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EXHIBIT 4.1
OPTIMARK HOLDINGS, INC.
SERIES E
PREFERRED STOCK PURCHASE AGREEMENT
JUNE 29, 2001
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SERIES E PREFERRED STOCK
PURCHASE AGREEMENT
This Series E Preferred Stock Purchase Agreement (the "AGREEMENT") is
entered into as of this 29th day of June, 2001, by and among OptiMark Holdings,
Inc. a Delaware corporation (the "COMPANY"), and each of those entities,
severally and not jointly, whose names are set forth on the Schedule of
Purchasers attached hereto as Exhibit A (which entities are hereinafter
collectively referred to as "PURCHASERS" and each individually as a
"PURCHASER").
Terms defined in the text of this Agreement shall have the meanings there
set forth herein. Other capitalized terms shall have the meaning set forth in
the Definitions Addendum, which is attached and incorporated herein.
RECITALS
WHEREAS, the Company has authorized the sale and issuance of an aggregate
of 1,000,000 shares of its Series E preferred stock, par value $0.01 per share
(the "SHARES");
WHEREAS, Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to Purchasers on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
SECTION 1. AGREEMENT TO SELL AND PURCHASE
1.1 AUTHORIZATION OF SHARES. On or prior to the First Closing Date
(as defined in Section 2 below), the Company shall have duly authorized the sale
and issuance to Purchasers of the Shares. The Shares shall have the rights,
preferences, privileges and restrictions set forth in the Certificate of
Designations of the Company, in the form attached hereto as Exhibit B (the
"CERTIFICATE"). The Company has, or before the First Closing Date will have,
adopted and filed with the Secretary of State of the State of Delaware the
Certificate and will have taken all necessary corporate action for the purpose
of authorizing the issuance and sale of the Shares pursuant hereto.
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1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof,
at each Closing (as hereinafter defined), the Company hereby agrees to issue and
sell to each Purchaser, and each Purchaser, severally and not jointly, agrees to
purchase from the Company, the number of Shares to be purchased by such
Purchaser at such Closing as set forth opposite such Purchaser's name in Exhibit
A, at a purchase price per Share equal to $15.00.
SECTION 2. CLOSING, DELIVERY AND PAYMENT
2.1 CLOSING. The consummation of each sale and purchase of the
Shares under this Agreement (each a "CLOSING") shall take place at the offices
of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Subject to
the fulfillment or waiver of the conditions set forth herein, the earliest
Closing (the "FIRST CLOSING") shall occur on June 29, 2001 and each other
Closing shall occur on the date therefor specified in Exhibit A. Notwithstanding
the foregoing, SOFTBANK, at its sole discretion may accelerate the date for any
Closing (the date for any Closing specified in Exhibit A, as it may be so
accelerated, the "CLOSING DATE") to an earlier Business Day specified by it by
written notice to the Company and each Purchaser other than SOFTBANK at least 5
Business Days prior to the date for such Closing as so accelerated. Upon such
notice duly given by SOFTBANK, the Closing Date for such Closing shall, for all
purposes of this Agreement, be the date so specified by SOFTBANK and Exhibit A
shall be deemed to be amended accordingly.
2.2 DELIVERY. At each Closing, subject to the terms and conditions
hereof, the Company will deliver to each Purchaser stock certificates issued in
such Purchaser's name representing the number of Shares to be purchased at such
Closing by such Purchaser as specified in Exhibit A, against payment of the
purchase price therefor by wire transfer of immediately available funds to the
Company's account (for credit to account number 0000841096, for further credit
to account number 00000000 with the name "OptiMark, Inc." at Xxxxx Fargo Bank
Minnesota, NA, ABA number 000000000) or such other bank account of the Company
designated by the Company in writing no later than the second Business Day
immediately preceding the date for such Closing.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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Except as set forth on the Schedule of Exceptions attached hereto, the
Company hereby represents and warrants to each Purchaser as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the
Company and each of its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
the Company and each of its Subsidiaries has all requisite corporate power and
authority to own and operate its properties and assets, to carry on its business
as currently conducted and as currently proposed to be conducted and, in the
case of the Company, to execute and deliver this Agreement and the Series E
Preferred Stock Registration Rights Agreement, in the form attached hereto as
Exhibit C (the "REGISTRATION RIGHTS AGREEMENT"), to issue and sell the Shares
and to carry out the provisions of this Agreement, the Registration Rights
Agreement, and the Certificate. Each of the Company and each of its Subsidiaries
is duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties (both owned and leased) make such qualifications
necessary, except for those jurisdictions in which failure to do so would not
have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries
owns any equity securities of any other corporation, limited partnership or
similar entity, other than the ownership by the Company of equity securities of
OptiMark US Equities, Inc. and OptiMark, Inc. (together, the "OPTIMARK
SUBSIDIARIES"). The Company owns all of the outstanding shares of capital stock
of each of the OptiMark Subsidiaries free of any Lien other than the security
interests granted to SOFTBANK pursuant to the Pledge Agreement and liens for
current taxes not yet due (it being understood that the Liens previously granted
to SOFTBANK shall be terminated on the Closing Date of the First Closing). The
Company is not a participant in any joint venture, partnership or similar
arrangement. The Company has made available to the Purchasers true, correct and
complete copies of the Company's Certificate of Incorporation and Bylaws, each
as amended to date and presently in effect.
3.2 CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of
the Company, consists of (a) 148,500,000 shares of voting Common Stock,
35,872,557 shares of which are issued and outstanding, 6,623,109 shares of which
are currently reserved for issuance pursuant to outstanding option agreements,
and 10,241,901 shares of which are currently reserved for
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issuance to key employees, consultants and others affiliated with the Company
pursuant to stock grant, stock purchase and/or option plans or any other stock
incentive program, arrangement or agreement approved by the Company's Board of
Directors, (b) 1,500,000 shares of non-voting Common Stock, of which 740,000 are
issued and outstanding, and (c) 40,000,000 shares of Preferred Stock, par value
$0.01 per share (the "Preferred Stock"), 3,222,068 of which are designated
Series A Convertible Preferred Stock, all of which are issued and outstanding,
11,000,000 shares of which are designated Series B Convertible Preferred Stock,
all of which are issued and outstanding, 8,250,000 shares of which are
designated Series C Convertible Preferred Stock, all of which are issued and
outstanding, and 250,000 shares of which are designated Series D Convertible
Preferred Stock, all of which are issued and outstanding. All issued and
outstanding shares of the Company's Common Stock and Preferred Stock (i) have
been duly authorized and validly issued, (ii) are fully paid and nonassessable,
and (iii) were issued in compliance in all material respects with all applicable
state and federal laws concerning the issuance of securities. The rights,
preferences, privileges and restrictions of the Shares, upon the First Closing,
will be as stated in the Certificate. Except as may be granted pursuant to this
Agreement and except as set forth above, there are no outstanding options,
warrants, puts, calls, rights (including conversion or preemptive rights and
rights of first refusal), proxy or stockholder agreements, or agreements of any
kind for the purchase or acquisition from, sale to or exchange, with the Company
or any of its Subsidiaries of any shares of any class or series of capital stock
of the Company or any of its Subsidiaries or other restrictions on the incidents
of ownership or transfer of any such shares of capital stock created by statute
(other than Federal and state securities laws), the charter documents of the
Company or any of its Subsidiaries or any agreement to which the Company or any
of its Subsidiaries is a party, by which any of them is bound or of which any of
them has knowledge. The Shares have been duly authorized and, when issued in
compliance with the provisions of this Agreement and the Certificate, will be
validly issued (including, without limitation, issued in compliance with
applicable state and federal securities laws, assuming the accuracy of
Purchasers' representations in Section 4 hereof), fully paid and nonassessable
and will be free of any Liens (other than Liens created by Purchasers);
provided, however, that the Shares may be subject to restrictions on transfer
under state and/or federal securities laws as set forth herein or as otherwise
required by such laws at the time transfer is proposed.
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3.3 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
due authorization, execution and delivery of this Agreement and the Registration
Rights Agreement, the performance of all obligations of the Company hereunder
and thereunder and the authorization, sale, issuance and delivery of the Shares
pursuant hereto has been taken. The Agreement and the Registration Rights
Agreement, when executed and delivered, will be valid and binding obligations of
the Company enforceable against the Company, in accordance with their terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; (ii) as limited by general principles of equity that restrict
the availability of specific performance, injunctive relief or other equitable
remedies; and (iii) to the extent that the enforceability of the indemnification
provisions of the Registration Rights Agreement may be limited by applicable
federal and state securities laws. The sale of the Shares are not and will not
be subject to any preemptive rights or rights of first refusal that have not
been properly waived or complied with.
3.4 FINANCIAL STATEMENTS; REPORTS. The audited consolidated balance
sheet of the Company and its Subsidiaries as of December 31, 2000, together with
its audited consolidated Statements of Operations and Comprehensive Loss,
Statements of Changes in Stockholders' Equity and Consolidated Statements of
Cash Flows for the fiscal year then ended (collectively, the "FINANCIAL
STATEMENTS") fairly present, in all material respects in accordance with GAAP,
the consolidated financial condition of the Company and its Subsidiaries and the
consolidated results of their operations, changes in stockholders' equity and
cash flows as of the dates and for the periods referred to. There are no
material Liabilities of the Company or any of its Subsidiaries as of the date of
such balance sheet which are not reflected therein or in the notes thereto, and
there has been no Material Adverse Effect since December 31, 2000. The Company
has made available to the Purchasers each registration statement, report, proxy
statement or information statement filed by it since December 31, 2000 (the
"AUDIT DATE"), including (i) the Company's Annual Report on Form 10-K for the
year ended December 31, 2000, together with all amendments thereto, and (ii) and
the Company's Quarterly Report on Form 10-Q for the three months ended March 31,
2001, together with amendments thereto filed with the SEC prior to the date
hereof, each in the form (including exhibits, annexes and any amendments
thereto)
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filed with the SEC (collectively, including any such reports filed subsequent to
the date hereof, the "REPORTS"). As of their respective dates, the Reports did
not, and any Reports filed with the SEC subsequent to the date hereof will not,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading. Each of
the consolidated balance sheets included in or incorporated by reference into
any Reports filed with the SEC after the date hereof (including the related
notes and schedules) will fairly present in all material respects, the
consolidated financial position of the Company and its Subsidiaries as of its
date and each of the consolidated statements of operations and comprehensive
loss, statements of changes in stockholders' equity and statements of cash flows
included in or incorporated by reference into any such Reports (including any
related notes and schedules) will fairly present in all material respects the
results of operations, retained earnings and cash flows, as the case may be, of
Company and its Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to the absence of complete notes and to normal,
recurring, year-end audit adjustments that will not be material in amount or
effect), in each case in accordance with GAAP consistently applied during the
periods involved, except as may be noted therein.
3.5 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Reports
filed with the SEC and made available to Purchasers prior to the date hereof,
since the Audit Date the Company and the Subsidiaries have conducted their
respective businesses only in, and have not engaged in any material transaction
other than according to, the ordinary and usual course of such business and
there has not been (i) any Material Adverse Effect or any development or
combination of developments of which management of the Company or any of its
Subsidiaries has knowledge that, individually or in the aggregate, has had or is
reasonably likely to result in a Material Adverse Effect; (ii) any material
damage, destruction or other casualty loss with respect to any material asset or
property owned, leased or otherwise used by the Company or any of its
Subsidiaries, whether or not covered by insurance; (iii) any change by the
Company in accounting principles, practices or methods; or (iv) any declaration,
setting aside or payment of any dividend or other distribution in cash, stock or
property in respect of the capital stock of the Company. Since the Audit Date,
except as disclosed in the Reports filed with the SEC and made
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available to Purchasers prior to the date hereof, there has not been any
increase in the compensation payable or that could become payable by the Company
or any of its Subsidiaries to officers or key employees or any amendment of any
of the Company's Compensation and Benefit Plans.
3.6 AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated hereby,
there are no agreements, understandings or proposed transactions between the
Company or any of its Subsidiaries, on the one hand, and any of their officers,
directors or affiliates or any affiliate thereof, on the other.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company or any of its Subsidiaries is a party or to their knowledge by which
any of them is bound which include provisions (i) restricting the development or
distribution of the products or services of the Company or any of its
Subsidiaries or (ii) providing for indemnification by the Company or any of its
Subsidiaries with respect to infringements or alleged infringements of
proprietary rights.
3.7 OBLIGATIONS TO RELATED PARTIES. There are no obligations of the
Company or any of its Subsidiaries to officers, directors, stockholders, or
employees of the Company or any of its Subsidiaries other than (a) for payment
of salary for services rendered, (b) reimbursement for reasonable expenses
incurred on behalf of the Company or any of its Subsidiaries and (c) for other
standard employee benefits made generally available to all employees (including
stock option agreements outstanding under any stock option plan approved by the
Board of Directors of the Company or the relevant Subsidiary). No officer or
director or, to the best of the Company's knowledge, any member of their
immediate families, are indebted to the Company or any of its Subsidiaries or
have any direct or indirect ownership interest in any firm or corporation with
which the Company or any of its Subsidiaries is affiliated or with which the
Company or any of its Subsidiaries has a business relationship, or any firm or
corporation which competes with the Company or any of its Subsidiaries, in each
case other than ownership of less than 1% of the outstanding stock of publicly
traded companies. No such officer or director, or, to the best of the Company's
knowledge, any member of their immediate families, is, directly or indirectly,
interested in any material contract with the Company or any of its Subsidiaries.
Neither
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the Company nor any of its Subsidiaries is a guarantor or indemnitor of any
indebtedness of any other Person.
3.8 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Neither the Company
nor any of its Subsidiaries owns any real property. Each of the Company and each
of its Subsidiaries has good title to its leasehold estates and personal
property owned by the Company and each of its Subsidiaries (as the case may be),
in each case subject to no Lien other than (i) liens for taxes which have not
yet become due, (ii) minor liens and encumbrances which do not materially
detract from the value of the property subject thereto or materially impair the
operations of the Company or any of its Subsidiaries, and (iii) Liens granted to
SOFTBANK pursuant to the Pledge Agreement and the Guarantees (it being
understood that the Liens previously granted to SOFTBANK shall be terminated on
the date of the First Closing). All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by the Company and each of
its Subsidiaries are in good operating condition and repair and are reasonably
fit and usable for the purposes for which they are being used. The Company and
each of its Subsidiaries is in compliance in all material respects with the
terms of each lease to which it is a party or is otherwise bound.
3.9 PATENTS AND TRADEMARKS. Each of the Company and each of its
Subsidiaries owns or possesses sufficient legal rights to all patents,
trademarks, service marks, trade names, copyrights, trade secrets, information
and other proprietary rights and processes necessary for its business as now
conducted and as currently proposed to be conducted, without any infringement
known to it of the rights of others. There are no outstanding options, licenses
or agreements of any kind relating to the foregoing, nor is the Company bound by
or a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes of any other
Person other than such licenses to the Company or its Subsidiaries (i) arising
from the purchase by any of them of "off the shelf" standard products or (ii)
that are not material to the business now conducted or currently proposed to be
conducted by the Company or any of its Subsidiaries. Neither the Company nor any
of its Subsidiaries has received any communications alleging that the Company or
any of its Subsidiaries has violated or, by conducting its business as currently
proposed, would violate any of the patents, trademarks, service marks, trade
names, copyrights or trade
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secrets or other proprietary rights of any other Person. Neither the Company nor
any of its Subsidiaries is aware that any of its employees is obligated under
any contract (including licenses, covenants or commitments or any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to the Company or
any of its Subsidiaries. The conduct of the Company's and each of its
Subsidiary's business as currently proposed to be conducted, will not, to the
knowledge of the Company or any of its Subsidiaries, conflict with or result in
a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any employee is now
obligated. Neither the Company nor any of its Subsidiaries believes it is or
will be necessary to utilize any inventions, trade secrets or proprietary
information developed or acquired by any of its employees in the conduct of the
Company's or any of its Subsidiary's business prior to their employment by the
Company or any of its Subsidiaries, except for inventions, trade secrets or
proprietary information that have been assigned to the Company or any of its
Subsidiaries.
3.10 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS; CONSENTS; PERMITS.
Neither the Company nor any of its Subsidiaries is in violation or default of
any term of its Certificate of Incorporation or Bylaws, or of any provision of
any mortgage, indenture, contract, agreement, instrument or contract to which it
is party or by which it or any of its property is bound or of any judgment,
decree, order, writ, statute, rule or regulation applicable to the Company or
any of its Subsidiaries or their properties which, individually or in the
aggregate, would have a Material Adverse Effect. The execution, delivery, and
performance of and compliance with this Agreement and the Registration Rights
Agreement, and the issuance and sale of the Shares pursuant hereto, will not,
with or without the passage of time or giving of notice, result in any violation
or default by the Company or any of its Subsidiaries of any term of its
Certificate of Incorporation or Bylaws, or of any provision of any mortgage,
indenture, contract, agreement, instrument or contract to which it is party or
by which it or any of its property is bound or of any judgment, decree, order,
writ, statute rule or regulation applicable to the Company, any of its
Subsidiaries or their properties, or result in the creation of any Lien upon any
of the properties or assets of the Company or any of its Subsidiaries or the
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization
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or approval applicable to the Company or any of its Subsidiaries, their business
or operations or any of their assets or properties. No orders, permissions,
consents, approvals or authorizations of any Governmental Entity is required to
be obtained by the Company or any of its Subsidiaries and no application,
notification, request, registration or declaration is required to be filed with
any Governmental Entity by the Company or any of its Subsidiaries in connection
with the execution and delivery of this Agreement and the offer, issuance, sale
and delivery of the Shares, or the other transactions to be consummated at any
Closing, as contemplated in this Agreement other than items which the failure by
the Company to file will not have a Material Adverse Effect. The Company has all
franchises, permits, licenses and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect and can obtain, without undue burden or expense, any
similar authority necessary for the conduct of its business as currently
proposed to be conducted.
3.11 LITIGATION. There is no action, suit, proceeding or
investigation pending or to the knowledge of the Company or any of its
Subsidiaries currently threatened against the Company or any of its Subsidiaries
that questions the validity of this Agreement, the Registration Rights Agreement
or the Certificate or the right of the Company to enter into any of such
agreements, to issue the Shares with the terms specified in the Certificate or
to consummate the transactions contemplated hereby or thereby, or which, if
determined adversely to the Company, might result, either individually or in the
aggregate, in any Material Adverse Effect or any change in the current equity
ownership of the Company or any of its Subsidiaries, nor is the Company or any
of its Subsidiaries aware that there is any basis for the foregoing. Neither the
Company nor any of its Subsidiaries is a party or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or other
Governmental Entity.
3.12 TAX RETURNS AND PAYMENTS. The Company and each of its
Subsidiaries has timely filed all tax returns (federal, state, local and
foreign) required to be filed by it. All Taxes shown to be due and payable on
such returns, any assessments imposed, and all other Taxes due and payable by
the Company or any of its Subsidiaries have been paid or will be paid prior to
the time they become delinquent. Neither the Company nor any of its Subsidiaries
has been advised (i) that any of its returns,
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federal, state, foreign or other, have been or are being audited as of the date
hereof, or (ii) of any deficiency in assessment or proposed adjustment to its
federal, state, foreign or other Taxes. There exists no liability for any Tax or
potential Tax to be imposed upon the properties or assets of the Company or any
of its Subsidiaries as of the date of this Agreement that is not adequately
provided for.
3.13 CONTRACTS. Neither the Company nor any of its
Subsidiaries is a party to or bound by any of the following:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person
providing for lease payments in excess of $100,000 per
annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities,
supplies, products, or other personal property, or for
the furnishing or receipt of services, the performance
of which will extend over a period of more than one
year, result in a material loss to the Company or any of
its Subsidiaries if terminated, or involve consideration
in excess of $100,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group or related agreements) under which
it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $100,000 or under which it has
imposed a Lien on any of its assets, tangible or
intangible;
(v) any agreement concerning noncompetition other than
agreements pursuant to which a current or former
employee of the Company has agreed not to compete with
the Company;
(vi) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other
plan or arrangement for the benefit of its current or
former directors, officers, and employees;
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(vii) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing
annual compensation in excess of $100,000 or providing
severance benefits;
(viii) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees
other than advances for travel expenses in the ordinary
course of business;
(ix) any agreement under which the consequences of a default
or termination would be reasonably likely to have a
Material Adverse Effect; and
(x) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of
$250,000.
The Company has a current and complete copy of each written
agreement listed in Section 3.13 of the Schedule of Exceptions (as amended to
dATe) and a written summary setting forth the terms and conditions of each oral
agreement referred to in Section 3.13 of the Schedule of Exceptions. With
respECt to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (B) the agreement will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby; (C) no
party is in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (D) no party has
repudiated any provision of the agreement.
3.14 EMPLOYEES. To the knowledge of the Company and its
Subsidiaries, no employee of the Company or any of its Subsidiaries, nor any
consultant with whom the Company or any of its Subsidiaries has contracted, is
in violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company or any of its Subsidiaries; and
to the knowledge of the Company and each of its Subsidiaries the continued
employment by the Company and each of its Subsidiaries of their present
employees, and the performance of the contracts of the Company and each of its
Subsidiaries with its independent contractors, will not result
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in any such violation except for such violations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has received any notice alleging
that any such violation has occurred. No employee of the Company or any of its
Subsidiaries has been granted the right to continued employment by the Company
or any of its Subsidiaries or to any material compensation following termination
of employment with the Company. Neither the Company nor any of its Subsidiaries
is aware that any officer or key employee intends to terminate his or her
employment with the Company or any of its Subsidiaries, nor does the Company or
any of its Subsidiaries have a present intention to terminate the employment of
any officer or key employee.
3.15 PROPRIETARY INFORMATION AND INVENTIONS ASSIGNMENT AGREEMENTS.
Each employee, consultant and officer of the Company and each of its
Subsidiaries and any other Person developing intellectual property on behalf of
the Company or any of its Subsidiaries has executed an agreement with the
Company or such Subsidiary regarding confidentiality and proprietary information
substantially in the form or forms delivered to the Purchasers. Neither the
Company nor any of its Subsidiaries is aware that any of its employees or
consultants is in violation thereof.
3.16 REGISTRATION RIGHTS. Except as required pursuant to the
Registration Rights Agreement, the Company is not under any obligation, and has
not granted any rights, to register any of the Company's securities under the
Securities Act of 1933, as amended (the "SECURITIES ACT").
3.17 ENVIRONMENTAL AND SAFETY LAWS. Neither the Company nor any of
its Subsidiaries is in violation in any material respect of any applicable
statute, law or regulation relating to the environment or occupational health
and safety, and to their knowledge, no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
3.18 OFFERING VALID. Assuming the accuracy of the representations
and warranties of the Purchasers contained in Section 4 hereof, the offer, sale
and issuance of the Shares will be exempt from the registration requirements of
the Securities Act, and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws. Neither the
Company nor any
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agent on its behalf has solicited or will solicit any offers to sell or has
offered to sell or will offer to sell all or any part of the Shares to any
person or persons so as to bring the sale of such Shares by the Company within
the registration provisions of the Securities Act or the registration or
qualification provisions of any state securities laws.
3.19 MINUTE BOOKS. The minute books of the Company and each of its
Subsidiaries made available to counsel for the Purchasers contain a fair and
accurate summary of all meetings of, and any actions taken by, the directors and
stockholders of the Company and its Subsidiaries since the date of their
incorporation.
3.20 ABSENCE OF LIABILITIES. Except as set forth in the Financial
Statements, neither the Company nor any of its Subsidiaries has any Liability in
excess of $300,000.
3.21 RETURNS AND COMPLAINTS. Neither the Company nor any of its
Subsidiaries has received any customer complaints concerning alleged defects in
its products or services that, if true, would reasonably be expected to have a
Material Adverse Effect.
3.22 DISCLOSURE. Neither this Agreement nor any other agreements,
written statement or certificates made or delivered in connection herewith
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements herein or therein not misleading, except
that with respect to assumptions, projections and expressions of opinion or
predictions contained in the Business Plan, the Company represents only that
such assumptions, projections, expressions of opinion and predictions were made
in good faith and that there is a reasonable basis therefor.
3.23 EXHIBITS TO REPORTS. With respect to the exhibits filed with
the SEC with the Company's Reports: (i) the Agreement for Information Technology
Services, dated May 6, 1999, by and between OptiMark Technologies, Inc. and IBM
Canada Limited, filed as Exhibit 10.20 to the Company's registration statement
on Form 10 (No. 000-30527), has been terminated pursuant to the provisions of
the Agreement of settlement dated as of December 29, 2000 by and among ISM
Information Systems Management Corporation, IBM Canada Limited, the Company and
its Subsidiaries, and (ii) performance by the parties to the NASDAQ/OptiMark
Agreement, dated September 1, 1998, between OptiMark Technologies, Inc. and The
NASDAQ Stock Market, Inc., filed as Exhibit 10.4 to the Company's registration
statement on
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Form 10 (No. 000-30527), has ceased as a result of the fact that the operation
of the market that is the subject matter of that agreement has been suspended by
The NASDAQ Stock Market, Inc.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, hereby represents and warrants
to the Company as follows:
4.1 REQUISITE POWER AND AUTHORITY. Such Purchaser has all necessary
power and authority under its organizational documents and all applicable
provisions of law to execute and deliver this Agreement and the Registration
Rights Agreement and to carry out its obligations hereunder and thereunder. All
actions on the part of such Purchaser required for the due and lawful
authorization, execution and delivery of this Agreement and the Registration
Rights Agreement and the performance of such Purchaser's obligations hereunder
and thereunder have been or will be effectively taken prior to the First
Closing. This Agreement has been, and upon its execution and delivery the
Registration Rights Agreement will be, duly executed and delivered by such
Purchaser, and this Agreement is, and upon such execution and delivery the
Registration Rights Agreement, will be, valid and binding obligations of such
Purchaser, enforceable against such Purchaser in accordance with their terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; (ii) as limited by general principles of equity that restrict
the availability of specific performance, injunctive relief or other equitable
remedies; and (iii) to the extent that the enforceability of the indemnification
provisions of the Registration Rights Agreement may be limited by applicable
federal and state securities laws.
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. Such Purchaser is
acquiring the Shares for its own account, not as a nominee or agent, for
investment and not with a view to the resale or distribution of any part
thereof.
4.3 INVESTMENT EXPERIENCE. Such Purchaser is an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Such Purchaser
believes it has acquired sufficient information about the Company and its
Subsidiaries to reach an informed decision to purchase the Shares. Such
Purchaser has such business and financial experience as are required to give it
the capacity to protect its own interests in connection with the purchase of the
Shares.
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4.4 RESTRICTED SECURITIES. Such Purchaser understands that the
Shares are being offered in a transaction not involving any public offering
within the meaning of the Securities Act, that such Shares have not been
registered under the Securities Act and that it may not resell, pledge or
otherwise transfer any such Shares except pursuant to an effective registration
statement under the Securities Act or pursuant to an exemption from
registration.
4.5 LEGENDS. Such Purchaser understands that the Shares and any
securities issued in respect thereof or exchange therefor, shall bear the
following legend until such time, if any, as (A) the Shares or such securities
(i) are sold in compliance with Rule 144 under the Securities Act (or a
comparable successor provisions) or pursuant to an effective registration
statement under the Securities Act or (ii) may be resold pursuant to Rule 144(k)
under the Securities Act (or a comparable successor provision), or (B) the
Company receives an opinion of counsel reasonably acceptable to it to the effect
that such legend may be removed:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN EXEMPTION FROM
REGISTRATION AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES."
SECTION 5. COVENANTS
5.1 PREEMPTIVE RIGHTS. (a) If the Company proposes to issue, grant
or sell common stock, preferred stock, other equity securities or Rights, the
Company shall first give to the Purchaser and any transferee of Shares from the
Purchaser (each a "SECURITYHOLDER") written notice setting forth in reasonable
detail the price and other terms on which such equity securities or Rights are
proposed to be issued, granted or sold, the terms of any such Rights and the
amount thereof proposed to be issued, granted or sold. Each Securityholder shall
thereafter have the preemptive right, exercisable by written notice to the
Company no later than 15 days after the Company's notice is given, to purchase
the lesser of (i) such Securityholder's Proportionate Share of the number of
such equity securities or Rights that are proposed to be issued, granted or sold
and (ii) the product of: (x) the number of such equity securities or Rights that
are proposed to be issued, granted or sold minus the number of such equity
securities or Rights purchased by the parties to the
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Stockholders' Agreement pursuant to their respective preemptive rights contained
in Sections 4.2 and 4.3 thereof and (y) a fraction equal to the number of Shares
held by such Securityholder as of the date notice delivered pursuant to this
section divided by the total number of issued and outstanding Shares held by all
Securityholders. Any such purchase by any Securityholder shall be at the price
and on the other terms set forth in the Company's notice. Any notice by a
Securityholder exercising the right to purchase equity securities or Rights
pursuant to this Section 5.1 shall constitute an irrevocable commitment to
purchase from the Company the equity securities or Rights specified in such
notice, subject to the maximum set forth in this paragraph. If the
Securityholders exercise their preemptive rights set forth in this Section
5.1(a) to the full extent of their rights set forth in this Section 5.1(a), then
the closing of the purchase of equity securities or Rights by Securityholders
shall take place on such date, no less than ten and no more than 60 days after
the expiration of the 15-day period referred to above, as the Company may
select, and the Company shall notify the Securityholders of such closing at
least seven days prior thereto. If all Persons entitled thereto do not exercise
their preemptive rights to the full extent of such preemptive rights and, as
contemplated by Section 5.1(b), the Company shall issue, grant or sell equity
securities or Rights to persons other than Securityholders and the parties to
the Stockholders Agreement, then the closing of the purchase of such equity
securities or Rights shall take place at the same time as the closing of such
issuance, grant or sale.
(b) The Company shall use its good faith and commercially
reasonable efforts to issue, grant or sell the remaining subject equity
securities or Rights on the terms set forth in its notice to Securityholders,
unless the Company is advised by its financial advisors that the remaining
number or amount is too small to be reasonably sold. From the expiration of the
15-day period first referred to in Section 5.1(a) and for a period of 90 days
thereafter, the Company may offer, issue, grant and sell to any person or entity
equity securities or Rights having the terms set forth in the Company's notice
relating to such equity securities or Rights at a price and on other terms no
less favorable to the Company, and including no less cash, than those set forth
in such notice (without deduction for reasonable underwriting, sales agency and
similar fees payable in connection therewith); provided, however, that the
Company may not issue, grant or sell equity securities or Rights in an amount
greater than the amount set forth in such notice minus the amount purchased or
committed to be purchased
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by Securityholders and the parties to the Stockholders Agreement pursuant to
Sections 4.2 and 4.3 thereof.
(c) The rights set forth in this Section 5.1 shall terminate
upon successful consummation of a firm commitment underwritten initial public
offering of Common Stock by the Company pursuant to an effective registration
statement under the Securities Act.
(d) The provisions of this Section 5.1 shall not apply to the
following issuances of securities: (i) pursuant to an approved employee stock
option plan, stock purchase plan, or similar benefit program or agreement, where
the primary purpose is not to raise additional equity capital for the Company,
(ii) as direct consideration for the acquisition by the Company of another
business entity or the merger of any business entity with or into the Company,
in each case provided that the transaction is approved by the vote of a majority
of the outstanding Shares, (iii) in connection with a stock split or dividend or
a recapitalization or reorganization of the Company, in each case provided that
the transaction is approved by the vote of a majority of the outstanding Shares,
(iv) upon the exercise of warrants or options, or upon the conversion of
convertible securities, outstanding on the date hereof or as to which
Securityholders have been previously offered the right to participate as
contemplated hereby or, (v) securities issued pursuant to this Agreement at any
Closing, (vi) securities issued in an underwritten public offering registered
under the Securities Act, provided that such offering is approved by a vote of a
majority of the outstanding Shares.
5.2 INFORMATION RIGHTS. The Company shall deliver to the Purchasers
(a) within 90 days after the end of each fiscal year of the Company, audited
annual financial statements (including a balance sheet, statements of operations
and comprehensive loss, statements of shareholders' equity and statements of
cash flows), (b) within thirty (30) days after the end of each of the first
three quarters of each fiscal year, unaudited financial statements (including a
balance sheet, statements or operations and comprehensive loss and statements of
cash flows), (c) within ten Business Days of the end of each month, unaudited
financial reports (including a balance sheet, statements or operations and
comprehensive loss and statements of cash flows), (d) within ten Business Days
of the end of each month, management reports explaining significant variances
from forecasts and all other significant developments, and (e) any other
financial or other information that the Purchasers may reasonably request;
provided, however, that the Purchasers shall
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preserve in a confidential manner all information received from the Company
pursuant to this Section 5.2, and shall not disclose such information except to
those Persons with which a confidential relationship is maintained (including
regulators, legal counsel, accountants, agents or an assignee or a prospective
assignee of any of such Purchaser's rights hereunder), or where required by law.
These rights will terminate upon the successful consummation of a firm
commitment underwritten initial public offering of the Company's Common Stock
registered under the Securities Act.
5.3 FURTHER ASSURANCES. The Company and the Purchasers shall use
their respective reasonable efforts at any time and from time to time prior to,
at and after the First Closing Date to execute and deliver to the applicable
parties such further documents and instruments and to take all such further
actions as such other parties to this Agreement reasonably may request to
consummate the transactions contemplated by this Agreement, the Certificate and
the Registration Rights Agreement.
5.4 BOARD OF DIRECTORS. On and after the First Closing Date SOFTBANK
shall have the right to designate a number of members of the Company's Board of
Directors (the "Board Composition Requirement") equal to the product of (A) the
total number of authorized directors and (B) SOFTBANK's aggregate Proportionate
Share, rounded up to the nearest whole number; provided, however, that, in any
case, SOFTBANK shall have the right to designate not less than two directors;
provided, further, that notwithstanding the foregoing, so long as the number of
authorized members of the Company's Board of Directors is four or more, the
number of directors that SOFTBANK shall have the right to designate pursuant to
this Section 5.4 at any time shall be less than a majority of the total number
of members of the Company's Board of Directors authorized at such time. After
the First Closing Date, SOFTBANK shall have the right to designate one member of
the Company's Board of Directors chosen by SOFTBANK pursuant to the foregoing to
the Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee Requirement"); provided, however, that prior to any
Closing after the First Closing the Company shall cause its Board of Directors
to constitute a committee of its Board of Directors that shall be responsible
for making decisions related to the compensation and employment arrangements of
employees of the Company if such a committee does not exist as of the First
Closing.
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5.5 USE OF PROCEEDS. The proceeds received by the Company from the
sale of the Shares are intended to be used for the B2B business of the Company.
The specific use or uses of the foregoing proceeds shall be approved by the
Company's board of directors prior to any application of such proceeds.
5.6 ISSUANCE OF SERIES F PREFERRED STOCK. On and after the First
Closing Date the Company shall not be permitted to issue any shares of its
Series F preferred stock (the "Series F Shares") or any Rights to purchase or
acquire any Series F Shares without the prior approval of the Company's Board of
Directors or any committee thereof, in either case including the affirmative
vote of at least one director appointed to the Company's Board of Directors by
SOFTBANK.
5.7 EMPLOYEE BONUS PAYMENTS. On and after the First Closing Date the
Company and any of its Subsidiaries shall not be permitted to pay any of its
respective employees a cash bonus or an amount in excess of an employee's base
annual salary without the prior approval of the Company's Board of Directors or
any committee thereof, in either case including the affirmative vote of at least
one director appointed to the Company's Board of Directors by SOFTBANK.
5.8 NOTICE OF EMPLOYEE TERMINATION. On and after the First Closing
Date: (i) the Company shall provide to SOFTBANK written notice of the
termination or resignation of the employment with the Company or any of its
Subsidiaries of any employee listed on Exhibit E-2 hereto within one business
day of such termination or resignation and (ii) the Company or any of its
Subsidiaries shall not amend the provisions of or waive any of its rights under
the agreement in the form attached hereto as Exhibit E-1 entered into with any
employee listed on Exhibit E-2.
SECTION 6. CONDITIONS TO CLOSING
6.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE FIRST CLOSING.
Each Purchaser's obligation to purchase the Shares at the First Closing are
subject to the satisfaction, on or prior to the First Closing Date, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects (except that such representations and warranties that
contain materiality qualifiers shall be true in all respects) as of the date of
this Agreement and as of such Closing Date, except to
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the extent such representations and warranties specifically speak as to an
earlier date, in which case they shall be true and correct as of such earlier
date.
(b) PERFORMANCE OF OBLIGATIONS. The Company shall have
performed and complied in all material respects with all agreements and
obligations herein required to be performed or complied with by the Company on
or before such Closing Date.
(c) ABSENCE OF CHANGES. Except as disclosed in the Reports
filed with the SEC and made available to Purchasers prior to the date hereof,
there shall have been no Material Adverse Effect.
(d) LEGAL INVESTMENT; ORDERS. The sale and issuance of the
Shares to be issued and sold on such Closing Date shall be legally permitted by
all laws and regulations to which Purchasers and the Company are subject. No
court or other Governmental Entity of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, law, ordinance, rule,
regulation, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and restrains, enjoins or otherwise
prohibits consummation of the issuance of the Shares or any of the other
transactions contemplated by this Agreement or the Registration Rights Agreement
(collectively, an "ORDER"), and no Governmental Entity or any other Person shall
have instituted any proceeding or threatened to institute any proceeding seeking
any such Order or questioning the legality, validity or appropriateness of any
such issuance or transaction.
(e) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation by it of the transactions contemplated by this Agreement and the
Registration Rights Agreement.
(f) BANKRUPTCY ETC. Neither the Company nor any of its
Subsidiaries shall have dissolved or liquidated or taken an equivalent action
nor shall an involuntary petition have been filed under any federal or state
bankruptcy, reorganization, insolvency, moratorium or similar statute against
the Company or any of its Subsidiaries, or a custodian, receiver, trustee,
assignee for the benefit of creditors or other similar official have been
appointed to take possession, custody, or control of the property of the Company
or any of its Subsidiaries; nor shall the Company or any of its Subsidiaries
have admitted in writing its inability to pay any of its debts as they mature,
or
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have filed any petition or action for relief relating to any bankruptcy,
reorganization, insolvency or moratorium law, or any other similar law for the
relief of, or relating to, debtors; nor shall the Company or any of its
Subsidiaries have made a general assignment for the benefit of creditors or
entered into an agreement of composition with its creditors.
(g) FILING OF CERTIFICATE. The Certificate shall have been
filed with the Secretary of State of the State of Delaware.
(h) REGISTRATION RIGHTS AGREEMENT. A Registration Rights
Agreement, substantially in the form attached hereto as Exhibit C, shall have
been executed and delivered by the Company and the other Purchasers.
(i) COMPLIANCE CERTIFICATE. The Chief Executive Officer of the
Company shall deliver to the Purchasers at the Closing a certificate, dated the
Closing Date, certifying that the conditions specified in Sections
6.1(a),(b),(c),(e) and (g) have been fulfilled.
(j) LEGAL OPINION. The Purchasers shall have received from
outside legal counsel to the Company an opinion addressed to them, dated as of
the First Closing Date, in the form of Exhibit F.
(k) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the First
Closing and all documents and instruments incident to the transactions
contemplated hereby shall be reasonably satisfactory in substance and form to
the Purchasers and their counsel, and the Purchasers and their counsel shall
have received all such counterpart originals or certified or other copies of
such documents as they may reasonably request.
(l) BOARD COMPOSITION. All necessary corporate action to
appoint the number of directors to the Company's Board of Directors to meet the
Board Composition Requirement effective immediately after giving effect to the
purchase of the Shares to be purchased on the First Closing Date.
(m) AMENDMENT OF BYLAWS. All necessary corporate action to
amend the bylaws of the Company in accordance with Exhibit H.
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6.2 CONDITIONS TO PURCHASER'S OBLIGATIONS AT EACH SUBSEQUENT
CLOSING. Each Purchaser's obligation to purchase the Shares at each Closing
other than the First Closing are subject to the satisfaction, on or prior to the
Closing Date for such Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects (except that such representations and warranties that
contain materiality qualifiers shall be true in all respects) as of the date of
this Agreement. The representations and warranties made by the Company in
Section 3 hereof shall be true and correct in all material respects (except that
such representations and warranties that contain materiality qualifiers shall be
true in all respects) as of such Closing Date, except (i) to the extent such
representations and warranties specifically speak as to an earlier date, in
which case they shall be true and correct as of such earlier date and (ii) in
the case of the representations and warranties contained in Sections 3.2, 3.6,
3.7, 3.8, 3.9, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17 and 3.20 (and only in the case
of such representations and warranties) the Company may update the Schedule of
Exceptions by delivery of such updated Schedule of Exceptions to the Purchasers
no later than the fifth Business Day prior to such Closing Date, except if such
Closing date has been accelerated by SOFTBANK pursuant to Section 2.1, in which
case such updated Schedule of Exceptions shall be delivered to the Purchasers no
later than the second Business Day prior to such Closing Date, and in such event
such representations and warranties shall be true and correct in all material
respects (except that such representations and warranties that contain
materiality qualifiers shall be true in all respects) as of such Closing Date
subject to the exceptions set forth in such updated Schedule of Exceptions.
(b) PERFORMANCE OF OBLIGATIONS. The Company shall have
performed and complied in all material respects with all agreements and
obligations herein required to be performed or complied with by the Company on
or before such Closing Date.
(c) ABSENCE OF CHANGES. Except as disclosed in the Reports
filed with the SEC and made available to Purchasers prior to the date hereof,
there shall have been no Material Adverse Effect.
(d) LEGAL INVESTMENT; ORDERS. The sale and issuance of the
Shares to be issued and sold on such Closing Date shall be legally permitted by
all laws and regulations to
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which Purchasers and the Company are subject. No court or other Governmental
Entity of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Order and no Governmental Entity or any other Person
shall have instituted any proceeding or threatened to institute any proceeding
seeking any such Order or questioning the legality, validity or appropriateness
of any such issuance or transaction.
(e) BANKRUPTCY, ETC. Neither the Company nor any of its
Subsidiaries shall have dissolved or liquidated or taken an equivalent action
nor shall an involuntary petition have been filed under any federal or state
bankruptcy, reorganization, insolvency, moratorium or similar statute against
the Company or any of its Subsidiaries, or a custodian, receiver, trustee,
assignee for the benefit of creditors or other similar official have been
appointed to take possession, custody, or control of the property of the Company
or any of its Subsidiaries; nor shall the Company or any of its Subsidiaries
have admitted in writing its inability to pay any of its debts as they mature,
or have filed any petition or action for relief relating to any bankruptcy,
reorganization, insolvency or moratorium law, or any other similar law or laws
for the relief of, or relating to, debtors; nor shall the Company or any of its
Subsidiaries have made a general assignment for the benefit of creditors or
entered into an agreement of composition with its creditors.
(f) ABSENCE OF LIABILITIES. Neither the Company nor any of its
Subsidiaries shall have any Liabilities other than: (i) Liabilities incurred
since March 31, 2001 in the ordinary course of conducting the Company's B2B
business, or (ii) Liabilities disclosed on Exhibit G hereto in an amount no
greater than the amount specified on Exhibit G for each Liability; and the
Company shall have caused to be delivered to such Purchaser a certificate, dated
such Closing Date, executed by the Chief Financial Officer or acting Chief
Financial Officer of the Company in which such officer shall certify that a
schedule attached to such certificate discloses any Liability of the Company or
any of its Subsidiaries in excess of $250,000.
(g) ABSENCE OF LITIGATION. Neither the Company nor any of its
Subsidiaries shall be a party to any litigation, mediation, arbitration or
similar proceeding, whether as a plaintiff or as a defendant which, if
determined adversely to the Company or any of its Subsidiaries, could have a
Material Adverse Effect.
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(h) BUSINESS PLAN. The Company's revenues, calculated on a
consolidated basis in accordance with GAAP, and certified as such by the Chief
Financial Officer or acting Chief Financial Officer of the Company, for the
calendar month immediately preceding the month in which such Closing Date occurs
shall equal or exceed the revenues projected for such month in the Business
Plan, and the Company's total operating expenses, calculated on a consolidated
basis in accordance with GAAP, and certified as such by the Chief Financial
Officer or acting Chief Financial Officer of the Company, for the calendar month
immediately preceding the month in which such Closing Date occurs shall be equal
to or less than the Company's operating expenses projected for such month in the
Business Plan.
(i) COMPLIANCE CERTIFICATE. The Chief Executive Officer of the
Company shall deliver to the Purchasers at the Closing a certificate, dated the
Closing Date, certifying that the conditions specified in Sections
6.2(a),(b),(c) and (f) have been fulfilled.
(j) EMPLOYEE NON-COMPETITION AGREEMENT. An Employee
Non-Competition Agreement, substantially in the form attached hereto as Exhibit
E-1, shall have been executed and delivered to the Company by each of the
persons listed on Exhibit E-2 hereto.
(k) COMPENSATION COMMITTEE. All necessary corporate
action to meet the Compensation Committee Requirement.
6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Shares at each Closing is subject to the
satisfaction, on or prior to the relevant Closing Date, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties made by the Purchasers in Section 4 hereof
shall be true and correct as of such Closing Date.
(b) PERFORMANCE OF OBLIGATIONS. Purchasers shall have
performed and complied in all material respects with all agreements and
obligations herein required to be performed or complied with by Purchasers on or
before such Closing Date.
(c) LEGAL INVESTMENT; ORDERS. The sale and issuance of the
Shares to be issued and sold on such Closing Date shall be legally permitted by
all laws and regulations to which Purchasers and the Company are subject. No
court or other Governmental Entity of competent jurisdiction shall have
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enacted, issued, promulgated, enforced or entered any Order, and no Governmental
Entity or any other Person shall have instituted any proceeding or threatened to
institute any proceeding seeking any such Order.
(d) TERMINATION OF LOAN AGREEMENTS; RETURN OF COLLATERAL.
SOFTBANK shall have: (i) terminated the Convertible Loan Agreement, dated as of
April 11, 2001, between the Company and SOFTBANK, (ii) terminated the Loan
Agreement, dated as of June 1, 2001, between the Company and SOFTBANK, (iii)
terminated the Pledge Agreement, (iv) terminated each of the Guarantees, (v)
surrendered for cancellation by the Company the three Promissory Notes issued by
the Company on April 11, 2001 with an aggregate face amount of $2,500,000, (vi)
surrendered for cancellation by the Company the three Promissory Notes issued by
the Company on June 1, 2001 with an aggregate face amount of $1,500,000, (vii)
provided the Company for filing by the Company copies of statements that will
terminate the UCC-1 Financing Statements filed by SOFTBANK in New York, New
Jersey and Connecticut, and (viii) returned any collateral to the Company of
which it took possession pursuant to the Pledge Agreement.
SECTION 7. REMEDIES
(a) SURVIVAL OF REPRESENTATIVES AND WARRANTIES. All of the
representations and warranties of the parties contained in this Agreement shall
survive each Closing hereunder (even if the damaged party knew or had reason to
know of any misrepresentation or breach of warranty or covenant at the time of
such Closing) and continue in full force and effect forever thereafter (subject
to any applicable statutes of limitations).
(b) INDEMNIFICATION. In the event the Company breaches (or in
the event any third party alleges facts that, if true, would mean the Company
has breached) any of its representations, warranties, and covenants contained
herein, then the Company agrees to indemnify each Purchaser from and against the
entirety of any Adverse Consequences such Purchaser may suffer through and after
the date of the claim for indemnification resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or the alleged breach).
(c) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Purchaser
(the "Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against the Company (the
"Indemnifying Party")
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under this Section 7, then the Indemnified Party shall promptly notify the
Indemnifying Party thereof in writing; provided, however, that no delay on the
part of the Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party thereby is prejudiced.
(ii) The Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with counsel of its
choice satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party notifies the Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the Indemnified Party with
evidence acceptable to the Indemnified Party that the Indemnifying Party will
have the financial resources to defend against the Third Party Claim and fulfill
its indemnification obligations hereunder, (C) the Third Party Claim involves
only money damages and does not seek an injunction or other equitable relief,
(D) settlement of, or an adverse judgment with respect to, the Third Party Claim
is not, in the good faith judgment of the Indemnified Party, likely to establish
a precedential custom or practice adverse to the continuing business interests
of the Indemnified Party, and (E) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting
the defense of the Third Party Claim in accordance with Section 7(c)(ii) above,
(A) the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party, and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the Indemnified
Party.
(iv) In the event any of the conditions in Section
7(c)(ii) above is or becomes unsatisfied, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it may deem appropriate
(and
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the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (B) the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses), and (C) the Indemnifying Party will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 7.
(D) OTHER INDEMNIFICATION PROVISIONS. The foregoing
indemnification provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy any party may have with respect to
the transactions contemplated by this Agreement and any rights any party may
have under any other agreement, document or instrument, including, without
limitation, the Registration Rights Agreement.
SECTION 8. MISCELLANEOUS
8.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of New York without regard to principles of
conflict of laws.
8.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the rights and obligations hereunder may not be assigned or delegated by
the Purchasers or the Company without the prior written consent of the other;
provided, however, that the Purchasers may assign their rights and delegate
their obligations hereunder, in whole or in part (including, without limitation,
the right to purchase any or all of the Shares and the obligation to pay all or
a part of the purchase price for the Shares), to any affiliates of Purchaser,
including, without limitation, any other partnership or other entity of which
any direct or indirect subsidiary of such Purchaser or any affiliate thereof is
a general partner or has investment discretion, or any employees of any of the
foregoing subject to applicable securities laws; provided, further, that any
such assignee that acquires any Shares shall, as a condition to acquiring such
Shares, agree to be bound by the provisions of any agreement applicable to the
Shares. The provisions hereof shall inure to the benefit of, and be binding
upon, the successors and permitted assigns of the parties hereto. Subject to
applicable securities laws, a Purchaser may transfer any Shares to any Person
without the prior consent of the Company.
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8.3 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Registration Rights Agreement, the Certificate and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subject matter hereof and
thereof.
8.4 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
8.5 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
written consent of the Company and holders of at least a majority of the Shares.
(b) The obligations of the Company and the rights of the
holders of the Shares under the Agreement may be waived only with the written
consent of the holders of at least a majority of the Shares.
8.6 DELAYS OR OMISSIONS It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party upon any breach,
default or noncompliance by another party under this Agreement, the Registration
Rights Agreement or the Certificate shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance thereafter occurring. It is further agreed that any waiver,
permit, consent or approval of any kind of character on any Purchaser's part of
any breach, default or noncompliance under this Agreement, the Registration
Rights Agreement or the Certificate or any waiver on such party's part of any
provisions or conditions of the Agreement, the Registration Rights Agreement or
the Certificate must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, under this Agreement, the
Registration Rights Agreement, the Certificate, by law or otherwise afforded to
any party shall be cumulative and not alternative.
8.7 NOTICES. All notices, requests, demands or other communications
which are required or may be given pursuant to the terms of this Agreement shall
be in writing and shall be deemed to have been duly given: (i) on the date of
delivery if personally delivered by hand, (ii) upon the third day after such
notice is (a) deposited in the United States mail, if mailed by
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registered or certified mail, postage prepaid, return receipt requested, or (b)
sent by a nationally recognized overnight express courier, or (iii) by facsimile
upon written confirmation (other than the automatic confirmation that is
received from the recipient's facsimile machine) of receipt by the recipient of
such notice:
If to any Purchaser: To the address or facsimile number of such
Purchaser specified on the signature pages
hereof.
With a copy to: Xxxxxxxx & Xxxxxxxx
0000 Xxxxxxxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to OptiMark: OptiMark Holdings, Inc.
00 Xxxxxxxx Xxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxxxx & Xxxxxxxx
Four Stamford Plaza
000 Xxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telephone No: (000) 000-0000
Facsimile No: (000) 000-0000
Such addresses may be changed, from time to time, by means of a notice given in
the manner provided in this Section 8.7.
8.8 TITLES AND SUBTITLES. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
8.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
8.10 BROKER'S FEES. Each party hereto represents and warrants that
no agent, broker, investment banker, person or
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firm acting on behalf of or under the authority of such party hereto is or will
be entitled to any broker's or finder's fee or any other commission directly or
indirectly in connection with the transactions contemplated herein. Each party
hereto further agrees to indemnify each other party for any claims, losses or
expenses incurred by such other party as a result of the representation in this
Section 8.10 being untrue.
8.11 EXPENSES. The Company and each of the Purchasers shall pay all
costs and expenses that it incurs with respect to the negotiation, execution,
delivery and performance of this Agreement and all of the transactions
contemplated herein; provided, however, that if the Purchasers consummate the
purchase of the Shares, the Company shall reimburse the reasonable legal fees
and expenses of counsel to SOFTBANK incurred in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement and all of
the transactions contemplated hereby.
8.12 SPECIFIC ENFORCEMENT. Any Purchaser shall be entitled to
specific enforcement of its rights under this Agreement. The Company
acknowledges that money damages would be an inadequate remedy for its breach of
this Agreement and consents to an action for specific performance or other
injunctive relief in the event of any such breach.
8.13 ATTORNEY'S FEES. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
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IN WITNESS WHEREOF, the parties hereto have executed the SERIES E
PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY:
OPTIMARK HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: CEO
PURCHASERS:
SOFTBANK CAPITAL PARTNERS LP
By: SOFTBANK Capital Partners LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------
Title: Admin. Member
----------------------------
Address:
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxx Xxxxxx
Facsimile No.: (000) 000-0000
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SOFTBANK CAPITAL LP
By: SOFTBANK Capital Partners LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------
Title: Admin. Member
----------------------------
Address:
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxx Xxxxxx
Facsimile No.: (000) 000-0000
SOFTBANK CAPITAL ADVISORS FUND LP
By: SOFTBANK Capital Partners LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------
Title: Admin. Member
----------------------------
Address:
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxx Xxxxxx
Facsimile No.: (000) 000-0000
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DEFINITIONS ADDENDUM
This Definitions Addendum is an attachment to and part of that
certain Series E Preferred Stock Purchase Agreement (the "PURCHASE AGREEMENT")
dated as of June 29, 2001 between OptiMark Holdings, Inc. and the purchasers
named therein, Softbank Capital Partners LP, Softbank Capital Advisors Fund LP,
and Softbank Capital LP. Except as otherwise stated in the Purchase Agreement,
the following terms shall have the following meanings:
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses,
including indirect, consequential and punitive damages.
"Business Day" means any day other than (i) a Saturday, Sunday or legal
holiday, or (ii) a day on which commercial banks in New York City are authorized
or required by law or executive order to close.
"Business Plan" means the Company's business plan, dated June 28, 2001,
delivered to the Purchasers and attached hereto as Exhibit D.
"Compensation and Benefit Plan" means any bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock option, employment,
termination, severance, compensation, medical, health or other plan, agreement,
policy or arrangement that covers employees, directors, former employees or
former directors of the Company or its Subsidiaries.
"GAAP" or "Generally Accepted Accounting Principles" means generally
accepted accounting principles as in effect from time to time in the United
States.
"Governmental Entity" means any governmental or regulatory authority,
agency, commission, body, court, tribunal or other governmental entity or
authority.
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"Guarantees" means those Amended and Restated Guarantees, dated June 1,
2001, between Softbank and each of OptiMark Equities, Inc. and OptiMark, Inc.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Lien" or "Liens" means, with respect to any Person, any security
interest, pledge, mortgage, charge, option, assignment, hypothecation,
encumbrance, attachment, garnishment, sequestration, forfeiture, execution or
other voluntary or involuntary lien upon or affecting the revenues of such
Person or any real or personal property in which such Person has or hereafter
acquires any interest.
"Material Adverse Effect" means a material adverse effect upon the
business, financial condition, results of operations or prospects of the Company
or any of its Subsidiaries, or upon the validity or enforceability of this
Agreement, the Certificate, the Registration Rights Agreement or the Shares, or
upon the ability of the Company to perform its obligations hereunder or under
the Certificate or the Registration Rights Agreement, or upon the rights of the
Purchasers hereunder or thereunder; provided, however, that the incurrence by
the Company and its Subsidiaries of expenses and losses in the amounts, and at
the times set forth in the Business Plan shall not, in itself, be deemed to
constitute a Material Adverse Effect.
"Person" means any individual, corporation (including not-for-profit),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, Governmental Entity or other entity of
any kind or nature.
"Pledge Agreement" means that certain Amended and Restated Pledge and
Security Agreement, dated June 1, 2001, between the Company and SOFTBANK.
"Proportionate Share" means, with respect to each Securityholder, a
fraction (i) the numerator of which is the total number of votes entitled to be
cast on matters as to which the holders of the Company's Common Stock are
entitled to vote, by the Shares together with shares of Common Stock owned and
the number of shares of Common Stock issuable upon exercise of
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Rights owned by such Securityholder, and (ii) the denominator of which is the
total number of such votes entitled to be cast on such matters by the shares of
Common Stock outstanding, the shares of Common Stock issuable upon exercise of
all Rights outstanding and the Shares outstanding.
"Right" means any option, warrant, security, right or other instrument
convertible into or exchangeable or exercisable for, or otherwise giving the
holder thereof the right to acquire, directly or indirectly, from the Company
any common stock, preferred stock or other equity security or any other such
option, warrant, security, right or instrument, including any instrument issued
by the Company or any Subsidiary thereof the value of which is measured by
reference to the value of the Company's Common Stock.
"SEC" means the Securities and Exchange Commission or any successor
agency.
"SOFTBANK" means, collectively, SOFTBANK Capital Partners LP, SOFTBANK
Capital LP and SOFTBANK Capital Advisors Fund LP, each a Delaware limited
partnership.
"Stockholders Agreement" means the Amended and Restated Stockholders
Agreement, dated as of April 23, 1998, among the Company and the parties named
therein.
"Subsidiary" means, with respect to any Person, any entity, whether
incorporated or unincorporated, of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a
majority of the board of directors or other Persons performing similar functions
is directly or indirectly owned or controlled by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries.
"Taxes" means for any Person any federal or state tax, assessment, duty,
levy, withholding liability, impost and other charges of every nature whatsoever
imposed by any Governmental Entity on such Person or on any of its property or
because of any, revenue, income, sales, use, product, employee or franchise, and
any interest or penalty with respect to any of the foregoing.
