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REGISTRATION RIGHTS AGREEMENT
by and among
eSpeed, Inc.
and
The Investors Named Herein
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TABLE OF CONTENTS
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ARTICLE I DEMAND REGISTRATIONS....................................................................................1
1.1 Requests for Registration...............................................................................1
1.2 Number of Demand Registrations; Expenses ...............................................................2
1.3 Effective Registration Statement .......................................................................2
1.4 Priority on Demand Registrations .......................................................................2
1.5 Selection of Underwriter ...............................................................................3
ARTICLE II PIGGYBACK REGISTRATIONS ...............................................................................3
2.1 Right to Piggyback .....................................................................................3
2.2 Piggyback Expenses .....................................................................................4
2.3 Priority on Primary Registrations ......................................................................4
2.4 Priority on Secondary Registrations ....................................................................4
ARTICLE III HOLDBACK AGREEMENTS ..................................................................................5
ARTICLE IV REGISTRATION PROCEDURES ...............................................................................5
ARTICLE V REGISTRATION EXPENSES ..................................................................................8
5.1 Registration Expenses ..................................................................................8
5.2 Holders' Expenses ......................................................................................8
ARTICLE VI UNDERWRITTEN AND OTHER OFFERINGS ......................................................................8
6.1 Underwriting Agreement .................................................................................8
6.2 Obligations of Participants ............................................................................8
ARTICLE VII INDEMNIFICATION ......................................................................................9
7.1 Company's Indemnification Obligations ..................................................................9
7.2 Holder's Indemnification Obligations ..................................................................10
7.3 Notices; Defense; Settlement ..........................................................................10
7.4 Indemnity Provision ...................................................................................11
ARTICLE VIII DEFINITIONS ........................................................................................11
8.1 Terms .................................................................................................11
8.2 Defined Terms in Corresponding Sections ...............................................................13
ARTICLE IX MISCELLANEOUS ........................................................................................14
9.1 Amendments and Waivers ................................................................................14
9.2 Successors and Assigns ................................................................................14
9.3 Notices ...............................................................................................14
9.4 Headings ..............................................................................................15
9.5 Gender ................................................................................................15
9.6 Invalid Provisions ....................................................................................15
9.7 Governing Law; Forum; Process .........................................................................15
9.8 Counterparts ..........................................................................................16
9.9 Additional Investors ..................................................................................16
ARTICLE X RULE 144 REPORTING ....................................................................................16
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REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
June 5, 2000, by and among eSpeed, Inc., a Delaware corporation (the "Company"),
the parties that have executed the signature pages hereto (the "Initial
Investors") and such other parties that otherwise execute a joinder agreement
and become a party hereto (collectively, the "Investors").
RECITALS
WHEREAS, as an inducement to each of the Initial Investors to
invest in the Company, the Company desires to grant to each of the Initial
Investors registration rights with respect to the shares (the "Shares") of Class
A Common Stock (as defined in Section 8.1 below) and warrants to purchase shares
of Class A Common Stock (the "Warrants") issued to the Initial Investors on the
date hereof as set forth on Schedule A hereto, on the terms and subject to the
conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and
agreements and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEMAND REGISTRATIONS
1.1. Requests for Registration . Subject to Sections 1.2
and 1.3 hereof, the Initial Investors may request, in writing, registration
under the Securities Act of all or part of their Registrable Securities. Within
15 days after receipt of any such request, the Company will give notice of such
request to all other Investors and to other persons holding piggyback
registration rights entitling them to have securities of the Company included
within such registration ("Other Holders"). Thereafter, the Company will use all
reasonable efforts to effect the registration under the Securities Act (i) on
Form S1 or any similar long-form registration statement (a "Long-Form
Registration") or (ii) on Form S3 or any similar short-form registration
statement (a "Short-Form Registration") if the Company qualifies to effect a
Short-Form Registration, and will include in such registration all Registrable
Securities and securities of the Company held by the Other Holders with respect
to which the Company has received written requests for inclusion therein within
20 days after the receipt of the Company's notice, subject to the provisions of
Section 1.4. All registrations initiated by an Investor pursuant to this Section
1.1 are referred to herein as "Demand Registrations". The Company shall not be
required to effect any underwritten Demand Registration requested by an Initial
Investor if either (a) within the 12 months preceding the receipt by the Company
of such request, the Company has filed and has had declared effective by the
Commission a Registration Statement with respect to an underwritten offering
under this Section 1.1 or has filed and has had declared effective by the
Commission another Registration Statement with respect to an underwritten
offering to which the Piggyback Registration rights set forth in Article II
hereof apply and such Initial Investor had an opportunity to include all the
shares requested to be included in such Registration Statements; and provided
further that the Company shall not be required to effect any Demand Registration
requested by an Initial Investor if such Investor may sell all of the
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Registrable Securities requested to be included in such Demand Registration
without registration under the Securities Act, pursuant to the exemption
provided by (i) Rule 144(k) under the Securities Act, as such rule may be
amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the Commission. The rights of an Initial Investor pursuant to this
Section 1.1 shall be assignable in accordance with the provisions of Section
9.9.
1.2. Number of Demand Registrations; Expenses . Subject to
Sections 1.1 and 1.3 hereof, each of the Initial Investors shall be entitled to
(i), from and after the one year anniversary of the date hereof, one Demand
Registration and (ii), from and after the date on which such Initial Investor's
Warrants become fully exercisable, one additional Demand Registration, with no
more than one of such Demand Registrations being a Long-Form Registration;
provided, however, that the Company need not effect any requested Demand
Registration unless the expected proceeds of such registration exceed
$20,000,000. The Company will pay all Registration Expenses in connection with
any Demand Registration.
1.3. Effective Registration Statement . A registration
requested pursuant to Section 1.1 of this Agreement shall not be deemed to have
been effected (i) unless a Registration Statement with respect thereto has been
declared effective by the Commission, (ii) if after it has become effective,
such registration is interfered with by any stop order, injunction or other
order or requirement of the Commission or other governmental agency or court for
any reason, and, as a result thereof, the Registrable Securities covered thereby
have not been sold or (iii) the Registration Statement does not remain effective
for a period of at least 180 days beyond the effective date thereof or, with
respect to an underwritten offering of Registrable Securities, until 45 days
after the commencement of the distribution by the holders of the Registrable
Securities included in such Registration Statement. If a registration requested
pursuant to this Article I is deemed not to have been effected as provided in
this Section 1.3, then the Company shall continue to be obligated to effect the
number of Demand Registrations set forth in Section 1.2 without giving effect to
such requested registration. The Initial Investors of the Registrable Securities
shall be permitted to withdraw all or any part of the Registrable Securities
from a Demand Registration at any time prior to the effective date of such
Demand Registration; provided that in the event of, and concurrently with such
withdrawal, the Initial Investors responsible for such Demand Registration shall
either (x) pay or reimburse the Company for all fees and expenses (including
counsel fees and expenses) incurred by them and the Company prior to such
withdrawal or (y) agree to forfeit one of its Demand Registration rights
hereunder.
1.4. Priority on Demand Registrations . If the Company
includes in any underwritten Demand Registration any securities which are not
Registrable Securities and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and other
shares of Common Stock proposed to be included exceeds the number of Registrable
Securities and other securities which can be sold in such offering, the Company
will include in such registration (i) first, the number of Registrable
Securities requested to be included which, in the opinion of such underwriters,
can be sold, by the Investor initiating the Demand Registration, (ii) second,
that number of other shares of Common Stock proposed to be included in such
registration equally between Cantor Fitzgerald Securities and its Affiliates,
and their successors and assigns on the one hand (the "Priority Piggyback
Registration Holders"), and any other Investors exercising their Piggyback
Registration rights on the one
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hand and (iii) third, that number of other shares of Common Stock proposed to be
included in such registration, pro rata among any other holders exercising their
respective piggyback registration rights thereof based upon the total number of
shares which such holders propose to include in such registration.
1.5. Selection of Underwriter. If the Investor exercising
its right to a Demand Registration so elects, the offering of such Registrable
Securities pursuant to such Demand Registration shall be in the form of an
underwritten offering. The Company shall select one or more nationally
recognized firms of investment bankers to act as the lead managing Underwriter
or Underwriters in connection with such offering and shall select any additional
investment bankers and managers to be used in connection with the offering.
1.6. Limitations, Conditions and Qualifications to
Obligations for a Demand Registration. The Company shall be entitled to
postpone, for a reasonable period of time (but not exceeding 90 days), the
filing of any registration statement otherwise required to be prepared and filed
by it pursuant to Section 1.1 if the Company determines, in its good faith
judgment, that such registration and offering would interfere with any material
financing, acquisition, corporate reorganization or other material transaction
involving the Company or any of its Affiliates and promptly gives the holders of
Registrable Securities requesting registration thereof pursuant to Section 1.1
written notice of such determination, containing an approximation of the
anticipated delay. If the Company shall so postpone the filing of a registration
statement, holders of Registrable Securities requesting the Demand Registration
pursuant to Section 1.1 shall have the right to withdraw the request for
registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which holders of Registrable Securities are entitled pursuant to Section 1.1
hereof.
ARTICLE II
PIGGYBACK REGISTRATIONS
2.1. Right to Piggyback . From and after the date which is
12 months from the date of this Agreement, whenever the Company proposes to
register any of its equity securities under the Securities Act (other than a
registration effected in connection with a Company stock option or other
employee benefit plan (such as a Registration Statement on Form S8), a
registration effected in connection with the conversion of debt securities, a
registration on any form that does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities (such as a Registration Statement on
Form S4), or a registration effected in connection with an acquisition), and
the form of registration statement to be used may be used for the registration
of Registrable Securities (a "Piggyback Registration"), the Company will give
notice (the "Notice") to all Investors of its intention to effect such a
registration and will include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein, subject to the provisions of Section 2.3 and 2.4 hereof. Such requests
for inclusion shall be in writing and delivered to the Company within 20 days
after the Investor's receipt of the Notice and shall specify the number of
Registrable Securities intended to be
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disposed of and the intended method of distribution thereof. Any holder shall
have the right to withdraw its request for inclusion of its Registrable
Securities in any Registration Statement pursuant to this Section 2.1 by giving
written notice to the Company of its request to withdraw. The Company may
withdraw a Piggyback Registration at any time prior to the time it becomes
effective. The Company is not required to include in a registration any
Registrable Securities which the holder is not then entitled to offer to sell
whether by contractual restriction or by law.
2.2. Piggyback Expenses . The Registration Expenses of the
Investors will be paid by the Company in all Piggyback Registrations
2.3. Priority on Primary Registrations . If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering, the Company will include in such
registration (i) first, the securities the Company proposes to sell, (ii)
second, that number of other shares of Common Stock proposed to be included in
such registration by the Priority Piggyback Registration Holders and (iii)
third, that number of other shares of Common Stock proposed to be included in
such registration, pro rata among any other holders (including the Investors)
exercising their respective piggyback registration rights thereof based upon the
total number of shares which such holders (including the Investors) propose to
include in such registration.
2.4. Priority on Secondary Registrations . If a Piggyback
Registration is an underwritten secondary registration on behalf of holders
(other than the Investors) of the Company's securities, and the managing
underwriters advise the Company that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering, the Company will include in such registration (i) first,
the number of shares of Common Stock requested to be included by the holders
exercising their demand registration rights, and (ii) second, that number of
other shares of Common Stock proposed to be included in such registration, pro
rata among any other holders (including the Investors) exercising their
respective piggyback registration rights thereof based upon the total number of
shares which such holders (including the Investors) propose to include in such
registration.
ARTICLE III
HOLDBACK AGREEMENTS
In the event the Company or another holder of the Company's
stock proposes to enter into an underwritten public offering, each holder of
Registrable Securities agrees to enter into an agreement with the managing
underwriters not to effect any sale or distribution of equity securities of the
Company, or any securities convertible, exchangeable or exercisable for or into
such securities, during the period beginning on the date of such offering and
extending for up to 90 days; provided that such holders shall not be so
obligated unless the Company and each of its Affiliates enter into the same or
comparable lockup agreement for the same period and further shall not be so
obligated if such holder then owns less than 2% of the outstanding Class A
Common Stock.
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ARTICLE IV
REGISTRATION PROCEDURES
Whenever holders of Registrable Securities have requested that
any Registrable Securities be registered pursuant to this Agreement (the
"Selling Holders"), the Company will use reasonable efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company will:
(a). use reasonable efforts to prepare and file with the
Commission a Registration Statement with respect to such Registrable Securities
as soon as practicably thereafter and, in the case of a Demand Registration
within 60 days (subject to a postponement pursuant to Section 1.6) of the
request for a Demand Registration and use all reasonable efforts to cause such
Registration Statement to become and remain effective until the completion of
the distribution contemplated thereby; provided, that as promptly as practicable
before filing a Registration Statement or Prospectus or any amendments or
supplements thereto, the Company will (i) furnish to the Selling Holders copies
of all such documents proposed to be filed and (ii) notify each Selling Holder
of Registrable Securities covered by such Registration Statement of (x) any
request by the Commission to amend such Registration Statement or amend or
supplement any Prospectus, or (y) any stop order issued or threatened by the
Commission, and take all reasonable actions required to prevent the entry of
such stop order or to promptly remove it if entered; and provided further that
the Company shall not be required to keep such Registration Statement effective
for more than (i) 45 days in the case of a Piggyback Registration or a Demand
Registration with respect to an underwritten offering or (ii) 180 days in the
case of a Demand Registration (or such shorter period which will terminate when
all Registrable Securities covered by such Registration Statement have been
sold, but not prior to the expiration of the applicable period referred to in
Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable);
(b). (i) prepare and file with the Commission such
amendments and supplements to such Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective for as long as such registration is required to remain
effective pursuant to the terms hereof and (ii) comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such Registration Statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such Registration
Statement;
(c). furnish to each Selling Holder, without charge, such
number of conformed copies of such Registration Statement, each amendment and
supplement thereto, the Prospectus included in such Registration Statement
(including each preliminary Prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Selling Holder;
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(d). use all reasonable efforts to register or qualify
such Registrable Securities under such other securities or "blue sky" laws of
such jurisdictions in the United States in which a registration or qualification
is required as any Selling Holder thereof shall reasonably request, to keep such
registration or qualification in effect for so long as such Registration
Statement remains in effect and do any and all other acts and things which may
be reasonably necessary or advisable to enable such Selling Holder to consummate
the disposition in such jurisdictions of the Registrable Securities owned by
such Selling Holder; provided, however, that the Company will not be required to
(i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this clause (d), (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general service of process
in any such jurisdiction;
(e). notify each Selling Holder, at a time when a
Prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event known to the Company as a result of which the
Prospectus included in such Registration Statement, as then in effect, contains
an untrue statement of a material fact or omits to state any fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and, at the request of
any such Selling Holder, the Company will prepare and furnish such Selling
Holder a reasonable number of copies of a supplement to or an amendment of such
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(f). make available for inspection by any Selling Holder,
any underwriter participating in any disposition pursuant to such Registration
Statement and any attorney, accountant or other agent retained by any such
Selling Holder or underwriter, all applicable, nonconfidential due diligence
documents of the Company which are requested, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such Registration Statement to enable them to conduct a
reasonable investigation within the meaning of the Securities Act, including a
customary accountant's "comfort" letter and opinion of counsel to the Company;
(g). subject to other provisions hereof, use all
reasonable efforts to cause such Registrable Securities covered by such
Registration Statement to be registered with or approved by such other
governmental agencies or authorities or selfregulatory organizations as may be
necessary to enable the Selling Holders thereof to consummate the disposition of
such Registrable Securities;
(h). promptly notify the Selling Holders of the issuance
of any stop order by the Commission or the issuance by any state securities
commission or other regulatory authority of any order suspending the
qualification or exemption from qualification of any of the Registrable
Securities under state securities or "blue sky" laws, and use every reasonable
effort to obtain the lifting at the earliest possible time of any stop order
suspending the effectiveness of
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any Registration Statement or of any order preventing or suspending the use of
any preliminary Prospectus; and
(i). promptly notify the Selling Holders of the occurrence
of any pending material merger, acquisition, corporate reorganization or other
material transaction involving the Company or any of its Affiliates which makes
it imprudent for the Company to be in registration, as determined in the good
faith judgment of the Company (a "Black-Out Period"). The Company shall not
impose BlackOut Periods that, either individually or in the aggregate, exceed
90 days during any fiscal year of the Company.
The Company may require each Selling Holder to promptly
furnish in writing to the Company such information regarding the distribution of
the Registrable Securities as the Company may from time to time reasonably
request and such other information as may be legally required in connection with
such registration including, without limitation, all such information as may be
requested by the Commission or any regulatory authority. The Company may exclude
from such Registration Statement any holder who fails to provide such
information.
Each Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
paragraph (a), (e), (h) or (i) above, such Selling Holder will forthwith
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Selling Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
paragraph (a) or (e) above, or in the case of a BlackOut Period until the
Company notifies the Selling Holders that the period has ended, and, if so
directed by the Company, such Selling Holder will deliver to the Company all
copies, other than permanent file copies then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. The periods referred to in paragraph (a)
above for maintaining the effectiveness of the Registration Statement shall be
extended for a period equal to the period during which the disposition of the
Registrable Securities is discontinued as set forth in the immediately preceding
sentence.
ARTICLE V
REGISTRATION EXPENSES
5.1. Registration Expenses . All registration and filing
fees, fees and expenses of compliance with securities or "blue sky" laws,
printing expenses, listing fees for securities to be registered on a national
securities exchange or The Nasdaq Stock Market and all independent certified
public accountants, underwriters (excluding discounts and commissions), fees and
expenses of counsel to the Company and other Persons retained by the Company
(all such expenses being herein called "Registration Expenses") will be borne by
the Company as provided in Sections 1.2 and 2.2 of this Agreement, but subject
to the provisions of Section 1.3 of this Agreement.
5.2. Holders' Expenses . The Company shall have no
obligation to pay (i) any underwriting discounts or commissions attributable to
the sale, or potential sale, of Registrable
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Securities, which expenses will be borne by all Selling Holders of Registrable
Securities included in such registration; and (ii) any fees or expenses of
counsel or others retained by the Selling Holders in connection with the sale,
or potential sale, of Registrable Securities.
ARTICLE VI
UNDERWRITTEN AND OTHER OFFERINGS
6.1. Underwriting Agreement . If requested by the
underwriters for any underwritten offering involving the Registrable Securities,
the Company will enter into an underwriting agreement with such underwriters for
such offering, such agreement to be reasonably satisfactory to the Company and
to contain such representations and warranties by the Company and such other
terms as are generally included in agreements of this type, including, without
limitation, indemnities customarily included in such agreements. The holders of
the Registrable Securities will cooperate in good faith with the Company in the
negotiation of the underwriting agreement.
6.2. Obligations of Participants . No Person may
participate in any underwritten registration hereunder unless such Person (i)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements, escrow agreements and
other documents required under the terms of such underwriting arrangements and
consistent with the provisions of this Agreement. In addition, the Company may
require each Selling Holder to promptly furnish in writing to the Company such
information regarding the distribution of the Registrable Securities as the
Company may from time to time reasonably request and such other information as
may be legally required in connection with such registration including, without
limitation, all such information as may be requested by the Commission or the
NASD. The Company may exclude from such Registration Statement any Holder who
fails to provide such information.
ARTICLE VII
INDEMNIFICATION
7.1. Company's Indemnification Obligations . The Company
agrees to indemnify and hold harmless each of the holders of any Registrable
Securities covered by any Registration Statement referred to herein and each
other Person, if any, who controls such holder within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act (collectively, the
"Holder Indemnitees"), as follows:
(i) against any and all loss, liability, claim,
damage or reasonable expense arising out of or based upon an untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment or supplement thereto), including all documents
incorporated therein by reference, or in any preliminary Prospectus or
Prospectus (or any amendment or supplement thereto) or the omission or alleged
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omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and reasonable expense to the extent of the aggregate amount paid in
settlement of any litigation, investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim based upon any such
untrue statement or omission or any such alleged untrue statement or omission,
if such settlement is effected with the prior written consent of the Company;
and
(iii) against any and all reasonable expense incurred
by them in connection with investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim based upon any such untrue statement or
omission or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under clause (i) or (ii) above;
provided, that this indemnity does not apply to any loss, liability, claim,
damage or expense to the extent arising out of an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with information furnished to the Company by or on behalf of any
holder expressly for use in the preparation of any Registration Statement (or
any amendment or supplement thereto), including all documents incorporated
therein by reference, or in any preliminary Prospectus or Prospectus (or any
amendment or supplement thereto); provided further, that (other than in
connection with an underwritten offering) the Company will not be liable to any
holder or any other Holder Indemnitee under the indemnity agreement in this
Section 7.1 with respect to any preliminary Prospectus or the final Prospectus
or the final Prospectus as amended or supplemented, as the case may be, to the
extent that any such loss, liability, claim, damage or expense of such Holder
Indemnitee results from the fact that such holder sold Registrable Securities to
a Person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the final Prospectus or of the final
Prospectus as then amended or supplemented, whichever is most recent, if the
Company has previously and timely furnished copies thereof to such holder; and
provided further, that the Company will not be liable to any holder or any other
Holder Indemnitee under the indemnity agreement in this Section 7.1 to the
extent that any such loss, liability, claim or expense arises out of or is based
upon an untrue statement or omission in any Prospectus, even if an amended and
corrected Prospectus is not furnished to such holder, but only to the extent
that the holder, after being notified by the Company pursuant to paragraph (e)
of Article III hereof, continues to use such Prospectus and in such case and to
the extent of, and with respect to, damages which arise after the holder
receives such notice.
7.2. Holder's Indemnification Obligations . In connection
with any Registration Statement in which a holder of Registrable Securities is
participating, each such holder agrees to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 7.1 of this
Agreement) the Company and each Person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act with respect to any statement or alleged statement in or omission or alleged
omission from such Registration Statement, any preliminary, final or summary
Prospectus contained therein, or
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any amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made about such holder in reliance upon and in
conformity with information furnished to the Company by or on behalf of such
holder expressly for inclusion in such Registration Statement. The obligations
of each holder pursuant to this Section 7.2 are to be several and not joint;
provided that, with respect to each claim pursuant to this Section 7.2, each
such holder's maximum liability under this Section shall be limited to an amount
equal to the net proceeds received by such holder (after deducting any
underwriting discount) from the sale of Registrable Securities being sold
pursuant to such Registration Statement or Prospectus by such holder.
7.3. Notices; Defense; Settlement . Promptly after receipt
by an indemnified party hereunder of written notice of the commencement of any
action or proceeding involving a claim referred to in Section 7.1 or Section 7.2
of this Agreement, such indemnified party will, if a claim in respect thereof is
to be made against an indemnifying party, give written notice to the latter of
the commencement of such action; provided, that the failure of any indemnified
party to give notice as provided herein shall not relieve the indemnifying party
of its obligations under Section 7.1 or Section 7.2 of this Agreement except to
the extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
the indemnifying party will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified,
to the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof, unless in the reasonable opinion of counsel to such indemnified
party a conflict of interest between such indemnified and indemnifying parties
may exist in respect of such claim, in which case the indemnifying party shall
not be liable for the fees and expenses of (i) more than one counsel for all the
Selling Holders, selected by a majority of the Selling Holders or (ii) more than
one counsel for the Company in connection with any one action or separate but
similar or related actions, as applicable. An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable opinion of counsel to any indemnified party a conflict of interest
may exist between such indemnified party and any other of such indemnified
parties with respect to such claim, in which event the indemnifying party shall
be obligated to pay the fees and expenses of such additional counsel or
counsels. The indemnifying party will not, without the prior written consent of
each indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not such
indemnified party or any Person who controls such indemnified party is a party
to such claim, action, suit or proceeding), unless such settlement, compromise
or consent includes an unconditional release of such indemnified party from all
liability arising out of such claim, action, suit or proceeding. Notwithstanding
anything to the contrary set forth herein, and without limiting any of the
rights set forth above, in any event any party will have the right to retain, at
its own expense, counsel with respect to the defense of a claim.
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7.4. Indemnity Provision . The Company and each holder of
Registrable Securities requesting registration shall provide for the foregoing
indemnity (with appropriate modifications) in any underwriting agreement with
respect to any required registration or other qualification of securities under
any Federal or state law or regulation of any governmental authority.
ARTICLE VIII
DEFINITIONS
8.1. Terms . As used in this Agreement, the following
defined terms shall have the meanings set forth below:
"Affiliate" means, with respect to any specified party, any other
individual, partnership, corporation or other organization, whether incorporated
or unincorporated, who, directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such specified party. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a party, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative of the foregoing.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the State of New York are authorized or obligated to
close.
"Class A Common Stock" means the Class A Common Stock, par value $.01
per share, of the Company and any securities into which the Class A Common Stock
shall have been changed or any securities resulting from any reclassification or
recapitalization of the Class A Common Stock.
"Commission" means the U.S. Securities and Exchange Commission.
"Common Stock" means the shares of Common Stock, regardless of
designation, of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar Federal statute then in effect, and any reference to a particular
section thereof shall include a reference to the equivalent section, if any, of
any such similar Federal statute, and the rules and regulations thereunder.
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means any individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Prospectus" means the Prospectus included in any Registration
Statement (including without limitation, a Prospectus that disclosed information
previously omitted from a Prospectus
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filed as part of an effective Registration Statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
Prospectus supplement, with respect to the terms of the offering of any portion
of the securities covered by such Registration Statement, and all other
amendments and supplements to the Prospectus, including posteffective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
"Registrable Securities" means (i) the Shares, (ii) the Class A Common
Stock issued or issuable at any time upon the exercise of the Warrants, and
(iii) any securities issued or received in respect of, or in exchange or in
substitution for any of the foregoing. Registrable Securities will continue to
maintain their status as Registrable Securities in the hands of a transferee
from an Investor of a majority of the Registrable Securities held by such
Investor provided such transferee executes a joinder agreement described by
Section 9.9. After the transfer (in one or more transactions) of a majority of
the Registrable Securities held by an Investor, any remaining Registrable
Securities held by such Investor shall cease to be Registrable Securities. As to
any particular Registrable Securities, such securities will cease to be
Registrable Securities when they (w) have been effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering them, (x) may be sold pursuant to Rule 144 under the Securities Act
without volume or manner of sale limitation (or any similar provisions then in
force), (y) have been otherwise transferred and the Company has delivered a new
certificate or other evidence of ownership for such securities not bearing a
restrictive legend and not subject to any stop order and such securities may be
publicly resold by the Person receiving such certificate without complying with
the registration requirements of the Securities Act, or (z) have ceased to be
outstanding.
"Registration Statement" means any Registration Statement of the
Company which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including posteffective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute then in effect, and any reference to a particular
section thereof shall include a reference to a comparable section, if any, of
any such similar Federal statute, and the rules and regulations thereunder.
8.2. Defined Terms in Corresponding Sections . The
following defined terms, when used in this Agreement, shall have the meaning
ascribed to them in the corresponding Sections of this Agreement listed below:
"Agreement" -- Preamble
"Company" -- Preamble
"Demand Registration" -- Section 1.1
"Holder Indemnitees"-- Section 7.1
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"Initial Investors" -- Preamble
"Investors" -- Preamble
"LongForm Registration" -- Section 1.1
"Notice" -- Section 2.1
"Other Holders" -- Section 1.1
"Piggyback Registration" -- Section 2.1
"Priority Piggyback Registration Holders" Section 1.4
"Registration Expenses" -- Section 5.1
"Selling Holder" -- Article IV
"Shares" -- Recitals
"ShortForm Registration" -- Section 1.1
"Warrants" -- Recitals
ARTICLE IX
MISCELLANEOUS
9.1 Amendments and Waivers . Except as otherwise provided
herein, no modification, amendment or waiver of any provision of this Agreement
will be effective against the Company or any holder of Registrable Securities,
unless such modification, amendment or waiver is approved in writing by the
Company and the Investors representing a majority of the Registrable Securities
then outstanding. The failure of any party to enforce any of the provisions of
this Agreement will in no way be construed as a waiver of such provisions and
will not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
9.2 Successors and Assigns . All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not.
9.3 Notices . All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission or
mailed by prepaid registered or certified mail, return receipt requested or
mailed by overnight courier prepaid to the parties at the following addresses or
facsimile numbers:
If to the Company, to:
eSpeed, Inc.
One World Trade Center
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103rd Floor
New York, New York 10048
Facsimile No.: (212) 938-5000
Attn.: General Counsel
with a copy to:
Swidler Berlin Shereff Friedman, LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Facsimile No.: (212) 938-5000
Attn.: General Counsel
If to any Investor, to the address set forth on the signature
page hereto.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 9.3, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section 9.3, be deemed given upon receipt of confirmation,
(iii) if delivered by mail in the manner described above to the address as
provided in this Section 9.3, be deemed given on the earlier of the third full
Business Day following the day of mailing or upon receipt, and (iv) if delivered
by overnight courier to the address provided in this Section 9.3, be deemed
given on the earlier of the first Business Day following the date sent by such
overnight courier or upon receipt. Any party from time to time may change its
address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other parties hereto.
9.4 Headings . The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
9.5 Gender . Whenever the pronouns "he" or "his" are used
herein they shall also be deemed to mean "she" or "hers" or "it" or "its"
whenever applicable. Words in the singular shall be read and construed as though
in the plural and words in the plural shall be construed as though in the
singular in all cases where they would so apply.
9.6 Invalid Provisions . If any provision of this Agreement
is held to be illegal, invalid or unenforceable under any present or future law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (i) such provision will be
fully severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
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9.7 Governing Law; Forum; Process . This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York, without giving effect to principles of conflicts of law. Each of the
parties hereto hereby irrevocably and unconditionally submits to the exclusive
jurisdiction of any court of the State of Delaware or any federal court sitting
in the State of Delaware for purposes of any suit, action or other proceeding
arising out of this Agreement (and agrees not to commence any action, suit or
proceedings relating hereto except in such courts). Each of the parties hereto
agrees that service of any process, summons, notice or document by U.S.
registered mail at its address set forth herein shall be effective service of
process for any action, suit or proceeding brought against it in any such court.
Each of the parties hereto hereby irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement, which is brought by or against it, in the courts of the State
of Delaware or any federal court sitting in the State of Delaware and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
9.8 Counterparts . This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
9.9 Additional Investors . Any transferee of a majority of
Registrable Securities held by an Investor shall be entitled to the benefits of
this Agreement, upon execution by such transferee of a joinder agreement in form
reasonably satisfactory to the Company stating that such transferee agrees to be
bound by the terms hereof as an "Investor". An Investor shall no longer be
entitled to the benefits of this Agreement upon its transfer (in one or more
transactions) of a majority of the Registrable Securities held by such Investor.
ARTICLE X
RULE 144 REPORTING
The Company hereby agrees as follows:
(a) The Company shall use its reasonable efforts to make and
keep public information available, as those terms are understood and defined in
Rule 144 under the Securities Act.
(b) The Company shall use its reasonable efforts to file with
the Commission in a timely manner all reports and other documents as the
Commission may prescribe under Section 13(a) or 15(d) of the Exchange Act at any
time while the Company is subject to such reporting requirements of the Exchange
Act.
(c) The Company shall furnish to each holder of Registrable
Securities forthwith upon a reasonable request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 and of
the Securities Act and the Exchange Act.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
COMPANY:
eSPEED, INC.
By: /s/ Howard W. Lutnick
------------------------------
Name: Howard Lutnick
Title: Chairman and
Chief Executive Officer
INITIAL INVESTORS:
WILLIAMS ENERGY MARKETING & TRADING COMPANY
By: /s/ William C. Lawson
------------------------------
Name: William C. Lawson
Title: Director, Energy Solutions
Address: One Williams Center
Tulsa, Oklahoma 74172
DYNEGY INC.
By: /s/ Kenneth E. Randolph
------------------------------
Name: Kenneth E. Randolph
Title: Senior Vice President and
General Counsel
Address: 1000 Louisiana
Suite 5800
Houston, Texas 77002
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