Property ManagementHomeseekers.com Secures Preferred Stock Financing
HomeSeekers.com (NASDAQ: HMSK), a leader in online real estate technology
and services, has entered into a Securities Purchase Agreement with E-Home.com,
Inc. d/b/a HomeMark, a privately owned Texas corporation. Subject to approval
of the stockholders of the Company and subject to the satisfaction of certain
terms and conditions in the Securities Purchase Agreement, HomeMark has agreed
to purchase from the Company, in a series of transactions scheduled from July
2001 through March 2002, an aggregate of 5,000,000 shares of Series A Preferred
Stock (the "Preferred Stock") at a cash purchase price of $4.00 per share, or
$20 million. Each share of the Preferred Stock is convertible into 20 shares
of unregistered Common Stock of the Company after a period of 24 months, or an
aggregate of 100,000,000 shares of Common Stock. Upon conversion, this would
represent an ownership of the Common Stock of the Company of approximately
61% on a fully diluted basis. Each share of Preferred Stock will be entitled
to immediate voting rights of 20 shares of Common Stock, representing a
current voting interest of approximately 68% based on the currently issued and
outstanding shares of Common Stock of the Company. The Preferred Stock will
pay a cumulative dividend of 15% in cash or common stock based on the $4.00 per
share cash price, as declared by the Board of Directors of the Company. The
Company may redeem the Preferred Stock at any time prior to conversion at a
cash price of $4.00 per share. In addition to the cash purchase price,
HomeMark will assign and contribute to capital $80 million of prepaid
advertising owned by HomeMark in a national print publication, or an additional
$16.00 per share for the Preferred Stock. This advertising will be used in
marketing and other business expansion programs of the Company. The financial
reporting treatment of the prepaid advertising has not been determined by the
Company.
Concurrent with the Securities Purchase Agreement, the Company and HomeMark
entered into short-term loan agreements whereby HomeMark agreed to advance to
the Company up to $2 million. The loans are secured by certain assets of the
Company. The Company received the first loan advance of $500,000 on June 6,
2001, which is payable September 30, 2001. A second loan advance of $500,000
is scheduled for June 19, 2001 and is payable December 31, 2001. The second
advance and any additional advances under the loan agreements are contingent
upon the needs of the Company.
Pursuant to the Securities Purchase Agreement, the Board of Directors of the
Company increased the number of board members from 5 to 9 and appointed to the
Board of Directors of the Company four new members who had been recommended by
HomeMark. The four new members of the Board are: Joseph Harker, Chief
Executive Officer of HomeMark; Ted C. Jones Ph.D., Chief Economist and Head of
Investor Relations of Stewart Information Services, the parent company of
Stewart Title Guaranty; James Sherry, industry consultant and former CEO of
Interealty; and Thomas Chaffee, CEO of Chaffee Interactive, a technology
consulting firm.