\nBalance at September 30, 1996 402,928 597,072 $1.00 to $1.50
\n =========
\n<\/c><\/c><\/c><\/s><\/table>\nOn November 8, 1996, the Company’s Board of Directors approved the acceleration
\nof all vesting provisions of all outstanding options of the Company totaling
\n597,072 shares.<\/p>\n
NOTE 13- REALTORS(R) INFORMATION NETWORK<\/p>\n
Effective February 1, 1996, the Company entered into the “Distribution and Web
\nSite Development Agreement” (“Agreement) with the REALTORS(R) Information
\nNetwork calling for the Company to design, develop and operate REALTOR.COM, with
\nRIN responsible for all data acquisition, sales and marketing efforts for the
\nsite, including, home page sales, third party banner advertising sales and other
\nforms on revenue to be potentially derived from the site. The agreement also
\ncalled for RIN to pay the Company a minimum of $95,000 per month (“Guaranty
\nPayment”) until such time as the Company’s portion of the cash flow from the
\nsite was sufficient to provide it with at least $95,000 a month. In late June,
\nRIN notified the Company of the financial difficulties that it was experiencing
\nand ceased paying the $95,000 monthly guaranteed amount. Subsequent to this
\nnotification, RIN made two payments to the Company, $42,422 in July and $50,000
\nin August. RIN also notified the Company that it could retain RIN’s portion of
\nany and all sales of agent and broker home pages collected by InfoTouch.<\/p>\n
Effective July 24, 1996, the Company notified RIN that during June and July
\n1996, RIN had discontinued making the Guaranty Payments as called for in the
\nAgreement and that the Company accepted the failure to pay as the equivalent of
\nthe 60 day prior written notice of RIN’s intent to discontinue such payments and
\nthat RIN was relieved of its obligation to make such payments as of August 1,
\n1996. The Company also notified RIN that as a result of RIN’s discontinuance of
\npayments, the Company exercised its option to purchase exclusive, full, complete
\nand unencumbered ownership of the software associated with the domain site for
\n$1. By letter dated July 29, 1996, RIN stated that it disagreed with the
\ncharacterization of the current status of the financial payments between it and
\nthe Company and that RIN had not provided InfoTouch with notice of its intent to
\ndiscontinue the guarantee payments and that in light of the foregoing, does not
\nbelieve that InfoTouch may exercise the option to purchase the software
\nassociated with the domain site for $1. Assuming the $1 option is not
\navailable, the buyout price would be $457,000 on October 31, 1996 and is
\n$366,000 on November 1, 1996.<\/p>\n
In connection with the Merger and the related agreements, it is anticipated that
\nall amounts owed to and from RIN will be eliminated.<\/p>\n
NOTE 14- SUBSEQUENT EVENTS<\/p>\n
In addition to the agreements above, as part of its participation in the
\nNovember 1996 NAR convention, the Company will be responsible for various
\nconvention associated expenses, including, but not limited to hotel, meals and
\nentertainment and other convention associated expenses.<\/p>\n
17<\/p>\n
Effective November 4, 1996, the Company entered into a Loan agreement with
\nMichael Flannery for $150,000. The loan from Mr. Flannery is intended to be
\nconverted into equity at a price per share as part of the $2,000,000 financing
\nportion of the transaction.<\/p>\n
Effective November 4, 1996, Michael S. Luther transferred 157,000 shares of his
\nstock to KL LLC.<\/p>\n
Effective November 12, 1996, Michael S. Luther entered into the Third Extension
\nand Security Agreement by and among Michael S. Luther, Dr. Anil K. Agarwal and
\nSecurity Escrow Co. (“Escrow Agent”) pursuant to which Mr. Luther has granted a
\nsecurity interest in 400,000 shares of lnfoTouch Common Stock owned by him (on
\nan as converted basis).<\/p>\n
On November 15, 1996, the Company filed its 1994 and 1995 State of Delaware
\nAnnual Franchise Tax Reports and paid taxes, filing fees, interest and penalties
\ntotaling $1,116.96. Also on November 15, 1996, the Company filed a Certificate
\nFor Renewal and Revival of Charter. On November 20, 1996, the Company was
\nnotified by the State of Delaware that it has been reinstated as a corporation
\nin good standing.<\/p>\n
Effective November 22, 1996, the Series A Convertible Preferred Stock and Series
\nB Convertible Preferred Stock stockholders elected to convert all of the shares
\nof Series A Convertible Preferred Stock and Series B Convertible Preferred Stock
\ninto shares of Common Stock, par value $01 per share pursuant to the terms as
\nset forth in the Certificate of Incorporation of InfoTouch Corporation and the
\nPurchase Agreement Series A Convertible Preferred Stock and Purchase Agreement
\nSeries B Convertible Preferred Stock, such election contingent upon the
\ncompletion of the transaction with the NAR and RIN described in the Company’s
\nletter dated November 21, 1996.<\/p>\n
EXHIBIT B<\/p>\n
Names of Directors and Officers of NetSelect, Inc.
\n ————————————————–<\/p>\n
DIRECTORS<\/p>\n
Representing Entity Name of Director
\n——————- —————-<\/p>\n
J.H. Whitney Michael Brooks
\nAllen & Co. Dort Cameron, III
\nCDW Internet, L.L.C. Stuart Wolff, Ph.D.
\nInfoTouch Investors Richard Janssen <\/p>\n
OFFICERS<\/p>\n
18<\/p>\n
Title Name of Officer
\n—– —————<\/p>\n
Chairman and CEO Stuart Wolff, Ph.D.
\nPresident and COO Richard Janssen
\nVP and CFO William Spazante
\nSr. VP, Sales Perry Morton
\nVP, Marketing Liesi Pike <\/p>\n
EXHIBIT C
\n Board of Members of NetSelect, L.L.C.<\/p>\n
MEMBERS<\/p>\n
Representing Entity Name of Member
\n——————- ————–<\/p>\n
REALTORS(R) Information Network Joe Hanauer
\nJ. H. Whitney Michael Brooks
\nAllen & Co. Dort Cameron, III
\nCDW Internet, L.L.C. Stuart Wolff, Ph.D.
\nInfoTouch Investors John Petrick
\nInfoTouch Corporation Richard Janssen
\nInfoTouch Corporation Daniel Koch <\/p>\n
OFFICERS<\/p>\n
Title Name of Officer
\n—– —————<\/p>\n
Chairman and CEO Stuart Wolff, Ph.D.
\nPresident and COO Richard Janssen
\nVP and CFO William Spazante
\nSr. VP, Sales Perry Morton
\nVP, Marketing Lisle Pike
\nVP, Technology Philip Dolly <\/p>\n
19<\/p>\n
EXHIBIT D<\/p>\n
AMENDED
\n AND
\n RESTATED
\n CERTIFICATE OF INCORPORATION
\n OF
\n NETSELECT, INC.<\/p>\n
NetSelect, Inc., a corporation (the “Corporation”) organized and
\nexisting under the General Corporation Law of the State of Delaware (the “GCL”)
\ndoes hereby certify as follows:<\/p>\n
FIRST: The name of ft corporation is NetSelect, Inc. (the
\n“Corporation”). “The original Certificate of Incorporation of the Corporation
\nwas filed with the office of the Secretary of State of Delaware on October 28,
\n1996.<\/p>\n
SECOND: This Amended and Restated Certificate of Incorporation was
\nduly adopted in accordance with Sections 228, 242 and 245 of the GCL. In lieu
\nof a meeting of stockholders of the Corporation in accordance with Section 242
\nof the GCL and a vote of stockholders thereat, all of the stockholders of the
\nCorporation adopted and approved this Amended and Restated Certificate of
\nIncorporation by written consent pursuant to Sections 228 of the GCL. As such
\nwritten consent of stockholders was unanimous, no notice of said corporate
\naction was required to be given, and none was given, under Section 228 of the
\nGCL.<\/p>\n
THIRD: This Amended and Restated Certificate of Incorporation
\nrestates and integrates and further amends the Certificate of Incorporation of
\nthe Corporation, as heretofore amended, supplemented, and\/or restated (the
\n“Certificate of Incorporation”).<\/p>\n
FOURTH: The text of the Certificate of incorporation is hereby
\namended restated and integrated to read in its entirety as follows:<\/p>\n
1. Name; Registered Office. The name of the corporation is
\n ———————–
\nNetSelect, Inc. The registered office of the Corporation is to be located at 15
\nEast North Street in the City of Dover, in the County of Kent, in the State of
\nDelaware. The name of its registered agent at that address is United Corporate
\nServices, Inc.<\/p>\n
2. Purposes of the Corporation. The purpose for which the
\n —————————
\nCorporation is organized is to engage in any lawful act or activity for which
\ncorporations may be organized under the GCL.<\/p>\n
3. Capitalization. (a) The total number of shares of all classes of
\n ————–
\nstock which the Corporation shall have authority to issue is 50,000,000 shares,
\nconsisting of (x) 35,000,000 shares of Class A Common Stock, $0.001 par value
\n(the “Class A Common Stock”), (y) 10,000,000 shares of Class B Common Stock,
\n$0.001 par value (the “Class B Common Stock,” and together with the Class A
\nCommon Stock, the “Corporation Common Stock”) and (z) 5,000,000 shares of
\nPreferred Stock, par value $0.001 per share (the “Preferred Stock”).<\/p>\n
(b) The Board of Directors may issue Preferred Stock having such
\npreferences, conversion and other rights, voting powers, restrictions and
\nlimitations as to dividends, qualifications and terms and conditions of
\nredemption of stock as the Board of Directors may from time to time determine
\nwhen designating such series.<\/p>\n
(c) The designations, powers, preferences and relative,
\nparticipating, optional or other special rights, and the qualifications,
\nlimitations and restrictions of the Corporation Common Stock is as follows:<\/p>\n
Class A Common Stock.
\n ——————– <\/p>\n
(i) Voting.
\n —— <\/p>\n
(A) Except as otherwise provided by law or this Certificate
\n of Incorporation, at each annual or special meeting of
\n stockholders, in the case of any written consent of
\n stockholders, and for all other purposes, each holder of
\n record of shares of Class A Common Stock on the relevant
\n record data shall rank equally and be entitled to one (1)
\n vote for each share of Class A Common Stock standing in such
\n holder’s name on the stock transfer records of the
\n Corporation.<\/p>\n
(B) Approval by 66-2\/3% of the issued and outstanding
\n shares of Class A Common Stock and Preferred Stock, voting
\n as a single class and representing at least 66-2\/3% of the
\n combined voting power of the Class A<\/p>\n
2<\/p>\n
Common and the Preferred Stock shall be required to
\n constitute the act of the stockholders on any actions
\n permitted pursuant to the GCL.<\/p>\n
(ii) Dividends. Subject to the provisions of law and the rights
\n ———
\n of the Preferred Stock, dividends may be paid on the Class A Common
\n Stock at such times and in such amounts as the Board of Directors
\n shall determine; provided, however, that in the case of dividends or
\n ——– ——-
\n other distributions payable in stock of the Corporation, including
\n distributions pursuant to stock splits or divisions of capital stock
\n of the Corporation (other than a split or division of the Preferred
\n Stock), only shares of Class A Common Stock shall be distributed with
\n respect to Class A Common Stock and only shares of Class B Common
\n Stock shall be distributed with respect to Class B Common Stock (with
\n no dividend or distribution payable in Corporation Common Stock being
\n paid on any shares of either class of Corporation Common Stock unless
\n a dividend or distribution of the same number of shares of Corporation
\n Common Stock is paid simultaneously on the shares of the other class
\n of Corporation Common Stock) and that, in the case of any combination
\n or reclassification of either the Class A Common Stock or the Class B
\n Common Stock, the shares of the other class of Corporation Common
\n Stock shall also be combined or reclassified so the number of shares
\n of each class of Corporation Common Stock outstanding immediately
\n following such combination or reclassification shall bear the same
\n ratio to the number of shares of such class of Corporation Common
\n Stock outstanding immediately prior to such combination or
\n reclassification as the number of shares of the other class of
\n Corporation Common Stock outstanding immediately prior to such
\n combination or reclassification bears to the number of shares of such
\n class of Corporation Common Stock outstanding immediately prior to
\n such combination or reclassification; provided, further, that no
\n ——– ——-
\n dividend or distribution may be declared or paid in cash or property
\n on shares of either Class A Common Stock nor Class B Common Stock
\n unless the same dividend or distribution per share is paid
\n simultaneously on the other class of Corporation Common Stock.<\/p>\n
(iii) Rights on Liquidation, Dissolution and Winding-up. Upon any
\n ————————————————-
\n duly authorized voluntary or any involuntary liquidated, dissolution,
\n or winding-up of the affairs of the Corporation, after payment in full
\n or reasonable provision for payment in full of all claims and
\n obligations of the Corporation, in accordance with Section 281 of the
\n GCL, as the same now exists or may hereafter be amended, or with the
\n provisions of any successor statute, shall have been made, and subject
\n to any preferential or other rights of holders of outstanding shares
\n of Preferred Stock, the holders of shares of Class A Common Stock and
\n Class B Common Stock shall be entitled to shares ratably, in
\n accordance with the number of shares of Class A Common Stock held by
\n each such holder, in all assets of the Corporation available for
\n distribution among the holder of Class A Common Stock and Class B
\n Common Stock, whether such assets are capital, surplus or earnings.<\/p>\n
3<\/p>\n
Class B Common Stock.
\n ——————– <\/p>\n
(i) Voting. The holders of the Class B Common Stock shall not be
\n ——
\n entitled to vote.<\/p>\n
(ii) Dividends. Subject to the provisions of law and the rights of
\n ———
\n the Preferred Stock, dividends may be paid on the Class B Common Stock
\n at such times and in such amounts as the Board of Directors shall
\n determine; provided, however, that in the case of dividends or other
\n ——– ——-
\n distributions payable in stock of the Corporation, including
\n distributions pursuant to stock splits or divisions of capital stock
\n of the Corporation (other than a split or division of the Preferred
\n Stock), only shares of Class B Common Stock shall be distributed with
\n respect to Class B Common Stock and only shares of Class A Common
\n Stock shall be distributed with respect to Class A Common Stock (with
\n no dividend or distribution payable in Corporation Common Stock being
\n paid on any shares of either class of Corporation Common Stock unless
\n a dividend or distribution of the same number of shares of Corporation
\n Common Stock is paid simultaneously on the shares of the other class
\n of Corporation Common Stock) and that, in the case of any combination
\n or reclassification of either the Class B Common Stock or the Class A
\n Common Stock, the shares of the other class of Corporation Common
\n Stock shall also be combined or reclassified so that the number of
\n shares of each class of Corporation Common Stock outstanding
\n immediately following such combination or reclassification shall bear
\n the same ratio to the number of shares of such class of Corporation
\n Common Stock outstanding immediately prior to such combination or
\n reclassification as the number of shares of the other class of
\n Corporation Common Stock outstanding immediately prior to such
\n combination or reclassification bears to the number of shares of such
\n class of Corporation Common Stock outstanding immediately prior to
\n such combination or reclassification: provided, further, that no
\n ——– ——-
\n dividend or distribution may be declared or paid in cash or property
\n on shares of either Class B Common Stock nor Class A Common Stock
\n unless the same dividend or distribution per share is paid
\n simultaneously on the other class of Corporation Common Stock.<\/p>\n
(iii) Automatic Conversion. (A) Promptly upon the occurrence of a
\n ——————–
\n Triggering Event (as hereinafter defined), each outstanding share of
\n Class B Common Stock shall, by virtue of, and simultaneously with, the
\n consummation of such offering and without any action on the part of
\n the holder thereof, be deemed automatically converted into one fully
\n paid and nonassessable share of Class A Common Stock.<\/p>\n
“Triggering Event” means that time at which the Board of
\n —————-
\n Directors of the Corporation shall effect a qualified public
\n offering (a “Qualified Public Offering”) of any or all of the
\n shares of Class A Common Stock then outstanding pursuant to an
\n effective registration statement under the Securities Act of
\n 1933, as amended, covering the offer and sale of shares of Class
\n A Common Stock which (A) yields proceeds to the Corporation<\/p>\n
4<\/p>\n
of at least $10,000,000 (net of underwriting discounts and
\n commissions) and (B) would establish an aggregate value for the
\n shares of Class A Common Stock outstanding immediately prior to
\n the consummation of such offering of at least $40,000,000.<\/p>\n
(B) Promptly upon the occurrence of a Triggering Event,
\n such that shares of Class B Common Stock are converted automatically
\n into shares of Class A Common Stock, the Corporation shall deliver
\n written notice to each of the holders of Class A Common Stock, Class B
\n Common Stock and Preferred Stock, and the certificate or certificates
\n that represented such shares of Class B Common Stock immediately prior
\n to the occurrence of the Triggering Event shall upon conversion
\n represent that number of shares of Class A Common Stock into which
\n such shares of Class B Common Stock theretofore represented by such
\n certificate shall have been automatically converted, and the holder of
\n such shares of Class B Common Stock shall surrender such certificate
\n of certificates, duly endorsed in blank or accompanied by proper
\n instruments of transfer, at the principal office of the Corporation or
\n of any transfer agent for shares of the Class A Common Stock.
\n Delivery of such certificates shall obligate the Corporation to issue
\n such shares of Class A Common Stock, and thereupon the Corporation or
\n its transfer agent shall promptly issue and deliver at such stated
\n address to such holder of shares of Class A Common Stock to which such
\n holder is entitled by reason of such conversion, and shall cause such
\n shares of Class A Common Stock to be registered in the name of such
\n holder.<\/p>\n
(C) The Corporation shall pay all documentary, stamp or
\n other transactional taxes attributable to the issuance or delivery of
\n shares of capital stock of the Corporation upon conversion of any
\n shares of Class B Common Stock; provided, however, that the
\n ——– ——-
\n Corporation shall not be required to pay any taxes which may be
\n payable in respect of any transfer involved in the issuance or
\n delivery of any certificate for such shares in a name other than that
\n of the holder of the shares of Class B Common Stock in respect of
\n which such shares are being issued.<\/p>\n
(D) The Corporation shall reserve, free from preemptive
\n rights, out of its authorized but unissued shares of Class A Common
\n Stock, solely for the purpose of effecting the conversion of the
\n shares of Class B Common Stock, sufficient shares to provide for the
\n conversion of all outstanding shares of Class B Common Stock.<\/p>\n
(E) All shares of Common Stock which may be issued in
\n connection with the conversion provisions set forth herein will, upon
\n issuance by the Corporation, be validly issued, fully paid and
\n nonassessable, with no personal liability attaching to the ownership
\n thereof, and free from all taxes, liens or charges with respect
\n thereto.<\/p>\n
5<\/p>\n
4. Reclassification. Upon the filing (the “Effective Time”) of this
\n —————-
\nAmended and Restated Certificate of Incorporation pursuant tot he GCL, the one
\nhundred (100) shares of the Corporation Common Stock, par value $0.001 per
\nshare, issued and outstanding immediately prior to the Effective Time (the “Old
\nCommon Stock”), shall be reclassified as and changed into an aggregate of
\n236,470 validly issued, fully paid, and non-assessable shares of Class A Common
\nStock authorized by Section 3 hereof. Each certificate that theretofore
\nrepresented a share of shares of Old Common Stock shall thereafter represent
\nthat number of shares of Class A Common Stock into which the share or shares of
\nOld Common Stock represented by such certificate shall have been reclassified;
\nprovided, however, that each record holder of a stock certificate or
\n——– ——-
\ncertificates that theretofore represented a share or shares of Old Common Stock
\nshall receive, upon surrender of such certificate or certificates, a new
\ncertificate or certificates evidencing and representing the number of shares of
\nClass A Common Stock to which such record holder is entitled pursuant to the
\nforegoing reclassification.<\/p>\n
5. Ranking. Except as otherwise provided herein, the Class A Common
\n ——-
\nStock and the Class B Common Stock shall have the same rights and privileges and
\nshall rank equally, share ratably and be identical in all respects as to all
\nmatters.<\/p>\n
6. Liability of Directors. The Corporation eliminates the personal
\n ———————-
\nliability of each member of its Board of Directors to the Corporation for
\nmonetary damages for breach of fiduciary duty as a Director to the Corporation;
\nprovided, however, that the foregoing shall not eliminate the stockholders, (ii)
\n——– ——-
\nfor acts or omissions not in good faith or which involve intentional misconduct
\nor a knowing violation of law, (iii) under Section 174 of the GCL or (iv) for
\nany transaction from which such Director derived an improper personal benefit.<\/p>\n
IN WITNESS WHEREOF, I have hereunto set my hand this 26\/th\/ day of
\nNovember, 1996.<\/p>\n
\/s\/ Stuart Wolff
\n __________________________________________
\n Name: Stuart Wolff, Ph.D.
\n Title: Chief Executive Officer<\/p>\n
6<\/p>\n
CERTIFICATE OF AMENDMENT
\n TO THE
\n CERTIFICATE OF INCORPORATION
\n OF
\n NETSELECT, INC.
\n _____________________________<\/p>\n
Pursuant to Section 242 of the General
\n Corporation Law of the State of Delaware
\n ______________________________<\/p>\n
NetSelect, Inc., a Delaware corporation (the “Corporation”), does
\nhereby certify as follows:<\/p>\n
FIRST: The first sentence of paragraph 4 of Article Fourth of the Restated
\n —–
\nCertificate of Incorporation is hereby deleted and integrated to read in its
\nentirety as follows:<\/p>\n
Upon the filing (the “Effective Date”) of this Amended and Restated
\n Certificate of Incorporation pursuant to the GCL, the one hundred (100)
\n shares of the Corporation Common Stock, par value $0.001 per share, issued
\n and outstanding immediately prior to the Effective Time (the “Old Common
\n Stock”), shall be reclassified and changed into (x) an aggregate of 236,470
\n validly issued, fully paid, and non-assessable shares of Class A Common
\n Stock and (y) and aggregate of 116,470 validly issued, fully paid, and non-
\n assessable shares of Class B Common Stock.<\/p>\n
SECOND: The foregoing amendments were duly adopted in accordance with
\n ——
\n Section 242 of the General Corporation Law of the State of Delaware.<\/p>\n
IN WITNESS WHEREOF, NetSelect, Inc. has caused this Certificate of
\nIncorporation to be duly executed in its corporate name this 27\/th\/ day of
\nNovember, 1996.<\/p>\n
NETSELECT, INC.<\/p>\n
\/s\/ Stuart Wolff
\n ________________________________________
\n Name: Stuart Wolff
\n Title: Chief Executive Officer<\/p>\n
NETSELECT, INC.<\/p>\n
Certificate of Designations for Series A Convertible Preferred Stock
\n ——————————————————————–
\n and Series B Convertible Preferred Stock
\n —————————————-<\/p>\n
Pursuant to the authority expressly granted to the Board of Directors
\nof this Corporation in accordance with the provisions of its Certificate of
\nIncorporation, as amended, two series of the Preferred Stock, par value $.001
\nper share, of the Corporation are hereby established (A) one, consisting of
\n1,647,059 shares, to be designated “Series A Convertible Preferred Stock”
\n(hereinafter “Series A Preferred Stock”), and (B) one, consisting or 352,941
\nshares, to be designated “Series B Convertible Preferred Stock” (hereinafter,
\n“Series B Preferred Stock”, and together with the Series A Preferred Stock, the
\n“Convertible Preferred Stock”). The Board of Directors hereby is authorized to
\nissue such shares of Convertible Preferred Stock from time to time and for such
\nconsideration and on such terms as the Board of Directors shall determine; and
\nsubject to the limitations provided by law and by the Certificate of
\nIncorporation as amended, the designations, powers, preferences and relative
\nparticipating, optional and other special rights of, and the qualifications,
\nlimitations and restrictions upon, the Convertible Preferred Stock are as
\nfollows:<\/p>\n
(1) Dividends.
\n ——— <\/p>\n
The holders of Convertible Preferred Stock shall be entitled to
\nparticipate with the holders of Class A Common Stock and Class B Common Stock in
\nany dividends paid or set aside for payment (other than dividends payable solely
\nin shares of Class A Common Stock and Class B Common Stock) so that the holders
\nof Convertible Preferred Stock shall receive with respect to each share of
\nConvertible Preferred Stock an amount equal to (x) the dividend payable with
\nrespect to each share of Class A Common Stock multiplied by (y) the number of
\nshares (and fraction of a share, if any) of Class A Common Stock into which such
\nshare of Convertible Preferred Stock is convertible as of the record date for
\nsuch dividend.<\/p>\n
(2) Voting Rights.
\n ————- <\/p>\n
Except as otherwise provided herein or by law, the holders of
\nConvertible Preferred Stock shall have full voting rights and powers, and they
\nshall be entitled to vote on all matters as to which holders of Class A Common
\nStock shall be entitled to vote, voting together with the holders of Class A
\nCommon Stock as one class. Each holder of shares of Convertible Preferred Stock
\nshall be entitled to the number of votes equal to the number of shares of Class
\nA <\/p>\n
2<\/p>\n
Common Stock into which such shares of Convertible Preferred Stock could be
\nconverted, Fractional votes shall not, however, be permitted and any fractional
\nvoting rights resulting from the above formula (after aggregating all shares
\ninto which shares of Convertible Preferred Stock held by each holder could be
\nconverted) shall be rounded to the nearest whole number (with one-half being
\nrounded upward).<\/p>\n
(3) Rights on Liquidation.
\n ——————— <\/p>\n
(a) In the event of any voluntary or involuntary liquidation,
\ndissolution or winding up of the Corporation (any such event being hereinafter
\nreferred to as a “Liquidation”), before any distribution of assets of the
\nCorporation shall be made to or set apart for the holders of Class A Common
\nStock or Class B Common Stock, the holders of Convertible Preferred Stock shall
\nbe entitled to receive payment out of such assets of the Corporation in the
\nfollowing amounts: (i) with respect to each share of Series A Preferred Stock,
\nthe sum of (A) $2.83, plus (B) an amount equal to $0.18 per annum accruing on a
\nquarterly basis on the last day of each calendar quarter for the period from the
\ndate of issuance of such share to the date of Liquidation, plus (C) any declared
\nand unpaid dividends on such share; and (ii) with respect to each share of
\nSeries B Preferred Stock, the sum of (A) $6.19, plus (B) an amount equal to
\n$0.40 per annum accruing on a quarterly basis on the last day of each calendar
\nquarter for the period from the date of issuance of such share to the date of
\nLiquidation, plus (C) any declared and unpaid dividends on such share. The
\namount payable with respect to each share of Series A Preferred Stock and Series
\nB Preferred Stock pursuant to clause (i) or (ii) above is referred to as the
\n“Preferred Stock Liquidation Preference” for such share. If the assets of the
\nCorporation available for distribution to the holders of Convertible Preferred
\nStock shall not be sufficient to make in full the payments herein required, such
\nassets shall be distributed ratably among the holders of Convertible Preferred
\nStock based upon the aggregate Liquidation Preferences of the shares of
\nConvertible Preferred Stock held by each such holder.<\/p>\n
(b) If the assets of the Corporation available for distribution to
\nstockholders exceed the aggregate amount payable pursuant to paragraph (a)
\nabove, the remainder of such assets shall be distributed to the holders of
\nConvertible Preferred Stock, Class A Common Stock and Class B Common Stock on a
\npro-rata basis, with the amount distributable to the holders of Convertible
\nPreferred Stock to be computed on the basis of the number of shares of Class A
\nCommon Stock which would be held by them if immediately prior to the Liquidation
\nall of the outstanding shares of Convertible Preferred Stock had been converted
\ninto shares of Class A Common Stock.<\/p>\n
(c) A merger or consolidation including the Corporation and a sale,
\nlease or transfer of all or substantially all of the assets of the Corporation
\nshall be deemed a Liquidation, unless in connection with such transaction, the
\nConvertible Preferred Stock remains unchanged or the holders of Convertible
\nPreferred Stock receive a stock having terms and condition which are no less
\nfavorable than the terms and conditions of the Convertible Preferred Stock;
\nprovided, however, that any such event shall not be deemed a Liquidation if so
\n——– ——-
\ndetermined by action of the holders of at least 66-2\/3% of the shares of
\nConvertible Preferred Stock at the time outstanding.<\/p>\n
3<\/p>\n
(4) Conversion.
\n ———- <\/p>\n
(a) Right to Convert. The holder of any share or shares of
\n —————-
\nConvertible Preferred Stock shall have the right at any time, as such holder’s
\noption, to convert all or a portion of the shares of Convertible Preferred Stock
\nheld by such holder into such number of fully paid nonassessable shares of Class
\nA Common Stock at the Conversion Rate (as defined below). The Initial
\n“Conversation Rate” shall be one share of Common Stock for each share of
\nConvertible Preferred Stock. In the event the Corporation shall issue any
\nshares of Class A Common Stock (i) by stock dividend or any other distribution
\nupon any stock of the Corporation payable in Class A Common Stock or securities
\nconvertible into Class A Common Stock or (ii) its subdivision of its outstanding
\nClass A Common Stock, by reclassification or otherwise, the Conversion Rate then
\nin effect shall be increased proportionately, and, in like manner, in the event
\nof any combination of shares of Class A Common Stock, by reclassification or
\notherwise, the Conversion Rate in effect shall be issued upon the conversion of
\nany Convertible Preferred Stock. With respect to any fraction of a share of a
\nConvertible Preferred Stock called for upon any conversion (after multiplying
\nthe Conversion Rate in effect by the total number of Conversion Shares, as
\ndefined below), the Corporation shall pay to the holder an amount in cash equal
\nto such fraction multiplied by the current market value of a share, determined
\nin good faith by the Board of Directors of the Corporation.<\/p>\n
(b) Mechanics of Conversion. Such right of conversion shall be
\n ———————–
\nexercised by the holder of shares of Convertible Preferred Stock by giving prior
\nwritten notice to the Corporation (the “Conversion Notice”) that such holder
\nelects to convert a stated number of shares of Convertible Preferred Stock(the
\n“Conversion Shares”) into shares of Class A Common Stock on the date specified
\nin the Conversion Notice (which date shall not be earlier than the date of the
\nConversion Notice), and by surrender of the certificate or certificates
\nrepresenting such Conversion Shares. The Conversion Notice shall also contain a
\nstatement of the name or names (with addresses) in which the certificate or
\ncertificates for Class A Common Stock shall be issued. Promptly after the
\nreceipt of the Conversion Notice and surrender of the Conversion Shares, the
\nCorporation shall issue and deliver, or cause to be delivered, to the holder of
\nthe Conversion Shares or his nominee or nominees, a certificate or certificates
\nfor the number of shares of Class A Common Stock issuable upon conversion of
\nsuch Conversion Shares. Such conversion shall be deemed to have been effected
\nas of the close of business on the date specified in the Conversion Notice, and
\nthe person or persons entitled to receive the shares of Class A Common Stock
\nissuable upon conversion shall be treated for all purposes as the holder of
\nholders of record of such shares of Class A Common Stock as the close of
\nbusiness of such date.<\/p>\n
(c) Stock Reserved. The Corporation shall at all times reserve and
\n ————–
\nkeep available out of its authorized but unissued Class A Common Stock, solely
\nfor issuance upon the conversion of shares of Convertible Preferred Stock as
\nherein provided, such number of shares of Class A Common Stock as shall from
\ntime to time be issuable upon the conversion of all of the shares of Convertible
\nPreferred Stock at the time outstanding.<\/p>\n
(d) Reorganization. If any capital reorganization or
\n ————–
\nreclassification of the Class A Common Stock of the Corporation, or
\nconsolidation or merger of the Corporation with<\/p>\n
4<\/p>\n
or into another corporation, shall be effected, then, as a condition of such
\nreorganization, reclassification, consolidation or merger, lawful or adequate
\nprovision shall be made whereby the holders of Convertible Preferred Stock shall
\nthereafter have the right to receive, in lieu of the shares of Class A Common
\nStock of the Corporation immediately theretofore receivable upon the exercise of
\nthe conversion rights, such shares of stock, securities or assets as may be
\nissued or payable with respect to or in exchange for the number of outstanding
\nshares of such Class A Common Stock equal to the number of shares of such Class
\nA Common Stock immediately theretofore receivable upon the exercise of such
\nrights had such reorganization, reclassification, consolidation or merger not
\ntaken place, and, in any such case, appropriate provision shall be made with
\nrespect rights and interests of the holders of Convertible Preferred Stock to
\nthe end that such conversion rights (including, without limitation, provisions
\nfor adjustment of Conversion Rate) shall thereafter be applicable, as nearly as
\nmay be practicable in relation to any shares of stock, securities or assets
\nthereafter deliverable upon the exercise thereof. The Corporation shall not
\neffect any such consolidation or merger to which this paragraph (d) is
\napplicable, unless prior to or simultaneously with the consummation thereof the
\nsuccessor corporation (of other than the Corporation) resulting from such
\nconsolidation or merger shall assume by written instrument, executed and mailed
\nor delivered to the holders of the Convertible Preferred Stock, the obligation
\nto deliver to such holders such shares of stock, securities or assets as, in
\naccordance with the foregoing provisions, such holders may be entitled to
\nreceive upon conversion of the Convertible Preferred Stock.<\/p>\n
(e) Automatic Conversion. Notwithstanding any other provisions of
\n ——————–
\nthis Section 4:<\/p>\n
(i) If the Corporation shall effect a public offering of shares of
\nClass A Common Stock registered under the Securities Act of 1933 at a price per
\nshare of Class A Common Stock which (A) yields proceeds to the Corporation of at
\nleast $10,000,000 (net of underwriting discounts and commissions) and (B) would
\nestablish an aggregate value for the Corporation’s Class A Common Stock
\n(assuming the conversion of all Convertible Preferred Stock and Class B Common
\nStock) outstanding immediately prior to the consummation of such offering of at
\nleast $40,000,000, the Corporation, by action of its Board of Directors, shall
\nhave the right to require that each share of Convertible Preferred Stock be
\nconverted into Class A Common Stock. Following any such action by the Board of
\nDirectors, all outstanding shares of Convertible Preferred Stock shall, by
\nvirtue of, and simultaneously with, the consummation of such transaction and
\nwithout any action on the part of the holder thereof, be deemed automatically
\nconverted into the number of fully paid and nonassessable shares of Class A
\nCommon Stock into which such shares of Convertible Preferred Stock are
\nconvertible at such time pursuant to Section 4(a) hereof.<\/p>\n
(ii) Upon the approval, set forth in a written notice to the
\nCorporation, of the holders of at least 75% of the outstanding shares of
\nConvertible Preferred Stock, of an election to convert the Convertible Preferred
\nStock into Class A Common Stock, all outstanding shares of Convertible Preferred
\nStock shall be automatically converted into the number of fully paid and
\nnonassessable shares of Class A Common Stock which such shares of Convertible
\nPreferred<\/p>\n
5<\/p>\n
Stock are convertible on the date of such approval without any further action by
\nthe holders of such shares.<\/p>\n
(f) Stock Transfer Taxes. The issue of stock certificates upon
\n ——————–
\nconversion of the Convertible Preferred Stock shall be made without charge to
\nthe converting holder for any tax in respect of such issue. The Corporation
\nshall not, however, be required to pay any tax which may be payable in respect
\nof any transfer involved in the issue and delivery of shares in any name other
\nthan that of the holder of any of the Convertible Preferred Stock converted, and
\nthe Corporation shall not be required to issue or deliver any stock certificate
\nunless and until the person or persons requesting the issue thereof shall have
\npaid to the Corporation the amount of such tax or shall have established to the
\nsatisfaction of the Corporation that such tax has been paid.<\/p>\n
(g) Certificate as to Adjustments. Upon the occurrence of each
\n —————————–
\nadjustment or readjustment of the Conversion Rate, the Corporation, at its
\nexpense, shall promptly compute such adjustment or readjustment in accordance
\nwith the terms hereof and prepare and furnish to each holder of Convertible
\nPreferred Stock a certificate setting forth such adjustment or readjustment and
\nshowing in detail the facts upon which such adjustment or readjustment is based.
\nThe Corporation shall, upon the written request at any time of any holder of
\nConvertible Preferred Stock, furnish or cause to be furnished to such holder a
\nlike certificate setting forth the number of shares of Class A Common Stock and
\nthe amount, if any, of other property which at the time would be received upon
\nthe conversion of Convertible Preferred Stock owned by such holder.<\/p>\n
(h) Notices of Record Date. In the event of any taking by the
\n ———————-
\nCorporation of a record of the holders of any class of securities for the
\npurpose of determining the holders thereof who are entitled to receive any
\ndividend (other than a cash dividend) or other distribution, any shares of Class
\nA Common Stock or other securities, or any right to subscribe for, purchase or
\notherwise acquire, or any option for the purchase of, any shares of stock of any
\nclass or any other securities or property, or to receive any other right, the
\nCorporation shall mail to each holders of Convertible Preferred Stock at least
\nthirty (30) days prior to the date specified therein, a notice specifying the
\ndate on which any such record is to be taken for the purpose of such dividend,
\ndistribution or rights, and the amount and character of such dividend,
\ndistributions or right.<\/p>\n
(i) Notices. Any notice required by the provisions of this Section 4
\n ——-
\nto be given to the holders of shares of Convertible Preferred Stock shall be
\ndeemed given if deposited in the United States mall, postage prepaid, and
\naddressed to each holder of record at his address appearing on the books of the
\nCorporation.<\/p>\n
(5) Negative Covenants.
\n —————— <\/p>\n
In addition to any other rights provided by law, neither the
\nCorporation nor any subsidiary of the Corporation shall, without first obtaining
\nthe affirmative vote or written consent of the holders of not less than 66-2\/3%
\nof the then outstanding shares of Convertible Preferred Stock:<\/p>\n
6<\/p>\n
(a) Amend or repeal any provision, or add any provision to, the
\nCorporation’s Certificate of Incorporation or By-laws, if such action would
\nadversely affect the preferences, rights, privileges or powers of, or the
\nrestrictions provided for the benefit of, Series A Preferred Stock or the Series
\nB Preferred Stock;<\/p>\n
(b) Authorize or issue any additional shares of any existing class or
\nseries of capital stock or any shares of any new class or series of capital
\nstock (except for (i) shares of Class A Common Stock upon conversion of shares
\nof Convertible Preferred Stock and Class B Common Stock and (ii) up to an
\naggregate of 400,000 shares of Class A Common Stock pursuant to the NetSelect,
\nInc. 1996 Stock Incentive Plan).<\/p>\n
(c) Recapitalize or reclassify any class or series of capital stock;<\/p>\n
(d) In the case of the Corporation, pay or declare any dividend or
\ndistribution on any shares of its capital stock (except dividends, pursuant to
\nSection 1(a) above), or apply any of its assets to the redemption, retirement,
\npurchase or acquisition, directly or indirectly, through subsidiaries or
\notherwise, of any shares of its capital stock;<\/p>\n
(e) Merge or consolidate with or into any other corporation or other
\nentity, or sell or otherwise dispose of all or substantially all of its assets;<\/p>\n
(f) Provide for any voluntary dissolution, liquidation or winding up;<\/p>\n
(g) Effect any material change in its business as such business was
\nproposed to be conducted or operated on the date this Certificate of Designation
\nbecame effective;<\/p>\n
(h) Enter into any transaction with any employee, consultant, officer
\nor director of the Corporation or any subsidiary or holder of 5% of any class of
\ncapital stock of the Corporation, or any member of their respective immediate
\nfamilies or any corporation or other entity directly or indirectly controlled by
\none or more of such employees, consultants, officers, directors or 5%
\nstockholders or members of their immediate families, on terms less favorable to
\nthe Corporation or the subsidiary than it would obtain in a transaction between
\nunrelated parties.<\/p>\n
(6) Purchase Rights.
\n ————— <\/p>\n
If at any time the Corporation grants, issues or sells any options,
\nsecurities convertible into Class A Common Stock or rights to purchase stock,
\nwarrants, securities or other property pro rata to the record holders of Class A
\nCommon Stock (the “Purchase Rights”), then each holder of Convertible Preferred
\nStock will be entitled to acquire, upon the terms applicable to such Purchase
\nRights, the aggregate Purchase Rights which such holder could have acquired if
\nsuch holder had held the number of shares of Class A Common Stock acquirable
\nupon conversion of such holder’s Convertible Preferred Stock immediately before
\nthe date on which a record is taken for the grant, issuance or sale of such
\nPurchase Rights, or, if no such record is<\/p>\n
7<\/p>\n
taken, the date as of which the record holders of Class A Common Stock are to be
\ndetermined for the grant, issue or sale of such Purchase Rights.<\/p>\n
IN WITNESS WHEREOF, the undersigned, acting for an on behalf of the
\nCorporation, has hereunto subscribed his name on this 26\/th\/ day of November,
\n1996.<\/p>\n
NETSELECT, INC.<\/p>\n
\/s\/ Stuart Wolff
\n _____________________________________
\n Name: Stuart Wolff, Ph.D.
\n Title: Chief Executive Officer<\/p>\n
8<\/p>\n
CERTIFICATE OF INCORPORATION<\/p>\n
OF<\/p>\n
NETSELECT, INC.<\/p>\n
THE UNDERSIGNED, in order to form a corporation for the purposes
\nherein stated, under and pursuant to the provisions of the General Corporation
\nLaw of the State of Delaware, does hereby certify as follows:<\/p>\n
FIRST: The name of the corporation is NetSelect, Inc.(hereinafter
\ncalled the “Corporation”).<\/p>\n
SECOND: The registered office of the Corporation is to located at 15
\nEast North Street in the City of Dover, in the County of Kent, in the State of
\nDelaware. The name of its registered agent at that address if United Corporate
\nServices, Inc.<\/p>\n
THIRD: The purpose of the Corporation is to engage in any lawful act
\nor activity, without limitation, for which a corporation may be organized under
\nthe General Corporation Law of the State of Delaware.<\/p>\n
FOURTH: The aggregate number of shares of all classes of stock which
\nthe Corporation is authorized to issue is One Thousand (1,000) shares,
\ndesignated Common Stock, of the par value of $0.001 per share.<\/p>\n
FIFTH: The name and mailing address of the incorporator is:
\n NAME ADDRESS
\n —- ——-<\/p>\n
George S. Vanarthos c\/o Battle Fowler LLP
\n 75 East 55\/th\/ Street
\n New York, New York 10022<\/p>\n
SIXTH: The election of directors need not be by written ballot unless
\nthe By-laws so provide.<\/p>\n
SEVENTH: The Board of Directors of the Old Common Stock is authorized
\nand empowered from time to time in its discretion to make, alter, amend or
\nrepeal By-laws of the Corporation, except as such power may be restricted or
\nlimited by the General Corporation Law of the State of Delaware.<\/p>\n
EIGHTH: No director of the Corporation shall be liable to the
\nCorporation or its stockholders for monetary damages for breach of fiduciary
\nduty as a director, except for liability (i) for any breach of the director’s
\nduty of loyalty to the Corporation or its stockholders, (ii) for acts or
\nomissions not in good faith or which involve intentional misconduct or a knowing
\nviolation of law, (iii) under Section 174 of the General Corporation Law of the
\nState of Delaware, or (iv) for any transaction from which the director derived
\nan improper personal benefit.<\/p>\n
NINTH: The Corporation shall, to the fullest extent permitted by the
\nprovisions of Section 145 of the General Corporation Law of the State of
\nDelaware, as the same may be amended and supplemented, indemnify any and all
\npersons whom it shall have power to indemnify under said section from and
\nagainst any and all expenses, liabilities, or other matters referred to in or
\ncovered by said section, and the indemnification provided for herein shall not
\nbe deemed exclusive of any other rights to which those indemnified may be
\nentitled under any By-<\/p>\n
2<\/p>\n
law, agreement, vote of stockholders or disinterested directors or otherwise,
\nboth as to action in his official capacity and as to action in another capacity
\nwhile holding such office, and shall continue as to a person who has ceased to
\nbe a director, officer, employee, or agent and shall inure to the benefit of the
\nheirs, executors, and administrators of such person.<\/p>\n
TENTH: Approval by 6\/7 of the Board of Directors of the Corporation
\nshall be required on the following actions:<\/p>\n
i. Mergers, consolidations, reorganizations, recapitalizations, or sales
\n of all or substantially all of the assets of the Corporation, or any
\n similar transactions; and<\/p>\n
ii. Any change in the business purpose of the Corporation.
\n ELEVENTH: Approval by 66-2\/3% of the stockholders of the Corporation
\nshall be required on the following actions:<\/p>\n
Mergers, consolidations, reorganizations, recapitalizations, or sales
\n of all or substantially all of the assets of the Corporation, or any
\n similar transactions.<\/p>\n
IN WITNESS WHEREOF, I have hereunto set my hand the 25\/th\/ day of
\nOctober, 1996.<\/p>\n
\/s\/ George S. Vanarthos
\n __________________________________________
\n George S. Vanarthos, Sole Incorporator
\n 75 East 55\/th\/ Street
\n New York, New York 10022<\/p>\n
3<\/p>\n
EXHIBIT E<\/p>\n
B Y – L A W S<\/p>\n
OF<\/p>\n
NETSELECT, INC.<\/p>\n
(a Delaware corporation)<\/p>\n
____________________________<\/p>\n
ARTICLE I<\/p>\n
OFFICES
\n ——-<\/p>\n
SECTION 1. OFFICES. The Corporation shall maintain its registered
\n ——-
\noffice in the State of Delaware at 15 North East Street, in the City of Dover,
\nin the County of Kent, and its resident agent at such address is United
\nCorporate Services, Inc. The Corporation may also have offices in such other
\nplaces in the United States or elsewhere as the Board of Directors may, from
\ntime to time, appoint or as the business of the Corporation may require.<\/p>\n
ARTICLE II<\/p>\n
MEETINGS OF STOCKHOLDERS
\n ————————<\/p>\n
SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the
\n —————
\nelection of directors and for such other business as may properly be conducted
\nat such meeting shall be held at such place, either within or without the State
\nof Delaware, and at such time and date as the Board of Directors shall determine
\nby resolution and set forth in the notice of the meeting. In the event that the
\nBoard of Directors fails to so determine the time, date and place<\/p>\n
for the annual meeting, it shall be held, beginning in March 1997, at the
\nprincipal office of the Corporation at 10 o’clock A.M. on the last Friday in
\nMarch of each year.<\/p>\n
SECTION 2. SPECIAL MEETINGS. Special meetings of stockholders,
\n —————-
\nunless otherwise prescribed by statute, may be called by the Chairman of the
\nBoard and shall be called by the Chief Executive Officer or Secretary upon the
\ndirection of the Board of Directors or the written request of not less than 10%
\nin interest of the stockholders entitled to vote thereat. Notice of each
\nspecial meeting shall be given in accordance with Section 3 of this Article II.
\nUnless otherwise permitted by law, business transacted at any special meeting of
\nstockholders shall be limited to the purpose stated in the notice.<\/p>\n
SECTION 3. NOTICE OF MEETINGS. Whenever stockholders are required or
\n ——————
\npermitted to take any action at a meeting, a written notice of the meeting,
\nwhich shall state the place, date and time of the meeting, and, in the case of a
\nspecial meeting, the purposes for which the meeting is called, shall be mailed
\nto or delivered to each stockholder of record entitled to vote thereat. Such
\nnotice shall be given not less than ten (10) days nor more than sixty (60) days
\nbefore the date of any such meeting.<\/p>\n
SECTION 4. QUORUM. (a) At each meeting of the stockholders, except
\n ——
\nwhere otherwise provided by law, the Certificate of Incorporation or these By-
\nLaws, the holders of record of a majority in voting power of the issued and
\noutstanding shares of stock of the Corporation entitled to vote at such meeting,
\npresent in person or represented by proxy, shall be required to constitute a
\nquorum for the transaction of business. Where a separate vote by class or
\nclasses or one or more series of a class or classes of stock is required by law
\nor the Certificate of Incorporation for any matter, the holders of a majority in
\nvoting power of the issued and outstanding shares of each such class or classes
\nor one or more series of a class or classes entitled<\/p>\n
2<\/p>\n
to vote, present in person or represented by proxy, shall be required to
\nconstitute a quorum with respect to a vote on that matter, except that where the
\nunanimous affirmative vote or written consent of all of the holders of the
\noutstanding shares of a class or classes of stock is required by the Certificate
\nof Incorporation with respect to any matter, all of the holders of the
\noutstanding shares of such class or classes entitled to vote, present in person
\nor by proxy, shall be required to constitute a quorum with respect to a vote on
\nthat matter. For purposes of these By-Laws, the term “total voting power” shall
\nmean, (a) in the case of matters which do not require a separate vote by class
\nor classes or one or more series of a class or classes of stock, the aggregate
\nnumber of votes which all of the shares of stock, excluding the votes of shares
\nof stock having such entitlement only upon the happening of a contingency, would
\nbe entitled to cast on any such matter, if all such shares of stock were present
\nat a meeting of the Corporation’s stockholders for the purpose of stockholder
\naction on such matter, and (b) in the case of matters which do require a
\nseparate vote by class or classes or one or more series of a class or classes of
\nstock, the aggregate number of votes which all of the shares of such class or
\nclasses or one or more series of a class or classes of stock, excluding the
\nvotes of shares of stock having such entitlement only upon the happening of a
\ncontingency, would be entitled to cast on any such matter, if all of the shares
\nof such class or classes or one or more series of a class or classes of stock
\nwere present and voted at a meeting of the Corporation’s stockholders for the
\npurpose of stockholder action on such matter.<\/p>\n
(b) In the absence of a quorum at any annual or special meeting of
\nstockholders, a majority in total voting power of the shares of stock entitled
\nto vote, or in the case of matters requiring a separate vote by any class or
\nclasses or one or more series of a class or classes of stock, a majority in
\ntotal voting power of the shares of each such class or classes or one of more<\/p>\n
3<\/p>\n
series of a class or classes entitled to vote, present in person or represented
\nby proxy or, in the absence of all such stockholders, any person entitled to
\npreside at or act as secretary of such meeting, shall have the power to adjourn
\nthe meeting from time to time, if the date, time and place thereof are announced
\nat the meeting at which the adjournment is taken. At any such adjourned meeting
\nat which a quorum shall be present, any business may be transacted which might
\nhave been transacted at the meeting as originally called. If the adjournment is
\nfor more than thirty days, or if after the adjournment a new record date is
\nfixed for the adjourned meeting, a notice of the adjourned meeting shall be
\ngiven to each stockholder of record entitled to vote at the meeting.<\/p>\n
SECTION 5. VOTING. (a) Except as otherwise provided by law or by
\n ——
\nthe Certificate of Incorporation or these By-Laws, at every meeting of the
\nstockholders, in the case of any written consent of stockholders, and for all
\nother purposes, each holder of record of shares of (x) Class A Common Stock, par
\nvalue $.001 per share (the “Class A Common Stock”), on the relevant record date
\nshall be entitled to one (1) vote for each share of Class A Common Stock
\nstanding in such person’s name on the stock transfer records of the Corporation,
\n(y) Class B Common Stock, par value $.001 per share (the “Class B Common
\nStock”), shall have no voting rights, and shall not be entitled to vote such
\nshares of Class B Common Stock standing in such person’s name on the stock
\ntransfer records of the Corporation on any matters, and (z) each of the Series A
\nConvertible Preferred Stock, par value $0.001 per share (the “Series A Preferred
\nStock”), and Series B Convertible Preferred Stock, par value $0.001 per share
\n(the “Series B Preferred Stock,” and, together with the Series A Preferred
\nStock, the “Preferred Stock”), shall be entitled to the number of votes equal to
\nthe number of shares of Class A Common Stock into which such shares of Preferred
\nStock could be converted.<\/p>\n
4<\/p>\n
(b) Unless otherwise provided in the Certificate of Incorporation,
\neach stockholder shall be entitled to one vote for each share of capital stock
\nheld by such stockholder. Upon the request of not less than 10% in interest of
\nthe stockholders entitled to vote at a meeting, voting shall be by written
\nballot. Unless otherwise required by law, the vote of a majority of the
\noutstanding shares, present in person or represented by proxy and entitled to
\nvote on the subject matter, at a meeting at which a quorum is present shall
\nconstitute the act of the stockholders.<\/p>\n
(c) At all meetings of the stockholders at which a quorum is present,
\nexcept as otherwise provided by law or by the Certificate of Incorporation or
\nthese By-Laws, all actions shall be decided by the affirmative vote of not less
\nthan 66-2\/3% of the total voting power of all of the issued and outstanding
\nshares of NetSelect Class A Common Stock and the Preferred Stock, voting as a
\nsingle class, at a meeting at which a quorum is present, shall be required to
\nconstitute the act of the stockholders on any actions permitted pursuant to the
\nGeneral Corporation Law of Delaware.<\/p>\n
SECTION 6. CHAIRMAN OF MEETINGS. The Chairman of the Board of
\n ——————–
\nDirectors of the Corporation, or, in his absence or disability, the Chief
\nExecutive Officer of the Corporation, shall preside at all meetings of the
\nstockholders.<\/p>\n
SECTION 7. SECRETARY OF MEETING. The Secretary of the Corporation
\n ——————–
\nshall act as Secretary at all meetings of the stockholders. In the absence or
\ndisability of the Secretary, the Chairman of the Board of Directors or the Chief
\nExecutive Officer shall appoint a person to act as Secretary at such meetings.<\/p>\n
SECTION 8. ACTION WITHOUT MEETING. Unless otherwise provided by the
\n ———————-
\nCertificate of Incorporation, any action required by law to be taken at any
\nannual or special meeting of stockholders, or any action which may be taken at
\nsuch meetings, may be taken<\/p>\n
5<\/p>\n
without a meeting, without prior notice and without a vote, if a consent or
\nconsents in writing, setting forth the action so taken, shall be signed by the
\nholders of outstanding shares having not less than the minimum number of votes
\nthat would be necessary to authorize or take such action at a meeting at which
\nall shares entitled to vote were present and voted. Every written consent shall
\nbear the date of signature of each stockholder who signs the consent. Prompt
\nnotice of the taking of the corporate action without a meeting by less than
\nunanimous written consent shall be given to those stockholders who have not
\nconsented in writing.<\/p>\n
SECTION 9. ADJOURNMENT. At any meeting of stockholders of the
\n ———–
\nCorporation, if less than a quorum be present, a majority of the stockholders
\nentitled to vote thereat, present in person or by proxy, shall have the power to
\nadjourn the meeting from time to time without notice other than announcement at
\nthe meeting until a quorum shall be present. Any business may be transacted at
\nthe adjourned meeting which might have been transacted at the meeting originally
\nnoticed. If the adjournment is for more than 30 days, or if after the
\nadjournment a new record date is fixed for the adjourned meeting, a notice of
\nthe adjourned meeting shall be given to each stockholder of record entitled to
\nvote at the meeting.<\/p>\n
ARTICLE III<\/p>\n
BOARD OF DIRECTORS
\n ——————<\/p>\n
SECTION 1. POWERS. The business and affairs of the Corporation shall
\n ——
\nbe managed by or under the direction of its Board of Directors. The Board shall
\nexercise all of the powers and duties conferred by law except as provided by the
\nCertificate of Incorporation or these By-Laws.<\/p>\n
6<\/p>\n
SECTION 2. NUMBER AND TERM. The number of directors shall be fixed
\n —————
\nat four. The Board of Directors shall be elected by the stockholders at their
\nannual meeting, and each director shall be elected to serve for the term of one
\nyear and until his successor shall be elected and qualified or until his earlier
\nresignation or removal. Directors need not be stockholders.<\/p>\n
SECTION 3. RESIGNATIONS. Any director may resign at any time. Such
\n ————
\nresignation shall be made in writing, and shall take effect at the time
\nspecified therein, and if no time is specified, at the time of its receipt by
\nthe Chief Executive Officer or Secretary. The acceptance of A resignation shall
\nnot be necessary to make it effective.<\/p>\n
SECTION 4. REMOVAL. Any director or the entire Board of Directors
\n ——-
\nmay be removed at any time by the affirmative vote of not less than 66-2\/3% of
\nthe total combined voting power of all of the issued and outstanding shares of
\nClass A Common Stock and Preferred Stock, voting as a single class.<\/p>\n
SECTION 5. MEETINGS. The newly elected directors shall hold their
\n ——–
\nfirst meeting to organize the Corporation, elect officers and transact any other
\nbusiness which may properly come before the meeting. An annual organizational
\nmeeting of the Board of Directors shall be held immediately after each annual
\nmeeting of the stockholders, or at such time and place as may be noticed for the
\nmeeting.<\/p>\n
Regular meetings of the Board may be held without notice at such
\nplaces and times as shall be determined from time to time by resolution of the
\ndirectors; provided however, that at least one regular meeting of the Board of
\n ——– ——-
\nDirectors shall be held every three months.<\/p>\n
Special meetings of the Board shall be called by the Chief Executive
\nOfficer, the Chairman or by the Secretary on the written request of any director
\nwith at least two days’ notice<\/p>\n
7<\/p>\n
to each director and shall be held at such place as may be determined by the
\ndirectors or as shall be stated in the notice of the meeting.<\/p>\n
SECTION 6. QUORUM, VOTING AND ADJOURNMENT. A majority of the total
\n ——————————
\nnumber of directors or any committee thereof shall constitute a quorum for the
\ntransaction of business. Unless otherwise required by law, the affirmative vote
\nby at least 66-2\/3 of the entire Board of Directors shall be the act of the
\nBoard of Directors. In the absence of a quorum, a majority of the directors
\npresent thereat may adjourn such meeting to another time and place. Notice of
\nsuch adjourned meeting need not be given if the time and place of such adjourned
\nmeeting are announced at the meeting so adjourned.<\/p>\n
SECTION 7. COMMITTEES. The Board of Directors may, by resolution
\n ———-
\npassed as provided in Section 6 of this Article III, designate one or more
\ncommittees, including, but not limited to, an Executive Committee and an Audit
\nCommittee, each such committee to consist of two or more of the directors of the
\nCorporation. The Board may designate one or more directors as alternate members
\nof any committee to replace any absent or disqualified member at any meeting of
\nthe committee. In the absence or disqualification of a member of a committee,
\nthe member or members present at any meeting and not disqualified from voting,
\nwhether or not he or they constitute a quorum, may unanimously appoint another
\nmember of the Board of Directors to act at the meeting in the place of any such
\nabsent or disqualified member. Any such committee, to the extent provided in
\nthe resolution of the Board, shall have and may exercise all the powers and
\nauthority of the Board of Directors in the management of the business and
\naffairs of the Corporation and may authorize the seal of the Corporation to be
\naffixed to all papers which may require it; but no such committee shall have the
\npower or authority to amend the Certificate of Incorporation, adopt an agreement
\nof merger or consolidation, recommend to the<\/p>\n
8<\/p>\n
stockholders the sale, lease, or exchange of all or substantially all of the
\nCorporation’s properties and assets, recommend to the stockholders a dissolution
\nof the Corporation or a revocation of a dissolution or to amend these By-Laws.
\nNo such committee shall have the power or authority to declare a dividend, to
\nauthorize the issuance of stock of the Corporation or to adopt a certificate of
\nownership and merger. All committees of the Board shall keep minutes of their
\nmeetings and shall report their proceedings to the Board when requested or
\nrequired by the Board.<\/p>\n
SECTION 8. ACTION WITHOUT A MEETING. Unless otherwise restricted by
\n ————————
\nthe Certificate of Incorporation, any action required or permitted to be taken
\nat any meeting of the Board of Directors or of any committee thereof may be
\ntaken without a meeting if all members of the Board or any committee thereof, as
\nthe case may be, consent thereto in writing, and the writing or writings are
\nfiled with the minutes of proceedings of the Board or such committee, as the
\ncase may be.<\/p>\n
SECTION 9. COMPENSATION. The Board of Directors shall have the
\n ————
\nauthority to fix the compensation of directors for their services. A director
\nmay also serve the Corporation in other capacities and receive compensation
\ntherefor.<\/p>\n
SECTION 10. TELEPHONIC MEETING. Unless otherwise restricted by the
\n ——————
\nCertificate of Incorporation, members of the Board, or any committee designated
\nby the Board, may participate in a meeting by means of conference telephone or
\nsimilar communications equipment in which all persons participating in the
\nmeeting can hear each other. Participation in a meeting by means of conference
\ntelephone or similar communications equipment shall constitute the presence in
\nperson at such meeting.<\/p>\n
9<\/p>\n
ARTICLE IV<\/p>\n
OFFICERS
\n ——–<\/p>\n
SECTION 1. The officers of the Corporation shall include a Chief
\nExecutive Officer, Chief Operating Officer and a Secretary, each of whom shall
\nbe elected by the Board of Directors and who shall hold office for a term of one
\nyear and until their successors are elected and qualify or until their earlier
\nresignation or removal. In addition, the Board of Directors may elect one or
\nmore Vice Presidents and a Chief Financial Officer, who shall hold their office
\nfor such terms and shall exercise such powers and perform such duties as shall
\nbe determined from time to time by the Board of Directors. The initial officers
\nshall be elected at the first meeting of the Board of Directors and, thereafter,
\nat the annual organizational meeting of the Board held after each annual meeting
\nof the stockholders. Any number of offices may be held by the same person.<\/p>\n
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may
\n ————————-
\nappoint such other officers and agents as it deems advisable, who shall hold
\ntheir respective office for such terms and shall exercise and perform such
\npowers and duties as shall be determined from time to time by the Board of
\nDirectors.<\/p>\n
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board of
\n ———————
\nDirectors shall, if present, preside at all meetings of the Board and exercise
\nand perform such other powers and duties as maybe from time to time assigned to
\nhim by the Board.<\/p>\n
SECTION 4. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
\n —————
\nshall be subject to the supervision, control and annual review of the
\nstockholders and the Board of Directors have general supervision, direction and
\ncontrol of the business and affairs of the<\/p>\n
10<\/p>\n
Corporation. The Chief Executive Officer shall preside at all meetings of the
\nstockholders of the Corporation and, in the absence of the Chairman of the
\nBoard, at all meetings of the Board.<\/p>\n
SECTION 5. CHIEF OPERATING OFFICER. Subject to such supervisory
\n ———————–
\npowers, if any, as may be given by the Board to the Chairman of the Board and
\nthe Chief Executive Officer, the Chief Operating Officer shall, subject to the
\ncontrol of the Board and the Chairman, have general supervision, direction and
\ncontrol of the business and officers of the Corporation. The Chief Operating
\nOfficer shall have such other powers and duties as may be from time to time
\nprescribed to him by the Board.<\/p>\n
SECTION 6. PRESIDENT. Subject to such supervisory powers, if any, as
\n ———
\nmay be given by the Board to the Chairman of the Board and the Chief Executive
\nOfficer, the President shall, subject to the control of the Board, have general
\nsupervision, direction and control of the business and the officers of the
\nCorporation (other than the Chairman and Chief Executive Officer). The
\nPresident shall preside at all meetings of the stockholders of the Corporation
\nin the absence of the Chairman and the Chief Executive Officer, and, in the
\nabsence of the Chairman and the Chief Executive Officer, at all meetings of the
\nBoard. The President shall have the general powers and duties of management
\nusually vested in the office of president and general manager of a corporation,
\nand shall have such other powers and duties as may be prescribed by. the Board.<\/p>\n
SECTION 7. VICE PRESIDENT. In the absence or disability of the
\n ————–
\nChairman, the Chief Executive Officer, the Chief Operating Officer and the
\nPresident, the Vice Presidents, if any, in order of their rank as fixed by the
\nBoard, or, if not ranked. the Vice President designated by the Board shall
\nperform all the duties of such officer and when so acting shall have all the
\npowers of, and be subject to all the restrictions upon, such offices. The Vice
\nPresidents<\/p>\n
11<\/p>\n
shall have such other powers and perform such other duties as from time to time
\nmay be prescribed for them respectively by the Board, the Chief Executive
\nOfficer or the President.<\/p>\n
SECTION 8. SECRETARY. The Secretary shall be the Chief
\n ———
\nAdministrative Officer of the Corporation and shall: (a) cause minutes of all
\nmeetings of the stockholders and directors to be recorded and kept; (b) cause
\nall notices required by these By-Laws or otherwise to be given properly; (c) see
\nthat the minute books, stock books, and other nonfinancial books, records and
\npapers of the Corporation are kept properly; and (d) cause all reports,
\nstatements, returns, certificates and other documents to be prepared and filed
\nwhen and as required. The Secretary shall have such further powers and perform
\nsuch other duties as prescribed from time to time by the Board.<\/p>\n
SECTION 9. CORPORATE FUNDS AND CHECKS. The funds of the Corporation
\n ————————–
\nshall be kept in such depositories as shall from time to time be prescribed by
\nthe Board of Directors. All checks or other orders for the payment of money
\nshall be signed by the Chief Executive Officer, Chairman or the Chief Operating
\nOfficer or such other person or agent as may from time to time be authorized and
\nwith such countersignature, if any, as may be required by the Board of
\nDirectors.<\/p>\n
SECTION 10. CONTRACTS AND OTHER DOCUMENTS. The Chief Executive
\n —————————–
\nOfficer, Chairman or Chief Operating Officer, or such other officer or officers
\nas may from time to time be authorized by the Board of Directors or any other
\ncommittee given specific authority in the premises by the Board of Directors
\nduring the intervals between the meetings of the Board of Directors, shall have
\npower to sign and execute on behalf of the Corporation deeds, conveyances and
\ncontracts, and any and all other documents requiring execution by the
\nCorporation.<\/p>\n
12<\/p>\n
SECTION 11. OWNERSHIP OF STOCK OF ANOTHER CORPORATION. The Chief
\n —————————————–
\nExecutive Officer, Chairman or the Chief Operating Officer, or such other
\nofficer or agent as shall be authorized by the Board of Directors, shall have
\nthe power and authority, on behalf of the Corporation, to attend and to vote at
\nany meeting of stockholders of any corporation in which the Corporation holds
\nstock and may exercise, on behalf of the Corporation, any and all of the rights
\nand powers incident to the ownership of such stock at any such meeting,
\nincluding the authority to execute and deliver proxies and consents on behalf of
\nthe Corporation.<\/p>\n
SECTION 12. DELEGATION OF DUTIES. In the absence, disability or
\n ——————–
\nrefusal of any officer to exercise and perform his duties, the Board of
\nDirectors may delegate to another officer such powers or duties.<\/p>\n
SECTION 13. RESIGNATION AND REMOVAL. Any officer of the Corporation
\n ———————–
\nmay be removed from office for or without cause at any time by the Board of
\nDirectors. Any officer may resign at any time in the same manner prescribed
\nunder Section 3 of Article III of these By-Laws.<\/p>\n
SECTION 14. VACANCIES. The Board of Directors shall have power to
\n ———
\nfill vacancies occurring in any office.<\/p>\n
ARTICLE V<\/p>\n
STOCK
\n —–<\/p>\n
SECTION 1. CERTIFICATES OF STOCK. Every holder of stock in the
\n ———————
\nCorporation shall be entitled to have a certificate signed by, or in the name of
\nthe Corporation by, the Chairman of the Board, the Chief Executive Officer, the
\nChief Operating Officer, or a Vice President and by the Secretary, certifying
\nthe number and class of shares of stock in the<\/p>\n
13<\/p>\n
Corporation owned by him. Any or all of the signatures on the certificate may be
\na facsimile. The Board of Directors shall have the power to appoint one or more
\ntransfer agents and\/or registrars for the transfer or registration of
\ncertificates of stock of any class, and may require stock certificates to be
\ncountersigned or registered by one or more of such transfer agents and\/or
\nregistrars.<\/p>\n
SECTION 2. TRANSFER OF SHARES. Shares of stock of the Corporation
\n ——————
\nshall be transferable upon its books by the holders thereof, in person or by
\ntheir duly authorized attorneys or legal representatives, upon surrender to the
\nCorporation by delivery thereof to the person in charge of the stock and
\ntransfer books and ledgers. Such certificates shall be cancelled and new
\ncertificates shall thereupon be issued. A record shall be made of each transfer.
\nWhenever any transfer of shares shall be made for collateral security, and not
\nabsolutely, it shall be so expressed in the entry of the transfer if, when the
\ncertificates are presented, both the transferor and transferee request the
\nCorporation to do so. The Board shall have power and authority to make such
\nrules and regulations as it may deem necessary or proper concerning the issue,
\ntransfer and registration of certificates for shares of stock of the
\nCorporation.<\/p>\n
SECTION 3. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. A new
\n ————————————————-
\ncertificate of stock may be issued in the place of any certificate previously
\nissued by the Corporation, alleged to have been lost, stolen -or destroyed, and
\nthe Board of Directors may, in their discretion, require the owner of such lost,
\nstolen or destroyed certificate, or his legal representative, to give the
\nCorporation a bond, in such sum as the Board may direct, not exceeding double
\nthe value of the stock, in order to indemnify the Corporation against any claims
\nthat may be made against it in connection therewith. A new certificate of stock
\nmay be issued in the place of any certificate previously issued by the
\nCorporation which<\/p>\n
14<\/p>\n
has become mutilated without the posting by the owner of any bond upon the
\nsurrender by such owner of such mutilated certificate.<\/p>\n
SECTION 4. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The stock ledger
\n ————————————-
\nshall be the only evidence as to who are the stockholders entitled to examine
\nthe stock ledger, the list required by Delaware General Corporation Law (S) 219
\nor the books of the Corporation, or to vote in person or by proxy at any meeting
\nof stockholders.<\/p>\n
SECTION 5. DIVIDENDS. Subject to the provisions of the Certificate
\n ———
\nof Incorporation, the Board of Directors may at any regular or special meeting,
\ndeclare dividends upon the stock of the Corporation either (i) out of its
\nsurplus, as defined in and computed in accordance with Delaware General
\nCorporation Law (S) 154 and (S) 244 or (ii) in case there shall be no such
\nsurplus, out of its net profits for the fiscal year in which the dividend is
\ndeclared and\/or the preceding fiscal year. Before the declaration of any
\ndividend, the Board of Directors may set apart, out of any funds of the
\nCorporation available for dividends, such sum or sums as from time to time in
\ntheir discretion may be deemed proper for working capital or as a reserve fund
\nto meet contingencies or for such other purposes as shall be deemed conducive
\nto-the interests of the Corporation.<\/p>\n
ARTICLE VI<\/p>\n
NOTICE AND WAIVER OF NOTICE
\n —————————<\/p>\n
SECTION 1. NOTICE. Whenever any written notice is required to be
\n ——
\ngiven by law, -the Certificate of Incorporation or these By-Laws, such notice,
\nif mailed, shall be deemed to be given when deposited in the United States mail,
\npostage prepaid, addressed to the person entitled to such notice at his address
\nas it appears on the books and records of the Corporation.<\/p>\n
15<\/p>\n
SECTION 2. WAIVER OF NOTICE. Whenever notice is required to be given
\n —————-
\nby law, the Certificate of Incorporation or these By-Laws, a written waiver
\nthereof signed by the person entitled to notice, whether before or after the
\ntime stated therein, shall be deemed equivalent to notice. Attendance of a
\nperson at a meeting shall constitute a waiver of notice of such meeting, except
\nwhen the person attends a meeting for the express purpose of objecting, at the
\nbeginning of the meeting, to the transaction of any business because the meeting
\nis not lawfully called or convened. Neither the business to be transacted at,
\nnor the purpose of, any meeting of the stockholders, directors, or members of a
\ncommittee of the Board need be specified in any written waiver of notice.<\/p>\n
ARTICLE VII<\/p>\n
AMENDMENT OF BY-LAWS
\n ——————–<\/p>\n
SECTION 1. AMENDMENTS. These By-Laws may be amended or repealed, or
\n ———-
\nnew By-Laws may be adopted by the affirmative vote of at least three-fifths
\n(3\/5) of the entire Board of Directors.<\/p>\n
ARTICLE VIII<\/p>\n
SECTION 1. SEAL. The seal of the Corporation shall be circular in
\n —-
\nform and shall have the name of the Corporation on the circumference and the
\njurisdiction and year of incorporation in the center.<\/p>\n
SECTION 2. FISCAL YEAR. The fiscal year of the Corporation shall
\n ————
\nend on December 31 of each year, or such other twelve consecutive months as the
\nBoard of Directors may designate.<\/p>\n
16<\/p>\n
SECTION 3. INDEMNIFICATION. Any person who was or is a party or is
\n —————
\nthreatened to be made a party to any threatened, pending or completed action,
\nsuit or proceeding, whether civil, criminal, administrative or investigative
\n(other than an action by or in the right of the Corporation), by reason of the
\nfact that he is or was a director, officer or employee of the Corporation, or is
\nor was serving at the request of the Corporation as a director, officer or
\nemployee of another corporation, partnership, joint venture, trust or other
\nenterprise, shall be indemnified by the Corporation to the fullest extent
\npermitted by law against expenses (including attorneys’ fees), judgments, fines
\nand amounts paid in settlement actually and reasonably incurred by him in
\nconnection with such action, suit or proceeding if he acted in good faith. and
\nin a manner he reasonably believed to be in or not opposed to the best interests
\nof the Corporation, and, with respect to any criminal action or proceeding, had
\nno reasonable cause to believe his conduct was unlawful. The termination of any
\naction, suit or proceeding by judgment, order, settlement, conviction or upon a
\nplea of nolo contendere or its equivalent shall not, of itself, create a
\n —- ———-
\npresumption that the person did not act in good faith and in a manner which he
\nreasonably believed to be in or not opposed to the best interests of the
\nCorporation, and, with respect to any criminal action or proceeding, had
\nreasonable cause to believe that his conduct was unlawful.<\/p>\n
The Corporation shall indemnify any person who was or is a party or is
\nthreatened to be made a party to any threatened, pending or completed action or
\nsuit by or in the right of the Corporation to procure a judgment in its favor by
\nreason of the fact that he is or was a director, officer or employee of the
\nCorporation, or is or was serving at the request of the Corporation as a
\ndirector, officer or employee of another corporation, partnership, joint
\nventure, trust or other enterprise against expenses (including attorneys’ fees)
\nactually and reasonably incurred by him in<\/p>\n
17<\/p>\n
connection with the defense or settlement of such action or suit if he acted in
\ngood faith and in a manner he reasonably believed to be in or not opposed to the
\nbest interests of the Corporation and except that no indemnification shall be
\nmade in respect of any claim, issue or matter as to which such person shall have
\nbeen adjudged to be liable to the Corporation unless. and only to the extent
\nthat the Court of Chancery of Delaware or the court in which such action or suit
\nwas brought shall determine upon application that, despite the adjudication of
\nliability but in view of all the circumstances of the case, such person is
\nfairly and reasonably entitled to indemnity for such expenses which the Court of
\nChancery of Delaware, or such other court shall deem proper.<\/p>\n
Any indemnification pursuant to this Article VIII (unless ordered by a
\ncourt) shall be made by the Corporation only as authorized in the specific case
\nupon a determination that indemnification of the director, officer or employee
\nis proper in the circumstances because he has met the applicable standard of
\nconduct set forth in this Article VIII. Such determination shall be made (i) by
\na majority vote of the directors who are not parties to such action, suit or
\nproceeding, even though less than a quorum, or (ii) if there are no such
\ndirectors, or if such directors so direct, by independent legal counsel in a
\nwritten opinion, or (iii) by the stockholders.<\/p>\n
SECTION 4. ADVANCE OF EXPENSES. Expenses (including attorneys’ fees)
\n ——————-
\nincurred by an officer, director, or employee in defending any civil, criminal,
\nadministrative or investigative action, suit or proceeding shall be paid by the
\nCorporation in advance of the final disposition of such action, suit or
\nproceeding upon receipt of an undertaking satisfactory to the Board of Directors
\nby or on behalf of such director, officer or employee to repay such amount if it
\nshall ultimately be determined that he is not entitled to be indemnified by the
\nCorporation as authorized in this Article VIII.<\/p>\n
18<\/p>\n
SECTION 5. REMEDIES NOT EXCLUSIVE. The indemnification and
\n ———————-
\nadvancement of expenses provided by this Article VIII shall not be deemed
\nexclusive of any other rights to which those seek in indemnification or
\nadvancement of expenses may be entitled under any by-law, agreement, vote of
\nstockholders or disinterested directors or otherwise, both as to action in his
\nofficial capacity and as to action in another capacity while holding such
\noffice, and shall, unless otherwise provided when authorized or ratified,
\ncontinue as to a person who has ceased to be a director, officer or employee and
\nshall inure to the benefit of the heirs, executors and administrators of such a
\nperson.<\/p>\n
SECTION 6. INSURANCE. The Corporation may purchase and maintain
\n ———
\ninsurance, at its expense, to protect itself and any director, officer or
\nemployee of the Corporation or another corporation, partnership, joint venture,
\ntrust or other enterprise against any expense, liability or loss, whether or not
\nthe Corporation would have the power to indemnify such person against such
\nexpense, liability or loss under the Delaware General Corporation Law.<\/p>\n
Date of Adoption: November 26, 1996<\/p>\n
19<\/p>\n
Exhibit F
\n ———<\/p>\n
FORM OF SUBSCRIPTION AGREEMIENT<\/p>\n
This SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of _________,
\n1996, is made by and between (the “Subscriber”), and NetSelect, Inc., a Delaware
\ncorporation (the “Corporation”).<\/p>\n
W I T N E S S E T H
\n – – – – – – – – – –<\/p>\n
WHEREAS, the capitalization of the Corporation consists of (x)
\n35,000,000 shares of NetSelect Class A Common Stock, par value $0.001 per share
\n(the “NetSelect Class A Common Stock”); (y) 10,000,000 shares of NetSelect Class
\nB Common Stock, par value $0.001 per share (the “NetSelect Class B Common
\nStock”); and (z) 5,000,000 shares of Preferred Stock, par value $0.001 per share
\n(the “Preferred Stock”), of which 1,647,059 shares of Preferred Stock have been
\ndesignated as Series A Convertible Preferred Stock (the “Series A Preferred
\nStock”), and 352,941 shares of Preferred Stock have been designated as Series B
\nConvertible Preferred Stock (the “Series B Preferred Stock”); and<\/p>\n
WHEREAS, the Subscriber desires to acquire an equity interest in the
\nCorporation, representing of the issued and outstanding shares of Series A
\nPreferred Stock, of which _______ shares (the “Initial Shares”) of Series A
\nPreferred Stock shall be purchased. by the Subscriber on the closing date of the
\ntransactions contemplated by that certain Stock and Interest Purchase Agreement,
\ndated as of the date hereof, by and among NetSelect, Inc., NetSelect, L.L.C. and
\nInfoTouch Corporation, and of which shares (the “Remaining Shares,” and together
\nwith the Initial Shares, the “Subscription Shares”) of Series A Preferred Stock
\nshall be purchased by the Subscriber on February 1, 1997, in consideration of a
\ncapital contribution by the Subscriber to the Corporation in the amount of
\n$_______.<\/p>\n
NOW, THEREFORE, in consideration of these premises, the mutual
\ncovenants and agreements contained in this Agreement, and in reliance upon the
\nrepresentations and warranties and covenants set forth herein, the Subscriber
\nhereby agrees with the Corporation as follows:<\/p>\n
SECTION 1. CAPITALIZATION OF PARTNERSHIP.
\n—————————————- <\/p>\n
1.1. “Subscriptions. The Subscriber hereby subscribes for the
\n ————-
\nSubscription Shares.<\/p>\n
1.2. Contribution of Cash. The Subscriber shall purchase from the
\n ——————–
\nCorporation, (x) on the date hereof, the Initial Shares for a cash payment in an
\namount equal to $________ (the “First Payment”) and (y) on February 1, 1997, the
\nRemaining Shares for a cash payment in an amount equal to $_______ (the ‘Second
\nPayment.’ and together with the First Payment, the ‘Contribution Amount’).<\/p>\n
1.3. The Closing. The Closing of the transactions contemplated by
\n ———–
\nSection 1.1 and Section 1.2 hereof (the “Closing”) shall take place on December
\n4, 1996 (the “Closing Date”) at the offices of Battle Fowler LLP, Park Avenue
\nTower, 75 East 55th Street, New York, New York 10022.<\/p>\n
1.4. Deliveries at the Closing.
\n ————————- <\/p>\n
(a) Deliveries at Closing the Corporation. At the Closing, the
\n ————————————-
\nCorporation shall deliver to the Subscriber the following Stock certificates
\nrepresenting the duly authorized, validly issued, fully paid and nonassessable
\nSubscription Shares.<\/p>\n
(b) Deliveries at Closing by the Subscriber. At the Closing, the
\n —————————————
\nSubscriber shall deliver by wire transfer in immediately available funds the
\nContribution Amount.<\/p>\n
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER.
\n———————————————————– <\/p>\n
2.1. The Subscriber hereby represents and warrants to, and covenants
\nwith the Corporation as follows:<\/p>\n
(i) The Subscriber is purchasing the Subscription Shares for its own
\naccount and not on behalf of any other person, group or entity, the Subscriber
\nis aware and acknowledges that the Subscription Shares have not been registered
\nunder the Securities Act of 1933, as amended (the “Securities Act”), and may not
\nbe offered or sold unless the Subscription Shares are registered under the
\nSecurities Act or an exemption from the registration requirements of the
\nSecurities Act is available;<\/p>\n
(ii) The Subscriber has had a reasonable opportunity to ask questions
\nof and receive answers from the Corporation concerning the Corporation and the
\nSubscription Shares, and all such questions, if any, have been answered to the
\nfull satisfaction of the Subscriber;<\/p>\n
(iii) No person or entity other than the Subscriber has any rights in
\nand to the Subscription Shares or any right to acquire the Subscription Shares;<\/p>\n
(iv) The Subscriber has such knowledge and expertise in financial and
\nbusiness matters that the Subscriber is capable of evaluating the merits and
\nrisks involve in an investment in the Subscription Shares; and the Subscriber is
\nfinancially able to bear the economic risk of the investment in the Subscription
\nShares, including a total loss of such investment,<\/p>\n
2<\/p>\n
(v) The Subscriber is purchasing the Subscription Shares for
\ninvestment, with no present intention of dividing or allowing others to
\nparticipate in the investment or of reselling, or otherwise participating
\ndirectly or indirectly, in a distribution of the Subscription Shares, and shall
\nnot make any sale, transfer or pledge thereof without registration under the
\nSecurities Act and any applicable securities laws of any state or unless an
\nexemption from registration is available;<\/p>\n
(vi) The Subscriber understands that the Subscription Shares are
\nbeing offered and sold to it in reliance on specific exemptions from the
\nregistration requirements of United States federal and state securities law and
\nthat the Corporation is relying upon the truth and accuracy of the
\nrepresentations, warranties, agreements, acknowledgments and understandings of
\nthe Subscriber set forth herein in order to determine the applicability of such
\nexemptions and the suitability of Subscriber to acquire the Subscription Shares;
\nand<\/p>\n
(vii) The Subscriber expressly acknowledges and agrees that the
\nCorporation is relying upon the Purchaser’s representations contained in this
\nAgreement.<\/p>\n
SECTION 3. MISCELLANEOUS.
\n———————— <\/p>\n
3.1. Fees and Ex2Snses. Except as expressly provided herein each of
\n —————–
\nthe parties hereto shall each pay all of their own costs and expenses, including
\nany and all legal and accounting fees, incident to the negotiation, execution
\nand delivery of this Agreement and the consummation of the transactions
\ncontemplated hereby whether or not such transactions shall be consummated.<\/p>\n
3.2. Counterparts. This Agreement may be executed in two or more
\n ————
\ncounterparts, all of which taken together shall constitute one instrument.<\/p>\n
3.3. Binding Effect. All of the terms of this Agreement shall be
\n ——-
\nbinding upon the respective personal representatives, heirs and successors of
\nthe parties hereto and shall inure to the benefit of and be enforceable by the
\nparties hereto and their respective personal representatives, heirs and
\nsuccessors.<\/p>\n
3.4. Assignment. Neither this Agreement nor any right or interest
\n ———-
\nhereunder may be assigned in whole or in part by any party without the prior
\nwritten consent of the other parties.<\/p>\n
3.5. Entire Agreement and Amendment. This Agreement contains the
\n ——————————
\nentire agreement between the parties hereto with respect to the subject matter
\nhereof. No change, modification, extension, termination, notice of termination,
\ndischarge, abandonment or waiver of this Agreement or any of the provisions
\nhereof, nor any representations, promise or condition relating to this
\nAgreement, shall be binding upon the parties hereto unless made in writing and
\nsigned by the parties hereto.<\/p>\n
3.6. Captions. The captions of Sections hereof are for convenience
\n ——–
\nonly and shall not control or affect the meaning or construction of any of the
\nprovisions of this Agreement.<\/p>\n
3<\/p>\n
3.7. Notices. All notices or other communications to be given or made
\n ——-
\nhereunder shall be in writing and shall be deemed given when delivered
\npersonally or mailed, by registered or certified mail, return receipt requested,
\npostage prepaid, or overnight delivery, to the parties hereto, as the case may
\nbe, at the respective addresses set forth on the signature pages hereto.<\/p>\n
3.8. Applicable Law. This Agreement shall be governed by and
\n ————–
\nconstrued in accordance with the laws of the State of Delaware as applied to
\nresidents of that State executing contracts wholly to be performed in that
\nState. The Investor hereby expressly submits to the jurisdiction of all federal
\nand state courts located in the State of Delaware and consents that any process
\nor notice of motion or other application to any of said courts or a judge
\nthereof may be served within or without such court’s jurisdiction by registered
\nmail or by personal service, provided a reasonable time for appearance is
\nallowed. The Investor also waives any claim that Delaware is an inconvenient
\nforum.<\/p>\n
4<\/p>\n
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
\nthe date and year first above written.<\/p>\n
[SUBSCRIBER]<\/p>\n
By: _______________________________
\n Name:
\n Title:<\/p>\n
NETSELECT, INC.<\/p>\n
By: _______________________________
\n Name: Stuart Wolff
\n Title: Chief Executive Officer<\/p>\n
Exhibit G
\n ———<\/p>\n
FORM OF INVESTOR REPRESENTATION LETTER<\/p>\n
__________, 1996<\/p>\n
NetSelect, Inc.
\n5655 Lindero Canyon Road Suite 106
\nWestlake Village, CA 91362<\/p>\n
Gentlemen:<\/p>\n
1. Representations and Warranties. The undersigned investor
\n ——————————
\n(“Investor” or the “undersigned”) understands that the offering of shares
\npursuant to the Subscription Agreement (as hereinafter defined) is intended to
\nbe exempt from registration under the Securities Act of 1933 as amended, and the
\nregulations thereunder (the `Securities Act”), by virtue of Section 4(2) of the
\nSecurities Act, and the undersigned hereby acknowledges, represents and warrants
\nto, and agrees with, the Corporation (as hereinafter defined) as follows:<\/p>\n
5<\/p>\n
(i) The offering hereto is being made pursuant to that Subscription
\n Agreement, dated as of the date hereof (the “Subscription
\n Agreement'”, by and between the Investor and NetSelect, Inc., a
\n Delaware corporation (the “Corporation’), pursuant to which the
\n Investor has subscribed to purchase __________ shares of the
\n Corporation’s Series A Convertible Preferred Stock, par value
\n $0.001 per share (the “Shares”). There is currently no public
\n or other market for the Corporation’s securities, and none is
\n expected to develop.<\/p>\n
(ii) The Investor and\/or the Investor’s advisor(s) has\/have had a
\n reasonable opportunity to ask questions of and receive answers
\n from a person or persons acting on behalf of the Corporation
\n concerning the Stock Purchase Agreement, and all such questions
\n have been answered to the reasonable satisfaction of the
\n Investor.<\/p>\n
(iii) The Investor is not investing in -the Corporation as a result
\n of or subsequent to any advertisement, article, notice, or
\n other communication published in any newspaper, magazine, or
\n similar media or broadcast over television or radio, or
\n presented at any seminar or meeting, or any solicitation of an
\n investment by a person other than a representative of the
\n Corporation with which the Investor had a preexisting
\n relationship, in connection with investments in securities
\n generally.<\/p>\n
(iv) The Investor has adequate means of providing for the Investor’s
\n current financial needs and contingencies, is able to bear the
\n economic risks of an investment in the Corporation for an
\n indefinite period of time, has no need for liquidity in such
\n investment, and, at the present time, could afford a complete
\n loss of such investment.<\/p>\n
(v) The Shares have not been registered under the Securities Act or
\n under the securities laws of certain states. The Investor
\n represents that the Investor is purchasing the Shares for the
\n undersigned’s own account, for investment and not with a view
\n to resale or distribution except in compliance with the
\n Securities Act. The Investor is aware that an exemption from
\n the registration requirements of the Securities Act pursuant to
\n Rule 144 promulgated thereunder is not presently available, and
\n that the Corporation has no obligation to make available an
\n exemption from the registration requirements pursuant to such
\n Rule 144 or any successor rule for resale of the Shares.<\/p>\n
(vi) The Investor acknowledges that the representations, warranties,
\n and agreements of the Investor contained herein will be relied
\n upon by the Corporation as a basis for the exemption of the
\n issuance of the Shares from the registration requirements of
\n the Securities Act and applicable<\/p>\n
6 <\/p>\n
state securities laws and shall survive the execution and
\n delivery of this Letter and the purchase of the Shares.<\/p>\n
(vii) The Investor is either (A) an “accredited investor” as such
\n term is defined in the rules promulgated under the Securities
\n Act; or (B) has such knowledge and experience in business and
\n financial matters as to be capable of evaluating the merits and
\n risks of an investment in the Shares to be received pursuant to
\n the Stock Purchase Agreement (the “Stock Purchase Shares”) and
\n has the capacity to protect its own interest in connection with
\n the acquisition of the Stock Purchase Shares.<\/p>\n
(viii) The Investor agrees not to sell, transfer or assign the Stock
\n Purchase Shares, or any interest therein (collectively,
\n “Transfer”), except pursuant to an effective registration
\n statement under the Securities Act or unless the Corporation
\n shall have received a written opinion of counsel, in form and
\n substance reasonably satisfactory to the Corporation, to the
\n effect that the Transfer may be effected without registration
\n under the Securities Act; as a further condition to any such
\n Transfer, except in the event that such Transfer is made
\n pursuant to an effective registration statement under the
\n Securities Act, if in the reasonable opinion of the
\n Corporation’s counsel any Transfer of the Stock Purchase Shares
\n by the contemplated transferee thereof would not be exempt from
\n the registration and prospectus delivery requirements of the
\n Securities Act, the Corporation may require the contemplated
\n transferee to furnish it with an investment letter,
\n substantially similar to this Letter, to insure compliance by
\n such transferee with the Securities Act.<\/p>\n
(ix) The Investor understands and agrees that the following
\n statement will be affixed as a legend on all certificates
\n representing the Stock Purchase Shares:<\/p>\n
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
\n UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND NEITHER
\n THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED,
\n SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
\n PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
\n ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER
\n SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR
\n THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY
\n SATISFACTORY TO THE ISSUER, IS AVAILABLE.<\/p>\n
7<\/p>\n
2. Binding Effect. The undersigned hereby acknowledges and agrees that
\n ————–
\nthis Letter shall survive the death or disability of the undersigned and shall
\nbe binding upon and inure to the benefit of the parties and their heirs,
\nexecutors, administrators, successors, legal representatives and permitted
\nassigns.<\/p>\n
3. Modification. Neither this Letter nor any provisions hereof shall be
\n ————
\nwaived, modified, discharged, or terminated except by an instrument in writing
\nsigned by the party against whom any such waiver, modification, discharge or
\ntermination is sought.<\/p>\n
4. Notices. Any notice or other communication required or permitted to
\n ——-
\nbe given hereunder shall be in writing and shall be mailed by certified mail,
\nreturn receipt requested, or delivered against receipt to the party to whom it
\nis to be given (a) if to the undersigned, at the address set forth above,
\nAttention: ___________; with a copy to _____________; and with a copy to Battle
\nFowler LLP, Park Avenue Tower, 75 East 55th Street, New York, New York 10022,
\nAttention: Charles H. Baker, Esq., or (b) if to the Corporation, at the address
\nset forth above; and with a copy to Battle Fowler LLP, Park Avenue Tower, 75
\nEast 55th Street, New York, New York 10022, Attention: Charles H. Baker, Esq.
\n(or, in either case, to such other address as the part), shall have furnished in
\nwriting in accordance with the provisions of this Section 4). Any notice or
\nother communication given by certified mail shall be deemed given at the time of
\ncertification thereof, except for a notice changing a party’s address which
\nshall be deemed given at the time of receipt thereof.<\/p>\n
5. Assignability. This Letter and the rights and obligations hereunder
\n ————-
\nare not transferable or assignable by the undersigned.<\/p>\n
6. Applicable Law. This Letter shall be governed by and construed in
\n ———-
\naccordance with the laws of the State of Delaware as applied to residents of
\nthat State executing contracts wholly to be performed in that State. The
\nInvestor hereby expressly submits to the jurisdiction of all federal and state
\ncourts located in the State of Delaware and consents that any process or notice
\nof motion or other application to any of said courts or a judge thereof may be
\nserved within or without such court’s jurisdiction by registered mail or by
\npersonal service, provided a reasonable time for appearance is allowed. The
\nInvestor also waives any claim that Delaware is an inconvenient forum.<\/p>\n
7. Counterparts. This Letter may be executed in two or more
\n ————
\ncounterparts, each of which shall be deemed an original, but all of which
\ntogether shall be deemed to be one and the same instrument.<\/p>\n
8<\/p>\n
IN WITNESS WHEREOF, the undersigned has executed this Agreement this
\n____ day of _________, 1996.<\/p>\n
_________________________________________
\n Signature of Investor<\/p>\n
_________________________________________
\n Social Security Number<\/p>\n
Address:<\/p>\n
ACCEPTED AND AGREED:<\/p>\n
NETSELECT,INC.<\/p>\n
By:______________________________
\n Name: Stuart Wolff, Ph.D.
\n Title: Chief Executive Officer<\/p>\n
Dated: __________, 1996<\/p>\n
9<\/p>\n
EXHIBIT H<\/p>\n
INFOTOUCH STOCKHOLDER AGREEMENT
\n ——————————-<\/p>\n
This Agreement (this “Agreement”), dated as of the th day of December
\n1996, is entered into by and between InfoTouch Corporation, a Delaware
\ncorporation (“InfoTouch”), and the undersigned, a stockholder of InfoTouch (the
\n“Stockholder” and collectively with all other stockholders of InfoTouch who sign
\na substantially identical agreement, the “Stockholders”).<\/p>\n
WHEREAS, InfoTouch has entered into that certain Stock and Interest
\nPurchase Agreement (the “Stock and Interest Purchase Agreement”), dated as of
\nNovember 26, 1996, by and among InfoTouch, NetSelect, Inc., a Delaware
\ncorporation (“NetSelect” or the “Corporation”), and NetSelect, L.L.C., a
\nDelaware limited liability company (“NS LLC”);<\/p>\n
WHEREAS, NetSelect and its stockholders, as well as InfoTouch, have
\nentered into that certain NetSelect, Inc, Stockholders Agreement, dated as of
\nNovember 26, 1996 (the “NetSelect Stockholders Agreement”), pursuant to which
\nRealtors Information Network, Inc., an Illinois corporation (“RIN”), was granted
\n(as a third party beneficiary) the right to approve certain transfers of
\nNetSelect’s capital stock (the “RIN Approval Rights”), which RIN Approval Rights
\nare substantially identical to the rights granted to RIN pursuant to Article 1
\nbelow; and<\/p>\n
WHEREAS, as an inducement and condition to NetSelect entering into the
\nStock and Interest Purchase Agreement, InfoTouch has agreed to use its best
\nefforts to cause as many stockholders of InfoTouch (but, in any event, not less
\nthan a majority in interest) to execute a form of this Agreement.<\/p>\n
NOW, THEREFORE, in consideration of the mutual covenants herein
\ncontained, it is hereby agreed as follows:<\/p>\n
ARTICLE 1<\/p>\n
RESTRICTIONS ON TRANSFER
\n ————————<\/p>\n
Section 1.1 RIN Restriction on Transfer. (a) Prior to the
\n —————————
\nStockholder making any proposed Transfer (as hereinafter defined) hereunder,
\nother than to another stockholder of InfoTouch or a Permitted Transferee (as
\ndefined below), that would result in such transferee (the “Transferee”)
\nbecoming the owner, whether of record or beneficially, of more than five percent
\n(5%) of the shares of Common Stock, par value $0.01 per share, of InfoTouch (the
\n“Shares”), the stockholder shall first obtain the written approval of RIN, which
\napproval shall not be unreasonably withheld. In seeking such approval, the
\nStockholder must identify the proposed Transferee and the number of Shares
\nproposed to be Transferred, and provide such additional publicly available
\ninformation regarding the proposed Transferee as RIN may reasonably request.
\nAny decision by RIN pursuant to this Section 1.1, whether to approve or not
\napprove<\/p>\n
10<\/p>\n
such Transfer, shall be set forth in writing and shall set forth in reasonable
\ndetail the basis of such decision; provided, however, that in the event RIN
\n ——– ——-
\nshall fail to approve or not approve such Transfer within thirty (30) days after
\nthe date of the receipt of such request, RIN shall be deemed to have approved
\nsuch Transfer. For purposes of this Agreement, “Transfer” shall mean” the
\ntransfer, pledge, sale, assignment, hypothecation, creation of a security
\ninterest in or a lien on, place in trust (voting or otherwise), or in any other
\nencumbrance or disposal, directly or indirectly, in one or more transactions.<\/p>\n
(b) Prior to making any proposed Transfer hereunder that shall result
\nin the ownership of Shares, whether of record or beneficially, by a Transferee
\nwhose primary business is “real estate related”, the Stockholder shall first
\nobtain the written approval of RIN, which approval shall not be unreasonably
\nwithheld. In seeking such approval, the Stockholder must identify the proposed
\nTransferee and the number of Shares proposed to be Transferred, and provide such
\nadditional publicly available information regarding the proposed Transferee as
\nRIN may reasonably request. Any decision by RIN pursuant to this section 1.1,
\nwhether to approve or not approve such Transfer, shall be set forth in writing
\nand shall set forth in reasonable detail the bases of such decision. For
\npurposes of this Agreement, “real estate related” shall mean any person, entity
\nor group whose primary business is comprised of real estate brokerage, real
\nestate management, mortgage financing, appraising, counseling, land development
\nand building, title insurance, escrow services, franchising, operation of an
\nassociation comprised of real estate licensees, operation of a multiple listing
\nservice, and entities that own or are owned by firms engaged in any of the
\nforegoing.<\/p>\n
(c) From and after the date of any Qualified Public offering (as such
\nterm is defined in Section 2.2 of Article 2 of this Agreement), no approval of
\nRIN pursuant to Section 1.1(a) or Section 1.1(b) hereof shall be required with
\nrespect to any Transfer made by or on behalf of the Stockholder other than a
\nTransfer made pursuant to a Long-Form Registration Statement or a Short-Form
\nRegistration Statement on a nationally recognized securities exchange or
\npursuant to an automatic quotation system, on which the Shares shall trade
\nfollowing any Qualified Public offering, such approval; right of RIN pursuant to
\nSection 1(a)and Section 1(b) hereof shall remain in full force and effect.<\/p>\n
(d) The rights granted to RIN in this Section 1.1 shall (A) cease upon
\nthe termination of that certain Operating Agreement, dated as of November 26,
\n1996, between RIN and RealSelect, Inc., a Delaware corporation (“RealSelect”),
\n(B) be suspended upon the occurrence of, and during the continuance of, the
\nbreach by the National Association of Realtors, an Illinois not-for-profit
\norganization (the “NAR”), of that certain (i) Joint Ownership Agreement, dated
\nas of November 26, 1996, between the NAR and NS LLC, or (ii) Trademark License,
\ndated as of November 26, 1996, by and between the NAR and RealSelect, (C) be
\nsuspended upon the occurrence of, and during the continuance of, the Transfer by
\nRIN of eighty percent (80%) or more of the shares of common stock, par value
\n$0.001 per share, of RealSelect (the “RealSelect Shares”) owned by RIN as of the
\nclosing of the Stock and Interest Purchase Agreement (the “Closing Date”);
\nprovided, however, that in the event that RIN shall transfer greater than eighty
\npercent (80%,) of the RealSelect Shares owned by RIN as of the Closing Date, and
\nRIN shall not, within forty-five (45) days from the date of such Transfer,
\nincrease its<\/p>\n
11<\/p>\n
its ownership in RealSelect Shares so that RIN shall own at least twenty percent
\n(20%) of the RealSelect Shares owned by RIN as of the Closing Date, RIN’s rights
\npursuant to this Section 1.1 shall terminate, and (D) be suspended upon the
\nexecution of a memorandum of understanding, letter of intent, or such other
\nbinding understanding or agreement in connection with the sale of RIN to any
\nperson, entity or group other than a member of NS LLC or a Permitted Transferee
\nof RIN; provided, however, that such right shall terminate upon the closing of
\nany such sale contemplated by such memorandum of understanding, letter of
\nintent, or such other binding understanding or agreement.<\/p>\n
(e) If at any time, the RIN Approval Rights contained in the NetSelect
\nStockholders Agreement are amended or revised in such a manner as to benefit the
\nNetSelect stockholders subject to the RIN Approval Rights, then simultaneously
\nwith such amendment or revision, the terms of this Article 1 shall be similarly
\namended or revised so that the restrictions on the Transfer of the Shares held
\nby the Stockholder are never more burdensome than the restrictions on the shares
\nof stock held by the stockholders of NetSelect.<\/p>\n
(f) A “Permitted Transferee” shall mean, with respect to the
\nStockholder:<\/p>\n
(i) the spouse of such Stockholder, any lineal descendant of a
\ngrandparent of such Stockholder, or of the spouse of such Stockholder, and any
\nspouse of such lineal descendant (which lineal descendants, their spouses, the
\nStockholder, and his or her spouse are herein collectively referred to as the
\n“Stockholder’s Family Members”);<\/p>\n
(ii) the trustee of a trust (including a voting trust) principally
\nfor the benefit of such Stockholder’s Family Members; provided, that such trust
\n ——–
\nmay also grant a general or special power of appointment to one or more of such
\nStockholder’s Family Members and may permit trust assets to be used to pay
\ntaxes, legacies and other obligations of the -trust or of the estates of one or
\nmore of such Stockholder’s Family Members payable by reason of the death of any
\nsuch Stockholder’s Family Members; in the case of a partnership or limited
\nliability company, (A) such partnership or limited liability company and any of
\nits partners (limited or general) or members, (B) the estates or legal
\nrepresentatives of any such limited partners, general partners or members, and
\n(C) any affiliated of such partnership or limited liability company; and<\/p>\n
(iv) in the case of a corporation, (A) any of its wholly-owned
\nsubsidiaries, (B) any stockholder or such corporation, or (C) any of the
\naffiliates of such corporation.<\/p>\n
Every Permitted Transferee to whom any Shares are Transferred, shall,
\nas a condition of such Transfer, execute and deliver to InfoTouch an agreement,
\nin form and substance reasonably satisfactory to InfoTouch, to be bound by this
\nAgreement.<\/p>\n
12<\/p>\n
ARTICLE 2<\/p>\n
REGISTRATION UNDER SECURITIES ACT
\n ———————————<\/p>\n
Section 2.1 Definitions. For the purposes of this Article 2, the
\n ———–
\nfollowing words shall have the meanings set forth below:<\/p>\n
(a) An “Affiliate” of any Person is any other Person which
\n ———
\ncontrols, is controlled by or is under common control with such Person.<\/p>\n
(b) “Initiating Holders” means the holders of Registrable Stock
\n ——————
\ninitially requesting registration pursuant to Section 2.2 of this Article 2.<\/p>\n
(c) “Long-Form Registration Statement” means a registration
\n ——————————–
\nstatement on Form S-1, Form S-2, Form SB-1 or Form SB-2, or any similar form of
\nregistration statement adopted by the Commission from and after the date hereof.<\/p>\n
(d) “Person” includes an individual, partnership, trust,
\n ——
\ncorporation, joint venture, association, government, government bureau or agency
\nor other entity of whatsoever kind or nature.<\/p>\n
(e) The terms “register,” “registered” and “registration” refer to
\n ——– ———- ————
\na registration effected by preparing and filing a registration statement in
\ncompliance with the Securities Act.<\/p>\n
(f) “Registrable Stock” means (x) the shares held by the
\nStockholders; and (y) any securities issued or issuable with respect to the
\nsecurities identified in clause (x) above by reason of a stock dividend or stock
\nsplit or in connection with a combination of shares, recapitalization, merger,
\nconsolidation or other reorganization.<\/p>\n
Each share of Registrable Stock shall continue to be Registrable Stock
\nin the hands of each subsequent holder thereof; provided that each share of
\n ——–
\nRegistrable Stock shall cease to be Registrable Stock when transferred to any
\nperson who is not Affiliated with a holder pursuant to a registered public
\noffering or pursuant to Rule 144 promulgated by the Commission under the
\nSecurities Act.<\/p>\n
(g) “Short-Form Registration Statement” means a registration
\n ———————————
\nstatement on Form S-3 or any similar form of registration statement adopted by
\nthe Commission from and after the date hereof.<\/p>\n
Section 2.2 Required Registrations.
\n ———————- <\/p>\n
(a) If, at any time following the date that is six months after
\nthe consummation of the Corporation’s initial Qualified Public Offering, the
\nInitiating Holders propose, pursuant to a Long-Form Registration Statement, to
\ndispose of at least 20% of the Registrable Stock then outstanding in a Qualified
\nPublic offering, then such Initiating Holders<\/p>\n
13<\/p>\n
may request the Corporation in writing to effect such registration, stating the
\nnumber of shares to be disposed of, the intended method of disposition of such
\nshares, and the anticipated offering price. The Corporation shall have the
\nabsolute right to determine the form of registration statement, and shall have
\nthe absolute right to cause the registration to be filed on a Short Form
\nRegistration Statement if the Corporation is then entitled to use a Short Form
\nRegistration Statement. A “Qualified Public Offering” shall mean a firmly
\nunderwritten, public offering pursuant to an effective registration statement
\ncovering the offer and sale of shares of Class A Common Stock, par value $0.001
\nper share (the “Class A Common Stock”) a class of equity securities of the
\nCorporation which (A) yields proceeds to the Corporation of at least $10,000,000
\n(net of underwriting discounts and commissions) and (B) would establish an
\naggregate value for the Class A Common Stock (assuming the conversion of all of
\nthe Preferred Stock and Class B Common Stock of the Corporation then convertible
\ninto such class of equity securities) outstanding immediately prior to the
\nconsummation of such offering of at least $40,000,000.<\/p>\n
(b) If, at any time when the Corporation is entitled to file a
\nregistration statement on a Short-Form Registration Statement, one or more
\nholders of Registrable Stock propose to dispose of shares of Registrable Stock
\nwhich would have an anticipated aggregate offering price of at least $1,000,000
\npursuant to a Short-Form Registration Statement, then such holders may request
\nthe Corporation in writing to effect such registration pursuant to a Short Form
\nRegistration Statement under the Securities Act, the number of shares of
\nRegistrable Stock to be disposed of, the intended method of disposition of such
\nshares of Registrable stock and the anticipated offering price.<\/p>\n
(c) Upon receipt of the request of the Initiating Holders pursuant to
\nSections 2.2(a) or 2.2(b) hereof, the Corporation shall give prompt written
\nnotice thereof to all other holders of Registrable Stock and to all other
\nholders of Shares who have the contractual right to include all or any portion
\nof their Shares in the registration. Subject to the provisions of Section 2.3
\nhereof, the Corporation shall use its best efforts promptly to effect the
\nregistration under the Securities Act of all shares of Registrable Stock
\nspecified in the requests of the Initiating Holders and the requests (stating
\nthe number of shares of Registrable Stock to be disposed of) of other holders of
\nshares of Registrable Stock (collectively, “Requesting Holders”) and other
\nholders of Shares (“Additional Requesting Holders”) given within fifteen (15)
\ndays after receipt of such notice from the Corporation.<\/p>\n
(d) Notwithstanding anything to the contrary contained in this Section
\n2.2. no Person (as defined, for these purposes, in Rule 144(a) (2) of the
\nCommission under the Securities Act) who then beneficially owns one percent (1%)
\nor less of the then outstanding shares of Registrable Stock may request (either
\nas an Initiating Holder, Requesting Holder or as an Additional Requesting
\nHolder) that any of its shares of Registrable Stock be included in any
\nregistration statement filed by the Corporation pursuant to this Section 2,2
\nunless, in the opinion of counsel for the Corporation, such Person’s intended
\ndisposition of Registrable Stock could not be effected within 90 days of the
\ndate of said opinion without registration of such shares under the Securities
\nAct (assuming, for this purpose, that if “current public information” (as
\ndefined in<\/p>\n
14<\/p>\n
Rule 144(c) of the Commission under the Securities Act) is available with
\nrespect to the Corporation as of the date of such opinion, it will remain so
\navailable for such 90-day period).<\/p>\n
Section 2.3 Limitations on Required Registrations.
\n ————————————- <\/p>\n
(a) The Corporation shall not be required to prepare and file more
\nthan two registration statements at the request of holders of Registrable Stock.
\npursuant to Section 2.2 hereof; provided, however, in no case shall the
\n ——– ——-
\ncorporation be required to file more than one Long-Form Registration Statement.<\/p>\n
(b) The registration requested by the Initiating Holders must be
\nfor a firmly underwritten offering, unless such registration shall be registered
\non Form S-3 under the Securities Act. In the event that the managing underwriter
\nadvises the Corporation in writing that the number of shares of Registrable
\nStock requested to be included exceeds the number which can be sold in such
\noffering, the Corporation shall include in such registration, prior to any
\nshares held by Additional Requesting Holders, the Registrable Stock requested to
\nbe included which in the opinion of the managing underwriters can be sold, among
\nthe Requesting Holders on the basis of the aggregate number of shares of
\nRegistrable Stock then held by each holder; provided that if any such holder
\n ——–
\nwould thus be entitled to include more shares of Registrable stock than such
\nholder requested to be registered, the excess will be allocated among the other
\nholders on the basis of the number of shares of Registrable Stock then held by
\neach holder. For purposes of making any such reduction, each Stockholder and the
\nPermitted Transferees shall be deemed to be a single “holder” of Registrable
\nStock, and any pro rata reduction with respect to such “holder” shall be based
\n — —-
\nupon the aggregate amount of Registrable Stock owned by all entities and
\nindividuals included in such “holder,” as defined in this sentence (and the
\naggregate amount so allocated to such “holder” shall be allocated among the
\nentities and individuals included in such “holder” in such manner as such
\nStockholder may reasonably determine.) If any holder of Registrable Stock
\ndisapproves of the terms of the underwriting, such Person may elect to withdraw
\ntherefrom by written notice to the Corporation, the managing underwriter and the
\nInitiating Holders. The Registrable stock so withdrawn shall also be withdrawn
\nfrom registration. Only securities which are to be included in the underwriting
\nmay be included in the registration.<\/p>\n
(c) The Corporation shall not be required to prepare and file a
\nregistration statement pursuant to Section 2.2 hereof (x) which would become
\neffective within 270 days following the effective date of a registration
\nstatement (other than a registration statement filed on Form S-8) filed by the
\nCorporation with the Commission pertaining to an underwritten public offering of
\nsecurities for cash for the account of the Corporation or its other shareholders
\nor (y) if the Corporation in good faith gives written notice to the holders of
\nRegistrable Stock that the Corporation has determined to prepare a Corporation-
\ninitiated registration statement in which, on the terms and subject to the
\nconditions of Sections 2.4 and 2.5 hereof, holders of Registrable Stock may
\nparticipate, and the Corporation is actively employing in good faith reasonable
\nefforts to cause such registration statement to he filed and thereafter to
\nbecome effective.<\/p>\n
15<\/p>\n
(d) Notwithstanding the foregoing, if the Corporation shall
\nfurnish to Initiating Holders a certificate signed by the Chief Executive
\nofficer of the Corporation stating that in the good faith judgment of the Board
\nof Directors of the Corporation it would be seriously detrimental to the
\nCorporation and its stockholders for such registration statement to be filed and
\nit is therefore essential to defer the filing of such registration statement,
\nthen the Corporation shall have the right to defer taking action with respect to
\nsuch filing for a period of not more than 90 days after receipt of the request
\nof the Initiating Holders. Additionally, if such a registration statement is
\ncurrently in effect and if the corporation shall furnish to all Prospective
\nSellers (as defined below) a certificate signed by the Chief Executive officer
\nof the Corporation stating that in the good faith judgment of the Board of
\nDirectors of the Corporation it would be seriously detrimental to the
\nCorporation and its stockholders for sales to continue under such registration
\nstatement, then the Prospective Sellers shall cease to sell the Registrable
\nStock for a period of up to 90 days following the date of the certificate of the
\nChief Executive Officer of the Corporation. The Corporation may not utilize its
\nrights contained in this Section 2.3(d) to defer or stop an offering more than
\nonce in any twelve month period.<\/p>\n
Section 2.4 Incidental Registration.
\n ———————– <\/p>\n
(a) If the Corporation at any time proposes to register on a
\nfirmly underwritten public offering basis any of its shares of Class A Common
\nStock to be offered for cash for its own account pursuant thereto (other than a
\nregistration requested pursuant to Section 2.2 hereof), it shall give written
\nnotice (the “Corporation’s Notice”), at its expense, to all holders of
\nRegistrable Stock of its intention to do so at least 15 days prior to the filing
\nof a registration statement with respect to such registration with the
\nCommission. If any holder of Registrable Stock desires to dispose of all or part
\nof such stock, it may request registration thereof in connection with the
\nCorporation’s registration by delivering to the Corporation, within ten days
\nafter receipt of the Corporation’s Notice, written notice of such request (the
\n“Holder’s Notice”) stating the number of shares of Registrable Stock to be
\ndisposed. The Corporation shall use good faith reasonable efforts to cause all
\nshares of Class A Common stock specified in the Holder’s Notice to be registered
\nunder the Securities Act so as to permit the sale or other disposition by such
\nholder or holders of the shares so registered, subject however, to the
\nlimitations set forth in Section 2.5 hereof.<\/p>\n
(b) Notwithstanding anything to the contrary contained in this
\nSection 2.4, no person (as defined, for these purposes, in Rule 144 (a) (2) of
\nthe Commission under the Securities Act) who then beneficially owns one percent
\n(it) or less of the outstanding shares of Class A Common Stock (including the
\nRegistrable Stock) may request that any of its shares of Registrable Stock be
\nincluded in any registration statement filed by the Corporation pursuant to this
\nSection 2.4 unless, in the opinion of counsel for such person, such person’s
\nintended disposition of Registrable Stock could not be effected within 90 days
\nof the date of said opinion without registration of such shares under the
\nSecurities Act (assuming, for this purpose, that if “current public information”
\n(as defined in Rule 144(c) of the Commission under the Securities Act) is
\navailable with respect to the Corporation as of the date of such opinion, it
\nwill remain so available for such 90-day period).<\/p>\n
16<\/p>\n
Section 2.5 Limitations on Incidental Registration.
\n ————————————– <\/p>\n
(a) The Corporation shall have the right to limit the aggregate
\nsize of the offering or the number of shares of to be included therein by
\nstockholders of the Registrable Stock corporation if requested to do so in good
\nfaith by the managing underwriter or agent of the offering. Only securities
\nwhich are to be included in the underwriting may be included in the
\nregistration.<\/p>\n
(b) Whenever the number of shares of Registrable Stock which may
\nbe registered pursuant to Section 2.4 is limited by the provisions of Section
\n2.5(a) hereof, the Corporation will include in such registration, (i) first, the
\nsecurities the Corporation proposes to sell, and (ii) second, the securities
\nrequested to be sold pro rata among the holders of Registrable Stock and all
\n — —-
\nother stockholders of the Corporation who have the contractual right to include
\nall or a portion of their Shares in the registration allocated on the basis of
\nthe number of Shares owned by each such holder; provided, that, if, at level
\n ——–
\n(ii) above, any such holder would thus be entitled to include more Shares than
\nsuch holder requested to be registered, the excess will be allocated among the
\nother requesting holders pro rata based upon the number of Shares owned by such
\n — —-
\nholders of Registrable Stock and other stockholders. For purposes of making any
\nsuch reduction, each Stockholder and the Permitted Transferees shall be deemed
\nto be a single “holder” of Registrable Stock, and any pro rata reduction with
\n — —-
\nrespect to such “holder” shall be based upon the aggregate amount of Registrable
\nStock owned by all entities and individuals included in such “holder,” as
\ndefined in this sentence (and the aggregate amount so allocated to such “holder”
\nshall be allocated among the entities and individuals included in such “holder”
\nin such manner as such Stockholder may reasonably determine.)<\/p>\n
(c) The Corporation shall not grant any Person registration rights
\nwhich shall have priority over the registration rights granted to the
\nStockholders by this Agreement, but may grant pari passu rights to additional
\n —- —–
\npurchasers of the Corporation’s securities.<\/p>\n
(d) Notwithstanding anything to the contrary contained in this
\nArticle 2, the Corporation may decide, in its sole and absolute discretion, not
\nto proceed with or to discontinue any registration commenced or proposed to be
\ncommenced under Section 2.4 hereof.<\/p>\n
Section 2.6 Designation of Underwriter. In the case of any registration
\n ————————–
\ninitiated by the holders of Registrable Stock pursuant to the provisions of
\nSection 2.2 hereof which is proposed to be effected pursuant to a firm
\ncommitment underwriting, the Corporation shall have the right to designate the
\nmanaging underwriter (which underwriter shall be acceptable to the Initiating
\nHolders), and all holders of Registrable Stock participating in the registration
\nshall sell their shares of- Registrable Stock only pursuant to such
\nunderwriting.<\/p>\n
Section 2.7 Registration Procedures.
\n ———————– <\/p>\n
(a) If and when the Corporation is required by the provisions of
\nthis Agreement to use its best efforts to effect the registration of shares of
\nRegistrable Stock, the Corporation shall:<\/p>\n
17<\/p>\n
(i) prepare and file with the Commission a registration
\nstatement with respect to such shares and use its best efforts to cause such
\nregistration statement to become and remain effective as provided herein;<\/p>\n
(ii) prepare and file with the Commission such amendments and
\nsupplements to such registration statement and the prospectuses used in
\nconnection therewith as may be necessary to keep such registration statement
\neffective and current for a period equal to the earlier of (x) 180 days from its
\neffective date or (y) until such time as the shares of Registrable Stock shall
\nhave been sold (or for such additional period as such registration is suspended
\npursuant to Section 2,3(d) hereof or pursuant to Section 2.7(c) hereof) and to
\ncomply with the provisions of the Securities Act with respect to the sale or
\nother disposition of all shares covered by such registration statement,
\nincluding such amendments and supplements as may be necessary for a period equal
\nto the earlier of (x) 180 days from its effective date or (y) until such time as
\nthe shares of Registrable Stock shall have been sold (or for such additional
\nperiod as such registration is suspended pursuant to Section 2.3(d) hereof or
\npursuant to Section 2.7(c) hereof) to reflect the intended method of disposition
\nfrom time to time of the holder or holders of Registrable Stock of the
\nCorporation who have requested that any of their shares be sold or otherwise
\ndisposed of in connection with the registration (the “Prospective Sellers”);<\/p>\n
(iii) furnish to each Prospective Seller such number of copies of
\neach prospectus, including preliminary prospectuses, in conformity with the
\nrequirements of the Securities Act, and such other documents, as the’
\nProspective Seller may reasonably request in order to facilitate the public sale
\nor other disposition of the shares of Registrable Stock owned by it;<\/p>\n
(iv) if requested by a Prospective Seller, use its best efforts
\nto register or qualify the shares of Registrable Stock covered by such
\nregistration statement under the securities or blue sky laws of California,
\nIllinois, Nebraska and New York ;<\/p>\n
(v) furnish to each Prospective Seller a copy of a “comfort”
\nletter addressed to the Corporation and the underwriter, if any, of the
\nProspective Sellers, signed by the independent public accountants who have.
\ncertified the Corporation’s financial statements included in the registration
\nstatement; covering substantially the same matters with respect to the
\nregistration statement (and the prospectus included therein) and (in the case of
\nthe accountants’ letter) with respect to the events subsequent to the date of
\nthe financial statements, as are customarily covered (at the time Of such
\nregistration) in accountants’ letters delivered to the underwriters in
\nconnection with underwritten public offerings of securities;<\/p>\n
(vi) cause all such Registrable Stock to be listed on each
\nsecurities exchange on which similar securities issued by the Corporation are
\nthen listed;<\/p>\n
(vii) provide a transfer agent and registrar for all shares of
\nRegistrable Stock not later than the effective date of such registration
\nstatement;<\/p>\n
18<\/p>\n
(viii) enter into such customary agreements (including an
\nunderwriting agreement in customary form) and take all such other customary.
\nactions as the holders of a majority of the Registrable Stock being sold may
\nreasonably request in order to expedite or facilitate the disposition of
\nRegistrable Stock; and<\/p>\n
(ix) make available for inspection by any underwriter
\nparticipating in any Prospective Seller, any underwriter participating in any
\ndisposition pursuant to such registration statement, and any attorney,
\naccountant or other agent retained by any such Prospective Seller or
\nunderwriter, all financial and other records, pertinent corporate documents and
\nproperties of the Corporation, and cause the Corporation’s officers, directors
\nand employees to supply all information reasonably requested by any such seller,
\nunderwriter attorney accountant or agent in connection with the preparation of
\nsuch registration statement.<\/p>\n
(b) Each Prospective Seller of Registrable stock shall furnish to the
\nCorporation in writing such information as the Corporation may reasonably
\nrequire from the Prospective Seller for inclusion in the registration statement
\n(and the prospectus included therein).<\/p>\n
(c) The Prospective Sellers shall not (until further notice) effect
\nsales of the shares of Registrable Stock covered by the registration statement
\nafter receipt of telegraphic or written notice from the corporation to suspend
\nsales to permit the Corporation to correct or update a registration statement or
\nprospectus.<\/p>\n
Section 2. 8 Expenses of Registration. All expenses incurred in
\n ————————
\neffecting any registration requested pursuant to Section 2.2 or Section 2.4
\nhereof, including, without limitation, all registration and filing fees,
\nprinting expenses of compliance with blue sky laws, fees and disbursements of
\ncounsel for the Corporation, and expenses of any audits incidental to or
\nrequired by any each registration (“Registration Expenses”) shall 3.3. be borne
\nby the corporation; provided that each Prospective Seller shall bear its own
\n ——–
\nlegal expenses (if it retains separate counsel) and all underwriting discounts
\nor brokerage fees or commissions relating to the sale of its Registrable Stock.<\/p>\n
Section 2.9 Indemnification and Contribution. (a) The Corporation
\n ——————————–
\nshall indemnify each Stockholder who sells Registrable Stock in a registration
\n(“Selling Stockholder”) (and each person, if any, who controls such Selling
\nStockholder) against all claims, losses, damages, expenses and liabilities
\narising out of or based on any untrue statement (or alleged untrue statement) of
\na material fact contained in any prospectus, offering circular or other document
\nincident to the offering, or any omission (or alleged omission) to state a
\nmaterial fact required to be stated or necessary to make the statements
\ncontained in any such document not misleading, or any violation by the
\nCorporation of any rule or regulation promulgated under the Securities Act
\napplicable to the Corporation, and shall reimburse such selling Stockholder (and
\neach person, if any, who controls such Selling Stockholder) for any legal and
\nany other expenses reasonably incurred in connection with investigating or
\ndefending any such claim, loss, damage, liability or action; provided, however,
\n ——– ——-
\nthat the Corporation shall not be liable to the extent that any claim, loss,
\ndamage, expense or liability arises out of or is based on any untrue statement
\nor<\/p>\n
19<\/p>\n
omission based upon written information furnished to the Corporation by such
\nSelling Stockholder specifically for use in such document.<\/p>\n
(b) Each Selling Stockholder shall indemnify the Corporation
\nand its officers and directors against all claims, losses, damages, expenses and
\nliabilities arising out of or based on any untrue statement (or alleged untrue
\nstatement) of a material fact contained in any prospectus, offering circular or
\nother document incident to the offering or any omission (or alleged omission) to
\nstate a material fact required to be stated or necessary to make the statements
\ncontained in any such document not misleading, and shall reimburse the
\nCorporation and its officers and directors for any legal and any other expenses
\nreasonably incurred in connection with investigating, or defending any such
\nclaim, loss, damage, expense, liability or action; provided, however, that such
\n ——– ——-
\nstatement or omission was made in reliance upon and in conformity with
\ninformation furnished to the corporation in -writing by such Selling Stockholder
\nspecifically for use in such document, In no event shall the liability of a
\nSelling Stockholder exceed the net amount received by such Selling Stockholder
\nupon the sale of Registrable Stock pursuant to such registration.<\/p>\n
(c) If the indemnification provided for in this Section 2.9 is
\nunavailable to an indemnified party in respect of any claims, losses, damages,
\nexpenses or liabilities referred to herein, then each applicable indemnifying
\nparty, in lieu of indemnifying such indemnified party, shall contribute to the
\namount paid or payable by such indemnified party as a result of such claims,
\nlosses, damages, expenses or liabilities in such proportion as is appropriate to
\nreflect the relative fault of the Corporation, on the one hand, and the Selling
\nStockholder, on the other hand, in connection with the statements or omissions
\nwhich resulted in such claims, losses, damages, expenses or liabilities, as well
\nas any other relative equitable considerations. The relative fault of the
\nCorporation, on the one hand, and of such Selling Stockholder, on the other
\nhand, shall be determined by reference to, among other things, whether the
\nuntrue or alleged untrue statement of a material fact or the omission or alleged
\nomission to state a material fact relates to information supplied by the
\nCorporation, on the one hand, or by such Selling Stockholder, on the other hand,
\nand the party’s relative intent, knowledge, access to information and
\nopportunity to correct or prevent such statement or omission. The amount paid or
\npayable by a party as a result of the claims, losses, damages, expenses and
\nliabilities referred to above shall be deemed to include any legal or other fees
\nor expenses reasonably incurred by such party in connection with investigating
\nor defending any such action or claim. The Corporation and Stockholders agree
\nthat it would not be just and equitable if contribution pursuant to this Section
\n2.9(c) were determined by pro rata allocation or by any other method of
\n — —-
\nallocation that does not take account of the equitable considerations referred.
\nto above. Notwithstanding the provisions of this Section 2.9(c), no Selling
\nStockholder shall be required to contribute any amount in excess of the amount
\nby which the net price at which the shares of Registrable Stock sold by such
\nselling Stockholder and distributed to the public or offered to the public
\nexceeds the amount of any damages which such Selling Stockholder has otherwise
\nbeen required to pay by reason of such untrue or alleged untrue statement or
\nomission or alleged commission. No person guilty of fraudulent misrepresentation
\n(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
\ncontribution from any person who is not guilty of such fraudulent
\nmisrepresentation.<\/p>\n
20<\/p>\n
Section 2.10. If at any time, the registration rights contained in the
\nNetSelect Stockholders Agreement are amended or revised in such a manner as to
\nbenefit the NetSelect stockholders, the simultaneously with such amendment or
\nrevision, the terms of this Article 2 shall be similarly amended or revised so
\nthat the Stockholders are-similarly benefited.<\/p>\n
Section 2.11 In the event that any of the provisions regarding
\nregistration rights set forth in this Agreement are not consistent with any of
\nthe provisions regarding registration rights in the NetSelect Stockholders
\nAgreement the provisions of the NetSelect Stockholders Agreement shall be deemed
\nto supersede the provisions set forth herein and shall govern the rights of the
\nStockholders hereunder.<\/p>\n
ARTICLE 3<\/p>\n
MISCELLANEOUS
\n ————-<\/p>\n
Section 3.1 Legend. All certificates representing the issued and
\n ——
\noutstanding Shares of the capital stock of InfoTouch shall bear the following
\nlegend:<\/p>\n
The shares represented by this Certificate are subject to the terms
\n of a Stockholder Agreement, dated December ___, 1996, by and
\n between InfoTouch and the Stockholder, a copy of which is on file
\n in the principal office of InfoTouch,<\/p>\n
Such endorsement shall not affect the rights of Stockholder to vote the Shares
\nand receive dividends thereon. Following any termination of this Agreement,
\nStockholder may have any legend referring to the existence of this Agreement
\nremoved from any certificates representing such Stockholder’s Shares.<\/p>\n
Section 3.2 Third Party Beneficiary. No provision of this
\n ———————–
\nAgreement, other than Article 1, is intended to confer upon any person other
\nthan the parties hereto any rights or remedies hereunder.<\/p>\n
Section 3.3 Further. Documents. The parties hereto shall execute
\n ——- ———
\nand deliver any and all documents or legal instruments necessary or desirable to
\ncarry out the provisions of this Agreement.<\/p>\n
Section 3.4 Binding Agreement. This Agreement shall be binding
\n —————–
\nupon the Stockholders and the Corporation, and their respective successors and
\nassigns.<\/p>\n
Section .3.5 Governing Law. This Agreement shall be governed by
\nthe laws of the State of Delaware except for those provisions governing conflict
\nof laws, notwithstanding that one or more of the parties to this Agreement is
\nnow, or may hereafter become, a resident or citizen of a different State.<\/p>\n
21<\/p>\n
Section 3.6 Amendment. This Agreement may be amended or altered
\n ———
\nin any provision, but any such change shall become effective only if, when and
\nto the extent it is reduced to a writing signed by the Stockholders and
\nInfoTouch.<\/p>\n
Section 3.7 Notices. All notices, requests, demands and other
\n ——-
\ncommunications made hereunder shall be in writing and shall be deemed duly given
\nwhen delivered personally against receipt, sent by facsimile, delivered by
\nrecognized overnight delivery service (i.e., Federal Express, Airborne or UPS),
\nor on the third day after deposit with the post offic6lby registered or
\ncertified mail, postage prepaid and return receipt requested, as follows, or to
\nsuch other address or person as a party may hereafter designate by notice to the
\nother party:<\/p>\n
If to the Stockholder, to:<\/p>\n
the address set forth on the
\n signature page hereto<\/p>\n
If to InfoTouch to:<\/p>\n
InfoTouch Corporation
\n 56SS Lindero Canyon Rd., Ste. 106
\n Los Angeles, California 91362
\n Attention: President<\/p>\n
Section 3.8 No Continuing Waiver. No waiver of any default or
\n ——————–
\nbreach of this Agreement shall be determined a continuing waiver or a waiver of
\nany other breach or default hereunder.<\/p>\n
Section 3.9 Severability. The invalidity or unenforceability of
\n ————
\nany particular provision of this Agreement shall not affect-the other provisions
\nhereof, and this Agreement shall be construed, in all respects, as though such –
\ninvalid or unenforceable provisions were omitted.<\/p>\n
Section 3.10 Counterparts. This Agreement may be executed in any
\n ————
\nnumber of counterparts, each of will shall be deemed an original, but all of
\nwhich together shall constitute one and the same instrument.<\/p>\n
22<\/p>\n
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
\nof the date first above written.<\/p>\n
INFOTOUCH CORPORATION<\/p>\n
By:____________________________
\n Name:
\n Title:<\/p>\n
_______________________________
\n Stockholder<\/p>\n
Address:<\/p>\n
_______________________________
\n _______________________________
\n _______________________________<\/p>\n
23<\/p>\n
STOCK AND INTEREST PURCHASE AGREEMENT
\n Schedules 4.1, 4.2, 4.3, 4.4 and
\n General Representations and Warranties of InfoTouch Corporation<\/p>\n
THE EXCEPTIONS TO THE REPRESENTATIONS AND WARRANTIES OF INFOTOUCH CORPORATION
\n(“THE COMPANY”) MADE PURSUANT TO ARTICLE IV OF THE STOCK AND INTEREST PURCHASE
\nAGREEMENT DATED AS OF NOVEMBER 26,1996 BY AND AMONG NETSELECT, INC., NETSELECT,
\nL.L.C., AND INFOTOUCH CORPORATION ARE SET FORTH UNDER THE SECTION NUMBER OF THE
\nREPRESENTATION TO WHICH IT MOST DIRECTLY RELATES BUT SHOULD BE READ AS A
\nDISCLOSURE APPLICABLE TO, AND IS DISCLOSED AS AN EXCEPTION TO, ALL OTHER
\nREPRESENTATIONS TO WHICH ITS PLAIN LANGUAGE REASONABLY RELATES, ADDITIONALLY,
\nTHE SUMMARIES OF ANY CONTRACTS OR AGREEMENTS LISTED BELOW ARE NOT COMPLETE AND
\nARE FOR DISCLOSURE PURPOSES ONLY, SUCH SUMMARIES ARE SUBJECT IN THEM ENTIRETY TO
\nTHE FULL TEXT OF THE APPROPRIATE CONTRACT OR AGREEMENT WHICH HAS BEEN PROVIDED
\nTO NETSELECT, INC.<\/p>\n
SCHEDULE 4.1 Organization; Etc:
\n —————– <\/p>\n
On November 15, 1996, the Company filed its 1994 and 1995 State of Delaware
\nAnnual Franchise Tax Reports and paid taxes, filing fees, interest and penalties
\ntotaling $1,495.96. Also on November 15, 1996, the Company filed a Certificate
\nFor Renewal and Revival of Charter. On November 20, 1996, the Company was
\nnotified by the State of Delaware that it has been reinstated as a corporation
\nin good standing.<\/p>\n
SCHEDULE 4.2 Capitalization
\n ————–<\/p>\n
The authorized and outstanding capital stock of InfoTouch Corporation as of
\nclosing is summarized as follows:<\/p>\n
\n\n Pre-closing Post-closing
\nType Authorized Outstanding Outstanding
\n—- ———- ———– ———–
\n
\nCommon Stock 5,000,000 1,281,147 3,809,239
\nSeries A Convertible Preferred Stock 400,000 398,000 0
\nSeries B Convertible Preferred Stock 200,000 200,000 0
\nUndesignated Preferred Stock 400,000 0 0
\n1994 Stock Incentive Plan options 1,000,000 721,072 721,072
\nWarrants to purchase shares
\n of Common Stock 32,500 32,500 32,500
\n<\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n 24 <\/p>\n
The issued and outstanding capital stock is owned by, and in the amounts set
\nforth opposite, the stockholders of’ InfoTouch listed on EXHIBIT 4.2 as of
\nNovember 26, 1996 attached to this Schedule.<\/p>\n
The Purchase Agreement Series A Convertible Preferred Stock and the Purchase
\nAgreement Series B Convertible Preferred Stock contain various rights and
\nconversion provisions. Refer to attached form of Purchase Agreement Series A
\nConvertible Preferred Stock and Purchase Agreement Series B Convertible
\nPreferred Stock.<\/p>\n
On November 8, 1996, the Company’s Board of Directors approved the conversion of
\nthe loans and cancellation of the warrants outstanding into the equivalent
\nnumber of shares of the Company’s common stock at the $28,777,771 Post Money
\n —————————–
\nvaluation the NetSelect Capitalization Table dated November 25, 1996 to be
\n———————— ——————————————–
\neffected within 15 days after the effective date of the transaction (estimated
\nto be 83,327 InfoTouch shares).<\/p>\n
On November 8, 1996, the Company’s Board of Directors approved the acceleration
\nof all vesting provisions of all outstanding options of the Company totaling
\n597,072 shares.<\/p>\n
On December 2, 1996 the Company’s Board of Directors approved the issuance of
\n124,000 options to two key employees of InfoTouch who will also become employees
\nof RealSelect, Inc.<\/p>\n
Effective November 4, 1996, the Company entered into a Loan agreement with
\nMichael Flattery for $150,000. See attached Loan Agreement. The loan from Mr.
\nFlattery is intended to be converted into equity at $28,777,771 Post Money
\n ————————-
\nvaluation per the NetSelect Capitalization Table dated November 25, 1996
\n————————————————————————
\npursuant to the transaction.<\/p>\n
Effective November 22, 1996, the Series A Convertible Preferred Stock and Series
\nB Convertible Preferred Stock stockholders elected to convert all of the shares
\nof Series A Convertible Preferred Stock and Series B Convertible Preferred Stock
\ninto shares of Common Stock, par value $.01 per share pursuant to the terms as
\nset forth in the Certificate of Incorporation of Infotouch Corporation and the
\nPurchase Agreement Series A Convertible Preferred Stock and Purchase Agreement
\nSeries B Convertible Preferred Stock, such election contingent upon the closure
\nof the transaction described in the Company’s letter dated November 21, 1996.<\/p>\n
Effective November 12, 1996, Michael S. Luther entered into the Third Extension
\nand Security Agreement by and among Michael S. Luther, Dr. Anil K. Agarwal and
\nSecurity Escrow Co. (“Escrow Agent”) pursuant to which Mr. Luther has granted a
\nsecurity interest in 400,000 shares of InfoTouch Stock owned by him (on an as
\nconverted basis).<\/p>\n
Effective November 4, 1996, Michael S. Luther transferred 157,000 shares of his
\nstock to KL LLC.<\/p>\n
Effective October 23, 1996, Michael S. Luther sold 23,267.33 shares of Series B
\nConvertible Preferred Stock to Daniel A. Koch.<\/p>\n
25<\/p>\n
By letter dated March 31, 1994, InfoTouch Corporation agreed that in the event
\nthat any taxing authority claims for any reason whatsoever, including any defect
\nin the content of filing of the Section 83(b) election, that the fair market
\nvalue of the shares issued to the named individuals is in excess of $.34 per
\nshare, InfoTouch will indemnify and hold harmless with respect to any and all
\nadditional taxes, interest and penalties resulting from that determination
\nprovided that the named individuals agree to several items.<\/p>\n
In addition, InfoTouch has provided copies of the following documents:<\/p>\n
Form of summary and detail of equity
\n Form of 1994 Stock Incentive Plan
\n Form of Common Stock Purchase Agreement
\n Form of Purchase Agreement Series A Convertible Preferred Stock
\n Form of Purchase Agreement Series B Convertible Preferred Stock
\n Form of Loan Agreement with Michael Flannery
\n Form of November 21, 1996 Letter to Stockholders and Vote Ledger
\n Form of Michael S. Luther Third Extension and Security Agreement by and
\n among
\n Michael Luther, Dr. Anil K. Agarwal and Security Escrow Co.
\n Form of memorandum from Michael S. Luther to William A. Spazante
\n Form of Legal Opinion and Investment Intent Letter
\n Form of March 31, 1994 Section 83(b) elections and letters<\/p>\n
SCHEDULE 4.3 Consents and Approvals: No Violations (SECTION 4.4)
\n —————————————————<\/p>\n
On November 15, 1996, the Company filed its 1994 and 1995 State of Delaware
\nAnnual Franchise Tax Report and paid taxes, filing fees, interest and penalties
\ntotaling $1,495.96. Also on November 15, 1996, the Company riled a Certificate
\nFor Renewal and Revival of Charter. On November 20, 1096, the Company was
\nnotified by the State of Delaware that it has been reinstated as a corporation
\nin good standing.<\/p>\n
In connection with a loan and security agreement by and between the Company and
\nRichard Janssen, dated August 23, 1994, the Company granted Mr. Janssen a
\ncontinuing security interest in all of the Company’s current and future computer
\nand office equipment, including those used in the HomeSelect kiosk, but
\nexcluding the Gateway personal computers in the kiosks, which are subject to
\npre-existing lease agreements. The Company has agreed not to encumber, assign
\nor transfer the collateral without prior written permission of Mr. Janssen.
\nRefer to attached Loan and Security Agreement between Richard R. Janssen and
\nInfoTouch Corporation.<\/p>\n
In 1994, the Company entered into leasing arrangements for Gateway computers
\nused in the Company’s business. The lease are with AT&T Capital Leasing for 10
\nP-5-66 Best Buy Gateway 2000 Computers and with Finova for 32 P-5-66 Best Buy
\nGateway 2000 Computers. Monthly payments, including interest, total $4,160 and
\nthe terms of each lease provide for a bargain purchase option of at the end of
\nthe lease term. Both computer leases are completed ill early April 1997 and are
\nrecorded as liabilities in the Company’s balance sheet as of September 30, 1996.
\nRefer to attached leases.<\/p>\n
26<\/p>\n
The Company entered into a lease with Greenbrier Properties (“Landlord”) dated
\nJuly 12, 1996 (signed by the Company August 19, 1996 and by Greenbrier on
\nSeptember 25, 1996) for certain office space at 5655 Lindero Canyon Road, Suite
\n121, Westlake Village, California 91362. The agreement calls for a term of four
\nyears commencing on the first day of November 1996 or upon completion of
\nconstruction of leasehold improvements. Under the terms of the new lease, die
\nmonthly rent is $8,048 per month, with cost of living adjustments on the first
\nday of each new lease year tied to the local Consumer Price Index, with each
\nincrease to be no greater than 5% annually. Other significant terms and
\n——–
\nconditions apply, including, but not limited to early termination clauses and
\nleasehold improvements. Refer to attached lease for full and complete terms and
\nconditions.<\/p>\n
Attached find copies of the following corporate governance documents:
\nCertificate of Incorporation
\nCertificate of Amendment of Certificate of Incorporation (3\/94)
\nCertificate of Amendment of Certificate of Incorporation (9\/94)
\nCertificate of Designation of Preferences, Rights and Restrictions (9\/94)
\nBylaws
\nBoard of Directors and Stockholder Minutes and Written Consents since inception<\/p>\n
State of Delaware Certificate of Good Standing
\nState of Delaware Certificate of Renewal
\nState of California Certificate of Qualification
\nStatement and Designation by Foreign Corporation
\nState Board of Equalization Sellers Permit
\nCity of San Diego Business Application<\/p>\n
SCHEDULE 4.4(b) Intellectual Property (SECTION 4.5)
\n ———————————–<\/p>\n
Refer to Section 1.3 of the STOCK AND INTEREST PURCHASE AGREEMENT Dated as of
\nNovember 26,1996 by and among NETSELECT, INC., NETSELECT L.L.C. AND INFOTOUCH
\nCORPORATION.<\/p>\n
GENERAL<\/p>\n
NetSelect, NetSelect LLC, CDW Internet, L.L.C., J.H. Whitney, Allen & Co. and
\nany and all other parties to this Agreement have had, during the course of this
\ntransaction the opportunity to ask questions of, and receive answers from,
\nInfoTouch and its management concerning the Company and its operations.<\/p>\n
The following are material contracts and supplemental disclosures to the Stock
\nand Interest Purchase Agreement dated as of November 26, 1996 by and among
\nNetSelect Inc., NetSelect LLC and lnfoTouch Corporation..<\/p>\n
27<\/p>\n
The Company has entered into a lease with PS Partners V, Ltd., (“Landlord”) on
\nJanuary 31, 1995 for certain office space at 316O Camino del Rio South, Suites
\nB301-303-305, San Diego, California 92108 under terms of a lease which runs
\nthrough January 31, 1997, with monthly payments of $2,426. Refer to lease for
\nfull and complete terms and conditions.<\/p>\n
In 1994, the Company entered into leasing arrangements for Gateway computers
\nused in the Company’s business. The leases are with AT&T Capital Leasing for 10
\nP-5-66 Best Buy Gateway 2000 Computers and with Finova for 32 P-5-66 Best Buy
\nGateway 2000 Computers. Monthly payments, including interest, total $4,160 and
\nthe terms of each lease provide for a bargain purchase option of $1 at the end
\nof the lease term. Both computer leases are completed in early April 1997 and
\nare recorded as liabilities in the Company’s balance sheet as of September 30,
\n1996. Refer to leases.<\/p>\n
In connection with a loan and security agreement by and between the Company and
\nRichard Janssen, dated August 23, 1994, the Company granted Mr. Janssen a
\ncontinuing security interest in all of the Company’s current and future computer
\nand office equipment, including those used in the HomeSelect kiosk, but
\nexcluding the Gateway personal computers in the kiosks, which are subject to
\npre-existing lease agreements. The Company has agreed not to encumber. assign
\nor transfer the collateral without prior written permission of Mr. Janssen.
\nRefer to Loan and Security Agreement between Richard R. Janssen and InfoTouch
\nCorporation.<\/p>\n
Refer to copies of the Company’s Federal income tax and California Franchise tax
\n returns:<\/p>\n
Form 1120 U.S. Corporation Income Tax Return 1995 and related returns and\/or
\n schedules
\nForm 100 Califomia Corporation Franchise or Income Tax Return 1995 anti related
\n returns and\/or schedules
\nForm 1120S U.S. Income Corporation Income Tax Return 1994 and related returns
\n and\/or schedules
\nForm 100S California Corporation Franchise or Income Tax Return 1994 and related
\n returns and\/or schedules
\nForm 1120S U.S. Income Tax Return for an S Corporation 1994
\nForm 100S California S Corporation Franchise or Income Tax Return
\nForm 100S U.S. Income Tax Return for an S Corporation 1994
\nForm 100S Califomia S Corporation Franchise or Income Tax Return
\nState of Delaware 1995 Annual Franchise Tax Report
\nState of Delaware 1994 Annual Franchise Tax Report
\nState of Delaware Certificate for Renewal and Revival of Charter<\/p>\n
Copies of Sales, Local and District Sales & Use Tax Returns<\/p>\n
Copies of Property tax returns<\/p>\n
October 31, 1996 Unaudited Financial Statements of lnfotouch Corporation.<\/p>\n
28<\/p>\n
The Company extends offers of employment in the normal course of its business.
\nRefer to employee offer letters, as well as an offer letter to a current
\nemployee or the REALTORS Information Network, Mr. Perry Morton.<\/p>\n
The Company has a line of credit card processing with Bank One for $20,000 dated
\nJuly 23,1996. The line of credit has a 15%, interest rate, with monthly
\nprincipal due of 2.5% of the amount borrowed Company has $95 outstanding as. it
\nwas charged a annual fee of $95.<\/p>\n
The Company has entered into a credit card processing arrangement with Union
\nBank in which all Mastercard and Visa credit cards processed are charged a
\nprocessing fee of 2.9% and American Express 3.25%. The Company’s President has
\nguaranteed chargebacks of credit card charges to the Company’s account in the
\nevent the Company fails to pay the chargebacks.<\/p>\n
GNN\/Webcrawler advertising contracts for REALTOR.COM dated October 18, 1996 and
\nOctober 17, 1996, for Internet advertising.<\/p>\n
Distribution and Web Site Development Agreement entered into as of February 1,
\n1996 between REALTORS Information Network and Infotouch Corporation<\/p>\n
Initial Development Contract between Union Tribune Publishing Co. and InfoTouch
\ndated March 29, 1996<\/p>\n
Kiosk contract: Longs dated March 3. 1994<\/p>\n
Kiosk contract: Naval installations dated various 1994<\/p>\n
Kiosk contract: Sandicor dated December 22, 1993<\/p>\n
Kiosk contract: Prudential dated July 1, 1995<\/p>\n
Kiosk contract: Parkway Plaza dated May 28, 1996<\/p>\n
Union Bank Credit Card Processing Agreement<\/p>\n
Showsites estimate of costs for the November 12, 1996 NAR convention.<\/p>\n
Broadcast lmages agreement for the November 12, 1996 NAR convention dated
\nOctober 27,1996 for public relations campaign for realtor.com.<\/p>\n
In addition to the agreements above, as part of its participation in the
\nNovember 1996 NAR convention, the Company will be responsible for various
\nconvention associated expenses, including, but not limited to hotel, meals and
\nentertainment and other convention associated expenses. Refer to summary of
\nbudgeted NAR convention costs.<\/p>\n
29<\/p>\n
The Company currently has rental agreements with various locations in the San
\nDiego County area to locate its 17 of its kiosks in the retail location at a
\nmonthly rental of $100 per location. The Company has been notified by the
\nretail location of its intent to terminate the rental agreements and has
\nprovided the Company with the required 6 months notification, effective February
\n1997. The Company has 13 other kiosks at various locations with no monthly
\nrental fees.<\/p>\n
The Company has entered into two agreements for Internet access, one each for
\nits Westlake Village and San Diego locations. The Company pays monthly fees
\ntotaling approximately $2,900 covering both locations. Both agreements were
\noriginally for a one year period and currently are on a month-to-month basis.
\nThe Company anticipates adding additional Internet capacity as it moves into its
\nnew facilities and as business conditions warrant.<\/p>\n
The Company entered into an agreement dated December 22, 1993 with Sandicor,
\nInc., the exclusive multiple listing service (“MLS”) for the San Diego resale
\nhome market, whereby the Company pays Sandicor for exclusive use of their MLS
\ndata on the kiosks. The royalty paid to Sandicor is based on a percentage of
\nthe Company’s adjusted kiosk sales each month. The agreement is for a five year
\nperiod, with an additional five year option period.<\/p>\n
On January 18, 1995, the Company entered into a licensing understanding for its
\nHomeSelect Kiosk System with TouchTech Corporation, an Ontario Canada company
\nfor license of its kiosk system for the province of Ontario as its territory.
\nThe original license arrangement letter was for $100,000, $5,000 on or before
\nJanuary 18, 1995, $5,000 April 15, 1995, $45,000 upon signing the definitive
\nlicense agreement and $45,000 payable 6 months after the definitive license
\nagreement has been centered into. On May 4, 1995, the licensing agreement
\nunderstanding was expanded to include not only the kiosks but all computer
\nactuated systems and mediums that HomeSelect and\/or InfoTouch markets. All
\ncomputer actuated systems will be subject to a 5% royalty fee generated from
\nsuch system (gross revenues) and $.40 per active property listing. As of
\nOctober 31, 1996. The (Company is owed $71,739, such amount for listing fees
\nbilled and unpaid as of October 31, 1996. The Company has not invoiced or
\ncollected from TouchTech the $45,000 owed upon signing the definitive license
\nagreement and $45,000 payable 6 months after the definitive license agreement
\nwas entered into. The Company has engaged in discussions TouchTech regarding a
\npotential acquisition of the business, however, nothing definitive has been
\nagreed to or resolved. Any and all discussions have been preliminary with no
\nagreement reached. The Company was notified by TouchTech that the Toronto Real
\nEstate Board (“TREB”) is currently considering exercising one of its options to
\nsubscribe for common shares of TouchTech (refer to copy of letter from TouchTech
\nto Company dated November 28, 1996 and letter from TREB to TouchTech dated
\nNovember 27, 1996).<\/p>\n
Pursuant to the Company’s Bylaws and Certificate of Incorporation documents, the
\nCompany indemnifies its directors and officers to the extent allowable under
\nDelaware law.<\/p>\n
The Company has not entered into any formal employee indemnification,
\nconfidentiality or trade secrets agreements.<\/p>\n
30<\/p>\n
In connection with the and the related agreements, anticipated that all amounts
\nowed to and from RIN will be eliminated.<\/p>\n
During October 1996, the Company received notification of a small claims court
\njudgment against it for a small claims case totaling less than $2,000. In
\nNovember 1996, the Company paid such amount to claimant.<\/p>\n
The Company has entered into the following discretionary bonus plans:<\/p>\n
-Mr. Richard Janssen. President and CEO, is eligible for a Board approved
\n ——————-
\ndiscretionary bonus of 15% of base salary. To date, no amounts have been earned
\nor paid.<\/p>\n
-Ms. Carol Garrison, Vice President of Product Development, is eligible for
\n ——————
\na 15% of base discretionary bonus based upon objectives agreed to by and between
\nMs. Garrison and the Management of the Company. To date, no amounts have been
\nearned or paid.<\/p>\n
-Mr. Philip Dawley,VP Technology, is eligible for a 15% of base
\n —————–
\ndiscretionary bonus based upon objectives agreed to by and between Mr. Dawley
\nand the Management of the Company. In fiscal 1996, $7,326 his been paid and
\n$3,663 has been accrued but not paid.<\/p>\n
-Mr. Mark Kajiwara, Technical Operations Manager, is eligible for a 10% of
\n —————–
\nbase discretionary bonus based upon objectives agreed to by and between Mr.
\nKajiwara and the Management of the Company. In fiscal 1996, $4,000 has been
\npaid and $2,000 has been accrued but not paid.<\/p>\n
-Mr. Todd Lyche, Senior Software Engineer, is eligible for a $5,000 per
\n ————–
\nyear discretionary bonus based upon objectives agreed to by and between Mr.
\nLyche and the Management of the Company. To date, no amounts have been
\ncommitted to or paid.<\/p>\n
-Mr. William Spazante, VP Finance and CFO, is eligible for a 10% of base
\n ——————–
\ndiscretionary bonus based upon objectives agreed to by and between Mr. Spazante
\nand the Management of the Company. To date, no amounts have been committed to
\nor paid.<\/p>\n
InfoTouch’s 1994 Stock Incentive Plan.<\/p>\n
The Company has a standard medical plan with Blue Cross. Refer to form of
\nplans.<\/p>\n
Janssen and Wolff employment agreements<\/p>\n
Effective October 30, 1996, Ms. Carol Garrison, resigned from the Board of
\nDirectors of the Company. Ms. Garrison is currently on a leave of absence from
\nher employment with the Company.<\/p>\n
In November, 1996, the Company purchased 2 Gateway computers for $9,936.83 for
\nits Realtor.com Internet business.<\/p>\n
In November 1996, the Company’s Westlake Village offices were broken into and a
\nnotebook computer, laser printer and telephone were stolen. The incident was
\nreported to the local authorities and the Company’s insurance company, and at
\npresent, the Company expects the replacement notebook computer to be covered by
\nthe insurance proceeds.<\/p>\n
31<\/p>\n
32<\/p>\n
SCHEDULE 5.2
\n ————<\/p>\n
PRIOR ACTIVITIES OF NETSELECT<\/p>\n
1. Stock and Interest Purchase Agreement, by and among NetSelect, Inc.,
\n InfoTouch Corporation and NetSelect L.L.C., dated November 26, 1996.<\/p>\n
2. NetSelect, Inc. Stockholders Agreement, by and among CDW Internet, L.L.C.,
\n Whitney Equity Partners, L.P., Allen & Co., InfoTouch Corporation,
\n NetSelect L.L.C. and NetSelect, Inc., dated November 26, 1996.<\/p>\n
3. RealSelect, Inc. Stockholders Agreement, by and among REALTORS\/(R)\/
\n Information Network, Inc., NetSelect, L.L.C. and RealSelect, Inc., dated
\n November 26, 1996.<\/p>\n
4. Joint Ownership Agreement, by and between National Association of
\n REALTORS\/(R)\/, NetSelect, Inc. and RealSelect, Inc., dated November 26,
\n 1996.<\/p>\n
5. Software License Agreement, by and among NetSelect, Inc., RealSelect, Inc.
\n an REALTORS\/(R)\/ Information Network, Inc., dated November 26, 1996.<\/p>\n
6. Trademark License, by and between the National Association of REALTORS\/(R)\/
\n and RealSelect, Inc., dated November 26, 1996.<\/p>\n
7. Operating Agreement, ‘ by and between REALTORS Information Network, Inc.
\n and RealSelect, Inc., dated November 26, 1996.<\/p>\n
8. Allen & Co. Subscription Agreement, by and between Allen & Co. and
\n NetSelect, Inc., dated November 26, 1996.<\/p>\n
9. CDW Internet, L.L.C. Subscription Agreement, by and between CDW Internet,
\n L.L.C. and NetSelect, Inc., dated November 26, 1996.<\/p>\n
10. Whitney Equity Partners, L.P. Subscription Agreement, by and between
\n Whitney Equity Partners, L.P. and NetSelect, Inc., dated November 26, 1996.<\/p>\n
11. REALTORS\/(R)\/ Information Network, Inc. Subscription and Capital
\n Contribution Agreement, by and between REALTORS’ Information Network, Inc.
\n and RealSelect, Inc., dated November 26, 1996.<\/p>\n
12. Employment Agreement, dated as of November 26, 1996, by and between
\n NetSelect, Inc. and Stuart Wolff, Ph.D.<\/p>\n
13. Employment Agreement, dated as of November 26, 1996, by and between
\n NetSelect, Inc. and Richard R. Janssen.<\/p>\n
33<\/p>\n
14. Master Agreement, dated November 26, 1996, by and among NetSelect. Inc.,
\n RealSelect. Inc., CDW Internet, L.L.C., Whitney Equity Partners, L.P.,
\n Allen & Co., InfoTouch Corporation, and REALTORS\/(R)\/ Information Network,
\n Inc.<\/p>\n
15. NetSelect, Inc. 1996 Stock Incentive Plan.<\/p>\n
16. Incentive Stock Option Agreement, dated as of November 26, 1996, by and
\n between NetSelect, Inc. and Richard R. Janssen.<\/p>\n
17. Incentive Stock Option Agreement, dated as of November 26, 1996, by and
\n between NetSelect, Inc. and Stuart Wolff, Ph.D.<\/p>\n
18. Investor Representation, by and between Stuart Wolff, Ph.D. and InfoTouch
\n Corporation, dated November 26, 1996.<\/p>\n
19. Investor Representation Letter, by and between WREN, L.L.C. and InfoTouch
\n Corporation, dated November 26, 1996.<\/p>\n
20. Investor Representation Letter, by and between Dort Cameron, III and
\n InfoTouch Corporation, dated November 26, 1996.<\/p>\n
21. Investor Representation Letter, by and between Andrew Dwyer and InfoTouch
\n Corporation, dated November 26 1996.<\/p>\n
22. Investor Representation Letter, by and between Whitney Equity Partners,
\n L.P. and InfoTouch Corporation, dated November 26, 1996.<\/p>\n
23. Investor Representation Letter, by and between Allen & Co. and InfoTouch
\n Corporation, dated November 26, 1996.<\/p>\n
24. Investor Representation Letter, by and between CDW Internet, L.L.C. and
\n InfoTouch Corporation, dated November 26, 1996.<\/p>\n
25. NetSelect, L.L.C. Operating Agreement, dated as of November 26, 1996, by
\n and between NetSelect, Inc. and InfoTouch Corporation.<\/p>\n
26. Booz-Allen\/Reach Settlement Agreement and Mutual Release, dated as of
\n November 26, 1996, by and between Booz-Allen & Hamilton and RealSelect,
\n Inc. REALTORS\/(R) \/Information Network, Inc.<\/p>\n
27. Settlement Agreement and Release, dated as of November 26, 1996, by and
\n between InfoTouch Corporation and REALTORS\/(R) \/Information Network, Inc.<\/p>\n
34<\/p>\n
SCHEDULE 5.3
\n ————<\/p>\n
CAPITALIZATION<\/p>\n
Items 2, 3, 9, 10, 11, 12, 15, 16, 17, 18, 19. 20, 21, 22, 23, 24 and 25 of
\nSchedule 5.2 hereto are incorporated herein by reference.<\/p>\n
35<\/p>\n
SCHEDULE 5.5
\n ————<\/p>\n
NETSELECT CONSENTS AND APPROVALS; NO VIOLATIONS<\/p>\n
NONE<\/p>\n
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