RIGHT OF FIRST REFUSAL AGREEMENT
THIS RIGHT OF FIRST REFUSAL AGREEMENT (this "Agreement") is made as of the
7th day of September, 2000, by and between The Xxxxxxx-Xxxxx Company, a
California corporation ("Xxxxxxx-Xxxxx"), Pequot Private Equity Fund II, L.P., a
limited partnership organized under the laws of Delaware ("Purchaser" and,
together with any of its Affiliates (as defined in the USS Purchase Agreement)
Pequot").
WHEREAS, at the date hereof Xxxxxxx-Xxxxx is the record and beneficial
owner of [_____] shares of common stock, par value $.001 per share, of US
Xxxxxx.xxx, Inc. (the "Stock").
WHEREAS, Xxxxxxx-Xxxxx and Pequot have entered into that Stock Purchase
Agreement, dated as of September 7, 2000 (the "KL Purchase Agreement"), whereby
Xxxxxxx-Xxxxx will sell to Pequot 3,500,000 shares of Stock.
WHEREAS, Pequot and US Xxxxxx.xxx Inc. have entered into that Stock
Purchase Agreement, dated as of September 7, 2000 (the "USS Purchase
Agreement"), whereby US Xxxxxx.xxx Inc. (the "Company"), a Delaware corporation,
sold 100,000 shares of Series A Convertible Preferred Stock of the Company and
certain other instruments to Pequot.
WHEREAS, after the above referenced sale of Stock, Xxxxxxx-Xxxxx will
remain the beneficial owner of additional shares of Stock (the "Remaining
Shares").
WHEREAS, Xxxxxxx-Xxxxx and Pequot have agreed that Pequot should have a
right of first refusal with respect to the Remaining Shares subject to the terms
and conditions set forth below.
NOW THEREFORE, IT IS AGREED between the parties as follows:
1. Right of First Refusal. Xxxxxxx-Xxxxx shall not sell, assign or in
any manner transfer any of the Remaining Shares or any right or interest
therein, whether voluntarily or by operation of law, or by gift or otherwise,
except by a transfer which meets the requirements hereinafter set forth in this
Agreement:
(A) If Xxxxxxx-Xxxxx desires to sell or otherwise transfer any portion of
the Remaining Shares, then Xxxxxxx-Xxxxx shall first give written notice thereof
(the "Notice") to Pequot by transmission through both facsimile and email;
provided, that, while receipt of such notice shall be deemed to occur on the day
of its transmission, Xxxxxxx-Xxxxx shall be required to send written notice to
Pequot by overnight delivery on the day of transmission. In the case of a
privately negotiated sale or transfer, the Notice shall state the number of
shares to be transferred, the proposed consideration, and all other terms and
conditions of the proposed transfer. In the case of a public market sale, the
Notice shall state the number of shares to be sold and the closing price of the
US XXXXXX.xxx shares quoted on the NASDAQ National Market System (the "US Search
Closing Price") on the date of the notice.
(B) In the event of a proposed sale of the Remaining Shares by Xxxxxxx-Xxxxx
in the public market, for three (3) business days following Pequot's
receipt of the Notice, Pequot shall have the option, to be exercised by notice
in writing (the "Response") received by Xxxxxxx-Xxxxx on or before the third
business day following Pequot's receipt of the Notice, to purchase all or any
portion of the shares specified in the Notice; provided, that the per share
price for such a purchase by Pequot shall be the US Search Closing Price for the
day on which Pequot delivers the Response and the other terms for such purchase
shall be as set forth in the Notice; provided, further that Xxxxxxx-Xxxxx shall
have the option not to proceed with the transaction contemplated in the Notice
by delivery of a notice in writing (a "Cancellation") to Pequot notifying Pequot
of such cancellation (i) in the event that the US Search Closing Price on the
day Xxxxxxx-Xxxxx delivers such Cancellation to Pequot is less than 92% of the
proposed per share consideration set forth in the Notice and such Cancellation
is delivered to Pequot prior to Pequot's delivery of a Response, or (ii) on or
before 6:00 p.m., local time in New York, NY on the day on which Pequot delivers
a Response in the event that the US Search Closing Price for the day of the
Response is less than 87% of the per share consideration set forth in the
Notice. In all cases, the parties understand and agree that if Xxxxxxx-Xxxxx so
elects not to complete the transaction contemplated in the Notice, Xxxxxxx-Xxxxx
shall be considered not to have delivered a Notice and the procedures set forth
in this Section 1(b) shall again be applicable. Subject to the foregoing, in
the event Pequot elects to purchase all of the Stock or any lesser portion of
the Stock, it shall give written notice to Xxxxxxx-Xxxxx of its election,
received within the specified time limitations, and settlement for said shares
shall be made as provided below in paragraph (d).
(C) In the event of a privately negotiated sale or transfer between
Xxxxxxx-Xxxxx and a third party (a "Private Transaction"), for five (5) business
days following Pequot's receipt of the Notice, Pequot shall have the
option, to be exercised by a Response received by Xxxxxxx-Xxxxx on or before the
fifth business day following Pequot's receipt of the Notice, to purchase all
(but not less than all) of the shares specified in the Notice at the price and
upon the terms specified in the Notice. In the event Pequot elects to purchase
all of the shares specified in the Notice, it shall give written notice to
Xxxxxxx-Xxxxx of its election, received within the specified time limitations,
and settlement for said shares shall be made as provided below in paragraph (d).
(D) The transfer of the shares to Pequot pursuant to Sections 1(b) or 1(c)
of this Agreement shall be effected through an agreement that is substantially
identical to the terms of the form of purchase agreement that Xxxxxxx-Xxxxx
would have used for the transfer, but with the inclusion therein of terms that
are substantially identical to Sections 4 and 5 of the KL Purchase Agreement.
Settlement of such transfer shall be made in cash within three (3) business days
after receipt of notice by Xxxxxxx-Xxxxx from Pequot; provided that if the
terms of payment set forth in the Notice were other than cash against delivery,
Pequot shall pay for said shares on the same terms and conditions set forth in
the Notice. Notwithstanding the foregoing, if it is necessary for Pequot to
comply with the HSR Act (as defined in the KL Purchase Agreement) in connection
with such transfer, the foregoing deadline for settlement of the transfer shall
be extended to the third business day following fulfillment of such compliance,
the provisions of Section 8(c)(2) of the KL Purchase Agreement shall be included
in the agreement referred to in the preceding sentence and the provisions of
Section 8.10 of the USS Purchase Agreement shall govern.
(E) For purposes of this Agreement the "Sale Period" for a public market
sale by Xxxxxxx-Xxxxx shall be that period which begins on the fourth (4th)
business day following Pequot's receipt of the Notice and ends at the close of
the nineteenth (19th) business day following Pequot's receipt of the Notice.
The "Sale Period" for a privately negotiated sale or transfer shall be that
period which begins on the sixth (6th) business day following Pequot's receipt
of the Notice and ends at the close of business on the forty-sixth (46th)
business day following Pequot's receipt of the Notice. In the event Pequot does
not elect to acquire all of the shares specified in the Notice,
Xxxxxxx-Xxxxx may, within the Sale Period following the expiration of the option
rights granted to Pequot, transfer the shares specified in the Notice which were
not acquired by Pequot, and as to a Private Transaction, on terms and conditions
no less favorable to Xxxxxxx-Xxxxx than as specified in the Notice.
(F) Anything to the contrary contained herein notwithstanding, the following
transactions shall be exempt from the provisions of this Section 1:
(1) Xxxxxxx-Xxxxx'x bona fide pledge or mortgage of any portion or all of
the Stock pursuant to the Credit Agreement (as defined in the Stock Purchase
Agreement of even date herewith) with The Chase Manhattan Bank, N.A. or pursuant
to a similar agreement with another commercial lending institution.
(2) Any transfer of all or any portion of the Stock pursuant to a
foreclosure on or sale of such Stock by the secured party under any bona fide
pledge or mortgage permitted under subsection (1) above, it being understood
that all rights of Pequot under this Agreement shall terminate with respect to,
and not be enforceable against, any transferee (other than Xxxxxxx-Xxxxx or any
of its Affiliates) pursuant to such foreclosure or sale.
(3) Xxxxxxx-Xxxxx'x transfer of all or any portion of the Stock to Pequot or
to any other Affiliate of Pequot.
(4) Xxxxxxx-Xxxxx'x transfer of any portion or all of the Stock to a person
who, at the time of such transfer, is an officer or director of Pequot.
(5) Xxxxxxx-Xxxxx'x transfer of all or any portion of the Stock pursuant to
and in accordance with the terms of any merger, consolidation or sale of all of
the shares of Xxxxxxx-Xxxxx, or pursuant to a sale of all or substantially all
of the assets of Xxxxxxx-Xxxxx.
In the event of any transfer or assignment specified in subsection (5) above,
the transferee, assignee, or other recipient shall receive and hold such stock
subject to the provisions of this Agreement, there shall be no further transfer
of such stock except in accord with this Agreement, and prior to the completion
of any such transfer, the applicable transferee shall execute a written
agreement agreeing and acknowledging that he, she or it shall comply with terms
of this Agreement in connection with any subsequent transfer.
(G) The provisions of this Section 1 may be waived with respect to any
transfer by express written consent of Pequot.
2. Termination. This Agreement shall terminate and be of no further
force or effect immediately when (i) Pequot owns less than ten percent (10%) of
the Series A Convertible Preferred Stock, or the Stock underlying such Series A
Convertible Stock, originally purchased on the First Closing or (ii) Pequot owns
less than ten percent (10%) of all the issued and outstanding shares of capital
stock of the Company (including all shares of capital stock issuable upon
conversion or exercise of any outstanding rights, warrants or other convertible
securities of the Company), whichever shall occur later.
3. Miscellaneous.
(a) Notices. Any notice, response or other communication required or
permitted hereunder shall be given, in the case of a communication to a Pequot,
to the attention of Xxxxx Xxxxx, the Chief Accounting Officer of Purchaser's
Investment Manager and to Xxxxx Xxxxxx, the Vice President of Purchaser's
Investment Manager, or to such other person or persons as shall have been
designated in writing to Xxxxxxx-Xxxxx by Pequot, in the case of a communication
to Xxxxxxx-Xxxxx, to the attention of Xxxxxx Xxxxxxx and Xxxxx Xxxxx. Except as
otherwise set forth in this Agreement, such notice, response or other
communication shall be by personal delivery to the applicable party's address,
as indicated below that party's signature to this Agreement, with written notice
of receipt, by facsimile transmission to the number shown below the applicable
party's signature to this Agreement, by email transmission to
xxxxxx@xxxxxxxxx.xxx, in the case of Xx. Xxxxx and to xxxxx@xxxxxxxxx.xxx, in
the case of Xx. Xxxxxx, or by Federal Express or similar service for overnight
delivery to the party's address, as indicated below that party's signature to
this Agreement. In the event of any other method of delivery, such
communications shall be deemed effectively given as of the date of receipt. Any
party to this Agreement may designate a new address for receipt of communication
or new persons to whose attention communications shall be addressed by providing
ten (10) days' advance written notice of such change to the other party hereto
by registered or certified mail with postage and fees prepaid, addressed to the
attention of Xxxxxx Xxxxxxx and Xxxxx Xxxxx at the address shown below or at
such other address as such party may designate by ten (10) days' advance written
notice to the other party hereto.
(b) Defined Terms. All capitalized terms used and not otherwise
defined in this Agreement shall have the meanings assigned to them in the USS
Purchase Agreement.
(c) Successors and Assigns. This Agreement may not be assigned by
either party hereto.
(d) Attorneys' Fees. Should any party to this agreement institute any
legal action against the other party to enforce provisions hereof (including any
claim for breaches of representations and warranties), the prevailing party in
such action shall be entitled to receive from the losing party, in addition to
any other relief to which the prevailing party may be entitled all expenses
incurred by the prevailing party in connection with the enforcement of this
Agreement.
(e) Expenses. Xxxxxxx-Xxxxx and Pequot shall each pay their own
expenses incident to the negotiation, preparation and performance of this
Agreement and the transactions contemplated hereby.
(f) Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. The parties
agree that any action brought by either party to interpret or enforce any
provision of this Agreement shall be brought in, and each party agrees to, and
does hereby, submit to the jurisdiction and venue of, the appropriate state or
federal court in the City of New York.
(g) Jurisdiction, Venue, Service of Process.
(1) each party hereto hereby expressly consents to personal jurisdiction
and venue in all federal and state courts sitting in the city of New York, and
all federal and state courts sitting in the county of New York, NY, in
connection with any suit, action or proceeding relating to any provision of, or
based on any matter arising out of or in connection with, this Agreement, any
instrument or document referred to herein or related hereto. Each party hereto
hereby expressly agrees that any process or notice of motion or other
application to any of the foregoing courts or a judge of such courts may be
served upon the sole shareholder within or without such courts jurisdiction by
registered or certified mail.
(2) each party hereto hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
relating to any provision of, or based on any matter arising out of or in
connection with, this Agreement, any instrument or document referred to herein
or related hereto, brought in any federal or state court sitting in the county
of New York and hereby further irrevocably waives any claim that such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(3) each party hereto hereby irrevocably waives any right to a trial by
jury in any suit, action or proceeding relating to any provision of, or based on
any matter arising out of or in connection with, this Agreement, any instrument
or document referred to herein or related hereto.
(h) Equitable Relief. The parties hereto acknowledge and agree that a
breach of the provisions of this Agreement cannot be reasonably or adequately
compensated in damages in an action at law and that a party's breach will cause
irreparable injury and damage to the other parties hereto. The parties hereto
further agree that they shall be entitled, in addition to any other remedies
they may have under this Agreement or otherwise, to temporary, preliminary
and/or permanent injunctive and other equitable relief to prevent or curtail any
breach of this Agreement, without proof of actual damages that have been or may
be caused to the party requesting such remedy by such breach or threatened
breach; provided, however, that no specification in this Agreement of a specific
legal or equitable remedy shall be construed as a waiver or prohibition against
the pursuing of other legal or equitable remedies in the event of a breach.
(i) Further Execution. The parties agree to take all such further
action(s) as may reasonably be necessary to carry out and consummate this
Agreement as soon as practicable, and to take whatever steps may be necessary to
obtain any governmental approval in connection with or otherwise qualify the
issuance of the securities that are the subject of this Agreement.
(j) Entire Agreement; Amendment. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes and merges all prior agreements or understandings, whether written or
oral. This Agreement may not be amended, modified or revoked, in whole or in
part, except by an agreement in writing signed by each of the parties hereto.
(k) Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
(l) Counterparts; Facsimile Execution. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original and
enforceable against the parties actually executing such counterpart, and all of
which, when taken together, shall constitute one instrument. Facsimile
execution and delivery of this Agreement shall be legal, valid and binding
execution and delivery for all purposes.
In Witness Whereof, the parties hereto have executed this Right of First
Refusal Agreement as of the day and year first above written.
THE XXXXXXX-XXXXX COMPANY
By:
Name: Xxxxxx Xxxxxxx
Title: Co-Chief Executive Officer
Address: 00000 Xxxxxxxx Xxxxxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
PEQUOT PRIVATE EQUITY FUND II, L.P.
By: PEQUOT CAPITAL MANAGEMENT, INC., its Investment Manager
By:
Name: Xxxxx X. X'Xxxxx,
Title: General Counsel
Address: 000 Xxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
