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Exhibit 10.7
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is
dated as of March 2, 2001 by and between LendingTree, Inc., a Delaware
corporation (the "Company"), and Xxxx Xxxxxx Capital Partners, Ltd. (the
"Purchaser"), a British Virgin Islands corporation.
WHEREAS, the parties desire that, upon the terms and subject
to the conditions contained herein, the Company may issue and sell to Purchaser
from time to time as provided herein, and Purchaser shall purchase, up to
$24,000,000 of Common Stock (as defined below); and
WHEREAS, such investments will be made by the Purchaser as
statutory underwriter of a registered indirect primary offering of such Common
Stock by the Company.
NOW, THEREFORE, in consideration of the foregoing premises,
and the promises and covenants herein contained, the receipt and sufficiency of
which are hereby acknowledged by the parties hereto, the parties, intending to
be legally bound, hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF COMMON STOCK
Section 1.1. Purchase and Sale of Stock. Subject to the terms
and conditions of this Agreement, the Company may, in its sole discretion, sell
and issue to the Purchaser and the Purchaser shall be obligated to purchase from
the Company, up to an aggregate of, $24,000,000 of the Common Stock, subject to
the terms herein.
Section 1.2. Purchase Price and Initial Closing. The Company
agrees to issue and sell to the Purchaser and the Purchaser agrees to purchase
that number of the Shares to be issued in connection with each Draw Down, if
any, in each case in consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement.
The delivery of executed documents under this Agreement and the other agreements
referred to herein and the payment of the fees set forth in Article I of the
Escrow Agreement, attached as Exhibit B hereto, (the "Initial Closing") shall
take place at the offices of Xxxxxxx Xxxxxx & Green, P.C., 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (i) within fifteen (15) days from the date hereof, or (ii)
such other time and place or on such date as the Purchaser and the Company may
agree upon (the "Initial Closing Date"). Each party shall deliver all documents,
instruments and writings required to be delivered by such party pursuant to this
Agreement at or prior to the Initial Closing.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1. Representation and Warranties of the Company. The
Company hereby makes the following representations and warranties to the
Purchaser:
(a) Organization, Good Standing and Power. The
Company is a corporation duly incorporated validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate authority to own, lease and operate its properties and assets
and to carry on its business as now being conducted, except as would
not have a Material Adverse Effect. The Company does not own more than
fifty percent (50%) of or control any other business entity except its
wholly owned subsidiary Homespace Acquisition Corp., a Delaware
Corporation and except as set forth in the SEC Documents. The Company
is duly qualified to do business and is in good standing as a foreign
corporation in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary,
other than those in which the failure so to qualify would not have a
Material Adverse Effect.
(b) Authorization, Enforcement. (i) The Company has
the requisite corporate power and corporate authority to enter into and
perform its obligations under the Transaction Documents and to issue
the Draw Down Shares pursuant to their respective terms, (ii) the
execution and delivery of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action and
no further consent or authorization of the Company or its Board of
Directors or stockholders is required (other than approvals required by
the Principal Market), and (iii) the Transaction Documents have been
duly executed and delivered by the Company and at the Initial Closing
shall constitute valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable
principles of general application. The Company has duly and validly
authorized and reserved for issuance shares of Common Stock sufficient
in number for the issuance of the Draw Down Shares.
(c) Capitalization. The authorized capital stock of
the Company consists of 100,000,000 shares of Common Stock of which
18,737,441 shares are issued and outstanding as of the date hereof and
10,000,000 shares of preferred stock, par value $0.01, of which none
are issued and outstanding. All of the outstanding shares of the
Company's Common Stock have been duly and validly authorized and are
fully paid and non-assessable, except as may be set forth in the SEC
Documents. Except as set forth in this Agreement and the Registration
Rights Agreement or as set forth in the SEC Documents, or on Schedule
2.1(c) hereto, no shares of Common Stock are entitled to preemptive
rights or registration rights and there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to,
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or securities or rights convertible into, any shares of capital stock
of the Company. Furthermore, except as set forth in this Agreement or
as set forth in the SEC Documents or on Schedule 2.1(c), there are no
contracts, commitments, understandings, or arrangements by which the
Company is or may become bound to issue additional shares of the
capital stock of the Company or options, securities or rights
convertible into shares of capital stock of the Company. Except as set
forth on Schedule 2.1(c), the Company is not a party to any agreement
granting registration rights to any person with respect to any of its
equity or debt securities. Except as set forth on Schedule 2.1(c), the
Company is not a party to, and it has no actual knowledge of, any
agreement restricting the voting or transfer of any shares of the
capital stock of the Company. Except as set forth in the SEC Documents
or on Schedule 2.1(c) hereto, the offer and sale of all capital stock,
convertible securities, rights, warrants, or options of the Company
issued prior to the Initial Closing complied in all material respects
with all applicable federal and state securities laws, and no
stockholder has a right of rescission or damages with respect thereto
which would have a Material Adverse Effect. The Company has made
available to the Purchaser true and correct copies of the Company's
certificate of incorporation as in effect on the date hereof (the
"Charter"), and the Company's bylaws as in effect on the date hereof
(the "Bylaws"). The Company has not received any notice from the
Principal Market questioning or threatening the continued inclusion of
the Common Stock on such market.
(d) [INTENTIONALLY DELETED]
(e) No Conflicts. Except as set forth on Schedule
2.1(e), the execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated herein do not and will not (i) violate any provision of
the Company's Charter or Bylaws, (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement,
instrument or obligation to which the Company is a party, (iii) create
or impose a lien, charge or encumbrance on any property of the Company
under any agreement or any commitment to which the Company is a party
or by which the Company is bound or by which any of its respective
properties or assets are bound, or (iv) result in a violation of any
federal or state statute, rule, regulation, order, judgment or decree
(including any federal or state securities laws and regulations)
applicable to the Company or any of its subsidiaries or by which any
property or asset of the Company or any of its subsidiaries are bound
or affected, except, in all cases in items (i)-(iv) above, for such
conflicts, defaults, termination, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The business of the Company
and its subsidiaries is not being conducted in violation of any laws,
ordinances or regulations of any governmental entity, except for
possible violations which singularly or in the aggregate do not and
will not have a Material Adverse Effect. The Company is not required
under any federal or state law, rule or regulation to obtain any
consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations
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under this Agreement, or issue and sell the Shares in accordance with
the terms hereof (other than any filings which may be required to be
made by the Company with the SEC or state securities administrators
subsequent to the Initial Closing and any registration statement which
may be filed pursuant hereto); provided, however, that for purposes of
the representations made in this sentence, the Company is assuming and
relying upon the accuracy of the relevant representations and
agreements of the Purchaser herein.
(f) SEC Documents, Financial Statements. The Common
Stock of the Company is registered pursuant to Section 12(g) of the
Exchange Act, and, except as disclosed in the SEC Documents or on
Schedule 2.1(f) hereto, the Company has timely filed in all material
respects, all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act, including material filed pursuant to
Section 13(a) or 15(d) of the Exchange Act. The Company has delivered
or made available to the Purchaser, true and complete copies of the SEC
Documents filed with the SEC since December 31, 1998, except for such
SEC Documents that may be retrieved through the XXXXX system. The
Company has not provided to the Purchaser any information which,
according to applicable federal or state securities laws, should have
been disclosed publicly by the Company but which has not been so
disclosed, other than with respect to the transactions contemplated by
this Agreement. As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the Exchange
Act or the Securities Act, as applicable, and the rules and regulations
of the SEC promulgated thereunder applicable to such documents, and, as
of their respective filing dates, none of the SEC Documents contained
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included
in the SEC Documents comply as to form in all material respects with
applicable accounting requirements under GAAP and the published rules
and regulations of the SEC or other applicable rules and regulations
with respect thereto. Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may
be condensed or summary statements), and fairly present in all material
respects the financial condition of the Company and its subsidiaries as
of the dates thereof and the results of operations and cash flows for
the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).
(g) Subsidiaries. The SEC Documents or Schedule
2.1(g) hereto sets forth each subsidiary of the Company, showing the
jurisdiction of its incorporation or organization and showing the
percentage of the Company's ownership of the outstanding stock or other
interests of such subsidiary. For the purposes of this Agreement,
"subsidiary" shall mean any corporation or other entity of which at
least a majority of the securities or other ownership interests having
ordinary voting power (absolutely or contingently) for the election of
directors or other persons performing similar functions are at the time
owned directly or indirectly by the Company and/or any of its other
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subsidiaries. All of the issued and outstanding shares of capital stock
of each subsidiary have been duly authorized and validly issued, and
are fully paid and non-assessable. There are no outstanding preemptive,
conversion or other rights, options, warrants or agreements granted or
issued by or binding upon any subsidiary for the purchase or
acquisition of any shares of capital stock of any subsidiary or any
other securities convertible into, exchangeable for or evidencing the
rights to subscribe for any shares of such capital stock. Neither the
Company nor any subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of
the capital stock of any subsidiary or any convertible securities,
rights, warrants or options of the type described in the preceding
sentence. Neither the Company nor any subsidiary is a party to, nor has
any actual knowledge of, any agreement restricting the voting or
transfer of any shares of the capital stock of any subsidiary.
(h) No Material Adverse Effect. Since the date of the
financial statements contained in the most recently filed Form 10-Q or
Form 10-K, whichever is most current, no Material Adverse Effect has
occurred or exists with respect to the Company, except as disclosed in
the SEC Documents or on Schedule 2.1(h) hereto.
(i) No Undisclosed Liabilities. Except as disclosed
in the SEC Documents or on Schedule 2.1(i) hereto, neither the Company
nor any of its subsidiaries has any liabilities, obligations, claims or
losses (whether liquidated or unliquidated, secured or unsecured,
absolute, accrued, contingent or otherwise) that would be required to
be disclosed on a balance sheet of the Company or any subsidiary
(including the notes thereto) in conformity with GAAP which are not
disclosed in the SEC Documents, other than those incurred in the
ordinary course of the Company's or its subsidiaries' respective
businesses since such date and which, individually or in the aggregate,
do not or would not have a Material Adverse Effect on the Company.
(j) No Undisclosed Events or Circumstances. Since the
date of the financial statements contained in the most recently filed
Form 10-Q, Form 10-K or Form 8-K, whichever is most current, no event
or circumstance has occurred or exists with respect to the Company or
its businesses, properties, prospects, operations or financial
condition, that, under applicable law, rule or regulation, requires
public disclosure or announcement prior to the date hereof by the
Company but which has not been so publicly announced or disclosed in
the SEC Documents.
(k) Indebtedness. The SEC Documents or Schedule
2.1(k) hereto sets forth as of the date hereof all outstanding secured
and unsecured Indebtedness of the Company or any subsidiary, or for
which the Company or any subsidiary has commitments. For the purposes
of this Agreement, "Indebtedness" shall mean (A) any liabilities for
borrowed money or amounts owed in excess of $250,000 (other than trade
accounts payable incurred in the ordinary course of business), (B) all
guaranties, endorsements and contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be
reflected in the Company's balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
and (C) the present
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value of any lease payments in excess of $250,000 due under leases
required to be capitalized in accordance with GAAP. Neither the Company
nor any subsidiary is in default with respect to any Indebtedness.
(l) Title to Assets. Each of the Company and the
subsidiaries has good and marketable title to all of its real and
personal property reflected in the SEC Documents, free of any
mortgages, pledges, charges, liens, security interests or other
encumbrances, except for those indicated in the SEC Documents or on
Schedule 2.1(1) hereto or such that do not cause a Material Adverse
Effect. All said leases of the Company and each of its subsidiaries are
valid and subsisting and in full force and effect.
(m) Actions Pending. There is no action, suit, claim,
investigation or proceeding pending or, to the actual knowledge of the
Company, threatened against the Company or any subsidiary which
questions the validity of this Agreement or the transactions
contemplated hereby or any action taken or to be taken pursuant hereto
or thereto. Except as set forth in the SEC Documents or on Schedule
2.1(m) hereto, there is no action, suit, claim, investigation or
proceeding pending or, to the actual knowledge of the Company,
threatened, against or involving the Company, any subsidiary or any of
their respective properties or assets, except as would not have a
Material Adverse Effect. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental
or regulatory body against the Company or any subsidiary, except as
would not have a Material Adverse Effect.
(n) Compliance with Law. The Company and each of its
subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for
the conduct of their respective businesses as now being conducted by
them unless the failure to possess such franchises, permits, licenses,
consents and other governmental or regulatory authorizations and
approvals, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
(o) Taxes. The Company and each subsidiary has filed
all material Tax Returns which it is required to file under applicable
laws; all such material Tax Returns are true and accurate in all
material respects and have been prepared in compliance with all
applicable federal and state laws; the Company has paid all Taxes due
and owing by it or any subsidiary (whether or not such Taxes are
required to be shown on a Tax Return), except as would not have a
Material Adverse Effect and has withheld and paid over to the
appropriate taxing authorities all Taxes which it is required to
withhold from amounts paid or owing to any employee, stockholder,
creditor or other third parties, except as would not have a Material
Adverse Effect; and since December 31, 1999, the charges, accruals and
reserves for Taxes with respect to the Company (including any
provisions for deferred income taxes) reflected on the books of the
Company are adequate in all material respects to cover any Tax
liabilities of the Company if its current tax year were treated as
ending on the date hereof.
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No material claim has been made by a taxing authority
in a jurisdiction where the Company does not file tax returns that the
Company or any subsidiary is or may be subject to taxation by that
jurisdiction. There are no federal or state audits or administrative or
judicial proceedings pending or being conducted with respect to the
Company or any subsidiary, except as would not have a Material Adverse
Effect; no material information related to Tax matters has been
requested by any federal or state taxing authority; and, except as
disclosed above, no written notice indicating an intent to open an
audit or other review has been received by the Company or any
subsidiary from any federal or state taxing authority. There are no
material unresolved questions or claims concerning the Company's Tax
liability. The Company (A) has not executed or entered into a closing
agreement pursuant to ss. 7121 of the Internal Revenue Code or any
predecessor provision thereof or any similar provision of state law;
and (B) has not agreed to or is required to make any adjustments
pursuant to ss. 481 (a) of the Internal Revenue Code or any similar
provision of state law by reason of a change in accounting method
initiated by the Company or any of its subsidiaries or has any actual
knowledge that the IRS has proposed any such adjustment or change in
accounting method, or has any application pending with any taxing
authority requesting permission for any changes in accounting methods
that relate to the business or operations of the Company. The Company
has not been a United States real property holding corporation within
the meaning of ss. 897(c)(2) of the Internal Revenue Code during the
applicable period specified in ss. 897(c)(1)(A)(ii) of the Internal
Revenue Code.
The Company has not made an election under ss. 341(f)
of the Internal Revenue Code. The Company is not liable for the Taxes
of another person that is not a subsidiary of the Company under (A)
Treas. Reg. ss. 1.1502-6 (or comparable provisions of state law), (B)
as a transferee or successor, (C) by contract or indemnity or (D)
otherwise. The Company is not a party to any tax sharing agreement. The
Company has not made any material payments, is not obligated to make
material payments nor is it a party to an agreement that could obligate
it to make any material payments that would not be deductible under ss.
280G of the Internal Revenue Code.
For purposes of this Section 2.1(o):
"IRS" means the United States Internal Revenue
Service.
"Tax" or "Taxes" means federal, state or other
income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications,
real or personal property, capital stock, license, payroll, wage or
other withholding, employment, social security, severance, stamp,
occupation, alternative or add-on minimum, estimated and other taxes of
any kind whatsoever (including, without limitation, deficiencies,
penalties, additions to tax, and interest attributable thereto) whether
disputed or not.
"Tax Return" means any return, information report or
filing with respect to Taxes, including any schedules attached thereto
and including any amendment thereof.
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(p) Certain Fees. Except as set forth on Schedule
2.1(p) hereto, no brokers, finders or financial advisory fees or
commissions will be payable by the Company or any subsidiary with
respect to the transactions contemplated by this Agreement.
(q) Disclosure. To the Company's actual knowledge,
neither this Agreement or the Schedules hereto nor any other documents,
certificates or instruments furnished to the Purchaser by or on behalf
of the Company or any subsidiary in connection with the transactions
contemplated by this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements made herein or therein, in the light of the
circumstances under which they were made herein or therein, not
misleading.
(r) Operation of Business. The Company and each of
the subsidiaries owns or possesses all patents, trademarks, service
marks, trade names, copyrights, licenses and authorizations as set
forth in the SEC Documents or on Schedule 2.1(r) hereto, and all rights
with respect to the foregoing, which are necessary for the conduct of
its business as now conducted.
(s) Insurance. Except as disclosed in the SEC
Documents or on Schedule 2.1(s) hereto, the Company carries or will
have the benefit of insurance in such amounts and covering such risks
as is adequate in all material respects for the conduct of its business
and the value of its properties and as is customary for companies
engaging in similar businesses and similar industries.
(t) Books and Records. The records and documents of
the Company and its subsidiaries accurately reflect in all material
respects the information relating to the business of the Company and
the subsidiaries, the location and collection of their assets, and the
nature of all transactions giving rise to the obligations or accounts
receivable of the Company or any subsidiary.
(u) Material Agreements. Except as set forth in the
SEC Documents, or on Schedule 2.1(u) hereto, neither the Company nor
any subsidiary is a party to any written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement, a copy of which
would be required to be filed with the SEC as an exhibit to a
registration statement on Form S-1 or other applicable form
(collectively, "Material Agreements") if the Company or any subsidiary
were registering securities under the Securities Act. Except as set
forth on Schedule 2.1(u), the Company and each of its subsidiaries has
in all material respects performed all the obligations required to be
performed by them to date under the foregoing agreements, have received
no notice of default and, to the best of the Company's knowledge are
not in default under any Material Agreement now in effect, the result
of which would cause a Material Adverse Effect. Except as set forth in
the SEC Documents, no written or oral contract, instrument, agreement,
commitment, obligation, plan or arrangement of the Company or of any
subsidiary limits or shall limit the payment of dividends on the
Company's Common Stock.
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(v) Transactions with Affiliates. Except as set forth
in the SEC Documents or on Schedule 2.1(v) hereto, there are no loans,
leases, agreements, contracts, royalty agreements, management contracts
or arrangements or other continuing transactions exceeding $100,000
between (A) the Company, any subsidiary or any of their respective
customers or suppliers on the one hand, and (B) on the other hand, any
officer, employee, consultant or director of the Company, or any of its
subsidiaries, or any person owning 5% or more of the capital stock of
the Company or any subsidiary or any member of the immediate family of
such officer, employee, consultant, director or stockholder or any
corporation or other entity controlled by such officer, employee,
consultant, director or stockholder, or a member of the immediate
family of such officer, employee, consultant, director or stockholder.
(w) Securities Laws. The Company has complied and
will comply with all applicable federal and state securities laws in
connection with the offer, issuance and sale of the Shares hereunder.
Neither the Company nor anyone acting on its behalf, directly or
indirectly, has or will sell, offer to sell or solicit offers to buy
the Shares or similar securities to, or solicit offers with respect
thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any person (other than the
Purchaser), so as to bring the issuance and sale of the Shares under
the registration provisions of the Securities Act and applicable state
securities laws. Neither the Company nor any of its affiliates, nor any
person acting on its or their behalf, has engaged in any form of
general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or
sale of the Shares.
(x) Employees. Neither the Company nor any subsidiary
has any collective bargaining arrangements or agreements covering any
of its employees. Except as set forth in the SEC Documents or on
Schedule 2.1(x) hereto, neither the Company nor any subsidiary is in
breach of any employment contract, agreement regarding proprietary
information, noncompetition agreement, nonsolicitation agreement,
confidentiality agreement, or any other similar contract or restrictive
covenant, relating to the right of any officer, employee or consultant
to be employed or engaged by the Company or such subsidiary, except as
would not have a Material Adverse Effect. Since the Company's initial
public offering, no officer, consultant or key employee of the Company
or any subsidiary whose termination, either individually or in the
aggregate, would have a Material Adverse Effect, has terminated or, to
the actual knowledge of the Company, has any present intention of
terminating his or her employment or engagement with the Company or any
subsidiary.
(y) Absence of Certain Developments. Except as
disclosed in SEC Documents, on Schedule 2.1(y) hereto or in widely
disseminated press releases, since the date of the financial statements
contained in the most recently filed Form 10-Q (or 10-QSB) or Form 10-K
(or 10KSB), whichever is most current, neither the Company nor any
subsidiary has:
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(i) issued any stock, bonds or other
corporate securities or any rights, options or warrants with
respect thereto (other than issuances under employee benefit
plans);
(ii) borrowed any material amount or
incurred or become subject to any material liabilities
(absolute or contingent) except current liabilities incurred
in the ordinary course of business which are comparable in
nature and amount to the current liabilities incurred in the
ordinary course of business during the comparable portion of
its prior fiscal year, as adjusted to reflect the current
nature and volume of the Company's or such subsidiary's
business and financial condition;
(iii) discharged or satisfied any material
lien or material encumbrance or paid any material obligation
or material liability (absolute or contingent), other than
current liabilities paid in the ordinary course of business;
(iv) declared or made any payment or
distribution of cash or other property to stockholders with
respect to its stock, or purchased or redeemed, or made any
agreements so to purchase or redeem, any shares of its capital
stock;
(v) sold, assigned or transferred any other
tangible assets, or canceled any debts or claims, except in
the ordinary course of business;
(vi) sold, assigned or transferred any
material intellectual property rights, or disclosed any
proprietary confidential information to any person except in
the ordinary course of business or to the Purchaser or its
representatives;
(vii) suffered any material losses (except
for anticipated losses consistent with prior quarters) or
waived any rights of material value, whether or not in the
ordinary course of business, or suffered the loss of any
material amount of prospective business;
(viii) made any material changes in employee
compensation except in the ordinary course of business and
consistent with past practices;
(ix) made capital expenditures or
commitments therefor that aggregate in excess of $500,000;
(x) entered into any other material
transaction, whether or not in the ordinary course of
business;
(xi) suffered any material damage,
destruction or casualty loss, whether or not covered by
insurance;
(xii) experienced any material problems with
labor or management in connection with the terms and
conditions of their employment; or
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(xiii) effected any two or more events of
the foregoing kind which in the aggregate would be material to
the Company or its subsidiaries.
(z) Governmental Approvals. Except as set forth in
the SEC Documents or on Schedule 2.1(z) hereto, and except for the
filing of any notice prior or subsequent to any Settlement Date that
may be required under applicable federal or state securities laws
(which if required, shall be filed on a timely basis), including the
filing of a registration statement or post-effective amendment pursuant
to this Agreement, no authorization, consent, approval, license,
exemption of, filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, is or
will be necessary for, or in connection with, the delivery of the
Shares, or for the performance by the Company of its obligations under
this Agreement, except as would not have a Material Adverse Effect.
(aa) Acknowledgment Regarding Purchaser's Purchase of
Shares. Company acknowledges and agrees that Purchaser is acting solely
in the capacity of arm's length purchaser with respect to this
Agreement and the transactions contemplated hereunder. The Company
further acknowledges that the Purchaser is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereunder.
The Company further represents to the Purchaser that the Company's
decision to enter into this Agreement has been based solely on (a) the
Purchaser's representations and warranties in Section 3.2, and (b) the
independent evaluation by the Company and its own representatives and
counsel.
(bb) Brokers and Finders Fees. Except as set forth on
Schedule 2.1(bb), the Company does not owe any broker or finder any
fees in connection with the transaction contemplated under this
Agreement.
Section 2.2. Representations and Warranties of the Purchaser.
The Purchaser hereby makes the following representations and warranties to the
Company:
(a) Organization and Standing of the Purchaser. The
Purchaser is a corporation duly incorporated, validly existing and in
good standing under the laws of the British Virgin Islands.
(b) Authorization and Power. The Purchaser has the
requisite power and authority to enter into and perform the Transaction
Documents and to purchase the Shares being sold to it hereunder. The
execution, delivery and performance of the Transaction Documents by
Purchaser and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action and
shall constitute valid and binding obligations of the Purchaser
enforceable against the Purchaser in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other equitable
principles of general application
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(c) No Conflicts. The execution, delivery and
performance of this Agreement and the consummation by the Purchaser of
the transactions contemplated hereby or relating hereto do not and will
not (i) result in a violation of the Purchaser's charter documents or
bylaws or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of any agreement, indenture or instrument
to which the Purchaser is a party, or result in a violation of any law,
rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to the Purchaser or its properties
(except for such conflicts, defaults and violations as would not,
individually or in the aggregate, have any adverse effect on the
business, operations, properties or financial condition of the
Purchaser). The Purchaser is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or
perform any of its obligations under this Agreement or to purchase the
Shares in accordance with the terms hereof.
(d) Financial Risks. The Purchaser acknowledges that
it is able to bear the financial risks associated with an investment in
the Shares and that it has been given full access to such records of
the Company and the subsidiaries and to the officers of the Company and
the subsidiaries as it has deemed necessary or appropriate to conduct
its due diligence investigation. The Purchaser is capable of evaluating
the risks and merits of an investment in the Shares by virtue of its
experience as an investor and its knowledge, experience, and
sophistication in financial and business matters and the Purchaser is
capable of bearing the entire loss of its investment in the Shares. The
Purchaser has the financial resources or commitments in place to meet
its obligations hereunder, including but not limited to, its obligation
to fund each properly noticed Draw Down.
(e) Accredited Investor. The Purchaser is an
"accredited investor" as defined in Regulation D promulgated under the
Securities Act.
(f) General. The Purchaser understands that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the
Purchaser set forth herein in order to determine the suitability of the
Purchaser to acquire the Shares.
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ARTICLE 3
COVENANTS
The Company covenants with the Purchaser as follows:
Section 3.1. The Shares. As of the date of each applicable
Draw Down, the Company will have authorized and reserved, free of preemptive
rights and other similar contractual rights of stockholders, a sufficient number
of its authorized but unissued shares of its Common Stock to cover the Draw Down
Shares to be issued in connection with such Draw Down requested under this
Agreement. The Draw Down Shares to be issued under this Agreement, when paid for
and issued in accordance with the terms hereof, shall be validly issued and
outstanding, fully paid and non-assessable, and the Purchaser shall be entitled
to all rights accorded to a holder of Common Stock. Anything in this Agreement
to the contrary notwithstanding, (i) at no time will the Company request a Draw
Down which would result in the issuance of an aggregate number of shares of
Common Stock pursuant to this Agreement which exceeds 19.9% of the number of
shares of Common Stock issued and outstanding on the Initial Closing Date
without obtaining stockholder approval of such excess issuance, or such other
amount as would require stockholder approval under rules of the Principal Market
or otherwise without obtaining stockholder approval of such excess issuance, and
(ii) at no time will the Company request a Draw Down to the extent that such
Draw Down would cause the Company to issue a number of shares of Common Stock
pursuant to such Draw Down greater than 8% of the then issued and outstanding
shares of Common Stock, based on the average of the VWAPs during the five (5)
Trading Days immediately prior to the date the Draw Down Notice is deemed
delivered.
Section 3.2. Securities Compliance. If applicable, the Company
shall notify the Principal Market, in accordance with its rules and regulations,
of the transactions contemplated by this Agreement, and shall take all other
necessary action and proceedings as may be required and permitted by applicable
law, rule and regulation, for the legal and valid issuance of the Shares to the
Purchaser or subsequent holders.
Section 3.3. Registration and Listing. The Company will cause
its Common Stock to continue to be registered under Sections 12(b) or 12(g) of
the Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, will comply with all federal and state
securities law requirements related to any registration statement filed pursuant
to this Agreement, and will not take any action or file any document (whether or
not permitted by the Securities Act or the Exchange Act or the rules promulgated
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under the Exchange Act or Securities Act,
except as permitted herein. The Company will take all action necessary to
continue the listing or trading of its Common Stock on the
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Principal Market and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Principal Market.
Section 3.4. Escrow Arrangement. The Company and the Purchaser
shall enter into an escrow arrangement with Xxxxxxx Xxxxxx & Green, P.C. (the
"Escrow Agent") in the form of Exhibit B hereto with respect to payment against
delivery of the Shares.
Section 3.5. Registration Rights Agreement. The Company and
the Purchaser shall enter into the Registration Rights Agreement in the Form of
Exhibit A hereto. Before the Purchaser shall be obligated to accept a Draw Down
request from the Company, the Company shall have caused a sufficient number of
shares of Common Stock to be registered to cover the Shares to be issued in
connection with such Draw Down.
Section 3.6. Accuracy of Registration Statement.On each
Settlement Date, the Registration Statement and the prospectus therein shall not
contain any untrue statement of a material fact or omit to state any material
fact to be required to be stated therein or necessary in order to make the
statements therein not misleading in light of the circumstances under which they
were made; and on such Settlement Date or date of filing of the Registration
Statement and the prospectus therein will not include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, the Company makes no representations or
warranties as to the information contained in or omitted from the Registration
Statement and the prospectus therein in reliance upon and in conformity with the
information furnished in writing to the Company by the Purchaser specifically
for inclusion in the Registration Statement and the prospectus therein.
Section 3.7. Compliance with Laws. The Company shall comply,
and cause each subsidiary to comply, with all applicable laws, rules,
regulations and orders, noncompliance with which could have a Material Adverse
Effect.
Section 3.8. Keeping of Records and Books of Account. The
Company shall keep and cause each subsidiary to keep adequate records and books
of account, in which substantially complete entries will be made in accordance
with GAAP consistently applied, reflecting all material financial transactions
of the Company and its subsidiaries, and in which, for each fiscal year, all
proper reserves for depreciation, depletion, obsolescence, amortization, taxes,
bad debts and other purposes in connection with its business shall be made,
except for any reserves or portions thereof which are not material.
Section 3.9. Other Agreements. The Company shall not enter
into any agreement the terms of which such agreement would restrict or impair
the ability of the Company to perform its obligations under this Agreement.
Section 3.10. Notice of Certain Events Affecting Registration;
Suspension of Right to Request a Draw Down. THE COMPANY WILL PROMPTLY NOTIFY THE
PURCHASER IN WRITING AND OBTAIN AN ACKNOWLEDGMENT FROM PURCHASER UPON THE
OCCURRENCE OF ANY OF THE FOLLOWING EVENTS IN RESPECT OF THE REGISTRATION
STATEMENT OR RELATED PROSPECTUS IN RESPECT OF
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THE SHARES (WITHOUT INDICATING TO THE PURCHASER THE NATURE OF SUCH AN EVENT):
(i) receipt of any request for additional information from the SEC or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement the response to which would require any amendments or
supplements to the Registration Statement or related prospectus; (ii) the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; and (iv) the
happening of any event that makes any statement made in the Registration
Statement or related prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related prospectus, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate. The Company shall
not deliver to the Purchaser any Draw Down Notice during the continuation of any
of the foregoing events. The Company shall promptly make available to the
Purchaser any such supplements or amendments to the related prospectus, at which
time, provided that the registration statement and any supplements and
amendments thereto are then effective, the Company may recommence the delivery
of Draw Down Notices.
Section 3.11. Consolidation; Merger. The Company shall not,
during a Draw Down Pricing Period or prior to ten (10) Trading Days' notice to
the Purchaser (provided that a Draw Down Pricing Period is not pending or in
effect during such period), effect any merger or consolidation of the Company
with or into, or a transfer of all or substantially all of the assets of the
Company to, another entity (a "Consolidation Event") unless the resulting
successor or acquiring entity (if not the Company) assumes by written instrument
or by operation of law the obligation to deliver to the Purchaser such shares of
stock and/or securities as the Purchaser is entitled to receive pursuant to this
Agreement.
Section 3.12. Limitation on Future Financing. The Company
agrees that it will not enter into any other equity line type of financing until
the earlier of (i) twenty-four (24) months from the Effective Date, or (ii)
sixty (60) days after the entire Commitment Amount has been purchased by the
Purchaser.
Section 3.13. Use of Proceeds. The proceeds from the sale of
the Shares will be used by the Company and its subsidiaries for general
corporate purposes.
The Purchaser covenants with the Company as follows:
Section 3.14. Compliance with Law. The Purchaser agrees that
its trading activities with respect to shares of the Company's Common Stock will
be in compliance with all
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applicable state and federal securities laws, rules and regulations and rules
and regulations of the Principal Market on which the Company's Common Stock is
listed. Without limiting the generality of the foregoing, the Purchaser agrees
that it will, whenever required by federal securities laws, deliver the
prospectus included in the Registration Statement to any purchaser of Shares
from the Purchaser.
Section 3.15. No Short Sales. [THE PURCHASER AND ITS
AFFILIATES SHALL NOT ENGAGE IN SHORT SALES OF THE COMPANY'S COMMON STOCK (AS
DEFINED IN APPLICABLE SEC AND THE PRINCIPAL MARKET RULES) DURING THE TERM OF
THIS AGREEMENT.]
Section 3.16. Cash. On each Settlement Date, the Purchaser
will have sufficient cash or cash equivalents to meet its obligations under this
Agreement.
ARTICLE 4
CONDITIONS TO INITIAL CLOSING AND DRAW DOWNS
Section 4.1. Conditions Precedent to the Obligation of the
Company. The obligation hereunder of the Company to proceed to close this
Agreement and to issue and sell the Shares to the Purchaser is subject to the
satisfaction or waiver, at or before the Initial Closing, and as of each
Settlement Date of each of the conditions set forth below. These conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion.
(a) Accuracy of the Purchaser's Representations and
Warranties. The representations and warranties of the Purchaser shall
be true and correct in all material respects as of the date when made
and as of the Initial Closing and as of each Settlement Date as though
made at that time, except for representations and warranties that speak
as of a particular date.
(b) Performance by the Purchaser. The Purchaser shall
have performed, satisfied and complied in all material respects with
all material covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Purchaser
at or prior to the Initial Closing and as of each Settlement Date.
(c) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.
Section 4.2. Conditions Precedent to the Obligation of the
Purchaser to Close. The obligation hereunder of the Purchaser to perform its
obligations under this Agreement and to purchase the Shares is subject to the
satisfaction or waiver, at or before the Initial Closing, of
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each of the conditions set forth below. These conditions are for the Purchaser's
sole benefit and may be waived by the Purchaser at any time in its sole
discretion.
(a) Accuracy of the Company's Representations and
Warranties. Each of the representations and warranties of the Company
shall be true and correct in all material respects as of the date when
made and as of the Initial Closing as though made at that time (except
for representations and warranties that speak as of a particular date).
(b) Performance by the Company. The Company shall
have performed, satisfied and complied in all material respects with
all covenants, agreements and conditions required by this Agreement to
be performed, satisfied or complied with by the Company at or prior to
the Initial Closing.
(c) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.
(d) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any governmental authority shall
have been commenced, and no investigation by any governmental authority
shall have been threatened, against the Purchaser or the Company or any
subsidiary, or any of the officers, directors or affiliates of the
Company or any subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in
connection with such transactions.
(e) Opinion of Counsel, Etc. At the Initial Closing,
the Purchaser shall have received an opinion of counsel to the Company,
dated as of the Initial Closing Date, in the form of Exhibit C hereto.
Section 4.3. Conditions Precedent to the Obligation of the
Purchaser to Accept a Draw Down and Purchase the Shares. The obligation
hereunder of the Purchaser to accept a Draw Down request and to acquire and pay
for the Shares is subject to the satisfaction at or before each Settlement Date,
of each of the conditions set forth below.
(a) Satisfaction of Conditions to Initial Closing.
The Company shall have satisfied, or the Purchaser shall have waived at
the Initial Closing, the conditions set forth in Section 5.2 hereof
(b) Effective Registration Statement. The
Registration Statement registering the Shares shall have been declared
effective by the SEC and shall remain effective on each Settlement
Date.
(c) No Suspension. Trading in the Company's Common
Stock shall not have been suspended by the SEC or the Principal Market
(except for any suspension of trading of limited duration agreed to by
the Company, which suspension shall be terminated prior to the delivery
of each Draw Down Notice), and, at any time prior to
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such Draw Down Notice, trading in securities generally as reported on
the Principal Market shall not have been suspended or limited, or
minimum prices shall not have been established on securities whose
trades are reported on the Principal Market unless the general
suspension or limitation shall have been terminated prior to the
delivery of such Draw Down Notice.
(d) Material Adverse Effect. No Material Adverse
Effect and no Consolidation Event where the successor entity has not
agreed to perform the Company's obligations shall have occurred.
(e) Opinion of Counsel. The Purchaser shall have
received (i) a "down-to-date" letter from the Company's counsel,
confirming that there is no change from the counsel's previously
delivered opinion, or else specifying with particularity the reason for
any change and an opinion as to the additional items specified in
Exhibit C hereto, and (ii) any other items set forth in Section 2.2 of
the Escrow Agreement.
ARTICLE 5
DRAW DOWN TERMS
Section 5.1. Draw Down Terms. Subject to the satisfaction of
the conditions set forth in this Agreement, the parties agree as follows:
(a) The Company, may, in its sole discretion, issue
and exercise up to twenty-four (24) draw downs (a "Draw Down") during
the Commitment Period, which Draw Downs the Purchaser shall be
obligated to accept.
(b) Only one Draw Down shall be allowed in each Draw
Down Pricing Period. The number of shares of Common Stock purchased by
the Purchaser with respect to each Draw Down shall be determined as set
forth in Section 5.1(e) herein and settled on:
(i) as to the 1st through the 11th Trading
Days after a Draw Down Pricing Period commences, on
or before the 12th Trading Day after a Draw Down
Pricing Period commences; and
(ii) as to the 12th through the 22nd Trading
Days after a Draw Down Pricing Period commences, on
or before the 23rd Trading Day after a Draw Down
Pricing Period (such settlement periods and such
settlement dates in subsection (i) and this
subsection (ii) each referred to as a "Settlement
Period" and a "Settlement Date", respectively).
(c) In connection with each Draw Down Pricing Period,
the Company shall set the Threshold Price in the Draw Down Notice,
which Threshold Price shall be the greater of (i) $0.75, and (ii) at
least 50% of the VWAP on the Trading Day
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immediately prior to the date on which the applicable Draw Down Notice
is delivered to the Purchaser.
(d) The minimum Investment Amount for any Draw Down
shall be $100,000 and the maximum Investment Amount as to each Draw
Down shall be the greater of (i) $1,000,000, and (ii) 20% of the
average of the VWAPs for the Common Stock for the twenty-two (22)
Trading Day period immediately prior to the applicable Commencement
Date (defined below) multiplied by the total trading volume in respect
of the Common Stock for such period.
(e) The number of Shares of Common Stock to be issued
on each Settlement Date shall be a number of shares (rounded to the
nearest whole share) equal to the sum of the quotients (for each
trading day within the Settlement Period) of (x) 1/22nd of the
Investment Amount, and (y) the Purchase Price on each Trading Day
within the Settlement Period, subject to the following adjustments:
(i) if the VWAP on a given Trading Day is
less than the Threshold Price, then the Investment Amount will
be reduced by 1/22nd and that day shall be withdrawn from the
Settlement Period;
(ii) if trading of the Common Stock on the
Principal Market is suspended for more than three (3) hours,
in the aggregate, on any Trading Day during the Settlement
Period, the Investment Amount shall be reduced by 1/22nd and
that day shall be withdrawn from the applicable Settlement
Period; and
(iii) if the Registration Statement is
suspended in accordance with Section 3(j) of the Registration
Rights Agreement for more than three (3) hours, in the
aggregate, on any Trading Day during the applicable Settlement
Period, the Investment Amount shall be reduced by 1/22nd and
that day shall be withdrawn from such Settlement Period.
(f) The Company must inform the Purchaser by
delivering a draw down notice, in the form of Exhibit D hereto (the
"Draw Down Notice"), via facsimile transmission in accordance with
Section 9.4 as to the amount of the Draw Down (the "Investment Amount")
the Company wishes to exercise, before the first day of the Draw Down
Pricing Period (the "Commencement Date"). If the Commencement Date is
to be the date of the Draw Down Notice, the Draw Down Notice must be
delivered to and receipt confirmed by the Purchaser at least one hour
before trading commences on such date. At no time shall the Purchaser
be required to purchase more than the maximum Investment Amount for a
given Draw Down Pricing Period so that if the Company chooses not to
exercise the maximum Investment Amount in a given Draw Down Pricing
Period the Purchaser is not obligated to and shall not purchase more
than the scheduled maximum Investment Amount in a subsequent Draw Down
Pricing Period.
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(g) On each Settlement Date, the Shares purchased by
the Purchaser shall be delivered to The Depository Trust Company
("DTC") on the Purchaser's behalf. Upon the Company electronically
delivering whole shares of Common Stock to the Purchaser or its
designees via DTC through its Deposit Withdrawal Agent Commission
("DWAC") system by 1:00 p.m. EST, the Purchaser shall wire transfer
immediately available funds to the Company's designated account on such
day, less any fees as set forth in Section 2.3 of the Escrow Agreement,
which fees shall be wired as directed in the Escrow Agreement. Upon the
Company electronically delivering whole shares of Common Stock to the
Purchaser or its designee's DTC account via DWAC after 1:00 p.m. EST,
the Purchaser shall wire transfer next day available funds to the
Company's designated account on such day, less any fees as set forth in
Section 2.3 of the Escrow Agreement, which fees shall be wired as
directed in the Escrow Agreement. In the event that either party elects
to use the Escrow Agent, the Shares shall be credited by the Company to
the DTC account designated by the Purchaser via DWAC upon receipt by
the Escrow Agent of payment for the Draw Down Shares into the Escrow
Agent's master escrow account, all as further set forth in the Escrow
Agreement. The Escrow Agent shall be directed to pay the purchase price
to the Company, net of escrow expenses and any additional fees as set
forth in Section 2.3 of the Escrow Agreement.
ARTICLE 6
TERMINATION
Section 6.1. Term. The term of this Agreement shall begin on
the date hereof and shall end 24 months from the Effective Date or as otherwise
set forth in Section 6.2.
Section 6.2. Other Termination.
(a) This Agreement shall terminate upon one (1)
Trading Day's notice if a Material Adverse Effect has occurred.
(b) The Company may terminate this Agreement (i) upon
one (1) Trading Day's notice if the Purchaser shall fail to fund more
than one properly noticed Draw Down within five (5) Trading Days of the
end of the applicable Settlement Period, or (ii) upon 10 Trading Days'
notice if the Company legally completes another private placement (not
including an equity line type financing); provided, however, as to
subsection (ii) only, the Company pays the Purchaser a termination fee
in the amount of $75,000, at the time notice is delivered there are no
pending Settlements and the Company does not issue a Draw Down Notice
during such notice period.
Section 6.3. Effect of Termination. In the event of
termination by the Company or the Purchaser pursuant to Section 6.2, written
notice thereof shall forthwith be given to the other party and the transactions
contemplated by this Agreement shall be terminated without further action by
either party. If this Agreement is terminated as provided in Section 6.1 or 6.2
herein, this Agreement shall become void and of no further force and effect,
except for Sections
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3.12, 8.1 and 8.2, and Article 7 herein. Nothing in this Section 6.3 shall be
deemed to release the Company or the Purchaser from any liability for any breach
under this Agreement, or to impair the rights of the Company or the Purchaser to
compel specific performance by the other party of its obligations under this
Agreement.
ARTICLE 7
INDEMNIFICATION
Section 7.1. General Indemnity.
(a) The Company agrees to indemnify and hold harmless
the Purchaser (and its directors, officers, affiliates, agents,
successors and assigns) from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys' fees, charges and
disbursements) incurred by the Purchaser as a result of any inaccuracy
in or breach of the representations, warranties or covenants made by
the Company herein.
(b) The Purchaser agrees to indemnify and hold
harmless the Company and its directors, officers, affiliates, agents,
successors and assigns from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys' fees, charges and
disbursements) incurred by the Company as result of any material
inaccuracy in or breach of the representations, warranties or covenants
made by the Purchaser herein.
Section 7.2. Indemnification Procedure. Any party entitled to
indemnification under this Article 7 (an "Indemnified Party") will give written
notice to the indemnifying party of any matters giving rise to a claim for
indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article 7 except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
Indemnified Party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of counsel to the Indemnified Party a conflict of interest
between it and the indemnifying party may exist with respect of such action,
proceeding or claim, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. In the event that the indemnifying party
advises an Indemnified Party that it will contest such a claim for
indemnification hereunder, or fails, within thirty (30) days of receipt of any
indemnification notice to notify, in writing, such person of its election to
defend, settle or compromise, at its sole cost and expense, any action,
proceeding or claim (or discontinues its defense at any time after it commences
such defense), then the Indemnified Party may, at its option, defend, settle or
otherwise compromise or pay such action or claim. In any event, unless and until
the indemnifying party elects in writing to assume and does so assume the
defense of any such claim, proceeding or action, the Indemnified Party's costs
(including reasonable attorneys' fees, charges and disbursements) and expenses
arising out of the defense, settlement or compromise of any
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such action, claim or proceeding shall be losses subject to indemnification
hereunder. The Indemnified Party shall reasonably cooperate with the
indemnifying party in connection with any settlement negotiations or defense of
any such action or claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the Indemnified
Party, which relates to such action or claim. The indemnifying party shall keep
the Indemnified Party fully apprised as to the status of the defense or any
settlement negotiations with respect thereto. If the indemnifying party elects
to defend any such action or claim, then the Indemnified Party shall be entitled
to participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any settlement of any
action, claim or proceeding effected without its prior written consent.
Notwithstanding anything in this Article 7 to the contrary, the indemnifying
party shall not, without the Indemnified Party's prior written consent, settle
or compromise any claim or consent to entry of any judgment in respect thereof
which imposes any material future obligation on the Indemnified Party or which
does not include, as an unconditional term thereof, the giving by the claimant
or the plaintiff to the Indemnified Party of a release from all liability in
respect of such claim. The indemnification required by this Article 7 shall be
made by periodic payments of the amount thereof during the course of
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred, within ten (10) Trading Days of written notice
thereof to the indemnifying party so long as the Indemnified Party irrevocably
agrees to refund such moneys, with interest, if it is ultimately determined by a
court of competent jurisdiction that such party was not entitled to
indemnification. The indemnity agreements contained herein shall be in addition
to (a) any cause of action or similar rights of the Indemnified Party against
the indemnifying party or others, and (b) any liabilities to which the
indemnifying party may be subject.
ARTICLE 8
MISCELLANEOUS
Section 8.1. Fees and Expenses. Each of the parties to this
Agreement shall pay its own fees and expenses related to the transactions
contemplated by this Agreement; except that, the Company shall pay, at the
Initial Closing, a non-accountable expense allowance of $35,000 for the
Purchaser's legal and administrative costs and expenses and any other additional
fees as set forth in the Escrow Agreement. In addition, the Company shall pay
all reasonable fees and expenses incurred by the Purchaser in connection with
any subsequent amendments, modifications or waivers of this Agreement, the
Escrow Agreement or the Registration Rights Agreement if such subsequent
amendment, modification or waiver is at the request of the Company, including,
without limitation, all reasonable attorneys' fees and expenses. The Company
shall pay all stamp or other similar taxes and duties levied in connection with
issuance of the Shares pursuant hereto.
Section 8.2. Specific Enforcement. [THE COMPANY AND THE
PURCHASER ACKNOWLEDGE AND AGREE THAT IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT
THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT PERFORMED IN ACCORDANCE
WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED. IT IS ACCORDINGLY AGREED
THAT THE PARTIES SHALL BE ENTITLED TO AN INJUNCTION OR INJUNCTIONS TO PREVENT OR
CURE BREACHES OF THE PROVISIONS OF THIS AGREEMENT
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AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF OR THEREOF, THIS
BEING IN ADDITION TO ANY OTHER REMEDY TO WHICH ANY OF THEM MAY BE ENTITLED BY
LAW OR EQUITY.]
Section 8.3. Entire Agreement; Amendment. The Transaction
Documents contain the entire understanding of the parties with respect to the
matters covered in the Transaction Documents. No provision of this Agreement may
be waived or amended other than by a written instrument signed by the party
against whom enforcement of any such amendment or waiver is sought and no
condition to closing any Draw Down in favor of the Purchaser may be waived by
the Purchaser.
Section 8.4. Notices. Any notice, demand, request, waiver or
other communication required or permitted to be given hereunder shall be in
writing and shall be effective (a) upon hand delivery or facsimile at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
If to the Company: 00000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Chief Financial Officer, General Counsel
and Controller
Tel: (000) 000-0000
Fax: (000) 000-0000
With copies to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
(which shall not constitute Four Times Square
notice) Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Purchaser: c/o Beacon Corporate Services, Ltd.
X.X. Xxx 000
Xxxx Xxxx, Xxxxxxx
Xxxxxxx Xxxxxx Xxxxxxx
Attn: Xxxxx Xxxx
Fax: (000) 000-0000
with copies to: Xxxxxxx Xxxxxx & Green P.C.
(which shall not constitute 000 Xxxx Xxxxxx
xxxxxx) Xxx Xxxx, XX 00000-0000
Tel: (000) 000-0000
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Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx
Any party hereto may from time to time change its address for
notices by giving written notice of such changed address to the other party
hereto in accordance herewith.
Section 8.5. Waivers. No waiver by either party of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
Section 8.6. Headings. The article, section and subsection
headings in this Agreement are for convenience only and shall not constitute a
part of this Agreement for any other purpose and shall not be deemed to limit or
affect any of the provisions hereof.
Section 8.7. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
assigns. The parties hereto may not amend this Agreement or any rights or
obligations hereunder without the prior written consent of the Company and each
Purchaser to be affected by the amendment. After Initial Closing, the assignment
by a party to this Agreement of any rights hereunder shall not affect the
obligations of such party under this Agreement.
Section 8.8. No Third Party Beneficiaries.This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
Section 8.9. Governing Law/Arbitration. This Agreement shall
be governed by and construed in accordance with the internal laws of the State
of New York, without giving effect to the choice of law provisions. The Company
and the Purchaser agree to submit themselves to the in personam jurisdiction of
the state and federal courts situated within the Southern District of the State
of New York with regard to any controversy arising out of or relating to this
Agreement. Any dispute under this Agreement or any Exhibit attached hereto shall
be submitted to arbitration under the American Arbitration Association (the
"AAA") in New York City, New York, and shall be finally and conclusively
determined by the decision of a board of arbitration consisting of three (3)
members (hereinafter referred to as the "Board of Arbitration") selected as
according to the rules governing the AAA. The Board of Arbitration shall meet on
consecutive business days in New York City, New York, and shall reach and render
a decision in writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the losing party is
required to pay to the other party in respect of a claim filed. In connection
with rendering its decisions, the Board of Arbitration shall adopt and follow
the laws of the State of New York. To the extent practical, decisions of the
Board of Arbitration shall be rendered no more than thirty (30) calendar days
following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to all parties
involved in the dispute. The Board of Arbitration shall be authorized and is
directed to enter a default judgment against any party refusing to participate
in the arbitration proceeding within
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thirty days of any deadline for such participation. Any decision made by the
Board of Arbitration (either prior to or after the expiration of such thirty
(30) calendar day period) shall be final, binding and conclusive on the parties
to the dispute, and entitled to be enforced to the fullest extent permitted by
law and entered in any court of competent jurisdiction. The prevailing party
shall be awarded its costs, including attorneys' fees, from the non-prevailing
party as part of the arbitration award. Any party shall have the right to seek
injunctive relief from any court of competent jurisdiction in any case where
such relief is available. The prevailing party in such injunctive action shall
be awarded its costs, including reasonable attorneys' fees, from the
non-prevailing party.
Section 8.10. Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument and shall become effective when counterparts have been
signed by each party and delivered to the other parties hereto, it being
understood that all parties need not sign the same counterpart. Execution may be
made by delivery by facsimile.
Section 8.11. Publicity. Neither the Company nor the Purchaser
shall issue any press release or otherwise make any public statement or
announcement with respect to this Agreement or the transactions contemplated
hereby or the existence of this Agreement unless, prior to issuing any such
press release, making any such public statement or announcement, the Company or
Purchaser, as applicable, obtains the prior consent of the other party, as
applicable, which consent shall not be unreasonably withheld or delayed.
Section 8.12. Severability. The provisions of this Agreement
are severable and, in the event that The Board of Arbitration or any court or
officials of any regulatory agency of competent jurisdiction shall determine
that any one or more of the provisions or part of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision or part of a provision of this Agreement
and this Agreement shall be reformed and construed as if such invalid or illegal
or unenforceable provision, or part of such provision, had never been contained
herein, so that such provisions would be valid, legal and enforceable to the
maximum extent possible, so long as such construction does not materially
adversely effect the economic rights of either party hereto.
Section 8.13. Further Assurances. From and after the date of
this Agreement, upon the request of the Purchaser or the Company, each of the
Company and the Purchaser shall execute and deliver such instruments, documents
and other writings as may be reasonably necessary or desirable to confirm and
carry out and to effectuate fully the intent and purposes of this Agreement.
Section 8.14. Effectiveness of Agreement. This Agreement shall
become effective only upon satisfaction of the conditions precedent to the
Initial Closing set forth in Article I of the Escrow Agreement.
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ARTICLE 9
DEFINITIONS
Section 9.1. Certain Definitions.
(a) "Commitment Amount" shall have the meaning
assigned to such term in Section 1.1 hereof.
(b) "Commitment Period" shall mean the period of 24
consecutive months commencing immediately after the Effective Date.
(c) "Common Stock" shall mean the Company's common
stock, $0.01 par value per share.
(d) "Draw Down" shall have the meaning assigned to
such term in Section 5.1(a) hereof.
(e) "Draw Down Notice" shall have the meaning
assigned to such term in Section 5.1(f) hereof.
(f) "Draw Down Pricing Period" shall mean a period of
twenty-two (22) consecutive Trading Days beginning on the date
specified in the Draw Down Notice (as defined in Section 5.1(f)
herein); provided, however, the Draw Down Pricing Period shall not
begin before the day on which receipt of such notice is confirmed by
the Purchaser.
(g) "Effective Date" shall mean the date the
Registration Statement of the Company covering the Shares being
subscribed for hereby is declared effective by the Securities and
Exchange Commission (the "SEC").
(h) "Exchange Act" shall mean the Securities and
Exchange Act of 1934, as amended.
(i) "GAAP" shall mean the United States Generally
Accepted Accounting Principles as those conventions, rules and
procedures are determined by the Financial Accounting Standards Board
and its predecessor agencies.
(j) "Initial Closing" shall have the meaning assigned
to such term in Section 1.2 hereof.
(k) "Initial Closing Date" shall have the meaning
assigned to such term in Section 1.2 hereof.
(l) "Investment Amount" shall have the meaning
assigned to such term in Section 5.1(f) hereof.
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(m) "Material Adverse Effect" means (i) any
suspension or termination of the effectiveness of the Registration
Statement which is not cured within 45 calendar days, (ii) the
commencement of a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law, and
(iii) the Company's common stock being de-listed and is no longer
eligible for trading on the Principal Market, unless such de-listing is
in connection with the Company's subsequent listing of the Common Stock
on the Nasdaq National Market, Nasdaq SmallCap Market, the American
Stock Exchange or the New York Stock Exchange.
(n) "Principal Market" shall mean initially the
Nasdaq National Market and shall include the American Stock Exchange,
the Nasdaq Small-Cap Market and the New York Stock Exchange if the
Company becomes listed and trades on such market or exchange after the
date hereof.
(o) "Purchase Price" shall mean, with respect to Draw
Down Shares purchased during each applicable Settlement Period, 95% of
the VWAP on the date in question.
(p) "Registration Statement" shall mean the
registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), to be filed with the Securities and Exchange
Commission for the registration of the Shares pursuant to the
Registration Rights Agreement attached hereto as Exhibit A (the
"Registration Rights Agreement).
(q) "SEC Documents" shall mean any of the Company's
Securities Act filings, latest Form 10-K as of the time in question,
all Forms 10-Q, 8-K filed thereafter and the Proxy Statement for its
latest fiscal year as of the time in question until such time as the
Company no longer has an obligation to maintain the effectiveness of a
Registration Statement as set forth in the Registration Rights
Agreement.
(r) "Settlement" shall mean the delivery of the Draw
Down Shares into the Purchaser's DTC account in exchange for payment
therefor.
(s) "Settlement Date" shall have the meaning assigned
to such term in Section 5.1(b).
(t) "Settlement Period" shall have the meaning
assigned to such term in Section 5.1(b).
(u) "Shares" shall mean the shares of Common Stock of
the Company being subscribed for hereunder to the extent such shares of
Common Stock are set forth in a Draw Down Notice (also referred to
herein as the "Draw Down Shares").
(v) "Threshold Price" shall mean the price per Share
designated by the Company as the lowest VWAP during any Draw Down
Pricing Period at which the Company will sell its Common Stock in
accordance with this Agreement.
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(w) "Trading Day" shall mean any day on which the
Principal Market is open for business.
(x) "Transaction Documents" shall mean this
Agreement, the Registration Rights Agreement and the Escrow Agreement.
(y) "VWAP" shall mean the daily volume weighted
average price of the Company's Common Stock on the Principal Market as
reported by Bloomberg Financial L.P. (or similar source mutually agreed
to by the parties)(based on a trading day from 9:30 a.m. Eastern Time
to 4:02 p.m. Eastern Time) using the VAP function on the date in
question.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorize officer as of this
__ day of March, 2001.
LENDINGTREE, INC.
By:
---------------------------------------
Xxxxxxx Xxxxx, Chief Executive Officer
XXXX XXXXXX CAPITAL PARTNERS, LTD.
By:
---------------------------------------
Xxxxx Xxxx, Authorized Signatory
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EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of March 2, 2001
between Xxxx Xxxxxx Capital Partners, Ltd. ("Purchaser") and LendingTree, Inc.
(the "Company").
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the parties shall enter into the Common Stock Purchase
Agreement, dated as of the date hereof, (the "Purchase Agreement") pursuant to
which the Purchaser has committed to purchase up to $24,000,000 of the Company's
Common Stock (terms not defined herein shall have the meanings ascribed to them
in the Purchase Agreement); and
WHEREAS, the execution and delivery of this Agreement and
granting to the Purchaser the registration rights set forth herein with respect
to the Shares is a component part of the transaction contemplated under the
Purchase Agreement.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term
"Registrable Security" means all the Shares that have not been previously sold
by Purchaser. In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Common
Stock, such adjustment shall be deemed to be made in the definition of
"Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Agreement.
Section 2. Restrictions on Transfer. The Purchaser
acknowledges and understands that in the absence of an effective Registration
Statement authorizing the resale of the Shares as provided herein, the Shares
are "restricted securities" as defined in Rule 144. The Purchaser understands
that no disposition or transfer of the Shares may be made by Purchaser in the
absence of (i) an opinion of counsel to the Purchaser, in form and substance
reasonably satisfactory to the Company, that such transfer may be made without
registration under the Securities Act, or (ii) such registration.
Section 3. Registration Rights With Respect to the Shares.
(a) The Company agrees that it will prepare and file
with the Securities and Exchange Commission ("Commission"), within
forty-five (45) days after the date hereof, a registration statement
(on Form S-3 and/or S-1, or other appropriate form of registration
statement) under the Securities Act (the "Registration Statement"), at
the sole expense of the Company (except as provided in Section 3(c)
hereof), so as to permit a public offering and resale of the Shares
under the Securities Act by Purchaser.
(b) The Company shall use its reasonable best efforts
to cause the Registration Statement to become effective within the
earlier of (i) 90 days of the date of filing the Registration
Statement, or (ii) five (5) days after receiving written notice of
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SEC clearance and will within said five (5) days request acceleration
of effectiveness. The Company will notify Purchaser of the
effectiveness of the Registration Statement within one Trading Day of
such event.
(c) The Company shall use its reasonable best efforts
to maintain the effectiveness of the Registration Statement or
post-effective amendment filed under this Section 3 hereof under the
Securities Act until the earliest of (i) the date that all the Shares
have been sold or otherwise disposed of pursuant to the Registration
Statement, (ii) twenty-five (25) months from the Effective Date of the
Registration Statement, or (iii) the date that all of the Shares have
been otherwise transferred to persons who may trade such shares without
restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such Shares not
bearing a restrictive legend (the "Effectiveness Period").
(d) All fees, disbursements and out-of-pocket
expenses and costs incurred by the Company in connection with the
preparation and filing of the Registration Statement under subparagraph
3(a) and in complying with applicable securities and Blue Sky laws
(including, without limitation, all attorneys' fees of the Company)
shall be borne by the Company. The Purchaser shall bear the cost of
underwriting and/or brokerage discounts, fees and commissions, if any,
applicable to the Shares being registered and the fees and expenses of
its counsel.
(e) The Purchaser and its counsel shall have a
reasonable period, not to exceed ten (10) Trading Days, to review the
proposed Registration Statement or any amendment thereto, prior to
filing with the Commission, and the Company shall provide the Purchaser
with copies of any comment letters received from the Commission with
respect thereto within two (2) Trading Days of receipt thereof.
(f) The Company shall, during regular business hours
at it corporate offices, make reasonably available for inspection by
Purchaser, any underwriter participating in any disposition pursuant to
the Registration Statement, and any attorney, accountant or other agent
retained by the Purchaser or any such underwriter all relevant
financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by the Purchaser or any such underwriter, attorney,
accountant or agent in connection with the Registration Statement, in
each case, as is customary for due diligence examinations; provided,
however, that as shall be set forth more fully in a non-disclosure
agreement satisfactory to the Company, all records, information and
documents that are designated in writing by the Company, in good faith,
as confidential, proprietary or containing any material non-public
information shall be kept confidential by the Purchaser and any such
underwriter, attorney, accountant or agent, unless such disclosure is
made pursuant to judicial process in a court proceeding (after first
giving the Company an opportunity promptly to seek a protective order
or otherwise limit the scope of the information sought to be disclosed)
or is required by law, or such records, information or documents become
available to the public generally or through a third party not in
violation of an accompanying obligation of confidentiality. If
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the foregoing inspection and information gathering would otherwise
disrupt the Company's conduct of its business, such inspection and
information gathering shall, to the maximum extent possible, be
coordinated on behalf of the Purchaser and the other parties entitled
thereto by one firm of counsel designed by and on behalf of the
Purchaser.
(g) The Company shall qualify any of the Shares for
sale in such states as the Purchaser reasonably designates and shall
furnish indemnification in the manner provided in Section 6 hereof.
However, the Company shall not be required to qualify in any state
which will require an escrow or other restriction relating to the
Company and/or the sellers, or which will require the Company to
qualify to do business in such state or require the Company to file
therein any general consent to service of process.
(h) The Company at its expense will supply the
Purchaser with copies of the Registration Statement and the final
prospectus included therein (the "Prospectus") and other related
documents in such quantities as may be reasonably requested by the
Purchaser.
(i) The Company shall not be required by this Section
3 to include a Purchaser's Shares in any Registration Statement which
is to be filed if, in the opinion of counsel for both the Purchaser and
the Company (or, should they not agree, in the opinion of another
counsel experienced in securities law matters acceptable to counsel for
the Purchaser and the Company) the proposed offering or other transfer
as to which such registration is requested is exempt from applicable
federal and state securities laws and would result in all purchasers or
transferees obtaining securities which are not "restricted securities",
as defined in Rule 144 under the Securities Act.
(j) If at any time or from time to time after the
effective date of the Registration Statement, the Company notifies the
Purchaser in writing of the existence of a Potential Material Event (as
defined in Section 3(k) below), the Purchaser shall not offer or sell
any Shares or engage in any other transaction involving or relating to
Shares, from the time of the giving of notice with respect to a
Potential Material Event until the Purchaser receives written notice
from the Company that such Potential Material Event either has been
disclosed to the public or no longer constitutes a Potential Material
Event (the "Suspension Period"). Notwithstanding anything herein to the
contrary, if a Suspension Period occurs during any period commencing on
a Trading Day a Draw Down Notice is deemed delivered and ending ten
(10) Trading Days following the end of the corresponding Draw Down
Pricing Period, then the Company must compensate the Purchaser for any
net decline in the market value of any Shares purchased by the
Purchaser pursuant to such Draw Down(s) and sold by the Purchaser
within five (5) Trading Days from the later of the end of such Draw
Down Pricing Period or the end of the Suspension Period. Net decline
shall be calculated as the difference between the highest VWAP during
the applicable Suspension Period and the price at which the Purchaser
sells the Shares. If a Potential Material Event shall occur prior to
the date the Registration Statement is filed, then the Company's
obligation to file the Registration Statement shall be delayed without
penalty for not more than thirty (30) calendar days. THE COMPANY MUST
GIVE PURCHASER NOTICE IN WRITING OF THE EXISTENCE OF A POTENTIAL
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MATERIAL EVENT PROMPTLY UPON KNOWLEDGE THAT SUCH AN EVENT EXISTS AND,
WHERE POSSIBLE, AT LEAST TWO (2) TRADING DAYS PRIOR TO THE FIRST DAY OF
A SUSPENSION PERIOD, IF LAWFUL TO DO SO.
(k) "Potential Material Event" means any of the
following: (i) the possession by the Company of material information
that is not ripe for disclosure in a registration statement, as
determined in good faith by the Chief Executive Officer or the Board of
Directors of the Company or that disclosure of such information in the
Registration Statement would be detrimental to the business and affairs
of the Company; or (ii) any material engagement or activity by the
Company which would, in the good faith determination of the Chief
Executive Officer or the Board of Directors of the Company, be
adversely affected by disclosure in a registration statement at such
time, which determination shall be accompanied by a good faith
determination by the Chief Executive Officer or the Board of Directors
of the Company that the Registration Statement could be materially
misleading absent the inclusion of such information.
Section 4. Cooperation with Company. The Purchaser will
cooperate with the Company in all respects in connection with this Agreement,
including timely supplying all information reasonably requested by the Company
(which shall include all information regarding the Purchaser and proposed manner
of sale of the Registrable Securities required to be disclosed in the
Registration Statement) and executing and returning all documents reasonably
requested in connection with the registration and sale of the Registrable
Securities and entering into and performing its obligations under any
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering. The Purchaser shall consent to be named as an underwriter
in the Registration Statement. Purchaser acknowledges that in accordance with
current Commission policy, the Purchaser will be deemed a statutory underwriter
of the Shares.
Section 5. Registration Procedures. If and whenever the
Company is required by any of the provisions of this Agreement to effect the
registration of any of the Registrable Securities under the Securities Act, the
Company shall (except as otherwise provided in this Agreement), as expeditiously
as reasonably practicable, subject to the Purchaser's assistance and cooperation
as reasonably required:
(a) prepare and file with the Commission such
amendments and supplements to the Registration Statement and the
Prospectus as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities covered by
such registration statement whenever the Purchaser of such Registrable
Securities shall desire to sell or otherwise dispose of the same
(including prospectus supplements with respect to the sales of
securities from time to time in connection with a registration
statement pursuant to Rule 415 promulgated under the Securities Act, if
Rule 415 is available for such purpose) and (ii) take all reasonable
action such that each of (A) the Registration Statement and any
amendment thereto does not, when it becomes effective, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (B) the
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Prospectus, and any amendment or supplement thereto, does not at any
time during the Effectiveness Period include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(b) prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the
distribution or delivery of the Prospectus (including any supplements
thereto), provide draft copies thereof to the Purchaser and reflect in
such documents all such comments as the Purchaser (and its counsel)
reasonably may propose and (ii) furnish to the Purchaser such numbers
of copies of the Prospectus including a preliminary prospectus or any
amendment or supplement to the Prospectus, as applicable, in conformity
with the requirements of the Securities Act, and such other documents,
as the Purchaser may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities;
(c) comply with the New York blue sky laws with
respect to the Registrable Securities (subject to the limitations set
forth in Section 3(g) above), and do such other reasonable acts and
things which may be reasonably necessary or advisable to enable the
Purchaser to consummate the public sale or other disposition in such
jurisdiction of the Registrable Securities;
(d) list such Registrable Securities on the Principal
Market, and any other exchange on which the Common Stock of the Company
is then listed, if the listing of such Registrable Securities is then
permitted under the rules of such exchange or the Nasdaq Stock Market;
(e) notify the Purchaser at any time when the
Prospectus is required to be delivered under the Securities Act, of the
happening of any event of which it has knowledge as a result of which
the Prospectus, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing, and the Company shall
prepare and file a curative amendment under Section 5(a) as quickly as
commercially reasonably possible;
(f) as promptly as practicable after becoming aware
of such event, notify the Purchaser (or, in the event of an
underwritten offering, the managing underwriters) of the issuance by
the Commission or any state authority of any stop order or other
suspension of the effectiveness of the Registration Statement and take
all lawful action to effect the withdrawal, rescission or removal of
such stop order or other suspension;
(g) take all such other lawful actions reasonably
necessary to expedite and facilitate the disposition by the Purchaser
of its Registrable Securities in accordance with the intended methods
therefor provided in the Prospectus which are customary for issuers to
perform under the circumstances;
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(h) in the event of an underwritten offering,
promptly include or incorporate in a prospectus supplement or
post-effective amendment to the Registration Statement such information
as the managing underwriters reasonably agree should be included
therein and to which the Company does not reasonably object and make
all required filings of such prospectus supplement or post-effective
amendment as soon as practicable after it is notified of the matters to
be included or incorporated in such prospectus supplement or
post-effective amendment; and
(i) maintain a transfer agent for its Common Stock.
Section 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless
the Purchaser and each person, if any, who controls the Purchaser
within the meaning of the Securities Act ("Distributing Purchaser")
against any losses, claims, damages or liabilities, joint or several
(which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees), to which the Distributing Purchaser may
become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement,
or any related preliminary prospectus, the Prospectus or amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement,
preliminary prospectus, the Prospectus or amendment or supplement
thereto in reliance upon, and in conformity with, written information
furnished to the Company by the Distributing Purchaser specifically for
use in the preparation thereof. This Section 6(a) shall not inure to
the benefit of any Distributing Purchaser with respect to any person
asserting such loss, claim, damage or liability who purchased the
Registrable Securities which are the subject thereof if the
Distributing Purchaser failed to send or give (in violation of the
Securities Act or the rules and regulations promulgated thereunder) a
copy of the Prospectus to such person at or prior to the written
confirmation to such person of the sale of such Registrable Securities,
where the Distributing Purchaser was obligated to do so under the
Securities Act or the rules and regulations promulgated thereunder.
This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Distributing Purchaser agrees that it will
indemnify and hold harmless the Company, and each officer, director of
the Company or person, if any, who controls the Company within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities (which shall, for all purposes of this Agreement, include,
but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees) to which the Company
or any such officer, director or controlling person
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may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement, or any related preliminary prospectus, the
Prospectus or amendment or supplement thereto, or arise out of or are
based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, preliminary
prospectus, the Prospectus or amendment or supplement thereto in
reliance upon, and in conformity with, written information furnished to
the Company by such Distributing Purchaser specifically for use in the
preparation thereof, or (ii) any person asserting such loss, claim,
damage or liability who purchased the Registrable Securities which are
the subject thereof if the Distributing Purchaser failed to send or
give (in violation of the Securities Act or the rules and regulations
promulgated thereunder) a copy of the Prospectus to such person at or
prior to the written confirmation to such person of the sale of such
Registrable Securities, where the Distributing Purchaser was obligated
to do so under the Securities Act or the rules and regulations
promulgated thereunder. This indemnity agreement will be in addition to
any liability which the Distributing Purchaser may otherwise have.
Notwithstanding anything to the contrary herein, the Distributing
Purchaser shall not be liable under this Section 6(b) for any amount in
excess of the net proceeds to such Distributing Purchaser as a result
of the sale of Registrable Securities pursuant to the Registration
Statement.
(c) Promptly after receipt by an indemnified party
under this Section 6 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 6, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve the indemnifying party
from any liability which it may have to any indemnified party except to
the extent of actual prejudice demonstrated by the indemnifying party.
In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, assume the defense thereof, subject to the
provisions herein stated and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action to its final conclusion.
The indemnified party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of
the action with counsel reasonably satisfactory to the indemnified
party; provided that the fees and expenses of such counsel shall be at
the expense of the indemnifying party if (i) the employment of such
counsel has been specifically authorized in writing by the indemnifying
party, or (ii)
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the named parties to any such action (including any impleaded parties)
include both the indemnified party and the indemnifying party and the
indemnified party shall have been advised by such counsel that there
may be one or more legal defenses available to the indemnifying party
different from or in conflict with any legal defenses which may be
available to the indemnified party (in which case the indemnifying
party shall not have the right to assume the defense of such action on
behalf of the indemnified party, it being understood, however, that the
indemnifying party shall, in connection with any one such action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable only for the reasonable fees and expenses of
one separate firm of attorneys for the indemnified party, which firm
shall be designated in writing by the indemnified party and be approved
by the indemnifying party). No settlement of any action against an
indemnified party shall be made without the prior written consent of
the indemnified party, which consent shall not be unreasonably
withheld.
All fees and expenses of the indemnified party
(including reasonable costs of defense and investigation in a manner
not inconsistent with this Section and all reasonable attorneys' fees
and expenses) shall be paid to the indemnified party, as incurred,
within ten (10) Trading Days of written notice thereof to the
indemnifying party; provided, that the indemnifying party may require
such indemnified party to undertake to reimburse all such fees and
expenses to the extent it is finally judicially determined that such
indemnified party is not entitled to indemnification hereunder.
Section 7. Contribution. In order to provide for just and
equitable contribution under the Securities Act in any case in which (i) the
indemnified party makes a claim for indemnification pursuant to Section 6 hereof
but is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
Section 6 hereof provide for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any indemnified party,
then the Company and the applicable Distributing Purchaser shall contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all reasonable
attorneys' fees), in either such case (after contribution from others) on the
basis of relative fault as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the applicable Distributing Purchaser
on the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Distributing Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this Section 7. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section 7
shall be deemed to include any legal or other expenses reasonably incurred by
such
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indemnified party in connection with investigating or defending any such action
or claim. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
Notwithstanding any other provision of this Section 7, in no
event shall any (i) Purchaser be required to undertake liability to any person
under this Section 7 for any amounts in excess of the dollar amount of the net
proceeds to be received by the Purchaser from the sale of the Purchaser's
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) pursuant to any Registration Statement under which such
Registrable Securities are or were to be registered under the Securities Act and
(ii) underwriter be required to undertake liability to any person hereunder for
any amounts in excess of the aggregate discount, commission or other
compensation payable to such underwriter with respect to the Registrable
Securities underwritten by it and distributed pursuant to the Registration
Statement.
Section 8. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be delivered as set forth
in the Purchase Agreement.
Section 9. Assignment. Neither this Agreement nor any rights
of the Purchaser or the Company hereunder may be assigned by either party to any
other person. Notwithstanding the foregoing, upon the prior written consent of
the Company, which consent shall not be unreasonably withheld or delayed in the
case of an assignment to an affiliate of the Purchaser, the Purchaser's interest
in this Agreement may be assigned at any time, in whole or in part, to any other
person or entity (including any affiliate of the Purchaser) who agrees to be
bound hereby.
Section 10. Counterparts/Facsimile. This Agreement may be
executed in two or more counterparts, each of which shall constitute an
original, but all of which, when together shall constitute but one and the same
instrument, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other party. In lieu of the
original, a facsimile transmission or copy of the original shall be as effective
and enforceable as the original.
Section 11. Remedies and Severability. The remedies provided
in this Agreement are cumulative and not exclusive of any remedies provided by
law. If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of those that may
be hereafter declared invalid, illegal, void or unenforceable.
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Section 12. Conflicting Agreements. The Company shall not
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the purchasers of Registrable Securities in this
Agreement or otherwise prevents the Company from complying with all of its
obligations hereunder.
Section 13. Headings. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 14. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made in New York by persons domiciled in New York City and without
regard to its principles of conflicts of laws. Any action may be brought as set
forth in the Purchase Agreement. The Company and the Purchaser agree to submit
themselves to the in personam jurisdiction of the state and federal courts
situated within the Southern District of the State of New York with regard to
any controversy arising out of or relating to this Agreement. Any party shall
have the right to seek injunctive relief from any court of competent
jurisdiction in any case where such relief is available. Any dispute under this
Agreement shall be submitted to arbitration under the American Arbitration
Association (the "AAA") in New York City, New York, and shall be finally and
conclusively determined by the decision of a board of arbitration consisting of
three (3) members (hereinafter referred to as the "Board of Arbitration")
selected as according to the rules governing the AAA. The Board of Arbitration
shall meet on consecutive business days in New York City, New York, and shall
reach and render a decision in writing (concurred in by a majority of the
members of the Board of Arbitration) with respect to the amount, if any, which
the losing party is required to pay to the other party in respect of a claim
filed. In connection with rendering its decisions, the Board of Arbitration
shall adopt and follow the laws of the State of New York. To the extent
practical, decisions of the Board of Arbitration shall be rendered no more than
thirty (30) calendar days following commencement of proceedings with respect
thereto. The Board of Arbitration shall cause its written decision to be
delivered to all parties involved in the dispute. The Board of Arbitration shall
be authorized and is directed to enter a default judgment against any party
refusing to participate in the arbitration proceeding within thirty days of any
deadline for such participation. Any decision made by the Board of Arbitration
(either prior to or after the expiration of such thirty (30) calendar day
period) shall be final, binding and conclusive on the parties to the dispute,
and entitled to be enforced to the fullest extent permitted by law and entered
in any court of competent jurisdiction. The prevailing party shall be awarded
its costs, including attorneys' fees, from the non-prevailing party as part of
the arbitration award. Any party shall have the right to seek injunctive relief
from any court of competent jurisdiction in any case where such relief is
available. The prevailing party in such injunctive action shall be awarded its
costs, including attorney's fees, from the non-prevailing party.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed, on this ___ day of March,
2001
LENDINGTREE, INC.
By:
-----------------------------------------
Xxxxxxx Xxxxx, Chief Executive Officer
XXXX XXXXXX CAPITAL PARTNERS, LTD.
By:
-----------------------------------------
Xxxxx Xxxx, Authorized Signatory
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