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EXHIBIT 4.10
SERIES C STOCK PURCHASE AGREEMENT
This Series C Stock Purchase Agreement (the "Agreement") made as of this
11th day of June, 1999, by and among (i) OptiMark Technologies, Inc., a Delaware
corporation (the "Company"), and (ii) the purchaser ("Purchaser") of the
Company's Series C Convertible Preferred Stock, $.01 par value per share
("Series C Stock") identified on Schedule I hereto.
SECTION 1. DEFINITIONS
In addition to other capitalized terms defined elsewhere herein, the
following terms shall have the indicated meanings:
1.1 "1933 Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
1.2 "Affiliate" of a Person means any corporation or other entity that
is or ever would have been considered a single employer with that Person under
ERISA Section 4001(b) or part of the same "controlled group" as that Person for
purposes of ERISA Section 302(d)(8)(C).
1.3 "Audited Financial Statements" means the audited consolidated
balance sheets of the Company and its Subsidiaries as of December 31, 1997 and
December 31, 1998, and the related statements of income, retained earnings and
cash flows of the Company and its Subsidiaries for the 12-month periods then
ended (together with the notes thereto), copies of which have been delivered to
the Purchaser.
1.4 "Board" means the board of directors of the Company as constituted
from time to time.
1.5 "BT Warrant" means the Common Stock Purchase Warrant dated May 7,
1999 in favor of BT Investment Partners, Inc. ("BT") under which the Company has
granted to BT the right to purchase up to 166,667 shares of voting Common Stock,
at an exercise price of $10.00 per share, subject to potential adjustment as
provided therein.
1.6 "CBOE Warrant" means a Common Stock Purchase Warrant dated December
3l, 1996, pursuant to which The Chicago Board Options Exchange, Incorporated has
the right to purchase from the Company up to 1,227,828 shares of Common Stock at
an exercise price of $1.8325 per share, subject to potential adjustment as
provided therein.
1.7 "Certificate of Incorporation" means the Amended and Restated
Certificate of Incorporation of the Company, including the Certificate of
Designations with respect to the Series A Stock and the Certificate of
Designations with respect to the Series B Stock (as amended) attached thereto,
filed with the Delaware Secretary of State on or about May 29, 1998, and
Certificates of Increase with respect to the Series B Stock filed subsequent to
May 29, 1998.
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1.8 "Code" means the Internal Revenue Code of 1986, as amended. For
purposes of this Agreement, all references to Sections of the Code shall include
any predecessor provisions to such Sections.
1.9 "Common Stock" means the voting and nonvoting common stock of the
Company, $.01 par value per share.
1.10 "Conversion Shares" means the shares of voting Common Stock or any
successor class of capital stock of the Company hereafter issued or issuable
upon conversion of the Series C Shares.
1.11 "Copyrights" means any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights.
1.12 "Employee Program" means (a) all employee benefit plans within the
meaning of ERISA Section 3(3), including but not limited to multiple employer
welfare arrangements (within the meaning of ERISA Section 3(40)), plans to which
more than one unaffiliated employer contributes, and employee benefit plans
(such as foreign or excess benefit plans) which are not subject to ERISA; and
(b) all stock or cash option plans, restricted stock plans, bonus or incentive
award plans, severance pay policies or agreements, deferred compensation
agreements, supplemental income arrangements, vacation plans, and all other
employee benefit plans, agreements, and arrangements not described in (a) above.
In the case of an Employee Program funded through an organization described in
Code Section 501(c)(9), each reference to such Employee Program shall include a
reference to such organization. An entity "maintains" an Employee Program if
such entity sponsors, contributes to, or provides (or has promised to provide)
benefits under such Employee Program, or has any obligation (by agreement or
under applicable law) to contribute to or provide benefits under such Employee
Program, or if such Employee Program provides benefits to or otherwise covers
employees of such entity (or their spouses, dependents, or beneficiaries).
1.13 "Environmental Laws" means and includes any environmental or health
and safety-related law, regulation, rule, ordinance, or by-law at the federal,
state or local level, whether existing as of the date hereof or subsequently
enacted.
1.14 "ERISA" means the Employee Retirement Income Security Act of l974,
as amended.
1.15 "Financial Statements" means and includes both the Audited
Financial Statements and the Unaudited Financial Statements, copies of both of
which have been delivered to the Purchaser.
1.16 "Goldman Warrant" means the Common Stock Purchase Warrant in favor
of The Xxxxxxx Sachs Group, Inc. ("Xxxxxxx Xxxxx") dated May 7, 1999 under which
the Company has granted to Xxxxxxx Sachs the right to purchase up to 1,000,000
shares of voting Common Stock, at an exercise price of $10.00 per share, subject
to potential adjustment as provided therein.
1.17 "Hazardous Material" means and includes any hazardous waste,
hazardous material, hazardous substance, petroleum product, oil, toxic
substance, pollutant, contaminant, or other
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substance which may pose a threat to the environment or to human health or
safety, as defined or regulated under any Environmental Law.
1.18 "Intellectual Property" means and includes Copyrights, Internet
Assets, Patents, Trade Secrets, Trademarks, Software and other proprietary
rights.
1.19 "Internet Assets" means any internet domain names and other
computer user identifiers and any rights in and to sites on the worldwide web,
including rights in and to any text, graphics, audio and video files and html or
other code incorporated in such sites.
1.20 "IPO Effectiveness Date" means the date (if any) upon which the
Company commences its initial public offering pursuant to an effective
registration statement filed with the SEC under the 0000 Xxx.
1.21 "IRS" means the Internal Revenue Service.
1.22 "Judgment" means any judgment, injunction, writ, award, decree or
order of any nature from any arbitrator, court or governmental agency.
1.23 "Liabilities" means and includes any indebtedness, liabilities,
guaranties or other obligations of any nature, whether accrued, absolute,
contingent or otherwise, known or unknown, asserted or unasserted.
1.24 "Lien" means and includes any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or preference,
priority, right or other security interest or preferential arrangement of any
kind or nature whatsoever (excluding preferred stock and equity related
preferences), including, without limitation, those created by, arising under or
evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease obligation, or any financing lease
having substantially the same economic effect as any of the foregoing.
1.25 "Losses" means and includes losses, claims, damages, causes of
action, liabilities, penalties, fines and related interest and expenses,
including reasonable attorneys' fees and disbursements, and costs of
investigation, litigation, arbitration, enforcement and indemnification.
1.26 "Material Contracts" means and includes any employment contract;
stock redemption or purchase agreement; loan, capital lease or other financing
agreement; license, distributor, sales representation or OEM agreement;
agreements with any officers, directors, employees or stockholders of the
Company or any persons related to or affiliated with any such persons; leases;
agreements relating to the licensing, distribution, development or maintenance
of Software and related hardware; agreements with customers of the Company;
powers of attorney; pension, profit-sharing, retirement or stock option plans;
any other contract, obligation or commitment (whether written or oral) involving
actual or potential consideration of more than $100,000; or any contract,
obligation or commitment not entered into in the ordinary course of business.
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1.27 "ML Warrants" means the Common Stock Purchase Warrants dated May 7,
1999 in favor of ML IBK Positions, Inc., Xxxxxxx Xxxxx KECALP L.P. 1997, and
Xxxxxxx Xxxxx KECALP International L.P. 1997 (altogether, "ML") under which the
Company has granted to ML the right to purchase a total of up to 500,000 shares
of voting Common Stock, at an exercise price of $10.00 per share, subject to
potential adjustment as provided therein.
1.28 "Multiemployer Plan" means an Employer Program to which more than
one employer contributes and which is maintained pursuant to one or more
collective bargaining agreements.
1.29 "NASDAQ Warrant" means the Warrant Agreement dated September 1,
1998 pursuant to which The Nasdaq Stock Market, Inc. has the right to purchase
from the Company up to 11,250,000 shares of voting Common Stock at exercise
prices ranging from $3.00 to $7.00 per share, subject to potential adjustment as
provided therein.
1.30 "NeoVision Lawsuit" means that complaint filed by NeoVision
Hypersystems, Inc. against the Company on January 25, 1999 in the United States
Southern District of New York, a summary of which is included in Schedule 3.13
hereto.
1.31 "OptiMark(TM)" means the Company's proprietary "OptiMark(TM)"
securities trading system.
1.32 "Outstanding Rights" means and includes (a) the rights of the
holder under the PCX Warrant, (b) the rights of the holder under the NASDAQ
Warrant, (c) the rights of the holder under the CBOE Warrant, (d) the rights of
the holder under the VSC Warrant, (e) the rights of the holder under the
TransAmerica Warrant, (f) the right of Xxxxx Xxxx to purchase from the Company
up to 40,000 shares of voting Common Stock at an exercise price of $10.00 per
share, (g) the right of Xxxxxx Xxxxxx Partners, L.L.C. to purchase from the
Company up to 5,000 shares of voting Common Stock at an exercise price of $10.00
per share, (h) the rights of the holder under the BT Warrant, (i) the rights of
the holder under the Goldman Warrant, (j) the rights of the holders under the ML
Warrants, (k) the right of BIOS Group, L.P. to purchase from the Company up to
5,000 shares of voting Common Stock at an exercise price of $10.00 per shares,
and (l) the rights of the holders of options and other rights to acquire Common
Stock, issued and reserved for issuance as incentives for the Company's
officers, directors, employees, former employees and consultants.
1.33 "Patents" means any foreign or United States patents and patent
applications, including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.
1.34 "Person" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, governmental agency or other entity of any
kind, and shall include any successor (by merger or otherwise) of such entity.
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1.35 "PCX Warrant" means the Common Stock Purchase Warrant dated August
27, 1996 pursuant to which The Pacific Exchange, Incorporated has the right to
purchase from the Company up to 2,104,000 shares of voting Common Stock at an
exercise price of $1.8325 per share, subject to potential adjustment as provided
therein.
1.36 "Purchaser" includes the Purchaser and its successors and assigns
with respect to the Series C Stock and the Conversion Shares.
1.37 "Registration Rights Agreement" means the Registration Rights
Agreement attached hereto as Exhibit A to be entered into between the Company
and the Purchaser.
1.38 "Requirement of Law" means, as to any Person, any law, statute,
treaty, rule, regulation, right, privilege, qualification, license, franchise or
Judgment, in each case applicable or binding upon such Person or any of its
property or to which such Person or any of its property is subject or pertaining
to any or all of the transactions contemplated or referred to herein.
1.39 "SEC" means the United States Securities and Exchange Commission.
1.40 "Securities Laws" means and includes the 1933 Act and all other
applicable federal, state and foreign securities laws.
1.41 "Series A Stock" means the Company's Series A Convertible
Participating Preferred Stock, $.01 par value per share, the rights, privileges,
preferences, limitations and qualifications of which are set forth in the
Certificate of Designations attached to the Company's Certificate of
Incorporation.
1.42 "Series B Stock" means the Company's Series B Convertible
Participating Preferred Stock, $.01 par value per share, the rights, privileges,
preferences, limitations and qualifications of which are set forth in the
Certificate of Designations attached to the Company's Certificate of
Incorporation.
1.43 "Series C Certificate of Designations" means that Certificate of
Powers, Designations, Preferences and Rights substantially in the form attached
hereto as Exhibit B setting forth the rights, privileges, preferences,
limitations and qualifications of the Series C Stock.
1.44 "Series C Shares" means the shares of Series C Stock being sold by
the Company to the Purchaser pursuant to this Agreement.
1.45 "Series C Stock" means the Company's Series C Convertible Preferred
Stock, $.01 par value per share, the rights, privileges, preferences,
limitations and qualifications of which are set forth in the Series C
Certificate of Designations.
1.46 "Software" means any computer software programs, source code,
object code, data and related documentation.
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1.47 "Stockholders Agreement" means the Amended and Restated
Stockholders Agreement dated April 23, 1998, among the Company, the holders of
the Series A Stock, and certain other stockholders of the Company, as amended
from time to time.
1.48 "Subsidiary" means any corporation or other entity (a) a majority
of which is owned or previously was owned by the Company, or (b) which the
Company otherwise directly or indirectly controls or previously controlled.
1.49 "Taxes" means and includes all federal, state, local, foreign and
other taxes and governmental assessments and levies, including without
limitation income taxes, alternative minimum taxes, sales taxes, franchise
taxes, excise taxes, employment and payroll taxes, estimated taxes, withholding
taxes, transfer taxes, and all associated fines, penalties and interest.
1.50 "Trade Secrets" means and includes any trade secrets, research
records, processes, procedures, manufacturing formulae, technical know-how,
technology, blueprints, designs, plans, inventions (whether patentable and
whether reduced to practice), invention disclosures and improvements thereto.
1.51 "Trademarks" means and includes any foreign or United States
trademarks, service marks, trade dress, trade names, brand names, designs and
logos, corporate names, product or service identifiers, whether registered or
unregistered, and all registrations and applications for registration thereof.
1.52 "Transaction Documents" means collectively this Agreement, the
Series C Certificate of Designations and the Registration Rights Agreement.
1.53 "TransAmerica Warrant" means the Common Stock Purchase Warrant
dated June 19, 1998, issued in connection with the Company's receipt of a
$5,000,000 line of credit for equipment leasing purposes, under which
TransAmerica Business Credit Corporation has the right to purchase from the
Company up to 42,500 shares of voting Common Stock at a price of $10.00 per
share, subject to potential adjustment as provided therein.
1.54 "Unaudited Financial Statements" as of any date means the most
recently available unaudited consolidated balance sheet of the Company and its
Subsidiaries as of that date, and the related statements of income and cash flow
of the Company and its Subsidiaries for the year or partial year then ended.
1.55 "Voting Agreement" means the Voting Agreement dated July 17, 1996
among some of the stockholders of the Company.
1.56 "VSC Warrant" means the Common Stock Purchase Warrant dated April
23, 1998 pursuant to which Virginia Surety Company, Inc. has the right to
purchase from the Company up to 500,000 shares of voting Common Stock at an
exercise price of $10.00 per share, subject to potential adjustment as provided
therein.
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SECTION 2. TERMS OF PURCHASE
2.1 General.
(a) The Company has authorized the issuance and sale of up to an
aggregate of eight million, five hundred twenty two thousand, seven hundred
twenty seven (8,522,727) shares of Series C Stock to the Purchaser. At the
Closing (as hereinafter defined), the Company shall sell to the Purchaser and,
subject to the terms and conditions set forth herein, the Purchaser shall
purchase from the Company (x) 6,250,000 shares of Series C Stock worth an
initial amount of $75,000,000 at $12.00 per share (the "Initial Amount") and (y)
an additional number of shares of Series C Stock worth an additional amount
equal to the positive difference between $25,000,000 and the amount of
commitments that the Company has received on or before June 30, 1999 from
certain strategic investors (the "Strategic Investor Commitments") to purchase
capital stock of the Company at or above $12 per share (the "Additional
Amount"). The Purchaser hereby acknowledges and agrees that in connection with
the Strategic Investor Commitments, (i) the strategic investors shall be
determined in good faith by Board and (ii) the Company may offer and issue
Series C Stock to the strategic investors or create and issue one or more
additional classes or series of preferred stock of the Company, with powers,
designations, preferences and rights substantially on par with the Series C
Stock (other than the purchase price, liquidation amount and conversion price
thereof) and file with the Delaware Secretary of State one or more certificates
of powers, designations, preferences and rights with respect thereto (the
"Additional Certificates of Designation").
(b) The aggregate number of shares of Series C Stock to be sold
by the Company and purchased by the Purchaser pursuant to Section 2.1(a) herein,
shall be equal to the sum of (x) 6,250,000 plus (y) the Additional Amount, if
any, divided by 11, rounded to the nearest whole share.
(c) The per share purchase price of Series C Stock to be sold by
the Company and purchased by the Purchaser pursuant to Section 2.1(a) herein
shall be equal to the quotient of (x) the sum of the Initial Amount plus the
Additional Amount, if any, divided by (y) the aggregate number of shares of
Series C Stock determined pursuant to Section 2.1(b) herein, rounded to the
nearest five decimal places.
2.2 Closing. The closing of the purchase and sale of the Series C Stock
(the "Closing") shall take place by facsimile on the later of (i) June 30, 1999,
or (ii) within two business days after the satisfaction of the condition set
forth in Section 2.3(g) below, or at such other time and date as may be mutually
agreeable to by the Company and the Purchaser, but in no event later than August
15, 1999. At the Closing, the Company shall deliver to the Purchaser stock
certificates evidencing the Series C Shares to be purchased by the Purchaser,
registered in the Purchaser's name, upon payment of the purchase price thereof
by wire transfer of immediately available funds to the Company.
2.3 Conditions to Closing. The obligation of the Purchaser to purchase
and pay for the Series C Stock at the Closing and the Company's obligation to
sell the Series C Stock at the Closing is subject to the satisfaction as of the
date of the Closing of the following conditions:
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(a) The Company and the Purchaser will mutually execute and
deliver the Registration Rights Agreement.
(b) The Company will deliver to the Purchaser an Officer's
Certificate as to (i) the due adoption and continuing effectiveness of the
resolutions of the Board, attached thereto, approving the Transaction Documents
and all transactions contemplated thereby, (ii) the accuracy and continuing
effectiveness of the Certificate of Incorporation, as amended by the Series C
Certificate of Designation and any Additional Certificates of Designation, and
Bylaws of the Company attached thereto, and (iii) the incumbency and specimen
signature of each officer executing the Transaction Documents and the other
closing documents on behalf of the Company.
(c) The representations and warranties made by the Company
contained in Section 3 hereof shall be true and correct in all material respects
at and as of the Closing as though then made and certified as such in writing at
and as of the Closing, except to the extent of changes caused by the
transactions expressly contemplated herein, but excluding any disclosures made
by the Company as provided in Section 3 hereof.
(d) The representations and warranties made by the Purchaser
contained in Section 4 hereof shall be true and correct in all material respects
at and as of the Closing as though then made and certified as such in writing at
and as of the Closing.
(e) The Company will deliver to the Purchaser a written opinion
of counsel to the Company, in form and substance reasonably satisfactory to the
Purchaser, as to certain legal matters of potential importance to the Purchaser.
(f) The Company shall have duly adopted, executed and filed with
the Secretary of State of Delaware the Series C Certificate of Designations. The
Series C Certificate of Designations shall be in full force and effect as of the
Closing under the laws of the State of Delaware and shall not have been amended
or modified. The Liquidation Amount and the Conversion Price (both as defined in
the Series C Certificate of Designations) shall be that per share purchase price
determined pursuant to the formula set forth in Section 2.1(c) herein, and shall
be inserted by the Company into the Series C Certificate of Designations prior
to its filing with the Delaware Secretary of State contemplated herein.
(g) The applicable waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended and the regulations thereunder
(the "HSR Act") shall have expired or been terminated.
2.4 Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each party hereto agrees to use reasonable efforts to take, or cause
to be taken, all action, and to do, or cause to be done, all things reasonably
necessary or appropriate to consummate as soon as reasonably practicable the
transactions set forth herein.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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To induce the Purchaser to enter into and consummate this Agreement,
effective as of the date hereof and at and as of the Closing unless otherwise
expressly indicated, the Company represents and warrants to the Purchaser as
follows:
3.1 Organization and Corporate Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is qualified to do business as a foreign corporation in each
jurisdiction in which the failure to qualify would have a material adverse
effect on the Company. The Company has all required corporate power and
authority to own and operate its property, to lease the property it operates as
lessee, to carry on its business as presently conducted or contemplated, to
enter into and perform the Transaction Documents and the agreements contemplated
thereby, and generally to carry out the transactions contemplated hereby and
thereby. Except as set forth on Schedule 3.1, the Company does not own or lease
real property in any jurisdiction other than its jurisdiction of incorporation
and the jurisdictions in which it is qualified to do business as a foreign
corporation. The copies of the Certificate of Incorporation and Bylaws of the
Company, each as amended to date, which have been furnished to the Purchaser,
are correct and complete at the date hereof. The Company is not in violation of
any term of its Certificate of Incorporation or Bylaws.
3.2 Authorization. The Transaction Documents and all documents and
instruments to be executed pursuant thereto have been or, as of the Closing,
will be duly executed and delivered by the Company and constitute legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms. The execution, delivery and performance of the
Transaction Documents and all documents and instruments contemplated thereby and
the delivery and issuance of the Series C Shares and, upon conversion of the
Series C Shares, the Conversion Shares have been duly authorized by all
necessary corporate or other action of the Company. Other than the filing of the
Series C Certificate of Designations, the routine filing of a Form D with the
SEC and any required filings under state securities laws, and the filing of a
Notification and Report Form for Certain Mergers and Acquisitions pursuant to
the HSR Act no consent, approval or authorization of, or designation,
declaration or filing with, any Person, is required of the Company in connection
with the execution, delivery and performance of the Transaction Documents, or
the issuance and delivery by the Company of the Series C Shares in accordance
with the terms of this Agreement and, upon conversion of the Series C Shares,
the Conversion Shares, or the performance or consummation of any other
transaction contemplated thereby.
3.3 Non-Contravention. The execution, delivery and performance by the
Company of the Transaction Documents and each of the other agreements and
instruments to which it is a party and which are contemplated thereby will not
(a) conflict with or result in any default under (i) any contract, obligation or
commitment of the Company, or (ii) any provision of the Certificate of
Incorporation or Bylaws of the Company or any amendment thereof; (b) result in
the creation of any Lien of any nature upon any of the properties or assets of
the Company; or (c) violate any Judgment or Requirement of Law applicable to the
Company. The Company has not previously entered into any contract, obligation or
commitment which is currently in effect or by which the Company is currently
bound, granting any rights to any Person which are inconsistent with the rights
to be granted by the Company in the Transaction Documents or any of the
agreements contemplated by the Transaction Documents.
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3.4 Capitalization of the Company.
(a) The authorized capital stock of the Company consists of (i)
150,000,000 shares of Common Stock, of which 148,500,000 shares are voting
Common Stock and 1,500,000 shares are nonvoting Common Stock, and (ii)
40,000,000 shares of preferred stock, $.01 par value per share ("Preferred
Stock"). No Certificate of Designation has been or will be filed with the
Delaware Secretary of State with respect to the Company's Preferred Stock except
the Certificate of Designations for the Series A Stock, the Certificate of
Designations for the Series B Stock and the Series C Certificate of Designations
to be filed on or before the Closing and the Additional Certificates of
Designation that may be filed in connection with the Strategic Investor
Commitments described in Section 2.1(a) above. As of the date hereof, there were
outstanding (x) 36,401,090 shares of Common Stock, including 35,661,090 shares
of voting Common Stock and 740,000 shares of nonvoting Common Stock, (y)
3,222,068 shares of Series A Stock, and (z) 11,000,000 shares of Series B Stock.
All outstanding shares of Preferred Stock and Common Stock are duly and validly
issued, fully paid and nonassessable. The 3,222,068 outstanding shares of Series
A Stock are convertible into a total of 12,888,272 shares of voting Common
Stock. The 11,000,000 outstanding shares of Series B Stock are convertible into
a total of 11,000,000 shares of voting Common Stock. As of the date hereof, the
Company has reserved an aggregate of 8,522,727 shares of voting Common Stock for
issuance upon conversion of the Series C Stock. Except for the Series A Stock,
the Series B Stock, the Series C Stock and the Outstanding Rights, as of the
date hereof there are no outstanding warrants, options or other rights or
obligations to purchase or acquire any Common Stock or other securities of the
Company from the Company. All of the outstanding shares of capital stock of the
Company (including the Series C Shares) have been offered, issued, sold and
delivered in compliance with all applicable federal and state securities laws.
The Series C Shares have been duly and validly authorized and, when delivered
and paid for pursuant to this Agreement, will be validly issued, fully paid and
nonassessable. Assuming sale of all 8,522,727 available shares of Series C
Stock, the Series C Stock will be initially convertible into 8,522,727 shares of
voting Common Stock which will represent approximately 9% of the Common Stock on
a fully-diluted basis after giving effect to the issuance of all shares reserved
for issuance upon conversion of the Series A Stock, the Series B Stock, the
Series C Stock, the nonvoting Common Stock and under the Outstanding Rights. The
Conversion Shares are duly authorized and, when issued in compliance with the
Company's Certificate of Incorporation, will be validly issued, fully paid and
nonassessable and will be issued in compliance with the registration and
qualification requirements of all applicable federal and state securities laws.
The Company effected a four-for-one Common Stock split in mid-1997, and all of
the numbers in this paragraph reflect that split.
(b) There are no preemptive rights or rights of first refusal
with respect to the issuance or sale of the Company's capital stock, other than
rights to which certain holders of the Company's capital stock are entitled as
set forth in the Stockholders Agreement. There are no restrictions on the
transfer of the Company's Preferred Stock (including Series C Shares) or the
Conversion Shares other than those arising from the Securities Laws and the
Stockholders Agreement, if applicable. Except for (i) the Registration Rights
Agreement, (ii) a registration rights agreement dated August 26, 1996, as
amended, in favor of the holders of the Series A Stock, (iii) a registration
rights agreement dated April 23 1998, as amended, in favor of the holders of the
Series B Stock, (iv) a registration rights agreement dated September 17, 1998 in
favor of the holder of the
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XXXXXX Xxxxxxx, and (v) the Voting Agreement, the Company is not party to and is
not bound by (and, to the Company's knowledge, no stockholder of the Company is
a party to or otherwise bound by) any agreement with respect to (x) the voting
of any of the Company's capital stock, or (y) the registration of such capital
stock for offering to the public pursuant to the 1933 Act.
(c) Except as otherwise set forth on Schedule 3.4, the Company
owns no Subsidiaries or investments in any other corporation or business
organization.
3.5 Financial Statements. The Financial Statements were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis, except that the Unaudited Financial Statements have been prepared without
footnote disclosures and year-end audit adjustments, which the Company believes
will not, in any event, be material. All of such Financial Statements fairly
represent the financial condition of the Company and its Subsidiaries as of the
date thereof, and are true, correct and complete as of the date thereof in all
material respects. Nothing has come to the attention of the management of the
Company since such dates which would indicate that the Financial Statements were
not true and correct as of the date thereof.
3.6 Absence of Undisclosed Liabilities. Between the date of the most
recent Financial Statements and the Closing, except as and to the extent
disclosed in Schedule 3.6, the Company did not incur any Liabilities that are
(a) individually in excess of $100,000 or (b) in the aggregate in excess of
$250,000, other than (i) Liabilities fully and adequately reflected or reserved
against on the Financial Statements and (ii) Liabilities incurred in the
ordinary course of business. As of the date of the Closing, the Company has no
knowledge of any circumstance, condition, event or arrangement that may
hereafter give rise to any Liabilities of the Company except in the ordinary
course of business or as otherwise set forth on Schedule 3.6.
3.7 Absence of Certain Developments. Except as disclosed in Schedule
3.7, between the date of the most recent Financial Statements and the Closing,
there was (i) no material adverse change in the condition, financial or
otherwise, of the Company or in the assets, liabilities, business or prospects
of the Company, (ii) no declaration, setting aside or payment of any dividend or
other distribution with respect to, or any direct or indirect redemption or
acquisition of, any of the capital stock of the Company, (iii) no waiver of any
right of the Company or cancellation of any debt or claim held by the Company,
(iv) no loan by the Company to any officer, director, employee or stockholder of
the Company, any affiliates of any of the foregoing, or any agreement or
commitment therefor, (v) no material loss, destruction or damage to any property
of the Company, whether or not insured, (vi) no labor trouble involving the
Company and no material change in the personnel of the Company or the terms and
conditions of their employment, and (vii) no acquisition or disposition of any
assets (or any contract or arrangement therefor) nor any other transaction by
the Company otherwise than for fair value in the ordinary course of business.
3.8 Accounts Receivable. Except as disclosed on Schedule 3.8, the
Company has no accounts receivable from any Person which is affiliated with the
Company or any of its directors, officers, employees or shareholders or any
affiliates of any of the foregoing.
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3.9 Debt. Schedule 3.9 sets forth (a) a list of all agreements for
incurring of indebtedness for borrowed money to which the Company is a party,
(b) the amount of all indebtedness under each such agreement, (c) the Liens that
relate to such indebtedness and that encumber the assets of the Company, and (d)
the name of the lender thereof. None of the obligations pursuant to such
agreements are subject to acceleration by reason of the consummation of the
transactions contemplated hereby, nor would the execution of the Transaction
Documents or the consummation of the transactions contemplated thereby result in
any default under such agreements.
3.10 Title to Properties. Except as set forth on Schedule 3.10, the
Company has good and marketable title to all of its properties and assets (other
than Intellectual Property, which is addressed by Section 3.13 below), free and
clear of all Liens, and such properties and assets constitute all of the assets
necessary for the conduct of the Company's business as presently conducted and
as presently contemplated to be conducted. All machinery and equipment included
in such properties which is necessary to the business of the Company is in good
condition and repair and all leases of real or personal property to which the
Company is a party are in full force and effect and afford the Company peaceful
and undisturbed possession of the subject matter of the lease. The Company is
not in violation of any Requirement of Law applicable to the operation of its
owned or leased properties, nor has the Company received any written notice of
violation with which it has not complied.
3.11 Tax Matters.
(a) The Company has paid or caused to be paid all Taxes required
to be paid by it through the date hereof, whether disputed or not. All Taxes
which the Company is required to withhold or collect have been withheld and
collected and have been paid over to the proper governmental authorities. The
Company has, in accordance with applicable law, timely and properly filed all
Tax returns or extensions required to be filed by it through the date hereof,
all such returns correctly and accurately set forth the amount of any Taxes
relating to the applicable period, and any deductions from, or credits against,
any Taxes or taxable income relating to such returns are in all material
respects valid and proper items of deduction or credit.
(b) Neither the IRS nor any other governmental authority is now
asserting or, to the knowledge of the Company, threatening to assert against the
Company any deficiency or claim for additional Taxes. No claim has ever been
made by an authority in a jurisdiction where the Company does not file reports
and returns that the Company is or may be subject to taxation by that
jurisdiction. There are no Liens on any of the assets of the Company that arose
in connection with any failure (or alleged failure) to pay any Taxes. The
Company has never entered into a closing agreement pursuant to Section 7121 of
the Code. The Company is not and never has been a "personal holding company" as
defined under Section 541 of the Code. There has not been any audit of any tax
return filed by the Company, no such audit is in progress, and the Company has
not been notified by any tax authority that any such audit is contemplated or
pending. To the best of the Company's knowledge, the Company does not have any
liability for the Taxes of any person or entity other than the Company and its
Subsidiaries.
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3.12 Contracts and Commitments. Except as provided on Schedule 3.12, the
Company is not a party to any Material Contract. The Company does not know of
any basis for the termination, expiration or modification of any such Material
Contracts. Neither the Company nor, to the knowledge of the Company, any other
party thereto is in default under any Material Contract and, to the best
knowledge of the Company, there is no current state of facts which upon notice
or lapse of time or both would constitute such a default. The Company does not
have any liability for renegotiation of any government contracts or
subcontracts.
3.13 Intellectual Property.
(a) Schedule 3.13 sets forth all Patents, Trademarks and
registered Copyrights owned by, and applications for any of the above filed by,
the Company specifying as to each item, as applicable: (i) the category of
Intellectual Property; (ii) the jurisdiction in which the item is issued or
registered or in which any application for issuance or registration has been
filed, including the respective issuance, registration or application number;
(iii) the date of application, issuance or registration; and (iv) with respect
to any Trademarks, the class or classes of goods or services on which each such
Trademark is or is intended to be used. None of the Intellectual Property of the
Company is subject to any outstanding Judgment, and, except as set forth in
Schedule 3.13, no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or, to the knowledge of the Company,
threatened, which challenges the validity, enforceability, use or ownership of
the Intellectual Property of the Company, nor does the Company know of any valid
basis for any such claim, or any prior art, or any act or omission or failure to
act which may render the Intellectual Property invalid or unenforceable.
(b) Schedule 3.13 sets forth all material licenses, sublicenses
and other agreements under which the Company is either a licensor or licensee of
any Intellectual Property, except such licenses, sublicenses and other
agreements relating to prepackaged software used solely on the computers of the
Company. The Company has substantially performed all obligations imposed upon it
thereunder, and neither the Company nor, to the knowledge of the Company, any
other party thereto, is in breach of or default thereunder in any respect, nor
is there any current event which with notice or lapse of time or both would
constitute a default thereunder. All of the licenses listed on Schedule 3.13 are
valid, enforceable and in full force and effect, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity relating to
enforceability (regardless of whether considered in a proceeding at law or in
equity).
(c) To the knowledge of the Company, none of the Intellectual
Property currently sold or licensed by the Company to any Person or used by or
licensed to the Company infringes upon or otherwise violates any Intellectual
Property rights of others. Except as set forth on Schedule 3.13, no claim is
pending or, to the knowledge of the Company, threatened which challenges the
freedom of the Company to conduct its business as presently conducted.
(d) Except as set forth on Schedule 3.13, no litigation, action,
suit, proceeding, arbitration, claim, complaint, dispute or investigation is
pending or, to the knowledge of the
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Company, threatened against the Company, contesting the right of the Company to
sell or license to any Person or use the Intellectual Property presently sold or
licensed to such Person or used by the Company, nor does the Company know of any
valid basis for any such claim.
(e) To the knowledge of the Company, no Person is infringing
upon or otherwise violating the Intellectual Property rights of the Company.
(f) Except as set forth on Schedule 3.13, the Company has not
agreed to indemnify any person against any charge of infringement or other
violation with respect to any Intellectual Property owned or used by the
Company.
(g) No former employer of any employee of the Company, and no
current or former client of any consultant of the Company, has made a claim
against the Company or, to the knowledge of the Company, against any other
Person, that such employee or such consultant is utilizing proprietary
information of such former employer or client.
(h) Except as set forth on Schedule 3.13, the Company is not a
party to or bound by and, upon the consummation of the transactions contemplated
by this Agreement, will not be a party to or bound by any license or other
agreement requiring the payment of any material royalty payment, excluding such
agreements relating to prepackaged software licensed for use solely on the
computers of the Company.
(i) To the knowledge of the Company, no employee of the Company
is in violation of any Requirement of Law applicable to such employee's
employment, or any term of any employment agreement, patent or invention
disclosure agreement or other contract or agreement relating to the relationship
of such employee with the Company.
(j) Since January 1995, each employee and officer of the Company
who has had access to OptiMark(TM) has executed an agreement regarding
confidentiality, proprietary information and assignment of inventions to the
Company and, to the knowledge of the Company, none of such employees and
officers are in violation of such agreements.
(k) To the knowledge of the Company, none of the Trade Secrets
of the Company, the value of which is contingent upon the continued maintenance
of the confidentiality thereof, has been disclosed to any Person other than
employees, representatives and agents of the Company, except (A) where the
Company determined that such disclosure was necessary to conduct the business of
the Company, such disclosure not having a material adverse effect on the
Company, (B) as required pursuant to the filing of a Patent application by the
Company, or (C) under a confidentiality agreement.
(l) The Company has the exclusive right to file, procure and
maintain all applications and registrations for the Intellectual Property owned
by the Company.
(m) To the present knowledge of the Company, all Patents,
Trademarks and Copyrights owned by the Company are valid. The Company has taken
commercially reasonable efforts to maintain and protect its Intellectual
Property.
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(n) The Intellectual Property owned by the Company is free and
clear of all Liens.
3.14 Litigation. Except as otherwise set forth on Schedule 3.14 hereto,
there is no litigation, arbitration or governmental proceeding pending or, to
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries, which could, if adversely determined, (i) call into question the
validity or hinder the enforceability or performance of the Transaction
Documents or the agreements and transactions contemplated thereby or (ii) have a
materially adverse effect on the assets, liabilities, business, condition
(financial or otherwise), or prospects of the Company; nor, to the best
knowledge of the Company, has there occurred any event nor does there exist any
condition on the basis of which any litigation, proceeding or investigation
might properly be instituted.
3.15 Offerees. Neither the Company nor anyone acting on its behalf has
sold, offered or solicited offers to buy any securities of the Company so as to
bring the offer, issuance or sale of the Series C Shares or the Conversion
Shares, as contemplated by this Agreement, within the provisions of Section 5 of
the 1933 Act, unless such offer, issuance or sale was within the exemptions of
the 1933 Act. Assuming the accuracy of the representations of the Purchaser in
Section 4 below, the Company has complied with all Securities Laws in connection
with the issuance and sale of the Series C Shares.
3.16 Business; Compliance with Laws. The Company has all material
franchises, permits, licenses, orders, approvals and all other rights and
privileges necessary to permit it to own its property and to conduct its
business as it is presently conducted and as it is presently contemplated to be
conducted (collectively, "Permits"). Such Permits are in full force and effect.
The Company is not in violation in any respect of any Requirement of Law,
Judgment or Permit. The Company is in compliance, in all respects, with all
material federal, state and local laws and regulations (including all applicable
environmental laws and regulations, whether material or immaterial) relating to
its business as presently conducted. Neither the Company nor any officer or
director of the Company has been (a) subject to voluntary or involuntary
petition under the federal bankruptcy laws or any state insolvency law or the
appointment of a receiver, fiscal agent or similar officer by a court for its or
his business or property; (b) convicted in a criminal proceeding or named as a
subject of a pending criminal proceeding (excluding traffic violations and other
minor offenses); (c) subject to any Judgment (not subsequently reversed,
suspended or vacated) permanently or temporarily enjoining it or him from, or
otherwise imposing limits or conditions on its or his, engaging in any
securities, investment advisory, banking, insurance or other type of business or
acting as an officer or director of a public company; or (d) found by a court of
competent jurisdiction in a civil action or by the SEC or the Commodity Futures
Trading Commission to have violated any federal or state commodities, securities
or unfair trade practices law, which such judgment or finding has not been
subsequently reversed, suspended, or vacated.
3.17 Information Supplied to Purchaser. Neither the Transaction
Documents, nor the Schedules and Exhibits attached thereto or any document
referenced therein, nor any certificate, projection or statement (whether oral
or written) furnished to the Purchaser by or on behalf of the Company, contains
any untrue statement of a material fact, and none of the Transaction Documents,
the Schedules and Exhibits attached thereto or such other documents,
certificates, projections or
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statements referenced therein, when taken together, omits to state a material
fact necessary in order to make the statements contained therein not misleading.
There is no material fact directly relating to the assets, liabilities,
business, condition (financial or otherwise) or prospects of the Company (other
than facts which relate to general economic trends or conditions) known to the
Company that materially adversely affects or in the future may reasonably be
expected to materially adversely affect the same that has not been set forth in
this Agreement or in the Schedules and Exhibits attached hereto.
3.18 Investment Banking; Brokerage. No broker, finder, agent or similar
intermediary has acted on behalf of the Company in connection with this
Agreement or the transactions contemplated hereby, and there are no brokerage
commissions, finder's fees or similar fees or commissions payable to any Person
as a result of any actions taken by the Company in connection with the
transactions contemplated hereby.
3.19 Environmental Matters.
(a) The Company has never generated, transported, used, stored,
treated, disposed of, or managed any Hazardous Material. No Hazardous Material
has ever been or, to the best knowledge of the Company, is threatened to be
spilled, released, or disposed of by the Company, at any site presently or
formerly owned, operated, leased, or used by the Company, or, to the knowledge
of the Company, no Hazardous Material of the Company has ever come to be located
in the soil or groundwater at any such site. No Hazardous Material of the
Company has ever been transported from any site presently or formerly owned,
operated, leased, or used by the Company for treatment, storage, or disposal at
any other place. To the knowledge of the Company, the Company presently does not
own, operate, lease, or use, nor has the Company previously owned, operated,
leased, or used, any site on which underground storage tanks are or were
located. No Lien has ever been imposed by any governmental agency on any
property, facility, machinery, or equipment owned, operated, leased, or used by
the Company with the presence of any Hazardous Material and based upon any
action or inaction of the Company.
(b) The Company has no material liability under, nor has it ever
violated in any material respect, any Environmental Law. The Company and, to the
Company's knowledge, any property owned, operated, leased, or used by the
Company, and any facilities and operations thereon are presently in compliance
in all material respects with all applicable Environmental Laws. The Company has
never entered into or been subject to any Judgment with respect to any
environmental or health and safety matter or received any request for
information, notice, demand letter, administrative inquiry, or formal or
informal complaint or claim with respect to any environmental or health and
safety matter or the enforcement of any Environmental Law.
(c) For purposes of this Section 3.19, the term "Company" shall
include the Company, its Subsidiaries and their Affiliates, and any predecessors
of the Company, its Subsidiaries and their Affiliates.
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17
3.20 Employee Benefit Programs.
(a) Schedule 3.20 sets forth a list of every Employee Program
that has been maintained by the Company at any time since January 1, 1995.
(b) Each Employee Program which has ever been maintained by the
Company and which has at any time been intended to qualify under Section 401 (a)
or Section 501 (c)(9) of the Code has received a favorable determination or
approval letter from the IRS regarding its qualification under such section and,
to the best knowledge of the Company, has in fact, been continuously qualified
under the applicable section of the Code since the effective date of such
Employee Program. No event or omission has occurred which would cause any such
Employee Program to lose its qualification under the applicable Code section.
(c) Each Employee Program that has ever been maintained by the
Company has been maintained in material compliance with all applicable laws.
With respect to any Employee Program ever maintained by the Company, there has
occurred no "prohibited transaction," as defined in Section406 of ERISA or
Section 4975 of the Code (for which there exists neither a statutory nor
regulatory exception), or material breach of any duty under ERISA or other
applicable law (including, without limitation, any health care continuation
requirements or any other tax law requirements, or conditions to favorable tax
treatment, applicable to such plan or to any person in regard to such plan),
which could result, directly or indirectly (including, without limitation,
through any obligation of indemnification or contribution), in any taxes,
penalties or other liability to the Company or any of its affiliates. No
litigation, arbitration, or governmental administrative proceeding (or
investigation) or other proceeding (other than those relating to routine claims
for benefits) is pending or, to the best knowledge of the Company, threatened
with respect to any such Employee Program.
(d) Neither the Company nor any Affiliate (i) has ever
maintained any Employee Program which has been subject to Title IV of ERISA or
Section 412 of the Code (including, but not limited to, any Multiemployer Plan)
or (ii) has ever provided health care or any other non-pension benefits to any
employees after their employment is terminated (other than as required by part 6
of subtitle B of Title I of ERISA) or has ever promised to provide such
post-termination benefits.
(e) With respect to each Employee Program maintained by or on
behalf of the Company or any Affiliate within the three (3) years preceding the
Closing, complete and correct copies of the following documents (if applicable
to such Employee Program) have been made available to the Purchaser: (i) all
documents embodying or governing such Employee Program, and any funding medium
for the Employee Program (including, without limitation, trust agreements), as
they may have been amended to the date hereof; (ii) the most recent IRS
determination or approval letter with respect to such Employee Program under
Code Section 401 or Section 501(c)(9), and any applications for determination or
approval subsequently filed with the IRS; (iii) the three most recently filed
IRS Forms 5500, with all applicable schedules and accountants' opinions attached
thereto; (iv) the summary plan description for such Employee Program (or other
descriptions of such Employee Program provided to employees) and all
modifications thereto; (v) any insurance policy (including any fiduciary
liability insurance policy and any excess loss policy) related to such Employee
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Program; (vi) any documents evidencing any loan to an Employee Program that is a
leveraged employee stock ownership plan; and (vii) all other materials
reasonably necessary for the Company to perform any of its responsibilities with
respect to any Employee Program subsequent to the Closing (including, without
limitation, health care continuation requirements).
(f) With respect to each Employee Program maintained by the
Company or its Affiliates, no event has occurred, and there exists no condition
or current set of circumstances in connection with which the Company could,
directly or indirectly (through a Commonly Controlled Entity or otherwise), be
subject to any liability under ERISA, the Code or any other applicable law,
except liability for benefits claims and funding obligations payable in the
ordinary course.
(g) Each Employee Program maintained by the Company or Affiliate
that is a "group health plan" (as defined in ERISA Section 607(1) or Code
Section 5001(b)(1)) has been operated at all times in compliance with the
provisions of COBRA and any applicable similar state law.
(h) The consummation of the transactions contemplated by this
Agreement will not: (i) entitle any current or former employee to severance pay,
unemployment compensation or any similar payment; (ii) accelerate the time of
payment or vesting, or increase the amount of any compensation due to, or in
respect of, any current or former employee; (iii) result in or satisfy a
condition to the payment of compensation that would, in combination with any
other payment, result in an "excess parachute payment" within the meaning of
Code 280G(b); or (iv) constitute or involve a prohibited transaction (as defined
in ERISA Section 502(1)) or otherwise violate Part 4 of Subtitle B of Title I of
ERISA.
3.21 Product and Services Claims. There are no pending or, to the best
of the Company's knowledge, threatened product or service claims with respect to
any products manufactured or services provided by the Company nor are there any
facts upon which a claim of such nature could reasonably be anticipated to be
based. The Company does not have any contractual liability for breach of
warranty or service claims. No claims have been made against the Company for
renegotiation or price redetermination of any business transaction resulting
from or relating to defective products or services, and, to the best of the
Company's knowledge, there are no current facts upon which any such claim could
reasonably be anticipated to be based.
3.22 Employees; Labor Matters. As of May 15, 1999, the Company employed
a total of approximately 319 full-time employees. The Company believes it enjoys
good employer--employee relationships. To the best of the Company's knowledge,
the Company is not delinquent in payments to any of its employees for any wages,
salaries, commissions, bonuses or other direct compensation for any services
performed to the date hereof or amounts required to be reimbursed to such
employees. The Company does not have any policy, practice, plan or program of
paying severance pay or any form of severance compensation in connection with
the termination of employment, except as set forth in Schedule 3.22. All of the
Company's programs and arrangements in connection with the payment of
commissions are described in Schedule 3.22. To the best of the Company's
knowledge, the Company is in material compliance with all Requirements of Law
respecting labor, employment, fair employment practices, workplace safety and
health, terms and conditions of employment, and wages and hours. There are no
charges of employment discrimination or unfair
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19
labor practices, nor are there any strikes, slowdowns, stoppages of work, or any
other concerted interference with normal operations which are existing, pending
or, to the best of the Company's knowledge, threatened against or involving the
Company. The Company has not received any information indicating that any of its
employment policies or practices is currently being audited or investigated by
any federal, state or local government agency. To the best of the Company's
knowledge, the Company is, and at all times since its incorporation has been, in
material compliance with the requirements of the Immigration Reform Control Act
of 1986.
3.23 Trade Relations. To the best knowledge of the Company, there exists
no actual or threatened termination, cancellation or limitation of, or any
adverse modification or change in, the business relationship of the Company with
any customer or any group of customers whose purchases are individually or in
the aggregate material to the business of the Company, or with any material
supplier.
3.24 Corporate Records; Copies of Documents. The corporate record books
of the Company accurately record all corporate action taken by its stockholders,
Board and committees thereof. The copies of the corporate records of the
Company, as made available to the Purchaser for review, are true and complete
copies of the originals of such documents. The Company has made available for
inspection by the Purchaser true and correct copies of all documents referred to
in this Section 3.24 or in the Schedules delivered pursuant to this Agreement.
3.25 Affiliate Transactions. Except as set forth in Schedule 3.25
hereto, neither the Company nor, to the best of the Company's knowledge, any
officer, employee or director of the Company owns or controls, directly or
indirectly, on an individual or joint basis, any interest in (excepting less
than 1% stockholding for investment purposes in securities of publicly-held
companies) or serves as an officer, director, employee, consultant, partner or
in another similar capacity of, any competitor, supplier, lessor, lessee,
distributor, sales agent or customer of or lender to or borrower from, the
Company.
3.26 Insurance. Schedule 3.26 lists all of the insurance policies held
by or on behalf of the Company as of the date of this Agreement, with the
effective date and coverage amounts indicated thereon. Except as set forth on
Schedule 3.26, such policies and binders are valid and enforceable in accordance
with their terms and are in full force and effect. None of such policies will be
affected by, or terminate or lapse by reason of, any transaction contemplated by
this Agreement or any transaction contemplated hereunder.
3.27 FIRPTA. The Company is not a "foreign person" within the meaning of
Section 1445 of the Code.
3.28 Investment Company. The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
3.29 Closing. The representations and warranties of the Company
contained in this Section 3 shall be true and correct in all material respects
on the date of the Closing as though then made, except
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as affected by the transactions expressly contemplated by this Agreement and
except as expressly disclosed in writing to the Purchaser by the Company prior
to the Closing.
SECTION 4. INVESTOR REPRESENTATIONS
To induce the Company to enter into this Agreement, effective as of the
date hereof and at and as of the Closing unless otherwise expressly indicated,
the Purchaser hereby represents to the Company as follows:
4.1 Authorization. This Agreement and all other documents executed
pursuant hereto have been duly authorized by all necessary action on the part of
the Purchaser, have been duly executed and delivered, and constitute valid,
binding and enforceable agreements of the Purchaser.
4.2 Investment Intent. The Purchaser is acquiring the Series C Shares
for its own account, for investment, and not with a present view to any
"distribution" thereof within the meaning of the 1933 Act.
4.3 Restrictions on Transfer. The Purchaser understands that, because
the Series C Shares have not been registered under the Securities Laws, the
Purchaser cannot dispose of any or all of the Series C Shares or the Conversion
Shares unless such securities are subsequently registered under the Securities
Laws or exemptions from such registration are available. The Purchaser
understands that each certificate representing the Series C Shares and the
Conversion Shares will bear a legend substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO A WRITTEN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
4.4 Sophistication. The Purchaser is sufficiently knowledgeable and
experienced in the making of venture capital investments so as to be able to
evaluate the risks and merits of its investment in the Company, and is able to
bear the economic risk of loss of its investment in the Company.
4.5 No General Solicitation. The Purchaser did not learn of this
investment through any general solicitation or general advertising by the
Company, as those terms are used in Rule 502(c) under the 0000 Xxx.
4.6 Brokers. No broker, finder, agent or similar intermediary has acted
on behalf of the Purchaser in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finder's fees or
similar fees or commissions payable in connection therewith.
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4.7 Accreditation. The Purchaser is an "accredited investor" as that
term is defined under Regulation D adopted under the 0000 Xxx.
4.8 Reliance by Company. The Purchaser has been advised that the Series
C Shares have not been and are not being registered under the Securities Laws
and that in issuing the Series C Shares the Company is relying upon, among other
things, the representations and warranties of the Purchasers contained in this
Section 4.
SECTION 5. INDEMNIFICATION
5.1 General.
(a) The Company shall, to the full extent permitted by law, and
in addition to any such rights which any Indemnified Party (as defined herein)
may have pursuant to statute, common law, separate agreement, the Company's
Certificate of Incorporation or By-laws, or otherwise, indemnify, defend and
hold harmless the Purchaser (including its subsidiaries, affiliates, directors,
officers, members, partners, employees and agents, an "Indemnified Purchaser")
and each person (a "Controlling Person" and, collectively with Indemnified
Purchasers, the "Indemnified Parties") who controls any of them within the
meaning of Section 15 of the 1933 Act, from and against any and all Losses
(including Losses incurred by the Indemnified Party in any action between the
Company and the Indemnified Party or between the Indemnified Party and any third
party or otherwise) resulting from, arising out of or relating to (i) any breach
of any representation or warranty, covenant or agreement by the Company in the
Transaction Documents and/or any Certificate or Schedule delivered by the
Company pursuant thereto, including, without limitation, any legal,
administrative or other actions (including actions brought by the Purchaser or
the Company or any equity holders of the Company or derivative actions brought
by any Person claiming through or in the Company's name), proceedings or
investigations (whether formal or informal), or written threats thereof, based
upon, relating to or arising out of the Transaction Documents and/or any
Certificate or Schedule delivered by the Company pursuant thereto, the
transactions contemplated thereby, or any Indemnified Party's role therein or in
transactions contemplated thereby, (ii) by reason of the Purchaser's status as a
security holder, creditor, director, agent, representative or controlling person
of the Company (including, without limitation, any and all Losses under the
Securities Laws, at common law or otherwise, which relate directly or indirectly
to the registration, purchase, sale or ownership of the Series C Shares or
Conversion Shares or to any fiduciary obligation owed with respect thereto), and
(iii) the claims of NeoVision Hypersystems, Inc. set forth in the NeoVision
Lawsuit; provided, however, that the Company will not be liable to the extent
that Losses arise from and are based on an untrue statement or omission or
alleged untrue statement or omission in a registration statement or prospectus
which is made in reliance on and in conformity with information furnished to the
Company by or on behalf of such Indemnified Party. The indemnification and
contribution provided for in this Section 5.1 will remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Parties or any officer, director, employee, agent or Controlling Person of the
Indemnified Parties.
(b) If the indemnification provided for in this Section 5.1 is for any
reason held by a court of competent jurisdiction to be unavailable to an
Indemnified Party in respect of any Losses
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referred to above, then the Company, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Purchaser, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Purchaser in connection with the action or inaction
which resulted in such Losses, as well as any other relevant equitable
considerations. In connection with any registration of the Company's securities,
the relative benefits received by the Company and the Purchaser shall be deemed
to be in the same respective proportions that the net proceeds from the offering
(before deducting expenses) received by the Company and the Purchaser, in each
case as set forth in the table on the cover page of the applicable prospectus,
bear to the aggregate public offering price of the securities so offered. The
relative fault of the Company and the Purchaser shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(c) The Company and the Purchaser agree that it would not be just and
equitable if contribution pursuant to the foregoing paragraph (b) were
determined by pro rata or per capita allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the foregoing paragraph (b). In connection with any registration of the
Company's securities, in no event shall the Purchaser be required to contribute
any amount under this Section 5.1 in excess of the lesser of (i) the total of
such Losses indemnified against divided by the total securities sold under such
registration statement which are being sold by the Purchaser or (ii) the
proceeds received by the Purchaser from its sale of securities under such
registration statement. No person found guilty of fraudulent misrepresentation
(within the meaning of the Securities Laws) shall be entitled to contribution
from any person who was not found guilty of such fraudulent misrepresentation.
5.2 Notice; Defense of Claims.
(a) Promptly after receipt by an Indemnified Party of notice of any
third party or other claim, liability or expense to which the indemnification
obligations hereunder would apply, including in connection with any governmental
proceeding, the Indemnified Party shall give notice thereof in writing to the
indemnifying party or parties, but the omission to so notify the indemnifying
party or parties promptly will not relieve the indemnifying party or parties
from any liability except to the extent that the indemnifying party or parties
shall have been materially prejudiced as a result of the failure or delay in
giving such notice. Such notice shall state the information then available
regarding the amount and nature of such claim, liability or expense and shall
specify the provision or provisions of this Agreement under which the liability
or obligation is asserted.
(b) In the case of any third party claim, if within twenty (20) days
after receiving the notice described in the preceding paragraph the indemnifying
party or parties (i) give written notice to the Indemnified Parties stating that
they intend to defend in good faith against such claim, liability or expense at
their own cost and expense and (ii) provide assurance and security reasonably
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acceptable to such Indemnified Parties that such indemnification will be paid
fully and promptly if required and such Indemnified Parties will not incur cost
or expense during the proceeding, then counsel for the defense shall be selected
by the indemnifying party or parties (subject to the consent of such Indemnified
Parties which consent shall not be unreasonably withheld) and such Indemnified
Parties shall not be eligible for any payment with respect to such claim,
liability or expense as long as the indemnifying party or parties are conducting
a good faith and diligent defense at their own expense; provided, however, that
the assumption of defense of any such matters by the indemnifying party or
parties shall relate solely to the claim, liability or expense that is subject
or potentially subject to indemnification. If the indemnifying party or parties
assume such defense in accordance with the preceding sentence, they shall have
the right, with the consent of such Indemnified Parties, which consent shall not
be unreasonably withheld, to settle all indemnifiable matters related to claims
by third parties which are susceptible to being settled provided the
indemnifying party or parties' obligation to indemnify such Indemnified Parties
therefor will be fully satisfied and the settlement includes a complete release
of such Indemnified Parties. The indemnifying party or parties shall keep such
Indemnified Parties apprised of the status of the claim, liability or expense
and any resulting suit, proceeding or enforcement action, shall furnish such
Indemnified Parties with all documents and information that such Indemnified
Parties shall reasonably request and shall consult with such Indemnified Parties
prior to acting on major matters, including settlement discussions.
Notwithstanding anything herein stated, such Indemnified Parties shall at all
times have the right to fully participate in such defense at its own expense
directly or through counsel; provided, however, if the named parties to the
action or proceeding include both the indemnifying party or parties and the
Indemnified Parties and representation of both parties by the same counsel would
be inappropriate under applicable standards of professional conduct, the expense
of separate counsel for such Indemnified Parties shall be paid by the
indemnifying party or parties. If no such notice of intent to dispute and defend
is given by the indemnifying party or parties, or if such diligent good faith
defense is not being or ceases to be conducted, such Indemnified Parties shall,
at the expense of the indemnifying party or parties, undertake the defense of
(with counsel selected by such Indemnified Parties), and shall have the right to
compromise or settle, such claim, liability or expense. If such claim, liability
or expense is one that by its nature cannot be defended solely by the
indemnifying party or parties, then such Indemnified Parties shall make
available all information and assistance that the indemnifying party or parties
may reasonably request and shall cooperate with the indemnifying party or
parties in such defense.
(c) Satisfaction of Indemnification Obligations. Any indemnity payable
pursuant to this Section 5 shall be paid not later than thirty (30) days
following the later of (a) the Indemnified Party's request therefor or (b) a
final non-appealable determination of Loss, but in any event such payment shall
be made not later than ten (10) days prior to the date on which the Loss upon
which the indemnity is based is required to be satisfied by the Indemnified
Party, if applicable.
SECTION 6. COVENANTS OF THE COMPANY
Until the earlier to occur of (i) August 27, 2016, or (ii) the IPO
Effectiveness Date:
6.1 Inspection. The Company will permit representatives of the Purchaser
to visit and inspect any of its properties, to examine its corporate, financial
and operating records and make copies
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thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with their respective directors, officers and independent public
accountants, all at such reasonable times during normal business hours and as
often as may be reasonably requested, upon reasonable advance notice to the
Company.
6.2 Financial Statements and Other Information. The Company shall
deliver to the Purchaser the following:
(a) as soon as available, but not later than ninety (90) days
after the end of each fiscal year of the Company, a copy of the audited balance
sheet of the Company as of the end of such year and the related statements of
operations and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous year, all in reasonable detail and
accompanied by a management summary and analysis of the operations of the
Company for such fiscal year and by the opinion of a nationally recognized
independent certified public accounting firm which report shall state without
qualification that such financial statements present fairly the financial
condition as of such date and results of operations and cash flows for the
periods indicated in conformity with GAAP applied on a consistent basis;
(b) as soon as available, but in any event not later than thirty
(30) days after the end of each of the first three fiscal quarters of each
fiscal year, the unaudited balance sheet of the Company, and the related
statements of operations and cash flows for such quarter and for the period
commencing on the first day of the fiscal year and ending on the last day of
such quarter, all certified by an appropriate officer of the Company as
presenting fairly the financial condition as of such date and results of
operations and cash flows for the periods indicated in conformity with GAAP
applied on a consistent basis, subject to normal year-end adjustments and the
absence of footnotes required by GAAP; and
(c) unaudited monthly financial statements within thirty (30)
days after the end of each month; and
(d) annual operating budgets no later than thirty (30) days
prior to the end of the Company's fiscal year and, from time to time, such other
financial data and information about the Company as is reasonably available to
the Company and as the Purchaser may reasonably request.
6.3 Management Compensation. Compensation paid by the Company to its
management will be reasonably comparable to compensation paid to management in
companies in the same or similar businesses of similar size and maturity and
with comparable financial performance.
6.4 Conduct of Business. The Company will (a) keep in full force and
effect (i) its corporate existence and good standing under the laws of its
jurisdiction of incorporation and (ii) all intellectual property rights useful
in its business (except such rights as the Board of Directors has reasonably
determined are not material to the Company's continuing operations), (b)
preserve and maintain in full force and effect all material rights, privileges,
qualifications, applications, licenses and franchises necessary in the normal
conduct of its business, (c) conduct its business in accordance with sound
business practices, and (d) file or cause to be filed in a timely manner all
reports,
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applications and licenses that shall be required by a governmental agency or
body and that, if not timely filed, could have a material adverse effect on the
Company.
6.5 Payment of Taxes, Compliance with Laws, etc. The Company will pay
and discharge all lawful taxes, assessments and governmental charges or levies
imposed upon it or upon its income or property before the same shall become in
default, as well as all lawful claims for labor, materials and supplies which,
if not paid when due, might become a lien or charge upon its property or any
part thereof; provided, however, that the Company shall not be required to pay
and discharge any such tax, assessment, charge, levy or claim so long as the
validity thereof is being contested by the Company in good faith by appropriate
proceedings and an adequate reserve therefor has been established on its books.
The Company will use its best efforts to comply with all applicable laws and
regulations in the conduct of its business, including, without limitation, all
applicable federal and state securities laws in connection with the issuance of
any shares of its capital stock.
6.6 Insurance. The Company will keep its insurable properties insured,
upon reasonable business terms, by financially sound and reputable insurers
against liability, and the perils of casualty, fire and extended coverage in
amounts of coverage at least equal to those customarily maintained by companies
in the same or similar business as the Company. The Company will also maintain
with such insurers insurance against other hazards and risks and liability to
persons and property to the extent and in the manner customary for companies
engaged in the same or similar business.
6.7 Maintenance of Properties. The Company will maintain all properties
used or useful in the conduct of its business in good repair, working order and
condition, ordinary wear and tear excepted, as necessary to permit such business
to be properly and advantageously conducted.
6.8 Affiliated Transactions. All transactions between the Company and
any director, officer or key employee of the Company shall be conducted on an
arm's-length basis, shall be on terms and conditions no less favorable to the
Company than could be obtained from nonrelated persons and shall be approved in
advance by a majority of disinterested members of the Board of Directors after
full disclosure of the terms thereof.
6.9 Books and Records. The Company shall keep books of record and
account, in which accurate entries shall be made of all financial transactions
and the assets and business of the Company in accordance with GAAP consistently
applied.
6.10 Back-ups of Computer Software. The Company shall make back-ups of
all material computer software programs and databases and shall maintain such
software programs databases at a secure off-site location.
6.11 Defense of Intellectual Property. In the event the Company
discovers, either through its own investigation or through notice from the
Purchaser or other entity, that a third party may be infringing the Intellectual
Property, the Company shall commence reasonable efforts to cease such
infringement. If the third party declines to cease infringement, the Company
shall consider in good faith whether to commence and pursue legal action against
such third party. The determination of
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whether or not legal action shall be commenced shall lie exclusively with the
Company; provided, however, the Company shall not unreasonably decline to
commence legal action if the Company obtains or receives reasonable evidence of
infringement by a third party and said infringement is having or may have a
material impact on the Company's revenue or other business interests. All costs
of such legal action shall be borne by the Company, and the Company shall retain
control over the conduct of such action, including settlement. In the event
threatened or actual legal action by the Company results in a settlement or
resolution that provides damages or other monies to the Company, such proceeds
will be the property of the Company, provided the Purchaser has incurred no
legal fees or costs in connection with that action not otherwise subject to
indemnification thereunder, in which event the Purchasers' fees and costs shall
first be reimbursed from such proceeds.
SECTION 7. GENERAL
7.1 Amendments; Waivers and Consents. No provision of this Agreement may
be waived or amended except in writing. For the purposes of this Agreement and
all agreements, documents and instruments executed pursuant hereto, except as
otherwise specifically set forth herein or therein, no course of dealing between
the Company on the one hand and the Purchaser on the other and no delay on the
part of any party hereto in exercising any rights hereunder or thereunder shall
operate as a waiver of the rights hereof and thereof. Except as otherwise
provided herein or therein, amendments in or additions to, and any consents
required by, this Agreement may be made, and compliance with any term, covenant,
condition or provision set forth herein may be omitted or waived (either
generally or in a particular instance and either retroactively or prospectively)
with a consent of the Purchaser and (in the case of any such amendment or
addition) the Company.
7.2 Survival of Representations, Warranties and Covenants; Assignability
of Rights. All covenants, agreements, representations and warranties of the
Company made herein and in the Schedules and Exhibits delivered or furnished by
or on behalf of the Company to the Purchaser in connection herewith shall
survive the delivery of the Series C Shares until the earlier of twenty four
(24) months after the date of the Closing or the IPO Effectiveness Date,
regardless of any instruction or any investigation by or on behalf of the
Purchaser. Except as otherwise provided in this Agreement, all such covenants,
agreements, representations and warranties shall inure to the benefit of the
Purchaser's successors and assigns and to transferees of the Series C Shares,
whether so expressed or not. The representations and warranties made by the
Purchaser in Section 4 of this Agreement shall survive the delivery of the
Series C Shares and shall bind the Purchaser's successors and assigns and shall
inure to the benefit of the Company's successors and assigns. It is understood
that the Purchaser's rights and obligations hereunder may be assigned to a
Person that controls, is controlled by, or is under common control with the
Purchaser, provided that such Person agrees to be bound by this Agreement as if
a party hereto.
7.3 Governing Law. This Agreement shall be deemed to be a contract made
under, and shall be construed in accordance with, the laws of the State of
Delaware without giving effect to principles of conflicts of law.
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7.4 Section Headings; Counterparts. The descriptive headings in this
Agreement have been inserted for convenience only and shall not be deemed to
limit or otherwise affect the construction of any provision thereof or hereof.
This Agreement may be executed simultaneously in any number of counterparts,
each of which when so executed and delivered shall be taken to be an original;
but such counterparts shall together constitute but one and the same document.
7.5 Notices and Demands. Any notice or demand which, by any provision of
this Agreement or any agreement, document or instrument executed pursuant hereto
or thereto, except as otherwise provided therein, is required or provided to be
given shall be deemed to have been sufficiently given or served and received for
all purposes upon the earlier to occur of actual delivery or five days after
being sent by certified or registered mail, postage and charges prepaid, return
receipt requested, or by express delivery providing receipt of delivery, to the
following addresses:
(a) if to the Company, at its chief executive office, or at any
other address designated by the Company to the Purchaser in writing;
(b) if to the Purchaser, at its mailing address as shown on
Schedule I hereto, or at any other address designated by the Purchaser to the
Company in writing.
7.6 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
7.7 Expenses. The Company shall pay its costs and expenses, and the
Purchaser shall pay its respective costs and expenses, incurred with respect to
the negotiation, execution, delivery and performance of this Agreement and the
agreements, documents and instruments contemplated hereby or executed pursuant
hereto.
7.8 Publicity. Except as may be required by an applicable Requirement of
Law, (i) the Purchaser shall not issue a publicity release or public
announcement or otherwise make any disclosure concerning the Transaction
Documents or the transactions contemplated thereby, without prior written
approval by the Company, and (ii) the Company shall not issue any publicity
release, public announcement or make any other disclosure regarding the
Transaction Documents, which disclosure directly or indirectly references the
name of the Purchaser, without prior written approval by the Purchaser;
provided, however, that nothing in this Agreement shall restrict any party to
this Agreement from disclosing information (a) that is already publicly
available; (b) to a prospective purchaser or transferee in connection with any
contemplated sale or transfer of any of the Series C Shares or Conversion
Shares; and/or (c) to its attorneys, accountants, consultants and other advisors
to the extent necessary to obtain their services in connection with this
Agreement. If any announcement is required by law to be made by the Purchaser,
prior to making such announcement the Purchaser will deliver a draft of such
announcement to the Company and shall give the Company an opportunity to comment
thereon.
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7.9 Further Assurances. Each of the parties shall execute such documents
and perform such further acts (including, without limitation, obtaining any
consents, exemptions, authorizations or other actions by, or giving any notices
to, or making any filings with, any governmental agency or any other Person) as
may be reasonably required or desirable to carry out or to perform the
provisions of this Agreement.
7.10 Integration. This Agreement together with the other Transaction
Documents, including the Schedules, Exhibits, documents and instruments referred
to herein or therein, constitutes the entire agreement and supersedes all other
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
7.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
a sealed instrument as of the day and year first above written.
Company:
--------
OptiMark Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxxx
Chief Executive Officer
Purchaser:
Softbank America, Inc.
By: /s/ Xxxxxx X. Xxxxxx
Treasurer
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Schedule I
(to Series C Stock Purchase Agreement)
NUMBER OF
EFFECTIVE SHARES OF
DATE OF SERIES C STOCK
CERT NO. NAME AND ADDRESS OF PURCHASER PURCHASE PURCHASED
-------- ----------------------------- -------- --------------
OTC-1 SOFTBANK Capital Partners LP
00 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx 07/26/99 8,136,150
OTC-2 SOFTBANK Capital Advisors Fund LP
00 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx 07/26/99 113,850
