WARRANT AGREEMENT
THIS WARRANT AGREEMENT, dated as of _______________, 1999 by
and between eSpeed, Inc., a Delaware corporation (the "Company"), and Xxxxxx X.
Wygod (the "Grantee").
In accordance with the letter agreement dated as of _______________ by and
between the Company and the Grantee, and in consideration for the services
rendered pursuant thereto, the Company hereby grants to the Grantee a warrant
(the "Warrant") to purchase shares of the Company's Class A Common Stock (the
"Shares") on the following terms and conditions:
1. Number of Shares. The number of Shares subject to the Warrant shall
equal _________.
2. Exercise Price. The exercise price per Share subject to the Warrant shall
equal $_____.
3. Exercisability/Termination. The Warrant shall be fully exercisable only
during the four year period commencing on the first anniversary hereof and
ending on the fifth anniversary hereof, at which time any unexercised
portion of the Warrant shall terminate. Notwithstanding the foregoing, the
Warrant shall terminate upon the consummation of any transaction whereby
the Company (or any successor to the Company or substantially all of its
business) becomes a wholly-owned subsidiary of any corporation or other
entity, unless such other corporation or entity shall continue or assume
the Warrant (in which case such other corporation or entity shall be
treated as the Company for all purposes hereunder, and shall make
appropriate adjustment pursuant to paragraph 5 below in the number and
kind of shares of stock subject thereto and the exercise price per share
thereof to reflect consummation of such transaction). If the Warrant is
not to be so assumed, the Company shall notify the Grantee of consummation
of such transaction at least ten days in advance thereof.
4. Exercise Procedures. The Grantee shall exercise the Warrant by delivery of
written notice to the Company setting forth the number of Shares with
respect to which the Warrant is to be exercised, together with a certified
check or bank draft payable to the order of the Company for an amount
equal to the sum of the exercise price for such Shares.
5. Adjustment Upon Changes in Capitalization. In the event any
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or exchange of Shares or
other securities, any special and nonrecurring dividend or distribution
(whether in the form of cash, securities or other property), liquidation,
dissolution, or other similar transactions or events, affects the Shares
such that an adjustment is, in the sole discretion of the Company,
appropriate in order to prevent dilution or enlargement of the rights of
the Grantee, then the Company shall equitably adjust (i) the number and
kind of Shares that may be delivered or deliverable in respect of the
Warrant, and/or (ii) the exercise price. In addition, the Company is
authorized to make adjustments in the terms and conditions of, and the
criteria included in, the Warrant (including, without limitation,
cancellation of the Warrant in exchange for its in-the-money value, if
any, or substitution of the Warrant using stock of a successor or other
entity) in recognition of unusual or nonrecurring events (including,
without limitation, an event described in the preceding sentence)
affecting the Company or any subsidiary of the Company or the financial
statements of the Company or any subsidiary of the Company, or in response
to changes in applicable laws, regulations, or accounting principles.
6. Restrictions on Issuing Stock. The Company shall not be obligated to issue
or deliver Shares upon exercise of the Warrant or take any other action in
a transaction subject to the requirements of any applicable securities
law, any requirement under any listing agreement between the Company and
any national securities exchange or automated quotation system or any
other law, regulation or contractual obligation of the Company until the
Company is satisfied that such laws, regulations, and other obligations of
the Company have been complied with in full. Certificates representing
Shares issued pursuant to exercise of the Warrant will be subject to such
stop-transfer orders and other restrictions as may be applicable under
such laws, regulations and other obligations of the Company, including any
requirement that a legend or legends be placed thereon.
7. Limitations on Transferability. The Warrant will not be transferable by
the Grantee except by will or the laws of descent and distribution or to a
beneficiary in the event of the Grantee's death, shall not be pledged,
mortgaged, hypothecated or otherwise encumbered, or otherwise subject to
the claims of creditors; provided, however, that the Warrant or any
portion thereof may be transferred by the Grantee to (a) trusts
established for the benefit of his children, stepchildren and
grandchildren or (b) charities. Any such transferee shall be bound by the
terms of this Agreement.
8. Taxes. The Grantee shall be responsible for the payment of all income,
social security taxes and Medicare taxes related to the exercise of the
Warrant, and shall indemnify the Company against any liability it may
incur with respect to such taxes, including by reason of the Company not
withholding any such taxes on behalf of the Grantee.
9. No Stockholder Rights. The Warrant shall not confer on the Grantee any of
the rights of a stockholder of the Company unless and until Shares are
duly issued or transferred and delivered to the Grantee upon exercise of
the Warrant.
10. Piggyback Registration Rights. If the Company intends to register
securities of any of its shareholders for an offering to the public while
the Warrant is exercisable, the Company shall notify the Grantee of its
intention to do so and, subject to such limitations as shall affect all
selling shareholders equally and as may be imposed by any underwriter of
such offering or by law, the Grantee may irrevocably elect to participate
in such offering on a pari passu basis with any other selling shareholders
(other than Cantor Xxxxxxxxxx X.X. or its affiliates, who shall have
priority over the Grantee on any cutback) based on the relative number of
shares owned and options or warrants vested of each of such other selling
shareholders (and its
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affiliates and permitted assigns) and the Grantee (the "Pari Passu
Percentage"). Such participation shall be under the same terms and
conditions as may apply to such other shareholders, provided that the
Grantee shall not have any rights to select the underwriter or similar
matters given to the other shareholders. The Grantee shall make any
election within 30 days of receipt of such notice of intent to register by
a writing given to the Secretary of the Company, which writing shall
indicate his irrevocable election to sell in the intended offering, the
number of Shares he wishes to sell and the portion thereof to be included
by him. The Grantee's notice may not be for less than 50% of the number of
Shares of the Grantee. The Grantee shall be responsible for delivery of
the Shares covered by the notice on a timely basis. The Company shall only
have to give notice of intent to register under this paragraph to the
Grantee and any notice of intent to participate shall only be valid if
received from the Grantee (or in the event of his death, his executor).
The Company may at any time abandon any offering. The Company or the
underwriter may at any time cutback (including, without limitation,
limiting the amount to the extent a prior amount had not been specified)
on the number of shares in any offering in which the Company is offering
shares and the underwriter may at any time cutback (including, without
limitation, limiting the amount to the extent a prior amount had not been
specified) on the number of shares to be offered by shareholders in any
offering in which the Company is not also offering shares. In either such
case the Grantee's Shares to be offered shall be proportionately reduced
so that the amounts offered by the Grantee and by other shareholders (and
their affiliates and permitted assigns) satisfy the Pari Passu Percentage.
The Grantee shall have no right to participate in any offering by the
Company that does not include any shares owned by other shareholders and
the provision of this paragraph shall not apply to any registration on
Form S-8, or otherwise with regard to securities of compensatory plans of
the Company, or any registration relating to business acquisitions on Form
S-1 or Form S-4. The Grantee shall sign such underwriting and other
agreements in the same forms as signed by the other participating
shareholders.
11. Demand Registration Right. Subject to the Company's qualification to use a
Form S-3, from and after the date that is one year after the date hereof,
the Grantee may request, in writing, registration (the "Demand
Registration") under the Securities Act of 1933, as amended (the
"Securities Act"), of all or a portion of the Shares and the Shares
underlying the warrant granted on the date hereof to Xxxxxx X. Wygod,
Trustee under the Trust Agreement dated 12/30/87 for the benefit of Xxxx
Xxxxxx ("the "Other Shares") on Form S-3; provided, however, that such
request must include at least 75% of the aggregate of the Shares and the
Other Shares. Thereafter, the Company will use all reasonable efforts to
effect the Demand Registration under the Securities Act within thirty (30)
days after the receipt of the request. The Company shall not be required
to effect the Demand Registration requested by the Grantee if either (a)
within the six (6) months preceding the receipt by the Company of such
request, the Company has filed a registration statement to which the
Piggyback Registration rights set forth in Section 10 hereof apply or (b)
such Grantee may sell the Shares and the Other Shares requested to be
included in the Demand Registration without registration under the
Securities Act, pursuant to the exemption provided by (i) Rule 144 under
the Securities Act, as such rule may be amended from time to time, or (ii)
any similar rule or registration
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adopted by the Commission. The Granter shall be entitle to no more than
one (1) Demand Registration. The Company agrees to keep the Demand
Registration effective for a period of sixty (60) days beyond the
effective date.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, this Warrant Agreement has been executed
and delivered by the parties hereto on the date first written above.
eSPEED, INC.
By
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GRANTEE:
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Xxxxxx X. Wygod
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