EXHIBIT 10.11
SECOND AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
BY AND AMONG
WIT CAPITAL GROUP, INC.
AND
SIGNATORIES LISTED HEREIN
___________________________________
Dated as of February 23, 1999
______________________________________
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS ............................................. 1
Section 1.1 Definitions ..................................... 1
ARTICLE 2 MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES ........ 6
Section 2.1 Board of Directors .............................. 6
2.1.1 Board Representation ............................ 6
2.1.2 Vacancies ....................................... 7
2.1.3 Termination of Rights ........................... 7
2.1.4 Committee Representation ........................ 8
2.1.5 Costs and Expenses .............................. 8
2.1.6 Other Activities of the Holders;
Fiduciary Duties................................ 8
ARTICLE 3 CAPITAL Z STANDSTILL .................................... 8
Section 3.1 Capital Z Standstill ............................ 8
ARTICLE 4 CERTAIN TRANSFER PROVISIONS ............................. 10
Section 4.1 Preemptive Rights ............................... 10
4.1.1 Right to Participate in Future Issuances ........ 10
4.1.2 Exceptions to Preemptive Rights ................. 10
Section 4.2 Right of First Refusal .......................... 11
Section 4.3 Tag-Along Rights ................................ 13
Section 4.4 Transfers by Key Employees ...................... 13
Section 4.5 Exceptions ...................................... 14
ARTICLE 5 DRAG ALONG RIGHTS ....................................... 14
Section 5.1 Applicability ................................... 14
Section 5.2 Notice of Significant Sale ...................... 15
ARTICLE 6 CERTIFICATE LEGEND ...................................... 15
Section 6.1 Certificate Legend .............................. 15
ARTICLE 7 TERMINATION ............................................. 15
Section 7.1 Termination ..................................... 15
ARTICLE 8 MISCELLANEOUS ........................................... 16
Section 8.1 Notices.......................................... 16
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TABLE OF CONTENTS
(continued)
Page
Section 8.2 Issuance of Additional Stock .................... 17
Section 8.3 Information Rights; Budgets ..................... 17
Section 8.4 Confidentiality ................................. 18
Section 8.5 Effectiveness ................................... 18
Section 8.6 Governing Law ................................... 18
Section 8.7 Successors and Assigns .......................... 18
Section 8.8 Duplicate Originals ............................. 19
Section 8.9 Severability .................................... 19
Section 8.10 No Waivers; Amendments .......................... 19
Section 8.11 Entire Agreement ................................ 19
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SECOND AMENDED AND RESTATED
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STOCKHOLDERS AGREEMENT
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THIS SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Stockholders
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Agreement") dated as of February 23, 1999 (and to become effective at the time
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hereinafter described), is entered into by and among WIT Capital Group, Inc., a
Delaware corporation (including its successors, the "Company"), and the
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securityholders (or persons who have entered into agreements to acquire
securities of the Company) listed on the signature pages hereof or who may
execute counterpart signature pages hereto following the date hereof, in
accordance with Section 6.1 hereto.
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WHEREAS, the Company and certain securityholders of the Company are parties
to that certain First Amended and Restated Stockholders Agreement dated as of
November __, 1998 (the "Existing Stockholders Agreement");
WHEREAS, the parties hereto desire to enter into this Stockholders Agreement
in order to, upon the effectiveness of this Agreement, amend, restate and
replace the Existing Stockholders Agreement in its entirety; and
WHEREAS, this Stockholders Agreement will automatically become effective
upon the Closing (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements hereinafter contained and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
Article 1
DEFINITIONS
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Section 1.1 Definitions.
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"Accredited Investor" means an "Accredited Investor," as defined in
Regulation D, or any successor rule then in effect.
"Affiliate" means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common
control with that Person. For purposes of this definition, "control"
when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise.
"Budget" shall have the meaning provided in Section 8.3.
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"Capital Z" means, collectively, Capital Z Financial Services Fund
II, L.P. and Capital Z Financial Services Private Fund II, L.P.
"Capital Z Holders" means, collectively, Capital Z and any Affiliate
or partner of Capital Z who is directly or indirectly transferred Common
Stock or Common Stock Equivalents or any interest therein by any Capital
Z Holder.
"Closing" means the closing of the purchase of shares of Series D
Preferred Stock by the New Investors (as defined in the Stock Purchase
Agreement) pursuant to the Stock Purchase Agreement.
"Common Stock" means shares of the Common Stock, $.01 par value per
share, of the Company, and any capital stock into which such Common Stock
thereafter may be changed.
"Common Stock Equivalents" means, without duplication with any other
Common Stock or Common Stock Equivalents, any security of the Company
which is convertible into, exercisable for or exchangeable for, directly
or indirectly, Common Stock of the Company, whether at the time of
issuance or upon the passage of time or the occurrence of some future
event.
"Company" shall have the meaning provided in the introductory
paragraph hereof.
"Controlled Affiliate" means, with respect to any Person, any
Affiliate of such Person who, directly or indirectly, is controlled by
such Person; provided, however, that the term "Controlled Affiliate" with
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respect to the Ultimate General Partner shall not include any entity with
respect to which, as of the time of such determination, the Ultimate
General Partner does not have the direct or indirect power (whether
through ownership of a majority of the voting securities of such entity
or by contract or otherwise) to elect a majority of the members of the
board of directors (or equivalent governing body) of such entity.
"Co-Seller" shall have the meaning set forth in Section 5.1 hereof.
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"DFJ Holders" means, collectively, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Jurvetson Fund V,
L.P. and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Jurvetson Partners, LLC and any Affiliate or
partner of such entities who is directly or indirectly transferred Common
Stock or Common Stock Equivalents or any interest therein by any DFJ
Holder.
"Dragging Holders" shall have the meaning provided in Section 5.1.
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"Drag Sale" shall have the meaning provided in Section 4.2 hereof.
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"Effective Time" means the time of the consummation of the Closing.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Existing Stockholders Agreement" shall have the meaning set forth
in the recitals hereto.
"First Option" shall have the meaning provided in Section 4.2
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hereof.
"Fully-Diluted Common Stock" means, at any time, the then
outstanding Common Stock of the Company plus (without duplication) all
shares of Common Stock issuable, whether at such time or upon the passage
of time or the occurrence of future events, upon the conversion or
exchange of all then outstanding Voting Stock which constitutes Common
Stock Equivalents; provided, however, that solely for purposes of Article
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3, "Fully-Diluted Common Stock" means, at any time, the then outstanding
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Common Stock of the Company plus (without duplication) all shares of
Common Stock issuable, whether at such time or upon the passage of time
or the occurrence of future events, upon the exercise, conversion, or
exchange of all then outstanding Common Stock Equivalents (regardless of
whether or not such Common Stock Equivalents constitute Voting Stock).
"Group" means, in the case of any Holder, such Holder and (i) all
Affiliates of such Holder, (ii) all partners of such Holder if such
Holder is a partnership, (iii) any Person to which such Holder transfers
all or substantially all of its assets and (iv) in the case of a Holder
that is an individual, the spouse and lineal descendants of such Holder,
any trust for the benefit of such spouse or any such lineal descendant,
or any other family member of such Holder.
"Holder" means (i) a securityholder that, immediately prior to the
execution and delivery of this Stockholders Agreement, was a party to the
Existing Stockholders Agreement (which is being amended and restated
pursuant to this Stockholders Agreement), (ii) any other securityholder
(or person who has entered into an agreement to acquire securities of the
Company) listed on the signature pages hereof (including but not limited
to any securityholder who, after the date of this Stockholders Agreement
but at or prior to the Closing, executes a counterpart signature page
hereto as contemplated by the Stock Purchase Agreement), and (iii) any
direct or indirect transferee of any such Person who shall become a party
to this Stockholders Agreement.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Key Employees" means each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇.
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"Majority Capital Z Holders" means Capital Z Holders holding Common
Stock and/or Common Stock Equivalents representing a majority of the
Fully-Diluted Common Stock then held by all Capital Z Holders.
"Majority DFJ Holders" means DFJ Holders holding Common Stock and/or
Common Stock Equivalents representing a majority of the Fully-Diluted
Common Stock then held by all DFJ Holders.
"Non-Responding Holder" shall have the meaning provided in Section
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4.1 hereof.
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"Offer Notice" shall have the meaning provided in Section 4.1
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hereof.
"Offered Securities" shall have the meaning provided in Section 4.1
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hereof.
"Option Holders" shall have the meaning provided in Section 4.2
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hereof.
"Participation Offer" shall have the meaning provided in Section 4.3
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hereof.
"Person" or "person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government or other agency
or political subdivision thereof.
"Preemptive Rights Offer" shall have the meaning set forth in
Section 4.1 hereof.
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"Preemptive Rights Offer Notice" shall have the meaning set forth in
Section 4.1 hereof.
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"Preemptive Rights Transaction" shall have the meaning set forth in
Section 4.1 hereof.
"Qualified IPO" means an underwritten public offering of Common
Stock pursuant to a registration statement under the Securities Act where
both (i) the proceeds to the Company (prior to deducting any
underwriters' discounts and commissions) equal or exceed Twenty-Five
Million Dollars ($25,000,000) and (ii) the initial price per share at
which such Common Stock is sold to the public in such offering is at
least $4.50 (subject to equitable adjustment for stock splits, stock
combinations, recapitalizations and similar occurrences).
"Regulation D" means Regulation D promulgated under the Securities
Act by the SEC.
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"SEC" means the U. S. Securities and Exchange Commission.
"Second Option" shall have the meaning provided in Section 4.2
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hereof.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Series D Preferred Stock" means the Series D Preferred Stock, $.01
par value, of the Company.
"Standstill Limit" shall have the meaning provided in Section 3.1.
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"Stockholders Agreement" means this Second Amended and Restated
Stockholders Agreement, as such from time to time may be amended.
"Stock Purchase Agreement" means the Amended and Restated Series D
Preferred Stock Purchase Agreement of even date herewith, among the
Company and Persons acquiring Series D Preferred Stock thereunder.
"Subsidiary" of any Person means (i) a corporation a majority of
whose outstanding shares of capital stock or other equity interests with
voting power, under ordinary circumstances, to elect directors, is at the
time, directly or indirectly, owned by such Person, by one or more
Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person, and (ii) any other Person (other than a
corporation) in which such Person, a Subsidiary of such Person or such
Person and one or more Subsidiaries of such Person, directly or
indirectly, at the date of determination thereof, has (x) at least a
majority ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"Transfer" means any sale or other disposition, whether voluntary or
involuntary, of any Common Stock and/or Common Stock Equivalent or any
interest therein.
"Transferor" shall have the meaning provided in Section 4.2 hereof.
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"Transferor Notice" shall have the meaning provided in Section 4.2
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hereof.
"Voting Stock" means capital stock of the Company which possesses
the right to vote generally in the election of directors.
Section 1.2 Rules of Construction. Unless the context otherwise requires
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(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
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(3) words in the singular include the plural, and words in the
plural include the singular;
(4) provisions apply to successive events and transactions; and
(5) "herein," "thereof" and other words of similar import refer
to this Stockholders Agreement as a whole and not to any particular
Article, Section or other subdivision.
Article 2
MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES
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Section 2.1 Board of Directors.
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2.1.1 Board Representation.
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(a) From and following the Effective Time, the Board of Directors
of the Company initially shall consist of nine (9) individuals. Subject to
Section 2.1.3, (i) the Majority DFJ Holders will be entitled to designate
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one (1) director, and (ii) the Majority Capital Z Holders will be entitled
to designate two (2) directors; provided, however, that if the size of the
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Board of Directors of the Company is increased, then the Majority Capital Z
Holders will be entitled to designate such additional number of directors,
if any, such that the total number of directors designated by the Majority
Capital Z Holders pursuant to this sentence shall not represent (as a
percentage of the total number of directors) less than the total percentage
of all shares of Fully-Diluted Common Stock represented by the shares of
Fully-Diluted Common Stock owned by the Capital Z Holders (in the event
such percentage would result in the Majority Capital Z Holders being
entitled to any fractional director, rounding down to the nearest whole
number of directors). The existence of the right, pursuant to this Section
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2.1.1(a), on the part of the Majority DFJ Holders and the Majority Capital
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Z Holders to designate certain directors will in no way limit or impair the
right of the Majority DFJ Holders and the Majority Capital Z Holders to
vote their shares of capital stock of the Company as they see fit with
respect to the election of persons to fill seats on the Board of Directors
other than the seats filled as a result of the designation rights under
this Section 2.2.1(a).
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(b) Each Holder shall vote his or its shares of Common Stock at any
regular or special meeting of stockholders of the Company or in any written
consent executed in lieu of such a meeting of stockholders and shall take
all other actions necessary to give effect to the agreements contained in
this Stockholders Agreement (including without limitation the election of
persons designated by the Majority DFJ Holders and/or the Majority Capital
Z Holders to be elected as directors as described in the preceding
paragraph) and to ensure that the certificate of incorporation and bylaws
of the Company do not, at any time hereafter, conflict in any respect with
the provisions of this Stockholders Agreement. In order to effectuate the
provisions of this Section 2, each Holder hereby agrees that when any
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action or vote is required to be taken by such Holder pursuant to this
Stockholders Agreement, such Holder shall use his or its best efforts to
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call, or cause the appropriate officers and directors of the Company to
call, a special or annual meeting of stockholders of the Company, as the
case may be, or execute or cause to be executed a consent in writing in
lieu of any such meetings pursuant to Section 228(a) of the General
Corporation Law of the State of Delaware.
2.1.2 Vacancies. If, prior to his election to the Board of Directors of
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the Company pursuant to Section 2.1.1 hereof, any designee of the Majority DFJ
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Holders or the Majority Capital Z Holders shall be unable or unwilling to serve
as a director of the Company, then the Majority DFJ Holders or the Majority
Capital z Holders, as applicable, shall be entitled to designate a replacement
designee. If, following an election to the Board of Directors of the Company
pursuant to Section 2.1.1 hereof, any designee of the Majority DFJ Holders or
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the Majority Capital Z Holders shall resign or be removed or be unable to serve
for any reason prior to the expiration of his term as a director of the Company,
then the Majority DFJ Holders or the Majority Capital Z Holders, as applicable,
shall, within thirty (30) days of such event, notify the Board of Directors of
the Company in writing of a replacement designee, and either (i) the Holders
shall vote their shares of Common Stock, at any regular or special meeting
called for the purpose of filling positions on the Board of Directors of the
Company or in any written consent executed in lieu of such a meeting of
stockholders, and shall take all such other actions necessary to ensure the
election to the Board of Directors of the Company of such replacement designee
to fill the unexpired term of the designee who such new designee is replacing or
(ii) the Board of Directors shall elect such replacement designee to fill the
unexpired term of the designee who such new designee is replacing. If the
Majority DFJ Holders or the Majority Capital Z Holders request that any of their
respective designees be removed as a director (with or without cause) by written
notice thereof to the Company, then each of the Holders shall vote all of its or
his capital stock in favor of, such removal upon such request.
2.1.3 Termination of Rights.
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(a) The right of the DFJ Holders to designate directors under
Section 2.1.1, and the obligation of the Holders to vote their shares as
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provided herein with respect to such designees, shall terminate upon the
first to occur of (i) the termination or expiration of this Stockholders
Agreement or this Article 2, (ii) such time as the Majority DFJ Holders
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elect in writing to terminate their rights under this Article 2, or (iii)
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such time as the DFJ Holders collectively cease to own at least five
percent (5%) of the Fully-Diluted Common Stock.
(b) The right of the Capital Z Holders to designate directors under
Section 2.1.1, and the obligation of the Holders to vote their shares as
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provided herein with respect to such designees, shall terminate upon the
first to occur of (i) the termination or expiration of this Stockholders
Agreement or this Article 2, (ii) such time as the Majority Capital Z
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Holders elect in writing to terminate their rights under this Article 2, or
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(iii) such time as the Capital Z Holders collectively cease to own at least
five percent (5%) of the Fully-Diluted Common Stock. In addition, prior to
the time that the right of the Majority Capital Z Holders to designate
directors is terminated in accordance with the provisions of the
immediately preceding sentence, the number of directors that
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the Majority Capital Z Holders are entitled to designate will be decreased
from two (2) directors to one (1) director from and following the time that
the Capital Z Holders collectively cease to own at least fifteen percent
(15%) of the Fully-Diluted Common Stock.
2.1.4 Committee Representation. So long as the Capital Z Holders are
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entitled to designate any directors under Section 2.1.1, at least one (1) of the
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directors designated by the Majority Capital Z Holders shall be permitted to
serve on each committee of the Board of Directors of the Company. So long as
the DFJ Holders are entitled to designate any director under Section 2.1.1, the
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director designated by the Majority DFJ Holders shall be permitted to serve on
the Compensation Committee and the Audit Committee of the Board of Directors of
the Company.
2.1.5 Costs and Expenses. The Company will pay all reasonable out-of-
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pocket expenses incurred by in connection with the participation by directors in
meetings of the Board of Directors (and committees thereof) of the Company and
the Boards of Directors (and committees thereof) of any Subsidiaries of the
Company.
2.1.6 Other Activities of the Holders; Fiduciary Duties. It is understood
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and accepted that the Holders and their Affiliates have interests in other
business ventures which may be in conflict with the activities of the Company
and its Subsidiaries and that, subject to applicable law, nothing in this
Stockholders Agreement shall limit the current or future business activities of
the Holders whether or not such activities are competitive with those of the
Company and its Subsidiaries. Nothing in this Stockholders Agreement, express
or implied, shall relieve any officer or director of the Company or any of its
Subsidiaries, or any Holder, of any fiduciary or other duties or obligations
they may have to the Company's stockholders.
Article 3
CAPITAL Z STANDSTILL
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Section 3.1 Capital Z Standstill.
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(a) For a period commencing upon the Closing and ending on the
later of (i) three (3) years after the Closing or (ii) if a Qualified IPO
is consummated within two years after the Closing, three years after the
consummation of such Qualified IPO, neither Capital Z nor Capital Z
Partners, Ltd., the ultimate general partner of Capital Z (the "Ultimate
General Partner") shall (nor shall the Ultimate General Partner permit any
of its Controlled Affiliates to), without the prior affirmative vote or
written consent of a majority of the directors of the Company (without
counting as a director for such purpose any director designated by the
Capital Z Holders or the proposed transferor or any Affiliate of either)
directly or indirectly, authorize or make a tender, exchange or other offer
for, or purchase or otherwise acquire, or agree to acquire, or obtain,
directly or indirectly, beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act) of any Voting Stock (except, in any
case, by way of stock dividends or other distributions or rights offerings
made available to holders of any Voting Stock
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generally), if the effect of such acquisition would be to increase the
aggregate number of shares of Voting Stock then beneficially owned by
Capital Z and the Ultimate General Partner and its Controlled Affiliates to
an amount in excess of 25% of the total Fully-Diluted Common Stock (the
"Standstill Limit"). Notwithstanding the foregoing, for the purposes of
calculating the number of shares of Voting Stock beneficially owned by
Capital Z and the Ultimate General Partner and its Controlled Affiliates,
there shall be excluded from such calculation any shares owned by any
insurance company or financial institution which is a Controlled Affiliate
of the Ultimate General Partner as part of such Controlled Affiliate's
investment portfolio (and not owned for the purpose of affecting control of
the Company). Capital Z represents and warrants to the Company that no
single Person owns, together with its Affiliates, in excess of 10% of the
voting power of the Ultimate General Partner.
(b) The provisions of this Section 3.1 shall terminate prior to
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expiration, and Capital Z or the Ultimate General Partner and its
Controlled Affiliates shall be free to acquire Voting Stock without regard
to the Standstill Limit, at such earlier time as (A) prior to the Qualified
IPO, any Person other than Capital Z and the Ultimate General Partner or
any of its Controlled Affiliates (and other than any Person acting in
concert with Capital Z or the Ultimate General Partner or any of its
Controlled Affiliates) acquires beneficial ownership (as defined in Rule
13d-3 promulgated under the Exchange Act ("Beneficial Ownership" or
"Beneficially Owned")) of Voting Stock representing, together with any
Voting Stock already Beneficially Owned by such Person and its Affiliates,
at least 25% of the total Fully-Diluted Common Stock or (B) following the
Qualified IPO, the earlier of (i) any Person other than Capital Z or the
Ultimate General Partner or any of its Controlled Affiliates (and other
than any Person acting in concert with Capital Z or the Ultimate General
Partner or any of its Controlled Affiliates) acquires Beneficial Ownership
of Voting Stock representing, together with any Voting Stock already
Beneficially Owned by such Person and its Affiliates, at least 25% of the
total Fully-Diluted Common Stock or (ii) any Person other than Capital Z or
the Ultimate General Partner or any of its Controlled Affiliates (and other
than any Person acting in concert with Capital Z or the Ultimate General
Partner or any of its Controlled Affiliates) notifies in writing the
Company or its Board of Directors of, or publicly announces, that it has
acquired or that it intends to acquire or offer to acquire (including but
not limited to any offer to acquire by means of a tender offer) (and in
connection therewith discloses, in a Schedule 13D or 14D-1 (or any other
successor schedule or form promulgated or adopted for such purpose by the
Securities and Exchange Commission) filed under the Securities Exchange Act
of 1934, as amended), or otherwise, an intention to acquire) Beneficial
Ownership of Voting Stock representing, together with any Voting Stock
already Beneficially Owned by such Person and its Affiliates, at least 25%
of the total Fully-Diluted Common Stock (and does not, prior to any
acquisition by Capital Z or the Ultimate General Partner or any of its
Controlled Affiliates of any Voting Stock that would otherwise be
prohibited by this Section 3.1, disclose in any statement of which Capital
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Z has or could reasonably be expected to have knowledge of an intention not
to proceed with such acquisition); provided, that the Company reasonably
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believes that (i) such Person is financially capable of consummating such
acquisition and (ii) such Person has a serious and bona fide intention to
consummate such acquisition.
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(c) The Capital Z Holders agree that it or they shall not exercise
any preemptive right otherwise provided under Section 4.1 or any right of
first refusal otherwise provided under Section 4.2 if such exercise would
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violate the provisions of Section 3.1(a) and cause Capital Z's and the
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Ultimate General Partner's and its Controlled Affiliates' aggregate
Beneficial Ownership of Voting Stock of the Company to exceed the
Standstill Limit; provided, however, that any exercise (or indication of
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intention to exercise) by another Holder of any preemptive right under
Section 4.1 or any right of first refusal under Section 4.2 which would
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result in such Holder and its Affiliates collectively Beneficially Owning
at least 25% of the total Fully-Diluted Common Stock will be deemed to
constitute an action which, pursuant to Section 3.1(b), will terminate the
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provisions of this Section 3.1.
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Article 4
CERTAIN TRANSFER PROVISIONS
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Section 4.1 Preemptive Rights.
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4.1.1 Right to Participate in Future Issuances. In case the Company
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proposes at any time following the Effective Time to issue or sell any Common
Stock or Common Stock Equivalents (the "Offered Securities"), the Company shall,
no later than twenty (20) days prior to the consummation of such transaction (a
"Preemptive Rights Transaction"), give notice in writing (the "Preemptive Rights
Offer Notice") to each Holder of such Preemptive Rights Transaction. The
Preemptive Rights Offer Notice shall describe the proposed Preemptive Rights
Transaction, identify the proposed purchaser, and contain an offer (the
"Preemptive Rights Offer") to sell to each Holder, at the same price and for the
same consideration to be paid by the proposed purchaser (provided that, in the
event any of such consideration is non-cash consideration, at the election of
such Holder to whom the Preemptive Rights Offer is made, such Holder may pay
cash equal to the value of such non-cash consideration), all or any part of such
Holder's pro rata portion of the Offered Securities (which shall be a percentage
of the Offered Securities equal to the percentage of all Fully-Diluted Common
Stock then outstanding (or deemed outstanding) that is represented by the Fully-
Diluted Common Stock held by such Holder). If any Holder to whom a Preemptive
Rights Offer is made fails to accept (a "Non-Responding Holder") in writing the
Preemptive Rights Offer by the fifteenth (15th) day after the Company's delivery
of the Preemptive Rights Offer Notice, the Company may proceed with the proposed
Preemptive Rights Transaction, free of any right on the part of any Non-
Responding Holders under this Section 4.1.1 in respect thereof.
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4.1.2 Exceptions to Preemptive Rights. Section 4.1.1 shall not apply
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to (i) issuances or sales of Common Stock or Common Stock Equivalents upon
exercise, conversion or exchange of any Common Stock Equivalent which, when
issued, was subject to or exempt from the preemptive rights provided under this
Section 4.1, (ii) shares of capital stock issued in a stock split or stock
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dividend or shares of capital stock or other securities distributed ratably or
sold to all holders of Common Stock on a per share equivalent basis, (iii)
issuances of Common Stock or Common Stock
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Equivalents pursuant to any exercise, conversion or exchange of any Common Stock
Equivalent that was outstanding as of the date of this Stockholders Agreement,
(iv) issuances of Common Stock Equivalents pursuant to the Stock Purchase
Agreement, (v) issuances or sales of Common Stock or Common Stock Equivalents
pursuant to acquisitions or strategic investments or corporate partnering
transactions or relationships, (vi) issuances of Common Stock or Common Stock
Equivalents pursuant to a merger of the Company or a Subsidiary of the Company
into or with another entity or pursuant to an acquisition by the Company or a
Subsidiary of the Company of the capital stock or assets of another business,
(vii) compensatory issuances of options, restricted stock or other equity rights
to officers, employees, directors or consultants of the Company with approval of
the Board of Directors of the Company, (viii) issuances or sales of Common Stock
in a Qualified IPO, (ix) issuances of Common Stock or Common Stock Equivalents
pursuant to commercial transactions approved by the Board of Directors of the
Company (including but not limited to equipment leases or bank lines of credit),
or (x) issuances of Common Stock or Common Stock Equivalents approved in advance
by holders of a majority of the Fully-Diluted Common Stock held by all Holders.
Section 4.2 Right of First Refusal. If at any time following the
----------------------
Effective Time a Holder other than a Key Employee (a "Transferor") has received
a bona fide offer to purchase any or all of the shares of Common Stock and/or
Common Stock Equivalents beneficially owned by the Transferor and such
Transferor desires to accept such offer to purchase, or if a Transferor
otherwise proposes to Transfer for value any shares of Common Stock and/or
Common Stock Equivalents (for purposes of this Section 4.2, "shares") to any
-----------
Person, the Transferor shall, not less than thirty (30) days prior to the
anticipated closing of such Transfer, give written notice (the "Transferor's
Notice") to the Company and the other Holders of such proposed Transfer. The
Transferor's Notice shall (i) specify the proposed transferee thereof, the
number of shares to be transferred, the amount and type of consideration to be
received therefor, and the other material terms on which the Transferor proposes
to Transfer the Common Stock and/or Common Stock Equivalents and (ii) contain an
undertaking by the proposed transferee, if applicable, to honor any
Participation Offer which is made in accordance with the terms of Section 4.3
-----------
hereof, and (iii) contain the following offer:
------
The Transferor shall offer to sell (the "First Option") all such
shares to the Company at the same price per share and for
consideration consisting of (x) cash equal to the amount of cash
proposed to be paid by the proposed transferee and (y) if any of the
consideration to be paid by the proposed transferee is non-cash
consideration, either the same non-cash consideration or, at the
election of the Company, cash having an equivalent value to the non-
cash consideration proposed to be paid by the proposed transferee.
The determination of equivalent value required by the preceding
sentence, as well as the decision whether or not the Company will
accept the First Option, in any particular instance shall be made by a
committee of the Board of Directors of the Company, excluding
therefrom any directors designated by the Transferor or proposed
transferee (or any Affiliate thereof) utilizing any method and/or
advisory assistance it deems appropriate, and the Company shall give
11
the Transferor and the other Holders written notice of such
determination within fifteen (15) days after receipt of the
Transferor's Notice. Notwithstanding the foregoing, in the event the
Transferor disputes the determination of equivalent value made
pursuant to the immediately preceding sentence, the Company shall
engage a nationally recognized investment banking firm to recompute
the equivalent value of the non-cash consideration offered by the
Company pursuant to the First Option, it being understood that the
fees and expenses of such investment banking firm shall be paid one-
half by the Company and one-half by the Transferor, and the investment
banking firm's method of calculation of equivalent value shall be used
in determining the amount of non-cash consideration permitted to be
paid by the Company pursuant to the First Option or by the Option
Holders pursuant to the Second Option (in each case, as defined
below). If the Company (A) fails to notify the Transferor in writing
within fifteen (15) days after receipt of the Transferor's Notice that
it elects to accept the First Option or (B) by written notice within
such 15-day period rejects the First Option in whole or in part, the
Transferor shall offer to sell (the "Second Option") the shares not to
be so purchased to the other Holders (the "Option Holders") at the
same price per share and for consideration consisting of (x) cash in
an amount equal to the amount of cash proposed to be paid by the
proposed transferee and (y) cash or non-cash consideration, if any,
having an equivalent value (determined as provided above) with the
non-cash consideration proposed to be paid by the proposed transferee.
The Option Holders may purchase the shares so offered in the
proportions upon which they mutually agree, or, if they are unable to
agree upon an allocation of such shares among themselves, then in
proportion to the number of shares of Fully-Diluted Common Stock owned
by each such Option Holder who wishes to participate in the purchase
of such shares pursuant to the Second Option. The Second Option may
be accepted by one or more of such Option Holders by written notice
delivered to the Transferor within thirty (30) days after receipt of
the Transferor's Notice. Unless, through exercise of the First Option
and/or the Second Option, all the securities proposed to be
transferred in the Transferor's Notice are to be acquired by the
Company and/or the Option Holders, the Transferor may transfer,
subject to Section 4.3 hereof, all shares covered by the Transferor's
-----------
Notice to the proposed transferee in accordance with the terms of such
transfer set forth in the Transferor's Notice; provided, however, that
-------- -------
such transfer must occur no later than seventy-five (75) days after
the date the Transferor's Notice was received by the Company or five
(5) days after the expiration or termination of any waiting period
applicable to such transfer pursuant to the HSR Act, whichever is
later. If the First Option and/or the Second Option, as the case may
be, is accepted in a manner such that all shares covered by the
Transferor's Notice are to be purchased, the Transferor shall transfer
all such shares (free of all liens and encumbrances except this
Agreement, all as reasonably determined by the Company) to the
12
respective purchasers thereof within twenty (20) days after the date
such offer is accepted by the Company and/or Option Holders, whichever
is later, against delivery by the purchaser of the consideration
payable to the Transferor as set forth in the Transferor's Notice;
provided that, if the HSR Act is applicable to the First Option or the
--------
Second Option, such date shall be extended to the date which is five
(5) days after the date the applicable waiting period expires or is
terminated.
Section 4.3 Tag-Along Rights. In the event that a Transferor proposes,
----------------
in a single transaction or series of related transactions, to Transfer for value
Common Stock and/or Common Stock Equivalents representing (alone or together
with Common Stock and/or Common Stock Equivalents to be Transferred by other
Transferors in such transaction or series of related transactions) at least five
percent (5%) of the Fully-Diluted Common Stock, then the Transferor's Notice
delivered pursuant to Section 4.2 hereof shall also state (the "Participation
-----------
Offer") that, in lieu of exercising the Second Option, each Option Holder may
request to have included in the proposed Transfer such Option Holder's pro rata
portion of the Common Stock and/or Common Stock Equivalents to be Transferred
(which shall be the percentage of the Common Stock and/or Common Stock
Equivalents to be Transferred that is equal to the percentage of Fully-Diluted
Common Stock held by the Transferor and any Option Holders exercising tag-along
rights under this Section 4.3 that is represented by the Fully-Diluted Common
-----------
Stock held by such Option Holder). The Participation Offer shall be conditioned
upon the execution and delivery by each Option Holder that accepts the
Participation Offer of all agreements and other documents as the Transferor is
required to execute and deliver in connection with such proposed Transfer. If
the First Option and/or Second Option is not exercised with respect to all the
securities proposed to be transferred by the Transferor and any Option Holder
shall accept the Participation Offer, the Transferor shall reduce, to the extent
necessary, the number of shares of Common Stock or Common Stock Equivalents it
otherwise would have sold in the proposed Transfer so as to permit those Option
Holders who have accepted the Participation Offer to sell the number of shares
of Common Stock and/or Common Stock Equivalents, if applicable, that they are
entitled to sell under this Section 4.3, and the Transferor and such Option
-----------
Holders shall transfer the number of shares of Common Stock and/or, if
applicable, Common Stock Equivalents specified in the Participation Offer to the
proposed transferee in accordance with the terms of such Participation Offer.
Notwithstanding the foregoing, if the transferee refuses to purchase any Common
Stock and/or Common Stock Equivalents, if applicable, proposed to be sold by
each Option Holder that accepts the Participation Offer, the Transferor shall be
prohibited from consummating the Transfer in respect of which the Participation
Offer was made.
Section 4.4 Transfers by Key Employees.
--------------------------
(a) Subject to Section 4.4(b), no Key Employee shall Transfer any
--------------
Common Stock and/or Common Stock Equivalents unless all of the Common Stock
and Common Stock Equivalents of the Company are being Transferred as part
of the same transaction.
13
(b) Notwithstanding the provisions of paragraph (a) of this
Section 4.4, following the consummation of a Qualified IPO, each of the two
-----------
Key Employees may Transfer in any given calendar year, the sum of (i) one
half of the number of securities he could sell into the public market
during each calendar quarter of such year under Rule 144 promulgated under
the Securities Act without registration under the Securities Act (prorated
for the partial year in which the Qualified IPO is consummated, and
calculated assuming that such Key Employee at all times is an "affiliate"
of the Company for purposes of such rule), plus (ii) if any Capital Z
Holder Transfers any of its shares (including any disposition or
distribution to any partner of such Capital Z Holder, but excluding any
Transfers between Capital Z Financial Services Fund II, L.P. and Capital Z
Financial Services Private Fund II, L.P.), that number of his securities as
represents the same percentage of his total securities as the percentage of
all Capital Z Holders' total securities represented by the securities so
Transferred by such Capital Z Holder, plus, (iii) any amount of securities
permitted to be Transferred under this provision in a prior calendar year
or years that he did not so Transfer.
Section 4.5 Exceptions. In no event shall any exchange,
----------
reclassification, or other conversion of shares of Common Stock or Common Stock
Equivalents into any cash, securities, or other property pursuant to a
recapitalization or a merger or consolidation of the Company or any Subsidiary
of the Company with, any sale of all of the outstanding Common Stock and Common
Stock Equivalents to, or any sale or Transfer by the Company or any Subsidiary
of the Company of all or substantially all its assets to, any Person (a
"Corporate Transaction") constitute a Transfer of shares of Common Stock or
Common Stock Equivalents for purposes of Section 4.2, Section 4.3, or Section
----------- ----------- -------
4.4 hereof. In addition, Section 4.2, Section 4.3 and Section 4.4 hereof shall
--- ----------- ----------- -----------
not apply to any Transfer of Common Stock or Common Stock Equivalents by a
Holder to a member of such Holder's Group; provided, however, that, for purposes
-------- -------
of Section 4.4, any member of a Key Employee's Group who acquires securities of
-----------
any Key Employee will itself be deemed (together with such Key Employee
transferor) to constitute a single Key Employee for purposes of Section 4.4.
-----------
Article 5
DRAG ALONG RIGHTS
-----------------
Section 5.1 Applicability. In the event Holders who collectively own more
-------------
than fifty percent (50%) of the Fully-Diluted Common Stock propose to Transfer
for value, in a single transaction or series of related transactions, Common
Stock and/or Common Stock Equivalents representing a majority of the Fully-
Diluted Common Stock in a case in which the right of first refusal provided for
in Section 4.2 hereof has not been exercised with respect to all such Common
-----------
Stock and/or Common Stock Equivalents proposed to be Transferred (a "Drag
Sale"), such Holders (the "Dragging Holders") shall have the right to require
each non-selling Holder (each, a "Co-Seller") to Transfer a portion of its
Common Stock and/or Common Stock Equivalents which represents the same
percentage of the Fully-Diluted Common Stock held by such Co-Seller as the
shares being disposed of by the Dragging Holders represent of the Fully-Diluted
Common Stock held collectively by the Dragging Holders. (For example, if the
14
Dragging Holders collectively are selling fifty percent (50%) of their Fully-
Diluted Common Stock position, each Co-Seller shall be required to sell fifty
percent (50%) of its Fully-Diluted Common Stock position.) All Common Stock
Transferred by Holders pursuant to this Section 5.1 shall be sold at the same
-----------
price and otherwise treated identically with the Common Stock being sold by the
Dragging Holders in all respects; provided, that the Co-Seller shall not be
required to make any representations or warranties in connection with such
Transfer other than representations and warranties as to (i) such Co-Seller's
ownership of his or its Common Stock and/or Common Stock Equivalents to be
Transferred free and clear of all liens, claims and encumbrances, (ii) such Co-
Seller's power and authority to effect such transfer, and (iii) such matters
pertaining to compliance with securities laws as the transferee may reasonably
require except that the transferee may not require that each Co-Seller be an
Accredited Investor.
Section 5.2 Notice of Significant Sale. The Dragging Holders shall give
--------------------------
each Co-Seller at least thirty (30) days' prior written notice of any Drag Sale
as to which the Dragging Holders intend to exercise their rights under this
Section 5.2. If the Dragging Holders elect to exercise their rights under this
-----------
Section 5.2, the Co-Sellers shall take such actions as may be reasonably
-----------
required and otherwise cooperate in good faith with the Dragging Holders in
connection with consummating the Drag Sale (including, without limitation, the
voting of any Common Stock or other voting capital stock of the Company to
approve such Drag Sale). At the closing of such Drag Sale, each Co-Seller shall
deliver certificates for all shares of Common Stock and/or Common Stock
Equivalents to be sold by such Co-Seller, duly endorsed for transfer, with the
signature guaranteed, to the purchaser against payment of the appropriate
purchase price.
Article 6
CERTIFICATE LEGEND
------------------
Section 6.1 Certificate Legend. Each share of Common Stock and/or Common
------------------
Stock Equivalent issued to each Holder or a subsequent transferee that is
required to be bound by this Stockholders Agreement shall include a legend in
the following form or a substantially similar form:
THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER, VOTING AND OTHER TERMS
AND CONDITIONS SET FORTH IN THE SECOND AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT DATED AS OF FEBRUARY 23, 1999, A COPY OF WHICH MAY BE OBTAINED FROM
WIT CAPITAL GROUP, INC. AT ITS PRINCIPAL EXECUTIVE OFFICES.
Article 7
TERMINATION
-----------
Section 7.1 Termination. The provisions of this Stockholders Agreement
-----------
shall terminate on the date that is 10 years following the Effective Time;
provided, however, that (i) Article 2, Article 4 (other than Section 4.4),
-------- ------- --------- --------- -----------
Article 5, Section 8.2 and
--------- -----------
15
Section 8.3 of this Stockholders Agreement shall terminate upon the consummation
-----------
prior to the expiration of such ten (10) year period of a Qualified IPO, and
(ii) Article 3 of this Stockholders Agreement will terminate at the time
----------
indicated therein, if applicable, prior to the expiration of such
ten (10) year period, and (iii) Section 4.4 of this Stockholders Agreement shall
-----------
terminate at the earlier of (x) the date on which the Capital Z Holders cease to
own, in the aggregate, at least 50% of the number of shares of Fully-Diluted
Common Stock owned by the Capital Z Holders immediately following consummation
of the Closing, or (y) the date on which the Capital Z Holders cease to own, in
the aggregate, at least 10% of the total Fully-Diluted Common Stock.
Article 8
MISCELLANEOUS
-------------
Section 8.1 Notices. Any notices or other communications required or
-------
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by telecopier or registered or certified mail,
postage prepaid, return receipt requested, addressed as follows (or at such
other address as may be substituted by notice given as herein provided):
If to the Company:
Wit Capital Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail address: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
with copies to (which shall not constitute notice):
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail address: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
If to any Holder, at its address listed on the signature pages hereof.
Any notice or communication hereunder shall be deemed to have been given or
made as of the date so delivered if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and five (5) calendar days
after mailing if sent by registered or certified mail (except that a notice of
change of address shall not be deemed to have been given until actually received
by the addressee).
16
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
Section 8.2 Issuance of Additional Stock. The Company will not issue
----------------------------
any additional Common Stock or Common Stock Equivalents (other than Common Stock
issuable upon the exercise, conversion or exchange of Common Stock Equivalents
that are outstanding as of the date hereof) if such issuance would result in the
acquiror thereof owning (immediately or following the exercise, exchange or
conversion of any security convertible into exchangeable for or exercisable for
any Common Stock or Common Stock Equivalents) at least one percent (1%) of the
Fully-Diluted Common Stock, unless such acquiror is a party to this Stockholders
Agreement or becomes a party to this Stockholders Agreement at or prior to the
time of such issuance by the Company.
Section 8.3 Information Rights; Budgets.
---------------------------
(a) Information. The Company shall provide each Holder the
-----------
following:
(i) General. The Company will permit each such Holder on
-------
reasonable notice to visit and inspect during normal business hours any of
the properties of the Company and to examine its books and records, and to
discuss with its officers the business and affairs of the Company, at such
reasonable times as such persons may desire without disruption of the
Company's normal business and affairs for any reasonable purpose relating
to its investment in the Company.
(ii) Quarterly Reports. As soon as available, but no later than
-----------------
45 days after the end of each fiscal quarter of the Company, the Company
will provide to each Holder unaudited financial statements of the Company,
which shall include a statement of operations for such quarter and a
balance sheet as of the last day thereof, prepared in accordance with
generally accepted accounting principles, consistently applied.
(iii) Annual Reports. As soon as available, but not later than
--------------
90 days after the end of each fiscal year of the Company, the Company will
provide to each Holder audited financial statements of the Company, which
shall include a statement of cash flows and statement of operations for
such fiscal year and a balance sheet as at the last day thereof, each
prepared in accordance with generally accepted accounting principles,
consistently applied, and accompanied by the report of a "Big Five"
accounting firm selected by the Board of Directors of the Company, subject
to the approval of the holders of at least a majority of the Fully-Diluted
Common Stock (which approval shall not be unreasonably withheld or
delayed).
(b) Budget. With respect to each calendar year, the Company shall,
------
prior to the commencement of each such calendar year, prepare a proposed
budget (the "Budget") of the Company (containing monthly and quarterly
breakdowns of income
17
(loss), balance sheet items and cash flow) and an updated five year
strategic plan of the company. The Budget shall be accepted as the Budget
for such fiscal year when it has been approved by the Board of Directors of
the Company. The Budget shall be reviewed by the Company periodically and
all changes therein and all material deviations therefrom shall be
resubmitted to the Board of Directors of the Company in advance and shall
be accepted when approved by the Board of Directors of the Company.
Section 8.4 Confidentiality. Each Holder agrees to and shall keep
---------------
strictly confidential and will not disclose or divulge any confidential,
proprietary or secret information which such Holder has obtained in the course
of the negotiation and consummation of the transactions contemplated hereby or
may obtain from the Company, including, by way of example and not in limitation
thereof, financial statements, reports and other information and materials
submitted by the Company as required hereunder, unless required to be disclosed
by law or pursuant to any judgment, order, subpoena or decree of any court
having competent jurisdiction, or unless such information is already known to
the Holder or is or becomes publicly known, or unless the Company gives its
written consent to the Holder's release of such information, except that no such
written consent shall be required (and Holder shall be free to release such
information) if such information is to be provided to Holder's lawyers,
accountants or other advisors; provided, such recipient is advised of the
--------
confidential nature of such information. Each Holder acknowledges that such
information is for its use solely in connection with evaluating its investment
in the Company.
Section 8.5 Effectiveness. This Stockholders Agreement will become
-------------
effective on the Effective Date.
Section 8.6 Governing Law. THIS STOCKHOLDERS AGREEMENT SHALL BE GOVERNED
-------------
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 8.7 Successors and Assigns. This Stockholders Agreement shall be
----------------------
binding upon the Company, each Holder, and their respective successors and
permitted assigns. Notwithstanding anything to the contrary set forth in this
Stockholders Agreement, no Person who becomes a Holder as a result of the
Transfer to such Person by another Holder of securities subject to this
Agreement shall be entitled to any rights of a Holder under Article 4, unless
---------
the Company has consented in writing to such Transfer, which consent shall not
be unreasonably withheld; provided, however, that no such written consent shall
-------- -------
be required if the Transfer is to any member of such Holder's Group or if such
Transfer includes at least a majority of the Fully-Diluted Common Stock owned by
such Holder and its Affiliates and the Company is given written notice of such
Transfer identifying the name and address of such transferee and the securities
being Transferred; provided, further, that the Company may refuse such written
-------- -------
consent (in a case where such written consent is required) if the Board of
Directors of the Company determines, in its reasonable discretion, that the
transferee is a direct competitor of the Company or has indicated an intention
to compete directly with the Company; provided, further, that under all
-------- -------
circumstances any permitted transferee shall have agreed in
18
advance in writing to be bound by and comply with this Agreement to the same
extent as the transferor.
Section 8.8 Duplicate Originals. All parties may sign any number of
-------------------
copies of this Stockholders Agreement. Each signed copy shall be an original,
but all of them together shall represent the same agreement.
Section 8.9 Severability. In case any provision in this Stockholders
------------
Agreement shall be held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and the remaining provisions shall not in any way be affected or
impaired thereby
Section 8.10 No Waivers; Amendments.
-----------------------
8.10.1 No failure or delay on the part of the Company or any Holder in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
any Holder at law or in equity or otherwise.
8.10.2 Any provision of this Stockholders Agreement may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed by the
Company and the Holders holding at least 66-2/3% of the Fully-Diluted Common
Stock; provided that no such amendment or waiver shall, (i) unless signed by the
Majority DFJ Holders or the Majority Capital Z Holders, as applicable, amend the
provisions of Section 2.1 applicable to such Majority DFJ Holders or Majority
-----------
Capital Z Holders, (ii) unless signed by the Majority Capital Z Holders, amend
the provisions of Article 3, (iii) unless signed by Holders holding at least 66-
---------
2/3% of the Fully-Diluted Common Stock held by all Holders, amend the provisions
of Section 4.1, Section 4.2 or Section 4.3 (or Section 4.5 insofar as it relates
----------- ----------- ----------- -----------
to Section 4.1, Section 4.2 or Section 4.3), (iv) unless signed by the Key
----------- ----------- -----------
Employees, amend the provisions of Section 4.4 (or Section 4.5 insofar as it
----------- -----------
relates to Section 4.4), or (iv) unless signed by all of the Holders affected,
-----------
(A) amend the provisions of this Section 8.10.2 or (B) change the number of
--------------
Holders which shall be required for the Holders or any of them to take any
action under this Section 8.10.2 or any other provision of this Stockholders
--------------
Agreement. Any such transferee who obtains such rights must agree to be bound
by the provisions of this Agreement.
Section 8.11 Entire Agreement. This Stockholders Agreement, which shall be
----------------
effective upon the Closing, contains the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings with respect to such subject matter, including, without
limitation, the Existing Stockholders Agreement, which, effective upon the
Closing, shall cease and terminate in its entirety and be of no further force or
effect; provided, however, that in the event that the Closing shall not occur,
-------- -------
then this Stockholders Agreement shall cease and terminate and be of no force or
effect and the Existing Stockholders Agreement shall continue in full force and
effect.
19
WIT CAPITAL GROUP, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
CAPITAL Z FINANCIAL SERVICES FUND II, L.P.
By: Capital Z Partners, L.P., its sole general
partner
By: Capital Z Partners, Ltd., its sole
general partner
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
CAPITAL Z FINANCIAL SERVICES PRIVATE FUND II, L.P.
By: Capital Z Partners, L.P., its sole general
partner
By: Capital Z Partners, Ltd., its sole
general partner
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
INVESTOR:
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
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