EXHIBIT 3
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EQUITY RIGHTS CERTIFICATE
REPRESENTING THE RIGHT TO RECEIVE SECURITIES
OF LENDINGTREE, INC.
AS SET FORTH HEREIN
THE SECURITIES REPRESENTED BY THIS EQUITY RIGHTS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR ANY
APPLICABLE STATE 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.
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Date of Issuance: September 29, 2000
LendingTree, Inc., a Delaware corporation (the "COMPANY"), for value
received, hereby certifies that Capital Z Financial Services Private Fund II,
L.P. and its registered assigns (the "REGISTERED HOLDER"), is entitled, subject
to the terms set forth below, to acquire from the Company, at any time from and
following the date hereof to and including the fifth business day following June
30, 2001 (the "EXERCISE PERIOD"), the Securities (as hereinafter defined). This
Equity Rights Certificate is being issued pursuant to the Securities Purchase
Agreement, dated as of September 29, 2000 between the Company and the Registered
Holder (the "PURCHASE AGREEMENT").
1. DEFINITIONS.
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"GOING PRIVATE TRANSACTION" means a "Rule 13e-3 transaction"
as defined in Rule 13e-3 under the Securities Exchange Act of 1934, as amended.
"JUNE 30, 2001 VALUE" means (i) if the Common Stock (as
hereinafter defined) is then traded on any national securities exchange or any
automated quotation system, the average closing price rounded to three (3)
decimal places of the Common Stock for the five (5) trading days immediately
preceding June 30, 2001 or (ii) if the Common Stock is not then traded on any
national securities exchange or any automated quotation system, the per share
fair market value of the Common Stock as agreed to by the Company and the
Registered Holder or, if such parties cannot agree, the per share fair market
value of the Common Stock as determined by an independent third party valuation
firm mutually acceptable to the parties.
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"SALE TRANSACTION" means (a) any consolidation, reorganization
or merger of the Company with or into any other corporation or other entity or
person, or any other corporate reorganization, in which the Company does not
survive, the Common Stock is modified or converted into any other security or
the stockholders of the Company immediately prior to such consolidation, merger
or reorganization, own less than fifty percent (50%) of the voting power of the
surviving entity or the entity that controls such surviving entity immediately
after such consolidation, merger or reorganization, (b) any transaction or
series of related transactions in which in excess of fifty percent (50%) of the
voting power of the surviving entity or the entity that controls such surviving
entity is transferred, or (c) any sale or other transfer of substantially all of
the assets of the Company.
"SECURITIES" means, at the sole election of the Registered
Holder, either:
(i) (a) 6,626 fully paid and nonassessable shares of the
Company's common stock, par value $.01 per share (the "COMMON STOCK"), or any
other equity securities that may be issued in addition thereto or in
substitution therefor as provided herein, and (b) a warrant in the form attached
hereto as Exhibit 1, initially exercisable for 1,189 shares of Common Stock (the
"WARRANT"), with an exercise price of $7.975 per share, or
(ii) (a) if a Subsequent Financing (as hereinafter defined)
occurs during the term hereof but prior to the occurrence of any other
Subsequent Event (as hereinafter defined), subject to the final paragraph of
this definition of "Securities", the type of securities issued to the
investor(s) in such Subsequent Financing (with the number and amount of such
securities issuable upon exercise of this Equity Rights Certificate bearing the
same ratio to $52,840.00 (the "Purchase Price") as the number and amount of such
securities issued to the investor(s) in the Subsequent Financing bears to the
total purchase price for such securities paid by such investor(s) in such
Subsequent Financing), (b) if a Sale Transaction occurs during the Exercise
Period but prior to the occurrence of any other Subsequent Event, subject to the
final paragraph of this definition of "Securities", (x) the number of shares of
Common Stock equal to the quotient of the Purchase Price divided by 75% of the
per share price for the Common Stock in such Sale Transaction and (y) the
Warrant, with an Exercise Price equal to 75% of the per share price for the
Common Stock in the Sale Transaction, (c) if a Going Private Transaction occurs
during the Exercise Period but prior to the occurrence of any other Subsequent
Event, subject to the final paragraph of this definition of "Securities", (x)
the number of shares of Common Stock equal to the quotient of the Purchase Price
divided by 75% of the lowest per share price paid to the public holders of
Common Stock in the Going Private Transaction and (y) the Warrant, with an
exercise price per share equal to 75% of the lowest per share price paid to the
public holders of Common Stock in the Going Private Transaction, or (d) if June
30, 2001 occurs and no other Subsequent Event has occurred, (x) the number of
shares of Common Stock equal to the quotient of the Purchase Price divided by
the June 30, 2001 Value (as hereinafter defined) and (y) the Warrant, with an
exercise price per share equal to the June 30, 2001 Value.
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For the purposes above, (i) if the applicable per share price
of the Common Stock in connection with any Sale Transaction or Going-Private
Transaction is paid in any form other than cash, then the applicable per share
price of the Common Stock will be as agreed to by the Company and the Registered
Holder, or if such parties cannot agree, as determined by an independent third
party valuation firm mutually acceptable to the parties and (ii) in the context
of a Sale Transaction involving the sale or other transfer of substantially all
of the assets of the Company, the per share price for the Common Stock in such
transaction will be deemed to be equal to the net proceeds of such transaction
to the Company available for distribution to stockholders divided by the number
of shares of Common Stock outstanding on a fully-diluted basis.
If, as a result of the operation of clause (ii)(a), (ii)(b) or
(ii)(c) above, as applicable, the Registered Holder would receive securities in
an amount that would require approval by the Company's stockholders pursuant to
the rules of the Nasdaq stock market, then the securities to be received by the
Registered Holder pursuant to such applicable clause shall consist of (x)
securities provided for in such applicable clause, up to the maximum amount of
such securities that may be received by the Registered Holder without triggering
such stockholder approval requirement (with the securities that would have been
received by the Registered Holder if not for the operation of this clause (x)
and that, as a result of the operation of this clause (x), are not received by
the Registered Holder, being referred to herein as the "Excluded Securities")
plus (y) shares of a new series of preferred stock (the "New Preferred Stock")
of the Company with an aggregate value at least equal to the value of the
Excluded Securities and with other terms reasonably satisfactory to the
Registered Holder and the Company. Such New Preferred Stock will (A) resemble
shares of Common Stock as closely as is possible without triggering any such
stockholder approval requirement, (B) participate with the Common Stock with
respect to dividends and upon liquidation, (C) not have voting rights (except as
otherwise required by law) and, (D) be convertible into shares of Common Stock
on a one-for-one basis (subject to appropriate adjustments for stock splits,
stock dividends and the like) in the event (but only in the event) that any
necessary stockholder approval for such conversion is obtained. The number of
shares of New Preferred Stock to be issued to the Registered Holder pursuant to
the immediately preceding sentence will be equal to the number of shares of
Common Stock that the Excluded Securities would have represented (on a
fully-converted or fully-exercised basis, as applicable).
"SUBSEQUENT EVENT" means a Subsequent Financing, a Sale
Transaction, a Going Private Transaction, or June 30, 2001.
"SUBSEQUENT FINANCING" means the first sale or issuance
occurring following the date of the Purchase Agreement of the Company's equity
securities (including, but not limited to, securities directly or indirectly
convertible into, exercisable for or exchangeable for such equity securities) in
a financing transaction or series of transactions, which involves an aggregate
cash consideration in excess of $15,000,000, provided that a Subsequent
Financing shall not include sales or issuances pursuant to (i) the Company's
existing employee benefit plans, (ii) upon the conversion or exchange of
convertible or exchangeable securities outstanding as of the date hereof or
(iii) pursuant to any pending or future acquisition of another entity made by
the Company.
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2. EXERCISE.
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(a) This Equity Rights Certificate may be exercised in whole
by the Registered Holder at any time during the Exercise Period by surrendering
this Equity Rights Certificate (together with a written notice specifying the
specific securities described in the definition of "Securities" for which this
Equity Rights Certificate is being exercised, duly executed by such Registered
Holder or by such Registered Holder's duly authorized attorney), at the
principal office of the Company, or at such other office or agency as the
Company may designate. If such written notice of exercise is not delivered prior
to the expiration of the Exercise Period, then this Equity Rights Certificate
shall be deemed to have been exercised, as of the time immediately prior to the
expiration of the Exercise Period, for the securities described in clause ii(d)
of the definition of "Securities."
(b) The Company shall notify the Registered Holder of the
definitive terms of any proposed Subsequent Event as soon as such terms are
agreed upon or as soon as reasonably practicable thereafter. The Registered
Holder shall provide notice of its irrevocable election to exercise its rights
referred to in Section 2(a) above within thirty (30) days of receipt of notice
of such proposed Subsequent Event by the Company; provided, however, that such
election may be revoked in the event that the applicable Subsequent Event fails
to close within a reasonable time following the delivery of such notice of
election by the Registered Holder. The failure of either party to deliver the
notices set forth above shall not impair the Registered Holder's right to
exercise this Equity Rights Certificate during the Exercise Period for any of
the securities described in the definition of "Securities," which it is
otherwise eligible to receive.
(c) The exercise of this Equity Rights Certificate shall be
deemed to have been exercised immediately prior to the close of business on the
day on which this Equity Rights Certificate shall have been surrendered to the
Company as provided in Section 2(a) above (or immediately prior to the close of
business on the day this Equity Rights Certificate is otherwise deemed to be
exercised as provided in Section 2(a), as applicable). At such time (or
thereafter immediately upon termination of any applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, if
applicable), the person or persons in whose name or names any securities shall
be issuable upon such exercise as provided in Section 2(d) below shall be deemed
to have acquired such securities and to have become the record owner of such
securities.
(d) As soon as practicable after the exercise of this Equity
Rights Certificate, and in any event within ten (10) days thereafter, the
Company at its expense will cause to be issued in the name of, and delivered to,
the Registered Holder, or as such Registered Holder (upon payment by such
Registered Holder of any applicable transfer taxes) may direct, a certificate or
certificates (or other documents, as appropriate) representing the securities to
which such Registered Holder shall be entitled.
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3. OTHER ADJUSTMENTS.
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(a) STOCK DIVIDENDS, SPLITS, COMBINATIONS, RECLASSIFICATION,
ETC. With respect to any exercise for which the Registered Holder has elected to
receive the securities described in clause (i) of the definition of
"Securities," in the event that the Company shall, at any time on or after the
date of the Purchase Agreement and prior to such exercise, (i) pay a dividend or
make a distribution on its Common Stock, (ii) subdivide shares of its
outstanding Common Stock into a greater number of shares, (iii) combine its
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock by reclassification of its Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), the Registered Holder, in lieu of
any shares of Common Stock which the Registered Holder would otherwise be
entitled to receive upon such exercise, shall be entitled to receive the
aggregate number and kind of shares which, if this Equity Rights Certificate had
been exercised immediately prior to such event, the Registered Holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, distribution, subdivision, combination or reclassification.
(b) With respect to any exercise for which the Registered
Holder has elected to receive the securities described in clause (i) of the
definition of "Securities," in case of any reclassification or change of the
outstanding securities of the Company or of any merger, reorganization or
consolidation of the Company (other than a Sale Transaction), causing an
adjustment in accordance with Section 4 below) or any similar corporate
reorganization, occurring at any time on or after the date of the Purchase
Agreement and prior to such exercise, then and in each such case the Registered
Holder, upon the exercise hereof at any time after the consummation of such
reclassification, change, reorganization, merger or conveyance, shall be
entitled to receive, in lieu of any shares of Common Stock otherwise receivable
upon the exercise hereof prior to such consummation, the stock or other
securities or property to which such Registered Holder would have been entitled
upon such consummation if such Registered Holder had exercised this Equity
Rights Certificate immediately prior thereto, all subject to further adjustment
as provided in paragraph (a); and in each such case, the terms of this Section 3
shall be applicable to the shares of stock or other securities or property
receivable upon the exercise of this Equity Rights Certificate after such
consummation.
(c) When any adjustment is required to be made pursuant to
this Section 3, the Company shall promptly mail to the Registered Holder a
certificate setting forth the Securities or other property receivable upon
exercise of this Equity Rights Certificate in a case in which the Registered
Holder elects to receive the securities described in clause (i) of the
definition of "Securities" after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.
4. SALE TRANSACTION. Simultaneous with the closing of a Sale
Transaction prior to the exercise of this Equity Rights Certificate or the
expiration of the Exercise Period, as applicable, as a result of which the
stockholders of the Company receive cash, stock or other property in respect of
their shares of Common Stock, the surviving entity or acquiring entity, as
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applicable, will, at the closing of such Sale Transaction, assume the
obligations of the Company hereunder and this Equity Rights Certificate will
thereafter (during the remainder of the Exercise Period) be exercisable, at the
sole election of the Registered Holder, either (a) for the securities described
in clause (i) of the definition of "Securities" or (b) the securities described
in clause (ii)(b) of the definition of "Securities;" provided, however, that, in
lieu of any shares of Common Stock to be received upon such exercise, the
Registered Holder shall receive the cash, stock or other property that such
Registered Holder would have been entitled to receive as a result of such Sale
Transaction in respect of such shares of Common Stock if the Registered Holder
owned such shares of Common Stock at the time of such Sale Transaction. The
Company shall deliver to the Registered Holder notice of the Sale Transaction no
less than thirty (30) business days before the date scheduled for closing of the
Sale Transaction.
5. TRANSFERS. Neither this Equity Rights Certificate nor any securities
purchased upon exercise of this Equity Rights Certificate may be transferred
unless either (i) such transfer is registered under the Securities Act of 1933
(the "SECURITIES ACT") and any applicable state securities or blue sky laws or
(ii) the transfer is exempt from the prospectus delivery and registration
requirements of the Securities Act and any applicable state securities or blue
sky laws. If a Registered Holder wishes to transfer such securities pursuant to
(ii) above and 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 transfer would require registration under the Securities Act and/or any
applicable state securities or blue sky laws, the Company may require that the
Registered Holder furnish the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
under the Securities Act and any applicable state securities or blue sky laws.
Upon any transfer of all or a portion of the Equity Rights Certificate in
compliance with this Section 5, the transferee shall be deemed a Registered
Holder.
6. LEGEND. A legend setting forth or referring to the above
restrictions shall be placed on this Equity Rights Certificate, any replacement
hereof and any certificate representing a security issued pursuant to the
exercise hereof, and a stop transfer restriction or order shall be placed on the
books of the Company and with any transfer agent until such securities may be
legally sold or otherwise transferred; provided, however, that such legend shall
not be required and a stop transfer restriction order shall not placed if (i) in
the opinion of counsel to the Registered Holder (reasonably satisfactory to the
Company) registration of any future transfer is not required by the applicable
provisions of the Securities Act, (ii) the Company shall have waived the
requirements of such legends or (iii) the transfer of such security shall be
made in compliance with the requirements of Rule 144(k).
7. REGISTERED HOLDER ITS OWNER. Except as provided in Section 5 hereto,
the Company may deem and treat the Registered Holder of this Equity Rights
Certificate as the absolute owner hereof for all purposes regardless of any
notice to the contrary.
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8. NO IMPAIRMENT. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Equity Rights Certificate, but will (subject to
Section 16 below) at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Registered Holder of this
Equity Rights Certificate against impairment.
9. NOTICES OF CERTAIN TRANSACTIONS. In case:
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(a) the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time deliverable upon the exercise of this
Equity Rights Certificate) for the purpose of entitling or enabling them to
receive any dividend or other distribution other than as described in Section 3,
or to receive any right to subscribe for or purchase any shares of stock of any
class or any other securities, or to receive any other right, to subscribe for
or purchase any shares of stock of any class or any other securities, or to
receive any other right, or
(b) of any capital reorganization of the Company, any reclassification
of the capital stock of the Company, any consolidation or merger of the Company,
any consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the surviving
entity), or any transfer of all or substantially all of the assets of the
Company, or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
(d) of any redemption of the Common Stock,
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder of this Equity Rights Certificate a notice specifying, as the
case may be, (i) the date on which a record is to be taken for the purpose of
such dividend, distribution or right and stating the amount and character of
such dividend distribution or right, or (ii) the effective date on which such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation, winding-up, redemption or conversion is to take place, and the
time, if any is to be fixed, as of which the holders of record of Common Stock
shall be entitled to exchange their shares of Common Stock for the securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, transfer, dissolution, liquidation, winding-up,
redemption or conversion. Such notice shall be mailed at least ten (10) days
prior to the record date or effective date for the event specified in such
notice.
10. RESERVATION OF STOCK; TAXES. The Company will at all times reserve
and keep available, solely for the issuance and delivery upon the exercise of
this Equity Rights Certificate, such shares of Common Stock and other stock,
securities and property, as from time to time shall be issuable upon the
exercise of this Equity Rights Certificate. The Company covenants that all
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Common Stock that may be issued upon the exercise of rights represented by this
Equity Rights Certificate or upon exercise of the Warrant, if applicable, will,
upon exercise, be fully paid and nonassessable and free from all taxes, liens
and chargers in respect of the issue (other than taxes in respect of any
transfer occurring contemporaneously with such issue.) The Company shall pay all
taxes and any and all United States federal, state and local taxes and other
charges that may be payable in connection with the preparation, issuance and
deliver of the certificates representing Common Stock issued hereunder or
issuable upon exercise of the Warrant, if applicable.
11. EXCHANGE OF EQUITY RIGHTS CERTIFICATE. Upon the surrender by the
Registered Holder of this Equity Rights Certificate, properly endorsed, to the
Company at the principal office of the Company, the Company will, subject to the
provisions of Section 5 hereof, issue and deliver to or upon the order of such
Registered Holder, at the Company's expense, a new Equity Rights Certificate of
like tenor, in the name of such Registered Holder or as such Registered Holder
(upon payment by such Registered Holder of any applicable transfer taxes) may
direct, calling in the aggregate on the face or faces thereof for the number and
type of securities called for in the Equity Rights Certificate so surrendered.
12. REPLACEMENT OF EQUITY RIGHTS CERTIFICATE. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Equity Rights Certificate and (in the case of loss, theft or
destruction) upon delivery of an indemnity agreement (with surety if reasonably
required) in an amount reasonably satisfactory to the Company, or (in the case
of mutilation) upon surrender and cancellation of this Equity Rights
Certificate, the Company will issue, in lieu thereof, a new Equity Rights
Certificate of like tenor.
13. MAILING OF NOTICES. Any notice required or permitted pursuant to
this Equity Rights Certificate 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 the Registered Holder
Capital Z Partners
54 Thompson Street
New York, NY 10012
Fax: (212) 965-2301
Attention:
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with a copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court - Suite 1300
Dallas, Texas 75201
Fax: (214) 746-7777
Attention: R. Jay Tabor, Esq.
If to the Company:
LendingTree
11115 Rushmore Drive
Charlotte, NC 28277
Fax: (704) 541-1824
Attention: CEO
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Fax: (212) 735-2000
Attention: David Goldschmidt, Esq.
Each of the foregoing parties shall be entitled to specify a different
address by giving five (5) days' advance written notice as aforesaid to the
other parties.
14. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Equity Rights
Certificate, the Registered Holder of this Equity Rights Certificate shall not
have or exercise any rights by virtue hereof as a stockholder of the Company;
and except as otherwise provided herein, no dividend or interest shall be
payable or shall accrue in respect of this Equity Rights Certificate or any
Common Stock that may be issued upon exercise of this Equity Rights Certificate
unless and until this Equity Rights Certificate shall be exercised.
15. NO FRACTIONAL SHARES. No fractional shares of any Common Stock that
may be issued upon exercise of this Equity Rights Certificate will be issued in
connection with any exercise hereunder. In lieu of any fractional shares which
would otherwise be issuable, the Company shall pay cash equal to the product of
such fraction multiplied by the closing price of the Company's Common Stock on
the trading day immediately prior to the date of exercise or, if the Common
Stock is not then traded on any national securities exchange or automated
quotation system, the fair market value of one share of Common Stock as
determined in good faith by the Company's Board of Directors.
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16. AMENDMENT OR WAIVER. This Equity Rights Certificate or any
provision thereof may be changed, waived, discharged or terminated only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
17. HEADINGS. The headings in this Equity Rights Certificate are for
purposes of reference only and shall not limit or otherwise affect the meaning
of any provision of this Equity Rights Certificate.
18. GOVERNING LAW. THIS EQUITY RIGHTS CERTIFICATE SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT
OF LAWS.
19. SUCCESSORS AND ASSIGNS. This Equity Rights Certificate shall be
binding upon the Company and inure to the benefit of the Registered Holder and
its successors and assigns.
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IN WITNESS WHEREOF, the Company has executed this Equity Rights
Certificate as of the date first written above.
LendingTree, Inc.
By:
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Name:
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Title:
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EXHIBIT 1.
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FORM OF WARRANT
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR ANY APPLICABLE STATE 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.
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No.- CZ2 Number of Shares:________
Date of Issuance: __________ ____, 2000 Subject To Adjustment
in The Manner Described
Below
LENDING TREE, INC.
WARRANT
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LendingTree, Inc., a Delaware corporation (the "Company"), for
value received, hereby certifies that [INVESTOR] and its registered assigns, the
"Registered Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company, at any time or from time to time on or after the one
year anniversary of the date of the Purchase Agreement (as defined below) until
the five year anniversary of the date of the Purchase Agreement (the "Exercise
Period"), fully paid and nonassessable shares of the Company's common stock, par
value $.O1 per share (the "Common Stock"), or any other equity securities that
may be issued in addition thereto or in substitution therefor, as provided
herein, at a price of $____________ per share (the "Exercise Price"). This
warrant (the "Warrant") is being issued pursuant to the Equity Rights
Certificate, dated as of September 29, 2000 (the "Certificate") issued pursuant
to the Securities Purchase Agreement, dated as of September 29, 2000 (the
"Purchase Agreement"). As used herein, the term "Warrant Stock" shall mean the
Common Stock issuable upon exercise of this Warrant.
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20. EXERCISE.
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(a) This Warrant may be exercised in whole or part by the
Registered Holder at any time during the Exercise Period by surrendering this
Warrant, with the purchase form appended hereto as Appendix- A duly executed by
such Registered Holder or by such Registered Holder's duly authorized attorney,
at the principal office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full by cash, check or wire
transfer in the amount of the Exercise Price multiplied by the number of shares
of Warrant Stock for which this Warrant is being exercised (the "PURCHASE
PRICE").
(b) The exercise of this Warrant, if any, shall be deemed to
have been effected immediately prior to the close of business on the day on
which this Warrant shall have been surrendered to the Company as provided in
Section 1(a) above. At such time, the person or persons in whose name or names
any certificates for Warrant Stock shall be issuable upon such exercise as
provided in Section 1(d) below shall be deemed to have become the Registered
Holder or Registered Holders of record of the Warrant Stock represented by such
certificates.
(c) NET ISSUE EXERCISE.
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(i) Notwithstanding the payment provisions set forth
above, in lieu of exercising this Warrant in the manner provided above in
Section 1(a), the Registered Holder may elect to receive shares of Warrant Stock
equal to the value of this Warrant by surrender of this Warrant at the principal
office of the Company, together with notice of such election, in which event the
Company shall issue to the Registered Holder a number of shares of Warrant Stock
computed using the following formula:
X = Y (A-B)
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A
Where X = The number of shares of Warrant Stock to be issued to the
Registered Holder.
Y = The number of shares of Warrant Stock as to which the
Warrant is being exercised.
A = The Fair Market Value (as defined below) of one share of
Warrant Stock (at the date of such calculation).
B = The Exercise Price (as adjusted to the date of such
calculation).
(ii) For purposes of this Section 1(c), the Fair Market
Value of the Warrant Stock shall be equal to the closing price of the Common
Stock on the trading day immediately preceding the date of delivery of the
notice of exercise pursuant to this Section 1(c) or, if the Common Stock is not
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then traded on any national securities exchange or automated quotation system,
the fair market value of a share of Common Stock as agreed to by the Company and
the Registered Holder (or, if such parties cannot agree, as determined by an
independent third party valuation firm mutually acceptable to the parties) (it
being understood that the original Warrant may be surrendered on the day
subsequent to the notice of exercise if such original Warrant is provided to an
overnight courier service (e.g. Federal Express) on the date of such notice).
(d) As soon as practicable after the exercise of this Warrant,
and in any event within ten (10) days thereafter, the Company at its expense
will cause to be issued in the name of, and delivered to, the Registered Holder,
or as such Registered Holder (upon payment by such Registered Holder of any
applicable transfer taxes) may direct, a certificate or certificates for the
number of shares of Warrant Stock to which such Registered Holder shall be
entitled.
21. OTHER ADJUSTMENTS.
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(a) STOCK DIVIDENDS, SPLITS, COMBINATIONS, RECLASSIFICATION,
ETC. In the event that the Company shall, at any time from the date of the
Purchase Agreement until the expiration of the Exercise Period, (i) pay a
dividend or make a distribution on its Common Stock, (ii) subdivide shares of
its outstanding Common Stock into a greater number of shares, (iii) combine its
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock by reclassification of its Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), the Registered Holder shall be
entitled to purchase the aggregate number and kind of shares which, if the
Warrant had been exercised at the Exercise Price in effect immediately prior to
such event, the Registered Holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, distribution, subdivision,
combination or reclassification; and the Exercise Price shall automatically be
adjusted immediately after the payment date, in the case of a dividend or
distribution, or the effective date, in the case of a subdivision, combination
or reclassification, to allow the purchase of such aggregate number and kind of
shares.
(b) In case of any reclassification or change of the
outstanding securities of the Company or of any merger, reorganization or
consolidation of the Company (other than a Reorganization (as defined below),
causing an adjustment in accordance with Section 3 below) or any similar
corporate reorganization on or after the date of the Purchase Agreement, then
and in each such case the Registered Holder of this Warrant, upon the exercise
hereof at any time after the consummation of such reclassification, change,
reorganization, merger or conveyance, shall be entitled to receive, in lieu of
the stock or other securities and property receivable upon the exercise hereof
prior to such consummation, the stock or other securities or property to which
such Registered Holder would have been entitled upon such consummation if such
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Registered Holder had exercised this Warrant immediately prior thereto, all
subject to further adjustment as provided in paragraph (a); and in each such
case, the terms of this Section 2 shall be applicable to the shares of stock or
other securities properly receivable upon the exercise of this Warrant after
such consummation.
(c) When any adjustment is required to be made pursuant to
this Section 2, the Company shall promptly mail to the Registered Holder a
certificate setting forth the Exercise Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment. Such certificate
shall also set forth the kind and amount of stock or other securities or
property into which this Warrant shall be exercisable following the occurrence
of any of the events specified in this Section 2.
22. REORGANIZATION. Simultaneous with the closing of a consolidation or
merger in which the Company is not the surviving entity or the closing of a
merger, consolidation, acquisition of all or substantially all of the assets or
stock, of the Company by another entity (the "SURVIVING ENTITY") as a result of
which the stockholders of the Company will own less than 50% of the voting
capital stock of the surviving entity or the entity that controls such surviving
entity immediately after the transaction or, in the case of a sale of assets,
the Company will own after the transaction less than 50% of the assets owned by
the Company prior to the transaction (collectively, a "REORGANIZATION") prior to
the expiration of the Exercise Period, as a result of which the stockholders of
the Company receive cash, stock or other property in respect of their shares of
Warrant Stock, this Warrant shall become, if it is not already, immediately
exercisable. Furthermore, the Surviving Entity will, at the closing of such
Reorganization, assume the obligations of the Company hereunder and this Warrant
will be exchanged for a warrant to purchase such kind and number of shares of
capital stock or other securities or property of the Company or the Surviving
Entity to which the Registered Holder would have been entitled if it had held
the Warrant Stock issuable upon the exercise hereof immediately prior to such
Reorganization, which warrant shall have the same terms and conditions hereof.
The Company shall deliver to the Registered Holder notice of the Reorganization
no less than thirty (30) business days before the date scheduled for closing of
the Reorganization
23. TRANSFERS. Neither this Warrant nor any securities purchased upon
exercise of this Warrant may be transferred unless either (i) such transfer is
registered under the Securities Act of 1933 (the "SECURITIES ACT") and any
applicable state securities or blue sky laws or (ii) the transfer is exempt from
the prospectus delivery and registration requirements of the Securities Act and
any applicable state securities or blue sky laws. If the Registered Holder
wishes to transfer the shares pursuant to (ii) above and 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 transfer would require
registration under the Securities Act and/or any applicable state securities or
blue sky laws, the Company may require that the Registered Holder furnish the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration under the Securities Act and any
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applicable state securities or blue sky laws. Upon any transfer of all or a
portion of the Warrant in compliance with this Section 4, the transferee shall
be deemed a Registered Holder.
24. LEGEND. A legend setting forth or referring to the above
restrictions shall be placed on this Warrant, any replacement hereof and any
certificate representing a security issued pursuant to the exercise hereof, and
a stop transfer restriction or order shall be placed on the books of the Company
and with any transfer agent until such securities may be legally sold or
otherwise transferred; provided, however, that such legend shall not be required
and a stop transfer restriction order shall not be placed if (i) in the opinion
of counsel to the Registered Holder (reasonably satisfactory to the Company)
registration of any future transfer is not required by the applicable provisions
of the Securities Act, (ii) the Company shall have waived the requirements of
such legends or (iii) the transfer of Warrant Stock shall be made in compliance
with the requirements of Rule 144(k).
25. REGISTERED HOLDER ITS OWNER. Except as provided in Section 4
hereto, the Company may deem and treat the Registered Holder of this Warrant as
the absolute owner hereof for all purposes regardless of any notice to the
contrary.
26. NO IMPAIRMENT. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will (subject to Section 16 below) at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Registered Holder of this Warrant against impairment.
27. EXPIRATION. This Warrant (and the right to purchase securities upon
exercise hereof) shall be void and all rights represented thereby shall cease
unless exercised during the Exercise Period. All restrictions set forth herein
on the shares of capital stock issued upon exercise of any rights hereunder
shall survive such exercise and expiration of the rights granted hereunder.
28. NOTICES OF CERTAIN TRANSACTIONS. In case:
-------------------------------
(a) the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable upon the
exercise of this Warrant) for the purpose of entitling or enabling them to
receive any dividend or other distribution other than as described in Section 2,
or to receive any right to subscribe for or purchase any shares of stock of any
class or any other securities, or to receive any other right, to subscribe for
or purchase any shares of stock of any class or any other securities, or to
receive any other right, or
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(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company, any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which the Company
is the surviving entity), or any transfer of all or substantially all of the
assets of the Company, or
(c) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company, or
(d) of any redemption of the Common Stock, then, and in each
such case, the Company will mail or cause to be mailed to the Registered Holder
of this Warrant a notice specifying, as the case may be, (i) the date on which a
record is to be taken for the purpose of such dividend, distribution or right
and stating the amount and character of such dividend distribution or right, or
(ii) the effective date on which such reorganization, reclassification,
consolidation, merger, transfer, dissolution, liquidation, winding-up,
redemption or conversion is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock shall be entitled to exchange
their shares of Common Stock for the securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation, winding-up, redemption or conversion. Such notice
shall be mailed at least ten (10) days prior to the record date or effective
date for the event specified in such notice.
29. RESERVATION OF STOCK: TAXES. The Company will at all times reserve
and keep available, solely for the issuance and delivery upon the exercise of
this Warrant, such shares of Common Stock and other stock, securities and
property, as from time to time shall be issuable upon the exercise of this
Warrant. The Company covenants that all Common Stock that maybe issued upon the
exercise of rights represented by this Warrant will, upon exercise, be fully
paid and nonassessable and free from all taxes, liens and charges in respect of
the issue (other than taxes in respect of any transfer occurring
contemporaneously with such issue.) The Company shall pay all taxes and any and
all United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of the
certificates representing Common Stock issued hereunder.
30. EXCHANGE OF WARRANT. Upon the surrender by the Registered Holder of
this Warrant, properly endorsed, to the Company at the principal office of the
Company, the Company will, subject to the provisions of Section 4 hereof, issue
and deliver to or upon the order of such Registered Holder, at the Company's
expense, a new Warrant of like tenor, in the name of such Registered Holder or
as such Registered Holder (upon payment by such Registered Holder of any
applicable transfer taxes) may direct, calling in the aggregate on the face or
faces thereof for the number of shares of Warrant Stock called for on the face
or faces of the Warrant so surrendered.
31. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
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indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
32. MAILING OF NOTICES. Any notice required or permitted pursuant to
this Warrant 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 the Registered Holder:
Capital Z Partners
54 Thompson Street
New York, NY 10012
Fax: (212) 965-2301
Attention:
with a copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court - Suite 1300
Dallas, Texas 75201
Fax: (214) 746-7777
Attention: R. Jay Tabor, Esq.
If to the Company:
LendingTree
11115 Rushmore Drive
Charlotte, NC 28277
Fax: (704) 541-1824
Attention: CEO
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Fax: (212) 735-2000
Attention: David Goldschmidt, Esq.
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Each of the foregoing parties shall be entitled to specify a
different address by giving five (5) days' advance written notice as aforesaid
to the other parties.
33. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company; and except as otherwise provided
herein, no dividend or interest shall be payable or shall accrue in respect of
this Warrant or the Warrant Stock purchasable hereunder unless, until and to the
extent that this Warrant shall be exercised.
34. NO FRACTIONAL SHARES. No fractional shares of Warrant Stock will be
issued in connection with any exercise hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the fair market value of one share of
Warrant Stock on the date of exercise, as determined in accordance with Section
1(c)(ii).
35. AMENDMENT OR WAIVER. This Warrant or any provision thereof may be
changed, waived, discharged or terminated only by a statement in writing signed
by the party against which enforcement of the change, waiver, discharge or
termination is sought.
36. HEADINGS. The headings in this Warrant are for purposes of
reference only and shall not limit or otherwise affect the meaning of any
provision of this Warrant.
37. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
38. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the
Company and inure to the benefit of the Registered Holder and its successors and
assigns.
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IN WITNESS WHEREOF, the Company has executed this Warrant as
of the date first written above.
LendingTree, Inc.
By:
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Name:
--------------------------------------
Title:
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<PAGE>
APPENDIX-A
FORM OF PURCHASE
----------------
[To be executed only upon exercise of Warrant]
To LendingTree, Inc.:
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, [ ] shares of Warrant
Stock of LendingTree, Inc. and herewith makes payment of $_________ therefor OR
by conversion of _____% of the Warrant, and requests that the certificates for
such shares be issued in the name of, and delivered to _____________________,
whose address is set forth below.
Dated:
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(Signature must conform in all respects to
name of holder as specified on the face of Warrant)
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(Street Address)
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(City) (State) (Zip Code)
