Exhibit 4.2
OPTIONSXPRESS, INC.
REGISTRATION AGREEMENT
THIS AGREEMENT is made as of [Insert Closing Date], 2004 by and among
optionsXpress, Inc., a Delaware corporation (the "COMPANY"), the Persons listed
on the SCHEDULE OF INVESTORS attached hereto (each, an "INVESTOR" and
collectively, the "INVESTORS"), and the Persons listed on the SCHEDULE OF
DESIGNATED OTHER STOCKHOLDERS attached hereto (each, a "DESIGNATED OTHER
STOCKHOLDER" and collectively, the "DESIGNATED OTHER STOCKHOLDERS").
WHEREAS, the parties to this Agreement are parties to a Stock Purchase
and Recapitalization Agreement dated as of December 17, 2003 (the
"RECAPITALIZATION AGREEMENT");
WHEREAS, in order to induce the Investors to enter into the
Recapitalization Agreement and consummate the transactions contemplated thereby,
the Company has agreed to provide the registration rights set forth in this
Agreement;
WHEREAS, the execution and delivery of this Agreement is a condition
to the Closing under the Recapitalization Agreement; and
WHEREAS unless otherwise provided in this Agreement, capitalized terms
used herein shall have the meanings set forth in paragraph 9 hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. DEMAND REGISTRATIONS.
(a) REQUESTS FOR REGISTRATION. Subject to the terms and conditions of
this paragraph 1, at any time after the third anniversary of the Closing under
the Recapitalization Agreement or such earlier time as the Company has completed
an initial public offering of its Common Stock under the Securities Act (an
"INITIAL PUBLIC OFFERING"), each of (i) the holders of a majority of the
Investor Registrable Securities and (ii) the holders of a majority of the Other
Registrable Securities may request registration under the Securities Act of all
or any portion of their Investor Registrable Securities or Other Registrable
Securities, as the case may be, on Form S-1 or any similar long-form
registration ("LONG-FORM REGISTRATIONS"), and the holders of a majority of the
Investor Registrable Securities or the holders of a majority of the Other
Registrable Securities, as the case may be, may each request registration under
the Securities Act of all or any portion of their Investor Registrable
Securities or Other Registrable Securities, as the case may be, on Form S-2 or
S-3 or any similar short-form registration ("SHORT-FORM REGISTRATIONS") if
available. All registrations requested pursuant to this paragraph 1(a) are
referred to herein as "DEMAND REGISTRATIONS." Each request for a Demand
Registration shall specify the approximate number of Registrable Securities
requested to be registered, the anticipated per share price range for such
offering and the intended method of distribution. Within ten days after receipt
of any such request, the Company shall give written notice of such requested
registration to all other holders of Investor Registrable Securities and Other
Registrable Securities and, subject to the terms of paragraph (d) hereof, shall
include in such registration (and in all related registrations and
qualifications under state blue sky laws or in compliance with other
registration requirements and in any related underwriting) all Investor
Registrable Securities and Other Registrable Securities with respect to which
the Company has received written requests for inclusion therein within 15 days
after the receipt of the Company's notice.
(b) LONG-FORM REGISTRATIONS. (i) The holders of a majority of the
Investor Registrable Securities shall be entitled to request two (2) Long-Form
Registrations in which the Company shall pay all Registration Expenses. A
registration shall not count as one of the permitted Long-Form Registrations
until it has become effective and unless the holders of Investor Registrable
Securities are able to register and sell at least two-thirds of the Investor
Registrable Securities requested to be included in such registration; PROVIDED
THAT in any event the Company shall pay all Registration Expenses in connection
with any registration initiated as a Long-Form Registration whether or not it
has become effective (subject to the next sentence) and whether or not such
registration has counted as one of the permitted Long-Form Registrations
hereunder. Notwithstanding the foregoing, if a Long-Form Registration is
withdrawn by the holders of Investor Registrable Securities who requested such
registration prior to the time that it has become effective for reasons other
than the disclosure of information concerning the Company that is materially
adverse to the Company or its stock price (which disclosure is made after the
date such registration is requested pursuant to paragraph 1(a) above), such
Long-Form Registration shall count as one of the permitted Long-Form
Registrations hereunder unless the holders of Investor Registrable Securities
reimburse the Company for all of the Registration Expenses incurred by the
Company prior to such withdrawal.
(ii) The holders of a majority of the Other Registrable
Securities shall be entitled to request two (2) Long-Form Registrations in which
the Company shall pay all Registration Expenses (PROVIDED THAT such Long-Form
Registration must constitute a Qualified Public Offering (as defined in the
Company's Certificate of Incorporation) if it is the Company's Initial Public
Offering). A registration shall not count as one of the permitted Long-Form
Registrations until it has become effective and unless the holders of Other
Registrable Securities are able to register and sell at least two-thirds of the
Other Registrable Securities requested to be included in such registration;
PROVIDED THAT in any event the Company shall pay all Registration Expenses in
connection with any registration initiated as a Long-Form Registration whether
or not it has become effective (subject to the next sentence) and whether or not
such registration has counted as one of the permitted Long-Form Registrations
hereunder. Notwithstanding the foregoing, if a Long-Form Registration is
withdrawn by the holders of Other Registrable Securities who requested such
registration prior to the time that it has become effective for reasons other
than the disclosure of information concerning the Company that is materially
adverse to the Company or its stock price (which disclosure is made after the
date such registration is requested pursuant to paragraph 1(a) above), such
Long-Form Registration shall count as one of the permitted Long-Form
Registrations hereunder unless the holders of Other Registrable Securities
reimburse the Company for all of the Registration Expenses incurred by the
Company prior to such withdrawal.
(c) SHORT-FORM REGISTRATIONS. In addition to the Long-Form
Registrations provided pursuant to paragraph 1(b), the holders of Investor
Registrable Securities shall be
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entitled to request an unlimited number of Short-Form Registrations in which the
Company shall pay all Registration Expenses; PROVIDED THAT the aggregate
offering value of the Investor Registrable Securities requested to be registered
in any Short-Form Registration must equal at least $5,000,000. In addition to
the Long-Form Registrations provided pursuant to paragraph 1(b), the holders of
Other Registrable Securities shall be entitled to request an unlimited number of
Short-Form Registrations in which the Company shall pay all Registration
Expenses; PROVIDED THAT the aggregate offering value of the Other Registrable
Securities requested to be registered in any Short-Form Registration must equal
at least $5,000,000. Demand Registrations shall be Short-Form Registrations
whenever the Company is permitted to use any applicable short form and if the
managing underwriters (if any) agree to the use of a Short-Form Registration.
After the Company has become subject to the reporting requirements of the
Securities Exchange Act, the Company shall use its reasonable efforts to make
Short-Form Registrations on Form S-3 available for the sale of Registrable
Securities. Notwithstanding the foregoing, if a Short-Form Registration is not
an underwritten registration, the Company shall not be required to include in
any such Short-Form Registration any Investor Registrable Securities or any
Other Registrable Securities held by any such holder if such holder (and all
other Persons whose securities must be aggregated at such time with those of
such holder under Rule 144), at the time of filing of the registration statement
for such Short-Form Registration, would be permitted to sell all of the Investor
Registrable Securities or Other Registrable Securities then held by such holder,
without registration, pursuant to Rule 144 during the 90-day period commencing
upon any such Short-Form Registration.
(d) PRIORITY ON DEMAND REGISTRATIONS. If a Demand Registration is an
underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and other
securities requested to be included in such offering exceeds the number of
Registrable Securities and other securities, if any, which can be sold in an
orderly manner in such offering within a price range acceptable to the holders
of a majority of the Investor Registrable Securities or Other Registrable
Securities, as the case may be, initially requesting such registration, the
Company shall include in any such registration (i) FIRST, such number of
Investor Registrable Securities requested to be included in such registration
which does not exceed the then-current value of the Investor Priority, pro rata
among the respective holders thereof on the basis of the number of Investor
Registrable Securities owned by each such holder, and (ii) SECOND, any other
Investor Registrable Securities and Other Registrable Securities requested to be
included in such registration, pro rata among the respective holders thereof on
the basis of the number of Registrable Securities owned by each such holder
immediately prior to such registration.
(e) RESTRICTIONS ON DEMAND REGISTRATIONS. The Company shall not be
obligated to effect any Demand Registration within 180 days after the effective
date of the Company's Initial Public Offering or within 90 days after the
effective date of a previous Demand Registration. The Company may postpone for
up to 120 days the filing or the effectiveness of a registration statement for a
Demand Registration if the Company's Board of Directors reasonably determines in
its good faith judgment that such Demand Registration would reasonably be
expected to have a material adverse effect on any proposal or plan by the
Company or any of its Subsidiaries to engage in any financing, sale, acquisition
of assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer, reorganization or similar transaction; PROVIDED
THAT in such event, the holders of Investor Registrable Securities
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or Other Registrable Securities, as the case may be, initially requesting such
Demand Registration shall be entitled to withdraw such request and, if such
request is withdrawn, such Demand Registration shall not count as one of the
permitted Demand Registrations hereunder and the Company shall pay all
Registration Expenses in connection with such registration. The Company may
delay a Demand Registration hereunder only once in any twelve-month period.
(f) SELECTION OF UNDERWRITERS. The Company shall have the right to
select the investment banker(s) and manager(s) to administer the Company's
Initial Public Offering so long as such investment banker(s) and manager(s) are
of recognized national standing. If any Demand Registration (other than the
Company's Initial Public Offering) is an underwritten offering, the holders of a
majority of either the Investor Registrable Securities or Other Registrable
Securities, as the case may be, initially requesting such registration shall
have the right to select the investment banker(s) and manager(s) to administer
the offering, subject to the Company's approval which shall not be unreasonably
withheld or delayed so long as such investment banker(s) and manager(s) are of
recognized national standing.
(g) OTHER REGISTRATION RIGHTS. The Company represents and warrants
that it is not a party to, or otherwise subject to, any other agreement granting
registration rights to any other Person with respect to any securities of the
Company. Except as provided in this Agreement, the Company shall not grant to
any Persons the right to request the Company to register any equity securities
of the Company, or any securities convertible or exchangeable into or
exercisable for such securities, without the prior written consent of the
holders of a majority of the Investor Registrable Securities; PROVIDED, HOWEVER,
that the Company may grant rights to participate in any Demand Registrations or
Piggyback Registrations so long as such rights are subordinate to the priority
rights of the holders of Investor Registrable Securities with respect to the
Investor Priority.
2. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register any
of its securities under the Securities Act (other than pursuant to a Demand
Registration or a registration on Form ▇-▇, ▇▇▇▇ ▇-▇ or any successor forms) and
the registration form to be used may be used for the registration of Registrable
Securities (a "PIGGYBACK REGISTRATION"), the Company shall give prompt written
notice to all holders of Investor Registrable Securities and Other Registrable
Securities of its intention to effect such a registration and, subject to the
terms of paragraphs 2(c) and 2(d) hereof, shall include in such registration
(and in all related registrations or qualifications under blue sky laws or in
compliance with other registration requirements and in any related underwriting)
all Investor Registrable Securities and Other Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within 20 days after the receipt of the Company's notice. Notwithstanding the
foregoing, if a Piggyback Registration is not an underwritten registration, the
Company shall not be required to include in any such Piggyback Registration any
Investor Registrable Securities or any Other Registrable Securities held by any
such holder if such holder (and all other Persons whose securities must be
aggregated at such time with those of such holder under Rule 144), at the time
of filing of the registration statement for such Piggyback Registration, would
be permitted to sell all of the Investor Registrable Securities or Other
Registrable Securities then
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held by such holder, without registration, pursuant to Rule 144 during the
90-day period commencing upon any such Piggyback Registration.
(b) PIGGYBACK EXPENSES. The Registration Expenses of the holders of
Registrable Securities and Other Registrable Securities shall be paid by the
Company in all Piggyback Registrations.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number of
securities which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration
(i) FIRST, the securities the Company proposes to sell, (ii) SECOND, such number
of Investor Registrable Securities requested to be included in such registration
which does not exceed the then-current value of the Investor Priority, pro rata
among the respective holders thereof on the basis of the number of Investor
Registrable Securities owned by each such holder, and (iii) THIRD, any other
Investor Registrable Securities and Other Registrable Securities requested to be
included in such registration, pro rata among the respective holders thereof on
the basis of the number of Registrable Securities owned by each such holder
immediately prior to such registration.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company shall include
in such registration (i) FIRST, the securities requested to be included therein
by the holders requesting such registration and the Investor Registrable
Securities requested to be included in such registration, pro rata among the
holders of such securities on the basis of the number of securities owned by
each such holder (PROVIDED THAT the number of Investor Registrable Securities
included in such registration pursuant to this clause (i) does not exceed the
then-current value of the Investor Priority, which number of Investor
Registrable Securities included pursuant to this clause (i) shall be allocated
pro rata among the respective holders thereof on the basis of the number of
Investor Registrable Securities owned by each such holder), and (ii) SECOND, any
other Investor Registrable Securities, Other Registrable Securities and other
securities requested to be included in such registration, pro rata among the
respective holders thereof on the basis of the number of securities owned by
each such holder immediately prior to such registration.
(e) OTHER REGISTRATIONS. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to
paragraph 1 or pursuant to this paragraph 2, and if such previous registration
has not been withdrawn or abandoned, the Company shall not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form ▇-▇, ▇▇▇▇ ▇-▇ or any successor forms),
whether on its own behalf or at the request of any holder or holders of such
securities, until a period of at least 90 days has elapsed from the effective
date of such previous registration.
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3. HOLDBACK AGREEMENTS.
(a) No holder of Investor Registrable Securities or Other Registrable
Securities shall effect any public sale or distribution (including sales
pursuant to Rule 144) of equity securities of the Company, or any securities
convertible into or exchangeable or exercisable for such securities, during the
seven (7) days prior to and the 180-day period beginning on the effective date
of the Company's Initial Public Offering, or during the seven (7) days prior to
and the 90-day period beginning on the effective date of any underwritten Demand
Registration or underwritten Piggyback Registration (other than the Company's
Initial Public Offering), except as part of any such underwritten registration,
unless the underwriters managing the registered public offering otherwise agree
in writing. The Company shall give the holders of Investor Registrable
Securities and Other Registrable Securities written notice at least twenty (20)
days prior to the commencement of any holdback period in connection with any
such underwritten Demand Registration or underwritten Piggyback Registration.
Notwithstanding the foregoing, this paragraph 3(a) shall not be applicable to or
otherwise be binding on the holders of Investor Registrable Securities unless
the Company causes all of its executive officers and directors (other than the
Investor Director as defined in the Stockholders Agreement) to be similarly
bound and the Company complies with its obligations under paragraph 3(b) below
in connection with any such offering.
(b) The Company (i) shall not effect any public sale or distribution
of its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during such period of time (not to exceed 180
days in connection with the Company's Initial Public Offering or 90 days in all
other cases, as may be determined by the underwriters managing such underwritten
registration) following the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-8 or any
successor forms), unless the underwriters managing the registered public
offering otherwise agree in writing, and (ii) shall cause each holder (other
than the Investors) of at least 2% (on a fully-diluted basis) of its Common
Stock, or any securities convertible into or exchangeable or exercisable for
Common Stock, to agree not to effect any public sale or distribution (including
sales pursuant to Rule 144) of any such securities during such period (except as
part of such underwritten registration, if otherwise permitted), unless the
underwriters managing the registered public offering otherwise agree.
4. REGISTRATION PROCEDURES. Whenever the holders of Registrable
Securities have requested that any Investor Registrable Securities or Other
Registrable Securities be registered pursuant to this Agreement, the Company
shall use its reasonable efforts to effect the registration and the sale of all
securities hereunder in accordance with the intended method of disposition
thereof, and pursuant thereto the Company shall as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement, and all amendments and supplements thereto and related
prospectuses as may be necessary to comply with applicable securities laws, with
respect to such Registrable Securities and use its reasonable efforts to cause
such registration statement to become effective (PROVIDED THAT before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company shall furnish to each counsel selected by the holders of a
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majority of the Investor Registrable Securities, on the one hand, and the
holders of a majority of the Other Registrable Securities, on the other hand,
covered by such registration statement copies of all such documents proposed to
be filed, which documents shall be subject to the review and reasonable comments
of each such counsel);
(b) notify each holder of Registrable Securities to be sold
thereunder of the effectiveness of each registration statement filed hereunder
and prepare and file with the Securities and Exchange 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 a period of either (i) not less than 120 days or, if such
registration statement relates to an underwritten offering, such longer period
as in the opinion of counsel for the underwriters a prospectus is required by
law to be delivered in connection with sales of securities thereunder by any
underwriter or dealer or (ii) such shorter period as shall terminate when all of
the securities covered by such registration statement have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in such registration statement (but in any event not before
the expiration of any longer period required under the Securities Act), and to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(c) furnish to each seller of Registrable Securities thereunder such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the securities to be sold
thereunder owned by such seller;
(d) use its reasonable efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (PROVIDED THAT the Company shall not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed,
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to be listed on the NASD automated quotation system and, if listed on the NASD
automated quotation system, use its reasonable efforts to secure designation of
all such Registrable Securities covered by such registration statement as a
NASDAQ "national market system security" within the meaning of Rule 11Aa2-1 of
the Securities and Exchange Commission or, failing that, to secure NASDAQ
authorization for such Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such Registrable Securities with the NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Investor Registrable Securities and/or the holders of a
majority of the Other Registrable Securities being sold or the underwriters, if
any, reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities (including effecting a stock split or a combination
of shares);
(i) subject to reasonable and customary confidentiality restrictions,
make available for inspection by any seller of Registrable Securities, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(j) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission, and
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; and
(k) permit any holder of Registrable Securities which holder, in its
good faith judgment (based on the advice of counsel), could reasonably be
expected to be deemed to be an underwriter or a controlling person of the
Company, to participate in the preparation of such registration or comparable
statement and to require the insertion therein of material, furnished to the
Company in writing, which in the reasonable judgment of such holder and its
counsel should be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Stock included in such registration statement for sale in any
jurisdiction, the Company shall use its reasonable efforts promptly to obtain
the withdrawal of such order;
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(m) use its reasonable efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
sellers thereof to consummate the disposition of such Registrable Securities;
(n) to the extent available pursuant to applicable accounting
standards, obtain a cold comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by cold comfort letters as the holders of a majority of the Investor
Registrable Securities and/or the holders of a majority of the Other Registrable
Securities being sold reasonably request;
(o) provide a legal opinion of the Company's outside counsel, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), with respect to the registration statement, each
amendment and supplement thereto, the prospectus included therein (including the
preliminary prospectus) and such other documents relating thereto in customary
form and covering such matters of the type customarily covered by legal opinions
of such nature; and
(p) notwithstanding any provision of this paragraph 4 to the
contrary, the Company shall not be required to amend or supplement a
registration statement prospectus if (i) such amendment or supplement would
require the Company to disclose a material financing, acquisition or other
transaction then being pursued by the Company and the Company's board of
directors shall determine in good faith that such disclosure is not in the best
interests of the Company or would have a material adverse effect on such
transaction or (ii) the Company's board of directors shall determine in good
faith that there is a valid business purpose or reason for suspending the use of
the prospectus in accordance with paragraph 4(l) hereof instead of making such
amendment or supplement; PROVIDED THAT (A) the Company shall supplement or amend
such registration statement prospectus promptly following the resolution of any
such matters (and in any event within 120 days following the date that the
Company notified the holders of Registrable Securities in writing that it would
not be preparing such supplement or amendment), (B) in any such event, the
holders of Investor Registrable Securities or Other Registrable Securities, if
any, initially requesting such registration (if a Demand Registration) shall be
entitled to withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as one of the permitted Demand Registrations
hereunder and the Company shall pay all Registration Expenses in connection with
such registration and (C) the Company may exercise its rights under this
paragraph 4(p) only once in any twelve-month period.
5. CERTAIN OBLIGATIONS OF HOLDERS OF INVESTOR REGISTRABLE SECURITIES
AND OTHER REGISTRABLE SECURITIES. Each holder of Investor Registrable Securities
and Other Registrable Securities that sells such securities pursuant to a
registration under this Agreement agrees as follows:
(a) Such holder (if such holder is an employee of the Company) shall
cooperate with the Company (as reasonably requested by the Company) in
connection with the preparation of the registration statement, and for so long
as the Company is obligated to file and keep effective such registration
statement, each holder of Investor Registrable Securities and
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Other Registrable Securities that is participating in such registration shall
provide to the Company, in writing, for use in the applicable registration
statement, all such information regarding such seller and its plan of
distribution of such securities as may be reasonably necessary to enable the
Company to prepare the registration statement and prospectus covering such
securities, to maintain the currency and effectiveness thereof and otherwise to
comply with all applicable requirements of law in connection therewith.
(b) During such time as such seller may be engaged in a distribution
of such securities, such seller shall distribute such securities under the
registration statement solely in the manner described in the registration
statement.
6. REGISTRATION EXPENSES.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration,
qualification and filing fees, fees and expenses of compliance with securities
or blue sky laws, printing expenses, messenger and delivery expenses, fees and
disbursements of custodians, and fees and disbursements of counsel for the
Company and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other Persons retained by the Company
(all such expenses being herein called "REGISTRATION EXPENSES"), shall be borne
by the Company as provided in this Agreement, and the Company shall also pay all
of its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit or quarterly review, the expense of any
liability insurance and the expenses and fees for listing the securities to be
registered on each securities exchange on which similar securities issued by the
Company are then listed or on the NASD automated quotation system.
Notwithstanding anything to the contrary contained herein, each seller of
securities pursuant to a registration under this Agreement shall bear and pay
all underwriting discounts and commissions applicable to the securities sold for
such seller's account.
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Investor Registrable
Securities and the holders of Other Registrable Securities included in such
registration for the reasonable fees and disbursements of one counsel chosen by
the holders of a majority of the Investor Registrable Securities included in
such registration and one counsel chosen by the holders of a majority of the
Other Registrable Securities included in such registration.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Investor Registrable Securities and each holder of Other
Registrable Securities, its officers and directors and each Person who controls
such holder (within the meaning of the Securities Act) against all losses,
claims, actions, damages, liabilities and expenses caused by (i) any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (ii) any violation or alleged violation by the Company
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of the Securities Act or any other similar federal or state securities laws or
any rule or regulation promulgated thereunder applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration, qualification or compliance, and to pay to each holder of
Investor Registrable Securities and each holder of Other Registrable Securities,
its officers and directors and each Person who controls such holder (within the
meaning of the Securities Act), as incurred, any legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action, except insofar as the same are
caused by or contained in any information furnished in writing to the Company or
any managing underwriter by such holder expressly for use therein, or by such
holder's failure to deliver a copy of the registration statement or prospectus
or any amendments or supplements thereto after the Company has furnished such
holder with a reasonably sufficient number of copies of the same. In connection
with an underwritten offering, the Company shall indemnify such underwriters,
their officers and directors and each Person who controls such underwriters
(within the meaning of the Securities Act) to the same extent as provided above
with respect to the indemnification of the holders of Investor Registrable
Securities and the holders of Other Registrable Securities.
(b) In connection with any registration statement in which a holder
of Investor Registrable Securities or Other Registrable Securities is
participating, each such holder shall furnish to the Company and the managing
underwriter in writing such information and affidavits as the Company or the
managing underwriter reasonably requests for use in connection with any such
registration statement or prospectus and, to the extent permitted by law, shall
indemnify the Company, its directors and officers and each Person who controls
the Company (within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is contained in any
information or affidavit so furnished in writing by such holder expressly for
use therein; PROVIDED THAT the obligation to indemnify shall be individual, not
joint and several, for each holder and shall be limited to the net amount of
proceeds received by such holder from the sale of Registrable Securities
pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (PROVIDED THAT the failure to give prompt notice
shall not impair any Person's right to indemnification hereunder to the extent
such failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment (based on the written advice of its
counsel) a conflict of interest between such indemnified and indemnifying
parties may reasonably be expected to exist with respect to such claim, permit
such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld or delayed). An indemnifying party who is not entitled to,
or elects not to, assume the defense of a claim shall not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified by
such indemnifying party with respect to such
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claim, unless in the reasonable judgment of any indemnified party (based on the
written advice of its counsel) a conflict of interest may reasonably be expected
to exist between such indemnified party and any other of such indemnified
parties with respect to such claim. In such instance, the conflicting
indemnified parties shall have a right to retain one separate counsel, chosen by
the holders of a majority of the securities included in the registration, at the
expense of the indemnifying party. No indemnifying party, in the defense of such
claim or litigation, shall, except with the consent of each indemnified party,
consent to the entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation.
(d) Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by paragraph 7(a) or 7(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by such
indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this paragraph 7(d) were determined by pro
rata allocation (even if the holders or any underwriters or all of them were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in this
paragraph 7(d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities or expenses (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or, except as provided in paragraph 7(c), defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The sellers' obligations in this paragraph 7(d) to contribute
shall be several in proportion to the amount of securities registered by them
and not joint and shall be limited to an amount equal to the net proceeds
actually received by such seller from the sale of Registrable Securities
effected pursuant to such registration.
(e) The indemnification provided for under this Agreement shall
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 shall survive the transfer of securities.
8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the
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Person or Persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements; PROVIDED THAT no holder of Registrable Securities
included in any underwritten registration shall be required to make any
representations or warranties to the Company or the underwriters (other than
representations and warranties regarding such holder and such holder's intended
method of distribution), or to undertake any indemnification obligations to the
Company or the underwriters with respect thereto, except as otherwise
specifically provided in paragraph 7 hereof, or to agree to any lock-up or
holdback restrictions, except as otherwise specifically provided in paragraph
3(a) hereof.
9. DEFINITIONS. (a) "INVESTOR PRIORITY" means an amount of Investor
Registrable Securities equal to $50,000,000 in the aggregate less the aggregate
value (based on the public offering price determined as of the date of sale) of
all Investor Registrable Securities sold from time to time prior to the date of
such determination in an offering to the public registered pursuant to this
Agreement.
(b) "INVESTOR REGISTRABLE SECURITIES" means (i) any Common Stock
issued or issuable upon the conversion of any Series A Convertible Preferred
Stock issued pursuant to the Recapitalization Agreement, (ii) any Common Stock
issued or issuable with respect to the securities referred to in clause (i)
above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization, and (iii) any other shares of Common Stock held by Persons
holding securities described in clauses (i) or (ii) above. As to any particular
Investor Registrable Securities, such securities shall cease to be Investor
Registrable Securities when they have been distributed to the public pursuant to
an offering registered under the Securities Act or sold to the public through a
broker, dealer or market maker in compliance with Rule 144 under the Securities
Act (or any similar rule then in force) or repurchased by the Company or any
Subsidiary. As to any particular Investor Registrable Securities held by the
Investors, such securities shall also cease to be Investor Registrable
Securities when they have been distributed by the Investors to any of their
direct or indirect partners or members. For purposes of this Agreement, a Person
shall be deemed to be a holder of Investor Registrable Securities, and the
Investor Registrable Securities shall be deemed to be in existence, whenever
such Person has the right to acquire directly or indirectly such Investor
Registrable Securities (upon conversion or exercise in connection with a
transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected, and such Person shall be entitled to exercise the
rights of a holder of Investor Registrable Securities hereunder.
(c) "OTHER REGISTRABLE SECURITIES" means (i) any Common Stock held by
any Designated Other Stockholder, and (ii) any Common Stock issued or issuable
with respect to the securities referred to in clause (i) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Other Registrable Securities, such securities shall cease to be Other
Registrable Securities when they have been distributed to the public pursuant to
an offering registered under the Securities Act or sold to the public through a
broker, dealer or market maker in compliance with Rule 144 under the Securities
Act (or any similar rule then in force) or repurchased by the Company or any
Subsidiary.
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(d) "REGISTRABLE SECURITIES" means, collectively, Investor
Registrable Securities and Other Registrable Securities.
(e) Unless otherwise stated, other capitalized terms contained herein
have the meanings set forth in the Recapitalization Agreement.
10. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company shall not hereafter enter
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the holders of Registrable Securities in this
Agreement.
(b) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company shall
not take any action, or permit any change to occur, with respect to its
securities which would materially and adversely affect the ability of the
holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement, or which would materially
and adversely affect the marketability of such Registrable Securities in any
such registration (including, without limitation, effecting a stock split or a
combination of shares).
(c) REMEDIES. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without posting
a bond or other security), to recover damages caused by reason of any breach of
any provision of this Agreement and to exercise all other rights granted by law.
The parties hereto agree and acknowledge that money damages would not be an
adequate remedy for any breach of the provisions of this Agreement and that, in
addition to any other rights and remedies existing in its favor, any party shall
be entitled to specific performance and/or other injunctive relief from any
court of law or equity of competent jurisdiction (without posting any bond or
other security) in order to enforce or prevent violation of the provisions of
this Agreement.
(d) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company, the holders of a majority of the Investor
Registrable Securities and the holders of a majority of the Other Registrable
Securities. The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
(e) SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Investor Registrable Securities or Other Registrable
Securities are also for the benefit of, and enforceable by, any subsequent
holder of Investor Registrable Securities or Other Registrable Securities, as
the case may be.
(f) SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such
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provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
(g) COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
(h) DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(i) GOVERNING LAW. The corporate law of the State of Delaware shall
govern all issues and questions concerning the relative rights of the Company
and its stockholders. All other issues and questions concerning the
construction, validity, interpretation and enforcement of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Illinois, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of Illinois or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Illinois.
(j) NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each Investor and Designated Other Stockholder
at the address indicated on the SCHEDULE OF INVESTORS and SCHEDULE OF DESIGNATED
OTHER STOCKHOLDERS, respectively, attached hereto and to the Company at the
address indicated below:
optionsXpress, Inc.
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▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
WITH A COPY TO:
(which shall not constitute notice to the Company)
KMZ Rosenman
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
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or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Agreement on the date first written above.
OPTIONSXPRESS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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Its: President
--------------------------------
SUMMIT VENTURES VI-A, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Its: Member
SUMMIT VENTURES VI-B, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Its: Member
SUMMIT VI ADVISORS FUND, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Its: Member
SUMMIT VI ENTREPRENEURS FUND, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Its: Member
SUMMIT INVESTORS VI, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Its: Member
G-BAR LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------
Its: General Partner
▇▇▇▇▇ ▇▇▇▇ DELTA TRUST FOR ▇▇▇
U/A/D JUNE 7, 2002
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------
Its: Trustee
/s/ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇
SCHEDULE OF INVESTORS
Summit Ventures VI-A, L.P.
Summit Ventures VI-B, L.P.
Summit VI Advisors Fund, L.P.
Summit VI Entrepreneurs Fund, L.P.
Summit Investors VI, L.P.
c/o Summit Partners, L.P.
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▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
WITH A COPY TO:
(which shall not constitute notice to the Investors)
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇, P.C.
SCHEDULE OF DESIGNATED OTHER STOCKHOLDERS
G-Bar Limited Partnership
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ Delta Trust for ▇▇▇ U/A/D June 7, 2002
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
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▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
