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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
February 22, 2002 (February 20, 2002)
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Date of Report (Date of Earliest Event Reported)
The Nasdaq Stock Market, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 000-32651 52-1165937
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(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
One Liberty Plaza
New York, New York 10006
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(Address of Principal Executive Offices and Zip Code)
(212) 858-4750
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
On February 20, 2002, The Nasdaq Stock Market, Inc. ("Nasdaq")
entered into a definitive agreement with the National Association of
Securities Dealers, Inc. (the "NASD") to repurchase 33,768,895 shares of
Nasdaq common stock, $0.01 par value per share (the "Common Stock"), from
the NASD. As of February 13, 2002, Nasdaq had approximately 111,286,985
shares of Common Stock outstanding. Pursuant to the terms of the agreement,
Nasdaq will purchase the shares of Common Stock from the NASD for
approximately $439,000,000 in aggregate consideration, payable in a
combination of cash and shares of newly issued Series A preferred stock and
Series B preferred stock. The preferred stock is designed, among other
things, to ensure that the NASD will retain majority voting control over
Nasdaq until such time as Nasdaq commences operating as a national
securities exchange.
The transaction will be completed in two stages. The first stage
closed on February 21, 2002 with Nasdaq repurchasing 13,461,538 shares of
Common Stock from the NASD for aggregate cash consideration of
approximately $175,000,000. The second stage is subject to certain
conditions and is expected to close by March 1, 2002.
The transaction is in furtherance of the restructuring efforts
undertaken by the two companies over the last two years to completely
separate Nasdaq from the NASD.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
4.1 Investor Rights Agreement, dated as of February 20, 2002,
between The Nasdaq Stock Market, Inc. and the National
Association of Securities Dealers, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: February 22, 2002
THE NASDAQ STOCK MARKET, INC.
By: /s/ Edward S. Knight
--------------------------------
Edward S. Knight
Executive Vice President
and General Counsel
EXHIBIT INDEX
Exhibit Description
4.1 Investor Rights Agreement, dated as of February 20, 2002,
between The Nasdaq Stock Market, Inc. and the National
Association of Securities Dealers, Inc.
Exhibit 4.1
INVESTOR RIGHTS AGREEMENT
between
THE NASDAQ STOCK MARKET, INC.
and
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
Dated as of February 20, 2002
INVESTOR RIGHTS AGREEMENT, dated as of February 20, 2002 (this
"Agreement"), between The Nasdaq Stock Market, Inc., a Delaware corporation
(the "Company"), and the National Association of Securities Dealers, Inc.,
a Delaware non-profit corporation (the "NASD").
WHEREAS, in connection with the restructuring and recapitalization
of the Company (the "Restructuring"), the Company has sold shares of its
common stock, par value $.01 per share (the "Common Stock"), and the NASD
has sold warrants (the "Warrants") to purchase shares of Common Stock held
by it in two phases of a private placement transaction (the "Private
Placement") exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act");
WHEREAS, in furtherance of enabling the Company and the NASD to
meet a principal goal of the Restructuring--the reduction of the NASD's
ownership of the Company--as well as to assist the NASD in fulfilling its
commitment to sell all shares of Common Stock that it owned following the
Private Placement (other than shares underlying outstanding Warrants) by
June 30, 2002, the Company has entered into a Purchase and Sale Agreement,
dated as of the date hereof (the "Purchase Agreement"), with the NASD,
whereby the Company has agreed to purchase, and the NASD has agreed to
sell, 33,768,895 shares of Common Stock (the "Shares"), such Shares
representing all the shares of Common Stock owned by it (other than shares
underlying outstanding Warrants), in exchange for, among other
consideration, 1,338,402 shares of the Company's Series A preferred stock
(the "Preferred Shares");
WHEREAS, upon the terms and subject to the conditions set forth
herein, the Company has agreed to provide the NASD registration rights with
respect to shares of Common Stock underlying any unexercised and unexpired
Warrants (such shares, the "Warrant Shares"), the Preferred Shares and
shares of Common Stock underlying unexercised and expired Warrants (such
shares, the "Expired Warrant Shares"); and
WHEREAS, in connection with the Restructuring, the NASD agreed,
subject to obtaining regulatory approvals, to offer members of the NASD the
opportunity to subscribe for an aggregate of up to 10,295,403 shares of
Common Stock (representing approximately 8% of the outstanding shares of
Common Stock upon completion of the Private Placement) in the initial
public offering of Common Stock, and in connection with the Purchase
Agreement, the Company has agreed to undertake, on the NASD's behalf, the
foregoing subscription obligation upon the terms and conditions set forth
herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. Demand Registration.
1.1 Request for Registration. Subject to the terms and conditions
of this Agreement, at any time beginning 180 days after the consummation of
the first underwritten public offering of Common Stock by the Company for
cash (the "IPO") pursuant to a registration statement under the Securities
Act, the NASD may make a written request (a "Demand") to the Company for
registration under the Securities Act of (i) a number of Registrable
Expired Warrant Shares and/or any Registrable Common Shares (each, as
defined in Section 8.10) having a value (based on the average closing sale
price per share of Common Stock for 10 trading days preceding the Demand)
of not less than $50,000,000 (or, if less, all of the Registrable Expired
Warrant Shares and Registrable Common Shares, then held by the NASD),
unless otherwise agreed by the Company and the NASD, or (ii) effective
concurrently with the consummation of the issuance of the Preferred Shares
to the NASD pursuant to the Purchase Agreement, all the Registrable
Preferred Shares (as defined in Section 8.10) then held by the NASD. Each
Demand shall specify the number of Registrable Shares (as defined in
Section 8.10) proposed to be sold and the intended method of disposition
thereof. Promptly upon receiving the Demand and subject to and in
accordance with the procedures set forth in Section 3, the Company shall
use its reasonable best efforts to effect the registration under the
Securities Act of all Registrable Shares requested to be registered so as
to permit the disposition thereof (in accordance with the methods described
in the Demand), provided that subject to the provisions of Section 1.3, the
Company may include in such registration shares of Common Stock for its own
account as well as any shares of Common Stock requested to be included in
such registration by any holder of Common Stock other than the NASD (each,
an "Other Stockholder") that is entitled to participate in such
registration through the exercise of registration rights. The registration
of the Registrable Shares so effected by the Company pursuant to this
Section 1.1 is referred to herein as a "Demand Registration." Subject to
the terms herein, with respect to the Registrable Expired Warrant Shares
and Registrable Common Shares, together, the NASD shall be entitled to
request: (i) two Demands on Form S-1 or any equivalent registration form;
provided, however, that if on or before July 1, 2002, the Company is
eligible to register securities on Form S-3, or any equivalent registration
form, the NASD shall only be entitled to request one Demand on Form S-1 or
any equivalent registration form, and (ii) unlimited demands on Form S-3 or
any equivalent registration form (but no more than two in any 12 month
period). Subject to the terms herein, the NASD shall also be entitled to
request one Demand with respect to the Registrable Preferred Shares.
Notwithstanding the foregoing, the Company shall not be required to effect
a Demand Registration pursuant to a Demand until 90 days shall have elapsed
following the effective date of a registration statement previously filed
by the Company pursuant to the Securities Act, excluding registration state
ments filed on Forms S-4 and S-8 (or any substitute forms that may be
adopted by the U.S. Securities and Exchange Commission (the "Commission")).
In addition, if (i) the board of directors of the Company has determined in
good faith (A) that the Company then is unable to comply with its
disclosure obligations (because it would otherwise need to disclose
material information which the Company has a bona fide business purpose for
preserving as confidential) or the Commission's requirements in connection
with a registration statement or (B) that the registration and distribution
of Registrable Shares (or the use of the registration statement or related
prospectus) would materially interfere with any proposed acquisition,
disposition, financing or other transaction involving the Company or any of
its subsidiaries and (ii) the Company shall have provided the NASD with
prompt notice of the determination contemplated by clause (i) above, then,
notwithstanding anything in this Agreement to the contrary, the Company
shall not be required to file a registration statement pursuant to this
Section 1.1 or a Shelf Registration Statement (as defined below) pursuant
to Section 1.5 and shall not be required to maintain the effectiveness
thereof or amend or supplement any such registration statement which had
previously been filed for a period (a "Permitted Delay Period") expiring
upon the earlier to occur of (x) the date on which such material
information is disclosed to the public or ceases to be material or the
Company is able to comply with its disclosure obligations and Commission
requirements, in the case of clause (A), (y) the date on which such
transaction is completed or abandoned, in the case of clause (B), or (z)
120 days after the Company makes such good faith determination; provided,
however, that the aggregate number of days included in all Permitted Delay
Periods during any consecutive 12 months shall not exceed 120 days and;
provided, further, that during any such Permitted Delay Period, the Company
will continue to cooperate with the NASD and take all actions reasonably
necessary or desirable in order to be able to promptly file or request
effectiveness of the registration statement, as the case may be, upon
termination of any such Permitted Delay Period.
1.2 Effective Registration. A Demand Registration pursuant to
Section 1.1 shall not be deemed to be effective (i) if a registration
statement with respect thereto shall not have become effective (other than
due to any action or inaction by the NASD, unless such action or inaction
is due to market conditions or a material adverse development involving the
Company), (ii) if, after it has become effective, such registration is
interfered with for any reason (other than due to any action or inaction by
the NASD, unless such action or inaction is due to market conditions or a
material adverse development involving the Company), including, without
limitation, by reason of any stop order, injunction or other order or
requirement of the Commission or any other governmental agency or any
court, and the result of such interference is to prevent the NASD from
disposing of the Registrable Shares to be sold thereunder in accordance
with the intended methods of disposition during a period commencing on the
effectiveness of such registration statement and ending on the earlier of
(A) the 120th day following the date on which such registration statement
became effective, subject to the last sentence of Section 3.1, and (B) the
date on which all of the Registrable Shares registered pursuant to such
registration statement are sold, or (iii) if the conditions to closing
specified in any purchase agreement or underwriting agreement entered into
in connection with any underwritten registration shall not be satisfied or
waived with the consent of the Company, the NASD or the lead underwriter,
as applicable (other than due to any action or inaction by the NASD, unless
such action or inaction is due to market conditions or a material adverse
development involving the Company).
1.3 Underwritten Offerings.
(a) Any Demand Registration in which (a) the Registrable Shares
being registered have a value (based on the average closing sale price per
share of Common Stock for 10 trading days preceding the Demand therefor) of
$50,000,000 or more and (b) the plan of distribution involves the sale of
the Registrable Shares other than in open market or block sale
transactions, shall be in the form of an underwritten offering. In such
case, the NASD shall select the lead underwriter and any additional
investment bankers and managers in connection with the offering from a list
of nationally-recognized investment banks reasonably agreed to between the
Company and the NASD. The Company will enter into an underwriting agreement
with such underwriter(s) for such offering that contains customary terms
(such agreement to be reasonably satisfactory to both the Company and the
NASD).
(b) If the managing underwriter of an underwritten offering
pursuant to a Demand made by the NASD under Section 1.1 delivers a written
statement to the NASD that the total amount of securities requested to be
included in such offering is sufficiently large so as to materially and
adversely affect the distribution thereof, then the number of securities to
be registered by each holder shall be reduced to the extent recommended by
the managing underwriter of such offering by giving priority to
participants as follows: (i) first, all the Registrable Shares which the
NASD proposes to sell in such offering pursuant to the applicable Demand
and (ii) second, pro rata among any securities being registered by the
Company for its own account and any securities requested to be registered
by Other Stockholders.
1.4 Price Determination. The NASD shall have the sole right to
determine the offering price per share and underwriting discounts, if
applicable, in connection with any resales of Registrable Shares in
connection with a Demand Registration pursuant to this Section 1, after
consultation with the Company and due regard for the Company's views
relating thereto; provided, however, that the Company may, and/or any
Other Stockholder may request the Company to, exclude its shares of Common
Stock, if any, from such registration if the Company or such holder, as the
case may be, disagrees with the final offering price per share and
underwriting discounts established by the NASD.
1.5 Shelf Registration. Upon receipt by the Company of a Demand
therefor in accordance with Section 1.1, the Company shall prepare and file
with the Commission a registration statement covering open market and block
resales of Registrable Expired Warrant Shares to be made on a continuous
basis pursuant to Rule 415 under the Securities Act (or any similar rule
that may be adopted by the Commission). In addition, upon receipt by the
Company of a request therefor not earlier than March 1, 2002, the Company
shall prepare and file with the Commission a registration statement
covering an offering of the Registrable Warrant Shares (as defined in
Section 8.10) to be made on a continuous basis pursuant to Rule 415 under
the Securities Act (or any similar rule that may be adopted by the
Commission). The registration of the Registrable Warrant Shares pursuant to
this Section 1.5 is referred to herein as a "Warrant Shelf Registration"
and the registration of Registrable Expired Warrant Shares pursuant to this
Section 1.5 is referred to herein as an "Expired Warrant Shelf
Registration" and, together with a Warrant Shelf Registration, a "Shelf
Registration." The NASD shall be entitled to request only one Warrant Shelf
Registration and only one Expired Warrant Shelf Registration pursuant to
this Section 1.5 and the Company shall only be required to effectuate each
such Shelf Registration on Form S-3 or any equivalent registration form.
The Company shall keep the registration statement relating to the Shelf
Registration effective pursuant to Rule 415 (or any similar rule that may
be adopted by the Commission) until such date as is the earlier of (i) the
date on which all of the Registrable Shares covered thereby have been sold,
(ii) the date on which all the Registrable Shares (in the opinion of
counsel to the Company) covered thereby may be immediately sold without
restriction (including, without limitation, as to volume) without
registration under the Securities Act and (iii) in the case of the Warrant
Shelf Registration, June 29, 2006.
2. Piggy-back Registration.
2.1 Request for Registration. If at any time that there are
Registrable Expired Warrant Shares or Registrable Common Shares the Company
proposes to register under the Securities Act an offering of Common Stock
or any other class of its equity securities (including a registration for
the IPO), for its own account or for the account of any holders (other than
the NASD) of its equity securities then, as soon as practicable (but in no
event less than 10 days before the anticipated filing date), the Company
shall give to the NASD a written notice describing the proposed
registration (including the intended method of distribution). Within 10
days after receipt of such notice, the NASD shall notify the Company of the
number of Registrable Expired Warrant Shares and Registrable Common Shares,
if any, that the NASD wishes to have included in such registration
statement. The Company will use its reasonable best efforts to effect the
registration under the Securities Act of the number of Registrable Expired
Warrant Shares and Registrable Common Shares that the NASD shall have
requested, to the extent required to permit the disposition of such
Registrable Expired Warrant Shares and Registrable Common Shares upon the
same terms (including the method of distribution), as any other Company
equity securities to be included in such offering. The registration of the
Registrable Expired Warrant Shares and Registrable Common Shares so
effected by the Company pursuant to this Section 2.1 is referred to herein
as a "Piggy-back Registration."
2.2 Underwritten Offerings. If the securities proposed to be
registered by the Company pursuant to Section 2.1 are to be disposed of in
an underwritten public offering, the notice of the Company's intention to
effect such registration shall designate the proposed managing underwriters
of such offering. Notwithstanding anything in this Agreement to the
contrary, if the managing underwriter of an underwritten offering pursuant
to Section 2.1 delivers a written statement to the Company that the total
amount of securities requested to be included in such offering is
sufficiently large so as to materially and adversely affect the
distribution thereof, then the number of securities to be registered by
each holder shall be reduced to the extent recommended by the managing
underwriter of such offering by giving priority to participants as follows:
(i) in cases where the registration is initiated by any holder of the
Company's equity securities exercising a contractual right to demand such
registration (a) first, all the securities requested to be registered by
such demanding holder, and (b) second, with respect to a registration for
which a registration statement is filed prior to the earlier of (i) the
date which is six months after the date on which the IPO is consummated and
(ii) December 31, 2002, any Registrable Common Shares being registered by
the NASD pursuant to its request under Section 2.1 for Piggyback
Registration, and (c) third, pro rata among any securities being registered
by the Company for its own account and any securities requested to be
registered by Other Stockholders, and (ii) in cases where the Company is
registering securities for its own account (a) first, the securities being
registered by the Company for its own account, and (b) second, with respect
to a registration for which a registration statement is filed prior to the
earlier of (i) the date which is six months after the date on which the IPO
is consummated and (ii) December 31, 2002, any Registrable Common Shares
being registered by the NASD pursuant to its request under Section 2.1 for
Piggyback Registration, and (c) third, pro rata among any securities
requested to be registered by Other Stockholders. The Company shall advise
the NASD and any Other Stockholders distributing their securities through
such underwriting of any such limitation, and the number of Registrable
Expired Warrant Shares, Registrable Common Shares and other securities that
may be included in the registration and underwriting, other than by the
Company.
2.3 Exceptions. Notwithstanding the provisions of Section 2.1, the
Company (i) shall not be required to give notice of or effect a Piggy-back
Registration if the Company's proposed registration is (a) a registration
of an employee stock ownership, stock option, stock purchase or other
employee incentive plan or arrangement adopted in the ordinary course of
business on Form S-8 (or any substitute form adopted by the Commission) or
(b) a registration of securities on Form S-4 (or any substitute form
adopted by the Commission) proposed to be issued in exchange for securities
or assets of, or in connection with a merger or consolidation with,
another person; and (ii) may withdraw, without the consent of the NASD, a
registration statement that the Company had filed as contemplated by
Section 2.1 and abandon the proposed offering in which the NASD had
requested to participate.
2.4 Price Determination. The Company shall have the sole right to
determine the offering price per share and underwriting discounts in
connection with any resale by the NASD of Registrable Expired Warrant
Shares and Registrable Common Shares pursuant to an underwritten offering
in connection with a Piggy-back Registration, after consultation with the
NASD and due regard for the NASD's view relating thereto; provided,
however, that the NASD may request the Company to exclude its Registrable
Expired Warrant Shares and Registrable Common Shares from such registration
if the NASD disagrees with the final offering price per share and
underwriting discount determined by the Company.
3. General Provisions.
3.1 Registration Procedures. If and whenever the Company is
required to effect a Demand Registration, a Shelf Registration or a
Piggy-back Registration, the Company shall:
(a) subject to the terms of Sections 1.1 and 1.5, (a) as
expeditiously as possible prepare and file with the Commission a
registration statement on a form for which the Company then qualifies or
which counsel for the Company shall deem appropriate with respect to such
Registrable Shares (and which form shall be available for the sale of the
Registrable Shares in accordance with the intended methods of distribution
thereof); (b) use its reasonable best efforts to cause such registration
statement to become and remain effective, in the case of registration that
is not a Shelf Registration, for the period set forth in Section 1.2, or,
in the case of a Shelf Registration, for the period set forth in Section
1.5; and (c) furnish to the NASD prior to the filing of such registration
statement copies of drafts and final conformed versions of such
registration statement as is proposed to be filed and provide the NASD with
reasonable time to review such documents and the Company will consider in
good faith incorporating any comments or other information in such
documents as the NASD reasonably requests;
(b) subject to the terms of Sections 1.1 and 1.2, (a) promptly
prepare and file with the Commission such amendments, post-effective
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the rules, regulations
or instructions of the registration form utilized by the Company, the
Securities Act and the rules and regulations thereunder with respect to the
disposition of all Registrable Shares and other securities covered by such
registration statement; (b) promptly furnish to the NASD, in the case of a
Demand Registration or a Shelf Registration, prior to the filing thereof, a
copy of any amendment, post-effective amendment or supplement to such
registra- tion statement or prospectus; and (c) provide to the NASD
reasonable time to review such documents and consider in good faith
incorporating any comments or other information in such documents as the
NASD reasonably requests;
(iii) promptly after the filing of any document
that is to be incorporated by reference into the registration
statement or the prospectus (after initial filing of the
registration statement), provide copies of such documents to the
NASD;
(iv) promptly notify the NASD (a) when or if the
prospectus or any prospectus supplement or post-effective
amendment has been filed, and with respect to the registration
statement or any post-effective amendment, when the same has
become effective; (b) of any request by the Commission for
amendments or supplements to the registration statement or the
prospectus or for additional information; (c) of the issuance by
the Commission of any stop order suspending the effectiveness of
the registration statement or the initiation of any proceedings
for that purpose; (d) of the receipt by the Company of any
notification with respect to the suspension of the qualification
of Registrable Shares for sale in any jurisdiction or the
initiation or threat of any proceeding for such purpose; (e)
except as contemplated in clause (f) below, of the existence of
any fact that makes any statement made in the registration
statement, the prospectus or any document incorporated therein by
reference untrue or that requires the making of any changes in the
registration statement, the prospectus or any document
incorporated therein by reference to make the statements therein
not misleading; and (f) of the occurrence or existence of any
Permitted Delay Period; provided, that the Company shall (i)
notify the NASD in writing of the existence of (but the Company
shall not be required to disclose to the NASD any of the facts or
circumstances regarding) a Permitted Delay Period and (ii) advise
the NASD in writing to cease all sales under the registration
statement until the end of the Permitted Delay Period. The NASD
shall cease all sales under the registration statement following
receipt of notification provided under any of the sub-clauses of
this clause (iv) until the end of the Permitted Delay Period (in
the case of clause (f)) or until such other matter has been
addressed; provided that during any such postponement the Company
shall continue to cooperate with the NASD and take all action
reasonably necessary or desirable in order to be able to promptly
file or request effectiveness of the registration statement, as
the case may be, upon the termination of any postponement period.
(v) subject to the terms of Section 1.1, if any
fact contemplated by clause (iv)(e) above shall exist, promptly
(a) prepare and file a supplement or post-effective amendment to
the registration statement or the related prospectus or any
document incorporated therein by reference or (b) file any
required document so that, as thereafter delivered to the
purchasers of Registrable Shares, the prospectus will not contain
an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not
misleading, and provide copies of such documents to the NASD;
(vi) if requested by the underwriter or
underwriters or the NASD in connection with an underwritten
offering of Registrable Shares, immediately incorporate in a
prospectus supplement or post-effective amendment such
information as the underwriters and the NASD agree should be
included therein relating to the plan of distribution with
respect to such Registrable Shares, including, without limitation,
information with respect to the principal amount of Registrable
Shares being sold to such underwriters, the purchase price being
paid therefor by such underwriters and with respect to any other
terms of such underwritten offering of Registrable Shares, and
make all required filings of the prospectus supplement or
post-effective amendment promptly upon being notified of the
matters to be incorporated in such prospectus supplement or
post-effective amendment;
(vii) use its reasonable best efforts to obtain
the withdrawal of any order suspending the effectiveness of the
registration statement at the earliest possible time;
(viii) otherwise use its reasonable best efforts
to comply with all applicable rules and regulations of the
Commission and make available to its securities holders, as soon
as reasonably practicable, an earnings statement that satisfies
the provisions of Section 11(a) of the Securities Act and covers
the period beginning with the first month of the first fiscal
quarter after the effective date of the registration statement and
ending between 12 months and 18 months thereafter;
(ix) enter into customary agreements (including
an underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Shares, including
without limitation furnishing the underwriters and the NASD with
reasonable access to, and causing the cooperation of, all
personnel reasonably requested by the underwriters and the NASD
and subject to appropriate confidentiality agreements, to
participate in and assist in arranging such meetings with third
parties as the underwriters and the NASD may reasonably request,
including without limitation any "roadshow" or other similar
marketing activity undertaken in connection with the distribution
of the Registrable Shares;
(x) to the extent the offering is an
underwritten offering, furnish to the NASD and to each
underwriter, if any, a signed counterpart, addressed to the NASD
or such underwriter, of (i) an opinion or opinions of counsel to
the Company and (ii) a comfort letter or comfort letters from the
Company's independent public accountants, each in customary form
and covering such matters as are customarily covered by opinions
and comfort letters, as the NASD or the lead underwriter therefor
reasonably requests; and
(xi) provide and cause to be maintained a
transfer agent and registrar for all Registrable Shares covered by
such registration statement from and after a date not later than
the effective date of such registration statement.
In determining the 120 day period for purposes of Section 1.2, any day for
which a stop order is in effect or has been initiated as contemplated by
clause (iv)(c) above, any day on which any fact contemplated by clause
(iv)(e) above exists or any day during a Permitted Delay Period shall not
be counted (in each case, other than if due to any action or inaction by
the NASD), and the period shall correspondingly be extended by the number
of such uncounted days.
3.2 Blue Sky Qualification. The Company will use its reasonable
best efforts to (i) register or qualify the Registrable Shares under such
other securities or blue sky laws of such jurisdictions in the United
States as the NASD reasonably requests to keep such registration or
qualification in effect for so long as such registration statement remains
in effect, and to take any other action which may be reasonably necessary
or advisable to enable the NASD to consummate the disposition in such
jurisdictions of the securities owned by the NASD and (ii) cause such
Registrable Shares to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company, to enable the NASD to consummate
the disposition of such Registrable Shares; provided, that the Company will
not be required to (i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section
3.2, (ii) subject itself to taxation in any such jurisdiction other than
taxation arising with respect to the registration of securities or (iii)
consent to general service of process in any such jurisdiction.
3.3 Copies Provided. The Company shall furnish to the NASD the
number of copies of the applicable registration statement and of each
amendment and supplement thereto (in each case, including all exhibits),
the number of copies of the prospectus contained in such registration
statement (including each preliminary prospectus) in conformity with the
requirements of the Securities Act, such documents, if any, incorporated
by reference in such registration statement or prospectus and any other
documents that the NASD may reasonably request to facilitate the
disposition of the Registrable Shares and, in each case, in the numbers
that the NASD may reasonably request.
3.4 Requested Information. The registration rights granted to the
NASD by this Agreement are subject to the condition that the NASD shall
provide the Company with information about the Registrable Shares to be
sold including the plans for the proposed disposition thereof, and other
information that is necessary, in the reasonable opinion of counsel for the
Company, to enable the Company to include in a registration statement all
material facts required to be disclosed with respect to the offering.
3.5 Participation in Underwritten Registration. Subject to the
provisions of Section 1 or Section 2, as applicable, the NASD may not
participate in any underwritten registration under Section 1 or Section 2
unless the NASD (i) agrees to sell Registrable Shares on the basis provided
in any underwriting arrangements entered into by the Company and (ii)
completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements; provided,
however, that such underwriting arrangements or any other document
requiring the NASD's execution does not contain any provision that is
inconsistent with the rights and obligations of, and the benefits provided
to, the NASD set forth in this Agreement.
3.6 Listing. The Company will use its reasonable best efforts (i)
to cause all Registrable Shares covered by such registration statement to
be listed on any national securities exchange (if such Registrable Shares
are not already listed), and on each other securities exchange, on which
similar securities issued by the Company are then listed, if the listing of
such Registrable Shares is then permitted under the rules of such exchange;
or (ii) to secure the designation of all such Registrable Shares covered by
such registration statement as a "national market system security" on The
Nasdaq Stock Market within the meaning of Rule 11Aa2-1 of the Commission
(if such Registrable Shares are not already so designated) or, failing
that, to secure authorization from The Nasdaq Stock Market for such
Registrable Shares, in each case if the Registrable Shares so qualify, 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
Shares with the NASD or the Company, as applicable, if requested by the
NASD.
3.7 Holdback.
(a) If so requested by the underwriters in connection with
an underwritten offering of shares of Common Stock covered by a
registration statement, the NASD shall agree with the underwriters, subject
to any agreed upon exceptions, not to effect any offer, sale, pledge,
transfer or other disposition or distribution (or agreement with respect to
any of the foregoing) of Registrable Shares other than pursuant to such
underwritten offering, including a sale pursuant to Rule 144, without the
prior written consent of such underwriters, during the seven day period
prior to, and during the 90-day period (or 180 days following the
consummation of the IPO) (or such shorter period as is applicable to other
similarly situated stockholders) beginning on, the date such registration
statement or amendment to such registration statement is declared effective
under the Securities Act by the Commission.
(b) If so requested by the underwriters in connection with
an underwritten Demand Registration, the Company shall agree with the
underwriters, subject to agreed upon exceptions, not to effect any offer,
sale, pledge, transfer or other disposition or distribution (or agreement
with respect to any of the foregoing) of shares of Common Stock without the
prior written consent of such underwriters (other than in connection with
any acquisition or business combination transaction and other than in
connection with stock options and employee benefit plans and compensation)
during the seven day period prior to, and during the 90-day period (or 180
days following the consummation of the IPO) (or such shorter period as is
applicable to other similarly situated persons) beginning on, the date the
registration statement or amendment to a registration statement relating to
such underwritten offering is declared effective under the Securities Act
by the Commission.
4. Registration Expenses. Registration Expenses (other than
underwriting discounts and commissions on the NASD's Registrable Shares)
incurred in connection with any registration made or requested to be made
pursuant to this Agreement will be borne by the Company, whether or not any
such registration statement becomes effective.
5. Indemnification and Contribution.
5.1 Indemnification by the Company. In connection with each Demand
Registration, Shelf Registration or Piggy-back Registration effected by the
Company hereby, to the extent permitted by applicable law, the Company will
indemnify and hold harmless the NASD, its assigns and successors, and each
of their respective officers, directors and agents and each person who
controls, within the meaning of Section 15 of the Securities Act, the NASD
or its assigns and successors (collectively, the "NASD Indemnified
Parties") against any and all losses, claims, damages, liabilities or
expenses to which they or any of them may become subject under the
Securities Act or any other statute or common law, including any amount
paid in settlement of any commenced or threatened litigation (collectively,
the "Damages"), insofar as any such Damages arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus (as amended or
supplemented) or any preliminary prospectus or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. The Company shall not be bound by
the indemnification provision of the preceding sentence with respect to a
NASD Indemnified Party if such Damages arise out of or are based upon any
untrue statement or alleged untrue statement, or any omission or alleged
omission, that was made in reliance upon and in conformity with information
furnished in writing to the Company by such NASD Indemnified Party for use
in connection with the preparation of the registration statement, any
preliminary prospectus, any prospectus contained in the registration
statement, or any such amendment thereof or supplement thereto. In
addition, the indemnification provided in this Section 5.1 shall not inure
to the benefit of any NASD Indemnified Party, if the NASD Indemnified Party
(or the underwriter or underwriters of the offering) failed to send or give
a copy of the final prospectus or any such amendment thereof or supplement
thereto, whichever is most recent, to the person asserting any such
Damages at or prior to the written confirmation of the sale of the
securities by such underwriter or underwriters to such person if there
would have been no liability if the final prospectus or any such amendment
thereof or supplement thereto had been delivered. If requested by the NASD
in connection with each Demand Registration, Shelf Registration or
Piggy-back Registration effected by the Company hereby, the Company also
agrees, to the extent permitted by applicable law, to indemnify any
underwriters of Registrable Shares, their officers and directors and each
person who controls, within the meaning of Section 15 of the Securities
Act, such underwriters on substantially the same basis as that of the
indemnification of the NASD provided in this Section 5.1.
5.2 Indemnification by the NASD.
(a) In connection with each Demand Registration, Shelf
Registration or Piggy-back Registration effected by the Company hereby and
in connection with the Company's obligations pursuant to Section 6, to the
extent permitted by applicable law, the NASD agrees to indemnify and hold
harmless the Company, its assigns and successors, and each of their
respective officers, directors and agents and each person who controls,
within the meaning of Section 15 of the Securities Act, the Company or its
assigns and successors (collectively, the "Company Indemnified Parties")
against all Damages insofar as such Damages arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus (as amended or
supplemented) or any preliminary prospectus or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, only if such statement or
omission was made in reliance upon and in conformity with information
furnished in writing to the Company by the NASD for use in connection with
the preparation of the registration statement or any post-effective
amendment thereof or any preliminary prospectus or prospectus contained in
such registration statement or any such amendment thereof or supplement
thereto; provided, however, that such indemnification in connection with
each Demand Registration, Shelf Registration or Piggy-back Registration
shall in no event exceed the gross proceeds from such Demand Registration,
Shelf Registration or Piggy-back Registration, as the case may be, received
by the NASD. Notwithstanding the foregoing, with respect to a Piggy-back
Registration, the indemnification provided in this Section 5.2 shall not
inure to the benefit of the Company Indemnified Parties, if the person
asserting any such Damages did not receive from the Company (or the
underwriter or underwriters of the offering) a copy of the final
prospectus or any such amendment thereof or supplement thereto, whichever
is most recent, at or prior to the written confirmation of the sale of the
securities by such underwriter or underwriters to such person if there
would have been no liability if the final prospectus or any such amendment
thereof or supplement thereto had been delivered. If requested by the
Company in connection with each Demand Registration, Shelf Registration or
Piggy-back Registration effected by the Company hereby, the NASD also
agrees, to the extent permitted by applicable law, to indemnify any
underwriters of Registrable Shares, their officers and directors and each
person who controls, within the meaning of Section 15 of the Securities
Act, such underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 5.2(a).
(b) In connection with the Company's obligations pursuant to
Section 6, the NASD agrees to indemnify and hold harmless the Company
Indemnified Parties against all Damages insofar as such Damages arise out
of or are based upon (i) any of the Company's or the NASD's actions taken
or omitted pursuant to Section 6, (ii) the allocation of shares of Common
Stock to Eligible Members (as defined in Section 6.2) as contemplated by
Section 6, and (iii) an Approval Failure (as defined in Section 6.4), in
each case in the absence of gross negligence, willful misconduct or bad
faith on the part of the Company.
5.3 Notice of Claim Triggering an Indemnity; Waiver. Promptly
after the receipt of notice of the commencement of any action, proceeding,
claim or investigation or other similar event against any party entitled to
indemnity under Section 5.1 or Section 5.2 (an "Indemnified Party") in
respect of which indemnity may be sought from any other party (an
"Indemnifying Party") on account of an indemnity agreement contained in
Section 5.1 or Section 5.2 (an action triggering the liability under
Section 5.1 or Section 5.2, an "Action"), the Indemnified Party will notify
the Indemnifying Party in writing of the commencement thereof. The failure
of any Indemnified Party to notify an Indemnifying Party of any Action
shall not relieve the Indemnifying Party from any liability in respect of
such Action, unless and to the extent the failure to provide prompt notice
materially prejudices the Indemnifying Party in its ability to defend
against or settle such Action. If any Action is brought against any
Indemnified Party and the Indemnified Party notifies an Indemnifying Party
of the commencement thereof, the Indemnifying Party will be entitled to
participate therein and to assume the defense of the Action (the "Assumed
Action") with counsel reasonably satisfactory to the Indemnified Party.
Upon any such assumption of defense, the Indemnifying Party will not be
liable to the Indemnified Party for any legal or other expenses that the
Indemnified Party subsequently incurs in connection with the Assumed
Action, other than reasonable costs of investigation; however, if the
Indemnified Party has a reasonable basis to believe and does in fact
believe that its interests in such Assumed Action conflict with those of
the Indemnifying Party, then the Indemnified Party may so notify the
Indemnifying Party and the Indemnifying Party will remain liable to the
Indemnified Party for reasonable legal expenses that the Indemnified Party
incurs for one counsel in connection with the Assumed Action. The
Indemnifying Party may not compromise or settle any Assumed Action without
the prior written consent of the Indemnified Party, unless such settlement
or compromise releases and forever holds harmless the Indemnified Party
from all Damages and any culpability in connection with or arising out of
the Assumed Action. The Indemnified Party may not compromise or settle any
Action without the prior written consent of the Indemnifying Party.
5.4 Contribution. To provide for contribution in circumstances in
which the indemnification provided for in Section 5.1 or Section 5.2 is for
any reason held to be unavailable from the Indemnifying Party, after
deducting any Damages which the Indemnifying Party has otherwise been
required to pay in connection with the matter for which indemnification was
unavailable, including from persons who control, within the meaning of
Section 15 of the Securities Act, either the Company or the NASD, officers
of the Company who signed the registration statement, and directors of the
Company, the Company and the NASD shall each contribute to the aggregate
Damages of the nature contemplated by the indemnification provisions set
forth in Section 5.1 and Section 5.2 (including any investigation, legal,
and other expenses incurred in connection with and any amount paid in
settlement of any action, suit, proceeding or asserted claims) to which
either the Company or the NASD may be subject. The Company and the NASD
each shall contribute an amount that shall reflect the relative fault of
the Company on the one hand and the NASD on the other hand as well as any
other relevant equitable considerations. The amount paid or payable by a
party as a result of the Damages referred to above shall be deemed to
include, subject to the limitations set forth in Section 5.3, any legal or
other fees or expenses reasonably incurred by such party in connection with
any investigation or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 5.4 were determined by pro-rata
allocation or by any other method of allocation that does not take into
account the considerations referred to in the immediately preceding
paragraph. Notwithstanding the foregoing provisions of this Section 5.4, in
accordance with Section 11(f) of the Securities Act, the NASD shall not be
required to contribute any amount in excess of the amount by which the
total price at which Registrable Shares of the NASD were offered to the
public (net of all underwriting discounts and commissions) exceeds the
amount of any damages the NASD has otherwise been required to pay by reason
of such untrue statement or omission, and no person guilty of fraudulent
misrepresentation shall be entitled to obtain contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 5.4, each person, if any, who controls, within the meaning of
Section 15 of the Securities Act, the Company or the NASD, each officer of
the Company who shall have signed the registration statement, and each
director of the Company or any of the NASD shall have the same rights to
contribution as the Company or the NASD, subject in each case to the
provisions of the preceding sentence.
6. Allocation of Common Stock to NASD Members.
6.1 Notice of IPO. The Company shall provide written notice to the
NASD of its intention to file a registration statement for an IPO with the
Commission (the "IPO Notice") not less than 21 days before the anticipated
filing date.
6.2 Allocation. Within 21 days of receipt of the IPO Notice or
such later date as the parties hereto may agree, the NASD shall provide the
Company with irrevocable written instructions (the "Directed Share
Instructions") as to the identity of the members of the NASD that shall be
entitled (the "Eligible Members") to participate in a directed share
subscription program in respect of an aggregate of up to 10,295,403 shares
of Common Stock (the "Eligible Shares") as part of the IPO (the "Directed
Share Program"), which instructions shall include the number of Eligible
Shares to be offered by the Company to each Eligible Member in the IPO. The
Company will cooperate in good faith with the NASD to correct any errors in
the Directed Share Instructions timely brought to the attention of the
Company. Upon receipt of the Directed Share Instructions, the Company
agrees to provide, and agrees to cause the managing underwriter of the IPO
to provide, the Eligible Members the right to subscribe in the IPO for such
Eligible Member's number of Eligible Shares as provided in the Directed
Share Instructions at the IPO price per share less the underwriting
discount per share.
6.3 Terms. The parties hereto agree that the Directed Share
Program shall be undertaken in accordance with customary terms and
conditions of the managing underwriter of the IPO for similar programs. In
connection with the foregoing, it is expected that, prior to the pricing of
the IPO, each of the Eligible Members will be furnished with a preliminary
prospectus and will be asked to indicate whether such Eligible Member has
an interest in purchasing its allocated portion of Eligible Shares in the
IPO. After the IPO registration statement has been declared effective under
the Securities Act, Eligible Members will be asked to confirm their
intention to purchase their portion of the Eligible Shares. In the event
any Eligible Member does not elect to purchase its Eligible Shares in the
IPO, such shares shall not be available for reoffering to other Eligible
Members in the Directed Share Program. It is expected that Eligible Members
that choose to participate in the Directed Share program will be restricted
from undertaking any offer, sale, assignment, pledge or other disposition
or distribution, or entering into any agreement with respect thereto, of
any Eligible Shares purchased in the IPO for some period of time after
consummation of the IPO (not to exceed 360 days), as determined by the
Company in consultation with the managing underwriter of the IPO. In order
to participate in the Directed Share Program, each Eligible Member will be
required to complete and execute all questionnaires, powers of attorney,
agreements and other documents reasonably required under the terms of the
underwriting arrangements entered into in connection with the IPO.
6.4 Required Approvals. The Company's obligations pursuant to this
Section 6 shall be subject to the Company and the NASD obtaining all
consents or approvals of any governmental, regulatory or self-regulatory
body or agency that are required in connection with the offering of
Eligible Shares to the Eligible Members pursuant to this Section 6 (each, a
"Required Approval"). The Company and the NASD shall use all reasonable
efforts to obtain the Required Approvals. In the event any Required
Approval cannot be obtained during the period ending 45 days subsequent to
the date of the filing of the registration statement (an "Approval
Failure"), the Company's obligations to offer the Eligible Shares to the
Eligible Members shall terminate and the Company shall have no further
obligation or liability pursuant to this Section 6.
6.5 Taking of Action. Notwithstanding the provisions of this
Section 6, the Company has no obligation to undertake an IPO and may
withdraw, without the consent of the NASD or any Eligible Member, any
registration statement that the Company had filed in connection with an IPO
and abandon the proposed offering of Eligible Shares contemplated by this
Section 6; provided, that the Company's and the NASD's obligations under
this Section 6 shall be deemed to apply to an IPO initiated by the Company
subsequent to such withdrawal.
6.6 Cooperation; Expenses. The NASD shall (i) cooperate with the
Company and use its reasonable best efforts to take all such actions and
provide all reasonable information as may be necessary in connection with
the Company's obligations pursuant to this Section 6, and (ii) promptly
reimburse the Company for one-half of all reasonable expenses incurred in
connection with the Company's obligations pursuant to this Section 6.
6.7 Effectiveness. The duties and obligations of the Company
pursuant to this Section 6 are conditioned upon and shall only become
effective concurrently with the consummation of the Stage Two Closing (as
defined in the Purchase Agreement). Until such date and time as this
Section 6 becomes effective in accordance with the terms hereof, neither
party shall have any right, privilege, duty or obligation pursuant to this
Section 6.
7. Tag-Along Right.
7.1 NASD Tag-Along Right.
(a) Subject to Section 7.1(b), if prior to the consummation
of the IPO, the Company proposes to sell shares of Common Stock for cash in
a transaction or series of related transactions not subject to the
registration requirements of the Securities Act (collectively, the
"Private Shares"), then the Company shall give written notice to the NASD
of each such proposed sale (the "Tag-Along Notice") at least 15 days prior
to the proposed sale. The Tag-Along Notice shall specify the proposed
purchaser(s), the number of Private Shares to be sold, the price per share
to be received therefor and the place and date on which the sale is to be
completed.
(b) Notwithstanding Section 7.1(a), the Company shall not be
required to give a Tag-Along Notice and the NASD shall not have any
tag-along rights pursuant to Section 7.1(a) if (i) the aggregate purchase
price of the shares being sold by the Company in such private transaction
or series of related transactions is less than $10,000,000, (ii) the
Company and the NASD agree in writing for the Company to acquire from the
NASD a number of Shares equal to the number of shares of Common Stock that
the NASD would otherwise have been entitled pursuant to Section 7.1(a) to
include in such private sale prior to commencement of such sale by the
Company, (iii) such sale is in connection with a joint venture, strategic
alliance or other similar arrangement involving the Company, in any such
case the primary purpose of which is not to raise capital and the
consideration involved in such transaction is not predominantly comprised
of cash, in each case as determined in good faith by the Board of Directors
of the Company; provided, however, the parties agree that any such
transaction that involves cross-shareholdings obtained through
substantially similar cash investments shall not be deemed primarily to
raise capital or to predominantly involve cash consideration, or (iv) any
issuance of shares of Common Stock (or securities exercisable for or
convertible into shares of Common Stock) by the Company pursuant to equity
plans or arrangements for employees, officers, directors or consultants, or
pursuant to warrants or convertible subordinated debentures outstanding on
the date hereof.
(c) The Tag-Along Notice shall constitute the Company's offer
(the "Tag-Along Offer") to include in the proposed sale a number of Shares
designated by the NASD, not to exceed the number of Shares equal to the
product of (x) the number of the Shares then held by the NASD and (y) a
fraction with a numerator equal to the number of Private Shares to be sold
as indicated in the Tag-Along Notice and a denominator equal to the number
of outstanding shares of Common Stock. If the NASD wishes to include Shares
in the proposed sale in accordance with the terms of this Section 7, it
shall so notify the Company (such notice, an "Acceptance Notice") not more
than seven days after the date of the Tag-Along Notice and shall indicate
the number of Shares, subject to the foregoing, intended to be sold by the
NASD pursuant to the Tag-Along Offer (the "Included Shares"). The Tag-Along
Offer shall be conditioned upon the Company's sale of shares of Common Stock
pursuant to the transactions contemplated in the Tag-Along Notice with the
purchaser(s) named therein. An Acceptance Notice shall constitute the NASD's
agreement to sell to the prospective purchaser(s) the Included Shares as set
forth in such Acceptance Notice. In addition, an Acceptance Notice shall include
(i) a written undertaking of the NASD to deliver, at least three business days
prior to the expected date of the consummation of such sale or other
disposition to the prospective purchaser(s) as indicated in the Tag-Along
Notice, such documents as shall be reasonably required to transfer the
Included Shares to the prospective purchaser(s) pursuant to the Tag-Along
Offer and (ii) a limited power-of-attorney authorizing the Company to
transfer such Included Shares to the prospective purchaser(s) pursuant to
the terms of the Tag-Along Offer. If the NASD does not deliver an
Acceptance Notice to the Company in accordance with the provisions of this
Section 7.1, the NASD shall be deemed to have irrevocably rejected the
Tag-Along Offer.
(d) If the NASD has delivered an Acceptance Notice, the
Company shall reduce to the extent necessary the number of Private Shares
it otherwise would have sold in the proposed sale so as to permit the NASD
to sell the number of Included Shares and the Company and the NASD shall
sell the applicable shares to the proposed purchaser(s) in accordance with
the terms of such sale set forth in the Tag-Along Notice; provided,
however, that if the Company shall be unable to sell the aggregate number
of shares that the NASD and the Company have elected to sell pursuant to
the Tag-Along Right at the price per share set forth in the Tag-Along
Notice, then the number of Private Shares to be sold by the Company, on the
one hand, and of Included Shares to be sold by the NASD, on the other hand,
shall be reduced ratably to the extent necessary to reduce the number of
shares to be included in such sale to the maximum number of shares the
Company can sell at such price.
(e) The NASD shall bear its pro rata share of the reasonable
expenses incurred by the Company in connection with any sales of Private
Shares that the NASD participates in pursuant to the terms of this Section
7.1.
(f) The tag-along rights pursuant to this Section 7.1 shall
terminate automatically upon the consummation of the IPO.
7.2 Compliance with Applicable Law. The exercise of the Tag-Along
Right set forth in this Section 7 and the completion of any offer, sale,
pledge, transfer or other disposition or distribution (or agreement with
respect to any of the foregoing) of Shares contemplated hereunder shall be
subject to compliance with all applicable laws.
8. Miscellaneous.
8.1 Specific Performance. The Company and the NASD agree that if
any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached, irreparable damage
would occur, no adequate remedy at law would exist and damages would be
difficult to determine, and that the parties shall be entitled to specific
performance of the terms hereof and immediate injunctive relief, without
the necessity of proving the inadequacy of money damages as a remedy, in
addition to any other remedy at law or equity.
8.2 Amendments and Waivers. No failure or delay on the part of any
party in exercising any rights, power or privilege hereunder shall operate
as a waiver thereof. Any waiver of any right or default hereunder will be
effective only in the instance given and will not operate as or imply a
waiver of any other or similar right or default on any subsequent occasion.
No waiver, modification or amendment of this Agreement or of any provision
hereof will be effective unless in writing and signed by the party against
whom such waiver, modification or amendment is sought to be enforced.
8.3 Notices. Any notice required or permitted by this Agreement
must be in writing and must be sent by facsimile, by nationally recognized
overnight courier, or mailed by U.S. registered or certified mail,
addressed to the other party at the address below or to such other address
for notice (or facsimile number, in the case of a notice by facsimile) as a
party gives the other party written notice of in accordance with this
Section 8.3. Any such notice will be effective as of the date of receipt:
Mailed notices should be addressed as follows:
(i) If to the Company, to:
The Nasdaq Stock Market, Inc.
One Liberty Plaza
New York, New York 10006
Attention: General Counsel
Facsimile: (212) 858-5150
(ii) If to the NASD, to:
National Association of Securities Dealers, Inc.
1735 K Street, N.W.
Washington, DC 20006
Attention: General Counsel
Facsimile: (202) 728-8075
8.4 Successors and Assigns. Except as otherwise provided herein,
the registration rights granted to the NASD under this Agreement shall be
transferable following consultations with the Company in good faith prior
to any such transfer, taking into account the circumstances of such
proposed transfer (each person with respect to which a valid transfer has
been made, being referred to as a "Permitted Transferee"); provided,
however, (i) that the assignment of registration rights under this
Agreement with respect to the Registrable Expired Warrant Shares and the
Registrable Common Shares shall be to no more than a total of four trans-
ferees, (ii) that the assignment of registration rights under this
Agreement with respect to the Registrable Preferred Shares shall be to one
transferee, (iii) without the prior written consent of the Company, which
may be withheld in its sole discretion, all registration rights shall be
non-transferable to NASD Regulation, Inc., another regulator of the
securities markets, another securities exchange, alternative trading
system, electronic communications network, any Competitor (as defined in
Section 8.10), or any Affiliate (as defined in Section 8.10) of the
foregoing and (iv) that any Permitted Transferee shall have executed and
delivered to the Company an instrument confirming that such Permitted
Transferee agrees to be bound by the terms of this Agreement applicable to
the transferor, whereupon such transferee shall be subject to the terms and
conditions of this Agreement as if such transferee were the NASD. Subject
to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective
successors and assigns. Neither this Agreement nor any provision hereof
shall be construed so as to confer any right or benefit upon any person
(including the Eligible Members) other than parties to this Agreement and
their respective successors and permitted assigns. Notwithstanding anything
to the contrary herein, the NASD may not assign (including by operation of
law or otherwise) its rights, duties and obligations pursuant to Section 7,
Section 6 or any provision of Section 5 relating to Section 6. Any attempted
assignment in contravention of this Section 8.4 shall be null and void.
8.5 Counterparts. This Agreement may be signed in one or more
counterparts, and all signed copies of this Agreement will together
constitute one original of this Agreement.
8.6 Headings. The descriptive headings herein are inserted for
convenience of reference only and shall in no way be construed to define,
limit, describe, explain, modify, amplify, or add to the interpretation,
construction or meaning of any provision of, or scope or intent of, this
Agreement nor in any way affect this Agreement.
8.7 Governing Law; Jurisdiction. This Agreement shall be governed
by, enforced under and construed in accordance with the laws of the State
of New York applicable to contracts executed and performed within the State
of New York. Each of the Company and the NASD hereby irrevocably and
unconditionally consents to submit to the non-exclusive jurisdiction of the
courts of the State of New York and of the United States of America in each
case located in the County of New York for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby, and
further agrees that service of any process, summons, notice or document by
U.S. registered mail to its respective address set forth in Section 8.3 (or
to such other address for notice that such party has given the other party
written notice of in accordance with Section 8.3) shall be effective
service of process for any litigation brought against it in any such court.
Each of the parties hereto hereby irrevocably and unconditionally waives
any objection to the laying of venue of any litigation arising out of this
Agreement or the transactions contemplated hereby in the courts of the
State of New York or of the United States of America in each case located in
the County of New York and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
litigation brought in any such court has been brought in an inconvenient
forum.
8.8 Severability. Any provision of this Agreement that is held by
a court of competent jurisdiction to violate applicable law shall be
limited or nullified only to the extent necessary to bring this Agreement
within the requirements of such law.
8.9 Entire Agreement. This Agreement constitutes the entire
agreement of the parties relating to the subject matter hereof and
supersedes other prior agreements and understandings between the parties
both oral and written regarding such subject matter.
8.10 Certain Definitions; Interpretation. For purposes of this
Agreement:
"Affiliate" of any person means any other person directly or
indirectly controlling, controlled by or under common control with such
person. For the purposes of this definition, "control" when used with
respect to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Competitor" shall mean any person that is principally engaged in
transaction services, market information services, or issuer services
related to securities trading on an exchange or similar market.
"person" shall mean any natural person, corporation, general or
limited partnership, limited liability company, joint venture, trust,
association or entity of any kind.
"Registrable Common Shares" shall mean the Shares or any other
equity securities of the Company or any successor of the Company (whether
by merger, consolidation or otherwise) which may be issued in respect of,
in exchange for, in substitution of, or as a distribution on, the Shares,
until in the case of any such share (i) it has been effectively registered
under Section 5 of the Securities Act and disposed of pursuant to an
effective registration statement under the Securities Act, (ii) it has been
transferred pursuant to a transaction exempt from registration under the
Securities Act, other than to a Permitted Transferee or (iii) it may be
transferred by a holder without registration pursuant to Rule 144 under the
Securities Act or any successor rule without being restricted by the volume
limitation contained in such rule. For the avoidance of doubt, any Shares
purchased by the Company shall no longer be deemed to be Registrable Common
Shares.
"Registrable Expired Warrant Shares" shall mean the Expired
Warrant Shares or any other equity securities of the Company or any
successor of the Company (whether by merger, consolidation or otherwise)
which may be issued in respect of, in exchange for, in substitution of, or
as a distribution on, the Expired Warrant Shares, until in the case of any
such share (i) it has been effectively registered under Section 5 of the
Securities Act and disposed of pursuant to an effective registration
statement under the Securities Act, (ii) it has been transferred pursuant
to a transaction exempt from registration under the Securities Act, other
than to a Permitted Transferee or (iii) it may be transferred by a holder
without registration pursuant to Rule 144 under the Securities Act or any
successor rule without being restricted by the volume limitation contained
in such rule.
"Registrable Shares" shall mean collectively the Registrable
Common Shares, Registrable Preferred Shares, the Registrable Warrant Shares
and the Registrable Expired Warrant Shares.
"Registrable Preferred Shares" shall mean the Preferred Shares or
any other equity securities of the Company or any successor of the Company
(whether by merger, consolidation or otherwise) which may be issued in
respect of, in exchange for, in substitution of, or as a distribution on,
the Preferred Shares, until in the case of any such share (i) it has been
effectively registered under Section 5 of the Securities Act and disposed
of pursuant to an effective registration statement under the Securities
Act, (ii) it has been transferred pursuant to a transaction exempt from
registration under the Securities Act, other than to a Permitted Transferee
or (iii) it may be transferred by a holder without registration pursuant to
Rule 144 under the Securities Act or any successor rule without being
restricted by the volume limitation contained in such rule.
"Registrable Warrant Shares" shall mean the Warrant Shares or any
other equity securities of the Company or any successor of the Company
(whether by merger, consolidation or otherwise) which may be issued in
respect of, in exchange for, in substitution of, or as a distribution on,
the Warrant Shares, until in the case of any such share (i) it has been
effectively registered under Section 5 of the Securities Act and disposed
of pursuant to an effective registration statement under the Securities
Act, (ii) it has been transferred pursuant to a transaction exempt from
registration under the Securities Act, other than to a Permitted Transferee
or (iii) it may be transferred by a holder without registration pursuant to
Rule 144 under the Securities Act or any successor rule without being
restricted by the volume limitation contained in such rule.
"Registration Expenses" means all (i) registration and filing
fees, (ii) fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of a qualified independent
underwriter, if any, counsel in connection therewith and the reasonable
fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Shares), (iii) printing expenses, (iv)
internal expenses of the Company (including, without limitation, all
salaries and expenses of officers and employees performing legal or
accounting duties), (v) fees and disbursements of counsel for the Company,
(vi) customary fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any comfort
letters or costs associated with the delivery by independent certified
public accountants of a comfort letter or comfort letters), (vii) fees and
expenses of any special experts retained by the Company in connection with
such registration, (viii) fees and expenses of listing or quoting the
Registrable Shares on a securities exchange or on the Nasdaq National
Market System or inter-dealer quotation system, (ix) rating agency fees,
(x) reasonable fees and expenses of counsel for the underwriter(s), (xi)
reasonable fees and expenses of the underwriter(s) (excluding discounts or
commissions relating to the distribution of the Registrable Shares), (xii)
out-of-pocket expenses of the Company (including the expenses of any
"roadshow" or similar marketing activity undertaken in connection with the
distribution of the Registrable Shares) and (xiii) reasonable fees and
expenses of one counsel for the NASD, it being understood that the Company
shall have the right, with reasonable advance notice, to review the
applicable records of the NASD in order to verify any amounts previously
invoiced or reported pursuant this clause (xiii) and, in the event such
review reveals that the amounts so invoiced or reported are 20 percent or
greater than determined by such review, the NASD shall reduce the
applicable invoice or reimburse the entire amount of the discrepancy.
In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the
parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Investor Rights
Agreement as of the date first written above.
THE NASDAQ STOCK MARKET, INC.
By: /s/ Edward S. Knight
---------------------------------
Name: Edward S. Knight
Title: Executive Vice President
and General Counsel
NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC.
By: /s/ Douglas Shulman
---------------------------------
Name: Douglas Shulman
Title: Executive Vice President