EXHIBIT 10.39
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN PORTIONS OF THIS
DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
FORMATION AND FUNDING AGREEMENT
by and between
XXXXXXXXX.XXX INCORPORATED
and
ALLIANCE PARTNERS, LP
Dated as of March 17, 2000
FORMATION AND FUNDING AGREEMENT
FORMATION AND FUNDING AGREEMENT (this "Agreement") dated as of March
17, 2000, by and between XXXXXXXXX.XXX INCORPORATED, a Delaware corporation
("Priceline"), and ALLIANCE PARTNERS, LP, a Delaware limited partnership
("Alliance"). Priceline and Alliance are hereunder also referred to
collectively as the "Parties" and individually as a "Party."
RECITALS
WHEREAS, Priceline is a public e-commerce company that facilitates the
sale of products and services over the Internet by means of the Priceline
Business Model; and
WHEREAS, Priceline has developed an Internet web site, currently
located at xxxx://xxx.Xxxxxxxxx.xxx (the "Priceline Site"), which
facilitates the marketing of various products and services using the
Priceline Business Model; and
WHEREAS, Alliance is a privately held financial services holding
company which owns and operates a number of businesses in the mortgage
lending and consumer loan origination industries; and
WHEREAS, Alliance has formed an operating subsidiary for the primary
purpose of acting as a broker and/or lender of residential mortgage loans
through an Internet marketing channel (the "Plan") and, in connection
therewith, desires to use the Priceline Business Model and certain
intellectual property of Priceline; and
WHEREAS, Priceline desires to license to an Affiliate of Alliance the
Priceline Business Model and certain intellectual property of Priceline in
furtherance of the Plan, and to invest certain funds in the operating
subsidiary formed by Alliance for the primary purpose of effectuating the
Plan.
NOW, THEREFORE, in consideration of the foregoing and the covenants,
representations and warranties contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:
1. DEFINITIONS
1.1 "Advertising Agreement" means the Advertising and Services
Agreement between Priceline and PricelineMortgage dated as of the date
hereof, as amended from time to time.
1.2 "Advertising Fees" means any and all fees payable under the
Advertising Agreement.
1.3 "Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control
with such Person and (ii) any officer or director of such Person. For
purposes of this definition, the terms "controls," "is controlled by," or
"is under common control with" shall mean possession, direct or indirect,
of the power to direct or cause the direction of the management and
policies of a Person or entity, whether through the ownership of voting
securities, by contract or otherwise.
1.4 "Alliance" means Alliance Partners, LP, a Delaware limited
partnership, as set forth in the Preamble to this Agreement.
1.5 "Alliance Call" shall have the meaning set forth in Section
9.3(a) hereof.
1.6 "Alliance Call Notice" has the meaning set forth in Section
9.3(b) hereof.
1.7 "Alliance Mortgage" means Alliance Mortgage Company, a Florida
corporation and an indirect wholly owned subsidiary of Alliance.
1.8 "Alliance Put" has the meaning set forth in Section 9.2(a)
hereof.
1.9 "Alliance Put Notice" has the meaning set forth in Section 9.2(b)
hereof.
1.10 "AllPrice" means AllPrice Holdings, Inc., a Delaware corporation
and a wholly owned subsidiary of AMC Acquisitions.
1.11 "AllPrice Certificate" means the Certificate of Incorporation of
AllPrice, as amended from time to time.
1.12 "AllPrice Common Stock" means the common stock, par value $.01
per share, of AllPrice.
1.13 "AllPrice Directors" has the meaning set forth in Section 5.4
hereof.
1.14 "AMC Acquisitions" means AMC Acquisitions, Inc., a Florida
corporation and a wholly owned subsidiary of Alliance.
1.15 "Annual Plan" means a business operations plan detailing
PricelineMortgage's goals and procedures for personnel, technical,
financial, administrative, marketing, and other significant activities for
PricelineMortgage's next succeeding fiscal year, as approved each year and
revised from time to time by the Board.
1.16 "Applicable Law" means, as to any Person, any statute, law, rule,
regulation, directive, treaty, judgment, order, decree or injunction of any
Governmental Authority that is applicable to or binding upon such Person or
any of its properties.
1.17 "Board" means the Board of Directors of PricelineMortgage as
described in the LLC Agreement.
1.18 "Business" means the business of PricelineMortgage, as described
in the LLC Agreement, as amended from time to time.
1.19 "Business Day" means each day of the calendar year other than a
Saturday, a Sunday or a day on which banks are authorized or required to
close in the States of Connecticut or Florida.
1.20 "Call Price" has the meaning set forth in Section 9.1(a) hereof.
1.21 "Capital Stock" means (i) in the case of a corporation, capital
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a partnership,
partnership interests (whether general or limited), (iv) in the case of a
limited liability company, shares, interests, units or any other equity
interests in such limited liability company and (v) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
1.22 "Cash Payment" has the meaning set forth in Section 9.4(b)(i)
hereof.
1.23 "Change in Control Transaction" means, as to any Person, (i) any
Initial Public Offering of any class of capital stock of such Person
following which the holders of such Person's capital stock immediately
prior to such Initial Public Offering shall cease to own, beneficially and
of record, shares representing at least fifty percent (50%) of the
aggregate ordinary voting power represented by the issued and outstanding
voting securities of such Person; (ii) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of such Person; (iii) any sale, pledge,
exchange or other transfer (in one transaction or a series of related
transactions) of shares of capital stock of such Person such that any
Person or group of Persons (other than the holders of such capital stock
immediately prior to such transaction or series of transactions) shall
become the owner, directly or indirectly, beneficially or of record, of
shares representing more than fifty percent (50%) of the aggregate ordinary
voting power represented by the issued and outstanding voting securities of
such Person; (iv) any merger, consolidation, recapitalization or similar
transaction in which the outstanding voting capital stock of such Person is
converted into or exchanged for cash, securities or other property, such
that immediately after such transaction any Person or group of Persons
(other than the holders of such capital stock immediately prior to such
transaction or series of transactions) shall become the owner, directly or
indirectly, beneficially or of record, of shares representing more than
fifty percent (50%) of the aggregate ordinary voting power represented by
the issued and outstanding voting securities of such Person; (v) the
replacement of a majority of the Board of Directors of such Person over a
two-year period from the directors who constituted the Board of Directors
of such Person at the beginning of such period, where such replacement
shall not have been approved by a vote of at least a majority of the Board
of Directors of such Person who either were members of such Board of
Directors at the beginning of such period or whose election as members of
such Board of Directors was previously so approved; or (vi) the liquidation
or dissolution of such Person.
1.24 "Closing" has the meaning set forth in Section 4.1 hereof.
1.25 "Confidential Information" has the meaning set forth in Section
6.8(a) hereof.
1.26 "Consents" has the meaning set forth in Section 7.1(c) hereof.
1.27 "Conversion" means the conversion, at any time and at the option
of Priceline, of the principal amount and interest due and owing under the
Note into One Thousand (1,000) duly authorized, validly issued, fully paid
and nonassessable shares of AllPrice Common Stock.
1.28 "Conversion Date" means the date of exercise by Priceline, or any
successor thereto or assignee thereof, of its right of Conversion pursuant
to the terms and provisions of the Note.
1.29 "Development Assets" means, collectively, all software and
customer interfaces developed by Alliance and/or Priceline for use by
PricelineMortgage.
1.30 "Development Costs" means the costs paid or incurred and
capitalized by Alliance and Priceline or any of their respective Affiliates
in connection with the acquisition and/or development of the Development
Assets.
1.31 "Director" means a member of the Board with the powers and duties
as specified in the LLC Agreement.
1.32 "Disclosing Party" has the meaning set forth in Section 6.8(a)
hereof.
1.33 "Equity Interests" means Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt security
that is convertible into, or exchangeable for, Capital Stock).
1.34 "FAB" means First Alliance Bank, a federal savings association
chartered by the OTS.
1.35 "FAB Directors" has the meaning set forth in Section 5.4 hereof.
1.36 "Fair Market Value" means the average of the daily closing prices
per share of Priceline Common Stock, as reported on the NASDAQ Stock Market
(or, if the Priceline Common Stock shall not trade on the NASDAQ Stock
Market on such date, as reported on such other national securities exchange
or automated quotation system on which the Priceline Common Stock shall
trade), for the thirty (30) trading days immediately preceding the date as
of which Fair Market Value is to be calculated.
1.37 "Governmental Authority" means any domestic or foreign
government, governmental authority, court, tribunal, agency or other
regulatory, administrative or judicial agency, commission or organization,
and any subdivision, branch or department of any of the foregoing.
1.38 "Independent Auditor" means the independent certified public
accounting firm engaged by PricelineMortgage to act as its independent
auditor.
1.39 "Initial Public Offering" means, as to any Person, an initial
public offering of any class of such Person's capital stock or other equity
interests pursuant to an effective Registration Statement filed under the
Securities Act.
1.40 "Investment Date" means the date on which AllPrice makes its
initial investment in PricelineMortgage, as contemplated by Section 2.3(b)
hereof.
1.41 "LendingTree" means LendingTree, Inc., a Delaware corporation.
1.42 "Licensing Agreement" means the Licensing Agreement by and among
Priceline, PricelineMortgage and AllPrice dated as of the date hereof, as
amended from time to time.
1.43 "LLC Agreement" means the limited liability company agreement of
PricelineMortgage dated as of the date hereof, as amended from time to
time.
1.44 "Loan Path" means any screen flow or customer interface that is
powered by PricelineMortgage.
1.45 "Note" means the 5.11% Convertible Secured Note dated as of the
date hereof in the aggregate principal amount of Three Million Six Hundred
Twenty Thousand Dollars ($3,620,000) evidencing the obligation of AllPrice
to repay the Priceline Funds to Priceline upon the terms and subject to the
conditions set forth therein.
1.46 "Option" means the option granted by AMC Acquisitions to
Priceline under the Option Agreement pursuant to which Priceline shall have
the right, at any time from and after the Conversion Date, to purchase all
of the Equity Interests of AllPrice then held by AMC Acquisitions at an
exercise price of One Dollar ($1.00) such that, following the exercise of
the Conversion and the Option, Priceline shall own one hundred percent
(100%) of the issued and outstanding Equity Interests of AllPrice.
1.47 "Option Agreement" means the Option Agreement, dated as of the
date hereof, between Priceline and AMC Acquisitions, pursuant to which AMC
Acquisitions has granted the Option to Priceline.
1.48 "OTS" means the Office of Thrift Supervision.
1.49 "Party" and "Parties" have the meanings set forth in the Preamble
to this Agreement.
1.50 "Permitted Transfer" has the meaning set forth in Section 8.1
hereof.
1.51 "Person" means an individual, Governmental Authority,
partnership, limited liability company, firm, corporation, or other
business association.
1.52 "Pilot Program" means the pilot program established by Alliance
and Priceline on October 10, 1999 for the purpose of implementing the Plan
on a preliminary basis in a limited number of jurisdictions.
1.53 "Pilot Program Assets" means all assets acquired or developed by
Alliance Mortgage and/or Priceline for use in connection with the
formation, development or operation of the Pilot Program.
1.54 "Pilot Program Costs" means, collectively, all costs and expenses
paid or incurred by Alliance and Priceline or any of their respective
Affiliates in forming, developing and operating the Pilot Program, but
excluding the net book value of the Pilot Program Assets.
1.55 "Plan" has the meaning set forth in the Recitals to this
Agreement.
1.56 "Pledge Agreement" means the Pledge Agreement dated as of the
date hereof between Priceline, as secured party, and AllPrice, as grantor,
as amended from time to time.
1.57 "Pre-Advertising Income" means, with respect to any period, the
net income of PricelineMortgage before deduction for taxes, plus the amount
of any Advertising Fees attributable to such period.
1.58 "Priceline" means xxxxxxxxx.xxx Incorporated, a Delaware
corporation, as set forth in the Preamble to this Agreement.
1.59 "Priceline Business Model" means the product distribution model
utilized by Priceline on the Priceline Site pursuant to which a consumer
identifies a specific price and terms under which he or she will purchase a
product or service, and Priceline attempts to find a seller willing to sell
the product or service to the consumer on the terms identified by the
consumer.
1.60 "Priceline Call" has the meaning set forth in Section 9.1(a)
hereof.
1.61 "Priceline Call Notice" has the meaning set forth in Section
9.1(b) hereof.
1.62 "Priceline Common Stock" means the common stock, par value $.008
per share, of Priceline.
1.63 "Priceline Funds" has the meaning set forth in Section 3.3(b)
hereof.
1.64 "Priceline Site" has the meaning set forth in the Recitals to
this Agreement.
1.65 "PricelineMortgage" means National Mortgage Center LLC (d.b.a.
"pricelinemortgage"), a limited liability company organized under the laws
of the State of Delaware for the purpose of carrying on the Business.
1.66 "PricelineMortgage Interest" means, as to any Person, the
percentage interest represented by the Shares held by such Person,
determined by dividing the number of Shares then held by such Person by all
then outstanding Shares.
1.67 "Put Price" has the meaning set forth in Section 9.2(b) hereof.
1.68 "Receiving Party" has the meaning set forth in Section 6.8(a)
hereof.
1.69 "Registration Rights Agreement" has the meaning set forth in
Section 9.4(a) hereof.
1.70 "RESPA" means the Real Estate Settlement Procedures Act, 12
U.S.C. section 2601 et seq., and the Department of Housing and Urban
Development's implementing regulation, Regulation X, 24 C.F.R. section 3500
et seq.
1.71 "Securities Act" means the Securities Act of 1933, as amended
from time to time.
1.72 "Shares" means equity interests in PricelineMortgage as
authorized by the LLC Agreement.
1.73 "Start-up Expenses" means, collectively, any attorneys' fees paid
or incurred by Alliance or Priceline for or on behalf of PricelineMortgage
in connection with the formation of PricelineMortgage as a limited
liability company or any related licensing, RESPA or other compliance
issues; provided, however, that Start-up Expenses shall not include any
amounts expended by any Party in connection with the preparation,
negotiation or execution of this Agreement and the other Transaction
Documents.
1.74 "Tax Payment" has the meaning set forth in Section 9.4(b)(ii)
hereof.
1.75 "Term" has the meaning set forth in Section 10.1 hereof.
1.76 "Transaction Documents" means this Agreement, the LLC Agreement,
the Note, the Licensing Agreement, the Advertising Agreement, the Pledge
Agreement and the Option Agreement.
1.77 "Transfer" means, as a noun, any voluntary or involuntary
transfer, sale, assignment, pledge, encumbrance or other disposition; and,
as a verb, voluntarily or involuntarily to sell, assign, transfer, grant,
give away, hypothecate, pledge, encumber or otherwise dispose of, and shall
include any transfer by will, gift or intestate succession.
1.78 "Year 4" means the calendar year ended December 31, 2003.
1.79 "Year 5" means the calendar year ended December 31, 2004.
1.80 "Year 5 Income" has the meaning set forth in Section 9.1(a)
hereof.
2. PRICELINEMORTGAGE
2.1 Establishment of PricelineMortgage. Prior to the date hereof,
Alliance has filed, or caused to be filed, with the Secretary of State of
the State of Delaware a Certificate of Formation pursuant to which
PricelineMortgage was formed as a limited liability company organized under
the laws of the State of Delaware. At the Closing, Alliance shall cause
FAB to execute the LLC Agreement and, except as expressly set forth herein,
the operations of PricelineMortgage shall thereafter be governed by the LLC
Agreement.
2.2 Purpose of PricelineMortgage. PricelineMortgage has been formed
for the primary purpose of effectuating the Plan. Pursuant to the Plan,
PricelineMortgage shall offer its loan products and the loan products of
FAB, its Affiliates and of other lenders under a variety of delivery
channels. PricelineMortgage shall pursue mortgage loan investor,
correspondent and wholesale relationships with non-affiliated companies as
well as participation by other lending concepts (such as LendingTree) in
order to provide optimal product and pricing alternatives for
PricelineMortgage's customers.
2.3 Capitalization of PricelineMortgage. PricelineMortgage shall
have the authority to issue an aggregate of One Hundred (100) Shares with
the rights set forth in the LLC Agreement. PricelineMortgage's initial
equity shall be funded as follows:
(a) FAB Initial Subscription. In one or more payments at or
prior to the date hereof, FAB has contributed Three Million Dollars
($3,000,000) to PricelineMortgage in exchange for Fifty-One (51) Shares,
which Shares shall initially represent a one-hundred-percent (100%)
PricelineMortgage Interest; provided, however, that from and after the
Investment Date, such Shares shall represent a fifty-one-percent (51%)
PricelineMortgage Interest.
(b) AllPrice Purchase. On a date within fifteen (15) days after
the date hereof mutually agreed to by the Parties (the "Investment Date"),
Alliance shall cause AllPrice to contribute to PricelineMortgage an amount
in cash equal to (i) the Priceline Funds minus (ii) (A) the aggregate
amount of all Pilot Program Costs reimbursed by AllPrice to Priceline and
Alliance pursuant to Section 6.7(b) hereof and (B) the amount of interest
payable to Priceline by AllPrice under the Note during the year 2000 in
exchange for Forty-Nine (49) Shares, which Shares shall represent a
forty-nine-percent (49%) PricelineMortgage Interest. On or prior to the
Investment Date, Alliance shall cause AllPrice to execute the LLC
Agreement, thereby agreeing to be bound by the terms thereof.
2.4 Purchase of Pilot Program Assets. Within five (5) Business Days
of the later to occur of (a) termination of the Pilot Program and (b) the
Investment Date, Alliance shall cause PricelineMortgage to purchase the
Pilot Program Assets from each of Alliance Mortgage and Priceline at a
purchase price equal to the net book value of such assets.
2.5 Financial Assistance. Pursuant to the terms of the LLC
Agreement, the Board may, by written notice to FAB and AllPrice, request
that FAB and AllPrice provide additional financial assistance to
PricelineMortgage in order to meet the regulatory capital requirements of
the OTS directly applicable to PricelineMortgage, including financial
assistance in the form of credit support or loans. Subject to the terms of
the LLC Agreement, any such financial assistance provided shall be provided
on a pro rata basis by FAB and AllPrice.
2.6 FAB Interest. The Parties acknowledge that it is their intent
that FAB's PricelineMortgage Interest shall, at all times during the Term,
be not less than fifty-one percent (51%).
3. ALLPRICE
3.1 Establishment of AllPrice. Prior to the date hereof, Alliance
has caused AMC Acquisitions to file a Certificate of Incorporation with the
Secretary of State of the State of Delaware pursuant to which AllPrice was
formed as a corporation organized under the laws of the State of Delaware.
3.2 Purpose of AllPrice. AllPrice shall be formed for the purpose of
(i) acquiring and holding Shares representing a forty-nine-percent (49%)
PricelineMortgage Interest, (ii) borrowing the Priceline Funds from
Priceline pursuant to the Note and (iii) entering into the Licensing
Agreement with Priceline and PricelineMortgage.
3.3 Capitalization of AllPrice. AllPrice shall have authorized
capital stock consisting of one class of shares designated as Common Stock
with the rights set forth in the AllPrice Certificate. The AllPrice
Certificate shall initially provide for One Million (1,000,000) authorized
shares of AllPrice Common Stock. AllPrice's initial equity shall be funded
as follows:
(a) AMC Acquisitions Initial Subscription. Prior to the
Closing, AMC Acquisitions shall have purchased One Hundred (100) shares of
AllPrice Common Stock, representing a one-hundred-percent (100%) interest
in AllPrice, for an aggregate purchase price of $1.00.
(b) Priceline Investment. At the Closing, (i) Priceline shall
provide financing to AllPrice in the aggregate principal amount of Three
Million Six Hundred Twenty Thousand Dollars ($3,620,000) (the "Priceline
Funds") by wire transfer of immediately available funds to an account
designated by AllPrice and (ii) AllPrice shall execute and deliver the Note
in favor of Priceline.
4. THE CLOSING
4.1 Closing. A closing (the "Closing") shall be held at 10:00 a.m.,
local time, on the date hereof at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, located at Xxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000, for the purpose of consummating the transactions contemplated by
this Agreement.
4.2 Closing Deliveries.
(a) Deliveries by Alliance. At or before the Closing, Alliance
shall, or shall cause its Affiliates, as designated below, to, take the
following actions:
(i) Alliance shall execute and deliver this Agreement;
(ii) FAB shall transfer Three Million Dollars
($3,000,000) to PricelineMortgage as a capital contribution;
(iii) PricelineMortgage shall issue to FAB a
certificate representing 51 Shares;
(iv) AMC Acquisitions shall transfer One Dollar ($1.00)
to AllPrice as a capital contribution;
(v) AllPrice shall issue to AMC Acquisitions a
certificate representing One Hundred (100) shares of AllPrice
Common Stock;
(vi) AllPrice shall execute and deliver the Note;
(vii) PricelineMortgage shall execute and deliver
the Advertising Agreement;
(viii) AllPrice and PricelineMortgage shall each
execute and deliver the Licensing Agreement;
(ix) FAB shall execute and deliver the LLC Agreement;
(x) AMC Acquisitions shall execute and deliver the
Option Agreement;
(xi) AllPrice shall execute and deliver the Pledge
Agreement;
(xii) FAB shall provide Priceline with
documentation, in form and substance reasonably satisfactory to
Priceline, evidencing the approval by the OTS of the formation of
PricelineMortgage as an operating subsidiary of FAB; and
(xiii) FAB shall provide Priceline with
documentation, in form and substance reasonably satisfactory to
Priceline, evidencing the approval of any other Governmental
Authority required to be obtained by Alliance, FAB,
PricelineMortgage or any Affiliate of any of the foregoing in
connection with the formation and/or operation of
PricelineMortgage.
(b) Deliveries by Priceline. At the Closing, Priceline shall
take the following actions:
(i) Priceline shall execute and deliver this
Agreement;
(ii) Priceline shall transfer the Priceline Funds to
AllPrice by wire transfer of immediately available funds to an
account designated by AllPrice;
(iii) Priceline shall execute and deliver the
Advertising Agreement;
(iv) Priceline shall execute and deliver the Licensing
Agreement;
(v) Priceline shall execute and deliver the Pledge
Agreement; and
(vi) Priceline shall execute and deliver the Option
Agreement.
5. OPERATION AND MANAGEMENT OF PRICELINEMORTGAGE
5.1 Operation of PricelineMortgage. Alliance and, from and after the
Conversion Date, Priceline hereby agree to take, and to cause each of their
respective Affiliates to take, all actions necessary to ensure that
PricelineMortgage shall be operated in accordance with the terms of this
Agreement and the other Transaction Documents, including, without
limitation, to vote all Shares held directly or indirectly by any such
entity (and to cause all Shares held by its permitted transferees under
Section 8.1 hereof to be voted) to effect the terms hereof and thereof.
5.2 Actions of Members. In order to effectuate the provisions of
this Article 5, each of the Parties (a) hereby agrees that when any action
or vote is required to be taken by the members of PricelineMortgage
pursuant to this Agreement or the LLC Agreement, such Party shall, or shall
cause its Affiliate to, use its best efforts to call, or cause the
appropriate officers and directors of PricelineMortgage to call, a meeting
of the members of PricelineMortgage, or to execute or cause to be executed
a written consent to effectuate such action, (b) shall use its best efforts
to cause the Board to adopt, either at a meeting of the Board or by
unanimous written consent of the Board, all the resolutions necessary to
effectuate the provisions of this Agreement, and (c) shall use its best
efforts to cause the Board to cause the Secretary of PricelineMortgage, or
if there be no Secretary, such other officer of PricelineMortgage as the
Board may appoint to fulfill the duties of Secretary, not to record any
vote or consent contrary to the terms of this Article 5.
5.3 Multi-Lender Model and Allocation Rules. PricelineMortgage shall
select the delivery channel and lender for each loan using its reasonable
judgment based on a best execution analysis. PricelineMortgage shall use
the execution method(s) that it determines will provide the highest likely
closing ratio within the target revenue and profitability ranges for
PricelineMortgage agreed to by the Parties from time to time, subject to
Applicable Law. Terms and conditions of transactions between
PricelineMortgage and Alliance or any of its Affiliates will be on an
arm's-length basis for purposes of this analysis, and PricelineMortgage
will not be required to deliver any minimum percentage of loans to Alliance
or any of its Affiliates.
5.4 Board of Directors. PricelineMortgage shall be managed by the
Board in accordance with the terms of the LLC Agreement and Applicable Law.
Pursuant to the terms of the LLC Agreement, from the date hereof until the
Investment Date, the Board shall consist of four (4) Directors and FAB
shall be entitled to elect all four (4) Directors to the Board. On the
Investment Date, the size of the Board shall be increased to five (5)
Directors. From the Investment Date until the Conversion Date, FAB shall
be entitled to elect four (4) Directors to the Board and AllPrice shall be
entitled to elect one (1) Director to the Board. From and after the
Conversion Date, FAB shall be entitled to elect three (3) Directors to the
Board and AllPrice shall be entitled to elect two (2) Directors to the
Board. All Directors, whether elected by FAB ("FAB Directors") or elected
by AllPrice ("AllPrice Directors"), shall serve until their respective
successors have been duly elected and qualified, or until their earlier
removal, resignation, death or disability; provided, however, that as soon
as practicable following the Conversion Date, Alliance shall cause FAB to
remove one (1) FAB Director from the Board such that the AllPrice Director
to be elected to the Board as provided above shall be elected to fill the
vacancy created by such removal. FAB may remove any FAB Director from the
Board at any time, with or without cause, and AllPrice may remove any
AllPrice Director from the Board at any time, with or without cause. Any
Director may resign at any time upon written notice to the Board. Alliance
shall cause AllPrice to comply with the terms and provisions of the Note
regarding the appointment of Priceline's designees to the Board.
5.5 Annual Plan. PricelineMortgage shall prepare, and the Board
shall approve, an Annual Plan with respect to each fiscal year of
PricelineMortgage no later than sixty (60) days prior to the commencement
of the relevant fiscal year; provided, however, that the initial Annual
Plan shall be approved on or prior to the date hereof and shall cover the
period from the date hereof until the end of the first full fiscal year of
PricelineMortgage.
5.6 Financial Statements and Accounting Records. Alliance shall
cause to be prepared financial statements for PricelineMortgage, including,
without limitation, a balance sheet, income statement, statement of cash
flows and statement of members' capital accounts, which shall be submitted
by PricelineMortgage to each of the Parties (a) within forty-five (45) days
after the end of each three (3) month period of each fiscal year for such
three (3) month period and for the year to date period and (b) within
ninety (90) days after the end of each fiscal year for such year. Each of
the annual financial statements shall be audited and certified by the
Independent Auditor retained by PricelineMortgage, selected by Alliance and
approved by Priceline. All financial statements shall be prepared in
accordance with United States generally accepted accounting principles
(although quarterly statements need not include footnotes and may be
subject to year-end adjustments). At Priceline's request, Alliance shall
cause PricelineMortgage to provide Priceline with such additional financial
information as Priceline may reasonably request, including any such
information Priceline deems necessary or desirable for purposes of
complying with Priceline's periodic reporting obligations under the federal
securities law.
5.7 Right of Inspection. During the regular office hours of
PricelineMortgage, and upon reasonable notice to PricelineMortgage, so long
as any Party maintains, directly or indirectly, at least a twenty percent
(20%) PricelineMortgage Interest or, in the case of Priceline, the Note
remains outstanding, such Party shall have (a) full access to all
properties, books of account and records of PricelineMortgage, and (b) the
right to make copies from such books and records at its own expense. Any
information obtained by the Parties through exercise of rights granted
under this Section 5.7 shall, to the extent constituting Confidential
Information hereunder, be subject to the confidentiality provisions set
forth in Section 6.8 hereof.
6. ADDITIONAL COVENANTS
6.1 Services to be Provided by Priceline.
(a) In accordance with the terms of the Licensing Agreement,
Priceline shall provide PricelineMortgage with a license to use the
Priceline Business Model and the names "priceline" and "pricelinemortgage"
in connection with services to be provided by PricelineMortgage.
(b) In accordance with the terms of the Advertising Agreement,
Priceline shall provide certain advertising and technical support services
to PricelineMortgage in connection with its brokerage and offering of
residential mortgage products through the Priceline Site.
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6.3 Systems Development.
(a) Priceline, with the advice and guidance of Alliance, shall
develop the required screen flows and customer interfaces needed to capture
consumer data, obtain an automated underwriting decision and deliver this
decision to the consumer. Priceline will structure the screen flow and
marketing efforts with the intent of generating closed loan volume in
accordance with the projected closed loan volumes agreed to by the Parties
from time to time; provided, however, that by performing its obligations
pursuant to this Section 6.3(a), Priceline does not make any guaranty that
the projected closed loan volumes agreed to by the Parties from time to
time will be achieved.
(b) Alliance and Priceline shall jointly develop and own
software for use by PricelineMortgage. Without the express written consent
of the other party hereto, which consent shall not be unreasonably
withheld, neither Alliance nor Priceline shall use any of the applications
developed for PricelineMortgage for any purpose other than in furtherance
of the Plan or in connection with the Business; provided, however, that
each of Alliance and Priceline shall be entitled to use any pricing engine
developed for use by PricelineMortgage or in connection with the Business
generally in furtherance of other business lines in which either such Party
is engaged. In the event that: (i) prior to the Conversion, Priceline
terminates its affiliation with AllPrice and/or assigns its rights under
one or more of the Transaction Documents to an unaffiliated third party,
(ii) prior to the Conversion, Alliance sells its interest in AMC
Acquisitions to an unaffiliated third party, (iii) prior to the Conversion,
AMC Acquisitions sells its interest in AllPrice to an unaffiliated third
party, (iv) following the Conversion, Priceline sells its interest in
AllPrice to an unaffiliated third party, (v) FAB or AllPrice sells its
interest in PricelineMortgage to an unaffiliated third party, (vi) Alliance
sells its interest in FAB and/or assigns its rights under one or more of
the Transaction Documents to an unaffiliated third party,
(vii) PricelineMortgage ceases to conduct its business, or (viii) the
Licensing Agreement and the Advertising Agreement are terminated or expire
and are not renewed, Priceline and Alliance will share equally all rights
to any screen flow, product and pricing engine and any other technologies
or intellectual property developed for and owned by PricelineMortgage;
provided, however, that neither Priceline nor Alliance shall be entitled to
use any such screen flow, product and pricing engine or other technologies
or intellectual property to the extent that such use conflicts with any
intellectual property and patent rights owned by the other Party prior to
the formation of PricelineMortgage. If any of the events described in
clauses (i) through (viii) of this Section 6.3(b) shall occur, Priceline
and Alliance shall each use their commercially reasonable efforts to enter
into an agreement, as soon as practicable following the occurrence of such
event, governing the terms of their respective ownership and rights in and
to the screen flow, product and pricing engine and other technologies and
intellectual property described in this Section 6.3(b).
6.4 Ancillary Revenues. The Parties acknowledge that consumers
accessing the Loan Path may wish to procure services or enter into
relationships which are outside the scope of the Business and, in
connection therewith, PricelineMortgage may have the opportunity to refer
consumers to other service providers, whether Internet-based or otherwise,
and derive revenue therefrom. The Parties further acknowledge that
PricelineMortgage may enter into agreements or relationships with such
other service providers pursuant to which PricelineMortgage shall generate
revenue outside the scope of the Business (e.g., agreements linking
PricelineMortgage to other related websites or directing consumers to other
service providers). The Parties hereby agree that, to the extent that
PricelineMortgage shall generate additional or ancillary revenues on the
Loan Path from business agreements constructed outside the scope of the
Transaction Documents, PricelineMortgage shall be the beneficiary of all
such revenue and associated income.
6.5 Priceline Exclusivity. During the Term, provided (i) each of the
Parties continues to hold, directly or indirectly, at least a twenty
percent (20%) PricelineMortgage Interest or (ii) in the case of Priceline,
the Note remains outstanding, Priceline shall not distribute residential
first mortgage brokerage services or residential first mortgage loan
services through any distribution channel other than PricelineMortgage
without the express written consent of Alliance; provided, however, that
Priceline shall not be deemed to be in breach of this Section 6.5, and
Alliance's consent shall not be required, as a result of any existing
contractual arrangements between LendingTree and Priceline. Priceline
shall use its commercially reasonable efforts to assign its rights under
any agreements between Priceline and LendingTree to PricelineMortgage or
cooperate with PricelineMortgage and LendingTree to establish a new
agreement with LendingTree on terms satisfactory to the Parties.
6.6 Alliance Non-Competition. During the Term, provided (i) prior to
the Conversion Date, the Note remains outstanding; or (ii) from and after
the Conversion Date, Priceline continues to hold, directly or indirectly,
at least a twenty-percent (20%) PricelineMortgage Interest, Alliance shall
not, directly or indirectly, operate or invest in any Internet mortgage
service or any other e-commerce company that provides services
substantially similar to those provided by PricelineMortgage without the
express written consent of Priceline; provided, however, that nothing
contained herein shall be construed to prohibit Alliance or any of its
Affiliates from engaging in Internet mortgage origination in the ordinary
course of their respective businesses, so long as any such Internet
mortgage originations do not involve a consumer proposition substantially
similar to the "Name Your Price" proposition provided by PricelineMortgage.
6.7 Reimbursement of Expenses. Except as set forth below,
PricelineMortgage shall bear all operating expenses of PricelineMortgage.
(a) Development Costs. Alliance shall cause PricelineMortgage
to purchase all Development Assets, whether in existence on the date hereof
or hereafter created, at a price equal to 100% of the aggregate Development
Costs.
(b) Pilot Program Costs. Alliance shall cause AllPrice to
reimburse to each of Alliance and Priceline all Pilot Program Costs.
(c) Start-up Expenses. Alliance shall cause PricelineMortgage
to reimburse each of Alliance and Priceline for all Start-up Expenses;
(d) Schedule I attached hereto sets forth the aggregate amount
of all (i) Development Costs, (ii) Pilot Program Costs and (iii) Start-up
Expenses paid or incurred by each of the Parties prior to the date hereof
and, with respect to Start-up Expenses, the election of such Party with
respect to whether such Party's Start-up Expenses shall be treated as (i) a
reimbursable expense, as provided in Section 6.7(c) hereof; or (ii) a
contribution of capital to PricelineMortgage with a corresponding increase
to FAB's capital account, in the case of Alliance, or AllPrice's capital
account, in the case of Priceline, but no commensurate issuance of Shares.
6.8 Confidentiality.
(a) The Parties recognize that, in connection with the
performance of this Agreement, each Party or their respective Affiliates
(in such capacity, the "Disclosing Party") may disclose Confidential
Information to the other Party or such Party's Affiliates (the "Receiving
Party"). For purposes of this Agreement "Confidential Information" means
(i) proprietary information (whether owned by the Disclosing Party or a
third party to whom the Disclosing Party owes a non-disclosure obligation)
regarding the Disclosing Party's business or (ii) information which is
marked as confidential at the time of disclosure to the Receiving Party, or
if in oral form, is identified as confidential at the time of oral
disclosure and reduced in writing or other tangible (including electronic)
form including a prominent confidentiality notice and delivered to the
Receiving Party within thirty (30) days of disclosure. "Confidential
Information" shall not include information which: (A) was known to the
Receiving Party prior to the disclosure by the Disclosing Party; (B)
becomes publicly known through no wrongful act of the Receiving Party; (C)
has rightfully been received by the Receiving Party from a third party; or
(D) has been independently developed by the Receiving Party. The Receiving
Party agrees (x) not to use any such Confidential Information for any
purpose other than in the performance of its obligations under this
Agreement or any other Transaction Document and (y) not to disclose any
such Confidential Information, except (1) to its employees who are
reasonably required to have the Confidential Information in connection
herewith or with any of the other Transaction Documents, (2) to its agents,
representatives, lawyers and other advisers that have a need to know such
Confidential Information and (3) pursuant to, and to the extent of, a
request or order by a Governmental Authority. The Receiving Party agrees
to take all reasonable measures to protect the secrecy and confidentiality
of, and avoid disclosure or unauthorized use of, the Disclosing Party's
Confidential Information.
(b) Each Party acknowledges and agrees that (i) its obligations
under this Section 6.8 are necessary and reasonable to protect the other
Party and its business, (ii) any violation of these provisions could cause
irreparable injury to the other Party for which money damages would be
inadequate, and (iii) as a result, the other Party shall be entitled to
obtain injunctive relief against the threatened breach of the provisions of
this Section 6.8 without the necessity of proving actual damages. The
Parties agree that the remedies set forth in this Section 6.8 are in
addition to and in no way preclude any other remedies or actions that may
be available at law or under this Agreement.
6.9 Publicity. The Parties shall consult with each other, in
advance, with regard to the terms of all proposed press releases, public
announcements and other public statements with respect to the transactions
contemplated hereby. Except as may be required by Applicable Law, court
process or by obligations pursuant to any listing agreement or similar
arrangement with any national securities exchange or automated quotation
system, neither Party shall issue any press release, public announcement or
other public statement with respect to the transactions contemplated hereby
without the prior consent of the other Party, which consent shall not be
unreasonably withheld.
6.10 Regulatory Approvals. Alliance shall use its commercially
reasonable efforts to obtain such approvals, consents and similar actions
from Governmental Authorities, including the approval of the OTS, as may be
necessary or appropriate in order for Alliance and each of its Affiliates,
including PricelineMortgage, to consummate the transactions contemplated by
the Transaction Documents. Each Party shall provide such assistance as the
other Party may reasonably request in connection with such consents and
approvals.
6.11 Performance of Alliance Affiliates. Alliance shall use its
best efforts to cause each of its Affiliates to fully perform all of their
respective obligations under each of the Transaction Documents to which any
such Affiliate is a party and to otherwise comply in all respects with the
terms and conditions of any such Transaction Document applicable to any
such Affiliate.
7. REPRESENTATIONS AND WARRANTIES OF THE PARTIES
7.1 Representations and Warranties of Priceline. Priceline hereby
represents and warrants to Alliance, as of the date hereof, as follows:
(a) Organization. Priceline is a corporation duly organized and
validly existing under the laws of the State of Delaware, and has the
corporate power and authority to enter into and perform this Agreement and
the other Transaction Documents to which it is a party.
(b) Authorization. All corporate action on the part of
Priceline necessary for the authorization, execution and delivery of this
Agreement and the other Transaction Documents to which it is a party and
for the performance of all of its obligations hereunder and thereunder has
been taken. This Agreement constitutes, and any such other Transaction
Documents, when fully executed and delivered, shall each constitute a
valid, binding and enforceable obligation of Priceline, except that (i)
such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now or
hereafter in effect, relating to or limiting creditors' rights generally
and (ii) the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(c) Government and Other Consents. Other than any consents,
licenses, permits, certifications, authorizations, registrations or
approvals of, or exemptions or other actions by, any Governmental Authority
or any other Person (collectively, "Consents") (i) which may be required in
order for PricelineMortgage to provide residential mortgage lending and
consumer loan origination services in compliance with Applicable Law, (ii)
which may be required from any state Governmental Authority responsible for
banking, mortgage or other lending activities as a result of the conduct of
the Business (including the provision of technical support or advertising
services in connection with the Business) in such Governmental Authority's
state of jurisdiction, or (iii) which may be required from LendingTree and,
in each case, as to which Priceline makes no representation or warranty, no
Consent of any Governmental Authority or any other Person is required in
connection with the execution, delivery and performance by Priceline or any
of its Affiliates of this Agreement or the other Transaction Documents to
which Priceline or any such Affiliate is a party, other than any such
Consent, the failure of which to be obtained would not materially and
adversely affect Priceline's ability to perform its obligations under this
Agreement or the other Transaction Documents to which it is a party.
(d) Effect of Agreement. Priceline's execution, delivery and
performance of this Agreement and the other Transaction Documents to which
it is a party will not (i) violate the Certificate of Incorporation of
Priceline or Applicable Law (other than any statute, law, rule, regulation,
directive, treaty, judgment, order, decree or injunction of any
Governmental Authority that becomes applicable to or binding upon Priceline
or any of its properties as a result of the conduct of the Business
(including the provision of technical support or advertising services in
connection with the Business) in any jurisdiction, as to which Priceline
makes no representation or warranty), (ii) violate any judgment, order,
writ, injunction or decree of any court applicable to Priceline, or (iii)
result in the breach of, give rise to a right of termination, cancellation
or acceleration of any obligation with respect to (presently or with the
passage of time), or otherwise be in conflict with any term of, or affect
the validity or enforceability of, any agreement or other commitment to
which Priceline is a party, other than such violations, breaches,
terminations, cancellations, accelerations or conflicts which would not
materially and adversely affect Priceline's ability to perform its
obligations under this Agreement or the other Transaction Documents to
which it is a party; provided, however, that certain Consents of
Governmental Authorities may be required in connection with the operation
of PricelineMortgage as a broker and/or lender of mortgage loans and
Priceline makes no representation or warranty with respect to any such
Consents.
(e) Litigation. There are no actions, suits or proceedings
pending or, to Priceline's knowledge, threatened, against Priceline before
any Governmental Authority which relate to Priceline's right to enter into
or perform this Agreement or any other Transaction Document to which it is
a party, or which relate to the validity of this Agreement or any of the
other Transaction Documents.
7.2 Representations and Warranties of Alliance. Alliance hereby
represents and warrants to Priceline, on behalf of itself and its
Affiliates, as follows:
(a) Organization. Alliance and each of its Affiliates is duly
organized and validly existing under the laws of the state of its
organization. Alliance and each of its Affiliates has the requisite power
and authority to enter into and perform this Agreement and the other
Transaction Documents to which it is a party.
(b) Authorization. All action (corporate or other) on the part
of Alliance and each of its Affiliates necessary for the authorization,
execution and delivery of this Agreement and the other Transaction
Documents to which Alliance or such Affiliate is a party and for the
performance of all of its obligations hereunder and thereunder has been
taken. This Agreement constitutes, and any such other Transaction
Document, when fully executed and delivered, shall each constitute a valid,
binding and enforceable obligation of Alliance or such Affiliate, except
that (i) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now or
hereafter in effect, relating to or limiting creditors' rights generally
and (ii) the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(c) Government and Other Consents. No Consent of any
Governmental Authority or any other Person is required in connection with
the execution, delivery and performance by Alliance or any of its
Affiliates of this Agreement or the other Transaction Documents to which it
is a party, other than any such Consent, the failure of which to be
obtained would not materially and adversely affect the ability of Alliance
or any of its Affiliates to perform its obligations under this Agreement or
the other Transaction Documents to which Alliance or any such Affiliate is
a party. On or prior to the date hereof, Alliance has obtained, or caused
to be obtained, all Consents, whether from the OTS or any other
Governmental Authority having jurisdiction over such matters, required in
order to (i) form PricelineMortgage as an operating subsidiary of FAB; (ii)
operate the Business as contemplated by the Transaction Documents; and
(iii) consummate the other transactions contemplated by this Agreement and
the other Transaction Documents.
(d) Effect of Agreement. The execution, delivery and
performance by Alliance or any of its Affiliates of this Agreement or the
other Transaction Documents to which Alliance or any such Affiliate is a
party will not (i) violate the Partnership Agreement, Certificate of
Incorporation or comparable organizational document of Alliance or any such
Affiliate or Applicable Law, (ii) violate any judgment, order, writ,
injunction or decree of any court applicable to Alliance or any such
Affiliate, or (iii) result in the breach of, give rise to a right of
termination, cancellation or acceleration of any obligation with respect to
(presently or with the passage of time), or otherwise be in conflict with,
any term of, or affect the validity or enforceability of any agreement or
other commitment to which Alliance or any such Affiliate is a party, other
than, in each case, any such violations, breaches, terminations,
cancellations, accelerations or conflicts which would not materially and
adversely affect the ability of Alliance or any of its Affiliates to
perform its obligations under this Agreement or the other Transaction
Documents to which Alliance or any such Affiliate is a party.
(e) Litigation. There are no actions, suits or proceedings
pending or, to Alliance's knowledge, threatened, against Alliance or any of
its Affiliates before any Governmental Authority which relate to the right
of Alliance or any such Affiliate to enter into or perform this Agreement
or any other Transaction Document to which Alliance or such Affiliate is a
party, or which relate to the validity of this Agreement or any of the
other Transaction Documents.
(f) Operations of AllPrice. AllPrice has been formed solely for
the purpose of engaging in the transactions contemplated by this Agreement
and by the other Transaction Documents, has engaged in no other business
activities and has conducted its operations only as contemplated by this
Agreement and by the other Transaction Documents.
8. TRANSFER RESTRICTIONS
8.1 General Restriction. Alliance and, from and after the Conversion
Date, Priceline shall hold, and shall cause each of their respective
Affiliates to hold, its Shares during the Term and shall not, directly or
indirectly, Transfer or in any way alienate any of such Shares or any right
or interest therein, other than (a) in the case of a direct Transfer, any
such Transfer made in compliance with the terms and provisions of the LLC
Agreement or (b) in the case of an indirect Transfer, (i) any such Transfer
made to an Affiliate of such Party or (ii) any such Transfer agreed to in
writing by the other Party (each, a "Permitted Transfer"). In the case of
any Permitted Transfer, the transferring Party shall deliver to the other
Party (a) at least twenty (20) Business Days prior to such Transfer, a
written notice stating its intention to Transfer the Shares to be
transferred, the name of the transferee, whether such transferee is an
Affiliate, the number of Shares to be transferred, and the price and other
material terms and conditions of the Transfer, and (b) except as otherwise
specifically provided herein, on or prior to the effective date of the
Transfer and in a form reasonably acceptable to the other Party and its
counsel, the transferee's written acknowledgment of and agreement to be
bound by, and to vote the transferred Shares at all times in accordance
with, the terms of this Agreement and the LLC Agreement.
8.2 Initial Public Offering. The restrictions set forth in Section
8.1 hereof shall cease to be of any further force or effect upon the
closing date of an Initial Public Offering of PricelineMortgage or any
successor thereto.
8.3 Board Approval. To the extent required under the LLC Agreement,
the Parties shall cause each Director it has appointed to vote to approve
any Transfer of Shares effected in accordance with Section 8.1 hereof.
9. ANCILLARY RIGHTS
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(b) The Priceline Call shall be exercisable for a period of
ninety (90) days from and after the receipt by Priceline and/or any
Priceline Successor of notice from PricelineMortgage that PricelineMortgage
has received from the Independent Auditor audited financial statements for
Year 5, which notice shall include a copy of such financial statements.
Such notice and statements shall be delivered to Priceline (and/or any
Priceline Successor) and Alliance (and/or any Alliance Successor) no later
than ninety (90) days after the end of Year 5. In the event that Priceline
(and/or any Priceline Successor) elects to exercise the Priceline Call,
Priceline and/or such Priceline Successor shall provide notice (the
"Priceline Call Notice") to the party or parties from whom the
PricelineMortgage Interest or Interests are to be purchased (including
Alliance, if Alliance shall still hold, directly or indirectly, a
PricelineMortgage Interest at such time, and any Alliance Successor). The
Priceline Call Notice shall set forth Priceline's (or such Priceline
Successor's) calculation of the Call Price and the basis for such
calculation. Any disagreement regarding the Call Price or any other matter
related to the exercise of the Priceline Call shall be resolved in
accordance with the provisions of Section 11.1 hereof. In the event that
Priceline or any such Priceline Successor elects to exercise the Priceline
Call, the Parties shall, and shall cause their respective Affiliates to,
cooperate as fully as reasonably practicable with one another to consummate
the Priceline Call transaction as soon as reasonably practicable following
the receipt of the Priceline Call Notice by the party or parties to the
Priceline Call transaction. In the event that Priceline (and/or any
Priceline Successor) elects not to exercise the Priceline Call, Priceline
(and/or such Priceline Successor) shall promptly provide notice of such
election to Alliance and/or any Alliance Successor holding the
PricelineMortgage Interest or Interests that would otherwise have been
subject to the Priceline Call.
(c) At its sole election, Priceline shall be entitled to pay the
Call Price in cash, in shares of Priceline Common Stock or in any
combination of the foregoing. In the event that Priceline elects to pay
all or a portion of the Call Price in cash, as promptly as reasonably
practicable following the distribution to Alliance of the Priceline Call
Notice, Priceline shall pay to Alliance (and/or any Alliance Successor that
shall be entitled to receipt of all or a portion of such Call Price), by
wire transfer of immediately available funds to an account or accounts
designated in writing by Alliance (or any such Alliance Successor), an
amount in cash equal to the Call Price or the portion of the Call Price
which Priceline has elected to pay in cash. In the event that Priceline
elects to pay all or a portion of the Call Price in shares of Priceline
Common Stock, as promptly as reasonably practicable following its election
to exercise the Priceline Call, and upon the Parties being able to fully
consummate the transactions contemplated by Priceline's exercise of the
Priceline Call, Priceline shall deliver to Alliance (and/or any Alliance
Successor that shall be entitled to receipt of all or a portion of such
Call Price) a certificate or certificates representing that number of whole
shares of Priceline Common Stock having a Fair Market Value equal to the
Call Price or the portion of the Call Price which Priceline has elected to
pay in shares of Priceline Common Stock.
(d) In the event Priceline exercises the Priceline Call, for a
period of one (1) year thereafter, Priceline shall not cause
PricelineMortgage to engage in any Change in Control Transaction without
the prior written consent of Alliance, which consent shall not be
unreasonably withheld.
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(c) The Alliance Put shall become exercisable upon the earlier
to occur of (i) the date on which Alliance has received written notice from
Priceline of both (x) Priceline's election not to exercise the Priceline
Call and (y) Priceline's election not to renew the Licensing Agreement and
the Advertising Agreement and (ii) the expiration of the Priceline Call,
the Licensing Agreement and the Advertising Agreement in accordance with
their respective terms. The Alliance Put shall remain exercisable until
the later of (i) June 30, 2005 or (ii) thirty (30) days from and after the
date on which the Alliance Put first becomes exercisable. In the event
that Alliance (and/or any Alliance Successor) elects to exercise the
Alliance Put, Alliance (and/or such Alliance Successor) shall provide
notice (the "Alliance Put Notice") to the party or parties to whom the
PricelineMortgage Interest or Interests are to be sold (including
Priceline, if Priceline shall still hold, directly or indirectly, a
PricelineMortgage Interest at such time, and any Priceline Successor). The
Alliance Put Notice shall set forth Alliance's (and/or such Alliance
Successor's) calculation of the Put Price and the basis for such
calculation. Any disagreement regarding the Put Price or any other matter
related to the exercise of the Alliance Put shall be resolved in accordance
with the provisions of Section 11.1 hereof. In the event that Alliance
(and/or such Alliance Successor) elects to exercise the Alliance Put, the
Parties shall, and shall cause their respective Affiliates to, cooperate as
fully as reasonably practicable with one another to consummate the Alliance
Put transaction as soon as reasonably practicable following the receipt of
the Alliance Put Notice by the party or parties to the Alliance Put
transaction. In the event that more than one party is required to purchase
a PricelineMortgage Interest pursuant to the Alliance Put, such parties
shall each be required to purchase a portion of the PricelineMortgage
Interest or Interests subject to the Alliance Put in proportion to the
PricelineMortgage Interests of such parties at the time of consummation of
the Alliance Put transaction. In the event Alliance (and/or any Alliance
Successor) elects not to exercise the Alliance Put, Alliance (and/or such
Alliance Successor) shall promptly provide notice to the party or parties
that would otherwise be required to purchase the PricelineMortgage Interest
or Interests subject to the Alliance Put.
(d) At its sole election, Priceline shall be entitled to pay the
Put Price in cash, in shares of Priceline Common Stock or in any
combination of the foregoing. In the event that Priceline elects to pay
all or a portion of the Put Price in cash, as promptly as reasonably
practicable following the receipt by Priceline of the Alliance Put Notice,
Priceline shall pay to Alliance (and/or any Alliance Successor that shall
be entitled to receipt of all or a portion of such Put Price), by wire
transfer of immediately available funds to an account or accounts
designated in writing by Alliance (or any such Alliance Successor), an
amount in cash equal to the Put Price or the portion of the Put Price which
Priceline has elected to pay in cash. In the event that Priceline elects
to pay the Put Price in shares of Priceline Common Stock, as promptly as
reasonably practicable following the receipt by Priceline of the Alliance
Put Notice, and upon the Parties being able to fully consummate the
transactions contemplated by Alliance's exercise of the Alliance Put,
Priceline shall deliver to Alliance (and/or any Alliance Successor that
shall be entitled to receipt of all or a portion of such Put Price) a
certificate or certificates representing that number of whole shares of
Priceline Common Stock having a Fair Market Value equal to the Put Price or
the portion of the Put Price which Priceline has elected to pay in shares
of Priceline Common Stock.
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(b) The Alliance Call shall be exercisable for a period of
ninety (90) days from and after the receipt by Alliance (and/or any
Alliance Successor) from Priceline (and/or any Priceline Successor) that
such party or parties have elected not to exercise the Priceline Call. In
the event that Alliance elects to exercise the Alliance Call, Alliance
shall provide notice (the "Alliance Call Notice") to the party or parties
from whom the PricelineMortgage Interest or Interests are to be purchased
(including Priceline, if Priceline shall still hold a PricelineMortgage
Interest at such time, and any Priceline Successor). The Alliance Call
Notice shall set forth Alliance's calculation of the price payable pursuant
to the Alliance Call and the basis for such calculation. Any disagreement
of the Parties regarding the price payable pursuant to the Alliance Call or
any other matter related to the exercise of the Alliance Call shall be
resolved in accordance with the provisions of Section 11.1 hereof. In the
event that Alliance elects to exercise the Alliance Call, the Parties
shall, and shall cause their respective Affiliates to, cooperate as fully
as reasonably practicable with one another to consummate the Alliance Call
transaction as soon as reasonably practicable following the receipt of the
Alliance Call Notice.
9.4 Registration Rights.
(a) In the event that Priceline elects to deliver shares of
Priceline Common Stock in full or partial payment of the Call Price or the
Put Price, as the case may be, as provided in Sections 9.1(c) and 9.2(c)
hereof, Priceline shall provide registration rights to the recipient of
such shares on terms and conditions mutually acceptable to Priceline and
the recipient of such shares. At Priceline's election, the registration
rights granted pursuant to this Section 9.4 shall be substantially to the
effect set forth in (i) the Registration Rights Agreement attached hereto
as Exhibit A (the "Registration Rights Agreement") or (ii) the Priceline
registration rights agreement that currently is in effect, a copy of which
is attached hereto as Exhibit B, including by causing Alliance and/or any
Alliance Successor that shall be entitled to receive shares of Priceline
Common Stock to become a party thereto; provided, however, that, in either
case, Alliance and any such Alliance Successors, collectively, shall be
limited, in the aggregate, to (a) one demand registration right on the
terms and conditions set forth in Section 3.1 of the Registration Rights
Agreement and (b) unlimited incidental or "piggy-back" registration rights.
Notwithstanding anything to the contrary contained herein, no provision of
this Agreement shall, or is intended by the Parties hereto, to prohibit or
otherwise restrict the ability of Priceline to grant registration rights to
other Persons from time to time.
(b) The registration rights contemplated by this Section 9.4
shall be subject to the terms and provisions of (i) the Registration Rights
Agreement and (ii) any registration rights agreement to which Priceline is
a party as of the date hereof. If, as a result of the terms and conditions
of the Registration Rights Agreement (including any "blackout" provisions
contained therein), Priceline is not able to effect a Demand Registration
(as defined in the Registration Rights Agreement) prior to the date on
which the tax liability incurred by Alliance (or any Alliance Successor) in
connection with the receipt of the Call Price or the Put Price, as
applicable, becomes due and payable, then Priceline and Alliance (or any
such Alliance Successor) shall use their respective commercially reasonable
efforts to consummate the Priceline Call or the Alliance Put, as
applicable, such that the Demand Registration can be effected prior to such
tax liability becoming due and payable (including by delaying the
consummation of the Priceline Call or Alliance Put, as the case may be,
until the next applicable tax year).
*********
(c) The Parties hereby acknowledge and agree that the Priceline
Call and the Alliance Put, to the extent either such transaction is
consummated, shall be structured so as to comply with the applicable rules
and regulations of the OTS and Applicable Law. Subject to the foregoing,
in the event that Priceline is prohibited from issuing shares of Priceline
Common Stock in full or partial satisfaction of the Call Price or the Put
Price, as applicable, whether as a result of applicable OTS rules and
regulations or otherwise, then the Parties shall use their respective
commercially reasonable efforts to structure the Priceline Call or the
Alliance Put, as the case may be, in such a manner as to (i) enable
Priceline, to the greatest extent possible, to pay the Call Price or the
Put Price, as applicable, in shares of Priceline Common Stock and (ii)
minimize the amount of cash which must be remitted by Priceline in
connection therewith, including, at Priceline's election, through the
issuance by Priceline of an unsecured promissory note containing terms and
conditions mutually satisfactory to the parties to the Priceline Call or
the Alliance Put, as applicable. In the event that Priceline is prohibited
both from (i) issuing shares of Priceline Common Stock and (ii) executing
an unsecured promissory note (as contemplated by clause (ii) of the
preceding sentence), in each case, in full or partial satisfaction of the
Put Price, whether as a result of applicable OTS rules and regulations or
otherwise, then Priceline shall be entitled to pay the Put Price in
quarterly installment payments over a two-year period commencing at the end
of the first full fiscal quarter following the date on which the Parties
finally determine that the Put Price cannot be paid in either shares of
Priceline Common Stock or an unsecured promissory note.
10. TERM AND TERMINATION
10.1 Term. This Agreement shall be effective as of the date hereof,
and shall continue in full force and effect until terminated pursuant to
Section 10.2 hereof (the "Term").
10.2 Termination. This Agreement shall terminate as follows:
(a) On the fifth (5th) anniversary of the date hereof, without
any action on the part of either Party hereto; provided, however, that in
the event that, pursuant to the terms of the Licensing Agreement and the
Advertising Agreement, Priceline elects to renew each of the Licensing
Agreement and the Advertising Agreement for one (1) additional five-year
term, this Agreement shall remain in full force and effect until the tenth
(10th) anniversary of the date hereof unless earlier terminated in
accordance with the other provisions of this Section 10.2.
(b) Upon the mutual written agreement of Priceline and Alliance.
(c) By either Priceline or Alliance, effective immediately upon
written notice of termination to the other Party, if (i) the other Party or
any of its Affiliates breaches in any material respect this Agreement or
any of the other Transaction Documents to which such Party or any such
Affiliate is a party, including, in the case of Priceline, any default by
AllPrice under the Note, and (ii) except in the case of any breach or
default that is subject to a cure period under the terms of the Transaction
Document under which it arises, such breach or default continues for a
period of thirty (30) days after the delivery of written notice of such
breach, describing the breach or default in reasonable detail.
(d) By either Priceline or Alliance, effective immediately upon
written notice of termination to the other Party and PricelineMortgage, in
the event that the other Party is dissolved, liquidated or declared
bankrupt or a voluntary or involuntary bankruptcy filing is made by such
Party, in each case, pursuant to an order which remains unstayed and in
effect for a period of sixty (60) days.
(e) By Alliance, in the event that PricelineMortgage shall have
generated net losses for the fourth quarter of fiscal year 2000.
(f) By either Priceline or Alliance, from and after the first
anniversary of the date hereof, in the event that: (i) the close rate on
PricelineMortgage's customer offers falls below 10% for two consecutive
quarters and, at Alliance's option, the deficiency in such close rate is
not cured within one (1) additional quarter such that, following the end of
the third such quarter, the average close rate on PricelineMortgage's
customer offers for such three-quarter period is greater than or equal to
10% or (ii) PricelineMortgage's annual application volume falls below
36,000 applications.
(g) Upon the consummation of the Priceline Call, the Alliance
Put, the Alliance Call or any other transaction pursuant to which,
following the completion of such transaction, either: (i) Priceline
(including, for this purpose, any and all Priceline Successors) shall own,
directly or indirectly, a One-Hundred-Percent PricelineMortgage Interest or
(ii) Alliance (including, for this purpose, any and all Alliance
Successors) shall own, directly or indirectly, a One-Hundred-Percent
PricelineMortgage Interest.
(h) Effective immediately, without any action on the part of
either Party hereto, in the event that PricelineMortgage shall be
liquidated or dissolved in accordance with the terms of the LLC Agreement.
(i) Notwithstanding anything in this Section 10.2 to the
contrary, in the event that Priceline shall not have terminated this
Agreement prior to the expiration of Year 5, this Agreement, the Licensing
Agreement and the Advertising Agreement shall each continue in full force
and effect until the latest to occur of (i) the consummation of the
Priceline Call by Priceline (and/or any Priceline Successor), which shall
occur on or prior to December 31, 2005, (ii) the receipt by Priceline
(and/or any Priceline Successor) of written notice from Alliance (and/or
any Alliance Successor) of Alliance's (and/or any such Alliance
Successor's) election not to exercise the Alliance Put, (iii) the
expiration of the Alliance Put in accordance with the terms set forth
herein, (iv) the consummation of the Alliance Call by Alliance (and/or any
Alliance successor), (v) the expiration of the Alliance Call in accordance
with the terms set forth herein. In the event that, following the
expiration of Year 5, none of the events specified in clauses (i) through
(v) of the preceding sentence shall have occurred and the Parties intend to
(i) negotiate a purchase of all outstanding Shares by one Party, (ii)
negotiate a sale of PricelineMortgage to a third party or (iii) liquidate
PricelineMortgage, in each case in accordance with the provisions of
Section 10.3 hereof, then the Licensing Agreement and the Advertising
Agreement shall each continue in full force and effect until the
consummation of such purchase, sale or liquidation.
10.3 Effect. Upon termination of this Agreement, in the event that
the Priceline Call, the Alliance Put and the Alliance Call (in each case,
as contemplated by Article 9 hereof) have not been exercised, the Parties
shall negotiate in good faith a possible purchase by one Party (and/or its
Affiliates) of all outstanding Shares held by the other Party or the sale
of PricelineMortgage to a third party. In the event that, notwithstanding
their good faith negotiations, the Parties are unable to agree upon such a
purchase or sale within One Hundred Twenty (120) days of the notice of
termination, the Parties shall cooperate to cause PricelineMortgage to be
liquidated as promptly as practical in accordance with Applicable Law.
10.4 Survival of Obligations. The rights and obligations of the
Parties under Sections 6.3 (Systems Development), 6.7 (Reimbursement of
Expenses), 6.8 (Confidentiality) and 6.9 (Publicity) hereof, this Section
10.4 and Sections 10.3, 10.5, 10.6, 11.1 and 11.2 hereof shall survive any
termination of this Agreement.
10.5 Return of Confidential Information. Upon the termination of this
Agreement, each Party, at its own cost, shall promptly return to the
Disclosing Party any and all documents and materials constituting or
containing Confidential Information of the Disclosing Party which are in
its possession or control, or at its option, shall destroy such documents
and materials and certify such destruction in writing to the Disclosing
Party.
10.6 Continuing Liability. Termination of this Agreement for any
reason shall not release any Party from any liability or obligation which
has already accrued as of the effective date of such termination, and shall
not constitute a waiver or release of, or otherwise be deemed to prejudice
or adversely affect, any rights, remedies or claims, whether for damages or
otherwise, which a Party may have hereunder, at law, equity or otherwise or
which may arise out of or in connection with such termination.
11. GENERAL PROVISIONS
11.1 Governing Law; Dispute Resolution. The validity, construction
and enforceability of this Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware. All disputes between
the Parties arising out of this Agreement shall be settled by the Parties
amicably through good faith discussions upon the written request of either
Party. In the event that any such dispute cannot be resolved thereby
within a period of sixty (60) days after such notice has been given, such
dispute shall be finally settled by arbitration in Wilmington, Delaware in
accordance with the rules then in effect of the American Arbitration
Association. Any such dispute shall be adjudicated by a panel of three (3)
arbitrators, one (1) of whom shall be appointed by Priceline, one (1) of
whom shall be appointed by Alliance and one (1) of whom shall be selected
by the two (2) previously selected panel members. The arbitrators shall
have the authority to grant specific performance, and to allocate between
the Parties the costs of arbitration in such equitable manner as the
arbitrators may determine. The prevailing Party in the arbitration shall
be entitled to receive reimbursement of its reasonable expenses incurred in
connection therewith. Judgment upon the award so rendered may be entered
in any court having jurisdiction or application may be made to such court
for judicial acceptance of any award and an order of enforcement, as the
case may be. Notwithstanding the foregoing, either Party shall have the
right to institute a legal action in a court of proper jurisdiction for
injunctive relief and/or a decree for specific performance pending final
settlement by arbitration.
11.2 Notices and Other Communications. Any and all notices, requests,
demands and other communications required or otherwise contemplated to be
made under this Agreement shall be in writing and shall be provided by one
or more of the following means and shall be deemed to have been duly given
(a) if delivered personally or by overnight courier service, when received,
or (b) if transmitted by facsimile, upon receipt of a transmittal
confirmation to the facsimile address provided by the receiving Party. All
such notices, requests, demands and other communications shall be addressed
as follows:
If to Priceline:
xxxxxxxxx.xxx Incorporated
000 Xxxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: General Counsel
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy (which copy shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx Chuff, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to Alliance:
Alliance Partners, LP
0000 Xxxxxxx Xxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx XxXxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy (which copy shall not constitute notice) to:
Xxxxxxxxxxx & Xxxxxxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
or to such other address or facsimile number as a Party may have specified
to the other Party in writing delivered in accordance with this Section
11.2.
11.3 Severability. If any provision in this Agreement shall be found
or be held to be invalid or unenforceable, then the meaning of such
provision shall be construed, to the extent feasible, so as to render the
provision enforceable, and if no feasible interpretation would save such
provision, it shall be severed from the remainder of this Agreement which
shall remain in full force and effect unless the severed provision is
essential and material to the rights or benefits received by any Party. In
such event, the Parties shall use best efforts to negotiate, in good faith,
a substitute, valid and enforceable provision or agreement which most
nearly effects the Parties' intent in entering into this Agreement.
11.4 References; Subject Headings. Unless otherwise indicated,
references to Articles, Sections and Schedules herein are to Articles of,
Sections of, and Schedules to, this Agreement. The subject headings of the
Articles and Sections of this Agreement are included for the purpose of
convenience of reference only, and shall not affect the construction or
interpretation of any of its provisions.
11.5 Further Assurances. The Parties shall each perform such acts,
execute and deliver such instruments and documents, and do all such other
things as may be reasonably necessary to accomplish the transactions
contemplated by this Agreement.
11.6 Expenses. Except as set forth in Section 6.7 hereof, each of the
Parties shall bear its own costs and expenses, including, without
limitation, fees and expenses of legal counsel, accountants, brokers,
consultants and other representatives used or hired in connection with the
negotiation and preparation of this Agreement and consummation of the
transactions contemplated hereby. All such expenses incurred by
PricelineMortgage shall be borne by PricelineMortgage to the maximum extent
permitted by Applicable Law including, without limitation, expenses
relating to the formation of PricelineMortgage, any transfer taxes for
transfer of the Shares to the Parties or their Affiliates, registration
charges, taxes, fees and expenses relating to required governmental or
regulatory approvals, notary fees and legal fees and expenses.
11.7 No Waiver. No waiver of any term or condition of this Agreement
shall be valid or binding on a Party unless the same shall have been set
forth in a written document, specifically referring to this Agreement and
duly signed by the waiving Party. The failure of a Party to enforce at any
time any of the provisions of this Agreement, or the failure to require at
any time performance by one or both of the other Parties of any of the
provisions of this Agreement, shall in no way be construed to be a present
or future waiver of such provisions, nor in any way affect the ability of a
Party to enforce each and every such provision thereafter.
11.8 Entire Agreement; Amendments. The terms and conditions contained
in this Agreement (including the Schedules and Exhibit hereto) and the
other Transaction Documents constitute the entire agreement between the
Parties and supersede all previous agreements and understandings, whether
oral or written, between the Parties with respect to the subject matter
hereof. No agreement or understanding amending this Agreement shall be
binding upon any Party unless set forth in a written document which
expressly refers to this Agreement and which is signed and delivered by
duly authorized representatives of each Party.
11.9 Assignment. Neither Party shall assign this Agreement without
the other Party's prior written consent. In the event of an assignment
pursuant to this Section 11.9, any such assignee shall assume in writing
the assigning Party's obligations under this Agreement. Notwithstanding
the foregoing, the assigning Party shall remain liable for the assignee's
performance of its obligations hereunder. This Agreement shall inure to
the benefit of, and shall be binding upon, the Parties and their respective
successors and permitted assigns.
11.10 No Third-Party Beneficiaries. Nothing herein express or
implied, is intended to or shall be construed to confer upon or give to any
person, firm, corporation or legal entity, other than the Parties and their
Affiliates who hold Shares or are a party to one or more of the Transaction
Documents, any interests, rights, remedies or other benefits with respect
to or in connection with any agreement or provision contained herein or
contemplated hereby.
11.11 Counterparts. This Agreement may be executed in any number
of counterparts, and each counterpart shall constitute an original
instrument, but all such separate counterparts shall constitute only one
and the same instrument.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties have caused their respective duly
authorized representatives to execute this Agreement as of the date first
above written.
XXXXXXXXX.XXX INCORPORATED ALLIANCE PARTNERS, LP
By:____________________________ By:______________________________
Name: Name:
Title: Title:
