eTOYS INC.
SECOND AMENDED AND RESTATED VOTING AGREEMENT
This Second Amended and Restated Voting Agreement (the "AGREEMENT") is
made as of the 24th day of March, 1999, by and among eToys Inc., a Delaware
corporation (the "COMPANY"), idealab!, a Delaware corporation, Xxxxxx X.
Xxxx, Xxxxx X. Xxx (collectively, the "COMMON STOCKHOLDERS"), the prior
investors listed on EXHIBIT A hereto (the "PRIOR INVESTORS") and the new
investors listed on EXHIBIT B hereto (the "NEW INVESTORS"). The Prior
Investors and the New Investors are referred to herein collectively as the
"INVESTORS" and each individually as an "INVESTOR".
RECITALS
The Company and the Prior Investors entered into that certain Amended
and Restated Voting Agreement on June 4, 1998, as amended on June 18, 1998
(the "PURCHASE AGREEMENT").
The Company and the New Investors have entered into a Series C Preferred
Stock Purchase Agreement of even date herewith pursuant to which the Company
desires to sell to the New Investors and the Investors desire to purchase
from the Company shares of the Company's Series C Preferred Stock. A
condition to the New Investors' obligations under the Purchase Agreement is
that the Company and the Prior Investors amend and restate the Existing
Agreement in the manner set forth herein, for the purpose of setting forth
the terms and conditions pursuant to which the Investors shall vote their
shares of the Company's voting stock in favor of certain designees to the
Company's Board of Directors.
The Company's Third Amended and Restated Certificate of Incorporation
provides as follows: the holder of each share of Preferred Stock shall have
the right to one vote for each share of Common Stock into which such
Preferred Stock could then be converted, and with respect to such vote, such
holder shall have full voting rights and powers equal to the voting rights
and powers of the holders of Common Stock, and shall be entitled to notice of
any stockholders' meeting in accordance with the bylaws of the Company, and
shall be entitled to vote, together with holders of Common Stock, with
respect to any question upon which holders of Common Stock have the right to
vote. In addition, (i) as long as twenty-five percent (25%) of the number of
shares of Series B Preferred Stock issued by the Company on the date the
Series B Preferred Stock was originally issued remain outstanding, the
holders of the Series B Preferred Stock shall be entitled, voting together as
a separate class, to elect two (2) directors (the "SERIES B DIRECTORS") of
this corporation at each annual election of directors and (ii) as long as
twenty-five percent (25%) of the number of shares of Series A Preferred Stock
issued by the Company on the date the Series A Preferred Stock was originally
issued remain outstanding, the holders of the Series A Preferred Stock shall
be entitled, voting together as a separate class, to elect one (1) director
(the "SERIES A DIRECTOR") of the Company at each annual election of
directors. The holders of Common Stock shall be entitled, voting together as
a separate class, to elect one (1) director (the "COMMON DIRECTOR") of the
Company at each annual meeting of directors. The
holders of Preferred Stock and Common Stock voting together as a single class
shall have the right to elect any remaining directors (the "INDEPENDENT
DIRECTORS").
The Company and the Investors each desire to facilitate the voting
arrangements set forth in this Agreement, and the sale and purchase of shares
of Series B Preferred Stock pursuant to the Purchase Agreement, by agreeing
to the terms and conditions set forth herein.
AGREEMENT
The parties hereby agree as follows:
1. BOARD REPRESENTATION. Until the earlier of (i) the date the number
of shares of Common Stock held in the aggregate by funds affiliated with
Highland Capital Partners (the "HIGHLAND ENTITIES") (assuming conversion of
the Series B Preferred Stock held by such entities) falls below five percent
(5%) of the Company's then outstanding capital stock or (ii) the date that
the Highland Entities in the aggregate hold less than twenty-five percent
(25%) of the number of shares of Common Stock (assuming conversion of the
Series B Preferred Stock held by the Highland Entities) that the Highland
Entities in the aggregate purchased pursuant to the Purchase Agreement, the
Investors agree to vote or act with respect to their shares so as to elect as
the Series B Director an individual designated by Highland Capital Partners
III Limited Partnership, the initial designee of which shall be Xxx Nova.
Until the earlier of (i) the date the number of shares of Common Stock held
in the aggregate by funds affiliated with Sequoia Capital (the "SEQUOIA
ENTITIES") (assuming conversion of the Series B Preferred Stock held by such
entities) falls below five percent (5%) of the Company's then outstanding
capital stock or (ii) the date that the Sequoia Entities in the aggregate
hold less than twenty-five percent (25%) of the number of shares of Common
Stock (assuming conversion of the Series B Preferred Stock held by the
Sequoia Entities) that the Sequoia Entities in the aggregate purchased
pursuant to the Purchase Agreement, the Investors agree to vote or act with
respect to their shares so as to elect as the Series B Director an individual
designated by the Sequoia Entities, the initial designee of which shall be
Xxxxxxx Xxxxxx. Until the earlier of (i) the date the number of shares of
Common Stock held in the aggregate by DynaFund LP and DynaFund International
LP (the "DYNAFUND ENTITIES") (assuming conversion of the Series A Preferred
Stock held by such entities) falls below five percent (5%) of the Company's
then outstanding capital stock or (ii) the date that the DynaFund Entities in
the aggregate hold less than twenty-five percent (25%) of the number of
shares of Common Stock (assuming conversion of the Series A Preferred Stock
held by the DynaFund Entities) that the DynaFund Entities in the aggregate
purchased pursuant to the Series A Preferred Stock Purchase Agreement dated
as of December 23, 1997, the Investors agree to vote or act with respect to
their shares so as to elect as the Series A Director an individual designated
by DynaFund LP, the initial designee of which shall be Xxxx Xxxx. During the
term of this Agreement, the Common Stockholders agree to vote or act with
respect to their shares so as to elect the Company's then-current Chief
Executive Officer as the Common Director. During the term of this
Agreement, the parties to this Agreement agree to vote or act with respect to
their shares so as to elect as one of the Independent Directors an individual
with relevant experience in the Company's industry, which person shall be
designated
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by the holders of a majority of the outstanding Preferred Stock and Common
Stock voting together as a single class, and which designee shall initially
be Xxxxx Xxxx.
2. REMOVAL. In the event of any termination, removal or resignation
of any director, the Investors shall take all actions necessary and
appropriate to cause such vacancy to be filled in the manner by which such
director was elected pursuant to the terms of this Agreement.
3. CHANGE IN NUMBER OF DIRECTORS. The Investors will not vote for any
amendment or change to the Bylaws providing for the election of more than six
(6) directors, or any other amendment or change to the Bylaws inconsistent
with the terms of this Agreement.
4. LEGENDS. Each certificate representing Investors' Shares shall be
endorsed by the Company with a legend reading as follows:
"THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT BY AND AMONG
THE COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY (A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES
THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL
BECOME BOUND BY ALL THE PROVISIONS OF SAID VOTING AGREEMENT."
5. TERMINATION. This Agreement shall terminate upon the earlier of
(a) the consummation of the Company's initial public offering on a firm
underwriting basis of any of its securities reflecting in proceeds of at
least $20,000,000, or (b) ten (10) years from the date hereof.
6. AMENDMENTS; WAIVERS. Any term hereof may be amended or waived only
with the written consent of the Company and holders of at least 66-2/3% of
the Series A, Series B and Series C Preferred Stock voting together as a
single class; PROVIDED, HOWEVER, that, subject to the limitation set forth in
Section 1 hereto, in no event shall an amendment or waiver hereto which
limits the rights of Highland Capital Partners III Limited Partnership, the
Sequoia Entities or DynaFund L.P., respectively, to designate a director
under Section 1 be effective without the written consent of the Highland
Capital Partners III Limited Partnership, the Sequoia Entities or DynaFund
L.P., respectively. In addition, in no event shall an amendment or waiver
hereto which alters the obligations of the parties hereto under Section 1 to
agree to vote or act with respect to their shares so as to elect as one of
the Independent Directors an individual with relevant experience in the
Company's industry that is designated by the holders of the outstanding
Preferred Stock and Common Stock voting together as a single class be
effective without the written consent of the Common Stockholders. Any
amendment or waiver effected in accordance with this Section 6 shall be
binding upon the Company, the holders of the Preferred Stock and each of
their respective successors and assigns.
7. NOTICES. Any notice required or permitted by this Agreement shall
be in writing and shall be deemed sufficient on the date of delivery, when
delivered personally or by overnight courier or sent by telegram or FAX, or
forty-eight (48) hours after being deposited in the U.S.
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mail, as certified or registered mail, with postage prepaid, and addressed to
the party to be notified at such party's address or fax number as set forth
below or on EXHIBIT A hereto, or as subsequently modified by written notice.
8. SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a)
such provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c)
the balance of the Agreement shall be enforceable in accordance with its
terms.
9. ENFORCEABILITY/SEVERABILITY. The parties hereto agree that each
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law. If any provision of this Agreement
shall nonetheless be held to be prohibited by or invalid under applicable
law, (a) such provision shall be effective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement, and (b) the parties
shall, to the extent permissible by applicable law, amend this Agreement, or
enter into a voting trust agreement under which shares of the DynaFund
Entities the ("DYNAFUND SHARES"), the shares held by the Highland Entities
("HIGHLAND SHARES"), the shares of the Sequoia Entities (the "SEQUOIA
SHARES") and shares of the Investors ("INVESTOR SHARES) and the Shares of the
Common Stockholders (the "COMMON STOCKHOLDER SHARES") (collectively, the
"TRUST SHARES") shall be transferred to the voting trust created thereby, so
as to make effective and enforceable the intent of this Agreement.
10. GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State
of California, without giving effect to principles of conflicts of law.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
12. SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors
and assigns of the parties. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
13. REMEDIES. Each party hereto will be entitled to enforce its rights
under this Agreement specifically, to recover damages by reason of any breach
of any provision hereof, and to exercise all other rights existing in its
favor. Each party hereto agrees and acknowledges that money damages may not
be an adequate remedy for any breach of the provisions of this Agreement and
that each holder may, in its sole discretion, apply for specific performance
and injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
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14. EXPENSES. The Company shall pay the reasonable expenses of
directors in attending Board meetings.
15. ENTIRE AGREEMENT. This Agreement, and the documents referred to
herein, constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof, and any and all other written or oral
agreements existing between the parties hereto are expressly canceled.
[Signature Pages Follow]
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The parties hereto have executed this Amended and Restated Voting
Agreement as of the date first written above.
COMPANY:
eTOYS INC.
By: /s/ Xxxxxx X. Xxxx
--------------------------------
Xxxxxx X. Xxxx
President and Chief Executive officer
Address: 0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
SIGNATURE PAGE TO eTOYS INC.
AMENDED AND RESTATED VOTING AGREEMENT
INVESTORS:
DYNAFUND LP
By: /s/ Xxxxx R.S. Ko
--------------------------------------
Name: Xxxxx R.S. Ko
------------------------------------
(print)
Title: General Partner
-----------------------------------
Address: 00000 Xxxxxxxxx Xxxx., Xxxxx 000
---------------------------------
Xxxxxxxx, XX 00000
---------------------------------
Fax: (000) 000-0000
---------------------------------
DYNAFUND INTERNATIONAL LP
By: /s/ Xxxxx R.S. Ko
--------------------------------------
Name: Xxxxx R.S. Ko
------------------------------------
(print)
Title: General Partner
-----------------------------------
Address: 00000 Xxxxxxxxx Xxxx., Xxxxx 000
---------------------------------
Xxxxxxxx, XX 00000
---------------------------------
Fax: (000) 000-0000
---------------------------------
SIGNATURE PAGE TO eTOYS INC.
AMENDED AND RESTATED VOTING AGREEMENT
INVESTOR:
INTEL CORPORATION
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
----------------------------------
(print)
Title: V.P. and Treasurer
---------------------------------
Address: 0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
Attn: Treasurer
Fax: (000) 000-0000
SIGNATURE PAGE TO eTOYS INC.
AMENDED AND RESTATED VOTING AGREEMENT
INVESTORS:
XXXXX GLOBAL INVESTMENTS, LTD.
By: Xxxxx Capital Management, Inc.
Its: Trading Advisor
By: /s/ Xxxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxxxx
---------------------------------
(print)
Title: Director of Operations
-------------------------------
Address: c/o Citco Fund Services
(Bahamas), Ltd.
Bahamas Financial Center
Charlotte & Xxxxxxx Xxxxxx
X.X. Xxx XX 00000
Xxxxxx, Bahamas
Fax:
---------------------------------
REMINGTON INVESTMENTS STRATEGIES, L.P.
By: Xxxxx Capital Advisors, L.L.C.
Its: General Partner
By: /s/ Xxxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxxxx
-------------------------------
(print)
Title: Director of Operations
------------------------------
Address: 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax:
----------------------------
SIGNATURE PAGE TO eTOYS INC.
AMENDED AND RESTATED VOTING AGREEMENT
INVESTORS:
MULTI-STRATEGIES FUND, L.P.
By: Xxxxx Capital Advisors, L.L.C.
Its: General Partner
By: /s/ Xxxxxx Xxxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxxx
---------------------------------
(print)
Title: Director of Operations
--------------------------------
Address: 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax:
-----------------------------
MULTI-STRATEGIES FUND LTD.
By: Xxxxx Capital Management, Inc.
Its: Trading Advisor
By: /s/ Xxxxxx Xxxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxxx
---------------------------------
(print)
Title: Director of Operations
--------------------------------
Address: c/o Citco Fund Services
(Bahamas), Ltd.
Bahamas Financial Center
Charlotte & Xxxxxxx Xxxxxx
X.X. Xxx XX 00000
Xxxxxx, Bahamas
Fax:
-----------------------------
SIGNATURE PAGE TO eTOYS INC.
AMENDED AND RESTATED VOTING AGREEMENT
COMMON STOCKHOLDERS:
/s/ Xxxxxx X. Xxxx
---------------------------------
Xxxxxx X. Xxxx
Address: 0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
/s/ Xxxxx X. Xxx
---------------------------------
Xxxxx X. Xxx
Address: 0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
Xxxx Xxxxx'
idealab!, a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
-----------------------------------
Name: Xxxxxxx Xxxxx
---------------------------------
(print)
Title:
--------------------------------
Address: 000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
SIGNATURE PAGE TO eTOYS INC.
AMENDED AND RESTATED VOTING AGREEMENT
INVESTORS:
HIGHLAND CAPITAL PARTNERS III LIMITED
PARTNERSHIP
By: Highland Management Partners III
Limited Partnership, its General
Partner
By: /s/ Xxxxxx X. Nova
-----------------------------------
Name: Xxxxxx X. Nova
---------------------------------
(print)
Title: Member
--------------------------------
Address: c/o Highland Capital Partners
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
HIGHLAND ENTREPRENEURS' FUND III
LIMITED PARTNERSHIP
By: HEF III, LLC, its General Partner
By: /s/ Xxxxxx X. Nova
-----------------------------------
Name: Xxxxxx X. Nova
---------------------------------
(print)
Title: Member
--------------------------------
Address: c/o Highland Capital Partners
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
SIGNATURE PAGE TO ETOYS INC.
AMENDED AND RESTATED VOTING AGREEMENT
INVESTORS:
HIGHLAND CAPITAL PARTNERS IV LIMITED
PARTNERSHIP
By:
By: /s/ Xxxxxx X. Nova
-----------------------------------
Name: Xxxxxx X. Nova
---------------------------------
(print)
Title: Member
--------------------------------
Address: c/o Highland Capital Partners
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
HIGHLAND ENTREPRENEURS' FUND IV
LIMITED PARTNERSHIP
By:
By: /s/ Xxxxxx X. Nova
-----------------------------------
Name: Xxxxxx X. Nova
---------------------------------
(print)
Title: Member
--------------------------------
Address: c/o Highland Capital Partners
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
SIGNATURE PAGE TO eTOYS INC.
AMENDED AND RESTATED VOTING AGREEMENT
INVESTORS:
idealab! CAPITAL PARTNERS I-A, LP
By its General Partner,
idealab! Capital Management I, LLC
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Xxxxxxx Xxxxx
Managing Member
Address: c/o idealab! Capital Partners
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
idealab! CAPITAL PARTNERS I-B, LP
By its General Partner,
idealab! Capital Management I, LLC
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Xxxxxxx Xxxxx
Managing Member
Address: c/o idealab! Capital Partners
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
SIGNATURE PAGE TO eTOYS INC.
AMENDED AND RESTATED VOTING AGREEMENT
INVESTORS:
BESSEMER VENTURE PARTNERS IV L.P.
By: Deer IV & Co. LLC, General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Manager
Address: 0000 Xxx Xxxxxxx Xxxx,
Xxxxx 000
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
BESSEMER VENTURE INVESTORS L.P.
By: Deer IV & Co. LLC, General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Manager
Address: 0000 Xxx Xxxxxxx Xxxx,
Xxxxx 000
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
BESSEC VENTURES IV L.P.
By: Deer IV & Co. LLC, General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Manager
Address: 0000 Xxx Xxxxxxx Xxxx,
Xxxxx 000
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
SIGNATURE PAGE TO eTOYS INC.
AMENDED AND RESTATED VOTING AGREEMENT
INVESTORS:
SEQUOIA CAPITAL VIII
SEQUOIA INTERNATIONAL
TECHNOLOGY PARTNERS VIII
SEQUOIA INTERNATIONAL
TECHNOLOGY PARTNERS VIII (Q)
CMS PARTNERS LLC
SEQUOIA 1997
SEQUOIA CAPITAL FRANCHISE FUND
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxx
---------------------------------
(print)
Title:
--------------------------------
Address: 0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Fax: (000) 000-0000
SIGNATURE PAGE TO eTOYS INC.
AMENDED AND RESTATED VOTING AGREEMENT
EXHIBIT A
PRIOR INVESTORS
DynaFund International LP
DynaFund LP
Intel Corporation
idealab! Capital Partners I-A, LP
Highland Capital Partners III Limited Partnership
Highland Entrepreneurs' Fund III Limited Partnership
idealab! Capital Partners I-A, LP
idealab! Capital Partners I-B, LP
Bessemer Venture Partners IV L.P.
Bessemer Venture Investors X.X.
Xxxxxx Ventures IV L.P.
DynaFund International LP
DynaFund LP
Intel Corporation
Xxxxx Global Investments, Ltd.
Remington Investment Strategies, L.P.
Multi Strategies Fund, L.P.
Multi Strategies Fund Ltd.
Xxxx X. Xxx Xxxxxx
Xxxxx X. Xxxxx
VLG Investments 1998
Multi Strategies Fund, L.P.
Multi-Strategies Fund Ltd.
Sequoia Capital VIII
Sequoia International Technology Partners VIII
Sequoia International Technology Partners VIII Q
CMS
Sequoia 1997
EXHIBIT B
NEW INVESTORS
Highland Capital Partners IV Limited Partnership
Highland Entrepreneurs' Fund IV Limited Partnership
Sequoia Capital Franchise Fund
