Exhibit 10.2
OPTIONSXPRESS, INC.
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "AGREEMENT") is made and entered
into as of January 15, 2004 by and among optionsXpress, Inc., a Delaware
corporation (the "COMPANY"), each of the Persons listed on the SCHEDULE OF
INVESTORS attached hereto (each, an "INVESTOR" and collectively, the
"INVESTORS") and each of the Persons listed on the SCHEDULE OF OTHER
STOCKHOLDERS attached hereto (each, an "OTHER STOCKHOLDER" and collectively, the
"OTHER STOCKHOLDERS"). The Investors and the Other Stockholders are collectively
referred to herein as the "STOCKHOLDERS" and individually as a "STOCKHOLDER."
Except as otherwise provided herein, capitalized terms used herein are defined
in paragraph 8 hereof.
WHEREAS, the Investors shall purchase shares of the Company's Series A
Convertible Preferred Stock, par value $.0001 per share (the "SERIES A
PREFERRED"), pursuant to that certain Stock Purchase and Recapitalization
Agreement, dated as of December 17, 2003, by and among the Company and the
Investors and the other Persons named therein (as the same may be amended or
modified from time to time in accordance with its terms, the "PURCHASE
AGREEMENT");
WHEREAS, the Other Stockholders own shares of the Company's
outstanding Common Stock, par value $.0001 per share (the "COMMON STOCK");
WHEREAS, certain of the Other Stockholders and the Company are parties
to an Amended and Restated Investor Rights Agreement dated December 19, 2001
(the "INVESTOR RIGHTS AGREEMENT");
WHEREAS, certain of the Other Stockholders and the Company are parties
to separate Amended and Restated Restricted Stock Agreements dated as of the
date hereof (the "RESTRICTED STOCK AGREEMENTS");
WHEREAS, certain of the Other Stockholders and the Company are parties
to separate Option Grant Agreements dated as of various dates (the "OPTION GRANT
AGREEMENTS");
WHEREAS, the Company and the Stockholders desire to enter into this
Agreement for the purposes, among others, of (i) establishing the composition of
the Company's board of directors (the "BOARD"), (ii) assuring continuity in the
management and ownership of the Company and (iii) limiting the manner and terms
by which the Company's capital stock may be transferred; and
WHEREAS, the execution and delivery of this Agreement is a condition
to the Closing (as defined in the Purchase Agreement) under the Purchase
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. BOARD OF DIRECTORS.
(a) From and after the Closing and until the provisions of this
paragraph 1 cease to be effective, each holder of Stockholder Shares shall vote
all of his, her or its Stockholder Shares which are voting shares and any other
voting securities of the Company over which such holder has voting control and
shall take all other necessary or desirable actions within his, her or its
control (whether in his, her or its capacity as a stockholder, director, member
of a board committee or officer of the Company or otherwise, and including
attendance at meetings in person or by proxy for purposes of obtaining a quorum
and execution of written consents in lieu of meetings), and the Company shall
take all necessary or desirable actions within its control (including calling
special board and stockholder meetings), so that:
(i) the authorized number of directors on the Board shall be
established and maintained at five (5) directors;
(ii) the following persons shall be elected to the Board:
(A) so long as the Investors who are original signatories
hereto and/or their affiliated investment funds hold in the aggregate
at least 25% of the Series A Preferred issued to the Investors as of
the date hereof, one (1) representative designated by the Investors
that hold a majority of the Stockholder Shares held by all of the
Investors (the "INVESTOR DIRECTOR"), with ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ serving
as the Investor Director immediately following the Closing (and with
it being understood that such Investor Director shall be elected by
the holders of a majority of the outstanding Series A Preferred
pursuant to Section 5A of Part D of Article IV of the Company's
Certificate of Incorporation for so long as any Series A Preferred
remains outstanding);
(B) three (3) representatives elected by the holders of the
Company's outstanding Common Stock (voting together as a single class
with any of the Existing Preferred that remains outstanding following
the Closing on an as-if converted basis) in accordance with applicable
corporate law and the Company's Certificate of Incorporation and
Bylaws (the "OTHER STOCKHOLDER DIRECTORS"), with ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ serving as the Other Stockholder Directors
immediately following the Closing; PROVIDED THAT, in the event that,
and only for so long as, either (1) the Company's Equity Value is less
than $180,000,000 or (2) the Designated Other Stockholder Group owns,
in the aggregate, less than 51% of the Company's outstanding Common
Stock (including any Common Stock issuable upon conversion of any of
the Existing Preferred that remains outstanding following the
Closing), then the Other Stockholder Directors shall be elected by
(and shall be subject to removal by) the holders of the Company's
outstanding Common Stock and Existing Preferred (to the extent that
any Existing Preferred remains outstanding following the Closing) and
Series A Preferred (voting together with the Company's outstanding
Common Stock as a single class on an as-if-converted basis) in
accordance with applicable corporate law and the Company's Certificate
of Incorporation and Bylaws; and
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(C) so long as the Investors who are original signatories
hereto and/or their affiliated investment funds hold in the aggregate
at least 25% of the Series A Preferred issued to the Investors as of
the date hereof, one (1) representative elected by the holders of the
Company's outstanding Common Stock, any of the Existing Preferred that
remains outstanding following the Closing and Series A Preferred
(voting together with the Company's outstanding Common Stock as a
single class on an as-if-converted basis) in accordance with
applicable corporate law and the Company's Certificate of
Incorporation and Bylaws, so long as such representative is approved
by the Investors that hold a majority of the Stockholder Shares held
by all of the Investors (which approval shall not be unreasonably
withheld or delayed so long as such representative satisfies the
requirements set forth below); PROVIDED THAT such representative shall
be qualified (including by virtue of relevant business and industry
experience) and independent and shall not be a member of the Company's
management or an employee or officer of the Company or any of its
Subsidiaries and shall not be a member of or otherwise affiliated with
(from a business perspective or otherwise) the Designated Other
Stockholder Group or the ▇▇▇▇ Family Group (the "OUTSIDE DIRECTOR"),
and with such Outside Director being so designated and approved as
provided herein and elected to the Board as soon as practicable after
the Closing;
(iii) the composition of the board of directors or equivalent
body of each of the Company's Subsidiaries (a "SUB BOARD") shall be
proportionately equivalent to that of the Board;
(iv) subject to subparagraph (ii)(B) above and
paragraph 1(a)(v) below, any director of the Company may be removed from
the Board or a Sub Board in the manner allowed by law and the Company's or
such Subsidiary's Certificate of Incorporation and Bylaws or similar
governing documents; PROVIDED THAT, (A) with respect to the Investor
Director, such removal (with or without cause) shall only be upon the
written request of the Investors that hold a majority of the Stockholder
Shares held by all of the Investors and for no other reason and (B) with
respect to any Outside Director, such removal (with or without cause) shall
also require the written approval of the Investors that hold a majority of
the Stockholder Shares held by all of the Investors; and
(v) in the event that any representative designated hereunder
for any reason ceases to serve as a member of the Board or any Sub Board
during his or her term of office, the resulting vacancy on the Board or Sub
Board shall be filled by (A) with respect to the representative designated
pursuant to subparagraph (ii)(A) above, a representative designated by the
Investors that hold a majority of the Stockholder Shares held by all of the
Investors, (B) with respect to a representative elected pursuant to
subparagraph (ii)(B) above, a representative elected as provided in
subparagraph (ii)(B) above, and (C) with respect to a representative
elected pursuant to subparagraph (ii)(C) above, a representative elected
and approved as provided in subparagraph (ii)(C) above, who satisfies the
other requirements set forth in subparagraph (ii)(C) above.
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(b) Subject to subparagraphs (i) and (ii) below, any committees
established by the Board or a Sub Board shall include the Investor Director, the
Outside Director and at least one Other Stockholder Director.
(i) A Compensation Committee of the Board comprised of three
(3) members shall be established promptly following the Closing and shall
include the Investor Director, one Other Stockholder Director and the
Outside Director. The Compensation Committee's authority and duties shall
include (1) determining the compensation (including salary, bonuses and
other forms of compensation) to be paid to each of the Company's executives
and key employees and, subject to approval by the Board, directors and (2)
the administration of (and exercise of any rights or powers under) the
Company's Equity Incentive Plans.
(ii) An Audit Committee of the Board comprised of three (3)
members shall be established promptly following the Closing and shall
include the Investor Director, one Other Stockholder Director and the
Outside Director. The Audit Committee's authority and duties shall be as
set forth in the Board's enabling resolutions adopted in connection with
the establishment of such committee.
(c) The Company shall pay the reasonable out-of-pocket expenses
(including travel expenses) incurred by each director in connection with
attending the meetings of the Board, any Sub Board and any committee thereof and
each non-management director (including the Investor Director) shall receive the
same remuneration (of whatever type) for serving as a director (if any);
PROVIDED THAT compensation received by ▇▇▇▇▇ ▇▇▇▇ pursuant to that certain
Employment Letter Agreement with the Company, dated as of the date hereof, or
otherwise payable to ▇▇. ▇▇▇▇ with the approval of the Compensation Committee,
shall not be deemed to constitute remuneration received by a non-management
director for purposes hereof. The Company shall use its reasonable efforts to
maintain reasonable directors and officers indemnity insurance coverage in
effect at all times (subject to appropriate cost considerations) and the
Company's Certificate of Incorporation and Bylaws shall at all times provide for
indemnification and exculpation of directors to the fullest extent permitted
under applicable law.
(d) The Board shall have regularly scheduled meetings no less than
one (1) time in each fiscal quarter of each calendar year.
(e) The provisions of this paragraph 1 shall terminate automatically
and shall be of no further force and effect upon the consummation of a Qualified
Public Offering or a Sale of the Company.
2. REPRESENTATIONS AND WARRANTIES; AGREEMENTS. Each Stockholder
represents and warrants as of the date hereof that (i) this Agreement has been
duly authorized, executed and delivered by such Stockholder and constitutes the
valid and binding obligation of such Stockholder, enforceable in accordance with
its terms, and (ii) such Stockholder has not granted and is not a party to any
proxy, voting trust or other agreement which is inconsistent with, conflicts
with or violates any provision of this Agreement. No holder of Stockholder
Shares shall grant any proxy or become party to any voting trust or other
agreement which is inconsistent with, conflicts with or violates any provision
of this Agreement.
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3. CERTAIN TRANSFER RESTRICTIONS.
(a) No Other Stockholder shall sell, transfer, assign, pledge or
otherwise dispose of (whether with or without consideration and whether
voluntarily or involuntarily or by operation of law or otherwise) any interest
in any Stockholder Shares, (a "TRANSFER"), except pursuant to a Public Sale or a
Sale of the Company (an "EXEMPT TRANSFER"), or a sale of Stockholder Shares to
the Company pursuant to the terms of the Restricted Stock Agreement (but subject
to the provisions of paragraph 3(f) below), or the provisions of this paragraph
3. Prior to making any Transfer (which for purposes of this paragraph 3 shall
include any Transfer by any Other Stockholder pursuant to and otherwise
permitted by any of the Restricted Stock Agreements, the Investor Rights
Agreement and/or any Option Grant Agreement to which such Other Stockholder is a
party) other than an Exempt Transfer, the Other Stockholder transferring any
Stockholder Shares (a "TRANSFERRING STOCKHOLDER") shall deliver a written notice
(a "SALE NOTICE") to the Company, the Investors and the Designated Other
Stockholders. The Sale Notice shall disclose in reasonable detail the identity
of the prospective transferee(s), the number of Stockholder Shares to be
transferred and the terms and conditions of the proposed Transfer. In no event
shall any Transfer (other than an Exempt Transfer) of Stockholder Shares
pursuant to this paragraph 3 be made by any Other Stockholder for any
consideration other than cash payable upon consummation of such Transfer or in
installments over time. No Other Stockholder shall consummate any Transfer until
30 days after the Sale Notice has been given to the Company and the Investors
and the Designated Other Stockholders (the "ELECTION PERIOD"), unless the
parties to the Transfer have been finally determined pursuant to this paragraph
3 prior to the expiration of such 30-day period. The date of the first to occur
of such events is referred to herein as the "AUTHORIZATION DATE."
(b) The Company may elect to purchase all or any portion of the
Transferring Stockholder's Stockholder Shares to be transferred upon the same
terms and conditions as those set forth in the Sale Notice by delivering a
written notice of such election to such Transferring Stockholder, the Investors
and the Designated Other Stockholders within 15 days after the Sale Notice has
been delivered to the Company. If the Company has not elected to purchase all of
such Transferring Stockholder's Stockholder Shares to be transferred, each of
the Investors and the Designated Other Stockholders may elect to purchase all or
any portion of the remaining Stockholder Shares to be transferred upon the same
terms and conditions as those set forth in the Sale Notice by delivering written
notice of such election to the Transferring Stockholder within 20 days after the
Sale Notice has been given to the Investors and the Designated Other
Stockholders. If more than one Investor or Designated Other Stockholder elects
to purchase such Stockholder Shares, the Stockholder Shares to be sold to such
Investors and/or Designated Other Stockholders shall be allocated (i) among the
Investors pro rata according to the number of Stockholder Shares owned by each
such Investor in an aggregate amount equal to the lesser of (A) one-third of the
aggregate Stockholder Shares to be transferred, and (B) the collective
percentage ownership of outstanding Common Stock (including shares of Common
Stock issuable upon conversion of the Series A Preferred) of all Investors, and
(ii) among the Designated Other Stockholders pro rata according to the number of
Stockholder Shares owned by each such Designated Other Stockholder in an amount
equal to all of the Stockholder Shares to be transferred other than those
allocated to the Investors pursuant to clause (i) immediately above. If the
Company, the Investors and the Designated Other Stockholders have not elected to
purchase all of such Transferring Stockholder's Stockholder Shares specified in
the Sale Notice,
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such Transferring Stockholder may Transfer the Stockholder Shares specified in
the Sale Notice for which no purchase election has been made at a price and on
terms no more favorable to the transferee(s) thereof than specified in the Sale
Notice (subject to the provisions of paragraph 3(c) below) during the 60-day
period immediately following the Authorization Date. Any Transferring
Stockholder's Stockholder Shares not transferred within such 60-day period shall
be subject to the provisions of this paragraph 3(b) upon subsequent Transfer. If
any of the Company, the Investors or the Designated Other Stockholders have
elected to purchase any Stockholder Shares hereunder, the Transfer of such
Stockholder Shares shall be consummated as soon as practical after the delivery
of the election notice(s) to the Transferring Stockholder, but in any event
within 15 days after the expiration of the Election Period. The Investors may
assign all or any portion of their repurchase rights under this paragraph 3(b)
to one or more of their affiliated investment funds.
(c) Notwithstanding anything to the contrary herein, the Investors
may elect to participate in any contemplated Transfer by delivering written
notice to such Transferring Stockholder and the Company within 30 days after
receipt by such Investor of the Sale Notice. If any Investors have elected to
participate in such sale, the Transferring Stockholder and the electing
Investors shall be entitled to sell in the contemplated sale (including any sale
to the Company or any other Stockholders pursuant to paragraph 3(b) above) at
the same price and on the same terms, a number of Stockholder Shares equal to
the product of (i) the quotient determined by dividing the percentage of
Stockholder Shares owned by such Person by the aggregate percentage of
Stockholder Shares owned by the Transferring Stockholder and all electing
Investors and (ii) the number of Stockholder Shares to be sold in the
contemplated sale.
For example, if the Sale Notice contemplated a sale of 100
Stockholder Shares, and if the Transferring Stockholder was at
such time the owner of 30% of all Stockholder Shares and if one
Investor elected to participate and such Investor owned 20% of
all Stockholder Shares, the Transferring Stockholder would be
entitled to sell 60 Stockholder Shares (30% DIVIDED BY 50% x 100
Stockholder Shares) and the Investor would be entitled to sell 40
Stockholder Shares (20% DIVIDED BY 50% x 100 Stockholder Shares).
The Transferring Stockholder shall use his, her or its best efforts to obtain
the agreement of the prospective transferee(s) to the participation of the
Investors in the contemplated Transfer and shall not Transfer any Stockholder
Shares to the prospective transferee(s) if such transferee(s) refuses to allow
the participation of the Investors.
(d) The restrictions contained in this paragraph 3 shall not apply
with respect to (i) any pledge by any Other Stockholder of up to 30% of the
value of such Other Stockholder's Stockholder Shares (as determined by the Board
at the time of such loan transaction) in support of a bona fide loan transaction
for such Other Stockholder's benefit (E.G., an Other Stockholder with
Stockholder Shares valued at $10,000,000 at the time of such loan transaction
may pledge all of such shares as collateral security for a loan of up to
$3,000,000) so long as, as a condition to any such pledge, the third party
lender agrees to grant the Company, the Investors and the Designated Other
Stockholders the right (in accordance with the provisions of paragraph 3(b)
above) to repurchase any such Stockholder Shares upon any default or foreclosure
in respect thereof by the applicable lender on terms and conditions satisfactory
to the
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Board (including the Investor Director), (ii) any Transfer (by way of in-kind
distribution) of Stockholder Shares by any Other Stockholder that is any entity
to the equity holder(s) of such Other Stockholder pro rata in accordance with
such other equity holders(s)' ownership interest in such Other Stockholder, or
(iii) any Transfer of Stockholder Shares by any Other Stockholder that is an
individual or trust (A) pursuant to applicable laws of descent and distribution
or (B) among such Other Stockholder's Family Group (collectively referred to
herein, for purposes of clauses (i), (ii) and (iii), as "PERMITTED
TRANSFEREES"); PROVIDED THAT such restrictions shall continue to be applicable
to the Stockholder Shares after any such Transfer and the transferees of such
Stockholder Shares shall agree in writing to be bound by the provisions of this
Agreement affecting the Stockholder Shares so transferred as a condition
precedent to any such Transfer. For purposes of this Agreement, "FAMILY GROUP"
means an individual's spouse, ancestors and descendants (whether natural or
adopted), the beneficiaries of any trust which is a Stockholder as of the date
hereof, or any partnership, limited liability company or trust established
principally for the benefit of such individual and/or such individual's spouse,
ancestors and/or descendants or any not-for-profit charitable entity.
Notwithstanding the foregoing, no party hereto shall avoid the provisions of
this Agreement by making one or more transfers to one or more Permitted
Transferees and then disposing of all or any portion of such party's interest in
any such Permitted Transferee, other than to a Permitted Transferee as provided
above or as a consequence of the death of the transferor.
(e) The restrictions set forth in this paragraph 3 shall continue
with respect to each Stockholder Share following any Transfer thereof (other
than an Exempt Transfer or a Transfer to an Investor (or any of its affiliated
investment funds) pursuant to subparagraph 3(b) above; PROVIDED THAT all such
restrictions shall terminate upon the consummation of a Qualified Public
Offering or a Sale of the Company.
(f) Notwithstanding any provision to the contrary herein, (i) the
restrictions on Transfer of Common Stock contained in the Investor Rights
Agreement, the Restricted Stock Agreements and the Option Grant Agreements, and
the terms of payment for such Common Stock or other securities upon exercise of
any repurchase rights therefor contained in such agreements, shall continue in
full force and effect, and (ii) the Company shall not approve or consent to any
Transfer of any Stockholder Shares by any Other Stockholder pursuant to the
terms of the Investor Rights Agreement, the Restricted Stock Agreements or the
Option Grant Agreements unless such Transfer shall thereafter be subject to the
provisions of this paragraph 3. In addition, if and to the extent that the
Company shall not exercise in full any of its repurchase (or buy-back) rights in
the Investor Rights Agreement, the Restricted Stock Agreements or the Option
Grant Agreements, the Company and the other party(ies) thereto shall permit the
Investors and the Designated Other Stockholders (in accordance with the
provisions of paragraph 3(b) above) to repurchase any Common Stock (or other
securities) not so purchased by the Company.
4. HOLDBACK AGREEMENT. No Other Stockholder shall effect any public
sale or distribution (including sales pursuant to Rule 144 under the Securities
Act) of any Stockholder Shares or of any other capital stock or equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such stock or securities, during the seven (7) days prior to and
the 180-day period beginning on the effective date of the Company's initial
Public Offering or during the seven (7) days prior to and the 90-day period
beginning on the
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effective date of any underwritten Demand Registration or Piggyback Registration
(each as defined in the Registration Agreement), except as part of such
underwritten registration if otherwise permitted in the Registration Agreement,
unless the underwriters managing the registration otherwise agree in writing.
5. TRANSFERS; FUTURE SALES. Prior to any Stockholder Transferring
any Stockholder Shares (other than pursuant to an Exempt Transfer) to any Person
and prior to the Company issuing any Common Stock (other than pursuant to an
initial Public Offering) or any options or other rights to acquire Common Stock
or any securities convertible into or exchangeable for such Common Stock to any
Person, such Stockholder or the Company, as the case may be, shall cause the
prospective transferee to be bound by this Agreement and to execute and deliver
to the Company and the other Stockholders a counterpart of this Agreement.
Transferees of Stockholder Shares held by Investors (other than the Other
Stockholders or their Permitted Transferees, all of whom shall be deemed to be
Other Stockholders hereunder) shall be deemed to be Investors hereunder.
Transferees of Stockholder Shares held by Other Stockholders (other than the
Investors or their affiliates, all of whom shall be deemed to be Investors
hereunder) and transferees of Common Stock (or options or other rights to
acquire Common Stock or securities convertible into or exchangeable for such
Common Stock) issued by the Company (other than the Investors and/or their
designees, all of whom shall be deemed to be Investors hereunder) shall be
deemed to be Other Stockholders hereunder.
6. LEGEND. Each certificate evidencing Stockholder Shares and each
certificate issued in exchange for or upon the Transfer of any Stockholder
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"The transfer of the securities represented by this
certificate is subject to a Stockholders Agreement dated as
of [________], among the issuer of such securities (the
"Company") and certain of the Company's stockholders, as the
same may be amended or modified from time to time. A copy of
such Stockholders Agreement shall be furnished without
charge by the Company to the holder hereof upon written
request."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding as of the date hereof.
7. FIRST REFUSAL RIGHTS.
(a) Except for issuances of Common Stock (i) pursuant to an Equity
Incentive Plan, (ii) upon the conversion of the Series A Preferred, (iii)
pursuant to the exercise or conversion of any warrants or convertible securities
issued after the date hereof in compliance with the provisions of this paragraph
7 so long as the issuance of Common Stock upon the exercise or conversion
thereof is in accordance with the original terms of such warrants or convertible
securities, (iv) as consideration in connection with the acquisition of another
company or business, (v) pursuant to a Public Offering, or (vi) pursuant to an
Option Adjustment Dividend, if the Company authorizes the issuance or sale of
any shares of
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Common Stock or any securities (including debt securities) containing options or
rights to acquire any shares of Common Stock (other than as a dividend on the
outstanding shares of Common Stock) or any securities exchangeable for or
convertible into Common Stock (collectively, "SECURITIES"), the Company shall
first offer to sell to each Investor, pro rata based upon such Investor's
ownership of Common Stock (including shares of Common Stock issuable upon
conversion of the Series A Preferred), a portion of such Securities equal to the
lesser of (A) one-third of the aggregate Securities to be issued, and (B) the
collective percentage ownership of outstanding Common Stock (including shares of
Common Stock issuable upon conversion of the Series A Preferred) of all
Investors, and shall offer to sell to each Designated Other Stockholder, so long
as such Designated Other Stockholder holds at least 50% of the Stockholder
Shares held by such Designated Other Stockholder as of the date hereof, pro rata
based upon such Designated Other Stockholder's ownership of Common Stock
(including shares of Common Stock issuable upon conversion of the Existing
Preferred), all of the Securities to be issued other than those to be offered to
the Investors pursuant to clause (A) immediately above. Each Investor and
Designated Other Stockholder shall be entitled to purchase all or any portion of
its allotment of such Securities at the most favorable price and on the most
favorable terms as such Securities are to be offered to any other Persons;
PROVIDED THAT if all Persons entitled to purchase or receive such Securities are
required to also purchase other securities of the Company, the Investors and/or
Designated Other Stockholders exercising their rights pursuant to this paragraph
shall also be required to purchase the same strip of securities (on the same
terms and conditions) that such other Persons are required to purchase. The
purchase price for all Securities offered to the Investors and the Designated
Other Stockholders shall be payable in cash or, to the extent otherwise
consistent with the terms offered to any other Persons, installments over time.
(b) In order to exercise its purchase rights hereunder, an Investor
or Designated Other Stockholder, as the case may be, must within 20 days after
receipt of written notice from the Company describing in reasonable detail the
Securities being offered, the purchase price thereof, the payment terms and such
Investor's or Designated Other Stockholder's percentage allotment deliver a
written notice to the Company describing its election hereunder. If all of the
Securities offered to the Investors and the Designated Other Stockholders are
not fully subscribed by such Stockholders, the remaining Securities shall be
reoffered by the Company to the Investors and the Designated Other Stockholders
purchasing their full allotment upon the terms set forth in this paragraph,
except that such holders must exercise their purchase rights within five (5)
days after receipt of such reoffer.
(c) Upon the expiration of the offering periods described above, the
Company shall be entitled to sell such Securities which the Investors and the
Designated Other Stockholders have not elected to purchase during the 60 days
following such expiration on terms and conditions no more favorable to the
purchasers thereof than those offered to such holders. Any Securities offered or
sold by the Company after such 60-day period must be reoffered to the Investors
and the Designated Other Stockholders pursuant to the terms of this paragraph.
(d) The provisions of this paragraph 7 shall terminate upon the
consummation of a Qualified Public Offering or a Sale of the Company.
8. DEFINITIONS
"BOARD" has the meaning set forth in the recitals hereto.
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"CLOSING" has the meaning set forth in the recitals hereto.
"COMMON STOCK" has the meaning set forth in the recitals hereto.
"COMPANY" has the meaning set forth in the preamble hereto.
"DESIGNATED OTHER STOCKHOLDER" means each of G-Bar Limited
Partnership, ▇▇▇▇▇ ▇▇▇▇ Delta Trust, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇, so long as, in
each such case, such Designated Other Stockholder holds at least fifty percent
(50%) of the Common Stock held by such Designated Other Stockholder on the date
hereof.
"DESIGNATED OTHER STOCKHOLDER GROUP" means the following Other
Stockholders: G-Bar Limited Partnership ("G-BAR"); ▇▇▇▇▇ ▇▇▇▇ Delta Trust; ▇▇▇▇▇
▇▇▇▇; ▇▇▇ ▇▇▇▇▇▇▇; Delaware Charter F/B/O ▇▇▇ ▇▇▇▇▇▇▇; ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Revocable Trust; ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇; ▇▇▇ Silver; ▇▇▇▇▇▇ ▇. ▇▇▇▇, Trustee; ▇▇▇▇▇ ▇.
▇▇▇▇ Revocable Trust; ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇; ▇▇▇▇▇▇ ▇▇▇▇▇▇ Revocable Trust; ▇▇▇▇
▇▇▇▇▇▇▇ Living Trust; ▇▇▇▇▇▇▇ ▇▇▇▇; ▇▇▇▇ ▇▇▇▇; ▇▇▇▇▇▇ ▇▇▇▇ Revocable Trust; ▇▇▇▇
▇▇▇▇; ▇▇▇▇ ▇. ▇▇▇▇ Revocable Trust; and Ian and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇. For purposes of
the foregoing, (i) G-Bar shall cease to be a member of the Designated Other
Stockholder Group if and when either (a) G-Bar is sold to a third party or (b)
the members of the ▇▇▇▇ Family Group cease to directly own or control a majority
of the partnership interests therein (i.e., cease to be allocated a majority of
the partnership gains and losses) or cease to control G-Bar's general partner
and (ii) no Person who receives Stockholder Shares from G-Bar following a
permitted distribution thereof by G-Bar shall be deemed to be a member of the
Designated Other Stockholder Group unless such Person is either listed above or
is a member of the ▇▇▇▇ Family Group.
"EQUITY INCENTIVE PLAN" means the optionsXpress, Inc. 2001 Equity
Incentive Plan and any employee option or stock incentive plan that may be
adopted by the Board from time to time, pursuant to which the Company may grant
Common Stock and/or options to purchase Common Stock to officers, directors,
employees and consultants of the Company.
"EQUITY VALUE" has the meaning given to such term in that certain
Investor Rights Agreement, dated as of the date hereof, by and among the Company
and the Investors (as the same may be amended or modified from time to time in
accordance with its terms).
"EXISTING PREFERRED" has the meaning set forth in the Purchase
Agreement (as the same may be amended or modified from time to time in
accordance with its terms)
"▇▇▇▇ FAMILY GROUP" means, collectively, each of ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇ and each of their respective spouses, descendants (whether natural or
adopted) and/or ancestors, and any partnership, limited liability company or
trust established principally for the benefit of any of the foregoing
individuals.
"INVESTOR DIRECTOR" has the meaning set forth in paragraph 1 above.
"INVESTORS" means those Persons identified on the SCHEDULE OF
INVESTORS attached hereto and such other Persons as may become "Investors"
hereunder from time to time under the circumstances described in paragraph 5
above.
-10-
"INVESTOR RIGHTS AGREEMENT" has the meaning set forth in the preamble
hereto.
"OPTION ADJUSTMENT DIVIDEND" has the meaning set forth in the
Company's Certificate of Incorporation.
"OTHER STOCKHOLDERS" means those Persons identified on the SCHEDULE OF
OTHER STOCKHOLDERS attached hereto and such other Persons as may become "Other
Stockholders" hereunder from time to time under the circumstances described in
paragraph 5 above.
"OTHER STOCKHOLDER DIRECTORS" has the meaning set forth in paragraph 1
above.
"OUTSIDE DIRECTOR" has the meaning set forth in paragraph 1 above.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"PUBLIC SALE" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act (or any similar provision then in force).
"PUBLIC OFFERING" means any offering by the Company of its Common
Stock to the public pursuant to an effective registration statement under the
Securities Act or any comparable statement under any similar federal statute
then in force.
"PURCHASE AGREEMENT" has the meaning set forth in the recitals hereto.
"QUALIFIED PUBLIC OFFERING" has the meaning set forth in the Company's
Certificate of Incorporation.
"QUALIFIED SALE" has the meaning set forth in the Company's
Certificate of Incorporation.
"REGISTRATION AGREEMENT" has the meaning set forth in the Purchase
Agreement (as the same may be amended or modified from time to time in
accordance with its terms).
"SALE OF THE COMPANY" means a sale of the Company pursuant to which
one or more Persons acquire (i) all or substantially all of the capital stock of
the Company (whether by merger, consolidation, sale or transfer of the Company's
capital stock or otherwise) or (ii) all or substantially all of the Company's
assets determined on a consolidated basis.
"SECURITIES" has the meaning set forth in paragraph 7.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SERIES A PREFERRED" has the meaning set forth in the recitals hereto.
-11-
"STOCKHOLDER" has the meaning set forth in the preamble hereto.
"STOCKHOLDER SHARES" means (i) any Common Stock purchased or otherwise
acquired or held by any Stockholder, (ii) any Common Stock issued or issuable
directly or indirectly upon the conversion, exercise or exchange of any
securities purchased or otherwise acquired by any Stockholder which are
convertible into or exercisable or exchangeable directly or indirectly for
Common Stock (including the Series A Preferred and the Existing Preferred but
excluding options to purchase Common Stock granted by the Company unless and
until such options are exercised) and (iii) any other capital stock or equity
securities issued or issuable directly or indirectly with respect to the
securities referred to in clauses (i) or (ii) above by way of a stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. As to any particular securities
constituting Stockholder Shares hereunder, such Stockholder Shares shall cease
to be Stockholder Shares hereunder when they have been (x) effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them or (y) sold to the public through a broker,
dealer or market maker pursuant to Rule 144 (or any similar provision then in
force) under the Securities Act.
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the limited
liability company, partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by that Person or one or
more Subsidiaries of that Person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of the limited liability
company, partnership, association or other business entity gains or losses or
shall be or control the managing member, general partner or managing director of
such limited liability company, partnership, association or other business
entity.
9. TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or attempted
Transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Stockholder Shares as the owner
of such Stockholder Shares for any purpose.
10. AMENDMENTS AND WAIVERS. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company, the Investors that
held a majority of the Stockholder Shares then held by the Investors and the
Other Stockholders that held a majority of the Stockholder Shares then held by
the Other Stockholders. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the
-12-
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
11. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
12. ENTIRE AGREEMENT. Except for the Investor Rights Agreement and
the Restricted Stock Agreements and as otherwise expressly set forth herein,
this Agreement embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
13. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Company and its successors and assigns and the Stockholders and any
subsequent holders of Stockholder Shares and the respective successors and
assigns of each of them, so long as they hold Stockholder Shares (except that
the rights of the Other Stockholders under paragraph 3(b) above shall not be
assignable by the Other Stockholders (whether in connection with the transfer of
Stockholder Shares or otherwise)).
14. COUNTERPARTS. This Agreement may be executed in multiple
counterparts (including by means of telecopied signature pages), each of which
shall be an original and all of which taken together shall constitute one and
the same agreement.
15. REMEDIES. The parties hereto shall be entitled to enforce their
rights under this Agreement specifically, to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages would not be an adequate remedy for any breach of the provisions of this
Agreement and that the Company and any Stockholder may in its sole discretion
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief (without posting a bond or other security)
in order to enforce or prevent any violation of the provisions of this
Agreement.
16. EXCESS CONSIDERATION. If and to the extent that any Other
Stockholder receives any consideration in connection with a Qualified Sale in
excess of arm's length compensation (as determined by the Compensation Committee
of the Board pursuant to clause (3) of subparagraph (v) of paragraph 1C of that
certain Investor Rights Agreement, dated as of the date hereof, by and among the
Company and the Investors (as the same may be amended or modified from time to
time in accordance with its terms)), such Other Stockholder agrees to allocate
such excess consideration to each of the Investors and the Company's other
stockholders
-13-
pro rata based upon the aggregate consideration otherwise payable to the
Investors and the Company's other stockholders in connection with such Qualified
Sale.
17. NOTICES. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, mailed first class mail
(postage prepaid), sent by reputable overnight courier service (charges prepaid)
or sent by facsimile to the Company at the address set forth below and to any
other recipient at the address indicated on the Schedules hereto and to any
subsequent Stockholder subject to this Agreement at such address as indicated by
the Company's records, or at such address or to the attention of such other
Person as the recipient party has specified by prior written notice to the
sending party. Notices shall be deemed to have been given hereunder when
delivered personally, five (5) days after deposit in the U.S. mail, one day
after deposit with a reputable overnight courier service (charges prepaid) or
upon machine-generated acknowledgment of receipt after being transmitted by
facsimile. The Company's address is:
optionsXpress, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
(which shall not constitute notice to the Company)
KMZ Rosenman
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
18. GOVERNING LAW. The corporate law of the State of Delaware shall
govern all issues concerning the relative rights of the Company and its
Stockholders. All other issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of Delaware without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
19. WAIVER OF PREEMPTIVE RIGHTS. Each of the Other Stockholders
hereby waives any existing preemptive rights with respect to the issuance and
sale of the Series A Preferred under the Purchase Agreement and the issuance of
any Common Stock upon conversion thereof. In addition, each Other Stockholder
that is a party to the Investor Rights Agreement hereby waives any and all
preemptive rights that such Other Stockholder has or may
-14-
have with respect to issuances of securities by the Company following the date
hereof pursuant to the Investor Rights Agreement, and hereby acknowledges that
the provisions of Section 2 of the Investor Rights Agreement are null and void
and of no further force or effect with respect to such Other Stockholder. Each
Designated Other Stockholder hereby agrees that the provisions of paragraph 7
hereof supersede and replace in their entirety the provisions of Section 2 of
the Investor Rights Agreement.
20. BUSINESS DAYS. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or legal holiday
in the state in which the Company's chief executive office is then located, the
time period shall automatically be extended to the business day immediately
following such Saturday, Sunday or legal holiday.
21. DESCRIPTIVE HEADINGS, ETC. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement. The use of the term "including" herein shall mean "including without
limitation."
22. NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question or intent or interpretation arises, this Agreement shall
be construed as it was drafted jointly by the parties hereto, and no presumption
or burden of proof shall arise favoring or disfavoring any party hereto by
virtue of the authorship of any of the provisions of this Agreement. The parties
hereto intend that each covenant contained herein shall have independent
significance. If any party has breached any covenant contained herein in any
respect, the fact that there exists another covenant relating to the same or
similar subject matter (regardless of the relative levels of speciality) which
the party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first covenant.
* * * * *
-15-
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement on the day and year first above written.
OPTIONSXPRESS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------
Its: President
----------------------------------
G-BAR LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------
Its: General Partner
▇▇▇▇▇ ▇▇▇▇ DELTA TRUST FOR ▇▇▇
U/A/D JUNE 7, 2002
By: /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------
Its: Trustee
/s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
▇▇▇ ▇▇▇▇▇▇▇
DELAWARE CHARTER GUARANTEE &
TRUST COMPANY F/B/O ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Its: Trustee
SUMMIT VENTURES VI-A, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Its: Member
SUMMIT VENTURES VI-B, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Its: Member
SUMMIT VI ADVISORS FUND, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Its: Member
SUMMIT VI ENTREPRENEURS FUND, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Its: Member
SUMMIT INVESTORS VI, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Its: Member
SCHEDULE OF INVESTORS
Summit Ventures VI-A, L.P.
Summit Ventures VI-B, L.P.
Summit VI Advisors Fund, L.P.
Summit VI Entrepreneurs Fund, L.P.
Summit Investors VI, L.P.
c/o Summit Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
WITH A COPY TO:
(which shall not constitute notice to the Investors)
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇, P.C.
SCHEDULE OF OTHER STOCKHOLDERS
NAMES AND ADDRESSES
G-Bar Limited Partnership
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ Delta Trust for ▇▇▇ U/A/D June 7, 2002
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Delaware Charter Guarantee & Trust Company F/B/O ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
[Other Post-Signing Other Stockholders]
