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GENERAL ATLANTIC PARTNERS, LLC
c/o General Atlantic Service Corporation
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
May 28, 1999
PERSONAL AND CONFIDENTIAL
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Xxxxxxx.xxx, Inc.
0000 XxxXxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxx
Xxxx Xxxxxxxxx
Ladies and Gentlemen:
This letter (this "Letter") sets forth the binding agreement and
commitment of General Atlantic Partners, LLC ("GAP") to make through affiliated
limited partnerships (such limited partnerships, together with GAP, "General
Atlantic") an equity investment in Xxxxxxx.xxx, Inc. (the "Company"), on the
following terms and conditions (the "Transaction").
1. Investment; Warrants. Subject to Sections 3 and 7 below, in the event
that the Company reasonably requires capital to fund the working
capital reasonably necessary to enable the Company to satisfy and
discharge its liabilities as such liabilities become due and payable,
General Atlantic agrees and commits to purchase from the Company at a
price per share of $2.25, newly issued shares of convertible preferred
stock of the Company (the "Preferred Stock") for an aggregate purchase
price of up to $12 million. In order to induce General Atlantic to
enter into this Letter and commit such capital, the Company hereby
grants to General Atlantic warrants (the "Warrants") to purchase
500,000 shares of common stock of the Company (the "Common Stock") at
an exercise price of $2.25 per share.
(a) Preferred Stock. The Preferred Stock shall have the same rank,
dividend, voting, anti-dilution and other rights and
preferences as the Series D Convertible Preferred Stock, par
value $.0001 per share, of the Company.
(b) Warrants. The Warrants shall have a term of 10 years and
include anti-dilution provisions customary for transactions of
this nature and reasonably acceptable to General Atlantic.
2. Additional Investors. GAP and the Company covenant and agree that each
of the stockholders of the Company entitled to preemptive rights with
respect to the Transaction, pursuant to Section 4 of the Third Amended
and Restated Stockholders Agreement, dated as of May 17, 1999 (the
"Stockholders Agreement"), among the Company and the parties set forth
on Schedule I thereto, shall be entitled to exercise such preemptive
rights and commit to purchase its applicable percentage (as determined
in accordance with Section 4.2 of the
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Stockholders Agreement) of the Preferred Stock and the Warrants until
5:00 p.m., PDT, on June 4, 1999. If any such stockholder does not
exercise or waive in writing such preemptive rights on or prior to such
date, then the Company shall obtain from such stockholder a written
waiver of its rights under the Stockholders Agreement with respect to
the Transaction.
3. Termination. This Letter shall terminate and be of no further force or
effect, and General Atlantic shall have no obligations hereunder, upon
the earlier to occur of (a) the closing of the Company's initial public
offering of shares of Common Stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended,
and (b) March 31, 2000. In the event of a termination pursuant to this
Section 3, neither the Company nor General Atlantic shall have any
liability for any damages whatsoever with respect to such termination;
provided, however, that notwithstanding the foregoing, Section 4 below
shall survive such termination.
4. Expenses. The Company shall pay all of General Atlantic's
transaction-related legal expenses in connection with this transaction.
5. Warrant Agreements. As soon as practicable after the date hereof, but
in any case no more than 10 business days after the date hereof, (a)
the Company shall execute and issue to General Atlantic the Warrants,
in form and substance reasonably satisfactory to the Company and
General Atlantic, and the Company and General Atlantic shall enter into
such additional agreements, containing customary representations,
warranties, covenants and indemnities, as are reasonably necessary to
evidence the issuance of the Warrants pursuant to Section 1 of this
Letter, (b) the Stockholders Agreement shall be amended to grant
General Atlantic the same first offer, tag-along rights, preemptive and
other rights with respect to its Warrants and the shares of Common
Stock issuable upon exercise of the Warrants that General Atlantic
currently enjoys with respect to its other shares of capital stock of
the Company and (c) the Fourth Amended and Restated Investor Rights
Agreement, dated as of May 17, 1999 (the "Investor Rights Agreement"),
among the Company and the parties set forth on Schedule I thereto shall
be amended to grant General Atlantic the same registration rights with
respect to the shares of Common Stock issuable upon exercise of the
Warrants that General Atlantic currently enjoys with respect to its
other shares of capital stock of the Company
6. Disclosure. From and after the date hereof, each of General Atlantic
and the Company agrees that it shall make no written or other public
disclosures regarding the Transaction or regarding the parties hereto
to any individual or organization without the prior written consent of
the other party, provided that such disclosure may be made (i) to
agents, banks, shareholders, employees and representatives of the
parties hereto and (ii) in the Company's registration statement with
respect to its initial public offering of shares of Common Stock to be
filed with the Securities and Exchange Commission if the Company's
counsel reasonably determines that such disclosure is required under
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
7. Conditions. This Letter is subject to (i) the negotiation of a
definitive stock purchase agreement governing the transactions
contemplated by this Letter, in form and substance reasonably
satisfactory to the Company and General Atlantic, containing
representations, warranties, covenants and indemnities customary for
transactions of this nature; (ii) the
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amendment of the Stockholders Agreement granting General Atlantic the
same first offer, tag-along rights, preemptive and other rights with
respect to its Preferred Stock that General Atlantic currently enjoys
with respect to its other shares of capital stock of the Company; (iii)
the amendment of the Investor Rights Agreement granting General
Atlantic the same registration rights with respect to the shares of
Common Stock issuable upon conversion of the Preferred Stock that
General Atlantic currently enjoys with respect to its other shares of
capital stock of the Company; and (iv) any governmental or third party
consents, if any.
8. No Brokers. The Company represents and warrants that it has incurred no
liability for any brokerage fees, agents' fees, commissions or finders'
fees in connection with this Letter or the consummation of the
transactions contemplated hereby.
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If the terms of this Letter are acceptable to the Company, please so
indicate on the enclosed copy of this letter and return it to the undersigned.
Yours sincerely,
General Atlantic Partners, LLC
By: /s/ XXXXXXX X. XXXX
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Name: Xxxxxxx X. Xxxx
Title: A Managing Member
Accepted and Agreed:
Xxxxxxx.xxx, Inc.
By: /s/ W. XXXXXX XXXXXX
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Name: W. Xxxxxx Xxxxxx
Title: President and Chief
Executive Officer
