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EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
BY AND AMONG
HOMESPACE SERVICES, INC.,
HOMESPACE ACQUISITION COMPANY
AND
LENDINGTREE, INC.
JULY 31, 2000
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TABLE OF CONTENTS
1. Definitions...........................................................1
2. Purchase and Sale of Assets...........................................8
3. Allocation of Purchase Price.........................................12
4. The Closing..........................................................12
5. Representations and Warranties of Seller.............................12
6. Representations and Warranties of Purchaser and Acquisition Sub......17
7. Covenants of the Parties.............................................18
8. Registration Rights..................................................22
9. Conditions to Obligation of Purchaser.......................... .....24
10. Conditions to Obligation of Seller...................................26
11. Indemnification......................................................27
12. Confidentiality; Public Announcements................................29
13. Termination..........................................................29
14. Brokers..............................................................30
15. Notices..............................................................30
16. Bulk Transfer Compliance.............................................31
17. Miscellaneous........................................................31
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of July 31,
2000 (this "Agreement"), by and among HOMESPACE SERVICES, INC., a Florida
corporation ("Seller"), LENDINGTREE, INC., a Delaware corporation ("Purchaser"),
and HOMESPACE ACQUISITION COMPANY, a Delaware corporation and wholly owned
subsidiary of Purchaser ("Acquisition Sub"). Seller, Purchaser and Acquisition
Sub are sometimes referred to individually as a "Party" and collectively as the
"Parties."
STATEMENT OF PURPOSE
Seller is an e-commerce company that maintains a web site offering
consumers access to real estate broker referral services (the "Real Estate
Line"), residential mortgage loans (the "Mortgage Line") and a full array of
related home services (the "Home Services Line"). Purchaser desires to purchase
certain of the assets of Seller related to the Real Estate Line and the Home
Services Line (the "Business"). The purpose of this Agreement is to set forth
the terms and conditions upon which Seller has agreed to sell to Purchaser, and
Purchaser has agreed through the Acquisition Sub to purchase and pay for, such
assets and assume certain liabilities and obligations in connection with the
Business.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the Parties do hereby agree as follows:
1. Definitions. The following terms shall have the meanings set forth
below:
"Affiliate" means a Person, directly or indirectly, under the control
of, controlled by or under common control with another Person.
"Affinity Contracts" has the meaning set forth in the definition of
"Assets."
"Alternative Transaction" has the meaning set forth in Section 13(d).
"Arbitrating Accountant" has the meaning set forth in Section
2(b)(ii)(B).
"Assets" means the following assets:
(i) all referral contracts between any of the HomeSpace
Companies and the members of its real estate broker network (the
"Referral Contracts"), a list of which is attached as Schedule 1(a);
(ii) all contracts between any of the HomeSpace Companies and
the providers of home services (the "Home Services Contracts"), a list
of which is attached as Schedule 1(b);
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(iii) all of Seller's contracts with Costco Companies, Inc.
and its affiliates, and Delta Airlines, Inc. (the "Affinity
Contracts");
(iv) the accounts receivable and proceeds thereof listed on
Schedule 1(c) (the "Receivables");
(v) to the extent assignable pursuant to applicable law, all
of Seller's federal, state and local permits, authorizations,
certificates, approvals, registrations, franchises, grants and licenses
(but excluding the real estate brokerage licenses and all licenses
related to the Mortgage Line) held for the conduct of the Business (the
"Licenses");
(vi) all rights to the "HomeSpace" name (subject to Section
7(b)(ii) below) and related goodwill;
(vii) as used in the Business, all (A) patents, patent
applications, patent disclosures and all related continuation,
continuation-in-part, divisional, reissue, reexamination, utility
model, certificate of invention and design patents, applications,
registrations and applications for registration, (B) registered or
unregistered trademarks, service marks, trade dress, logos, trade
names, brand names, corporate names, registration or applications for
registration thereof, (C) copyrights, copyright registrations or
applications for registration thereof, (D) mask works or registration
or applications for registration thereof, (E) computer software, data
or documentation (including applications and operating systems software
and all intellectual property rights required to operate such
applications and software (other than off-the-shelf software listed on
Schedule 1(d)), (F) licenses or franchises from nongovernmental third
Persons, (G) trade secrets or confidential information, know-how,
technical drawings, research and development information, copyrightable
works, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer lists and
information, (H) the website, URLs, code and other rights relating
specifically to the website located at www.homespace.com, (I) the
goodwill of the Business included in connection with any of the
foregoing, (J) other proprietary rights relating to any of the
foregoing (including remedies against infringements thereof and rights
of protection of interest therein under the Laws of all jurisdictions)
and (K) copies and tangible embodiments of any of the foregoing (the
"Intellectual Property");
(viii) all records, invoices and other documents and
information necessary to the ownership of the Assets and operation of
the Business, including all purchase orders, invoices, referrals and
contracts (the "Books and Records") subject to Section 7(b)(i);
(ix) all telephone numbers, facsimile numbers and post office
boxes now in use, other than those in use in Seller's Pasadena,
California location that are not currently used by customers of the
Business; and
(x) all other tangible and intangible assets (other than the
Retained Assets) relating to or used in the Business, including the
assets set forth on Schedule 1(e).
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"Assumed Liabilities" means the following Liabilities of Seller only
and no other Liabilities whatsoever:
(i) liabilities arising on or after the Closing Date under the
Referral Contracts, the Affinity Contracts and the Home
Services Contracts;
(ii) accrued expenses relating to the Assets up to $105,000;
and
(iii) the $200,000 Costco notes payable (with respect to which
$200,000 of principal and approximately $28,000 of accrued
interest is owed as of the date hereof).
"Assumption Notice" has the meaning set forth in Section 11(e)(ii).
"Bankruptcy Proceeding" means, with respect to any of the HomeSpace
Companies, (i) the commencement of a voluntary case under the federal bankruptcy
laws, (ii) the filing of a petition seeking to take advantage of any other laws
relating to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts, (iii) consenting to any petition filed against it in an involuntary case
under such bankruptcy laws or other laws, (iv) the appointment of, or the taking
of possession by, a receiver, custodian, trustee, or liquidator of itself or of
a substantial part of its property, (v) the making of a general assignment for
the benefit of creditors, or (vi) the taking of any corporate action for the
purpose of authorizing any of the foregoing.
"Basket Amount" has the meaning set forth in Section 11(d).
"Books and Records" has the meaning set forth in the definition of
Assets.
"Business Combination" means (1) any merger, consolidation or similar
transaction in which Seller is a party or that directly or indirectly relates to
Seller, the Business or any interest therein, or (2) any direct or indirect sale
or disposition of any equity interest in Seller or a disposition of a material
portion of the Assets.
"Closing" means the consummation of the transactions contemplated by
this Agreement.
"Closing Balance Sheet" has the meaning set forth in Section 2(b)(i).
"Closing Date" means August 1, 2000 or such later date on which all the
conditions of Closing herein are satisfied and that the Parties agree as being
the date on which the Closing is to take place.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended and rules and regulations promulgated thereunder.
"Code" means the Internal Revenue Code of 1986, as amended, and rules
and regulations promulgated thereunder.
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"Commission" means the Securities and Exchange Commission.
"Commission Filings" has the meaning set forth in Section 6(e).
"Covered Action" has the meaning set forth in Section 11(e)(i).
"Default" means an event of default, as defined in any contract or
other agreement or instrument, or any event which, with the passage of time or
the giving of notice or both, would constitute an event of default or other
breach under such document or instrument.
"Dispute" has the meaning set forth in Section 2(b)(ii).
"Dispute Notice" has the meaning set forth in Section 2(b)(ii).
"Dispute Period" has the meaning set forth in Section 2(b)(ii).
"Employment Agreements" means agreements, understandings or contracts
with any Person, whether written or oral, to which Seller is a party relating to
employment, non-competition, management, agency or consulting, severance
including with respect to the payment of bonuses or incentives.
"Encumbrances" means all claims, mortgages, pledges, liens,
encumbrances, security interests and adverse interests of every nature
whatsoever.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means a corporation that is or was a member of a
controlled group of corporations with Seller within the meaning of section
4001(a) or (b) of ERISA or section 414(b) of the Code, a trade or business
(including a sole proprietorship, partnership, trust, estate, limited liability
company or corporation) that is under common control with Seller within the
meaning of section 414(m) of the Code, or a trade or business which, together
with Seller, is treated as a single employer under section 414 of the Code.
"Escrow Agreement" means the Escrow Agreement to be entered into by and
among the Parties hereto and First Union National Bank, as escrow agent, in
substantially the form attached hereto as Exhibit A.
"Escrow Cash" has the meaning set forth in Section 2(a)(i)(C).
"Escrow Shares" has the meaning set forth in Section 2(a)(i)(D).
"Financial Statements" means (i) the audited balance sheet and
statements of operations, stockholders' equity (deficit) and cash flows of
AmeriNet Financial Systems, Inc. as of and for the fiscal years ended March 31,
1998 and 1999, (ii) the unaudited balance sheet and statements of operations,
stockholders' equity (deficit) and cash flows of Seller as of and for the fiscal
year ended March 31, 2000 and (iii) the unaudited balance sheet and statements
of operations of
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Seller as of and for the two-month period ended May 31, 2000 (the "Interim
Financial Statements"), all of which are attached hereto as Schedule 1(f). The
unaudited Financial Statements do not contain footnotes or year-end adjustments.
"GAAP" means Generally Accepted Accounting Principles applied on a
basis consistent with the preparation of the Financial Statements.
"Generally Accepted Accounting Principles" has the meaning ascribed to
it from time to time by the American Institute of Certified Public Accountants.
"Governmental Body" means any federal, state, provincial, municipal or
other governmental department, commission, board, bureau, authority, court,
agency or instrumentality, domestic or foreign.
"Home Services Contracts" has the meaning set forth in the definition
of "Assets".
"HomeSpace Companies" means Seller, HomeSpace Delaware, Inc., a
Delaware corporation, and HomeSpace, Inc., a Delaware corporation.
"Indebtedness" means as to any Person at any time: (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, notes, debentures, or other similar instruments, (c) all obligations
of such Person to pay the deferred purchase price of property or services,
except trade accounts payable of such person arising in the ordinary course of
business that are not past due by more than ninety (90) days, (d) all capital
lease obligations of such Person, (e) all Indebtedness or other obligations of
others guaranteed by such Person, (f) all obligations secured by any Encumbrance
on property owned or acquired by such Person, and (g) all reimbursement
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, bankers' acceptances, surety or other bonds and similar
instruments.
"Indemnified Party" has the meaning set forth in Section 11(e)(i).
"Indemnifying Party" has the meaning set forth in Section 11(e)(i).
"Intellectual Property" has the meaning set forth in the definition of
Assets.
"Interim Balance Sheet" means the unaudited balance sheet of Seller
dated May 31, 2000 contained in the Financial Statements.
"Interim Financial Statements" has the meaning set forth in the
definition of Financial Statements.
"Knowledge" means actual knowledge or knowledge that any Person
reasonably should have by reason of his or her position. The Knowledge of Seller
shall include the Knowledge of all senior executives of Seller at the level of
Senior Vice President and above.
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"Law" or "Laws" means any federal, state, local or foreign laws,
ordinance, rules, regulations or Order.
"LendingTree Common Stock" means the common stock, $.01 par value, to
be issued by Purchaser pursuant to this Agreement.
"Liability" or "Liabilities" means any liability (whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued or
liquidated or unliquidated), including Indebtedness and liability for Taxes.
"Licenses" has the meaning set forth in the definition of "Assets".
"Loss" or "Losses" means any loss, claim, demand, damage, penalty,
fine, cost, settlement payment, Liability, Tax, Encumbrance, diminution of
value, expense, fee, court costs or attorneys' fees and expenses.
"Material Adverse Effect" means a materially adverse effect on the
Business or Assets, taken as a whole, or an effect which could reasonably
foreseeably impair the ability of Seller to perform any material obligation
under this Agreement.
"Order" means any order, writ, injunction, decree, judgment, award,
determination, request for information, direction or demand issued, promulgated,
approved, entered or delivered by any Governmental Body.
"Person" means any natural person, corporation, limited liability
company, partnership, unincorporated association, firm, trust or other entity.
"Purchase Price" has the meaning set forth in Section 2(a)(i).
"Purchase Price Adjustment" has the meaning set forth in Section
2(a)(ii).
"Qualified Holders" has the meaning set forth in Section 8(a).
"Receivables" has the meaning set forth in the definition of Assets.
"Referral Contracts" has the meaning set forth in the definition of
"Assets".
"Registrable Shares" has the meaning set forth in Section 8(a).
"Related Party" has the meaning set forth in Section 5(l).
"Retained Assets" means those assets of Seller identified below which
shall be retained by Seller and shall not be a part of the Assets purchased by
Purchaser:
(i) all cash and deposits;
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(ii) all real estate broker and mortgage broker licenses;
(iii) all telecommunications and computer equipment subject to
any lease obligations;
(iv) all assets relating to the Mortgage Line;
(v) all off-the-shelf software listed on Schedule 1(d); and
(vi) all other assets not related to the Business (including,
but not limited to, tax refunds, insurance policies, binders, claims,
trust accounts, prepaid expenses, mortgage loans receivable and other
employee loans receivable, financial statements, corporate
organizational documents, correspondence relating to corporate and
shareholders affairs, all rights and interests relating to the
Retained Assets or any liabilities other than Assumed Liabilities,
including claims, causes of action and rights of recovery or set-off,
trust fund related to the HomeSpace, Inc. 401(k) savings plan, and all
of Seller's rights under this Agreement).
"Securities Act" means the Securities Act of 1933, as amended, and
rules and regulations promulgated thereunder.
"Seller Cash Payment" has the meaning set forth in Section 2(a)(i)(B).
"Service Fees" has the meaning set forth in Section 7(b)(v).
"Stock Consideration" has the meaning set forth in Section 2(a)(i)(E).
"Subsidiary" means any Person, at least a majority of the voting stock
or other voting or management power of which is owned, directly or indirectly,
by another Person, or which is otherwise directly or indirectly controlled by
such other Person.
"Tangible Assets" means the assets listed on Schedule 1(e).
"Tax Returns" means all returns, reports or claims for refunds with
respect to Taxes.
"Taxes" means all types of taxes of any kind, including income,
franchise, gross receipt, transfer, value added, sales, use, wage and/or
employment or unemployment, excise, disability, real and personal property,
superfund, capital or other taxes, levies, imports, duties, license and
registration fees, assessments, and governmental charges of any nature
whatsoever relating to or in lieu of any of the foregoing, together with any
interest, penalties, fines, assessments and deficiencies related thereto.
"Trade Payables" has the meaning set forth in Section 2(c).
"Transfer" has the meaning set forth in Section 2(a)(iv).
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"Year 2000 Compliant" has the meaning set forth in Section 5(r).
2. Purchase and Sale of Assets. At the Closing, Seller agrees to sell
to Purchaser, and Purchaser agrees to purchase from Seller, the Assets, upon the
terms and subject to the conditions of this Agreement.
(a) Purchase Price.
(i) Payment of Purchase Price. The purchase price (the
"Purchase Price") to be paid by Purchaser for the purchase of the
Assets shall be payable as follows:
(A) On the Closing Date, Acquisition Sub shall assume
the Assumed Liabilities;
(B) On the Closing Date, Purchaser shall wire
transfer One Million Seven Hundred Fifty Thousand Dollars
($1,750,000) to an account designated by Seller (the "Seller
Cash Payment");
(C) On the Closing Date, Purchaser shall deliver to
First Union National Bank, as escrow agent, Four Million Two
Hundred Thousand Dollars ($4,200,000) (the "Escrow Cash") for
payment of the Trade Payables (other than obligations with
respect to employee severance) in accordance with the Escrow
Agreement;
(D) On the Closing Date, Purchaser shall deliver to
Escrow Agent a duly executed stock certificate of Purchaser
representing that number of shares of LendingTree Common Stock
with a value (calculated in the manner contemplated by
subsection (iii) below) of One Million Five Hundred Thousand
Dollars ($1,500,000) (the "Escrow Shares");
(E) On the Closing Date, Purchaser shall deliver to
Seller a duly executed stock certificate of Purchaser
representing that number of shares of LendingTree Common Stock
with a value (calculated in the manner contemplated by
subsection (iii) below) of Four Million Three Hundred Thousand
Dollars ($4,300,000) minus $156,146, the amount of the
estimated Purchase Price Adjustment (the "Stock
Consideration"); and
(F) The Parties agree that as soon as possible after
signing the Agreement, Purchaser shall wire transfer Two
Hundred Fifty Thousand Dollars ($250,000) to an account
designated by Seller (it being understood that (1) if the
Closing does not occur on or before August 2, 2000 as a result
of failure of the conditions in Sections 9(g), 9(k), 10(a) or
10(b), the funds advanced under this Section 2(a)(i)(F) shall
be forfeited by Purchaser, and (2) if the Closing does not
occur for any other reason, the funds advanced under this
Section 2(a)(i)(F) shall be reimbursed to Purchaser within two
business days after termination of the Agreement).
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(ii) Purchase Price Adjustment. At least one business day
prior to the Closing, Purchaser shall, based on the most recent
financial information furnished to it by Seller, estimate in good faith
the amount of the Purchase Price Adjustment (defined below) and shall
notify the Seller thereof. "Purchase Price Adjustment" means that
amount equal to (A) the book value of the Tangible Assets less (B) the
amount of the Assumed Liabilities, which shall be determined on a basis
consistent with the accounting principles used in the preparation of
the Financial Statements and the Interim Balance Sheet.
(iii) Value of LendingTree Common Stock. For purposes of this
Agreement, the LendingTree Common Stock shall be given the value equal
to the average closing price of the LendingTree Common Stock as
reported on the NASDAQ National Market for the ten trading days ending
two business days before the Closing.
(iv) Restricted Stock. The shares of LendingTree Common Stock
delivered pursuant to Section 2(a)(i)(C) and (D) have not been
registered under the Securities Act or any state securities laws and
may not be sold, transferred, assigned, pledged, hypothecated or
otherwise disposed of (collectively, "Transfer") unless (A) they are
registered with the Commission or (B) (1) an exemption under federal
and state securities laws is available, (2) Seller shall have delivered
an opinion of counsel reasonably acceptable to Purchaser to such effect
and (3) Purchaser shall have otherwise consented to such Transfer.
Without limiting the foregoing, (A) Seller will not dissolve or
liquidate or permit its board of directors to adopt resolutions
relating to such a dissolution or liquidation within one year after the
Closing Date and (B) Seller will not distribute the LendingTree Common
Stock to be received by it hereunder to its, or any of its Affiliates',
stockholders without Purchaser's written consent. Purchaser's right to
consent to any Transfer or distribution pursuant to this section (iv)
shall not be unreasonably withheld. Such consent shall be given within
three business days of delivery to Purchaser of the required opinion of
counsel. Purchaser may withhold its consent only if it determines in
good faith that such Transfer or distribution would violate applicable
federal or state securities laws. If any such consent is withheld,
Purchaser shall provide Seller in writing with the substantive analysis
supporting such determination to withhold consent. The certificates
representing such shares shall bear a legend to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD, ASSIGNED, PLEDGED TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION THEREFROM IN THE MANNER CONTEMPLATED BY
THE ASSET PURCHASE AGREEMENT DATED AS OF JULY 31, 2000 BY AND
AMONG LENDINGTREE, INC. AND THE OTHER PARTIES THERETO
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(b) Closing Balance Sheet and Final Purchase Price Adjustment.
(i) Closing Balance Sheet. Within 60 days after the Closing,
Purchaser shall prepare and deliver to Seller a balance sheet
reflecting the book value of the Tangible Assets and the amount of the
Assumed Liabilities (the "Closing Balance Sheet") as of the close of
business on the business day immediately preceding the Closing Date.
The Closing Balance Sheet shall be accompanied by a calculation of the
Purchase Price Adjustment.
(ii) Closing Balance Sheet Disputes.
(A) Seller shall have 15 days after receipt of the
Closing Balance Sheet from Purchaser (the "Dispute Period") to
dispute any of the elements of, or amounts reflected on, the
Closing Balance Sheet or in the calculation of the Purchase
Price Adjustment (a "Dispute"). In Seller's review of the
Closing Balance Sheet, Purchaser shall reasonably cooperate
with Seller to provide the relevant financial information used
in such determination. If Seller does not give written notice
to Purchaser of a Dispute within the Dispute Period (a
"Dispute Notice"), or Seller delivers written notice to
Purchaser of approval of the Closing Balance Sheet and
calculation of the Purchase Price Adjustment before the end of
the Dispute Period, the Closing Balance Sheet and the Purchase
Price Adjustment shall be deemed to have been accepted and
agreed to by Seller in the form in which it was delivered by
Purchaser, and shall be final and binding upon the Parties. If
Seller has a Dispute, Seller shall give Purchaser a Dispute
Notice within the Dispute Period setting forth in reasonable
detail the elements and amounts with which it disagrees.
Within 15 days after delivery of such Dispute Notice, the
Parties shall attempt to resolve such Dispute and agree in
writing upon the final content of the disputed Closing Balance
Sheet or calculation of the Purchase Price Adjustment.
(B) If Seller and Purchaser are unable to resolve any
Dispute within the thirty (30) day period after Purchaser's
receipt of a Dispute Notice, the Charlotte, North Carolina
office of the certified public accounting firm of Deloitte &
Touche, LLP (the "Arbitrating Accountant") shall be engaged as
arbitrator hereunder to settle such Dispute as soon as
practicable. In the event the Arbitrating Accountant is
unwilling or unable to serve as the Arbitrating Accountant,
the Parties shall select by mutual agreement another
nationally recognized certified public accounting firm which
is not rendering (and during the preceding two-year period has
not rendered) services to any of the Parties, to serve as the
Arbitrating Accountant. In connection with the resolution of
any Dispute, the Arbitrating Accountant shall have access to
all documents, records, work papers, facilities and personnel
necessary to perform its function as arbitrator. The
Arbitrating Accountant's award with respect to any Dispute
shall be final and binding upon the Parties (in the absence of
fraud or manifest error) and judgment may be entered on the
award. The fees and expenses of the Arbitrating Accountant
shall be allocated between Seller and Purchaser so that
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Seller's share of such fees and expenses shall be equal to the
product of (i) and (ii), where (i) is the aggregate amount of
such fees and expenses and where (ii) is a fraction, the
numerator of which is the amount in dispute that is ultimately
unsuccessfully disputed by Seller (as determined by the
Arbitrating Accountant), and the denominator of which is the
total amount in dispute. The Purchaser shall bear the balance
of the Arbitrating Accountants' fees and expenses. Upon the
resolution of all Disputes, the Closing Balance Sheet and/or
calculation of the Purchase Price Adjustment shall be revised
to reflect such resolution.
(iii) Adjustment to Stock Consideration. Promptly after final
resolution of the Closing Balance Sheet and calculation of the Purchase
Price Adjustment as provided in Section 2(b)(ii) above, Seller and
Purchaser shall make appropriate adjustments in the Stock Consideration
based on such final amounts. If the actual amount of the Purchase Price
Adjustment was greater than the estimated amount thereof (i.e.,
resulting in a greater reduction in the consideration deliverable
pursuant to Section 2(a) above), the Seller shall promptly transfer to
Purchaser that number of shares of Lending Tree Common Stock with a
value (calculated pursuant to subsection (a)(ii) above) equal to the
amount by which the final Purchase Price Adjustment amount exceeds the
estimated amount. If the actual amount of the Purchase Price Adjustment
was less than the estimated amount thereof, the Purchaser shall
promptly issue to Seller a stock certificate representing that number
of shares of LendingTree Common Stock with a value (calculated in the
manner contemplated by subsection (a)(ii) above) equal to the amount by
which the final Purchase Price Adjustment amount exceeds the estimated
amount.
(iv) Revenues Related to Certain Transactions in Process.
After the Closing Date, the revenues generated by real estate referral
transactions initiated by Seller prior to the Closing Date (as set
forth on Schedule 2(b)(iv)) shall be allocated to Seller, which shall
be entitled to receive all net revenues (gross revenues less consumer
rebates or incentive payments) related to the real estate referral
transactions initiated by Seller prior to the Closing Date.
(c) No Other Liabilities Assumed by Purchaser. Notwithstanding anything
contained in this Agreement to the contrary, Purchaser shall not assume or
become liable for any Liabilities of Seller or any of its Affiliates other than
the Assumed Liabilities, and Seller or the applicable Affiliates shall pay,
satisfy and perform all of such other Liabilities as and when due. Without
limiting the foregoing, Purchaser is not assuming any liabilities relating to:
(i) the real property leases for the facilities located at 6200 South Syracuse
Street and 5680 Greenwood Plaza Boulevard, Englewood, Colorado and 251 South
Lake Avenue, Pasadena, California, (ii) leases for telecommunications and
computer hardware, (iii) the Mortgage Line (including liabilities related to the
mortgage warehouse financing facility), (iv) any employment agreements or other
benefit programs or arrangements currently in place (including any liabilities
relating to the Seller's 401(k) plan), (v) WARN Act violations, employee
severance or any other amounts owed to Seller's employees (subject to Section
7(b)(vi) below), (vi) the Series D Preferred Notes payable, (vii) the Lehman
Brothers engagement letter, (viii) any accounts payable, (ix) all amounts owed
to any holders of securities of, or any officers or directors of, each of the
HomeSpace Companies, (x) Taxes that are owed by Seller or any of its Affiliates
or that otherwise relate to the conduct of the
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Business prior to the Closing Date, (xi) HomeSpace's expenses in connection with
the Acquisition (including those owed to its attorneys, accountants, investment
bankers and other financial advisors), (xii) any amounts owed in connection with
the claim made by Leon Stambler regarding a potential patent infringement,
(xiii) any amounts owed to Seller's creditors including, without limitation, the
amounts owed to creditors or other third parties listed on Schedule 2(c) (the
"Trade Payables"), (xiv) any amounts owed to Gary Stines, (xv) obligations owed
to Starwood Hotels & Resorts Worldwide, Inc. and Alaska Airlines, Inc. and (xvi)
any litigation, claims or disputes relating to any of the foregoing.
3. Allocation of Purchase Price. The Purchase Price shall be allocated
among the Assets as reasonably determined by Purchaser and set forth on a
schedule to be prepared and submitted by Purchaser to Seller within 60 days
after the date hereof. Purchaser and Seller agree that each will report the
federal, state and local income and other tax consequences of the transactions
contemplated by this Agreement in a manner consistent with such allocation and
that neither Purchaser nor Seller will take any position inconsistent with such
allocation unless otherwise required by applicable Law. If the Stock
Consideration is adjusted pursuant to Section 2(b)(iii), the allocation will be
proportionately adjusted to reflect such increase or decrease, as the case may
be.
4. The Closing. The Closing shall be completed and the Seller Cash
Payment received by 5:00 p.m. E.D.T. on Wednesday August 2, 2000. The Closing
shall be accomplished by exchange of signature pages on all documents required
to be delivered at the Closing followed by next-day delivery of two (2) original
signature pages for each such document.
5. Representations and Warranties of Seller . Seller hereby represents
and warrants as follows:
(a) Organization. Seller is a corporation duly organized and validly
existing and in good standing under the Laws of Florida. Seller has all
requisite power and authority to own or lease its properties and assets as now
owned or leased, to carry on the Business as and where now being conducted and
to enter into this Agreement and perform its obligations hereunder. The copies
of Seller's articles of incorporation and bylaws, as amended to date, which have
been delivered to Purchaser, are correct and complete and are in full force and
effect.
(b) Noncontravention; Enforceability. Except as set forth on Schedule
5(b), the execution, delivery and performance of this Agreement and all
instruments and documents to be delivered by Seller hereunder (i) are within the
power and authority of Seller, (ii) do not require the consent or approval of,
or filing, registration or qualification with, any Governmental Body or any
other Person other than as otherwise provided herein, (iii) will not conflict
with any of the terms, conditions or provisions of the articles of incorporation
or bylaws of any HomeSpace Company, (iv) will not violate any Laws of any
Governmental Body, (v) will not conflict with, result in the breach of, or
constitute a Default under any material indenture, mortgage, deed of trust,
lease, agreement, contract, license or other instrument relating to the
Business, the Assets or Assumed Liabilities to which any HomeSpace Company or
any of their respective properties are bound and (vi) will not result in the
creation or imposition of any Encumbrance upon any of the Assets, other than as
contemplated by this Agreement and the documents executed in
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connection with the transactions contemplated hereby. This Agreement and the
agreements and other instruments to be entered into a connection herewith have
been duly authorized, executed and delivered by Seller and constitute, or will
constitute, the legal, valid and binding obligations of Seller, enforceable in
accordance with their terms, except as (A) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar Laws which
affect the enforceability of creditors' rights generally, and (B) general
equitable principles and general standards of commercial reasonableness.
(c) Title to Assets. Seller has good, valid and marketable title to all
of the Assets and none of the Assets are subject to, and the consummation of the
transactions contemplated hereby (including the transfer of the Assets to
Purchaser) shall not create, any Encumbrance with respect to the Assets, except
as disclosed on Schedule 5(c) hereto. Except as disclosed on Schedule 5(c)
hereto, each lease or license of an Asset is a valid and subsisting obligation
enforceable in accordance with its terms and fully transferable to Purchaser at
Closing. No Affiliate, director, officer or employee of Seller nor any third
Person owns or has any rights in any Asset.
(d) No Litigation; Observance of Laws. Except as set forth on Schedule
5(d) hereto, there is no litigation, at law or in equity, or any proceeding
before any Governmental Body or any arbitration pending or, to the knowledge of
Seller, threatened against or relating to Seller and the Assets, or which seeks
to enjoin the consummation of, or questions the validity of, any of the
transactions contemplated hereby, and no Order of any Governmental Body or
arbitrator has been issued against or binds the Seller which has, or could have,
a Material Adverse Effect. Seller is not in violation of or Default with respect
to any Order of any arbitrator or Governmental Body and, to the Knowledge of
Seller, there is no basis for the declaration of any such violation or Default.
Seller has, to its Knowledge, conducted the Business so that it is in compliance
with all Laws, except where the failure to so comply could not be reasonably
expected to have a Material Adverse Effect.
(e) Taxes and Tax Returns. There are no Encumbrances for Taxes upon any
of the Assets of Seller (except for current Taxes not yet due) and Seller has
complied with all Tax Laws except where the failure to comply would not have a
Material Adverse Effect.
(f) Financial Statements. Seller has delivered to Purchaser correct and
complete copies of the Financial Statements. The Financial Statements present
fairly, in all material respects, the financial condition of Seller as of the
dates thereof and its results of operations, changes in stockholders' equity and
cash flows for the periods indicated, in accordance with GAAP (except that the
Interim Financial Statements and unaudited Financial Statements as of March 31,
2000 omit footnotes and are subject to normal year-end adjustments that do not
vary significantly in nature or amount from prior year-end adjustments).
(g) Conduct of the Business. Except as set forth on Schedule 5(g),
since June 30, 2000:
(i) Seller has not incurred any Indebtedness or other
Liabilities in excess of $25,000 (other than trade payables incurred in
the ordinary course of business);
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(ii) Seller has not acquired or sold any material amount of
assets or created or permitted to exist any Encumbrances on its assets
except in the ordinary course of business;
(iii) Seller has not declared any dividends or made any
distributions to its stockholders; and
(iv) There has not been any change in Seller's business
relationships with respect to the Referral Contracts, the Affinity
Contracts or the Prism Contract that would be reasonably expected to
have a Material Adverse Effect.
(h) Accounts Receivable. All Receivables represent valid obligations
arising from sales actually made or services actually performed in the ordinary
course of Business and are collectible within 90 days after the Closing Date.
(i) No Default. Except as set forth on Schedule 5(i), there exists no
event or condition which constitutes, or which as a consequence of the execution
and performance of this Agreement, could constitute a Default or event of
termination under or result in the acceleration of or the creation in any Person
the right to accelerate, modify or cancel any material mortgage, indenture,
lease, contract, agreement, instrument, judgment, decree, or Order to which
Seller is a party or by which it or any of its assets are bound and which relate
to the Business or the Assets.
(j) No Right of Action. The execution of this Agreement and the other
agreements contemplated hereby and the completion of the transactions
contemplated hereby and thereby, shall not cause Purchaser or any of its
Subsidiaries or Affiliates to be liable for damages to any other Person or give
such Person any equitable right against any of them or any of their respective
assets by reason of any agreement or arrangement to which Seller is a party
except for those agreements which are Assumed Liabilities.
(k) Compliance with Employment Laws. Seller and each of its ERISA
Affiliates has complied with all Laws related to employees and employee benefits
(including COBRA and the Worker Adjustment and Restraining Notification Act),
except where the failure to comply would not have a Material Adverse Effect or
would not result in the imposition of any Encumbrance on the Assets.
(l) Dealings with Affiliates. No officer, director or shareholder of
Seller, or any Affiliate of any such officer, director or shareholder (each, a
"Related Party"), (i) has any interest in any of the Assets or (ii) has any
contractual or other claim, express or implied, of any kind whatsoever against
Seller that relates to the Business or the Assets.
(m) Agreements. Schedule 5(m) hereto sets forth a list of all
agreements, contracts or commitments related to the conduct of the Business.
True, correct and complete copies of all such contracts have been delivered to
Purchaser. Except as set forth on Schedule 5(i) hereto, Seller is not in default
under any such agreement, contract or commitment or under any other obligation
that could have a Material Adverse Effect.
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(n) Severance Obligations. Schedule 7(b)(vi) hereto sets forth a list
of all employees of Seller who may have any claim or entitlement to severance
benefits if their employment with Seller or any successor to the Business or
Assets is terminated.
(o) Intellectual Property.
(i) Schedule 5(o) identifies (A) each patent, copyright or
trademark registration which has been issued to or is owned by Seller
or any employee of Seller with respect to any Intellectual Property
used in, relating to or arising out of the Business; (B) each pending
patent, copyright or trademark application for registration which
Seller has made or which Seller or any employee of Seller owns with
respect to any Intellectual Property used in, relating to or arising
out of the Business; (C) with respect to each such patent, copyright or
trademark registration or application, the jurisdiction or
jurisdictions where such filings have been made; (D) each domain name,
website or URL used or relating to the Business or Assets; and (E) each
license or other agreement pursuant to which Seller has granted any
rights to, or has been granted any rights by, a third Person with
respect to any such Intellectual Property. Seller has delivered to
Purchaser correct and complete copies of all such licenses and
agreements and has made available to Purchaser correct and complete
copies of all other written documentation evidencing ownership of, and
any claims or disputes relating to, each such item, as well as all
patents, copyright and trademark registrations and applications.
(ii) Seller owns or has the right to use all Intellectual
Property. Upon the Closing, each such item of Intellectual Property
owned by Seller immediately prior to the Closing will be owned by
Purchaser immediately following the Closing and each such item of
Intellectual Property otherwise available for use by Seller immediately
prior to the Closing will be available for use by Purchaser on
identical terms and conditions, immediately following the Closing.
Seller has taken reasonable measures to protect the proprietary nature
of each item of Intellectual Property, and to maintain in confidence
all trade secrets and confidential information that it owns or uses in
connection with the Business. No other Person has any rights to any of
the Intellectual Property (except pursuant to agreements or licenses
specified in Schedule 5(o)), and, to the Knowledge of Seller, no other
Person is infringing, violating or misappropriating any of the
Intellectual Property and Seller has not infringed or violated any
intellectual property rights of any other Person or received notice of
such. Seller has the right and authority to cause Douglas Grey and
Richard Ward to assign to Purchaser the patent applications owned by
them described in Schedule 5(o).
(p) Audits and Investigations. Seller has delivered to Purchaser all
responses to auditors' inquiry letters received in the past three years and all
letters to Seller from the auditors during such period. Schedule 5(p) hereto
identifies all correspondence received from a Governmental Body in the past
three years relating to regulatory compliance reviews, audits or investigations.
(q) Product and Service Warranties. Seller has not made any warranties
with respect to assets sold by it or with respect to services provided to third
parties in connection with the
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Business other than those warranties expressly made in the literature
accompanying such products or services, copies of which are attached hereto as
Schedule 5(q).
(r) Year 2000 Compliance. To Seller's knowledge, none of the computer
software, computer firmware, computer hardware or other similar or related items
of automated, computerized or software systems that are Assets used or relied on
by Seller in the conduct of the Business will materially malfunction, cease to
function, generate incorrect data or produce incorrect results when processing,
providing or receiving date-related data in connection with any date in the
twentieth and twenty-first centuries ("Year 2000 Compliant").
(s) Securities Law Matters.
(i) The LendingTree Common Stock to be acquired by Seller
pursuant to this Agreement is being acquired for Seller's own account
and not with a view to, or intention of, distribution thereof in
violation of the Securities Act or any applicable state securities
laws;
(ii) Seller is an "accredited investor" as such term is
defined in Rule 501(a) promulgated under the Securities Act, is
sophisticated in financial matters and is able to evaluate the risks
and benefits of the investment in the LendingTree Common Stock;
(iii) Seller is aware that transfer of the LendingTree Common
Stock may not be possible because the shares of LendingTree Common
Stock issued pursuant to this Agreement have not been registered under
the Securities Act or any applicable state securities laws and,
therefore, cannot be sold unless subsequently registered under the
Securities Act and such state securities laws or an exemption from such
registration is available;
(iv) Seller has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
LendingTree Common Stock and has had full access to such other
information concerning the Purchaser as it has requested (including
copies of Purchaser's Commission Filings); and
(v) Seller does not plan on distributing the shares of
LendingTree Common Stock received by it hereunder to its shareholders
in violation of the Securities Act or any applicable state securities
laws.
(t) Referral Contracts. Schedule 1(a) hereto sets forth a list of all
Referral Contracts. There are no obligations to pay any termination fees under
Section 12 (or similar provision) of any of the Referral Contracts.
(u) Keycorp Leasing. The maximum amount owing to Keycorp Leasing under
any lease or other agreement between Seller and Keycorp Leasing, including any
outstanding balance, interest, fees, penalties or acceleration clauses, is
$336,000 (the "Keycorp Obligation"). The Keycorp Obligation is personally
guaranteed by Eric Cunliffe, W.P. Yeager and John Pembroke.
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6. Representations and Warranties of Purchaser and Acquisition Sub.
Purchaser and Acquisition Sub jointly and severally represent and warrant to
Seller as follows:
(a) Organization. Purchaser is a corporation duly organized and validly
existing and in good standing under the Laws of Delaware and has all requisite
power and authority to enter into this Agreement and perform its obligations
hereunder. Acquisition Sub is a corporation duly organized and validly existing
and in good standing under the Laws of Delaware and has all requisite power and
authority to enter into this Agreement and perform its obligations hereunder.
(b) Noncontravention; Enforceability. The execution, delivery and
performance of this Agreement and all instruments and documents to be delivered
by Purchaser and Acquisition Sub hereunder (i) are within the power and
authority of each of Purchaser and Acquisition Sub, (ii) do not require the
prior consent or approval of or filing with any Governmental Body, or any other
Person other than as otherwise specifically provided herein, (iii) will not
conflict with any of the terms, conditions or provisions of the certificates of
incorporation or bylaws of Purchaser or Acquisition Sub, (iv) will not violate
any Laws of any Governmental Body and (v) will not conflict with, result in the
breach of, or constitute a Default under any material indenture, mortgage, deed
of trust, lease, agreement, contract, license or other instrument to which
Purchaser or Acquisition Sub is bound. This Agreement, and the agreements and
other instruments to be entered into in connection herewith have been duly
authorized, executed and delivered by Purchaser and Acquisition Sub and
constitute, or will constitute, the legal, valid and binding obligations of each
of Purchaser and Acquisition Sub; enforceable against each in accordance with
their respective terms, except as (A) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar Laws which
affect the enforceability of creditors' rights generally, and (B) general
equitable principles and general standards of commercial reasonableness.
(c) No Litigation. There is no litigation, at law or in equity, or any
proceeding before any Governmental Body or any arbitration pending or, to the
knowledge of Purchaser, threatened against or relating to Purchaser or
Acquisition Sub, or which seeks to enjoin the consummation of, or questions the
validity of, any of the transactions contemplated hereby, and no Order of any
Governmental Body or arbitrator has been issued against or binds the Purchaser
which has, or could have, a Material Adverse Effect.
(d) LendingTree Common Stock. The shares of LendingTree Common Stock to
be issued pursuant to this Agreement, when issued in accordance with the terms
hereof, will be validly issued, fully paid and nonassessable.
(e) Commission Filings. The Purchaser has heretofore made available to
Seller true and complete copies of (i) its Registration Statement on Form S-1
(Registration No. 333-91839), and (ii) its Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2000 (together, the "Commission Filings"). The
Commission Filings did not (as of their respective filing dates) and, taken as a
whole (giving effect to updated information in the Form 10-Q), do not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances
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under which they were made, not misleading. There have been no material changes
in the business of the Purchaser that have not been disclosed in Commission
Filings.
7. Covenants of the Parties.
(a) Pre-Closing Covenants. The Parties agree as follows with respect to
the period from the date of execution of this Agreement to the Closing Date:
(i) General. Each of the Parties will use its best efforts to
take all action and to do all things necessary, proper or advisable in
order to consummate and make effective the transactions contemplated by
this Agreement.
(ii) Operation of Business. Seller shall not take any action,
or enter into any transaction, outside the ordinary course of the
business with respect to the Assets; without limiting the foregoing,
Seller shall (A) continue processing real estate applications, (B)
maintain good relationships with the parties to the Affinity Contracts,
(C) protect the Assets from any diminution in value, (D) assist in the
retention of key employees identified by Purchaser and (E) not incur
any (1) secured indebtedness or (2) other indebtedness over $25,000
without the written consent of Purchaser.
(iii) Notice of Developments. Each Party will give prompt
notice to the others of any material adverse development causing a
breach of any of its representations and warranties in this Agreement.
(iv) Access. Purchaser, through its employees, advisors and
other representatives, shall have access to the properties, personnel,
books, records and documents of Seller to the extent reasonably related
to the transactions contemplated hereby.
(v) Exclusivity. Neither Seller nor any of its Affiliates,
employees, representatives or agents will take, directly or indirectly,
any action with respect to the Business to assist, solicit, negotiate,
encourage, accept or otherwise pursue any offer or inquiry from any
Person to engage in a Business Combination other than the transactions
contemplated hereby. If, prior to the Closing, Seller receives any
offer or proposal relating to a Business Combination, it will
immediately notify Purchaser of all or the material terms thereof. If
Seller or any of its Affiliates breaches the foregoing, Purchaser shall
be entitled to be reimbursed for all of its out-of-pocket fees and
expenses in connection with its pursuit of the transaction contemplated
hereby in addition to any amounts due Purchaser pursuant to Section
13(d).
(vi) Notice of Termination. Seller shall terminate all
employees of Seller that Purchaser is hiring as of the Closing Date by
written notice effective immediately prior to Closing.
(b) Closing and Post-Closing Covenants. The Parties agree as follows
with respect to the Closing and the period thereafter:
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(i) General. On the Closing Date, Seller shall deliver to
Purchaser all original Books and Records, agreements and documents
relating to the Assets. Purchaser agrees to provide Seller reasonable
access for legitimate business purposes to the original Books and
Records for a period of five years. Notwithstanding the foregoing,
Seller may retain its Tax Returns and all corporate minute and stock
books. Seller shall provide Purchaser with such access as it may
reasonably request and shall otherwise use its reasonable best efforts
to cooperate with Purchaser in connection with the preparation of any
financial statements related to the Business that are required to be
filed with the Commission.
(ii) Change of Seller's Name. Following the Closing, Seller,
HomeSpace, Inc. and HomeSpace Delaware, Inc. will take all corporate
action necessary to change their names to other names that do not
include "HomeSpace" or any variation thereof. Seller will retain the
name "HomeSpace Services, Inc." for the sole purpose of closing
mortgage loan transactions for a period of 180 days after the Closing
(or such shorter period of time by which all such pending mortgage loan
transactions shall have been closed), after which time Seller will
change the name of this corporation to a name that does not include
"HomeSpace" or any variation thereof. Other than as provided in the
preceding sentence, the Seller will not use the name "HomeSpace
Services, Inc." for any other purpose whatsoever after Closing.
(iii) Tax Cooperation. After Closing, Purchaser and Seller
shall cooperate and exchange information relating to the Assets as is
necessary in (A) filing all Tax Returns, (B) determining any Tax
liability or a right to refund of Taxes, (C) conducting or defending
any audit or other proceeding in respect of Taxes, or (D) effecting the
terms of this Agreement.
(iv) Transition. Neither Seller nor any of its Affiliates will
take any action that is designed or intended to have the effect of
discouraging any customer, supplier or party to a Referral Contract or
an Affinity Contract from continuing to have a business relationship
with Purchaser after the closing. Seller will refer all customer
inquiries relating to the Business to Purchaser from and after the
Closing.
(v) Interim Service. From time to time during the period from
Closing until August 31, 2000 and within 2 days after a request
therefor is made (which request shall be made in consultation with
Purchaser and shall indicate the purposes for which the advance shall
be used), Purchaser shall pay to Seller cash advances for Seller's
direct operating, staffing and out-of-pocket expenses in connection
with Purchaser's having access to the Seller's South Triad, Englewood,
Colorado equipment, employees (which shall include approximately 44
transition employees) and facilities from July 31, 2000 through August
31, 2000 and cash advances aggregating $120,000 for Seller's direct
operating and out-of-pocket expenses in connection with Purchaser's
having access to the Seller's Pasadena, California equipment and
facilities from July 31, 2000 through August 31, 2000 ("Service Fees").
Purchaser shall not be obligated to fund the full amounts described in
the preceding sentence on the Closing Date and instead shall advance
Seller such amounts a reasonable time (but at least two business days)
in advance of the time at
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which it will actually incur such operating, staffing and out-of-pocket
expenses. On the Closing Date, Purchaser shall advance Service Fees for
Seller's real estate leases, operating and equipment leases, payroll
expenses and other expenses to be incurred on or before August 11, 2000
and shall subsequently advance amounts in accordance with this
subsection 7(b)(v). Seller shall maintain such facilities, staffing and
equipment during such time so that the Purchaser can effectively
continue to both operate and transition the Business to other locations
during such period. Purchaser shall not be directly responsible for any
amounts owed with respect to any real or personal property leases. The
actual amount of the Service Fees incurred by Seller directly relating
to Purchaser's access will be reconciled with the advance by Purchaser
paying any additional amounts owing or Seller refunding any overpayment
of Service Fees on or before September 30, 2000. The Parties shall
cooperate in good faith with respect to the transitioning of those of
Seller's employees that Purchaser desires to hire on a full-time basis
(it being understood that Seller shall terminate any such employee
prior to Purchaser's hiring such employee).
(vi) Employee Severance; Other Employee Matters. Purchaser
shall have no obligation to employ any current or former employees of
Seller and Purchaser shall have no obligations or liabilities to such
employees, whether arising out of the termination by Seller of the
employment of any such employees as a result of the transactions
contemplated hereby or otherwise, all of which shall be the
responsibility of Seller. Notwithstanding the foregoing, if Purchaser
employs or makes an offer that is accepted to employ (directly or as a
consultant) any employee of Seller for a period exceeding 60 days,
Purchaser shall either (a) assume the severance obligation of Seller to
such employee reflected on Schedule 7(b)(vi), (b) reimburse Seller for
any payments actually made by Seller in accordance with such severance
obligation reflected on Schedule 7(b)(vi), (c) or obtain a waiver of
such rights from the employee for the benefit of Seller.
(vii) Transactions in Process. Purchase will use its
commercially reasonable efforts to process and close real estate and
mortgage transactions in process at the Closing to the same extent
processed by Seller.
(viii) Covenant Not to Compete. Seller acknowledges the
benefits received by it in connection with the sale of the Assets to
Purchaser pursuant to this Agreement. Seller acknowledges that it has
special knowledge, expertise, contacts and other information with
respect to the Business, and that Purchaser would not enter into this
Agreement without obtaining the agreements of Seller set forth in this
Section 7(b)(viii), which Seller acknowledges and agrees reflect
reasonable restrictions necessary and appropriate to protect the
interests of Purchaser and to ensure that Purchaser obtains all of the
benefits intended to be conveyed to Purchaser pursuant to this
Agreement, including the goodwill of the Business.
(A) Non-Competition. Seller agrees that, for two
years after the Closing, it will not, directly or indirectly,
have any ownership interest in, or otherwise engage in, the
Business (without regard to the form in which conducted).
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(B) No Interference With Employees. Seller agrees
that, for two years after the Closing, Seller will not,
directly or indirectly, solicit, request, induce, assist or
encourage any employee of Purchaser (including any former
employee of Seller hired by Purchaser) to terminate his or her
employment with Purchaser.
(C) Trade Secrets; Confidential Information. Seller
acknowledges that the Assets include highly sensitive, special
or unique information that is confidential or proprietary, and
agrees that, except as required by law or to the limited
extent necessary to resolve matters with its creditors and
only after consultation with Purchaser, it shall not use or
divulge, furnish or make accessible to anyone any knowledge or
information of a confidential or secret nature with respect to
the Business; provided, that Seller, shall give prompt notice
to Purchaser prior to any such disclosure required by Law to
permit Purchaser to contest such disclosure with the
applicable Governmental Body.
(D) Miscellaneous. If a court of competent
jurisdiction declares that any term or provision of this
Section 7(b)(viii) is invalid or unenforceable, the Parties
agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this
Agreement shall be enforceable as so modified.
(ix) Trade Payables. Until all creditor claims are satisfied,
Seller shall use the Escrow Cash only to pay the Trade Payables (other
than those relating to employee severance obligations).
(x) Further Assurances. At the Closing and from time to time
after the Closing, at the request of Purchaser and without further
consideration, Seller shall promptly execute and deliver to Purchaser
such certificates and other instruments of sale, conveyance, assignment
and transfer, and take such other action, as may reasonably be
requested by Purchaser more effectively to confirm any right obtained
by Purchaser hereunder and any obligation expressly assumed by
Purchaser hereunder and the ownership of or to put Purchaser in
possession of the Assets. To the extent that any consents, waivers or
approvals necessary to effectively transfer Seller's rights to
contracts or avoid a default thereunder are not obtained prior to the
Closing, Seller shall use its best efforts to (A) provide to Purchaser,
at the request of Purchaser, the benefits and burdens of any such
Asset, and hold the same in trust for Purchaser, (B) cooperate in any
reasonable and lawful arrangement, approved by Purchaser, designed to
provide such benefits and burdens to Purchaser and (C) enforce and
perform, at the request of Purchaser, for the account of Purchaser, any
rights or obligations of Seller arising from any such Asset against or
in respect of any third person including the right to elect to
terminate any contract, arrangement or agreement in accordance with the
terms thereof
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upon the advice of Purchaser. At the Closing and from time to time
after the Closing, at the request of Seller and without further
consideration, Purchaser shall promptly execute and deliver to Seller
such certificates, instruments and other documents, and take such other
action, as may reasonably be requested by Seller, to confirm or
complete any obligation of Purchaser hereunder or any agreement
executed in conjunction herewith.
(xi) Forwarding Mail. If, after the Closing, Seller receives
any checks, correspondence or other items relating to the Business and
Assets being purchased and sold hereunder, it shall promptly forward
such items to Purchasers at such location as it shall from time to time
specify.
(xii) Licenses. Seller shall retain its real estate broker
licenses and its mortgage broker licenses for the sole and limited
purpose of receiving revenue from such activities as provided under
this Agreement. Seller shall surrender all such licenses on the first
to occur of the payment of all revenue due under this Agreement or the
day that is 180 days from the Closing.
(xiii) Assignment of Patent Applications. Seller shall cause
Douglas Grey and Richard Ward to assign to Purchaser the patent
applications owned by them described in Schedule 5(o).
8. Registration Rights.
(a) Registration Statement. Purchaser shall prepare and file by March
31, 2001 (subject to subsection (c) below), and shall thereafter use its
reasonable best efforts to cause to be declared effective, a registration
statement providing for the registration under the Securities Act of the shares
of LendingTree Common Stock issued hereunder that are held by Purchaser and any
Person to whom the Purchaser shall have transferred such shares in accordance
with Section 2(a)(iv) of this Agreement (collectively, the "Qualified Holders")
to permit the public resale of such shares (the "Registrable Shares").
(b) Plan of Distribution; Period of Effectiveness. The plan of
distribution of the Registrable Shares that will be described in such
registration statement shall be reasonably agreed to by Seller and Purchaser but
shall not consist of an underwritten offering arranged by Purchaser. Purchaser
shall use its reasonable best efforts to keep such registration statement
current and effective until the earliest of (i) September 30, 2001 (plus any
period during which there shall have been a postponement pursuant to subsection
(c) below), (ii) such time as all of the Registrable Shares registered
thereunder shall have been sold or (iii) such time as all of the Registrable
Shares may be publicly resold by the Qualified Holders thereof without
registration under the Act and without a volume limitation or other pending
condition and the Qualified Holders shall have received an opinion from
Purchaser's counsel to that effect, after which earliest time Purchaser in its
discretion may withdraw such registration statement. Upon receiving such notice,
the Qualified Holders shall terminate and shall cause all third parties to
terminate any further offer or sale of Registrable Shares pursuant to such
registration statement.
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<PAGE> 25
(c) Postponement. Notwithstanding any provision contained herein to the
contrary, Purchaser shall be entitled to postpone such registration for a period
up to 90 days if the Purchaser delivers to Seller a notice stating that, in the
Purchaser's good faith judgment, the filing of such registration statement would
be materially detrimental to Purchaser.
(d) Procedures. Whenever Purchaser registers Registrable Shares
pursuant to this Section 8, Purchaser agrees that it shall do the following:
(i) Prepare for filing and file with the Commission a
registration statement and such amendments and supplements to the
registration statement and the prospectus used in connection therewith,
and such reports and other filings under the Securities Exchange Act of
1934, as amended, as may be necessary to keep said registration
statement effective and to comply with the provisions of the Securities
Act with respect to the sale of securities covered by such registration
statement until such time as it is permitted to withdraw such
registration statement;
(ii) Furnish to each Qualified Holder such copies of each
preliminary and final prospectus and such other documents as such
Qualified Holder may reasonably request to facilitate the public
offering of such Qualified Holder's Registrable Shares; and
(iii) Use its best efforts to register or qualify the
Registrable Shares under the securities or blue sky laws of such U.S.
jurisdictions as any Qualified Holder may reasonably request; provided,
however, that in connection therewith Purchaser shall not be required
to qualify as a foreign corporation or to execute a general consent to
service of process in any jurisdiction.
(e) Purchaser Indemnification. In connection with any registration
statement filed pursuant to this Section 8, Purchaser shall indemnify and hold
harmless any underwriter with respect to the Registrable Shares, each Qualified
Holder who has had Registrable Shares so registered, and each person controlling
such underwriter or Qualified Holder (collectively, "Indemnified Persons")
against all claims, losses, damages and liabilities, including legal and other
expenses incurred in investigating or defending the same (collectively,
"Losses"), arising out of any untrue statement or alleged untrue statement of a
material fact in such registration statement (or in the prospectus, any
preliminary prospectus or any supplement to the prospectus contained therein) or
any omission or alleged omission to state a material fact necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading, or arising out of any violation or alleged
violation by Purchaser of the Securities Act, any state securities or blue sky
laws or any rule or regulation thereunder in connection with such registration,
except insofar as the same may have been caused (i) by an untrue statement of a
material fact or a material omission in information furnished in writing to
Purchaser by such Qualified Holder or such underwriter, as the case may be,
expressly for use therein or (ii) by any Qualified Holder's or any such
underwriter's failure to send or give a purchaser of any such Registrable
Shares, at or prior to the written confirmation of the sale, a copy of the
applicable prospectus, as then amended or supplemented.
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<PAGE> 26
(f) Seller's Obligations. Notwithstanding anything to the contrary in
this Section 8, it shall be a condition to Purchaser's obligation to include
Registrable Shares of a Qualified Holder in or file a registration statement
pursuant to this Section 8 that such Qualified Holder (i) furnish Purchaser in
writing all information with respect to (A) such Qualified Holder and (B) the
intended methods of disposition or distribution of such Registrable Shares
(which methods shall be reasonably acceptable to Purchaser), (ii) agree in
writing to indemnify and hold harmless Purchaser, each director of Purchaser,
each officer of Purchaser signing such registration statement, any other person
having securities covered by such registration statement, each participating
underwriter and each person, if any, controlling (within the meaning of the
Securities Act) Purchaser, such underwriters, or such other person from and
against any and all loss, damage, liability and expense arising out of any
misstatement in or omission from information furnished to Purchaser by such
Qualified Holder pursuant to clause (i) of this subsection resulting in a
material misstatement in or material omission from such registration statement
and each preliminary prospectus, prospectus, post-effective amendment,
supplement or similar document forming a part thereof, (iii) agree in writing
that, in the event they are notified by Purchaser that in its judgment the
registration statement or prospectus should be amended or supplemented in order
to avoid any material misstatements or omissions, they will suspend any further
offers or sales of the Registrable Shares until such time as such amendment or
supplement has been prepared and become effective and (iv) agree in writing that
they will offer and sell, and cause any and all third parties acting on behalf
of any such Qualified Holder to offer and sell, Registrable Shares only in
accordance with the plan of distribution described in any such registration
statement or prospectus.
(g) Expenses. Purchaser agrees to bear and to pay all reasonable
expenses of registration of the Registrable Shares pursuant to this Section 8
other than any underwriting or selling discounts or commissions associated with
the offer and sale thereof and any legal fees and expenses of any counsel
engaged by Seller or the Qualified Holders.
(h) Other Securities. The provisions of this Section 8 shall apply
mutatis mutandi to any shares or other securities of Purchaser resulting from
any stock split or reverse split, stock dividend, reclassification of the
capital stock of which may be received by any of the Qualified Holders by virtue
of their ownership of the Registrable Shares.
9. Conditions to Obligation of Purchaser. The obligation of Purchaser
to consummate the transactions contemplated hereby is subject to satisfaction of
the following conditions:
(a) the representations and warranties of Seller set forth in
Section 5 shall be true and correct in all material respects at and as
of the Closing Date;
(b) Seller shall have performed and complied with all of its
covenants hereunder through the Closing;
(c) no action, suit, or proceeding shall be pending or
threatened before any Governmental Body wherein an unfavorable Order
would prevent consummation of any
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<PAGE> 27
of the transactions contemplated by this Agreement or materially or
adversely affect the right of Purchaser to own the Assets nor shall any
such Order be in effect;
(d) Seller shall have delivered to Purchaser a certificate,
dated as of the Closing Date, certifying as to the incumbency and
genuineness of the signature of each officer of Seller executing this
Agreement or any of the other documents contemplated hereby and
certifying as to the matters described in clauses (a) and (b) above;
(e) Seller shall have delivered to Purchaser a Bill of Sale,
Assignment and Assumption Agreement substantially in the form of
Exhibit B hereto and Assignments of Patents, Patent Applications,
Trademarks, Copyrights and URLs in substantially the form of Exhibit
C-1 to -5 hereto;
(f) Purchaser shall have received from counsel to Seller an
opinion substantially in the form of Exhibit D hereto, addressed to
Purchaser, and dated as of the Closing Date;
(g) The transactions contemplated hereby shall have been
approved by the requisite vote of the Board of Directors of Purchaser;
(h) The transactions contemplated hereby shall have been
approved by the requisite vote of the stockholders of HomeSpace, Inc.
at its meeting to be held on July 30, 2000 (or any adjournment
thereof);
(i) Seller shall have delivered to Purchaser a letter from
Ernst & Young, LLP agreeing to deliver the following items within three
(3) days after the Closing Date: (i) Seller's audited balance sheet and
statement of operations, stockholders' equity (deficit) and cash flows
as of and for the fiscal year ended March 31, 2000 which shall (A) not
differ in any material respect from the unaudited financial statements
for such period attached as Schedule 1(f) hereto and (B) be accompanied
by the report of Ernst & Young, LLP thereon which shall be unqualified
(other than for a "going-concern" type qualification to the extent
deemed necessary by Ernst & Young, LLP) and (ii) the written
confirmation of Ernst & Young, LLP that such firm will consent to the
use of its reports on Seller's financial statements in all filings by
Purchaser under the Securities Act and the Securities Exchange Act of
1934, as amended, in which the inclusion of such reports and consent is
required.
(j) Purchaser shall have executed an agreement with Prism
Mortgage Company;
(k) Purchaser shall have received executed consents to
assignment of the Affinity Contract with Delta Airlines, Inc.;
(l) Purchaser shall have received copies of all regulatory
audit letters referenced in Schedule 5(p) and such other regulatory due
diligence items as it has
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<PAGE> 28
specifically requested and Purchaser shall be reasonably satisfied with
its review of such letters and items;
(m) Purchaser shall have received notice from Costco Companies
Inc., that the Affinity Contract between Costco Companies, Inc. and
Seller has not been terminated and will be fully and properly assigned
to Purchaser at Closing;
(n) None of the HomeSpace Companies shall be the subject of a
Bankruptcy Proceeding; and
(o) The Escrow Agreement shall have been executed and
delivered by all the parties thereto.
10. Conditions to Obligation of Seller . The obligation of Seller to
consummate the transactions contemplated hereby is subject to satisfaction of
the following conditions:
(a) the representations and warranties of Purchaser and
Acquisition Sub set forth in Section 6 shall be true and correct in all
material respects at and as of the Closing Date;
(b) Purchaser and Acquisition Sub shall have performed and
complied with all covenants hereunder through the Closing;
(c) no action, suit, or proceeding shall be pending or
threatened before any Governmental Body wherein an unfavorable Order
would prevent consummation of any of the transactions contemplated by
this Agreement nor shall any such Order be in effect;
(d) Purchaser and Acquisition Sub shall have delivered to
Seller a certificate, dated as of the Closing Date certifying as to the
incumbency and genuineness of the signature of each officer of
Purchaser and Acquisition Sub executing this Agreement or any of the
other documents contemplated hereby and certifying as to the matters
described in clauses (a) and (b) above;
(e) Acquisition Sub shall have delivered to Seller a Bill of
Sale, Assignment and Assumption Agreement substantially in the form of
Exhibit B hereto;
(f) Seller shall have received from counsel to Purchaser
opinions substantially in the form of Exhibit E hereto, addressed to
Seller, and dated as of the Closing Date;
(g) the transactions contemplated hereby shall have been
approved by the requisite vote of the stockholders of HomeSpace, Inc.
at its meeting to be held on July 30, 2000 (or any adjournment
thereof); and
(h) The Escrow Agreement shall have been executed and
delivered by all the parties thereto.
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<PAGE> 29
11. Indemnification.
(a) Indemnification by Seller. After the Closing, subject to the terms
and conditions of this Section 11, Seller will indemnify and hold harmless
Purchaser and its Affiliates from all Losses, directly or indirectly, relating
to or arising from: (i) any breach of any representation or warranty made by
Seller in this Agreement or in any agreement entered into in connection
herewith; (ii) any breach of any covenant or agreement of Seller in this
Agreement or in any agreement Seller entered into in connection herewith; (iii)
any Liability of Seller and its Affiliates other than the Assumed Liabilities;
(iv) the other matters as to which Seller has agreed to indemnify Purchaser as
set forth in Section 14 and 16 hereof, and (v) any claim by a third party
against or with respect to the Assets, or any other claim by a third party
against Purchaser or its Affiliates arising out of any act or omission as
alleged act or omission of Seller, unless such claim is with respect to the
failure of Purchaser to duly pay or perform the Assumed Liabilities as and when
due.
(b) Indemnification by Purchaser. After the Closing, subject to the
terms and conditions of this Section 11, Purchaser will indemnify and hold
harmless Seller and its Affiliates from all Losses, directly or indirectly,
relating to or arising from: (i) any breach of any representation or warranty
made by Purchaser or Acquisition Sub in this Agreement or in any agreement
entered into in connection herewith; (ii) any breach of any covenant or
agreement of Purchaser or Acquisition Sub in this Agreement or in any agreement
entered into in connection herewith; and (iii) any failure to pay the Assumed
Liabilities as and when due.
(c) Survival and Time Limitations. All representations, warranties,
covenants and agreements of Purchaser, Seller and Acquisition Sub in this
Agreement and in any agreement entered into in connection herewith will survive
the Closing. If the Closing occurs, Seller will have no liability with respect
to any claim for any breach of any representation or warranty unless Purchaser
notifies Seller of such a claim on or before the date six months after the
Closing Date; provided, however, that any claim made with respect to Sections 2,
3, 7(b)(ii), (iii), (viii) and (ix), 8 and 17(c) may be made at any time without
any time limitation. If the Closing occurs, Purchaser will have no liability
with respect to any claim for any breach of any representation or warranty
unless Seller notifies Purchaser of such a claim on or before the date six
months after the Closing Date; provided, however, that any claim made with
respect to Sections 2, 3, 7(b)(iii), (vi) and (ix) and 8 may be made at any time
without any time limitation. If Purchaser or Seller, as applicable, provides
proper notice of a claim within the applicable time period set forth above,
liability for such claim shall continue until such claim is resolved.
(d) Limitations on Indemnification by Seller; Use of Escrow Shares to
Satisfy Claims. Seller will have no Liability with respect to the matters
described in Section 11(a)(i) until the total of all Losses with respect to such
matters exceeds $50,000 (the "Basket Amount"), at which point Seller will be
obligated to indemnify and hold harmless Purchaser and its Affiliates for all
Losses in excess of the Basket Amount. Any claims that Purchaser has under this
Section 11 shall be satisfied first by recourse to Escrow Shares in accordance
with the provisions of the Escrow Agreement and thereafter by recourse to
Seller. For purposes of any such reduction, the Escrow Shares shall be valued in
the manner contemplated by Section 2(a)(iii) above.
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<PAGE> 30
(e) Loss Indemnity Procedure.
(i) Upon the receipt by the Party claiming a right of
indemnification (the "Indemnified Party") of information relating to
the purported existence of facts or circumstances involving a third
party claim that could result in the incurrence of Loss (a "Covered
Action"), the Indemnified Party shall promptly, but no later than
fifteen (15) days after learning of such receipt, give written notice
thereof, with reasonable specificity of the facts as then known, to the
Party having the indemnification obligation (the "Indemnifying Party");
provided, that, failure to give timely notice shall not release the
Indemnifying Party of its obligations hereunder except, and only, to
the extent the Indemnifying Party suffers actual prejudice as a result
of such failure.
(ii) The Indemnifying Party shall have the right to assume the
defense of any such Covered Action involving a third party claim by
giving written notice (the "Assumption Notice") to the Indemnified
Party within ten (10) days after notice is given pursuant to Section
11(e)(i) above, which Assumption Notice shall state that (A) the
Indemnifying Party agrees that the claimant is entitled to
indemnification hereunder and that any resulting Loss is a Loss for
which it is liable and (B) the Indemnifying Party agrees to assume the
defense thereof in the name and on behalf of the Indemnified Party with
counsel reasonably satisfactory to the Indemnified Party, in either
event at the sole cost and expense of the Indemnifying Party; provided,
that (1) all such costs and expenses of the foregoing counsel, if not
paid by the Indemnifying Party and instead paid by the Indemnified
Party shall be Losses indemnifiable by the Indemnifying Party under
Section 11(a) or (b), as the case may be, (2) the Indemnified Party,
notwithstanding the timely delivery of an Assumption Notice, may
participate in such Covered Action through counsel separately selected
and paid for by the Indemnified Party, and (3) if no Assumption Notice
is timely given, or despite the giving of the Assumption Notice the
defendants in any Covered Action include both the Indemnified Party and
the Indemnifying Party, and the Indemnified Party shall have reasonably
concluded that there may be legal defenses available to it which are
different from or additional to those available to the Indemnifying
Party, or if there is a conflict of interest which would prevent
counsel for the Indemnifying Party from also representing the
Indemnified Party, the Indemnified Party shall have the right to select
separate counsel to conduct the defense of such action on its behalf,
and all such costs and expenses shall be paid by the Indemnifying Party
and, if paid by the Indemnified Party, shall be Losses under Section
11(a) or (b), as the case may be.
(iii) Where Seller is the Indemnifying Party, Seller shall not
consent to the entry of any judgment or enter into any settlement
without the written consent of Purchaser, which shall not be
unreasonably withheld or delayed.
(iv) A claim for indemnification not involving a third party
claim may be asserted by notice to the Indemnifying Party.
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<PAGE> 31
(f) Exclusive Remedy. After the Closing, this Section 11 will provide
the exclusive legal remedy for the breach of any representation, warranty,
covenant or agreement contained herein except for claims involving fraud or
willful misconduct. This Section 11 will not affect any remedy any Party may
have under this Agreement prior to the Closing or upon termination.
Additionally, Purchaser shall be entitled to pursue injunctive relief with
respect to breaches of Section 7(b)(viii) hereof.
12. Confidentiality; Public Announcements. Prior to the Closing, the
transactions contemplated herein may be disclosed by Purchaser and Seller to
their respective Boards of Directors, management personnel, legal, accounting
and financial advisors, lenders, employees and other representatives and third
parties on a "need-to-know" basis, but neither Purchaser, Seller nor any of
their representatives shall make any public disclosure of the proposed
transaction without the prior consent of the other Party; provided, that a party
may make such disclosure to others without the consent of the other party if the
disclosing party reasonably believes that such disclosure is required by
applicable law or the rules of the Nasdaq National Market and the disclosing
party promptly notifies the other party of such disclosure and the reason
therefor. Both before and after the Closing, the parties will use their
reasonable efforts to cooperate with each other in making any disclosures as to
the proposed acquisition and as to the form and substance of any press releases,
announcements and other disclosures.
13. Termination. This Agreement may be terminated as provided below:
(a) Purchaser and Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) Purchaser may terminate this Agreement by giving written
notice to Seller at any time prior to the Closing (i) if Seller has
breached any representation, warranty, covenant or agreement contained
in this Agreement in any material respect, provided Purchaser has
notified Seller of the breach and the breach has continued without cure
for a period of ten (10) days after the notice of breach, or (ii) if
the Closing shall not have occurred on or before 5:00 p.m. E.D.T. on
August 2, 2000, by reason of the failure of any condition precedent
under Section 9 (unless the failure results primarily from Purchaser or
Acquisition Sub breaching any representation, warranty, covenant or
agreement contained in this Agreement); and
(c) Seller may terminate this Agreement by giving written
notice to Purchaser at any time prior to the Closing (i) if Purchaser
has breached of any representation, warranty, covenant or agreement
contained in this Agreement in any material respect, provided Seller
has notified Purchaser of the breach and the breach has continued
without cure for a period of ten (10) days after the notice of breach,
or (ii) if the Closing shall not have occurred on or before 5:00 p.m.
E.D.T. on August 2, 2000, by reason of the failure of any condition
precedent under Section 10 (unless the failure results primarily from
Seller breaching any representation, warranty, covenant or agreement
contained in this Agreement).
(d) Seller shall pay to Purchaser a termination fee in the
amount of $300,000 if Purchaser has satisfied all conditions to Closing
to be performed by it and this Agreement is terminated by Seller in
accordance with Section 13(c)(ii) above and within 120 days from the
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<PAGE> 32
termination Seller consummates an Alternative Transaction. "Alternative
Transaction" means any sale of all, or substantially all, of the Assets
of, or a majority of voting securities of, or any merger,
consolidation, recapitalization or other business combination
involving, HomeSpace, HomeSpace Delaware, Inc. or HomeSpace, Inc.
14. Brokers. Except as provided for below, each of the Parties hereto
represents and warrants to the other that it has not employed or dealt with any
broker in connection with any transactions contemplated by this Agreement, and
shall save the other parties hereto harmless from any and all other claims at
any time hereafter made for brokers' or finders' fees or commissions, which
claim or claims arise out of any agreement alleged to have been made or action
taken by the other, concerning or relating to the subject matter of this
Agreement. Notwithstanding the foregoing, Seller acknowledges that it has
engaged Lehman Brothers in regards to this transaction and shall have full
responsibility for the payment of any fee due it and agrees to indemnify
Purchaser and its Affiliates and hold them harmless from and against any claims
by Lehman Brothers related to this Agreement and the transaction contemplated
hereby.
15. Notices.
(a) All notices and other communications hereunder shall be in writing
and shall be given by delivery in person, by facsimile, by overnight courier, or
by registered or certified mail, return receipt requested, to the Parties at
their respective addresses set forth below:
If to Purchaser: LendingTree, Inc.
11115 Rushmore Drive
Charlotte, North Carolina 28277
Attention: Kim Gorsuch-Bradbury
Robert J. Flemma, Jr.
Facsimile: (704) 540-2486
with a copy to: Kennedy Covington Lobdell & Hickman, L.L.P.
Bank of America Corporate Center
Suite 4200
100 North Tryon Street
Charlotte, North Carolina 28202-4006
Attention: Sean M. Jones
William J. Walsh
Facsimile: (704) 331-7598
If to Seller: HomeSpace Services, Inc.
c/o Global Retail Partners
2121 Avenue of the Stars
Suite 1630
Los Angeles, California 90049
Attention: Henry DeNero
Fax: (310) 785-5111
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<PAGE> 33
with a copy to: Latham & Watkins
650 Town Center Drive, Suite 2000
Costa Mesa, California 92626-1925
Attention: Cary Hyden
Facsimile: (714) 755-8290
Notice given by mail (registered or certified, return receipt
requested) shall be deemed given four business days after deposit with the
United States Postal Service; notice given by facsimile shall be deemed given
one business day after receipt of telecopied confirmation thereof; notice given
by overnight courier shall be deemed given one business day after delivery into
the custody and control of such overnight courier service for next day delivery;
and notice delivered in person shall be deemed given one business day after such
delivery.
(b) Any Party hereto may change the address to which any notice or
other communication shall be given by a notice to such effect complying with
Section 15(a).
16. Bulk Transfer Compliance. Inasmuch as Purchaser is to assume the
Assumed Liabilities and Seller has agreed to duly pay, perform and discharge all
Liabilities of Seller other than the Assumed Liabilities, Purchaser and Seller
hereby mutually agree to waive compliance with the provisions of Article 6 of
the Uniform Commercial Code, entitled "Uniform Commercial Code - Bulk
Transfers," in the jurisdictions applicable and to the extent applicable to the
transactions contemplated hereby. Seller covenants and agrees to indemnify and
save harmless Purchaser from and against any and all Losses arising out of
noncompliance with such bulk transfers laws except to the extent such Losses
arise solely out of Purchaser's failure to pay, perform and discharge the
Assumed Liabilities as and when due, in which case Purchaser agrees to indemnify
and save harmless Seller.
17. Miscellaneous.
(a) Rights Confined to Parties. Nothing expressed or implied herein is
intended or shall be construed to confer upon or give to any Person (including
any employee of Seller of its Affiliate), other than the Parties hereto, and
their respective successors and assigns as permitted hereunder, any right,
remedy or claim under or by reason of this Agreement and all the terms,
covenants, and agreements contained herein shall be for the sole and exclusive
benefit of the Parties hereto and their permitted successors and assigns.
(b) Entire Agreement. This Agreement, together with the Exhibits and
Schedules hereto, and the other agreements expressly contemplated hereby,
constitute the entire understanding among the Parties hereto with respect to the
subject matter hereof and thereof and supersede any and all prior agreements
between the Parties hereto with respect to the subject matter hereof and
thereof.
(c) Assignment. This Agreement is not assignable by any Party hereto
and any purported assignment shall be null and void and of no effect.
Notwithstanding the foregoing, Purchaser may (i) assign any or all of its rights
and interests hereunder to one or more of its Affiliates or to any Person who
succeeds to substantially all of Purchaser's assets and business
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<PAGE> 34
and (ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases Purchaser nonetheless shall remain
primarily responsible for the payment and performance of all of its obligations
hereunder).
(d) Expenses. Each Party will bear all expenses incurred by it and its
representatives in connection with the transactions contemplated hereby.
(e) Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall not affect the validity or
enforceability of any other provision in such jurisdiction or the validity or
enforceability of such provision in any other jurisdiction.
(f) Effect of Headings. The Article, Section, Subsection, Exhibit and
Schedule headings contained herein or therein are for convenience only and shall
not affect the construction hereof.
(g) Governing Law. This Agreement, and all the rights and obligations
of the Parties hereunder, shall be governed by and construed in accordance with
the laws of the State of California, without giving effect to any choice or
conflict of law provision that would cause the laws of any other jurisdiction to
be applied.
(h) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all of which
shall constitute the same instrument.
* * * * *
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 35
IN WITNESS WHEREOF, the Parties hereto have executed or caused this
Agreement to be executed by their respective officers or other representatives
thereunto duly authorized, as of the date first above written.
HOMESPACE SERVICES, INC.
By: /s/ Henry DeNero
-----------------------------------------
Name: Henry DeNero
Title: Chairman and Chief Executive Officer
LENDINGTREE, INC.
By: /s/ Douglas R. Lebda
-----------------------------------------
Name: Douglas R. Lebda
Title: CEO
HOMESPACE ACQUISITION COMPANY
By: /s/ Douglas R. Lebda
-----------------------------------------
Name: Douglas R. Lebda
Title: CEO
<PAGE> 36
Schedules and Exhibits
to
ASSET PURCHASE AGREEMENT
SCHEDULES
Schedule 1(a) - Referral Contracts
Schedule 1(b) - Home Services Contracts
Schedule 1(c) - Receivables
Schedule 1(d) - Certain Software
Schedule 1(e) - Tangible Assets
Schedule 1(f) - Financial Statements
Schedule 2(b)(iv) - Referral Transactions Initiated Prior to Closing
Schedule 2(c) - Trade Payables
Schedule 5(b) - Noncontravention and Third Party Consents
Schedule 5(c) - Encumbrances
Schedule 5(d) - Litigation
Schedule 5(g) - Conduct of Business
Schedule 5(i) - Defaults
Schedule 5(m) - Agreements, Contracts and Commitments
Schedule 5(o) - Patents, Copyrights, Trademarks, URLs and Licenses
Schedule 5(p) - Correspondence with Regulatory Bodies
Schedule 5(q) - Product and Service Warranties
Schedule 7(b)(vi) - Severance
EXHIBITS
Exhibit A - Form of Escrow Agreement
Exhibit B - Form of Bill of Sale, Assignment and Assumption
Agreement
Exhibit C-1 - Form of Assignment of Trademarks and Tradenames
Exhibit C-2 - Form of Assignment of Patents
Exhibit C-3 - Form of Assignment of Patent Applications
Exhibit C-4 - Form of Assignment of URL/Domain Names
Exhibit C-5 - Form of Assignment of Copyrights
Exhibit D - Form of Legal Opinion of Seller's Counsel
Exhibit E - Form of Legal Opinions of Purchaser's Counsel
i
