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Exhibit 10.1
SERIES A 8% CONVERTIBLE
PREFERRED STOCK
PURCHASE AGREEMENT
among
LENDINGTREE, INC.
and
THE INVESTORS NAMED HEREIN
dated as of March 7, 2001
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TABLE OF CONTENTS
Page
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1. DEFINITIONS..............................................................1
1.1 Certain Definitions................................................1
1.2 Other Terms........................................................3
2. AUTHORIZATION AND SALE OF SECURITIES.....................................4
2.1 Authorization......................................................4
2.2 Sale of Series A Preferred Stock...................................4
3. CLOSINGS.................................................................4
3.1 Class 1 Closing....................................................4
3.2 Class 2 Closing....................................................5
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................5
4.1 Organization and Standing; Articles and Bylaws.....................5
4.2 Corporate Power....................................................5
4.3 Capitalization.....................................................5
4.4 Authorization......................................................6
4.5 No Conflict; Required filings and Consents.........................6
4.6 Securities Act.....................................................7
4.7 Reports and Financial Statements...................................7
4.8 Intellectual Property..............................................8
4.9 Litigation.........................................................8
4.10 Operating Rights...................................................8
4.11 Taxes..............................................................8
4.12 ERISA..............................................................9
4.13 Regulatory Matters................................................10
4.14 Finders Fees......................................................10
4.15 Absence of Certain Changes........................................10
4.16 Disclosures.......................................................10
4.17 Compliance with Other Instruments, etc............................10
4.18 Government Licenses...............................................10
4.19 Internal Controls.................................................11
4.20 Auditors Letter...................................................11
5. INVESTMENT REPRESENTATIONS..............................................11
5.1 Accredited Investor; Experience; Risk.............................11
5.2 Investment........................................................12
5.3 Restricted Securities; Rule 144...................................12
5.4 Authorization.....................................................12
5.5 Further Limitations on Disposition................................12
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5.6 Legends...........................................................13
6. PRE-CLASS 1 CLOSING COVENANTS...........................................13
6.1 Reasonable Best Efforts...........................................13
6.2 Conduct of Business of the Company................................13
6.3 Financial Statements..............................................13
6.4 Availability of Documents.........................................14
7. ADDITIONAL COVENANTS OF THE COMPANY.....................................14
7.1 Use of Proceeds...................................................14
7.2 Board Representation..............................................14
7.3 Form D; Blue Sky Laws.............................................14
7.4 Reservation of Shares.............................................14
7.5 Listing...........................................................15
7.6 Meeting of the Company Stockholders...............................15
7.7 Limitation on Subsequent Issuances of Common Stock................15
8. CONDITIONS TO THE OBLIGATIONS OF THE CLASS 1 INVESTOR...................16
8.1 Certain Closing Conditions........................................16
8.2 Voting Agreement..................................................17
8.3 Registration Rights Agreement.....................................17
8.4 Other Financings..................................................17
8.5 Modifications.....................................................17
8.6 Federal Home Loan Mortgage Corporation License....................17
8.7 No Constraints....................................................17
8A. CONDITIONS TO OBLIGATIONS OF CLASS 2 INVESTORS..........................18
9. CONDITIONS TO COMPANY'S OBLIGATIONS.....................................18
9.1 Representations Correct...........................................18
9.2 Payment of Purchase Price.........................................18
9.3 Cancellation of Equity Rights Certificate.........................18
9.4 No Constraints....................................................18
10. ADDITIONAL CONDITION TO THE OBLIGATIONS OF CAPITAL Z....................18
11. TERMINATION.............................................................19
11.1 Termination of Agreement..........................................19
11.2 Effect of Termination.............................................19
12. INDEMNIFICATION.........................................................19
12.1 Claims for Indemnification........................................19
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12.2 Defense of Third-party Claims.....................................20
12.3 Survival of Representations and Warranties........................21
13. MISCELLANEOUS...........................................................21
13.1 Governing Law.....................................................21
13.2 Fees and Expenses.................................................21
13.3 Public Announcements..............................................22
13.4 Successors and Assigns............................................22
13.5 Entire Agreement; Amendment.......................................22
13.6 Notices, etc......................................................22
13.7 Delays or Omissions...............................................23
13.8 Counterparts......................................................23
13.9 Severability......................................................23
13.10 Specific Performance..............................................23
SCHEDULES
Schedule I...................................................................S-1
EXHIBITS
Exhibit A Form of Voting Agreement
Exhibit B Form of Registration Rights Agreement
Exhibit C Certificate of Designations Preferences and Rights
of Series A Preferred Stock
Exhibit D Credit Agreement between the Company and The Union Labor Life
Insurance Company, dated as of March 7, 2001
Exhibit E Revolving Credit Facility between the Company and the Federal
Home Loan Mortgage Corporation, dated as of March 7, 2001
Exhibit F Common Stock Purchase Agreement between the Company and Xxxx
Xxxxxx Capital Partners, Ltd., dated as of March 7, 2001
Exhibit G First Amendment to the Software Customization, License and
Services Agreement between the Company and the Federal Home
Loan Mortgage Corporation, dated as of March 7, 2001
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SERIES A PREFERRED STOCK PURCHASE AGREEMENT, dated as of March 7, 2001,
between LENDINGTREE, INC., a Delaware corporation (the "Company"), and all of
the investors named in Schedule I hereto.
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
1. DEFINITIONS
1.1. Certain Definitions. As used in this Agreement, the following terms shall
have the meanings set forth in this Section 1.1:
1.1.1. "Capital Z" shall mean any of Capital Z Financial Services Fund
II, L.P., Capital Z Financial Services Private Fund II, L.P., Capital Z
Management LLC or Specialty Finance Partners or, with respect to the
holder of the Capital Z Equity Rights Certificate, any transferees or
holders of any of the rights evidenced by the Capital Z Equity Rights
Certificate.
1.1.2. "Capital Z Equity Rights Certificate" shall mean the Equity
Rights Certificate, dated as of September 29, 2000, issued to Capital
Z, evidencing the right to receive certain Securities (as defined
therein).
1.1.3. "Certificate of Designations" shall mean the Certificate of
Designations setting forth the designation, privileges and rights of
the Series A Preferred Stock (as hereinafter defined), a copy of which
is attached hereto as Exhibit C.
1.1.4. "Class 1 Closing" shall have the meaning specified in Article 3
of this Agreement.
1.1.5. "Class 2 Closing" shall have the meaning specified in Article 3
of this Agreement.
1.1.6. "Class 1 Closing Date" shall have the meaning specified in
Article 3 of this Agreement.
1.1.7. "Class 2 Closing Date" shall have the meaning specified in
Article 3 of this Agreement.
1.1.8. "Class 1 Investors" shall mean those Investors set forth under
the caption Class 1 Investors on Schedule I hereto.
1.1.9. "Class 2 Investors" shall mean those Investors set forth under
the caption Class 2 Investors on Schedule I hereto.
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1.1.10. "Code" shall mean the Internal Revenue Code of 1986, as
amended, and all Laws promulgated pursuant thereto or in connection
therewith.
1.1.11. "Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities
Act.
1.1.12. "Common Stock" shall mean the common stock of the Company,
$0.01 par value per share.
1.1.13. "Equity Security" shall mean any stock or similar security of
the Company or any security (including any note or debt instrument)
convertible or exchangeable, with or without consideration, into or for
any stock or similar security, or any security carrying or representing
any option, warrant or right to subscribe to or purchase any stock or
similar security, or any such option, warrant or right; provided, that
the Securities (as hereinafter defined) shall not be included in the
definition of Equity Security.
1.1.14. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to
time and any regulations promulgated thereunder.
1.1.15. "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect at the time.
1.1.16. "GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, which
are in effect from time to time.
1.1.17. "Holder" shall mean (i) each Investor and (ii) any transferee
of an Investor.
1.1.18. "Investors" shall mean the investors named in Schedule I
hereto, including both the Class 1 Investors and the Class 2 Investors.
1.1.19. "Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, preemptive right, assignment, deposit arrangement, lien,
charge, claim, security interest, easement or encumbrance, or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any title
retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or
agreement to give, any financing statement perfecting
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a security interest as to assets owned by the relevant person under the
Uniform Commercial Code or comparable law of any jurisdiction).
1.1.20. "Material Adverse Effect" shall mean the existence of
circumstances that had or would reasonably be expected to, individually
or in the aggregate, have a material adverse effect on the business,
operations, assets, condition (financial or otherwise) or prospects of
the Company and the Subsidiaries taken as a whole.
1.1.21. "Person" shall mean an individual, partnership, corporation,
joint venture, limited liability company, trust, unincorporated
organization, governmental agency or department.
1.1.22. "Securities" shall mean the Series A Preferred Stock and the
Common Stock issuable upon conversion thereof.
1.1.23. "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect at the time.
1.1.24. "Series A Preferred Stock" shall mean the Series A 8%
Convertible Preferred Stock, $0.01 par value per share, of the Company.
1.1.25. "Subsidiary" means any corporation, association trust, limited
liability company, partnership, joint venture or other business
association or entity (i) at least 50% of the outstanding voting
securities of which are at the time owned or controlled directly or
indirectly by the Company or (ii) with respect to which the Company
possesses, directly or indirectly, the power to direct or cause the
direction of the affairs or management of such person.
1.1.26. "Transaction Documents" shall mean collectively, this
Agreement, the Voting Agreement, dated March 7, 2000, among the Company
and signatories thereto, the form of which is attached hereto as
Exhibit A (the "Voting Agreement"), the Registration Rights Agreement,
dated March 7, 2000, among the Company and signatories thereto, the
form of which is attached hereto as Exhibit B (the "Registration Rights
Agreement"), the Certificate of Designations and any certificates
executed by officers of the Company in connection with the consummation
of the transactions contemplated hereby.
1.2. Other Terms. Other terms used in this Agreement are defined in the context
in which they are used and shall have the meanings therein indicated.
2. AUTHORIZATION AND SALE OF SECURITIES
2.1. Authorization. Prior to the Class 1 Closing, the Company shall have
authorized the sale and issuance of up to 6,885,715 shares of Series A Preferred
Stock having the rights, restrictions, privileges and preferences set forth in
the Certificate of Designations. As set forth in the Certificate of
Designations, no shares of Series A Preferred Stock shall be convertible into
Common Stock or be entitled to any voting right unless and until such
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conversion privileges and voting rights are approved by the Company's
stockholders as contemplated by Section 7.6 below.
2.2. Sale of Series A Preferred Stock. On the basis of the representations,
warranties and agreements contained herein, and subject to the terms and
conditions hereof, (i) at the Class 1 Closing, the Company shall issue and sell
to each Investor, and each Class 1 Investor shall purchase from the Company, the
number of shares of Series A Preferred Stock set forth opposite its name on
Schedule I attached hereto under the heading "Number of Shares," for the
aggregate consideration set forth opposite the name of such Class 1 Investor in
such schedule under the heading "Purchase Price," and (ii) at the Class 2
Closing the cash sum of (a) the aggregate consideration set forth opposite the
name of such Class 2 Investor in such schedule under the heading "Purchase
Price" plus, (b) any accumulated dividends on the shares of Series A Preferred
Stock being purchased by such Class 2 Investor from the Class 1 Closing Date up
to and including the Class 2 Closing Date. The obligations of each Investor
hereunder are several and not joint obligations and no Investor shall have any
obligation or liability to any Person for the performance or non-performance by
any other Investor hereunder.
3. CLOSINGS
3.1. Class 1 Closing. Subject to the satisfaction of the conditions set forth in
this Agreement, the closing of the purchase and sale of the Series A Preferred
Stock being purchased by the Class 1 Investors hereunder (the "Class 1 Closing")
shall be held at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx
Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 a.m. on March 20, 2001 or at such
other time and place as the Company and Zions Bank and Capital Z mutually agree
(the "Class 1 Closing Date"). At the Class 1 Closing, the Company shall (i)
deliver to each Class 1 Investor a certificate representing the shares of Series
A Preferred Stock being purchased by such Class 1 Investor against payment of
the purchase price therefor, as specified in Section 2.2, by wire transfer to an
account of the Company, which account shall have been specified in a written
notice delivered to the Class 1 Investors not less than two business days prior
to the Class 1 Closing, and (ii) deliver to Capital Z a certificate representing
that certain number of shares of Series A Preferred Stock (at a price of $3.50
per share) to be issued upon conversion of the Capital Z Equity Rights
Certificate, which conversion shall occur concurrently with the purchase by
Capital Z of the Series A Preferred Stock to be purchased by it thereunder as
set forth in Section 2.2 above.
3.2. Class 2 Closing. Subject to the satisfaction of the applicable conditions
set forth in this Agreement, the closing of the purchase and sale of the Series
A Preferred Stock being purchased by the Class 2 Investors hereunder (the "Class
2 Closing" and together with the Class 1 Closing, the "Closings") shall be held
at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Four Times Square,
Xxx Xxxx, XX 00000, at 10:00 a.m. on April 30, 2001 or at such time and place
prior to April 30, 2001 as the Company and the Investors mutually agree (the
"Class 2 Closing Date"). At the Class 2 Closing, the Company shall deliver to
each Class 2 Investor a certificate representing the shares of Series A
Preferred Stock being purchased by such Class 2 Investor against payment of the
purchase price therefor, as specified in Section 2.2, by wire transfer to an
account of the Company, which account shall have been specified in a written
notice delivered to the Class 2 Investors not less than two business days prior
to the Class 2 Closing.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company hereby represents and warrants to the Investors as follows:
4.1. Organization and Standing; Articles and Bylaws. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and is authorized to exercise all its corporate
powers, rights and privileges. The Company has made available to the Investors
true and complete copies of its certificate of incorporation and bylaws, each as
currently in effect.
4.2. Corporate Power. The Company has all requisite legal and corporate power to
execute and deliver this Agreement and the other Transaction Documents, to sell
and issue the Series A Preferred Stock and to carry out and perform its
obligations under the terms of this Agreement and the other Transaction
Documents.
4.3. Capitalization. As of February 28, 2001, the authorized capital stock of
the Company consisted of 100,000,000 shares of Common Stock, 18,737,441 shares
of which were issued and outstanding, and 10,000,000 shares of preferred stock,
par value $0.01 per share, none of which were issued and outstanding. As of the
date hereof, the Company's Board of Directors has authorized the issuance of
6,885,715 shares of Series A Preferred Stock, none of which have been issued. At
the Class 1 Closing, the rights, restrictions, privileges and preferences of the
Series A Preferred Stock will be as stated in the Certificate of Designations
relating thereto in accordance with the Delaware General Corporation Law. All
such issued and outstanding shares have been duly authorized and validly issued,
and are fully paid and nonassessable and have been issued in compliance with
federal and state securities law. Except as contemplated in the Transaction
Documents, there were no options, warrants, conversion privileges or other
rights presently outstanding to purchase or otherwise acquire any shares of the
capital stock or other securities of the Company, nor any agreements or
understandings with respect thereto, other than (i) options to purchase
5,126,569 shares of Common Stock granted to eligible participants under the
Company's benefit plans, (ii) warrants to purchase 992,885 shares of Common
Stock and (iii) pursuant to such other agreements and instruments set forth on
Schedule 4.3 hereto. Except as contemplated in the Transaction Documents,
neither the offer nor the issuance or sale of the Securities will trigger any
anti-dilution or similar provision under any Equity Security or of any agreement
or instrument to which the Company is a party or by which it is bound or
affected.
4.4. Authorization. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, execution, delivery
and performance of the Transaction Documents, the authorization, sale, issuance
and delivery of the Series A Preferred Stock and the performance of the
Company's obligations hereunder, have been taken. The Transaction Documents,
when executed and delivered by the Company, shall constitute valid and binding
obligations of the Company enforceable in accordance with their respective
terms, subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and rules of law governing specific performance,
injunctive relief or other equitable remedies. The terms, designations, powers,
preferences and relative, participating and optional or other rights, and the
qualifications, limitations and restrictions of the Series A Preferred Stock
being issued hereby are stated in the Certificate of Designations. The Series A
Preferred Stock to be issued at the Closings shall, against receipt of payment
therefor as contemplated herein, be duly and validly issued, fully paid and
non-assessable, and free of preemptive rights and
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restrictions on transfer (other than those contemplated by the Transaction
Documents or under applicable securities laws). The Common Stock issuable upon
conversion of the Series A Preferred Stock will, upon the receipt of stockholder
approval, be duly and validly reserved for issuance, and upon issuance will be
duly and validly issued, fully paid and nonassessable, free of pre-emptive
rights and restrictions on transfer; provided, however, that the Securities will
be subject to applicable restrictions on transfer under applicable securities
laws.
4.5. No Conflict; Required filings and Consents.
(a) The execution and delivery by the Company of this Agreement and the
other Transaction Documents does not, and consummation of the transactions
contemplated by this Agreement and the other Transaction Documents will not, (i)
conflict with, or result in any violation or breach of any provision of, the
Certificate of Incorporation or Bylaws of the Company, (ii) result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit) under, any of
the terms, conditions, or provisions of any note, bond, mortgage, indenture,
lease contract or other agreement, instrument or obligation to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries, properties or assets may be bound, or (iii) conflict with or
violate any permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries, properties or assets (provided, with respect to clauses (ii)
and (iii), that stockholder approval of such purchase is obtained in conformity
with the rules and regulations of the National Association of Securities
Dealers, Inc. (the "NASD Rules")), except in the case of (ii) and (iii) for any
such violations, defaults, breaches, terminations, cancellations, accelerations,
losses or conflicts which would not, individually or in the aggregate, have a
Material Adverse Effect, and would not materially burden or delay the
consummation of the transactions contemplated hereby.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality (a "Governmental Entity") is
required by or with respect to the Company in connection with the execution and
delivery of this Agreement and the other Transaction Documents or the
consummation of the transactions contemplated hereby or thereby, except for (i)
the filing of a Form D under the Securities Act of 1933, as amended (the
"Securities Act"), (ii) such filings as may be required under applicable state
securities laws, and (iii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not,
individually or in the aggregate, have a Material Adverse Effect and would not
materially burden or delay the consummation of the transactions contemplated
hereby.
4.6. Securities Act. Subject to the accuracy of the Investors' representations
in Section 5 hereof, the offer, sale and issuance of the Securities and the
issuance of the Company's Common Stock upon conversion of the Series A Preferred
Stock, all in conformity with the terms of this Agreement, constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act and applicable state securities laws.
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4.7. Reports and Financial Statements. The Company has filed all required
registration statements, prospectuses, reports, schedules, forms, statements and
other documents required to be filed by it with the Commission (collectively,
including all exhibits thereto, the "Company SEC Reports"). None of the Company
SEC Reports, as of their respective dates (and, if amended or superseded by a
filing prior to the date of this Agreement or the Class 1 Closing Date, then on
the date of such filing), contained any untrue statement of a material fact or
omitted or will 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. Each of the financial statements
(including the related notes) included in the Company SEC Reports presents
fairly, in all material respects, the financial position and results of
operations and cash flows of the Company as of the respective dates or for the
respective periods set forth therein, all in conformity with United States
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved except as otherwise noted therein, and subject, in the case
of the unaudited interim financial statements, to the absence of notes and
normal year-end adjustments that have not been and are not expected to be
material in amount. All of such Company SEC Reports, as of their respective
dates (and as of the date of any amendment to the respective Company SEC
Report), complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act. Except as disclosed in
the Company SEC Reports filed prior to the date hereof, since September 30,
2000, (i) the Company has not incurred any liabilities that are of a nature that
would be required to be disclosed on a balance sheet of the Company or the
footnotes thereto prepared in conformity with GAAP, other than (x) liabilities
incurred in the ordinary course of business, or (y) liabilities that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect or; and (ii) there have not been any changes,
circumstances or events which, individually or in the aggregate, have had, or
would reasonably be expected to have, a Material Adverse Effect on the Company.
4.8. Intellectual Property. The Company owns, licenses or otherwise has the
right to use all licenses, patents, patent applications, trademarks and
registrations and applications for registration thereof, service marks, trade
names, copyrights and other intellectual property necessary to enable it to
carry on its and its Subsidiaries' businesses as now conducted, except where any
failure to own, license or have the right to use any such intellectual property
would not result in a Material Adverse Effect, and the Company has not received
notice from any third-party of, nor is the Company aware of, any conflict with
or infringement of the intellectual property rights of any third-party, except
for any conflict or infringement which would not result in a Material Adverse
Effect.
4.9. Litigation. Except as disclosed in the Company SEC Reports, (i) there is no
action, suit, proceeding or investigation pending or threatened against the
Company or any of its Subsidiaries, which, either in any single case or in the
aggregate, would result in a Material Adverse Effect, and none which questions
the validity of this Agreement or any action taken or to be taken in connection
herewith, and (ii) neither the Company nor any of its Subsidiaries is a party or
subject to any writ, order, decree or judgment, and there is no action, suit,
proceeding or investigation by the Company or any of its Subsidiaries currently
pending or which the Company or any of its Subsidiaries intends to initiate,
other than any action, suit, proceeding or investigation which would not result
in a Material Adverse Effect.
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4.10. Operating Rights. To the best of the Company's knowledge, except as
disclosed in the Company SEC Reports, the Company and each of its Subsidiaries
has all material operating authority, licenses, franchises, permits,
certificates, consents, rights, and privileges (collectively, "Licenses") as are
necessary to the operation of its business, as now conducted, the absence of
which would have a Material Adverse Effect. Such Licenses are in full force and
effect, no material violations have been recorded in respect of any such
Licenses, and no material proceeding is pending or, to the best knowledge of the
Company, threatened that could result in the revocation or limitation of any of
such Licenses except, in each case, as disclosed in the Company's SEC Reports.
The Company and each of its Subsidiaries presently conducts its business so as
to comply in all material respects with all such material Licenses.
4.11. Taxes. All material federal, state, local and foreign tax returns, reports
and statements required to be filed by Company and each of its Subsidiaries have
been timely filed with the appropriate Governmental Entity and all such returns,
reports and statements are true, correct and complete in all material respects.
All material charges and other material impositions due and payable for the
periods covered by such returns, reports and statements have been paid prior to
the date on which any fine, penalty, interest or late charge may be added
thereto for nonpayment thereof, or any such fine, penalty, interest, late charge
or loss has been paid or is immaterial in amount. Except as disclosed in the
Company SEC Reports, no material tax audits or other administrative or judicial
proceedings are pending or, to the Company's knowledge, threatened with regard
to any charges for which Company or any of its Subsidiaries may be liable and no
material assessment of charges is proposed against Company or any of its
Subsidiaries. For purposes of this Section 4.11, "charges" shall mean all
federal, state and city (including, without limitation, the Pension Benefit
Guaranty Corporation) taxes at the time due and payable, levies, assessments,
charges or Liens upon or relating to the Company's or any of its Subsidiaries'
business.
(a) ERISA. Schedule 4.12(a) hereto sets forth a list of each material pension,
retirement, savings, disability, dental, health, life, death benefit, group
insurance, profit-sharing, deferred compensation, stock option, bonus,
incentive, severance pay or other employee benefit plan, trust, arrangement,
contract, commitment, agreement or policy (collectively, "Benefit Plans")
sponsored or maintained by the Company or any of its Subsidiaries, in which
present or former employees of the Company or any of its Subsidiaries
participate (collectively, the "Company Plans"). Correct and complete copies of
the following documents, which are correct and complete in all material
respects, with respect to each of the Company Plans, have been made available to
the Investors, to the extent applicable: (i) any plans, all material amendments
thereto and related trust documents, and amendments thereto; (ii) the most
recent Forms 5500 and all schedules thereto and the most recent actuarial
reports, if any; (iii) the most recent IRS determination letter; (iv) summary
plan descriptions; (v) material written communications to employees relating to
the Company Plans; and (vi) written descriptions of all material non-written
agreements relating to the Company Plans.
(b) No Company Plan is subject to Title IV of ERISA. Except as set forth in
Schedule 4.12(b) hereto and except as would not have a Material Adverse Effect:
(A) the Company Plans have been administered and are in compliance with the
terms of such plan and all applicable laws, (B) no "reportable event" (as such
term is used in Section 4043 of ERISA
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other than those events for which the thirty (30) day notice has been waived
pursuant to the regulations) or "prohibited transaction" (as such term is used
in Section 406 of ERISA or Section 4975 of the IRC) has heretofore occurred with
respect to any Company Plan and (C) each Company Plan intended to qualify under
Section 401(a) of the IRC has received a favorable determination from the IRS
regarding its qualified status and no notice has been received from the IRS with
respect to the revocation of such qualification. None of the Company Plans
provides for post-employment life or health insurance, benefits or coverage for
any participant or any beneficiary of a participant, expect as may be required
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
and at the expense of the participant or the participant's beneficiary.
(c) There is no litigation or administrative or other proceeding involving any
Company Plan (other than routine claims for benefits), nor has the Company or
any of its Subsidiaries received notice that any such proceeding is threatened,
in each case that would have a Material Adverse Effect.
4.12. Regulatory Matters. Except as disclosed in the Company SEC Documents and
except as would not have, individually or in the aggregate, a Material Adverse
Effect, the Company and each of its Subsidiaries: (i) has completed all
regulatory applications, filings and tariffs, has received all regulatory
certificates or other approvals, and has otherwise complied with all regulatory
requirements necessary to offer any and all services currently offered by
Company and its Subsidiaries; and (ii) with respect to any currently planned
services that it may offer, it will complete all regulatory applications,
filings and tariffs, will obtain all regulatory certificates or other approvals
and will otherwise comply with all regulatory requirements necessary to offer
any and all such services.
4.13. Finders Fees. Except for Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx,
Incorporated, whose fees will be paid by the Company, there is no investment
banker, broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of the Company who might be entitled to any fee or
commission in connection with the transactions contemplated by this Agreement.
4.14. Absence of Certain Changes. Since September 30, 2000, there has not been
any event, occurrence or development of a state of circumstances or facts that
would have a Material Adverse Effect or an adverse effect on the ability of the
Company to perform its obligations under this Agreement.
4.15. Disclosures. Neither this Agreement nor any exhibit or schedule hereto,
nor any report, certificate or instrument furnished to the Investors pursuant to
this Agreement or in connection with the transactions contemplated by this
Agreement, when taken in their entirety, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
There is no fact which the Company has not disclosed to the Investors which
would have a Material Adverse Effect or, insofar as the Company foresees, could
reasonably be expected to have a material adverse effect on the ability of the
Company to perform its obligations under this Agreement or the other Transaction
Documents.
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4.16. Compliance with Other Instruments, etc. Neither the Company nor any of its
Subsidiaries is in violation of any term of its certificate or articles of
incorporation or by-laws, and neither the Company nor any of its Subsidiaries is
in violation of any term of any agreement or instrument to which it is a party
or by which it is bound or any term of any applicable order, judgment or decree
of any court, arbitrator or Governmental Entity, the consequences of which
violation could reasonably be expected to have Material Adverse Effect.
4.17. Government Licenses. The Company and its Subsidiaries possess such
permits, licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by them, except where the failure to so possess such Government
Licenses would not, singly or in the aggregate have a Material Adverse Effect;
the Company and its Subsidiaries are in compliance with the terms and conditions
of all such Governmental Licenses, except where the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have, singly or in the aggregate, a Material Adverse
Effect; and neither the Company nor any of its Subsidiaries have received any
notice of proceedings relating to the revocation of modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
4.18. Internal Controls. The Company and its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization; (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with generally accepted
accounting principles and (ii) to maintain accountability for assets; (c) access
to assets is permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any material differences. Any exceptions to this representation would
not render the representation in Section 4.7 incorrect in any material respect
or have a Material Adverse Effect.
4.19. Auditors Letter. The Audit Committee of the Company's Board of Directors
has received a letter from its independent auditors indicating that upon the
closing of the transactions contemplated hereby and finalization of certain
audit procedures, and assuming no other subsequent events occur, the Expected
Audited Financial Statements (as defined in Section 6.3 below) will be the
financial statements included in the Company's Annual Report on Form 10-K for
its fiscal year ended December 31, 2000 (the "2000 Annual Report"), and the
opinion letter included in the 2000 Annual Report, as so reported, will not
contain a "going-concern" qualification.
5. INVESTMENT REPRESENTATIONS AND COVENANTS
Each Class 1 Investor, severally but not jointly, hereby represents,
warrants and covenants to the Company, as of the Class 1 Closing Date, and each
Class 2 Investor, severally but not jointly, further represents, warrants and
covenants to the Company as follows:
5.1. Accredited Investor; Experience; Risk. Such Investor is an "accredited
investor" as such term is defined in Regulation D promulgated under the
Securities Act and has not been organized for the specific purpose of acquiring
Series A Preferred Stock. Such Investor
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and its representatives have been solely responsible for its own "due diligence"
investigations of the Company and its management and business, for its own
analysis of the merits and risks of the investment, and for its own analysis of
the fairness and desirability of the terms of the investment. Such Investor has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks associated with the purchase of the
Series A Preferred Stock and of protecting its interests in connection
therewith. Such Investor is able to fend for itself in the transactions
contemplated by this Agreement and has the ability to bear the economic risk of
the investment, including complete loss of the investment.
5.2. Investment. Such Investor is acquiring the Securities for investment for
its own account and not with a view to, or for resale in connection with, any
distribution thereof, and it has no present intention of selling or distributing
the Securities. Such Investor understands that the Securities have not been
registered under the Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent as expressed herein.
5.3. Restricted Securities; Rule 144. Such Investor understands that the
Securities are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations the Securities may be resold without registration under
the Securities Act only in certain limited circumstances. Such Investor
acknowledges that the Securities must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available. Such Investor is aware of the provisions of Rule 144 promulgated
under the Securities Act, which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the shares, the
availability of certain current public information about the Company, the resale
occurring not less than one (1) year after a party has purchased and paid for
the security to be sold, the sale being effected through a "broker's
transaction" or in transactions directly with a "market maker" (as provided by
Rule 144(f)) and the number of shares being sold during any three (3) month
period not exceeding specified limitations.
5.4. Authorization. Such Investor represents that it has the full right, power
and authority to enter into and perform its obligations under this Agreement,
and this Agreement when executed and delivered by such Investor will constitute
a valid and binding obligation of such Investor, enforceable in accordance with
its terms, subject to the laws of general application relating to bankruptcy,
insolvency and the relief of debtors, rules of law governing specific
performance, injunctive relief or other equitable remedies.
5.5. Further Limitations on Disposition. Without in any way limiting the
representations set forth above, such Investor further agrees not to make any
disposition of all or any portion of the Securities unless and until either:
(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement and the provisions of the
Registration Rights Agreement; or
(b) If, in the good faith determination of the General Counsel (and/or
outside counsel) of the Company, there is a reasonable basis for the belief that
such disposition
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would require registration under the Securities Act, the Company may require
that such Investor furnish the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
under the Securities Act.
5.6. Legends. Such Investor understands that each certificate representing any
of the Securities shall bear a legend in the following form or substantially
similar form (in addition to any legend required under applicable state
securities laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR ANY
APPLICABLE STATE SECURITIES LAW AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY
BE EFFECTED WITHOUT (A) AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR (B) AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS."
6. PRE-CLASS 1 CLOSING COVENANTS
6.1. Reasonable Best Efforts. The Company and each Investor shall each use its
respective reasonable best efforts to (i) take all actions necessary or
appropriate to consummate the transactions contemplated by this Agreement and
the Transaction Documents, and (ii) cause the fulfillment at the earliest
practicable date of all of the conditions to its obligations to consummate the
transactions contemplated by this Agreement and the Transaction Documents.
6.2. Conduct of Business of the Company. Except as contemplated by this
Agreement, during the period from the date hereof to the Class 1 Closing Date,
the Company will conduct its operations in the ordinary course of business and,
to the extent consistent therewith, maintain its capitalization as set forth in
Section 4.3, seek to preserve intact its current business organizations, seek to
keep available the service of its current officers and employees and seek to
preserve its relationships with customers, suppliers and others having business
dealings with it to the end that goodwill and ongoing businesses shall be
materially unimpaired on the Class 1 Closing Date.
6.3. Financial Statements. Prior to the Class 1 Closing Date, the Company shall
deliver to the Investors, (ii) a draft of the expected audited balance sheet of
Company as of December 31, 2000 (the "Expected Audited Balance Sheet"), and (ii)
a draft of the expected audited statements of income and cash flows of Company
for the 12-month period ended December 31, 2000 (the "Expected Audited
Statements" and, together with the Expected Audited Balance Sheet, the "Expected
Audited Financial Statements"). The Expected Audited Financial Statements
(including the notes thereto) shall (1) be prepared in accordance with GAAP
consistently applied, and (2) be in reasonable detail.
6.4. Availability of Documents. Prior to executing definitive documents
(excluding term sheets and letters of intent), the Company shall make available
to the Investors
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current drafts of all currently proposed agreements, arrangements and amendments
to existing agreements between the Company on the one hand and any of (i)
Federal Home Loan Mortgage Corporation, (ii) The Union Labor Life Insurance
Company, or (iii) Xxxx Xxxxxx Capital Partners, Ltd. on the other hand.
7. ADDITIONAL COVENANTS OF THE COMPANY
The Company hereby covenants as follows:
7.1. Use of Proceeds. The proceeds of the sale of the Series A Preferred Stock
contemplated hereby shall be used by the Company for general corporate purposes.
7.2. Board Representation. The Company shall, consistent with its fiduciary
duties and the rules and regulations of the relevant securities exchange or
automated quotation system, if any, on which the Company's securities are
listed, use its best efforts to increase the size of its Board of Directors from
seven members to eight members and to cause a representative designated by Zions
Bancorporation to be nominated to fill the vacancy on its Board of Directors
created by such increase (the "Board Composition Requirement").
7.3. Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to
the Securities as required under Regulation D of the Securities Act and to
provide a copy thereof to each Investor promptly after such filing. The Company
shall take such action as the Company shall reasonably determine is necessary to
qualify the Securities for sale to the Investors at the Closings, pursuant to
this Agreement under applicable securities or "blue sky" laws of the states of
the United States (or to obtain an exemption from such qualification).
7.4. Reservation of Shares. From such time as the Company has obtained the
approval of its stockholders with respect to the conversion features of the
Series A Preferred Stock until such time as no shares of Series A Preferred
Stock are outstanding (the "Conversion Period"), the Company shall at all times
have authorized, and reserved for the purpose of issuance, a sufficient number
of shares of Common Stock (the "Conversion Shares") to provide for the full
conversion of the outstanding Series A Preferred Stock. If at any time during
the Conversion Period the number of shares of Common Stock authorized and
reserved for issuance is below the number of shares of Common Stock issued and
issuable upon conversion of the outstanding Series A Preferred Stock, the
Company will promptly take all reasonable corporate action necessary to
authorize and reserve a sufficient number of shares, including, without
limitation, calling a special meeting of stockholders to authorize additional
shares to meet the Company's obligations under this Section 7.4., in the case of
an insufficient number of authorized shares, and using its best efforts to
obtain stockholder approval of an increase in such authorized number of shares.
7.5. Listing. At the commencement of the Conversion Period, the Company shall
have secured the listing of the Conversion Shares upon each national securities
exchange or automated quotation system, if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance) and, shall use
its reasonable best efforts to maintain such listing for so long as any Investor
or its assigns owns any of the Securities.
7.6. Meeting of the Company Stockholders. The Company shall take all necessary
actions in accordance with applicable law and its Certificate of Incorporation
and Bylaws (including providing appropriate instructions to its transfer agent
as authorized under the Voting Agreement) to seek and obtain stockholder
approval by the holders of a majority of the
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outstanding shares of Common Stock at the annual meeting of stockholders, which
is currently scheduled to be held on May 24, 2001(the "Annual Meeting") or, if
the Annual Meeting is postponed or delayed for more than thirty (30) days, at a
special meeting of stockholders to be held for such purpose on or prior to June
23, 2001 (the "Special Meeting") of (i) the items set forth in the Voting
Agreement, including approval of (x) the general voting rights of the Series A
Preferred Stock described in the third sentence of Section 8 of the Certificate
of Designations and (y) the ability to convert the shares of Series A Preferred
Stock into Common Stock as described in Section 6(a) of the Certificate of
Designations, and any subsequent issuances of Common Stock upon any such
conversion of the Series A Preferred Stock, or in favor of any other proposal
the purpose of which is to seek approval of matters relating to the foregoing or
the rights intended to be afforded to the holders of the Series A Preferred
Stock under the Certificate of Designations that otherwise require approval of
the Company's stockholders under applicable rules of the Nasdaq Stock Market to
be effective; and (ii) the election of a Board of Directors in conformity with
the Board Composition Requirements. The Board of Directors of the Company shall
recommend such approval, and the Company shall solicit such approval. No
amendment or supplement to the proxy statement soliciting proxies in connection
with such Annual Meeting or Special Meeting shall be filed or made by the
Company without prior consultation with the Investors.
7.7. Limitation on Subsequent Issuances of Common Stock. Prior to the
commencement of the Conversion Period, the Company shall not issue any shares of
Common Stock or any Equity Securities which could (assuming the maximum
conversion or exercise of any such Equity Securities), under any circumstances,
result in the total number of Shares (as defined in the Voting Agreement)
subject to the Voting Agreement and the irrevocable proxy forming a part thereof
representing less than 50.1% of the Company's voting securities outstanding at
any time prior to the commencement of the Conversion Period.
8. CONDITIONS TO THE OBLIGATIONS OF THE CLASS 1 INVESTORS
8.1. Certain Closing Conditions. The obligations of each Class 1 Investor to
purchase the Series A Preferred Stock at the Class 1 Closing are subject to the
fulfillment on or prior to the Closing Date of all of the conditions set forth
below in this Section 8.1, the waiver of which shall not be effective against
any Class 1 Investor who does not consent thereto.
(a) Representations and Warranties Correct. The representations and warranties
made in Article 4 hereof shall be true and correct when made, and shall be true
and correct on and as of the Class 1 Closing Date with the same force and effect
as if they had been made on and as of the Class 1 Closing Date.
(b) Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Class 1 Closing Date
shall have been performed or complied with.
(c) Election of the Zions Bancorporation nominee to the Board of Directors. Xxxx
Xxxxxxx shall have been duly elected to the Company's Board of Directors.
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(d) Good Standing. The Investors shall have received a copy of a certificate
dated as of a recent date by the Secretary of State of the State of Delaware as
to the good standing of the Company under the laws of the State of Delaware.
(e) Opinion of Company's Counsel. At the Class 1 Closing the Investors shall
have received from Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, as special counsel
to the Company, an opinion addressed to them, dated the Class 1 Closing Date, in
form reasonably acceptable to the Investors.
(f) Approval of the Certificate of Designations. The Certificate of Designations
shall have been approved in the manner required by law, shall have been duly
filed with and accepted by the Secretary of State of the State of Delaware.
(g) Consents. The Company shall have secured any and all material permits,
waivers, consents, and authorizations as shall be necessary or required for the
Company lawfully to issue the Securities.
(h) Resolutions. All corporate and other proceedings in connection with the
transactions contemplated at the Class 1 Closing hereby and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to the Investors and their counsel, and the Investors and
their counsel shall have received all such counterpart originals or certified or
other copies of such documents as they may reasonably request.
(i) Officer*s Certificate. The Company shall have delivered to the Investors a
certificate, executed by the Chief Executive Officer or the Chief Financial
Officer of the Company, dated the Class 1 Closing Date, certifying as to the
accuracy of the representations and warranties contained in Article 4 and the
fulfillment of the conditions specified in this Article 8.
(j) Sale of Series A Preferred Stock to Each Investor. At the Class 1 Closing,
the Company shall have entered into fully executed definitive documents
(including this Agreement) which represent debt and/or equity financing
commitments of not less than $25,000,000 in the aggregate (excluding the
investment amount being converted under the Capital Z Equity Rights
Certificate), all of which shall be reasonably acceptable to the Investors.
8.2. Voting Agreement. The Company and the holders of at least 55% of the
Company's voting securities outstanding immediately prior to the Class 1 Closing
shall each have entered into the Voting Agreement, in the form attached hereto
as Exhibit A.
8.3. Registration Rights Agreement. The Company shall have entered into the
Registration Rights Agreement, in the form attached hereto as Exhibit B.
8.4. Other Financings. On or prior to the Class 1 Closing Date, the transactions
under (i) the $5 million Credit Agreement dated as of March 7, 2001 between the
Company and The Union Labor Life Insurance Company, on behalf of its Separate
Account P, as
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Lender, a copy of which is attached hereto as Exhibit E; and (ii) the $2.5
million Revolving Credit Facility dated as of March 7, 2001; between the Company
and Federal Home Loan Mortgage Corporation, a federally-chartered corporation, a
copy of which is attached hereto as Exhibit F, shall have been consummated, and
the Common Stock Purchase Agreement, dated as of March 7, 2001, between the
Company and Xxxx Xxxxxx Capital Partners, Ltd., a copy of which is attached
hereto as Exhibit G, shall have been executed and delivered by the parties
thereto.
8.5. Modifications. There shall not have occurred any decrease in the amount of
Series A Preferred Stock to be purchased as the Class 1 Closing that causes an
increase in the amount of Series A Preferred Stock to be purchased at the Class
2 Closing.
8.6. Federal Home Loan Mortgage Corporation License. The First Amendment to the
Software Customization, License and Services Agreement dated July 20, 2000 and
the Marketing Alliance Agreement dated July 7, 2000 by and between the Company
and and the Federal Home Loan Mortgage Corporation, dated March 7, 2001, a copy
of which is attached hereto as Exhibit H, shall have been executed and delivered
by the parties thereto.
8.7. No Constraints. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
8A. CONDITIONS TO OBLIGATIONS OF CLASS 2 INVESTORS
8A.1 The obligations of each Class 2 Investor to purchase the Series A
Preferred Stock at the Class 2 Closing on the Class 2 Closing Date are subject
only to the Class 1 Closing having taken place prior thereto.
9. CONDITIONS TO COMPANY'S OBLIGATIONS
The Company's obligation to sell the Series A Preferred Stock to each
Class 1 Investor at the Class 1 Closing and to each Class 2 Investor at the
Class 2 Closing is subject to the fulfillment of the following conditions:
9.1. Representations Correct. The representations made by such Investor in
Article 5 hereof shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on the Class 1 Closing
Date with respect to Class 1 Investors and on the Class 2 Closing Date with
respect to Class 2 Investors, with the same force and effect as if they had been
made on the date hereof.
9.2. Payment of Purchase Price. With respect to the Class 1 Closing, the Class 1
Investors shall have delivered the total purchase price, as such amount is set
forth in Schedule I under the line item "Class 1 Total Purchase Price"; it being
understood, that, no additional purchase price is required to be paid by Capital
Z for the shares of Series A Preferred Stock to be issued hereunder upon
conversion of the Capital Z Equity Rights Certificate. With respect to the Class
2 Closing, the Investors shall have delivered the total purchase price, as such
amount is set forth in Schedule I under the line item "Class 2 Total Purchase
Price."
9.3. Cancellation of Equity Rights Certificate. Capital Z shall deliver the
Equity Rights Certificate for cancellation.
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9.4. No Constraints. No litigation, statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
10.
ADDITIONAL CONDITION TO THE OBLIGATIONS OF
CAPITAL Z
11.1. Additional Condition to the Obligations of Capital Z. In addition to the
conditions set forth Section 8 above, the obligation of Capital Z to purchase
Series A Preferred Stock at the Class 1 Closing is subject to the Capital Z
Equity Rights Certificate being converted into Series A Preferred Stock at a
conversion price equal to $3.50 per share.
12. TERMINATION
12.1. Termination of Agreement. This Agreement may be terminated prior to the
Class 1 Closing as follows:
(i) With respect to each Class 1 Investor, at the election of such
Class 1 Investor on or after March 30, 2001, if the Class 1 Closing
shall not have occurred by the close of business on such date;
(ii) At the election of the Company on or after June 30, 2001, if the
Class 1 Closing shall not have occurred by the close of business on
such date; or
(iii) With respect to each Class 1 Investor, by mutual written consent
of the Company and such Class 1 Investor.
The right to terminate this Agreement under clause (i) and (ii) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the ability of any condition to
be satisfied.
12.2. Effect of Termination. In the event of termination by the Company or a
Purchaser pursuant to Section 11.1, written notice thereof shall promptly be
given to the other party and, expect as otherwise provided herein, the
transactions contemplated by this Agreement shall be terminated with respect to
such Investor and the Company, without further action by either party.
Notwithstanding the foregoing, nothing in this Section 11.2 shall be deemed to
release any party from any liability for any breach by such party of the terms
and provisions of this Agreement or to impair the right of the Company, on the
one hand, and each Investor, on the other hand, to compel specific performance
of the other party of its obligations under this Agreement. After termination
pursuant to Section 11.1, no party shall have any liability to the other, expect
pursuant to Section 13.2 and except for any willful breach of any
representation,
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warranty, covenant or obligation contained in this Agreement. This Section 11.2
and Section 13.2 shall survive any termination of this Agreement.
13. INDEMNIFICATION
13.1. Claims for Indemnification.
(a) From and after the date upon Shares of Series A Preferred Stock are issued
to an Investor, the Company shall indemnify and hold harmless such Investor, and
such Investor's respective officers, directors, employees, agents, partners,
representatives, subsidiaries, affiliates and permitted successors and assigns
from and against, and promptly reimburse for, any and all loss, diminution in
value, damage, cost, expense (including court costs and reasonable attorneys'
fees and costs of investigation), fine, penalty, suit, action, claim,
deficiency, liability or obligation (collectively, "Losses") caused by or
arising from (i) any breach by the Company of any representation, warranty or
other provision set forth in this Agreement or any Transaction Document (a
"Breach"), or (ii) any and all claims of third parties made based upon facts
alleged that, if true, would constitute such a Breach. For purposes of
determining the amount of indemnifiable Losses of any Investor for which the
Company shall be obligated to indemnify any Investor under this Section 12.1(a),
there shall be taken into account any diminution in the value of the Securities
and other securities acquired by such Investor that results from any payment of
amounts to any indemnitee in respect of indemnifiable Losses.
(b) The representations, warranties, covenants and agreements contained in this
Agreement shall not be affected by any party hereto or by anyone on behalf of
any such party: (i) investigating, verifying or examining any matters with
respect to the Company or the transactions contemplated hereby; (ii) having the
opportunity to investigate, verify or examine any matters related to the Company
or the transactions contemplated hereby; or (iii) failing to determine or
discover any facts which were determinable or discoverable by any such party.
All rights contained in this Agreement are cumulative and are in addition to all
other rights and remedies which are otherwise available, pursuant to the terms
of this Agreement or applicable law.
13.2. Defense of Third-party Claims. With respect to each third-party claim
subject to this Section 12 (a "Third-party Claim"), the party seeking
indemnification (the "Indemnified Party") shall give prompt notice to the
indemnifying party (the "Indemnifying Party") of the Third-party Claim, provided
that failure to give such notice promptly shall not relieve or limit the
obligations of the Indemnifying Party except to the extent the Indemnifying
Party is materially prejudiced thereby. The Indemnifying Party, at its sole cost
and expense, may, upon notice of the Third-party Claim, assume the defense of
the Third-party Claim. If it assumes the defense of a Third-party Claim, then
the Indemnifying Party shall select counsel reasonably satisfactory to the
Indemnified Party to conduct the defense. The Indemnifying Party shall not
consent to a settlement of, or the entry of any judgment arising from, any
Third-party Claim, unless (i) the settlement or judgment is solely for money
damages and the Indemnifying Party admits in writing its liability to hold the
Indemnified Party harmless from and against any losses, damages, expense and
liabilities arising out of such settlement or (ii) the Indemnified Party
consents thereto, which consent shall not be unreasonably withheld and, in the
case of either clause (i) or clause (ii), the settlement contains an
unconditional release of the Indemnified
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Party with respect to the Third-party Claim from each Person asserting such
claim and does not contain an admission of fault on the party of the Indemnified
Party. The Indemnified Party shall provide the Indemnified Party with fifteen
(15) days prior notice before it consents to a settlement of, or the entry of a
judgment arising from, any Third-party Claim. The Indemnified Party shall be
entitled to participate in the defense of any Third-party Claim, the defense of
which is assumed by the Indemnifying Party, with its own counsel and at its own
expense. With respect to Third-Party Claims in which the remedy sought is not
solely money damages, (i) the Indemnifying Party shall, upon notice to the
Indemnified Party with fifteen (15) days after the Indemnifying Party receives
notice of the Third-party Claim, be entitled to participate in the defense with
its own counsel at its own expense and (ii) the Indemnified Party shall not
consent to any settlement of, or entry of any judgment arising from, such
Third-party Claim unless the Indemnifying Party consents thereto, which consent
shall not be unreasonably withheld. If the Indemnifying Party does not elect to
assume or participate in the defense of any Third-party Claim in accordance with
the terms of this Section, then the Indemnifying Party shall be bound by the
results obtained by the Indemnified Party with respect to the Third-party Claim.
The parties shall cooperate in the defense of any Third-party Claim and the
relevant records of each party shall be made available on a timely and
reasonable basis.
13.3. Survival of Representations and Warranties. All representations and
warranties of the Company contained herein shall survive the execution and
delivery of this Agreement and the closing of the transactions contemplated
hereby until the first anniversary of the Class 1 Closing (provided, that the
representations and warranties in Sections 4.3, 4.4 and 4.14 shall survive
forever).
14. MISCELLANEOUS
14.1. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK, EXCLUDING ITS CONFLICTS OF LAWS RULES. THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY CONSENT TO SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF
AMERICA LOCATED IN THE COUNTY OF NEW YORK, NEW YORK (THE "NEW YORK COURTS") FOR
ANY LITIGATION ARISING OUT OF OR RELATING TO THE AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION IN THE NEW YORK COURTS AND AGREE NOT TO PLEAD OR CLAIM IN ANY NEW
YORK COURT THAT SUCH LITIGATION BROUGHT THEREIN HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
14.2. Fees and Expenses. Each of the parties shall pay its own fees and expenses
of its counsel, accountants, and other experts incurred by it in connection with
the negotiation, preparation, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and all other matters
incident hereto. Notwithstanding the foregoing, upon presentment of receipts
reasonably satisfactory to the Company, at or prior to the Class 1 Closing Date,
the Company shall pay the following counsel for certain of the Investors up to
the following amounts: (x) in the case of Weil, Gotshal & Xxxxxx LLP, up to
$45,000; (y) in the case of Xxxxxxxx & Xxxxxxxx, up to $25,000; and (z) in the
case of Xxxxx, Xxxxxx & Xxxxxx LLP, up to $10,000.
19
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14.3. Public Announcements. At the proper time, as determined by the parties
hereto in good faith consultation with each other, the parties hereto shall
issue a press release or make a public statement concerning this Agreement and
the related transactions containing disclosure which is mutually agreeable to
the parties; provided, that prior to the issuance of a press release, none of
the parties hereto shall make any announcement of such transaction or disclose
the existence of and/or particulars of any negotiations related thereto,
including, but not limited to, the terms, conditions, consideration to be paid
or other facts related to this Agreement.
14.4. Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
Without the prior written consent of the Company, the rights under this
Agreement shall be non-assignable by the Investors to any transferee; provided,
however, that any Investor may assign its rights hereunder to any affiliates,
partners or members thereof.
14.5. Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof and
supersede and preempt any prior understandings, agreements or representations by
or among the parties, written or oral, which may have related to the subject
matter hereof in any way, including, without limitation, any summary of terms or
similar agreement. As between the Company and any Investor, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the Company and such Investor.
14.6. Notices, etc. Any notice required or permitted pursuant to this Agreement
shall be in writing and shall be deemed sufficient (i) immediately when
delivered personally or by facsimile, (ii) twenty (20) hours after being
deposited with an overnight courier service (e.g., Federal Express) for next day
delivery, or (iii) forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, addressed as
follows:
If to any Investor at its address as listed on Schedule I hereto.
If to the Company:
LendingTree, Inc.
00000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Chief Financial Officer
Attention: General Counsel
Attention: Controller
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxxxx, Esq.
20
25
14.7. Delays or Omissions. No delay or omission to exercise any right, power or
remedy accruing to the Investor, upon any breach or default of the Company under
this Agreement, shall impair any such right, power or remedy of the Investor nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of the
Investor of any breach or default under this Agreement, or any waiver on the
part of any holder of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to the Investor, shall be cumulative and not alternative.
14.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
14.9. Severability. In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided, however, that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
14.10. Specific Performance. Each party hereto, in addition to being entitled to
exercise all rights provided herein or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. Each party hereto hereby agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
[Execution Page Follows]
21
26
IN WITNESS WHEREOF, the parties hereto have duly executed this Stock
Purchase Agreement, or have caused this Stock Purchase Agreement to be fully
executed on their behalf as of the date first set forth above.
LENDINGTREE, INC.
By:
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President and
Chief Operating Officer
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
22
27
ZIONS SBIC LLC
By:
--------------------------------------
Name:
Title:
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
23
28
SPECIALTY FINANCE PARTNERS
By: Capital Z Financial Services Fund II, L.P.
By: Capital Z Partners, Ltd.,
its ultimate General Partner
By:
-------------------------------------------
Name:
Title:
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
24
29
By:
--------------------------------------
Xxxxxxx X. Xxxxx
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
25
30
By:
--------------------------------------
Pei-Yuan Chia
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
26
31
XXXX XXXXXX FAMILY INV. L.L.C.
By:
--------------------------------------
Name: Xxxx X. Xxxxxx
Title:
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
27
32
By:
--------------------------------------
Xxxxxxx X. Xxxxxx
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
28
33
By:
--------------------------------------
Xxxxxxx Xxxxxxxx
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
29
34
By:
--------------------------------------
Xxxxxx X. Xxxx
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
30
35
CRATON CAPITAL
By:
--------------------------------------
Name:
Title:
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
31
36
By:
--------------------------------------
Xxxxx Xxxxxxx
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
32
37
By:
--------------------------------------
Xxxxx Xxxxxxxxx
By:
--------------------------------------
Xxxxxxx Xxxxxxxxx
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
33
38
By:
--------------------------------------
Xxxxxxx X. Field
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
34
39
XXXXXXX X. FIELD XXX ROLLOVER,
by Bank of New York, Trustee
By:
--------------------------------------
Name:
Title
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
35
40
TASK FOUNDATION, INC.
By:
--------------------------------------
Name:
Title:
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
36
41
BULGROUP PROPERTIES
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: General Partner
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
37
42
By:
--------------------------------------
Xxxxxxxx X. Xxxxxxx
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
38
43
By:
--------------------------------------
Name:
On Behalf of Xxxxx X. Xxxx XXX
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
39
44
By:
--------------------------------------
W. Xxxxx Xxxxx, Xx.
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
40
45
W. XXXXX XXXXX, XX. XXX
By: ABN AMRO, Inc., Custodian
By:
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President - Operations
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
41
46
SCHEDULE I
INVESTORS
Name and Address Number of Shares Purchase Price(1)
-------------------------------------------------------------------------------
CLASS 1 INVESTORS
Zions Bancorporation 1,428,571 $5,000,000
Xxx Xxxxx Xxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, XX 00000
Specialty Finance Partners 1,142,857 $4,000,000(2)
00 Xxxxxxxx Xx.
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Spass
Xxxxxxx X. Xxxxx 200,000 $700,000
c/o LendingTree, Inc.
00000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 0000
(000) 000-0000
Pei-Yuan Chia 71,429 $250,000
0000 Xxxx Xxxxx Xxx
Xxxx Xxxx Xxxxx, XX 00000
Xxxx Xxxxxx Family INV. LLC 71,429 $250,000
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0X
Xxxx Xxxx Xxxx, XX 00000
Xxxxxxx X. Xxxxxx 71,429 $250,000
The Cypress Group
00 Xxxx 00xx Xxxxxx--00xx Xxxxx
Xxx Xxxx, XX 00000
-------------------------------------------------------------------------------
--------------------
(1) The aggregate consideration payable by each Class 2 Investor at the Class 2
Closing shall equal the cash sum of (a) the aggregate consideration set forth
opposite the name of such Class 2 Investor above under the heading "Purchase
Price" plus, (b) any accumulated dividends on the shares being purchased by such
Class 2 Investor from the Class 1 Closing Date up to and including the Class 2
Closing Date.
(2) Specialty Finance Partners will be also granted at the Class 1 Closing
2,857,143 shares of Series A Preferred Stock in connection with the concurrent
conversion of the Capital Z Equity Rights Certificate.
47
-------------------------------------------------------------------------------
Name and Address Number of Shares Purchase Price
-------------------------------------------------------------------------------
Xxxxxxx Xxxxxxxx 57,143 $200,000
X.X. Xxx 0000
0000 Xxxxxxxx Xxxxx
Xxxx Xxxx, Xxxx 00000
Xxxxxx X. Xxxx 42,857 $150,000
0000 Xx. Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Craton Capital 57,143 $200,000
c/o Vectra Management Group
00 Xxxx 00xx Xxxxxx- 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxx
Xxxxx Xxxxxxx 42,857 $150,000
c/o Vectra Management Group
00 Xxxx 00xx Xxxxxx-00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxx and Xxxxxxx Xxxxxxxxx 28,571 $100,000
The River House
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx X. Field 85,714 $300,000
00 Xxxxxx Xxx., Xxxxx 000
Xxx Xxxxxx, XX 00000
Xxxxxxx X. Field XXX 114,286 $400,000
c/o 000 Xxxxx Xxxxx Xxxx
Xxxx Xxxxx, XX 00000
TASK Foundation, Inc. 142,857 $500,000
c/o Paul, Hastings, Xxxxxx & Xxxxxxxx
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Bulgroup Properties 71,429 $250,000
Xxxxxxx X. Xxxxx, General Partner
000 00xx Xxxxxx
Xxx Xxxx, XX 00000
-------------------------------------------------------------------------------
48
Name and Address Number of Shares Purchase Price
-------------------------------------------------------------------------------
Xxxxxxxx X. Xxxxxxx 71,429 $250,000
Quad-C, Inc.
Queen Charlotte Square
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxxxxxx, XX 00000
W. Xxxxx Xxxxx, Xx. XXX 200,000 $700,000
c/o Xx. Xxxxxxx X. Xxxxxxxxxx
Vice President - Operations
ABN AMRO Inc.
000 Xxxxx Xx Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
-------------------------------------------------------------------------------
49
Name and Address Number of Shares Purchase Price
-------------------------------------------------------------------------------
CLASS 2 INVESTORS
Xxxxx Xxxx 28,571 $100,000
Prudential Securities
Retirement Operations,
C/F Xxxxx Xxxx Account # 051-R29898-41
Attention Xxx Xxxxxxx
Xxx Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
W. Xxxxx Xxxxx, Xx. 100,000 $350,000
Vectra Management Group
00 Xxxx 00xx Xxxxxx-00xx Xxxxx
Xxx Xxxx, XX 00000
Total 4,028,572 $14,100,000
===========
50
EXHIBIT A
FORM OF VOTING AGREEMENT
51
EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
52
EXHIBIT C
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES A PREFERRED STOCK
