Document:

Exhibit 10.2

 

 

 

LIQUIDNET HOLDINGS, INC.

 

REGISTRATION RIGHTS

 

1.          Definitions.
Capitalized terms used in this Exhibit and not otherwise defined shall
have the meanings ascribed to such terms in the Stock Purchase Agreement; provided,
however, that the following terms shall have the following meanings:

 

(a)        “Common Stock” means the Common Stock, par value
$0.0001 per share, of Seller.

 

(b)        “Seller” means
Liquidnet  Holdings, Inc., a Delaware corporation, and any successor(s) thereto.

 

(c)        “Form S-3” means such form under the Securities
Act as in effect on the date hereof or any successor form under the Securities
Act.

 

(d)        “Holders” means (i) the Buyers and all Affiliates
of Buyers who are transferees of Registrable Securities (as defined herein) who
agree in writing to be bound by the restrictions contained in this Exhibit and
to act through Buyer as its representative (and such writing is in a form
reasonably acceptable to Seller and delivered to Seller) and (ii)(x) transferees
of any person identified in clause (i) who acquire at least 50,000
Registrable Securities (as adjusted for stock splits, stock dividends,
combinations, reclassifications, reorganizations, recapitalizations and the
like) from such person or (y) limited partners of any person identified in
clause (i), in each case provided that such transferees agree in writing to be
bound by the restrictions contained in this Exhibit (and such writing is
in a form reasonably acceptable to Seller and delivered to Seller).

 

(e)       “Registrable
Securities” means: (i) the shares of Common Stock issued or issuable
upon conversion of shares of Series A-1 Preferred Stock; (ii) the
shares of Common Stock issued or issuable upon conversion of shares of Series A-2
Preferred Stock; (iii) any other shares of Common Stock acquired by the
Holders pursuant to Sections 7.5 or 7.7 of the Stock Purchase Agreement; and (iv) any
other shares of Common Stock acquired by the Holders as a result of stock
splits, stock dividends, reclassifications, recapitalizations, or similar
events relating to the shares specified in the foregoing clauses; provided,
however, that Registrable Securities shall not include any shares
previously registered under the Securities Act or which have been sold to the
public either pursuant to a Registration Statement or Rule 144, or which
have been sold in a private transaction in which the transferor’s rights under
this Exhibit are not assigned or which do not satisfy clause (ii) of
the definition of Holder. Wherever reference is made in this Agreement to a
request or consent of holders of a certain percentage of, or a majority of,
Registrable Securities, the determination of such percentage shall include
shares of Common Stock issuable upon conversion of issued shares of Series A-1
Preferred Stock and

 

 

Series
A-2 Preferred Stock, even if such conversion has not yet been effected (but
assuming no application of Section 6(m) of the Certificate of
Designation).

 

(f)              “Registration Statement” means a
registration statement as contemplated by the Securities Act.

 

(g)             “Securities Act” means the Securities Act of
1933, as amended.

 

(h)             “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

(i)              “SEC” means the Securities and Exchange
Commission.

 

(j)              “Series A-1 Preferred Stock” means the Series A-1
Convertible Preferred Stock, par value $0.0001, of Seller.

 

(k)             “Series A-2 Preferred Stock” means the Series A-2
Convertible Preferred Stock, par value $0.0001, of Seller.

 

(l)              “Stock Purchase Agreement” means the
Stock Purchase Agreement relating to the Series A-1 Preferred Stock to
which this Exhibit is
attached.

 

2.              Demand Registration.

 

(a)             Notice. If at any time following
the expiration of six months after the later of (i) Seller’s initial
underwritten public offering and (ii) Seller’s most recent subsequent
registration, a Holder or Holders (collectively, the “Initiating
Holders”) of 50% or more in interest of the outstanding
Registrable Securities then owned by all the Holders propose that Seller file a
Registration Statement with respect to all or some of the Registrable
Securities held by the Initiating Holder by giving written notice (a “Demand
Notice”) of such proposal to Seller, then Seller shall promptly
deliver to each other Holder a copy of such Demand Notice and shall, subject to
the limitations of this Section 2, use reasonable efforts to effect, as
soon as is practicable, the registration under the Securities Act of all
Registrable Securities proposed to be registered in such Demand Notice and all
other Registrable Securities requested to be registered in any written request
received by any other Holder within 20 days following Seller’s delivery of the
Demand Notice. Notwithstanding anything to the contrary contained herein,
Seller’s obligation under this Section 2 shall in the aggregate be limited
to two (2) registrations that are declared effective by the SEC in
accordance with Section 2(d) below (one of which shall have been
initiated by one or more of the TCV Entities and their Affiliates and one of
which shall have been initiated by one or more of the Summit Entities and their
Affiliates) (each, a “Demand Registration”). The Demand
Notice shall describe the number of shares intended to be disposed of and the
intended method of disposition. If the Initiating Holders intend to distribute
the Registrable Securities by means of an underwriting, they shall so advise
Seller in their Demand Notice. In such event, the Seller, in consultation with
the Initiating Holders, shall have the right to select the investment banker or
bankers and managers to underwrite and administer the offering. Notwithstanding
the foregoing, if Seller shall furnish to the Holders requesting a

 

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Registration
Statement pursuant to this Section 2(a) a certificate signed by an
officer of Seller stating that the Board of Directors of Seller has concluded
that the filing of such Registration Statement at such time would be detrimental
to Seller because such filing (x) would interfere with an acquisition,
corporate reorganization, securities offering or other similar transaction
involving Seller, (y) would require premature disclosure of material
information that Seller has a bona fide business purpose for preserving as
confidential, or (z) would render Seller unable to comply with
requirements under the Securities Act or Exchange Act, then Seller shall have
the right to defer such filing for a period of not more than ninety (90) days; provided, however, that Seller
may not exercise this right more than once during any period of twelve (12)
consecutive months, and provided  further that Seller
shall not register any securities primarily for the account of any other
stockholder, excluding Seller, during such ninety (90) day period.
Notwithstanding anything to the contrary contained herein, Seller shall not be
obligated to proceed with any registration under this Section 2 unless
Registrable Securities to be included therein have an anticipated aggregate
offering price of not less than fifty million dollars ($50,000,000).

 

(b)           Registration Statement Form.  Registrations under this Section 2 shall
be on such appropriate form of Registration Statement (i) as shall be
selected by Seller and as shall be reasonably acceptable to the Initiating
Holders and (ii) as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods of disposition
specified in the Demand Notice.

 

(c)           Underwritten Registrations.  In a registration pursuant to this Section 2
involving an underwritten offering:

 

(i)           No securities other than Registrable Securities shall be
included among the securities covered by such registration unless the managing
underwriter of such offering shall have advised the Initiating Holders in
writing that the inclusion of such other securities would not adversely affect
such offering.

 

(ii)          If the managing underwriter advises the Initiating Holders
in writing that the inclusion of all the Registrable Securities which the
Holders have requested to be registered exceeds the number which can be sold in
such offering within a price range acceptable to the Initiating Holders, the
Initiating Holders may either (A) terminate the registration or (B) effect
such registration, in which case there shall be included
only that number of the Registrable Securities which the Initiating Holders are
advised can be sold in such offering drawn pro rata from the Holders based on
the number of Registrable Securities then held by each such Holder (including
the Initiating Holders); provided that in connection with any
offering effected pursuant to clause (B) of the previous sentence, no
securities other than Registrable Securities shall be covered by such
registration.

 

(iii)        All Holders proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriters selected for the underwriting (provided that the
Holders shall not be bound to agree to indemnify the underwriters for any breach
or violation by Seller of such agreement or by Seller of any applicable law or
SEC rule or regulation).

 

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(d)           Effective Registration Statement. A Registration
Statement requested pursuant to this Section 2 shall not be considered a
Demand Registration for purposes of the limit of Demand Registrations which may
be requested pursuant to paragraph (a) above, unless a Registration
Statement with respect thereto has been declared by the SEC to be, and remains,
effective for a period of at least one hundred twenty (120)
consecutive days (or such shorter period if the Registrable Securities
registered thereunder have been sold or disposed of prior to the expiration of
such one hundred twenty (120) day period) and is not interfered with by any
stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court.

 

3.              Piggyback
Registration.

 

(a)           Notice. If Seller proposes to file a Registration
Statement under the Securities Act (other than a registration relating to (i) any
compensation or benefit plan,
agreement or arrangement (including those on Form S-8), (ii) any
corporate reorganization or business combination transaction (including those
on Form S-4), and (iii) Rule 145 transactions, with respect to
an offering for its own account or for the account of others of any class of
securities of Seller (including the Seller’s initial registered public
offering, but only if such offering includes securities for the account of any
Person other than Seller), then each such time, Seller shall promptly give written
notice of such intention to file a Registration Statement (a “Piggyback
Notice”) to each Holder. The Piggyback Notice shall describe the intended
method of distribution and offer each Holder the opportunity to register
pursuant to such Registration Statement such Registrable Securities as the
Holder may request in writing to Seller within thirty (30) days after the date
the Holder first received the Piggyback Notice (a “Piggyback Registration”).
Seller shall use reasonable efforts to include in the Registration Statement
all Registrable Securities which Seller has been so requested to register by
the Holders (subject to the provisions of paragraph (b) below). Seller
shall have no obligation under this Section 3 to complete any offering of
its securities that it proposes to make; provided that, for the
avoidance of doubt, the expenses of any such incomplete registration shall be
borne by Seller.

 

(b)           Underwritten Registrations. In a registration
pursuant to this Section 3 involving an underwritten offering, whether or
not for sale for the account of Seller, Seller shall notify the Holders
thereof. If the managing underwriter with respect to such an offering advises
Seller in writing that the inclusion of all the Registrable Securities which
the Holders have requested to be included in the Registration Statement would
jeopardize the success of the offering, then Seller shall be required to
include in the underwriting only that number, if any, of Registrable Securities
which the underwriter advises Seller in writing may be sold without
jeopardizing the offering, in which case the Holders who have requested
registration and any other stockholders requesting registration shall
participate in the underwriting pro rata based on their total ownership of
securities to be included in such offering; provided that (i) in no
event shall any Registrable Securities of a Holder be excluded from such
offering, to the extent that, as a result of such exclusion, any other
stockholders who is not a Holder and is participating in such offering would be
selling, as a percentage of such other stockholder’s aggregate shares of Seller
capital stock, a greater percentage of such other stockholders aggregate shares
of Seller capital stock, than such Holder and (ii) for purposes of this Section 3(b),
for any selling Holder that is a fund, partnership or corporation, the
affiliated

 

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funds,
partners, retired partners, and stockholders of such Holder, all entities under
common investment management of such Holder, and the estates and family members
of any such partners and retired partners and any trusts for the benefit of any
of the foregoing persons shall be deemed to be a single “selling Holder,” and
any pro rata reduction made with respect to such “selling Holder” shall be based upon the
aggregate amount of Registrable Securities owned by all such related entities
and individuals. All Holders proposing to distribute their securities through
such underwriting shall severally and not jointly enter into an underwriting
agreement in customary form with the underwriter so selected for such
underwriting (provided that the Holders shall not
be bound to agree to indemnify the underwriters for any breach or violation by
Seller of such underwriting agreement or by Seller of any applicable law or  SEC rule or
regulation). Any Holder disapproving of the terms of any such underwriting may
elect to withdraw from it by written notice to Seller and the underwriter.

 

4.                Form S-3
Registration.

 

(a)          In case Seller shall at any time be permitted to effect a
registration on Form S-3 with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, following a written request from
any Holder or Holders of the Registrable Securities then outstanding, Seller
shall:

 

(i)         promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and

 

(ii)        use reasonable efforts to effect such registration as
promptly as is reasonably practicable and all such qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holder’s or Holders’
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request delivered to
Seller within fifteen (15) days after provision by Seller of written notice of
such registration request. Notwithstanding the foregoing, if Seller shall
furnish to Holders requesting a Registration Statement pursuant to this Section 4
a certificate signed by an officer of Seller stating that the Board of
Directors of Seller has concluded that the filing of such Registration
Statement at such time would be detrimental to Seller because such filing (x) would
interfere with an acquisition, corporate reorganization, securities offering or
other similar transaction involving Seller, (y) would require premature
disclosure of material information that Seller has a bona fide business purpose
for preserving as confidential, or (z) would render Seller unable to
comply with requirements under the Securities Act or Exchange Act, then Seller
shall have the right to defer such filing for a period of not more than ninety
(90) days; provided, however, that Seller
may not utilize this right more than once during any period of twelve (12)
consecutive months, and provided  further that Seller
shall not register any securities primarily for the account of any other
stockholder, excluding Seller, during such ninety (90) day period.
Notwithstanding anything to the contrary contained herein, Seller shall not be
obligated to proceed with any such registration (1) unless Registrable
Securities to be included therein have an anticipated aggregate offering price
of not less than five million dollars ($5,000,000) or (2) if Seller has
already effected two registrations on Form S-3 for one or more Holders
during the twelve-month period preceding the date of such request, and

 

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such
registrations have been declared effective. Registrations effected pursuant to
this Section 4 shall not be counted as registrations effected pursuant to
Sections 2 or 3.

 

(c)          If the registration under this Section 4 is for an
underwritten offering, the provisions of Section 2(c) shall apply
thereto (with the substitution of Section 4 for references to Section 2).

 

(d)         Seller may include in any registration pursuant to this Section 4
securities being sold for its own account or, subject to the other provisions
of this Section 4, for the account of other persons.

 

5.             Registration Expenses. All expenses incident to a
Piggyback Registration or a Demand Registration or a registration pursuant to Section 4,
including, without limitation, all registration and filing fees, including fees
with respect to filings required to be made with the SEC and the National
Association of Securities Dealers, Inc., fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger, telephone and
delivery expenses, fees and disbursements of counsel of Seller and of all
independent public accountants of Seller (including the expenses of any special
audit and “comfort” letters required by or incident to such performance),
reasonable fees and disbursements of one counsel for the selling Holders (not
to exceed twenty five thousand dollars ($25,000)), underwriters’ fees
(excluding discounts and commissions of underwriters), and fees and expenses of
other persons or entities retained by Seller will be borne by Seller whether or
not any of the Registration Statements become effective.

 

6.             Holdback Agreements. In connection with Seller’s
initial underwritten public offering, each Holder agrees not to effect any sale
or distribution of any Seller preferred stock or Common Stock, including a sale
pursuant to Rule 144 or in reliance on any other exemption from
registration under the Securities Act, for a period of time specified by the
managing underwriter of such initial public offering (not to exceed one hundred
eighty (180) days from the effective date of the Registration Statement for
Seller’s initial public offering), except as part of such registration, and
shall execute such agreements as may be reasonably requested by the
underwriters of Seller’s initial public offering that are consistent with the
foregoing provisions of this Section 6; provided that (i) directors
and executive officers of Seller and holders of Seller securities representing
3% or more of the Common Stock of the Seller (calculated on an as converted
basis (but assuming no application of Section 6(m) of the Certificate
of Designation)) agree to similar or more restrictive arrangements or
agreements and (ii) all such agreements with the Holders provide that any
discretionary waiver or termination of the restrictions of such arrangements by
Seller or representatives of the underwriters shall apply to all persons
subject to such agreements pro rata based on the number of shares subject to
such agreements. In order to effect the foregoing, Seller shall have the right
to place a legend on the shares subject to this Section 6 providing notice
of the obligations of the selling Holders contained in this Section 6 and
to impose stop transfer restrictions with respect to such shares until the end
of such period.

 

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7.             Registration Procedures.

 

(a)           In connection with any registration under Section 2,
3 or 4, and without limiting any covenants of Seller contained in such Sections
2, 3 and 4, Seller covenants and agrees that it shall, as expeditiously as
reasonably practicable;

 

(i)           prepare and file with the SEC a Registration Statement
with respect to the Registrable Securities and use reasonable efforts to cause
such Registration Statement to become and remain effective;

 

(ii)          notify each Holder, promptly after it shall receive notice
thereof, of the time such Registration Statement has become effective or any
supplement to any prospectus forming a part of such Registration Statement has
been filed;

 

(iii)         notify each Holder promptly of any request by the SEC for
the amendment or supplement of such Registration Statement or prospectus or of
a request for additional information;

 

(iv)        prepare and file with the SEC such amendments and supplements
to such Registration Statement and the prospectus used in connection therewith
and such other documents necessary to comply with the Securities Act, the
Exchange Act, and the rules and regulations promulgated under the
Securities Act and the Exchange Act, as may be necessary to keep such
Registration Statement effective for a period of not less than one hundred
twenty (120) consecutive days (or such shorter period if the Registrable
Securities registered thereunder have been sold or disposed of prior to the
expiration of such one hundred twenty (120) day
period) and 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;

 

(v)         furnish to each Holder 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, including correspondence with the SEC, as such Holder may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Holder;

 

(vi)        concurrently with the effectiveness of the Registration Statement
under the Securities Act, qualify the Registrable Securities under such other
securities or “blue sky” laws of such jurisdictions as a majority in interest
of the selling Holders reasonably may request, and do any and all other acts
and things necessary or desirable to enable each such Holder to consummate the sale of the Registrable
Securities owned by such Holder;

 

(vii)       notify each Holder, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event of which it has knowledge and as a result of which the prospectus
included in such Registration Statement, as then in effect,
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the statement therein not misleading, and (without
limiting Seller’s other obligations hereunder) prepare and furnish to
such Holder a reasonable number of copies of a supplement to or amendment of
such prospectus so that, as thereafter delivered to the

 

7

 

purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading in light of the circumstances under which
they were made;

 

(viii)     advise each Holder promptly after it shall
receive notice of the issuance of any stop order by the SEC suspending the
effectiveness of any such Registration Statement or the initiation or threat of
any proceeding for that purpose and promptly use its reasonable efforts to
prevent the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued;

 

(ix)       use reasonable efforts to cause all Registrable Securities so registered
to be listed on a national exchange or trading system and on each securities
exchange and trading system on which similar securities issued by Seller are
then listed;

 

(x)        provide a transfer agent and registrar for all such
Registrable Securities, and a CUSIP number for all such Registrable Securities,
not later than the effective date of such Registration Statement;

 

(xi)       allow a representative designated by a majority in interest of
the Holders participating in such registration to participate in the
preparation of the Registration Statement, each prospectus included therein or
filed with the Commission and each amendment or supplement thereto;

 

(xii)      in
the event of any underwritten public offering, enter into an underwriting
agreement, in usual and customary form with the managing underwriter of such
offering; and

 

(xiii)     furnish,
at the request of any Holder or Holders requesting registration of Registrable
Securities pursuant to Section 2, on the date that such Registrable
Securities are delivered to the underwriters for the sale pursuant to such
registration or, if such Registrable Securities are not being sold
through underwriters, on the date that the Registration Statement with respect
to such Registrable Securities becomes effective, an opinion, dated such date, of
the independent counsel representing Seller for the purposes of such
registration, addressed to the underwriters, if any, and to the Holder or
Holders making such request, covering such legal matters with respect to the
registration in respect of which such opinion is being given as is customary,
and a letter dated such date, from the independent certified public
accountants of Seller, addressed to the underwriters, if any, and to the Holder
or Holders making such request, stating that they are independent certified
public accountants within the meaning of the Securities Act and that in
the opinion of such accountants, the financial statements and other financial
data of Seller included in the Registration Statement or prospectus, or any
amendment or supplement thereto, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act.

 

(b)           It shall be a condition precedent to Seller’s obligations
under this Agreement that the selling Holders furnish to Seller such
information regarding themselves, the Registrable Securities held by them, and
the intended method of disposition of such securities as shall be required to
timely effect the registration of the Registrable Securities.

 

8

 

(c)           The Holder or Holders who include Registrable Securities
in any registration under Section 2, 3 or 4 shall distribute those
Registrable Securities in a manner consistent with the distribution described
in the relevant Registration Statement.

 

(d)           Notwithstanding anything to the contrary contained herein,
Seller shall not be required to effect, or take any action to effect, any
registration (i) in any jurisdiction in which Seller would be required to
execute a general consent to service of process or (ii) which would
subject Seller or its subsidiaries to taxation in any jurisdiction in which
Seller or its subsidiaries would not otherwise be subject to taxation.

 

8.              Indemnification.

 

(a)          Indemnification by Seller. In the event of
any registration of any of the Registrable Securities under the Securities Act
pursuant to this Agreement, Seller will indemnify and hold harmless each Holder
participating in the registration, as well as its directors, stockholders,
officers, members and partners, its legal counsel and accountants, and each
underwriter involved in such registration and each other person, if any, who
controls each selling Holder or underwriter within the meaning of the
Securities Act or the Exchange Act, or any state securities laws (or any rule or
regulation promulgated under the Securities Act or Exchange Act, or any state
securities laws), from and against any losses, claims, damages or liabilities,
joint or several, to which each of the aforementioned Persons may become
subject, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement under which such Registrable Securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in
such Registration Statement, or any amendment or supplement to such
Registration Statement, (ii) the omission or alleged omission to state in
any such prospectus or Registration Statement a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (iii) any other violation or alleged violation by Seller
of the Securities Act, the Exchange Act, any state securities laws, or any rule or
regulation promulgated under the Securities Act, Exchange Act or state
securities laws, and Seller will further reimburse each of the
aforementioned Persons for any legal or any other expenses reasonably incurred
by any of them as they are incurred in connection with investigating or
defending any such loss, claim, damage, liability or action;
provided,  however, that Seller will not be
liable to any selling Holder or any of the other aforementioned Persons in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon any untrue statement or omission made in such
Registration Statement, preliminary prospectus or final prospectus, or any such
amendment or supplement thereto, in reliance upon and in conformity with
information furnished to Seller, in writing, by or on behalf of such selling
Holder or its officers, directors, stockholders or partners, or controlling
persons, for use in the preparation of such Registration Statement,
preliminary prospectus or final prospectus or amendment or supplement thereto.

 

(b)         Indemnification by the Holder. In the event
of any registration of any of the Registrable Securities under the Securities
Act pursuant to this Agreement, each selling Holder, severally and not jointly,
will indemnify and hold harmless Seller, each of its directors, each of its
officers who has signed such Registration Statement, legal counsel and

 

9

 

accountants
for the Seller, each underwriter involved in such registration, each other
selling Holder and their respective officers, members, directors, stockholders
and partners and each person, if any, who controls Seller or any such
underwriter or selling Holder within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities, to which any
of the aforementioned Persons may become subject, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement under which such Registrable
Securities were registered under the Securities Act, any preliminary prospectus
or final prospectus contained in such Registration Statement, or any amendment
or supplement to such Registration Statement, or arise out of or are based upon
any omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse Seller and each of the other aforementioned Persons for any legal or
any other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or action,
in each case to the extent (and only to the extent) the statement or omission
was made in reliance upon and in conformity with information furnished in
writing to Seller by or on behalf of such selling Holder or its officers,
directors, stockholders or partners or controlling persons, for use in
connection with the preparation of such Registration Statement, preliminary
prospectus or final prospectus or amendment or supplement thereto; provided,
however, that the maximum obligation of each selling Holder for indemnification
shall be limited to the proceeds received by it (which, for the avoidance of
doubt, shall not include any underwriter discounts and commissions) from the sale
of Registrable Securities pursuant to such Registration Statement.

 

(c)             Required Notices. Each party
entitled to indemnification under this Section 8 (the “Indemnified
Party”) shall give notice to the party required to provide indemnification
(the “Indemnifying Party”) promptly after the
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought and, with respect to third party claims, shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting from it, provided that counsel for the Indemnifying Party who shall
conduct the defense of such claim or litigation must be approved by the
Indemnified Party (whose approval shall not unreasonably be withheld or
delayed), and provided further that the failure of any Indemnified Party to
give notice as provided in this Section 8(c) shall only relieve the
Indemnifying Party of its obligations under Section 8(a) or (b), as
the case may be, to the extent that such failure actually adversely affects the
Indemnifying Party’s ability to defend against such claim or litigation. The
Indemnified Party shall have the right to employ its own counsel in any claim
or litigation, but, with respect to third party claims or litigation, the fees
and expenses of counsel shall be at the expense of such Indemnified Party, when
and as incurred, except that such fees and expenses shall be paid by the
Indemnifying Party if (i) the Indemnified Party shall have reasonably
concluded that there may be a conflict of interest between the Indemnifying
Party and the Indemnified Party in the conduct of the defense of such claim or
litigation (in which case the Indemnifying Party shall not have the right to
direct the defense of such claim or litigation on behalf of the Indemnified
Party), (ii) the Indemnifying Party shall fail, within a reasonable time
after notice of the claim, to have given written notice of its intention to
assume such defense, and to have employed counsel to assume the defense of such
claim or litigation, or (iii) the Indemnifying Party fails timely and
actively to assume or to continue to assume the defense of such claim. No
Indemnifying Party, in the defense of any claim or litigation, shall,

 

10

 

without
the consent of the Indemnified Party, consent to entry of any judgment or enter
into any settlement that does not include, as an unconditional term, the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such third party claim or litigation. In no event shall
an Indemnified Party consent to any entry of any judgment in a third party
claim or litigation, or settle a third party claim or litigation without the
prior written consent of the Indemnifying Party (which shall not be
unreasonably withheld or delayed) unless the Indemnifying Party fails to timely
give notice of its intention to assume defense or timely and actively to assume
and continue such defense.

 

(d)            If the indemnification provided for in Section 8(b) is
held by a

court of competent jurisdiction to be unavailable to an Indemnified Party (and
the indemnification provided for in Section 8(b) is otherwise
applicable) with respect to any loss, liability, claim, damage or expense
referred to herein, then (in order to provide just and equitable contribution
under the 1933 Act) the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and the Indemnified Party on the other
hand, in connection with the statements or omissions that resulted in such
loss, liability, claim, damage or expense, as well as any other relevant
equitable considerations; provided, however that no
contribution by any Holder, when combined with any amounts paid by such Holder
pursuant to Section 8(b) hereof, shall exceed the proceeds received
by such Holder (which, for the avoidance of doubt, shall not include any
underwriter discounts and commissions) from the sale of Registrable Securities
under the Registration Statement to which such loss, liability, claim, damage
or expense pertains. The relative fault of the Indemnifying Party and the Indemnified
Party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Indemnifying Party or by the Indemnified Party and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

 

(e)             The foregoing indemnity (and contribution) agreements of
Seller

and the Holders are subject to the condition that, insofar as they relate to
any of the aforementioned indemnifiable (or contributable matters) with respect
to a preliminary prospectus but eliminated or remedied in an amended prospectus
on file with the SEC at the time the registration statement becomes effective
or at the time it is filed following effectiveness with the SEC in accordance
with the Securities Act, such indemnity (and contribution) agreement shall not
inure to the benefit of any indemnified party if a copy of the final prospectus
was furnished to the indemnified party, was required by the Securities Act
and/or regulations thereunder to be furnished to the person alleging the loss,
claim, damage or liability and was not so furnished by such indemnified person
to the person alleging the loss, claim, damage or liability at or prior to the
time required by the Securities Act and/or regulations thereunder.

 

(f)             Notwithstanding anything to the contrary contained
herein, each Holder agrees that it shall not (and shall not agree to
arrangements that would) impair any of Seller’s indemnification rights
hereunder in any underwriting agreement or related arrangement it may enter
into in connection with the registration rights in this Exhibit.

 

11

 

9.             Termination. Seller shall not have
obligations under Sections 2, 3 and 4 (i) with respect to any request for
registration made by any Holder on a date more than five (5) years after
the closing of Seller’s initial underwritten public offering of its equity
securities pursuant to the Securities Act or (ii) as to any Holder, except
with respect to any registration already commenced under such Section 2, 3
or 4 and obligations of Seller under Sections 5, 7 and 8 with respect to any
such registration(s), at such time after such initial underwritten public
offering when all Registrable Securities held by such Holder (together with any
affiliate of the Holder with whom such Holder must aggregate its sales under Rule 144
promulgated under the Securities Act) may be sold in a three month period
without registration under Rule 144 and such Holder holds one percent (1%) or less of
Seller’s outstanding Common Stock.

 

10.           Future Registration Rights. Until such
time as Seller’s obligations under Sections 2, 3 and 4 are terminated in
accordance with Section 9 (and without regard to any registration then
already commenced under such Section 2, 3 or 4), the Company shall not
grant any registration rights which are superior in priority to, or otherwise
greater than, in any respect, those contained in this Agreement to any person
without the consent of a majority of the then outstanding Registrable
Securities.

 

11.           Delay of Registration. No Holder shall have any
right to obtain or seek an injunction or take any other action otherwise
restraining or delaying any registration as a result of any controversy that
might arise with respect to the interpretation or implementation of the matters
set forth on this Exhibit.

 

12.           Assigns. Notwithstanding anything to
the contrary contained in the Stock Purchase Agreement, no Holder may assign
its rights under this Exhibit to any other person or entity (except as
provided in the definition of Holder in this Exhibit).

 

13.           Integration. Except as provided in Section 12
above, this Exhibit shall be deemed to be part of the Stock Purchase
Agreement for all purposes thereunder.

 

12Exhibit
10.4

LIQUIDNET
HOLDINGS, INC.

 

AMENDED
AND RESTATED

2000
STOCK OPTION PLAN

 

WHEREAS, Liquidnet Holdings, Inc.
(the “Company”) adopted its 2000 Stock Option Plan (the “Original Plan”) on January 10,
2000 and the Original Plan was approved by the Company’s Stockholders on January 10,
2000; and

 

WHEREAS, the Board of Directors of the Company has determined
that the maximum aggregate number of shares of the Company’s Common stock
available for issuance pursuant to stock options awarded under the Original
Plan should be increased from 2,551,200 shares (such amount having previously
been adjusted to reflect a 10 for 1 stock split) to 3,001,200 shares and on June 29,
2004, a majority of the Company’s stockholders approved such share increase;
and

 

WHEREAS, the Board of Directors wishes to amend and
restate the Original Plan to effect and reflect such share increase and certain
other changes to the Plan it has determined are in the best interests of the
Company.

 

NOW, THEREFORE, the Original Plan is hereby amended
and restated, effective as of June 29, 2004 (the “Restatement Date”), as
follows:

 

1.             Purposes
of the Plan.  The purposes of this
Stock Option Plan are to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to
Employees, Directors and Consultants and to promote the success of the Company’s
business.  Options granted under the Plan
may be Incentive Stock Options or Nonstatutory Stock Options, as determined by
the Administrator at the time of grant.

 

2.             Definitions.  As used herein, the following definitions
shall apply:

 

(a)   “Administrator” means
the Board or any of its Committees as shall be administering the Plan in
accordance with Section 4 hereof.

 

(b)   “Applicable Laws” means
the requirements relating to the administration of stock option plans under
U.S. state corporate laws, U.S. federal and state securities laws, the Code,
any stock exchange or quotation system on which the Common Stock is listed or
quoted and the applicable laws of any other country or jurisdiction in which
Options are granted under the Plan.

 

(c)   “Board” means the Board
of Directors of the Company.

 

(d)   “Code” means the
Internal Revenue Code of 1986, as amended.

 

(e)   “Committee” means a
committee of Directors appointed by the Board in accordance with Section 4
hereof.

 

 

(f)    “Common Stock” means
the common stock of the Company, par value $.0001 per share.

 

(g)   “Company” means
Liquidnet Holdings, Inc., a Delaware corporation.

 

(h)   “Consultant” means any
person who is engaged by the Company or any Parent or Subsidiary to render
consulting or advisory services to such entity.

 

(i)    “Director” means a
member of the Board of Directors of the Company.

 

(j)    “Employee” means any
person, including Officers and Directors, employed by the Company or any Parent
or Subsidiary of the Company.  A Service
Provider shall not cease to be an Employee in the case of (i) any
military, sick leave or other bona fide leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor.  For purposes of Incentive Stock Options, no
such leave may exceed ninety days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. 
If the period of leave exceeds ninety (90) days and reemployment upon
expiration of such leave is not so guaranteed, any Incentive Stock Option held
by the Optionee shall cease to be treated as an Incentive Stock Option on the
180th day following the first day of such leave and shall thereafter
be treated for tax purposes as a Nonstatutory Stock Option.  Neither service as a Director nor payment of
a director’s fee by the Company shall be sufficient to constitute “employment”
by the Company.

 

(k)   “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

(l)    “Fair Market Value”
means, as of any date, the value of Common Stock determined as follows:

 

(i)            If the Common Stock is
listed on any established stock exchange or a national market system, including
without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of
the Nasdaq Stock Market, its Fair Market Value shall be the closing sales price
for such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;

 

(ii)           If the Common Stock is
regularly quoted by a recognized securities dealer but selling prices are not
reported, its Fair Market Value shall be the mean between the high bid and low
asked prices for the Common Stock on the last market trading day prior to the
day of determination; or

 

(iii)          In the absence of an
established market for the Common Stock, the Fair Market Value thereof shall be
determined in good faith by the Administrator.

 

(m)  “Incentive Stock Option”
means an Option intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code.

 

2

 

(n)   “Non-employee Director”
means any Director that is not employed by the Company.

 

(o)   “Nonstatutory Stock Option”
means an Option not intended to qualify as an Incentive Stock Option.

 

(p)   “Officer” means a person
who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.

 

(q)   “Option” means a stock
option granted pursuant to the Plan.

 

(r)    “Option Agreement”
means a written or electronic agreement between the Company and an Optionee
evidencing the terms and conditions of an individual Option grant.  The Option Agreement is subject to the terms
and conditions of the Plan.

 

(s)   “Option Exchange Program”
means a program whereby outstanding Options are exchanged for Options with a
lower exercise price.

 

(t)    “Optioned Stock” means
the Common Stock subject to an Option.

 

(u)   “Optionee” means the
holder of an outstanding Option granted under the Plan.

 

(v)   “Parent” means a “parent
corporation,” whether now or hereafter existing, as defined in Section 424(e) of
the Code.

 

(w)  “Plan” means this Amended
and Restated 2000 Stock Option Plan.

 

(x)    “Section 16(b)”
means Section 16(b) of the Securities Exchange Act of 1934, as
amended.

 

(y)   “Service Provider” means
an Employee, Director or Consultant.

 

(z)    “Share” means a share
of the Common Stock, as adjusted in accordance with Section 12 below.

 

(aa) “Subsidiary” means a “subsidiary
corporation,” whether now or hereafter existing, as defined in Section 424(f) of
the Code.

 

3.             Stock
Subject to the Plan. Subject to the provisions of Section 12 of the
Plan, the maximum aggregate number of Shares which may be subject to Options
and sold under the Plan is 3,001,200 Shares. 
The Shares may be authorized but unissued, or reacquired Common
Stock.  Subject to the provisions of Section 12
of the Plan, no one person participating in the Plan may receive an Option for
more than 100,000 shares of Common Stock in the aggregate during any calendar
year.

 

3

 

If an Option expires or
becomes unexercisable without having been exercised in full, or is surrendered
pursuant to an Option Exchange Program, the unpurchased Shares which were
subject thereto shall become available for future grant or sale under the Plan
(unless the Plan has terminated). 
However, Shares that have actually been issued under the Plan, upon
exercise of an Option , shall not be returned to the Plan and shall not become
available for future distribution under the Plan.

 

4.             Administration of the Plan

 

(a)           The Plan shall be
administered by the Board or a Committee appointed by the Board, which
Committee shall be constituted to comply with Applicable Laws.

 

(b)           Powers of the
Administrator.  Subject to the
provisions of the Plan and, in the case of a Committee, the specific duties
delegated by the Board to such Committee, and subject to the approval of any
relevant authorities, the Administrator shall have the authority in its
discretion:

 

(i)            to determine the Fair
Market Value;

 

(ii)           to select the Service
Providers to whom Options may from time to time be granted hereunder;

 

(iii)          to determine the number
of Shares to be covered by each such award granted hereunder;

 

(iv)          to approve forms of agreement
for use under the Plan;

 

(v)           to determine the terms
and conditions, of any Option granted hereunder.  Such terms and conditions include, but are
not limited to, the exercise price, the time or times when Options may be
exercised (which may be based on performance criteria), any forfeiture of
Options due to a termination as a Service Provider for “cause”, any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or the Common Stock relating thereto, based in
each case on such factors as the Administrator, in its sole discretion, shall
determine;

 

(vi)          to determine whether and
under what circumstances an Option may be settled in cash under subsection 9(e) instead
of Common Stock;

 

(vii)         to reduce the exercise
price of any Option to the then current Fair Market Value if the Fair Market
Value of the Common Stock covered by such an Option has declined since the date
the Option was granted;

 

(viii)        to initiate an Option
Exchange Program:

 

4

 

(ix)           to prescribe, amend and
rescind rules and regulations relating to the Plan, including rules and
regulations relating to sub-plans established for the purpose of qualifying for
preferred tax treatment under foreign tax laws;

 

(x)            to allow Optionees to
satisfy withholding tax obligations electing to have the Company withhold from
the Shares to be issued upon exercise of an Option that number of Shares having
a Fair Market Value equal to the amount required to be withheld.  The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined.  All elections by
Optionees to have Shares withheld for this purpose shall be made in such form
and under such conditions as the Administrator may deem necessary or advisable;
and

 

(xi)           to construe and
interpret the terms of the Plan and awards granted pursuant to the Plan.

 

(c)           Effect of
Administrator’s Decision.  All
decisions, determinations and interpretations of the Administrator shall be
final and binding on all Optionees.  The
Administrator shall not be liable for any action or determination made in good
faith with respect to the Plan or any Stock Option granted under it.

 

5.             Eligibility; Grants.

 

(a)     Nonstatutory Stock
Options may be granted to Service Providers. 
Incentive Stock Options may be granted only to Employees.

 

(b)     Each Option shall be
designated in the Option Agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option.  However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options.  For purposes of this Section 5(b),
Incentive Stock Options shall be taken into account in the order in which they
were granted.  The Fair Market Value of
the Shares shall be determined as of the time the Option with respect to such
Shares is granted.

 

(c)     Neither the Plan nor any
Option shall confer upon any Optionee any right with respect to continuing the
Optionee’s relationship as a Service Provider with the Company, nor shall it
interfere in any way with his or her right or the Company’s right to terminate
such relationship at any time, with or without cause.

 

(d)     The Board or the Committee
shall have the right to issue to the Non-employee Directors options in such
amount at fair market value and at such times as shall be approved by the
entire Board.

 

5

 

6.             Term
of Plan.  The Plan shall become
effective upon its adoption by the Board. 
It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 14 of the Plan.

 

7.             Term
of Option.  The term of each Option
shall be stated in the Option Agreement; provided, however, that the term shall
be no more than ten (10) years from the date of grant thereof.  In the case of an Incentive Stock Option
granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant or such shorter term as may be
provided in the Option Agreement.

 

8.             Option
Exercise Price and Consideration.

 

(a)           The per share exercise
price for the Shares to be issued upon exercise of an Option shall be such
price as is determined by the Administrator, but shall be subject to the
following:

 

(i)            In the case of an Incentive Stock Option

 

(A)          granted to an Employee
who, at the time of grant of such Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the exercise price shall be no less that 110% of the Fair
Market Value per Share on the date of grant.

 

(B)           granted to any other
Employee, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant.

 

(ii)           Notwithstanding the
foregoing, Options may be granted with a per Share exercise price other than as
required above pursuant to a merger or other corporate transaction.

 

(b)           The consideration to be
paid for the Shares to be issued upon exercise of an Option, including the
method of payment, shall be determined by the Administrator (and, in the case
of an Incentive Stock Option, shall be determined at the time of grant).  Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in
the case of Shares acquired upon exercise of an Option, have been owned by the
Optionee for more than six months on the date of surrender, and (y) have a
Fair Market Value on the date of surrender equal to the aggregate exercise
price of the Shares as to which such Option shall be exercised, (5) consideration
received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan, or (6) any combination of the
foregoing methods of payment.  In making
its determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may reasonably be expected
to benefit the Company.

 

6

 

9.             Exercise
of Options.

 

(a)           Vesting; Procedure
for Exercise; Rights as a Stockholder. 
Any Option granted hereunder shall be exercisable according to the terms
hereof at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement.  Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence.  An Option may not be exercised
for a fraction of a Share.

 

An Option shall be deemed
exercised when the Company receives: (i) written notice of exercise (in
accordance with the Option Agreement) from the person entitled to exercise the
Option, and (ii) full payment for the Shares with respect to which the
Option is exercised.  Full payment may
consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan.  Shares issued upon exercise of an Option
shall be issued in the name of the Optionee or, if requested by the Optionee,
in the name of the Optionee and his or her spouse.  Until the Shares are issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Shares,
notwithstanding the exercise of the Option. 
The Company shall issue (or cause to be issued) such Shares promptly
after the Option is exercised.  No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Shares are issued, except as provided in Section 12
of the Plan.

 

Exercise of an Option in
any manner shall result in a decrease in the number of Shares thereafter
available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.

 

(b)           Termination of
Relationship as a Service Provider. If an Optionee ceases to be an Employee
or Consultant, such Optionee may exercise his or her Option within such period
of time as is specified in the Option Agreement (of at least thirty (30) days)
to the extent that the Option is vested on the date of termination (but in no
event later than the expiration of the term of the Option as set forth in the
Option Agreement).  In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
three (3) months following the Optionee’s termination.  If, on the date of termination, the Optionee
is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not
exercise his or her Option within the time specified by the Administrator, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.

 

(c)           Disability of
Optionee.  If an Optionee ceases to
be an Employee or Consultant as a result of the Optionee’s disability, the
Optionee may exercise his or her Option within such period of time as is
specified in the Option Agreement to the extent the Option is vested on the
date of termination (but in no event later than the expiration of the term of
such Option as set forth in the Option Agreement).  In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for twelve (12) months
following the Optionee’s termination.  If
such disability is not a “disability” as such term is defined in Section 22(e)(3) of  

 

7

 

the Code, in the case of
an Incentive Stock Option such Incentive Stock Option shall automatically cease
to be treated as an Incentive Stock Option and shall be treated for tax
purposes as a Nonstatutory Stock Option on the day three months and one day
following such termination.  If, on the
date of termination, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall revert to the
Plan.  If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

 

(d)           Death of Optionee.  If an Optionee dies while an Employee or
Consultant, the Option may be exercised within the period of time as is
specified in the Option Agreement (but in no event later than the expiration of
the term of such Option as set forth in the Notice of Grant), by the Optionee’s
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance, but only to the extent that the Option is vested on the date of
date of death.  In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the Optionee’s termination.  If, at the time of death, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall immediately revert to the Plan.  The Option may be exercised by the executor
or administrator of the Optionee’s estate or, if none, by the persons entitled
to exercise the Option under the Optionee’s will or the laws of descent or
distribution.  If the Option is not so
exercised within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

 

(e)   Buyout Provisions.  The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

 

(f)    Non-employee Director
Options.  Except as provided herein,
a Non-employee Director Option may be exercised at any time during its
term.  The Non-employee Director Option
shall not be affected by the Optionee thereunder ceasing to be a Director of
the Company or becoming an employee of the Company, any of its subsidiaries;
provided, however, that if he is terminated for cause, such Non-employee
Director Options then held by such Director shall terminate immediately.

 

10.           Non-Transferability
of Options.  Options may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.

 

11.           [Intentionally
Omitted.]

 

12.           Adjustments upon Changes in Capitalization, Merger or
Asset Sale.

 

(a)           Changes in
Capitalization.  The maximum number
of shares of Common Stock for which Options may be issued to any single
individual in any calendar year, and the 

 

8

 

number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company. 
The conversion of any convertible securities of the Company shall not be
deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and
conclusive.  Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.

 

(b)           Dissolution or
Liquidation.  In the event of the
proposed dissolution or liquidation of the Company, the Administrator shall
notify each Optionee as soon as practicable prior to the effective date of such
proposed transaction.  The Administrator
in its discretion may provide for an Optionee to have the right to exercise his
or her Option until fifteen (15) days prior to such transaction as to all of
the Optioned Stock covered thereby, including Shares as to which the Option
would not otherwise be exercisable.  In
addition, the Administrator may provide that any Company repurchase  option applicable to any Shares purchased
upon exercise of an Option shall lapse as to all such Shares, provided the
proposed  dissolution or liquidation
takes place at the time and in the manner contemplated.  To the extent it has not been previously
exercised, an Option will terminate immediately prior to the consummation of
such proposed action.

 

(c)           Merger or Asset Sale.  In the event of a merger of the Company with
or into another corporation, or the sale of substantially all of the assets of
the Company, each outstanding Option shall be assumed or an equivalent option
or right substituted by the successor corporation or a Parent or Subsidiary of
the successor corporation.  In the event
that the successor corporation refuses to assume or substitute for the Option ,
the Optionee shall fully vest in and have the right to exercise the Option as
to all of the Optioned Stock, including Shares as to which it would not
otherwise be vested or exercisable.  If
an Option becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator
shall notify the Optionee in writing or electronically that the Option shall be
fully exercisable for a period of fifteen (15) days from the date of such
notice, and the Option shall terminate upon the expiration of such period.  For the purposes of this paragraph, the
Option shall be considered assumed if, following the merger or sale of assets,
the option or right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock for
each Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Administrator may,
with 

 

9

 

the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option , for each Share of Optioned Stock subject to the Option
, to be solely common stock of the successor corporation or its Parent equal in
fair market value to the per share consideration received by holders of Common
Stock in the merger or sale of assets.

 

13.           Time
of Granting Options.  The date of
grant of an Option shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option, or such other date
as is determined by the Administrator. 
Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.

 

14.           Amendment
and Termination of the Plan.

 

(a)           Amendment and Termination.  The Board may at any time, amend, alter,
suspend or terminate the Plan.

 

(b)           Stockholder Approval.  The Board shall obtain stockholder approval
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.

 

(c)           Effect of Amendment
or Termination.  No amendment,
alteration, suspension or termination of the Plan shall impair the right of the
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee
and the Company.  Termination of the Plan
shall not affect the Administrator’s ability to exercise the powers granted to
it hereunder with respect to Options granted under the Plan prior to the date
of such termination.

 

15.           Conditions Upon Issuance of Shares.

 

(a)           Legal Compliance.  Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

 

(b)           Investment
Representations.  As a condition to
the exercise of an Option, the Administrator may require the person exercising
such Option to represent and warrant at the time of any such exercise that the
Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required.

 

16.           Inability
to Obtain Authority.  The inability
of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

 

10

 

17.           Reservation
of Shares.  The Company, during the
term of this Plan, shall at all times reserve and keep available such number of
Shares as shall be sufficient to satisfy the requirements of the Plan.

 

18.           Stockholder
Approval.  The Plan shall be subject
to approval by the stockholders of the Company within twelve (12) months after
the date the Plan is adopted.  Such
stockholder approval shall be obtained in the degree and manner required under
Applicable Laws.

 

19.           Information
to Optionees and Purchasers.  The
Company shall provide to each Optionee and to each individual who acquires
Shares pursuant to the Plan, not less frequently than annually during the
period such Optionee or purchaser has one or more Options outstanding and, in
the case of an individual who acquires Shares pursuant to the Plan, during the
period such individual owns such Shares, copies of annual financial
statements.  The Company shall not be
required to provide such statements to key employees whose duties in connection
with the Company assure their access to equivalent information.  This Section shall not apply to Options
awarded after the Restatement Date.

 

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