BRITESMILE, INC.
VOTING AND RIGHT OF CO-SALE AGREEMENT
This Voting and Right of Co-Sale Agreement (this "Agreement") is made
as of the 18th day of January, 2000, by and among BriteSmile, Inc., a Utah
corporation ("the Company"), LCO Investments Limited, a Guernsey, Channel
Islands corporation (together with any of its affiliates who currently own
shares of Common Stock of the Company, "LCO") and Pequot Private Equity Fund II,
L.P. ("PPEII"), Pequot Partners Fund, L.P. ("PPF"), and Pequot International
Fund, Inc. ("PIF")(PPEII, PPF, and PIF are referred to collectively herein as
the "Purchasers").
WITNESSETH
WHEREAS, the Purchasers have entered into a Stock Purchase Agreement
(the "Stock Purchase Agreement") with the Company dated January 12, 2000,
pursuant to which each Purchaser is making a significant equity contribution to
the Company.
WHEREAS, the Stock Purchase Agreement grants the right to the
Purchasers to collectively nominate one person for election to the Board of
Directors of the Company, and the Purchasers seek reasonable assurance that such
nominee will be appointed and elected to the Board of Directors after nomination
by the Purchasers.
WHEREAS, LCO owns and has voting power over a substantial number of
shares of voting Common Stock, par value $.001 per share, of the Company (the
"Stock").
WHEREAS, the Purchasers wish to enter into this Agreement in connection
with the Stock Purchase Agreement for the purpose of setting forth the terms and
conditions pursuant to which the Company shall propose a certain designee for
election to the Company's Board of Directors at each annual general meeting, and
LCO shall vote its shares of the Company's Stock in favor of such designee.
WHEREAS, the Purchasers and LCO also wish to agree to certain co-sale
rights with respect to transfers of their shares of Stock of the Company, as
provided in Section 10 below.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and undertakings of the parties, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Election of Directors and Board Representation. As provided in the
Stock Purchase Agreement, following the closing referred to therein and upon
delivery of written request by the Purchasers to the Company, the Board of
Directors of the Company will appoint a nominee designated by the Purchasers to
fill a vacancy on the Board of Directors. At each annual meeting of the
stockholders of the Company, or at any meeting of the stockholders of the
Company at which members of the Board of Directors of the Company are to be
elected, or whenever members of the Board of Directors are to be elected by
written
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consent of the stockholders (i) upon request of the Purchasers, the Company
agrees to nominate for election to the Board of Directors and (ii) LCO agrees to
vote and act with respect to all of its shares of voting securities of the
Company owned beneficially as of the record date in respect of any such meeting
(the "LCO Shares") so as to elect one (1) member as shall be designated, from
time to time, by the Purchasers and their Permitted Transferees (as defined in
this Section 1) pursuant to the Stock Purchase Agreement, and to remove such
member upon the written request of the Purchasers. The rights to designate a
director in this Section 1 and Section 3 shall continue so long as the
Purchasers and their Permitted Transferees collectively are the beneficial
owners of at least Fifty Percent (50%) of the original shares of Stock purchased
under the Stock Purchase Agreement (the "Shares"). For clarification, LCO shall
not be required by this Section 1 or Section 3 to vote the LCO Shares in a
manner that results in two or more designees of the Purchasers serving as
members of the Company's Board at the same time. For purposes of this Agreement,
"Permitted Transferees" shall mean any Affiliate (as defined in Section 10(f)
below) of a Purchaser who receives Shares by way of purchase, transfer or
assignment from a Purchaser.
2. Certain Resignations or Removals. Any party or parties having the
right to nominate a director pursuant to Section 1, shall also have the right to
request the resignation or removal of the director so nominated and elected.
Likewise, in the event that any director does not continue to be entitled to be
nominated to be a director pursuant to Section 1 (for example, because the
Purchasers no longer wish to nominate such person), the party or parties
entitled to nominate a director pursuant to Section 1, shall have the right to
request the resignation or removal of the director no longer entitled to be
nominated. In either case, if such director shall fail to resign, to the extent
a meeting of stockholders is called for the purpose of removing such director,
or the stockholders act by written consent, LCO shall vote all of the LCO Shares
entitled to vote at such meeting or pursuant to such consents, as the case may
be, in favor of removal.
3. Filling Vacancies. In the event of the death, disability, legal
incapacity, resignation or removal of any director, to the extent a special
meeting is called for the purpose of electing a replacement director, or the
stockholders act by written consent, to fill the vacancy created by such death,
disability, legal incapacity, resignation or removal, LCO shall, provided that
such director was designated in accordance with Section 1, vote all of the LCO
Shares entitled to vote in favor of the election of the replacement director
designated in accordance with Section 1.
4. Covenant to Vote. LCO shall appear in person or by proxy at any
annual or special meeting of stockholders for the purpose of obtaining a quorum
and shall vote the LCO Shares, either in person or by proxy, at any annual or
special meeting of stockholders of the Company called for the purpose of voting
on the election of directors or by consensual action of stockholders with
respect to the election of directors, in favor of the election of the director
nominated in accordance with Sections 1 and 3 hereof. In addition, LCO shall
appear in person or proxy at any annual or special meeting of stockholders for
the purpose of obtaining a quorum and shall vote the LCO Shares entitled to vote
upon any other matter submitted to a vote of the stockholders of the Company in
a manner so as to be consistent
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and not in conflict with, and to implement, the terms of this Agreement;
provided, however, that nothing herein shall obligate LCO to vote the LCO Shares
in favor of any proposal, resolution or other proposed shareholder action
endorsed by the director designated by the Purchasers.
5. No Conflicting Agreements. LCO shall not enter into any agreements
or arrangements of any kind with any person with respect to the LCO Shares which
would prohibit it from voting the LCO Shares it may own from time to time as
provided herein (whether or not such agreements and arrangements are with other
stockholders of the Company that are not parties to this Agreement).
6. Ownership. LCO is the beneficial owner of approximately 12,429,438
LCO Shares with the right to vote each of the LCO Shares. LCO represents and
warrants to the Purchasers that (a) it owns the LCO Shares and has not, prior to
or on the date of this Agreement, executed or delivered any proxy or entered
into any other agreement which would prevent it from voting the LCO Shares as
provided herein, and (b) it has full power and capacity to execute and deliver
and perform this Agreement on its own behalf, which has been duly executed and
delivered by, and evidences the valid and binding obligation of LCO enforceable
in accordance with its terms.
7. Termination. This Agreement shall terminate (i) on the termination
of the Purchasers' right to designate a nominee to the Board of Directors of the
Company; (ii) by mutual agreement in writing signed by each of the parties
hereto; or (iii) on written notice of termination by the Purchasers to the
Company and LCO.
8. Certain Transferees Subject to Agreement. In the event of any
transfer of LCO Shares to an affiliate of LCO, the transferee shall hold such
LCO Shares so acquired with all the rights conferred by, and subject to all of
the restrictions imposed by, this Agreement applicable to the transferor of such
LCO Shares. Any transferee of any LCO Shares who is an affiliate of LCO shall,
as a condition of the consummation of such transfer, agree to be subject to the
terms of this Agreement. Except as provided otherwise in Sections 8 and 10 of
this Agreement, nothing in this Agreement shall prevent LCO at any time from
selling, transferring or assigning LCO Shares to any person.
9. Notice of Purchasers' Nominee. Purchasers and their Permitted
Transferees, acting collectively and not individually, shall have the rights to
elect a director in accordance with Sections 1 and 3 hereof. Any notice to the
Company of the Purchasers' and their Permitted Transferees' nominee shall be
submitted for and on behalf of all of them. Should the Company receive (i) a
nominee notice from one or more but not all Purchasers and their Permitted
Transferees; (ii) more than one nominee notices specifying more than one
nominee; or (iii) any objection from one or more Purchasers and their Permitted
Transferees to any nominee submitted to the Company on behalf of all Purchasers
and their Permitted Transferees, then the Company shall promptly notify all
Purchasers and their Permitted Transferees of the nature of the
nominations/objections received and the Company shall not be obligated to take
further action regarding the Purchasers' and their Permitted Transferees'
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rights to elect a director until the Company shall receive a notice signed by
all Purchasers and their Permitted Transferees specifying their nominee.
10. Right of Co-Sale.
a. If any Significant Shareholder, as defined in Section 10(h)
herein (the "Transferring Shareholder"), proposes to transfer, sell or assign in
a Covered Transaction, as defined in Section 10(e) herein, (collectively, a
"Transfer") shares of Stock of the Company (the "Offered Stock") to any person
or persons (other than to an Affiliate, as defined in Section 10(f) herein),
such Transferring Shareholder shall notify each of the other Significant
Shareholders in writing (the "Transfer Notice") of such proposed Transfer and
its terms and conditions at least 20 days prior to such transfer. Upon receipt
of a Transfer Notice, such other Significant Shareholders may elect to
participate in the proposed Transfer by delivering written notice to the
Transferring Shareholder within 15 days of the date of receipt of such Transfer
Notice stating the number of shares of Stock that such Significant Shareholder
desires to sell.
b. Each such Significant Shareholder who has elected to
participate in the proposed transfer shall have the right (the "Right of
Co-Sale") to sell to the proposed transferee(s), as a condition to such Transfer
by the Transferring Shareholder, at the same price per share of Stock and on the
same terms and conditions as are specified in the Transfer Notice, up to a
number of shares of Stock of the Company equal to (its "Pro Rata Share") the
product of (x) the number of shares of Offered Stock times (y) the quotient
obtained by dividing (i) the number of shares of Stock (on a fully-diluted
basis) owned by such Significant Shareholder, by (ii) the number of shares of
Stock (on a fully-diluted basis) of the Company owned by all Significant
Shareholders, including the Transferring Shareholder, who have elected to
participate in the proposed Transfer, immediately prior to the Transfer of the
Offered Stock to the proposed transferee(s). The Transferring Shareholder will
be entitled to sell in the proposed Transfer the balance of the Offered Stock
proposed to be so sold. If such other Significant Shareholders elect to
participate in such Transfer, the Transferring Shareholder shall use his, her or
its best efforts to obtain the agreement of the prospective transferee(s) to the
participation of such Significant Shareholders in any proposed Transfer and
shall not Transfer any shares of the capital stock of the Company to such
prospective transferee(s) unless such prospective transferee(s) allow(s) the
participation of such Significant Shareholders on the terms specified in the
Transfer Notice. Any Significant Shareholder electing to participate in such
proposed Transfer shall execute and deliver a definitive purchase agreement with
the proposed transferee in substantially the form executed by the Transferring
Shareholder. Subject to the foregoing, the Transferring Shareholder may, within
45 days after the expiration of the 15-day period referred to above (provided
that such time period may be extended by the number of days required to obtain
any necessary regulatory approvals for the Transfer, but not to exceed 135 days
in total), transfer the Offered Stock (reduced by the number of shares of Stock
with respect to which the other Significant Shareholders have elected to
participate, if any) to the transferee(s) identified in the Transfer Notice at a
price and on the terms no more favorable to the Transferring Shareholder than
specified in the Transfer Notice. However, if such Transfer
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is not consummated within such 45-day, or extended period, the Transferring
Shareholder shall not Transfer any shares of the Offered Stock as have not been
purchased within such period without again complying with all of the provisions
of this Section 10. Notwithstanding the foregoing and irrespective of whether a
Transfer Notice has been delivered to other Significant Shareholders, a
Transferring Shareholder shall have no obligation to consummate a proposed
Transfer, it being understood that any such decision shall be made by the
Transferring Shareholder in its sole discretion, subject to the other
Significant Shareholders' right to participate in any Transfer the Transferring
Shareholder elects to consummate, to the extent provided herein.
c. Any attempt by a Transferring Shareholder to transfer
shares of Stock in violation of this Section 10 shall be void and the Company
agrees that it will (a) not effect such a Transfer nor will it treat any alleged
transferee as the holder of such shares of Stock, or (b) treat as owner of such
Stock, or accord the right to vote or pay dividends to any such transferee to
whom Stock may have been so transferred, without the unanimous consent of the
other Significant Shareholders.
d. If a Transferring Shareholder transfers any Stock in
contravention of this Section 10 (a "Prohibited Transfer"), or if the Company
has effected such Transfer and is treating the transferee as a Shareholder, the
relevant Significant Shareholder may, if it delivers a Put Notice as provided
below, require such Transferring Shareholder to purchase from such Significant
Shareholder, for cash or such other consideration as the Transferring
Shareholder received in the Prohibited Transfer, that number of shares of Stock
having a purchase price equal to the aggregate purchase price such Significant
Shareholder would have received in the closing of such Prohibited Transfer if
such Significant Shareholder had exercised and been able to consummate such
Significant Shareholder's Right of Co-Sale with respect thereto (the Significant
Shareholder's "Put Right"). A Significant Shareholder may exercise such
Significant Shareholder's Put Right by delivery of written notice to the
Transferring Shareholder and the Company (a "Put Notice") within the earlier of
(i) ten days after such Significant Shareholder becomes aware of the Prohibited
Transfer or (ii) 24 months after the Prohibited Transfer. The closing of such
sale to the Transferring Shareholder under such Significant Shareholder's Put
Right will occur within seven days after the date of such Significant
Shareholder's Put Notice.
e. "Covered Transaction" means a sale or series of sales
constituting an integrated transaction by a Significant Shareholder of 10% or
more of the number of shares of Stock of the Company on a fully-diluted basis
owned by such Significant Shareholder on the date hereof; provided, however,
that a Covered Transaction shall not include (i) any sale effected pursuant to
an effective registration statement under the Securities Act of 1933, as amended
(the "Act") or pursuant to Rule 144 under the Act, (ii) any transfer by merger
or consolidation in a transaction approved by the Company's shareholders at a
duly convened shareholders meeting of which all Significant Shareholders were
given proper notice, or (iii) any transfer by way of foreclosure or assignment
in lieu of foreclosure in connection with any bona fide security interest,
provided neither such foreclosure, assignment in lieu thereof or the applicable
underlying obligation was incurred or consummated as a device to
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avoid the application of this Agreement.
f. An "Affiliate" shall mean, with respect to any person, any
person that, directly or indirectly, controls, is controlled by or is under
common control with such person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise. Without limiting the
foregoing, the ownership by any person of 50% or more of the outstanding voting
securities of any other person shall be deemed to be "control" for the purposes
of this Agreement.
g. Any transfer by a Significant Shareholder of shares of
Stock to an Affiliate who is not a party to this Agreement shall be made only
pursuant to the terms of this Agreement and on the condition that such person
shall become a party to this Agreement, agreeing in writing to be bound by all
of its terms. Any Significant Shareholder making a transfer shall promptly
notify the Company, and the Company shall promptly notify the other Significant
Shareholders, if any, of the name of each transferee and the date of such
transfer.
h. A "Significant Shareholder" shall mean LCO, PPEII, PPF, or
PIF, but only for so long as such person and its Affiliates owns a number of
shares of Stock equal to or in excess of 50% of the number of shares of Stock of
the Company held by such person and its Affiliates on the date of closing of the
Stock Purchase Agreement.
11. Miscellaneous.
a. No Inconsistent Agreements. This Agreement, with regard to
the subjects hereof, constitutes the full and entire understanding and agreement
between the parties and supersedes any agreement between the parties.
b. Successors and Assigns. Except as specifically provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the Affiliate transferees of LCO and the Purchasers and
their Permitted Transferees. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
c. Amendments and Waivers. Any term hereof may be amended or
waived only with the written consent of each of the parties.
d. Notices. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient on the date of receipt, when
delivered personally or by overnight courier or sent by telegram or fax, or sent
as certified or registered mail, with
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postage prepaid, and addressed to the party to be notified at such party's
address or fax number as set forth on the signature page, or as subsequently
modified by written notice.
e. 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.
f. Governing Law. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Utah, without giving effect to principles of conflicts of law.
g. Counterparts. This Agreement may be executed in any number
of counterparts (and by facsimile), each of which shall be deemed an original
and all of which together shall constitute one instrument.
h. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
[The remainder of the page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties named below have signed this Agreement
as of the date first above written.
PEQUOT PRIVATE EQUITY FUND II, L.P., a "Purchaser"
BY: PEQUOT CAPITAL MANAGEMENT, INC.
ITS: INVESTMENT MANAGER
By: /S/ Xxxxx X. Xxxxx
----------------------------------------------------------
Xxxxx X. Xxxxx, CFO
Date: January 18, 2000
PEQUOT PARTNERS FUND, L.P., a "Purchaser"
BY: PEQUOT CAPITAL MANAGEMENT, INC.
ITS: INVESTMENT MANAGER
By: /s/ Xxxxx X. Xxxxx
----------------------------------------------------------
Xxxxx X. Xxxxx, CFO
Date: January 18, 2000
PEQUOT INTERNATIONAL FUND, INC., a "Purchaser"
BY: PEQUOT CAPITAL MANAGEMENT, INC.
ITS: INVESTMENT ADVISOR
By: /s/ Xxxxx X. Xxxxx
----------------------------------------------------------
Xxxxx X. Xxxxx, CFO
Date: January 18, 2000
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BRITESMILE, INC., the "Company"
By: /s/ Xxxx X. Xxxxx
----------------------------------------------------------
Xxxx X. Xxxxx, CFO
Date: January 18, 2000
LCO INVESTMENTS LIMITED
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman
Date: January 18, 2000
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