Document:

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                                                                    Exhibit 10.4

                                CREDIT AGREEMENT

                                     between

                         LENDINGTREE, INC., as Borrower

                                       and

                     THE UNION LABOR LIFE INSURANCE COMPANY,

                 ON BEHALF OF ITS SEPARATE ACCOUNT P, as Lender

                                  March 7, 2001

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         THIS CREDIT AGREEMENT (this "Agreement") dated as of March 7, 2001, is
made by and between LENDINGTREE, INC., a Delaware corporation ("Borrower"), and
THE UNION LABOR LIFE INSURANCE COMPANY, a Maryland corporation, ON BEHALF OF ITS
SEPARATE ACCOUNT P ("Lender").

                                    ARTICLE 1

                                   DEFINITIONS

         For the purposes of this Agreement:

         "Advance" has the meaning specified in Section 2.1 hereof.

         "Advance Date" means the date on which each of the conditions set forth
in Section 4.2 hereof is satisfied (or waived by Lender) and an Advance is made.

         "Affiliate" means any Person directly or indirectly controlling,
controlled by, or under common control with Borrower, and any Person who is a
director, officer or partner of Borrower. For purposes of this definition,
"control," when used with respect to any Person, includes, without limitation,
the direct or indirect beneficial ownership of ten percent (10%) or more of the
outstanding voting securities or voting equity of such Person or the power to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise; provided, however, that the term "Affiliate"
shall specifically exclude Lender.

         "Agreement" has the meaning specified in the introductory paragraph
hereto.

         "Applicable Laws" means, collectively, all applicable international,
foreign, federal, state and local statutes, treaties, rules, guidelines,
regulations, ordinances, codes and administrative or judicial precedents or
authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or
administration thereof, and all applicable administrative orders, decrees,
directed duties, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Authority, court or arbitral body, in each
case whether or not having the force of law.

         "Asset Sale" means any sale, transfer, conveyance or other disposition
by Borrower or any of its Subsidiaries to any Person (including by way of
redemption by such Person), other than to Borrower or another Subsidiary that is
a Subsidiary Guarantor, of any asset (including, without limitation, any Capital
Stock or other securities of or equity interests in, another Person) except as
otherwise permitted under Section 8.7(b).

         "Authorized Signatory" means such senior personnel of a Person as may
be duly authorized and designated in writing by such Person to execute
documents, agreements, and instruments on behalf of such Person.

         "Borrower" has the meaning specified in the introductory paragraph
hereto.

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         "Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks are authorized to close under the Applicable Laws of,
or are in fact closed in, the state where Lender's principal office is located.

         "Business Plan" means Borrower's fiscal 2001 budget attached hereto as
Exhibit H.

         "Capital Stock" means, as applied to any Person, any capital stock of
such Person, regardless of class or designation, and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto.

         "Capital Z" means, collectively, Capital Z Financial Securities Fund
II, L.P., and its affiliates

         "Change of Control" means the point in time at which (i) any Person (as
defined in Section 13(d) and Section 14(d)(2) under the Securities Exchange Act
of 1934, as amended) (A) acquires all or substantially all of the properties and
assets of Borrower or (B) shall have (directly or indirectly) acquired
beneficial ownership of fifty percent (50%) or more of the issued and
outstanding voting stock of Borrower or (ii) less than a majority of the members
of Borrower's Board shall be persons who either (A) were serving as directors on
the date of this Agreement or (B) were nominated as directors by the vote of a
majority of the directors who are directors referred to in clause (ii)(A) above
or this clause (ii)(B).

         "Closing Date" means the date on which each of the conditions precedent
set forth in Section 4.1 hereof are met or waived by Lender.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Commitment" has the meaning specified in Section 2.1 hereof.

         "Common Stock" has the meaning specified in Section 5.1(d)(i) hereof.

         "Compliance Report" means the monthly report provided by Borrower to
Lender pursuant to Section 7.2 hereof.

         "Coverage Ratio" means the ratio of (a) the amount of the Receivables
Value to (b) the amount of Borrower's Obligations to Lender under this
Agreement.

         "Default" means any of the events specified in Section 9.1 hereof
regardless of whether there shall have occurred any passage of time or giving of
notice (or both) that would be necessary in order to constitute an Event of
Default.

         "Dividends" means any direct or indirect distribution, dividend or
payment to any Person on account of any Capital Stock of Borrower.

         "EBITDA" means, for any period, Borrower's operating income (loss),
excluding non-cash charges for compensation attributable to options, warrants
and other equity instruments, depreciation, amortization and one-time
non-operating charges, if any, as determined by Borrower in its reasonable
judgment consistent with the information as or to be reported in Borrower's
earnings releases and included or to be included in Borrower's SEC Filings, and
excludes

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deferred revenues adjustments determined as follows: Borrower may, from time to
time, perform services under customized software arrangements. At times, GAAP
accounting may require Borrower to recognize expenses before recognizing
proportional revenues for such arrangements. If this occurs during the term of
this Agreement, the actual EBITDA amount will be increased to the extent of any
cash paid in advance (deferred Revenue) to Borrower for such arrangements.

         "Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.

         "Environmental Laws" means any and all applicable federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
permit conditions, decrees or requirements of any Governmental Authority
regulating, relating to or imposing liability or standards of conduct concerning
environmental protection matters, including without limitation, hazardous
materials, as now or may at any time hereafter be in effect.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
in effect on the Closing Date and as such Act may be amended thereafter from
time to time.

         "ERISA Affiliate" means any "affiliate" of Borrower within the meaning
of Section 414 of the Code.

         "ERISA Event" shall mean, with respect to Borrower or any of its
Subsidiaries or any ERISA Affiliate, (a) any event described in Section 4043(c)
of ERISA with respect to a Title IV Plan; (b) the withdrawal of Borrower or such
Subsidiary or ERISA Affiliate from a Title IV Plan subject to section 4063 of
ERISA during a plan year in which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of Borrower
or such Subsidiary or any ERISA Affiliate from any Multiemployer Plan; (d) the
filing of a notice of intent to terminate a Title IV Plan or the treatment of a
plan amendment as a termination under Section 4041 of ERISA; (e) the institution
of proceedings to terminate a Title IV Plan or Multiemployer Plan by the Pension
Benefit Guaranty Corporation (or any successor thereto); (f) the failure by
Borrower or such Subsidiary or ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Title IV Plan unless such failure is
cured within 30 days; (g) any other event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Title IV Plan or
Multiemployer Plan or for the imposition of liability under Section 4069 or
4212(c) of ERISA; (h) the termination of a Multiemployer Plan under Section
4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan under
Section 4241 of ERISA; (i) the loss of a Qualified Plan's qualification or tax
exempt status; or (j) the termination of a Plan described in Section 4064 of
ERISA.

         "Event of Default" means any of the events specified in Section 9.1
hereof, provided that any requirement for notice or lapse of time, or both, has
been satisfied.

         "Financing Documentation" has the meaning specified in Section 4.1(f)
hereof.

         "Financing Transactions" has the meaning specified in Section 4.1(f)
hereof.

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         "Fiscal Quarter" means any of the quarterly accounting periods of
Borrower.

         "Freddie Mac" means the Federal Home Loan Mortgage Corporation.

         "GAAP" means generally accepted accounting principles and practices in
the United States as in effect from time to time applied on a consistent basis.
If, at any time after the date hereof, there are changes in GAAP that materially
impact the Borrower's calculation of Revenue or EBITDA as compared to how it
calculated such amounts in prior periods, the Borrower and Lender shall
negotiate in good faith to adjust the Revenue and EBITDA amounts contained in
Section 3.1(b).

         "Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

         "Indebtedness" means, with respect to any Person, (a) all items, except
items of shareholders' and partners' equity or Capital Stock or surplus or
general contingency or deferred tax reserves, which in accordance with GAAP
would be included in determining total liabilities as shown on the liability
side of a balance sheet of such Person, (b) all direct or indirect obligations
secured by any Lien to which any property or asset owned by such Person is
subject, whether or not the obligation secured thereby shall have been assumed,
(c) all capitalized lease obligations of such Person, (d) all reimbursement
obligations with respect to outstanding letters of credit, and (e) all
obligations of other persons or entities which such Person has guaranteed.

         "Independent Auditor" has the meaning specified in Section 7.1(a)
hereof.

         "Intellectual Property" means all patents, patent applications, trade
names, trademarks, trademark registration applications, copyrights, copyright
registration applications and other material proprietary rights that are
registered and owned by or licensed to Borrower or used or to be used by
Borrower in its business as presently conducted or contemplated.

         "Interest Payment Date" has the meaning specified in Section 2.4(c)
hereof.

         "Interest Rate" has the meaning specified in Section 2.4(a) hereof.

         "IRC" means the Internal Revenue Code, as amended.

         "Lender" has the meaning specified in the introductory paragraph.

         "Lien" means, with respect to any property, any mortgage, lien, pledge,
assignment, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment, or other encumbrance of any kind in
respect of such property, whether or not choate, vested, or perfected.

         "Loan Availability Period" means the period from the Closing Date to,
but excluding, the Maturity Date.

         "Loan Documents" means this Agreement, the Note, the Subsidiary
Guarantee Agreement, all Requests for Advance, all Compliance Reports, the
Security Documents

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(including the Pledge Agreement), the Warrants, the Registration Rights
Agreement and all other documents, instruments, certificates, and agreements
executed or delivered in connection with or contemplated by this Agreement.

         "Loan Parties" means, collectively, Borrower or any Subsidiary that is
now or hereafter becomes a party to any Loan Document.

         "Material Adverse Effect" means any material adverse effect (a) upon
the business, assets, liabilities, financial condition, results of operations,
or business prospects of Borrower and its Subsidiaries taken as a whole, or (b)
upon the ability of Borrower and its Subsidiaries taken as a whole to ensure
their performance under this Agreement or any other Loan Document, or (c) upon
the rights, benefits or interests of Lender in or to this Agreement or any other
Loan Document, in each case, resulting from any act, omission, situation,
status, event, or undertaking, either singly or taken together.

         "Maturity Date" has the meaning specified in Section 2.2 hereof.

         "Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, subject to Title IV of ERISA.

         "Necessary Authorizations" means all material authorizations, consents,
permits, approvals, licenses, and exemptions from, and all filings and
registrations with, and reports to, any Governmental Authority whether federal,
state, local, and all agencies thereof, which are required for the conduct of
the businesses and the ownership (or lease) of the properties and assets of
Borrower and its Subsidiaries.

         "Net Debt Proceeds" means, with respect to any incurrence of
Indebtedness for borrowed money, the cash proceeds (net of underwriting
discounts and commissions and other reasonable out-of-pocket costs associated
therewith) received by the respective Person from the respective incurrence of
such Indebtedness for borrowed money.

         "Net Equity Proceeds" means, with respect to each issuance or sale of
any equity by any Person or any capital contribution to such Person, the cash
proceeds (net of underwriting discounts and commissions and other reasonable
out-of-pocket costs associated therewith) received by such Person from the
respective sale or issuance of its equity or from the respective capital
contribution.

         "Net Sale Proceeds" means, for any Asset Sale, the gross cash proceeds
(including any cash received by way of deferred payment pursuant to a promissory
note, receivable or otherwise, but only as and when received) received from such
sale of assets, net of the reasonable out-of-pocket costs of such sale
(including fees and commissions, payments of unassumed liabilities relating to
the assets sold and required payments of any Indebtedness (other than
Indebtedness secured pursuant to the Security Documents) which is secured by the
respective assets which were sold), and the incremental taxes paid or payable as
a result of such Asset Sale.

         "Note" means that certain promissory note dated as of the date hereof
in the aggregate principal amount of the Commitment issued by Borrower to Lender
and substantially in the form

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of Exhibit A attached hereto, and any extensions, renewals or amendments to, or
replacements of, the foregoing.

         "Obligations" means (a) all payment and performance obligations of
Borrower and each of its Subsidiaries to Lender, under this Agreement and the
other Loan Documents (including any obligations that, but for the provisions of
Title 11 of the United States Code, would have accrued), as they may be amended
from time to time, or as a result of making the Advances, (b) the obligation to
pay an amount equal to the amount of any and all damages which Lender may suffer
by reason of a breach by Borrower or any of its Subsidiaries of any obligation,
covenant, or undertaking with respect to this Agreement or any other Loan
Document, and (c) all other obligations of Borrower to Lender (or any affiliate
of Lender) (other than in the capacity of a holder of Borrower's Warrants)
whatsoever now existing or hereafter arising, direct or indirect, due or to
become due.

         "Option Plans" has the meaning specified in Section 5.1(d).

         "Other Lender" means any person other than Lender or The Union Labor
Life Insurance Company, a Maryland corporation, or their respective Affiliates.

         "Payment Office" means Lender's office designated as the Payment Office
on Schedule 1 hereto or such other office as may be designated from time to time
by Lender to Borrower in writing.

         "Permitted Liens" means, as applied to any Person:

         (i) Any Lien in favor of Lender;

         (ii) Liens in favor of lessors under capitalized leases to the extent
that the obligations thereunder is Indebtedness permitted under Section 8.1(d)
of this Agreement; provided, however, that each such Lien extends only to the
property which is the subject of such capitalized lease and is given only to
secure the obligations under such capitalized lease;

         (iii) Liens to secure Indebtedness for purchase money indebtedness to
the extent that such Indebtedness is permitted under Section 8.1(e) of this
Agreement; provided, however, that each such Lien is given only to secure the
purchase price of the property which is the subject of such purchase money
indebtedness, does not extend to any other property and is given at the time of
acquisition of the property;

         (iv) Liens on real property for real property taxes not yet delinquent
and Liens for taxes, assessments, judgments, governmental charges or levies, or
claims, the non-payment of which is being diligently contested in good faith by
appropriate proceedings and for which adequate reserves have been set aside on
such Person's books;

         (v) Liens of landlords and liens of carriers, warehousemen, mechanics,
laborers, suppliers, workers and materialmen incurred in the ordinary course of
business for sums not yet due or being diligently contested in good faith, if
such reserve or appropriate provision, if any, shall have been made therefor;

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         (vi) Liens incurred in the ordinary course of business in connection
with worker's compensation and unemployment insurance or other types of social
security benefits;

         (vii) Easements, rights-of-way, restrictions, and other similar
encumbrances on the use of real property which do not interfere with the
ordinary conduct of the business of such Person, or Liens incidental to the
conduct of the business of such Person or to the ownership of its properties
which were not incurred in connection with Indebtedness or other extensions of
credit and which do not in the aggregate materially detract from the value of
such properties or materially impair their use in the operation of the business
of such Person;

         (viii) Deposits to secure the performance of bids, trade contracts,
tenders, sales, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

         (ix) Liens listed on Schedule 3 hereto; provided, that (i) the
aggregate principal amount of the Indebtedness, if any, secured by such Liens
does not increase, and (ii) such Liens do not encumber any additional properties
of Borrower or any of its Subsidiaries;

         (x) Liens of Other Lenders on Receivables permitted by Section
3.1(a)(i); and

         (xi) Liens (if any) in favor of Freddie Mac under the Software
Customization, License and Services Agreement between Freddie Mac and the
Borrower dated July 7, 2000, as amended on March ___, 2001.

         "Person" means an individual, corporation, partnership, trust, joint
stock company, limited liability company, unincorporated organization, or a
government or any agency or political subdivision thereof.

         "Plan" means an employee benefit plan within the meaning of Section
3(3) of ERISA or any other plan maintained for employees of any Person or any
Affiliate of such Person.

         "Pledge Agreement" means Stock Pledge Agreement substantially in the
form of Exhibit E hereto.

         "Qualified Plan" means a Plan which is intended to be tax-qualified
under Section 401(a) of the IRC.

         "Qualified Receivables" means those Receivables that meet the
requirements set forth in Schedule 2 hereof.

         "Receivables" means all Accounts (as defined in the Security Documents)
arising from the licensing of Intellectual Property, sale of goods or provision
of services to any Person by Borrower, which Receivables are subject to a first
priority security interest in favor of Lender pursuant to the Security
Documents.

         "Receivables Value" means, on any date of the determination thereof,
the Dollar value of Qualified Receivables.

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         "Registration Rights Agreement" means the Registration Rights Agreement
substantially in the form of Exhibit G hereto.

         "Revenue" means the amount of Borrower's total revenue as set forth in
Borrower's financial statements prepared in accordance with GAAP, and as are or
to be reported in Borrower's earning releases and included or to be included in
Borrower's SEC Filings.

         "Reportable Event" has the meaning set forth in Section 4043(c) of
ERISA and the regulations thereunder, but shall not include any event which is
not subject to the thirty (30) day notice requirement of such regulations other
than 29 Code of Federal Regulations Sections 2615.11, 2615.12 and 2615.19.

         "Request for Advance" means the request in substantially the form of
Exhibit B attached hereto.

         "Restricted Payment" means (a) cash Dividends, (b) any payment of any
management fees, consulting fees or similar fees payable by Borrower to any of
its Affiliates (but excluding reimbursement of legal fees and other expenses, if
any, incurred by such Affiliates in connection with the Financing Transactions
or any other financing transactions otherwise permitted by this Agreement), (c)
any payment of any other Indebtedness for borrowed money to any Affiliate of
Borrower, and (d) any loan or advance to any Affiliate of Borrower (other than
loans to employees permitted pursuant to Section 8.5).

         "Restricted Purchase" means any payment on account of the purchase,
redemption, or other acquisition or retirement of any shares of Capital Stock of
Borrower.

         "SEC" means the Securities and Exchange Commission.

         "SEC Filings" means documents and reports filed by Borrower with the
SEC pursuant to the Securities Act or Sections 13 or 15(d) of the Securities
Exchange Act of 1934, as amended.

         "Securities Act" has the meaning specified in Section 5.1(x) hereof.

         "Security Document" and "Security Documents" have the meaning set forth
in Section 3.1(c) hereof.

         "Subsidiary" means (a) any corporation of which more than fifty percent
(50%) of the outstanding stock (other than directors' qualifying shares) having
ordinary voting power to elect a majority of its board of directors, regardless
of the existence at the time of a right of the holders of any class or classes
of securities of such corporation to exercise such voting power by reason of the
happening of any contingency, or any partnership of which more than fifty
percent (50%) of the outstanding partnership interests is at the time owned by
Borrower, or by one or more its Subsidiaries, or by Borrower and one or more of
its Subsidiaries, and (b) any other entity which is controlled or capable of
being controlled by Borrower, or by one or more of its Subsidiaries, or by
Borrower and one or more its Subsidiaries.

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         "Subsidiary Guarantee Agreement" means the Subsidiary Guarantee
Agreement substantially in the form of Exhibit D hereto, executed by each of the
Borrower's Subsidiaries pursuant to Section 6.14.

         "Subsidiary Guarantor" means any of the Borrower's Subsidiaries that is
party to the Subsidiary Guarantee Agreement.

         "Title IV Plan" shall mean an employee pension benefit plan, as defined
in Section 3(2) of ERISA (other than a Multiemployer Plan), which is covered by
Title IV of ERISA, and which Borrower or any of its Subsidiaries or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.

         "Warrant" means any warrant, issued by Borrower to Lender, delivered in
accordance with the terms hereof, and substantially in the form of Exhibit F
attached hereto.

         Each definition of an agreement in this Article 1 shall include such
instrument or agreement as modified, amended, or supplemented from time to time
with, if required pursuant to the express terms hereof, the prior written
consent of Lender, and except where the context otherwise requires, definitions
imparting the singular shall include the plural and vice versa. Except where
otherwise specifically restricted, reference to a party to a Loan Document
includes that party and its successors and assigns. All accounting terms used
herein without definition shall be used as defined under GAAP.

                                    ARTICLE 2

                                    THE LOAN

         Section 2.1 Extension of Credit.

         (a) Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make available, from time to time, advances (each,
an "Advance") to Borrower during the Loan Availability Period consisting of
Advances in an aggregate principal amount not to exceed $5,000,000 (the
"Commitment") as hereafter provided. Within the limits of the Commitment, and
subject to the other terms and conditions hereof, Borrower may borrow under this
Section 2.1, prepay under Section 2.3 and reborrow under this Section 2.1.

         (b) Borrowing Mechanics. In the event Borrower desires an Advance,
Borrower shall give Lender telephonic notice of the proposed borrowing by no
later than 11:00 a.m. (Washington, D.C. time) three (3) Business Days before the
Advance Date, which notice shall also specify (i) the proposed Advance Date
(which shall be a Business Day), (ii) the amount of such Advance, and (iii) the
account into which the proceeds of the Advance are to be deposited. Any such
telephonic notice shall be confirmed by delivery of a written Request for
Advance on the same day. Lender shall not incur any liability to Borrower for
acting upon any telephonic notice Lender believes in good faith to have been
given by a duly authorized officer or other person authorized to borrow on
behalf of Borrower or for otherwise acting in good faith under this Section
2.1(b). Each Advance shall be deposited by wire transfer in immediately
available funds in such account as Borrower designates in the applicable Request
for Advance.

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         (c) Minimum Amounts. The initial Advance shall be in a principal amount
of $250,000 or a whole multiple of $250,000 in excess thereof. Each subsequent
Advance shall be in a principal amount of $250,000 or a whole multiple of
$250,000 in excess thereof.

         (d) Use of Proceeds. The proceeds of the Advances shall be used for the
Borrower's technology, advertising and marketing activities and other general
corporate purposes.

         Section 2.2 Repayment. The principal balance of all Advances then
outstanding, together with all accrued and unpaid interest and other
Obligations, shall be due and payable in full on the date (the "Maturity Date")
which is the earlier of (a) March __, 2003, or (b) such earlier date as all such
amounts may become due and payable and the Commitment is terminated upon the
occurrence of an Event of Default pursuant to Section 9.1.

         Section 2.3 Optional/Mandatory Prepayments and Commitment Reductions

         (a) Optional prepayments of the Advances may be made at any time upon
two (2) Business Days' prior irrevocable written notice to Lender, without
penalty or premium, provided that such prepayments shall be in minimum amounts
of $500,000 and whole multiples of $500,000 in excess thereof. Borrower may,
upon not less than three (3) Business Days' prior irrevocable written notice to
Lender, terminate the Commitment or permanently reduce the Commitment by an
aggregate minimum amount of $1,000,000 or any multiple of $1,000,000 in excess
thereof; unless, after giving effect to any reduction of Commitment and to any
prepayment of the Advances made on the effective date thereof, the outstanding
principal amount of the Advances would exceed the amount of the Commitment then
in effect. Upon any termination of the Commitment pursuant to this Section 2.3,
Borrower shall issue to Lender Warrants to purchase 40,000 shares of Common
Stock (as equitably and proportionately adjusted for stock splits, combinations,
stock dividends, reorganizations and reclassifications). Once reduced or
terminated in accordance with this Section 2.3(a), the Commitment may not be
increased or reinstated.

         (b) In addition to any other mandatory prepayments made pursuant to
this Section 2.3, on each date after the Closing Date upon which the Borrower or
any of its Subsidiaries receives any cash proceeds from any capital contribution
or any sale or issuance of its equity, or options to purchase shares of its
Capital Stock, whether to officers, directors and employees of the Borrower and
its Subsidiaries or any other Persons (other than equity issuances pursuant to
employee benefit plans not in excess of $400,000 per year), an amount equal to
100% of the Net Equity Proceeds of such capital contribution or sale or issuance
of equity or options shall be applied as a mandatory prepayment of principal of
outstanding Advances in accordance with Section 2.8.

         (c) In addition to any other mandatory prepayments made pursuant to
this Section 2.3, on each date on or after the Closing Date upon which the
Borrower or any of its Subsidiaries receives any cash proceeds equaling or
exceeding $50,000 from any incurrence by the Borrower or any of its Subsidiaries
of Indebtedness for borrowed money (other than Indebtedness in connection with
the Financing Transactions), an amount equal to 100% of the Net Debt Proceeds of
the respective incurrence of Indebtedness shall be applied as a mandatory
prepayment of principal of outstanding Advances in accordance with Section 2.8.

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         (d) In addition to any other mandatory prepayments made pursuant to
this Section 2.3, on each date on or after the Closing Date upon which the
Borrower or any of its Subsidiaries receives any cash proceeds from any Asset
Sale, an amount equal to 100% of the Net Sale Proceeds therefrom shall be
applied as a mandatory prepayment of principal of outstanding Advances pursuant
to Section 2.8; provided that with respect to no more than $100,000 in the
aggregate of cash proceeds from Asset Sales in any fiscal year of the Borrower,
such Net Sale Proceeds therefrom shall not be required to be so applied on such
date so long as no Default or Event of Default then exists and the Borrower
delivers a certificate to the Agent on or prior to such date stating that such
Net Sale Proceeds shall be used to purchase replacement assets within 90 days
following the date of such Asset Sale (which certificate shall set forth the
estimates of the proceeds to be so expended), and provided further, that if all
of any portion of such Net Sale Proceeds not required to be applied to the
prepayment of outstanding Advances are not so reinvested in replacement assets
within such 90 day period, such remaining portion shall be applied on the last
day of such period as a mandatory prepayment of principal of outstanding
Advances as provided above in this Section 2.3 without regard to this proviso.

         (e) Notwithstanding any right or intent of Borrower to prepay all or
any part of the Advances on or before the Maturity Date, (i) Borrower shall at
all times reserve and keep available for issuance such number of its authorized
but unissued shares of Common Stock (or other capital stock from time to time
issuable upon exercise of Warrants) as shall be necessary to permit the Lender
to exercise its rights under the Warrants that may or are issued hereunder, and
(ii) Borrower shall not, by amendment of its certificate of incorporation or
through reorganization, consolidation, merger, dissolution, issue or sale of
securities, sale of assets or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of Section 2.4, but shall at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of Lender against impairment.

         Section 2.4 Interest.

         (a) Rate of Interest. The Advances and all other Obligations shall bear
interest from the date such Advances are made or such other Obligations become
due to the date paid at a rate per annum equal to twenty percent (20%) for
Advances and all other Obligations for which no other interest rate is specified
(the "Interest Rate").

         (b) Payment of Interest All payments of interest due hereunder shall be
payable as follows: (a) thirty percent (30%) in immediately available cash, and
(b) seventy percent (70%) by the issuance of Warrants (the value of which, for
the purposes of this Agreement, shall be deemed to be $3.99 with respect to each
such Warrant); provided, however, that, with respect to clause (b), Borrower
shall pay such interest in cash in lieu of any Warrant that would otherwise be
issued for the purchase of a fractional share of Common Stock.

         (c) Interest Payment Dates. Interest on all outstanding Advances and
all other Obligations shall be payable to Lender (i) quarterly in arrears on the
first Business Day of each [June, September, December and March of each year,
(ii) on the date of any prepayment of Advances if such prepayment is a full
prepayment of all Advances outstanding, but if such prepayment is for less than
the full amount outstanding on all Advances, then on the next Interest Payment
Date following the date of such partial prepayment, and (iii) on the Maturity
Date,

                                      -11-

<PAGE>   13

whether by acceleration or otherwise (each such date, an "Interest Payment
Date"). Notwithstanding the foregoing, interest payable in Warrants shall be
payable to Lender not later than ten (10) days following the Interest Payment
Date applicable thereto.

         Section 2.5 Computations of Interest and Fees. Computation of interest
on Advances and all fees shall be calculated on the basis of a year of 360 days
and the actual number of days elapsed based on the average daily balance of such
Advances and Obligations outstanding computed on a quarterly basis. Interest
shall accrue on each Advance for the day on which the Advance is made, and shall
not accrue on an Advance, or any portion thereof, for the day on which the
Advance or such portion is paid, provided that any Advance that is repaid on the
same day on which it is made shall bear interest for one day.

         Section 2.6 Note; Loan Accounts. The Advances shall be repayable in
accordance with the terms and provisions set forth herein and in the Note, and
shall be evidenced by the Note. Lender may open and maintain on its books in the
name of Borrower a loan account with respect to the Advances and interest
thereon. Lender shall debit such loan account for the principal amount of each
Advance made by it, accrued interest thereon, and all other amounts which shall
become due from Borrower pursuant to this Agreement and shall credit such loan
account for each payment which Borrower shall make in respect to the
Obligations. The records of Lender with respect to such loan account shall be
prima facie evidence of the Advances and accrued interest thereon.

         Section 2.7 Manner of Payment.

         (a) Payment Dates. Each payment (including any prepayment) by Borrower
on account of the principal of or interest on the Advances, fees, and any other
amount owed to Lender under this Agreement, the Note, or the other Loan
Documents shall be made not later than 11:00 a.m. (Washington, D.C. time) on the
date specified for payment under this Agreement, the Note or any other Loan
Document to Lender at Lender's Payment Office in immediately available funds or
the issuance of Warrants, as required pursuant to Section 2.4(b). Any payment
received by Lender after 11:00 a.m. (Washington, D.C. time) on the date
specified therefor shall be deemed received on the next Business Day and any
applicable interest or fees shall continue to accrue.

         (b) No Deduction; Taxes. Borrower agrees to pay principal, interest,
fees, and all other amounts due hereunder or under the Note without condition or
deduction for any counterclaim, defense, recoupment or setoff. If Borrower shall
hereafter be required by law to deduct any taxes from or in respect of any sum
payable hereunder or under the Note to Lender (other than income taxes solely on
Lender's taxable income), (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.7(b)), Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions, and (iii)
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with Applicable Law.

         Section 2.8 Application of Payments. Borrower irrevocably waives the
right to direct the application of any and all payments in cash at any time or
times hereafter received from or on behalf of Borrower, and Borrower irrevocably
agrees that Lender shall have the continuing

                                      -12-

<PAGE>   14

exclusive right to apply any and all such payments against the then due and
payable Obligations of Borrower and in repayment of the Advances, as Lender may
deem advisable. In the absence of a specific determination by Lender with
respect thereto, the same shall be applied in the following order: (a) then due
and payable fees and expenses; (b) then due and payable interest payments
(including, with respect to optional or mandatory prepayments made pursuant to
Section 2.3, interest due and payable accrued on amounts so prepaid through the
date of such prepayment); (c) then due and payable Obligations other than fees,
expenses and interest and principal payments; and (d) the principal amount due
on the Advances.

         Section 2.9 Maximum Rate of Interest. In no contingency or event
whatsoever shall the aggregate of all amounts deemed interest on the Advances
and charged or collected pursuant to the terms of this Agreement or pursuant to
the Note exceed the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable thereto.
In the event that such a court determines that Lender has charged or received
interest hereunder in excess of the highest applicable rate, the rate in effect
hereunder shall automatically be reduced to the maximum rate permitted by
Applicable Law and Lender shall promptly refund to Borrower any interest
received by it in excess of the maximum lawful rate or, if so requested by
Borrower, shall apply such excess to the principal balance of the Obligations.
It is the intent of the parties hereto that Borrower not pay or contract to pay,
and that Lender not receive or contract to receive, directly or indirectly in
any manner whatsoever, interest in excess of that which may be paid by Borrower
under Applicable Law.

                                    ARTICLE 3

                                    SECURITY

         Section 3.1 Security for the Obligations.

         (a) The Obligations of Borrower shall be secured at all times by:

                  (i) a first priority perfected security interest in and lien
         upon all presently owned and hereafter acquired tangible and intangible
         personal property and fixtures of Borrower, subject only to any
         Permitted Liens (including without limitation the right to receive all
         proceeds derived or arising from or in connection with the sale,
         assignment or transfer thereof); provided, however, that so long as (A)
         no Default or Event of Default has occurred and is continuing and (B)
         Borrower's Coverage Ratio exceeds 150% as determined at the end of each
         monthly reporting period or on any Advance Date, Borrower may (X) enter
         into financing arrangements with Other Lenders and (Y) grant to any
         such Other Lender a security interest in the Receivables; provided,
         further, that any such financing arrangements with any such Other
         Lender (including any intercreditor agreement proposed to be executed
         in connection therewith between such Other Lender and Lender) shall be
         on such terms and conditions that are satisfactory to the Lender in its
         sole and absolute discretion; and

                  (ii) without limiting the generality of Section 3.1(a)(i), a
         first priority perfected security interest in the Intellectual
         Property, together with such third party consents as the Agent may
         reasonably require.

                                      -13-

<PAGE>   15

         (b) Financial Targets; Deposit Accounts. In the event that:

                  (i) Borrower has Revenue for the Fiscal Quarter ending March
         31, 2001 of less than $10,200,000 and an EBITDA loss for such quarter
         of greater than negative $12,400,000;

                  (ii) Borrower has Revenue for the Fiscal Quarter ending June
         30, 2001 of less than $13,700,000 and an EBITDA loss for such quarter
         of greater than negative $10,100,000;

                  (iii) Borrower has Revenue for the Fiscal Quarter ending
         September 30, 2001 of less than $15,000,000 and an EBITDA loss for such
         quarter of greater than negative $9,000,000;

                  (iv) Borrower has Revenue for the Fiscal Quarter ending
         December 31, 2001 of less than $16,000,000 and an EBITDA loss for such
         quarter of greater than negative $7,500,000;

                  (v) commencing in the first Fiscal Quarter of 2002, Borrower
         has negative EBITDA for any Fiscal Quarter and less than $5,000,000 in
         cash, restricted cash and cash equivalents at the end of such Fiscal
         Quarter;

                  (vi) Borrower raises more than $33,000,000 (in the aggregate)
         in equity financing for operating purposes during the year 2001,
         without first obtaining the Lender's consent or repaying all amounts
         then outstanding under this Credit Agreement;

                  (vii) (A) is in default of a payment obligation in excess of
         $25,000 under the terms of its agreement with its then-current hosting
         service provider and such default is not cured within four (4) business
         days and jeopardizes Borrower's ability to maintain uninterrupted
         hosting of its software system, or (B) is in material, non-monetary
         default with its then-current hosting service provider and such default
         is not cured within thirty (30) days; or

                  (viii) Borrower fails to maintain the Coverage Ratio for two
         consecutive monthly reporting periods;

then Lender may retain a third-party administrative or collateral agent to
monitor Receivables and to institute custody, lockbox, collection and cash
management arrangements (collectively, the "Cash Management Accounts") to
receive any cash received by Borrower, including with respect to the
Receivables. Borrower shall execute (and shall use its best efforts to cause
third parties to execute) all agreements, documents or instruments reasonably
necessary to institute and/or implement the Cash Management Accounts and to
grant Lender the right to cause funds held in connection therewith to be
remitted to Lender upon the occurrence or during the continuance of an Event of
Default under Section 9.1. The costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred by Lender in connection with
the Cash Management Accounts shall be paid by Borrower as required by Section
10.2.

                                      -14-

<PAGE>   16

         (c) Security Documents. All agreements and instruments described or
contemplated in this Section 3.1, together with any and all other agreements and
instruments heretofore or hereafter securing the Note and the other Obligations
or otherwise executed in connection with this Agreement, are sometimes
hereinafter referred to collectively as the "Security Documents" and each
individually as a "Security Document." Borrower agrees to execute and deliver
any and all Security Documents in form and substance reasonably satisfactory to
Lender and to take such action as Lender may reasonably request from time to
time, in order to cause Lender to be secured at all times as described in this
Section 3.1.

                                    ARTICLE 4

                              CONDITIONS PRECEDENT

         Section 4.1 Conditions to Closing. This Agreement shall not be
effective, and Lender shall have no obligation to take, fulfill or perform any
action contemplated hereunder, until each of the following conditions has been
satisfied or waived by Lender:

         (a) Lender shall have received each of the following documents, in form
and substance reasonably satisfactory to Lender:

                  (i) a duly executed Note payable to the order of Lender in the
         amount of the Commitment;

                  (ii) duly executed Security Documents, including without
         limitation, all Uniform Commercial Code Financing Statements to be
         filed in state and county offices and all security agreements to be
         filed with the United States Patent and Trademark Office;

                  (iii) the Subsidiary Guarantee Agreement, duly executed by the
         parties thereto;

                  (iv) the Pledge Agreement, duly executed by the parties
         thereto;

                  (v) the Registration Rights Agreement, duly executed by the
         parties thereto;

                  (vi) from each Loan Party, a certificate signed by an
         Authorized Signatory of such Loan Party in substantially the form of
         Exhibit C attached hereto, including a certificate of incumbency with
         respect to each Authorized Signatory of such Loan Party, together with
         the following attachments: (A) a copy of the Certificate of
         Incorporation of such Loan Party, certified to be true, complete and
         correct by the applicable Secretary of State, (B) a true, complete and
         correct copy of the by-laws of such Loan Party, (C) a true, complete
         and correct copy of the resolutions of the Board of Directors of such
         Loan Party authorizing the borrowing hereunder and/or the execution,
         delivery and performance by such Loan Party of the Loan Documents, and
         (D) certificates of good standing from each jurisdiction in which such
         Loan Party does business;

                                      -15-

<PAGE>   17

                  (vii) favorable written opinion(s) of Borrower's special
         counsel in form and substance reasonably satisfactory to Lender and its
         counsel, which opinion(s) shall cover such matters relating to the Loan
         Documents and the transactions contemplated hereunder as Lender and its
         counsel shall reasonably request;

                  (viii) consent of First Union Commercial Corporation in
         connection with the Master Equipment Lease Agreement dated as of March
         14, 2000 between the Borrower and First Union Commercial Corporation;

                  (ix) copies of any pay-off letters, termination statements,
         canceled mortgages and the like required by Lender in connection with
         the removal of any Liens (other than Permitted Liens) against the
         assets of Borrower and its Subsidiaries;

                  (x) the Business Plan; and

                  (xi) all such other documents or information (including
         without limitation, information regarding the assets, capitalization,
         litigation, tax, accounting, labor, insurance, pension liabilities
         (actual or contingent), real estate leases, material contacts,
         agreements for Indebtedness, salary structure, property ownership,
         environmental matters, contingent liabilities and management of the
         Borrower and its Subsidiaries) as Lender may reasonably request,
         certified by an appropriate governmental official or an Authorized
         Signatory if so requested.

         (b) Lender shall have received a commitment fee payable by Borrower to
Lender in the form of Warrants to purchase 40,000 shares of Common Stock (as
equitably and proportionately adjusted for stock splits, combinations, stock
dividends, reorganizations and reclassifications), which commitment fee shall be
fully earned when paid and non-refundable;

         (c) Lender shall have received evidence reasonably satisfactory to it
that (i) all Necessary Authorizations for the transaction contemplated hereunder
have been obtained and (ii) there exists no action, suit, proceeding at law or
in equity, claim, investigation or dispute pending, which purports to affect or
pertain to this Agreement or any other Loan Document, or any of the transactions
contemplated hereby or thereby;

         (d) Lender shall have received Lien search results with respect to
Borrower from all appropriate jurisdictions and filing offices;

         (e) No Material Adverse Effect shall have occurred since January 31,
2001;

         (f) Lender shall have received evidence reasonably satisfactory to it
that Borrower has entered into the unsecured debt facilities and equity
offerings (collectively, the "Financing Transactions") described in the term
sheets previously provided to Lender and Lender shall have received true and
complete, fully executed copies of all agreements, documents and instruments
related thereto (the "Financing Documentation"), which Financing Documentation
shall be in form and substance reasonably satisfactory to Lender; and

                                      -16-

<PAGE>   18

         (g) Lender shall have received payment of any expenses referenced in
Section 10.2(a) for which Lender has been invoiced as of the Closing Date;
provided however, that nothing contained in this Section 4.1(g) shall relieve
Borrower from its obligation under this Agreement to pay for any expenses
referenced in Section 10.2(a) that arise or are invoiced after the Closing Date.

         Section 4.2 Conditions Precedent to Each Advance. The obligation of
Lender to undertake the Commitment and to make any Advance hereunder is subject
to the prior fulfillment of each of the following conditions or the waiver
thereof by Lender:

         (a) Lender shall have received, in form and substance reasonably
satisfactory to Lender, a duly executed Request for Advance;

         (b) Lender shall have received a certificate executed by the chief
financial officer of Borrower certifying (i) the Receivables Value and (ii) the
Coverage Ratio (after giving effect to such Advance);

         (c) All of the representations and warranties of Borrower under this
Agreement, which, pursuant to Section 5.3 hereof, are made at and as of the time
of such Advance, shall be true and correct in all material respects at such
time, both before and after giving effect to the application of the proceeds of
the Advance, and Lender shall have received a certificate (which may be a
Request for Advance) to that effect signed by the Authorized Signatory of
Borrower in his representative capacity on behalf of Borrower, and not
individually, and dated the date of such Advance;

         (d) The incumbency of the Authorized Signatories shall be as stated in
the certificate of incumbency contained in the certificate of Borrower delivered
pursuant to Section 4.1 hereof or as subsequently modified and reflected in a
certificate of incumbency delivered to Lender; and

         (e) There shall not exist on the date of such Advance and after giving
effect thereto, a Default or Event of Default hereunder.

         (f) There shall not have been initiated any litigation, legal or
administrative proceeding or other action of any nature in connection with
Capital Z's ownership of any of Borrower's securities or Capital Stock.

                                    ARTICLE 5

                         REPRESENTATIONS AND WARRANTIES

         Section 5.1 General Representations and Warranties. In order to induce
Lender to enter into this Agreement and to make Advances to Borrower, Borrower
hereby agrees, represents, and warrants, on behalf of itself and each of its
Subsidiaries, that:

         (a) Organization; Power; Qualification. Each of Borrower and its
Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the laws of its state of incorporation, has the corporate power
and authority to own or lease and operate its

                                      -17-

<PAGE>   19

properties and to carry on its business as now being and hereafter proposed to
be conducted, and is duly qualified and is in good standing as a foreign
corporation, and authorized to do business, in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification or authorization, except where the failure to be so qualified
and/or in good standing, in the aggregate could not reasonably be expected to
have a Material Adverse Effect.

         (b) Authorization; Enforceability. Each of Borrower and its
Subsidiaries has the power and has taken all necessary corporate action to
authorize it to execute, deliver, and perform this Agreement and each of the
other Loan Documents to which it is a party in accordance with the terms thereof
and to consummate the transactions contemplated hereby and thereby. This
Agreement and each of the other Loan Documents to which Borrower or any of its
Subsidiaries is a party has been duly executed and delivered by Borrower or such
Subsidiary, as the case may be, and is, and each of the other Loan Documents to
which Borrower or any of its Subsidiaries is a party is, a legal, valid and
binding obligation of Borrower and each such Subsidiary, as the case may be,
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).

         (c) Subsidiaries. Borrower has no Subsidiaries or Affiliates other than
those set forth in Schedule 5.1(c), and does not own or otherwise control,
directly or indirectly, any interest in any corporation, association or business
entity other than as set forth on Schedule 5.1(c). Borrower is not a participant
in any joint venture, partnership or similar arrangement.

         (d) Capitalization. As of February 28, 2001, the authorized Capital
Stock of Borrower consists of:

                  (i) 100,000,000 shares of Common Stock, $.01 par value (the
         "Common Stock"), of which 18,737,441 shares are outstanding. Under
         Borrower's 1997 Stock Option Plan, its 1998 Stock Option Plan, its
         Amended and Restated 1999 Stock Option Plan and its 2001 Stock Option
         Plan (collectively, the "Option Plans"), (x) 894,668 shares of Common
         Stock have been issued pursuant to restricted stock purchase agreements
         and/or the exercise of outstanding options, (y) options to purchase
         5,126,569 shares of Common Stock have been granted and are currently
         outstanding and (z) 3,199,603 shares of Common Stock remain available
         for future issuance to officers, directors, employees and consultants
         of Borrower.

                  (ii) 10,000,000 shares of Series A Convertible Preferred
         Stock, $.01 par value, (none of which are issued and outstanding prior
         to the Closing). Borrower has reserved 3,900,000 shares of Common Stock
         for issuance upon conversion of such Preferred Stock.

                  (iii) Borrower has reserved 8,326,172 shares of Common Stock
         for issuance to officers, directors, employees or consultants pursuant
         to the Option Plans. Except (x) as set forth in Schedule 5.1(d), (y)
         for options granted pursuant to the Option Plans, and (z) as
         contemplated under this Agreement and the

                                      -18-

<PAGE>   20

         Financing Transactions, there are no options, calls, warrants,
         conversion privileges, preemptive rights, rights of first refusal or
         other commitments or rights of any character whatsoever to which
         Borrower is bound, presently outstanding or in existence with respect
         to the purchase or other acquisition of any of the authorized but
         unissued Capital Stock of Borrower.

                  (iv) All issued and outstanding shares of Borrower's Common
         Stock (i) have been duly authorized and validly issued and are fully
         paid and nonassessable, and (ii) were issued in compliance with all
         applicable state and federal laws concerning the issuance of
         securities.

         (e) No Conflict. The execution, delivery, and performance of this
Agreement and each of the other Loan Documents in accordance with the terms
thereof and the consummation of the transactions contemplated hereby and thereby
do not and will not (i) violate any Applicable Law, (ii) conflict with, result
in a breach of, or constitute a default under the certificate or articles of
incorporation or by-laws of Borrower or any of its Subsidiaries or under any
material indenture, agreement, or other instrument to which Borrower is a party
or by which it or any of its properties may be bound, or (iii) result in or
require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by Borrower or any of its Subsidiaries,
except Permitted Liens.

         (f) Necessary Authorizations. Each of Borrower and its Subsidiaries has
obtained all Necessary Authorizations and all such Necessary Authorizations are
in full force and effect. None of said Necessary Authorizations are the subject
of any pending or, to the best of Borrower's knowledge, threatened attack or
revocation, by the grantor of the Necessary Authorizations. Neither Borrower nor
any of its Subsidiaries is required to obtain any additional Necessary
Authorizations in connection with the execution, delivery, and performance, in
accordance with the terms of this Agreement or any other Loan Document, and the
borrowing hereunder.

         (g) Title to Properties. Each of Borrower and its Subsidiaries has
good, marketable, and legal title to, or a valid leasehold interest in, all of
its material properties and assets, and none of such properties or assets is
subject to any Liens other than Permitted Liens.

         (h) Taxes. All material federal, state, and other tax returns of
Borrower and each of its Subsidiaries required by law to be filed have been duly
filed, and all material federal, state, and other taxes, assessments, and other
governmental charges or levies upon Borrower and each of its Subsidiaries and
any of their respective properties, income, profits, and assets, which are due
and payable, have been paid, except any payment of any of the foregoing which
Borrower or the applicable Subsidiary is currently contesting in good faith by
appropriate proceedings and with respect to which reserves have been provided on
the books of Borrower or such Subsidiary. The charges, accruals, and reserves on
the books of Borrower or any of its Subsidiaries in respect of taxes are, in the
reasonable judgement of Borrower, adequate. Except as set forth on Schedule
5.1(h), neither Borrower nor any of its Subsidiaries is presently being audited
by, or received notice of any future audit from, the Internal Revenue Service or
any other tax authority.

         (i) Financial Statements.

                                      -19-

<PAGE>   21

                  (a) Borrower has heretofore furnished to Lender balance sheets
         and statements of operations, changes in shareholders' equity (deficit)
         and cash flows of Borrower (i) dated as of December 31, 1998 and 1999
         and audited by and accompanied by the opinion of independent public
         accountants, and (ii) dated as of September 30, 2000 for the nine-month
         period then ended and prepared by management. Such balance sheets and
         statements of income and cash flows present fairly in all material
         respects the consolidated financial condition and results of operations
         of Borrower and its consolidated Subsidiaries as of the dates and for
         the periods indicated, and such audited balance sheets and the notes
         thereto disclose all material liabilities, direct and contingent, of
         Borrower and its Subsidiaries, as of the dates thereof, that are
         required to be disclosed in accordance with GAAP.

                  (b) The Borrower has heretofore furnished to Lender projected
         income statements, balance sheets and cash flows of Borrower on a
         consolidated basis for a four year period (quarterly for the remainder
         of 2001 and quarterly for 2002 and annually for the following two
         years), such projections disclosing all material assumptions made by
         Borrower in formulating such projections and giving effect to the
         Transactions. The projections are based upon estimates and assumptions,
         all of which were believed by management to be reasonable in light of
         the conditions which existed at the time the projections were made and
         have been prepared on the basis of the assumptions stated therein.

                  (c) The financial statements referred to in Section 5.1(i)(a)
         have been prepared in accordance with GAAP, except that the unaudited
         statements do not contain footnotes and are subject to year-end audit
         adjustments.

         (j) No Adverse Change. Since January 31, 2001, there has occurred no
event which has had, or could reasonably be expected to have, a Material Adverse
Effect on Borrower, any of its Subsidiaries.

         (k) Investments and Guaranties. As of the Closing Date, neither
Borrower nor any of its Subsidiaries has made investments in, advances to, or
guaranties of, the obligations of any Person, except as reflected in the
financial statements referred to in Section 5.1(i) above, or otherwise expressly
set forth herein or disclosed to Lender in writing.

         (l) Liabilities, Litigation. As of the Closing Date, except for
liabilities incurred in the normal course of business and liabilities incurred
in connection with the Financing Transactions, neither Borrower nor any of its
Subsidiaries has any material (individually or in the aggregate) liabilities,
direct or contingent, except as disclosed or referred to in the financial
statements referred to in Section 5.1(i) above or otherwise disclosed to Lender
in writing. As of the Closing Date, except as described on Schedule 5.1(l)
attached hereto, there is no litigation, legal or administrative proceeding,
investigation, or other action of any nature pending or, to the best knowledge
of Borrower, threatened against or affecting Borrower, or any of its properties
that involves an amount in controversy in excess of $100,000 or that is not
covered by insurance. None of such litigation disclosed on Schedule 5.1(l),
individually or collectively, involves the possibility of any judgment or
liability not fully covered by insurance, or, if determined adversely to
Borrower or any of its Subsidiaries could reasonably be expected to have a
Material Adverse Effect.

                                      -20-
<PAGE>   22

         (m) ERISA. Borrower, each of its Subsidiaries, each of its ERISA
Affiliates and its Plans are in compliance with ERISA and the Code in all
material respects. None of the Plans sponsored by Borrower or any of its
Subsidiaries, or to which Borrower or any of its Subsidiaries contributes, are
subject to Section 302 or Title IV of ERISA. Borrower, each of its Subsidiaries
and each of Borrower's ERISA Affiliates have complied in all material respects
with all requirements of ERISA Sections 601 through 608 and Code Section 4980B.
None of Borrower, its Subsidiaries and its ERISA Affiliates has made any
promises of retirement or other benefits to employees, except as set forth in
the Plans. No such Plans or trust created thereunder, or party in interest (as
defined in Section 3(14) of ERISA, or any fiduciary (as defined in Section 3(21)
of ERISA), has engaged in a "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) which would subject such Plans
or any other Plans of Borrower, any of its Subsidiaries, any of its ERISA
Affiliates, any trust created thereunder, or any such party in interest or
fiduciary, or any party dealing with any such Plans or any such trust to the
penalty or tax on "prohibited transactions" imposed by Section 502 of ERISA or
Section 4975 of the Code. None of Borrower, its Subsidiaries and its ERISA
Affiliates is a participant in or is obligated to make any payment to a
Multiemployer Plan.

         (n) Intellectual Property. Except as set forth on Schedule 5.1(n)
attached hereto, or as otherwise disclosed to Lender in writing, neither
Borrower nor any of its Subsidiaries owns any registered patents, trademarks,
service marks or copyrights and has no pending registration applications with
respect to patents, trademarks, service marks or copyrights. No other patents,
trademarks, service marks or copyrights are necessary for the operation of the
business of Borrower and its Subsidiaries.

         (o) Compliance with Law; Absence of Default. Each of Borrower and its
Subsidiaries is in compliance with all Applicable Laws (except to the extent
that the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect) and with all provisions of its certificate or articles
of incorporation and by-laws, and no event has occurred or has failed to occur
which has not been remedied or waived, the occurrence or non-occurrence of which
constitutes (i) a Default or (ii) a default by Borrower or any of its
Subsidiaries under any other material indenture, agreement, or other instrument,
or any judgment, decree, or order to which Borrower or any of its Subsidiaries
is a party or by which Borrower, any of its Subsidiaries or any of their
respective properties may be bound.

         (p) Compliance with Regulations U and X. Neither Borrower nor any of
its Subsidiaries is engaged principally in, or has as one of its important
activities, the business of purchasing or carrying, or extending credit for the
purpose of purchasing or carrying, any margin stock within the meaning of
Regulations U and X of the Board of Governors of the Federal Reserve System.

         (q) Solvency. Borrower has received, or has the right hereunder to
receive, consideration which is the reasonably equivalent value of the
obligations and liabilities that Borrower has incurred to Lender. Borrower is
not insolvent as defined in Section 101 of Title 11 of the United States Code or
any applicable state insolvency statute, nor, after giving effect to the
consummation of the transactions contemplated herein, will Borrower be rendered
insolvent by the execution and delivery of this Agreement or the Note to Lender.
Borrower is not engaged or about to engage in any business or transaction for
which the assets retained by it shall be an unreasonably small capital, taking
into consideration the obligations to Lender incurred hereunder. Borrower does
not intend to, nor does it believe that it will, incur debts beyond its ability
to pay them as they mature.

                                      -21-

<PAGE>   23

         (r) Environmental Matters. Borrower conducts in the ordinary course of
business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof Borrower has reasonably concluded that such Environmental Laws and
Environmental Claims could not, individually or in the aggregate, be expected to
have a Material Adverse Effect.

         (s) Name of Borrower. Except as set forth on Schedule 5.1(s), neither
Borrower nor any of its Subsidiaries has changed its name within the preceding
five (5) years from the Closing Date nor has Borrower or any of its Subsidiaries
transacted business under any other name or trade name.

         (t) Regulated Entities. Neither Borrower nor any of its Subsidiaries is
required to register under the provisions of the Investment Company Act of 1940,
as amended, and neither the entering into or performance by Borrower of this
Agreement nor the issuance of the Note violates any provision of such Act or
requires any consent, approval, or authorization of, or registration with, any
governmental or public body or authority pursuant to any of the provisions of
such Act. Borrower is not subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any
state public utilities code, or any other federal or statute or regulation
limiting its ability to incur Indebtedness.

         (u) No Material Misstatements. The information, reports, financial
statements, exhibits or schedules, taken as a whole, furnished by or on behalf
of the Loan Parties to Lender in connection with any of the Transactions or this
Agreement or any Loan Document or included therein, do not contain any material
misstatement of fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, misleading in any material respect; provided, however, that to the extent
any such information, report, financial statement, exhibit or schedule was based
upon or constitutes a forecast or projection, the Borrower represents only that
it acted in good faith and used reasonable assumptions based on information
available to it at the time of preparation thereof and due care in the
preparation of such information, report, financial statement, exhibit or
schedule.

         (v) Ownership of Shares. Upon the issuance and delivery of the Common
Stock issuable to Lender pursuant to any Warrant issued in connection with this
Agreement, the Common Stock will be duly and validly issued, fully paid and
nonassessable, free and clear of all liens, charges and encumbrances, other than
any liens, charges or encumbrances created by Lender. The delivery of the Common
Stock issued to Lender will transfer good and valid title to, and beneficial
ownership of, the Common Stock, other than as a result of any encumbrances,
liens and claims described in the preceding sentence. The issuance of the Common
Stock pursuant to this Agreement will not be subject to any preemptive rights or
rights of first refusal that have not been properly waived or complied with.

         (w) Registration Rights and Voting Rights. Except as set forth on
Schedule 5.1(w), as of the Closing Date, Borrower will not be under any
contractual obligation to register any of its securities or any of its
securities which may hereafter be issued, other than Borrower's

                                      -22-

<PAGE>   24

securities issued or issuable pursuant to this Agreement and the other Loan
Documents. To Borrower's knowledge, no stockholder of Borrower has entered into
any agreement with respect to the voting of equity securities of Borrower.

         (x) Offering. The offer, sale and issuance to Lender hereunder of the
Warrants (or Common Stock or other Capital Stock issued to Lender upon the
exercise thereof (collectively, the "Agreement Securities")) will be exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws. Neither
Borrower nor any agent on its behalf has solicited or will solicit any offers to
buy or has offered to sell or will offer to sell all or any part of the
Agreement Securities to any person or persons so as to bring the sale of such by
Borrower within the registration provisions of the Securities Act or any state
securities laws.

         (y) Insurance. As of the Closing Date, Borrower and its Subsidiaries
are insured in accordance with Section 6.5 hereof.

         (z) Deposit Accounts with Financial Institutions. As of the Closing
Date, Borrower and its Subsidiaries do not maintain any deposit account with any
bank or other financial institution other than those listed on Schedule 5.1(z).

         (aa) ERISA Party In Interest. Neither Borrower nor any Subsidiary
Guarantor is (or will be) a party in interest under Section 3(14) of ERISA with
respect to the employee benefit plans invested in Lender except solely by reason
of providing services to such plans or by reason of having a relationship with a
person providing services to the plan as follows: a relative of a service
provider; an entity beneficially or otherwise owned 50 percent or more by a
service provider; or an employee, officer, director of, or 10 percent or more
owner or joint venturer in, a service provider.

         Section 5.2 Investment Representations. Lender is acquiring the
Warrants purchased hereunder for its own account for investment purposes and not
with a view to distribution thereof. Lender understands that the Warrants have
not been registered under the Securities Act or the securities laws of any state
and must be held indefinitely unless subsequently registered under the
Securities Act and any applicable state securities laws or unless an exemption
from such registration becomes or is available. Lender is an "accredited
investor" for the purposes of Regulation D under the Securities Act.

         Section 5.3 Survival of Representations and Warranties. All
representations and warranties made under this Agreement (other than those that
specifically refer to an earlier date) shall be deemed to be made, and shall be
true and correct in all material respects, at and as of the Closing Date and the
date of each Advance, except to the extent previously fulfilled in accordance
with the terms hereof and to the extent subsequently inapplicable and except as
disclosed in writing to Lender. All representations and warranties made under
this Agreement shall survive, and not be waived by, the execution hereof by
Lender, any investigation or inquiry by Lender, or the making of any Advance
under this Agreement.

                                      -23-

<PAGE>   25

                                    ARTICLE 6

                                GENERAL COVENANTS

         Borrower covenants and agrees that, so long as any of the Obligations
are outstanding and unpaid or Borrower shall have the right to borrow hereunder
(whether or not the conditions to borrowing have been or can be fulfilled):

         Section 6.1 Preservation of Existence and Similar Matters. Borrower
will, and will cause each of its Subsidiaries to, (i) preserve and maintain its
existence, rights, franchises, licenses, and privileges in its jurisdiction of
incorporation including, without limitation, all Necessary Authorizations,
except where the failure to have any such rights, franchises, licenses or
privileges could not be reasonably expected to have a Material Adverse Effect
and (ii) qualify and remain qualified and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except where the failure
to be so qualified and/or in good standing, in the aggregate could not
reasonably be expected to have a Material Adverse Effect.

         Section 6.2 Compliance with Applicable Law. Borrower will, and will
cause each of its Subsidiaries to, comply with the requirements of all
Applicable Law in all material respects.

         Section 6.3 Maintenance of Properties and Assets. Borrower will, and
will cause each of its Subsidiaries to, maintain in the ordinary course of
business in good repair, working order, and condition, normal wear and tear
excepted, all equipment and other fixed assets used or useful in its business
(whether owned or held under lease), and from time to time make or cause to be
made all needed and appropriate repairs, renewals, replacements, additions,
betterments, and improvements thereto.

         Section 6.4 Accounting Methods and Financial Records. Borrower will,
and will cause each of its Subsidiaries to, maintain a system of accounting
reasonably acceptable to Lender, and will keep adequate records and books of
account in which complete entries will be made in accordance with such system of
accounting.

         Section 6.5 Insurance. Borrower will, and will cause each of its
Subsidiaries to:

         (a) Maintain insurance, including, but not limited to, public liability
coverage insurance and business interruption insurance, from responsible
companies in at least such amounts and against at least such risks as are
usually insured against in the same general area by companies engaged in the
same or similar business; and

         (b) Keep their respective properties and assets insured by responsible
companies against such risks, and in at least such amounts, as are usually
insured against by companies engaged in the same or a similar business.

         Section 6.6 Payment of Taxes and Claims. Borrower will, and will cause
each of its Subsidiaries to, pay and discharge income taxes, if any, and all
material taxes, assessments, and governmental charges or levies imposed upon it
or its income or profit or upon any properties belonging to it prior to the date
on which penalties attach thereto, and all lawful claims for labor,

                                      -24-

<PAGE>   26

materials and supplies which have become due and payable and which by law have
or may become a Lien upon any of its properties or assets; except that, no such
tax, assessment, charge, levy, or claim need be paid which is being contested in
good faith by appropriate proceedings and for which adequate reserves shall have
been set aside on the appropriate books, but only so long as such tax,
assessment, charge, levy, or claim does not become a Lien or charge other than a
Permitted Lien and no foreclosure, distraint, sale, or similar proceedings shall
have been commenced and remain unstayed for a period thirty (30) days after such
commencement. Borrower shall, and shall cause each of its Subsidiaries to,
timely file all information returns required by federal, state, or local tax
authorities.

         Section 6.7 Visits and Inspections. Borrower will, and will cause each
of its Subsidiaries to, permit representatives of Lender to (a) visit and
inspect the properties of Borrower or such Subsidiary, as the case may be,
during normal business hours, (b) inspect and make extracts from and copies of
the books and records of Borrower or such Subsidiary, as the case may be, and
(c) discuss with its respective principal officers its businesses, assets,
liabilities, financial positions, results of operations, and business prospects.

         Section 6.8 Payment of Indebtedness. Borrower will, and will cause each
of its Subsidiaries to, pay any and all of its Indebtedness when and as the same
becomes due in the ordinary course of business, other than amounts diligently
disputed in good faith and for which adequate reserves have been set aside.

         Section 6.9 Conduct of Business. Borrower shall, and shall cause each
of its Subsidiaries to, continue to engage in the business in which it is
currently engaged.

         Section 6.10 ERISA. Borrower shall, and shall cause each of its
Subsidiaries to, at all times, be in material compliance with all ERISA
requirements under ERISA.

         Section 6.11 Further Assurances. Borrower at its expense will promptly
execute and deliver to Lender, or cause to be executed and delivered to Lender,
all such other and further documents, agreements, and instruments in compliance
with or required pursuant to the covenants and agreements of Borrower and its
Subsidiaries in the Loan Documents, including this Agreement, or to correct any
obvious omissions in the Loan Documents, or to obtain any consents, all as may
be necessary or appropriate in connection therewith as may be requested by
Lender.

         Section 6.12 Indemnity. Borrower, for itself and on behalf of each of
its Subsidiaries, will indemnify and hold harmless Lender and each of its
employees, representatives, officers and directors from and against any and all
claims, liabilities, losses, damages, actions, fees and expenses of counsel for
Lender, and demands by any party, including the costs of investigating and
defending such claims (a) resulting from any breach or alleged breach by
Borrower or any of its Subsidiaries of any representation, warranty, or covenant
made hereunder or under any other Loan Document; (b) arising out of or in
connection with (i) the Commitment, the Advance or otherwise under this
Agreement or any other Loan Document, including, without limitation, the taking
of collateral security for the Obligations, the use of the proceeds of the
Advance hereunder in any fashion by Borrower or any of its Subsidiaries, or the
performance of their respective obligations under the Loan Documents by Borrower
or any of its Subsidiaries, (ii) allegations of any participation by Lender in
the affairs of Borrower or any of its Subsidiaries, or allegations

                                      -25-

<PAGE>   27

that Lender has any joint liability with Borrower or any of its Subsidiaries for
any reason, or (iii) any claims against Lender by any shareholder, partner, or
other investor in or lender to Borrower or any of its Subsidiaries, by any
brokers or finders or investment advisers or investment bankers retained by
Borrower or by any other third party, arising out of the Commitment, the Advance
or otherwise under this Agreement or any other Loan Document; or (c) in
connection with taxes (other than income taxes), fees, and other charges payable
in connection with the Advance, or the execution, delivery, recording, and
enforcement of this Agreement, the other Loan Documents, and any amendments
thereto or waivers of any of the provisions thereof; unless the Person seeking
indemnification hereunder is determined in such case to have acted with gross
negligence or willful misconduct, in any case by a final, non-appealable
judicial order. The obligations of Borrower and its Subsidiaries under this
Section 6.12 are in addition to, and shall not otherwise limit, any liabilities
which Borrower or any of its Subsidiaries might otherwise have in connection
with any warranties or similar obligations of Borrower or such Subsidiary in any
other agreement or instrument or for any other reason.

         Section 6.13 Environmental Matters. Borrower shall, and shall cause
each of its Subsidiaries to, conduct its business operations so as to not
violate any Environmental Laws.

         Section 6.14 Subsidiary Guarantors. Borrower shall cause each of its
current and future Subsidiaries (with respect to such future Subsidiaries,
immediately upon such entity becoming a Subsidiary) to execute the Subsidiary
Guarantee Agreement (or a supplement thereto).

         Section 6.15 Coverage Ratio. Borrower shall cause the Coverage Ratio to
be at least 150% at all times.

         Section 6.16 Union Covenants.

         (a) In the event of, at any time from the date hereof until the
Maturity Date, any attempt by any union to organize or seek to represent
employees of Borrower or any of its Subsidiaries, Borrower shall, and shall
cause its Subsidiaries and Affiliates to, recognize the union as the
representative of its workers upon a showing of majority support through a
formal gathering of cards for the union in an appropriate unit.

         (b) In connection with any organizing done by a union, Borrower
recognizes the right of its employees (and those of its Subsidiaries) to choose
their bargaining representative without interference from their employer.
Accordingly, from the date hereof until the Maturity Date, Borrower shall, and
shall cause its Subsidiaries and Affiliates to, and its and their respective
officers, directors, employees and agents to, refrain from its or their support
of or opposition to the union and from actively campaigning in an opposition to
the designation of such union as the representative of such employees.

                                      -26-

<PAGE>   28

                                    ARTICLE 7

                              INFORMATION COVENANTS

         Borrower covenants and agrees that, so long as any of the Obligations
are outstanding and unpaid or Borrower has a right to borrow hereunder (whether
or not the conditions to borrowing have been or can be fulfilled), it will
furnish or cause to be furnished to Lender:

         Section 7.1 Financial Statements and Information.

         (a) As soon as available, but not later than one hundred twenty (120)
days after the end of each fiscal year (commencing with the fiscal year ended
December 31, 2000), audited consolidated financial statements for Borrower and
its Subsidiaries, which statements shall contain a copy of the balance sheet as
of the end of such year and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such year, setting forth in
each case in comparative form the figures for the previous fiscal year, and
accompanied by the opinion of a recognized independent public accounting firm
reasonably acceptable to the Lender (the "Independent Auditor") which opinion
shall state that such consolidated financial statements present fairly the
financial position of Borrower for the periods indicated in conformity with
GAAP. Such opinion shall not be limited because of a restricted or limited
examination by the Independent Auditor of any material portion of Borrower's
records. Borrower may satisfy its obligations under this Section 7.1(a) by
delivering to Lender its annual report or Form 10-K as filed with the SEC.

         (b) As soon as available, but not later than sixty (60) days after the
end of each of the first three Fiscal Quarters of each fiscal year (commencing
with the Fiscal Quarter ended March 31, 2001), unaudited consolidated financial
statements for Borrower and its Subsidiaries, which statements shall contain a
copy of the balance sheet as of the end of such quarter and the related
statements of income and cash flows for the period commencing on the first day
and ending on the last day of such quarter, and certified by Borrower's chief
financial officer as fairly presenting the financial position and the results of
operations of Borrower. Borrower may satisfy its obligations under this Section
7.1(b) by delivering to Lender its quarterly report on Form 10-Q filed with the
SEC.

         (c) As soon as available, but not later than thirty (30) days after the
end of the first two months of each Fiscal Quarter (commencing with February,
2001), unaudited consolidated financial statements for Borrower and its
Subsidiaries, which statements shall contain a copy of the balance sheet as of
the end of such month and the related statements of income, cash and cash
forecasts for the period commencing on the first day and ending on the last day
of such month, and certified by Borrower's chief financial officer as fairly
presenting the financial position and the results of operations of borrower.

         (d) As soon as available, but not later than thirty (30) days after the
end of each month, a certified aging report on all Receivables, certified by the
Borrower's chief financial officer, which report shall also include an
identification of any Receivables (including the identity of the Person
obligated thereunder) owed by a Person not previously obligated to Lender under
any Receivable set forth (with respect to any aging report other than the
initial aging report delivered hereunder) in the immediately preceding aging
report delivered hereunder.

                                      -27-

<PAGE>   29

         Section 7.2 Compliance Reports. Within thirty (30) days after the end
of each calendar month, a Compliance Report executed by Borrower's chief
financial officer, (A) stating that, to the best of his or her knowledge, no
Default or Event of Default has occurred as at the end of such month, or, if a
Default or an Event of Default has occurred, disclosing each such Default or
Event of Default and its nature, when it occurred, whether it is continuing, and
the steps being taken by Borrower with respect to such Default or Event of
Default; and (B) setting forth, in reasonable detail, the calculations used to
determine Borrower's attainment or non-attainment of the financial targets set
forth in Section 3.1(b); and (C) setting forth, in reasonable detail, the
calculations used to determine Borrower's maintenance of the Coverage Ratio
during such calendar month.

         Section 7.3 Access to Accountants. Borrower hereby authorizes Lender to
discuss the financial condition of Borrower and its Subsidiaries with Borrower's
independent public accountants.

         Section 7.4 Notice of Litigation and Other Matters. Prompt notice (and,
in any event notice within three (3) Business Days of Borrower's receipt of
notice (or knowledge) of the occurrence thereof) of any of the following events
after Borrower has received notice or otherwise becomes aware thereof:

         (a) the commencement of any material proceedings and investigations by
or before any governmental body and all actions and proceedings in any court or
before any arbitrator against, Borrower or any of its Subsidiaries or any
Necessary Authorizations;

         (b) any change with respect to the business, assets, liabilities,
financial position, results of operations of Borrower or any of its Subsidiaries
that could reasonably be expected to have a Material Adverse Effect;

         (c) any Default or Event of Default, or the occurrence or
non-occurrence of any event which constitutes, or which with the passage of time
or giving of notice or both would constitute a default by Borrower or any of its
Subsidiaries under any material agreement, other than this Agreement and the
other Loan Documents, to which Borrower or any of its Subsidiaries is a party or
by which any of their respective properties may be bound, which reasonably could
be expected to have a Material Adverse Effect, giving in each case the details
thereof and specifying the action proposed to be taken with respect thereto;

         (d) the occurrence of any event subsequent to the Closing Date which,
if such event had occurred prior to the Closing Date, would have constituted an
exception to the representation and warranty in Section 5.1(l) hereof; and

         (e) the occurrence of any "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) with respect to any
Plan of Borrower, any of its Subsidiaries or any of its ERISA Affiliates or the
commencement or threatened commencement of any litigation regarding any such
Plan or naming it or the Trustee of any such Plan with respect to such Plan.

                                      -28-

<PAGE>   30

                                    ARTICLE 8

                               NEGATIVE COVENANTS

         Borrower covenants and agrees that, so long as any of the Obligations
are outstanding and unpaid or Borrower has a right to borrow hereunder (whether
or not the conditions to borrowing have been or can be fulfilled):

         Section 8.1 Indebtedness. Borrower will not, and will not permit any of
its Subsidiaries to, create, assume, incur, or otherwise become or remain
obligated in respect of, or permit to be outstanding, any Indebtedness except:

         (a) Indebtedness to Lender arising under this Agreement, and the other
Loan Documents;

         (b) Trade or accounts payable and/or similar obligations, and accrued
expenses, incurred in the ordinary course of business (other than Indebtedness
for borrowed money);

         (c) Indebtedness with respect to capitalized lease obligations and
purchase money Indebtedness of Borrower or any of its Subsidiaries not to exceed
the aggregate sum of $3,000,000;

         (d) Indebtedness arising under the Financing Transactions, so long as
the outstanding principal amount of such Indebtedness does not exceed in the
aggregate, $7,500,000;

         (e) other Indebtedness for borrowed money or arising from financing or
factoring arrangements with Other Lenders pursuant to Section 3.1(a)(i);

         (f) Indebtedness with respect to taxes, assessments, governmental
charges or levies which are being contested in good faith by appropriate
proceedings, provided that adequate reserves with respect thereto are maintained
on the books of Borrower or its Subsidiaries, as the case may be;

         (g) Indebtedness existing on the date hereof and described on Schedule
8.1(g);

         (h) Indebtedness owing to Borrower by any Subsidiary Guarantor or owing
to any Subsidiary Guarantor by Borrower; and

         (i) any refinancing of any of the Indebtedness permitted pursuant to
the preceding clauses of this Section 8.1; provided, however, that the original
aggregate principal amount of such Indebtedness is not increased pursuant to
such refinancing.

         Section 8.2 Guaranties. Borrower will not, and will not permit any of
its Subsidiaries to, at any time guarantee or enter into or assume any guaranty,
or be obligated with respect to, or permit to be outstanding, any guaranty
except for guaranties made in the ordinary

                                      -29-

<PAGE>   31

course of the business by Borrower of obligations of any Subsidiary, which
obligations are otherwise permitted under this Agreement.

         Section 8.3 Liens. Borrower will not, and will not permit any of its
Subsidiaries to, create, assume, incur, or permit to exist or to be created,
assumed, or permitted to exist, directly or indirectly, any Lien on any of its
property, real or personal, now owned or hereafter acquired, except for
Permitted Liens.

         Section 8.4 Restricted Payments and Purchases. Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly declare or
make any Restricted Payment or Restricted Purchase, or set aside any funds for
any such purpose; provided, however, that any Subsidiary of Borrower or Borrower
may make Restricted Payments to Borrower or a Subsidiary of Borrower.

         Section 8.5 Investments. Borrower will not, and will not permit any of
its Subsidiaries to, make any loan or advance (other than loans to employees
described on Schedule 8.5 and additional loans approved by the Board of
Directors of Borrower or any of its Subsidiaries to officers thereof in an
aggregate amount (with respect to all such loans) not to exceed $1,000,000 at
any time) to, or otherwise acquire for consideration evidences of Indebtedness,
Capital Stock, partnership interests or other securities of or equity interests
in any Person other than Borrower or its Subsidiaries.

         Section 8.6 Affiliate Transactions. Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into any transaction or series of
transactions (including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service) whether or not in the
ordinary course of business, with any Affiliate of any of the Loan Parties other
than on fair and reasonable terms no less favorable to Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate; provided, however,
that the foregoing restriction shall not prohibit the transaction contemplated
by the agreements listed in Schedule 8.6.

         Section 8.7 Liquidation; Change in Ownership, Name, or Year;
Disposition or Acquisition of Assets. Borrower shall not, and shall not permit
any of its Subsidiaries to, at any time:

         (a) Liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up its business;

         (b) Sell, lease, abandon, transfer or otherwise dispose of, in a single
transaction or a series of related transactions, any assets, property or
business except (i) in the ordinary course of business at the fair market value
thereof and for cash or cash equivalents, (ii) for physical assets used,
consumed or otherwise disposed of in the ordinary course of business, and (iii)
the sale of Receivables in connection with factoring arrangements permitted by
Section 8.1(e);

         (c) Become a partner or joint venturer with any third party;

                                      -30-

<PAGE>   32

         (d) Acquire (i) all or any substantial part of the assets, property or
business of, or (ii) any assets that constitute a division or operating unit of
the business of, any other Person;

         (e) Merge or consolidate with any other Person or conduct a
reorganization or recapitalization of its Capital Stock;

         (f) Change its corporate name without giving Lender thirty (30) days
prior written notice of its intention to do so and complying with all
requirements of Lender in regard thereto;

         (g) Create any Subsidiary; provided, however, that Borrower may create
any such Subsidiary so long as (x) such Subsidiary executes a Subsidiary
Guarantee Agreement and (y) such Subsidiary's stock is pledged to Lender
pursuant to a Pledge Agreement; and

         (h) Change its year-end for accounting purposes from December 31.

         Section 8.8 Amendment and Waiver. Borrower shall not, without the prior
written consent of Lender, enter into any amendment, or agree to or accept any
waiver, of its certificate or articles of incorporation or by-laws.

         Section 8.9 ERISA Liability. Neither Borrower nor any of its
Subsidiaries shall, or shall cause or permit any ERISA Affiliate to, cause or
permit to occur an event which could result in the imposition of a Lien under
Section 302 or 4068 of ERISA or cause or permit to occur an ERISA Event to the
extent such ERISA Event could reasonably be expected to have a Material Adverse
Effect.

         Section 8.10 Negative Pledge. Borrower shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, enter into any agreement
with any Person that prohibits or restricts or limits the ability of Borrower or
any such Subsidiary to create, incur, pledge, or suffer to exist any Lien upon
any assets of Borrower or any such Subsidiary.

         Section 8.11 No Additional Deposit Accounts. Borrower shall not, and
shall not permit it Subsidiaries to, maintain any deposit account with any bank
or other financial institution other than those listed on Schedule 5.1(z) and
those deposit accounts (which shall not contain more than $2,500 at any time)
maintained with state regulatory authorities in connection with Borrower's
obtainment and maintenance of its mortgage broker's licenses in certain
jurisdictions without first notifying Lender within five (5) Business Days prior
to establishing any such deposit account.

                                      -31-

<PAGE>   33

                                    ARTICLE 9

                                     DEFAULT

         Section 9.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule, or regulation of any
governmental or non-governmental body:

         (a) Any representation or warranty made or deemed made by Borrower or
any other Loan Party herein or in any other Loan Document or which is contained
in any certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been incorrect in any material respect on or as of
the date made or deemed made;

         (b) Borrower shall (i) default in the payment when due of any principal
of or interest on any or all of the Advances, or (ii) default, and such default
shall continue for five (5) or more days, in the payment when due of any fees or
any other amounts owing hereunder or under any other Loan Document;

         (c) Any Loan Party shall (i) default in the due performance or
observance by it of any term, covenant or agreement contained in Article 7 or 8
of this Agreement, or (ii) default in the due performance or observance by it of
any term, covenant or agreement (other than those referred to in Section 9.1(a),
9.1(b) or clause (i) of this Section 9.1(c)) contained in this Agreement or any
of the other Loan Documents and such default, in the case of the preceding
clauses (i) and (ii), shall continue unremedied for a period of at least 30 days
after Borrower obtains knowledge thereof including as a result of written notice
to the defaulting party by Lender;

         (d) There shall occur any Change of Control;

         (e) There shall be entered a decree or order for relief in respect of
Borrower or any of its Subsidiaries under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other applicable federal or state
bankruptcy law or other similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator, or similar official of Borrower or
any of its Subsidiaries or of any substantial part of any of their respective
properties, or ordering the winding-up or liquidation of the affairs of Borrower
or any of its Subsidiaries or an involuntary petition shall be filed against
Borrower or any of its Subsidiaries and a temporary stay entered, and (i) such
involuntary petition and stay shall not be diligently contested, or (ii) any
such involuntary petition and stay shall continue undismissed for a period of
sixty (60) consecutive days;

         (f) Borrower or any of its Subsidiaries shall file a petition, answer,
or consent seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other applicable federal or state
bankruptcy law or other similar law, or Borrower or any of its Subsidiaries
shall consent to the institution of proceedings thereunder or to the filing of
any such petition or to the appointment or taking of possession of a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or other similar
official of Borrower or any

                                      -32-

<PAGE>   34

of its Subsidiaries or of any substantial part of any of their respective
properties, or Borrower or any of its Subsidiaries shall fail generally to pay
its debts as they become due, or Borrower or any of its Subsidiaries shall take
any action in furtherance of any such action;

         (g) One or more judgments or decrees shall be entered against any Loan
Party involving a liability of $100,000 or more in the case of any one such
judgment or decree and $500,000 or more in the aggregate for all such judgments
and decrees for all Loan Parties (all to the extent not covered by insurance
with respect to which such Loan Party shall have delivered to Lender a written
acknowledgement from the applicable insurance carrier of its unconditional
liability to pay such judgment and related costs) and any such judgments or
decrees shall not have been vacated, discharged or stayed or bonded pending
appeal for a period of sixty (60) consecutive days at any time after the entry
thereof;

         (h) [Intentionally left blank]

         (i) (A) Any Loan Party shall (1) default in any payment with respect to
any Indebtedness (other than the Obligations but including Indebtedness
evidenced by the Financing Transactions) beyond the period of grace, if any,
applicable thereto or (2) default in the observance or performance of any
agreement or condition relating to any Indebtedness (other than the Obligations
but including Indebtedness evidenced by the Financing Transactions) or contained
in any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause any such Indebtedness to become due prior to its stated maturity; or (B)
any such Indebtedness of any Loan Party shall be declared to be due and payable
prior to the stated maturity thereof, provided that it shall not constitute an
Event of Default pursuant to clauses (A) or (B) above unless the principal
amount of all Indebtedness referred to in clauses (A) and (B) above exceeds
$100,000 at any one time;

         (j) All or any portion of any Loan Document shall at any time and for
any reason be declared to be null and void, or a proceeding shall be commenced
by Borrower, any of its Subsidiaries or any of respective Affiliates, or by any
governmental authority having jurisdiction over Borrower, any of its
Subsidiaries or any of its Affiliates, seeking to establish the invalidity or
unenforceability thereof (exclusive of questions of interpretation of any
provision thereof), or Borrower, or any of its Subsidiaries or any of its
Affiliates shall deny that it has any liability or obligation for the payment of
principal or interest purported to be created under any Loan Document;

         (k) Borrower defaults under any of its material obligations beyond the
period of grace, if any, applicable thereto, under the agreements, contracts or
documents executed in connection with the Financing Transactions; or

         (l) Borrower shall fail to maintain the Coverage Ratio at the end of
each month, as reported in each Compliance Report delivered in accordance with
Section 7.2.

         Section 9.2 Remedies. If an Event of Default shall have occurred and be
continuing, and until such Event of Default is waived in writing by Lender,

                                      -33-

<PAGE>   35

         (a) With the exception of an Event of Default specified in Section
9.1(e) or (f) hereof, Lender may (i) terminate the Commitment, or (ii) declare
the principal of and interest on the Advances and the Note and all other
Obligations to be forthwith due and payable without presentment, demand,
protest, or notice of any kind, all of which are hereby expressly waived,
anything in this Agreement or in the Note to the contrary notwithstanding, or
both.

         (b) Upon the occurrence and continuance of an Event of Default
specified in Sections 9.1(e) or (f) hereof, such principal, interest, and other
Obligations shall thereupon and concurrently therewith become due and payable,
and the Commitment shall forthwith terminate, all without any action by Lender
or any holder of the Note and without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived, anything in this
Agreement or in the Note to the contrary notwithstanding.

         (c) Lender may exercise all of the post default rights granted to it
under the Loan Documents or under Applicable Law. Lender shall have the right to
the appointment of a receiver for the property and assets of Borrower and its
Subsidiaries, and Borrower hereby consents, for itself and on behalf of its
Subsidiaries, to such rights and such appointment and hereby waives any
objection Borrower or any Subsidiary may have thereto or the right to have a
bond or other security posted by Lender in connection therewith.

         (d) The rights and remedies of Lender hereunder shall be cumulative and
not exclusive.

                                   ARTICLE 10

                                  MISCELLANEOUS

         Section 10.1 Notices.

         (a) All notices and other communications under this Agreement shall be
in writing and shall be deemed to have been given five (5) days after deposit in
the mail, designated as certified mail, return receipt requested, post-prepaid,
or one (1) Business Day after being entrusted to a reputable commercial
overnight delivery service, or when sent by facsimile (provided confirmation is
obtained and such notice or communication is thereafter deposited in the mail,
postage prepaid) addressed to the party to which such notice is directed at its
address or telephone number set forth below. All notices and other
communications under this Agreement shall be given to the parties hereto at the
following addresses:

                  (i)  If to Borrower, to it at:

                       LendingTree, Inc.
                       11115 Rushmore Drive
                       Charlotte, North Carolina 28277
                       Attn:  Keith Hall, Robert J. Flemma, Jr., Matt Packey
                       Facsimile No. (704) 541-1824

                                      -34-

<PAGE>   36

                       with a copy to:

                       Kennedy Covington Lobdell & Hickman L.L.P.
                       100 North Tryon Street, Suite 4200
                       Charlotte, North Carolina 28202
                       Attention: Sean M. Jones, Esq.
                       Facsimile No. (704) 331-7598

                  (ii) If to Lender, to it at:

                       The Union Labor Life Insurance Company
                       111 Washington Avenue, N.W.
                       Washington, DC 20001
                       Attention: Mr. Robert Kennedy
                       Facsimile No. (202) 682-4690

                       with a copy to:

                       Paul, Hastings, Janofsky & Walker LLP
                       555 South Flower Street, 23rd Floor
                       Los Angeles, CA 90071
                       Attn: Craig S. Seligman, Esq.
                       Facsimile No. (213) 996-3307

         (b) Any party hereto may change the address to which notices shall be
directed under this Section 10.1 by giving ten (10) days' written notice of such
change to the other parties.

         Section 10.2 Expenses. Borrower agrees to promptly pay:

         (a) All reasonable out-of-pocket expenses of Lender in connection with
the preparation, negotiation, execution, and delivery of this Agreement and the
other Loan Documents, the transactions contemplated hereunder and thereunder,
and the making of the initial Advance hereunder, including, but not limited to,
the reasonable fees and disbursements of counsel for Lender;

         (b) All reasonable out-of-pocket expenses of Lender in connection with
the administration of transactions contemplated in this Agreement or the other
Loan Documents, and the preparation, negotiation, execution, and delivery of any
waiver, amendment, or consent by Lender relating to this Agreement or the other
Loan Documents, including, but not limited to, the reasonable fees and
disbursements of counsel for Lender; and

         (c) All reasonable out-of-pocket costs and expenses of Lender in
connection with any restructuring, refinancing, or "work out" of the
transactions contemplated by this Agreement, and of obtaining performance under
this Agreement or the other Loan Documents, and all reasonable out-of-pocket
costs and expenses of collection if default is made in the payment of the Note,
which in each case shall include the reasonable fees and expenses of

                                      -35-

<PAGE>   37

counsel for Lender, and the reasonable fees and expenses of any experts, agents,
or consultants of Lender.

         Section 10.3 Waivers. The rights and remedies of Lender under this
Agreement and the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which it would otherwise have. No failure or delay by
Lender in exercising any right shall operate as a waiver of such right. Lender
expressly reserves the right to require strict compliance with the terms of this
Agreement in connection with any funding of any Advance. In the event Lender
decides to fund any Advance at a time when Borrower is not in strict compliance
with the terms of this Agreement, such decision by Lender shall not be deemed to
constitute an undertaking by Lender to fund any further Advances or preclude
Lender from exercising any rights available to it under the Loan Documents or at
law or equity. Any waiver or indulgence granted by Lender shall not constitute a
modification of this Agreement, except to the extent expressly provided in such
waiver or indulgence, or constitute a course of dealing by Lender at variance
with the terms of the Agreement such as to require further notice by Lender of
its intent to require strict adherence to the terms of the Agreement in the
future. Any such actions shall not in any way affect the ability of Lender, in
its discretion, to exercise any rights available to it under this Agreement or
under any other agreement relating to Borrower, whether or not Lender is a
party.

         Section 10.4 Set-Off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
Lender and any subsequent holder or holders of the Note are hereby authorized by
Borrower at any time or from time to time after any Event of Default has
occurred and is continuing, without notice to Borrower or to any other Person,
any such notice being hereby expressly waived to the extent permitted by
Applicable Law, to set-off and to appropriate and apply any and all deposits
(general or special, time or demand, including, but not limited to, Indebtedness
evidenced by certificates of deposit, in each case whether matured or unmatured)
and any other Indebtedness at any time held or owing by Lender or such holder to
or for the credit or the account of Borrower, against and on account of the
obligations and liabilities of Borrower, to Lender or such holder under this
Agreement, the Note, and any other Loan Document, including, but not limited to,
all claims of any nature or description arising out of or connected with this
Agreement, the Note, or any other Loan Document, irrespective of whether or not
(a) Lender or the holder of the Note shall have made any demand hereunder or (b)
Lender shall have declared the principal of and interest on the Advance and the
Note and other amounts due hereunder to be due and payable as permitted by
Section 10.2 hereof and although said obligations and liabilities, or any of
them, shall be contingent or unmatured. Any sums obtained by Lender or by any
subsequent holder of the Note shall be subject to the application of payment
provisions of Article 2 hereof.

         Section 10.5 Assignment.

         (a) Borrower shall not assign or transfer any of its rights or
obligations hereunder, under the Note or under any other Loan Document without
the prior written consent of Lender.

         (b) Lender may assign, negotiate, pledge or otherwise hypothecate all
or any portion of this Agreement, or grant participations herein, in all or any
portion of the Advance or in any of its rights or security hereunder and under
the other Loan Documents or any part thereof, including, without limitation, any
instruments securing Borrower's obligations hereunder.

                                      -36-

<PAGE>   38

         Section 10.6 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.

         Section 10.7 Governing Law and Jurisdiction; Waiver of Jury Trial. (a)
THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK (EXCLUDING ITS CHOICE OF LAW RULES)
PROVIDED THAT LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

         (a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, BOTH
LOCATED IN NEW YORK CITY, NEW YORK (COLLECTIVELY, THE "NEW YORK COURTS"), AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF BORROWER AND LENDER CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE NEW YORK COURTS. EACH OF BORROWER AND LENDER IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN THE NEW YORK COURTS IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. BORROWER AND LENDER EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.

         (b) BORROWER AND LENDER EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL
BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED
TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. BORROWER AND
LENDER EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

         Section 10.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without

                                      -37-

<PAGE>   39

invalidating the remaining provisions hereof in that jurisdiction or affecting
the validity or enforceability of such provision in any other jurisdiction.

         Section 10.9 Headings. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.

         Section 10.10 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement and the other documents described or contemplated herein
embody the entire Agreement and understanding among the parties hereto and
thereto and supersede all prior agreements, understandings, and conversations
relating to the subject matter hereof and thereof.

         Section 10.11 Amendment and Waiver. Neither this Agreement nor any term
hereof may be amended orally, nor may any provision hereof be waived orally but
only by an instrument in writing signed by Lender and by Borrower.

         Section 10.12 Other Relationships. No relationship created hereunder or
under any other Loan Document shall in any way affect the ability of Lender to
enter into or maintain business relationships with Borrower, or any of its
Affiliates, beyond the relationships specifically contemplated by this Agreement
and the other Loan Documents.

         Section 10.13 Pronouns. The pronouns used herein shall include, when
appropriate, either gender and both singular and plural, and the grammatical
construction of sentences shall conform thereto.

         Section 10.14 Disclosure. Upon the approval by Borrower of the contents
thereof, Borrower agrees that Lender shall have the right to issue press
releases regarding the making of the Advances to Borrower pursuant to the terms
of this Agreement.

                                      -38-

<PAGE>   40

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers, all as of the day and
year first above written.

BORROWER:                           LENDINGTREE, INC.

                                    By:
                                       -----------------------------------------
                                             Its:
                                                 -------------------------------

LENDER:                             UNION LABOR LIFE INSURANCE COMPANY,
                                    ACTING ON BEHALF OF ITS SEPARATE
                                    ACCOUNT P

                                    By:
                                       -----------------------------------------
                                             Its:
                                                 -------------------------------

                                      -39-

<PAGE>   41

                                   SCHEDULE 1

                                 PAYMENT OFFICE

The Union Labor Life Insurance Company
111 Washington Avenue, N.W.
Washington, DC 20001

                                       -1-

<PAGE>   42

                                   SCHEDULE 2

                              QUALIFIED RECEIVABLES

The Receivables constituting Qualified Receivables shall not include any
Receivable:

         (a) that does not arise from the licensing of Intellectual Property,
the sale of goods or the performance of services by Borrower in the ordinary
course of Borrower's business;

         (b) upon which (i) Borrower's right to receive payment is not absolute
or is contingent upon the fulfillment of any condition whatsoever or (ii)
Borrower is not able to bring suit or otherwise enforce its remedies against the
obligor thereunder through judicial process;

         (c) (i) against which any defense, counterclaim or setoff, whether
well-founded or otherwise, is asserted against such Receivables or (ii) which
are "contra" Receivables.

         (d) that is not a true and correct statement of a bona fide
indebtedness incurred in the amount of the Receivables and accepted by the
Person obligated under such Receivables;

         (e) that is not owned by Borrower or is subject to any right, claim, or
interest of another Person, other than the Lien in favor of Lender;

         (f) that arises from a transaction with an employee, Affiliate,
Subsidiary or shareholder of Borrower or any other Loan Party, or an entity
which has common officers or directors with Borrower;

         (g) that is the obligation of a Person located in a country other than
the U.S. unless such Receivables are supported by a letter of credit acceptable
to Lender;

         (h) that is the obligation of a Person to whom Borrower is or may
become liable for goods sold or services rendered by such Person to Borrower, to
the extent of Borrower's liability to such Person;

         (i) that arises on terms by reason of which the payment by the obligor
of such Receivable may be conditional;

         (j) that is in default; provided, that Receivables shall be deemed in
default upon the occurrence of any of the following:

                  (i) the Receivables are not paid within 60 days from its due
         date or 90 days from their invoice date;

                  (ii) the Person obligated on such Receivables suspends
         business, makes a general assignment for the benefit of creditors, or
         fails to pay its debts generally as they come due; or

                  (iii) a petition is filed by or against any Person obligated
         upon such Receivables under any bankruptcy law or any other national,
         state or provincial receivership, insolvency relief or other law or
         laws for the relief of debtors;

                                       -1-

<PAGE>   43

         (k) that is the obligation of a Person that is in default (as defined
in subparagraph (j) above) on 50% or more of the Receivables upon which such
Person is obligated;

         (l) as to which Lender's interest therein is not a first priority
perfected security interest (including those Receivables of the federal
government subject to the Federal Assignment of Claims Act of 1940 for which the
Borrower has not yet obtained the necessary consents as required thereunder);

         (m) to the extent that such Receivables exceed any credit limit
established by Lenders in Lender's sole discretion, which discretion shall be
exercised reasonably based on such credit and collateral considerations as
Lender may reasonably deem appropriate;

         (n) that represents interest payments or service charges owing to
Borrower; or

         (o) that is not otherwise acceptable in the sole discretion of Lender,
which discretion shall be exercised reasonably based on such credit and
collateral considerations as Lender may reasonably deem appropriate;

provided, that Lender shall have the right to create and adjust eligibility
standards and related reserves from time to time in its sole judgment.

                                       -2-

<PAGE>   44

ARTICLE 1             DEFINITIONS.............................................1

ARTICLE 2             THE LOAN................................................9

         Section 2.1       Extension of Credit................................9

                  (b)      Borrowing Mechanics................................9

                  (c)      Minimum Amounts....................................9

                  (d)      Use of Proceeds....................................9

         Section 2.2       Repayment..........................................9

         Section 2.3       Optional/Mandatory Prepayments and Commitment
                             Reductions......................................10

         Section 2.4       Interest..........................................11

                  (a)      Rate of Interest..................................11

                  (b)      Payment of Interest...............................11

                  (c)      Interest Payment Dates............................11

         Section 2.5       Computations of Interest and Fees.................11

         Section 2.6       Note; Loan Accounts...............................12

         Section 2.7       Manner of Payment.................................12

                  (a)      Payment Dates.....................................12

                  (b)      No Deduction; Taxes...............................12

         Section 2.8       Application of Payments...........................12

         Section 2.9       Maximum Rate of Interest..........................12

ARTICLE 3             SECURITY...............................................13

         Section 3.1       Security for the Obligations......................13

ARTICLE 4             CONDITIONS PRECEDENT...................................15

         Section 4.1       Conditions to Closing.............................15

         Section 4.2       Conditions Precedent to Each Advance..............16

ARTICLE 5             REPRESENTATIONS AND WARRANTIES.........................17

         Section 5.1       General Representations and Warranties............17

                  (a)      Organization; Power; Qualification................17

                  (b)      Authorization; Enforceability.....................17

                  (c)      Subsidiaries......................................18

                  (d)      Capitalization....................................18

                  (e)      No Conflict.......................................18

                  (f)      Necessary Authorizations..........................19

                  (g)      Title to Properties...............................19

                  (h)      Taxes.............................................19

                  (i)      Financial Statements..............................19

<PAGE>   45

                  (j)      No Adverse Change.................................20

                  (k)      Investments and Guaranties........................20

                  (l)      Liabilities, Litigation...........................20

                  (m)      ERISA.............................................20

                  (n)      Intellectual Property.............................21

                  (o)      Compliance with Law; Absence of Default...........21

                  (p)      Compliance with Regulations U and X...............21

                  (q)      Solvency..........................................21

                  (r)      Environmental Matters.............................21

                  (s)      Name of Borrower..................................21

                  (t)      Regulated Entities................................22

                  (v)      Ownership of Shares...............................22

                  (w)      Registration Rights and Voting Rights.............22

                  (x)      Offering..........................................22

                  (y)      Insurance.........................................23

                  (z)      Deposit Accounts with Financial Institutions......23

                  (aa)     ERISA Party In Interest...........................23

         Section 5.2       Investment Representations........................23

         Section 5.3       Survival of Representations and Warranties........23

ARTICLE 6             GENERAL COVENANTS......................................23

         Section 6.1       Preservation of Existence and Similar Matters.....23

         Section 6.2       Compliance with Applicable Law....................24

         Section 6.3       Maintenance of Properties and Assets..............24

         Section 6.4       Accounting Methods and Financial Records..........24

         Section 6.5       Insurance.........................................24

         Section 6.6       Payment of Taxes and Claims.......................24

         Section 6.7       Visits and Inspections............................24

         Section 6.8       Payment of Indebtedness...........................25

         Section 6.9       Conduct of Business...............................25

         Section 6.10      ERISA.............................................25

         Section 6.11      Further Assurances................................25

         Section 6.12      Indemnity.........................................25

         Section 6.13      Environmental Matters.............................26

         Section 6.14      Subsidiary Guarantors.............................26

         Section 6.15      Coverage Ratio....................................26

<PAGE>   46

                  (a)      26

ARTICLE 7             INFORMATION COVENANTS..................................26

         Section 7.1       Financial Statements and Information..............26

         Section 7.2       Compliance Reports................................27

         Section 7.3       Access to Accountants.............................27

         Section 7.4       Notice of Litigation and Other Matters............27

ARTICLE 8             NEGATIVE COVENANTS.....................................28

         Section 8.1       Indebtedness......................................28

         Section 8.2       Guaranties........................................29

         Section 8.3       Liens.............................................29

         Section 8.4       Restricted Payments and Purchases.................29

         Section 8.5       Investments.......................................29

         Section 8.6       Affiliate Transactions............................29

         Section 8.7       Liquidation; Change in Ownership, Name, or
                             Year; Disposition or Acquisition of Assets......30

         Section 8.8       Amendment and Waiver..............................30

         Section 8.9       ERISA Liability...................................30

         Section 8.9       ERISA Liability TC "Section 8.9 ERISA
                             Liability" \l "2"...............................30

         Section 8.10      Negative Pledge...................................31

         Section 8.11      No Additional Deposit Accounts....................31

ARTICLE 9             DEFAULT................................................31

         Section 9.1       Events of Default.................................31

         Section 9.2       Remedies..........................................33

ARTICLE 10            MISCELLANEOUS..........................................33

         Section 10.1      Notices...........................................33

         Section 10.2      Expenses..........................................34

         Section 10.3      Waivers...........................................35

         Section 10.4      Set-Off...........................................35

         Section 10.5      Assignment........................................36

         Section 10.6      Counterparts......................................36

         Section 10.7      Governing Law and Jurisdiction; Waiver of
                             Jury Trial......................................36

         Section 10.8      Severability......................................37

         Section 10.9      Headings..........................................37

         Section 10.10     Entire Agreement..................................37

         Section 10.11     Amendment and Waiver..............................37

<PAGE>   47

         Section 10.12     Other Relationships...............................37

         Section 10.13     Pronouns..........................................37

         Section 10.14     Disclosure........................................37

<PAGE>   48

EXHIBIT                         TITLE

Exhibit A                       Form of Promissory Note
Exhibit B                       Form of Request for Advance
Exhibit C                       Form of Loan Party Certificate
Exhibit D                       Form of Subsidiary Guarantee Agreement
Exhibit E                       Form of Pledge Agreement
Exhibit F                       Form of Warrant
Exhibit G                       Form of Registration Rights Agreement
Exhibit H                       Business Plan

SCHEDULE                        TITLE

Schedule 1                      Payment Office
Schedule 2                      Qualified Receivables
Schedule 3                      Liens
Schedule 5.1(c)                 Subsidiaries or Affiliates
Schedule 5.1(d)                 Capitalization
Schedule 5.1(h)                 Tax Audits
Schedule 5.1(l)                 Litigation
Schedule 5.1(n)                 Intellectual Property
Schedule 5.1(s)                 Name of Borrower
Schedule 5.1(w)                 Registration Rights and Voting Rights
Schedule 5.1(z)                 Deposit Accounts
Schedule 8.1(g)                 Indebtedness
Schedule 8.5                    Loans to Employees
Schedule 8.6                    Affiliate Transactions<PAGE>   1
                                                                    Exhibit 10.5

                            REVOLVING CREDIT FACILITY

         THIS REVOLVING CREDIT FACILITY is entered into as of March 7, 2001 by
and between LendingTree, Inc., a Delaware corporation (the "Borrower"), and the
Federal Home Loan Mortgage Corporation, a federally-chartered corporation (the
"Lender").

                              STATEMENT OF PURPOSE

         A. The Borrower has requested that the Lender provide revolving loans
of up to $2,500,000 in order to finance (i) the continued development and
implementation of the Borrower's technology, advertising and marketing and (ii)
the ongoing working capital needs of the Borrower, but not for warehouse lending
or any other consumer loan funding purpose.

         B. The Lender is willing to make the above-described revolving loans to
the Borrower in accordance with the terms of this agreement.

         NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Borrower and the Lender hereby agree as
follows:

                                    ARTICLE I
                                   DEFINITIONS

         1.01 As used herein, each of the following terms has the meaning
indicated, unless the context otherwise requires:

                  "Advances" shall have the meaning given to such term in
         Section 2.01 hereof.

                  "Affiliates" means, with respect to any Person, any other
         Person that, directly or indirectly through one or more intermediaries,
         controls, or is controlled by, or is under common control with, such
         first Person or any of its Subsidiaries. As used in this definition,
         "control" means the possession, directly or indirectly, of the power to
         direct or cause the direction of the management or policies of a Person
         (whether through ownership of securities or limited liability company,
         partnership or other ownership interests, by contract or otherwise).

                  "Applicable Rate" shall have the meaning given to such term in
         Section 2.04 hereof.

                  "Borrower" shall have the meaning given to such term in the
         Preamble of this Revolving Credit Facility.

                  "Business Day" means any day other than (a) a Saturday, (b) a
         Sunday, (c) a day on which banking institutions are authorized or
         required to be closed in New York City, or (d) a day on which the
         Lender's offices are closed.

<PAGE>   2

                  "Change of Control" shall mean (x) any transaction, or series
         of related transactions, however structured (including, without
         limitation, a purchase of securities or other equity interests, merger,
         tender offer whether or not contested by the Borrower, or transfer or
         other dispositions of assets) that results in any of the following and
         (y) shall be deemed to have occurred upon the earliest of any of the
         following to occur:

                           (i) any Person or group (within the meaning of
                  Section 13(d) or 14(d) of the Securities Exchange Act of 1934,
                  as amended (the "Exchange Act")) (other than Capital Z
                  Financial Services Fund II, L.P. and its Affiliates) has
                  become, directly or indirectly, the beneficial owner (within
                  the meaning of Rule 13-d of the Exchange Act), by way of
                  merger, consolidation or otherwise, of 50% or more of the
                  voting power of the then-outstanding Voting Securities of the
                  Borrower, on a fully-diluted basis, after giving effect to the
                  conversion and exercise of all outstanding warrants, options
                  and other securities of the Borrower convertible into or
                  exercisable for Voting Securities of the Borrower (whether or
                  not such securities are then currently convertible or
                  exercisable); or

                           (ii) the sale, lease, transfer or other disposition
                  of all or substantially all of the consolidated assets of the
                  Borrower to any Person or group; or

                           (iii) the Borrower consolidates with or merges with
                  or into another Person or any Person consolidates with, or
                  merges with or into, the Borrower, in any such event pursuant
                  to a transaction in which immediately after the consummation
                  thereof the Persons owning the then-outstanding Voting
                  Securities of the Borrower immediately prior to such
                  consummation shall not own a majority in the aggregate (by
                  reason of such prior ownership) of the then-outstanding Voting
                  Securities of the Borrower or the surviving entity if other
                  than the Borrower; or

                           (iv) during any period of two consecutive calendar
                  years, individuals who at the beginning of such period
                  constituted the Board of Directors, together with any new
                  members of such Board of Directors whose election by such
                  Board of Directors or whose nomination for election by the
                  stockholders of the Borrower was approved by a vote of at
                  least a majority of the members of such Board of Directors
                  then still in office who were directors at the beginning of
                  such period or whose election or nomination for election was
                  previously so approved, cease for any reason to constitute a
                  majority of the directors of the Borrower then in office.

                  "Closing Date" means the date of this Revolving Credit
         Facility.

                  "Commitment Fee" shall have the meaning given to such term in
         Section 2.05 hereof.

                  "Default" means any of the events specified in Section 6.01
         hereof regardless of whether there shall have occurred any passage of
         time or giving of notice (or both) that would be necessary in order to
         constitute an Event of Default.

                                       2
<PAGE>   3

                  "EBITDA" means, for any period, the Borrower's operating
         income (loss), excluding non-cash charges for compensation attributable
         to options, warrants and other equity instruments, depreciation,
         amortization and one-time non-operating charges, if any, as determined
         by the Borrower in its reasonable judgment consistent with the
         information as or to be reported in the Borrower's earnings releases
         and included or to be included in the Borrower's SEC Filings, and
         excludes deferred revenues adjustments determined as follows:

                  The Borrower may, from time to time, perform services under
         customized software arrangements. At times, GAAP accounting may require
         the Borrower to recognize expenses before recognizing proportional
         revenues for such arrangements. If this occurs during the term of the
         Revolving Credit Facility, the actual EBITDA amount will be increased
         to the extent of any cash paid in advance (deferred revenue) to the
         Borrower for such arrangements.

                  "Effective Date" means the later of (x) the date hereof and
         (y) the date as of which all of the conditions precedent to Lender's
         obligations to make its initial Advance set forth in Section 2.08
         hereof shall have been satisfied or waived by Lender.

                  "Escrow Agreement" means the Software Escrow Agreement dated
         as of December 20, 2000 by and among the Borrower, the Lender and Fort
         Knox Escrow Services, Inc., as amended, modified and supplemented from
         time to time.

                  "Escrow Agreement Amendment" shall have the meaning given to
         such term in Section 2.08(a)(iii).

                  "Events of Default" shall have the meaning given to such term
         in Section 6.01 hereof.

                  "Excluded Financings" means (i) indebtedness incurred in
         connection with accounts receivable financing or factoring
         transactions; or (ii) indebtedness under capitalized leases or incurred
         for purposes of financing the purchase price or construction cost of
         equipment, fixtures or similar property (so long as such indebtedness
         is secured only by such equipment, fixtures or property and the amount
         of such indebtedness is reasonably equivalent to the cost of financing
         such equipment, fixtures or property).

                  "Exercise Price" shall have the meaning given to such term in
         Section 2.04(a)(ii) hereof.

                  "Financial Statements" shall have the meaning given to such
         term in Section 3.01(d) hereof.

                  "Financing Transactions" means, collectively, the transactions
         contemplated by the Paul Revere Purchase Agreement and the Preferred
         Stock Transaction.

                  "GAAP" means generally accepted accounting principles and
         practices in the United States as in effect from time to time applied
         on a consistent basis.

                                       3
<PAGE>   4

                  "Interest Payment Date" shall have the meaning given to such
         term in Section 2.04(a) hereof.

                  "Judgments" shall have the meaning given to such term in
         Section 3.01(b)(iv) hereof.

                  "Laws" shall have the meaning given to such term in Section
         3.01(b)(iv) hereof.

                  "Lender" shall have the meaning given to such term in the
         Preamble of this Revolving Credit Facility.

                  "License Agreement" means the Software Customization, License
         and Services Agreement dated as of July 7, 2000 between the Borrower
         and the Lender, as amended, modified and supplemented from time to
         time.

                  "License Agreement Amendment" shall have the meaning given to
         such term in Section 2.08(a)(iii).

                  "Liens" means all liens, claims, rights, pledges, charges,
         options, rights of third parties, encumbrances, security interests,
         conditional sales or other restrictions or limitations of any nature
         whatsoever.

                  "Loan Documents" means this Revolving Credit Facility, the
         Note, the Warrant, the Subsidiary Guaranty and the Registration Rights
         Agreement and all other documents, agreements, and instruments now or
         hereafter existing, evidencing, or otherwise relating to this Revolving
         Credit Facility (but excluding the License Agreement and the Escrow
         Agreement), as any of the foregoing items may be amended, modified or
         supplemented from time to time.

                  "Note" shall have the meaning given to such term in Section
         2.03.

                  "Notice of Borrowing" shall have the meaning given to such
         term in Section 2.02.

                  "Obligations" means all present and future indebtedness,
         obligations and liabilities of any form or nature, whether or not
         matured or unmatured, fixed or contingent, of the Borrower to the
         Lender, and all renewals, extensions and modifications thereof, arising
         pursuant to any of the Loan Documents and all interest accruing
         thereon, and all other fees, costs, expenses, charges and attorneys'
         fees payable, and covenants performable, under any of the Loan
         Documents (including without limitation this Revolving Credit
         Facility).

                  "Paul Revere Purchase Agreement" means the Common Stock
         Purchase Agreement dated as of March __, 2001 by and between the
         Borrower and Paul Revere Capital Partners, Ltd., a British Virgin
         Islands corporation.

                                       4
<PAGE>   5

                  "Permitted Liens" shall mean, when used with respect to the
         Borrower's assets (real or personal, tangible or intangible), any of
         the following liens or encumbrances:

                           (i) liens imposed by mandatory provisions of law of
                  carriers, warehousemen, mechanics and materialmen for sums not
                  yet due and incurred in the ordinary course of business;

                           (ii) liens incurred in the ordinary course of
                  business in connection with worker's compensation,
                  unemployment insurance or other forms of governmental
                  insurance or benefits;

                           (iii) liens for taxes, assessments or governmental
                  charges or levies if the underlying obligations for the same
                  are not delinquent or are being contested in good faith and
                  with due diligence by appropriate proceedings, and if the
                  Borrower has set aside on its books such reserves (segregated
                  to the extent required by sound accounting practices) as may
                  be required by GAAP;

                           (iv) liens set forth on Exhibit A hereto;

                           (v) liens incurred in the ordinary course of business
                  that are not material to the Borrower's consolidated financial
                  condition;

                           (vi) liens in favor of Union Labor Life Insurance
                  Company securing the Borrower's indebtedness under the ULLICO
                  Credit Facility, the principal amount of which shall not
                  exceed $5,000,000 at any time;

                           (vii) liens in favor of lessors under capitalized
                  leases; provided, however, that each such lien extends only to
                  the property which is the subject of such capitalized lease
                  and is given only to secure the obligations under such
                  capitalized lease;

                           (viii) liens to secure purchase money indebtedness;
                  provided, however, that each such lien is given only to secure
                  the purchase price of the property which is the subject of
                  such purchase money indebtedness, does not extend to any other
                  property and is given at the time of acquisition of the
                  property;

                           (ix) liens on accounts receivable incurred in
                  connection with financing or factoring transactions; and

                           (x) liens in favor of the Lender under the License
                  Agreement.

                  "Person" means an individual, sole proprietorship,
         partnership, limited liability company, corporation, trust,
         unincorporated organization, association, joint venture or a government
         or agency or political subdivision thereof.

                                       5
<PAGE>   6

                  "Preferred Stock Transaction" means the transactions
         contemplated by the Series A 8% Convertible Preferred Stock Purchase
         Agreement dated as of March __, 2001 by and among the Borrower and the
         other parties thereto.

                  "Registration Rights Agreement" means the Registration Rights
         Agreement substantially in the form of Exhibit B hereto.

                  "Revenue" means the amount of the Borrower's total revenue as
         set forth in the Borrower's financial statements prepared in accordance
         with GAAP, and as are or to be reported in the Borrower's earnings
         releases and included or to be included in the Borrower's SEC Filings.

                  "Revolving Credit Facility" means this Revolving Credit
         Facility, including the schedules and exhibits hereto (but excluding
         the License Agreement and the Escrow Agreement(each as amended from
         time to time)), each as amended, modified and supplemented from time to
         time.

                  "Revolving Loan" means the aggregate principal amount of
         Advances at any one time outstanding.

                  "Revolving Loan Committed Amount" shall have the meaning given
         to such term in Section 2.01.

                  "SEC Filings" means documents and reports filed by the
         Borrower with the Securities and Exchange Commission pursuant to the
         Securities Act of 1933, as amended, or Sections 13 or 15(d) of the
         Exchange Act.

                  "Subsidiary" or "Subsidiaries" means any corporation or
         corporations of which more than fifty percent (50%) of the voting stock
         at the time of computation is owned, directly or indirectly, by the
         Borrower.

                  "Subsidiary Guaranty" means the Subsidiary Guaranty Agreement,
         substantially in the form of Exhibit C attached hereto, executed by
         each of the Borrower's Subsidiaries pursuant to the terms hereof.

                  "Termination Date" means the second anniversary of the Closing
         Date or such earlier date as provided herein.

                  "ULLICO Credit Facility" means the revolving credit facility
         in the aggregate principal amount of $5,000,000 between Union Labor
         Life Insurance Company and the Borrower.

                  "Voting Securities" means all securities or other equity
         interests that entitle the holder thereof to vote generally in the
         election of directors (or comparable management authority if other than
         a corporation).

                                       6
<PAGE>   7

                  "Warrant" means any warrant issued by the Borrower to Lender,
         delivered in accordance with the terms hereof, and substantially in the
         form of Exhibit D attached hereto.

         The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.

         1.02 All accounting terms not specifically defined herein shall be
construed in accordance with GAAP.

                                   ARTICLE II
                                 REVOLVING LOANS

         2.01 Subject to and in reliance upon the terms, conditions,
representations and warranties hereinafter set forth, the Lender agrees to make
revolving loan advances (each herein called an "Advance") to the Borrower from
time to time during the period from the Closing Date to but excluding the
Termination Date in an aggregate outstanding amount not to exceed at any time an
amount equal to $2,500,000 (the "Revolving Loan Committed Amount"). Within the
limits set forth herein, the Lender shall make Advances, accept payments and
prepayments (without premium or penalty) and readvance any amount so paid or
prepaid in accordance with the provisions hereof. Funds borrowed and repaid may
be reborrowed, so long as all conditions precedent to Advances are met and so
long as (i) all Advances shall be in the minimum amount of $100,000 and integral
multiples in excess thereof of $100,000, (ii) all prepayments shall be in
integral multiples of $50,000, and (iii) the aggregate unpaid principal balance
of all Advances does not exceed the Revolving Loan Committed Amount.

         2.02 The Borrower shall give the Lender at least three (3) Business
Days prior written notice in the form attached hereto as Exhibit E (a "Notice of
Borrowing") of its intention to borrow, specifying the date for the receipt of
such funds, the amount of such borrowing and the relevant payment instructions
(to include both the name of the bank and deposit account of the Borrower to
which such Advance is to be deposited). Such Notice of Borrowing may be hand
delivered or sent by facsimile and must be received by noon (Eastern Standard
Time). If sent by facsimile, the Borrower must confirm by telephone receipt of
the facsimile by the Lender. Each Notice of Borrowing shall be irrevocable and
binding on the Borrower.

         2.03 The Revolving Loan shall be evidenced by a Promissory Note, the
form of which is attached hereto as Exhibit F (the "Note"), payable by the
Borrower to the Lender. The Lender shall keep a record of the date and amount of
(i) each Advance made by the Lender pursuant to Section 2.02 and (ii) each
payment of principal made pursuant hereto. Unless accelerated pursuant to
Section 6.02 hereof, the principal amount of and all remaining accrued and
unpaid interest on the Revolving Loan shall be due and payable on the
Termination Date.

         2.04 (a) Subject to Section 2.04(b), Advances hereunder shall bear
interest on the average daily outstanding balance at a per annum interest rate
equal to twenty percent (20%) (the "Applicable Rate") and shall be due and
payable in the following manner:

                                       7
<PAGE>   8

                  (i) fifty percent (50%) of the accrued interest shall be
         payable quarterly in arrears in cash on each March 31, June 30,
         September 30, and December 31, commencing March 31, 2001 and ending on
         the Termination Date (each, an "Interest Payment Date"). Each interest
         payment period will be from and including the previous Interest Payment
         Date (or from the Closing Date if no interest has been paid yet) to but
         excluding the next Interest Payment Date or the Termination Date (as
         appropriate); and

                  (ii) the remaining fifty percent (50%) of the accrued interest
         ("the Warrant Interest") shall be payable quarterly in arrears on each
         Interest Payment Date by the delivery to the Lender on such Interest
         Payment Date of a warrant certificate, in the form of Exhibit D
         attached hereto, which shall entitle the Lender to purchase, at an
         exercise price of $.01 (the "Exercise Price"), the number of shares of
         common stock of the Borrower equal to (i) the amount of Warrant
         Interest divided by (ii) $4.00 minus the Exercise Price. It is
         understood and agreed that, in order to fairly protect the rights of
         the parties, it may be appropriate to amend the amount defined as the
         Exercise Price if an event described in Sections 2(a), 2(b) or 2(c) of
         the warrant certificate described above occurs between the Closing Date
         and the Termination Date.

                  (b) On any stated or accelerated maturity of the Revolving
Loan, the Borrower will pay all accrued and unpaid interest on the Revolving
Loan. In addition, upon any Event of Default, the Borrower will on demand pay
daily interest on any overdue installments of principal and, to the extent not
prohibited by applicable law, on any overdue installments of interest and fees
owed under any Loan Document at a fixed rate which shall at all times equal the
Applicable Rate, and which shall be paid in its entirety in cash.

         2.05 In consideration of the Lender's commitments to make the
extensions of credit provided for herein, the Borrower will pay to the Lender on
the Closing Date a commitment fee by the delivery of a warrant certificate,
attached hereto as Exhibit D, that shall entitle the Lender to purchase 12,500
fully paid-up shares of the Borrower's common stock (par value $.01) with an
exercise price of $.01 per share (the "Commitment Fee").

         2.06 The Borrower shall make each payment hereunder and under the Note
on the day when due in lawful money of the United States of America in same day
funds to the Lender in accordance with the following wiring instructions:
Freddie Mac Account: ABA# 021033215, Telegraphic Abbreviation FHLMC WASH or, in
the case of Warrant Interest, by delivery of a duly executed warrant certificate
as set forth in Section 2.04(a)(ii) to the Lender at its address referred to in
Section 7.01 within five (5) days after the relevant payment date. For purposes
of this Revolving Credit Facility, interest and fees shall be computed on the
basis of actual number of days elapsed over a year of 360 days.

         2.07 Whenever any payment to be made hereunder or under the Note shall
be stated to be due on a day other than a Business Day, such payment may be made
on the next succeeding Business Day, and, in the case of cash payments, such
extension of time shall in such case be included in the computation of payment
of interest.

                                       8
<PAGE>   9

         2.08 (a) The obligation of the Lender to make an initial Advance on or
after the Closing Date shall be subject to the satisfaction of the following
conditions:

                  (i) This Revolving Credit Facility and the Note and the other
         Loan Documents shall have been duly authorized, executed and delivered
         to the Lender by the Borrower, shall be in full force and effect and no
         default or Event of Default shall exist thereunder;

                  (ii) the Lender shall have received a copy or copies of
         definitive final executed documents evidencing that the Borrower has
         obtained conclusive irrevocable commitments from third parties for at
         least $20,000,000 in cash (exclusive of the Revolving Loan Committed
         Amount and any amounts available under the ULLICO Credit Facility),
         whether in consideration for the issuance of common stock or preferred
         stock or through the establishment of one or more equity credit lines
         (it being understood that the conditions described in Section 4.3(b) -
         (e) of the Paul Revere Purchase Agreement do not void or otherwise
         abrogate the purchaser's commitment thereunder);

                  (iii) the Lender and the Borrower shall have entered into an
         amendment to the License Agreement (the "License Agreement Amendment"),
         and the Lender, the Borrower and Fort Knox Escrow Services, Inc. shall
         have entered into an amendment to the Escrow Agreement (the "Escrow
         Agreement Amendment"), in each case in the forms attached hereto as
         Exhibits G-1 and G-2, respectively, and such License Agreement
         Amendment and Escrow Agreement Amendment shall have been entered into
         prior to the entry into by the Borrower of the ULLICO Credit Facility
         and the creation of any security interests thereunder;

                  (iv) the Borrower shall have paid the Commitment Fee to the
         Lender;

                  (v) the Borrower shall have delivered to the Lender an
         officer's certificate signed by its Chief Executive Officer or Chief
         Financial Officer, dated as of the date of such initial Advance, to the
         effect that (i) the representations and warranties set forth in Section
         3.01 were true and correct in all material respects as of the Closing
         Date and are true and correct in all material respects as of the date
         of such initial Advance and (ii) no Event of Default, and no event
         which, with the lapse of time or notice or both, could become an Event
         of Default, has occurred and is continuing or would exist as a result
         of making an Advance on the date of such initial Advance;

                  (vi) the Borrower shall have obtained the consent from each
         Person listed in Schedule 2.08(a)(vi), whose consent is required for
         Borrower to enter into this Revolving Credit Facility and consummate
         the transactions contemplated hereby;

                  (vii) the Borrower shall have delivered to the Lender a
         subsidiary guaranty in the form attached hereto as Exhibit C executed
         by HomeSpace Acquisition Company;

                  (viii) the Borrower shall have delivered a written opinion of
         Borrower's counsel in form and substance reasonably satisfactory to
         Lender and its counsel, which opinion

                                       9
<PAGE>   10

         shall cover the validity, enforceability and any other matters as shall
         be reasonably requested by the Lender and its counsel as related to the
         Loan Documents and the License Agreement Amendment and Escrow Agreement
         Amendment;

                  (ix) the Borrower shall have received cash proceeds in an
         amount equal to at least $2,500,000 from any one Financing Transaction
         or any combination thereof;

                  (x) the Lender shall have received a letter from Union Labor
         Life Insurance Company acknowledging the Lender's rights in or to
         certain of Borrower's assets, in form and substance reasonably
         satisfactory to Lender and its counsel; and

                  (xi) the Borrower shall have delivered to the Lender such
         other documents, certificates or evidences as the Lender may reasonably
         request (in form and substance reasonably satisfactory to the Lender).

                  (b) The obligation of the Lender to make any Advance
(including the initial Advance on or after the Closing Date) shall be subject to
the satisfaction of the following additional conditions:

                  (i) The representations and warranties set forth in Section
         3.01 are true and correct on and as of the date of such Advance as
         though made on and as of such date (provided that the representation
         and warranty set forth in Section 3.01(d)(i) shall be true and correct
         on and as of the date of the initial Advance but shall not be repeated
         on and as of the date of Advances after the initial Advance);

                  (ii) On the date of the Advance and immediately after the
         making of such Advance, no Event of Default, and no event which, with
         the lapse of time or notice or both, could become an Event of Default,
         has occurred and is continuing;

                  (iii) The sum of the outstanding Revolving Loan plus the
         amount of the requested Advance is equal to or less than the Revolving
         Loan Committed Amount;

                  (iv) The Lender shall have received on or before noon (Eastern
         Standard Time) on at least three (3) Business Days prior to the
         Business Day of the requested Advance, a Notice of Borrowing in the
         form attached hereto as Exhibit E executed by the Borrower;

                  (v) Each of the Loan Documents to which the Borrower is a
         party shall be in full force and effect;

                  (vi) the License Agreement Amendment and the Escrow Agreement
         Amendment shall each be in full force and effect; and

                  (vii) Satisfaction of the Lender that the proceeds of such
         Loan will be used for purposes not inconsistent with Section 4.01(t).

                                       10
<PAGE>   11

                  Each request for an Advance shall be deemed a representation
by the Borrower that the conditions of this Section 2.08(b) have been met.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         3.01 In order to induce the Lender to enter into this Agreement and to
make each Advance requested to be made by it, the Borrower hereby represents and
warrants as follows (which representations and warranties will survive the
delivery of any Note and any other Loan Document and the making of any Advance):

                           (a) (i) The Borrower and each Subsidiary thereof is a
         corporation, duly organized, validly existing and in good standing
         under the laws of the jurisdictions in which they are incorporated;

                           (ii) The Borrower and each Subsidiary thereof has the
         corporate power and authority to own its properties and assets and to
         carry on its business as now being conducted and is qualified to do
         business in every jurisdiction in which, by reason of the character of
         its business, it is required to qualify as a foreign corporation;

                           (iii) The Borrower and each Subsidiary (to the extent
         applicable) has the corporate power and authority to execute and
         deliver this Agreement, the Note and each of the other Loan Documents
         to be executed and delivered by it, to borrow and otherwise perform its
         obligations under this Revolving Credit Facility, the Note and such
         other Loan Documents and to otherwise consummate the transactions
         contemplated by this Revolving Credit Facility, the Note and such other
         Loan Documents;

                           (iv) This Revolving Credit Facility, the Note and
         each other Loan Document to which the Borrower is a party and the
         Subsidiary Guarantee to which the Subsidiary is a party have been duly
         executed and delivered by the Borrower or the Subsidiary, as the case
         may be, and are the legal, valid and binding obligations of the
         Borrower or the Subsidiary, as the case may be, enforceable against the
         Borrower or the Subsidiary, as the case may be, in accordance with
         their respective terms, subject to applicable bankruptcy, insolvency,
         reorganization, moratorium or similar laws affecting the enforcement of
         creditors' rights generally and general principles of equity
         (regardless of whether such enforceability is considered in a
         proceeding in equity or at law); and

                           (v) Set forth on Schedule 3.01(a)(v) is a complete
         list of the Borrower's Subsidiaries.

         (b) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Borrower of this Revolving
Credit Facility or the Note or any other Loan Document to which the Borrower is
a party or by the Subsidiary of the Subsidiary Guarantee to which the Subsidiary
is a party. Neither the execution, delivery and performance of this

                                       11
<PAGE>   12

Revolving Credit Facility, the Note, or any other Loan Document to which the
Borrower or the Subsidiary is a party nor the consummation of the transactions
contemplated hereby or thereby does or will:

                           (i) conflict with or violate any provision of the
         Certificate of Incorporation, By-laws or any other document of
         organization of the Borrower or its Subsidiaries;

                           (ii) violate, conflict with or result in the breach
         or termination of, or otherwise give any other Person the right to
         accelerate, renegotiate or terminate or receive any payment, or require
         any consent, or constitute a default or event of default (or an event
         which with notice, lapse of time, or both, would constitute a default
         or event of default) under the terms of, any material indenture,
         agreement or other instrument, or any material permits, authorizations,
         approvals, registrations or licenses granted by or obtained from any
         governmental, administrative or regulatory authority, to which the
         Borrower or any of its Subsidiaries is a party or by which any of them
         or their respective securities, properties or businesses are bound;

                           (iii) result in the creation of any Liens upon the
         Borrower's or any of its Subsidiaries' respective securities,
         properties or businesses;

                           (iv) constitute a violation by the Borrower or any of
         its Subsidiaries of any laws, rules, ordinances or regulations of any
         governmental, administrative or regulatory authority ("Laws") or any
         judgments, orders, decrees, injunctions, rulings or awards of any
         court, arbitrator or other judicial authority or any governmental,
         administrative or regulatory authority ("Judgments"); or

                           (v) require any consent, approval, waiver, order or
         authorization of, or registration, declaration or filing with, any
         federal, state, local or foreign governmental or regulatory authorities
         on the part of the Borrower or any of its Subsidiaries.

                  (c) Neither the Borrower nor any of its Subsidiaries is in
default under any agreement, document, instrument, judgment, order or decree to
which it is a party or by which it is bound, which default could reasonably be
expected to have a material adverse effect on the Borrower's financial
condition, business, operations, prospects or earnings or its ability to perform
hereunder.

                  (d) (i) The Borrower has heretofore made available to the
Lender (1) its SEC Filings which contain an (A) audited balance sheet of the
Borrower as of December 31, 1999 and the related audited statements of
operations, changes in shareholders' equity (deficit) and cash flows for the 12
months then ended and the notes thereto and (B) an unaudited balance sheet of
the Borrower as of September 30, 2000 and the related unaudited statements of
operations, changes in shareholders' equity (deficit) and cash flows for the
nine months then ended; and (2) its unaudited balance sheet of the Borrower as
of December 31, 2000 and the related unaudited statements of operations, changes
in shareholders' equity (deficit) and cash flows for the 12 months then ended
and the notes thereto (collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP (except that the unaudited

                                       12
<PAGE>   13

financial statements are subject to normal year-end adjustments and lack certain
notes); the Financial Statements (including in each case the notes thereto)
present fairly in all material respects the consolidated financial position of
the Borrower and its Subsidiaries as of the respective dates of the balance
sheets included therein and the consolidated results of their operations and
their consolidated cash flows for the respective periods set forth therein.

         (ii) Since September 30, 2000, no change has occurred in the business,
operations, properties or assets, liabilities, condition (financial or
otherwise) or results of operations of the Borrower that could reasonably be
expected, either alone or together with all other such changes, to have a
material adverse effect on the Borrower's financial condition, business,
operations, prospects or earnings or its ability to perform hereunder.

                  (e) Except as set forth on Schedule 3.01(e), there are no
pending or, to the knowledge of the Borrower or any Subsidiary, threatened
actions, claims, investigations, suits or proceedings against the Borrower or
any Subsidiary before any governmental authority, court or administrative agency
that (i) would materially impair the right of the Borrower or any Subsidiary
thereof to carry on business substantially as now conducted or could reasonably
be expected to have a material adverse effect on the financial condition,
business, operations, prospects or earnings of the Borrower or any Subsidiary or
the ability of the Borrower to perform hereunder and/or (ii) primarily involve
intellectual property rights.

                  (f) The Borrower and each of its Subsidiaries has filed all
tax returns required to be filed and have paid all material taxes and other
amounts shown as due on such returns or as otherwise due, except for taxes being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established on its books in accordance with GAAP.

                  (g) Neither the Borrower nor any Subsidiary thereof is a party
to any Judgment. Each of the Borrower and its Subsidiaries (a) possesses, and is
in compliance with the terms and conditions of, all governmental permits and
approvals necessary for the ownership or lease and operation of its property and
the carrying on of its business as now conducted or proposed to be conducted,
except for such failures to possess and noncompliances that individually or in
the aggregate could not reasonably be expected to have a material adverse effect
on the financial condition, business, operations, prospects or earnings of the
Borrower or such Subsidiary or the Borrower's ability to perform hereunder, and
(b) is in compliance with all Laws and Judgments applicable to it or any of its
properties or assets, except for such noncompliances by the Borrower and the
Subsidiaries that individually or in the aggregate could not reasonably be
expected to have a material adverse effect on the financial condition, business,
operations, prospects or earnings of the Borrower or such Subsidiary or the
Borrower's ability to perform hereunder.

                  (h) Each of the Borrower and its Subsidiaries owns or
possesses all patents, licenses, trademarks, trademark rights, trade names,
trade name rights, copyrights or other similar intellectual property rights
necessary to conduct their respective businesses as now conducted and proposed
to be conducted, in each case without known conflict with any patent, license,
trademark, trade name, copyrights or other similar intellectual property rights
of any other Person except for any such conflict which could not be reasonably
expected have a

                                       13
<PAGE>   14

material adverse effect on the financial condition, business, operations,
prospects or earnings of the Borrower or such Subsidiary or the Borrower's
ability to perform hereunder.

                  (i) Neither the Borrower nor any Subsidiary thereof has
incurred or assumed, or is reasonably expected to incur or assume, any liability
for any accumulated unfunded deficiency within the meaning of the Employee
Retirement Income Security Act of 1974 as amended ("ERISA"), or has incurred, or
is reasonably expected to incur, any material liability to the Pension Benefit
Guaranty Corporation established under ERISA (or any successor thereto under
ERISA) in connection with any employee benefit plan established or maintained by
the Borrower and any Subsidiary thereof.

                  (j) The Borrower and its Subsidiaries have good and valid
title to all its properties and assets, free and clear of all Liens other than
Permitted Liens. The Borrower's obligations under this Revolving Credit Facility
rank, and its obligations under the Note will rank, at least pari passu with all
other obligations of the Borrower, other than those secured by Permitted Liens.
All leases of property or assets by the Borrower and its Subsidiaries that
individually or in the aggregate are material to the Borrower or such
Subsidiaries are valid and subsisting and in full force and effect.

                  (k) As of the date hereof, all written information, including,
without limitation, data, certificates, reports, statements (excluding Financial
Statements) and documents, that has been made available to the Lender by or on
behalf of the Borrower prior to the date of this Revolving Credit Facility in
connection with the transactions contemplated by this Revolving Credit Facility
is, taken together, true and correct in all material respects and does not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not materially
misleading in light of the circumstances under which such statements were made.
All such written information that is made available after the date of this
Revolving Credit Facility from time to time to the Lender by or on behalf of the
Borrower in connection with or pursuant to this Revolving Credit Facility, the
Note or any other Loan Document or the transactions contemplated hereby or
thereby will be, when made available and taken together, true and correct in all
material respects and will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made.

                                   ARTICLE IV
                              AFFIRMATIVE COVENANTS

         4.01 The Borrower covenants and agrees that from the date hereof and
until the later of payment in full of all principal and interest due hereunder
or on the Note and the termination of the commitment of the Lender to make loans
hereunder, the Borrower will:

                  (a) provide to the Lender immediately upon completion, but not
later than 30 days after the end of each calendar month (commencing with March
2001 and ending with December 2001), unaudited consolidated financial statements
for the Borrower and its Subsidiaries, which statements shall contain a copy of
the balance sheet as of the end of such

                                       14
<PAGE>   15

month and the related statements of operations, cash and cash forecasts for the
period commencing on the first day and ending on the last day of such month, and
certified by the Borrower's Chief Financial Officer as fairly presenting the
financial position and results of operations of Borrower; along with a
compliance report executed by the Borrower's Chief Financial Officer, (i)
stating that, to the best of his or her knowledge as at the end of such month,
no Default or Event of Default has occurred or any act, event or occurrence that
with the giving of notice or the lapse of time or both, would constitute a
Default or an Event of Default has occurred, or, if a Default or Event of
Default has occurred, disclosing each such Default or Event of Default and its
nature, when it occurred, whether it is continuing, and the steps being taken by
the Borrower with respect to such Default or Event of Default; and (ii) setting
forth, in reasonable detail, the calculations used to determine the Borrower's
attainment or nonattainment of the financial targets set forth in Section
6.01(i)(A)-(F);

                  (b) provide to the Lender immediately upon completion, but not
later than (i) 30 days after the end of the first three fiscal quarters of each
fiscal year and (ii) 45 days after the end of the fourth fiscal quarter of each
fiscal year (commencing with January 2002 and ending with March 2003), unaudited
consolidated financial statements for the Borrower and its Subsidiaries, which
statements shall contain a copy of the balance sheet as of the end of such
quarterly period and the related statements of operations, cash and cash
forecasts for the period commencing on the first day and ending on the last day
of such quarter, and certified by the Borrower's Chief Financial Officer as
fairly presenting the financial position and results of operations of Borrower;
along with a compliance report executed by the Borrower's Chief Financial
Officer, (i) stating that, to the best of his or her knowledge as at the end of
such quarter, no Default or Event of Default has occurred or any act, event or
occurrence that with the giving of notice or the lapse of time or both, would
constitute a Default or an Event of Default has occurred, or, if a Default or
Event of Default has occurred, disclosing each such Default or Event of Default
and its nature, when it occurred, whether it is continuing, and the steps being
taken by the Borrower with respect to such Default or Event of Default; and (ii)
setting forth, in reasonable detail, the calculations used to determine the
Borrower's attainment or nonattainment of the financial targets set forth in
Section 6.01(i)(A)-(F);

                  (c) provide to the Lender by facsimile transmission on a
quarterly basis immediately upon completion but no later than 45 days after the
end of the first three fiscal quarters of each fiscal year and 60 days after the
end of the fourth fiscal quarter of each fiscal year the following: (i) a
financial report including an unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such quarterly fiscal period and
the related unaudited consolidated statements of operations and cash flows for
the period from the beginning of the current fiscal year to the end of such
quarterly fiscal period (each, a "Quarterly Financial Statement") and (ii) the
Borrower's Revenues and EBITDA for such fiscal quarter and its cash, restricted
cash and cash equivalents as of the last day of such fiscal quarter (with each
amount broken out and labeled separately). The Borrower shall send with each
Quarterly Financial Statement a certificate signed by its Chief Financial
Officer whereby the Borrower shall represent and warrant to the Lender:

                  (i) whether or not, as of the date of such Quarterly Financial
         Statement, any Event of Default listed in Section 6.01 (a), (c), (d),
         (e) or (i)(A) through (F) hereof has

                                       15
<PAGE>   16

         occurred or, as of the date of such certificate, any other Default or
         Event of Default or any act, event or occurrence that with the giving
         of notice or the lapse of time or both, would constitute a Default or
         an Event of Default has occurred, disclosing each such Default or Event
         of Default or such act, event or occurrence and its nature, when it
         occurred, whether it is continuing, and the steps being taken by the
         Borrower with respect to such Default or Event of Default (it being
         understood that Borrower's certification in this regard may be made to
         the best of its knowledge, but only with respect to acts of third
         parties outside its control and not with respect to its own acts or
         acts of its agents, employees or representatives);

                  (ii) that such Quarterly Financial Statement and the notes
         thereto have been prepared in accordance with GAAP (except as otherwise
         disclosed therein) and presents fairly the financial condition and
         results of operations of the Borrower as of the date of such Quarterly
         Financial Statement, except for normal year-end audit adjustments; and

                  (iii) that, as of the date of such Quarterly Financial
         Statement, the Borrower had no liabilities or obligations of any
         nature, whether accrued, absolute, contingent or otherwise, and whether
         due or to become due, which are of a type required to be reflected on,
         or described in a footnote to, an audited balance sheet prepared under
         GAAP, except to the extent specifically disclosed or provided for in
         such Quarterly Financial Statement, except for normal year-end audit
         adjustments.

                  (d) immediately upon completion and in any event within 90
days following the end of each fiscal year ending after the date hereof, deliver
to the Lender a financial report including a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of operations, changes in shareholders' equity (deficit)
and cash flows for such fiscal year and the notes thereto, setting forth in each
case comparative financial statements for the preceding year, all prepared in
accordance with GAAP and containing an opinion of independent certified public
accountants selected by the Borrower;

                  (e) provide to the Lender true and accurate copies of all SEC
Filings and all written and material oral disclosures to the Nasdaq Stock Market
or other securities exchange on which the Borrower's securities are listed,
within two days after making such filing or disclosure;

                  (f) promptly, from time to time, deliver to the Lender such
other information regarding the operations, business, affairs and financial
condition of the Borrower and its Subsidiaries as the Lender may reasonably
request;

                  (g) do or cause to be done all things necessary to preserve
and keep in full force and effect the corporate existence, rights and franchises
of the Borrower and its Subsidiaries;

                  (h) pay all taxes, assessments, governmental charges and any
other material obligation which, if unpaid, might become or result in a Lien
against any of the property of the Borrower and its Subsidiaries except
liabilities being contested in good faith;

                                       16
<PAGE>   17

                  (i) maintain insurance covering the Borrower's and its
Subsidiaries' property, plant and equipment in such amounts that the Borrower
reasonably deems appropriate;

                  (j) maintain and protect its and its Subsidiaries' ownership
of or rights to use all intellectual property owned or used by it in the conduct
of its business as now conducted and proposed to be conducted, in each case free
of all claims and infringements known to the Borrower;

                  (k) not merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any Person or convey,
transfer, lease or otherwise dispose of all or substantially all of its or any
of their properties and assets in a single transaction or series of
transactions; provided, that any Subsidiary of the Borrower may merge or
consolidate with or into or transfer all or substantially all its properties and
assets to any other Subsidiary of the Borrower so long as (A) no Event of
Default exists or would exist after giving effect thereto and (B) such
Subsidiary has guaranteed all Obligations;

                  (l) keep and maintain a system of accounting established and
administered in accordance with sound business practices, keep accurate books of
records and accounts in accordance with GAAP and provide the Lender with such
information regarding the Loan Documents, the Loans, the books and records,
business, affairs, operations, property or assets, liabilities, condition
(financial or otherwise) or results of operations of the Borrower and the
Subsidiaries and other information concerning the Borrower and the Subsidiaries
as the Lender may from time to time reasonably request;

                  (m) permit representatives (whether or not employees) of the
Lender designated in writing by the Lender to visit and inspect any of the
properties, corporate books and financial records of the Borrower and its
Subsidiaries at such times as the Lender may reasonably request upon reasonable
notice and during ordinary business hours;

                  (n) allow the Lender to inspect any of the Borrower's
investment properties and financial records and to discuss any of their
financial or business affairs with the Borrower's business associates, creditors
and independent public accountants from time to time upon reasonable notice
during reasonable business hours;

                  (o) promptly but in any event within two (2) Business Days of
the Borrower's acquiring knowledge thereof, notify the Lender of the occurrence
of an Event of Default or any act, event or occurrence that with the giving of
notice or the lapse of time or both, would constitute an Event of Default
(including any occurrence as described in Section 6.01(e) that, even though
cured within applicable grace periods, would have constituted an Event of
Default if not cured), and shall specify in detail the nature of such Event of
Default or such act, event or occurrence, and any action that the Borrower is
taking or proposes to take with respect thereto;

                  (p) promptly but in any event within five (5) Business Days of
the Borrower's acquiring knowledge thereof, notify the Lender of any claims,
litigation, arbitration proceedings or other proceedings pending or threatened
before any court, governmental authority, administrative agency, or arbitration
panel that, if adversely determined, could reasonably be

                                       17
<PAGE>   18

expected to, in the aggregate, have a material adverse effect on the Borrower's
financial condition, business, operations, prospects or earnings or its ability
to perform hereunder;

                  (q) promptly but in any event within five (5) Business Days of
the Borrower's acquiring knowledge thereof, notify the Lender of any material
adverse change in the Borrower's financial condition, business, operations,
prospects or earnings or its ability to perform hereunder, including the nature
thereof;

                  (r) comply and cause each of its Subsidiaries to comply in all
material respects with all applicable Judgments and federal, state or local
Laws, rules or regulations or other binding determinations of any governmental
authority, such compliance to include, without limitation, paying before the
same become delinquent all taxes, assessments and governmental charges imposed
upon the Borrower's or any of such Subsidiaries' property, except to the extent
any such compliance or payment is being contested in good faith by appropriate
proceedings and for which adequate reserves have been established;

                  (s) promptly pay all lawful claims that could, if not paid,
become or result in a Lien on any property or assets of the Borrower or its
Subsidiaries, unless and to the extent only that the same are being contested in
good faith by appropriate proceedings and reserves deemed adequate by the
Borrower have been established therefor on its books in accordance with GAAP;

                  (t) use the proceeds of the Advances to finance the continued
development and implementation of the Borrower's technology, advertising and
marketing and to fund general working capital needs of the Borrower. Under no
circumstances shall proceeds from any Advance be utilized for warehouse lending
or other consumer loan funding purposes;

                  (u) provide the Lender written notice within five (5) Business
Days of the execution of any contract or arrangement (including, without,
limitation, agreements designated as non-binding agreements in principle, term
sheets or letters of intent) that if consummated would result in the occurrence
of a transaction or event of the type described in clauses (i), (ii) or (iii) of
the definition of "Change of Control" contained in Article I hereof; and

                  (v) upon the request of the Lender, to cooperate with and
furnish all documents and/or instruments as may be reasonably requested by the
Lender in order to file and/or record the License Agreement with any Copyright
Office if the software subject to the license is registered in any such office.

                                    ARTICLE V
                               NEGATIVE COVENANTS

         5.01 Until payment in full of the principal and interest of the Note
and until the commitment of the Lender to make loans hereunder has been
terminated, the Borrower covenants that it will not, nor will it permit any of
its Subsidiaries to, incur, create or permit to exist any Lien on any properties
or assets of the Borrower or any Subsidiary thereof, other than the Permitted
Liens.

                                       18
<PAGE>   19

         5.02 Until payment in full of the principal and interest of the Note
and until the commitment of the Lender to make loans hereunder has been
terminated, the Borrower covenants that it will not create a Subsidiary
subsequent to the Closing Date unless the Subsidiary enters into, and delivers
to the Lender, a Guaranty Agreement.

                                   ARTICLE VI
                 EVENTS OF DEFAULT, ACCELERATION AND TERMINATION

         6.01 Any of the following shall constitute an event of default
hereunder (hereinafter an "Event of Default"):

                  (a) the Borrower shall fail to pay (i) any principal when due
and payable under this Revolving Credit Facility, (ii) any interest or fee under
this Revolving Credit Facility or any other Loan Document within two (2)
Business Days after the date the same becomes due and payable, or (iii) any
other Obligation under this Revolving Credit Facility or any other Loan Document
within ten (10) days after written notice thereof by the Lender to the Borrower;

                  (b) the failure of the Borrower to comply with any other
covenants, conditions, obligations, agreements or terms in this Revolving Credit
Facility or any other Loan Document (other than those covenants contained in
Section 4.01(a)- (e)) and the continuation of such failure for a period of
thirty (30) days after the Lender sends written notice to the Borrower or when
the Borrower became aware of such failure, whichever is earlier;

                  (c) the failure of the Borrower to comply with the covenants
contained in Section 4.01(a) - (e) and the continuation of such failure for a
period of one (1) Business Day (24 hours) after the Borrower receive written
notice from the Lender of such failure to comply;

                  (d) (i) in the event that the Borrower or any Subsidiary
         generally does not pay its debts as such debts become due, or shall
         admit in writing its inability to pay its debts generally, or shall
         make an assignment for the benefit of creditors; or

                           (ii) any proceeding shall be instituted by or against
         the Borrower or any Subsidiary seeking liquidation, winding up,
         reorganization, arrangement, adjustment, protection, relief or
         composition of the Borrower's or any Subsidiary's debts under any law
         relating to bankruptcy, insolvency, reorganization, or relief of
         debtors, or seeking the entry of an order for relief or the appointment
         of a receiver, trustee, or other similar official for the Borrower or
         any Subsidiary or for any substantial part of the Borrower's or any
         Subsidiary's property, and in the case of any such proceeding
         instituted against the Borrower or any Subsidiary (but not instituted
         by Borrower or any Subsidiary), either such proceeding shall remain
         undismissed or unstayed for a period for sixty (60) days or an order
         for relief shall have been entered;

                  (e) if the Borrower or any Subsidiary thereof (A) defaults in
any material respect under the terms of any agreement relating to indebtedness
in excess of $250,000 of the Borrower or any such Subsidiary whether or not such
default results in the acceleration of such

                                       19
<PAGE>   20

indebtedness or would permit the lender to accelerate such indebtedness and such
default is not cured prior to the earlier of (i) two Business Days after the
Borrower obtains knowlege of such default and (ii) the expiration of any
applicable cure periods set forth in any agreement relating to any such
indebtedness, or (B) defaults under the terms of any agreement relating to
indebtedness in excess of $250,000 of the Borrower or any such Subsidiary and
such default is not cured after LendingTree receives notice of such default (if
required under the terms of the indebtedness) and before the expiration of any
applicable cure periods set forth in any such agreement;

                  (f) any warranty or representation now or hereafter made by
the Borrower to the Lender in this Revolving Credit Facility or any other Loan
Document shall be incorrect in any material adverse respect, or any financial
statement, schedule, certificate or written statement required to be furnished,
that is furnished at any time by the Borrower to the Lender in connection with
this Revolving Credit Facility or any other Loan Document shall, at such time,
be incorrect in any material adverse respect;

                  (g) one or more judgments or decrees shall be entered against
the Borrower or any Subsidiary involving a liability of $100,000 or more in case
of any one such judgment or decree and $500,000 or more in the aggregate for all
such judgments and decrees (all to the extent not covered by insurance with
respect to which the Borrower shall have delivered to Lender a written
acknowledgement from the applicable insurance carrier of its unconditional
liability to pay such judgment and related costs) and any such judgments or
decrees shall not have been vacated, discharged or stayed or bonded pending
appeal for a period of sixty (60) consecutive days at any time after the entry
thereof;

                  (h) a material breach by the Borrower shall occur under any
agreement, document, instrument, judgment, order or decree (other than this
Revolving Credit Facility, the Note, or any other Loan Document), whether now or
hereafter existing between the Borrower and any other person, default under
which agreement or other item would reasonably be expected to have a material
adverse effect on the Borrower's financial condition, business, operations,
prospects or earnings or its ability to perform hereunder, and such breach shall
not have been waived or cured to the Lender's satisfaction within sixty (60)
days after the Borrower has knowledge thereof;

                  (i) in the event that the Borrower:

                           (A) has (1) Revenue for the quarter ending March 31,
                  2001 of less than $10,200,000 and (2) an EBITDA loss for such
                  quarter of greater than negative $12,400,000; or

                           (B) has (1) Revenue for the quarter ending June 30,
                  2001 of less than $13,700,000 and (2) an EBITDA loss for such
                  quarter of greater than negative $10,100,000; or

                           (C) has an EBITDA loss for the year ended December
                  31, 2001 of greater than negative $36,300,000; or

                                       20
<PAGE>   21

                           (D) has, commencing in the first fiscal quarter of
                  2002 and for every fiscal quarter up to and including the
                  Termination Date, an EBITDA loss for any such fiscal quarter
                  and less than $5,000,000 in cash, restricted cash and cash
                  equivalents as of the last day of any such fiscal quarter (as
                  set forth in the financial information as or to be reported in
                  Borrower's earnings releases and included or to be included in
                  the Borrower's SEC Filings); or

                           (E) raises more than a total of $33,000,000 in
                  financing for operating purposes during calendar year 2001
                  (other than in connection with Excluded Financings and
                  inclusive of the amount borrowed under this Revolving Credit
                  Facility), without either (1) obtaining the Lender's prior
                  written consent, or (2) repaying all amounts then outstanding
                  under the Revolving Credit Facility and agreeing (if requested
                  in writing by the Lender) to the immediate termination of the
                  Revolving Credit Facility; or

                           (F) is in default of (1) a payment obligation in
                  excess of $5,000 under the terms of its agreement(s) with its
                  then-current hosting service provider and such default is not
                  cured within four (4) Business Days, or (2) the Borrower is in
                  material, non-monetary default with its then-current hosting
                  service provider and such default is not cured before the
                  expiration of any applicable cure period set forth in any such
                  agreement or, if no such cure period is provided, within
                  thirty (30) days following the date of default; or

                  (j) this Revolving Credit Facility, the License Agreement
Amendment, the Escrow Agreement Amendment or any Loan Document to which the
Borrower is a party shall for any reason cease to be enforceable.

         6.02 Upon the occurrence of any Event of Default, the Lender's
commitment to make Advances shall automatically terminate and the Lender,
without (a) presentment, demand, or protest, (b) notice of default, dishonor,
demand, non-payment, or protest, (c) notice of intent to accelerate all or any
part of the Obligations, (d) notice of acceleration of all or any part of the
Obligations, or (e) notice of any other kind, all of which the Borrower and each
guarantor, surety or endorser of the Note hereby expressly waive, except for any
notice required under this Revolving Credit Facility or any other Loan Document,
may, at the Lender's option: (i) declare the Obligations, in whole or in part,
immediately due and payable; and/or (ii) exercise any other rights and remedies
available to the Lender under this Revolving Credit Facility, any other Loan
Document, or applicable laws; provided, that upon the occurrence of an Event of
Default described in subsections (c), (d), (e), (i) and (j) of Section 6.01, all
of the Obligations shall automatically be immediately due and payable, without
notice of any kind (including, without limitation, notice of intent to
accelerate and notice of acceleration) to the Borrower or to any guarantor, or
to any surety or endorser of the Note or to any other person, which notice is
hereby expressly waived by all such parties.

         6.03. The Borrower hereby authorizes the Lender, to the maximum extent
permitted under and in accordance with applicable laws, at any time after the
occurrence of an Event of Default, to set-off and apply any and all funds or
assets at any time held and any and all other indebtedness or funds at any time
owing by the Lender to or for the credit or the account of the

                                       21
<PAGE>   22

Borrower against any and all Obligations, whether or not the Lender exercises
any other right or remedy hereunder.

         6.04. No remedy, right or power conferred upon the Lender is intended
to be exclusive of any other remedy, right, or power given hereunder or now or
hereafter existing at law, in equity, or otherwise, and all such remedies,
rights and powers shall be cumulative.

         6.05 At any time following the occurrence of an Event of Default, the
Lender may, in its sole discretion, terminate this Revolving Credit Facility and
the other Loan Documents.

         6.06 If, at any time after the date hereof, there are changes in GAAP
that materially impact the Borrower's calculation of Revenue or EBITDA as
compared to how it calculated such amounts during prior periods, the Borrower
and the Lender shall negotiate in good faith to adjust the Revenue and EBITDA
amounts contained in Section 6.01(i)(A)-(D).

                                   ARTICLE VII
                                  MISCELLANEOUS

         7.01 All notices, requests and demands which either party is required
or may desire to give to any other party under any provision of this Revolving
Credit Facility must be in writing delivered to each party as indicated below.
Any notice shall be conclusively deemed to have been received by any party
hereto and be effective on the day on which delivered to such party at the
address set forth below or such other address as such party shall specify to the
other party in writing, or if sent prepaid by certified or registered mail on
the fifth Business Day after the day on which mailed (or sent), addressed to
such party at said address, or if sent by facsimile, upon receipt:

                  (a) if to the Borrower at the following address:

                           LendingTree, Inc.
                           11115 Rushmore Drive
                           Charlotte, North Carolina 28277
                           Attention:   Keith B. Hall
                                        Robert J. Flemma, Jr.
                                        Matt Packey
                           Telephone: (704) 944-8500
                           Telecopy: (704) 540-2486

                           with a copy to:

                           Kennedy Covington Lobdell & Hickman, L.L.P.
                           100 N. Tryon Street, Suite 4200
                           Charlotte, North Carolina  28202-4006
                           Attention:  Sean M. Jones
                           Telephone:  (704) 331-7406
                           Telecopy:  (704) 331-7598

                                       22
<PAGE>   23

                  (b)      if to the Lender:

                           Federal Home Loan Mortgage Corporation
                           8200 Jones Branch Drive
                           MS B3A
                           McLean, Virginia  22102
                           Fax:  (703) 903-2919
                           Phone:  (703) 903-3410
                           Attention:  Senior Vice President - Business
                                       Development

                           with a copy to:

                           Federal Home Loan Mortgage Corporation
                           8200 Jones Branch Drive
                           MS 208
                           McLean, Virginia  22102
                           Fax:  (703) 903-3613
                           Phone:  (703) 903-2781
                           Attention:  Associate General Counsel - Securities

         7.02 No failure, delay or discontinuance on the part of the Lender in
the exercise of any right, power, remedy or privilege hereunder or under any
other Loan Document shall affect or operate as a waiver of any such right,
power, remedy or privilege nor shall any such failure, delay or discontinuance
preclude any other or further exercise of any such right, power, remedy or
privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law. Any waiver, permit, consent
or approval of any kind by the Lender of any breach of or default under any of
the Loan Documents must be in writing and shall be effective only to the extent
set forth in such writing.

         7.03 This Revolving Credit Facility shall be binding on and inure to
the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided, however, that the Borrower may
not assign or transfer its interest hereunder without the prior written consent
of the Lender. All covenants, provisions and agreements by or on behalf of the
Borrower that are contained in the Loan Documents or this Revolving Credit
Facility shall inure to the benefit of the successors and assigns of the Lender.
Notwithstanding the foregoing, prior to the occurrence of an Event of Default,
the Lender may not sell, assign, transfer or otherwise dispose of or create
participations in this Revolving Credit Facility or any of the other Loan
Documents or any portions thereof, including without limitation, any of the
Lender's rights, title, interests, remedies, powers and duties hereunder or
thereunder, without the prior written consent of the Borrower.

         7.04 This Revolving Credit Facility may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original.

                                       23
<PAGE>   24

         7.05 The terms hereof shall extend to any subsequent holder of the Note
to the extent such holder has acquired the Note in accordance with the terms
hereof.

         7.06 This Revolving Credit Facility shall terminate on the earlier to
occur of (a) the Termination Date and payment in full of all sums payable by the
Borrower hereunder under the Note or otherwise payable to the Lender, howsoever
evidenced, whichever is later; (b) the date of termination by the Lender
pursuant to Section 6.02; (c) at the Lender's option, a Change of Control of the
Borrower in which case all Obligations, in whole or in part, shall become
immediately due and payable; or (d) at the Borrower's option, upon five (5)
Business Days prior written notice so long as all outstanding Obligations are
repaid on or prior to such fifth Business Day. No termination of this Revolving
Credit Facility or any of the other Loan Documents shall terminate or otherwise
affect the parties' obligations under the License Agreement Amendment, the
Escrow Agreement Amendment or any other agreements that they may be parties to
other than as expressly set forth in any such documents.

         7.07 The Borrower shall pay to the Lender immediately upon demand the
full amount of all costs and expenses, including reasonable attorneys' fees (to
include outside counsel fees), incurred by the Lender in connection with (a) the
enforcement of the Lender's rights and/or the collection of any amounts which
become due to the Lender under any of the Loan Documents, and (b) the
prosecution or defense of any action in any way related to any of the Loan
Documents, including without limitation any action for declaratory relief.

         7.08 This Revolving Credit Facility together with each other of the
Loan Documents constitutes the entire agreement between the Borrower and the
Lender with respect to the Obligations and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Revolving Credit Facility may be amended or modified only by a
written instrument executed by each party hereto.

         7.09 This Revolving Credit Facility is made and entered into for the
sole protection and benefit of the parties hereto and their respective permitted
successors and assigns, and except as provided in Section 7.03 and Section 7.05,
no other person or entity shall be a third party beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Revolving
Credit Facility or any other of the Loan Documents to which it is not a party.

         7.10. Time is of the essence of each and every provision of this
Revolving Credit Facility and each other of the Loan Documents.

         7.11. THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION
BETWEEN THE HOLDER OF THIS REVOLVING CREDIT FACILITY AND ANY OF THE OTHER LOAN
DOCUMENTS AND THE BORROWER ARISING OUT OF THIS REVOLVING CREDIT FACILITY AND ANY
OF THE OTHER LOAN DOCUMENTS.

          7.12 If any provision of this Revolving Credit Facility shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Revolving Credit Facility.

                                       24
<PAGE>   25

         7.13 This Revolving Credit Facility shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflict of laws, except to the extent that the Lender has greater
rights or remedies under Federal law, in which case such choice of the State of
New York law shall not be deemed to deprive the Lender of such rights and
remedies as may be available under Federal law.

THE WRITTEN REVOLVING CREDIT FACILITY REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AS TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN PARTIES.

                                      * * *

                                       25
<PAGE>   26

         IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers as of the day and year first above
written.

                                   LENDINGTREE, INC., as Borrower

                                   By:
                                       -----------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                             -----------------------------------

                                   FEDERAL HOME LOAN MORTGAGE
                                   CORPORATION, as Lender

                                   By:
                                       -----------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------

<PAGE>   27

                                    EXHIBIT A
                          TO REVOLVING CREDIT FACILITY

                                 PERMITTED LIENS

1.       Those liens set forth on Annex 1 attached hereto.

<PAGE>   28

                                     ANNEX 1
                    TO EXHIBIT A TO REVOLVING CREDIT FACILITY

                            UCC FINANCING STATEMENTS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
            JURISDICTION              SEARCH                                          RESULT
--------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>              <C>               <C>
NC Secretary of State                  UCC             1  File No.:      19990028028
                                                          Date Filed:    3/23/99
                                                          Secured:       Newcourt Communications Finance
                                                                         Corporation as Lessor
                                                          Collateral:    leased equipment

                                                       2  File No.:      19990052006
                                                          Date Filed:    3/27/99
                                                          Secured:       Green Tree Vendor Services Corporation
                                                          Collateral:    leased copier

                                                       3  File No.:      200058460
                                                          Date Filed:    6/8/00
                                                          Secured:       Dell Financial Services, L.P.
                                                          Collateral:    leased computer equipment

                                                       4  File No.:      20000077811
                                                          Date Filed:    8/3/00
                                                          Secured:       First Union Commercial Corporation
                                                          Collateral:    119 pages of equipment

                                                       5  File No.:      20000082150
                                                          Date Filed:    8/14/00
                                                          Secured:       Dell Financial Services, L.P.
                                                          Collateral:    leased computer equipment

                                                       6  File No.:      20000107125
                                                          Date Filed:    10/30/00
                                                          Secured:       Newcourt Financial, Inc.
                                                          Collateral:    equipment

                                                       7  File No.:      20000109926
                                                          Date Filed:    11/7/00
                                                          Secured:       Dell Financial Services, L.P.
                                                          Collateral:    leased computer equipment

                                                       8  File No.:      20000112823
                                                          Date Filed:    11/15/00
                                                          Secured:       United Capital Leasing Corporation
                                                          Collateral:    equipment
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   29

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>              <C>               <C>
Register of Deeds,                     UCC             1  File No.:      199903109
Mecklenburg County, NC                                    Date Filed:    3/23/99
                                                          Secured:       Newcourt Communications Finance
                                                                         Corporation as Lessor
                                                          Collateral:    leased equipment

                                                       2  File No.:      199905395
                                                          Date Filed:    6/1/99
                                                          Secured:       Green Tree Vendor Services Corporation
                                                          Collateral:    leased copier

                                                       3  File No.:      200005190
                                                          Date Filed:    6/9/00
                                                          Secured:       Dell Financial Services, L.P.
                                                          Collateral:    leased computer equipment

                                                       4  File No.:      200007014
                                                          Date Filed:    8/7/00
                                                          Secured:       First Union Commercial Corporation
                                                          Collateral:    119 pages of equipment

                                                       5  File No.:      200007599
                                                          Date Filed:    8/23/00
                                                          Secured:       Dell Financial Services, L.P.
                                                          Collateral:    leased computer equipment

                                                       6  File No.:      200009967
                                                          Date Filed:    11/6/00
                                                          Secured:       Newcourt Financial, Inc.
                                                          Collateral:    equipment

                                                       7  File No.:      200010109
                                                          Date Filed:    11/10/00
                                                          Secured:       Dell Financial Services, L.P.
                                                          Collateral:    leased computer equipment

                                                       8  File No.:      200010349
                                                          Date Filed:    11/17/00
                                                          Secured:       United Capital Leasing Corporation
                                                          Collateral:    equipment
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   30

                                    EXHIBIT B
                          TO REVOLVING CREDIT FACILITY

                      FORM OF REGISTRATION RIGHTS AGREEMENT

<PAGE>   31

                                    EXHIBIT C
                          TO REVOLVING CREDIT FACILITY

                           FORM OF SUBSIDIARY GUARANTY

<PAGE>   32

                                    EXHIBIT D
                          TO REVOLVING CREDIT FACILITY

                                 FORM OF WARRANT

<PAGE>   33

                     EXHIBIT E TO REVOLVING CREDIT FACILITY

                           FORM OF NOTICE OF BORROWING

                           Dated as of: ______________

Federal Home Loan Mortgage Corporation,
   as Lender

------------------------------------
------------------------------------
------------------------------------
Attention:
          --------------------------

Ladies and Gentlemen:

         This Notice of Borrowing is delivered to you pursuant to the Revolving
Credit Facility dated as of March __, 2001 (as amended, restated or otherwise
modified from time to time, the "Revolving Credit Facility") by and between
LENDINGTREE, INC., a Delaware corporation (the "Borrower"), and the FEDERAL HOME
LOAN MORTGAGE CORPORATION, a federally-chartered corporation (the "Lender").

         1. The Borrower hereby requests that the Lender make an Advance to the
Borrower in the aggregate principal amount of $___________. (Complete with an
amount in accordance with Section 2.01 of the Revolving Credit Facility.)

         2. The Borrower hereby requests that such Advance be made on _________,
which shall be a Business Day as defined in the Revolving Credit Facility.
(Complete with a Business Day in accordance with Section 2.02 of the Credit
Agreement).

         3. The Borrower hereby requests that such Advance be deposited
according to the following wire payment instructions:
___________________________________. (Complete with both the name of the bank
and deposit account of the Borrower to which such Advance is to be deposited).

         4. The undersigned hereby certifies that all of the conditions
applicable to the Advance requested herein as set forth in the Revolving Credit
Facility, including without limitation those set forth in Section 2.08, have
been satisfied as of the date hereof and will remain satisfied to the date of
such Advance.

         5. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Revolving Credit Facility.

                            [Signature Page Follows]

<PAGE>   34

         IN WITNESS WHEREOF, the undersigned has executed this Notice of
Borrowing as of the ____ day of _______, ____.

                                            LENDINGTREE, INC., as Borrower

                                            By:
                                                --------------------------------
                                                Name:
                                                      --------------------------
                                                Title:
                                                       -------------------------

<PAGE>   35

                                    EXHIBIT F
                          TO REVOLVING CREDIT FACILITY

                             FORM OF PROMISSORY NOTE

$2,500,000                                                        March __, 2001

         FOR VALUE RECEIVED, the undersigned, LENDINGTREE, INC., a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of the FEDERAL HOME LOAN MORTGAGE CORPORATION, a federally-chartered
corporation (the "Lender"), at its office in McLean, Virginia (or at such other
place or places as the Lender may designate), the principal sum of up to TWO
MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000) or, if less, the aggregate
principal amount of all Advances made by the Lender to the Borrower pursuant to
the Revolving Credit Facility, dated as of March __, 2001, between the Borrower
and the Lender (as amended, supplemented or otherwise modified from time to
time, the "Revolving Credit Facility") and then outstanding, on March __, 2003.
Capitalized terms used by not defined herein shall have the meanings assigned to
them in the Revolving Credit Facility.

         The Borrower further agrees to pay interest, in like money and in
warrants to purchase shares of the Borrower's common stock, at such office on
the unpaid principal amount hereof until paid in full (both before and after
judgment) on the dates, at the applicable rates per annum and, with respect to
such warrants, on the terms and conditions, specified in Article II of the
Revolving Credit Facility.

         The holder of this Note is authorized to endorse the date and amount of
all Advances made by the Lender to the Borrower pursuant to the Revolving Credit
Facility, the maturity date thereof (which shall in no event be later than the
Termination Date), the date and amount of each repayment of principal thereof
and the interest rate with respect thereto, on the schedule annexed hereto and
hereby made a part hereof or on any continuation thereof which shall be attached
hereto and thereby made a part hereof, and any such endorsement shall constitute
prima facie evidence of the accuracy of the information so endorsed.

         This Note is the Note referred to in the Revolving Credit Facility and
is entitled to the benefits thereof.

         Upon the occurrence of an Event of Default specified in the Revolving
Credit Facility, to the extent expressly provided in the Revolving Credit
Facility, all amounts then remaining unpaid on this Note shall become, or may be
declared to be, immediately due and payable, all as provided therein.

         The Borrower agrees to pay the holder's costs of collection and
enforcement (including reasonable attorneys' fees and disbursements of counsel
of the holder's choice) in respect of this Note, including, without limitation,
through appellate proceedings.

<PAGE>   36

         The Borrower waives all requirements as to diligence, presentment,
demand of payment, protest and notice of any kind with respect to this
promissory note.

         IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
under seal by its duly authorized officers as of the day and year first above
written.

                                                 LENDINGTREE, INC., as Borrower
[CORPORATE SEAL]

                                                 By:
                                                    ----------------------------
                                                 Name:
                                                      --------------------------
                                                 Title:
                                                       -------------------------

<PAGE>   37

                                   SCHEDULE A
                               TO PROMISSORY NOTE

                                ADVANCES REGISTER

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
DATE OF ADVANCE         PRINCIPAL AMOUNT OF      PRINCIPAL PAYMENTS    INTEREST PAYMENTS
                        ADVANCE
-------------------------------------------------------------------------------------------
<S>                     <C>                      <C>                   <C>

-------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   38

                                   EXHIBIT G-1
                          TO REVOLVING CREDIT FACILITY

                         AMENDMENT TO LICENSE AGREEMENT

<PAGE>   39

                                   EXHIBIT G-2
                          TO REVOLVING CREDIT FACILITY

                          AMENDMENT TO ESCROW AGREEMENT

<PAGE>   40

                              SCHEDULE 2.08(a)(vi)

                                    CONSENTS

Consent of First Union Capital Corporation under the Master Equipment Lease
dated March 14, 2000.

<PAGE>   41

                               SCHEDULE 3.01(a)(v)

                                  SUBSIDIARIES

                          HomeSpace Acquisition Company

<PAGE>   42

                                SCHEDULE 3.01(e)

                                   LITIGATION

--   The Borrower has been named as one of a number of defendants in a putative
     class action lawsuit originally filed on September 7, 2000 in California
     Superior Court in Contra Costa, California. The lawsuit was removed to
     federal court on October 13, 2000 and is now captioned Thomas E. Ainsworth,
     et al. v. Ohio Savings Bank, et al., Case No. C-00-3786, (N.D. Cal.). The
     other defendants named in the action are Ohio Savings Bank, Costco
     Wholesale Corp., Costco Financial Services Inc., First American Title
     Insurance Company and First American Lenders Advantage. The complaint
     alleges various claims under California law arising from a loan that
     plaintiffs obtained through HomeSpace Services, Inc. ("HomeSpace") and Ohio
     Savings Bank in February 1999. In particular, the complaint raises claims
     regarding the legality of certain compensation paid to HomeSpace. The
     complaint seeks damages in the amount of $10 million, plus unenumerated
     punitive damages. Although the Borrower was not a party to plaintiffs' loan
     transaction, the lawsuit alleges that the Borrower is liable as a result of
     its acquisition of certain assets of HomeSpace on August 2, 2000. The
     Borrower filed its answer to the complaint on November 8, 2000, denying all
     liability. The Borrower believes that it has strong defenses against both
     liability and class certification. It has retained counsel and intends to
     defend vigorously against the claims.

--   The Borrower recently was the subject of a routine examination conducted by
     the New York State Banking Department ("NYSBD"). At the close of the
     examination, during the exit interview, NYSBD examiners raised an issue
     orally as to whether the Borrower is obligated to make certain mortgage
     broker disclosures to consumers under New York state law. As of this date,
     NYSBD has not instituted any investigation or enforcement action. The
     Borrower could face a possible administrative fine and/or penalty. The
     Borrower believes that the NYSBD regulation which triggers the disclosures
     in question is inapplicable to it. The Borrower intends to work with the
     NYSBD to clarify the application of its regulations to the Borrower's
     activities, and, if necessary, to contest any fine or penalty. Although
     there can be no assurances, the Borrower does not believe that the outcome
     of any proceeding will have a material effect on its financial condition or
     the results of its operations.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}]]