1
EXHIBIT 4.2
Registration Rights Agreement
By and Among
OPTIMARK HOLDINGS, INC.
and
THE HOLDERS OF SERIES E
CUMULATIVE PREFERRED STOCK
2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of June 29, 2001, by and
among OptiMark Holdings, Inc., a Delaware corporation (the "Company"), and the
holders of the Company's Series E Cumulative Preferred Stock, par value $0.01
per share (the "Series E Shares") set forth on Schedule I hereto.
RECITALS
WHEREAS, the Company and the purchasers of the Series E Shares set
forth on Schedule I hereto (collectively, the "Purchasers") have entered into
the Series E Preferred Stock Purchase Agreement, dated as of June 29, 2001 (the
"Subscription Agreement"), providing for, among other things, the sale by the
Company and the purchase by the Purchasers of an aggregate of 1,000,000 Series E
Shares; and
WHEREAS, this Agreement is being entered into in order to induce the
Purchasers to purchase the Series E Shares pursuant to the Subscription
Agreement;
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the
following respective meanings:
(a) "Closing Date" shall mean the First Closing Date, as defined in
the Subscription Agreement.
(b) "Commission" shall mean the United States Securities and
Exchange Commission, or any other federal agency at the time administering the
Exchange Act or the Securities Act, whichever is the relevant statute for the
particular purpose.
(c) "Common Stock" shall mean the Common Stock, par value $0.01 per
share, of the Company.
(d) "Exchange Act" shall mean the United States Securities Exchange
Act of 1934, or any successor thereto, as the same shall be amended from time to
time.
-2-
3
(e) "Excluded Shareholder" shall mean any of the Company's then
current or former directors or employees, in each case that is a Piggyback
Shareholder or a Requesting Shareholder.
(f) "Existing Registration Rights Agreement" shall mean any of: (i)
the Series A Registration Rights Agreement, (ii) the Registration Rights
Agreement, dated April 23, 1998, between the Company as successor to OptiMark
Technologies, Inc. and the Holders of its Series B Convertible Participating
Preferred Stock, (iii) the Registration Rights Agreement, dated July 26, 1999,
between the Company as successor to OptiMark Technologies, Inc. and the Holders
of its Series C Convertible Preferred Stock, (iv) the Registration Rights
Agreement, dated July 30, 1999, between the Company as successor to OptiMark
Technologies, Inc. and the Holders of its Series D Convertible Preferred Stock,
and (v) Registration Rights Agreement, dated September 17, 1998, between the
Company as successor to OptiMark Technologies, Inc. and The Nasdaq Stock Market,
Inc.
(g) "Holder" shall mean any party hereto (other than the Company)
and each of its respective successive successors and assigns who acquire
Registrable Securities, directly or indirectly, from any such party or from any
successive successor or assign of any such party.
(h) The term "person" shall mean a corporation, association,
partnership, limited liability company, organization, business, individual,
government or political subdivision thereof or governmental agency.
(i) "Registrable Securities" shall mean the Series E Shares; and any
securities issued successively in exchange for or in respect of any of the
foregoing, whether pursuant to a merger or consolidation, as a result of any
successive stock split or reclassification of, or share dividend on, any of the
foregoing or otherwise; provided, however, that such Series E Shares or
securities shall cease to be Registrable Securities when (i) a registration
statement registering such Series E Shares or securities, as the case may be,
under the Securities Act has been declared effective and such Series E Shares or
securities, as the case may be, have been sold or otherwise transferred by the
Holder thereof pursuant to such effective registration statement, (ii) all of
such Series E Shares or securities, as the case may be, are sold pursuant to
Rule 144 (or any similar successor provision) promulgated under the
-3-
4
Securities Act under circumstances in which any legend borne by such Series E
Shares or securities relating to restrictions on transferability thereof, under
the Securities Act or otherwise, is removed by the Company or (iii) all of such
Series E Shares or securities, as the case may be, are eligible for resale
pursuant to Rule 144(k) of the Securities Act (or any similar successor
provision) without restriction and the Company removes any legend borne by such
Series E Shares or securities relating to restrictions or transferability, under
the Securities Act or otherwise.
(j) "Registration Expenses" shall have the meaning assigned thereto
in Section 4 of this Agreement.
(k) "Rights" shall mean any option, warrant, security, right or
other instrument convertible into or exchangeable or exercisable for, or
otherwise giving the holder thereof the right to acquire, directly or
indirectly, any capital stock of the Company or any other such option, warrant,
security, right or instrument, including any instrument the value of which is
measured by reference to the value of any capital stock of the Company.
(l) "Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
(m) "Series A Registration Rights Agreement" shall mean the
Registration Rights Agreement, dated August 27, 1996, between the Company as
successor to OptiMark Technologies, Inc., General Atlantic Partners 35, L.P.,
GAP Co-Investment Partners, L.P., Dow Xxxxx & Company, Inc., Xxxxx X. Xxxxxx and
The Pacific Stock Exchange Incorporated.
(n) "Softbank Entities" shall mean SOFTBANK Capital Partners LP,
SOFTBANK Capital Advisors Fund LP, SOFTBANK Capital LP and each of their
respective successors and assigns who acquires Registrable Securities, directly
or indirectly, from any such party or from any successor or assign of any such
party.
2.Registration Under the Securities Act.
(a) Demand Registrations.
(i) At any time from and after (i) the date 180 days after the
consummation by the Company of an underwritten initial public offering of its
Common Stock or (ii) the first anniversary of the Closing Date, whichever
-4-
5
occurs earlier, any Holder or Holders who own, in the aggregate, at least a
majority of the Registrable Securities may elect, by giving written notice
thereof to the Company, to require the Company to use its reasonable best
efforts to register all or a portion of its Registrable Securities under the
Securities Act so long as such registration is expected to yield gross proceeds
to such Holder(s) of at least $5,000,000. Promptly following such election, the
Company shall (1) give notice to each other Holder of Registrable Securities, if
any, of such election, which notice shall set forth the identity of the electing
Holders, and (2) use its reasonable best efforts to cause to be declared or
become effective under the Securities Act a registration statement providing for
the registration of, and the sale in accordance with the intended method or
methods of distribution thereof by the electing Holders of, the Registrable
Securities. The Company shall be required to cause to become effective pursuant
to this Section 2(a) no more than one registration statement upon any election
pursuant to this Section 2(a)(i) by the Softbank Entities and no more than one
registration statement upon any election pursuant to this Section 2(a)(i) by any
Holder other than a Softbank Entity unless the Company is eligible to register
the Registrable Securities on Form S-3 under the Securities Act, in which case
the Holders shall have the unlimited right to require such registrations.
Notwithstanding the foregoing, the Company shall not be obligated to register
Registrable Securities on Form S-3 under the Securities Act upon any election
pursuant to this Section 2(a)(i) if the Company has registered Registrable
Securities on Form S-3 or any other form under the Securities Act twice in any
twelve month period upon elections pursuant to this Section 2(a)(i).
(ii) In the event of any registration of Registrable Securities
pursuant to Section 2(a)(i) hereof, the Company shall not, without the express
written consent of the Holders of a majority of such Registrable Securities,
cause or permit any other securities of the Company or of any other Person
(whether such securities are to be issued by the Company, are held in the
Company's treasury or are then outstanding and held by other persons) to be
covered by such registration statement or otherwise to be included in such
registration (except that such consent shall not be required in the event such
registration statement is a "shelf" that only covers a non-underwritten offering
pursuant to Rule 415 of the Securities Act); provided, however, that any other
Holder of Registrable Securities may elect, by giving written notice to such
effect to the Company no later than 15 business days after the Company
-5-
6
shall have given the notice referred to in clause (1) of Section 2(a)(i), to
have such Holder's Registrable Securities included in such registration, in
which case such Holder shall be treated for all purposes hereunder as having
made a demand for registration pursuant to this Section 2(a).
(iii) In the event that, following any election pursuant to Section
2(a)(i) hereof but prior to the filing of a registration statement in respect of
such election, (A) the Board of Directors of the Company, in its reasonable
judgment and in good faith, resolves that the filing of such registration
statement and the offering of Registrable Securities pursuant thereto would
materially interfere with any significant acquisition, corporate reorganization
or other similar transaction involving the Company, and (B) the Company gives
the Holders having made such election written notice of such determination
(which notice shall include a copy of such resolution), the Company shall,
notwithstanding the provisions of Section 2(a)(i) hereof, be entitled to
postpone for up to 90 days the filing of any registration statement otherwise
required to be prepared and filed by it pursuant to Section 2(a)(i) hereof;
provided, however, that no such postponement may be effected if any other
postponement of a registration pursuant to this Section 2 was in effect during
the 12 months immediately preceding the commencement of such postponement,
unless any Holders having made elections during the previous postponement shall
have had the opportunity to register their Registrable Securities pursuant to an
effective registration statement prior to the current postponement.
(b) "Piggy-Back" Registrations.
(i) If, at any time, the Company proposes to register any of its
Common Stock or Rights or any other equity securities under the Securities Act
on a registration statement on Form S-1, Form S-2 or Form S-3 (or an equivalent
general registration form then in effect) for purposes of an offering or sale by
or on behalf of the Company of its Common Stock or Rights or such equity
securities for its own account (a "primary offering"), or upon the request or
for the account of any holder of its Common Stock or Rights or any such equity
securities (a "secondary offering"), or for purposes of a combined primary and
secondary offering (a "combined offering"), then each such time the Company
shall, at least 10 business days prior to the time when any such registration
statement is filed with the Commission, give prompt written notice to the
Holders of its intention to do so. Such notice shall
-6-
7
specify, at a minimum, the number and class of shares, Rights or equity
securities so proposed to be registered, the proposed date of filing of such
registration statement, any proposed means of distribution of such shares,
Rights or securities, any proposed managing underwriter or underwriters of such
shares, Rights or securities and a good faith estimate by the Company of the
proposed maximum offering price thereof, as such price is proposed to appear on
the facing page of such registration statement. Upon the written direction of
any Holder or Holders, given within five business days following the receipt by
such Holder of any such written notice (which direction shall specify the number
of Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution thereof), the Company shall include in such
registration statement any or all of the Registrable Securities then held by
such Holder requesting such registration (a "Selling Shareholder") to the extent
necessary to permit the sale or other disposition of such Registrable Securities
as such Holder has so directed the Company to be so registered. Notwithstanding
the foregoing, the Holders shall not have any right under this Section 2(b) if
the registration proposed to be effected by the Company relates solely to Common
Stock, Rights or other equity securities which are issuable solely to officers
or employees of the Company or any subsidiary thereof pursuant to a bona fide
employee stock option, bonus or other employee benefit plan or as direct
consideration in connection with a merger, exchange offer or acquisition of a
business.
(ii) In the event that the Company proposes to register Common
Stock, Rights or other equity securities for purposes of a primary offering or a
combined offering, and any managing underwriter shall advise the Company and the
Selling Shareholders in writing that, in its opinion, the inclusion in the
registration statement of some or all of the Registrable Securities sought to be
registered by such Selling Shareholders creates a substantial risk that the
price per unit the Company will derive from such registration will be materially
and adversely affected or that the number of shares, Rights or securities sought
to be registered (including, in addition to the securities sought to be
registered by the Company, any securities sought to be included in such
registration statement by any other shareholder pursuant to "piggyback"
registration rights (a "Piggyback Shareholder") and those sought to be
registered by the Selling Shareholders) is too large a number to be reasonably
sold, then the Company will include in such registration statement such number
of shares, Rights or securities as the Company, the Piggyback Shareholders and
-7-
8
such Selling Shareholders are so advised can be sold in such offering without
such an effect (the "Primary Maximum Number"), as follows and in the following
order of priority: (A) first, such number of shares, Rights or securities as the
Company, in its reasonable judgment, shall have determined to sell for its own
account, (B) second, if and to the extent that the number of shares, Rights or
securities to be registered under clause (A) is less than the Primary Maximum
Number, shares, Rights or securities of each Piggyback Shareholder party to an
Existing Registration Rights Agreement that is not an Excluded Shareholder, to
the extent required to be included pursuant to any Existing Registration Rights
Agreement, and (C) third, if and to the extent that the sum of the number of
shares, Rights or securities to be registered under clauses (A) and (B) is less
than the Primary Maximum Number, Registrable Securities of the Selling
Shareholders, pro rata, and without any priority as between the Selling
Shareholders, in proportion to the number sought to be registered by each
Selling Shareholder relative to the number sought to be registered by all the
Selling Shareholders.
(iii) In the event that the Company proposes to register
Common Stock or other equity securities for purposes of a secondary offering,
upon the request or for the account of any holder thereof pursuant to "demand"
registration rights of such holder pursuant to the Series A Registration Rights
Agreement (each a "Requesting Shareholder"), and any managing underwriter shall
advise the Requesting Shareholder or Shareholders and the Selling Shareholders
in writing that, in its opinion, the inclusion in the registration statement of
some or all of the shares, Rights or securities sought to be registered by the
Requesting Shareholders and of the Registrable Securities sought to be
registered by the Selling Shareholders creates a substantial risk that the price
per unit that such Requesting Shareholder or Shareholders and such Selling
Shareholders will derive from such registration will be materially and adversely
affected or that the number of shares, Rights or securities sought to be
registered (including any securities sought to be registered at the instance of
the Requesting Shareholder or Shareholders, any securities sought to be included
in such Registration Statement by any Piggyback Shareholder and those sought to
be registered by the Selling Shareholders) is too large a number to be
reasonably sold, the Company will include in such registration statement such
number of shares, Rights or securities as the Requesting Shareholders and the
Selling Shareholders are so advised can reasonably be sold in such offering, or
can be sold without such an effect (the
-8-
9
"Secondary Maximum Number"), as follows and in the following order of priority:
(A) first, such number of shares, Rights or securities as the Requesting
Shareholders and the Piggyback Shareholders party to an Existing Registration
Rights Agreement, other than an Excluded Shareholder, shall have requested, in
each case to the extent required to be included pursuant to any Existing
Registration Rights Agreement prior to the inclusion of Registrable Securities
proposed to be registered by the Selling Shareholders, and (B) second, if and to
the extent that the number of shares, Rights or securities to be registered
under clause (A) is less than the Secondary Maximum Number, such number of
shares, Rights or securities of the Requesting Shareholders and the Piggyback
Shareholders party to an Existing Registration Rights Agreement, other than an
Excluded Shareholder, in each case that are not required to be included in such
registration statement prior to the inclusion of Registrable Securities proposed
to be registered by the Selling Shareholders pursuant to the foregoing clause
(A) and Registrable Securities of each Selling Shareholder, pro rata, and
without any priority as between the Selling Shareholders, in proportion to the
number sought to be registered by each Selling Shareholder relative to the
number sought to be registered by all the Selling Shareholders.
(c) Withdrawals. Any Holder having notified or directed the Company
to include any or all of his or its Registrable Securities in a registration
statement pursuant to Section 2(a) or 2(b) hereof shall have the right to
withdraw such notice or direction with respect to any or all of the Registrable
Securities designated for registration thereby by giving written notice to such
effect to the Company at least five business days prior to the anticipated
effective date of such registration statement. In the event of any such
withdrawal, the Company shall amend such registration statement and take such
other actions as may be necessary so that such Registrable Securities are not
included in the applicable registration and not sold pursuant thereto, and such
Registrable Securities shall continue to be Registrable Securities in accordance
herewith. No such withdrawal shall affect the obligations of the Company with
respect to Registrable Securities not so withdrawn.
3.Registration Procedures.
(a) In connection with the Company's obligations with respect to any
registration of Registrable Securities pursuant to Section 2 hereof, the Company
shall use its
-9-
10
reasonable best efforts to effect or cause such registration to permit the sale
of the Registrable Securities by the Holders thereof in accordance with the
intended method or methods of distribution thereof described in the registration
statement relating thereto and to maintain the effectiveness of such
registration statement for a period of six calendar months after the date of
effectiveness of such registration statement or, if shorter, until the
disposition of all of the Registrable Securities covered by such registration
statement is completed. In connection therewith, the Company shall, as soon as
reasonably possible:
(i) prepare and file with the Commission and all other applicable
governmental or regulatory authorities a registration statement with
respect to such registration on any form which may be utilized by the
Company and which shall permit the disposition of the Registrable
Securities in accordance with the intended method or methods thereof, as
specified in writing by the Holders thereof, and use its reasonable best
efforts to cause such registration statement to become effective as soon
as reasonably possible thereafter;
(ii) prepare and file with the Commission and all other applicable
governmental or regulatory authorities such amendments and supplements to
such registration statement and the prospectus included therein as may be
necessary to effect and maintain the effectiveness of such registration
statement and as may be required by the applicable rules and regulations
of the Commission and the instructions applicable to the form of such
registration statement, and furnish to the underwriters, if any, of the
Registrable Securities to be registered, the sales or placement agent, if
any, therefor, and a representative of the Holders of Registrable
Securities registered thereby copies of any such supplement or amendment
prior to its being used and/or filed with the Commission;
(iii) comply in all material respects with the provisions of the
Securities Act and the requirements of all other governmental or
regulatory authorities applicable to issuers with respect to the
disposition of all of the Registrable Securities covered by such
registration statement in accordance with the intended methods of
disposition by the Holders thereof set forth in such registration
statement, in any such case for a period of six calendar months after the
date of
-10-
11
effectiveness of such registration statement or, if shorter, until such
disposition is completed;
(iv) provide (A) any Holder, (B) the underwriters (which term, for
purposes of this Agreement, shall include a person deemed to be an
underwriter within the meaning of Section 2(11) of the Securities Act), if
any, of the Registrable Securities to be registered, (C) the sales or
placement agent, if any, therefor, (D) counsel for such underwriters or
agent, and (E) counsel for the Holders thereof the opportunity to
participate in the preparation of such registration statement, each
prospectus included therein or filed with the Commission, and each
amendment or supplement thereto;
(v) for a reasonable period prior to the filing of such registration
statement, and throughout the period specified in Section 3(a)(iii)
hereof, make available for inspection by the parties referred to in
Section 3(a)(iv), subject to execution and delivery of a confidentiality
agreement in customary form in favor of the Company by the Holders seeking
to exercise such inspection rights, the financial and other information
and books and records of the Company, and cause the officers, directors,
employees, counsel and independent certified public accountants of the
Company to respond to such inquiries, as shall be reasonably necessary, in
the judgment of the respective counsel referred to in such Section, to
conduct a reasonable investigation within the meaning of Section 11 of the
Securities Act;
(vi) promptly notify the selling Holders of Registrable Securities,
the sales or placement agent, if any, therefor and the managing
underwriter or underwriters, if any, thereof and confirm such advice in
writing, (A) when such registration statement or the prospectus included
therein or any prospectus amendment or supplement or post-effective
amendment has been filed, and, with respect to such registration statement
or any post-effective amendment, when the same has become effective, (B)
of any comments by the Commission and by the Blue Sky or securities
commissioner or regulator of any state with respect thereto or any request
by the Commission for amendments or supplements to such registration
statement or prospectus or for additional information, (C) of the issuance
by the Commission of any stop order suspending the effectiveness of such
registration statement or the initiation or threatening of any proceedings
for that
-00-
00
xxxxxxx, (X) if at any time the representations and warranties of the
Company contemplated by Section 3(a)(xv) or Section 5 hereof cease to be
true and correct in all material respects, (E) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose, or
(F) at any time when a prospectus is required to be delivered under the
Securities Act, that such registration statement, prospectus, prospectus
supplement or post-effective amendment, or any document incorporated by
reference in any of the foregoing, contains an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(vii) use its reasonable best efforts to obtain the withdrawal of
any order suspending the effectiveness of such registration statement or
any post-effective amendment thereto at the earliest practicable date;
(viii) if requested by any managing underwriter or underwriters, any
placement or sales agent or any Holder, promptly incorporate in a
prospectus supplement or post-effective amendment such information as is
required by the applicable rules and regulations of the Commission and as
such managing underwriter or underwriters, such agent or such Holder
specifies should be included therein relating to the terms of the sale of
such Registrable Securities, including, without limitation, information
with respect to the number of Registrable Securities being sold by the
Holders or agent or to any underwriters, the name and description of the
Holders, agent or underwriter, the offering price of such Registrable
Securities and any discount, commission or other compensation payable in
respect thereof, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering of the
Registrable Securities to be sold by the Holders or agent or to such
underwriters; and make all required filings of such prospectus supplement
or post-effective amendment promptly after notification of the matters to
be incorporated in such prospectus supplement or post effective amendment;
(ix) furnish (A) to any Holder, each placement or sales agent, if
any, therefor, each underwriter, if
-12-
13
any, thereof and the respective counsel referred to in Section 3(a)(iv) an
executed copy of such registration statement, each such amendment and
supplement thereto (in each case including all exhibits thereto and
documents incorporated by reference therein), and (B) to any Holder of
Registrable Securities to be registered in such registration such number
of copies of such registration statement (excluding exhibits thereto and
documents incorporated by reference therein unless specifically so
requested by any Holder, agent or underwriter, as the case may be) and of
the prospectus included in such registration statement (including each
preliminary prospectus), in conformity with the requirements of the
Securities Act, and such other documents, as any such Holder, agent, if
any, and underwriter, if any, may reasonably request in order to
facilitate the offering and disposition of the Registrable Securities
owned by any such Holder, offered or sold by such agent or underwritten by
such underwriter and to permit each Holder, agent and underwriter to
satisfy the prospectus delivery requirements of the Securities Act; and
the Company hereby consents to the use of such prospectus (including such
preliminary prospectus) and any amendment or supplement thereto by each
Holder and by any such agent and underwriter, in each case in the form
most recently provided to such party by the Company, in connection with
the offering and sale of the Registrable Securities covered by the
prospectus (including such preliminary prospectus) or any supplement or
amendment thereto;
(x) use its reasonable best efforts to (A) register or qualify the
Registrable Securities to be included in such registration statement under
such securities laws or blue sky laws of such jurisdictions as any Holder
and any placement or sales agent, if any, therefor and underwriter, if
any, thereof shall reasonably request, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions
for so long as may be necessary to enable the Holders, agents or
underwriters to complete its distribution of Securities pursuant to such
registration statement and (C) take any and all other actions as may be
reasonably necessary or advisable to enable the Holders, agents, if any,
and underwriters, if any, to consummate the disposition in such
jurisdictions of such Registrable Securities; provided, however, that the
Company shall
-13-
14
not be required for any such purpose to (I) qualify as a foreign
corporation in any jurisdiction wherein it would not otherwise be required
to qualify but for the requirements of this Section 3(a)(x) or (II)
consent to general service of process in any such jurisdiction;
(xi) use its reasonable best efforts to obtain the consent or
approval of each governmental agency or authority, whether federal, state
or local, which may be required to effect such registration or the
offering or sale in connection therewith or to enable the Holders to
offer, or to consummate the disposition of, the Registrable Securities;
(xii) cooperate with the Holders and the managing underwriters, if
any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates shall
be in a form acceptable under the terms of the Company's By-laws, printed,
lithographed or engraved, or produced by any combination of such methods,
on steel engraved borders if required or appropriate and which shall not
bear any restrictive legends; and, in the case of an underwritten
offering, enable such Registrable Securities to be in such denominations
and registered in such names as the managing underwriters may request at
least two business days prior to any sale of the Registrable Securities;
(xiii) provide a CUSIP number for all Registrable Securities, not
later than the effective date of such registration statement;
(xiv) enter into one or more underwriting agreements, engagement
letters, agency agreements, "best efforts" underwriting agreements or
similar agreements, as appropriate, and take such other actions in
connection therewith as the Holders shall reasonably request in order to
expedite or facilitate the disposition of the Registrable Securities
registered;
(xv) whether or not an agreement of the type referred to in Section
(3)(a)(xiv) hereof is entered into and whether or not any portion of the
offering contemplated by such registration statement is an underwritten
offering or is made through a placement or sales agent or any other
entity, (A) make such representations and warranties to the Holders and
the placement or sales agent, if any, therefor and the underwriters, if
any, thereof in form, substance and
-14-
15
scope as are customarily made in connection with an offering of common
stock or other equity securities pursuant to any appropriate agreement
and/or to a registration statement filed on the form applicable to such
registration; (B) use its reasonable best efforts to obtain an opinion of
counsel to the Company in customary form and covering such matters, of the
type customarily covered by such an opinion, as the managing underwriters,
if any, and as the Holders may reasonably request, addressed to the
Holders and the placement or sales agent, if any, therefor and the
underwriters, if any, thereof, and dated the effective date of such
registration statement (or if such registration statement contemplates an
underwritten offering of a part or all of the Registrable Securities,
dated the date of the closing under the underwriting agreement relating
thereto); (C) to use its reasonable best efforts obtain a "comfort" letter
or letters from the independent certified public accountants of the
Company addressed to the Holders and the placement or sales agent, if any,
therefor and the underwriters, if any, thereof, dated (I) the effective
date of such registration statement, (II) the effective date of any
prospectus supplement, if any, to the prospectus included in such
registration statement or post-effective amendment to such registration
statement which includes unaudited or audited financial statements as of a
date or for a period subsequent to that of the latest such statements
included in such prospectus and (III) dated the date of the closing under
the underwriting agreement relating thereto, such letter or letters to be
in customary form and covering such matters of the type customarily
covered by letters of such type; (D) deliver such documents and
certificates, including officers' certificates, as may be reasonably
requested by the Holders and the placement or sales agent, if any,
therefor and the managing underwriters, if any, thereof to evidence the
accuracy of the representations and warranties made pursuant to clause (A)
above or those contained in Section 5(a) hereof and the compliance with or
satisfaction of any agreements or conditions contained in the underwriting
agreement or other agreement entered into by the Company; and (E)
undertake such obligations relating to expense reimbursement,
indemnification and contribution as are provided in Section 6 hereof;
(xvi) in the event that (i) any broker-dealer registered under the
Exchange Act shall underwrite any
-15-
16
Registrable Securities or participate as a member of an underwriting
syndicate or selling group or "assist in the distribution" (within the
meaning of the Rules of Fair Practice and the By-Laws of the National
Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a
Holder of Registrable Securities or as an underwriter, a placement or
sales agent or a broker or dealer in respect thereof, or otherwise, or
(ii) more than 10% of the net offering proceeds, not including
underwriting compensation, of such distribution is intended to be paid to
any such broker-dealer or "associated or affiliated persons" of such
broker-dealer or "members of the immediate family of such persons" (each
within the meaning of such Rules), the Company shall take reasonable steps
to assist such broker-dealer in complying with the requirements of such
Rules and By-Laws, including, without limitation, by (A) if such Rules or
By-Laws shall so require, engaging a "qualified independent underwriter"
(as defined in such Schedule) to participate in the preparation of the
registration statement relating to such Registrable Securities, to
exercise usual standards of due diligence in respect thereto and, if any
portion of the offering contemplated by such registration statement is an
underwritten offering or is made through a placement or sales agent, to
recommend the price of such Registrable Securities, (B) indemnifying any
such qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 6 hereof, and (C)
providing such information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements of the Rules
of Fair Practice of the NASD;
(xvii) comply in all material respects with all applicable rules and
regulations of the Commission, and make generally available to its
securityholders, as soon as practicable but in any event not later than
eighteen months after the effective date of such registration statement,
an earning statement of the Company and its subsidiaries complying with
Section 11(a) of the Securities Act (including, at the option of the
Company, Rule 158 thereunder); and
(xviii) use its reasonable best efforts to list prior to the
effective date of such registration statement, subject to notice of
issuance, the Registrable Securities covered by such registration
statement on any securities exchange on which the
-16-
17
Common Stock is then listed or, if the Common Stock is not then so listed,
to have the Registrable Securities accepted for quotation of trading on
the Nasdaq National Market (or a comparable interdealer quotation system
then in effect).
(b) In the event that the Company would be required, pursuant to
Section 3(a)(vi)(F) above, to notify the Holders, the placement or sales agent,
if any, therefor and the managing underwriters, if any, thereof, the Company
shall without delay prepare and furnish to the Holders, to each placement or
sales agent, if any, and to each underwriter, if any, a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter delivered
to purchasers of Registrable Securities, such prospectus shall not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing. The Holders agree that upon receipt of
any notice from the Company pursuant to Section 3(a)(vi)(F) hereof, they shall
forthwith discontinue the disposition of Registrable Securities pursuant to the
registration statement applicable to such Registrable Securities until they
shall have received copies of such amended or supplemented prospectus, and if so
directed by the Company, the Holders shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in their
possession of the prospectus covering such Registrable Securities at the time of
receipt of such notice.
(c) The Company may require the Holders to furnish to the Company
such information regarding the Holders and their intended method of distribution
of such Registrable Securities as the Company may from time to time reasonably
request in writing, but only to the extent that such information is required in
order to comply with the Securities Act. Each Holder agrees to notify the
Company as promptly as practicable of any inaccuracy or change in information
previously furnished by such Holder to the Company or of the occurrence of any
event in either case as a result of which any prospectus relating to such
registration contains or would contain an untrue statement of a material fact
regarding such Holder or such Holder's intended method of distribution of such
Registrable Securities or omits or would omit to state any material fact
regarding such Holder or its intended method of distribution of such Registrable
Securities required to be stated therein or necessary to make the statements
therein not misleading
-17-
18
in light of the circumstances then existing, and promptly to furnish to the
Company any additional information required to correct and update any previously
furnished information or required so that such prospectus shall not contain,
with respect to such Holder or the distribution of such Registrable Securities,
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing.
(d) From the time that the Company receives any notice pursuant to
Section 2(a)(i) hereof or, as the case may be, any direction from a Holder in
connection with a primary offering, a secondary offering or a combined offering
pursuant to Section 2(b)(i) hereof until the earlier of (i) the date 90 days
after the effectiveness of the registration statement relating thereto or such
shorter period of time as may be recommended by the managing underwriters
involved in such offering and (ii) the date an election is made not to file a
registration statement with the Commission pursuant to Section 2(c) hereof, the
Company will not offer, issue, sell, agree or commit to issue or sell, grant any
option for the purchase of, file with the Commission a registration statement
relating to any primary, secondary or combined offering of or solicit any offer
to buy (each a "Transfer") any Common Stock or any Rights or any other equity
securities, other than (A) in connection with the Registrable Securities to be
registered pursuant to such notice or direction, (B) such equity securities as
were, at the time of such notice or direction, to be included in such primary
offering, secondary offering or combined offering, (C) pursuant to an approved
employee stock option, stock purchase plan, or similar benefit program or
agreement for the benefit of employees of, or consultants to, the Company, where
the primary purpose is not to raise additional equity capital for the Company or
(D) as direct consideration for the acquisition of a business in a merger,
consolidation or similar transaction, provided that the persons acquiring such
securities agree, for the benefit of the Holders, not to Transfer such
securities for the remainder of such 90-day period.
(e) If requested in writing by the Company or the managing
underwriter, the Holders will agree not to sell or dispose any Registrable
Securities held by such Holder for a period of no more than 180 days after the
effective date of the registration statement for the Company's initial public
offering so long as all directors, officers and holders of 1% or more of the
Company's outstanding capital stock
-18-
19
execute and deliver an agreement which is identical to the agreement the Holders
were requested to sign.
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly
upon request being made therefor all expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
(a) all Commission and any NASD registration and filing fees and expenses, (b)
all fees and expenses in connection with the qualification of the Securities for
offering and sale under the State securities and blue sky laws, including
reasonable fees and disbursements of counsel for the placement or sales agent or
underwriters in connection with such qualifications, (c) all expenses relating
to the preparation, printing, distribution and reproduction of each registration
statement required to be filed hereunder, each prospectus included therein or
prepared for distribution pursuant hereto, each amendment or supplement to the
foregoing, the certificates representing the Common Stock or other equity
securities to be sold and all other documents relating hereto, (d) messenger and
delivery expenses, (e) fees and expenses of any escrow agent or custodian, (f)
internal expenses of the Company (including, without limitation, all salaries
and expenses of the Company's officers and employees performing legal or
accounting duties), (g) fees, disbursements and expenses of counsel and
independent certified public accountants of the Company (including the expenses
of any opinions or "comfort" letters required by or incident to such performance
and compliance), (h) fees, disbursements and expenses (including fees and
expenses of counsel) of any "qualified independent underwriter" engaged pursuant
to Section 3(a)(xvi) hereof, (i) reasonable fees, disbursements and expenses of
one counsel for all of the Holders retained in connection with any particular
registration, and fees, expenses and disbursements of any other persons retained
by the Company in connection with such registration, and (j) all fees and
expenses (including, without limitation, listing and qualification fees) in
connection with the listing or admission to quotation of the Registrable
Securities as required by Section 3(a)(xviii) hereof (collectively, the
"Registration Expenses"). To the extent that any Registration Expenses are
incurred, assumed or paid by the Holder or any placement or sales agent therefor
or underwriter thereof, the Company shall reimburse such person for the full
amount of the Registration Expenses so incurred, assumed or paid promptly after
receipt of a request therefor. Notwithstanding the foregoing, the
-19-
20
Holders of Registrable Securities being registered each shall pay their pro rata
share (based on their proportion of the Registrable Securities being sold by
them) of all agency fees and commissions and all underwriting discounts and
commissions attributable to the sale of the Registrable Securities and the fees
and disbursements of any counsel or other advisors or experts retained by the
Holder, other than the counsel and experts specifically referred to above.
5.Representations and Warranties.
The Company represents and warrants to, and agrees with, each Holder
from time to time of Registrable Securities that:
(a) Each registration statement covering Registrable Securities and
each prospectus (including any preliminary prospectus) contained therein or
furnished pursuant to Section 3(a)(ix) hereof and any further amendments or
supplements to any such registration statement or prospectus, when it becomes
effective or is filed with the Commission and all other applicable governmental
or regulatory authorities, as the case may be, and, in the case of an
underwritten offering of Registrable Securities, at the time of the closing
under the underwriting agreement relating thereto will conform in all material
respects to the requirements of the Securities Act and the requirements of all
other applicable governmental or regulatory authorities and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
and at all times subsequent to the effective date of such registration statement
when a prospectus would be required to be delivered under the Securities Act or
the requirements of any other applicable governmental or regulatory authorities,
other than from (i) such time as a notice has been given to Holders of
Registrable Securities pursuant to Section 3(a)(vi)(F) hereof until (ii) such
time as the Company furnishes an amended or supplemented prospectus pursuant to
Section 3(b) hereof, each such registration statement, and each prospectus
contained therein or furnished pursuant to Section 3(a)(ix) hereof, as then
amended or supplemented, will conform in all material respects to the
requirements of the Securities Act and the requirements of all other applicable
governmental or regulatory authorities and will not contain an untrue statement
of a material fact or omit 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; provided,
-20-
21
however, that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information furnished
in writing to the Company by a Holder of Registrable Securities expressly for
use therein.
(b) Any documents incorporated by reference in any prospectus
referred to in Section 5(a) hereof, when they become or became effective or are
or were filed with the Commission and all other applicable governmental or
regulatory authorities, as the case may be, as then amended or supplemented,
will conform or conformed in all material respects to the requirements of the
Securities Act, the Exchange Act and the requirements of all other applicable
governmental or regulatory authorities, as applicable, and none of such
documents will contain an untrue statement of a material fact or will omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company by a
Holder of Registrable Securities expressly for use therein.
(c) The compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein contemplated will not
(i) conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any
subsidiary is a party or by which the Company or any subsidiary is bound or to
which any of the property or assets of the Company or any subsidiary is subject,
or (ii) result in any violation of the provisions of the Certificate of
Incorporation or By-Laws of the Company or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any subsidiary or any of their properties except, with respect to
clause (i) or (ii), for such conflicts, breaches, defaults and violations as,
individually and in the aggregate, do not have a material adverse effect on the
business, financial condition, results of operations or prospects of the Company
and its subsidiaries; and no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental agency
or body is required for the consummation by the Company of the transactions
contemplated by this Agreement, except the registration under the Securities Act
of the Registrable Securities and such
-21-
22
consents, approvals, authorizations, registrations or qualifications as may be
required under State securities and blue sky laws in connection with the
offering and distribution of the Registrable Securities.
6. Indemnification.
(a) Indemnification by the Company. Upon the registration of any
Registrable Securities pursuant to Section 2 hereof, and in consideration of the
agreements of the Holders contained herein, and as an inducement to the
Purchasers to enter into the Subscription Agreement, the Company shall, and it
hereby agrees to, indemnify and hold harmless each Holder, and each person who
participates as a placement or sales agent or as an underwriter in any offering
or sale of such Registrable Securities, against any losses, claims, damages or
liabilities, joint or several, to which any such Holder, agent or underwriter
may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any registration statement under which such
Registrable Securities were registered under the Securities Act, or any
preliminary or final prospectus contained therein or furnished by the Company to
any such Holder, agent or underwriter, or any amendment or supplement thereto,
or any document incorporated by reference therein, 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
(in the case of the Registration Statement or any amendment thereto or any
document incorporated by reference therein) or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (in the case of any preliminary or final prospectus or supplement
thereto), and the Company shall, and it hereby agrees to, reimburse any such
Holder, agent and underwriter for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such action
or claim; provided, however, that the Company shall not be liable to any such
person in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
preliminary or final prospectus, amendment or supplement or incorporated
document in reliance upon and in conformity with written information furnished
to the Company by such person expressly for use therein; provided, further, that
the
-22-
23
Company shall not be liable to (i) any Holder, underwriter or placement or sales
agent 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, underwriter or agent, respectively, results from the
fact that such Holder, underwriter or agent 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, underwriter or agent,
respectively, sufficient copies thereof and such prospectus corrects the
statement or omission, or alleged statement or omission, out of which such loss,
claim, damage or liability 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
3(a)(vi)(F) hereof and the amended or supplemented prospectus furnished pursuant
to Section 3(b) hereof corrects the statement or omission, or alleged statement
or omission, out of which such loss, claim, damage or liability arises.
(b) Indemnification by the Holder and any Agents and Underwriters.
Upon the registration of any Registrable Securities pursuant to Section 2
hereof, and in consideration of the Agreement of the Company, and as an
inducement to the Company to enter into the Subscription Agreement, each Holder
severally and not jointly, shall, and hereby agrees to, (i) indemnify and hold
harmless the Company, and all other Holders, if any, of Registrable Securities
selling under the same registration statement, against any losses, claims,
damages or liabilities to which the Company or such other Holders of Registrable
Securities may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in such registration statement, or any preliminary
or final prospectus contained therein or furnished by the Company to the
Holders, agent or underwriter, or any amendment or supplement 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 (in the case of the Registration Statement or
-23-
24
any amendment thereto or any incorporated document) or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (in the case of any preliminary or final prospectus or
supplement thereto), in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by the Holder expressly for use therein, and (ii)
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such action or claim;
provided, however, that no Holder shall be required to undertake liability under
this Section 6(b) for any amounts in excess of the dollar amount of the net
proceeds (after deducting any fees, discounts and commissions applicable
thereto) to be received by such Holder from the sale of its Registrable
Securities pursuant to such registration, as reduced by any damages or other
amounts that such Holder was otherwise required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of written notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 6, notify such indemnifying party in writing of
the commencement of such action; but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party except to the extent the indemnifying party is materially
prejudiced thereby. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the commencement
thereof, such indemnifying party shall be entitled to participate therein and,
to the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who may be counsel to the indemnifying party unless
representation of both parties by the same counsel would be inappropriate due to
actual or potential conflicts of interest between them), and, after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, such indemnifying party shall not be liable to such
indemnified party for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party,
-24-
25
in connection with the defense thereof other than reasonable costs of
investigation.
(d) Contribution. Each party hereto agrees that, if for any reason
the indemnification provisions contemplated by Section 6(a) or Section 6(b)
hereof are unavailable to or insufficient to hold harmless an indemnified party
in respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or by
such indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation (even if
the Holders or any agents or underwriters or all of them were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this Section 6(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, or liabilities (or actions in respect thereof) referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this Section 6(d),
no Holder shall be required to contribute any amount in excess of the amount by
which the dollar amount of the net proceeds received by such Holder from the
sale of any Registrable Securities (after deducting any fees, discounts and
commissions applicable thereto) exceeds the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to
-25-
26
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations in this Section 6(d) to contribute
shall be several in proportion to the number or amount of Registrable Securities
sold or underwritten, as the case may be, by them and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director and partner of any
Holder, agent or underwriter and each person, if any, who controls any Holder,
agent or underwriter within the meaning of the Securities Act; and the
obligations of the Holders contemplated by this Section 6 shall be in addition
to any liability which the Holders may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company
(including any person who, with his consent, is named in any registration
statement as about to become a director of the Company) and to each person, if
any, who controls the Company within the meaning of the Securities Act.
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable Securities
covered by any registration statement filed pursuant to Section 2(a) hereof are
to be sold pursuant to an underwritten offering, the managing underwriter or
underwriters thereof shall be designated: (i) in the event of a registration
pursuant to Section 2(a) hereof, by the Holders requesting such registration or
(ii) in the event of a registration pursuant to Section 2(b) hereof, by the
Company.
(b) Participation by Holders. Each Holder hereby agrees that it may
not participate in any underwritten offering hereunder unless it (i) agrees to
sell its Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements or, in the case of an
underwritten offering, all customary questionnaires reasonably requested by the
Company.
-26-
27
8. Rule 144.
The Company covenants to and with each Holder of Registrable
Securities that to the extent it shall be required to do so under the Exchange
Act, the Company shall timely file the reports required to be filed by it under
the Exchange Act or the Securities Act (including, but not limited to, the
reports under Section 13 and 15(d) of the Exchange Act referred to in
subparagraph (c)(1) of Rule 144 adopted by the Commission under the Securities
Act) and the rules and regulations adopted by the Commission thereunder, and
shall take such further action as any Holder may reasonably request, all to the
extent required from time to time to enable the Holders to sell Registrable
Securities without registration under the Securities Act within the limitations
of the exemption provided by Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Holder of Registrable
Securities, the Company shall deliver to such Holder a written statement as to
whether it has complied with such requirements.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company covenants and agrees
that it shall not (i) grant registration rights with respect to any securities
which would be inconsistent with the terms contained in this Agreement or (ii)
enter into or become bound by, or permit any subsidiary of the Company to enter
into or become bound by, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument which would prohibit, be violated by, conflict
with or provide that a default would arise from, the compliance by the Company
with any of the provisions of this Agreement or the consummation of the
transactions herein contemplated.
(b) Specific Performance. The Company acknowledges that it would be
impossible to determine the amount of damages that would result from any breach
by it of any of the provisions of this Agreement and that the remedy at law for
any breach, or threatened breach, of any of such provisions would likely be
inadequate and, accordingly, agrees that each Holder shall, in addition to any
other rights or remedies which it may have, be entitled to seek such equitable
and injunctive relief as may be available from any court of competent
jurisdiction to compel specific performance of, or restrain the Company from
violating any of, such provisions. In connection with any action or
-27-
28
proceeding for injunctive relief, the Company hereby waives the claim or defense
that a remedy at law alone is adequate and agrees, to the maximum extent
permitted by law, to have each provision of this Agreement specifically enforced
against it, without the necessity of posting bond or other security against it.
(c) Illegality. If any term or provision of this Agreement or any
application thereof shall be declared or held invalid, illegal or unenforceable,
in whole or in part, whether generally or in any particular jurisdiction, such
provision shall be deemed amended to the extent, but only to the extent,
necessary to cure such invalidity, illegality or unenforceability, and the
validity, legality and enforceability of the remaining provisions, both
generally and in every other jurisdiction, shall not in any way be affected or
impaired thereby.
(d) Recovery of Litigation Costs. Except as otherwise expressly
provided herein to the contrary, in the event any dispute between the parties to
this Agreement shall result in litigation, arbitration or other proceeding, the
prevailing party shall be entitled to recover from the losing party all
reasonable costs and expenses, including without limitation reasonable
attorneys' fees and disbursements, incurred by the prevailing party in
connection with such litigation or other proceeding and any appeal thereof. Such
costs, expenses, fees and disbursements shall be included in and made a part of
the judgment recovered by the prevailing party, if any.
(e) Notices. All notices, requests, claims, demands, waivers and
other communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, when delivered personally or by courier,
three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested), or when received by facsimile
transmission if promptly confirmed by one of the foregoing means, as follows: If
to the Company, to it at 00 Xxxxxxxx Xxxxx, Xxxxxx Xxxx, Xxx Xxxxxx 00000,
Attention: General Counsel, facsimile no. (000) 000-0000, and if to a Holder, to
the address or facsimile transmission number of such Holder set forth in the
security register or other records of the Company, or to such other address or
facsimile transmission number as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
-28-
29
(f) Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall be
enforceable by the parties hereto and their respective successors and assigns,
but, except as set forth in this Section 9(f), no such term or provision is for
the benefit of, or intended to create any obligations to, any other persons. In
the event that any transferee of the Purchasers or any other Holder shall
acquire Registrable Securities, in any manner, whether by gift, bequest,
purchase, operation of law or otherwise, such transferee shall, without any
further writing or action of any kind, be deemed a party hereto for all purposes
and such Registrable Securities shall be held subject to all of the terms of
this Agreement, and by taking and holding such Registrable Securities, such
transferee shall be entitled to receive the benefits of and be conclusively
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement. If the Company shall so request, any such
successor, assign or transferee shall agree in writing to acquire and hold the
Registrable Securities subject to all of the terms hereof. Any Holder effecting
a transfer to a transferee that acquires any rights or benefits under this
Agreement as a result of such transfer shall, prior to or promptly after such
transfer is made, give written notice to the Company of such transfer,
specifying the number of Registrable Securities transferred and identifying the
transferee.
(g) Survival. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this Agreement
or made pursuant hereto shall remain in full force and effect regardless of any
investigation (or statement as to the results thereof) made by or on behalf of
any Holder, any director, officer, partner or employee of any Holder, any agent
or underwriter or any director, officer, partner or employee thereof, or any
controlling person of any of the foregoing, and shall survive delivery of and
payment for the Registrable Stock purchased pursuant to the Subscription
Agreement and the transfer and registration of Registrable Securities by any
Holder.
(h) Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
(i) Submission to Jurisdiction; Appointment of Agent for Service of
Process. (1)Each party hereto hereby irrevocably consents and agrees, for the
benefit of each other party hereto, that any legal action, suit or proceeding
against it with respect to its obligations,
-29-
30
liabilities or any other matter under or arising out of or in connection with
this Agreement may be brought in any Federal or State court located in the
Borough of Manhattan, The City of New York, and hereby irrevocably accepts and
submits to the non-exclusive jurisdiction of each such court with respect to any
such action, suit or proceeding. Each party hereto hereby waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions, suits or proceedings brought in any such court and hereby
further waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought therein has been brought in an inconvenient
forum.
(2) Each party hereto agrees that a final judgment against it in any
action, suit or proceeding taken in any Federal or State Court in the Borough of
Manhattan, the City of New York in accordance with the immediately preceding
paragraph shall be conclusive and may be enforced in any jurisdiction by suit on
the judgment, a certified copy of which judgment shall be conclusive evidence
thereof, or by any other means provided by law.
(j) Headings. The descriptive headings of the several Sections and
paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
(k) Entire Agreement; Amendments. This Agreement and the other
writings referred to herein or delivered pursuant hereto which form a part
hereof contain the entire understanding of the parties with respect to its
subject matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only by a written instrument duly executed by the Company and the
Holders of more than 50 percent of the Registrable Securities at the time
outstanding. Each Holder of any Registrable Securities at the time or thereafter
outstanding shall be bound by any amendment or waiver effected pursuant to this
Section 9(k), whether or not any notice, writing or marking indicating such
amendment or waiver appears on such Registrable Securities or is delivered to
such Holder. The entry by the Company into any contract, agreement or
understanding that directly or indirectly gives to any person the right to
register, or cause the Company to register, any securities
-30-
31
of the Company under the Securities Act on terms more favorable to such person
than those set forth herein shall require written approval by the Holders of
more than 50 percent of the Registrable Securities at the time outstanding.
(l) Inspection. For so long as this Agreement shall be in effect,
this Agreement and a complete list of the names and addresses of all the Holders
of Registrable Securities shall be made available for inspection and copying on
any business day by any Holder of Registrable Securities at the offices of the
Company at the address thereof set forth in Section 9(e) above.
(m) 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.
-31-
32
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be duly executed as of the date first written above.
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: Xxxxxx X. Xxxxxx
Title: Admin. Member
SOFTBANK CAPITAL ADVISORS
FUND LP
By: SOFTBANK CAPITAL PARTNERS
LLC, its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Admin. Member
SOFTBANK CAPITAL LP
By: SOFTBANK CAPITAL PARTNERS
LLC, its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Admin. Member
-32-
