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Exhibit 10.5
REVOLVING CREDIT FACILITY
THIS REVOLVING CREDIT FACILITY is entered into as of March 7, 2001 by
and between LendingTree, Inc., a Delaware corporation (the "Borrower"), and the
Federal Home Loan Mortgage Corporation, a federally-chartered corporation (the
"Lender").
STATEMENT OF PURPOSE
A. The Borrower has requested that the Lender provide revolving loans
of up to $2,500,000 in order to finance (i) the continued development and
implementation of the Borrower's technology, advertising and marketing and (ii)
the ongoing working capital needs of the Borrower, but not for warehouse lending
or any other consumer loan funding purpose.
B. The Lender is willing to make the above-described revolving loans to
the Borrower in accordance with the terms of this agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Borrower and the Lender hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.01 As used herein, each of the following terms has the meaning
indicated, unless the context otherwise requires:
"Advances" shall have the meaning given to such term in
Section 2.01 hereof.
"Affiliates" means, with respect to any Person, any other
Person that, directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such
first Person or any of its Subsidiaries. As used in this definition,
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person
(whether through ownership of securities or limited liability company,
partnership or other ownership interests, by contract or otherwise).
"Applicable Rate" shall have the meaning given to such term in
Section 2.04 hereof.
"Borrower" shall have the meaning given to such term in the
Preamble of this Revolving Credit Facility.
"Business Day" means any day other than (a) a Saturday, (b) a
Sunday, (c) a day on which banking institutions are authorized or
required to be closed in New York City, or (d) a day on which the
Lender's offices are closed.
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"Change of Control" shall mean (x) any transaction, or series
of related transactions, however structured (including, without
limitation, a purchase of securities or other equity interests, merger,
tender offer whether or not contested by the Borrower, or transfer or
other dispositions of assets) that results in any of the following and
(y) shall be deemed to have occurred upon the earliest of any of the
following to occur:
(i) any Person or group (within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (other than Capital Z
Financial Services Fund II, L.P. and its Affiliates) has
become, directly or indirectly, the beneficial owner (within
the meaning of Rule 13-d of the Exchange Act), by way of
merger, consolidation or otherwise, of 50% or more of the
voting power of the then-outstanding Voting Securities of the
Borrower, on a fully-diluted basis, after giving effect to the
conversion and exercise of all outstanding warrants, options
and other securities of the Borrower convertible into or
exercisable for Voting Securities of the Borrower (whether or
not such securities are then currently convertible or
exercisable); or
(ii) the sale, lease, transfer or other disposition
of all or substantially all of the consolidated assets of the
Borrower to any Person or group; or
(iii) the Borrower consolidates with or merges with
or into another Person or any Person consolidates with, or
merges with or into, the Borrower, in any such event pursuant
to a transaction in which immediately after the consummation
thereof the Persons owning the then-outstanding Voting
Securities of the Borrower immediately prior to such
consummation shall not own a majority in the aggregate (by
reason of such prior ownership) of the then-outstanding Voting
Securities of the Borrower or the surviving entity if other
than the Borrower; or
(iv) during any period of two consecutive calendar
years, individuals who at the beginning of such period
constituted the Board of Directors, together with any new
members of such Board of Directors whose election by such
Board of Directors or whose nomination for election by the
stockholders of the Borrower was approved by a vote of at
least a majority of the members of such Board of Directors
then still in office who were directors at the beginning of
such period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority of the directors of the Borrower then in office.
"Closing Date" means the date of this Revolving Credit
Facility.
"Commitment Fee" shall have the meaning given to such term in
Section 2.05 hereof.
"Default" means any of the events specified in Section 6.01
hereof regardless of whether there shall have occurred any passage of
time or giving of notice (or both) that would be necessary in order to
constitute an Event of Default.
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"EBITDA" means, for any period, the Borrower's operating
income (loss), excluding non-cash charges for compensation attributable
to options, warrants and other equity instruments, depreciation,
amortization and one-time non-operating charges, if any, as determined
by the Borrower in its reasonable judgment consistent with the
information as or to be reported in the Borrower's earnings releases
and included or to be included in the Borrower's SEC Filings, and
excludes deferred revenues adjustments determined as follows:
The Borrower may, from time to time, perform services under
customized software arrangements. At times, GAAP accounting may require
the Borrower to recognize expenses before recognizing proportional
revenues for such arrangements. If this occurs during the term of the
Revolving Credit Facility, the actual EBITDA amount will be increased
to the extent of any cash paid in advance (deferred revenue) to the
Borrower for such arrangements.
"Effective Date" means the later of (x) the date hereof and
(y) the date as of which all of the conditions precedent to Lender's
obligations to make its initial Advance set forth in Section 2.08
hereof shall have been satisfied or waived by Lender.
"Escrow Agreement" means the Software Escrow Agreement dated
as of December 20, 2000 by and among the Borrower, the Lender and Fort
Xxxx Escrow Services, Inc., as amended, modified and supplemented from
time to time.
"Escrow Agreement Amendment" shall have the meaning given to
such term in Section 2.08(a)(iii).
"Events of Default" shall have the meaning given to such term
in Section 6.01 hereof.
"Excluded Financings" means (i) indebtedness incurred in
connection with accounts receivable financing or factoring
transactions; or (ii) indebtedness under capitalized leases or incurred
for purposes of financing the purchase price or construction cost of
equipment, fixtures or similar property (so long as such indebtedness
is secured only by such equipment, fixtures or property and the amount
of such indebtedness is reasonably equivalent to the cost of financing
such equipment, fixtures or property).
"Exercise Price" shall have the meaning given to such term in
Section 2.04(a)(ii) hereof.
"Financial Statements" shall have the meaning given to such
term in Section 3.01(d) hereof.
"Financing Transactions" means, collectively, the transactions
contemplated by the Xxxx Xxxxxx Purchase Agreement and the Preferred
Stock Transaction.
"GAAP" means generally accepted accounting principles and
practices in the United States as in effect from time to time applied
on a consistent basis.
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"Interest Payment Date" shall have the meaning given to such
term in Section 2.04(a) hereof.
"Judgments" shall have the meaning given to such term in
Section 3.01(b)(iv) hereof.
"Laws" shall have the meaning given to such term in Section
3.01(b)(iv) hereof.
"Lender" shall have the meaning given to such term in the
Preamble of this Revolving Credit Facility.
"License Agreement" means the Software Customization, License
and Services Agreement dated as of July 7, 2000 between the Borrower
and the Lender, as amended, modified and supplemented from time to
time.
"License Agreement Amendment" shall have the meaning given to
such term in Section 2.08(a)(iii).
"Liens" means all liens, claims, rights, pledges, charges,
options, rights of third parties, encumbrances, security interests,
conditional sales or other restrictions or limitations of any nature
whatsoever.
"Loan Documents" means this Revolving Credit Facility, the
Note, the Warrant, the Subsidiary Guaranty and the Registration Rights
Agreement and all other documents, agreements, and instruments now or
hereafter existing, evidencing, or otherwise relating to this Revolving
Credit Facility (but excluding the License Agreement and the Escrow
Agreement), as any of the foregoing items may be amended, modified or
supplemented from time to time.
"Note" shall have the meaning given to such term in Section
2.03.
"Notice of Borrowing" shall have the meaning given to such
term in Section 2.02.
"Obligations" means all present and future indebtedness,
obligations and liabilities of any form or nature, whether or not
matured or unmatured, fixed or contingent, of the Borrower to the
Lender, and all renewals, extensions and modifications thereof, arising
pursuant to any of the Loan Documents and all interest accruing
thereon, and all other fees, costs, expenses, charges and attorneys'
fees payable, and covenants performable, under any of the Loan
Documents (including without limitation this Revolving Credit
Facility).
"Xxxx Xxxxxx Purchase Agreement" means the Common Stock
Purchase Agreement dated as of March __, 2001 by and between the
Borrower and Xxxx Xxxxxx Capital Partners, Ltd., a British Virgin
Islands corporation.
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"Permitted Liens" shall mean, when used with respect to the
Borrower's assets (real or personal, tangible or intangible), any of
the following liens or encumbrances:
(i) liens imposed by mandatory provisions of law of
carriers, warehousemen, mechanics and materialmen for sums not
yet due and incurred in the ordinary course of business;
(ii) liens incurred in the ordinary course of
business in connection with worker's compensation,
unemployment insurance or other forms of governmental
insurance or benefits;
(iii) liens for taxes, assessments or governmental
charges or levies if the underlying obligations for the same
are not delinquent or are being contested in good faith and
with due diligence by appropriate proceedings, and if the
Borrower has set aside on its books such reserves (segregated
to the extent required by sound accounting practices) as may
be required by GAAP;
(iv) liens set forth on Exhibit A hereto;
(v) liens incurred in the ordinary course of business
that are not material to the Borrower's consolidated financial
condition;
(vi) liens in favor of Union Labor Life Insurance
Company securing the Borrower's indebtedness under the ULLICO
Credit Facility, the principal amount of which shall not
exceed $5,000,000 at any time;
(vii) liens in favor of lessors under capitalized
leases; provided, however, that each such lien extends only to
the property which is the subject of such capitalized lease
and is given only to secure the obligations under such
capitalized lease;
(viii) liens to secure purchase money indebtedness;
provided, however, that each such lien is given only to secure
the purchase price of the property which is the subject of
such purchase money indebtedness, does not extend to any other
property and is given at the time of acquisition of the
property;
(ix) liens on accounts receivable incurred in
connection with financing or factoring transactions; and
(x) liens in favor of the Lender under the License
Agreement.
"Person" means an individual, sole proprietorship,
partnership, limited liability company, corporation, trust,
unincorporated organization, association, joint venture or a government
or agency or political subdivision thereof.
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"Preferred Stock Transaction" means the transactions
contemplated by the Series A 8% Convertible Preferred Stock Purchase
Agreement dated as of March __, 2001 by and among the Borrower and the
other parties thereto.
"Registration Rights Agreement" means the Registration Rights
Agreement substantially in the form of Exhibit B hereto.
"Revenue" means the amount of the Borrower's total revenue as
set forth in the Borrower's financial statements prepared in accordance
with GAAP, and as are or to be reported in the Borrower's earnings
releases and included or to be included in the Borrower's SEC Filings.
"Revolving Credit Facility" means this Revolving Credit
Facility, including the schedules and exhibits hereto (but excluding
the License Agreement and the Escrow Agreement(each as amended from
time to time)), each as amended, modified and supplemented from time to
time.
"Revolving Loan" means the aggregate principal amount of
Advances at any one time outstanding.
"Revolving Loan Committed Amount" shall have the meaning given
to such term in Section 2.01.
"SEC Filings" means documents and reports filed by the
Borrower with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, or Sections 13 or 15(d) of the
Exchange Act.
"Subsidiary" or "Subsidiaries" means any corporation or
corporations of which more than fifty percent (50%) of the voting stock
at the time of computation is owned, directly or indirectly, by the
Borrower.
"Subsidiary Guaranty" means the Subsidiary Guaranty Agreement,
substantially in the form of Exhibit C attached hereto, executed by
each of the Borrower's Subsidiaries pursuant to the terms hereof.
"Termination Date" means the second anniversary of the Closing
Date or such earlier date as provided herein.
"ULLICO Credit Facility" means the revolving credit facility
in the aggregate principal amount of $5,000,000 between Union Labor
Life Insurance Company and the Borrower.
"Voting Securities" means all securities or other equity
interests that entitle the holder thereof to vote generally in the
election of directors (or comparable management authority if other than
a corporation).
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"Warrant" means any warrant issued by the Borrower to Lender,
delivered in accordance with the terms hereof, and substantially in the
form of Exhibit D attached hereto.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
1.02 All accounting terms not specifically defined herein shall be
construed in accordance with GAAP.
ARTICLE II
REVOLVING LOANS
2.01 Subject to and in reliance upon the terms, conditions,
representations and warranties hereinafter set forth, the Lender agrees to make
revolving loan advances (each herein called an "Advance") to the Borrower from
time to time during the period from the Closing Date to but excluding the
Termination Date in an aggregate outstanding amount not to exceed at any time an
amount equal to $2,500,000 (the "Revolving Loan Committed Amount"). Within the
limits set forth herein, the Lender shall make Advances, accept payments and
prepayments (without premium or penalty) and readvance any amount so paid or
prepaid in accordance with the provisions hereof. Funds borrowed and repaid may
be reborrowed, so long as all conditions precedent to Advances are met and so
long as (i) all Advances shall be in the minimum amount of $100,000 and integral
multiples in excess thereof of $100,000, (ii) all prepayments shall be in
integral multiples of $50,000, and (iii) the aggregate unpaid principal balance
of all Advances does not exceed the Revolving Loan Committed Amount.
2.02 The Borrower shall give the Lender at least three (3) Business
Days prior written notice in the form attached hereto as Exhibit E (a "Notice of
Borrowing") of its intention to borrow, specifying the date for the receipt of
such funds, the amount of such borrowing and the relevant payment instructions
(to include both the name of the bank and deposit account of the Borrower to
which such Advance is to be deposited). Such Notice of Borrowing may be hand
delivered or sent by facsimile and must be received by noon (Eastern Standard
Time). If sent by facsimile, the Borrower must confirm by telephone receipt of
the facsimile by the Lender. Each Notice of Borrowing shall be irrevocable and
binding on the Borrower.
2.03 The Revolving Loan shall be evidenced by a Promissory Note, the
form of which is attached hereto as Exhibit F (the "Note"), payable by the
Borrower to the Lender. The Lender shall keep a record of the date and amount of
(i) each Advance made by the Lender pursuant to Section 2.02 and (ii) each
payment of principal made pursuant hereto. Unless accelerated pursuant to
Section 6.02 hereof, the principal amount of and all remaining accrued and
unpaid interest on the Revolving Loan shall be due and payable on the
Termination Date.
2.04 (a) Subject to Section 2.04(b), Advances hereunder shall bear
interest on the average daily outstanding balance at a per annum interest rate
equal to twenty percent (20%) (the "Applicable Rate") and shall be due and
payable in the following manner:
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(i) fifty percent (50%) of the accrued interest shall be
payable quarterly in arrears in cash on each March 31, June 30,
September 30, and December 31, commencing March 31, 2001 and ending on
the Termination Date (each, an "Interest Payment Date"). Each interest
payment period will be from and including the previous Interest Payment
Date (or from the Closing Date if no interest has been paid yet) to but
excluding the next Interest Payment Date or the Termination Date (as
appropriate); and
(ii) the remaining fifty percent (50%) of the accrued interest
("the Warrant Interest") shall be payable quarterly in arrears on each
Interest Payment Date by the delivery to the Lender on such Interest
Payment Date of a warrant certificate, in the form of Exhibit D
attached hereto, which shall entitle the Lender to purchase, at an
exercise price of $.01 (the "Exercise Price"), the number of shares of
common stock of the Borrower equal to (i) the amount of Warrant
Interest divided by (ii) $4.00 minus the Exercise Price. It is
understood and agreed that, in order to fairly protect the rights of
the parties, it may be appropriate to amend the amount defined as the
Exercise Price if an event described in Sections 2(a), 2(b) or 2(c) of
the warrant certificate described above occurs between the Closing Date
and the Termination Date.
(b) On any stated or accelerated maturity of the Revolving
Loan, the Borrower will pay all accrued and unpaid interest on the Revolving
Loan. In addition, upon any Event of Default, the Borrower will on demand pay
daily interest on any overdue installments of principal and, to the extent not
prohibited by applicable law, on any overdue installments of interest and fees
owed under any Loan Document at a fixed rate which shall at all times equal the
Applicable Rate, and which shall be paid in its entirety in cash.
2.05 In consideration of the Lender's commitments to make the
extensions of credit provided for herein, the Borrower will pay to the Lender on
the Closing Date a commitment fee by the delivery of a warrant certificate,
attached hereto as Exhibit D, that shall entitle the Lender to purchase 12,500
fully paid-up shares of the Borrower's common stock (par value $.01) with an
exercise price of $.01 per share (the "Commitment Fee").
2.06 The Borrower shall make each payment hereunder and under the Note
on the day when due in lawful money of the United States of America in same day
funds to the Lender in accordance with the following wiring instructions:
Xxxxxxx Mac Account: ABA# 021033215, Telegraphic Abbreviation FHLMC WASH or, in
the case of Warrant Interest, by delivery of a duly executed warrant certificate
as set forth in Section 2.04(a)(ii) to the Lender at its address referred to in
Section 7.01 within five (5) days after the relevant payment date. For purposes
of this Revolving Credit Facility, interest and fees shall be computed on the
basis of actual number of days elapsed over a year of 360 days.
2.07 Whenever any payment to be made hereunder or under the Note shall
be stated to be due on a day other than a Business Day, such payment may be made
on the next succeeding Business Day, and, in the case of cash payments, such
extension of time shall in such case be included in the computation of payment
of interest.
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2.08 (a) The obligation of the Lender to make an initial Advance on or
after the Closing Date shall be subject to the satisfaction of the following
conditions:
(i) This Revolving Credit Facility and the Note and the other
Loan Documents shall have been duly authorized, executed and delivered
to the Lender by the Borrower, shall be in full force and effect and no
default or Event of Default shall exist thereunder;
(ii) the Lender shall have received a copy or copies of
definitive final executed documents evidencing that the Borrower has
obtained conclusive irrevocable commitments from third parties for at
least $20,000,000 in cash (exclusive of the Revolving Loan Committed
Amount and any amounts available under the ULLICO Credit Facility),
whether in consideration for the issuance of common stock or preferred
stock or through the establishment of one or more equity credit lines
(it being understood that the conditions described in Section 4.3(b) -
(e) of the Xxxx Xxxxxx Purchase Agreement do not void or otherwise
abrogate the purchaser's commitment thereunder);
(iii) the Lender and the Borrower shall have entered into an
amendment to the License Agreement (the "License Agreement Amendment"),
and the Lender, the Borrower and Fort Xxxx Escrow Services, Inc. shall
have entered into an amendment to the Escrow Agreement (the "Escrow
Agreement Amendment"), in each case in the forms attached hereto as
Exhibits G-1 and G-2, respectively, and such License Agreement
Amendment and Escrow Agreement Amendment shall have been entered into
prior to the entry into by the Borrower of the ULLICO Credit Facility
and the creation of any security interests thereunder;
(iv) the Borrower shall have paid the Commitment Fee to the
Lender;
(v) the Borrower shall have delivered to the Lender an
officer's certificate signed by its Chief Executive Officer or Chief
Financial Officer, dated as of the date of such initial Advance, to the
effect that (i) the representations and warranties set forth in Section
3.01 were true and correct in all material respects as of the Closing
Date and are true and correct in all material respects as of the date
of such initial Advance and (ii) no Event of Default, and no event
which, with the lapse of time or notice or both, could become an Event
of Default, has occurred and is continuing or would exist as a result
of making an Advance on the date of such initial Advance;
(vi) the Borrower shall have obtained the consent from each
Person listed in Schedule 2.08(a)(vi), whose consent is required for
Borrower to enter into this Revolving Credit Facility and consummate
the transactions contemplated hereby;
(vii) the Borrower shall have delivered to the Lender a
subsidiary guaranty in the form attached hereto as Exhibit C executed
by HomeSpace Acquisition Company;
(viii) the Borrower shall have delivered a written opinion of
Borrower's counsel in form and substance reasonably satisfactory to
Lender and its counsel, which opinion
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shall cover the validity, enforceability and any other matters as shall
be reasonably requested by the Lender and its counsel as related to the
Loan Documents and the License Agreement Amendment and Escrow Agreement
Amendment;
(ix) the Borrower shall have received cash proceeds in an
amount equal to at least $2,500,000 from any one Financing Transaction
or any combination thereof;
(x) the Lender shall have received a letter from Union Labor
Life Insurance Company acknowledging the Lender's rights in or to
certain of Borrower's assets, in form and substance reasonably
satisfactory to Lender and its counsel; and
(xi) the Borrower shall have delivered to the Lender such
other documents, certificates or evidences as the Lender may reasonably
request (in form and substance reasonably satisfactory to the Lender).
(b) The obligation of the Lender to make any Advance
(including the initial Advance on or after the Closing Date) shall be subject to
the satisfaction of the following additional conditions:
(i) The representations and warranties set forth in Section
3.01 are true and correct on and as of the date of such Advance as
though made on and as of such date (provided that the representation
and warranty set forth in Section 3.01(d)(i) shall be true and correct
on and as of the date of the initial Advance but shall not be repeated
on and as of the date of Advances after the initial Advance);
(ii) On the date of the Advance and immediately after the
making of such Advance, no Event of Default, and no event which, with
the lapse of time or notice or both, could become an Event of Default,
has occurred and is continuing;
(iii) The sum of the outstanding Revolving Loan plus the
amount of the requested Advance is equal to or less than the Revolving
Loan Committed Amount;
(iv) The Lender shall have received on or before noon (Eastern
Standard Time) on at least three (3) Business Days prior to the
Business Day of the requested Advance, a Notice of Borrowing in the
form attached hereto as Exhibit E executed by the Borrower;
(v) Each of the Loan Documents to which the Borrower is a
party shall be in full force and effect;
(vi) the License Agreement Amendment and the Escrow Agreement
Amendment shall each be in full force and effect; and
(vii) Satisfaction of the Lender that the proceeds of such
Loan will be used for purposes not inconsistent with Section 4.01(t).
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Each request for an Advance shall be deemed a representation
by the Borrower that the conditions of this Section 2.08(b) have been met.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 In order to induce the Lender to enter into this Agreement and to
make each Advance requested to be made by it, the Borrower hereby represents and
warrants as follows (which representations and warranties will survive the
delivery of any Note and any other Loan Document and the making of any Advance):
(a) (i) The Borrower and each Subsidiary thereof is a
corporation, duly organized, validly existing and in good standing
under the laws of the jurisdictions in which they are incorporated;
(ii) The Borrower and each Subsidiary thereof has the
corporate power and authority to own its properties and assets and to
carry on its business as now being conducted and is qualified to do
business in every jurisdiction in which, by reason of the character of
its business, it is required to qualify as a foreign corporation;
(iii) The Borrower and each Subsidiary (to the extent
applicable) has the corporate power and authority to execute and
deliver this Agreement, the Note and each of the other Loan Documents
to be executed and delivered by it, to borrow and otherwise perform its
obligations under this Revolving Credit Facility, the Note and such
other Loan Documents and to otherwise consummate the transactions
contemplated by this Revolving Credit Facility, the Note and such other
Loan Documents;
(iv) This Revolving Credit Facility, the Note and
each other Loan Document to which the Borrower is a party and the
Subsidiary Guarantee to which the Subsidiary is a party have been duly
executed and delivered by the Borrower or the Subsidiary, as the case
may be, and are the legal, valid and binding obligations of the
Borrower or the Subsidiary, as the case may be, enforceable against the
Borrower or the Subsidiary, as the case may be, in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law); and
(v) Set forth on Schedule 3.01(a)(v) is a complete
list of the Borrower's Subsidiaries.
(b) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Borrower of this Revolving
Credit Facility or the Note or any other Loan Document to which the Borrower is
a party or by the Subsidiary of the Subsidiary Guarantee to which the Subsidiary
is a party. Neither the execution, delivery and performance of this
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Revolving Credit Facility, the Note, or any other Loan Document to which the
Borrower or the Subsidiary is a party nor the consummation of the transactions
contemplated hereby or thereby does or will:
(i) conflict with or violate any provision of the
Certificate of Incorporation, By-laws or any other document of
organization of the Borrower or its Subsidiaries;
(ii) violate, conflict with or result in the breach
or termination of, or otherwise give any other Person the right to
accelerate, renegotiate or terminate or receive any payment, or require
any consent, or constitute a default or event of default (or an event
which with notice, lapse of time, or both, would constitute a default
or event of default) under the terms of, any material indenture,
agreement or other instrument, or any material permits, authorizations,
approvals, registrations or licenses granted by or obtained from any
governmental, administrative or regulatory authority, to which the
Borrower or any of its Subsidiaries is a party or by which any of them
or their respective securities, properties or businesses are bound;
(iii) result in the creation of any Liens upon the
Borrower's or any of its Subsidiaries' respective securities,
properties or businesses;
(iv) constitute a violation by the Borrower or any of
its Subsidiaries of any laws, rules, ordinances or regulations of any
governmental, administrative or regulatory authority ("Laws") or any
judgments, orders, decrees, injunctions, rulings or awards of any
court, arbitrator or other judicial authority or any governmental,
administrative or regulatory authority ("Judgments"); or
(v) require any consent, approval, waiver, order or
authorization of, or registration, declaration or filing with, any
federal, state, local or foreign governmental or regulatory authorities
on the part of the Borrower or any of its Subsidiaries.
(c) Neither the Borrower nor any of its Subsidiaries is in
default under any agreement, document, instrument, judgment, order or decree to
which it is a party or by which it is bound, which default could reasonably be
expected to have a material adverse effect on the Borrower's financial
condition, business, operations, prospects or earnings or its ability to perform
hereunder.
(d) (i) The Borrower has heretofore made available to the
Lender (1) its SEC Filings which contain an (A) audited balance sheet of the
Borrower as of December 31, 1999 and the related audited statements of
operations, changes in shareholders' equity (deficit) and cash flows for the 12
months then ended and the notes thereto and (B) an unaudited balance sheet of
the Borrower as of September 30, 2000 and the related unaudited statements of
operations, changes in shareholders' equity (deficit) and cash flows for the
nine months then ended; and (2) its unaudited balance sheet of the Borrower as
of December 31, 2000 and the related unaudited statements of operations, changes
in shareholders' equity (deficit) and cash flows for the 12 months then ended
and the notes thereto (collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP (except that the unaudited
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financial statements are subject to normal year-end adjustments and lack certain
notes); the Financial Statements (including in each case the notes thereto)
present fairly in all material respects the consolidated financial position of
the Borrower and its Subsidiaries as of the respective dates of the balance
sheets included therein and the consolidated results of their operations and
their consolidated cash flows for the respective periods set forth therein.
(ii) Since September 30, 2000, no change has occurred in the business,
operations, properties or assets, liabilities, condition (financial or
otherwise) or results of operations of the Borrower that could reasonably be
expected, either alone or together with all other such changes, to have a
material adverse effect on the Borrower's financial condition, business,
operations, prospects or earnings or its ability to perform hereunder.
(e) Except as set forth on Schedule 3.01(e), there are no
pending or, to the knowledge of the Borrower or any Subsidiary, threatened
actions, claims, investigations, suits or proceedings against the Borrower or
any Subsidiary before any governmental authority, court or administrative agency
that (i) would materially impair the right of the Borrower or any Subsidiary
thereof to carry on business substantially as now conducted or could reasonably
be expected to have a material adverse effect on the financial condition,
business, operations, prospects or earnings of the Borrower or any Subsidiary or
the ability of the Borrower to perform hereunder and/or (ii) primarily involve
intellectual property rights.
(f) The Borrower and each of its Subsidiaries has filed all
tax returns required to be filed and have paid all material taxes and other
amounts shown as due on such returns or as otherwise due, except for taxes being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established on its books in accordance with GAAP.
(g) Neither the Borrower nor any Subsidiary thereof is a party
to any Judgment. Each of the Borrower and its Subsidiaries (a) possesses, and is
in compliance with the terms and conditions of, all governmental permits and
approvals necessary for the ownership or lease and operation of its property and
the carrying on of its business as now conducted or proposed to be conducted,
except for such failures to possess and noncompliances that individually or in
the aggregate could not reasonably be expected to have a material adverse effect
on the financial condition, business, operations, prospects or earnings of the
Borrower or such Subsidiary or the Borrower's ability to perform hereunder, and
(b) is in compliance with all Laws and Judgments applicable to it or any of its
properties or assets, except for such noncompliances by the Borrower and the
Subsidiaries that individually or in the aggregate could not reasonably be
expected to have a material adverse effect on the financial condition, business,
operations, prospects or earnings of the Borrower or such Subsidiary or the
Borrower's ability to perform hereunder.
(h) Each of the Borrower and its Subsidiaries owns or
possesses all patents, licenses, trademarks, trademark rights, trade names,
trade name rights, copyrights or other similar intellectual property rights
necessary to conduct their respective businesses as now conducted and proposed
to be conducted, in each case without known conflict with any patent, license,
trademark, trade name, copyrights or other similar intellectual property rights
of any other Person except for any such conflict which could not be reasonably
expected have a
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material adverse effect on the financial condition, business, operations,
prospects or earnings of the Borrower or such Subsidiary or the Borrower's
ability to perform hereunder.
(i) Neither the Borrower nor any Subsidiary thereof has
incurred or assumed, or is reasonably expected to incur or assume, any liability
for any accumulated unfunded deficiency within the meaning of the Employee
Retirement Income Security Act of 1974 as amended ("ERISA"), or has incurred, or
is reasonably expected to incur, any material liability to the Pension Benefit
Guaranty Corporation established under ERISA (or any successor thereto under
ERISA) in connection with any employee benefit plan established or maintained by
the Borrower and any Subsidiary thereof.
(j) The Borrower and its Subsidiaries have good and valid
title to all its properties and assets, free and clear of all Liens other than
Permitted Liens. The Borrower's obligations under this Revolving Credit Facility
rank, and its obligations under the Note will rank, at least pari passu with all
other obligations of the Borrower, other than those secured by Permitted Liens.
All leases of property or assets by the Borrower and its Subsidiaries that
individually or in the aggregate are material to the Borrower or such
Subsidiaries are valid and subsisting and in full force and effect.
(k) As of the date hereof, all written information, including,
without limitation, data, certificates, reports, statements (excluding Financial
Statements) and documents, that has been made available to the Lender by or on
behalf of the Borrower prior to the date of this Revolving Credit Facility in
connection with the transactions contemplated by this Revolving Credit Facility
is, taken together, true and correct in all material respects and does not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements were made.
All such written information that is made available after the date of this
Revolving Credit Facility from time to time to the Lender by or on behalf of the
Borrower in connection with or pursuant to this Revolving Credit Facility, the
Note or any other Loan Document or the transactions contemplated hereby or
thereby will be, when made available and taken together, true and correct in all
material respects and will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made.
ARTICLE IV
AFFIRMATIVE COVENANTS
4.01 The Borrower covenants and agrees that from the date hereof and
until the later of payment in full of all principal and interest due hereunder
or on the Note and the termination of the commitment of the Lender to make loans
hereunder, the Borrower will:
(a) provide to the Lender immediately upon completion, but not
later than 30 days after the end of each calendar month (commencing with March
2001 and ending with December 2001), unaudited consolidated financial statements
for the Borrower and its Subsidiaries, which statements shall contain a copy of
the balance sheet as of the end of such
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month and the related statements of operations, cash and cash forecasts for the
period commencing on the first day and ending on the last day of such month, and
certified by the Borrower's Chief Financial Officer as fairly presenting the
financial position and results of operations of Borrower; along with a
compliance report executed by the Borrower's Chief Financial Officer, (i)
stating that, to the best of his or her knowledge as at the end of such month,
no Default or Event of Default has occurred or any act, event or occurrence that
with the giving of notice or the lapse of time or both, would constitute a
Default or an Event of Default has occurred, or, if a Default or Event of
Default has occurred, disclosing each such Default or Event of Default and its
nature, when it occurred, whether it is continuing, and the steps being taken by
the Borrower with respect to such Default or Event of Default; and (ii) setting
forth, in reasonable detail, the calculations used to determine the Borrower's
attainment or nonattainment of the financial targets set forth in Section
6.01(i)(A)-(F);
(b) provide to the Lender immediately upon completion, but not
later than (i) 30 days after the end of the first three fiscal quarters of each
fiscal year and (ii) 45 days after the end of the fourth fiscal quarter of each
fiscal year (commencing with January 2002 and ending with March 2003), unaudited
consolidated financial statements for the Borrower and its Subsidiaries, which
statements shall contain a copy of the balance sheet as of the end of such
quarterly period and the related statements of operations, cash and cash
forecasts for the period commencing on the first day and ending on the last day
of such quarter, and certified by the Borrower's Chief Financial Officer as
fairly presenting the financial position and results of operations of Borrower;
along with a compliance report executed by the Borrower's Chief Financial
Officer, (i) stating that, to the best of his or her knowledge as at the end of
such quarter, no Default or Event of Default has occurred or any act, event or
occurrence that with the giving of notice or the lapse of time or both, would
constitute a Default or an Event of Default has occurred, or, if a Default or
Event of Default has occurred, disclosing each such Default or Event of Default
and its nature, when it occurred, whether it is continuing, and the steps being
taken by the Borrower with respect to such Default or Event of Default; and (ii)
setting forth, in reasonable detail, the calculations used to determine the
Borrower's attainment or nonattainment of the financial targets set forth in
Section 6.01(i)(A)-(F);
(c) provide to the Lender by facsimile transmission on a
quarterly basis immediately upon completion but no later than 45 days after the
end of the first three fiscal quarters of each fiscal year and 60 days after the
end of the fourth fiscal quarter of each fiscal year the following: (i) a
financial report including an unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such quarterly fiscal period and
the related unaudited consolidated statements of operations and cash flows for
the period from the beginning of the current fiscal year to the end of such
quarterly fiscal period (each, a "Quarterly Financial Statement") and (ii) the
Borrower's Revenues and EBITDA for such fiscal quarter and its cash, restricted
cash and cash equivalents as of the last day of such fiscal quarter (with each
amount broken out and labeled separately). The Borrower shall send with each
Quarterly Financial Statement a certificate signed by its Chief Financial
Officer whereby the Borrower shall represent and warrant to the Lender:
(i) whether or not, as of the date of such Quarterly Financial
Statement, any Event of Default listed in Section 6.01 (a), (c), (d),
(e) or (i)(A) through (F) hereof has
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occurred or, as of the date of such certificate, any other Default or
Event of Default or any act, event or occurrence that with the giving
of notice or the lapse of time or both, would constitute a Default or
an Event of Default has occurred, disclosing each such Default or Event
of Default or such act, event or occurrence and its nature, when it
occurred, whether it is continuing, and the steps being taken by the
Borrower with respect to such Default or Event of Default (it being
understood that Borrower's certification in this regard may be made to
the best of its knowledge, but only with respect to acts of third
parties outside its control and not with respect to its own acts or
acts of its agents, employees or representatives);
(ii) that such Quarterly Financial Statement and the notes
thereto have been prepared in accordance with GAAP (except as otherwise
disclosed therein) and presents fairly the financial condition and
results of operations of the Borrower as of the date of such Quarterly
Financial Statement, except for normal year-end audit adjustments; and
(iii) that, as of the date of such Quarterly Financial
Statement, the Borrower had no liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise, and whether
due or to become due, which are of a type required to be reflected on,
or described in a footnote to, an audited balance sheet prepared under
GAAP, except to the extent specifically disclosed or provided for in
such Quarterly Financial Statement, except for normal year-end audit
adjustments.
(d) immediately upon completion and in any event within 90
days following the end of each fiscal year ending after the date hereof, deliver
to the Lender a financial report including a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of operations, changes in shareholders' equity (deficit)
and cash flows for such fiscal year and the notes thereto, setting forth in each
case comparative financial statements for the preceding year, all prepared in
accordance with GAAP and containing an opinion of independent certified public
accountants selected by the Borrower;
(e) provide to the Lender true and accurate copies of all SEC
Filings and all written and material oral disclosures to the Nasdaq Stock Market
or other securities exchange on which the Borrower's securities are listed,
within two days after making such filing or disclosure;
(f) promptly, from time to time, deliver to the Lender such
other information regarding the operations, business, affairs and financial
condition of the Borrower and its Subsidiaries as the Lender may reasonably
request;
(g) do or cause to be done all things necessary to preserve
and keep in full force and effect the corporate existence, rights and franchises
of the Borrower and its Subsidiaries;
(h) pay all taxes, assessments, governmental charges and any
other material obligation which, if unpaid, might become or result in a Lien
against any of the property of the Borrower and its Subsidiaries except
liabilities being contested in good faith;
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(i) maintain insurance covering the Borrower's and its
Subsidiaries' property, plant and equipment in such amounts that the Borrower
reasonably deems appropriate;
(j) maintain and protect its and its Subsidiaries' ownership
of or rights to use all intellectual property owned or used by it in the conduct
of its business as now conducted and proposed to be conducted, in each case free
of all claims and infringements known to the Borrower;
(k) not merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any Person or convey,
transfer, lease or otherwise dispose of all or substantially all of its or any
of their properties and assets in a single transaction or series of
transactions; provided, that any Subsidiary of the Borrower may merge or
consolidate with or into or transfer all or substantially all its properties and
assets to any other Subsidiary of the Borrower so long as (A) no Event of
Default exists or would exist after giving effect thereto and (B) such
Subsidiary has guaranteed all Obligations;
(l) keep and maintain a system of accounting established and
administered in accordance with sound business practices, keep accurate books of
records and accounts in accordance with GAAP and provide the Lender with such
information regarding the Loan Documents, the Loans, the books and records,
business, affairs, operations, property or assets, liabilities, condition
(financial or otherwise) or results of operations of the Borrower and the
Subsidiaries and other information concerning the Borrower and the Subsidiaries
as the Lender may from time to time reasonably request;
(m) permit representatives (whether or not employees) of the
Lender designated in writing by the Lender to visit and inspect any of the
properties, corporate books and financial records of the Borrower and its
Subsidiaries at such times as the Lender may reasonably request upon reasonable
notice and during ordinary business hours;
(n) allow the Lender to inspect any of the Borrower's
investment properties and financial records and to discuss any of their
financial or business affairs with the Borrower's business associates, creditors
and independent public accountants from time to time upon reasonable notice
during reasonable business hours;
(o) promptly but in any event within two (2) Business Days of
the Borrower's acquiring knowledge thereof, notify the Lender of the occurrence
of an Event of Default or any act, event or occurrence that with the giving of
notice or the lapse of time or both, would constitute an Event of Default
(including any occurrence as described in Section 6.01(e) that, even though
cured within applicable grace periods, would have constituted an Event of
Default if not cured), and shall specify in detail the nature of such Event of
Default or such act, event or occurrence, and any action that the Borrower is
taking or proposes to take with respect thereto;
(p) promptly but in any event within five (5) Business Days of
the Borrower's acquiring knowledge thereof, notify the Lender of any claims,
litigation, arbitration proceedings or other proceedings pending or threatened
before any court, governmental authority, administrative agency, or arbitration
panel that, if adversely determined, could reasonably be
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expected to, in the aggregate, have a material adverse effect on the Borrower's
financial condition, business, operations, prospects or earnings or its ability
to perform hereunder;
(q) promptly but in any event within five (5) Business Days of
the Borrower's acquiring knowledge thereof, notify the Lender of any material
adverse change in the Borrower's financial condition, business, operations,
prospects or earnings or its ability to perform hereunder, including the nature
thereof;
(r) comply and cause each of its Subsidiaries to comply in all
material respects with all applicable Judgments and federal, state or local
Laws, rules or regulations or other binding determinations of any governmental
authority, such compliance to include, without limitation, paying before the
same become delinquent all taxes, assessments and governmental charges imposed
upon the Borrower's or any of such Subsidiaries' property, except to the extent
any such compliance or payment is being contested in good faith by appropriate
proceedings and for which adequate reserves have been established;
(s) promptly pay all lawful claims that could, if not paid,
become or result in a Lien on any property or assets of the Borrower or its
Subsidiaries, unless and to the extent only that the same are being contested in
good faith by appropriate proceedings and reserves deemed adequate by the
Borrower have been established therefor on its books in accordance with GAAP;
(t) use the proceeds of the Advances to finance the continued
development and implementation of the Borrower's technology, advertising and
marketing and to fund general working capital needs of the Borrower. Under no
circumstances shall proceeds from any Advance be utilized for warehouse lending
or other consumer loan funding purposes;
(u) provide the Lender written notice within five (5) Business
Days of the execution of any contract or arrangement (including, without,
limitation, agreements designated as non-binding agreements in principle, term
sheets or letters of intent) that if consummated would result in the occurrence
of a transaction or event of the type described in clauses (i), (ii) or (iii) of
the definition of "Change of Control" contained in Article I hereof; and
(v) upon the request of the Lender, to cooperate with and
furnish all documents and/or instruments as may be reasonably requested by the
Lender in order to file and/or record the License Agreement with any Copyright
Office if the software subject to the license is registered in any such office.
ARTICLE V
NEGATIVE COVENANTS
5.01 Until payment in full of the principal and interest of the Note
and until the commitment of the Lender to make loans hereunder has been
terminated, the Borrower covenants that it will not, nor will it permit any of
its Subsidiaries to, incur, create or permit to exist any Lien on any properties
or assets of the Borrower or any Subsidiary thereof, other than the Permitted
Liens.
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5.02 Until payment in full of the principal and interest of the Note
and until the commitment of the Lender to make loans hereunder has been
terminated, the Borrower covenants that it will not create a Subsidiary
subsequent to the Closing Date unless the Subsidiary enters into, and delivers
to the Lender, a Guaranty Agreement.
ARTICLE VI
EVENTS OF DEFAULT, ACCELERATION AND TERMINATION
6.01 Any of the following shall constitute an event of default
hereunder (hereinafter an "Event of Default"):
(a) the Borrower shall fail to pay (i) any principal when due
and payable under this Revolving Credit Facility, (ii) any interest or fee under
this Revolving Credit Facility or any other Loan Document within two (2)
Business Days after the date the same becomes due and payable, or (iii) any
other Obligation under this Revolving Credit Facility or any other Loan Document
within ten (10) days after written notice thereof by the Lender to the Borrower;
(b) the failure of the Borrower to comply with any other
covenants, conditions, obligations, agreements or terms in this Revolving Credit
Facility or any other Loan Document (other than those covenants contained in
Section 4.01(a)- (e)) and the continuation of such failure for a period of
thirty (30) days after the Lender sends written notice to the Borrower or when
the Borrower became aware of such failure, whichever is earlier;
(c) the failure of the Borrower to comply with the covenants
contained in Section 4.01(a) - (e) and the continuation of such failure for a
period of one (1) Business Day (24 hours) after the Borrower receive written
notice from the Lender of such failure to comply;
(d) (i) in the event that the Borrower or any Subsidiary
generally does not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or shall
make an assignment for the benefit of creditors; or
(ii) any proceeding shall be instituted by or against
the Borrower or any Subsidiary seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or
composition of the Borrower's or any Subsidiary's debts under any law
relating to bankruptcy, insolvency, reorganization, or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, or other similar official for the Borrower or
any Subsidiary or for any substantial part of the Borrower's or any
Subsidiary's property, and in the case of any such proceeding
instituted against the Borrower or any Subsidiary (but not instituted
by Borrower or any Subsidiary), either such proceeding shall remain
undismissed or unstayed for a period for sixty (60) days or an order
for relief shall have been entered;
(e) if the Borrower or any Subsidiary thereof (A) defaults in
any material respect under the terms of any agreement relating to indebtedness
in excess of $250,000 of the Borrower or any such Subsidiary whether or not such
default results in the acceleration of such
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indebtedness or would permit the lender to accelerate such indebtedness and such
default is not cured prior to the earlier of (i) two Business Days after the
Borrower obtains knowlege of such default and (ii) the expiration of any
applicable cure periods set forth in any agreement relating to any such
indebtedness, or (B) defaults under the terms of any agreement relating to
indebtedness in excess of $250,000 of the Borrower or any such Subsidiary and
such default is not cured after LendingTree receives notice of such default (if
required under the terms of the indebtedness) and before the expiration of any
applicable cure periods set forth in any such agreement;
(f) any warranty or representation now or hereafter made by
the Borrower to the Lender in this Revolving Credit Facility or any other Loan
Document shall be incorrect in any material adverse respect, or any financial
statement, schedule, certificate or written statement required to be furnished,
that is furnished at any time by the Borrower to the Lender in connection with
this Revolving Credit Facility or any other Loan Document shall, at such time,
be incorrect in any material adverse respect;
(g) one or more judgments or decrees shall be entered against
the Borrower or any Subsidiary involving a liability of $100,000 or more in case
of any one such judgment or decree and $500,000 or more in the aggregate for all
such judgments and decrees (all to the extent not covered by insurance with
respect to which the Borrower shall have delivered to Lender a written
acknowledgement from the applicable insurance carrier of its unconditional
liability to pay such judgment and related costs) and any such judgments or
decrees shall not have been vacated, discharged or stayed or bonded pending
appeal for a period of sixty (60) consecutive days at any time after the entry
thereof;
(h) a material breach by the Borrower shall occur under any
agreement, document, instrument, judgment, order or decree (other than this
Revolving Credit Facility, the Note, or any other Loan Document), whether now or
hereafter existing between the Borrower and any other person, default under
which agreement or other item would reasonably be expected to have a material
adverse effect on the Borrower's financial condition, business, operations,
prospects or earnings or its ability to perform hereunder, and such breach shall
not have been waived or cured to the Lender's satisfaction within sixty (60)
days after the Borrower has knowledge thereof;
(i) in the event that the Borrower:
(A) has (1) Revenue for the quarter ending March 31,
2001 of less than $10,200,000 and (2) an EBITDA loss for such
quarter of greater than negative $12,400,000; or
(B) has (1) Revenue for the quarter ending June 30,
2001 of less than $13,700,000 and (2) an EBITDA loss for such
quarter of greater than negative $10,100,000; or
(C) has an EBITDA loss for the year ended December
31, 2001 of greater than negative $36,300,000; or
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(D) has, commencing in the first fiscal quarter of
2002 and for every fiscal quarter up to and including the
Termination Date, an EBITDA loss for any such fiscal quarter
and less than $5,000,000 in cash, restricted cash and cash
equivalents as of the last day of any such fiscal quarter (as
set forth in the financial information as or to be reported in
Borrower's earnings releases and included or to be included in
the Borrower's SEC Filings); or
(E) raises more than a total of $33,000,000 in
financing for operating purposes during calendar year 2001
(other than in connection with Excluded Financings and
inclusive of the amount borrowed under this Revolving Credit
Facility), without either (1) obtaining the Lender's prior
written consent, or (2) repaying all amounts then outstanding
under the Revolving Credit Facility and agreeing (if requested
in writing by the Lender) to the immediate termination of the
Revolving Credit Facility; or
(F) is in default of (1) a payment obligation in
excess of $5,000 under the terms of its agreement(s) with its
then-current hosting service provider and such default is not
cured within four (4) Business Days, or (2) the Borrower is in
material, non-monetary default with its then-current hosting
service provider and such default is not cured before the
expiration of any applicable cure period set forth in any such
agreement or, if no such cure period is provided, within
thirty (30) days following the date of default; or
(j) this Revolving Credit Facility, the License Agreement
Amendment, the Escrow Agreement Amendment or any Loan Document to which the
Borrower is a party shall for any reason cease to be enforceable.
6.02 Upon the occurrence of any Event of Default, the Lender's
commitment to make Advances shall automatically terminate and the Lender,
without (a) presentment, demand, or protest, (b) notice of default, dishonor,
demand, non-payment, or protest, (c) notice of intent to accelerate all or any
part of the Obligations, (d) notice of acceleration of all or any part of the
Obligations, or (e) notice of any other kind, all of which the Borrower and each
guarantor, surety or endorser of the Note hereby expressly waive, except for any
notice required under this Revolving Credit Facility or any other Loan Document,
may, at the Lender's option: (i) declare the Obligations, in whole or in part,
immediately due and payable; and/or (ii) exercise any other rights and remedies
available to the Lender under this Revolving Credit Facility, any other Loan
Document, or applicable laws; provided, that upon the occurrence of an Event of
Default described in subsections (c), (d), (e), (i) and (j) of Section 6.01, all
of the Obligations shall automatically be immediately due and payable, without
notice of any kind (including, without limitation, notice of intent to
accelerate and notice of acceleration) to the Borrower or to any guarantor, or
to any surety or endorser of the Note or to any other person, which notice is
hereby expressly waived by all such parties.
6.03. The Borrower hereby authorizes the Lender, to the maximum extent
permitted under and in accordance with applicable laws, at any time after the
occurrence of an Event of Default, to set-off and apply any and all funds or
assets at any time held and any and all other indebtedness or funds at any time
owing by the Lender to or for the credit or the account of the
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Borrower against any and all Obligations, whether or not the Lender exercises
any other right or remedy hereunder.
6.04. No remedy, right or power conferred upon the Lender is intended
to be exclusive of any other remedy, right, or power given hereunder or now or
hereafter existing at law, in equity, or otherwise, and all such remedies,
rights and powers shall be cumulative.
6.05 At any time following the occurrence of an Event of Default, the
Lender may, in its sole discretion, terminate this Revolving Credit Facility and
the other Loan Documents.
6.06 If, at any time after the date hereof, there are changes in GAAP
that materially impact the Borrower's calculation of Revenue or EBITDA as
compared to how it calculated such amounts during prior periods, the Borrower
and the Lender shall negotiate in good faith to adjust the Revenue and EBITDA
amounts contained in Section 6.01(i)(A)-(D).
ARTICLE VII
MISCELLANEOUS
7.01 All notices, requests and demands which either party is required
or may desire to give to any other party under any provision of this Revolving
Credit Facility must be in writing delivered to each party as indicated below.
Any notice shall be conclusively deemed to have been received by any party
hereto and be effective on the day on which delivered to such party at the
address set forth below or such other address as such party shall specify to the
other party in writing, or if sent prepaid by certified or registered mail on
the fifth Business Day after the day on which mailed (or sent), addressed to
such party at said address, or if sent by facsimile, upon receipt:
(a) if to the Borrower at the following address:
LendingTree, Inc.
00000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Xxxxxx X. Xxxxxx, Xx.
Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx, L.L.P.
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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(b) if to the Lender:
Federal Home Loan Mortgage Corporation
0000 Xxxxx Xxxxxx Xxxxx
XX X0X
XxXxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attention: Senior Vice President - Business
Development
with a copy to:
Federal Home Loan Mortgage Corporation
0000 Xxxxx Xxxxxx Xxxxx
XX 000
XxXxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attention: Associate General Counsel - Securities
7.02 No failure, delay or discontinuance on the part of the Lender in
the exercise of any right, power, remedy or privilege hereunder or under any
other Loan Document shall affect or operate as a waiver of any such right,
power, remedy or privilege nor shall any such failure, delay or discontinuance
preclude any other or further exercise of any such right, power, remedy or
privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law. Any waiver, permit, consent
or approval of any kind by the Lender of any breach of or default under any of
the Loan Documents must be in writing and shall be effective only to the extent
set forth in such writing.
7.03 This Revolving Credit Facility shall be binding on and inure to
the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided, however, that the Borrower may
not assign or transfer its interest hereunder without the prior written consent
of the Lender. All covenants, provisions and agreements by or on behalf of the
Borrower that are contained in the Loan Documents or this Revolving Credit
Facility shall inure to the benefit of the successors and assigns of the Lender.
Notwithstanding the foregoing, prior to the occurrence of an Event of Default,
the Lender may not sell, assign, transfer or otherwise dispose of or create
participations in this Revolving Credit Facility or any of the other Loan
Documents or any portions thereof, including without limitation, any of the
Lender's rights, title, interests, remedies, powers and duties hereunder or
thereunder, without the prior written consent of the Borrower.
7.04 This Revolving Credit Facility may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original.
23
24
7.05 The terms hereof shall extend to any subsequent holder of the Note
to the extent such holder has acquired the Note in accordance with the terms
hereof.
7.06 This Revolving Credit Facility shall terminate on the earlier to
occur of (a) the Termination Date and payment in full of all sums payable by the
Borrower hereunder under the Note or otherwise payable to the Lender, howsoever
evidenced, whichever is later; (b) the date of termination by the Lender
pursuant to Section 6.02; (c) at the Lender's option, a Change of Control of the
Borrower in which case all Obligations, in whole or in part, shall become
immediately due and payable; or (d) at the Borrower's option, upon five (5)
Business Days prior written notice so long as all outstanding Obligations are
repaid on or prior to such fifth Business Day. No termination of this Revolving
Credit Facility or any of the other Loan Documents shall terminate or otherwise
affect the parties' obligations under the License Agreement Amendment, the
Escrow Agreement Amendment or any other agreements that they may be parties to
other than as expressly set forth in any such documents.
7.07 The Borrower shall pay to the Lender immediately upon demand the
full amount of all costs and expenses, including reasonable attorneys' fees (to
include outside counsel fees), incurred by the Lender in connection with (a) the
enforcement of the Lender's rights and/or the collection of any amounts which
become due to the Lender under any of the Loan Documents, and (b) the
prosecution or defense of any action in any way related to any of the Loan
Documents, including without limitation any action for declaratory relief.
7.08 This Revolving Credit Facility together with each other of the
Loan Documents constitutes the entire agreement between the Borrower and the
Lender with respect to the Obligations and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Revolving Credit Facility may be amended or modified only by a
written instrument executed by each party hereto.
7.09 This Revolving Credit Facility is made and entered into for the
sole protection and benefit of the parties hereto and their respective permitted
successors and assigns, and except as provided in Section 7.03 and Section 7.05,
no other person or entity shall be a third party beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Revolving
Credit Facility or any other of the Loan Documents to which it is not a party.
7.10. Time is of the essence of each and every provision of this
Revolving Credit Facility and each other of the Loan Documents.
7.11. THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION
BETWEEN THE HOLDER OF THIS REVOLVING CREDIT FACILITY AND ANY OF THE OTHER LOAN
DOCUMENTS AND THE BORROWER ARISING OUT OF THIS REVOLVING CREDIT FACILITY AND ANY
OF THE OTHER LOAN DOCUMENTS.
7.12 If any provision of this Revolving Credit Facility shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Revolving Credit Facility.
24
25
7.13 This Revolving Credit Facility shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflict of laws, except to the extent that the Lender has greater
rights or remedies under Federal law, in which case such choice of the State of
New York law shall not be deemed to deprive the Lender of such rights and
remedies as may be available under Federal law.
THE WRITTEN REVOLVING CREDIT FACILITY REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AS TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN PARTIES.
* * *
25
26
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers as of the day and year first above
written.
LENDINGTREE, INC., as Borrower
By:
-----------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION, as Lender
By:
-----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
27
EXHIBIT A
TO REVOLVING CREDIT FACILITY
PERMITTED LIENS
1. Those liens set forth on Annex 1 attached hereto.
28
ANNEX 1
TO EXHIBIT A TO REVOLVING CREDIT FACILITY
UCC FINANCING STATEMENTS
--------------------------------------------------------------------------------------------------------------------------
JURISDICTION SEARCH RESULT
--------------------------------------------------------------------------------------------------------------------------
NC Secretary of State UCC 1 File No.: 19990028028
Date Filed: 3/23/99
Secured: Newcourt Communications Finance
Corporation as Lessor
Collateral: leased equipment
2 File No.: 19990052006
Date Filed: 3/27/99
Secured: Green Tree Vendor Services Corporation
Collateral: leased copier
3 File No.: 200058460
Date Filed: 6/8/00
Secured: Dell Financial Services, L.P.
Collateral: leased computer equipment
4 File No.: 20000077811
Date Filed: 8/3/00
Secured: First Union Commercial Corporation
Collateral: 119 pages of equipment
5 File No.: 20000082150
Date Filed: 8/14/00
Secured: Dell Financial Services, L.P.
Collateral: leased computer equipment
6 File No.: 20000107125
Date Filed: 10/30/00
Secured: Newcourt Financial, Inc.
Collateral: equipment
7 File No.: 20000109926
Date Filed: 11/7/00
Secured: Dell Financial Services, L.P.
Collateral: leased computer equipment
8 File No.: 20000112823
Date Filed: 11/15/00
Secured: United Capital Leasing Corporation
Collateral: equipment
--------------------------------------------------------------------------------------------------------------------------
29
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Register of Deeds, UCC 1 File No.: 199903109
Mecklenburg County, NC Date Filed: 3/23/99
Secured: Newcourt Communications Finance
Corporation as Lessor
Collateral: leased equipment
2 File No.: 199905395
Date Filed: 6/1/99
Secured: Green Tree Vendor Services Corporation
Collateral: leased copier
3 File No.: 200005190
Date Filed: 6/9/00
Secured: Dell Financial Services, L.P.
Collateral: leased computer equipment
4 File No.: 200007014
Date Filed: 8/7/00
Secured: First Union Commercial Corporation
Collateral: 119 pages of equipment
5 File No.: 200007599
Date Filed: 8/23/00
Secured: Dell Financial Services, L.P.
Collateral: leased computer equipment
6 File No.: 200009967
Date Filed: 11/6/00
Secured: Newcourt Financial, Inc.
Collateral: equipment
7 File No.: 200010109
Date Filed: 11/10/00
Secured: Dell Financial Services, L.P.
Collateral: leased computer equipment
8 File No.: 200010349
Date Filed: 11/17/00
Secured: United Capital Leasing Corporation
Collateral: equipment
--------------------------------------------------------------------------------------------------------------------------
30
EXHIBIT B
TO REVOLVING CREDIT FACILITY
FORM OF REGISTRATION RIGHTS AGREEMENT
31
EXHIBIT C
TO REVOLVING CREDIT FACILITY
FORM OF SUBSIDIARY GUARANTY
32
EXHIBIT D
TO REVOLVING CREDIT FACILITY
FORM OF WARRANT
33
EXHIBIT E TO REVOLVING CREDIT FACILITY
FORM OF NOTICE OF BORROWING
Dated as of: ______________
Federal Home Loan Mortgage Corporation,
as Lender
------------------------------------
------------------------------------
------------------------------------
Attention:
--------------------------
Ladies and Gentlemen:
This Notice of Borrowing is delivered to you pursuant to the Revolving
Credit Facility dated as of March __, 2001 (as amended, restated or otherwise
modified from time to time, the "Revolving Credit Facility") by and between
LENDINGTREE, INC., a Delaware corporation (the "Borrower"), and the FEDERAL HOME
LOAN MORTGAGE CORPORATION, a federally-chartered corporation (the "Lender").
1. The Borrower hereby requests that the Lender make an Advance to the
Borrower in the aggregate principal amount of $___________. (Complete with an
amount in accordance with Section 2.01 of the Revolving Credit Facility.)
2. The Borrower hereby requests that such Advance be made on _________,
which shall be a Business Day as defined in the Revolving Credit Facility.
(Complete with a Business Day in accordance with Section 2.02 of the Credit
Agreement).
3. The Borrower hereby requests that such Advance be deposited
according to the following wire payment instructions:
___________________________________. (Complete with both the name of the bank
and deposit account of the Borrower to which such Advance is to be deposited).
4. The undersigned hereby certifies that all of the conditions
applicable to the Advance requested herein as set forth in the Revolving Credit
Facility, including without limitation those set forth in Section 2.08, have
been satisfied as of the date hereof and will remain satisfied to the date of
such Advance.
5. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Revolving Credit Facility.
[Signature Page Follows]
34
IN WITNESS WHEREOF, the undersigned has executed this Notice of
Borrowing as of the ____ day of _______, ____.
LENDINGTREE, INC., as Borrower
By:
--------------------------------
Name:
--------------------------
Title:
-------------------------
35
EXHIBIT F
TO REVOLVING CREDIT FACILITY
FORM OF PROMISSORY NOTE
$2,500,000 March __, 2001
FOR VALUE RECEIVED, the undersigned, LENDINGTREE, INC., a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of the FEDERAL HOME LOAN MORTGAGE CORPORATION, a federally-chartered
corporation (the "Lender"), at its office in McLean, Virginia (or at such other
place or places as the Lender may designate), the principal sum of up to TWO
MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000) or, if less, the aggregate
principal amount of all Advances made by the Lender to the Borrower pursuant to
the Revolving Credit Facility, dated as of March __, 2001, between the Borrower
and the Lender (as amended, supplemented or otherwise modified from time to
time, the "Revolving Credit Facility") and then outstanding, on March __, 2003.
Capitalized terms used by not defined herein shall have the meanings assigned to
them in the Revolving Credit Facility.
The Borrower further agrees to pay interest, in like money and in
warrants to purchase shares of the Borrower's common stock, at such office on
the unpaid principal amount hereof until paid in full (both before and after
judgment) on the dates, at the applicable rates per annum and, with respect to
such warrants, on the terms and conditions, specified in Article II of the
Revolving Credit Facility.
The holder of this Note is authorized to endorse the date and amount of
all Advances made by the Lender to the Borrower pursuant to the Revolving Credit
Facility, the maturity date thereof (which shall in no event be later than the
Termination Date), the date and amount of each repayment of principal thereof
and the interest rate with respect thereto, on the schedule annexed hereto and
hereby made a part hereof or on any continuation thereof which shall be attached
hereto and thereby made a part hereof, and any such endorsement shall constitute
prima facie evidence of the accuracy of the information so endorsed.
This Note is the Note referred to in the Revolving Credit Facility and
is entitled to the benefits thereof.
Upon the occurrence of an Event of Default specified in the Revolving
Credit Facility, to the extent expressly provided in the Revolving Credit
Facility, all amounts then remaining unpaid on this Note shall become, or may be
declared to be, immediately due and payable, all as provided therein.
The Borrower agrees to pay the holder's costs of collection and
enforcement (including reasonable attorneys' fees and disbursements of counsel
of the holder's choice) in respect of this Note, including, without limitation,
through appellate proceedings.
36
The Borrower waives all requirements as to diligence, presentment,
demand of payment, protest and notice of any kind with respect to this
promissory note.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
under seal by its duly authorized officers as of the day and year first above
written.
LENDINGTREE, INC., as Borrower
[CORPORATE SEAL]
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
37
SCHEDULE A
TO PROMISSORY NOTE
ADVANCES REGISTER
-------------------------------------------------------------------------------------------
DATE OF ADVANCE PRINCIPAL AMOUNT OF PRINCIPAL PAYMENTS INTEREST PAYMENTS
ADVANCE
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38
EXHIBIT G-1
TO REVOLVING CREDIT FACILITY
AMENDMENT TO LICENSE AGREEMENT
39
EXHIBIT G-2
TO REVOLVING CREDIT FACILITY
AMENDMENT TO ESCROW AGREEMENT
40
SCHEDULE 2.08(a)(vi)
CONSENTS
Consent of First Union Capital Corporation under the Master Equipment Lease
dated March 14, 2000.
41
SCHEDULE 3.01(a)(v)
SUBSIDIARIES
HomeSpace Acquisition Company
42
SCHEDULE 3.01(e)
LITIGATION
-- The Borrower has been named as one of a number of defendants in a putative
class action lawsuit originally filed on September 7, 2000 in California
Superior Court in Contra Costa, California. The lawsuit was removed to
federal court on October 13, 2000 and is now captioned Xxxxxx X. Xxxxxxxxx,
et al. v. Ohio Savings Bank, et al., Case No. C-00-3786, (N.D. Cal.). The
other defendants named in the action are Ohio Savings Bank, Costco
Wholesale Corp., Costco Financial Services Inc., First American Title
Insurance Company and First American Lenders Advantage. The complaint
alleges various claims under California law arising from a loan that
plaintiffs obtained through HomeSpace Services, Inc. ("HomeSpace") and Ohio
Savings Bank in February 1999. In particular, the complaint raises claims
regarding the legality of certain compensation paid to HomeSpace. The
complaint seeks damages in the amount of $10 million, plus unenumerated
punitive damages. Although the Borrower was not a party to plaintiffs' loan
transaction, the lawsuit alleges that the Borrower is liable as a result of
its acquisition of certain assets of HomeSpace on August 2, 2000. The
Borrower filed its answer to the complaint on November 8, 2000, denying all
liability. The Borrower believes that it has strong defenses against both
liability and class certification. It has retained counsel and intends to
defend vigorously against the claims.
-- The Borrower recently was the subject of a routine examination conducted by
the New York State Banking Department ("NYSBD"). At the close of the
examination, during the exit interview, NYSBD examiners raised an issue
orally as to whether the Borrower is obligated to make certain mortgage
broker disclosures to consumers under New York state law. As of this date,
NYSBD has not instituted any investigation or enforcement action. The
Borrower could face a possible administrative fine and/or penalty. The
Borrower believes that the NYSBD regulation which triggers the disclosures
in question is inapplicable to it. The Borrower intends to work with the
NYSBD to clarify the application of its regulations to the Borrower's
activities, and, if necessary, to contest any fine or penalty. Although
there can be no assurances, the Borrower does not believe that the outcome
of any proceeding will have a material effect on its financial condition or
the results of its operations.
