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