SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 5, 2000
NATIONAL DISCOUNT BROKERS GROUP, INC.
(Exact name of Registrant as specified in Charter)
Delaware 1-9480 22-2394480
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
10 Exchange Place Centre, 15th Floor, Jersey City, New Jersey 07302-3913
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(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code: (201) 946-2200
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Not Applicable
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(Former name and former address, as changed since last report)
<PAGE>
Item 5. Other Events
National Discount Brokers Group, Inc. (the "Company") entered into a
Securities Purchase Agreement dated February 5, 2000 (the "Purchase Agreement")
with Go2Net, Inc., a Delaware corporation ("Go2Net"), and Vulcan Ventures
Incorporated, a Washington corporation ("Vulcan" and together with Go2Net, the
"Purchasers"), pursuant to which, in a private offering, the Purchasers (i)
agreed to purchase 500,000 shares of common stock of the Company, par value $.01
per share for $13,500,000, and (ii) obtained warrants to purchase up to 500,000
additional shares of common stock at a purchase price of $33 per share for a
period of three years subject to earlier termination if the market price of the
Common Stock equals or exceeds $33.00 per share for a specified period of time.
The Company consummated this sale on February 5, 2000. An application to list
the total 1,000,000 shares of common stock on the New York Stock Exchange was
approved by the NYSE.
Included in the Purchase Agreement is a standstill provision generally
providing that each Purchaser may not, until the earlier of (i) February 5,
2003, or (ii) the termination or expiration of the Co-Branding and Marketing
Agreement (as defined below), acquire ownership of voting securities of the
Company (except for certain permitted securities) if the acquisition of such
securities would result in the Purchasers together beneficially owning more than
10% of the then outstanding voting securities of the Company. The standstill
provision also prohibits without approved of the Board of Directors of the
Company the solicitation of proxies to vote securities of the Company for a
change in the directors or management of the Company and certain other specified
matters; initiation, proposal or otherwise solicitation of any stockholder for
approval of any stockholder proposal to change the directors or management of
the Company or in connection with any merger or acquisition of the Company. The
Purchase Agreement also provides for certain restrictions on the transfer of the
shares and warrants and for a right of first refusal to the Company until
February 4, 2001.
As part of the Purchase Agreement the Company agreed to appoint a
representative of the Purchasers to the Board of Directors of the Company.
Go2Net Chairman and Chief Executive Officer Russell C. Horowitz was elected as
that representative for the Company's Board of Directors on February 7, 2000.
Contemporaneously with its entering into the Purchase Agreement, (i) the
Company entered into a Registration Rights Agreement (the "Registration Rights
Agreement')dated as of February 5, 2000 among the Company, the Purchasers and
IAT Reinsurance Syndicate, Ltd. ("IAT") pursuant to which the Company agreed
under certain conditions to register for resale under Section 5 of the
Securities Act of 1933, as amended, shares of common stock of the Company
purchased by each of Go2Net, Vulcan and IAT, and (ii) the Company's subsidiary,
National Discount Brokers Corporation ("NDB.com"), entered into a Co-Branding
and Marketing Agreement dated February 5, 2000 with Go2Net (the "Co-Branding and
Marketing Agreement"). The Company's previous registration rights agreement with
IAT was terminated and replaced by the Registration Rights Agreement.
Pursuant to the Co-Branding and Marketing Agreement, Go2Net will be paid an
annual cash payment by NDB.com during the three-year term of the agreement, in
exchange for NDB.com being the exclusive integrated brokerage service for the
Go2Net Network, Go2Net's development and license of the Silicon Investor
discussion boards to NDB.com and Go2Net placing NDB.com advertising on its
various internet sites. The agreement also provides for additional payments by
NDB.com in the event that Go2Net generates brokerage account referrals for
NDB.com above levels specified in the agreement. The agreement also provides for
earlier termination by either party in certain events.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
<TABLE>
<CAPTION>
(c) Exhibits
Exhibit No. Description
<S> <C>
4(a) Registration Rights Agreement among the Company, the Purchasers and IAT
dated as of February 5, 2000.
4(b) Common Stock Purchase Warrant of the Company in favor of Go2Net dated
February 5, 2000.
4(c) Common Stock Purchase Warrant of the Company in favor of Vulcan dated
February 5, 2000.
99(a) Securities Purchase Agreement among the Company and the Purchasers dated
February 5, 2000 (without schedules and exhibits).
The Registrant agrees to provide omitted schedules and exhibits
upon request of the Commission. Omitted schedules and exhibits
include exceptions to representations and warranties, form of opinion
of counsel and forms of related agreements.
99(b) Press Release dated February 7, 2000.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
National Discount Brokers Group, Inc.
Registrant
Dated: February 17, 2000 By:
Name: Arthur Kontos
Title: President and Chief Executive Officer
<PAGE>
Exhibit 4(a)
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REGISTRATION RIGHTS AGREEMENT
dated February 5, 2000,
among
NATIONAL DISCOUNT BROKERS GROUP, INC.
and the
STOCKHOLDERS LISTED HEREIN
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<PAGE>
REGISTRATION RIGHTS AGREEMENT dated February 5, 2000, among NATIONAL
DISCOUNT BROKERS GROUP, INC., a Delaware corporation (the "Company"), and the
stockholders of the Company listed on Schedule I (the "Investors").
Each Investor currently owns (or has the right to acquire) the number
of shares of Common Stock, $.01 par value (the "Common Stock"), of the Company
set forth opposite the name of such Investor on Schedule I. The parties hereto
deem it to be in their best interests to set forth their rights and obligations
in connection with public offerings and sales of shares of Common Stock.
Accordingly, the parties agree as follows:
SECTION 1. Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" has the meaning ascribed to it in Rule 12b-2 promulgated
under the Exchange Act.
"Commission" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, and the rules
and regulations of the Commission promulgated thereunder, all as the same shall
be in effect from time to time.
"Go2Net" means Go2Net, Inc., a Delaware corporation.
"Go2Net Group" means Go2Net and Vulcan.
"Go2Net Group Investors" means the Go2Net Group, any Affiliate of
Go2Net Group which owns Restricted Shares and any successor to, or assignee or
transferee of, a Go2Net Group Investor who shall agree in writing to be treated
as a Go2Net Group Investor and to be bound by the terms and comply with the
provisions of this Agreement.
"Go2Net Group Restricted Shares" means all Restricted Shares held by
the Go2Net Group.
"IAT" means IAT Reinsurance Syndicate, Ltd., a Bermuda corporation.
"IAT Investors" means IAT, any Affiliate of IAT which owns Restricted
Shares and any successor to, or assignee or transferee of, a IAT Investor who
shall agree in writing to be treated as a IAT Investor and to be bound by the
terms and comply with the provisions of this Agreement.
"IAT Restricted Shares" means all Restricted Shares held by IAT
Investors.
"Other Shares" means at any time those shares of Common Stock which do
not constitute Primary Shares or Registrable Shares.
"Primary Shares" means at any time the authorized but unissued shares
of Common Stock or shares of Common Stock held by the Company in its treasury.
"Registrable Shares" means at any time, with respect to any
Stockholder, the Restricted Shares held by such Stockholder which constitute
Common Stock, but shall in no event include any warrants to purchase Common
Stock.
"Restricted Shares" means at any time, with respect to any Stockholder,
the shares of Common Stock, the Warrant Shares, any other securities (except the
Warrants) which by their terms are exercisable or exchangeable for or
convertible into Common Stock or other securities which are so exercisable or
convertible and any securities received in respect thereof, which are held by
such Stockholder and which have not previously been sold to the public pursuant
to a registration statement under the Securities Act or pursuant to Rule 144 or
which are not (or would not be, upon any such exercise, exchange or conversion)
eligible for sale by the holder thereof under Rule 144 or any successor rule
thereto or any complementary rule thereto.
"Rule 144" means Rule 144 promulgated under the Securities Act or any
successor rule thereto or any complementary rule thereto.
"Securities Act" means the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
"Securities Purchase Agreement" means the Securities Purchase Agreement
dated the date hereof among the Company, Go2Net and Vulcan.
"Stockholders" means the Investors and any person or entity that
acquires Restricted Shares directly or indirectly from an Investor in accordance
with Section 17.
"Transfer" means any disposition of any Restricted Shares or of any
interest therein which constitutes a sale within the meaning of the Securities
Act, other than any disposition pursuant to an effective registration statement
under the Securities Act and complying with all applicable state securities and
"blue sky" laws.
"Vulcan" means Vulcan Ventures Incorporated, a Washington corporation.
"Warrants" means warrants to purchase Common Stock pursuant to the
Securities Purchase Agreement.
"Warrant Shares" means Common Stock to be issued by the Company
pursuant to the Warrants.
SECTION 2. Demand Registration.
(a) Subject to Section 3(b) below, at any time until June 30, 2002, the
Stockholder(s) holding IAT Restricted Shares shall be entitled to request once
that the Company effect a registration under the Securities Act of Registrable
Shares in accordance with this Section; provided that such Stockholder(s) must
request registration of at least 50% of the then outstanding IAT Restricted
Shares.
(b) Subject to paragraph (d) and Section 3(d) below, the Stockholder(s)
holding Go2Net Group Restricted Shares shall be entitled to request once that
the Company effect a registration under the Securities Act of Registrable Shares
in accordance with this Section; provided that such Stockholder(s) must request
registration of at least 50% of the then outstanding Go2Net Group Restricted
Shares. However, no request for registration may be made for one year after the
date hereof unless the Go2Net Group Restricted Shares may be sold, transferred
or assigned as provided in Section 9.16 of the Securities Purchase Agreement,
except a Permitted Transfer as defined in the Securities Purchase Agreement.
(c) If the Company shall be requested to effect a registration under
the Securities Act of Registrable Shares in accordance with this Section, then
the Company shall promptly give written notice of such proposed registration to
all Stockholders who are then holders of Restricted Shares and shall offer to
include in such proposed registration any Registrable Shares requested to be
included in such proposed registration by such holders who respond in writing to
the Company' s notice within 30 days after delivery of such notice (which
response shall specify the number of Registrable Shares proposed to be included
in such registration). The Company shall promptly use its commercially
reasonable efforts in good faith to effect such registration on an appropriate
form, including Form S-3, if available, under the Securities Act of the
Registrable Shares which the Company has been so requested to register.
(d) The Company shall not be obligated to effect any registration under
the Securities Act requested under this Section except in accordance with the
following provisions:
(i) The Company shall not be required to file a registration
statement in any case with respect to the Go2Net Restricted Shares
where Section 9.16 of the Securities Purchase Agreement would not allow
the transfer, sale or assignment of the relevant Common Stock except a
Permitted Transfer. The Company shall not be required to register a
Permitted Transfer.
(ii) The Company's obligations to file a registration
statement under this Section shall be suspended at any time when (A) it
has not received a request under paragraph (a) or (b) above, and (B) it
has filed, or its Board of Directors has approved the filing of, a
registration statement under the Securities Act (other than on Form S-4
or Form S-8 or any successor forms thereto) for the offer and sale of
Primary Shares. Such obligations shall resume on the earliest to occur
of (X) the date on which such registration statement is withdrawn by
the Company, or the Company's Board of Directors abandons its
determination to file a registration statement for the offer and sale
of Primary Shares, (Y) the date which is 90 days after the effective
date of such registration statement, and (Z) the date which is 180 days
after the first filing date of such registration statement;
(iii) the Company may delay the filing or effectiveness of any
registration statement pursuant to this Section for a period not to
exceed 90 days after the date of the Company's receipt of a request for
registration if the Company's Board of Directors has determined that
such registration would have a material adverse effect upon the Company
or its then current business plans; provided, however, that the Company
may cause such delay only once during any 360-day period;
(iv) with respect to any registration pursuant to this
Section, the Company may include in such registration any Primary
Shares or Other Shares; provided, however, that if the managing
underwriter (if any) advises the Company that the inclusion of all
Registrable Shares, Primary Shares and Other Shares proposed to be
included in such registration would interfere with the successful
marketing (including pricing) of all such shares, then the number of
Registrable Shares, Primary Shares and Other Shares proposed to be
included in such registration shall be included in the following order:
(A) first, the Registrable Shares held by the
Stockholders, pro rata based upon the number of Restricted
Shares (based upon Common Stock equivalents) owned by each
such Stockholder at the time of such registration;
(B) second, the Primary Shares; and
(C) third, the Other Shares.
(e) A requested registration under this Section may be rescinded by
written notice to the Company by all of the Stockholders requesting such
registration pursuant to paragraphs (a) or (b); such rescinded registration
shall not count as a registration statement initiated pursuant to this Section
if such registration statement is rescinded prior to the effective date thereof
and if the Stockholder initiating such request shall have reimbursed the Company
for all out-of-pocket expenses incurred by the Company in connection with such
rescinded registration after the first rescission. Even if a registration
statement is not rescinded pursuant to this paragraph (e), the Company will, at
any time prior to the effectiveness of a registration statement, deregister any
or all of a Stockholder's Registrable Shares included in such registration
statement, promptly upon the Company's receipt of a written request from such
Stockholder and the Company may withdraw a registration statement so requested
if a Stockholder requesting deregistration initiated the registration statement.
SECTION 3. Piggyback Registration.
(a) If the Company at any time proposes for any reason to register
Primary Shares or Other Shares or Registrable Shares if and as required under
Sections 2(a) or 2(b) hereof, under the Securities Act (other than on Form S-4
or Form S-8 promulgated under the Securities Act or any successor forms thereto
or other than in connection with an exchange offer or offering solely to the
Company's stockholders ), it shall promptly give written notice to each
Stockholder of its intention to so register the Primary Shares or Other Shares
or such Registrable Shares and, upon the written request, given within 10 days
after delivery of any such notice by the Company, of any Stockholder to include
in such registration Registrable Shares held by such Stockholder (which request
shall specify the number of Registrable Shares proposed to be included in such
registration), the Company shall use its commercially reasonable efforts to
cause all such Registrable Shares to be included in such registration on the
same terms and conditions as the securities otherwise being sold in such
registration; provided, however, that if the managing underwriter advises the
Company that the inclusion of all Registrable Shares or Other Shares or such
Registrable Shares proposed to be included in such registration would interfere
with the successful marketing (including pricing) of the Primary Shares proposed
to be registered by the Company, then the number of Primary Shares, Registrable
Shares and Other Shares or such Registrable Shares proposed to be included in
such registration shall be included in the following order:
(a) first, the Primary Shares;
(b) second, the Registrable Shares held by the Stockholders, pro
rata based upon the number of Restricted Shares (based upon Common Stock
equivalents) specified in their written requests made under this Section 3(a)
above;
(c) third, the Other Shares; and
(d) fourth, such other Registrable Shares.
(e) No Stockholder may request that the Company file a
registration statement pursuant to Section 2 until the date which is 180
days after the effective date of any registration statement filed pursuant to
paragraph (a).
(f) Any Stockholder requesting registration under this Section
shall enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for such
underwriting by the Company. No Stockholder may utilize a registration
statement filed pursuant to this Section to register Go2Net Group Restricted
Shares if the sale, transfer or assignment of such Shares is subject to the
transfer restriction of Section 9.16 of the Securities Purchase Agreement,
except a Permitted Transfer. No Permitted Transfer may be registered
pursuant to this Section.
SECTION 4. Expenses.
The Company shall bear the expense of the registrations effected
pursuant to Sections 2 and 3, including, in each case, without limitation, all
registration and filing fees (including all expenses incident to filing with the
NASD), fees and expenses of complying with securities and blue sky laws,
printing expenses, and fees and expenses of the Company's counsel and
accountants, and the fees and expenses of the Selling Stockholders' Counsel (as
defined below), but excluding any underwriters' or brokers' discounts or
commissions and the fees of any counsel to the selling Stockholders, other than
the Selling Stockholders' Counsel.
SECTION 5. Holdback Agreement.
If the Company at any time shall register shares of Common Stock under
the Securities Act (including any registration pursuant to Sections 2 or 3) for
sale to the public and the managing underwriter for such registration shall
request, the Stockholders shall not sell, make any short sale of, grant any
option for the purchase of, or otherwise dispose of any Restricted Shares (other
than those shares of Common Stock included in such registration) without the
prior written consent of the Company for a period designated by the Company in
writing to the Stockholders, which period shall not begin more than 10 days
prior to the effective date of the registration statement pursuant to which such
public offering shall be made and shall not last more than 180 days after the
effective date of such registration statement.
SECTION 6. Preparation and Filing.
If and whenever the Company is under an obligation pursuant to the
provisions of this Agreement to use its commercially reasonable efforts to
effect the registration of any Registrable Shares, the Company shall, as
expeditiously as practicable:
(a) use its commercially reasonable efforts in good faith to
cause a registration statement that registers such Registrable Shares
to become and remain effective for a period of 180 days (as extended
pursuant to Section 22) or until all of such Registrable Shares have
been disposed of (if earlier);
(b) furnish, at least five business days before filing a
registration statement that registers such Registrable Shares, a
prospectus relating thereto or any amendments or supplements relating
to such a registration statement or prospectus, to one counsel selected
by the holders of a majority of such Registrable Shares (the "Selling
Stockholders' Counsel"), copies of all such documents proposed to be
filed (it being understood that such five-business-day period need not
apply to successive drafts of the same document proposed to be filed so
long as such successive drafts are supplied to such counsel in advance
of the proposed filing by a period of time that is customary and
reasonable under the circumstances);
(c) 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 at least a period of 180 days (as extended
pursuant to Section 22) or until all of such Registrable Shares have
been disposed of (if earlier) and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of such
Registrable Shares;
(d) notify in writing the Selling Stockholders' Counsel
promptly (i) of the receipt by the Company of any notification with
respect to any comments by the Commission with respect to such
registration statement or prospectus or any amendment or supplement
thereto or any request by the Commission for the amending or
supplementing thereof or for additional information with respect
thereto, (ii) of the receipt by the Company of any notification with
respect to the issuance by the Commission of any stop order suspending
the effectiveness of such registration statement or prospectus or any
amendment or supplement thereto or the initiation or threatening of any
proceeding for that purpose and (iii) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
such Registrable Shares for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purposes;
(e) use its commercially reasonable efforts in good faith to
register or qualify such Registrable Shares under such other securities
or blue sky laws of such jurisdictions as any seller of Registrable
Shares reasonably requests and do any and all other acts and things
which may be reasonably necessary or advisable to enable such seller of
Registrable Shares to consummate the disposition in such jurisdictions
of the Registrable Shares owned by such seller; provided, however, that
the Company will not be required to qualify generally to do business,
subject itself to general taxation or consent to general service of
process in any jurisdiction where it would not otherwise be required so
to do but for this paragraph (e);
(f) furnish to each seller of such Registrable Shares such
number of copies of a summary prospectus or other prospectus, including
a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such seller of Registrable
Shares may reasonably request in order to facilitate the public sale or
other disposition of such Registrable Shares;
(g) use its commercially reasonable efforts to cause such
Registrable Shares to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Company to enable the seller or
sellers thereof to consummate the disposition of such Registrable
Shares;
(h) notify on a timely basis each seller of such Registrable
Shares at any time when a prospectus relating to such Registrable
Shares is required to be delivered under the Securities Act within the
appropriate period mentioned in paragraph (a) of this Section, of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and, at the
request of such seller, prepare and furnish to such seller 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 offerees of
such shares, 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 not misleading in
light of the circumstances then existing;
(i) make available for inspection by the Selling Stockholders'
Counsel or any underwriter participating in any disposition pursuant to
such registration statement and any attorney, accountant or other agent
retained by a seller of Registrable Shares or any such underwriter
(collectively, the "Inspectors"), all pertinent financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause
the Company's officers, directors and employees to supply all
information (together with the Records, the "Information") reasonably
requested by any such Inspector in connection with such registration
statement. Any of the Information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are
so notified, shall not be disclosed by the Inspectors unless (i) the
disclosure of such Information is necessary to avoid or correct a
misstatement or omission in the registration statement, (ii) the
release of such Information is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (iii) such Information
has been made generally available to the public. Each Investor agrees
that it will, upon learning that disclosure of such Information is
sought in a court of competent jurisdiction, give notice to the Company
and allow the Company, at the Company's expense, to undertake
appropriate action to prevent disclosure of the Information deemed
confidential;
(j) use its commercially reasonable efforts in good faith to
obtain from its independent certified public accountants "comfort"
letters in customary form and at customary times and covering matters
of the type customarily covered by comfort letters;
(k) use its commercially reasonable efforts in good faith
to obtain from its counsel an opinion or opinions in customary form;
(l) provide a transfer agent and registrar (which may be
the same entity and which may be the Company) for such Registrable
Shares;
(m) issue to any underwriter to which any seller of
Registrable Shares may sell shares in such offering certificates
evidencing such Registrable Shares; provided, however, that the Company
shall have the right to approve any such underwriter which approval
shall not be unreasonably withheld or delayed; provided that the
Company specifies in writing the reason for any rejection of an
underwriter selected by the holders of the Registrable Shares;
(n) list such Registrable Shares on any national securities
exchange on which any shares of the Common Stock are listed or, if the
Common Stock is not listed on a national securities exchange, use its
commercially reasonable efforts to qualify such Registrable Shares for
inclusion on the automated quotation system of the National Association
of Securities Dealers, Inc. (the "NASD") or such national securities
exchange as the holders of a majority of such Registrable Shares shall
request;
(o) otherwise use its commercially reasonable efforts in good
faith to comply with all applicable rules and regulations of the
Commission and make available to its securityholders, as soon as
reasonably practicable, earnings statements (which need not be audited)
covering a period of 12 months beginning within three months after the
effective date of the registration statement, which earnings statements
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder; and
(p) use its commercially reasonable efforts in good faith to
take all other steps necessary to effect the registration of such
Registrable Shares contemplated hereby.
SECTION 7. Indemnification.
In connection with any registration of any Registrable Shares under the
Securities Act pursuant to this Agreement, the Company shall and hereby agrees
to indemnify and hold harmless the seller of such Registrable Shares, its
officers and directors, each underwriter, broker or any other person acting on
behalf of such seller and each other person, if any, who controls any of the
foregoing persons within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, (or actions in respect
thereof) to which any of the foregoing persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
registration statement under which such Registrable Shares were registered under
the Securities Act, any preliminary prospectus or final prospectus contained
therein or otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of any
Registrable Shares, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse
such seller, such officer or director, such underwriter, such broker or such
other person acting on behalf of such seller and each such controlling person
for any legal or other expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or action arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in said registration statement, preliminary prospectus,
final prospectus, amendment, supplement or document incident to registration or
qualification of any Registrable Shares in reliance upon and in conformity with
written information furnished to the Company in an instrument duly executed by
such seller or underwriter specifically for use in the preparation thereof;
provided, further, that the foregoing indemnity shall not inure to the benefit
of any underwriter, with respect to any preliminary prospectus, from whom the
person asserting any losses, claims, damages and liabilities and judgments
purchased Registrable Shares or any person controlling such underwriter, if a
copy of the prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such underwriter to such person, if required by law so to have
been delivered, or prior to a written confirmation of the sale of the
Registrable Shares to such person, and if the prospectus (as so amended and
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or judgment, unless such failure to deliver the prospectus (as
so amended and supplemented) was a result of noncompliance by the Company with
Section 6(f) hereof.
In connection with any registration of Registrable Shares under the
Securities Act pursuant to this Agreement, each seller of Registrable Shares
shall indemnify and hold harmless (in the same manner and to the same extent as
set forth in the preceding paragraph of this Section) the Company, each director
of the Company, each officer of the Company who shall sign such registration
statement, each underwriter, broker or other person acting on behalf of such
seller, each person who controls any of the foregoing persons within the meaning
of the Securities Act and each other seller of Registrable Shares under such
registration statement with respect to any statement or omission from such
registration statement, any preliminary prospectus or final prospectus contained
therein or otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of any
Registrable Shares, if such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company or such
underwriter in an instrument duly executed by such seller or underwriter
specifically for use in connection with the preparation of such registration
statement, preliminary prospectus, final prospectus, amendment, supplement or
document; provided, however, that such obligation to indemnify will be several,
not joint and several, among such sellers of Registrable Shares, and the maximum
amount of liability in respect of such indemnification shall be in proportion to
and limited to, in the case of each seller of Registrable Shares, an amount
equal to the lesser of (i) such seller's proportionate share of any such loss,
claim, damage, liability or expense which is equal to the proportion that the
public offering price of the Registrable Shares sold by such seller under such
registration statement bears to the total public offering price of all
securities sold thereunder or (ii) the net proceeds actually received by such
seller from the sale of Registrable Shares effected pursuant to such
registration.
The indemnification required by this Section 7 will be made by periodic
payments during the course of the investigation or defense, as and when bills
are received or expenses incurred, subject to prompt refund in the event any
such payments are determined not to have been due and owing hereunder.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice to the latter
of the commencement of such action. 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 shall not be responsible for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof; provided, however, that if any indemnified party shall have
reasonably concluded that there may be one or more legal or equitable defenses
available to such indemnified party which are additional to or conflict with
those available to the indemnifying party, or that such claim or litigation
involves or could have an effect upon matters beyond the scope of the indemnity
agreement provided in this Section, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party
and such indemnifying party shall reimburse such indemnified party and any
person controlling such indemnified party for that portion of the fees and
expenses of any counsel retained by the indemnified party which is reasonably
related to the matters covered by the indemnity agreement provided in this
Section.
The indemnification provided for under this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling person of such
indemnified party and will survive the transfer of the Registrable Shares by the
relevant Stockholder.
If the indemnification provided for in this Section is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any loss, claim, damage, liability or action referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amounts paid or payable by such indemnified party as a
result of such loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions which resulted in such loss, claim, damage or liability as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party 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 indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the sellers of Registrable Shares agree that it would not be just and equitable
if contributions pursuant to this paragraph were determined by pro rata
allocation or by any other method of allocation which did not take into account
the equitable considerations referred to herein. The amount paid or payable to
an indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to above shall be deemed to include, subject to the limitation
set forth in the fourth paragraph of this Section 7, any legal or other expenses
reasonably incurred in connection with investigating or defending the same.
Notwithstanding the foregoing, in no event shall the amount contributed by a
seller of Registrable Shares exceed the lesser of (i) such seller's
proportionate share of any such loss, claim, damage, liability or expense which
is equal to the proportion that the public offering price of the Registrable
Shares sold by such seller under such registration statement bears to the total
public offering price of all securities sold thereunder or (ii) the aggregate
net proceeds received by such seller from the sale of its Registrable Shares.
SECTION 8. Underwriting Agreement.
Notwithstanding the provisions of Sections 5, 6 and 7, to the extent
that the Company and the Stockholders selling Registrable Shares in a proposed
registration shall enter into an underwriting or similar agreement, which
agreement contains provisions covering one or more issues addressed in such
Sections, the provisions contained in such Sections addressing such issue or
issues shall be superseded with respect to such registration by such other
agreement. Notwithstanding the foregoing, the Stockholders will execute
underwriting agreements when requested by the Company, including
indemnifications consistent with prevalent commercial practices in the
securities industry, which indemnifications shall supersede those provided
above.
SECTION 9. Information by Holder.
Each Stockholder selling Registrable Shares in a proposed registration
shall furnish to the Company such written information regarding such holder and
the distribution proposed by such Stockholder as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Agreement.
SECTION 10. Exchange Act Compliance.
The Company shall comply with all of the reporting requirements of the
Exchange Act and with all other public information reporting requirements of the
Commission which are conditions to the availability of Rule 144 for the sale of
the Common Stock. The Company shall cooperate with each Stockholder in supplying
such information as may be necessary for such Stockholder to complete and file
any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of Rule 144.
SECTION 11. Rule 144 Requirements.
With a view to making available to the Stockholders the benefits of
Rule 144 promulgated under the Securities Act and any other rule or regulation
of the Commission that may at any time permit a Stockholder to sell Registrable
Shares to the public without registration, the Company agrees to use its best
efforts to
(a) make and keep current public information available, as those
terms are understood and defined in Rule 144(c)(1);
(b) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to any holder of Registrable Shares upon request a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144(c)(1) and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Company filed under Section 13 or
15(d) of the Exchange Act, and such other reports and documents of the Company
as such holder may reasonably request to avail itself of any similar rule or
regulation of the Commission allowing it to sell any such securities without
registration.
SECTION 12. Restriction on Transfer.
(a) The Restricted Shares shall not be transferable except upon the
conditions specified in this Section, which conditions are intended to insure
compliance with the provisions of the Securities Act.
(b) Each certificate representing Restricted Shares shall (unless
otherwise permitted by the provisions of paragraph (c) and (d) below) be stamped
or otherwise imprinted with a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL SUCH
SHARES ARE REGISTERED UNDER THE ACT AND SUCH LAWS OR (1)
REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT THAT
REGISTRATION UNDER THE ACT IS NOT REQUIRED." [APPLIES ONLY TO
SHARES HELD BY GO2NET GROUP INVESTORS - THESE SHARES ARE
SUBJECT TO TRANSFER RESTRICTIONS SET FORTH IN THE SECURITIES
PURCHASE AGREEMENT, AND HOLDERS OF THE SHARES ARE SUBJECT TO
STANDSTILL PROVISIONS SET FORTH IN THE SECURITIES PURCHASE
AGREEMENT.]
The foregoing legend shall be removed from the certificates representing any
Registrable Shares at the request of the holder thereof at such time as they
become registered and sold under the Securities Act or eligible for resale
pursuant to Rule 144 under the Securities Act.
(c) The holder of any Restricted Shares by acceptance thereof agrees,
prior to any Transfer of any Restricted Shares, to give written notice to the
Company of such holder's intention to effect such Transfer and to comply in all
other respects with the provisions of this Section. Each such notice shall
describe the manner and circumstances of the proposed Transfer. Upon request by
the Company, the holder delivering such notice shall deliver a written opinion,
addressed to the Company, of counsel for the holder of Restricted Shares,
stating that in the opinion of such counsel (which opinion and counsel shall be
reasonably satisfactory to the Company) such proposed Transfer does not involve
a transaction requiring registration or qualification of such Restricted Shares
under the Securities Act or the securities or "blue sky" laws of any state of
the United States. Such holder of Restricted Shares shall be entitled to
Transfer such Restricted Shares in accordance with the terms of the notice
delivered to the Company, if the Company does not reasonably object to such
Transfer and request such opinion within fifteen days after delivery of such
notice, or, if it requests such opinion, does not reasonably object to such
Transfer within fifteen days after delivery of such opinion. Each certificate or
other instrument evidencing the securities issued upon the Transfer of any
Restricted Shares (and each certificate or other instrument evidencing any
untransferred balance of such Registered Shares) shall bear the legend set forth
in paragraph (b) above unless (i) in such opinion of counsel to the holder of
Restricted Shares (which opinion and counsel shall be reasonably acceptable to
the Company) registration of any future Transfer is not required by the
applicable provisions of the Securities Act or (ii) the Company shall have
waived the requirement of such legends.
(d) Notwithstanding the foregoing provisions of this Section, the
restrictions imposed by this Section upon the transferability of any Restricted
Shares shall cease and terminate when (i) any such Restricted Shares are sold or
otherwise disposed of (A) pursuant to an effective registration statement under
the Securities Act or (B) in a transaction contemplated by paragraph (c) above
which does not require that the Restricted Shares so transferred bear the legend
set forth in paragraph (b) hereof, or (ii) the holder of such Restricted Shares
has met the requirements for Transfer of such Restricted Shares under Rule 144
under the Securities Act (subject to the delivery of opinions as set forth
above). Whenever the restrictions imposed by this Section shall terminate, the
holder of any Restricted Shares as to which such restrictions have terminated
shall be entitled to receive from the Company, without expense, a new
certificate not bearing the restrictive legend set forth in paragraph (b) above
and not containing any other reference to the restrictions imposed by this
Section.
SECTION 13. Successors and Assigns.
This Agreement shall bind and inure to the benefit of the Company and
the Stockholders and, subject to Section 14, their respective successors and
assigns.
SECTION 14. Assignment.
A Stockholder may assign its rights hereunder to any persons or
entities that acquire Restricted Shares from such Stockholder; provided,
however, that such person or entity shall, as a condition to the effectiveness
of such assignment, be required to execute a counterpart to this Agreement
whereupon such person or entity shall have the benefits of, and shall be subject
to the restrictions contained in, this Agreement with respect to such Restricted
Shares.
SECTION 15. Entire Agreement.
This Agreement contains the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior arrangements or
understandings with respect hereto. Any prior registration rights agreement with
IAT Reinsurance Syndicate, Ltd. is hereby terminated, without any liability.
SECTION 16. Notices.
All notices, requests, consents and other communications hereunder to
any party shall be deemed to be sufficient if contained in a written instrument
and shall be deemed to have been duly given when delivered in person, by
telecopy, by nationally-recognized overnight courier, or by first class
registered or certified mail, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by the addressee to the addressor:
(i) if to the Company:
National Discount Brokers Group, Inc.
10 Exchange Place Centre
Jersey City, NJ 07302
Fax: (201) 946-4510
Telephone: (201) 946-4482
Attention: General Counsel
with a copy to:
Gibbons, Del Deo, Dolan, Griffinger & Vecchione
One Riverfront Plaza
Newark, New Jersey 07102
Fax: (973) 596-0545
Telephone: (973) 596-4549
Attention: James B. Keenan, Esq.
(ii) if to the Investors:
to the address set forth for such Investor on
Schedule I, with copies to:
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, MA 02110
Fax: (617) 951-1295
Telephone: (617) 951-6600
Attention: Francis J. Feeney, Jr., Esq.
Cooley, Godward LLP
5200 Carillon Point
Kirkland, WA 98033
Fax: (425) 893-7777
Attention: Christopher Wright, Esq.
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by
telecopy, on the date of such delivery, (b) in the case of a
nationally-recognized overnight courier, on the next business day and (c) in the
case of mailing, on the fifth business day following such mailing if sent by
certified mail, return receipt requested.
SECTION 17. Modifications: Amendments: Waivers.
The terms and provisions of this Agreement may not be modified or
amended, except pursuant to a writing signed by the Company and the
Stockholders.
SECTION 18. Counterparts.
This Agreement may be executed in any number of counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement.
SECTION 19. Headings.
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
SECTION 20. Severability.
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any provision of this Agreement would be held in any
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 21. Governing Law; Submission to Jurisdiction.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to principles governing
conflicts of laws. The Company and the Investors submit to, and agree to take
all further steps necessary to submit to, the jurisdiction of the United States
District Court of Delaware, and irrevocably waive any objection to venue in such
court in the event liability is alleged and/or any action, suit or proceeding is
commenced under this Agreement.
SECTION 22. Suspension of Disposition of Registrable Shares.
It shall be a condition precedent to the obligations of the Company
under Section 6 that each seller of Registrable Shares shall have agreed that,
(i) upon receipt of any notice from the Company of the happening of any event of
the kind described in paragraph 6(h) hereof, such selling Stockholder will
forthwith discontinue disposition of Registrable Shares until such selling
Stockholder receives copies of a supplemented or amended prospectus contemplated
by paragraph 6(h) hereof, or until such selling Stockholder is advised in
writing by the Company that the use of the prospectus may be resumed and has
received copies of any additional or supplemental filings which are incorporated
by reference in the prospectus, and (ii) if so directed by the Company, such
selling Stockholder will deliver to the Company (at the expense of the Company)
all copies, other than permanent file copies then in such selling Stockholder's
possession, of the prospectus covering such Registrable Shares current at the
time of receipt of such notice. The 180-day periods referred to in paragraphs
6(a) and 6(c) of this Agreement shall be extended by the number of days during
which a selling Stockholder is prevented from disposing of Registrable Shares by
virtue of this Section 25.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement on the date first written above.
NATIONAL DISCOUNT BROKERS GROUP, INC.
By: /s/ Arthur Kontos
Name: Arthur Kontos
Title: President and CEO
GO2NET, INC.
By: /s/ Michael J. Ricco, Jr.
Name: Michael J. Ricco, Jr.
Title: Chief Operating Officer
VULCAN VENTURES INCORPORATED
By: /s/ William D. Savoy
Name: William D. Savoy
Title: Vice President
IAT REINSURANCE SYNDICATE, LTD.
By: /s/ Peter R. Kellogg
Name: Peter R. Kellogg
Title:
<PAGE>
<TABLE>
<CAPTION>
Schedule I
Investors Shares of
Common Stock
<S> <C>
Go2Net, Inc. 260,000
999 Third Avenue
Seattle, WA 98104
Fax: (206) 447-1625
Phone: (206) 447-1595
Attention: General Counsel
Vulcan Ventures Incorporated 740,000
110 110th Avenue, N.E., Suite 550
Bellevue, WA 98004
Fax: (425) 453-1540
Attention: Diane Daggatt
IAT Reinsurance Syndicate, Ltd. 1,500,000
</TABLE>
<PAGE>
31
Exhibit 4(b)
COMMON STOCK PURCHASE WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND NO SALE OR TRANSFER
HEREOF MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION
OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THIS
WARRANT IS SUBJECT TO THE STANDSTILL PROVISION SET FORTH IN THAT CERTAIN
SECURITIES PURCHASE AGREEMENT DATED FEBRUARY 5, 2000 AMONG THE COMPANY, GO2NET,
INC. AND VULCAN VENTURES INCORPORATED, A COPY OF WHICH MAY BE OBTAINED FROM THE
SECRETARY OF THE COMPANY AT ITS PRINCIPAL OFFICES (THE "AGREEMENT").
No. W-G1 Right to Purchase 130,000 Shares of Common Stock of National Discount
Brokers Group, Inc.
Common Stock Purchase Warrant
NATIONAL DISCOUNT BROKERS GROUP, INC., a Delaware corporation (the "Company"),
hereby certifies that, for value received, GO2NET, INC., or registered permitted
assigns, is entitled, subject to the terms set forth below, to purchase from the
Company at any time or from time to time before 5:00 P.M., New York, New York,
time, on February 5, 2003, ONE HUNDRED THIRTY THOUSAND (130,000) fully paid and
nonassessable shares of common stock, par value $.01 per share, of the Company
(the "Warrant Shares"), at an exercise price per share of $33.00 (such Exercise
Price per share as adjusted from time to time as herein provided is referred to
herein as the "Exercise Price"). The number and character of such shares of
Common Stock and the Exercise Price are subject to adjustment as provided
herein.
This Warrant is issued pursuant to the Agreement. The holder of this
Warrant shall be entitled to all of the benefits of the Agreement and the
Registration Rights Agreement, as provided therein, respectively. Capitalized
terms not otherwise defined herein shall have the meanings ascribed thereto in
the Agreement.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" shall include the Company and any
corporation which shall succeed or assume the obligations of the Company
hereunder.
(b) The term "Common Stock" includes the Company's Common
Stock, $.01 par value per share, as authorized on the date of the Agreement and
any other securities into which or for which any of such Common Stock may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
1. Exercise of Warrant.
1.1. Full Exercise. Subject to the provisions of Section 1.6
hereof, this Warrant may be exercised at any time in full in the sole discretion
of the holder hereof by surrender of this Warrant, with the form of subscription
at the end hereof duly executed by such holder, to the Company at its principal
office, accompanied by payment, in cash or by certified or official bank check
payable to the order of the Company or by wire transfer in immediately available
funds, in the amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Exercise Price then in
effect.
1.2. Partial Exercise. Subject to the provisions of Section
1.6 hereof, this Warrant may be exercised at any time in the sole discretion of
the holder hereof in part by surrender of this Warrant in the manner and at the
place provided in Section 1.1 except that the amount payable by the holder on
such partial exercise shall be the amount obtained by multiplying (a) the number
of shares of Common Stock designated by the holder in the subscription at the
end hereof by (b) the Exercise Price then in effect; provided that any exercise
of this Warrant in part shall be for the lesser of (i) 50,000 shares of Common
Stock, or (ii) the remaining amount of shares of Common Stock which may be
exercised hereunder. On any such partial exercise the Company at its expense
will forthwith issue and deliver to or upon the order of the holder hereof a new
Warrant or Warrants of like tenor, in the name of the holder hereof or as such
holder (upon payment by such holder of any applicable transfer taxes) may
request, calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock for which such Warrant or Warrants may still be
exercised.
1.3 Termination. Subject to the provisions of Section 1.6
hereof, unless sooner terminated, this Warrant shall expire ten (10) days after
the Company shall notify the holder hereof in writing that the Market Price (as
hereinafter defined) per share of Common Stock has equaled or exceeded $33.00
(as adjusted for any of the changes set forth in, and consistent with, Section 5
hereof) for eighteen (18) of twenty-one (21) consecutive trading days prior to
the date of said notice, where trading days means any day during which (i) the
principal securities exchange on which the Common Stock is listed is open for
trading, or (ii) if the Common Stock is not so listed, a day when the principal
securities market where the Common Stock is traded is open for trading; provided
however, that if the exercise of this Warrant will require any filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
then the termination of this Warrant pursuant to this Section 1.3 shall be
tolled until all such filings shall have been made by the parties required to do
so and any waiting period (and any extension thereof) under the HSR Act,
applicable to the exercise of this Warrant, shall have expired or shall have
terminated and neither the Company nor the holder hereof shall be subject to any
injunction or temporary restraining order against any exercise of this Warrant.
The holder hereof covenants and agrees to promptly file all such filings
required under the HSR Act within ten (10) days after receiving the foregoing
notice from the Company.
As used herein, the phrase "Market Price" at any date shall be deemed
to be the last reported sale price, or, in case no such reported sale takes
place on such day, the average of the last reported sale prices for the last
three (3) trading days, in either case as officially reported by the principal
securities exchange on which the Common Stock is listed or admitted to trading,
or, if the Common Stock is not listed or admitted to trading on any national
securities exchange, the average closing bid price as furnished by the National
Association of Securities Dealers, Inc. ("NASD") through Nasdaq SmallCap Market
("NSM") or similar organization if NSM is no longer reporting such information,
or if the Common Stock is not quoted on NSM, as determined in good faith by
resolution of the Board of Directors of the Company, based on the best
information available to it.
1.4. Standstill Agreement The shares of Common Stock acquired pursuant
to this Warrant are subject to (i) the Standstill Agreement provision set forth
in Article VII of the Agreement, and (ii) the provisions regarding
transferability set forth in Section 9.17 of the Agreement, as fully and
completely as if set forth herein at length.
1.5 Company Acknowledgment. The Company will, at the time of the
exercise of this Warrant, upon the request of the holder hereof, acknowledge in
writing its continuing obligation to afford to such holder any rights to which
such holder shall continue to be entitled after such exercise in accordance with
the provisions of this Warrant. If the holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such holder any such rights.
1.6 Compliance with HSR Act. Prior to any exercise of this Warrant, all
required filings under the HSR Act shall have been made by the parties required
to do so and any waiting period (and any extension thereof) under the HSR Act,
applicable to the exercise of this Warrant, shall have expired or shall have
terminated and neither the Company nor the holder hereof shall be subject to any
injunction or temporary restraining order against any exercise of this Warrant.
1.7 Right of First Refusal. If a holder proposes to sell, transfer or
assign any of its shares of Common Stock acquired pursuant to this Warrant (the
"Warrant Shares") on or before February 5, 2001 then prior to such sale,
transfer or assignment, the holder shall give written notice to the Company of
such transfer, sale or assignment for purposes of offering the Company the
opportunity to purchase such Warrant Shares on the same terms and conditions as
set forth in such offer to purchase (the "Notice"). The Notice shall describe in
reasonable detail the proposed transfer including: (i) the number of Warrant
Shares to be transferred, (ii) the nature of such transfer, and (iii) if such
transfer is to be done by a private placement then the name and address of each
prospective purchaser or transferee and the consideration to be paid for the
Warrant Shares. If the holder desires to sell any of the Warrant Shares to the
public pursuant to a registration statement filed with and declared effective by
the Commission under the Securities Act of 1933, as amended, then the applicable
price per share shall be the closing price of the Common Stock on the New York
Stock Exchange on the date of the Notice. In the event that within one (1)
business day following its receipt of the Notice, the Company does not notify
the holder in writing of its desire to purchase all, but not less than all, of
such Warrant Shares on the same terms and conditions as set forth in the Notice,
then the holder may sell the Warrant Shares. The Company shall effect the
purchase of the Warrant Shares, including payment of the purchase price, not
more than one (1) business day after delivery of its notice to the holder that
it intends to purchase the Warrant Shares, and at such time the holder shall
deliver to the Company the certificate(s) representing the Warrant Shares to be
purchased by the Company, each certificate to be properly endorsed for transfer.
The Warrant Shares so purchased shall thereupon be canceled and cease to be
issued and outstanding shares of Common Stock. Notwithstanding the foregoing,
the right of first refusal of the Company set forth in this Section 1.7 shall
not apply to any Permitted Transfer. Terms used in this Section 1.7 and not
otherwise defined herein shall have the meanings assigned to such terms in the
Agreement.
2. Delivery of Stock Certificates, etc. on Exercise.
As soon as practicable after the exercise of this Warrant in full or in
part, and in any event within ten (10) days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the holder hereof, or as such
holder (upon payment by such holder of any applicable transfer taxes and, if
requested by the Company, demonstration by such holder of compliance with
applicable securities laws) may direct, a certificate or certificates for the
number of fully paid and nonassessable shares of Common Stock to which such
holder shall be entitled on such exercise, plus, in lieu of any fractional share
to which such holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current market value of one full share, together with any
other stock or other securities and property (including cash, where applicable)
to which such holder is entitled upon such exercise pursuant to Section 1 or
otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc.
In case at any time or from time to time, the holders of Common Stock shall
have received, or (on or after the record date fixed for the determination of
shareholders eligible to receive) shall have become entitled to receive, without
payment therefor,
(a) other or additional stock or other securities or
property (other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out
of earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement,
other than additional shares of Common Stock issued as a stock dividend or in a
stock-split (adjustments in respect of which are provided for in Section 5),
then and in each such case the holder of this Warrant, on the exercise hereof as
provided in Section 1, without duplicating any of the adjustments required by
Section 5 hereof, shall be entitled to receive the amount of stock and other
securities and property (including cash in the cases referred to in clauses (b)
and (c) of this Section 3) which such holder would hold on the date of such
exercise if on the date hereof the holder had been the holder of record of the
number of shares of Common Stock called for on the face of this Warrant and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and all such other or additional stock and
other securities and property (including cash in the cases referred to in
clauses (b) and (c) of this Section 3) receivable by the holder as aforesaid
during such period, giving effect to all adjustments called for during such
period by Sections 4 and 5.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1. Reorganization. In case at any time or from time to time, the
Company shall (a) effect a reorganization, (b) consolidate with or merge into
any other person, or (c) transfer all or substantially all of its properties or
assets to any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, the holder of this Warrant,
on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution as the case may be, shall receive, in lieu of the
Common Stock issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such holder had so
exercised this Warrant immediately prior thereto, all subject to further
adjustment thereafter as provided in Sections 3 and 5.
4.2. Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the holders of the Warrant after the effective date of
such dissolution pursuant to this Section 4 to a bank or trust company having
its principal office in New York, New York, as trustee for the holder or holders
of the Warrant.
4.3 Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 4, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant.
5. Adjustment for Changes in Shares
In the event that the Company shall (i) issue additional shares of Common
Stock as a dividend or other distribution on outstanding Common Stock, (ii)
subdivide its outstanding shares of Common Stock, or (iii) combine its
outstanding shares of the Common Stock into a smaller number of shares of the
Common Stock, then, in each such event, the Exercise Price shall, simultaneously
with the happening of such event, be adjusted by multiplying the then Exercise
Price by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such event and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after such event, and the product so obtained shall thereafter be the Exercise
Price then in effect. The Exercise Price, as so adjusted, shall be readjusted in
the same manner upon the happening of any successive event or events described
herein in this Section 5. The holder of this Warrant shall thereafter, on the
exercise hereof as provided in Section 1, be entitled to receive that number of
shares of Common Stock determined by multiplying the number of shares of Common
Stock which would otherwise (but for the provisions of this Section 5) be
issuable on such exercise by a fraction of which (i) the numerator is the
Exercise Price which would otherwise (but for the provisions of this Section 5)
be in effect, and (ii) the denominator is the Exercise Price in effect on the
date of such exercise.
6. No Dilution or Impairment.
The Company will not, by amendment of its Restated Certificate of
Incorporation, as amended, or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, increase the par value of any shares of stock receivable on
the exercise of this Warrant above the amount payable therefor on such exercise.
The Company will (a) provided that this Warrant may at the time of exercise
still be exercised for stock and not other property or cash, will take all such
reasonable action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable shares of stock on
the exercise of this Warrant from time to time outstanding, and (b) notify the
holder of this Warrant no later than twenty (20) days prior to the transfer of
all or substantially all of its properties and assets to any other person
(corporate or otherwise) or consolidation with or merger with or into any other
person, whether or not the Company is the surviving corporation.
7. Accountants' Certificate as to Adjustments.
In each case of any adjustment or readjustment in the shares of Common
Stock issuable on the exercise of this Warrant, the Company at its expense will
promptly cause its Chief Financial Officer or, if the holder of a Warrant so
requests, independent certified public accountants of recognized standing
selected by the Company to compute such adjustment or readjustment in accordance
with the terms of this Warrant and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock outstanding or deemed to be outstanding, and
(c) the Exercise Price and the number of shares of Common Stock to be received
upon exercise of this Warrant, in effect immediately prior to such issue or sale
and as adjusted and readjusted as provided in this Warrant. The Company will
forthwith mail a copy of each such certificate to the holder of this Warrant,
and will, on the written request at any time of the holder of this Warrant,
furnish to such holder a like certificate setting forth the Exercise Price at
the time in effect and showing how it was calculated.
8. Notices of Record Date, etc.
In the event of
(a) any taking by the Company of a record of the holders of
any class or securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all the assets of the Company to or
consolidation or merger of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
(d) any proposed issue or grant by the Company of any shares
of stock of any class or any other securities, or any right or option to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities (other than the issue of Common Stock on the exercise of
this Warrant), then and in each such event the Company will mail or cause to be
mailed to each registered holder of a Warrant a notice specifying (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up, and
(iii) the amount and character of any stock or other securities, or rights or
options with respect thereto, proposed to be issued or granted, the date of such
proposed issue or grant and the persons or class of persons to whom such
proposed issue or grant is to be offered or made. Such notice shall be mailed at
least twenty (20) days prior to the date specified in such notice on which any
such action is to be taken.
9. Reservation of Stock, etc., Issuable on Exercise of Warrant.
The Company will at all times reserve and keep available, solely for
issuance and delivery on the exercise of this Warrant, all shares of Common
Stock from time to time issuable on the exercise of this Warrant.
10. Exchange of Warrant.
On surrender for exchange of any Warrant, properly endorsed, to the
Company, the Company at its expense will issue and deliver to or on the order of
the holder thereof a new warrant or warrants of like tenor, in the name of such
holder or as such holder (upon payment by such holder of any applicable transfer
taxes and, if requested by the Company, demonstration by such holder of
compliance with applicable securities laws) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common Stock called for
on the face or faces of the Warrant so surrendered.
11. Replacement of Warrant.
On receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction of any Warrant, on delivery of an indemnity agreement
or security reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, on surrender and cancellation of such warrant, the
Company at its expense will execute and deliver, in lieu thereof, a new warrant
of like tenor.
12. Warrant Agent.
The Company may, by written notice to each holder of a Warrant, appoint an
agent having an office in New York, New York, for the purpose of issuing Common
Stock on the exercise of this Warrant pursuant to Section 1, exchanging this
Warrant pursuant to Section 10, and replacing this Warrant pursuant to Section
11, or any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by such agent.
13. Remedies.
The Company stipulates that the remedies at law of the holder of this
Warrant in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
14. Negotiability, etc.
This Warrant is issued upon the following terms, to all of which each
holder or owner hereof by the taking hereof consents and agrees, subject,
however, to Section 15 hereof and the restrictions on transfer set forth
therein:
(a) subject to compliance with all applicable securities laws,
title to this Warrant may be transferred by endorsement (by the holder hereof
executing the form of assignment at the end hereof) and delivery in the same
manner as in the case of a negotiable instrument transferable by endorsement and
delivery;
(b) any person in possession of this Warrant properly endorsed
is authorized to represent himself as absolute owner hereof and is empowered to
transfer absolute title hereto by endorsement and delivery hereof to a bona fide
purchaser hereof for value; each prior taker or owner waives and renounces all
of his equities or rights in this Warrant in favor of each such bona fide
purchaser, and each such bona fide purchaser shall acquire absolute title hereto
and to all rights represented hereby; and
(c) until this Warrant is transferred on the books of the
Company, the Company may treat the registered holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary.
15. Restriction on Transfer of Warrants.
Each holder or owner of this Warrant, by its acceptance hereof, covenants
and agrees that this Warrant is being acquired as an investment and not with a
view to the distribution thereof; and that this Warrant may not be sold,
transferred, assigned, hypothecated or otherwise disposed of, in any way or
manner, in whole or in part, without the prior written consent of the Company,
which consent may be withheld by the Company in its sole discretion, except to
Go2Net, Inc. which in such case, as a condition to such transfer, also shall be
subject to this restriction.
16. Notices, etc.
All notices and other communications from the Company to the holder of this
Warrant shall be mailed by first class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company in writing by
such holder or, until any such holder furnishes to the Company an address, then
to, and at the address of, the last holder of this Warrant who has so furnished
an address to the Company.
17. Miscellaneous.
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. The
parties hereby agree that this Warrant, and the respective rights, duties and
obligations of the parties hereunder, shall be governed by and construed in
accordance with the General Corporation Law of the State of Delaware, without
giving effect to principles of conflicts of law thereunder. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. This Warrant is being executed as an instrument
under seal. The invalidity or unenforceability of any provision hereof shall in
no way affect the validity or enforceability of any other provision.
18. Expiration; Automatic Exercise.
Subject to Section 1.3, the right to exercise this Warrant shall expire at 5:00
P.M., New York, New York, time, on February 5, 2003.
NATIONAL DISCOUNT BROKERS GROUP, INC.
By: /s/ Arthur Kontos
Name: Arthur Kontos
Title: President and CEO
Dated: February 5, 2000
<PAGE>
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: NATIONAL DISCOUNT BROKERS GROUP, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably elects to
exercise this Warrant for, and to purchase thereunder __________shares of Common
Stock of National Discount Brokers Group, Inc. and herewith makes payment of
$__________ therefor, and requests that the certificates for such shares be
issued in the name of, and delivered to whose address is
- ------------------------------
Dated: ___________________________
(Signature must conform to name of holder as
specified on the face of the Warrant)
- ------------------------------
<PAGE>
FORM OF ASSIGNMENT
(To be signed only on transfer of warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto
______________ the right represented by the within Warrant to purchase _____
shares of Common Stock of National Discount Brokers Group, Inc. to which the
within Warrant relates, and appoints ____________________ Attorney to transfer
such right on the books of National Discount Brokers Group, Inc. with full power
of substitution in the premises.
Dated: ____________________________________
(Signature must conform to name of holder as specified on the face of the
Warrant)
- ------------------------------
(Address)
Signed in the presence of:
- ------------------------------
<PAGE>
Exhibit 4(c)
COMMON STOCK PURCHASE WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND NO SALE OR TRANSFER
HEREOF MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION
OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THIS
WARRANT IS SUBJECT TO THE STANDSTILL PROVISION SET FORTH IN THAT CERTAIN
SECURITIES PURCHASE AGREEMENT DATED FEBRUARY 5, 2000 AMONG THE COMPANY, GO2NET,
INC. AND VULCAN VENTURES INCORPORATED, A COPY OF WHICH MAY BE OBTAINED FROM THE
SECRETARY OF THE COMPANY AT ITS PRINCIPAL OFFICES (THE "AGREEMENT").
No. W-V1 Right to Purchase 370,000 Shares of Common Stock of National
Discount Brokers Group, Inc.
Common Stock Purchase Warrant
NATIONAL DISCOUNT BROKERS GROUP, INC., a Delaware corporation (the "Company"),
hereby certifies that, for value received, VULCAN VENTURES INCORPORATED, or
registered permitted assigns, is entitled, subject to the terms set forth below,
to purchase from the Company at any time or from time to time before 5:00 P.M.,
New York, New York, time, on February 5, 2003, THREE HUNDRED SEVENTY THOUSAND
(370,000) fully paid and nonassessable shares of common stock, par value $.01
per share, of the Company (the "Warrant Shares"), at an exercise price per share
of $33.00 (such Exercise Price per share as adjusted from time to time as herein
provided is referred to herein as the "Exercise Price"). The number and
character of such shares of Common Stock and the Exercise Price are subject to
adjustment as provided herein.
This Warrant is issued pursuant to the Agreement. The holder of this
Warrant shall be entitled to all of the benefits of the Agreement and the
Registration Rights Agreement, as provided therein, respectively. Capitalized
terms not otherwise defined herein shall have the meanings ascribed thereto in
the Agreement.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" shall include the Company and any
corporation which shall succeed or assume the obligations of the Company
hereunder.
(b) The term "Common Stock" includes the Company's Common
Stock, $.01 par value per share, as authorized on the date of the Agreement and
any other securities into which or for which any of such Common Stock may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
1. Exercise of Warrant.
1.1. Full Exercise. Subject to the provisions of Section 1.6
hereof, this Warrant may be exercised at any time in full in the sole discretion
of the holder hereof by surrender of this Warrant, with the form of subscription
at the end hereof duly executed by such holder, to the Company at its principal
office, accompanied by payment, in cash or by certified or official bank check
payable to the order of the Company or by wire transfer in immediately available
funds, in the amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Exercise Price then in
effect.
1.2. Partial Exercise. Subject to the provisions of Section
1.6 hereof, this Warrant may be exercised at any time in the sole discretion of
the holder hereof in part by surrender of this Warrant in the manner and at the
place provided in Section 1.1 except that the amount payable by the holder on
such partial exercise shall be the amount obtained by multiplying (a) the number
of shares of Common Stock designated by the holder in the subscription at the
end hereof by (b) the Exercise Price then in effect; provided that any exercise
of this Warrant in part shall be for the lesser of (i) 50,000 shares of Common
Stock, or (ii) the remaining amount of shares of Common Stock which may be
exercised hereunder. On any such partial exercise the Company at its expense
will forthwith issue and deliver to or upon the order of the holder hereof a new
Warrant or Warrants of like tenor, in the name of the holder hereof or as such
holder (upon payment by such holder of any applicable transfer taxes) may
request, calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock for which such Warrant or Warrants may still be
exercised.
1.3 Termination. Subject to the provisions of Section 1.6
hereof, unless sooner terminated, this Warrant shall expire ten (10) days after
the Company shall notify the holder hereof in writing that the Market Price (as
hereinafter defined) per share of Common Stock has equaled or exceeded $33.00
(as adjusted for any of the changes set forth in, and consistent with, Section 5
hereof) for eighteen (18) of twenty-one (21) consecutive trading days prior to
the date of said notice, where trading days means any day during which (i) the
principal securities exchange on which the Common Stock is listed is open for
trading, or (ii) if the Common Stock is not so listed, a day when the principal
securities market where the Common Stock is traded is open for trading; provided
however, that if the exercise of this Warrant will require any filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
then the termination of this Warrant pursuant to this Section 1.3 shall be
tolled until all such filings shall have been made by the parties required to do
so and any waiting period (and any extension thereof) under the HSR Act,
applicable to the exercise of this Warrant, shall have expired or shall have
terminated and neither the Company nor the holder hereof shall be subject to any
injunction or temporary restraining order against any exercise of this Warrant.
The holder hereof covenants and agrees to promptly file all such filings
required under the HSR Act within ten (10) days after receiving the foregoing
notice from the Company.
As used herein, the phrase "Market Price" at any date shall be deemed
to be the last reported sale price, or, in case no such reported sale takes
place on such day, the average of the last reported sale prices for the last
three (3) trading days, in either case as officially reported by the principal
securities exchange on which the Common Stock is listed or admitted to trading,
or, if the Common Stock is not listed or admitted to trading on any national
securities exchange, the average closing bid price as furnished by the National
Association of Securities Dealers, Inc. ("NASD") through Nasdaq SmallCap Market
("NSM") or similar organization if NSM is no longer reporting such information,
or if the Common Stock is not quoted on NSM, as determined in good faith by
resolution of the Board of Directors of the Company, based on the best
information available to it.
1.4. Standstill Agreement The shares of Common Stock acquired
pursuant to this Warrant are subject to (i) the Standstill Agreement provision
set forth in Article VII of the Agreement, and (ii) the provisions
regarding transferability set forth in Section 9.17 of the Agreement, as
fully and completely as if set forth herein at length.
1.5 Company Acknowledgment. The Company will, at the
time of the exercise of this Warrant, upon the request of the holder hereof,
acknowledge in writing its continuing obligation to afford to such holder any
rights to which such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant. If the holder shall fail
to make any such request, such failure shall not affect the continuing
obligation of the Company to afford to such holder any such rights.
1.6 Compliance with HSR Act. Prior to any exercise of this
Warrant, all required filings under the HSR Act shall have been made by the
parties required to do so and any waiting period (and any extension thereof)
under the HSR Act, applicable to the exercise of this Warrant, shall have
expired or shall have terminated and neither the Company nor the holder hereof
shall be subject to any injunction or temporary restraining order against any
exercise of this Warrant.
1.7 Right of First Refusal. If a holder proposes to sell,
transfer or assign any of its shares of Common Stock acquired pursuant to this
Warrant (the "Warrant Shares") on or before February 5, 2001 then prior
to such sale, transfer or assignment, the holder shall give written notice to
the Company of such transfer, sale or assignment for purposes of offering
the Company the opportunity to purchase such Warrant Shares on the same terms
and conditions as set forth in such offer to purchase (the "Notice"). The Notice
shall describe in reasonable detail the proposed transfer including: (i) the
number of Warrant Shares to be transferred, (ii) the nature of such transfer,
and (iii) if such transfer is to be done by a private placement then the name
and address of each prospective purchaser or transferee and the consideration
to be paid for the Warrant Shares. If the holder desires to sell any of the
Warrant Shares to the public pursuant to a registration statement filed with and
declared effective by the Commission under the Securities Act of 1933, as
amended, then the applicable price per share shall be the closing price of the
Common Stock on the New York Stock Exchange on the date of the Notice. In
the event that within one (1) business day following its receipt of the
Notice, the Company does not notify the holder in writing of its desire to
purchase all, but not less than all, of such Warrant Shares on the same terms
and conditions as set forth in the Notice, then the holder may sell the
Warrant Shares. The Company shall effect the purchase of the Warrant Shares
including payment of the purchase price, not more than one (1) business day
after delivery of its notice to the holder that it intends to purchase the
Warrant Shares, and at such time the holder shall deliver to the Company the
certificate(s) representing the Warrant Shares to be purchased by the Company,
each certificate to be properly endorsed for transfer. The Warrant Shares so
purchased shall thereupon be canceled and cease to be issued and outstanding
shares of Common Stock. Notwithstanding the foregoing, the right of first
refusal of the Company set forth in this Section 1.7 shall not apply to any
Permitted Transfer. Terms used in this Section 1.7 and not otherwise
defined herein shall have the meanings assigned to such terms in the Agreement.
2. Delivery of Stock Certificates, etc. on Exercise.
As soon as practicable after the exercise of this Warrant in full or in
part, and in any event within ten (10) days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the holder hereof, or as such
holder (upon payment by such holder of any applicable transfer taxes and, if
requested by the Company, demonstration by such holder of compliance with
applicable securities laws) may direct, a certificate or certificates for the
number of fully paid and nonassessable shares of Common Stock to which such
holder shall be entitled on such exercise, plus, in lieu of any fractional share
to which such holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current market value of one full share, together with any
other stock or other securities and property (including cash, where applicable)
to which such holder is entitled upon such exercise pursuant to Section 1 or
otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc.
In case at any time or from time to time, the holders of Common Stock shall
have received, or (on or after the record date fixed for the determination of
shareholders eligible to receive) shall have become entitled to receive, without
payment therefor,
(a) other or additional stock or other securities or
property (other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out
of earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement,
other than additional shares of Common Stock issued as a stock dividend or in a
stock-split (adjustments in respect of which are provided for in Section 5),
then and in each such case the holder of this Warrant, on the exercise hereof as
provided in Section 1, without duplicating any of the adjustments required by
Section 5 hereof, shall be entitled to receive the amount of stock and other
securities and property (including cash in the cases referred to in clauses (b)
and (c) of this Section 3) which such holder would hold on the date of such
exercise if on the date hereof the holder had been the holder of record of the
number of shares of Common Stock called for on the face of this Warrant and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and all such other or additional stock and
other securities and property (including cash in the cases referred to in
clauses (b) and (c) of this Section 3) receivable by the holder as aforesaid
during such period, giving effect to all adjustments called for during such
period by Sections 4 and 5.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1. Reorganization. In case at any time or from time to time, the
Company shall (a) effect a reorganization, (b) consolidate with or merge into
any other person, or (c) transfer all or substantially all of its properties or
assets to any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, the holder of this Warrant,
on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution as the case may be, shall receive, in lieu of the
Common Stock issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such holder had so
exercised this Warrant immediately prior thereto, all subject to further
adjustment thereafter as provided in Sections 3 and 5.
4.2. Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the holders of the Warrant after the effective date of
such dissolution pursuant to this Section 4 to a bank or trust company having
its principal office in New York, New York, as trustee for the holder or holders
of the Warrant.
4.3 Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 4, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant.
5. Adjustment for Changes in Shares In the event that the Company shall
(i) issue additional shares of Common Stock as a dividend or other distribution
on outstanding Common Stock, (ii) subdivide its outstanding shares of Common
Stock, or (iii) combine its outstanding shares of the Common Stock into a
smaller number of shares of the Common Stock, then, in each such event, the
Exercise Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Exercise Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Exercise Price then in effect. The Exercise
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this Section 5. The holder
of this Warrant shall thereafter, on the exercise hereof as provided in Section
1, be entitled to receive that number of shares of Common Stock determined by
multiplying the number of shares of Common Stock which would otherwise (but for
the provisions of this Section 5) be issuable on such exercise by a fraction of
which (i) the numerator is the Exercise Price which would otherwise (but for the
provisions of this Section 5) be in effect, and (ii) the denominator is the
Exercise Price in effect on the date of such exercise.
6. No Dilution or Impairment. The Company will not, by amendment of its
Restated Certificate of Incorporation, as amended, or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, increase the par value of any
shares of stock receivable on the exercise of this Warrant above the amount
payable therefor on such exercise. The Company will (a) provided that this
Warrant may at the time of exercise still be exercised for stock and not other
property or cash, will take all such reasonable action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of stock on the exercise of this Warrant from time to
time outstanding, and (b) notify the holder of this Warrant no later than twenty
(20) days prior to the transfer of all or substantially all of its properties
and assets to any other person (corporate or otherwise) or consolidation with or
merger with or into any other person, whether or not the Company is the
surviving corporation.
7. Accountants' Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock issuable on the
exercise of this Warrant, the Company at its expense will promptly cause its
Chief Financial Officer or, if the holder of a Warrant so requests, independent
certified public accountants of recognized standing selected by the Company to
compute such adjustment or readjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or receivable by
the Company for any additional shares of Common Stock issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock
outstanding or deemed to be outstanding, and (c) the Exercise Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such issue or sale and as adjusted and readjusted
as provided in this Warrant. The Company will forthwith mail a copy of each such
certificate to the holder of this Warrant, and will, on the written request at
any time of the holder of this Warrant, furnish to such holder a like
certificate setting forth the Exercise Price at the time in effect and showing
how it was calculated.
8. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of
any class or securities for the purpose of determining the holders thereof who
are entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all the assets of the Company to or
consolidation or merger of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation
or winding-up of the Company, or
(d) any proposed issue or grant by the Company of any shares
of stock of any class or any other securities, or any right or option to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities (other than the issue of Common Stock on the exercise of
this Warrant), then and in each such event the Company will mail or cause to be
mailed to each registered holder of a Warrant a notice specifying (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock shall be entitled
to exchange their shares of Common Stock for securities or other property
deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up, and
(iii) the amount and character of any stock or other securities, or rights or
options with respect thereto, proposed to be issued or granted, the date of such
proposed issue or grant and the persons or class of persons to whom such
proposed issue or grant is to be offered or made. Such notice shall be mailed at
least twenty (20) days prior to the date specified in such notice on which any
such action is to be taken.
9. Reservation of Stock, etc., Issuable on Exercise of Warrant.
The Company will at all times reserve and keep available, solely for
issuance and delivery on the exercise of this Warrant, all shares of Common
Stock from time to time issuable on the exercise of this Warrant.
10. Exchange of Warrant.
On surrender for exchange of any Warrant, properly endorsed, to the
Company, the Company at its expense will issue and deliver to or on the order of
the holder thereof a new warrant or warrants of like tenor, in the name of such
holder or as such holder (upon payment by such holder of any applicable transfer
taxes and, if requested by the Company, demonstration by such holder of
compliance with applicable securities laws) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common Stock called for
on the face or faces of the Warrant so surrendered.
11. Replacement of Warrant.
On receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction of any Warrant, on delivery of an indemnity agreement
or security reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, on surrender and cancellation of such warrant, the
Company at its expense will execute and deliver, in lieu thereof, a new warrant
of like tenor.
12. Warrant Agent.
The Company may, by written notice to each holder of a Warrant, appoint an
agent having an office in New York, New York, for the purpose of issuing Common
Stock on the exercise of this Warrant pursuant to Section 1, exchanging this
Warrant pursuant to Section 10, and replacing this Warrant pursuant to Section
11, or any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by such agent.
13. Remedies.
The Company stipulates that the remedies at law of the holder of this
Warrant in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
14. Negotiability, etc.
This Warrant is issued upon the following terms, to all of which each
holder or owner hereof by the taking hereof consents and agrees, subject,
however, to Section 15 hereof and the restrictions on transfer set forth
therein:
(a) subject to compliance with all applicable securities laws,
title to this Warrant may be transferred by endorsement (by the holder hereof
executing the form of assignment at the end hereof) and delivery in the same
manner as in the case of a negotiable instrument transferable by endorsement and
delivery;
(b) any person in possession of this Warrant properly endorsed
is authorized to represent himself as absolute owner hereof and is empowered to
transfer absolute title hereto by endorsement and delivery hereof to a bona fide
purchaser hereof for value; each prior taker or owner waives and renounces all
of his equities or rights in this Warrant in favor of each such bona fide
purchaser, and each such bona fide purchaser shall acquire absolute title hereto
and to all rights represented hereby; and
(c) until this Warrant is transferred on the books of the
Company, the Company may treat the registered holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary.
15. Restriction on Transfer of Warrants.
Each holder or owner of this Warrant, by its acceptance hereof, covenants
and agrees that this Warrant is being acquired as an investment and not with a
view to the distribution thereof; and that this Warrant may not be sold,
transferred, assigned, hypothecated or otherwise disposed of, in any way or
manner, in whole or in part, without the prior written consent of the Company,
which consent may be withheld by the Company in its sole discretion, except to
Go2Net, Inc. which in such case, as a condition to such transfer, also shall be
subject to this restriction.
16. Notices, etc.
All notices and other communications from the Company to the holder of this
Warrant shall be mailed by first class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company in writing by
such holder or, until any such holder furnishes to the Company an address, then
to, and at the address of, the last holder of this Warrant who has so furnished
an address to the Company.
17. Miscellaneous.
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. The
parties hereby agree that this Warrant, and the respective rights, duties and
obligations of the parties hereunder, shall be governed by and construed in
accordance with the General Corporation Law of the State of Delaware, without
giving effect to principles of conflicts of law thereunder. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. This Warrant is being executed as an instrument
under seal. The invalidity or unenforceability of any provision hereof shall in
no way affect the validity or enforceability of any other provision.
18. Expiration; Automatic Exercise.
Subject to Section 1.3, the right to exercise this Warrant shall expire at
5:00 P.M., New York, New York, time, on February 5, 2003.
NATIONAL DISCOUNT BROKERS GROUP, INC.
By: /s/ Arthur Kontos
Name: Arthur Kontos
Title: President and CEO
Dated: February 5, 2000
<PAGE>
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: NATIONAL DISCOUNT BROKERS GROUP, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably elects to
exercise this Warrant for, and to purchase thereunder __________shares of Common
Stock of National Discount Brokers Group, Inc. and herewith makes payment of
$__________ therefor, and requests that the certificates for such shares be
issued in the name of, and delivered to whose address is
- ------------------------------
Dated: ___________________________
(Signature must conform to name of holder as
specified on the face of the Warrant)
- ------------------------------
<PAGE>
FORM OF ASSIGNMENT
(To be signed only on transfer of warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto
______________ the right represented by the within Warrant to purchase _____
shares of Common Stock of National Discount Brokers Group, Inc. to which the
within Warrant relates, and appoints ____________________ Attorney to transfer
such right on the books of National Discount Brokers Group, Inc. with full power
of substitution in the premises.
Dated: ____________________________________
(Signature must conform to name of holder as specified on the face of the
Warrant)
- ------------------------------
(Address)
Signed in the presence of:
- ------------------------------
<PAGE>
Exhibit 99(a)
Execution Copy
NATIONAL DISCOUNT BROKERS GROUP, INC.
SECURITIES PURCHASE AGREEMENT
Dated as of February 5, 2000
<PAGE>
NATIONAL DISCOUNT BROKERS GROUP, INC.
SECURITIES PURCHASE AGREEMENT
Dated as of February 5, 2000
<TABLE>
<CAPTION>
INDEX
<S><C> <C>
ARTICLE I PURCHASE AND SALE OF SHARES..............................................................................1
1.1 Purchase and Sale..........................................................................................1
-----------------
1.2 Purchase and Sale of Warrant...............................................................................1
----------------------------
1.3 Closing....................................................................................................1
-------
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................................................2
2.1 Organization and Corporate Power...........................................................................2
--------------------------------
2.2 Authorization..............................................................................................2
-------------
2.3 Government Approvals.......................................................................................2
--------------------
2.4 Authorized and Outstanding Stock...........................................................................3
--------------------------------
2.5 Subsidiaries...............................................................................................4
------------
2.6 Securities Law Compliance..................................................................................4
-------------------------
2.7 Commission Documents; Financial Information................................................................4
-------------------------------------------
2.8 Absence of Certain Events; No Material Adverse Change......................................................5
-----------------------------------------------------
2.9 Litigation.................................................................................................6
----------
2.10 Compliance with Laws and Other Instruments.................................................................6
------------------------------------------
2.11 Taxes......................................................................................................6
-----
2.12 Intellectual Property; Proprietary Rights; Employee Restrictions...........................................7
----------------------------------------------------------------
2.13 Agreements of Directors, Officers and Employees............................................................7
-----------------------------------------------
2.14 Governmental and Industrial Approvals......................................................................7
-------------------------------------
2.15 Intentionally Omitted......................................................................................8
---------------------
2.16 Contracts and Commitments..................................................................................8
-------------------------
2.17 Employee Matters...........................................................................................8
----------------
2.18 No Brokers or Finders......................................................................................8
---------------------
2.19 Transactions with Affiliates...............................................................................9
----------------------------
2.20 Assumptions, Guarantees, etc. of Indebtedness of Other Persons.............................................9
--------------------------------------------------------------
2.21 Intentionally Omitted......................................................................................9
---------------------
2.22 Investment Company Act.....................................................................................9
----------------------
2.23 Disclosures................................................................................................9
-----------
ARTICLE III AFFIRMATIVE COVENANTS OF THE COMPANY...................................................................9
3.1 Intentionally Omitted......................................................................................9
---------------------
3.2 Board of Directors.........................................................................................9
------------------
3.3 The Company SEC Documents.................................................................................10
-------------------------
ARTICLE IV INVESTMENT REPRESENTATIONS.............................................................................10
4.1 Representations and Warranties............................................................................10
------------------------------
4.2 Permitted Sales; Legends..................................................................................12
------------------------
ARTICLE VCONDITIONS OF PURCHASERS' OBLIGATION.....................................................................12
5.1 Effect of Conditions......................................................................................12
--------------------
5.2 Representations and Warranties............................................................................12
------------------------------
5.3 Performance...............................................................................................12
-----------
5.4 Board Election............................................................................................13
--------------
5.5 Opinion of Counsel........................................................................................13
------------------
5.6 Certified Documents, etc..................................................................................13
------------------------
5.7 No Material Adverse Change................................................................................13
--------------------------
5.8 Warrant ..................................................................................................13
--------
5.9 Co-Branding and Marketing Agreement.......................................................................13
-----------------------------------
5.10 Registration Rights Agreement.............................................................................13
-----------------------------
5.11 Consents and Waivers......................................................................................13
--------------------
5.12 Common Stock Certificates.................................................................................13
-------------------------
5.13 Vulcan Side Letter........................................................................................13
------------------
ARTICLE VI CONDITIONS OF THE COMPANY'S OBLIGATION.................................................................14
6.1 Effect of Conditions......................................................................................14
--------------------
6.2 Representations and Warranties; Performance...............................................................14
-------------------------------------------
6.3 Co-Branding and Marketing Agreement.......................................................................14
-----------------------------------
6.4 Registration Rights Agreement.............................................................................14
-----------------------------
6.5 Consideration for the Shares..............................................................................14
----------------------------
6.6 Consents and Waivers......................................................................................14
--------------------
6.7 Vulcan Side Letter........................................................................................14
------------------
6.8 Warrant Certificate.......................................................................................14
-------------------
ARTICLE VII.......................................................................................................14
STANDSTILL AGREEMENT..............................................................................................14
- --------------------
ARTICLE VIII CERTAIN DEFINITIONS..................................................................................16
ARTICLE IX MISCELLANEOUS..........................................................................................19
9.1 Survival of Representations...............................................................................19
---------------------------
9.2 Parties in Interest.......................................................................................19
-------------------
9.3 Intentionally Omitted.....................................................................................19
---------------------
9.4 Amendments and Waivers....................................................................................19
----------------------
9.5 Notices...................................................................................................19
-------
9.6 Expenses..................................................................................................21
--------
9.7 Counterparts..............................................................................................21
------------
9.8 Effect of Headings........................................................................................21
------------------
9.9 Adjustments...............................................................................................21
-----------
9.10 Governing Law.............................................................................................21
-------------
9.11 Assignment................................................................................................21
----------
9.12 Intentionally Omitted.....................................................................................21
---------------------
9.13 Waiver of Jury Trial......................................................................................22
--------------------
9.14 Attorneys Fees............................................................................................22
--------------
9.15 Exemption from HSR Act....................................................................................22
----------------------
9.16 Right of First Refusal....................................................................................22
----------------------
</TABLE>
<PAGE>
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT is entered into as of February 5,
2000 by and among National Discount Brokers Group, Inc., a Delaware corporation
(the "Company"); Go2Net, Inc., a Delaware corporation ("Go2Net"), and Vulcan
Ventures Incorporated, a Washington corporation ("Vulcan," and at times together
with Go2Net, the "Purchasers").
WHEREAS, the Purchasers have indicated a desire to purchase from the
Company 1,000,000 shares of the Company's common stock, $0.01 par value per
share ("Common Stock"); and
WHEREAS, the Company has indicated a desire to sell an aggregate of
500,000 shares of Common Stock to the Purchasers and to grant warrants to the
Purchasers for an aggregate of 500,000 shares of Common Stock; and the Company
has agreed to register such securities under the Securities Act (as such term is
defined herein) on the terms set forth in the Amended and Restated Registration
Rights Agreement, dated the date hereof, by and among the Company, the
Purchasers, and IAT Reinsurance Syndicate Ltd. (the "Registration Rights
Agreement").
NOW, THEREFORE, for and in consideration of the mutual consents and
agreements herein contained, the parties hereto do hereby covenant and agree as
follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale. Subject to the terms and conditions hereinafter
set forth, at the Closing (as defined below) the Company shall issue and sell to
the Purchasers and the Purchasers shall purchase from the Company, 500,000
shares (the "Purchased Shares") of the Common Stock, at a price per share equal
to twenty-seven Dollars ($27.00) payable as provided in Section 1.3. The number
of Purchased Shares to be purchased by each Purchaser is set forth opposite each
Purchaser's name on Schedule 1.1 attached hereto. The Common Stock shall have
the rights, terms and privileges set forth in the Company's Restated Certificate
of Incorporation, as amended. Terms used herein as defined terms that are not
defined in the context hereof shall have the meaning set forth in Article IX.
1.2 Purchase and Sale of Warrant. At the Closing, the Company will
grant to each Purchaser a warrant in the form of Exhibit A attached hereto
(collectively, the "Warrant") exercisable for the number of shares of Common
Stock set forth opposite such Purchaser's name on Schedule 1.1 attached hereto.
The aggregate number of shares of Common Stock issuable upon exercise of the
Warrant is 500,000 (subject to adjustments as set forth in the Warrant), which
are referred to herein as the "Warrant Shares."
1.3 Closing. Subject to the satisfaction or waiver of the conditions
set forth in Articles VI and VII hereof, a closing (the "Closing") of the sale
and purchase of the Purchased Shares and the grant of the Warrant above shall
take place at the offices of Hutchins, Wheeler & Dittmar, A Professional
Corporation, 101 Federal Street, Boston, Massachusetts, at 10:00 A.M., on
February 5, 2000, or such other date, time and place as shall be mutually agreed
upon by the Company and the Purchasers (the "Closing Date"). At the Closing, the
Company will deliver the Purchased Shares being acquired by each Purchaser in
the form of a certificate issued in each Purchaser's name, and the Warrant upon
receipt by the Company of payment of the full purchase price therefor by or on
behalf of such Purchaser to the Company by check or by wire transfer of
immediately available funds.
ARTICLE IITHE COMPANY
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
In order to induce the Purchasers to purchase the Purchased Shares and
the Warrant, the Company makes the following representations and warranties
which shall be true, correct and complete in all respects on the date hereof.
2.1 Organization and Corporate Power. The Company and each of its
Principal Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own its properties and to carry
on its business as presently conducted in all material respects. The Company and
each of its Principal Subsidiaries is duly licensed or qualified to do business
as a foreign corporation in each jurisdiction wherein the character of its
property or the nature of the activities presently conducted by it, makes such
qualification necessary except where the failure to so qualify would not have a
Material Adverse Effect.
2.2 Authorization. The Company has all necessary corporate power and
has taken all necessary corporate action required for the due authorization,
execution, delivery and performance by the Company of this Agreement, the
Registration Rights Agreement, the Warrant, and those other agreements and
instruments set forth on Schedule 2.2 attached hereto (collectively, the
"Related Agreements"), and the consummation of the transactions contemplated
herein or therein, and for the due authorization, issuance and delivery of the
Purchased Shares and the Warrant. Sufficient shares of authorized, but unissued
shares of Common Stock have been reserved for issuance upon the exercise of the
Warrant. The issuance of the Purchased Shares, the Warrant, and the Warrant
Shares will not, require any further corporate action and is not and will not be
subject to any preemptive right, right of first refusal or the like. This
Agreement and the Related Agreements will each be a valid and binding obligation
of the Company enforceable in accordance with its terms, except that the
enforceability hereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding may be
brought.
2.3 Government Approvals. No consent, approval, license or
authorization of, or designation, declaration or filing with, any court or
governmental authority is or will be required on the part of the Company in
connection with the execution, delivery and performance by the Company of this
Agreement, any of the Related Agreements or in connection with the issuance of
the Purchased Shares and the Warrant and/or the issuance of the Warrant Shares
upon exercise of the Warrant, except for (i) those which have already been made
or granted and (ii) the filing of registration statements with the Securities
and Exchange Commission (the "Commission") the filing of notices with and any
applicable state securities commission, (iii) the listing of the Purchased
Shares and the Warrant Shares on the New York Stock Exchange and (iv) the
filings under the HSR Act (as such term is defined herein) contemplated by
Section 9.15 herein.
2.4 Authorized and Outstanding Stock.
(a) The authorized capital stock of the Company
(immediately prior to the Closing and the transactions contemplated by Section
1.2 hereof) will consist of 51,000,000 shares of capital stock, of which
50,000,000 shares are Common Stock and 1,000,000 shares are Preferred Stock.
(b) As of the date hereof, the issued and outstanding
capital stock of the Company consists of 16,990,125 shares of Common Stock. As
of the date hereof, options to purchase 1,937,513 shares of Common Stock have
been granted and are unexercised under the Company's stock option plans. All of
the issued and outstanding shares of capital stock of the Company are, and when
issued in accordance with the terms hereof, the Purchased Shares and the Warrant
Shares will be, duly authorized and validly issued and fully paid and
non-assessable, with no personal liability attaching to the ownership thereof
and will be free and clear of all Liens, claims, charges, Encumbrances, or
transfer restrictions imposed by or through the Company, except for restrictions
imposed by Federal or state securities or "blue sky" laws and except for those
imposed pursuant to this Agreement. The designations, powers, preferences,
rights, qualifications, limitations and restrictions in respect of each class or
series of capital stock of the Company are as set forth in the certified copy of
the Company's Restated Certificate of Incorporation, as amended, delivered under
Section 5.6 hereof and all such designations, powers, preferences, rights,
qualifications, limitations and restrictions are valid, binding and enforceable
in accordance with their terms and in accordance with applicable law.
(c) As of the date of this Agreement and except as set
forth in Schedule 2.4(c) hereto (i) no subscription, warrant, option,
convertible security or other right (contingent or otherwise) to purchase or
acquire any shares of capital stock of the Company is authorized or outstanding,
(ii) there is not any commitment of the Company to issue any subscription,
warrant, option, convertible security or other such right or to issue or
distribute to holders of any shares of its capital stock any evidences of
indebtedness or assets of the Company, (iii) the Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any shares of
its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof and (iv) there are no agreements, written
or oral, between the Company and any holder of its capital stock or, to its
Knowledge, among any holders of its capital stock, relating to the acquisition,
disposition or voting of the capital stock of the Company. As of the date of
this Agreement and in Schedule 2.4(c), no person or entity is entitled to (i)
any preemptive right, right of first refusal or similar rights granted by the
Company with respect to the issuance of any capital stock of the Company. As of
the date of this Agreement, except as provided in the Registration Rights
Agreement, no person or entity has been granted rights by the Company with
respect to the registration of any capital stock of the Company under the
Securities Act of 1933, as amended (the "Securities Act"). All of the issued and
outstanding shares of the Company's capital stock have been offered, issued and
sold by the Company in compliance with applicable Federal and state securities
laws.
2.5 Subsidiaries. Except as set forth in the SEC Documents and Schedule
2.5, at the date hereof the Company has no Subsidiaries nor any material
investment or other interest in, or any outstanding loan or advance to or from
in excess of $2,500,000, any officer or director of the Company or any Person
who owns 5% or more of the issued and outstanding capital stock of the Company.
The Company owns of record and beneficially, free and clear of all Liens,
charges, restrictions, claims and Encumbrances of any nature, all of the issued
and outstanding capital stock of each of its Principal Subsidiaries.
2.6 Securities Law Compliance. Assuming the representations, warranties
and covenants of the Purchaser set forth in Section 5.1 hereof are true and
correct in all material respects, the offer and sale of the Purchased Shares,
the Warrant and the Warrant Shares (collectively, the "Issuable Securities")
pursuant to this Agreement will be exempt from the registration requirements of
Section 5 the Securities Act. Neither the Company nor any person acting on its
behalf has, in connection with the offering of the Issuable Securities, engaged
in (i) any form of general solicitation or general advertising (as those terms
are used within the meaning of Rule 502(c) under the Securities Act), (ii) any
action involving a public offering within the meaning of Section 4(2) of the
Securities Act, or (iii) any action that would require the registration under
the Securities Act of the offering and sale of the Issuable Securities pursuant
to this Agreement or that would violate applicable state securities or "blue
sky" laws. The Company has not made and will not prior to the Closing make,
directly or indirectly, any offer or sale of the Issuable Securities or of
securities of the same or similar class as the Issuable Securities if, as a
result, the offer and sale contemplated hereby could fail to be entitled to
exemption from the registration requirements of the Securities Act. As used
herein, the terms "offer" and "sale" have the meanings specified in Section 2(3)
of the Securities Act.
2.7 Commission Documents; Financial Information.
(a) The Company has made available to the Purchasers true
and complete copies of all SEC Documents filed with the Commission since June 1,
1997. As of their respective filing dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act, the Exchange Act
and the rules and regulations of the Commission thereunder applicable to such
SEC Documents, and as of their respective dates none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company and its
consolidated subsidiaries included in the SEC Documents comply as of their
respective dates in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto (except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q promulgated by the Commission),
and present fairly (or will present fairly) in all material respects as of their
respective dates the consolidated financial position of the Company and the
subsidiaries as at the dates thereof and the consolidated results of their
operations and their consolidated cash flows for each of the respective periods,
in conformity with GAAP. As used in this Agreement, the consolidated balance
sheet of the Company and its consolidated subsidiaries at May 31, 1999,
previously provided to the Purchaser is hereinafter referred to as the "Balance
Sheet," and May 31, 1999 is hereinafter referred to as the "Balance Sheet Date."
(b) Except as set forth in Schedule 2.7(b) and to the
extent expressly set forth in the Balance Sheet, or the notes, schedules or
exhibits thereto, or as disclosed in the SEC Documents, (i) as of the Balance
Sheet Date, neither the Company nor the Principal Subsidiaries had any material
liabilities or obligations (whether absolute, contingent, accrued or otherwise)
that would be required to be included on a balance sheet prepared in accordance
with GAAP and (ii) since the Balance Sheet Date, the Company and its
consolidated Subsidiaries have not incurred any such material liabilities or
obligations other than in the ordinary course of business and not exceeding
$5,000,000 in the aggregate.
2.8 Absence of Certain Events; No Material Adverse Change. Except as
disclosed in Schedule 2.8 or in the SEC Documents filed with the Commission
prior to the date hereof, since the Balance Sheet Date, the Company and its
Principal Subsidiaries each has conducted its business operations in the
ordinary course and there has not occurred any event or condition having or,
that is reasonably likely to have, a Material Adverse Effect. Without limiting
the generality of the foregoing, other than as is disclosed in the SEC Documents
filed with the Commission prior to the date hereof or on Schedule 2.8 hereto,
since the Balance Sheet Date there has not occurred:
(a) any change or agreement to change the character or
nature of the business of the Company or any of its Principal Subsidiaries;
(b) any purchase, sale, transfer, assignment, conveyance
or pledge of the assets or properties of the Company or any of its Principal
Subsidiaries, except in the ordinary course of business or as contemplated in
the SEC Documents;
(c) any waiver or modification by the Company or any of
its Principal Subsidiaries of any right or rights of substantial value, having a
Material Adverse Effect;
(d) any liability, contract, agreement, license, loan,
advance, or capital expenditure or other commitment entered into or assumed by
or on behalf of the Company or any of its Principal Subsidiaries relating to the
business, assets or properties of the Company or any of its Principal
Subsidiaries, whether oral or written, except in the ordinary course of business
or which would have a Material Adverse Effect;
(e) any change in the accounting principles, methods,
practices or procedures followed by the Company in connection with the business
of the Company or any change in the depreciation or amortization policies or
rates theretofore adopted by the Company in connection with the business of the
Company and the Principal Subsidiaries or which would have a Material Adverse
Effect;
(f) any declaration or payment of any dividends, or other
distributions in respect of the outstanding shares of capital stock of the
Company or any other change in the authorized capitalization of the Company,
except as contemplated in this Agreement; or
(g) entering into any commitment (contingent or otherwise)
to do any of the foregoing.
2.9 Litigation. Except as otherwise set forth on Schedule 2.9, there is
no litigation or governmental proceeding or investigation pending including,
without limitation, proceedings, investigations, or arbitrations by the
Commission, the National Association of Securities Dealers, Inc. ("NASD"), any
stock exchanges, other self-regulatory organizations or state securities
commissions or the National Securities Clearing Corporation, the Depository
Trust Company or any other clearing agency, or, to the Knowledge of the Company,
threatened, against the Company or any Principal Subsidiary if determined
adversely to the Company or any of its Principal Subsidiaries would have a
Material Adverse Effect or prevent the consummation of the transactions
contemplated by this Agreement.
2.10 Compliance with Laws and Other Instruments. The Company and its
Principal Subsidiaries are in compliance in all material respects with all of
the provisions of this Agreement and of its charter and by-laws, and, except
where such non-compliance would not have a Material Adverse Effect, with the
provisions of each mortgage, indenture, lease, license, other agreement or
instrument, and each judgment, decree, judicial order, statute, and regulation
(whether issued under domestic, foreign or international law) by which any of
them is bound or to which any of them or any of their respective properties are
subject, including, without limitation, the NASD, any stock exchanges, the
National Securities Clearing Corporation, the Depository Trust Company, and any
other clearing agency, which apply to the conduct of its business. Neither the
execution, delivery or performance of this Agreement and the Related Agreements,
nor the offer, issuance, sale or delivery of the Purchased Shares, the Warrant
or the Warrant Shares upon exercise of the Warrant with or without the giving of
notice or passage of time, or both, will violate, or result in any material
breach of, or constitute a material default under, or result in the imposition
of any material encumbrance upon any asset of the Company or any Principal
Subsidiary pursuant to any provision of the Company's or such Principal
Subsidiary's charter or by-laws, or any statute, rule or regulation, contract,
lease, judgment, decree or other document or instrument by which the Company or
any Principal Subsidiary is bound or to which the Company or any Principal
Subsidiary or any of their respective properties are subject, or, to the
Knowledge of the Company, will cause the Company or any Principal Subsidiary to
lose the benefit of any right or privilege it presently enjoys or, to the
Knowledge of the Company, cause any Person who is expected to normally do
business with the Company or any Principal Subsidiary to discontinue to do so on
the same basis which discontinuance would not have a Material Adverse Effect.
2.11 Taxes. The Company and each Principal Subsidiary has filed all Tax
returns (including statements of estimated Taxes owed) required to be filed
within the applicable periods for such filings or required notification of
extensions and has paid all Taxes required to be paid indicated by the
applicable Tax return. All Tax liabilities have been adequately provided for in
the consolidated financial statements of the Company and its Subsidiaries. For
the purposes of this Agreement, the terms "Tax" and "Taxes" shall include all
federal, state, local and foreign taxes, including income, franchise, property,
sales, withholding, payroll and employment taxes.
2.12 Intellectual Property; Proprietary Rights; Employee Restrictions.
For purposes of this Agreement, "Intellectual Property Rights" shall mean all
registered copyrights, copyright registrations and copyright applications,
trademark registrations and applications for registration, patents and patent
applications, trademarks, service marks, trade names and Internet domain names
that are used by the Company in the Company's business or by a Principal
Subsidiary in its business as presently conducted, together with all other
intellectual property rights owned by the Company and/or any of its Principal
Subsidiaries and used in connection with its business and (i) all licenses,
assignments and releases of intellectual property rights of others in material
works embodied in the Company's or any Principal Subsidiary's products, (ii) any
and all intellectual property rights, licenses, databases, computer programs and
other computer software user interfaces, know-how, trade secrets, customer
lists, proprietary technology, processes and formulae, source code, object code,
algorithms, architecture, structure, display screens, layouts, development
tools, instructions, templates and marketing materials created by or on behalf
of the Company or any Principal Subsidiary, and (iii) inventions, trade dress,
logos and designs created by or on behalf of the Company or any Principal
Subsidiary. The Company and each of its Principal Subsidiaries own or possess
all requisite licenses or other rights to use all the Intellectual Property
Rights in order to conduct their business as conducted and as proposed to be
conducted where the lack of any such license or right would not have a Material
Adverse Effect. The present business activities or products of the Company and
any of its Principal Subsidiaries do not materially infringe any Intellectual
Property Rights of others, which infringement would not have a Material Adverse
Effect.
2.13 Agreements of Directors, Officers and Employees. To the Knowledge
of the Company, no director, officer or employee of or consultant to the Company
or any Principal Subsidiary is in violation of any terms of any employment
contract, non-competition agreement, non-disclosure agreement, patent disclosure
or assignment agreement or other contract or agreement containing restrictive
covenants relating to the right of any such director, officer, employee or
consultant to be employed or engaged by the Company or such Principal Subsidiary
because of the nature of the business conducted or proposed to be conducted by
the Company or such Principal Subsidiary, or relating to the use of trade
secrets or proprietary information of others.
2.14 Governmental and Industrial Approvals. The Company and each of its
Principal Subsidiaries has all material permits, licenses, orders, franchises
and other rights and privileges of all federal, state, local or foreign
governmental or regulatory bodies necessary for the Company and such Principal
Subsidiaries to conduct their respective businesses as presently conducted in
all material respects. Except when the failure would result in a Material
Adverse Effect, all such permits, licenses, orders, franchises and other rights
and privileges are in full force and effect and, to the Knowledge of the
Company, no suspension or cancellation of any of them is threatened, and none of
such permits, licenses, orders, franchises or other rights and privileges will
be affected by the consummation of the transactions contemplated in this
Agreement and the Related Agreements.
Each of the Principal Subsidiaries is registered a broker-dealer with
the Commission, is a duly qualified member of the NASD, and is duly qualified or
registered as a broker-dealer in each jurisdiction where the failure to be so
qualified or registered could have a Material Adverse Effect. Neither the
Company nor the Principal Subsidiaries is required to be registered or qualified
as a broker-dealer with the Commission or in any jurisdiction where the failure
to be so registered or qualified would result in a Material Adverse Effect.
Except as set forth on Schedule 2.14, and except for registrations already
applied for, the applications for which are being diligently prosecuted, neither
the Company nor the Principal Subsidiaries is required to obtain any
registration as an investment advisor, a broker or dealer, a commodity trading
advisor, a commodity pool operator, a future commission merchant, an introducing
broker, an insurance agent, a sales person or in any similar capacity with the
Commission, the NASD, the Commodity Future Trading Commission, any clearing
agency, the securities commission of any jurisdiction or any self-regulatory
organization, that has not already been obtained.
2.15 Intentionally Omitted .
2.16 Contracts and Commitments. All of the contracts of the Company or
any of its Principal Subsidiaries which are in effect on the date of this
Agreement and that are required to be described in the SEC Documents or to be
filed as exhibits thereto prior to the date hereof are described in the SEC
Documents filed prior to the date hereof or filed as exhibits thereto and are in
full force and effect, except where such failure would not have a Material
Adverse Effect. True and complete copies of all such contracts which are
currently in effect have been made available to the Purchaser. All material
contracts to which the Company or its Principal Subsidiaries are parties on or
prior to the date hereof which will be required to be described or filed as an
Exhibit in the SEC Documents required to be filed following the date hereof have
been provided to the Purchaser or are listed on Schedule 2.16 and are in full
force and effect. Neither the Company nor any of its Principal Subsidiaries nor,
to the Knowledge of the Company, any other party is in material breach of or in
default under any such contract.
2.17 Employee Matters. The Company is in compliance in all material
respects with all currently applicable provisions of ERISA; no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company would have any liability; the Company
has not incurred and does not expect to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any pension plan or
(ii) Sections 412 or 4971 of the Code; and each pension plan for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
2.18 No Brokers or Finders. Except as set forth on Schedule 2.18, no
person has or will have, as a result of the transactions contemplated by this
Agreement, any right, interest or claim against or upon the Company, any of its
Principal Subsidiaries or the Purchasers for any commission, fee or other
compensation as a finder or broker because of any act or omission by the Company
or any of its Principal Subsidiaries.
2.19 Transactions with Affiliates. There are no loans, leases or other
agreements, understandings or continuing transactions between the Company or any
Principal Subsidiary on the one hand, and any officer or director of the Company
or any Principal Subsidiary or any person owning five percent (5%) or more of
the Common Stock of the Company or any respective family member or affiliate of
such officer, director or shareholder on the other hand, which are required to
be disclosed in the SEC Documents and which are not so disclosed.
2.20 Assumptions, Guarantees, etc. of Indebtedness of Other Persons.
Except as set forth on Schedule 2.20 and other than in the ordinary course of
its business, neither the Company nor any Principal Subsidiary has assumed,
guaranteed, endorsed or otherwise become directly or contingently liable on or
for any indebtedness of any other Person, except a Subsidiary and guarantees by
endorsement of negotiable instruments for deposit or collection.
2.21 Intentionally Omitted.
2.22 Investment Company Act. The Company is not an "investment
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
2.23 Disclosures. Neither this Agreement, any Schedule or Exhibit to
this Agreement, the Related Agreements contains any untrue statement of a
material fact by the Company or omits a material fact required to be provided by
the Company in response to the requirements of this Agreement or any such
Schedule or Exhibit to make the statements made herein or therein, in light of
the circumstances in which made, not misleading.
ARTICLE III
AFFIRMATIVE COVENANTS OF THE COMPANY
Without limiting any other covenants and provisions hereof, the Company
covenants and agrees that it will observe the following covenants on and after
the date hereof, and for so long as either Purchaser hold any shares of Common
Stock, except for the covenant set forth in Section 3.2:
3.1 Intentionally Omitted.
3.2 Board of Directors. The Company shall use its best efforts to cause
the election of, and to thereafter continue in office until such time as either
of the Purchasers sells any of the Purchased Shares or the Warrant Shares or
transfers the Warrant (except as otherwise provided for in the Warrant), the
Purchaser Representative (as defined below) as a member of its Board of
Directors including, without limitation, recommending for election of the
Purchase Representative at a meeting of the Company's stockholders. The
Purchaser Representative will be nominated by the Purchasers, and shall
initially be Russell C. Horowitz. The Restated Certificate of Incorporation, as
amended (and all subsequent amendments and restatements thereof) and/or By-laws
of the Company shall at all times provide for indemnification of the directors
and limitations on the liability of the directors as currently provided or
enhanced. The Company will enter into a mutually acceptable indemnity agreement
with the Purchaser Representative similar in all material respects to the
agreement that the Company has with its other directors as of the date hereof
and will be amended in a manner similar to any favorable amendment of any such
other agreement. The Company shall reimburse the Purchaser Representative for
his reasonable travel expenses, including the cost of airfare and any necessary
meals and lodging, incurred in connection with attending meetings of the Board
of Directors. In addition, the Company shall maintain at all times a
Compensation Committee and an Audit Committee of the Board of Directors. A
vacancy in the directorship to be occupied by the Purchaser Representative shall
be filled only by a nominee of the Purchasers who must be appointed by the Board
of Directors in accordance with the By-laws of the Company. The Purchaser
Representative shall be entitled to attend in person or by telephone conference
call any and all meetings of the Board of Directors and all committees thereof
to the extent he is a member of such committee.
3.3 The Company SEC Documents. The Company shall continue to file all
reports in accordance with Section 13(a) and 15(d) of the Exchange Act with the
Commission in order to maintain its eligibility to register Purchased Shares and
the Warrant Shares on Form S-3 (or any successor form thereto) and to permit the
Purchaser to sell the Purchased Shares and the Warrant Shares pursuant to Rules
144 and 144A under the Securities Act. After the Closing Date, the Company will
file with the Commission SEC Documents and any other such reports and other
materials required to be filed by the Company under the federal securities laws
on a timely basis.
ARTICLE IV
INVESTMENT REPRESENTATIONS
4.1 Representations and Warranties. Each Purchaser, severally and not
jointly, hereby represents and warrants to the Company, understanding and
agreeing that the Company is entering into this Agreement in part in reliance on
such representations and warranties, as follows:
(a) Such Purchaser is an "Accredited Investor" as that
term is defined in Rule 501(a) of Regulation D promulgated under the Act;
(b) Such Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own its
properties and to carry on its business as presently conducted in all material
respects. Such Purchaser is duly authorized to execute this Agreement and the
Related Agreements, and assuming due execution and delivery by the Company of
the Agreement and the Related Agreements, this Agreement and the Related
Agreements to which such Purchaser is a party constitute legal, valid and
binding obligations of such Purchaser, enforceable against such Purchaser in
accordance with their respective terms, except that the enforceability hereof
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding may be brought.
(c) Such Purchaser has been advised by the Company that
the Purchased Shares, the Warrant and the Warrant Shares have not been
registered under the Act, that the Purchased Shares, the Warrant and the Warrant
Shares will be issued on the basis of the statutory exemption provided by
Section 4(2) of the Act or Regulation D promulgated thereunder, or both,
relating to transactions by an issuer not involving any public offering and
under similar exemptions under certain state securities laws, that this
transaction has not been reviewed by, passed on or submitted to any federal or
state agency or self-regulatory organization where an exemption is being relied
upon, and that the Company's reliance thereon is based in part upon the
representations made by such Purchaser in this Agreement and the Related
Agreements. Such Purchaser acknowledges that it has been informed by the Company
of, or is otherwise familiar with, the nature of the limitations imposed by the
Act and the rules and regulations thereunder on the transfer of securities;
(d) Such Purchaser is purchasing the Purchased Shares and
is being granted the Warrant for investment purposes, for its own account and
not with a view to, or for sale in connection with, any distribution thereof in
violation of federal or state securities laws and it has had access to such
financial and other information and has been afforded the opportunity to ask
such questions of representatives of the Company and receive answers thereto, as
it deems necessary in connection with the purchase of the Purchased Shares and
the Warrant;
(e) By reason of its business or financial experience,
such Purchaser has the capacity to protect its own interest in connection with
the transactions contemplated hereunder;
(f) No Person has or will have, as a result of the
transaction contemplated by this Agreement, any right, interest or claim against
or upon such Purchaser, the Company, or any of its Principal Subsidiaries for
any commission, fee or other compensation as a finder or broker because of any
act or omission by such Purchaser;
(g) Such Purchaser understands that an investment in the
Purchase Shares and the Warrant bears a high degree of risk and represents that
it has such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of purchasing the Purchased Shares
and the Warrant and is able to bear the economic risk of its investment for an
indefinite period of time;
(h) The principal executive offices of such Purchaser
are located in the State of Washington; (i)......No material consent, approval,
license or authorization of, or designation, declaration or filing with, any
court or governmental authority is or will be required on the part of such
Purchaser in connection with the execution, delivery and performance by such
Purchaser of this Agreement or any of the Related Agreements, except for (i)
those which have already been made or granted and (ii) the filing of
registration statements with the Commission and any applicable state securities
commission, (iii) the listing of the Purchased Shares and the Warrant Shares on
the New York Stock Exchange and (iv) the filings under the HSR Act contemplated
by Section 9.15 herein; and
(j) Such Purchaser does not beneficially own any shares
of capital stock of the Company which is defined in Rule 13(d)(3) under
Securities Exchange Act of 1934, as amended (the "Exchange Act").
4.2 Permitted Sales; Legends. Notwithstanding the foregoing
representations, the Company agrees that it will permit (i) a distribution of
Purchased Shares and the Warrant Shares by a Purchaser to one or more of its
affiliates, if the transferee agrees in writing to be subject to the terms
hereof to the same extent as if it were an original purchaser hereunder and (ii)
a sale or other transfer of any of the Purchased Shares and the Warrant Shares
if in either event such transaction or distribution is exempt from the
registration requirements of, or is covered by an effective registration
statement under, the Act and applicable state securities or "blue-sky" laws, and
if requested, the Purchaser has provided an opinion of counsel that such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended. The certificates representing the Purchased Shares and the
Warrant Shares shall bear a legend evidencing such restriction on transfer
substantially in the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("the
Act"), or any state securities laws, and sale or transfer
hereof may be effected without an effective registration
statement or an opinion of counsel for the Holder,
satisfactory to the Company, that such registration is not
required under the Act and any applicable state securities
laws. The shares represented by this certificate are subject
to certain Standstill and Transfer Restriction provisions set
forth in that certain Securities Purchase Agreement dated
February 5, 2000 among the Company, Go2Net, Inc. and Vulcan
Ventures Incorporated, a copy of which may be obtained from
the Secretary of the Company at its principal offices"
ARTICLE V
5.1 Effect of Conditions. The obligation of the Purchasers to purchase
and pay for the Purchased Shares and the Warrant at the Closing, if any, shall
be subject at their election to the satisfaction of each of the conditions
stated in the following Sections of this Article V.
5.2 Representations and Warranties. The representations and warranties
of the Company contained in this Agreement shall be true and correct on the date
of the Closing, and the Purchasers shall have received a certificate dated as of
such Closing and signed on behalf of the Company to that effect.
5.3 Performance. The Company shall have performed and complied with all
of the agreements, covenants and conditions contained in this Agreement required
to be performed or complied with by it at or prior to the Closing, and the
Purchasers shall have received a certificate dated as of such Closing and signed
on behalf of the Company to that effect.
5.4 Board Election. Concurrently with the Closing, the Purchaser
Representative shall have been appointed as a Director of the Board of Directors
of the Company.
5.5 Opinion of Counsel. The Purchasers shall have received an
opinion, dated the date of the Closing, from Gibbons, Del Deo, Dolan, Griffinger
& Vecchione, P.C., counsel to the Company, in the form attached hereto as
Exhibit B, and an opinion from Frank E. Lawatch, Jr., Executive Vice President,
Secretary and General Counsel of the Company, in the form attached hereto as
Exhibit C.
5.6 Certified Documents, etc. Counsel for the Purchasers shall have
received a copy of the Company's Restated Certificate of Incorporation, as
amended, certified by the Secretary of State of the State of Delaware and copies
of the Company's by-laws certified by its Secretary, as well as any and all
other documents, including certificates as to votes adopted and incumbency of
officers and certificates from appropriate authorities as to the legal existence
and good standing of the Company and its Principal Subsidiaries, which the
Purchaser or their counsel may reasonably request.
5.7 No Material Adverse Change. No Material Adverse Effect shall have
occurred since the date of this Agreement, and there shall have been no other
changes in the business, properties, assets, condition (financial or otherwise),
management or prospects of the Company or any of its Principal Subsidiaries that
would have a Material Adverse Effect.
5.8 Warrant . A Warrant in the form of Exhibit A attached hereto shall
have been executed by the Company in the name of each of the Purchasers .
5.9 Co-Branding and Marketing Agreement. The Company and Go2Net shall
have executed the Co-Branding and Marketing Agreement in the form of Exhibit D
attached hereto.
5.10 Registration Rights Agreement. The Company and the Purchasers
shall have executed the Registration Rights Agreement in the form of Exhibit E
attached hereto.
5.11 Consents and Waivers. The Company shall have obtained all consents
or waivers necessary to execute this Agreement and the other Related Agreements,
to issue the Purchased Shares, and to carry out the transactions contemplated
hereby and thereby. All corporate and other action and governmental filings
necessary to effectuate the terms of this Agreement, the Related Agreements, the
Purchased Shares and other agreements and instruments executed and delivered by
the Company in connection herewith shall have been made or taken by it, except
the filing of Form D with the Commission.
5.12 Common Stock Certificates. The Company shall have delivered a
stock certificate to each Purchaser representing the portion of the Purchased
Shares to be purchased by such Purchaser.
5.13 Vulcan Side Letter. Vulcan and the Company shall have
executed that certain side letter in the form of Exhibit F attached hereto (the
"Vulcan Side Letter").
ARTICLE VI
CONDITIONS OF THE COMPANY'S OBLIGATION
6.1 Effect of Conditions. The Company's obligation to sell the
Purchased Shares and to issue the Warrant shall be subject at its election to
the satisfaction of each of the conditions stated in the following Sections of
this Article VI.
6.2 Representations and Warranties; Performance. The representations
and warranties of each Purchaser contained in this Agreement shall be true and
correct on the date of the Closing with the same effect as though made on and as
of that date and, with respect to the Company's obligation to issue and deliver
Purchased Shares and the Warrant of each Purchaser, each Purchaser shall have
tendered payment for the Purchased Shares and the Warrant at the Closing in
accordance with Section 1.3 hereof.
6.3 Co-Branding and Marketing Agreement. The Company and Go2Net shall
have executed the Co-Branding and Marketing Agreement in the form of Exhibit D
attached hereto.
6.4 Registration Rights Agreement. The Company and the Purchasers
shall have executed the Registration Rights Agreement in the form of Exhibit E
attached hereto.
6.5 Consideration for the Shares. The Purchasers shall pay the purchase
price of the Purchased Shares in full at the Closing either by check or by wire
transfer to an account designated in writing by the Company.
6.6 Consents and Waivers. The Company shall have obtained the consents
or waivers set forth on Schedule 6.6 attached hereto necessary to execute this
Agreement and the Related Agreements, to issue the Purchased Shares, the Warrant
and the Warrant Shares and to carry out the transactions contemplated hereby and
thereby by it. All corporate and other action and governmental filings necessary
to effectuate the terms of this Agreement, the Related Agreements, the Purchased
Shares, the Warrant and the Warrant Shares and other agreements and instruments
executed and delivered by the Company in connection herewith shall have been
made or taken by it, except the filing of Form D with the Commission.
6.7 Vulcan Side Letter. The Company and Vulcan shall have
executed the Vulcan Side Letter in the form of Exhibit F attached hereto.
6.8 Warrant . The Company shall have executed the Warrant Certificate
in the form of Exhibit A attached hereto for each of the Purchasers.
ARTICLE VII
STANDSTILL AGREEMENT
7.1 Except for the Purchased Shares and as permitted by this Article
VII, each Purchaser agrees that until the earlier of (i) the third anniversary
of the date of this Agreement or (ii) the termination or expiration of the
Co-Branding and Marketing Agreement, without the prior consent of the Board of
Directors of the Company, it will not at any time, nor will it permit any of its
subsidiaries or Affiliates to, acquire directly or indirectly, by purchase or
otherwise, record ownership or beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act ) of any voting securities of the Company (other
than the Purchased Shares, the Warrant and the Warrant Shares), or rights or
options to acquire, or securities convertible into or exchangeable for, any such
voting securities (together with the Purchased Shares, the Warrant and the
Warrant Shares if the acquisition of such voting securities would result in the
Purchasers together beneficially owning more than ten percent (10%) of the then
outstanding voting securities of the Company (such voting securities other than
the Purchased Shares, the Warrant and the Warrant Shares), and such rights,
options and convertible or exchangeable securities (other than the Warrant),
being herein defined as "Other Securities"); provided that the term "Other
Securities" shall not include any voting securities of the Company or any rights
or options to acquire, or securities convertible into or exchangeable for, any
such voting securities including, without limitation, the Warrant Shares), which
a Purchaser may acquire as a result of any distribution by the Company to
holders of its capital stock generally and such Purchaser receives such Other
Securities solely in its capacity as a holder of capital stock of the Company.
7.2 If at any time the Purchasers are the record owners or beneficial
owners in the aggregate of capital stock of the Company in violation of Section
7.1 above, such Other Securities, shall be deemed to be "Prohibited Securities."
Each Purchaser agrees that neither it nor any of its subsidiaries or Affiliates
shall (and neither it nor any of its subsidiaries or Affiliates shall be
entitled to) vote any Prohibited Securities with respect to any matter subject
to the vote or written consent of the Company's stockholders, and the Purchasers
shall divest themselves of record and beneficial ownership of the Prohibited
Shares as promptly as reasonably possible provided that such divestiture shall
not cause a Purchaser to be liable to the Company pursuant to Section 16(b) of
the Exchange Act, or result in violation by the Company, any of the Purchasers
or any of its subsidiaries or Affiliates of Section 5 or 17(a) of the Securities
Act, or Section 10(b) of the Exchange Act or Rule 10b-5 thereunder.
7.3 The Purchasers agree that, without the prior consent of the Board
of Directors of the Company, neither of them will at any time, nor will a
Purchaser permit any subsidiaries or Affiliates to: (a) solicit proxies to vote
any securities of the Company under any circumstances for a change in the
directors or management of the Company, or in connection with a merger or
acquisition of the Company, or deposit any securities of the Company in a voting
trust or subject them to a voting agreement or other agreement of similar
effect; (b) initiate, propose, or otherwise solicit any stockholder of the
Company for the approval of, or induce or attempt to induce any other person to
initiate any stockholder proposal for a change in the directors or management of
the Company or in connection with a merger or acquisition of the Company; or (c)
take any action individually or jointly with any Person or group, or assist any
Person or group in taking any action, which it could not take individually under
the terms of this section.
7.4 The preceding provisions in this Article VII shall terminate in the
event that the Board of Directors of the Company shall (i) approve a tender
offer for a majority of the outstanding capital stock of the Company; (ii)
liquidate the Company or sell all or substantially all of the assets of the
Company to another Person; (iii) approve a merger or consolidation of the
Company with any other Person that would result in the voting securities of the
Company outstanding immediately prior thereto representing less than a majority
of the voting power to elect a majority of the board of directors or similar
body of the Person surviving such merger or resulting from such consolidation,
or (iv) sell or otherwise issue to any person voting securities of the Company
having a majority of the combined Voting Power of the voting securities of the
Company where Voting Power means the power to vote in the election of directors
generally.
7.5 In the event of any action by the Board of Directors of the Company
described in the Section 7.4, the Company shall notify each Purchaser at least
fifteen (15) days prior to the final approval of such transaction. All of the
provisions of this subsection shall be reinstated and shall apply in full force
according to their terms in the event that: (x) if the preceding provisions of
this Article shall have terminated as a result of a tender offer under clause
7.4(i) above, such tender offer (as originally made or as extended or modified)
shall have terminated (without any securities being accepted thereunder for
purchase) prior to the commencement of a tender offer by any Purchaser or any of
its subsidiaries or Affiliates that would have been permitted pursuant to clause
7.4(i) as a result of such third-party tender offer; (y) any tender offer by any
Purchaser or any of its subsidiaries or Affiliates (as originally made or as
extended or modified) that was permitted to be made pursuant to clause 7.4(ii)
through (iv) shall have terminated (without any securities being accepted
thereunder for purchase); or (z) if the preceding provisions of this Article
shall have terminated as a result of clause 7.4(ii) through (iv), the Board of
Directors of the Company shall have determined to rescind or abandon the
previous action described in clause 7.4(ii) through (iv) (and no such action
shall have closed). Upon reinstatement of the provisions of this Article VII,
the preceding provisions of this Article VII shall continue to govern,
including, without limitations, those that provide for the termination of the
preceding provisions of this Article VII in the event that any of the events
described in clause 7.4 shall occur.
7.6 This Article VII shall not be applicable to any Purchased Shares
and/or Warrant Shares sold by a Purchaser or an Affiliate pursuant to a
registration statement filed by the Company or under the Securities Act , or
Rule 144.
ARTICLE VIII
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Affiliate" means when used with respect to any Person, such Person is,
directly or indirectly, the beneficial owner of more than fifty percent (50%) of
the voting securities or any other voting interest of a corporation,
partnership, limited partnership, limited liability company, trust or business
trust (as the case may be).
"Agreement" means this Securities Purchase Agreement as from time to
time amended and in effect between the parties.
"Change of Control" means (i) any merger or consolidation of the
Company which the stockholders of the Company immediately prior to such merger
or consolidation own less than fifty percent (50%) of the surviving entity, (ii)
any sale, assignment, transfer or other disposition of the all or substantially
all of the assets of the Company or (iii) any transaction in which any Person,
or any two or more Persons acting as a group, and all Affiliates of such Person
or Persons, who prior to such time owned shares representing less than fifty
percent (50%) of the voting power at elections for the Board of Directors of the
Company, shall acquire, whether by purchase, exchange, tender offer, merger,
consolidation or otherwise, such additional shares of the Company's capital
stock in one or more transactions, or series of transactions, such that
following such transaction or transactions, such person or group and Affiliates
beneficially own (as such term is defined in Rule 13d-3 of Commission under the
Exchange Act fifty percent (50%) or more of the voting power at elections for
the Board of Directors of the Company; provided, however the foregoing shall not
apply to the grant of proxy voting rights to a Person designated by the Board of
Directors of the Company in connection with any meeting of stockholders of the
Company.
"Closing" and "Closing Date" shall the meanings set forth in Section
1.3.
"Co-Branding and Marketing Agreement" shall have the meaning set forth
in Section 5.8.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall have the meaning set forth in Section 2.3.
"Common Stock" shall have the meaning set forth in the preamble.
"Company" means and shall include National Discount Brokers Group, Inc.
, a Delaware corporation, its predecessors,successors and assigns.
"Encumbrances" means any lien, mortgage, security interest, pledge,
restriction on transferability, defect of title or other claim, charge or
encumbrance of any nature whatsoever on any property or property interest.
"ERISA" shall have the meaning set forth in Section 2.17.
"Exchange Act" shall have the meaning set forth in Section 4.1(j).
"Financial Statements" shall have the meaning set forth in Section 2.6.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Go2Net" shall mean Go2Net, Inc., a Delaware corporation.
"Intellectual Property Rights" shall have the meaning set forth in
Section 2.12.
"Knowledge" means the actually knowledge of the President, any
Executive Vice President or Senior Vice President of the Company after due
inquiry and an investigation of the books and records of the Company and each
Principal Subsidiary.
"Kontos Shares" means and includes all shares of Common Stock now or
hereinafter owned directly by Arthur Kontos and shares of Common Stock issuable
to Mr. Kontos upon the exercise of then vested and exercisable stock options
granted by the Company, excluding for this purpose all shares of Common Stock
owned by the Arthur Kontos Foundation, by limited partnerships of which Mr.
Kontos is general partner and Mr. Kontos' children are the sole limited partners
and shares of Common Stock held in voting trust agreement with his former wife.
"Lien" means, with respect to any asset, any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien, charge, restriction,
adverse claim by a third party, title defect or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any assignment or other conveyance of any right to receive
income and any assignment of receivables with recourse against assignor), any
filing of any financing statement as debtor under the Uniform Commercial Code or
comparable law of any jurisdiction and any agreement to give or make any of the
foregoing.
"Material Adverse Effect" shall mean a material adverse effect upon the
business, properties, assets, rights, operations, management, earnings,
financial conditions, or financial prospects of the Company and its
Subsidiaries, taken as a whole, and shall exclude and not give effect to events,
circumstances, or conditions effecting the economy of the United States, the
securities markets or the brokerage or market making industries generally.
"Permitted Transfer" shall have the meaning set forth in Section 9.17.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, trust or unincorporated organization or a
government or agency or political subdivision thereof.
"Principal Subsidiaries" means National Discount Brokers Corporation,
Sherwood Securities Corp. and SHD Corp., and their respective successors and
assigns.
"Purchaser" shall mean either Go2Net or Vulcan.
"Purchasers" shall mean Go2Net and Vulcan.
"Purchased Shares" shall have the meaning set forth in Section 1.1.
"Registration Rights Agreement" shall have the meaning set forth in the
preamble.
"Related Agreements" shall have the meaning set forth in Section 2.2.
"SEC Documents" means all reports, schedules, registration statements
and other documents (including all exhibits and schedules thereto) filed by the
Company with the Commission pursuant to Sections 13(a) or 14(a) of the Exchange
Act.
"Securities Act" shall have the meaning set forth in Section 2.4(c).
"Subsidiary" or "Subsidiaries" means any corporation, association or
other business entity of which the Company and/or any of its other Subsidiaries
(as herein defined), directly or indirectly owns at the time more than fifty
percent (50%) of the outstanding voting shares of every class of such
corporation or trust other than directors' qualifying shares.
"Tax" and "Taxes" shall have the meaning set forth in Section 2.11.
"Vulcan" shall mean Vulcan Ventures Incorporated, a Washington
corporation.
"Vulcan Side Letter" shall have the meaning set forth in Section 5.13.
"Warrant" shall have the meaning set forth in Section 1.2.
"Warrant Shares" shall have the meaning set forth in Section 1.2.
ARTICLE IX
MISCELLANEOUS
9.1 Survival of Representations. The representations, warranties,
covenants and agreements made herein or in any certificates or documents
executed in connection herewith shall survive the execution and delivery hereof
and the Closing of the transactions contemplated hereby for a period of two (2)
years, other than the representations and warranties of each Purchaser made in
Section 4.1 (a), (c), (e) and (g), which shall survive until such time as such
Purchaser who made the representations and warranties no longer holder any
Purchased Shares.
9.2 Parties in Interest. Except as otherwise set forth herein, all
covenants, agreements, representations, warranties and undertakings contained in
this Agreement shall be binding on and shall inure to the benefit of the
respective successors and assigns of the parties hereto (including permitted
transferees of any of the Purchased Shares).
9.3 Intentionally Omitted.
9.4 Amendments and Waivers. Amendments or additions to this Agreement
may be made and compliance with any term, covenant, agreement, condition or
provision set forth herein may be omitted or waived (either generally or in a
particular instance and either retroactively or prospectively) upon the written
consent of the Company and the Purchasers. This Agreement (including the
Schedules and Exhibits annexed hereto, which are an integral part of this
Agreement) constitutes the full and complete agreement of the parties with
respect to the subject matter hereof.
9.5 Notices. All notices, requests, consents, reports and demands shall
be in writing and shall be hand delivered, sent by facsimile or other electronic
medium, or mailed, postage prepaid, to the Company or to the Purchaser at the
address set forth below or to such other address as may be furnished in writing
to the other parties hereto:
The Company: National Discount Brokers Group, Inc.
10 Exchange Place Centre
Jersey City, New Jersey 07302
Attention: President
Tel: (201) 946-2200
Fax:201-946-4510
E-mail: [email protected]
with copy to: National Discount Brokers, Group, Inc.
10 Exchange Place Centre
Jersey City, New Jersey 07302
Attention: General Counsel
Tel: 201-946-4482
Fax: 201-946-4510
E-mail: [email protected]
Go2Net: Go2Net, Inc.
999 Third Avenue
Seattle, WA 98104
Attention: General Counsel
Tel: (206) 447-1595
Fax: (206) 447-1625
E-mail: [email protected]
with copy to: Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
Attention: Francis J. Feeney, Jr., Esq.
Tel: (617) 951-6600
Fax: (617) 951-1295
E-mail: [email protected]
Vulcan: Vulcan Ventures Incorporated
110 110th Avenue, N.E., Suite 550
Bellevue, Washington 98004
Attention: Diane Daggatt
Fax: (425) 453-1540
E-mail: [email protected]
with a copy to: Cooley, Godward LLP
5200 Carillon Point
Kirkland, Washington 98033-7356
Attention: Christopher Wright, Esq.
Fax: (425) 893-7777
E-mail: [email protected]
All such notices, request, demands, consents and other communications
shall be deemed to have been duly given or sent two (2) days following the date
on which mailed, or on the date on which delivered by hand, by facsimile
transmission or e-mail (receipt confirmed), as the case may be, and addressed as
aforesaid.
9.6 Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby.
9.7 Counterparts. This Agreement and any exhibit hereto may be executed
in multiple counterparts, each of which shall constitute an original but all of
which shall constitute but one and the same instrument. One or more counterparts
of this Agreement or any exhibit hereto may be delivered via telecopier, with
the intention that they shall have the same effect as an original counterpart
hereof.
9.8 Effect of Headings. The article and section headings herein
are for convenience only and shall not affect the construction or interpretation
hereof.
9.9 Adjustments. All provisions of this Agreement shall be
automatically adjusted to reflect any stock dividend, stock split or other such
form of recapitalization.
9.10 Governing Law. The parties hereby agree that this Agreement, and
the respective rights, duties and obligations of the parties hereunder, shall be
governed by and construed in accordance with the General Corporation Law of the
State of Delaware, without giving effect to principles of conflicts of law
thereunder. Each of the parties hereby (i) irrevocably consents and agrees that
any legal or equitable action or proceeding arising under or in connection with
this Agreement shall be brought exclusively in the Federal or state courts
sitting in Delaware and any court to which an appeal may be taken in any such
litigation, and (ii) by execution and delivery of this Agreement, irrevocably
submits to and accepts, with respect to any such action or proceeding, for
itself and in respect of its properties and assets, generally and
unconditionally, the jurisdiction of the aforesaid courts, and irrevocably
waives any and all rights such party may now or hereafter have to object to such
jurisdiction.
9.11 Assignment. The Purchasers have the right to assign or transfer
any of its rights pursuant to this Agreement in connection with (and in
proportion to) its transfer of securities purchased hereunder to any of its
affiliates. The Company may not assign or transfer any of its rights pursuant to
this Agreement unless the Company first obtains the express written consent of
the Purchasers.
9.12 Intentionally Omitted.
9.13 Waiver of Jury Trial. Each of the Company, Go2Net and Vulcan
hereby expressly waives its respective rights to a jury trial of any claim or
cause of action based upon or arising out of this agreement, any other related
agreements or any dealings between them relating to the subject matter of this
agreement. The Company and the Purchasers also waive any bond or surety or
security upon such bond which might, but for this waiver, be required of any
party. The scope of this waiver is intended to be all encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation, contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
The Company and the Purchasers further warrant and represent that each has
reviewed this waiver with its legal counsel, and that each voluntarily waives
its jury trial rights following consultation with legal counsel. This waiver is
irrevocable and may only be modified either orally or in amendments, renewals,
supplements or modifications to this agreement, any other related agreement or
the purchased shares. In the event of litigation, this agreement may be filed as
a written consent to a trial (without a jury) by the court.
9.14 Attorneys Fees. If any legal proceeding is initiated by any party
hereto to enforce this Agreement or otherwise with respect to the subject matter
of this Agreement, the prevailing party or parties shall be entitled to recover
reasonable attorneys' fees incurred in connection with any such proceedings.
9.15 HSR Act. On or before the date of the exercise of the Warrant, all
required filings (if necessary) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") shall have been made by the
parties required to do so, and any waiting period (and any extension thereof)
under the HSR Act, applicable to the transactions contemplated hereby shall have
expired or shall have terminated and neither the Company nor the Purchasers
shall be subject to any injunction or temporary restraining order against
consummation of the transactions contemplated hereby.
9.16 Right of First Refusal. If a Purchaser proposes to sell, transfer
or assign any of its Purchased Shares or Warrant Shares on or before February 4,
2001 then prior to such sale, transfer or assignment, such Purchaser shall give
written notice to the Company of such transfer, sale or assignment for purposes
of offering the Company the opportunity to purchase such Purchase Shares or
Warrant Shares on the same terms and conditions as set forth in such offer to
purchase (the "Notice"). The Notice shall describe in reasonable detail the
proposed transfer including: (i) the number of Purchased Shares to be
transferred, (ii) the nature of such Transfer, and (iii) if such transfer is to
be done by a private placement then the name and address of each prospective
purchaser or transferee and the consideration to be paid for the Purchased
Shares. If the Purchaser desires to sell any of the Purchased Shares to the
public either pursuant to a registration statement filed with and declared
effective by the Commission under the Securities Act as amended, Rule 144, then
the applicable price per share shall be the closing price of the Common Stock on
the New York Stock Exchange on the date of the Notice. In the event that within
one (1) business day following its receipt of the Notice, the Company does not
notify the Purchaser in writing of its desire to purchase all, but not less than
all, of such Purchased Shares on the same terms and conditions as set forth in
the Notice, then such Purchaser may sell the Purchased Shares. The Company shall
effect the purchase of the Purchased Shares, including payment of the purchase
price, not more than one (1) business day after delivery of its notice to the
Purchaser that it intends to purchase the Purchased Shares, and at such time the
Purchaser shall deliver to the Company the certificate(s) representing the
Purchased Shares to be purchased by the Company, each certificate to be properly
endorsed for transfer. The Purchased Shares so purchased shall thereupon be
cancelled and cease to be issued and outstanding shares of the Company's Common
Stock. Notwithstanding the foregoing, the right of first refusal of the Company
set forth in this Section 9.16 shall not apply to any Permitted Transfer.
9.l7. Transfer Restrictions. Each of the Purchasers shall not sell,
assign or transfer all or any portion of the Purchased Shares or the Warrant
Shares owned by it other than to (i) an Affiliate of such Purchaser, (ii) the
other Purchaser or (iii) an Affiliate of the other Purchaser (a "Permitted
Transfer"), except in compliance with this Section 9.17; provided, however that
as a condition to a Permitted Transfer, the acquirer of the Purchased Shares or
Warrant Shares shall have agreed to be bound by the provisions of this Section,
Section 9.16 and Article VII of this Agreement and the Company shall have
received an opinion of counsel competent in such matters that the transfer is
exempt from the registration requirements of the Act. During the period from the
date of this Agreement until the first anniversary thereof, a Purchaser may not
sell, assign or transfer all or any portion of the Purchased Shares or the
Warrant Shares owned by it. During the period between the first anniversary of
the date of this Agreement and the second anniversary of the date of this
Agreement, a Purchaser may sell, assign or transfer up to fifty percent (50%) of
the Purchased Shares and 50% of the Warrant Shares owned by such Purchaser.
After the second anniversary of this Agreement each Purchaser shall be able to
sell, assign or transfer all or any portion of its Purchased Shares or Warrant
Shares without any restrictions.
Notwithstanding the foregoing, the restrictions set forth above will
not be applicable and a Purchaser will be able to sell, assign or transfer all
or any portion of its Purchased Shares or the Warrant Shares at any time in
connection with or subsequently to the following: (i) a Change of Control of the
Company; (ii) a sale, assignment or transfer of greater than 10% of the Kontos
Shares, provided that any such sale, assignment or transfer of the Purchased
Shares and Warrant Shares by a Purchaser in connection with any such sale,
assignment or transfer of the Kontos Shares shall not exceed that percentage of
the Purchased Shares and Warrant Shares owned by such Purchaser as is equal to
that percentage of Kontos Shares that has been sold, assigned or transferred and
provided further that a transfer of Kontos Shares to the Company in connection
with the exercise of one or more options granted to Arthur Kontos or delivered
to the Company by Arthur Kontos to satisfy withholding taxes or any transfer or
disposition of Common Stock shall not be deemed a sale, assignment or transfer
of the Kontos Shares; (iii) an offering of more than 100,000 shares of Common
Stock by the Company on the account of a stockholder or stockholders (other than
the Purchasers or their Affiliates), pursuant to a registration statement under
the Securities Act, as amended, other than a registration statement filed by the
Company at the request of (and only registering for sale the shares of ) Peter
R. Kellog and/or any of his Affiliates (including IAT Reinsurance Syndicate
Ltd.) or pursuant to a registration statement on Form S-8 or any successor form
thereto; or (iv) upon the termination or expiration of the Co-Branding and
Marketing Agreement.
* * * * * * *
<PAGE>
S-1
NATIONAL DISCOUNT BROKERS GROUP, INC.
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Agreement to be duly executed and delivered as an instrument under seal as of
the date first above written.
THE COMPANY:
NATIONAL DISCOUNT BROKERS GROUP, INC.
By: /s/ Arthur Kontos
Name: Arthur Kontos
Title: President and CEO
PURCHASERS:
GO2NET, INC.
By: /s/ Michael J. Ricco, Jr.
Name: Michael J. Ricco, Jr.
Title: Chief Operating Officer
VULCAN VENTURES INCORPORATED
By: /s/ William D. Savoy
William D. Savoy
Vice President
<PAGE>
<TABLE>
<CAPTION>
Schedule 1.1
Investors Purchased Shares Purchase Price Warrant Shares
<S> <C> <C> <C>
Go2Net, Inc. 130,000 $3,510,000 130,000
Vulcan Ventures
Incorporated 370,000 $9,990,000 370,000
</TABLE>
<PAGE>
Exhibit 99(b)
National Discount Brokers and Go2Net Enter Into Strategic Alliance
Monday, February 7, 2000 08:08 AM
Vulcan Ventures Inc. and Go2Net to Invest Up To $30 Million in National Discount
Brokers NEW YORK and SEATTLE, Feb. 7 /PRNewswire/ -- National Discount Brokers
Corporation/ndb.com, a leading online brokerage and financial services company
(http://www.ndb.com/) and subsidiary of National Discount Brokers Group, Inc.
(NYSE: NDB, news, msgs) and Go2Net, Inc. (Nasdaq: GNET, news, msgs), one of the
Internet's leading networks (http://www.go2net.com/), today announced a
three-year agreement establishing NDB.com as the exclusive integrated brokerage
service for the Go2Net Network, including Silicon Investor
(http://www.siliconinvestor.com), the Web's premier financial discussion and
information site.
In addition, Go2Net will develop and license to NDB.com a co-branded version of
the Silicon Investor financial discussion boards to enable NDB.com's more than
200,000 account holders to view and post messages within NDB.com. As part of the
agreement, Vulcan Ventures Incorporated, the investment organization of Paul G.
Allen, and Go2Net have agreed to purchase up to one million shares of common
stock of from National Discount Brokers Group, Inc.
NDB.com is consistently recognized as one of the Internet's leading brokerages,
having received highest overall ratings from Barron's and Money magazine, as
well as a listing as one of the Internet's 100 hottest companies by Business 2.0
magazine.
The agreement establishes Silicon Investor as the first online financial
discussion site with complete, integrated brokerage capabilities, complementing
Silicon Investor's industry-leading community, financial research, analytics,
and original editorial content offerings. It also sets the stage for Silicon
Investor to extend its community membership, through the development of a
co-branded Silicon Investor discussion forum for National Discount Brokers' more
than 200,000 account holders.
In the coming months, Silicon Investor's more than 250,000 active members and
National Discount Brokers' account holders will experience seamless integration
between Silicon Investor's discussion threads and National Discount Brokers'
investment site. This will allow both Silicon Investor members and NDB account
holders to more easily access an array of real-time financial resources and
investing tools. Under the agreement, Go2Net will receive an annual minimum
payment of $7.5 million from NDB.com during the three-year term, of which the
third year is cancelable, if Go2Net fails to achieve certain performance goals,
in exchange for NDB.com being the exclusive integrated brokerage service for the
Go2Net Network and Go2Net's development and license of the Silicon Investor
discussion boards to NDB.com. Today's agreement also includes a significant
marketing and promotion component, in which NDB.com will be prominently featured
throughout the Go2Net Network and Silicon Investor.
Vulcan Ventures and Go2Net will purchase 500,000 shares of common stock of
National Discount Brokers Group at a purchase price of $27 per share and
warrants to purchase an additional 500,000 shares of common stock at a purchase
price of $33 per share. As part of the agreement, Go2Net Chairman and Chief
Executive Officer Russell C. Horowitz will join the National Discount Brokers
Group Board of Directors.
"Today marks a historic agreement for National Discount Brokers. It provides us
with access to the robust Go2Net Network, and in particular, the sophisticated
membership base of Silicon Investor. NDB and Silicon Investor represent a solid
fit and we look forward to working with what is widely acknowledged as the
Internet's leading provider of financial discussions and information," said
Dennis Marino, Chairman of National Discount Brokers Corporation. "The agreement
also serves as an important endorsement of NDB and our business strategy by
Vulcan Ventures, which will allow us to take advantage of new opportunities and
possibly expand our services into areas such as broadband."
"This is an important agreement on many levels, as National Discount Brokers is
exceptionally well positioned to not only meet the needs of Silicon Investor's
membership, but to excel in an online marketplace that demands high levels of
quality brokerage services," said Russell C. Horowitz, Go2Net Chairman and Chief
Executive Officer. "We're looking forward to working closely with them to
leverage the many opportunities ahead."
William Savoy, president of Vulcan Ventures Incorporated, added: "We're pleased
to add National Discount Brokers Group to the Vulcan portfolio of companies and
look forward to the possibilities of extending the NDB.com brokerage services to
broadband customers through Broadband Partners, Inc."
Silicon Investor was recently relaunched, integrating the original editorial and
research content of Go2Net's StockSite -- and IQC's charting and analytics
services -- with a new graphical interface for the site, along with improved
navigation schemes throughout its discussion threads and services. Go2Net
acquired Silicon Investor in 1998 and has since established the site as an
integral part of the Go2Net Network.
About National Discount Brokers Group, Inc.
Headquartered in Jersey City, New Jersey, National Discount Brokers Group, Inc.,
a S&P Small Cap 600 Index company, is the parent company of two financial
services entities: National Discount Brokers Corporation/ndb.com and Sherwood
Securities. National Discount Brokers at November 30, 1999 had 178,400 customer
accounts, with assets of $8.9 billion. Sherwood Securities' main operations are
as a market maker in approximately 4,500 Nasdaq and other OTC securities. The
Company has offices in Jersey City, New York, Los Angeles, Chicago, San
Francisco, Denver and Boston. Customers can access National Discount Brokers
Corporation/ndb.com at http://www.ndb.com, via the PowerBroker automated
touch-tone telephone system 800-631-8884 or by calling 800-4-1-PRICE.
Statements made in this press release constitute forward-looking statements, as
that term is defined in the Private Securities Litigation Reform Act of 1995.
These statements are subject to risks and uncertainties. These forward-looking
statements generally are accompanied by words such as "intend," "anticipate,"
"believe," "estimate," "expect," "should" or similar expressions. It should be
understood that these forward-looking statements are subject to a number of
assumptions, risks and uncertainties that could cause actual results to differ
materially from those expressed or implied in the forward-looking statements.
About Go2Net, Inc.
Go2Net (http://www.go2net.com/) is one of the Internet's leading networks,
providing consumer services, business services, and enabling services. The
company offers through the World Wide Web a network of branded properties and
aggregated content in the categories of search and directory, personal finance,
multi-player games, small business services and ecommerce solutions. The company
also develops Internet technologies for its own network and for license to
strategic partners. The Go2Net Network is home to many of the Internet's leading
vertical destinations, including: MetaCrawler, Silicon Investor, the HyperMart
Network, PlaySite, Dogpile and 100hot.
This announcement contains forward-looking statements that involve risks and
uncertainties, including those relating to the company's ability to grow its
user and advertiser base. Actual results may differ materially from the results
predicted and reported results should not be considered as an indication of
future performance. The potential risks and uncertainties include, among others,
the company's limited operating history, the competitive environment in which
the company competes, the early stage of the Web as an advertising and
electronic commerce medium, the company's dependence on advertising, sponsorship
and commerce revenues, the company's dependence on strategic relationships to
drive traffic to its Web sites, consumer acceptance of the company's new
products and services, the company's ability to develop and integrate new
technologies and services into its existing services and into new platforms,
such as broadband, and the increased use of the Web for commerce. More
information about the potential factors that could affect the company's business
and financial results is included in the company's Annual Report on Form 10-K
for the year ended September 30, 1999, which is on file with the Securities and
Exchange Commission.
For information, contact Mark S. Peterson, Director of Public Relations,
[email protected], or John Ruljancich, Investor Relations Manager,
[email protected], both of Go2Net, Inc., 206-447-1595; or Rich Tauberman of The
MWW Group, 201-507-9500, [email protected], for National Discount Brokers Group
, Inc.; or Rafael H. Yaghoutiel, Vice President, Investor Relations, 201-536-
6830, [email protected], or Frank E. Lawatsch, Jr., Executive Vice President and
General Counsel, 201-946-4482, [email protected], both of National Discount
Brokers Group, Inc.
SOURCE Go2Net, Inc.
CONTACT: Mark S. Peterson, Director of Public Relations, [email protected], or
John Ruljancich, Investor Relations Manager, [email protected], both of Go2Net,
Inc., 206-447-1595; or Rich Tauberman of The MWW Group, 201-507-9500,
[email protected], for National Discount Brokers Group, Inc.; or Rafael H.
Yaghoutiel, Vice President, Investor Relations, 201-536-6830, [email protected],
or Frank E. Lawatsch, Jr., Executive Vice President and General Counsel, 201-946
- -4482, [email protected], both of National Discount Brokers Group, Inc.
Quote for referenced ticker symbols: NDB, GNET
(C) 2000, PR Newswire
