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STOCK AND INTEREST PURCHASE AGREEMENT
Dated as of November 26, 1996
by and among
_______________
NETSELECT, INC.
_______________
NETSELECT, L.L.C.
________________
AND
________________
INFOTOUCH CORPORATION
_______________
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<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
<S> <C>
ARTICLE I PURCHASE AND SALE OF STOCK AND INTERESTS................................ 1
SECTION 1.1. Transfer of Stock................................................... 1
SECTION 1.2. Transfers of Interests.............................................. 1
SECTION 1.3. Amount and Payment of Purchase Price................................ 2
SECTION 2.1. The Closing......................................................... 2
SECTION 2.2. Deliveries by NetSelect............................................. 3
SECTION 2.3. Deliveries by NS LLC................................................ 3
SECTION 2.4. Deliveries by InfoTouch............................................. 3
ARTICLE III CLOSING MATTERS....................................................... 4
SECTION 3.1. Certificate of Incorporation........................................ 4
SECTION 3.2. By-laws............................................................. 4
SECTION 3.3. LLC Agreement....................................................... 4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INFOTOUCH............................ 5
SECTION 4.1. Organization; Etc................................................... 5
SECTION 4.2. Capitalization...................................................... 5
SECTION 4.3. Authorization....................................................... 6
SECTION 4.4. Consents and Approvals; No Violations............................... 6
SECTION 4.5. Intellectual Property............................................... 6
SECTION 4.6. Compliance with Laws................................................ 7
SECTION 4.7. Brokers and Finders................................................. 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF NETSELECT............................. 7
SECTION 5.1. Organization; Etc................................................... 7
SECTION 5.2. No Prior Activities................................................. 7
SECTION 5.3. Capitalization...................................................... 8
SECTION 5.4. Authorization....................................................... 8
SECTION 5.5. Consents and Approvals; No Violations............................... 9
SECTION 5.6. Brokers and Finders................................................. 9
ARTICLE VI COVENANTS OF THE PARTIES............................................... 9
SECTION 6.1. Reasonable Best Efforts............................................. 9
SECTION 6.2. Public Announcements................................................ 10
SECTION 6.3. Additional Capital Contributions of InfoTouch Investors............. 10
SECTION 6.4. Solvency Letter..................................................... 10
SECTION 6.5. Additional Capital Contributions of NetSelect....................... 11
SECTION 6.6. Merger of NetSelect and InfoTouch................................... 11
SECTION 6.7. InfoTouch Public Offering and NetSelect Capital Stock Issuance...... 13
SECTION 6.8. NetSelect Options................................................... 13
SECTION 6.9. InfoTouch Audit..................................................... 13
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SECTION 6.10. RIN Restriction on Transfer......................................... 14
SECTION 6.11. InfoTouch Stockholder Restrictions.................................. 15
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE AGREEMENT............................. 16
SECTION 7.1. Condition to Each Party's Obligations to Consummate the Agreement... 16
SECTION 7.2. Further Conditions to InfoTouch's Obligations....................... 17
SECTION 7.3. Further Conditions to NetSelect's and NS LLC's Obligations.......... 18
ARTICLE VIII TERMINATION AND ABANDONMENT............................................ 19
SECTION 8.1. Termination......................................................... 19
SECTION 8.2. Effect of Termination............................................... 19
ARTICLE IX SURVIVAL AND INDEMNIFICATION............................................. 19
SECTION 9.1. Survival; Remedy for Breach......................................... 19
SECTION 9.2. Indemnification by InfoTouch........................................ 20
SECTION 9.3. Indemnification by NetSelect........................................ 20
SECTION 9.4. Indemnification Limits.............................................. 21
SECTION 9.5. Indemnification; Notice and Settlements............................. 21
ARTICLE X MISCELLANEOUS PROVISIONS.................................................. 22
SECTION 10.1. Amendment and Modification.......................................... 22
SECTION 10.2. Extension; Waiver................................................... 22
SECTION 10.3. Entire Agreement; Assignment........................................ 22
SECTION 10.4. Validity............................................................ 22
SECTION 10.5. Notices............................................................. 22
SECTION 10.6. Governing Law....................................................... 23
SECTION 10.7. Descriptive Headings................................................ 23
SECTION 10.8. Counterparts........................................................ 24
SECTION 10.9. Parties in Interest................................................. 24
SECTION 10.10. No Waivers.......................................................... 24
SECTION 10.11. Specific Performance................................................ 24
SECTION 10.12. Definition of Knowledge............................................. 24
</TABLE>
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<PAGE>
EXHIBITS and ANNEXES
ANNEX A NetSelect Investors and Capitalization
ANNEX B Liabilities and Expenses of CDW Internet, L.L.C.
EXHIBIT A Intellectual Property, Assets and Liabilities of InfoTouch
EXHIBIT B Names of Directors and Officers of NetSelect
EXHIBIT C Board of Managers of NetSelect, L.L.C.
EXHIBIT D Form of Amended and Restated Certificate of Incorporation of
NetSelect
EXHIBIT E Form of Amended and Restated By-Laws of NetSelect
EXHIBIT F Form of Subscription Agreement
EXHIBIT G Form of Investor Representation Letter
EXHIBIT H Form of InfoTouch Stockholder Agreement
Schedule 4.2 InfoTouch Capitalization and Stockholders
Schedule 4.3 InfoTouch Consents and Approvals; No Violations
Schedule 4.5 Intellectual Property Rights
Schedule 5.2 Prior Activities of NetSelect
Schedule 5.3 NetSelect Capitalization
Schedule 5.5 NetSelect Consents and Approvals; No Violations
iii
<PAGE>
EXHIBIT 10.06
STOCK AND INTEREST PURCHASE AGREEMENT
-------------------------------------
STOCK AND INTEREST PURCHASE AGREEMENT, dated as of November 26, 1996
(this "Agreement"), by and among NETSELECT, INC., a Delaware corporation
("NetSelect"), NetSelect, L.L.C., a Delaware limited liability company ("NS
LLC"), and INFOTOUCH CORPORATION, a Delaware corporation ("InfoTouch").
WHEREAS, NetSelect desires to issue to those certain investors listed
on Annex A hereto (the "Investors") the capital stock set forth and described
thereon, and such Investors desire to purchase, 236,470 shares of NetSelect
Class A common stock, par value $0.001 per share (the "NetSelect Class A Common
Stock"), 116,470 shares of NetSelect Class B common stock, par value $0.001 per
share (the "NetSelect Class B Common Stock"), and 1,647,059 shares of NetSelect
Series A Convertible Preferred Stock, par value $0.001 per share (the "NetSelect
Series A Preferred Stock") upon and subject to the terms, conditions and
provisions hereinafter set forth; and
WHEREAS, NS LLC desires to issue to NetSelect and InfoTouch, and
InfoTouch and NetSelect desire to purchase Membership interests in NS LLC (the
"Interests"), upon and subject to the terms, conditions and provisions
hereinafter set forth and in the LLC Agreement (as defined in Section 1.2
below).
NOW, THEREFORE, in consideration of the respective covenants,
representations and warranties herein contained, and intending to be legally
bound hereby to the covenants and agreements contained herein, the parties
hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK AND INTERESTS
----------------------------------------
SECTION 1.1. Transfer of Stock. Upon the terms and subject to the
-----------------
conditions set forth herein, NetSelect shall sell, convey, transfer, assign and
deliver to the Investors, and the Investors shall purchase from NetSelect,
236,470 shares of NetSelect Class A Common Stock, 116,470 shares of NetSelect
Class B Common Stock, and 1,647,059 shares of NetSelect Series A Preferred
Stock, in the proportions set forth on Annex A hereto.
SECTION 1.2. Transfers of Interests. Upon the terms and subject to
----------------------
the conditions set forth herein, NS LLC shall, convey, transfer, assign and
deliver to InfoTouch, and InfoTouch shall purchase from NS LLC, the InfoTouch
Membership Interest (as defined in that certain L.L.C. Limited Liability Company
Agreement of NetSelect, L.L.C. (the "LLC Agreement"), and NS LLC shall convey,
transfer, assign and deliver to NetSelect and NetSelect shall purchase from NS
LLC, the NetSelect Membership Interest (as defined in the LLC Agreement).
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<PAGE>
SECTION 1.3. Amount and Payment of Purchase Price. In consideration
------------------------------------
of the sale, conveyance, transfer, assignment and delivery of the InfoTouch
Membership Interest to InfoTouch on the Closing Date pursuant to Section 1.1
hereof, InfoTouch shall, on the Closing Date, in full payment therefor, transfer
and assign to NS LLC all of the Intellectual Property (as defined in section 4.5
hereof) free and clear of all Liens (as defined in Section 2.4(a)), and certain
assets and liabilities, as listed on Exhibit A hereto (the "Assets and
Liabilities"), pursuant to appropriate assignment provisions in such Exhibit A
in form and substance acceptable to NS LLC in its sole discretion. In
consideration of the sale, conveyance, transfer, assignment and delivery of the
NetSelect Membership Interest to NetSelect on the Closing Date (except as such
date may otherwise be provided in Sections 7.2(c) and (d) hereof) pursuant to
Section 1.2 hereof, NetSelect shall, in full payment therefor, (x) on the
Closing Date, transfer and assign to NS LLC all of NetSelect's ownership rights
in the capital stock (the "RealSelect Capital Stock") of RealSelect, Inc., a
Delaware corporation ("RealSelect"), including by operation of law, all of
RealSelect's contract rights under and pursuant to that previously executed and
delivered Operating Agreement, dated as of November 26, 1996 (the "RIN Operating
Agreement"), by and between RealSelect and REALTORS(R) Information Network,
Inc., an Illinois corporation ("RIN"), (y) pay to NS LLC (i) $2,600,000 on the
Closing Date, (ii) $1,600,000 on or before December 12, 1996 (of which $150,000
would be paid by the assumption of certain indebtedness (created pursuant to
that certain Loan Agreement, dated November 4, 1996, between Michael N. Flannery
and InfoTouch, the proceeds of which were used for funding operating activity of
InfoTouch during November, 1996) by NS LLC from InfoTouch at the Closing (the
"InfoTouch Debt")), and (iii) $2,800,000 on or before February 1, 1997; and (z)
on the Closing Date, transfer the liabilities and expenses of CDW Internet,
L.L.C., a Delaware limited liability company ("CDW Internet"), including those
expenses incurred by CDW Internet in the reasonable course of its business
including, in connection with consummating the transactions contemplated by this
Agreement and all other agreements referred to herein, including, without
limitation, those personal expenses of Mr. Stuart Wolff and all legal fees and
expenses incurred by CDW Internet, as set forth on Annex B hereto.
ARTICLE II
CLOSING
-------
SECTION 2.1. The Closing. Upon the terms and subject to the
-----------
conditions contained in this Agreement, the Closing will take place at 10:00
a.m. at the offices of Battle Fowler LLP, Park Avenue Tower, 75 East 55th
Street, New York, New York 10022, on the date on which all of the conditions to
each party's obligations hereunder have been satisfied or waived; or at such
other place or time or both as the parties may mutually agree (the "Closing
Date").
SECTION 2.2. Deliveries by NetSelect. (a) On the Closing Date,
-----------------------
NetSelect will deliver the following to the Investors:
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<PAGE>
(a) Certificates representing shares of NetSelect Class A Common
Stock, NetSelect Class B Common Stock and NetSelect Series A Preferred Stock.
(b) Certified copies of the resolutions, duly adopted by each of
the Board of Directors of NetSelect and the stockholders of NetSelect, which
will be in full force and effect at the time of delivery, authorizing the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby, including, without limitation, the election or appointment,
as the case may be, of each of the officers and directors of NetSelect set forth
on Exhibit B hereto, to be effective immediately upon the Closing.
(c) All other documents, instruments and writings required to be
delivered by NetSelect at the Closing Date pursuant to this Agreement.
(B) On the Closing Date, NetSelect will deliver the following to NS
LLC:
(a) The RealSelect Capital Stock.
(b) The aggregate amount of those capital contributions to
NetSelect contemplated by Sections 7.2(c) and (d) hereof.
(c) Those liabilities of CDW Internet set forth on Annex B
hereto.
(d) All other documents, instruments and writings required to be
delivered by NetSelect on the Closing Date pursuant to this Agreement.
SECTION 2.3. Deliveries by NS LLC. On the Closing Date, NS LLC will
--------------------
deliver the following to NetSelect and InfoTouch:
(a) The LLC Agreement.
(b) Certified copies of the resolutions, duly adopted by the
Board of Managers of NS LLC, which will be in full force and effect at the time
of delivery, authorizing the execution, delivery and performance of this
Agreement and the transactions contemplated hereby, including, without
limitation, the election or appointment, as the case may be, of the Board of
Managers of NS LLC set forth on Exhibit C hereto, to be effective immediately
upon the Closing.
(c) All other documents, instruments and writings required to be
delivered by NS LLC on the Closing Date pursuant to this Agreement.
SECTION 2.4. Deliveries by InfoTouch. On the Closing Date, InfoTouch
-----------------------
will deliver the following to NS LLC:
(a) The Intellectual Property, Assets and Liabilities described
on Exhibit A hereto pursuant to Exhibit A, free and clear of all claims, levies,
charges, pledges,
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<PAGE>
hypothecations, trusts, security interests, proxies, voting arrangements,
conditional sales or title retention contracts, or other encumbrances or
restrictions of any kind, including restrictions affecting voting rights,
transferability or incidents of record or beneficial ownership (any of such
being referred to as a "Lien").
(b) All other documents, instruments and writings required to be
delivered by InfoTouch on the Closing Date pursuant to this Agreement.
ARTICLE III
CLOSING MATTERS
---------------
SECTION 3.1. Certificate of Incorporation. In connection with the
----------------------------
transactions contemplated hereby, the Certificate of Incorporation of NetSelect,
in effect immediately prior to the Closing Date, shall be amended and restated
in its entirety as set forth in Exhibit D hereto; and, from and after the
Closing Date and, until further amended as provided by law, such amended and
restated certificate of incorporation, shall be, and may be separately certified
as, the Amended and Restated Certificate of Incorporation of NetSelect.
SECTION 3.2. By-laws. In connection with the transactions
-------
contemplated hereby, the By-laws of NetSelect in effect immediately prior to the
Closing Date, shall be amended and restated in their entirety as set forth in
Exhibit E hereto; and, from and after the Closing Date and, until further
amended as provided by law, such amended and restated By-laws, shall be, and may
be separately certified as, the By-laws of NetSelect.
SECTION 3.3. LLC Agreement. In connection with the transactions
-------------
contemplated hereby, the LLC Agreement and Certificate of Formation of NS LLC
(the "Certificate of Formation"), in effect immediately prior to the Closing
Date, shall be the LLC Agreement and Certificate of Formation of NS LLC in
effect from and after the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INFOTOUCH
-------------------------------------------
InfoTouch hereby represents and warrants to NetSelect that as of the
Closing Date, the following shall be true, complete and correct:
SECTION 4.1. Organization; Etc. (a) InfoTouch is a corporation duly
-----------------
organized, validly existing and in good standing under the laws of the state of
its incorporation, and has all requisite power and authority to own, lease and
operate its properties and to carry on the business conducted by it as now
conducted.
(b) InfoTouch is duly qualified or licensed and in good standing
to do business as a foreign corporation in each jurisdiction in which
qualification is required and there
-4-
<PAGE>
are no other jurisdictions in which InfoTouch's ownership of property or the
conduct of its business requires such qualification, except where the failure to
be so qualified would not have a Material Adverse Effect (as hereinafter
defined). Complete and correct copies of the InfoTouch Certificate of
Incorporation, as amended to date ("InfoTouch Certificate of Incorporation") and
By-laws, as amended to date ("InfoTouch By-laws"), and as in effect on the date
hereof have been delivered to NetSelect prior to the date of this Agreement.
"Material Adverse Effect" with respect to a party shall mean any event having
(or reasonably likely to have) a material adverse effect on the business,
condition, (financial or otherwise), results of operations, properties or
prospects of such party or which may materially impair the ability of such party
to consummate the transactions contemplated by this Agreement.
SECTION 4.2. Capitalization. The authorized capital stock of
--------------
InfoTouch consists of (i) 5,000,000 shares of InfoTouch Common Stock and
1,000,000 shares of Preferred Stock, of which 3,809,239 shares of InfoTouch
Common Stock will be issued and outstanding. The issued and outstanding capital
stock is owned by, and in the amounts set forth opposite, the stockholders of
InfoTouch listed on Exhibit 4.2 hereto.
(a) Except as set forth on Schedule 4.2 of the disclosure
schedule delivered by InfoTouch to NetSelect in connection herewith (the
"InfoTouch Disclosure Schedule"), there are no (i) subscriptions, options,
warrants, calls, rights, convertible securities or other agreements or
commitments of any character, whether oral or written, relating to the issuance,
transfer or sale, delivery, transfer, voting or redemption (including any right
of conversion or exchange under any outstanding security or other instrument) of
any of the capital stock or other equity interests of InfoTouch, or (ii)
agreements, arrangements, or understandings granting any Person (as hereinafter
defined) any rights in InfoTouch similar to capital stock or other equity
interests (collectively, "Options"). All of the outstanding shares of InfoTouch
Common Stock and InfoTouch Preferred Stock and outstanding Options were issued
by InfoTouch in compliance with all applicable securities laws. Except as
provided on Schedule 4.2 of the InfoTouch Disclosure Schedule, there are no
voting trusts, shareholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of the
outstanding shares of InfoTouch Common Stock or shares of InfoTouch Preferred
Stock or Shares to which InfoTouch or, to the best of its knowledge, any of its
stockholders, is a party or is bound.
SECTION 4.3. Authorization. InfoTouch has taken all corporate action
-------------
required to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and this Agreement has
been duly executed by InfoTouch and constitutes the legal, valid and binding
obligation of InfoTouch enforceable in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditors' rights generally and
(ii) the general principles of equity, regardless of whether asserted in a
proceeding in equity or at law.
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<PAGE>
SECTION 4.4. Consents and Approvals; No Violations. Except as
-------------------------------------
contemplated by this Agreement, no filing with, and no permit, authorization,
consent or approval of, any public body or governmental authority, domestic or
foreign, is necessary for the consummation by InfoTouch of the transactions
contemplated by this Agreement. Any consents, approvals, or authorizations of
any third party or governmental authority, domestic or foreign, required or
necessary to assign and deliver the Intellectual Property hereunder and pursuant
to Exhibit A have been obtained. Except as set forth on Schedule 4.3 of the
InfoTouch Disclosure Schedule, neither the execution and delivery of this
Agreement by InfoTouch nor the consummation by InfoTouch of the transactions
contemplated hereby nor compliance by InfoTouch with any of the provisions
hereof will (i) conflict with or result in any breach of any provision of the
InfoTouch Certificate of Incorporation or InfoTouch By-laws; (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, or require any consent under, any of the terms,
conditions, or provisions of any indenture, license, contract, agreement, or
other instrument or obligation to which InfoTouch is a party or by which it or
any of its properties or assets may be bound, except for violations, breaches
and defaults which in the aggregate would not have a Material Adverse Effect on
InfoTouch; or (iii) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to InfoTouch, except for violations of statutes, rules
and regulations which in the aggregate would not have a Material Adverse Effect
on NetSelect or NS LLC.
SECTION 4.5. Intellectual Property. InfoTouch is the owner or the
---------------------
exclusive licensee of all of the intellectual property set forth on Exhibit A
hereto (the "Intellectual Property"). InfoTouch owns, or is licensed to use all
of the Intellectual Property, free and clear of all Liens, and has not assigned,
hypothecated or otherwise encumbered any of the Intellectual Property. Except as
set forth on Schedule 4.4(b) of the InfoTouch Disclosure Schedule, (i) no Person
has a right to receive a royalty with respect to any of the Intellectual
Property; (ii) no claim has been asserted or, to the best of the knowledge of
InfoTouch, threatened by a third party with respect to the use of such
Intellectual Property by InfoTouch; (iii) to the knowledge of InfoTouch, the use
of Intellectual Property by InfoTouch does not infringe on the rights of any
Person; (iv) consummation of the transactions contemplated by this Agreement
will not impair or alter any of the rights to the Intellectual Property rights;
and (v) to the best of the knowledge of InfoTouch, there are no infringements of
the Intellectual Property by any third party.
SECTION 4.6. Compliance with Laws. InfoTouch is not, and within the
--------------------
prior three years has not been, in violation of (i) any judgment, decree,
injunction, order or ruling of any federal, state or local court or governmental
or regulatory body or authority that is binding on any such Person or its
property under applicable law; or (ii) any statute, law, ordinance, regulation,
order or rule of any federal, state, local or other governmental agency or body,
which in either case is likely to have a Material Adverse Effect on NetSelect or
NS LLC.
SECTION 4.7. Brokers and Finders. InfoTouch has not employed any
-------------------
broker or finder nor incurred any liability for any investment banking fees,
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
-6-
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NETSELECT
-------------------------------------------
NetSelect hereby represents and warrants to InfoTouch that as of the
Closing Date, the following shall be true and correct:
SECTION 5.1. Organization; Etc. (a) NetSelect is a corporation duly
-----------------
organized, validly existing and in good standing under the laws of the state of
its incorporation, and has all requisite power and authority to own, lease and
operate its properties and to carry on the business conducted by it as now
conducted.
(b) NetSelect is duly qualified or licensed and in good standing
to do business as a foreign corporation in each jurisdiction in which
qualification is required and there are no other jurisdictions in which
NetSelect's ownership of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect on NetSelect. Complete and correct copies of the
NetSelect Certificate of Incorporation and the NetSelect By-laws as in effect on
the date hereof have been made available or delivered to NetSelect prior to the
date of this Agreement.
SECTION 5.2. No Prior Activities. As of the date hereof, except for
-------------------
as set forth on Schedule 5.2 of the disclosure schedules delivered by NetSelect
herewith (the "NetSelect Disclosure Schedule"), and for obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated hereby, NetSelect has not and will not have
incurred, directly or indirectly through any subsidiary or affiliate, any
obligations or liabilities or engaged in any business or activities of any type
or kind whatsoever or entered into any agreements or arrangements with any
Person.
SECTION 5.3. Capitalization. (a) The capitalization of NetSelect
--------------
consists of (i) 35,000,000 shares of the NetSelect Class A Common Stock; (ii)
10,000,000 shares of NetSelect Class B Common Stock, par value $0.001 per share
of NetSelect (the "NetSelect Class B Common Stock"); (iii) 5,000,000 shares of
Preferred Stock, par value $0.001 per share (the "NetSelect Preferred Stock"),
and, together with the NetSelect Class A Common Stock and the NetSelect Class B
Common Stock, the "NetSelect Shares"). As of the date hereof and prior to the
Closing, (i) 236,470 shares of NetSelect Class A Common Stock are issued and
outstanding; (ii) 116,470 shares of NetSelect Class B Common Stock are issued
and outstanding, and (iii) zero (0) shares of NetSelect Preferred Stock are
issued and outstanding. All of such issued and outstanding NetSelect Shares are
duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. All of the outstanding NetSelect Shares were issued by
NetSelect in compliance with all applicable securities laws.
(b) The NetSelect Shares represent all of the issued and
outstanding capital stock and equity interests in NetSelect. Except as set forth
on Schedule 5.3 of the NetSelect Disclosure Schedule and except for the
NetSelect, Inc. Stockholders Agreement (as
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<PAGE>
hereinafter defined), the NetSelect Preferred Stock, and the NetSelect Class B
Common Stock, there are no (i) subscriptions, options, warrants, calls, rights,
convertible securities or other agreements or commitments of any character,
whether oral or written, relating to the issuance, transfer or sale, delivery,
transfer, voting or redemption (including any right of conversion or exchange
under any outstanding security or other instrument) of any of the capital stock
or other equity interests of NetSelect; or (ii) agreements, arrangements, or
understandings granting any person or entity any rights in NetSelect similar to
capital stock or other equity interests. Except as set forth on Schedule 5.3 of
the NetSelect Disclosure Schedule, and except for the NetSelect, Inc.
Stockholders Agreement, that certain RealSelect, Inc. Stockholders Agreement,
dated as of the date hereof, by and between NetSelect and RIN, the NetSelect
Preferred Stock and the NetSelect Class B Common Stock, there are no voting
trusts, shareholder agreements, proxies or other agreements or understandings in
effect with respect to the voting or transfer of the NetSelect Shares to which
NetSelect is a party or is bound.
SECTION 5.4. Authorization. NetSelect has taken all corporate action
-------------
required to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and this Agreement has
been duly executed by NetSelect and constitutes the legal, valid and binding
obligation of NetSelect enforceable in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditors' rights generally and
(ii) the general principles of equity, regardless of whether asserted in a
proceeding in equity or at law.
SECTION 5.5. Consents and Approvals; No Violations. Except as
-------------------------------------
contemplated by this Agreement, and except for "blue sky" laws and regulations,
no filing with, and no permit, authorization, consent or approval of, any public
body or governmental authority, domestic or foreign, is necessary for the
consummation by NetSelect of the transactions contemplated by this Agreement.
Except as set forth on Schedule 5.4 of the NetSelect Disclosure Schedule,
neither the execution and delivery of this Agreement by NetSelect nor the
consummation by NetSelect of the transactions contemplated hereby nor compliance
by NetSelect with any of the provisions hereof, will (i) conflict with or result
in any breach of any provision of the NetSelect Certificate of Incorporation or
NetSelect By-laws; (ii) result in a violation or breach of, or constitute (with
or without due notice or lapse of time, or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, or require any
consent under, any of the terms, conditions, or provisions of any indenture,
license, contract, agreement, or other instrument or obligation to which
NetSelect is a party or by which it or its properties or assets may be bound,
except for violations, breaches and defaults which in the aggregate would not
have a Material Adverse Effect on NetSelect; or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to NetSelect, except
for violations of statutes, rules and regulations which in the aggregate would
not have a Material Adverse Effect.
SECTION 5.6. Brokers and Finders. NetSelect has not employed any
-------------------
broker or finder nor incurred any liability for any investment banking fees,
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
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ARTICLE VI
COVENANTS OF THE PARTIES
------------------------
SECTION 6.1. Reasonable Best Efforts. (a) Subject to the terms and
-----------------------
conditions herein provided, each of the parties hereto agrees to use reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable to fulfill the conditions to
the parties' obligations hereunder and to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
making all required filings and applications and complying with or responding to
any requests by governmental agencies and obtaining all consents, approvals,
orders, waivers, licenses, permits and authorizations required in connection
with the transactions contemplated hereby.
(b) If at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the parties
hereto shall take or cause to be taken all such necessary action, including,
without limitation, the execution and delivery of such further instruments and
documents as may be reasonably requested by the other party for such purposes or
otherwise to consummate and make effective the transactions contemplated hereby.
SECTION 6.2. Public Announcements. InfoTouch, NetSelect and NS LLC
--------------------
will consult with each other before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated by
this Agreement, and shall not issue any press release or make any such public
statement without the prior approval of InfoTouch, NetSelect and NS LLC, as the
case may be, except as may be required by law.
SECTION 6.3 Additional Capital Contributions of InfoTouch Investors.
-------------------------------------------------------
On or prior to December 12, 1996, InfoTouch shall use its best efforts to cause
certain investors to enter into that certain NetSelect, Inc. Stockholders
Agreement, dated as of the date hereof (the "NetSelect Stockholders Agreement"),
a subscription agreement, substantially in the form of Exhibit F hereto (the
"Subscription Agreement"), and an investor representation letter substantially
in the form of Exhibit G hereto ("Investor Representation Letter"), with
NetSelect, pursuant to which each of the investors shall subscribe to purchase
from NetSelect 352,941 shares of Series B Preferred Stock, for an aggregate
purchase price of not less than $2,333,333, and such purchase price shall be
paid to NetSelect, in immediately available funds in two installments of not
less than $1,600,000 of which $1,450,000 represents cash consideration and
$150,000 represents the contribution and forgiveness of the InfoTouch Debt on or
prior to December 12, 1996, and not less than $733,333 on or prior to February
1, 1997. NetSelect shall issue the shares concurrently with the receipt of each
installment. In the event InfoTouch shall not obtain at least $1,600,000 equity
investment prior to December 12, 1996, InfoTouch shall transfer to NetSelect on
a pro rata basis 419,140 of the Units (as defined in the LLC Agreement) free and
clear of all Liens. In the event InfoTouch shall not obtain at least $733,333
equity investment prior to February 1, 1997, InfoTouch shall transfer to
NetSelect on a pro rata basis 148,204 of the Units (as defined in the LLC
Agreement) free and clear of all Liens.
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SECTION 6.4. Solvency Letter. Prior to the sale, assignment,
---------------
transfer, pledge, distribution or other conveyance (a "Distribution") of any or
all of the InfoTouch Membership Interests by InfoTouch to any of the
stockholders of InfoTouch, and provided such Distribution shall occur prior to
December 31, 2000, InfoTouch shall: (a) Obtain an opinion letter (containing
customary assumptions, qualifiers and disclaimers), satisfactory to NetSelect in
its sole and absolute discretion, from a nationally recognized independent
investment banking or solvency firm substantially to the following effect:
(i) InfoTouch is not insolvent and will not be rendered insolvent as a
result of the consummation of the Distribution. The present fair saleable value
of the assets of InfoTouch, and the assets of InfoTouch at fair valuation,
exceed InfoTouch's existing debts and other liabilities.
(ii) The property of InfoTouch does not, and shall not, following the
consummation of the transactions contemplated hereby, constitute unreasonably
small capital, for InfoTouch to carry out its business as now conducted and as
proposed to be conducted following consummation of the transactions contemplated
hereby, including the capital needs of InfoTouch, taking into account the
particular capital requirements of the business conducted by InfoTouch, and
projected capital requirements and capital availability thereof.
(iii) InfoTouch has not incurred and does not intend to incur debts beyond
its ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be received, and of amounts to be payable on or in respect of
the debts of InfoTouch). The cash flow of InfoTouch, after taking into account
all anticipated uses of the cash of InfoTouch, will at all times be sufficient
to pay all amounts on or in respect of the debts of InfoTouch when such amounts
are required to be paid; and
(b) Represent to NetSelect that (i) InfoTouch does not believe that
any final judgments against InfoTouch or any actions against InfoTouch for money
damages will be rendered at a time when, or in an amount such that, InfoTouch
would be unable to satisfy such judgments promptly and in accordance with their
terms (taking into account the maximum reasonable amount of such judgments in
such actions at the earliest reasonable time at which such judgments might be
rendered); and (ii) the cash flow of InfoTouch, after taking into account all
other anticipated uses of the cash of InfoTouch (including the payments on or in
respect of the debt referred to above in Section 6.4(c)), will at all times be
sufficient to pay all such judgments promptly and in accordance with their
terms.
SECTION 6.5. Additional Capital Contributions of NetSelect. On or
---------------------------------------------
prior to the Closing Date, Whitney (as defined in Section 7.1(i)) shall make a
$1,400,000 equity investment in NetSelect, Allen & Co. shall make a $700,000
equity investment in NetSelect, and CDW Internet shall make a $500,000 equity
investment in NetSelect. On February 1, 1997, CDW Internet shall make a $666,667
equity investment in NetSelect, Allen & Co. shall make a $466,667 equity
investment in NetSelect, and Whitney shall make a $933,333 equity investment in
NetSelect. In the event NetSelect shall not contribute a $2,066,667 equity
investment to NS
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LLC prior to or on February 1, 1997, NS LLC shall cancel that number of Units
(as defined in the LLC Agreement) held by NetSelect determined by dividing (i)
the amount not contributed by NetSelect by (ii) $2.83.
SECTION 6.6. Merger of NetSelect and InfoTouch. Prior to May 1, 1997,
---------------------------------
InfoTouch shall terminate its operating activities and its sole activity
thereafter shall be to own the InfoTouch Membership Interest. Except as may
otherwise be provided below in this Section 6.6, NetSelect agrees that its sole
activity shall be to own the NetSelect Membership Interest. In the event that
(a) the Board of Directors of NetSelect shall determine that NetSelect shall
file a registration statement with the Securities and Exchange Commission for
the sale of shares of capital stock of NetSelect in a public offering, (b) the
Board of Directors of NetSelect shall resolve to enter a Merger (as defined
below), consolidation or sale of NetSelect or all or substantially all of the
assets of NetSelect, (c) the stockholders of NetSelect upon the issuance of all
of the NetSelect Shares contemplated by this Agreement shall own equity
securities of NetSelect possessing less than 50% of the voting power of
NetSelect, or (d) the Board of Managers of NS LLC shall resolve to sell the
Membership Interests in a public offering, then NetSelect shall promptly notify
InfoTouch thereof. Upon receipt of notice from NetSelect (the "Notice Date"),
InfoTouch shall have thirty (30) days to request that NetSelect merge InfoTouch
with NetSelect and NetSelect shall have thirty (30) days to request that
InfoTouch merge with NetSelect, and, if either party so requests, the parties
shall enter into such merger subject to the satisfaction of all of the following
within ninety (90) days following the Notice Date: (v) InfoTouch shall have
terminated all of its operating activities by May 1, 1997 and its sole activity
shall be to own the InfoTouch Membership Interest in NS LLC; (w) InfoTouch shall
have a full audit of its financial statements for its three prior fiscal years
conducted and certified by a "Big 6" accounting firm (the "Full Audit"), and
shall deliver the certified financial statements, together with the accountants'
unqualified opinion (which may contain a "going-concern" reservation) thereon
(such Full Audit to be paid by NS LLC), to NetSelect; (x) the Full Audit shall
show as of the date of the most recent balance sheet included in its financial
statements that the stockholders' equity of InfoTouch shall be greater than zero
and the total liabilities of InfoTouch (including, without limitation,
contingent liabilities) shall not exceed $100,000 (either of the foregoing
results set forth in clause (x), a "Qualified Audit"). If any of the foregoing
conditions are not satisfied, neither NetSelect nor NS LLC shall be obligated to
merge with InfoTouch and neither NetSelect nor NS LLC shall be precluded from
commencing a public offering at such time, and furthermore, InfoTouch (not NS
LLC) shall pay the expenses of the "Big 6" accounting firm in preparing such
Full Audit. InfoTouch shall be provided a reasonable opportunity to "cure" any
Qualified Audit rendered, for example, by paying money or posting another form
of security, reasonably satisfactory to NetSelect, to settle any contingent
liability, and to have a Full Audit which is not a Qualified Audit rendered. If
InfoTouch is able to obtain a Full Audit which is not a Qualified Audit,
InfoTouch shall pay the expenses of the "Big 6" firm in connection therewith,
and NetSelect shall merge with InfoTouch.
Any merger shall be pursuant to an agreement in form and substance
reasonably approved by InfoTouch and NetSelect. In the case of a merger prior
to a public offering of
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NetSelect, the agreement shall provide that the shareholders of InfoTouch shall
receive a combination of shares of Class A Common Stock and Class B Common Stock
of NetSelect (in the same ratio as owned by InfoTouch in NS LLC) equal to the
(i) Adjusted Fully Diluted Shares of NetSelect outstanding as of the date of the
merger divided by (ii) one minus the InfoTouch LLC Percentage minus (iii) the
number of Adjusted Fully Diluted Shares outstanding as of such date. In the
event of any public offering of NetSelect prior to any merger between NetSelect
and InfoTouch, upon any such merger, the parties shall invoke the valuation
procedures set forth in Section 3.5 of that certain RealSelect, Inc.
Stockholders Agreement, dated as of the date hereof, to determine the relative
equity interests of the InfoTouch Stockholders and the NetSelect Stockholders in
the surviving entity. For purposes of this Section 6.6, the following terms
shall have the meaning set forth below:
"ADJUSTED FULLY DILUTED SHARES" of NetSelect outstanding at any date
shall mean (i) the number of shares of Class A Common Stock of NetSelect
outstanding on such date, plus (ii) the maximum number of shares of Class A
Common Stock of NetSelect which are issuable pursuant to convertible securities,
options, warrants or other rights outstanding on such date, excluding, for this
purpose, any outstanding options granted to officers and employees of NetSelect
in their capacities as such, which grants have been approved by the Board of
Managers of NS LLC.
"INFOTOUCH LLC PERCENTAGE" at any date shall mean a fraction, the
numerator of which is the aggregate membership interests of InfoTouch in NS LLC
at such date and the denominator of which is the aggregate membership interests
of all Members in NS LLC outstanding at such date.
"MERGER" shall mean any consolidation of NetSelect with, or merger of
NetSelect with or into, another corporation or reorganization of NetSelect,
other than a consolidation, reorganization or merger in which NetSelect is the
surviving corporation. NetSelect shall be the "surviving corporation" in any
merger if NetSelect, or its stockholders immediately before the transaction,
shall own (immediately after the transaction) equity securities, other than
warrants, options or similar rights to subscribe to or purchase equity
securities, of the surviving or acquiring corporation, or its parent
corporation, possessing more than 50% of the voting power of the surviving or
acquiring corporation or its parent corporation; and in making the determination
of ownership by the stockholders of a corporation, immediately after the
transaction, of equity securities pursuant to the preceding clause, equity
securities which they owned immediately before the transaction as shareholders
of another party to the transaction shall be disregarded. For the purposes
hereof, voting power of a corporation shall be calculated by assuming the
conversion of all then outstanding convertible equity securities (including
those convertible at some future date), but not assuming the exercise of any
warrants, options or other rights to subscribe to or purchase voting shares.
SECTION 6.7 InfoTouch Public Offering and NetSelect Capital Stock
-----------------------------------------------------
Issuance. InfoTouch hereby agrees that it shall not commence any public offering
--------
(regardless of the
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aggregate value established for the InfoTouch capital stock at such time)
without first merging with NetSelect pursuant to the provisions of Section 6.6
hereof.
SECTION 6.8. NetSelect Options. Except as contemplated on the
-----------------
Closing Date, NetSelect agrees not to issue any equity securities of NetSelect
without the prior approval of the Board of Managers of NS LLC.
SECTION 6.9. InfoTouch Audit. Promptly following the Closing Date,
---------------
InfoTouch shall have a pre-Closing balance sheet audit conducted and certified
by a "Big 6" accounting firm (the "Balance Sheet Audit") and shall deliver the
balance sheet, together with accountant's unqualified opinion thereon (which may
contain a "going concern" qualification), to NetSelect. To the extent that the
Balance Sheet Audit confirms that InfoTouch contributed an amount to NS LLC in
excess of $50,000 more than that represented by InfoTouch on Exhibit A hereto
----
(the "Excess"), NetSelect shall then transfer to InfoTouch at NetSelect's
option, (i) cash in the amount of such Excess, or (ii) that number of Units of
the NetSelect Membership Interest as shall equal such Excess divided by $2.83.
To the extent that the Balance Sheet Audit confirms that InfoTouch contributed
an amount to NS LLC in excess of $50,000 less than that represented by InfoTouch
----
on Exhibit A hereto (the "Deficit"), InfoTouch shall promptly transfer to
NetSelect at InfoTouch's option, either (i) cash in the amount of such Deficit,
or (ii) that number of Units of the InfoTouch Membership Interest as shall equal
such Deficit divided by $2.83.
SECTION 6.10. RIN Restriction on Transfer. (a) Prior to making any
---------------------------
proposed Transfer (as hereinafter defined), other than to a Member or a
Permitted Transferee (as hereinafter defined) that would result in such
transferee (a "Transferee") becoming the owner, whether of record or
beneficially, of more than five percent (5%) of the Units in NS LLC, the
transferring Member shall first obtain the written approval of RIN, which
approval shall not be unreasonably withheld. In seeking such approval, a Member
must identify the proposed Transferee and the number of Membership Interests
proposed to be Transferred, and provide such additional publicly available
information regarding the proposed Transferee as RIN may reasonably request. Any
decision by RIN pursuant to this Section 6.10, whether to approve or not approve
such Transfer, shall be set forth in writing and shall set forth in reasonable
detail the basis of such decision; provided, however, that in the event RIN
-------- -------
shall fail to approve or not approve such Transfer within thirty (30) days after
the date of the receipt of such request, RIN shall be deemed to have approved
such Transfer. For purposes hereof, "Transfer" shall mean any transfer, pledge,
sale, assignment, hypothecation, creation of a security intent or a lien on,
placing in trust (voting or otherwise), or any other way encumbrance or
disposal, directly or indirectly, in one or more transactions.
(b) Prior to making any proposed Transfer hereunder that shall result
in the ownership of Membership Interests, whether of record or beneficially, by
a Transferee whose primary business is "real estate related", the transferring
Member shall first obtain the written approval of RIN, which approval shall not
be unreasonably withheld. In seeking such approval a Member must identify the
proposed Transferee and the number of Membership Interests proposed to be
Transferred, and provide such additional publicly available information
regarding
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the proposed Transferee as RIN may reasonably request. Any decision by RIN
pursuant to this Section 6.10, whether to approve or not approve such Transfer,
shall be set forth in writing and shall set forth in reasonable detail the basis
of such decision. For purposes of this Agreement, "real estate related" shall
mean any person, entity or group whose primary business is comprised of real
estate brokerage, real estate management, mortgage financing, appraising,
counseling, land development and building, title insurance, escrow services,
franchising, operation of an association comprised of real estate licensees,
operation of a multiple listing service, and entities that own or are owned by
firms engaged in any of the foregoing.
(c) The approval rights of RIN described in Sections 6.10(a) and (b)
above shall (a) cease upon the termination of that certain Operating Agreement,
dated as of November 26, 1996 (the "Operating Agreement"), by and between RIN
and RealSelect, (B) be suspended upon the occurrence of, and during the
continuance of, any breach by the NAR of that certain (i) Joint Ownership
Agreement, dated as of November 26, 1996, between the NAR and NS LLC, or (ii)
Trademark License, dated as of November 26, 1996, by and between the NAR and
RealSelect, (C) be suspended upon the occurrence of, and during the continuance
of, the Transfer by RIN of eighty percent (80%) or more of the shares of common
stock, par value $0.001 per share (the "RealSelect Shares"), of RealSelect owned
by RIN as of the Closing Date; provided, however, that in the event that RIN
-------- -------
shall transfer greater than eighty percent (80%) of the RealSelect Shares owned
by RIN as of the Closing Date, and RIN shall not, within forty-five (45) days
from the date of such Transfer, increase its ownership in RealSelect Shares so
that RIN shall own at least twenty percent (20%) of the RealSelect Shares owned
by RIN as of the Closing Date, RIN's rights pursuant to Section 6.10(a) and (b)
shall terminate, and (D) be suspended upon the execution of a memorandum of
understanding, letter of intent, or such other binding understanding or
agreement in connection with the sale of RIN to any person, entity or group
other than a Member or a Permitted Transferee (as hereinafter defined);
provided, however, that such right shall terminate upon the closing of any such
-------- -------
sale contemplated by such memorandum of understanding, letter of intent, or such
other binding understanding or agreement.
(d) A "Permitted Transferee" shall mean, with respect to a Member:
(i) the spouse of such Member, any lineal descendant of a grandparent
of such Member, or of the spouse of such Member, and any spouse of such lineal
descendant (which lineal descendants, their spouses, the Member, and his or her
spouse are herein collectively referred to as the "Member's Family Members");
(ii) the trustee of a trust (including a voting trust) principally for
the benefit of such Member's Family Members; provided, that such trust may also
--------
grant a general or special power of appointment to one or more of such Member's
Family Members and may permit trust assets to be used to pay taxes, legacies and
other obligations of the trust or of the estates of one or more of such Member's
Family Members payable by reason of the death of any of such Member's Family
Members;
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(iii) in the case of a partnership or limited liability company, (a) such
partnership's partners (limited or general) or such limited liability company's
members, (B) the estates or legal representatives of any such limited partners,
general partners or members, and (C) any affiliates of such partnership or
limited liability company; and
(iv) in the case of a corporation, (a) any of its wholly-owned
subsidiaries, (B) any stockholder of such corporation, or (C) any of the
affiliates of such corporation.
SECTION 6.11. InfoTouch Stockholder Restrictions. InfoTouch shall use
-----------------------------------
its best efforts to cause as many of its stockholders, representing as great a
percentage of the InfoTouch Capital Stock as possible, to execute a stockholders
agreement, substantially in the form of Exhibit H hereto (the "InfoTouch
Stockholder Agreement"), consistent with the terms and restrictions set forth
with respect to the InfoTouch Membership Interest in Section 6.10 above.
NetSelect hereby acknowledges and agrees to the registration rights provisions
contained in the InfoTouch Stockholder Agreement, including, without limitation,
Section 2.11 thereof.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE AGREEMENT
-------------------------------------------
SECTION 7.1. Condition to Each Party's Obligations to Consummate the
-------------------------------------------------------
Agreement. The respective obligations of each party to consummate this Agreement
---------
is subject to the satisfaction or waiver of the following conditions on or
before the Closing Date:
(a) No statute, rule, regulation, executive order, decree, or
injunction shall have been enacted, entered, promulgated, enforced or threatened
by any court or governmental entity which prohibits or restricts the
consummation of this Agreement;
(b) All authorizations, approvals, consents and waivers required
to be obtained from and notices and filings required to be given to or made with
any governmental agency or third party shall have been obtained, given or made;
(c) That certain Employment Agreement by and between NetSelect
and Stuart Wolff, Ph.D., dated as of the Closing Date (the "Wolff Employment
Agreement"), shall have been executed and delivered, and shall be effective as
and after the Closing Date;
(d) That certain Employment Agreement by and between NetSelect
and Richard R. Janssen, dated as of the Closing Date (the "Janssen Employment
Agreement"), shall have been executed and delivered, and shall be effective as
and after the Closing Date;
(e) That certain Software License Agreement, by and among NAR,
RealSelect, and NetSelect shall have been executed and delivered;
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<PAGE>
(f) That certain Trademark License Agreement, by and between NAR
and RealSelect shall have been executed and delivered;
(g) That certain Joint Ownership Agreement, by and among NAR,
NetSelect and NS LLC shall have been executed and delivered;
(h) NetSelect shall have duly elected or appointed and
qualified, as Directors and officers to NetSelect, at and after the Closing
Date, those individuals listed on Exhibit B hereto;
(i) CDW Internet, Whitney Equity Partners, L.P., a Delaware
limited partnership ("Whitney"), Allen & Co., InfoTouch, and NetSelect shall
have duly executed the NetSelect, Inc. Stockholders Agreement;
(j) NetSelect shall have granted to Stuart Wolff incentive stock
options to purchase up to an aggregate of 174,118 shares pursuant to NetSelect's
1996 Stock Incentive Plan;
(k) NetSelect shall have granted to Richard Janssen incentive
stock options to purchase up to an aggregate of 130,588 shares pursuant to
NetSelect's 1996 Stock Incentive Plan;
(l) That certain Distribution and Web Site Development
Agreement, dated as of February 1, 1996, shall have been properly terminated;
(m) That certain RIN Operating Agreement shall have been
executed and delivered;
(n) NetSelect shall have transferred the RealSelect Capital
Stock to NS LLC;
(o) That certain Master Agreement shall have been executed and
delivered; and
(p) InfoTouch and NetSelect shall have duly executed and
delivered the LLC Agreement.
SECTION 7.2. Further Conditions to InfoTouch's Obligations. The
---------------------------------------------
obligations of InfoTouch to consummate the transactions contemplated hereby at
the Closing are subject to satisfaction or waiver by InfoTouch of the following
conditions on or before the Closing Date:
(a) The representations and warranties of NetSelect contained
herein shall be true and correct in all material respects as of the date of this
Agreement and at and as of the Closing Date;
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<PAGE>
(b) NetSelect and NS LLC shall have performed and complied in
all material respects with all respective agreements, obligations, covenants and
conditions required by this Agreement to be performed or complied with by each
on or prior to the Closing;
(c) Each of Whitney and Allen & Co. shall have duly executed and
delivered a Subscription Agreement, dated as of the Closing Date, pursuant to
which (i) Whitney shall have committed to pay to NetSelect $1,400,000 on or
before the Closing Date and $933,333 on or before February 1, 1997 and (ii)
Allen & Co. shall have committed to pay to NetSelect $700,000 on or before the
Closing Date and $466,667 on or before February 1, 1997, to purchase shares of
Series A Preferred Stock consistent with the amounts set forth in Annex A
hereto, to be paid and issued, respectively, on the Closing Date and February 1,
1997;
(d) CDW Internet shall have duly executed and delivered a
Subscription Agreement, dated as of the Closing Date, pursuant to which CDW
Internet shall have committed to pay to NetSelect $500,000 on or before the
Closing Date and $666,667 on or before February 1, 1997 to purchase shares of
capital stock of NetSelect consistent with the amounts set forth in Annex A
hereto, to be paid and issued, respectively, on the Closing Date and February 1,
1997;
(e) NS LLC shall have delivered to InfoTouch the InfoTouch
Membership Interest; and
(f) InfoTouch shall have received a duly executed certificate of
an authorized officer of NetSelect to the effect that the conditions in Section
7.2(a) and Section 7.2(b) have been satisfied.
SECTION 7.3. Further Conditions to NetSelect's and NS LLC's
----------------------------------------------
Obligations. The obligations of NetSelect to consummate the transactions
-----------
contemplated hereby at the Closing are subject to the satisfaction or waiver by
NetSelect and NS LLC of the following conditions:
(a) The representations and warranties of InfoTouch contained
herein shall be true, complete and correct in all material respects as of the
date of this Agreement and at and as of the Closing Date;
(b) InfoTouch shall have performed and complied in all material
respects with all agreements, obligations, covenants and conditions required by
this Agreement or to be performed or complied with by it on or prior to the
Closing;
(c) NetSelect and NS LLC shall have received a duly executed
certificate from a duly authorized officer of InfoTouch to the effect that the
conditions in Section 7.3(a) and Section 7.3(b) have been satisfied;
(d) Each of CDW Internet, L.L.C., WREN L.L.C., Stuart Wolff,
Ph.D., Dort Cameron, III, Andrew Dwyer, Whitney and Allen & Co. shall have duly
executed
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<PAGE>
and delivered a Subscription Agreement and an Investor Representation Letter,
substantially in the form, set forth as Exhibit F and Exhibit G, respectively;
(e) All actions, proceedings, instruments and documents required
to carry out the transactions contemplated by this Agreement or incidental
thereto and all other related legal matters shall be reasonably satisfactory to
counsel for NetSelect and NS LLC, and such counsel shall have been furnished
with such certified copies of such actions and proceedings and such other
instruments, documents and opinions as it shall have reasonably requested;
(f) All consents, approvals, orders and permits of, and
registrations, declarations and filings with, any governmental authority that
shall be required in order to enable InfoTouch to consummate the transactions
contemplated hereby;
(g) That certain indebtedness owed by RIN to InfoTouch shall
have been forgiven by InfoTouch in all respects, and RIN shall be released
therefrom;
(h) InfoTouch shall have duly delivered Exhibit A; and
(i) Stockholders of InfoTouch holding shares of capital stock of
InfoTouch representing at least a majority of those shares outstanding on the
Closing Date shall have executed the InfoTouch Stockholder Agreement.
ARTICLE VIII
TERMINATION AND ABANDONMENT
---------------------------
SECTION 8.1. Termination. This Agreement may be terminated at any
-----------
time prior to the Closing:
(a) by the mutual written consent of each of InfoTouch,
NetSelect and NS LLC;
(b) by either InfoTouch, NetSelect or NS LLC, if there shall be
any law or regulation that makes consummation of this Agreement illegal or if
any judgment, injunction, order or decree enjoining InfoTouch or NetSelect from
consummating this Agreement is entered and such judgment, injunction, order or
decree shall become final and non-appealable; and
(c) by either NetSelect, InfoTouch or NS LLC, if the Closing has
not been consummated by December 4, 1996; provided, however, that the right to
-------- -------
terminate this Agreement under this paragraph shall not be available to any
party whose willful failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure to meet the date requirements of
this subsection.
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<PAGE>
SECTION 8.2. Effect of Termination. In the event of termination of
---------------------
this Agreement and abandonment of the transactions contemplated hereby by the
parties hereto pursuant to Section 8.1 hereof, this Agreement shall forthwith
become null and void and of no further force and effect, without any liability
on the part of any party or its directors, officers, partners, members,
managers, affiliates, employees, agents or securityholders. Nothing in this
Section 8.2 shall relieve any party from any liability for any willful breach of
this Agreement or any intentional tort.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
----------------------------
SECTION 9.1. Survival; Remedy for Breach. The representations and
---------------------------
warranties of the parties contained herein or in any writing delivered pursuant
hereto or in connection herewith shall survive the Closing for a period equal to
the earlier of (i) the IPO (as defined in Section 9.4 hereof) or (ii) three
months following the completion of the audit for the 1998 fiscal year of
NetSelect. Notwithstanding the preceding sentence, any representation or
warranty in respect of which indemnity may be sought under Section 9.2 or
Section 9.3 hereof shall survive the time at which it would otherwise terminate
pursuant to such sentence, if notice of the inaccuracy or breach thereof giving
rise to such indemnity shall have been given to the party against whom such
indemnity may be sought prior to such time. All representations and warranties
of InfoTouch and NetSelect set forth in this Agreement, together with each of
the InfoTouch Disclosure Schedule, delivered by InfoTouch, and the NetSelect
Disclosure Schedule, delivered by NetSelect, herewith shall be deemed to have
been made by each of InfoTouch and NetSelect at and as of the Closing, except as
otherwise specified in this Agreement.
SECTION 9.2. Indemnification by InfoTouch. InfoTouch hereby agrees
----------------------------
that it shall indemnify, save and hold harmless NetSelect, NS LLC and their
respective officers, directors, employees, managers, members, agents and
affiliates (other than InfoTouch), and their respective representatives
(collectively, the "NetSelect Affiliates"), from and against any and all costs,
losses, liabilities, damages, lawsuits, deficiencies, claims, actions, suits,
administrative, arbitration or other proceedings or governmental investigations
and expenses (whether or not arising out of third-party actions), including,
without limitation, interest, penalties, attorneys' fees and all amounts paid in
investigation, defense or settlement of any of the foregoing (herein,
collectively, the "Damages"), incurred in connection with or arising out of or
resulting from (i) all liabilities of InfoTouch (other than those liabilities
specifically set forth and described on Exhibit A hereto) not disclosed herein
and on the InfoTouch Disclosure Schedule arising, or based on acts, omissions or
conditions occurring or failing to occur, prior to or on the Closing Date; (ii)
any breach of any covenant or agreement by InfoTouch, not waived in writing by
NetSelect and NS LLC prior to the Closing Date, or the inaccuracy of any
representation or warranty, made by InfoTouch in this Agreement, the LLC
Agreement or any documents delivered in connection herewith or therewith prior
to the Closing Date, including the InfoTouch Disclosure Schedules and (iii) any
Damages arising from any liabilities of InfoTouch not
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disclosed herein or in the InfoTouch Disclosure Schedule relating to any or all
of the Intellectual Property, Assets and Liabilities assigned and transferred by
InfoTouch to NS LLC hereunder and pursuant to Exhibit A, but not including
liabilities arising out of actions, incurrences or circumstances by persons
other than InfoTouch after the Closing. The term "Damages" as used in this
Section 9.2 and Section 9.3 hereof is not limited to matters asserted by third
parties against InfoTouch, NetSelect, NS LLC or the NetSelect Affiliates, but
includes Damages incurred or sustained by InfoTouch, NetSelect, NS LLC or the
NetSelect Affiliates in the absence of third party claims.
SECTION 9.3. Indemnification by NetSelect. NetSelect hereby agrees
----------------------------
that it shall indemnify, save and hold harmless InfoTouch and its officers,
directors, employees, managers, members, agents and affiliates, and their
respective representatives (collectively, the "InfoTouch Affiliates"), from and
against any and all Damages incurred in connection with or arising out of or
resulting from any breach of any covenant or agreement by NetSelect or NS LLC,
not waived in writing by InfoTouch prior to the Closing Date, or the inaccuracy
of any representation or warranty, made by NetSelect in this Agreement or any
documents delivered in connection herewith prior to the Closing Date, including
the NetSelect Disclosure Schedule.
SECTION 9.4. Indemnification Limits. Notwithstanding any provision
----------------------
to the contrary contained in this Agreement, InfoTouch and NetSelect shall not
be obligated to indemnify the NetSelect Affiliates or the InfoTouch Affiliates,
as the case may be, for any Damages unless and until the aggregate amount of all
Damages subject to indemnification by NetSelect or InfoTouch, as the case may
be, hereunder exceeds $100,000, and then only to the extent that such Damages
shall exceed $100,000. In addition, NetSelect's and InfoTouch's respective
indemnification obligations hereunder shall commence on the Closing Date and
terminate upon the earlier of (i) the IPO or (ii) three months following the
completion of the audit of the 1998 fiscal year of NetSelect. Notwithstanding
the preceding sentence, any claims for indemnification shall survive the time at
which it would otherwise terminate pursuant to such sentence if notice of the
inaccuracy or breach thereof giving rise to such indemnity shall have been given
to the party against whom such indemnity may be sought prior to such time. For
purposes of this Agreement, "IPO" shall mean the initial public offering,
pursuant to a registration statement on Form S-1, Form S-2, Form SB-2, or any
similar form of registration statement adopted by the Securities and Exchange
Commission from and after the date hereof, which (a) yields proceeds of at least
$10,000,000 (net of underwriting discounts and commissions) and (b) would
establish an aggregate value for the NetSelect Class A Common Stock (assuming
the conversion of the NetSelect Class B Common Stock and the NetSelect Preferred
Stock) outstanding immediately prior to the consummation of such offering of at
least $40,000,000.
SECTION 9.5. Indemnification; Notice and Settlements. A party seeking
---------------------------------------
indemnification pursuant to Section 9.2 or Section 9.3 hereof (an "Indemnified
Party") shall give prompt notice to the party from whom such indemnification is
sought (the "Indemnifying Party") of the assertion of any claim, or the
commencement of any action or proceeding, in respect of which indemnity may be
sought hereunder. The Indemnified Party shall not have the right to,
-20-
<PAGE>
but shall, at the request of the Indemnifying Party, assume the defense of any
such suit, action or proceeding at the expense of the Indemnifying Party. The
Indemnified Party shall be entitled to participate in such defense so assumed,
but shall not be entitled to indemnification with respect to the costs and
expenses of such defense if the Indemnifying Party shall have assumed the
defense of the claim with counsel reasonably satisfactory to the Indemnified
Party. The Indemnifying Party shall not be liable under Section 9.2 or Section
9.3 hereof for any settlement effected without its consent, which consent may
not be unreasonably withheld, of any claim, litigation or proceeding in respect
of which indemnity may be sought hereunder. No investigation by an Indemnified
Party at or prior to the Closing shall relieve an Indemnifying Party of any
liability hereunder.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
SECTION 10.1. Amendment and Modification. This Agreement may be
--------------------------
amended or modified at any time by the parties hereto pursuant to an instrument
in writing signed by InfoTouch, NS LLC and NetSelect; provided, that Sections
--------
6.10 and 6.11 shall not be amended without RIN's written approval for so long as
RIN's approval rights granted pursuant to Sections 6.10(a) and (b) have not
terminated pursuant to Section 6.10(c).
SECTION 10.2. Extension; Waiver. At any time prior to the Closing
-----------------
Date, the party entitled to the benefit of any respective term or provision
hereof may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document, certificate
or writing delivered pursuant hereto or (c) waive compliance with any
obligation, covenant, agreement or condition contained herein. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party entitled to the benefits
of such extended or waived term or provisions The representations, warranties
and agreements of any of the parties provided for in this Agreement, and the
parties' obligations hereunder, shall continue in effect notwithstanding any
investigation made by the other party hereto.
SECTION 10.3. Entire Agreement; Assignment. This Agreement and the
----------------------------
other agreements contemplated hereby or referred to herein (a) constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties hereto with respect to the subject matter
hereof and (b) shall not be assigned, by operation of law or otherwise by a
party hereto, without the prior written consent of the other parties.
SECTION 10.4. Validity. The invalidity or unenforceability of any
--------
term or provision of this Agreement in any situation or jurisdiction shall not
affect the validity or enforceability of the other terms or provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
-21-
<PAGE>
SECTION 10.5. Notices. Unless otherwise provided herein, all notices
-------
and other communications hereunder shall be in writing and shall be deemed given
upon receipt by the other parties at the following addresses or facsimile
numbers:
(a) if to NetSelect, NS LLC or the NetSelect Affiliates, to:
NetSelect, Inc.
5655 Lindero Canyon Road
Westlake Village, CA 91362
Attention: Stuart Wolff, Ph.D.
Chairman and Chief Executive Officer
Facsimile No.: (818) 879-5822
With a copy to:
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, NY 10022
Attention: Charles H. Baker, Esq.
Facsimile No.: (212) 856-7814
(b) If to InfoTouch or the InfoTouch Affiliates, to:
InfoTouch Corporation
5655 Lindero Canyon Road, Suite 106
Westlake Village, CA 91362
Attention: Richard R. Janssen
President, Chief Executive Officer
Facsimile No.: (818) 879-5822
With a copy to:
Troop Meisinger Steuber & Pasich, LLP
10940 Wilshire Boulevard
Los Angeles, CA 90024-3902
Attention: Alan B. Spatz, Esq.
Facsimile No.: (310) 443-7599
SECTION 10.6. Governing Law. This Agreement shall be governed by the
-------------
laws of the State of Delaware (regardless of the laws that might otherwise
govern under applicable Delaware principles of conflicts of law) as to all
matters, including but not limited to matters of validity, construction, effect,
performance and remedies.
-22-
<PAGE>
SECTION 10.7. Descriptive Headings. The descriptive headings herein
--------------------
are inserted for convenience of reference only and shall in no way be construed
to define, limit, describe, explain, modify, amplify, or add to the
interpretation, construction or meaning of any provision of, or scope or intent
of, this Agreement nor in any way affect this Agreement.
SECTION 10.8. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 10.9. Parties in Interest. This Agreement shall be binding
-------------------
upon and insure solely to the benefit of each party hereto and its affiliates
and nothing in this Agreement, express or implied, is intended by or shall
confer upon any other person or entity any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement, provided, however, that
each of CDW Internet, Allen & Co. and Whitney shall be deemed third party
beneficiaries of the representations and warranties of NetSelect set forth in
Article V hereof and, provided, further, however that InfoTouch, NS LLC and RIN
shall be deemed third party beneficiaries of each of the Subscription
Agreements, substantially in the form of Exhibit F hereto, obtained by
NetSelect, and RIN shall be deemed a third party beneficiary of Sections 6.10,
6.11 and 10.1 hereof.
SECTION 10.10. No Waivers. Except as otherwise expressly provided
----------
herein, no failure to exercise, delay in exercising or single or partial
exercise of any right, power or remedy by any party, and no course of dealing
between the parties, shall constitute a waiver of any such right, power or
remedy.
SECTION 10.11. Specific Performance. The parties hereto agree that
--------------------
if any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage would occur,
no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties shall be entitled to specific performance of the
terms hereof and immediate injunctive relief, in addition to any other remedy at
law or equity.
SECTION 10.12. Definition of Knowledge. Any reference in this
-----------------------
Agreement or in any certificate delivered pursuant hereto to the "knowledge" of
InfoTouch (whether to "the best of InfoTouch's knowledge," "InfoTouch's
knowledge", or other similar expressions relating to the knowledge or awareness
of InfoTouch) shall include all matters which each of InfoTouch, any of the
respective officers or directors actually knew or should have known after
diligent inquiry. In making each representation or warranty set forth in this
Agreement, the InfoTouch Disclosure Schedule and any certificate delivered
pursuant hereto which is qualified by any such expression as to the knowledge of
InfoTouch, InfoTouch hereby represents and warrants that it has duly and
diligently inquired of all relevant officers, directors, and all other relevant
persons or entities as to the accuracy and completeness of such representation
or warranty.
-23-
<PAGE>
[SIGNATURE PAGES FOLLOW.]
-24-
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be duly signed as of the date first above written.
NETSELECT, INC.
By: /s/ Stuart Wolff
-------------------------------------------
Name: Stuart Wolff
Title: Chief Executive Officer
NETSELECT, L.L.C.
By: /s/ Stuart Wolff
-------------------------------------------
Name: Stuart Wolff
Title: Chairman of the Board of Managers
INFOTOUCH CORPORATION
By: /s/ Richard Janssen
-------------------------------------------
Name:
Title: President & CEO
<PAGE>
ANNEX A
NETSELECT INVESTORS AND CAPITALIZATION
<PAGE>
NetSelect Corp
Net Select Incorporated Capitalization Table
<TABLE>
<CAPTION>
Round 1
----------------------------------------------------------------
Voting Non-voting Imputed Total
Shares Shares Share price Shares Value
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Series A Preferred
J. H. Whitney 823,529 2.83 823,529 2,333,333
Allen & Co. 411,765 2.83 411,765 1,166,667
CDW 411,765 2.83 411,765 1,166,667
Subtotal: Institutional Investors 1,647,059 1,647,059 4,666,667
Series B Preferred
InfoTouch Investors 235,294 8.50 235,294 2,000,000
117,647 2.83 117,647 333,333
Subtotal: InfoTouch Investors 352,941 6.61 351,941 2,333,333
COMMON STOCK CLASS A CLASS B
--------------------------
CDW (voting) 236,470 236,470
CDW (non-voting) 116,470 116,470
-------------------------- -----------
Subtotal: CDW 236,470 116,470 352,940
SUBTOTAL: NETSELECT INC. 2,236,470 116,470 2,352,940 7,000,000
NetSelect Inc. Options
Richard Janssen 130,588 2.83 130,588 370,000
Stuart Wolff 174,118 2.83 174,118 493,333
Other management options 130,588 2.83 130,588 370,000
-------------------------- ----------------------
435,294 - 435,294 1,233,334
Total fully diluted shares 2,671,764 116,470 2,788,234 8,233,334
<CAPTION>
Before Options Fully Diluted
----------------------------------------
Ownership Voting Ownership Voting
% % % %
----------------------------------------
<S> <C> <C> <C> <C>
Series A Preferred
J. H. Whitney 35.00% 36.82% 29.54% 30.82%
Allen & Co. 17.50% 18.41% 14.77% 15.41%
CDW 17.50% 18.41% 14.77% 15.41%
Subtotal: Institutional Investors 70.00% 73.65% 59.07% 61.65%
Series B Preferred
InfoTouch Investors 10.00% 10.52% 8.44% 8.81%
5.00% 5.26% 4.22% 4.40%
Subtotal: InfoTouch Investors 15.00% 15.78% 12.66% 13.21%
COMMON STOCK
CDW (voting) 10.05% 10.57% 8.48% 8.85%
CDW (non-voting) 4.95% 0.00% 4.18% 0.00%
----------------------------------------
Subtotal: CDW 15.00% 10.57% 12.66% 8.85%
SUBTOTAL: NETSELECT INC. 108.60% 100.00% 84.39% 83.71%
NetSelect Inc. Options
Richard Janssen 4.68% 4.89%
Stuart Wolff 6.24% 6.52%
Other management options 4.68% 4.89%
---------------------
15.61% 16.29%
Total fully diluted shares 100% 100%
</TABLE>
1
<PAGE>
$7M ROUND (PRO RATA)
NET SELECT L.L.C. CAPITALIZATION TABLE
<TABLE>
<CAPTION>
ROUND 1 BEFORE OPTIONS
--------------------------------------------------------------------------------------------
VOTING NON-VOTING IMPUTED TOTAL OWNERSHIP VOTING
SHARES SHARES SHARE PRICE SHARES VALUE % %
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Series A Preferred
J. H. Whitney 823,529 2.83 823,529 2,333,333 18.92% 23.03%
Allen & Co. 411,765 2.83 411,765 1,166,667 9.48% 11.51%
CDW 411,765 2.83 411,765 1,166,667 9.48% 11.51%
----------- --------- --------------------------------
Subtotal: Institutional Investors 1,647,059 1,647,059 4,666,667 37.84% 46.05%
Series B Preferred
InfoTouch Investors 235,294 8.50 235,294 2,000,000 5.41% 6.58%
117,647 2.83 117,647 333,333 2.70% 3.29%
----------- --------------------- ---------------------------------
Subtotal: InfoTouch Investors 352,941 6.61 351,941 2,333,333 8.11% 9.87%
COMMON STOCK CLASS A CLASS B
-----------------------------
CDW (voting) 236,470 236,470 5.43% 6.61%
CDW (non-voting) 116,470 116,470 2.68% 0.01%
----------------------------- ----------- ------------------
Subtotal: CDW 236,470 116,470 352,940 8.11% 6.61%
SUBTOTAL: NETSELECT INC. 2,236,470 116,470 2,352,940 7,000,000 54.85% 62.53%
InfoTouch Corporation (voting) 1,340,001 1,340,001 30.78% 37.41%
InfoTouch Corporation (non-voting) 660,001 660,001 15.16% 0.09%
----------------------------- ------------------ ------------------------
SUBTOTAL: INFOTOUCH CORPORATION 1,340,001 660,001 2,000,001 45.95% 37.47%
SUBTOTAL: COMMON AND PREFERRED 3,576,471 776,471 4,352,941 2,000,000 100.00% 100.00%
------------------------
Ownership Voting
% %
-------------------------------------------------------------------------------------------------
Institutional Investors 46% 53%
-------------------------------------------------------------------------------------------------
InfoTouch Corp. & InfoTouch Investors 54% 47%
-------------------------------------------------------------------------------------------------
NetSelect Inc. Options
Richard Janssen 130,588 2.83 130,588 370,000
Stuart Wolff 174,118 2.83 174,118 493,333
Other management options 130,588 2.83 130,588 370,000
----------------------------- ------------------------------
435,294 - 435,294 1,233,334
TOTAL FULLY DILUTED SHARES 4,011,768 776,461 4,788,236 8,233,334
---------------------------------------
Institutional Investors
---------------------------------------
InfoTouch
---------------------------------------
Note: excludes unallocated options
---------------------------------------
-----------------------------------------------------------
Option pool 10%
CDW Promote 0.02%
New money 1,060,000
Effective price 2.83
R. Janssen share of option pool 50%
Stuart Wolff share of option pool 40%
Others' share of option pool 50%
-----------------------------------------------------------
<CAPTION>
FULLY DILUTED
--------------------------------------------
POST MONEY OWNERSHIP VOTING
VALUATION % %
--------------------------------------------
<S> <C> <C> <C>
Series A Preferred
J. H. Whitney 12,333,335 17.20% 20.58%
Allen & Co. 12,333,335 8.60% 10.25%
CDW 12,333,335 8.60% 10.28%
---------------------
Subtotal: Institutional Investors 34.40% 41.04%
Series B Preferred
InfoTouch Investors 37,000,006 4.91% 5.87%
12,333,335 2.46% 2.93%
-----------------------------------
Subtotal: InfoTouch Investors 28,777,782 7.37% 8.80%
COMMON STOCK
CDW (voting) 4.94% 5.89%
CDW (non-voting) 2.43% 0.00%
-----------------------------------
Subtotal: CDW 7.37% 5.89
SUBTOTAL: NETSELECT INC. 49.14% 55.75%
InfoTouch Corporation (voting) 27.99% 33.40%
InfoTouch Corporation (non-voting) 13.78% 0.00%
-----------------------------------
SUBTOTAL: INFOTOUCH CORPORATION 41.77% 33.40%
SUBTOTAL: COMMON AND PREFERRED 2.73% 3.269%
3.64% 3.64%
2.73% 3.26%
-----------------------------------
9.09% 10.85%
100.00% 100.00%
--------------------------------------
Ownership Voting
% %
----------------------------------------
45% 51%
----------------------------------------
52% 45%
----------------------------------------
----------------------------------------
</TABLE>
-----------------------------------------------------------
Option pool 10%
CDW Promote 0.02%
New money 1,060,000
Effective price 2.83
R. Janssen share of option pool 50%
Stuart Wolff share of option pool 40%
Others' share of option pool 50%
-----------------------------------------------------------
<PAGE>
ANNEX B
ESTIMATE OF
LIABILITIES AND EXPENSES OF CDW INTERNET, L.L.C.
<TABLE>
<S> <C> <C>
Stuart Wolff, Ph.D. $35,000.00 (representing consulting fees
for time accrued on a monthly basis)
CDW Internet, L.L.C. 18,000.00
Legal [TBD]
</TABLE>
2
<PAGE>
EXHIBIT "A"
ASSIGNMENT
---------
1. InfoTouch hereby irrevocably assigns, transfers and sets over unto
NetSelect, its successors and assigns, all of its right, title and interest in
and to, and all of the covenants, conditions, agreements, terms and obligations
of InfoTouch associated with, the assets and liabilities of InfoTouch set forth
on Schedule A attached hereto ("Transferred Assets and Liabilities"), to have,
hold, perform, observe and discharge the same, from and after the Closing Date;
provided however InfoTouch hereby expressly retains a royalty-free, license
(without any obligation to account therefor to NetSelect), which license shall
terminate on May 1, 1997, to use, modify and copy the Transferred Assets and
Liabilities consisting solely of the software, trademarks and patents identified
on Schedule A for the purpose of engaging in the kiosk business, which is
defined for these purposes as a non-internet connected stand alone interactive
business based on touch screen devices.
2. NetSelect, for itself and its successors and assigns, hereby accepts
all of InfoTouch's right, title and interest in and to, and covenants and agrees
with InfoTouch and its successors and assigns that it accepts, adopts and
assumes and agrees to perform, observe and discharge, from and after the Closing
Date, all of the covenants, conditions, agreements, terms and obligations on the
part of InfoTouch to be performed with respect to, the Transferred Assets and
Liabilities.
3. InfoTouch agrees to execute, acknowledge (where appropriate) and
deliver such other or further instruments of transfer or assignment as NetSelect
may reasonably require to confirm the foregoing, or as may be otherwise
reasonably requested by NetSelect to carry out the intent and purpose hereof.
3
<PAGE>
Schedule A
Transferred Assets and Liabilities
Intellectual Property
---------------------
1. Software developed by InfoTouch (all software developed and currently owned
by InfoTouch and the copyrights thereto)
This software includes all software included in Schedule A of the Operating
Agreement between RIN and RealSelect as further described in Schedule J
thereof. It also includes similar software developed by InfoTouch for use
with its HomeSelect kiosks.
2. Patents (all filed for)
InfoTouch has filed for a patent on the search methodology it uses to
select and display homes on the Internet and on kiosks. InfoTouch makes no
claim that this patent will be granted.
3. Trademarks (all filed for)
InfoTouch has filed for certain trademarks such as HomeSelect, AutoSelect,
LoanSelect. InfoTouch makes no claim that these trademarks will be upheld
or that they have not been used by other companies prior to InfoTouch
filing for their trademark.
4. Domain Site Registrations (all registered with Intemic showing InfoTouch as
the owner, except InfoTouch.com)
InfoTouch does not make any claim that it owns these registered names and
that they are not subject to possible dispute by third parties who may
claim prior rights or use.
5. Software licensed from Third Parties
InfoTouch either purchased (licensed) this software from retail stores and
through other retail distribution methods or as part of the purchase of a
computer system. Not withstanding anything herein to the contrary,
InfoTouch shall only be obligated to exercise reasonable commercial efforts
(not including payments to third parties) to assign such third party
software.. This software, if capitalized, is included in the fixed assets
listed below. Not included in this software licensed from third parties is
software necessary to run the kiosk business but not used for the Internet.
Financial Balances
------------------
<TABLE>
<S> <C>
1. Current Assets $0
A. Cash Balance
(less $18,433 to be retained by InfoTouch)
B. Accounts Receivable
i. HomeSelect Services Toronto $71,739
(See Note 2 to October 31, 1996 Balance Sheet)
ii. Internet Other Receivables $8,494
C. Allowance for Bad Debts ($2,000)
D. Security Deposits - Current
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
i. PS Limited (San Diego Office Deposit) $1,471
E. Prepaid Expenses
i. NAR Annual Convention Costs $15,030
F. Unbilled License Fees HomeSelect Toronto $90,000
(See Note 2 to October 31, 1996 Balance Sheet)
Total Current Assets $184,734
--------
2. Fixed Assets
A. Computer Equipment less depreciation 5,065
B. Computer Equipment - newer less depreciation $22,415
C. Furniture less depreciation (fully depreciated) $0
D. Furniture newer less depreciation $3,353
E. Office Equipment less depreciation (fully depreciated) $0
F. Software less depreciation $3,733
G. Software newer less depreciation $1,161
H. Hardware Purchased by InfoTouch never paid by RIN $60,022
(see attached schedule of assets, this computer equipment was
purchase for use on REALTOR.COM Internet Site but never paid
for by RIN)
I. Hardware Purchased by InfoTouch for RIN $45,777
(see attached schedule of assets, this computer equipment was
purchased for use on REALTOR.COM Internet Site and was paid
for by RIN but in Operating Agreement RIN agreed to provide
hardware to RWSelect for term of Operating Agreement at no
cost since the S262,504 receivable from RIN was written of by
InfoTouch as part of the agreements)
Total Fixed Assets $141,526
--------
3. Security Deposit Long Term
A. Rent deposit on Westlake office (Greenbrier Properties) $8,048
------
4. Current Liabilities
A. Accounts Payable
i. Balance as of 10/31/96 (see attached schedule) $107,230
B. Accrued Commissions $1,750
C. Accrued Bonus $6,140
D. Accrued Vacation $35,915
(limited to vacation earned for one year period per employee)
E. Accrued Sick Pay $35,359
F. Other Accrued Liabilities $5,801
G. Loans payable - Richard Janssen $152,307
Total Current Liabilities $344,502
--------
Total Book Value of Specific Assets ($9,504)
</TABLE>
5
<PAGE>
Note: the above assets and liabilities are indicated as of October 31, 1996, as
of the closing date November 26, 1996, these accounts have changed in the normal
course of business of InfoTouch and therefore the actual assets and liabilities
to be transferred should be those relating to the above in effect as of the
closing date November 26, 1996. InfoTouch will provide a closing balance sheet
as of November 26, 1996 indicating the actual assets and liabilities transferred
to NS LLC. Attached are the Financial Statements of InfoTouch Corporation
(unaudited) as of October 31, 1996 and the related notes. Also attached is an
analysis of the balance sheet that adjusts certain accounts and allocates the
balances between InfoTouch and NS LLC.
The above assets transferred to NS LLC include all of InfoTouch's Intellectual
Property and fixed assets, except those that are predominately used in the kiosk
business.
The following material unusual transactions occurred in November 1996 and will
be included in the transferred liabilities as of the November 26, 1996:
<TABLE>
<S> <C>
1. Loan from Mike Flannery $150,000
(this loan will be offset against planned investment by
"InfoTouch Investors" that InfoTouch has committed to be
invested in NetSelect, Inc. by December 6, 1996.)
2. Legal Fees by Troop Meisinger Steuber & Pasich, LLP. TBD
(these legal fees are related to the RIN/NAR transaction and incurred
in October and November and were estimated to be approximately S60,000
as of November 19, 1996)
3. NAR Annual Convention Estimated Expenses TBD
(see attached schedule, this includes estimated booth, hotel, equipment
promotion items, brochures, and PR and Video News Release activities
and totals $120,277)
</TABLE>
6
<PAGE>
Notes Regarding Allocation of Assets and Liabilities
to NetSelect L.L.C and lnfoTouch as of 10131/96
1. Accounts Receivable- RIN receivable written off as part of new agreement
--------------------
with RIN and NAR $262,504. Remaining balance includes $71,739 in billed
Internet fees to Toronto Franchisee, see note 2 below and $8,494 is
miscellaneous Internet receivables.
2. Toronto Unbilled Software License Fees: This $90,000 is unbilled license
---------------------------------------
fees per unsigned agreement with Toronto Franchisee. This amount and the
receivable above will be offset against a purchase of the Toronto
Franchisee that is currently under discussion.
3. Internet Hardware Purchased by InfoTouch for RIN: This was not included on
-------------------------------------------------
the books of InfoTouch because under our operating agreement this hardware
was to be paid for by RIN. The $60,022 (see attached schedule) was
Internet hardware purchased by InfoTouch for RIN but never paid for by RIN
and therefore should be capitalized as fixed assets on the balance sheet.
The $45,777 (see attached schedule) is Internet hardware purchased by
InfoTouch for RIN and paid for by RIN. However, as part of the agreement
to forgive the receivable due to InfoTouch by RIN, RIN agreed to provide
this equipment to us at no cost. Therefore this should be capitalized as a
fixed asset on the books of NetSelect.
4. Accrued Vacation: he amount of accrued vacation over one years vacation
-----------------
was transferred as a liability to InfoTouch and not included as a
liability of NetSelect.
5. Officer Loans and Warrants: The InfoTouch Board voted to convert these
---------------------------
shares to InfoTouch stock at the price that InfoTouch's financing round
will come in at. This will only dilute InfoTouch shareholders and have no
effect on NetSelect.
6. For Analysis of Other-Balances: See October 31, 1997 balance sheet and
-------------------------------
related footnotes.
7
<PAGE>
InfoTouch Corporation
FINANCIAL STATEMENTS
(UNAUDITED)
OCTOBER 31, 1996
8
<PAGE>
InfoTouch Corporation
Balance Sheet
October 31,1996
Unaudited
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets
Cash and cash equivalents $ 18,433
Accounts receivable, net (Notes 2 and 14) 334,100
Security deposits-current (Note 3) 16,984
Prepaid expenses (Note 4) 16,618
---------------------
Total current assets 386,135
Property and equipment, net (Note 5)