Exhibit 4.2
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AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT is made as of
the 3 day of May, 2002, by and among OPTIMARK INNOVATIONS INC., f/k/a OTSH,
Inc., a Delaware corporation (the "Company"), OPTIMARK HOLDINGS, INC., a
Delaware corporation ("Holdings"), OPTIMARK, INC., a Delaware corporation
("OptiMark"), XXXXXX XXXXXX JURVETSON EPLANET VENTURES, L.P., a Cayman Islands
limited partnership ("ePlanet Ventures"), XXXXXX XXXXXX JURVETSON EPLANET
PARTNERS FUND, LLC, a California limited liability company ("ePlanet Partners")
and XXXXXX XXXXXX JURVETSON EPLANET VENTURES GmBH & CO. KG., a German
partnership ("ePlanet KG"), SOFTBANK CAPITAL PARTNERS LP, a Delaware limited
partnership ("Capital Partners"), SOFTBANK CAPITAL LP, a Delaware limited
partnership ("SOFTBANK Capital"), and SOFTBANK CAPITAL ADVISORS FUND LP, a
Delaware limited partnership ("Capital Advisors"). For purposes of this
Agreement: (i) each of Capital Partners, SOFTBANK Capital, and Capital Advisors
may be referred to as a "SOFTBANK Entity" and, collectively, as the "SOFTBANK
Entities"; (ii) each of ePlanet Ventures ePlanet Partners and ePlanet KG may be
referred to as an "ePlanet Entity" and, collectively, as the "ePlanet Entities";
and (iii) the Company, Holdings, OptiMark, each ePlanet Entity and each SOFTBANK
Entity are sometimes hereinafter referred to individually as a "Party" and
collectively as the "Parties".
RECITALS
WHEREAS, the Company and the ePlanet Entities are parties to a
Subscription Agreement, dated as of April 30, 2002, for the purchase and
issuance of shares of the Company's Common Stock (the "ePlanet Common Stock
Subscription Agreement"); and
WHEREAS, the Company and the ePlanet Entities are parties to a
Subscription Agreement, dated as of the date hereof, for the purchase and
issuance of shares of the Company's Series B Preferred Stock (the "ePlanet
Preferred Stock Subscription Agreement" and collectively, the "ePlanet
Subscription Agreements"); and
WHEREAS, the Company, Holdings, OptiMark and the SOFTBANK Entities are
parties to a Subscription Agreement, dated as of December 31, 2001, for the
purchase and issuance of shares of the Company's Common Stock (the "SOFTBANK
Subscription Agreement"); and
WHEREAS, the Company and OptiMark are parties to a Subscription
Agreement, dated as of December 31, 2001, for the purchase and issuance of
shares of the Company's Common Stock and Non-Qualified Preferred Stock (the
"OptiMark Subscription Agreement"); and
WHEREAS, in connection with the transactions contemplated by the
SOFTBANK Subscription Agreement and the OptiMark Subscription Agreement, the
Company, Holdings, OptiMark and the SOFTBANK Entities are parties to an
Investors' Rights Agreement, dated as of December 31, 2001 (the "Original Rights
Agreement"); and
WHEREAS, in order to induce the Company to enter into the ePlanet
Preferred Stock Subscription Agreement and to induce the ePlanet Entities to
invest funds in the Company pursuant to the ePlanet Preferred Stock Subscription
Agreement, the parties hereby agree that this Agreement shall govern certain
rights and obligations associated with ownership of shares of the Company's
capital stock and certain other matters as set forth herein.
NOW, THEREFORE, THE PARTIES HEREBY AGREE THAT THE ORIGINAL RIGHTS
AGREEMENT IS HEREBY AMENDED AND RESTATED IN ITS ENTIRETY AS FOLLOWS:
1. Definitions. For purposes of this Agreement, capitalized terms shall have
the meanings set forth in the Definitions Addendum attached hereto as Exhibit A
and incorporated herein.
2. Restrictions on Transfer; Compliance with Act; Registration Rights.
2.1. Restrictions on Transfer. The (i) Common Stock, (ii) Non-Qualified
Preferred Stock, (iii) Series B Preferred Stock, or (iv) any other securities
issued in respect of those referred to in clauses (i) - (iii) upon any stock
split, stock dividend, recapitalization, merger, consolidation or similar event
(collectively, "Restricted Securities"), shall not be Transferred except upon
the conditions specified in this Section 2, which conditions are intended to
ensure compliance with the provisions of the Act. Each Party will cause any
proposed purchaser, assignee, transferee, or pledgee of Restricted Securities
held by such Party to agree to take and hold such securities subject to the
provisions and upon the conditions specified in Sections 2.1-2.4 of this
Agreement.
2.2. Restrictive Legends. Each certificate representing Restricted
Securities shall be stamped or otherwise imprinted with the following legends
(in addition to any legend required under applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED, PROVIDED THAT NO SUCH REGISTRATION OR
OPINION OF COUNSEL SHALL BE REQUIRED IF THE SECURITIES ARE SOLD
PURSUANT TO RULE 144 OF SUCH ACT. COPIES OF THE AGREEMENT COVERING
THESE SECURITIES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE COMPANY.
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A CERTAIN AMENDED AND RESTATED INVESTORS'
RIGHTS AGREEMENT DATED AS OF MAY 3, 2002 AMONG OPTIMARK INNOVATIONS
INC. AND CERTAIN HOLDERS OF THE OUTSTANDING CAPITAL STOCK OF SUCH
CORPORATION, AS SUCH AGREEMENT MAY BE AMENDED, RESTATED OR MODIFIED
FROM TIME TO TIME.
The Parties consent to the Company making a notation on its records and
giving instructions to any transfer agent of the Restricted Securities in order
to implement the restrictions on Transfer established in this Section 2.
2.3. Notice of Proposed Transfers. The holder of Restricted Securities by
acceptance thereof agrees to comply in all material respects with the provisions
of this Section 2.3. Prior to any proposed Transfer of any Restricted Securities
by a Holder (other than (i) a Transfer not involving a change in beneficial
ownership, (ii) in transactions involving the distribution without consideration
of Restricted Securities by any Holder to any of its member or partners, (iii) a
Transfer to the Company, subject to compliance with applicable securities laws,
(iv) solely in the case of the ePlanet Entities, a Transfer to an Affiliate of
any transferring ePlanet Entity, subject to compliance with applicable
securities laws, (v) solely in the case of the SOFTBANK Entities, a Transfer to
an Affiliate of the transferring SOFTBANK Entity, subject to compliance with
applicable securities laws, (vi) solely in the case of OptiMark, a Transfer to
an Affiliate of OptiMark, subject to compliance with applicable securities laws,
or (vii) Transfers in compliance with Rule 144, unless there is in effect a
registration statement under the Act covering the proposed Transfer, the Holder
shall give written notice to the Company of such Holder's intention to effect
such Transfer. Each such notice shall describe the manner and circumstances of
the proposed Transfer in sufficient detail, and, if requested by the Company,
shall be accompanied, at such Holder's expense, by either (i) a written opinion
of legal counsel who shall be, and whose legal opinion shall be, addressed to
the Company and satisfactory to the Company and its legal counsel in their
reasonable discretion, to the effect that the proposed Transfer of the
Restricted Securities may be effected without registration under the Act, or
(ii) a "no action" letter from the SEC to the effect that the Transfer of such
Restricted Securities without registration under the Act will not result in a
recommendation by the staff of the SEC that action be taken with respect
thereto, whereupon the Holder of such Restricted Securities shall be entitled to
Transfer such Restricted Securities in accordance with the terms of the notice
delivered by the Holder to the Company.
2.4. Removal of Restrictions on Transfer of Securities. Any legend
referenced in Section 2.2 appearing on a certificate evidencing Restricted
Securities, and the stock transfer instructions and stock transfer record
notations with respect to such Restricted Securities, shall be removed and the
Company shall issue a certificate without such legend to the Holder of such
Restricted Securities if (i) such securities are registered under the Act, or
(ii) such Holder provides the Company with an opinion of counsel (which may be
counsel for the Company) reasonably acceptable to the Company and its counsel to
the effect that a public sale or Transfer of such securities may be made without
registration under the Act, other than in connection with
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a Transfer of such securities pursuant to Rule 144 under the Act, or (iii) such
securities are Transferred by Holder under Rule 144.
2.5. Request for Registration By Holders of Non-Qualified Preferred and
Series B Preferred. The Company covenants and agrees as follows:
(a) If the Company shall receive at any time after 180 days after the
effective date of the first registration statement for a public offering of
securities of the Company a written request that the Company file a registration
statement under the Act covering the registration of Registrable Securities then
outstanding from Parties that are (x) the holders of not less than fifty percent
(50%) of the shares of Non-Qualified Preferred Stock, (y) the holders of not
less than fifty percent (50%) of the shares of Series B Preferred Stock, or (z)
the holders of not less than ten percent (10%) of the shares of Common Stock
(together, the "Initiating Holders"), then the Company shall:
(i) within ten (10) days of the receipt thereof, give written
notice of such request to all Holders; and
(ii) use its best efforts to effect as soon as practicable the
registration under the Act (including, without limitation, appropriate
qualification under applicable blue sky or other state securities laws) of all
Registrable Securities which the Holders request to be registered in a written
request received by the Company within twenty (20) days after receipt of notice
from the Company of a request for registration under this Section 2.5(a),
subject to the limitations of Section 2.5(b) below.
(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by its request by means of an underwriting, they shall so
advise the Company as a part of the request made pursuant to Section 2.5(a) and
the Company shall include such information in the written notice referred to in
Section 2.5(a). The underwriter will be selected by the Company and shall be
reasonably acceptable to the Initiating Holders. In such event, the right of any
Holder to include Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by the Initiating Holders and such Holder) to the
extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company as provided in
subsection 2.8(e)) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting. Notwithstanding
any other provision of this Section 2.5, if the underwriter advises the Company
and the Initiating Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Company shall so
advise all other Holders of Registrable Securities which would otherwise be
underwritten pursuant hereto, and shares shall be included in such underwriting
according to the following priorities: (i) first, to the Initiating Holders up
to the total number of Registrable Securities requested to be registered; (ii)
secondly, pro rata among any other Holders according to the total number of
Registrable Securities entitled to be included therein by each Holder, and (iii)
lastly, pro rata among any other holders of the Company's securities seeking
registration (including, for the avoidance of doubt, the Company)
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(c) Notwithstanding the foregoing, if the Company shall furnish to the
Initiating Holders requesting a registration statement pursuant to this Section
2.5, a certificate signed by the Chief Executive Officer of the Company stating
that in the good faith judgment of the Board of Directors, it would be seriously
detrimental to the Company and its stockholders for such registration statement
to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer taking action
with respect to such filing for a period of not more than 90 days after receipt
of the request of the Initiating Holders; provided, however, that the Company
may not utilize this right more than once in any twelve-month period.
(d) In addition, the Company shall not be obligated to effect, or to
take any action to effect, any registration pursuant to this Section 2.5:
(i) After the Company has effected one (1) registration pursuant
to this Section 2.5 initiated by Parties who are Holders of not less than fifty
percent (50%) of the shares of Non-Qualified Preferred Stock and such
registration has been declared or ordered effective;
(ii) After the Company has effected one (1) registration pursuant
to this Section 2.5 initiated by Parties who are Holders of not less than fifty
percent (50%) of the shares of Series B Preferred Stock and such registration
has been declared effective or ordered effective;
(iii) After the Company has effected one (1) registration
pursuant to this Section 2.5 initiated by Parties who are Holders of not less
than ten percent (10%) of the shares of Common Stock and such registration has
been declared or ordered effective;
(iv) During the period starting with the date forty-five (45)
days prior to the Company's good faith estimate of the date of filing of, and
ending on a date one hundred eighty (180) days after the effective date of, a
registration subject to this Section 2.5; provided that the Company is actively
employing in good faith all reasonable efforts to cause (A) such registration
statement to become effective, (B) Holders of Registrable Securities to join
such registration pursuant to this Agreement and (C) all Registrable Securities
requested by the Holders to be registered to be so registered; provided,
further, that the Company shall not be permitted to exercise the rights set
forth in this Section 2.5(d)(iv) more than once in any twelve (12) month period;
(v) If the Initiating Holders propose to dispose of shares of
Registrable Securities at a time when the Company is permitted to register the
Registrable Securities immediately on Form S-3 pursuant to a request made in
accordance with Section 2.11 below; or
(vi) In a particular jurisdiction if, in order for the Company to
effect such registration pursuant to this Section 2.5, the Company would be
required to qualify as a foreign corporation, subject itself to taxation in that
jurisdiction and consent to service of process
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in such jurisdiction (unless the Company is already subject to the same in such
jurisdiction and except as may be required by the Act).
2.6. Expenses of Demand Registration. All expenses, filings or
qualifications pursuant to Section 2.5 including, without limitation, all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company and reasonable fees and
disbursements (not to exceed $50,000) of one counsel for the selling Holders
selected by them (but excluding underwriting discounts and commissions) shall be
borne by the Company.
2.7. Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for stockholders other than the Holders) any of its stock under
the Act in connection with the public offering of such stock solely for cash
(other than a registration on Form S-4 (including registrations relating solely
to a Rule 145 transaction) or Form S-8 or any other relating solely to the sale
of securities to participants in a Company stock plan or a registration in which
only Common Stock is being registered and such Common Stock is issuable upon
conversion of debt securities which are also being registered), the Company
shall, at such time, promptly give each Holder advance written notice of such
registration. Upon the written request of each Holder given within twenty (20)
days after mailing of such notice by the Holder, the Company shall, subject to
the provisions of Section 2.9, cause to be registered under the Act all of the
Registrable Securities that each such Holder has requested to be registered.
2.8. Expenses of Company Registration. All expenses incurred in connection
with any registration, filing or qualification of Registrable Securities with
respect to the registrations pursuant to Section 2.7 for each Holder, including,
without limitation, all registration, filing, and qualification fees, printers
and accounting fees relating or apportionable thereto and the fees and
disbursements of one counsel (not to exceed $50,000) for the selling Holders
selected by them (but excluding underwriting discounts and commissions) shall be
borne by the Company.
2.9. Underwriting Requirements. In connection with any offering involving
an underwriting of shares of the Company's capital stock, the Company shall not
be required under Section 2.7 to include any of the Holders' securities in such
underwriting unless they accept in writing the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it (or by other
Persons entitled to select the underwriters), and then only in such quantity as
the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company. If the total amount of Registrable
Securities, requested by Holders to be included in such offering exceeds the
amount of securities that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned (i) first, to shares proposed to be registered by the
Company in connection with the private offering of such stock solely for cash,
(ii) second, pro rata among the holders of Registrable Securities according to
the total amount of Registrable Securities entitled to be included therein by
each Holder of Registrable Securities, and (iii) lastly, pro rata among the
other selling stockholders according to the total
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amount of securities entitled to be included therein owned by each other selling
stockholder or in such other proportions as shall mutually be agreed to by such
other selling stockholders).
2.10. Company Right to Terminate. The Company shall have the right to
terminate or withdraw any registration initiated by it under Section 2.7 prior
to the effectiveness of such registration whether or not any Holder has elected
to include Registrable Securities in such registration. The registration
expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.8 hereof.
2.11. Form S-3 Registration. In case the Company shall receive from any
Holder or Holders a written request or requests that the Company effect a
registration on Form S-3, the Company will:
(a) promptly give written notice of the proposed registration, and any
related qualification or compliance, to all other Holders; and
(b) as soon as practicable, use its best efforts to effect such
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other Holder or Holders joining in such request as are specified in a written
request given within 15 days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance, pursuant to this Section
2.11: (i) if Form S-3 is not available for such offering by the Holders; (ii) if
the Company shall furnish to the Holders a certificate signed by the President
of the Company stating that in the good faith judgment of the Board of
Directors, it would be seriously detrimental to the Company and its stockholders
for such Form S-3 Registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than 90 days after receipt of the request of
the Holder or Holders under this Section 2.11; provided, however, that the
Company shall not utilize this right more than once in any twelve-month period;
(iii) if the participating Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities of the Company (if any),
and the aggregate price to the public of the shares to be registered on Form S-3
is less than $500,000 (unless all Holders of Registrable Securities are
participating and selling all Registrable Securities that they hold); (iv) if
the Company, within ten (10) days of the receipt of the request for registration
on Form S-3 from a Holder, gives notice of its bona fide intention to effect the
filing of a registration statement with the SEC within ninety (90) days of
receipt of such request (other than with respect to a registration statement on
Form S-4 (including registrations relating solely to a Rule 145 transaction) or
Form S-8 or any other relating solely to the sale of securities to participants
in a Company stock plan) in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more
than 90 days after receipt of the request of the Holder or Holders under this
Section 2.11 and such Holder or Holders shall be entitled to participate in such
Company Registration pursuant to Section 2.7 hereof; (v) during the period
starting with the date forty-five (45) days prior to the Company's good faith
estimate of the date of filing of, and ending on the date one hundred eighty
(180) days
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after the effective date of, any registration statement pertaining to a public
filing of securities for the Company's account, provided the Company is actively
employing in good faith its best efforts to cause (A) such registration
statement to become effective, (B) Holders of Registrable Securities to join
such registration pursuant to this Agreement and (C) all Registrable Securities
requested by the Holders to be registered pursuant to Section 2.11 to be so
registered; provided, further, that the Company shall not be permitted to
exercise the rights set forth in this Section 2.11(b)(v) more than once in any
twelve month period; and (vi) in a particular jurisdiction if, in order for the
Company to effect such registration pursuant to this Section 2.11, the Company
would be required to qualify as a foreign corporation, subject itself to
taxation in that jurisdiction and consent to service of process in such
jurisdiction (unless the Company is already subject to the same in such
jurisdiction and except as may be required by the Act).
Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Holders. All expenses incurred in connection with a registration
requested pursuant to this Section 2.11, including, without limitation, all
registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of one counsel for the selling Holder or
Holders selected by them (not to exceed $50,000) and counsel for the Company,
but excluding any underwriters' discounts or commissions associated with
Registrable Securities, shall be borne by the Company. Registrations effected
pursuant to this Section 2.11 shall not be counted as demands for registration
or registrations effected pursuant to Section 2.5. The Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to this Section 2.11 if the registration request is subsequently withdrawn at
the request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders of Registrable Securities
shall bear such expenses); provided, however, that if at the time of such
withdrawal, the Holders of Registrable Securities have learned of a material
adverse change in the condition, business or prospects of the Company from that
known to the Holders of Registrable Securities at the time of their request and
have withdrawn the request with reasonable promptness following disclosure by
the Company of such material adverse change, then the Holders of Registrable
Securities shall not be required to pay any of such expenses and shall retain
their rights pursuant to this Section 2.11.
2.12. Obligations of the Company. Whenever required under this Section 2 to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to one hundred twenty (120)
days or until the distribution contemplated in the Registration Statement has
been completed; provided, however, that (i) such 120-day period shall be
extended for a period of time equal to the period the Holder refrains from
selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of the Company; and (ii) in
the case of any registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, such 120-day period
shall be extended,
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if necessary, to keep the registration statement effective until all such
Registrable Securities are sold.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders participating in such registration such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as they
may reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business, subject itself to general taxation
or file a general consent to service of process in any such states or
jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(i) Furnish, at the request of the Holders holding a majority of the
Registrable Securities to be included in the registration pursuant to this
Section 2, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this Section
2, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (x) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is
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customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (y) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and, to
the extent permitted by applicable accounting standards, to the Holders
requesting registration of Registrable Securities.
2.13. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 2 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such written information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
2.14. [Intentionally Omitted]
2.15. Indemnification. In the event any Registrable Securities are included
in a registration statement under this Section 2:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Act) of such
Registrable Securities and each Person, if any, who controls such Holder or
underwriter within the meaning of the Act, or the 1934 Act, and each officer,
director, partner and employee of such Holder or underwriter against any
expenses, losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Act, or the 1934 Act or other federal or state
securities laws, insofar as such expenses, losses, claims, damages, or
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arise out of
or are based upon any the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, or any
preliminary prospectus, final prospectus or any prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act, contained
therein or any amendments or supplements thereto or, arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading; or (ii) any violation or alleged violation by the Company of the
Act, the 1934 Act, any state securities law or any other federal or state law,
rule or regulation applicable to the Company in connection with any such
registration statement, qualification or compliance; and the Company will pay to
each such Holder, underwriter controlling Person, officer, director, partner or
employee, as incurred, any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 2.15(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company (which shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation
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which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any such
Holder; provided, further, that the Company shall not be liable to (i) any
Holder under the indemnity agreement in this subsection (a) with respect to any
preliminary prospectus to the extent that any such loss, claim, damage or
liability of such Holder results from the fact that such Holder sold Registrable
Securities to a Person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the related final prospectus if the
Company has previously furnished on a timely basis to such Holder sufficient
copies thereof and such prospectus corrects the statement or omission, or
alleged statement or arises or (ii) any Holder distributing securities otherwise
than in an underwritten offering or through a broker-dealer acting as placement
agent for such Holder, with respect to any preliminary or final prospectus to
the extent that any such loss, claim, damage or liability of such Holder arises
from the fact that such Holder delivered such preliminary or final prospectus
after receipt of any notice from the Company pursuant to Section 2.12(f) hereof
and an amended or supplemented prospectus which corrects the statement or
omission, or alleged statement or omission, out of which such loss, claim,
damage or liability arises.
(b) To the extent permitted by law, each Holder for whom Registrable
Securities are included among the securities included in the registration
statement, qualification or compliance being effected, severally and not
jointly, will indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement, each Person, if
any, who controls the Company within the meaning of the Act, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
Persons may become subject, under the Act, or the 1934 Act or other federal or
state securities laws, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any Person intended to be indemnified pursuant to this subsection 2.15(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 2.15(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder; provided, that, the liability of any Holder
under this Section 2.15(b) will equal the proportion that the public offering
price of the shares sold by such Holder under such registration statement bears
to the total public offering price of all securities sold thereunder and in no
event shall exceed the gross proceeds from the offering received by such Holder
unless such liability results from the willful misconduct of the Holder.
(c) Promptly after receipt by an indemnified party under this Section
2.15 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under this Section 2.15, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented
11
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under this Agreement unless the failure to give such notice is materially
prejudicial to any indemnifying party's ability to defend such action. No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party (whose consent shall not be
unreasonably withheld), consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section 2.15 is held
by a court of competent jurisdiction to be unavailable or insufficient to hold
harmless to an indemnified party with respect to any loss, liability, claim,
damage, or expense thereof referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such loss,
liability, claim, damage, or expense in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
that resulted in such loss, liability, claim, damage, or expense as well as any
other relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. The Company and each of the Holders agrees that it would
not be just and equitable if contributions pursuant to this paragraph were
determined by pro rata allocation (even if all of the Holders of such
Registrable Securities were treated as one entity for such purpose) or by any
other method of allocation which did not take account of the equitable
considerations referred to above in this paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or action in respect thereof, referred to above in this paragraph, shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this paragraph, no Holder shall be
required to contribute any amount in excess of the lesser of (i) the proportion
that the public offering price of shares sold by such Holder under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not to exceed the proceeds received by such
Holder for the sale of Registrable Securities covered by such registration
statement and (ii) the amount of any damages which they would have otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act), shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in
12
connection with the underwritten public offering are in conflict with the
foregoing provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and Holders under this Section 2.15
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 2, and otherwise.
2.16. Reports Under the 1934 Act. With a view to making available to the
Holders the benefits of Rule 144 promulgated under the Act and any other rule or
regulation of the SEC that may at any time permit a Holder to sell Restricted
Securities of the Company to the public without registration after such time as
a public market exists for the Common Stock of the Company, the Company agrees
to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act (at any time
after it has become subject to such reporting requirements); and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (ii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
2.17. Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 2 may be assigned (but
only with all related obligations) by any Holder to a transferee or assignee of
such securities provided that not less than 50 shares Common Stock or 500 shares
of either Series B Preferred Stock or Non-Qualified Preferred Stock are so
transferred, as adjusted for stock splits, stock dividends, recapitalizations,
or other similar events (or a lesser number if such number represents all of the
Holder's Registrable Securities), provided such transferee or assignee agrees in
writing to be bound by and subject to the terms and conditions of this Agreement
relating to registration of Registrable Securities including without limitation
the provisions of Section 2.19 below. A transferor agrees to furnish the Company
in writing not more than ten (10) Business Days after the transfer, the name and
address of the transferee and the Registrable Securities underlying the subject
transfer.
2.18. Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the then outstanding Registrable Securities,
enter into any agreement with any holder or prospective holder of any securities
of the Company which would allow such holder or prospective holder to include
such securities in any registration filed pursuant to this Agreement
13
unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of his securities will not reduce the amount of the Registrable
Securities of the Holders which may be included.
2.19. "Market Stand-Off" Agreement. Each Holder hereby agrees that, during
the period of duration specified by the Company and an underwriter of Common
Stock or other securities of the Company, following the effective date of
registration statement of the Company filed under the Act, it shall not, to the
extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), enter into any hedging or similar transaction with the same economic
effect as a sale, grant any option to purchase or otherwise transfer or dispose
of (other than to donees who agree to be similarly bound) any securities of the
Company held by it at any time during such period except Common Stock included
in such registration; provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
(b) such agreement shall not be in effect unless all officers,
directors and holders of more than 5% of any outstanding series of capital stock
of the Company and all other Persons with registration rights (whether or not
pursuant to this Agreement) enter into similar agreements;
(c) such market standoff time period shall not exceed one hundred
eighty (180) days in the case of an initial firm commitment underwritten public
offering by the Company of its Common Stock under an effective registration
statement under the Act which results in the Company's Common Stock being quoted
on a national securities exchange;
(d) such market standoff time period shall not exceed one hundred
twenty (120) days in any other offering by the Company under an effective
registration statement under the Act.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other Person subject to the
foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in this
Section 2.19 shall not apply to a registration relating solely to employee
benefit plans on Form S-l or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to a transaction pursuant to
Rule 145 under the Act on Form S-4 or similar forms which may be promulgated in
the future.
2.20. Termination of Registration Rights. The registration rights granted
under this Section 2 shall terminate on the earlier to occur of: (i) the fifth
(5th) anniversary of the consummation of the initial underwritten public
offering of the Company's securities pursuant to
14
a registration statement filed under the Act; or (ii) as to a particular Holder,
when such Holder is eligible to sell all of its Registrable Securities within
any ninety (90) day period in reliance on Rule 144 under the Act.
3. Covenants of the Company.
3.1. Delivery of Financial Statements. Until the closing of an initial
public offering of the Company's Common Stock, the Company shall deliver to each
holder of Non-Qualified Preferred Stock and Series B Preferred Stock:
(a) as soon as practicable, but in any event within ninety (90) days
after the end of each fiscal year of the Company, an income statement for such
fiscal year, a balance sheet of the Company and statement of stockholder's
equity as of the end of such year, and a schedule as to the sources and
applications of funds for such year, such year-end financial reports to be in
reasonable detail, prepared in accordance with generally accepted accounting
principles consistently applied ("GAAP"), and audited and certified by
independent public accountants of nationally recognized standing selected by the
Company;
(b) as soon as practicable, but in any event within forty-five (45)
days after the end of each of the first three (3) quarters of each fiscal year
of the Company, an unaudited profit or loss statement, schedule as to the
sources and application of funds for such fiscal quarter and an unaudited
balance sheet, a statement of stockholder's equity as of the end of such fiscal
quarter and comparisons to budget and prior year, in reasonable detail, prepared
in accordance with GAAP consistently applied with prior practice for earlier
periods;
(c) with respect to the financial statements called for in subsection
(b) of this Section 3.1, an instrument executed by the Chief Financial Officer
or President of the Company and certifying that such financials were prepared in
accordance with GAAP consistently applied with prior practice for earlier
periods (with the exception of footnotes that may be required by GAAP) and
fairly present the financial condition of the Company and its results of
operation for the period specified, subject to year-end audit adjustment;
(d) notice of any material adverse change in the financial condition,
business, prospects or corporate affairs of the Company, or the commencement or
threat of commencement of any material litigation, promptly upon the Company
becoming aware of such changes, commencement or threat;
(e) as soon as practicable, copies of all reports filed with the SEC;
and
(f) such other information relating to the financial condition,
business, prospects or corporate affairs of the Company as a Party or any
assignee of such Party may from time to time reasonably request.
The rights granted pursuant to this Section 3.1 may not be assigned or
otherwise conveyed by any Party or by any subsequent transferee of any such
rights without the prior written consent of the Company, which consent shall not
be unreasonably withheld.
15
3.2. Preemptive Rights. Subject to the terms and conditions specified in
this Section 3.2, the Company hereby grants to each Party a right of first offer
with respect to future sales by the Company of its Additional Stock (as
hereinafter defined).
Each time the Company proposes to offer any shares of, or securities
convertible into or exercisable for any shares of, any class of its capital
stock ("Additional Stock"), the Company shall first make an offering of such
Additional Stock to each Party in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail ("Notice") to
each Party stating (i) its bona fide intention to offer such Additional Stock,
(ii) the number of such shares of Additional Stock to be offered, and (iii) the
price and terms, if any, upon which it proposes to offer such Additional Stock.
(b) Within 20 calendar days after receipt of the Notice, each Party
may elect to purchase or obtain (each Party electing to purchase, a "Subscribing
Party"), at the price and on the terms specified in the Notice, up to that
portion of such Additional Stock which equals the proportion that the number of
shares of Common Stock issued and held by such Party bears to the total number
of shares of Common Stock of the Company held by all Parties ("Pro Rata Share").
(c) If any Party elects not to purchase its respective Pro Rata Share
of the Additional Stock (or fails to respond within the 20 day period specified
in Section 3.2(b) above), then (i) the Company shall deliver a second notice by
certified mail (the "Second Notice") to each Subscribing Party stating the
number of shares of Additional Stock still available (the "Available Additional
Stock") and (ii) each Subscribing Party may elect to purchase its Pro Rata Share
of the Available Additional Stock within 10 calendar days after receipt of the
Second Notice.
(d) If all shares of Additional Stock which a Party is entitled to
obtain pursuant to Sections 3.2(b) and 3.2(c) are not elected to be obtained as
provided, then the Company may, during the 60-day period following the
expiration of the periods provided in Sections 3.2(b) and 3.2(c), offer the
remaining unsubscribed portion of such Additional Stock to any Person or Persons
at a price not less than, and upon terms no more favorable to the offeree than
those specified in the Notice. If the Company does not enter into an agreement
for the sale of the Additional Stock within such period, or if such agreement is
not consummated within 60 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Additional Stock shall not be
sold unless first reoffered to the Parties in accordance herewith.
(e) The preemptive right in this Section 3.2 shall expire on the
closing of an IPO.
(f) The preemptive right set forth in this Section 3.2 may be assigned
or transferred by a Party to a transferee or assignee of any of its shares of
capital stock of the
16
Company, provided such transferee or assignee agrees in writing to be bound by
and subject to the terms and conditions of this Agreement relating to this
Section 3.2.
3.3. Positive Covenants. So long as any shares of the Non-Qualified
Preferred Stock or Series B Preferred Stock are still outstanding, the Company
agrees as follows:
(a) The Company will promptly pay and discharge, or cause to be paid
and discharged, when due and payable, all lawful taxes, assessments, and
governmental charges or levies imposed upon the income, profits, property, or
business of the Company or any subsidiary; provided, however, that any such tax,
assessment, charge, or levy need not be paid if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if the
Company shall have set aside on its books adequate reserves with respect
thereof, and provided further, that the Company will pay all such taxes,
assessments, charges, or levies forthwith upon the commencement of proceedings
to foreclose any lien that may have attached as security therefor. The Company
will promptly pay or cause to be paid when due, or in conformance with customary
trade terms, all other material indebtedness incident to the operations of the
Company;
(b) The Company will keep, and cause each of its subsidiaries to keep,
its properties in good repair, working order, and condition, reasonable wear and
tear excepted, and from time to time make all needful and proper repairs,
renewals, replacements, additions, and improvements thereto; and the Company
will, and will cause its subsidiaries to, at all times comply with the
provisions of all material leases to which any of them is a party or under which
any of them occupies property so as to prevent any material loss or forfeiture
thereof or thereunder;
(c) The Company will keep, and cause its subsidiaries to keep, its
assets that are of an insurable character insured by financially sound and
reputable insurers against loss or damage, casualties and contingencies, and of
such types and in such amounts as is customary for companies in similar
businesses similarly situated; and the Company will maintain, with financially
sound and reputable insurers, insurance against other hazards, risks, and
liabilities to Persons and property to the extent and in the manner customary
for companies in similar businesses similarly situated;
(d) The Company will keep true records and books of account in which
full, true, and correct entries in all material respects will be made of all
dealings or transactions in relation to its business and affairs in accordance
with GAAP applied on a consistent basis;
(e) The Company shall, and shall cause its subsidiaries to, duly
observe and conform to all material requirements of governmental authorities
relating to the conduct of their businesses or to their property or assets;
(f) The Company shall, and shall cause its subsidiaries to, maintain
in full force and effect its corporate existence, rights, and franchises and all
licenses and other rights to use patents, processes, licenses, trademarks, trade
names, or copyrights owned or possessed by it or any subsidiary and deemed by
the Company to be material to the conduct of its business;
17
(g) The Company will retain independent public accountants of
recognized national standing who shall certify the Company's financial
statements at the end of each fiscal year;
(h) The Company will cause each Person now or hereafter employed by it
or any subsidiary with access to confidential information to enter into a
proprietary information and inventions agreement substantially in the form
approved by the Board of Directors;
(i) The Company will cause each senior manager and key employee now or
hereafter employed by it or any subsidiary to (I) dedicate substantially their
full working schedule to the Company and refrain from pursuing outside business
activities during the Company's business hours, consistent with the Company's
current personnel policies, and (II) enter into a noncompetition and
nonsolicitation agreement substantially in the form approved by the Board of
Directors;
(j) The Company will, and will cause each of its subsidiaries to,
comply with all applicable requirements of law of any governmental authority in
respect of conduct of its businesses and the ownership of its properties, except
such as are being contested in good faith and except for such noncompliances as
will not in the aggregate have a material adverse effect on its business or
properties; and
(k) Upon receipt of a request in writing from any Party, the Company
will permit such Party to inspect the books and records of the Company at the
principal offices of the Company and meet with management.
The covenants set forth in this Section 3.3 shall terminate and be of
no further effect upon the closing of an IPO.
3.4. Board of Directors.
(a) Until the closing of an IPO, the number of directorships for the
Board of Directors shall be fixed at five (5). For so long as the SOFTBANK
Entities or their respective Affiliates collectively hold not less than fifty
percent (50%) of the shares of Common Stock held as of the date of this
Agreement, the SOFTBANK Entities shall be entitled to appoint one (1) member of
the Board of Directors (the "SOFTBANK Designee"). For so long as the ePlanet
Entities and their respective Affiliates collectively hold not less than fifty
percent (50%) of the shares of each of the Common Stock and Series B Preferred
Stock held as of the date of this Agreement, ePlanet Ventures shall be entitled
to appoint two (2) members of the Board of Directors (the "ePlanet Designees").
For so long as the ePlanet Entities and their respective Affiliates collectively
hold not less than twenty-five percent (25%) of the shares of Common Stock and
Series B Preferred Stock held as of the date of this Agreement, ePlanet Ventures
shall be entitled to appoint one (1) member of the ePlanet Designee of
Directors. For so long as OptiMark and its Affiliates hold not less than fifty
percent (50%) of the shares of each of the Common Stock and Non-Qualified
Preferred Stock held as of the date of this Agreement, OptiMark shall be
entitled to appoint two (2) members of the Board of Directors (collectively, the
"OptiMark Designees"). For so long as OptiMark and its Affiliates hold not less
than
18
twenty-five percent (25%) of the shares of Common Stock and Non-Qualified
Preferred Stock held as of the date of this Agreement, OptiMark shall be
entitled to appoint one OptiMark Designee. The Parties agree to vote their
shares of Common Stock in order to comply with the obligations of this Section
3.5. Notwithstanding the foregoing, in the event that OptiMark and its
Affiliates (for the purpose of this sentence neither a SOFTBANK Entity nor an
ePlanet Entity shall be deemed an Affiliate of OptiMark) transfers shares of
each of the Common Stock and Non-Qualified Preferred Stock held as of the date
of this Agreement to either a SOFTBANK Entity and its Affiliates or an ePlanet
Entity and its Affiliates and such transfer causes OptiMark to no longer be
entitled to appoint one or both OptiMark Designees, then such transferee shall
be entitled to appoint one member or both members, as the case may be, of the
Board of Directors that OptiMark is no longer entitled to appoint.
(b) The affirmative vote each of the SOFTBANK Designee, the ePlanet
Designee and at least one OptiMark Designee, shall be required for the Company
to:
(i) make any material acquisition, investment, capital
expenditure, sale of assets, incurrence of debt or contract;
(ii) approve the annual operating budget of the Company;
(iii) declare, pay or set aside any sums for the payment of any
dividends, or make any distribution, on any shares of its capital stock, or
redeem, repurchase or otherwise acquire any outstanding shares of its capital
stock or any other of its outstanding securities;
(iv) enter into any contracts or arrangements, whether written or
oral, with stockholders or any Affiliate or "associate" (as such term is defined
under Rule 12b-2 under the 0000 Xxx) of the Company;
(v) create, authorize, or designate any stock option, "phantom"
equity or stock appreciation rights plan or other employee benefits program
(including, without limitation, the Option Plan), or amend any existing plan;
(vi) change the material accounting policies or methods of the
Company or change the Company's independent auditors;
(vii) create, incur, assume or suffer to exist any indebtedness
of the Company for borrowed money (which shall include for purposes hereof
capitalized lease obligations and guarantees or other contingent obligations for
indebtedness for borrowed money) or grant any pledge, lien, mortgage, charge,
security interest or other encumbrance on any assets of the Company;
(viii) materially change the nature or scope of the Company's
principal line of business; or
19
(ix) use, commit to use, reserve, set-aside, or otherwise
encumber any proceed from the sale by the Company of any shares of capital stock
of The Ashton Technology Group, Inc. held as of the date hereof or hereafter
acquired by the Company.
(c) In the event that OptiMark, the SOFTBANK Entities or the ePlanet
Entities, or any of them, lose their respective rights to designate members of
the Board of Directors pursuant to Section 3.4(a) above, then the voting
requirements set forth in Section 3.4(b) shall be automatically amended to
require the affirmative vote of the designees of the Parties retaining rights to
designate members of the Board of Directors.
4. Rights of First Offer; Drag Along.
4.1. Right of First Offer. Each Party hereby grants to the other Parties a
right of first offer (according to each Party's Pro Rata Share) with respect to
future Transfers by such Party of its shares of capital stock of the Company.
Each time a Party proposes to Transfer any shares of such Party's capital stock
of the Company (the "Transferred Shares"), such Party (a "Transferring Party")
shall first make an offering of such Transferred Shares to all of the other
Parties in accordance with the following provisions:
(a) The Transferring Party shall deliver a notice by certified mail
("ROF Notice") to the other Parties stating (i) its bona fide intention to
Transfer such Transferred Shares, (ii) the number of Transferred Shares to be
Transferred, and (iii) the price and terms, if any, upon which it proposes to
Transfer such Transferred Shares.
(b) Within 20 calendar days after receipt of the ROF Notice, each
Party may elect to purchase or obtain, at the price and on the terms specified
in the ROF Notice, up to such Party's Pro Rata Share of such Transferred Shares.
(c) If any Party elects not to purchase its respective Pro Rata Share
of the Transferred Shares (or fails to respond within the 20 day period
specified in Section 4.1(b) above), then (i) the Transferring Party shall
deliver a second notice by certified mail (the "Second ROF Notice") to each
Subscribing Party stating the number of Transferred Shares still available (the
"Available Transferred Shares") and (ii) each Subscribing Party may elect to
purchase its Pro Rata Share of the Available Transferred Shares within 10
calendar days after receipt of the Second ROF Notice.
(d) If all Transferred Shares which the Parties are entitled to obtain
pursuant to Sections 4.1(b) and 4.1(c) are not elected to be obtained as
provided, the Transferring Party may, during the 30-day period following the
expiration of the periods provided in Sections 4.1(b) and 4.1(c), offer the
remaining unsubscribed portion of such Transferred Shares, to any Person or
Persons, at a price not less than, and upon terms no more favorable to the
offeree or transferee than those specified in the ROF Notice, provided that such
Person agrees in writing to be bound by the terms and conditions of this Section
4.1. If the Transferring Party does not enter into an agreement for the Transfer
of the Transferred Shares within such period, or if such agreement is not
consummated within 30 days of the execution thereof, the right provided
hereunder shall be
20
deemed to be revived and such Transferred Shares shall not be Transferred unless
the Transferring Party first complies with the right of first offer under this
Section 4.1.
(e) Prohibited Transfer.
(i) In the event any Transferring Party should Transfer any
Transferred Shares in contravention of the participation rights of the other
Parties under this Agreement (a "Prohibited Transfer"), the other Parties, in
addition to such other remedies as may be available at law, in equity or
hereunder, shall have the put option provided in Section 4.2(e)(ii) below, and
such Transferring Party shall be bound by the applicable provisions of such put
option.
(ii) In the event of a Prohibited Transfer, the other Parties
shall have the right to Transfer to such Transferring Party, and such
Transferring Party shall have the obligation to purchase, a number of shares of
capital stock equal to the number of shares that the other Parties would have
been entitled to Transfer to the purchaser in the Prohibited Transfer pursuant
to the terms hereof. Such Transfer shall be made on the following terms and
conditions:
(A) The price per share at which the shares are to be
Transferred to such Transferring Party shall be equal to the price per share
paid by the purchaser to such Transferring Party in the Prohibited Transfer.
Such Transferring Party shall also reimburse the other Parties for reasonable
fees and expenses, including legal fees and expenses, incurred pursuant to the
exercise or the attempted exercise of the other Parties' rights under this
Section 4.1.
(B) Within a period of thirty (30) days after the later of
the dates on which the other Parties (I) receives notice from a Transferring
Party of the Prohibited Transfer or (II) otherwise becomes aware of the
Prohibited Transfer, the other Parties shall, if exercising the put option
created hereby, deliver to such Transferring Party the certificate or
certificates representing shares to be Transferred, each certificate to be
properly endorsed for Transfer.
(C) Such Transferring Party shall, upon receipt of the
certificate or certificates for the shares to be Transferred by the other
Parties pursuant to Section 4.1(e)(ii)(B), pay simultaneously to the order of
such other Parties the aggregate purchase price therefor and the reasonable
amount of any fees and expenses reimbursable under Section 4.1(e)(ii)(A) (each
in immediately available funds).
(D) Notwithstanding the foregoing, any attempt to Transfer
shares of the Company in violation of Section 4.1 hereof shall be voidable at
the option of the other Parties, and the Company agrees it will not effect such
a Transfer nor will it treat any alleged transferee as the holder of such shares
without the written consent of the other Parties.
(f) Notwithstanding anything to the contrary herein: (i) in the case
of a Transfer by an ePlanet Entity, the provisions of this Section 4.1 and
Section 4.2 shall not apply to
21
(A) a Transfer to another ePlanet Entity, (B) a Transfer to an Affiliate of an
ePlanet Entity or (C) a Transfer by such ePlanet Entity to any of its partners
or members; (ii) in the case of a Transfer by a SOFTBANK Entity, the provisions
of this Section 4.1 and Section 4.2 shall not apply to (A) a transfer to another
SOFTBANK Entity, (B) a Transfer to an Affiliate of a SOFTBANK Entity or (C) a
Transfer by such SOFTBANK Entity to any of its partners or members; and (iii) in
the case of a Transfer by OptiMark, the provisions of this Section 4.1 and
Section 4.2 shall not apply to a Transfer to an Affiliate of OptiMark.
4.2. Drag Along Rights.
(a) Right to Compel Participation in Certain Transfers. If at any time
one or more holders of not less than seventy five percent (75%) of the shares of
Common Stock then outstanding (the "Dragging Parties") propose a Qualifying
Transfer of all or a portion of their shares to a third Person, the Dragging
Parties may require each of the holders of the outstanding shares of capital
stock of the Company who are not Dragging Parties (collectively, the
"Non-Dragging Parties") to Transfer all of their shares of capital stock, to
such third Person, as follows: (i) holders of shares of Common Stock shall be
entitled to the consideration to be received by the Dragging Parties; (ii)
holders of shares of capital stock that are not convertible into shares of
Common Stock shall be entitled to the aggregate amount of the liquidation
preference plus accrued but unpaid dividends for such shares; and (iii) holders
of shares of capital stock that are convertible into shares of Common Stock, if
any, shall be deemed to have converted such shares into shares of Common Stock
at the then applicable conversion price immediately prior to the closing of the
Qualifying Transfer. The Dragging Parties shall be obligated to ensure that, in
the event of the closing of such Qualifying Transfer, the same terms and price
will apply to all shareholders.
(b) Drag-Along Notice. The Dragging Parties shall provide a written
and dated notice (the "Drag-Along Notice") of such proposed Qualifying Transfer
to each of the Non-Dragging Parties not later than thirty (30) days prior to the
consummation of the proposed Qualifying Transfer. The Drag-Along Notice shall
contain (i) written notice of the exercise of the Dragging Parties' rights
pursuant to this Section 4.2, (ii) the consideration per share of Common Stock,
to be paid by the third Person and (iii) the other material terms and conditions
of the proposed Qualifying Transfer. At the closing of the Qualifying Transfer,
each of the Non-Dragging Parties shall deliver to such third Person the
certificate or certificates evidencing all of the shares of capital stock to be
sold, pursuant to the terms of the proposed Qualifying Transfer and to take all
such actions reasonably requested by such third Person in order to consummate
such Qualifying Transfer.
(c) Non Consummation. Anything hereto the contrary notwithstanding,
the Dragging Parties shall have no obligation to the Non-Dragging Parties to
Transfer any shares of capital stock of the Company pursuant to this Section 4.2
as a result of any decision by the Dragging Parties not to accept or consummate
any Qualifying Transfer of the shares of Common Stock owned by the Dragging
Parties (it being understood that any and all such decisions shall be made by
the Dragging Parties in their sole discretion).
22
4.3. Term and Expiration of Rights of First Offer and Drag Along;
Assignment.
(a) Term. The rights set forth in Sections 4.1 and 4.2 shall expire
upon the closing of an IPO.
(b) Assignment. The rights set forth in Sections 4.1 and 4.2 may be
assigned and Transferred by an ePlanet Entity to a transferee or assignee of not
less than 100 of its shares of capital stock of the Company (or a lesser number
if such number represents all of such assigning or transferring entity's
Registrable Securities); provided, however, that such permitted transferee or
assignee agrees in writing to be bound by and subject to the terms and
conditions of this Agreement related to these Sections 4.1 and 4.2.
5. Put and Call Rights.
5.1. Independent Committee. The Independent Committee shall have the rights
and obligations as set forth herein. In the event that one or more members of
the Independent Committee as constituted as of the date of this Agreement, and
thereafter for the term of this Section 5 of the Agreement, (i) no longer
qualify as disinterested or (ii) resign or are terminated, then the Holdings
Board shall use reasonable good faith efforts to find independent third persons
to fill such vacancies on the Holdings Board and appoint such successor
independent directors to serve on the Independent Committee. The Independent
Committee shall at all times during the term of this Agreement have the rights
and obligations provided under this Section 5 of the Agreement.
5.2. First Call Right of Holdings on Common Stock of the SOFTBANK Entities.
(a) First Call Right. Commencing on October 1, 2002 and continuing
until September 30, 2003 (the "First Call Exercise Period"), the Independent
Committee, in its sole discretion, shall have the right to require each of the
SOFTBANK Entities to sell to Holdings (the "First Call Right") all, but not less
than all, of the Common Stock held by the SOFTBANK Entities in exchange for an
aggregate consideration of (i) US$125,000 and (ii) 16,667 shares of authorized
but unissued shares of the Series E Preferred Stock. In the event of the
exercise and closing of the transactions contemplated by the First Call Right,
Holdings shall pay to each of the SOFTBANK Entities their pro rata share of the
foregoing aggregate consideration based upon the total number of shares of
Common Stock sold by such SOFTBANK Entity.
(b) Exercise. To exercise the First Call Right, Holdings shall deliver
written notice of its intent to so exercise (the "First Call Exercise Notice")
so that it is received by the SOFTBANK Entities during the First Call Exercise
Period. Upon receipt of such exercise notice, Holdings and the SOFTBANK Entities
shall arrange a mutually agreed upon time and place in which to consummate the
transactions contemplated by the First Call Right, which in no event shall be
more than ten (10) days from the date on which the First Call Exercise Notice is
received. In the event that the closing does not occur during the foregoing ten
(10) day period, the provisions of Section 5.8 shall come into effect.
23
(c) Closing Deliveries. At the closing, Holdings shall deliver the
appropriate consideration to each of the SOFTBANK Entities and each of the
SOFTBANK Entities shall tender to Holdings the certificates representing their
respective shares of Common Stock, accompanied by stock power(s) duly executed
in blank enabling the transfer of the shares of Common Stock to Holdings or its
designee. In addition, each of the SOFTBANK Entities, the Company and Holdings
agrees to execute and deliver any other documents and take such actions that any
other party may reasonably request to evidence such transaction.
5.3. First Put to Holdings of Common Stock of SOFTBANK Entities.
(a) First Put Right. Commencing on October 1, 2002 and continuing
until September 30, 2003 (the "First Put Exercise Period"), the SOFTBANK
Entities, acting unanimously, shall have the right to require Holdings to
purchase from the SOFTBANK Entities (the "First Put Right") all, but not less
than all, of the shares of Common Stock held by them in exchange for an
aggregate consideration of 16,667 shares of authorized but unissued shares of
the Series E Preferred Stock. In the event of the exercise and closing of the
transactions contemplated by the First Put Right, Holdings shall pay to each of
the SOFTBANK Entities their pro rata share of the Series E Preferred Stock based
upon the total number of shares of Common Stock sold by such SOFTBANK Entity.
(b) Exercise. To exercise the First Put Right, each of the SOFTBANK
Entities shall deliver one collective written notice of their intent to so
exercise (the "First Put Exercise Notice") so that it is received by Holdings
during the First Put Exercise Period. Upon receipt of such exercise notice,
Holdings and the SOFTBANK Entities shall arrange a mutually agreed upon time and
place in which to consummate the transactions contemplated by the First Put
Right, which in no event shall be more than ten (10) days from the date on which
the First Put Exercise Notice is received.
(c) Closing Deliveries. At the closing, Holdings shall deliver the
appropriate consideration to each of the SOFTBANK Entities and each of the
SOFTBANK Entities shall tender to Holdings the certificates representing their
respective shares of Common Stock, accompanied by stock power(s) duly executed
in blank enabling the transfer of the shares of Common Stock held by them to
Holdings or its designee. In addition, each of the SOFTBANK Entities, the
Company and Holdings agrees to execute and deliver any other documents and take
such actions that any other party to this Agreement may reasonably request to
evidence such transaction.
5.4. Liquidity Event Discretionary Call of Holdings on Common Stock of
SOFTBANK Entities.
(a) Discretionary Call. Subject to the rights granted to the
Independent Committee in Section 5.4(d) hereof, in the event of a Company
Liquidity Event on or before September 30, 2003, then Holdings shall purchase
(the "Discretionary Call") all of the shares of Common Stock held by the
SOFTBANK Entities in exchange for an aggregate consideration of (i) US$125,000
and (ii) 16,667 shares of authorized but unissued shares of the Series E
Preferred Stock. In the event of the exercise and closing of the transactions
contemplated by the
24
Discretionary Call, Holdings shall pay to each of the SOFTBANK Entities their
pro rata share of the foregoing aggregate consideration based upon the total
number of shares of Common Stock sold by such SOFTBANK Entity.
(b) Notice of Discretionary Call. In the event of an Company Liquidity
Event, Holdings shall promptly provide written notice of the same to the
SOFTBANK Entities (the "Liquidity Notice"). If Holdings, pursuant to Section
5.4(d) hereof, determines not to exercise its Discretionary Call, it shall
include notice of its determination not to do so in the Liquidity Notice. If the
Liquidity Notice does not include notice of Holdings' decision not to exercise
its Discretionary Call pursuant to Section 5.4(d) hereof, then upon receipt of
the Liquidity Notice, Holdings and the SOFTBANK Entities shall arrange a
mutually agreed upon time and place in which to consummate the transactions
contemplated by the Discretionary Call, which in no event shall be more than ten
(10) days from the date on which the SOFTBANK Entities receive the Liquidity
Notice. In the event that the closing does not occur during the foregoing ten
(10) day period, the provisions of Section 5.8 of this Agreement shall come into
effect.
(c) Closing Deliveries. At the closing, Holdings shall deliver the
appropriate consideration to each of the SOFTBANK Entities and each of the
SOFTBANK Entities shall tender to Holdings the certificates representing their
respective shares of Common Stock, accompanied by stock power(s) duly executed
in blank enabling the transfer of the shares of Common Stock held by them to
Holdings or its designee. In addition, each of the SOFTBANK Entities, the
Company and Holdings agrees to execute and deliver any other documents and take
such actions that any other party to this Agreement may reasonably request to
evidence such transaction.
(d) Independent Committee Veto. Notwithstanding anything in this
Agreement to the contrary, in the event that the Independent Committee is in
existence at the time of a Liquidity Event and the Independent Committee, in its
sole discretion, opposes exercising the Discretionary Call, then Holdings shall
not exercise the Discretionary Call and no party shall have any obligations
pursuant to the Discretionary Call.
5.5. Mandatory Call of Holdings on SOFTBANK Common Stock.
(a) Mandatory Call. In the event that: (i) none of the options set
forth in Sections 5.2 through 5.4 of this Agreement have been exercised on or
before September 30, 2003; (ii) the Independent Committee no longer exists; and
(iii) no independent directors sit on the Holdings Board and, after reasonable
good faith efforts by the remaining members of the Holdings Board, no
independent persons qualified to serve on the Holdings Board have been found or,
if found, are not willing to sit on the Holdings Board, then the Holdings Board
shall engage an independent investment banking, accounting or third party
valuation firm to evaluate whether or not it is in the best interests of
Holdings that it purchase the shares of Common Stock held by the SOFTBANK
Entities. In the event that such independent investment banking, accounting or
third party valuation firm selected by the Holdings Board thereafter recommends
to the Holdings Board that Holdings purchase the shares of Common Stock held by
the SOFTBANK Entities, then Holdings shall be obligated to purchase (the
"Mandatory Call") on or
25
before December 31, 2003 (the "Mandatory Call Period") all of the shares of
Common Stock held by the SOFTBANK Entities in exchange for an aggregate
consideration of (x) US$125,000 and (y) 16,667 shares of authorized but unissued
shares of the Series E Preferred. In the event of the exercise and closing of
the transactions contemplated by the Mandatory Call, Holdings shall pay to each
of the SOFTBANK Entities their pro rata share of the foregoing aggregate
consideration based upon the total number of shares of Common Stock sold by such
entity.
(b) Exercise of Mandatory Call. In accordance with Section 5.4(b)
hereof, Holdings shall provide the SOFTBANK Entities with the Liquidity Notice.
Holdings shall include in such Liquidity Notice its intention to exercise its
Mandatory Call. Upon receipt of the foregoing Liquidity Notice, Holdings and the
SOFTBANK Entities shall arrange a mutually agreed upon time and place in which
to consummate the transaction contemplated by the Mandatory Call, which in any
event shall occur during the Mandatory Call Period. In the event that the
closing does not occur during the foregoing ten (10) day period, then the
provisions of Section 5.88 shall come into effect.
(c) Closing Deliveries. At the closing, Holdings shall deliver the
appropriate consideration to each of the SOFTBANK Entities and each of the
SOFTBANK Entities shall tender to Holdings the certificates representing their
shares of Common Stock, accompanied by stock power(s) duly executed in blank
enabling the transfer of such shares of Common Stock to Holdings or its
designee. In addition, each of the parties to this Agreement agrees to execute
and deliver any other documents and take such actions that any other party to
this Agreement may reasonably request to evidence such transaction.
5.6. Second Put of SOFTBANK to Holdings of the SOFTBANK Common Stock.
(a) Second Put Right. In the event that on October 31, 2003 the
SOFTBANK Entities still own all of the their shares Common Stock and no other
puts or calls granted in this Agreement have been exercised, then commencing on
November 1, 2003 and continuing until November 30, 2003 (the "Second Put
Exercise Period"), the SOFTBANK Entities, acting unanimously, shall have the
right to require Holdings to purchase from the SOFTBANK Entities (the "Second
Put Right") all, but not less than all, of the shares of Common Stock held by
the SOFTBANK Entities in exchange for an aggregate consideration of 16,667
shares of authorized but unissued shares of the Series E Preferred Stock. In the
event of the exercise and closing of the transactions contemplated by the Second
Put Right, Holdings shall pay to each of the SOFTBANK Entities their pro rata
share of the Series E Preferred Stock based upon the total number of shares of
Common Stock sold by such entity.
(b) Exercise. To exercise the Second Put Right, each of the SOFTBANK
Entities shall delivery one collective written notice of their intent to so
exercise (the "Second Put Exercise Notice") so that it is received by Holdings
during the Second Put Exercise Period. Upon receipt of such exercise notice,
Holdings and the SOFTBANK Entities shall arrange a mutually agreed upon time and
place in which to consummate the transactions contemplated by the Second Put
Right, which in no event shall be more than ten (10) days from the date on the
Second Put Exercise Notice is received.
26
(c) Closing Deliveries. At the closing, Holdings shall deliver the
appropriate consideration to each of the SOFTBANK Entities and each of the
SOFTBANK Entities shall tender to Holdings the certificates representing their
shares of Common Stock, accompanied by stock power(s) duly executed in blank
enabling the transfer of such shares of Common Stock to Holdings or its
designee. In addition, each of the parties to this Agreement agrees to execute
and deliver any other documents and take such actions that any other party to
this Agreement may reasonably request to evidence such transaction.
5.7. Adjustment to Preferred Stock Consideration.
(a) Adjustment for Stock Splits, Stock Dividends, Recapitalizations.
To the extent any SOFTBANK Entity is to receive Series E Preferred Stock as
consideration hereunder and there occurs a stock dividend, stock split, reverse
stock split, recapitalization or the like after the Effective Date affecting the
number of outstanding shares of Series E Preferred Stock, the number of shares
of Series E Preferred Stock to be paid as consideration shall be equitably
adjusted.
(b) Adjustments for Reorganization, Consolidation, Merger. To the
extent any SOFTBANK Entity is to receive Series E Preferred Stock as
consideration hereunder and after the date of this Agreement Holdings
consolidates with or merges into another Person or conveys all or substantially
all of its assets to another Person, then, in each such case, the number of
shares of Series E Preferred Stock such SOFTBANK Entity would be entitled to
receive shall become the stock or other securities or property to which such
SOFTBANK Entity would have been entitled upon the consummation of such
reorganization, consolidation, merger or conveyance if such SOFTBANK Entity had
ownership of the Series E Preferred Stock immediately prior thereto.
5.8. Remedy for Failure to Tender Shares. In the event that any stockholder
shall be required to sell his shares of stock pursuant to any provision hereof,
and in the further event that such stockholder for any reason does not deliver
the certificate or certificates evidencing such shares to the Person who is (or
desires) to purchase such shares, in accordance with the applicable provisions
of this Section 5, then the purchaser of such shares may deposit the purchase
price or other consideration for such shares with any bank doing business within
fifty (50) miles of Holdings' principal office, or with Holdings' certified
public accountants, as agent or trustee, or in escrow, for such stockholder, to
be held by such bank or accountant until withdrawn by such stockholder. Upon
such deposit by the purchaser of such consideration and upon notice to the
stockholder who was required to sell, the shares of stock of such stockholder to
be sold pursuant to the applicable provisions of this Section 5 shall at such
time be deemed to have been sold, assigned, transferred and conveyed to such
purchaser, such stockholder shall have no further rights thereto and the
applicable corporation shall record such transfer in its stock transfer book.
27
5.9. Representations and Warranties of Holdings. Holdings hereby represents
and warrants to the SOFTBANK Entities as follows:
(a) Organization, Good Standing and Qualification. Holdings is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Holdings has all requisite corporate power and
authority to own and operate its properties and assets, to carry on its business
as currently conducted and as currently proposed to be conducted and, in the
case of Holdings, to execute and deliver this Agreement, to issue and sell the
shares of Series E Preferred Stock and to carry out the provisions of this
Agreement. Holdings has made available to the undersigned true, correct and
complete copies of Holdings' Certificate of Incorporation and Bylaws, each as
amended to date and presently in effect.
(b) Authorization; Binding Obligations. All corporate action on the
part of Holdings, its officers, directors and stockholders necessary for the due
authorization, execution and delivery of this Agreement, the performance of all
obligations of Holdings hereunder and the authorization, sale, issuance and
delivery of the shares of Series E Preferred Stock pursuant hereto has been
taken. This Agreement, when executed and delivered, will be the valid and
binding obligation of Holdings enforceable against Holdings, in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights; and (ii) as limited by general principles of
equity that restrict the availability of specific performance, injunctive relief
or other equitable remedies. The issuance of the shares of Series E Preferred
Stock is not and will not be subject to any preemptive rights or rights of first
refusal.
(c) Series E Preferred Stock. The shares of Series E Preferred Stock,
when issued and delivered in accordance with the terms of this Agreement, will
be duly and validly issued, and when the shares of Common Stock held by the
SOFTBANK Entities are delivered as consideration for the receipt of such shares
of Series E Preferred Stock in accordance with this Section 5, will be fully
paid and non-assessable.
(d) Compliance with Other Instruments and Laws. Holdings is not in
violation or default of any term of its certificate of incorporation or bylaws,
or of any provision of any mortgage, indenture, contract, agreement, instrument
or contract to which it is party or by which it or any of its property is bound
or of any judgment, decree, order, writ, statute, rule or regulation applicable
to Holdings or its properties which, individually or in the aggregate, would
have a material adverse effect on the financial condition or results of
operations, or the assets of Holdings. The execution, delivery, and performance
of and compliance with the SOFTBANK Subscription Agreement by the Company and
this Agreement by Holdings, and the issuance and sale of the shares of Common
Stock held by the SOFTBANK Entities pursuant to the SOFTBANK Subscription
Agreement, and the shares of Series E Preferred Stock issuable as consideration
for the receipt of the shares of Common Stock pursuant hereto, will not, with or
without the passage of time or giving of notice, result in any violation or
default by Holdings of any term of its certificate of incorporation or bylaws,
or of any provision of any mortgage, indenture, contract, agreement, instrument
or contract to which it is party or by which it or any of its property is bound
or (ii) of any judgment, decree, order, writ, statute rule or regulation
applicable to Holdings, any or its properties, or result in the creation of any
lien upon any of the
28
properties or assets of Holdings or the suspension, revocation, impairment,
forfeiture or nonrenewal of any permit, license, authorization or approval
applicable to Holdings, its business or operations or any of its assets or
properties which, individually or in the aggregate, would have a material
adverse effect on the financial condition or results of operations, or the
assets of Holdings.
5.10. Term and Performance of Put and Call Rights.
(a) Term. Unless extended or earlier terminated by the parties
according to the provisions of Section 7.3 below, the term of Section 5 of this
Agreement shall expire and terminate on December 31, 2003.
(b) Specific Performance. Holdings and the SOFTBANK Entities agree
that the shares of Common Stock held by the SOFTBANK Entities and the Series E
Preferred Stock are unique, that failure to perform the obligations provided by
Section 5 of this Agreement shall result in immediate and irreparable damage and
that specific performance of these obligations may be obtained by a lawsuit in
equity.
6. Non-Competition Covenant. Holdings hereby agrees that, for the period
commencing on the date of the closing of the transactions contemplated by the
ePlanet Preferred Stock Subscription Agreement and ending five (5) years
thereafter, none of Holdings, OptiMark or any Affiliate of either Holdings or
OptiMark, other than the SOFTBANK Entities, any Affiliate of a SOFTBANK Entity
(other than Holdings or the Company), the ePlanet Entities, any Affiliate of an
ePlanet Entity (other than the Company), the Company or a direct subsidiary of
the Company, shall (i) design, implement or operate a system or service for
itself, (ii) operate a system for a third party that matches or fills equity
orders for Securities priced at the VWAP or (iii) design, develop, create or
issue any derivative instrument whose specifications or pricing is derived from
the VWAP of an underlying equity security or index of securities.
7. Miscellaneous.
7.1. Assignment; No Third Party Beneficiaries. No Party shall be entitled
to assign this Agreement without the prior written consent of the other Parties
hereto; provided, however, that (i) OptiMark may assign its rights (solely in
connection with the assumption of their obligations) to an Affiliate, and (ii)
the SOFTBANK Entities and the ePlanet Entities may assign their rights (solely
in connection with the assumption of their obligations) to any Affiliate of such
SOFTBANK Entity or ePlanet Entity, as the case may be, including, without
limitation, any other partnership or other entity of which any direct or
indirect subsidiary of such SOFTBANK Entity or ePlanet Entity or any Affiliate
thereof is a general partner or has investment discretion, or any employees of
the foregoing subject to applicable securities laws; and provided further that
any such assignee, as a condition of such assignment, must agree in writing to
be bound by the provisions of this Agreement and any related agreement. The
provisions hereof shall inure to the benefit of, and be binding upon, the
successors and assigns of the Parties hereto. This Agreement and the rights
contained herein shall not run to the benefit of or be enforceable by any third
Person other than a Party and its respective successors and permitted assigns.
29
7.2. Negotiated Document; Gender. This Agreement is a compilation of the
efforts and negotiations of the Parties hereto and their respective counsel, if
any. Accordingly, this Agreement should not be interpreted in favor of one Party
over another as a matter of drafting. The use of any gender herein shall be
deemed to be or include the other gender and the use of the singular herein
shall be deemed to be or include the plural (and vice versa), wherever
appropriate.
7.3. Changes; Waiver. No change or modification of this Agreement shall be
valid unless the same is in writing and signed by all the Parties hereto. No
waiver of any provision of this Agreement shall be valid unless in writing and
signed by the Person against whom the Agreement is sought to be enforced. The
failure of any Party at any time to insist upon strict performance of any
condition, promise, agreement or understanding set forth herein shall not be
construed as a waiver or relinquishment of the right to insist upon strict
performance of the same or any other condition, promise, agreement or
understanding at a future time.
7.4. Entire Agreement. This Agreement sets forth all of the promises,
agreements, conditions, understandings, warranties and representations among the
Parties hereto with respect to the matters set forth herein. This Agreement is,
and is intended by the Parties to be, an integration of any and all prior
agreements or understandings, oral or written, with respect to the matters set
forth herein.
7.5. Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Delaware without regard to principles of conflicts of
laws.
7.6. 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.
7.7. Notices. Any and all notices, requests or other communications
provided for herein shall be given in writing and shall be deemed to have been
duly given: (i) on the date of delivery if personally delivered by hand, (ii)
upon the third day after such notice is (a) deposited in the United States mail,
if mailed by registered or certified mail, postage prepaid, return receipt
requested, or (b) sent by nationally recognized express courier, or (iii) by
facsimile upon written confirmation (other than automatic confirmation that is
received from the recipient's facsimile machine) of receipt by the recipient of
such notice:
If to Holdings, OptiMark or the Company:
OptiMark Holdings, Inc.
00 Xxxxxxxx Xxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: General Counsel
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
30
with a copy to:
Xxxxxxxx & Xxxxxxxx
Four Stamford Plaza
000 Xxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
If to any SOFTBANK Entity:
SOFTBANK Capital Partners LLC
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxx Xxxxxx
Facsimile Number: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx
0000 Xxxxxxxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
If to any ePlanet Entity:
Xxxxxx Xxxxxx Jurvetson ePlanet Ventures, L.P.
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
31
7.8. Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
7.9. Expenses. Each Party shall bear its own expenses and legal fees in
connection with the negotiation and execution of this Agreement; provided,
however, that upon execution of this Agreement, the Company shall reimburse each
of the SOFTBANK Entities, the ePlanet Entities and Holdings for their respective
fees and expenses (including reasonable attorneys' fees and expenses) related to
the due diligence, negotiation and execution of this Agreement and the
transactions contemplated by the ePlanet Subscription Agreements and the
Securities Purchase Agreement.
7.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Signature pages follow]
32
IN WITNESS WHEREOF, the parties hereto have executed this Investors'
Rights Agreement as of the date first set forth above.
OPTIMARK INNOVATIONS INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
OPTIMARK, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: CEO
OPTIMARK HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: CEO
SOFTBANK CAPITAL PARTNERS LP
By: SOFTBANK Capital Partners LLC,
its general partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name:
Title:
SOFTBANK CAPITAL LP
By: SOFTBANK Capital Partners LLC,
its general partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name:
Title:
SOFTBANK CAPITAL ADVISORS FUND LP
By: SOFTBANK Capital Partners LLC,
its general partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name:
Title:
XXXXXX-XXXXXX JURVETSON EPLANET VENTURES, L.P.
By: Xxxxxx Xxxxxx Jurvetson ePlanet
Partners, Ltd., its general partner
By: /s/ Xxxx Xxxxx
------------------------------
Name:
Title:
XXXXXX XXXXXX JURVETSON EPLANET PARTNERS
FUND, LLC
By: /s/ Xxxx Xxxxxx
------------------------------
Name:
Title:
XXXXXX XXXXXX JURVETSON EPLANET VENTURES
GMBH & CO. KG
By: Xxxxxx Xxxxxx Jurvetson ePlanet SLP
Germany, Ltd., its special limited
partner
By: /s/ Xxxx Xxxxx
------------------------------
Name:
Title:
EXHIBIT A
---------
DEFINITIONS ADDENDUM
This Definitions Addendum is an attachment to and part of that certain
Amended and Restated Investors' Rights Agreement dated as of May ___, 2002 by
and among the Company and the other Parties signatory thereto. Except as
otherwise stated in the Agreement, the following terms shall have the following
meanings:
1. "Act" means the Securities Act of 1933, as amended.
2. "Additional Stock" has the meaning set forth in Section 3.2 of this
Agreement.
3. "Affiliate" or "Affiliates" has the meaning set forth in Rule 12b-2 of the
1934 Act, or any successor thereto.
4. "Agreement" means this Amendment and Restated Investors' Rights Agreement,
dated as of the date set forth above, among the Parties, as amended,
restated, supplemented or modified from time to time and including all
exhibits and schedules hereto.
5. "Available Additional Stock" has the meaning set forth in Section 3.2 of
this Agreement.
6. "Available Transferred Shares" has meaning set forth in Section 4.1 of this
Agreement.
7. "Board of Directors" means the board of directors of the Company.
8. "Capital Advisors" has the meaning set forth in the preamble to this
Agreement.
9. "Capital Partners" has the meaning set forth in the preamble to this
Agreement.
10. "Common Stock" means the Company's common stock, par value $.01 per share
held by a Party or its permitted transferees.
11. "Company" has the meaning set forth in the preamble to this Agreement.
12. "Company Liquidity Event" means any of the following: (A) the Company's
sale, conveyance or other disposition of all or substantially all of its
assets; (B) the acquisition of the Company by another entity by means of
merger or consolidation resulting in the exchange of the outstanding shares
of the Company for securities or other consideration issued, or caused to
be issued, by the acquiring entity or its subsidiary, unless the
stockholders of the Company immediately prior to the consummation of such
transaction hold at least 50% of the voting power of the surviving
corporation as a result of such transaction; (C) the consummation by the
Company of a transaction or series of related transactions (which in no
event shall
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include the Formation), including the issuance or sale of voting
securities, if the stockholders of the Company immediately prior to such
transaction (or, in the case of a series of transactions, the first of such
transactions) hold less than 50% of the voting power of the Company
immediately after the consummation of such transaction (or, in the case of
a series of transactions, the last of such transactions); or (D) any
initial underwritten public offering of the Company's common stock.
13. "Debt" of any Person means, without duplication, all liabilities,
obligations and indebtedness of such Person, of any kind or nature, now or
hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or otherwise, consisting of indebtedness for borrowed
money or the deferred purchase price of real or personal property.
14. "Discretionary Call" has the meaning set forth in Section 5.4 of this
Agreement.
15. "Drag Along Notice" has the meaning set forth in Section 4.2 of this
Agreement.
16. "Dragging Parties" has the meaning set forth in Section 4.2 of this
Agreement.
17. "ePlanet Designee" has the meaning set forth in Section 3.4 of this
Agreement.
18. "ePlanet Entities" has the meaning set forth in the preamble to this
Agreement.
19. "ePlanet Common Stock Subscription Agreement" has the meaning set forth in
the recitals to this Agreement, as amended, restated, supplemented or
modified from time to time and including all exhibits and schedules
thereto.
20. "ePlanet Preferred Stock Subscription Agreement" has the meaning set forth
in the recitals to this Agreement, as amended, restated, supplemented or
modified from time to time and including all exhibits and schedules
thereto.
21. "ePlanet Subscription Agreements" has the meaning set forth in the recitals
to this Agreement, as amended, restated, supplemented or modified from time
to time and including all exhibits and schedules thereto.
22. "First Call Exercise Notice" has the meaning set forth in Section 5.2 of
this Agreement.
23. "First Call Exercise Period" has the meaning set forth in Section 5.2 of
this Agreement.
24. "First Call Right" has the meaning set forth in Section 5.2 of this
Agreement.
25. "First Put Exercise Notice" has the meaning set forth in Section 5.3 of
this Agreement.
26. "First Put Exercise Period" has the meaning set forth in Section 5.3 of
this Agreement.
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27. "First Put Right" has the meaning set forth in Section 5.3 of this
Agreement.
28. "Form S-3" means such form under the Act as in effect on the date hereof or
any registration form under the Act subsequently adopted by the SEC which
permits inclusion or incorporation of substantial information by reference
to other documents filed by the Company with the SEC.
29. "GAAP" has the meaning set forth in Section 3.1 of this Agreement.
30. "Holder" means any Party owning or having the right to acquire Registrable
Securities or any assignee thereof in accordance with Section 2.17 hereof.
31. "Holdings" has the meaning set forth in the preamble to this Agreement.
32. "Holdings Board" means the board of directors of Holdings.
33. "Independent Committee" means the independent committee of the Holdings
Board.
34. "Initiating Holders" has the meaning set forth in Section 2.5 of this
Agreement.
35. "IPO" means an initial firm commitment underwritten public offering by the
Company of its Common Stock under an effective registration statement under
the Act which results in the Company's Common Stock being quoted on a
national securities exchange and for an offering price resulting in gross
proceeds to the Company of not less than thirty million dollars
($30,000,000).
36. "Liquidity Notice" has the meaning set forth in Section 5.4 of this
Agreement.
37. "Mandatory Call" has the meaning set forth in Section 5.5 of this
Agreement.
38. "Mandatory Call Period" has the meaning set forth in Section 5.5 of this
Agreement.
39. "1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
40. "Non-Dragging Parties" has the meaning set forth in Section 4.2 of this
Agreement.
41. "Non-Qualified Preferred Stock" means the Company's Non-Qualified Preferred
Stock, par value $.01 per share held by a Party or its permitted
transferees.
42. "Notice" has the meaning set forth in Section 3.2 of this Agreement.
43. "OptiMark" has the meaning set forth in the preamble to this Agreement.
44. "OptiMark Designee" and "OptiMark Designees" have the meanings set forth in
Section 3.4 of this Agreement.
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45. "OptiMark Subscription Agreement" has the meaning set forth in the recitals
to this Agreement, as amended, restated, supplemented or modified from time
to time and including all exhibits and schedules thereto.
46. "Option Plan" means the Company's Stock Option Plan as approved by the
Board of Directors and in effect from time to time following the date of
this Agreement.
47. "Original Rights Agreement" has the meaning set forth in the recitals to
this Agreement.
48. "Party" or "Parties" have the meanings set forth in the preamble to this
Agreement.
49. "Person" means any natural person, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated
organization, association, corporation, governmental authority, or any
other entity.
50. "Prohibited Transfer" has the meaning set forth in Section 4.2 of this
Agreement.
51. "Pro Rata Share" has the meaning set forth in Section 3.2 of this
Agreement.
52. "Purchase Price" has the meaning set forth in Section 5.3 of this
Agreement.
53. "Qualifying Transfer" means a Transfer of all or any portion of the capital
stock of the Company for Transaction Value of not less than five million
dollars ($5,000,000). For purposes of this Agreement, Transfers during any
twelve (12) month period which do not individually constitute a Qualifying
Transfer shall be aggregated and the individual Transfer that, when
aggregated with Transfers for the preceding twelve (12) months, exceeds the
Qualifying Transfer threshold shall trigger the rights set forth in Section
4.2 of the Agreement.
54. The term "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.
55. "Registrable Securities" means (i) the Restricted Securities, and (ii) any
capital stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of the shares referenced in clause (i) above. Notwithstanding
the foregoing, Registrable Securities shall not include any securities of
the Company sold by a Person to the public pursuant to either (i) a
registration statement duly filed under the Act and declared effective by
the SEC, or (ii) a transaction permitted under Rule 144 of the Act.
56. The number of shares of "Registrable Securities then outstanding" shall be
determined by the number of shares of Common Stock outstanding which are,
and
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the number of shares of Common Stock issuable pursuant to then exercisable
or convertible securities which are, Registrable Securities.
57. "Restricted Securities" has the meaning set forth in Section 2.1 of this
Agreement.
58. "ROF Notice" has the meaning set forth in Section 4.1 of this Agreement.
59. "SEC" means the Securities and Exchange Commission.
60. "Second Notice" has the meaning set forth in Section 3.2 of this Agreement.
61. "Second Put Exercise Notice" has the meaning set forth in Section 5.6 of
this Agreement.
62. "Second Put Exercise Period" has the meaning set forth in Section 5.6 of
this Agreement.
63. "Second Put Right" has the meaning set forth in Section 5.6 of this
Agreement.
64. "Second ROF Notice" has the meaning set forth in Section 4.1 of this
Agreement.
65. "Securities" means all equity securities and equity derivatives listed on a
securities exchange or eligible for quotation on a securities quotation
system in the United Stated or Canada, other than American Depository
Receipts, American Depository Shares and similar instruments.
66. "Securities Purchase Agreement" means the Securities Purchase Agreement,
dated as of February 4, 2002, as amended on March 6, 2002 and May 3, 2002,
by and between the Company and The Ashton Technology Group.
67. "Series B Preferred Stock" means the Company's Series B Preferred Stock,
par value $.01 per share held by a Party or its permitted transferees.
68. "Series E Preferred Stock" means the Series E Preferred Stock, par value
$0.01 per share, of Holdings.
69. "SOFTBANK Capital" has the meaning set forth in the preamble to this
Agreement.
70. "SOFTBANK Designee" has the meaning set forth in Section 3.4 of this
Agreement.
71. "SOFTBANK Entity" and "SOFTBANK Entities" have the meanings set forth in
the preamble to this Agreement.
72. "SOFTBANK Subscription Agreement" has the meaning set forth in the recitals
to this Agreement, as amended, restated, supplemented or modified from time
to time and including all exhibits and schedules thereto.
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73. "Subscribing Party" has the meaning set forth in Section 3.2 of this
Agreement.
74. "Transaction Value" means the aggregate value of the proceeds and other
consideration to be received by the Dragging Parties, in exchange for or
with respect to the shares of Common Stock in connection with a Transfer,
including, without limitation: (i) cash; (ii) notes, securities and other
property; (iii) liabilities, including all debt, pension liabilities and
guarantees, assumed; (iv) payments made in installment; (v) amounts paid or
payable under agreements not to compete or similar agreements; (vi) amounts
paid under contractual arrangements (including lease arrangements,
management fees, put or call agreements); (vii) contingent payments
(whether or not related to future earnings or operations); and (viii)
amounts held in escrow. For purposes of computing Transaction Value,
non-cash consideration shall be valued as follows: (x) contingent and
installment payments shall be valued based upon the estimated net present
value thereof using an appropriate discount rate as reasonably determined
in good faith by the parties, (y) publicly traded securities shall be
valued at the average of their closing prices (as reported in The Wall
Street Journal) for five trading days prior to the closing of the Transfer
and (z) any other non-cash consideration shall be valued at the fair market
value thereof as reasonably determined in good faith by the parties;
provided that if such parties are unable to agree on -------- a fair market
value for such non-cash consideration, the parties shall submit such issue
to a panel of three arbitrators located in New York, New York (with one
arbitrator being chosen by each party and the third being chosen jointly by
the parties) for determination, which determination shall be binding upon
each of the parties.
75. "Transfer" or "Transferred" means (i) any sale, transfer, gift, assignment,
distribution, charge or lien in or other disposition of a security
including, without limitation, any transfer of bankruptcy assets pursuant
to the U.S. Bankruptcy Code or (ii) permitting any such action with respect
to, or interest to exist in, a security, except that as used in Section 2.1
hereof Transfer shall also mean any pledge, encumbrance, hypothecation,
mortgage or granting of a security interest.
76. "Transferring Party" has the meaning set forth in Section 4.1 of this
Agreement.
77. "Transferred Shares" has the meaning set forth in Section 4.1 of this
Agreement.
78. "Violation" has the meaning set forth in Section 2.15 of this Agreement.
79. "VWAP" means Volume Weighted Average Price.
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