.
[_] [X] (C) Discretionary contributions.
NOTE: Elective Deferrals can always be contributed regardless of
profits.
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Prototype Cash or
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[X] (b) Salary Savings Agreement:
The Employer shall contribute and allocate to each Participant's
account an amount equal to the amount withheld from the Compensation
of such Participant pursuant to his or her Salary Savings Agreement.
If applicable, the maximum percentage is specified in Section 6 above.
An Employee who has terminated his or her election under the Salary
Savings Agreement other than for hardship reasons may not make another
Elective Deferral:
[_] (i) until the first day of the next Plan Year.
[X] (ii) for a period of 3 month(s) (not to exceed 12 months).
---
[_] (iii) until the next Plan Entry Date.
[_] (iv) until the of the next Plan Entry Date after __ days or
__ months.
[X] (c) Matching Employer Contribution [See Paragraphs (g) and (h)]:
[_] (i) Percentage Match: The Employer shall continue and
allocate to each eligible Participant's account an
amount equal to ___% of the amount contributed and
allocated in accordance with paragraph 7(b) above and
(if checked) ___% of [_] the amount of Voluntary
Contributions made in accordance with paragraph 4.1 of
the Basic Plan Document #01. The Employer shall not
match Participant Elective Deferrals as provided above
in excess of $ ___ or in excess of ___% of the
Participant's Compensation or if applicable, Voluntary
Contributions in excess of $ ___ or in excess of ___%
of the Participant's Compensation. In no event will the
match on both Elective Deferrals and Voluntary
Contributions exceed a combined amount of $ ___ or ___%
[X] (ii) Discretionary Match: The Employer shall contribute and
allocate to each eligible Participant's account a
percentage of the Participant's Elective Deferral
contributed and allocated in accordance with paragraph
7(b) above. The Employer shall set such percentage
prior to the end of the Plan Year. The Employer shall
not match Participant Elective Deferrals in excess of
an amount specified by the Employer each year.
[X] (iii) Qualified Match: Employer Matching Contributions will
be treated as Qualified Matching Contributions to the
extent specified below:
[_] (A) All Matching Contributions.
[X] (B) None.
[_] (C) % of the Employer's Matching Contribution.
[_] (D) up to % of each Participant's Compensation.
[_] (E) The amount necessary to meet the [ ] Average
Deferral Percentage (ADP) test, [ ] Average
Contribution Percentage (ACP) test, [ ] Both
the ADP and ACP tests.
Qualified Matching Contributions are fully vested and
are subject to withdrawal restrictions prior to the
earlier of age 59 1/2 or separation from employment.
(iv) Matching Contribution Computation Period: The time
period upon which matching contributions will be based
shall be
[_] (A) weekly
[_] (B) bi-weekly
[_] (C) semi-monthly
[_] (D) monthly
[_] (E) quarterly
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Prototype Cash or
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[_] (F) semi-annually
[X] (G) annually
(v) Eligibility for Match: Employer Matching Contributions,
whether or not Qualified, will only be made on Employee
Contributions not withdrawn prior to the end of the [ ]
Matching Contribution Computation Period [X]Plan Year.
[X] (d) Qualified Non-Elective Employer Contribution - [See Paragraphs (g) and
(h)]
The Employer shall have the right to make an additional fully vested
discretionary contribution subject to withdrawal restrictions prior to
the earlier of age 59 1/2 or separation from employment. Such
contributions shall be allocated to each eligible Employee in
proportion to his or her Compensation as a percentage of the
Compensation of all eligible Employees. This part of the Employer's
contribution and the allocation thereof shall be unrelated to any
Employee contributions made hereunder. Qualified non-Elective
Contributions shall be taken into account to the extent necessary to
satisfy the ADP or ACP test requirements. Qualified non-Elective
Contributions will be allocated to:
[X] (i) All Employees eligible to participate.
[_] (ii) Only non-Highly Compensated Employees eligible to
participate.
[X] (e) Additional Employer Contribution Other Than Qualified Non-Elective
Contributions- Non-Integrated [See Paragraphs (g) and (h)]
The Employer shall have the right to make an additional discretionary
contribution which shall be allocated to each eligible Employee in
proportion to his or her Compensation as a percentage of the
Compensation of all eligible Employees. This part of the Employer's
contribution and the allocation thereof shall be unrelated to any
Employee contributions made hereunder.
[_] (f) Additional Employer Contribution - Integrated Allocation Formula [See
Paragraphs (g) and (h)]
The Employer shall have the right to make an additional discretionary
contribution. The Employer's contribution for the Plan Year plus any
forfeitures shall be allocated to the accounts of eligible
Participants as follows:
(i) First, to the extent contributions and forfeitures are
sufficient, all Participants will receive an allocation equal
to 3% of their Compensation.
(ii) Next, any remaining Employer Contributions and forfeitures will
be allocated to Participants who have Compensation in excess of
the Taxable Wage Base (excess Compensation). Each such
Participant will receive an allocation in the ratio that his or
her excess compensation bears to the excess Compensation of all
Participants. Participants may only receive an allocation of 3%
of excess Compensation.
(iii) Next, any remaining Employer contributions and forfeitures will
be allocated to all Participants in the ratio that their
Compensation plus excess Compensation bears to the total
Compensation plus excess Compensation of all Participants.
Participants may only receive an allocation of up to 2.7% of
their Compensation plus excess Compensation, under this
allocation method.
(iv) Next, any remaining Employer contributions and forfeitures will
be allocated to all Participants (whether or not they received
an allocation under the preceding paragraphs) in the ratio that
each Participant's Compensation bears to all Participants'
Compensation.
NOTE: Only one plan maintained by the Employer may be integrated with
Social Security.
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Prototype Cash or
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Sharing Plan #001
(g) Allocation of Excess Amounts (Annual Additions)
Excess Amounts shall be eliminated by first returning Employee after
tax contributions, then returning Employee required after tax
contributions, and then returning Employee Elective Deferrals. In the
case of a Highly Compensated Employee only unmatched Elective
Deferrals may be returned. If any excess remains after completing the
above refunds the excess will be:
[X] (i) unallocated until the next Limitation Year at which time
it will be allocated to the affected Participant.
[_] (ii) allocated to other eligible Participants in proportion to
Compensation.
(h) Minimum Employer Contribution Under Top-Heavy Plans:
For any Plan Year during which the Plan is Top-Heavy, the sum of the
contributions and forfeitures as allocated to eligible Employees
under paragraphs 7(d), 7(e), 7(f), 7(g) and 9 of this Adoption
Agreement shall not be less than the amount required under paragraph
14.2 of the Basic Plan Document #01. Top-Heavy minimums will be
allocated to:
[_] (i) all eligible Participants.
[X] (ii) only eligible non-Key Employees who are Participants.
(i) Return of Excess Contributions and/or Excess Aggregate Contributions:
In the event that one or more Highly Compensated Employees is subject
to both the ADP and ACP tests and the sum of such tests exceeds the
Aggregate Limit, the limit will be satisfied by reducing the:
[_] (i) the ACP of the affected Highly Compensated Employees.
[X] (ii) a combination of the ADP and ACP of the affected Highly
Compensated Employees.
[_] (iii) The ADP of the affected Highly Compensated Employees.
8. ALLOCATIONS TO TERMINATED EMPLOYEES
The Employer will allocate Employer related contributions to any
Participant who terminates employment during the Plan Year and is credited
with more than 500 Hours of Service. The Employer will also allocate
Employer Matching Contributions to any Participant who terminates
employment during the Plan Year and is credited with 1 (not more than 500)
---
Hour of Service. The Employer will allocate all Employer related
contributions to any Participant who terminates during the Plan Year
without accruing the necessary Hours of Service if they terminate as a
result of:
[X] (i) Retirement.
[X] (ii) Disability.
[X] (iii) Death.
[_] (iv) Other termination.
9. ALLOCATION OF FORFEITURES
NOTE: Subsections (a), (b) and (c) below apply to forfeitures of amounts
other than Excess Aggregate Contributions.
(a) Allocation Alternatives:
[_] (i) Not Applicable. All contributions are always fully vested.
[_] (ii) Forfeitures shall be allocated to Participants in the same
manner as the
8
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Prototype Cash or
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Sharing Plan #001
Employer's contribution.
[1] Forfeitures attributable to Employer discretionary
contributions and Top-Heavy minimums will be
allocated to:
[_] all eligible Participants under the Plan.
[_] only those Participants eligible for an
allocation of matching contributions in the
current year.
[2] Forfeitures attributable to Employer Matching
contributions will be allocated to:
[_] all eligible Participants.
[_] only those Participants eligible for allocations
of matching contributions in the current year.
[X] (iii) Forfeitures shall be applied to reduce the Employer's
contribution for such Plan Year.
[_] (iv) Forfeitures shall be applied to offset administrative
expenses of the Plan. If forfeitures exceed these
expenses, (iii) above shall apply.
(b) Date for Reallocation:
Forfeitures shall be reallocated to eligible Employees on the earlier
of: (i) the end of the Plan Year during which the Participant
receives distribution of his or her benefit, or (ii) the end of the
Plan Year during which the Participant incurs five consecutive one
year Breaks in Service.
(c) Restoration of Forfeitures:
If amounts are forfeited prior to five consecutive 1-year Breaks in
Service, the Funds for restoration of account balances will be
obtained by means of an additional Employer contribution.
(d) Forfeitures of Excess Aggregate Contributions shall be
[X] (i) Applied to reduce Employer contributions.
[_] (ii) Allocated, after all other forfeitures under the Plan, to
the Matching Contribution account of each non-Highly
Compensated Participant who made Elective Deferrals or
Voluntary Contributions in the ratio which each such
Participant's Compensation for the Plan Year bears to the
total Compensation of all Participants for such Plan Year.
Such forfeitures cannot be allocated to the account of any
Highly Compensated Employee.
Forfeitures of Excess Aggregate Contributions will be so applied at
the end of the Plan Year in which they occur.
10. CASH OPTION
[X] (a) The Employer may permit a Participant to elect to defer to the Plan,
an amount not to exceed 100 % of any Employer paid cash bonus made
---
for such Participant for any year. A Participant must file an
election to defer such contribution at least fifteen (15) days prior
to the end of the Plan Year. If the Employee fails to make such an
election, the entire Employer paid cash bonus to which the
Participant would be entitled shall be paid as cash and not to the
Plan. Amounts deferred under this section shall be treated for all
purposes as Elective Deferrals. Notwithstanding the above, the
election to defer must be made before the bonus is made available to
the Participants.
[_] (b) Not Applicable.
9
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Prototype Cash or
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Sharing Plan #001
11. LIMITATIONS ON ALLOCATIONS AND TOP HEAVY PROVISIONS
[X] This section is not applicable since this is the only Plan the
Employer maintains or ever maintained.
[_] Annual Additions - The Employer does maintain or has maintained
another Plan (including a Welfare Benefit Fund or an individual
medical account [as defined in Code Section 415(l)(2)], under which
amounts are treated as Annual Additions) and has completed the proper
sections below.
Complete (a), (b) and (c) only if the Employer maintains or ever
maintained another qualified plan, including a Welfare Benefit Fund
or an individual medical account [as defined in Code Section
415(l)(2)], in which any Participant in this Plan is (or was) a
participant or could possibly become a participant.
(a) If the Participant is covered under another qualified Defined
Contribution Plan maintained by the Employer, other than a Master or
Prototype Plan:
[_] (i) the provisions of Article X of the Basic Plan Document #01
will apply, as if the other plan were a Master or
Prototype Plan.
[_] (ii) Attach provisions stating the method under which the plans
will limit total Annual Additions to the Maximum
Permissible Amount, and will properly reduce any Excess
Amounts, in a manner that precludes Employer discretion.
(b) If a Participant is or ever has been a participant in a Defined
Benefit Plan maintained by the Employer:
Attach provisions which will satisfy the 1.0 limitation of Code
Section 415(e). Such language must preclude Employer discretion. The
Employer must also specify the interest and mortality assumptions
used in determining Present Value in the Defined Benefit Plan.
(c) Top Heavy Contribution - The minimum contribution or benefit required
under Code Section 416 relating to Top-Heavy Plans shall be satisfied
by:
[_] (i) this Plan.
[_] (ii) ________________________________________
(Name of other qualified plan of the Employer).
[_] (iii) Attach provisions stating the method under which the
minimum contribution and benefit provisions of Code
Section 416 will be satisfied. If a Defined Benefit Plan
is or was maintained, an attachment must be provided
showing interest and mortality assumptions used in the
Top-Heavy Ratio.
12. VESTING
Employees shall have a fully vested and nonforfeitable interest in any
Employer contribution and the investment earnings thereon made in
accordance with paragraph 6 hereof. Employer contributions and the
investment earnings thereon made in accordance with paragraph 7(b),
7(c)(iii), 7(d) and, if elected, paragraphs [ ] 7(c)(i), [ ] 7(c)(ii), [ ]
7(e) and [ ] 7(f) are also fully vested. Other Employer contributions shall
be subject to the vesting table selected by the Employer except with
respect to any Plan Year during which the Plan is Top-Heavy, in which case
the Two-twenty vesting schedule [Option (b)(iii)] shall automatically apply
unless the Employer has already elected a faster vesting schedule. If the
Plan is switched to option (b)(iii), because of its Top-Heavy status, that
vesting schedule will remain in effect even if the Plan later becomes non-
Top-Heavy until the Employer executes an amendment of this Adoption
Agreement indicating otherwise.
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Prototype Cash or
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(a) Computation Period:
The computation period for purposes of determining Years of Service
and Breaks in Service for purposes of computing a Participant's
nonforfeitable right to his or her account balance derived from
Employer contributions:
[_] (i) shall not be applicable since Participants are always
fully vested,
[_] (ii) shall commence on the date on which an Employee first
performs an Hour of Service for the Employer and each
subsequent 12-consecutive month period shall commence
on the anniversary thereof, or
[X] (iii) shall commence on the first day of the Plan Year during
which an Employee first performs an Hour of Service for
the Employer and each subsequent 12-consecutive month
period shall commence on the anniversary thereof.
A Participant shall receive credit for a Year of Service if he or
she completes at least 1,000 Hours of Service [or if lesser, the
number of hours specified at 3(k)(iv) of this Adoption Agreement] at
any time during the 12-consecutive month computation period.
Consequently, a Year of Service may be earned prior to the end of
the 12-consecutive month computation period and the Participant need
not be employed at the end of the 12-consecutive month computation
period to receive credit for a Year of Service.
(b) Vesting Schedules:
NOTE: The vesting schedules below only apply to a Participant who has at
least one Hour of Service during or after the 1989 Plan Year. If
applicable, Participants who separated from Service prior to the
1989 Plan Year will remain under the vesting schedule as in effect
in the Plan prior to amendment for the Tax Reform Act of 1986.
[_] (i) Full and immediate vesting.
<TABLE>
<CAPTION>
Years of Service
----------------
1 2 3 4 5 6 7
------ ------ ------ ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
[_] (ii) 0% 0% 0% 0% 100% 100% 100%
[_] (iii) __% 20% 40% 60% 80% 100% 100%
[_] (iv) __% __% 20% 40% 60% 80% 100%
[X] (v) 25% 50% 75% 100% 100% 100% 100%
------ ------ ------ ------- ------- ------- ------
</TABLE>
[_] An Employee shall be _____% vested upon being hired. (This option can
only be used in conjunction with vesting schedule (v).
NOTE: The percentages selected for schedule (v) may not be less for any
year than the percentages shown at schedule (iv).
(c) Service Disregarded For Vesting:
[X] (i) Not Applicable. All Service shall be considered.
[_] (ii) Service prior to the Effective Date of this Plan or a
predecessor plan shall be disregarded when
computing a Participant's vested and nonforfeitable
interest.
[_] (iii) Service prior to a Participant having attained age 18
shall be disregarded when computing a Participant's
vested and nonforfeitable interest.
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Prototype Cash or
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13. SERVICE WITH PREDECESSOR ORGANIZATION
For purposes of satisfying the Service requirements for eligibility, Hours
of Service shall include Service with the following predecessor
organization(s):
(These hours will also be used for vesting purposes.)
14. ROLLOVER/TRANSFER CONTRIBUTIONS
(a) Rollover Contributions, as described at paragraph 4.3 of the Basic
Plan Document #01, [X] shall [_] shall not be permitted. If permitted,
Employees [X] may [_] may not make Rollover Contributions prior to
meeting the eligibility requirements for participation in the Plan.
(b) Transfer Contributions, as described at paragraph 4.4 of the Basic
Plan Document #01 [X] shall [_] shall not be permitted. If permitted,
Employees [X] may [_] may not Transfer Contributions prior to meeting
the eligibility requirements for participation in the Plan.
NOTE: The Employer may not accept such contributions if they are subject to
the Joint and Survivor Annuity Rules.
15. HARDSHIP WITHDRAWALS
Hardship withdrawals, as provided for in paragraph 6.9 of the Basic Plan
Document #01, [X] are [ ] are not permitted.
16. PARTICIPANT LOANS
Participant loans, as provided for in paragraph 13.5 of the Basic Plan
Document #01, [X] are [ ] are not permitted. If permitted, repayments of
principal and interest shall be repaid to [X] the Participant's segregated
account or [ ] the general Fund.
17. EMPLOYEE INVESTMENT DIRECTION
Participants may direct all Contributions among funds offered by the
Sponsor in accordance with paragraph 13.8 of the Basic Plan Document #01.
18. EARLY PAYMENT OPTION
(a) A Participant who separates from Service prior to retirement, death or
Disability [X] may [ ] may not make application to the Employer
requesting an early payment of his or her vested account balance.
(b) A Participant who has attained age 59-1/2 and who has not separated
from Service [ ] may [X] may not obtain a distribution of his or her
vested Employer contributions. Distribution can only be made if the
Participant is 100% vested.
(c) A Participant who has attained the Plan's Normal Retirement Age and
who has not separated from
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Prototype Cash or
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Sharing Plan #001
Service [X] may [ ] may not receive a distribution of his or her
vested account balance.
NOTE: If the Participant has had the right to withdraw his or her account
balance in the past, this right may not be taken away.
Notwithstanding the above, to the contrary, required minimum
distributions will be paid.
19. DISTRIBUTION OPTIONS
(a) Timing of Distributions:
[_] (i) As soon as administratively feasible following the
close of the Plan Year during which a distribution is
requested or is otherwise payable.
[X] (ii) As soon as administratively feasible, following the
date on which a distribution is requested or is
otherwise payable.
[_] (iii) As soon as administratively feasible, after the
consecutive one-year Breaks in Service. close of the
Plan Year during which the Participant incurs
[_] (iv) Only after the Participant has achieved the Plan's
Normal Retirement Age, or Early Retirement Age, if
applicable.
(b) Optional Forms of Payment:
[X] (i) Lump Sum.
[_] (ii) Installment Payments.
[_] (iii) Life Annuity*.
[_] (iv) Life Annuity Term Certain*.
Life Annuity with payments guaranteed for period (not
to exceed 20 years, specify all applicable).
[_] (v) Joint and [_] 50%, [_] 66-2/3%, [_] 75% or [_] 100%
survivor annuity* (specify all applicable).
[_] (vi) If applicable, other form(s) as previously offered
*Not available in Plan meeting provisions of paragraph 8.7 of Basic
Plan Document #01.
(c) Recalculation of Life Expectancy:
In determining required distributions under the Plan, Participants
and/or their Spouse (Surviving Spouse) [X] shall [ ] shall not have
the right to have their life expectancy recalculated annually. If
life expectancy is recalculated, it will follow the Employer's
administrative policy.
20. SPONSOR CONTACT
Employers should direct questions concerning the language contained in and
qualification of the Prototype to:
The Case Manager Assigned to Your Plan
1-800-338-4015
In the event that the Sponsor amends, discontinues or abandons this
Prototype Plan, notification will be provided to the Employer's address
provided on the first page of this Agreement.
13
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Prototype Cash or
Deferred Profit-
Sharing Plan #001
21. SIGNATURES
The Sponsor recommends that you contact your attorney or tax advisor prior
to executing this Adoption Agreement.
(a) EMPLOYER:
Name and address of Employer if different than specified in Section 1
above.
This agreement and the corresponding provisions of the Plan and Trust
Account Basic Plan Document #01 were adopted by the Employer the _____
day of _________________, 19 .
---
Signed for the Employer by: Catherine Kwong Giffen
Title: VP of Human Resources and Administration
Signature: ________________________________________
The Employer understands that its failure to properly complete the
Adoption Agreement may result in disqualification of its Plan.
Employer's Reliance: An Employer who maintains or has ever maintained
or who later adopts any Plan [including, after December 31, 1985, a
Welfare Benefit Fund, as defined in Section 419(e) of the Code, which
provides post-retirement medical benefits allocated to separate
accounts for Key Employees, as defined in Section 419A(d)(3)] or an
individual medical account, as defined in Code Section 415(l)(2) in
addition to this Plan may not rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence that this
Plan is qualified under Section 401 of the Code. If the Employer who
adopts or maintains multiple Plans wishes to obtain reliance that such
Plan(s) are qualified, application for a determination letter should
be made to the appropriate Key District Director of Internal Revenue.
The Employer understands that its failure to properly complete the
Adoption Agreement may result in disqualification of its plan. This
Adoption Agreement may only be used in conjunction with Basic Plan
Document #01.
The Employer may not rely on the opinion letter issued by the National
Office of the Internal Revenue Service as evidence that this Plan is
qualified under Section 401 of the Code unless the terms of the Plan,
as herein adopted or amended, that pertain to the requirements of
Sections 401(a)(4), 401(a)(17), 401(l), 401(a)(5), 410(b) and 414(s)
of the Code, as amended by the Tax Reform Act of 1986 or later laws,
(a) are made effective retroactively to the first day of the first
Plan Year beginning after December 31, 1988 (or such other date on
which these requirements first become effective with respect to this
Plan); or (b) are made effective no later than the first day on which
the Employer is no longer entitled, under regulations, to rely on a
reasonable, good faith interpretation of these requirements, and the
prior provisions of the Plan constitute an interpretation.
14
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Prototype Cash or
Deferred Profit-
Sharing Plan #001
21. SIGNATURES
The Sponsor recommends that you contact your attorney or tax advisor prior
to executing this Adoption Agreement.
(a) EMPLOYER:
Name and address of Employer if different than specified in Section 1
above.
New Homes Search
This agreement and the corresponding provisions of the Plan and Trust
Account Basic Plan Document #01 were adopted by the Employer the _____
day of _________________, 19 .
---
Signed for the Employer by:
Title:
Signature: ____________________________________
The Employer understands that its failure to properly complete the
Adoption Agreement may result in disqualification of its Plan.
Employer's Reliance: An Employer who maintains or has ever maintained
or who later adopts any Plan [including, after December 31, 1985, a
Welfare Benefit Fund, as defined in Section 419(e) of the Code, which
provides post-retirement medical benefits allocated to separate
accounts for Key Employees, as defined in Section 419A(d)(3)] or an
individual medical account, as defined in Code Section 415(l)(2) in
addition to this Plan may not rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence that this
Plan is qualified under Section 401 of the Code. If the Employer who
adopts or maintains multiple Plans wishes to obtain reliance that such
Plan(s) are qualified, application for a determination letter should
be made to the appropriate Key District Director of Internal Revenue.
The Employer understands that its failure to properly complete the
Adoption Agreement may result in disqualification of its plan. This
Adoption Agreement may only be used in conjunction with Basic Plan
Document #01.
The Employer may not rely on the opinion letter issued by the National
Office of the Internal Revenue Service as evidence that this Plan is
qualified under Section 401 of the Code unless the terms of the Plan,
as herein adopted or amended, that pertain to the requirements of
Sections 401(a)(4), 401(a)(17), 401(l), 401(a)(5), 410(b) and 414(s)
of the Code, as amended by the Tax Reform Act of 1986 or later laws,
(a) are made effective retroactively to the first day of the first
Plan Year beginning after December 31, 1988 (or such other date on
which these requirements first become effective with respect to this
Plan); or (b) are made effective no later than the first day on which
the Employer is no longer entitled, under regulations, to rely on a
reasonable, good faith interpretation of these requirements, and the
prior provisions of the Plan constitute an interpretation.
15
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #001
21. SIGNATURES
The Sponsor recommends that you contact your attorney or tax advisor prior
to executing this Adoption Agreement.
(a) EMPLOYER:
Name and address of Employer if different than specified in Section 1
above.
The Enterprise
This agreement and the corresponding provisions of the Plan and Trust
Account Basic Plan Document #01 were adopted by the Employer the _____
day of _________________, 19 .
-----
Signed for the Employer by:
Title:
Signature: ______________________________________
The Employer understands that its failure to properly complete the
Adoption Agreement may result in disqualification of its Plan.
Employer's Reliance: An Employer who maintains or has ever maintained
or who later adopts any Plan [including, after December 31, 1985, a
Welfare Benefit Fund, as defined in Section 419(e) of the Code, which
provides post-retirement medical benefits allocated to separate
accounts for Key Employees, as defined in Section 419A(d)(3)] or an
individual medical account, as defined in Code Section 415(l)(2) in
addition to this Plan may not rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence that this
Plan is qualified under Section 401 of the Code. If the Employer who
adopts or maintains multiple Plans wishes to obtain reliance that such
Plan(s) are qualified, application for a determination letter should
be made to the appropriate Key District Director of Internal Revenue.
The Employer understands that its failure to properly complete the
Adoption Agreement may result in disqualification of its plan. This
Adoption Agreement may only be used in conjunction with Basic Plan
Document #01.
The Employer may not rely on the opinion letter issued by the National
Office of the Internal Revenue Service as evidence that this Plan is
qualified under Section 401 of the Code unless the terms of the Plan,
as herein adopted or amended, that pertain to the requirements of
Sections 401(a)(4), 401(a)(17), 401(l), 401(a)(5), 410(b) and 414(s)
of the Code, as amended by the Tax Reform Act of 1986 or later laws,
(a) are made effective retroactively to the first day of the first
Plan Year beginning after December 31, 1988 (or such other date on
which these requirements first become effective with respect to this
Plan); or (b) are made effective no later than the first day on which
the Employer is no longer entitled, under regulations, to rely on a
reasonable, good faith interpretation of these requirements, and the
prior provisions of the Plan constitute an interpretation.
16
<PAGE>
Prototype Cash or
Deferred Profit-
Sharing Plan #001
[X] (b) TRUSTEE:
Name of Trustee:
Catherine Kwong Giffen & John M. Giesecke
The assets of the Fund shall be invested in accordance with paragraph 13.3
of the Basic Plan Document #01 as a Trust. As such, the Employer's Plan as
contained herein was accepted by the Trustee the ______ day of_______,
19____.
Signed for the Trustee by: Catherine Kwong Giffen John M. Giesecke
Title: Trustee Trustee
Signature: _______________________ _________________
(c) SPONSOR:
The Employer's Agreement and the corresponding provisions of the Plan and
Trust Account Basic Plan Document #01 were accepted by the Sponsor the
18th day of August, 1998.
Signed for the Sponsor by: Mark R. Hackl
Title: Vice President
Signature: ___________________________________
17
<PAGE>
EXHIBIT 10.30
AGREEMENT
This Agreement (the "Agreement") is dated as of May 28, 1999 (the
"Agreement Date"), and is entered into by and among (i) NetSelect, Inc., a
Delaware corporation ("NetSelect"), (ii) RealSelect, Inc., a Delaware
corporation ("RealSelect"), (iii) Realtors Information Network, Inc., an
Illinois corporation ("RIN"), and (iv) the National Association of Realtors, an
Illinois not-for-profit corporation ("NAR").
BACKGROUND
A. RealSelect and RIN are parties to an Operating Agreement dated as of
November 26, 1996 (such agreement, as amended, referred to as the "Operating
Agreement"). RealSelect, RIN, the NAR, and NetSelect are parties to that certain
Agreement dated as of August 21, 1998 (the "August 1998 Agreement"). RIN and NAR
also executed a Waiver and Consent dated August 21, 1998 (the "Waiver and
Consent").
B. Pursuant to Section 6.3(b) of the Operating Agreement, RealSelect is
obligated to make certain payments to RIN of $1,000,000 (the "Free Operating
Cash Flow Amount"). Under Section 1(c) of the August 1998 Agreement, RealSelect
agreed to pay to RIN the remaining $200,000 of the Active Real Property Ads
Amount (as defined in the August 1998 Agreement) and all of the Free Operating
Cash Flow Amount (as defined in the August 1998 Agreement) no later than April
1, 1999 (together, the "Obligation"). As of the date of this Agreement, the
Obligation has not been paid.
C. Pursuant to the terms of Section 3.5 of that certain RealSelect, Inc.
Stockholders Agreement dated as of November 26, 1996 by and among RealSelect,
NetSelect, L.L.C. and RIN (as amended, the "RealSelect Stockholders Agreement"),
the NAR (as successor in interest to the rights of RIN under the RealSelect
Stockholders Agreement) has certain rights (the "Put Right") to require, upon
the announcement by NetSelect of a Qualified Public Offering of NetSelect Common
Stock (as defined in Section 4.2 of the RealSelect Stockholders Agreement), that
NetSelect issue shares of NetSelect Convertible Preferred Stock or NetSelect
Common Stock, as the case may be, in exchange for shares of RealSelect Common
Stock held by NAR. RIN and the NAR executed a Waiver and Consent dated August
21, 1998, in which RIN and the NAR agreed, among other things, on the number of
shares of NetSelect that RIN and/or NAR would be entitled to receive if
NetSelect and RealSelect had merged as of that date.
D. NetSelect intends to file a registration statement (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
relating to its IPO (as defined below).
E. The parties desire to settle certain prior obligations of NetSelect
and/or RealSelect to the NAR and/or RIN, and to issue to the NAR one share of
Series A Preferred Stock of NetSelect, on the terms and subject to the
conditions set forth in this Agreement.
<PAGE>
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. When used in this Agreement, the following terms shall have
the meanings set forth below.
"Amended NetSelect Restated Certificate" means the Amended and Restated
Certificate of Incorporation of NetSelect, in substantially the form attached
hereto as Exhibit B with such changes or additions thereto as NetSelect may
approve after the date of this Agreement which do not affect the interests of
RIN or the NAR in a manner differently from other stockholders of NetSelect.
"Closing Date" shall mean the closing of the IPO or, if later, a date no
later than two business days after the closing of the IPO on which the Amended
NetSelect Restated Certificate is filed with the Delaware Secretary of State.
"IPO" means the initial underwritten public offering of NetSelect's Common
Stock.
"RealSelect Bylaws" means the Bylaws of RealSelect as in effect on the date of
this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred" means the share of Series A Preferred Stock of
NetSelect that is authorized by the Amended NetSelect Restated Certificate.
Share and per share amounts in this Agreement give effect to the two-for-
one split of the NetSelect Common Stock effected earlier in 1999, and, to the
extent not issued by the record date for such event, shall be adjusted
appropriately for any stock split or reverse stock split of NetSelect stock that
may occur between the Agreement Date and the Closing Date.
2. Amendment of RealSelect Bylaws. The parties hereby approve an amendment to
Article III, Section 6 of the RealSelect Bylaws so that such section provides in
its entirety as set forth on Exhibit C.
3. Settlement of the Obligation. (i) On the Closing Date, NetSelect shall
issue to NAR one share of Series A Preferred, for a purchase price of $1.00
payable in cash, and (ii) effective as of the Agreement Date, NetSelect shall
issue to NAR 75,000 shares of NetSelect Common Stock (the "Shares") at a
purchase price of $8.00 per share for an aggregate purchase price of $600,000
(the "Purchase Price"). Payment of the purchase price for the Shares shall be by
cancellation of a portion of the Obligation equal to the Purchase Price.
NetSelect will pay the remaining $600,000 of the Obligation no later than five
business days following the Closing Date. NAR and RIN acknowledge and
<PAGE>
agree that upon delivery of the Shares and payment of the remaining Obligation
as provided in the preceding sentence, the Obligation shall be deemed fully
satisfied. In connection with the issuance of the Shares, NAR and/or RIN, as the
case may be, agrees to execute and deliver to NetSelect a customary purchase
agreement with customary investment representations relating to the issuance of
the Shares, which agreement shall be in substantially the form of Exhibit A
attached hereto.
4. Put Right. Each of NAR and RIN agrees that on the Closing Date it hereby
exercises its Put Right to exchange all shares (and all rights to acquire
shares) of RealSelect that it owns or has rights to acquire for shares of
NetSelect Common Stock, except for one-half of one share of RealSelect Common
Stock issuable to NAR and/or RIN pursuant to Section 1(b) of the August 1998
Agreement (as so defined in the August 1998 Agreement, the "RealSelect Shares")
which, by virtue of the last sentence of Section 1(b) of the August 1998
Agreement, are not subject to the Put Right. If not theretofore issued, the
RealSelect Shares shall be issued on the Closing Date. Notwithstanding the
preceding sentence, if NetSelect and RealSelect complete a merger of the two
companies within twelve (12) months of the Agreement Date, then in connection
with the closing of such transaction such unexchanged RealSelect Shares shall
(pursuant to the Put Right) be converted into a total of 49,926 shares of
NetSelect Common Stock. NAR and RIN agree that the number of shares of NetSelect
Common Stock that NAR has the right to receive pursuant to exercise of its Put
Right pursuant to the RealSelect Stockholders Agreement and this Agreement is
1,566,906 shares of NetSelect Common Stock. NAR agrees that this Section 4
supersedes the provisions of Section 3.5 of the RealSelect Stockholders
Agreement, as applied to the IPO.
5. NetSelect Restated Certificate. NAR agrees to vote any shares of NetSelect
that it owns in favor of the Amended NetSelect Restated Certificate. NetSelect
agrees that its certificate of incorporation in effect immediately after the
Closing Date will include provisions relating to the Series A Preferred similar
in all respects to the provisions in the Amended NetSelect Restated Certificate
attached hereto as Exhibit B.
6. Cooperation; Further Actions. Each party agrees to take such further
actions, and execute such further agreements as the other party may reasonably
request in order to carry out the intent of the foregoing provisions.
7. Miscellaneous Provisions.
7.1 Third Party Beneficiary. No provision of this Agreement is intended to
confer upon any person other than the parties hereto (and their respective
successors and assigns) any rights or remedies hereunder.
7.2 Further Documents. The parties hereto shall execute and deliver any and all
documents or legal instruments necessary or desirable to carry out the
provisions of this Agreement.
7.3 Binding Agreement; Entire Agreement; Successors and Assigns. This Agreement
shall be binding upon the parties, and their respective successors and assigns.
This Agreement constitutes the entire contract between the parties relative to
the subject matter hereof. Any previous agreement between the parties concerning
the subject matter
<PAGE>
hereof is superseded by this Agreement. Subject to the exceptions specifically
set forth in this Agreement, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective executors,
administrators, heirs, successors, and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
7.4 Governing Law; Consent to Jurisdiction. This Agreement shall be governed in
all respects by the laws of the State of Delaware, as applied to contracts
entered into and to be performed entirely within the State of Delaware. In any
action by NAR or RIN against NetSelect or RealSelect, the parties consent to the
exclusive jurisdiction and venue of the Federal and State Courts located in Los
Angeles, California for purposes of any proceeding arising out of or relating to
this Agreement, and agree that service of process in any such action may be made
by means of delivery of notices in the manner provided in this Agreement; and in
any action by NetSelect or RealSelect against RIN or NAR, the parties consent to
the exclusive jurisdiction and venue of the Federal and State Courts located in
Chicago, Illinois, for purposes of any proceeding arising out of or relating to
this Agreement, and agree that service of process in any such action may be made
by means of delivery of notices in the manner provided in this Agreement.
7.5 Amendment; Waiver. This Agreement or any provision hereof may be amended,
waived, discharged or altered in any manner, but any such change shall become
effective only if, when and to the extent it is reduced to a writing signed by
all of the parties. Any party may waive one or more of the provisions of this
Agreement as to itself by means of a written instrument.
7.6 No Continuing Waiver. No waiver of any default or breach of this Agreement
shall be determined a continuing waiver or a waiver of any other breach or
default hereunder.
7.7 Severability. If any provision of this Agreement is determined to be
invalid or unenforceable, it shall be enforced to the extent possible, and the
other provisions of this Agreement shall continue in effect.
7.8 Counterparts. This Agreement may be executed in any number of counterparts,
each of will shall be deemed an original, but all of which together shall
constitute one and the same instrument.
7.9 Expenses. All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such costs and expenses.
7.10 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered personally, one
business day after transmission by facsimile with confirmation of receipt, one
business day after deposit with a reputable national overnight courier service
for overnight delivery, or four days after deposit in the United States mail,
certified with return receipt requested, to the address or facsimile telephone
number set forth beneath the name of such party below (or to such other address
or facsimile telephone number as such party shall have specified in
<PAGE>
a written notice given to the other parties hereto):
if to NAR or RIN:
at the address set forth below NAR's or RIN's signature, as the case may be, on
the signature page hereto;
if to NetSelect:
NetSelect, Inc.
225 W. Hillcrest Drive, Suite 100
Thousand Oaks, CA 91360
Attn: President
Facsimile: (805) 557-8200
[Remainder of this page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date
first above written.
NETSELECT, INC.
REALSELECT, INC.
By: /s/ Stuart Wolff
Name: Stuart Wolff, Ph.D.
Title: Chief Executive Officer
REALTORS INFORMATION NETWORK, INC.
By: /s/ Robert A. Goldberg
Name: Robert A. Goldberg
Title: CEO
Address:
430 North Michigan Avenue
Chicago, Illinois 60611-4087
Attention: President and Chief Executive Officer
Fax No: (312) 329-8539
NATIONAL ASSOCIATION OF REALTORS(R)
By: /s/ Terrence M. McDermott
Name: Terrence M. McDermott
Title: Executive Vice President
Address:
<PAGE>
430 North Michigan Avenue
Chicago, Illinois 60611-4087
Attention: General Counsel
Fax No: (312) 329-8256
EXHIBIT A
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is dated as of May 28, 1999 (the
"Agreement Date") and is entered into by and among NetSelect, Inc. ("NetSelect"
or the "Company"), a Delaware corporation, and the National Association of
Realtors ("Purchaser").
BACKGROUND
A. Purchaser and NetSelect, among other parties, are parties to an Agreement
dated as of May 28, 1999 (the "May 1999 Agreement").
B. The Company desires to issue and sell to the Purchaser, and Purchaser
desires to purchase, one share of Series A Preferred Stock of NetSelect ("Series
A Preferred"), and 75,000 shares (the "Shares") of Common Stock of the Company
("Common Stock") (the Shares and the share of Series A Preferred referred to
collectively as the "Securities"), at the times and prices, and on the other
terms and conditions, set forth in this Agreement.
C. Capitalized terms not defined herein will have the meanings given to those
terms in the May 1999 Agreement.
AGREEMENT
The parties agree as follows:
1. Purchase Of Securities.
1.1 Purchase and Sale of Series A Preferred and the Shares. On the Closing Date
and subject to the terms and conditions of this Agreement, Purchaser shall
purchase from the Company, and the Company hereby sells to Purchaser, one share
of Series A Preferred at a purchase price of $1.00 per share payable in cash.
Effective as of the Agreement Date, Purchaser shall purchase from the Company,
and the Company shall sell to Purchaser, the Shares at a purchase price per
Share equal to 8.00 per Share, for an aggregate purchase price of $600,000 (the
"Purchase Price").
1.2 Closing; Payment of Purchase Price. The closing of the purchase and sale of
the Shares contemplated by this Agreement shall occur at a place and time
mutually agreeable to NetSelect and Purchaser, but in all events within five
business days of the Agreement Date. The Closing of the sale of the share of
Series A Preferred shall occur on the Closing Date. The Purchase Price for the
Shares shall be paid by means of cancellation of $600,000 of the Obligation.
1.3 Accredited Investor Requirements. Purchaser hereby represents to NetSelect
that Purchaser is an "accredited investor" as defined in Rule 501 of Regulation
D, being a corporation, not formed for the specific purpose of acquiring the
Shares, with total assets in excess of $5 million.
1.4 Deliveries by the Company. After its receipt of the entire Purchase Price
and all
<PAGE>
the documents to be executed and delivered by Purchaser to the Company under
this Agreement, the Company will issue duly executed stock certificates
evidencing the Securities in the name of Purchaser, registered in Purchaser's
name.
2. Representations. Purchaser represents to NetSelect that the following
statements are true and correct in all respects:
2.1 Purchaser's Qualifications. Purchaser has a preexisting personal or
business relationship with the Company and/or certain of its officers and/or
directors of a nature and duration sufficient to make Purchaser aware of the
character, business acumen and general business and financial circumstances of
the Company and/or such officers and directors. By reason of Purchaser's
business or financial experience, Purchaser is capable of evaluating the merits
and risks of this investment, has the ability to protect Purchaser's own
interests in this transaction and is financially capable of bearing a total loss
of this investment.
No General Solicitation. At no time was Purchaser presented with or solicited by
any publicly issued or circulated newspaper, mail, radio, television or other
form of general advertising or solicitation in connection with the offer, sale
and purchase of the Restricted Securities.
Investment Representations.
The Purchaser is receiving the Securities for investment for the Purchaser's own
account, not as a nominee or agent, and not with a view to the public resale or
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and the Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Purchaser also represents that it has not been formed for the specific purpose
of acquiring the Securities.
The Purchaser has received or has had full access to all the information the
Purchaser considers necessary or appropriate to make an informed investment
decision with respect to the Securities receivable by the Purchaser pursuant to
the Agreement.
The Purchaser understands that the acquisition of the Securities involves
substantial risk. The Purchaser understands that the Securities, are
characterized as "restricted securities" under the Securities Act inasmuch as
they are being acquired from NetSelect in a transaction not involving a public
offering and that under the Securities Act and applicable regulations thereunder
such Securities may be resold without registration under the Securities Act only
in certain limited circumstances. The Purchaser understands that NetSelect is
under no obligation to register any of the Securities. The Purchaser understands
that no public market now exists for any of the Securities and that it is
uncertain whether a public market will ever exist therefor.
Without in any way limiting the representations set forth above or any other
provisions in any other agreements to which the Purchaser is a party or by which
the Purchaser or the Securities are bound, the Purchaser further agrees not to
make any disposition of all or any portion of the Securities unless and until:
there is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or the Purchaser shall have notified NetSelect
of the proposed disposition and shall have furnished NetSelect with a statement
of the circumstances surrounding the proposed disposition, and, if such
disposition is made within two years of the Closing Date or if the
<PAGE>
securities proposed to be transferred cannot be transferred pursuant to Rule
144(k), at the expense of the Purchaser or its transferee, with an opinion of
counsel, reasonably satisfactory to NetSelect, that such disposition will not
require registration of such Securities under the Securities Act.
e. It is understood that the certificates evidencing the Securities may bear
the legends set forth below:
(1) The Shares represented hereby have not been registered under the
Securities Act of 1933, as amended (the "Act"), or under the securities laws of
certain states. These Shares are subject to restrictions on transferability and
resale and may not be transferred or resold except as permitted under the Act
and the applicable state securities laws, pursuant to registration or exemption
therefrom. investors should be aware that they may be required to bear the
financial risks of this investment for an indefinite period of time. The issuer
of these Shares may require an opinion of counsel in form and substance
satisfactory to the issuer to the effect that any proposed transfer or resale is
in compliance with the Act and any applicable state securities laws.
(2) Any legend required by any state securities laws, or any other
legend that NetSelect reasonably determines is necessary or advisable.
The legend set forth in clause (1) above shall be removed by NetSelect from any
certificate evidencing Shares if requested by the original holder thereof at any
time on or after the second anniversary of the Closing Date (provided that such
shares can be sold without restrictions pursuant to Rule 144(k)) or upon
delivery to NetSelect of an opinion by counsel, reasonably satisfactory to
NetSelect, that a registration statement under the Securities Act is at that
time in effect with respect to the legended security or that such security can
be freely transferred in a public sale without such a registration statement
being in effect and that such transfer will not jeopardize the exemption or
exemptions from registration pursuant to which NetSelect issued the Shares.
2.4 Refusal to Transfer. The Company will not be required to (i) transfer on
its books any Shares that have been sold or otherwise transferred in violation
of any of the provisions of this Agreement or (ii) treat as owner of such
Shares, or to accord the right to vote or pay dividends, to any purchaser or
other trustee to whom such Shares have been so transferred.
3. Further Representations and Warranties of Purchaser. Purchaser,
represents and warrants to the NetSelect that each of the following statements
is true and correct:
(i) Purchaser has all right, power and authority to enter into and perform
its obligations set forth in this Agreement in accordance with its terms;
(ii) the execution, delivery and performance of this Agreement (and the other
agreements contemplated hereby) by Purchaser has been authorized and approved by
all necessary corporate or other action of Purchaser;
(iii) the person executing this Agreement (and the other agreements
contemplated hereby) on behalf of Purchaser has the authority and power to
execute and deliver the Agreement (and the other agreements contemplated hereby)
on behalf of Purchaser; and this Agreement (and the other agreements
contemplated hereby) constitutes a valid and legally binding obligation of
Purchaser, enforceable agains t Purchaser in accordance with its terms.
4. Securities Law Matters. This Agreement does not constitute an offer to
sell or solicitation of an offer to buy any Shares in any jurisdiction where it
is unlawful to make
<PAGE>
such offer or solicitation, and no issuance of Shares or offer or agreement to
do any of the foregoing, is made hereby that would be in violation of the
securities or "blue sky" laws of any jurisdiction.
THE SALE OF THE SHARES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND
THE ISSUANCE OF THE SHARES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE
OF SHARES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF
THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE
IS SO EXEMPT.
5. Miscellaneous.
5.1 Governing Law; Consent to Jurisdiction. This Agreement shall be governed in
all respects by the laws of the state of Delaware applicable to contracts
entered into and performed entirely within Delaware. In any action by Purchaser
against the Company, the parties consent to the exclusive jurisdiction and venue
of the Federal and State Courts located in Los Angeles, California for purposes
of any proceeding arising out of or relating to this Agreement, and agree that
service of process in any such action may be made by means of delivery of
notices in the manner provided in this Agreement; and in any action by the
Company against Purchaser, the parties consent to the exclusive jurisdiction and
venue of the Federal and State Courts located in Chicago, Illinois, for purposes
of any proceeding arising out of or relating to this Agreement, and agree that
service of process in any such action may be made by means of delivery of
notices in the manner provided in this Agreement.
5.2 Assignment. Neither this Agreement nor any obligation arising hereunder may
be assigned (voluntarily, by operation of law or otherwise), in whole or in
part, by Purchaser without the prior written consent of NetSelect. Improper
assignments are void. NetSelect may assign this Agreement in whole or in part
without the consent of Purchasers.
5.3 Successors and Assigns. This Agreement shall be binding upon, and inure to
the benefit, the parties and their respective successors and permitted assigns,
subject to paragraph 5.2 above.
5.4 Entire Agreement. This Agreement sets forth the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
or contemporaneous understandings, communications or agreements, whether written
or oral, regarding such subject matter.
5.5 Amendment. Any provision of this Agreement may be amended, waived or
modified, either retroactively or prospectively, only by a written instrument
signed by NetSelect and Purchaser.
5.6 Notices. All notices or other communications given under this Agreement
shall be in writing and shall be delivered in person, by first class mail, by
national overnight courier service, or facsimile, addressed as follows:
If to Purchaser:
To the address for the Purchaser set forth on the signature page hereto.
<PAGE>
If to NetSelect or RealSelect:
225 West Hillcrest Drive, Suite 100
Thousand Oaks, CA 91360
Attn: General Counsel
Telephone: (805) 557-2300
Facsimile: (805) 557-2680
Either party may change its address or addressee for the purpose of this
Agreement by notice. Notices or other communications shall be deemed given or
delivered upon receipt if delivered in person, four (4) days after deposit in
the mails, one (1) business day after deposit with a reputable overnight courier
service, or one (1) business day after transmission if delivered by facsimile
with confirmation of receipt.
5.7 Waiver. No waiver by either party of any breach or default by any other
shall be deemed a waiver of any other breach or default.
5.8 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law, or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in order that
the transactions be consummated as originally contemplated to the fullest extent
possible.
5.9 Counterparts. This Agreement may be executed in any number of counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by both parties and
delivered to the other party.
[Remainder of this page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
written above.
NETSELECT, INC.
By: /s/ Stuart Wolff
Name:
Title:
PURCHASER
NATIONAL ASSOCIATION OF
REALTORS(R) Address:
<PAGE>
By: /s/ Terrence M. McDermott 430 North Michigan Avenue
Chicago, Illinois 60611-4087
Name: Terrence M. McDermott Attention: General Counsel
------------------------ Fax No: (312) 329-8256
Title: Executive Vice President
EXHIBIT B
Amended and Restated Certificate of Incorporation of
NetSelect, Inc.
EXHIBIT C
Article III, Section 6 of RealSelect Bylaws
SECTION 6. QUORUM, VOTING AND ADJOURNMENT. A majority of the total number of
directors or any committee thereof shall constitute a quorum for the transaction
of business. The affirmative vote by at least six-sevenths (6/7) of the entire
Board of Directors shall be required to approve the following actions: (i)
mergers, consolidations, reorganizations, or sales, leases or exchanges of all
or substantially all of the assets of the Corporation; and (ii) any change in
the business purpose of the Corporation. The affirmative vote by at least four-
sevenths (4/7) of the entire Board of Directors (including, in such four-
sevenths, at least one Director nominated by NAR) shall be required to approve
the following actions: (i) amendments of the Corporation's Certificate of
Incorporation or By-laws; (ii) approval of the annual budget of the Corporation
(which shall specify the issues addressed and conclusions reached); provided,
however, that in the event that an annual budget shall not be approved pursuant
to this Article III, Section 6, the last annual budget of the Corporation duly
approved by the Board, adjusted to the Consumer Price Index for urban consumers
(CPI-U) as of the date of the end of the last fiscal year, shall be the annual
budget of the Corporation until such time as the Board of Directors shall duly
approve a new annual budget; (iii) salary reviews, bonuses, and staff changes
for executive officers of the Corporation; (iv) investments, loans, mortgages,
pledges of corporate assets or other transactions not set forth in the annual
budget in which the amount involved exceeds $2,500,000; (v) incurrences,
assumptions, guarantees or cancellations of indebtedness for money borrowed or
other liabilities not set forth in the annual budget in which the amount exceeds
$2,500,000; (vi) approval of transactions with affiliates, stockholders,
employees, and relatives of affiliates, stockholders and employees, including
any employment or consulting agreements, that exceed $100,000 per annum,
provided, however, that no interested director shall vote on any such action;
(vii) the establishment of, and the appointment of members to, any committees of
the Board of Directors; (viii) issuance of any equity securities of the
Corporation, or any securities exchangeable or convertible into equity
securities or measured by earnings or profits of the Corporation,
<PAGE>
or any redemption, repurchase or other acquisition for value of any equity
security of the Corporation by the Corporation, provided, however, the approval
of the NAR Director shall not be required for the issuance of equity securities
by the Corporation at a price per share that would establish an aggregate value
for such equity securities outstanding immediately prior to the consummation of
such issuance of at least fifteen million dollars ($15,000,000); (ix) a firmly
underwritten public offering of at least twenty percent (20%) of the shares of
the Corporation pursuant to an effective registration statement covering the
offer and sale of such shares with an aggregate offering price of at least
$7,000,000; and (x) declaration of dividends or other distributions to
stockholders; provided, however, that any declaration of dividends or
distributions to NetSelect shall require the prior approval of NetSelect, Inc.,
a Delaware corporation. Unless otherwise required by law or provided herein, the
affirmative vote of a majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board. In the absence of a quorum, a
majority of the directors present thereat may adjourn such meeting to another
time and place. Notice of such adjourned meeting need not be given if the time
and place of such adjourned meeting are announced at the meeting so adjourned.
<PAGE>
EXHIBIT 10.32
[CONFIDENTIAL TREATMENT REQUESTED]
NATIONAL ASSOCIATION OF REALTORS(TM) EXECUTIVE OFFICES
430 NORTH MICHIGAN AVENUE
The Voice For Real Estate(R) CHICAGO, IL 60611-4087
800.374.6500 FAX: 321.329.9960
700 ELEVENTH STREET,NW
WASHINGTON, DC 20001-1507
303.383.1000 FAX: 303.283.1035
www.REALTOR.com
[LOGO]
REALTOR(R) May 17, 1999
Stuart Wolff
Chairman & CEO
RealSelect, Inc.
225 West Hillcrest Drive/Suite 100
Thousand Oaks, CA 91360
Dear Stuart:
The purpose of this letter is to set forth the terms and conditions upon which
the NATIONAL ASSOCIATION OF REALTORS(R) (NAR) and its wholly-owned subsidiary,
REALTORS(R) Information Network, Inc. (RIN) are willing to consent to the
acquisition, management and operation by RealSelect of as Internet site that
displays information pertaining to the rental of real property ("Rental
Site").
1. The Rental Site will be controlled by RealSelect and not by its parent
corporation.
2. The site initially may operate with two Internet URL addresses, one being
the URL currently used by the acquired company and the second being a
REALTOR(R) branded URL to be agreed upon by Real/Select and NAR and to be
owned by NAR. RealSelect agrees to use only the REALTORS(R) branded URL as
soon as it is commercially reasonable, but in no event more than *_______*
after the acquisition of the Rental Site, provided, however, that if at the
end of the *_______* period following acquisition of the Rental Site, (i)
RealSelect can demonstrate that it has used commercially reasonable efforts
to move all of the content to the REALTOR(R) branded URL but in spite of
such efforts RealSelect will experience *_______* or more of the total
content on the Rental Site by using only the REALTOR(R) branded URL, or
(ii) in response to an official action of the NATIONAL ASSOCIATION OF
REALTORS(R), an organization representing property managers takes an
official action to discourage its members from advertising rental
properties on the REALTOR(R) branded URL and RealSelect can demonstrate
that in spite of exercising commercially reasonable efforts, it will
experience *___________* or more of the total content on the Rental Site by
using only the REALTOR(R) branded URL, then RealSelect may continue to use
both Internet URL addresses for an additional *_________* period, after
which time RealSelect must use only the REALTOR(R) branded URL.
3. A hypertext link shall be established from the Rental Site to REALTOR.com
after RealSelect receives the express written consent of NAR or when
RealSelect commences using only the REALTOR branded URL, whichever comes
first, provided, however, that no link to REALTOR.com shall be established
or maintained if information on the Rental Site in any way disparages
REALTORS or NAR or discourages the use of the real estate professionals in
the process of seeking housing. A link may be established from the non-
Realtor branded Internet URL address, at NAR's sole discretion.
_______________________
* Confidential treatment has been requested with respect to certain portions of
this exhibit. Confidential portions have been omitted from the public filing and
have been separately filed with the Securities and Exchange Commission.
<PAGE>
4. A hypertext link shall be established from REALTOR.com to the Rental Site
after RealSelect receives the express written consent of NAR or when
RealSelect commences using only the REALTOR branded URL, whichever comes
first, provided, however, that no link from REALTOR.com shall be
established and maintained if information on the Rental Site in any way
disparages REALTORS or NAR or discourages the use of real estate
professionals in the process of seeking housing. A link may be established
from REALTOR.com to the non-Realtor branded Internet URL address, at NAR's
sole discretion.
5. Any *_______________________________________________________________* which
appear on the Rental Site must be listed for rent *____________________* or
listed for rent *__________________________________________________________
_______________________________*. Notwithstanding the foregoing, RealSelect
may display on the Rental Site *__________________________* in a particular
geographic area that are listed with *____________________________* who are
not *_________________________* if (i) RealSelect provides objective
market data acceptable to RIN which demonstrates that in either a given MSA
or jurisdiction of a *_____________________________* fewer than *_________*
of such properties that are listed for rent are *________________________*.
RIN shall advise RealSelect within five business days after receipt of the
market data whether RIN accepts or challenges the market data. RealSelect
must cease accepting or renewing *_______________________________* once
Realtor Listings in the Exceptions Market exceed *___________________* and
(ii) RealSelect establishes and maintains commercially reasonable price
differentials for home pages, enhanced property ads and other Internet
advertising *_____________________________________________________________
_______________*.
6. Except as otherwise provided herein, RealSelect agrees to operate the
Rental Site in a manner consistent with the terms of paragraphs 1.1,
2.1(b), 3.4, 5.2(b), 5.3(a), 5.7(a), 5.7(c), 5.7(d), 5.7(g), 6.4, 7.2,
8.1(b) and 9.2 of the Operating Agreement dated as of November 26, 1996,
between RealSelect and RIN, as amended from time to time ("Operating
Agreement"), except that RIN and NAR agree that Section 5.3(a) of the
Operating Agreement shall not apply until six months after the acquisition
of the Rental Site and further that ads for apartment building rentals may
appear on the Rental Site even if those rentals are not listed with
REALTORS(R). No properties that are for sale may appear on the Rental Site
for the duration of the Operating Agreement and for two years thereafter.
Except for paragraphs 1.1, 2.1(b), 3.4, 5.7(a), 5.7(c), 6.4, 7.2 and 9.2 of
the Operating Agreement, all sections referred to in this paragraph 6 shall
refer only to properties listed for rent *_________________________________
_____________________________________*.
7. RealSelect agrees to use its best efforts to assure that the performance of
its obligations for the Rental Site will have no impact on the quality or
timeliness of the performance of its duties and obligations under the
Operating Agreement.
8. *____* pricing or discounts will be provided by RealSelect to REALTORS(R)
for *___________________________________________* for like services or
products on the Rental Site, with the amount of such pricing or discounts
to be negotiated in good faith by RealSelect and NAR.
9. RealSelect agrees to pay Data Content Providers and RIN revenues from the
Rental Site as provided for in Section 6.4(a) of the Operating Agreement,
as amended from time to time, in accordance with the formula specified for
"Calendar Year 2000 and thereafter"; provided, however, that the percentage
to be paid to Data Contents Providers (in the aggregate) shall be *________
_____________________________________________*.
___________________
* Confidential treatment has been requested with respect to certain portions of
this exhibit. Confidential portions have been omitted from the public filing and
have been separately filed with the Securities and Exchange Commission.
<PAGE>
10. Upon termination of this agreement, RealSelect shall cease all use of
the Realtor(R) branded URL. In the event that this agreement is
terminated by RealSelect due to a breach by NAR, NAR agrees that it will
cease use of the REALTOR(R) branded URL. If this agreement terminates
for reasons other than a breach by NAR, RealSelect acknowledges that NAR
may continue use of the REALTOR(R) branded URL. Additionally, upon
termination RealSelect agrees promptly to transfer to NAR all content on
the Rental Site that was provided by REALTOR(R) multiple listing
services.
Sincerely,
/s/ Terrence M. McDermott /s/ Robert A. Goldberg
Terrence M. McDermott Robert A. Goldberg
Executive Vice President President & CEO
NATIONAL ASSOCIATION OF REALTORS(R) REALTORS(R) Information Network
RealSelect, Inc. hereby agrees to
the above terms and conditions.
By: /s/ Stuart H. Wolff
-----------------------
Title: CEO
-----------------------
Date: 5-18-99
-----------------------
