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EXHIBIT 10.1
REVENUE SHARING AGREEMENT
This Revenue Sharing Agreement ("this Agreement") is entered into as of
the 27th day of August, 1996, by and between OptiMark Technologies, Inc., a
Delaware corporation (the "Company"), and The Pacific Stock Exchange
Incorporated, a Delaware corporation ("PSE").
1. DEFINITIONS. For purposes of this Agreement, in addition to terms
defined elsewhere herein, the following terms shall have the indicated meanings:
(a) "Exchange" means any domestic securities exchange
registered under Section 6 of the Securities Exchange Act of 1934, including but
not limited to the Pacific Exchange, or any foreign securities exchange
registered, licensed or otherwise authorized as such under the laws of any other
country.
(b) "Exchange After-Hours Commencement Date" means the first
day on which any Exchange is making OptiMark-Securities Available with respect
to at least 50% of the total number of issues of equity securities traded on
such Exchange after its normal trading hours.
(c) "Exchange Listed Equities Commencement Date" means the
first day on which any Exchange is making OptiMark-Securities Available with
respect to at least 50% of the total number of issues of listed equity
securities traded on such Exchange during its normal trading hours.
(d) "Exchange Options Commencement Date" means the first day on
which any Exchange is making OptiMark-Securities Available with respect to at
least 50% of the total number of issues of equity options traded on such
Exchange.
(e) "Exchange UTP Commencement Date" means the first day on
which any Exchange is making OptiMark-Securities Available with respect to at
least 50% of the total number of issues of equity securities traded on such
Exchange with unlisted trading privileges (UTP).
(f) "Gross Revenues" of the Company means the gross revenues of
the Company (including, for this purpose, the Company's allocable share of the
gross revenues of any consolidated or majority-owned subsidiaries and any other
controlled entities) from all sources, determined in accordance with generally
accepted accounting principles consistently applied.
(g) Making "Available", as applied to OptiMark-Securities and
the Pacific Exchange and/or Other Exchanges, means that the necessary
communications between OptiMark-Securities and the relevant systems of the
Pacific Exchange and/or such Other Exchanges have been established such that
users have the ability to utilize OptiMark-Securities subject to entering into a
User Agreement with the Company and/or
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its Affiliates. Notwithstanding the use of such phrases in this Agreement, PSE
is not providing or offering to provide OptiMark-Securities to users, either
directly or indirectly.
(h) "OptiMark-Securities" means the market structuring
technology and related software which is generally described as
"OptiMark-Securities" in the PSE-OptiMark Agreement, including all derivatives,
releases and subsequent versions of such technology and software, regardless of
platform or operating media.
(i) "Pacific Exchange" means the registered national securities
exchange operated by PSE.
(j) "PSE After-Hours Commencement Date" means the first day on
which the Pacific Exchange is making OptiMark-Securities Available with respect
to at least 50% of the total number of issues of equity securities traded on the
Pacific Exchange after hours; provided, however that (i) if the PSE After-Hours
Commencement Date has not earlier occurred, and (ii) OptiMark-Securities and all
necessary PSE Interfaces have been completed under the PSE-OptiMark Agreement
for after-hours trading on the Pacific Exchange, then the PSE After-Hours
Commencement Date shall occur on the date that PSE notifies the Company of PSE's
desire to make OptiMark-Securities Available for such after-hours trading,
without regard to whether the Company has allowed PSE to make
OptiMark-Securities Available for such after-hours trading.
(k) "PSE Listed Equities Commencement Date" means the first day
on which the Pacific Exchange is making OptiMark-Securities Available with
respect to at least 50% of the total number of issues of listed equity
securities traded on the Pacific Exchange during its normal trading hours.
(l) "PSE Options Commencement Date" means the first day on
which the Pacific Exchange is making OptiMark-Securities Available with respect
to at least 50% of the total number of issues of equity options traded on the
Pacific Exchange.
(m) "PSE-OptiMark Agreement" means the PSE-OptiMark Agreement
of even date between PSE and the Company.
(n) "PSE UTP Commencement Date Period" means the first day on
which the Pacific Exchange is making OptiMark-Securities Available with respect
to at least 50% of the total number of issues of equity securities traded on the
Pacific Exchange with unlisted trading privileges (UTP).
(o) "Warrant" means the Common Stock Purchase Warrant of even
date issued by the Company in favor of PSE.
(p) "Warrant Expiration Date" shall have the meaning provided
in the Warrant.
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2. ESTABLISHMENT, CREDITS AND DEBITS TO REVENUE ACCRUAL ACCOUNT. The
Company hereby establishes an internal account called the "Revenue Accrual
Account". The initial balance in the Revenue Accrual Account shall be zero. At
the end of each complete calendar month from and after the date of this
Agreement through December 31, 2005, the Revenue Accrual Account shall be
credited with (increased by) one and one-half percent (1.5%) of all Gross
Revenues of the Company for that month, up to an aggregate maximum amount of
credits equal to Three Million Eight Hundred Fifty Five Thousand Five Hundred
Eighty Dollars (US $3,855,580). All payments from the Revenue Accrual Account
under Section 3 below shall be debited (subtracted) form the Revenue Accrual
Account. The Revenue Accrual Account shall not bear interest.
3. DISTRIBUTIONS.
(a) Promptly following the end of the calendar quarter during
which occurs the PSE Listed Equities Commencement Date (if any), the Company
shall pay to PSE the lesser of (i) an amount equal to the balance in the Revenue
Accrual Account as of the end of such quarter, or (ii) $771,116. If the payment
to PSE under the foregoing sentence is less than $771,116, the Company shall
continue to make payments to PSE promptly following the end of each complete
calendar quarter thereafter, in an amount equal to the balance of the Revenue
Accrual Account as of the end of such quarter, until the earliest to occur of
(i) the Warrant Expiration Date, (ii) the date on which all payments to PSE
under this paragraph (a) have totalled $771,116, or (iii) the date (if any) on
which PSE unilaterally and permanently withdraws OptiMark(TM) from Availability
through the Pacific Exchange for listed equity securities during normal trading
hours.
(b) Promptly following the end of the calendar quarter during
which occurs the Exchange Listed Equities Commencement Date (if any), the
Company shall pay to PSE the lesser of (i) an amount equal to the balance in the
Revenue Accrual Account as of the end of such quarter, or (ii) $771,116. If the
payment to PSE under the foregoing sentence is less than $771,116, the Company
shall continue to make payments to PSE promptly following the end of each
complete calendar quarter thereafter, in an amount equal to the balance of the
Revenue Accrual Account as of the end of such quarter, until the earlier to
occur of (i) the Warrant Expiration Date, or (ii) the date on which all payments
to PSE under this paragraph (b) have totalled $771,116.
(c) Promptly following the end of the calendar quarter during
which occurs the PSE Options Commencement Date (if any), the Company shall pay
to PSE the lesser of (i) an amount equal to the balance in the Revenue Accrual
Account as of the end of such quarter, or (ii) $385,558. If the payment to PSE
under the foregoing sentence is less than $385,558, the Company shall continue
to make payments to PSE promptly following the end of each complete calendar
quarter thereafter, in an amount equal to the balance of the Revenue Accrual
Account as of the end of such quarter, until the earliest to occur of (i) the
Warrant Expiration Date, (ii) the date on which all payments to PSE under this
paragraph (c) have totalled $385,558, or (iii) the date (if any) on which PSE
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unilaterally and permanently withdraws OptiMark(TM) from Availability through
the Pacific Exchange for options.
(d) Promptly following the end of the calendar quarter during
which occurs the Exchange Listed Options Commencement Date (if any), the Company
shall pay to PSE the lesser of (i) an amount equal to the balance in the Revenue
Accrual Account as of the end of such quarter, or (ii) $385,558. If the payment
to PSE under the foregoing sentence is less than $385,558, the Company shall
continue to make payments to PSE promptly following the end of each complete
calendar quarter thereafter, in an amount equal to the balance of the Revenue
Accrual Account as of the end of such quarter, until the earlier to occur of (i)
the Warrant Expiration Date, or (ii) the date on which all payments to PSE under
this paragraph (d) have totalled $385,558.
(e) Promptly following the end of the calendar quarter during
which occurs the PSE UTP Commencement Date (if any), the Company shall pay to
PSE the lesser of (i) an amount equal to the balance in the Revenue Accrual
Account as of the end of such quarter, or (ii) $385,558. If the payment to PSE
under the foregoing sentence is less than $385,558, the Company shall continue
to make payments to PSE promptly following the end of each complete calendar
quarter thereafter, in an amount equal to the balance of the Revenue Accrual
Account as of the end of such quarter, until the earliest to occur of (i) the
Warrant Expiration Date, (ii) the date on which all payments to PSE under this
paragraph (e) have totalled $385,558, or (iii) the date (if any) on which PSE
unilaterally and permanently withdraws OptiMark(TM) from Availability through
the Pacific Exchange for equity securities with unlisted trading privileges.
(f) Promptly following the end of the calendar quarter during
which occurs the Exchange UTP Commencement Date (if any), the Company shall pay
to PSE the lesser of (i) an amount equal to the balance in the Revenue Accrual
Account as of the end of such quarter, or (ii) $385,558. If the payment to PSE
under the foregoing sentence is less than $385,558, the Company shall continue
to make payments to PSE promptly following the end of each complete calendar
quarter thereafter, in an amount equal to the balance of the Revenue Accrual
Account as of the end of such quarter, until the earlier to occur of (i) the
Warrant Expiration Date, or (ii) the date on which all payments to PSE under
this paragraph (f) have totalled $385,558.
(g) Promptly following the end of the calendar quarter during
which occurs the PSE After-Hours Commencement Date (if any), the Company shall
pay to PSE the lesser of (i) an amount equal to the balance in the Revenue
Accrual Account as of the end of such quarter, or (ii) $385,558. If the payment
to PSE under the foregoing sentence is less than $385,558, the Company shall
continue to make payments to PSE promptly following the end of each complete
calendar quarter thereafter, in an amount equal to the balance of the Revenue
Accrual Account as of the end of such quarter, until the earliest to occur of
(i) the Warrant Expiration Date, (ii) the date on which all payments to PSE
under this paragraph (g) have totalled $385,558, or (iii) the date (if any) on
which PSE unilaterally and permanently withdraws OptiMark(TM) from Availability
through the Pacific Exchange for equity securities after normal trading hours.
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(h) Promptly following the end of the calendar quarter during
which occurs the Exchange After-Hours Commencement Date (if any), the Company
shall pay to PSE the lesser of (i) an amount equal to the balance in the Revenue
Accrual Account as of the end of such quarter, or (ii) $385,558. If the payment
to PSE under the foregoing sentence is less than $385,558, the Company shall
continue to make payments to PSE promptly following the end of each complete
calendar quarter thereafter, in an amount equal to the balance of the Revenue
Accrual Account as of the end of such quarter, until the earlier to occur of (i)
the Warrant Expiration Date, or (ii) the date on which all payments to PSE under
this paragraph (h) have totalled $385,558.
An example of payments under this Section 3 is set forth on
Exhibit A to this Agreement.
4. REVENUE STATEMENT. Within twenty (20) days following request by
PSE from time to time, the Company shall deliver to PSE a written statement,
certified by the Chief Financial Officer of the Company to be accurate and
complete, attesting to: (i) the total Gross Revenues of the Company from and
after the date of this Agreement through and including the end of the most
recent calendar month, and (ii) the then-current balance in the Revenue Accrual
Account, if any (a "Revenue Statement"). The Company shall maintain, at its
executive offices, books of account concerning Gross Revenues and credits and
debits to the Revenue Accrual Account under this Agreement. Such books of
account shall be maintained in accordance with generally accepted accounting
principles consistently applied and shall be consistent with the general ledger
of the Company. PSE, or a certified public accountant on PSE's behalf may, at
PSE's sole expense, examine such books of account solely for the purpose of
verifying the accuracy thereof. Such examination may take place during normal
business hours, upon reasonable advance written notice, and not more than twice
per year; provided, however, that if any such examination of the Company's books
of account reveals a discrepancy to PSE's detriment of more than five percent
(5%) in the Revenue Accrual Account, then (x) the Company shall pay or reimburse
PSE for the auditing expenses incurred in connection with such examination, and
(y) PSE shall be entitled thereafter to examine the Company's books of account
for such purpose at any time and the Company shall pay the costs of each such
examination.
5. TERMINATION. Upon payment of all amounts required to be paid out
under Section 3 above, any remaining balance in the Revenue Accrual Account
shall be extinguished on the Warrant Expiration Date, and no further payments
shall be made to PSE under this Agreement thereafter.
6. CONTEXT. This Agreement is being executed and delivered in
connection with and in consideration of PSE's execution and delivery of the
PSE-OptiMark Agreement.
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7. MISCELLANEOUS.
(a) Except as provided above to the contrary, each of the
parties shall bear their own costs and expenses in connection with this
Agreement.
(b) All notices required or permitted under this Agreement
shall be in writing and given by prepaid Federal Express or other nationally
recognized overnight delivery service as follows (or to any other addresses
which either party subsequently may designate by notice):
i) if to PSE, to:
The Pacific Stock Exchange Incorporated
attn: Xxxx X. Xxxxxxxx, Esq.
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
with a copy in the same manner to:
Xxxxxxx X. XxXxxx, Esq.
Howard, Rice, Nemerovski, Canady, Xxxx & Xxxxxx
A Professional Corporation
Xxxxx Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
ii) If to the Company, to:
OptiMark Technologies, Inc.
attn: Xxxxxxx X. Xxxxxx
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
with a copy in the same manner to:
Xxxxx Xxxxxx, Esq.
Xxxxxx, Xxxxxxx & Xxxxxxxxxx, P.C.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
(c) This Agreement shall not be assignable by either party except in
connection with a merger, consolidation, sale of all or substantially all
assets, or analogous transaction in which a third party succeeds to all or
substantially all of the business and assumes all or substantially all of the
liabilities (including the obligations under this Agreement) of one of the
parties hereto. Any non-permitted assignment shall
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be void ab initio. This Agreement shall bind and inure to the benefit of the
parties and their respective successors and permitted assigns.
(d) This Agreement may be executed in several counterparts, all of
which taken together shall constitute a single agreement between the parties.
(e) No delay or omission by either party hereto to exercise any right
or power occurring upon any noncompliance or default by the other party with
respect to any of the terms of this Agreement shall impair any such right or
power or be construed to be a waiver thereof. A waiver by either of the parties
hereto of any of the covenants, conditions, or agreements to be performed by the
other shall not be construed to be a waiver of any succeeding breach thereof or
of any other covenant, condition, or agreement herein contained.
(f) This Agreement, the PSE-OptiMark Agreement, the Warrant and their
Exhibits constitute the entire agreement between the parties with respect to
their subject matter, and all prior negotiations, agreements and letters of
intent are superseded and merged herein. No change, waiver, or discharge hereof
shall be valid unless it is in writing and is executed by the party against whom
such change, waiver, or discharge is sought to be enforced.
(g) In the event any party hereto initiates any legal action or suit
in connection with any dispute concerning the interpretation of this Agreement
or the enforcement of any provision hereof, the prevailing party in such action
or suit shall be entitled to recover all of its costs of action or suit
(including without limitation reasonable attorneys' and expert witness fees)
from the other party.
(h) This Agreement shall for all purposes be construed and enforced in
accordance with, and governed by, the internal laws of the State of California,
without giving effect to principles of conflict of laws. The exclusive venue for
any litigation related to this Agreement shall be the Superior Court in and for
San Francisco County, California or, if jurisdictionally available, the U.S.
District Court for the Northern District of California.
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IN WITNESS WHEREOF, the parties have set their hands and seals as of the
date first set forth above.
THE PACIFIC STOCK EXCHANGE INCORPORATED
By: /s/ Xxxxxx X. Xxxxxx
Chief Executive Officer
OPTIMARK TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Chief Executive Officer
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Exhibit A
(to Revenue Sharing Agreement)
Assumptions:
8. The American Stock Exchange makes OptiMark(TM) Available for
listed equities on September 1, 1997. The Pacific Exchange makes OptiMark(TM)
Available for listed equities on February 1, 1999.
9. The Pacific Exchange makes OptiMark(TM) Available for equities
with unlisted trading privileges on July 20, 1999. The Pacific Exchange
permanently unilaterally withdraws OptiMark(TM) for equities with unlisted
trading privileges on September 30, 2000.
10. The Pacific Exchange makes OptiMark(TM) Available for options on
February 15, 2001. The Pacific Exchange temporarily unilaterally withdraws
OptiMark(TM) for options on February 1, 2002, but reinstitutes OptiMark(TM) for
options trading on July 15, 2002.
11. The Pacific Exchange never makes OptiMark(TM) Available for
after-hours trading.
12. No stock exchange other than the Pacific Exchange and the American
Stock Exchange ever makes OptiMark(TM) Available. The American Stock Exchange
never makes OptiMark(TM) Available for listed options, unlisted equities, or
after-hours trading.
13. The Company's initial public offering becomes effective on
December 31, 2004.
14. The Company's Gross Revenues are as follows:(1)
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Payment to PSE
Credits to Revenue following End of
Accrual Period Gross Revenues Accrual Account Accrual Period
-------------- -------------- --------------- --------------
---------------------------------------------------------------------------------------------
8/__/96-9/30/97 -0- -0- -0-
---------------------------------------------------------------------------------------------
10/1/97-12/31/97 $2,000,000 $30,000 $30,000
---------------------------------------------------------------------------------------------
1/1/98-3/31/98 $20,000,000 $300,000 $300,000
---------------------------------------------------------------------------------------------
4/1/98-6/30/98 $26,666,667 $400,000 $400,000
---------------------------------------------------------------------------------------------
7/1/98-9/30/98 $40,000,000 $600,000 $41,116
---------------------------------------------------------------------------------------------
10/1/98-12/31/98 $66,666,667 $1,000,000 -0-
---------------------------------------------------------------------------------------------
1/1/99-3/31/99 -0- -0- $771,116
---------------------------------------------------------------------------------------------
4/1/99-6/30/99 -0- -0- -0-
---------------------------------------------------------------------------------------------
7/1/99-9/30/99 -0- -0- $771,116
---------------------------------------------------------------------------------------------
10/1/99-12/31/99 $666,667 $10,000 -0-
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---------------------------------------------------------------------------------------------
1/1/00-3/31/00 $1,333,334 $20,000 -0-
---------------------------------------------------------------------------------------------
4/1/00-6/30/00 $1,333,334 $20,000 -0-
---------------------------------------------------------------------------------------------
7/1/00-9/30/00 $3,333,334 $50,000 -0-
---------------------------------------------------------------------------------------------
10/1/00-12/31/00 $6,666,667 $100,000 -0-
---------------------------------------------------------------------------------------------
1/1/01-3/31/01 $13,333,334 $200,000 $416,652
---------------------------------------------------------------------------------------------
4/1/01-6/30/01 $666,667 $10,000 $10,000
---------------------------------------------------------------------------------------------
7/1/01-9/30/01 $666,667 $10,000 $10,000
---------------------------------------------------------------------------------------------
10/1/01-12/31/01 $666,667 $10,000 $10,000
---------------------------------------------------------------------------------------------
1/1/02-3/31/02 $666,667 $10,000 $10,000
---------------------------------------------------------------------------------------------
4/1/02-6/30/02 -0- -0- -0-
---------------------------------------------------------------------------------------------
7/1/02-9/30/02 $666,667 $10,000 $10,000
---------------------------------------------------------------------------------------------
10/1/02-12/31/02 $666,667 $10,000 $10,000
---------------------------------------------------------------------------------------------
1/1/03-3/31/03 $1,333,334 $20,000 $20,000
---------------------------------------------------------------------------------------------
4/1/03-6/30/03 $2,000,000 $30,000 $30,000
---------------------------------------------------------------------------------------------
7/1/03-9/30/03 $2,666,667 $40,000 $40,000
---------------------------------------------------------------------------------------------
10/1/03-12/31/03 $3,333,334 $50,000 $50,000
---------------------------------------------------------------------------------------------
1/1/04-3/31/04 $4,000,000 $60,000 $60,000
---------------------------------------------------------------------------------------------
4/1/04-6/30/04 $6,666,667 $100,000 $94,464
---------------------------------------------------------------------------------------------
7/1/04-9/30/04 $20,000,000 $300,000 -0-
---------------------------------------------------------------------------------------------
10/1/04-12/31/04 $26,666,667 $400,000 -0-
---------------------------------------------------------------------------------------------
1/1/05-3/31/05 $29,000,000 $65,580(2) -0-
---------------------------------------------------------------------------------------------
4/1/05-6/30/05 $32,000,000 -0- -0-
---------------------------------------------------------------------------------------------
7/1/05-9/30/05 $35,000,000 -0- -0-
---------------------------------------------------------------------------------------------
10/1/05-12/31/05 $40,000,000 -0- -0-
---------------------------------------------------------------------------------------------
1/1/06-12/31/06 $100,000,000 N/A -0-
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