UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/x/ Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 2001
or
/ / Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
------------ -------------
Commission File Number 000-30527
OPTIMARK HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-3730995
(State or Other Jurisdiction of (I.R.S.-Employer
Incorporation or Organization) Identification No.)
10 Exchange Place Centre, 07302
24th Floor, Jersey City, NJ
(Address of Principal Executive Offices) (Zip Code)
(201) 536-7000
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.01 Per Share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
No sales of the common equity of the Registrant have been consummated
within sixty days of this filing and the Registrant's common equity is not
publicly traded on an exchange for purposes of establishing bid and ask prices.
Therefore, the Registrant is unable to state the aggregate market value of the
voting and non-voting common equity held by non-affiliates of the Registrant.
As of March 21, 2002, there were 33,369,913 shares of the Registrant's
Common Stock outstanding.
Documents Incorporated by Reference
The information called for by Part III is incorporated by reference to
specified portions of the Registrant's definitive Proxy Statement to be issued
in conjunction with the Registrant's 2002 Annual Meeting of Stockholders, which
will be filed not later than 120 days after the Registrant's fiscal year ended
December 31, 2001.
Items Omitted
The following items were omitted pursuant to regulation 240.12b-25: Part
II, Items 6, 7, 7A, and 8.
OPTIMARK HOLDINGS, INC.
FORM 10-K
DECEMBER 31, 2001
TABLE OF CONTENTS
Page No.
PART I
Item 1. Business 3
Item 2. Properties 11
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 13
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 14
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 15
PART III
Item 10. Directors and Executive Officers of the Registrant 16
Item 11. Executive Compensation 17
Item 12. Security Ownership of Certain Beneficial Owners and
Management 17
Item 13. Certain Relationships and Related Transactions 17
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 18
Signatures 24
FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K includes forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. These statements are based on our beliefs and assumptions, and on
information currently available to us. Forward-looking statements include the
information concerning our possible or assumed future results of operations set
forth in Part II, Item 7 - " Management's Discussion and Analysis of Financial
Condition and Results of Operations." Forward-looking statements also include
statements in which words such as "expect", "anticipate", "contemplate",
"intend", "plan", "believe", "estimate", "consider" or similar expressions are
used.
Forward-looking statements are not guarantees of future performance.
They involve risks, uncertainties and assumptions, including the risks discussed
under the heading, "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and elsewhere in this Form 10-K. Such risks,
uncertainties and assumptions include, but are not limited to, those factors
described in Part II, Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," under the sub-heading "Factors that may
affect future results." The factors described in that section are incorporated
herein by reference.
Our future results and stockholder values may differ materially from
those expressed in these forward-looking statements. Many of the factors that
will determine these results and values are beyond our ability to control or
predict. Investors are cautioned not to put undue reliance on any
forward-looking statements. In addition, we disclaim any intention or obligation
to update forward-looking statements after the filing of this Annual Report,
even if new information, future events or other circumstances have made them
incorrect or misleading. For these statements, we claim the protection of the
safe harbor for forward-looking statements contained in Section 21E of the
Exchange Act.
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PART I
ITEM 1. BUSINESS
OptiMark Holdings, Inc. ("Holdings") was established as a holding
company on June 12, 2000 as the result of a reorganization of the company
formerly known as OptiMark Technologies, Inc. OptiMark Technologies, Inc. was
the successor to the company founded in 1996 to begin development of software
for use in an electronic system for trading stocks and other financial
instruments, goods and services.
Holdings has two wholly-owned subsidiaries: (1) OptiMark, Inc.
("OptiMark") and (2) OptiMark US Equities, Inc. ("Equities"). On December 28,
2001, OptiMark formed a majority-owned subsidiary, OptiMark Innovations Inc.
(formerly known as OTSH, Inc. and referred to below as "Innovations").
Innovations was capitalized on December 31, 2001, and OptiMark currently holds
67% of the voting interests in Innovations as more fully described below.
OptiMark also has an approximately 15% voting interest in Japan OptiMark Systems
("JOS"), a Japanese corporation.
In this report, Holdings, OptiMark, Equities, and Innovations are
referred to collectively as the "Company," "our," and/or "we."
HOLDINGS
Holdings' principal business is to hold the securities of OptiMark
and, through OptiMark, Innovations. Until September 19, 2000, Holdings operated
in two segments, the Exchange Solutions Services Business and the US Equities
Business. The Exchange Solutions Services business operated by OptiMark was
formerly referred to as the Electronic Markets Business and developed software
and provided design, development and maintenance services for building and
operating electronic markets and exchanges. On or about January 30, 2002,
OptiMark effectively suspended development, sales, and marketing efforts related
to its Exchange Solutions Services Business.
The second segment, the US Equities Business, was operated by
Equities. Prior to September 19, 2000, the US Equities Business owned and
operated exchanges or exchange facilities which used the OptiMark software and
services. This business was discontinued on September 19, 2000 due to high fixed
costs and lack of revenue resulting from the failure of these proprietary
exchange facilities to attract users or liquidity.
As a result of the suspension of the Exchange Solutions Services
Business and the discontinuation of the US Equities Business, the future value
of Holdings' common stock will depend principally on the value of the potential
investment that Innovations has agreed to make in The Ashton Technology Group,
Inc. ("Ashton") and/or on other transactions that the Company can consummate.
There are a number of conditions described below, including
Innovations receiving a $10 million investment from a third party, that must
occur or be waived before Innovations' transaction with Ashton can be
consummated. Holdings cannot be sure that the transaction with Ashton will
close. A number of the conditions require actions by, or the resolution of
issues with, third parties over which Innovations has no control. In addition,
Innovations cannot be sure that its continuing due diligence review of Ashton
will be satisfactory or that Innovations will be able to obtain sufficient
financing or capital contributions.
While the Company pursues a transaction with Ashton, OptiMark
continues to solicit interest from or opportunities with third parties
concerning possible investments and/or strategic alliances. However, no binding
or definitive arrangements have been reached with any third parties and there
can be no assurances that any such transactions will be consummated.
In the event that the transaction with Ashton does not close and/or
the Company cannot consummate other transactions, Holdings would not have access
to sufficient financial capital to permit continued business operations.
Accordingly, Holdings would face the imminent and likely potential for
bankruptcy or liquidation. If Holdings is forced to declare bankruptcy or pursue
liquidation, the value of
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Holdings' assets would not be sufficient to pay its creditors in full and,
accordingly, Holdings' common and preferred stock would have no value.
INNOVATIONS
Formation of Innovations
Innovations was incorporated in Delaware on December 28, 2001.
Innovations has authorized capital stock of 1,000 shares of common stock, par
value $.01 per share (the "Innovations Common Stock"), and 2,000 shares of
preferred stock, par value $.01 per share (the "Innovations Preferred Stock").
The Innovations Preferred Stock has a cumulative preferred dividend at an annual
rate of $500 per share, payable when and if declared by the Board of Directors
of Innovations. The liquidation preference of the Innovations Preferred Stock is
equal to $10,000 per share plus the aggregate amount of accrued and unpaid
dividends or distributions. The Innovations Preferred Stock is also subject to a
mandatory redemption, at a price equal to the liquidation preference amount, in
four equal quarterly installments on December 31, 2016, March 31, 2017, June 30,
2017 and September 30, 2017. The Innovations Preferred Stock is non-voting.
Investment Structure
OptiMark received 200 shares of Innovations Common Stock in exchange
for a cash payment of $500,000 and 2,000 shares of Innovations Preferred Stock
in exchange for the transfer to Innovations of certain intangible assets
consisting of software, a patent application and other assets relating to a
securities trading technology which is under development (the "Assets"). The
stated value of the Innovations Preferred Stock was the result of the evaluation
by the board of directors of Innovations of the value of the Assets based, in
part, upon preliminary discussions with independent parties regarding a
$10,000,000 investment for a one-third interest in Innovations. SOFTBANK Capital
Partners LP, SOFTBANK Capital LP and SOFTBANK Capital Advisors Fund LP
(collectively, "SOFTBANK") received 100 shares of Innovations Common Stock (the
"SOFTBANK Shares") for $250,000 cash. Simultaneously, SOFTBANK's remaining
obligation to purchase shares of Series E Cumulative Preferred Stock ("Series E
Preferred Stock") from Holdings pursuant to that certain Series E Preferred
Stock Purchase Agreement, dated as of June 29, 2001 (as amended on August 16,
2001 and November 16, 2001), by and among Holdings and SOFTBANK was reduced by
$250,000. Upon completion of the transaction, Innovations' aggregate assets
consisted of the Assets and $750,000 in cash.
Put and Call Rights of SOFTBANK and Holdings
--------------------------------------------
SOFTBANK and Holdings agreed to certain put and call rights applicable
to the SOFTBANK Shares as follows:
First Call Right of Holdings on SOFTBANK Shares
-----------------------------------------------
The Independent Committee (the "Independent Committee") of Holdings'
Board of Directors (the "Board") has the right commencing October 1, 2002 and
exercisable until September 30, 2003, to recommend to the Board that Holdings
purchase all, but not less than all, of the SOFTBANK Shares for $125,000 in cash
and 16,667 shares of Series E Preferred Stock of Holdings. If the Board of
Directors accepts such recommendation, SOFTBANK would be obligated to sell the
SOFTBANK shares for that consideration.
Liquidity Event Discretionary Call of Holdings on SOFTBANK Shares
-----------------------------------------------------------------
Upon the occurrence of a Liquidity Event (defined below) on or before
September 30, 2003, the SOFTBANK Shares will be purchased by Holdings for
$125,000 in cash and 16,667 shares of Series E Preferred Stock of Holdings. A
"Liquidity Event" means any of the following: (i) Innovations' sale, conveyance
or other disposition of all or substantially all of its assets; (ii) the
acquisition of Innovations by another entity by means of merger or consolidation
resulting in the exchange of the outstanding shares of
4
Innovations for securities or other consideration issued, or caused to be
issued, by the acquiring entity or its subsidiary, unless the stockholders of
Innovations immediately prior to the consummation of such transaction hold at
least 50% of the voting power of the surviving corporation as a result of such
transaction; (iii) the consummation by Innovations of a transaction or series of
related transactions, including the issuance or sale of voting securities, if
the stockholders of Innovations immediately prior to such transaction (or, in
the case of a series of transactions, the first of such transactions) hold less
than 50% of the voting power of Innovations immediately after the consummation
of such transaction (or, in the case of a series of transactions, the last of
such transactions); or (iv) any initial underwritten public offering of
Innovations Common Stock. Notwithstanding the foregoing, Holdings will not
exercise this call option in the event that the Independent Committee recommends
that Holdings not purchase the SOFTBANK Shares.
Mandatory Call of Holdings on SOFTBANK Shares
---------------------------------------------
In the event that: (i) the call rights of Holdings described above
have not been exercised on or before September 30, 2003, (ii) the Independent
Committee no longer exists and (iii) no independent directors serve on the
Holdings Board of Directors and, after reasonable good faith efforts by the
remaining members of the Holdings Board of Directors, no independent persons
qualified to serve on the Holdings Board of Directors have been found or, if
found, are not willing to serve on the Holdings Board of Directors, then the
Holdings Board of Directors will engage an independent investment banking,
accounting or third party valuation firm to evaluate whether or not it is in the
best interests of Holdings that it purchase the SOFTBANK Shares. If such third
party determines it is in the best interests of Holdings to purchase the
SOFTBANK Shares, Holdings will be obligated to purchase such shares on or before
December 31, 2003 for $125,000 in cash and 16,667 shares of Series E Preferred
Stock of Holdings.
First Put Right to Holdings of SOFTBANK Shares
----------------------------------------------
SOFTBANK has the right, commencing on October 1, 2002 and continuing
until September 30, 2003, to put all, but not less than all, of the SOFTBANK
Shares to Holdings in exchange for 16,667 shares of Series E Preferred Stock of
Holdings.
Second Put Right to Holdings of SOFTBANK Shares
-----------------------------------------------
In the event that no put of, or call on, the SOFTBANK Shares has been
exercised by October 31, 2003, then commencing on November 1, 2003 and
continuing until November 30, 2003, SOFTBANK has the right to require Holdings
to purchase all, but not less than all, of the SOFTBANK Shares for 16,667 shares
of Series E Preferred Stock of Holdings.
Business of Innovations
The principal business of Innovations is to (a) consummate a purchase
of a controlling interest in Ashton through the purchase of Ashton's common
stock and (b) hold Ashton's common stock for the benefit of the shareholders of
Holdings and Innovations. Holdings believes that the future value of its stock
will depend principally on the value of Ashton's common stock held by
Innovations and its ability to consummate financing and strategic transactions
with other parties.
On February 4, 2002, Innovations entered into a securities purchase
agreement with Ashton. Upon closing and subject to the satisfaction or waiver of
certain closing conditions, Ashton has agreed to sell and Innovations has agreed
to purchase up to 633,443,600 shares of Ashton common stock for the purchase
price of approximately $7.3 million in cash and the Assets. The Ashton common
stock that would be purchased by Innovations would represent 80% of Ashton's
fully-diluted equity.
In addition, subject to the closing of the sale of Ashton's common
stock to Innovations pursuant to the securities purchase agreement, Innovations
has agreed to lend approximately $2.7 million to Ashton to be evidenced by a
senior secured convertible note. The five-year senior secured convertible note
would be convertible at any time into shares of Ashton common stock at a rate of
$0.0492782 per share, subject to
5
adjustment prior to the closing and to customary anti-dilution adjustments after
the closing, and would accrue interest at a rate of 7.5% per annum. The
principal amount of the senior secured note would be initially convertible into
55,344,360 shares of Ashton's common stock.
If and when the purchase of Ashton's common stock closes, Innovations
will own 80% of the then fully-diluted outstanding shares of Ashton's common
stock. Assuming conversion of the senior secured convertible note that would be
issued to Innovations, Innovations would own an additional 7% of the
fully-diluted outstanding equity.
As the owner of at least 80% of Ashton's then fully-diluted equity,
Innovations would be Ashton's majority stockholder, and would be able to control
the election of directors, appointment of senior management, and any other
matters submitted to the stockholders for a vote. By exercising such control, it
is intended that Ashton's wholly-owned broker-dealer subsidiary, ATG Trading,
LLC ("ATG") will offer a new service for trading United States equity securities
at the volume weighted average price ("VWAP"). This service is referred to below
as the "New VWAP Service."
The New VWAP Service will be a service for sell-side brokerage firms,
enabling them to cost-effectively guarantee VWAP orders for their clients. To
provide these guaranteed VWAP orders, ATG will become a principal trading firm
using electronic trading algorithms that over the past five years have
demonstrated the viability of this approach by achieving returns approximating
the VWAP.
Based on preliminary discussions with a number of major brokerage
firms, it is believed that such firms would pay a mutually acceptable rate per
share for a guaranteed VWAP execution in large cap stocks. This would benefit
these firms in that the New VWAP Service would tend to minimize the risk and
administrative burdens associated with the firms guaranteeing the VWAP directly
to their customers.
In the event of the closing of the purchase and sale of common stock
and other transactions contemplated by the securities purchase agreement, Ashton
will continue to operate its primary business, which is providing (a) a
business/technology approach for filling, as an agency broker, customer equity
orders at the VWAP and (b) a business/technology approach for crossing equity
orders within the Philadelphia Stock Exchange (PHLX) VWAP crossing facility,
known as the eVWAP(R) System.
Upon the closing of the sale of common stock, Ashton will receive a
cash infusion of approximately $7.3 million and a loan of approximately $2.7
million to be used as working capital, minus certain expenses of Ashton and
Innovations incurred in connection with the transaction.
The intellectual property and non-cash assets to be transferred to
Ashton by Innovations as partial consideration to purchase Ashton's common stock
are:
- U.S. provisional patent application (No. 60/323,940 entitled
"Volume Weighted Average Price System and Method" filed on
September 1, 2001) that relates to VWAP trading. The
provisional patent application relates to processing orders
for trading equity securities at the VWAP and guaranteeing
the price and quantity of trades to users who submit orders.
The patent application will not provide any exclusive rights
to Ashton until such time as it issues into a patent. There
can be no assurance that the patent application will issue
into a patent.
- Trade secrets and know how relating to VWAP trading.
- An assignment to Ashton of a license for technology for use
in a system for VWAP trading (the "VWAP License").
- An assignment to Ashton of all rights, duties, and
obligations under a bilateral nondisclosure agreement
between the licensor of the technology described above and
Innovations.
6
- Software developed to implement critical components of the
VWAP trading system, including certain tools for testing,
de-bugging and building source code.
The intellectual property and non-cash assets described above, with
the exception of the VWAP License, constitute the Assets transferred from
OptiMark to Innovations on December 31, 2001.
The intellectual property and non-cash assets to be provided to Ashton
under the securities purchase agreement relate to the services that are
currently provided or under development by Ashton and, together with the New
VWAP Service, have the potential to:
- Provide increased VWAP liquidity in a cost-efficient manner
to the agency broker VWAP operation of Ashton, which
currently depends on non-affiliated VWAP dealers who require
Ashton to pay for their VWAP liquidity.
- Provide a dealer operation for delivering VWAP liquidity
that diversifies the current broker operation and exchange
facility operation. In particular, the assets may assist in
expanding Ashton's customer base to the broker market
segment since the agency VWAP operation focuses on the
buy-side market segment and the exchange eVWAP(R)operation
focuses on the market segment interested in low cost,
anonymous, crossing of equity orders at the VWAP but not
necessarily filling those orders.
- Provide a technology and system software to perform
proprietary dealer trading within a profit center. This
would help enable Ashton to expand, with current designs
under development, into more diverse VWAP-related products
and services driven by customer feedback from the three
diverse business operations that Ashton will then be able to
prosecute; namely:
- filling, as a proprietary dealer, customer equity
orders at the VWAP;
- filling, as an agency broker, customer equity orders at
the VWAP;
- crossing equity orders within the PHLX eVWAP(R)
facility.
While Innovations expects Ashton to benefit from the cash and non-cash
assets transferred, Innovations cannot predict the extent to which those
benefits will occur. Specifically, there can be no assurance that:
- the performance characteristics of the software and
technology that is the subject of the VWAP License will
scale to the increased level of operations anticipated in
the New VWAP Service;
- the intellectual property can achieve the desired
operational benchmarks; or
- integration of the existing Ashton technologies and
VWAP-related business models with the acquired technologies
and associated business models will be feasible or possible.
There are no assurances that the closing of the sale of Ashton's
common stock to Innovations will occur. The closing is contingent upon, among
other things:
- Approval by Ashton's stockholders to increase the number of
shares of Ashton's authorized common stock from 100 million
to 1 billion shares;
- Modification, on terms and conditions acceptable to
Innovations, of certain agreements by and between Ashton and
its creditors and partners;
7
- The resignation of Ashton's current CEO and certain of its
board members and the appointment of a number of directors
by Innovations to Ashton's Board of Directors proportionate
to its common stock ownership by Innovations at the time of
closing;
- Execution of employment agreements with certain of Ashton's
key employees;
- Settlement of the arbitrator's award against Ashton dated as
of January 14, 2002 in the amount of $510,750 related to the
employment agreement with the former president of Ashton's
subsidiary, Electronic Market Center, Inc.;
- Resolution on terms acceptable to Innovations of all matters
associated with an offer to minority stockholders of
Ashton's subsidiary, Universal Trading Technologies
Corporation ("UTTC"), to exchange certain shares of UTTC
common stock for shares of Ashton's common stock;
- Innovations' satisfaction with the results of its due
diligence review of Ashton; and
- No material adverse effect having occurred to Ashton between
the signing of the securities purchase agreement and the
closing of the sale of common stock to Innovations.
In addition, closing of the sale of common stock to Innovations is
contingent upon Innovations:
- receiving financing or capital contributions from a third
party in the amount of $10 million necessary to (a) pay the
approximately $7.3 million cash portion of the purchase
price for Ashton's common stock and (b) provide the
principal amount of approximately $2.7 million for the
senior secured convertible note; and
- presenting to Ashton definitive documentation executed in
connection with such venture capital investor's investment
of $10 million in cash for a one-third interest in
Innovations.
Innovations currently is negotiating the terms and conditions of a $10
million financing or capital contribution with a potential venture capital
investor. Under the non-binding terms and conditions currently contemplated, and
subject to the negotiation and entering into definitive agreements and
satisfaction or waiver of closing conditions to be included therein, the venture
capital investor would contribute $10 million in cash for a one-third interest
in Innovations.
If we are successful in obtaining the $10 million financing or capital
contribution for the Ashton transaction, our ownership percent of Innovations
would be reduced to less than 50%. As a result, we would not be able to include
Innovations as a consolidated subsidiary, but would rather have to account for
our investment using the equity method of accounting.
There can be no assurances that the $10 million investment in
Innovations will occur on acceptable terms or at all.
Ashton
Prior to closing of the transaction with Ashton, the business of
Ashton is not part of the business of Holdings. However, because the future of
Holdings is heavily dependent on this transaction, a brief description of the
current business of Ashton is provided. As stated above, there can be no
assurances that the transaction with Ashton will occur.
9
The following description of Ashton's business has been adapted from
the information contained in Ashton's Definitive Proxy Statement on Form 14A,
filed with the SEC on March 19, 2002. Innovations has conducted limited due
diligence with respect to Ashton's business. Based solely on that limited
review, Innovations has no reason to believe that Ashton's description of its
business is incorrect in any material respect. As noted above, the closing of
the transactions as contemplated by the securities purchase agreement is
contingent upon, among other things, Innovations' satisfaction with the results
of its due diligence review of Ashton. The following description is not intended
to amend, modify or supplement Ashton's disclosure regarding its business
contained in its public filings.
Ashton is an e-commerce company that develops and operates electronic
trading and intelligent matching systems for the global financial securities
industry. Ashton provides equity trading services to exchanges, institutional
investors and broker-dealers in the U.S. and internationally. Ashton enables
these market participants to trade in an electronic global trading environment
that provides large order size, absolute anonymity, no market impact and low
transaction fees. The services offered by Ashton compete with services offered
by brokerage firms and with providers of electronic trading and trade order
management systems. Ashton's eVWAP(R) Trading System, or eVWAP System also
competes with various national and regional securities exchanges and execution
facilities such as alternative trading systems, or ATSs and electronic
communication networks, or ECNs. During August 1999, Ashton launched the eVWAP
System for 20 selected New York Stock Exchange ("NYSE")-listed securities. eVWAP
is a fully automated system that permits market participants to trade eligible
securities before the market opens at the VWAP for the day. Ashton's eVWAP is
the average price for a stock, weighted by the volume of shares of that stock
traded during the day on all U.S. securities exchanges as reported to the
Consolidated Tape. Ashton operates the pre-opening eVWAP System as a facility of
the Philadelphia Stock Exchange, Inc. through Ashton's UTTC subsidiary.
OPTIMARK
On or about January 30, 2002, OptiMark effectively suspended
development, sales, and marketing efforts related to its Exchange Solutions
Services Business. As of that date, OptiMark became a company whose primary
purpose is to hold the securities of Innovations and to consummate financing and
strategic transactions with other parties.
Prior to and since January 30, 2002, OptiMark has engaged in
discussions with number of potential investors and strategic partners concerning
possible investments and/or alliances relative to the Exchange Solutions
Services Business. To date, none of these discussions has resulted in any such
investment or alliance. OptiMark continues to engage in discussions with third
parties in an effort to secure funding for the Exchange Solutions Services
Business; however, there can be no assurances that any such transactions will be
consummated.
Clients of OptiMark
As of December 31, 2001, OptiMark had definitive agreements with two
clients -- Asset International, Inc. and The Nasdaq Stock Market, Inc.
("Nasdaq"). Under an agreement dated November 3, 2000 with Asset International,
OptiMark has not received any revenues. For approximately the past twelve
months, OptiMark has not performed, nor has Asset International requested that
any services be performed under the agreement. The Nasdaq contract, as amended
on April 27, 2001, expired on December 31, 2001. OptiMark does not anticipate
receiving any additional revenues from either Asset International or Nasdaq.
Competition
As holding companies, Holdings, OptiMark, and Innovations face no
clearly defined competition; however, in the event that the transactions
contemplated by the securities purchase agreement with Ashton close, the value
of Innovations' investment in Ashton will, in part, be contingent upon Ashton's
competing effectively in its industry and marketplace.
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The following description relating to the competitive aspects of
Ashton's business has been adapted from the information contained in Ashton's
Annual Report on Form 10-K, filed with the SEC on July 16, 2001. Innovations has
conducted limited due diligence with respect to Ashton's business. Based solely
on that limited review, Innovations has no reason to believe that Ashton's
description of the competitive aspects of its business is incorrect in any
material respect. As noted above, the closing of the transactions as
contemplated by the securities purchase agreement is contingent upon, among
other things, Innovations' satisfaction with the results of its due diligence
review of Ashton. The following description is not intended to amend, modify or
supplement Ashton's disclosure regarding competition contained in its public
filings.
The SEC's regulations governing alternative trading systems have
lowered the barriers to entering the securities trading markets. Ashton's
products and services, including the New VWAP Service, will face competition
from traditional securities exchanges, which could establish similar trading
systems in an attempt to retain their transaction volumes. Ashton's products and
services will also face competition from other alternative trading systems and
leading brokerage firms offering similar trade execution services. Many of these
competitors have substantially greater financial, research, development, sales,
marketing and other resources than Ashton will have, if and when the transaction
with Innovations closes, and many of the products of Ashton's competitors have
substantial operating histories.
While Innovations believes that the Ashton products and services will
offer certain competitive advantages, the ability to maintain these advantages
will require continued investment in the development of products, and additional
marketing and customer support activities. Innovations and/or Ashton may not
have sufficient resources to continue to make this investment, while competitors
may continue to devote significantly more resources to competing services.
Ashton's products and services will compete with other electronic
trading systems, including Instinet Corporation's crossing network, Investment
Technology Group Inc.'s POSIT system, Bloomberg, L.P.'s Bloomberg Professional
and Bloomberg Tradebook, Liquidnet, and other companies that develop proprietary
electronic trading systems. Ashton's products and services will also compete
with services offered by leading brokerage firms offering various forms of VWAP
trade execution. Ashton's products and services will also compete with various
national, regional and foreign securities exchanges for trade execution
services.
Innovations believes that Ashton's products and services will compete
favorably on the basis of quality of trade execution, pricing, and reliability
of trade processing and settlement operations. While Innovations believes that
Ashton's products and services will offer benefits not offered by any other
service, there can be no assurance that Ashton's products and services will be
accepted by an extended customer base. Nor can Innovations be sure that Ashton's
products and services will adequately address all of the competitive criteria in
a manner that results in a competitive advantage.
Intellectual property and proprietary rights
As of December 31, 2001, the Company owned or controlled seven issued
United States patents and twelve pending United States patent applications. As
of that date, the Company also owned or controlled sixteen issued international
patents and forty five pending international patent applications. The Company
plans to file one additional patent application domestically and, may file
related patent applications internationally. The Company has discontinued
prosecution of patent applications and maintenance of patents that were deemed
to be strategically unimportant, either because of geography or subject matter.
The Company seeks to protect its trade secrets, service marks,
trademarks, and copyrights through a combination of laws and contractual
restrictions, such as confidentiality and license agreements. The Company
attempts to register our trademarks and service marks in the United States and
internationally. The Company has registered a corporate logo and the mark
"OPTIMARK," among others, in the United States and internationally in several
countries. However, effective trademark, service mark, trade secret, and
copyright protection may not be available in all countries. The Company also has
discontinued
10
prosecution of trademark applications and maintenance of trademarks that were
deemed to be strategically unimportant, either because of geography or subject
matter.
Employees
As of December 31, 2001, the Company had eighty full-time and one part
time employee, forty one of whom were engaged in technology development, twenty
four in quality assurance and support, five in sales and marketing, and eleven
in executive, finance, administration and personnel.
In connection with OptiMark suspending its development, sales, and
marketing efforts related to the building and operation of electronic markets
and exchanges, on January 30, 2002 and periodically thereafter, the Company has
undertaken to reduce its workforce. As of February 15, 2001, the Company had
thirty seven full-time and two part time employees, nineteen of whom were
engaged in technology development, eleven in quality assurance and support,
three in sales and marketing, and six in executive, finance, administration and
personnel.
The foregoing numbers of employees do not include four employees on
leaves of absence from the Company. The Company has never had a work stoppage
and our employees are not represented by any collective bargaining unit.
The Company plans to continue to retain personnel to carry out its
duties and obligations as a holding company, including its administration and
financial reporting obligations.
Financial information about industry segments
Please refer to the financial statements for financial information
about our industry segments.
Discontinued operations
Until September 19, 2000, Holdings operated in two segments, the
Exchange Solutions Services Business and the US Equities Business. The first
segment, the Exchange Solutions Services Business, was formerly referred to as
the Electronic Markets Business. On or about January 30, 2002, OptiMark
effectively suspended development, sales, and marketing efforts related to its
Exchange Solutions Services Business, which developed software and provided
design, development and maintenance services for building and operating
electronic markets and exchanges. The second segment, the US Equities Business,
was operated by Equities. Holdings discontinued the operations of the US
Equities Business on September 19, 2000. As of that date all criteria for the
measurement date per APB 30, "Reporting the Results of Operations -- Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions", had been met. The Company
expects the process of disposing of the net liabilities of the discontinued
business to be completed by December 31, 2002 as a result of the continuing
settlement negotiations with certain companies from which we had previously
leased equipment. Disposition includes negotiated payments to be made after
December 31, 2002.
ITEM 2. PROPERTIES
The Company's headquarters are located in Jersey City, New Jersey. We
sublease approximately 32,000 square feet under a sublease that expires in
February 2014 and approximately 3,300 square feet with a remaining term to
September 30, 2008. The foregoing space consists of standard commercial office
premises in a metropolitan area. The Company believes that our present
facilities exceed our current needs and is attempting to reduce our office space
commitments.
12
ITEM 3. LEGAL PROCEEDINGS
Holdings and/or its subsidiaries are subject to the following legal
proceedings:
1. Finova Capital Corporation (Plaintiff) v. OptiMark Technologies, Inc.,
OptiMark, Inc. and OptiMark Holdings, Inc. (Defendants), Superior
Court of New Jersey - Hudson County. Plaintiff filed this action on
June 15, 2001, asserting claims that allegedly arise out of an
equipment lease agreement pursuant to which it is alleged that
OptiMark Technologies, Inc. (now known as OptiMark US Equities, Inc.)
agreed to lease certain equipment. Plaintiff contends that OptiMark
Technologies, Inc. breached the equipment lease by, among other
things, failing to pay the amounts due under the equipment lease.
Based on these allegations, Plaintiff has made claims for breach of
contract, tortious interference, fraudulent conveyance of such
equipment lease agreement and/or the related equipment and/or other
assets from OptiMark Technologies, Inc. to OptiMark, Inc. and/or
OptiMark Holdings, Inc. and damages in unspecified amounts exceeding
$6,000,000, plus interest, late charges, litigation costs and
expenses, and reasonable counsel fees. In the fourth quarter of 2011,
most, if not all, of the equipment that was the subject of the
equipment lease was returned consensually to Plaintiff. The parties
currently are engaged in exchanging responses to written discovery
requests. On February 14, 2002, Plaintiff made a motion to add
Innovations as a defendant in the case. In the motion, Plaintiff
alleges that the transfer of certain assets from OptiMark to
Innovations on December 31, 2001 constituted a fraudulent conveyance
of such assets. The Defendants and Innovations intend to defend this
action and the motion vigorously. The outcome of this litigation
cannot be predicted at this time, although it may have a material
affect on the Company's financial condition and results of operations.
2. Comdisco, Inc. (Plaintiff) v. OptiMark Technologies, Inc. (now known
as OptiMark US Equities, Inc.) (Defendant) and Avnet, Inc. State of
Connecticut Superior Court, Judicial District of Fairfield at
Bridgeport. Plaintiff filed a Complaint on December 18, 2000. The
action seeks possession of leased equipment, proceeds from the sale of
leased equipment, a deficiency judgment in an unspecified amount, and
fees and costs and interest. Since the complaint was filed, most, if
not all, of the equipment was returned consensually to Plaintiff.
Based on the complaint filed in a related action in New Jersey
(described below) and on other information received from Comdisco, it
is believed that amount of damages claimed is approximately
$6,500,000. On March 30, 2001, the parties agreed to consolidate a
related case captioned Comdisco, Inc. v. OptiMark Technologies, Inc.,
Superior Court of New Jersey Law Division Hudson County (filed on
January 23, 2001) with the Connecticut proceeding. To effect the
consolidation, on or about April 2, 2001, the parties filed a
stipulation withdrawing Defendant's motion to dismiss Comdisco's
Complaint filed in the Superior Court of New Jersey. That motion had
sought dismissal principally on grounds that an identical action
alleging breach of contract had previously been filed by Comdisco in
Connecticut State Court. In exchange for Defendant's agreement to
withdraw its motion, Comdisco agreed to withdraw its New Jersey
Complaint without prejudice. In June 2001, Comdisco made a motion for
summary judgment with respect to a claim against Avnet relating to a
guaranty by Avnet of Defendant's obligations under a Master Lease
Agreement for computer equipment leased from Comdisco. Avnet responded
to Comdisco's motion by denying liability under the guaranty and
asserting a variety of special defenses. In addition, Avnet filed a
cross claim against Defendant. The cross claim alleges that if Avnet
is found liable under the guaranty, then Avnet becomes subrogated to
Comdisco's rights under the Master Lease Agreement to the extent of
the payments Avnet makes to Comdisco and that OptiMark is liable to
Avnet for any such payments. Defendant has responded to the
cross-claim by denying its material allegations. The Company intends
to defend this action vigorously. On February 12, 2002, Plaintiff
filed a motion for default for failure to plead, alleging that
OptiMark Technologies, Inc. did not file a pleading responsive to
Plaintiff's second amended complaint. This default will be set aside
if OptiMark Technologies, Inc. files an answer before a judgment after
default has been rendered. OptiMark Technologies, Inc. intends to file
such a responsive pleading. The outcome of this
12
litigation cannot be predicted at this time, although it may have a
material affect on the Company's financial condition and results of
operations.
The Company believes that each of the foregoing pending actions or
threatened proceedings is derived from the discontinuation of the business of
Equities in September 2000 and each seeks monetary damages for an alleged breach
of a payment obligation. If the Company is ultimately found to be liable for any
loss or impairment resulting from any of these suits, any such loss or
impairment will have a material adverse impact on the Company's financial
position, results of operations and cash flows.
The Company currently is in discussions with the plaintiffs in the
Comdisco and Finova litigations concerning a possible settlement of their
respective claims in these actions. There can be no assurances that such
settlements will be consummated on terms acceptable to the Company or at all.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of the stockholders of the Company was held on
November 13, 2001. The stockholders voted on whether to approve the OptiMark
Holdings, Inc. 2001 Series F Preferred Stock Plan. The stockholders voted
45,022,603 shares in favor of the proposal and 1,019,723 shares against the
proposal. The number of votes that abstained from voting on the proposal was
225,188.
13
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for the shares of common
stock and we do not currently intend to seek inclusion of the shares of common
stock in any established public trading market. As of December 31, 2001, we had
33,369,913 outstanding shares of common stock, including 740,000 shares of
non-voting common stock, owned by approximately 1,100 holders.
There are 56,572,645 outstanding shares of common stock on an as
converted basis that can be sold currently pursuant to Rule 144. As of December
31, 2001, we have
- issued options to purchase an aggregate of 5,759,939 shares of
common stock and 5,593,398 shares of Series F Preferred Stock to
our directors, officers and current and former employees,
- issued warrants to purchase an aggregate of 12,710,900 shares of
common stock to investors, consultants and strategic partners,
and
- granted registration rights to holders of approximately
40,113,000 of common stock, on an as converted basis.
Since our inception, we have not declared any dividends or other
distributions on our shares of common stock. We do not anticipate paying any
other cash dividends in the foreseeable future and anticipate that future
earnings would be retained to finance operations.
On June 29, 2001, Holdings and certain stockholders entered into a
Preferred Stock Purchase Agreement whereby the stockholders agreed to purchase
up to an aggregate of 1,000,000 shares of the Series E Preferred at a price of
$15.00 per share. The purchase of shares took place at approximately one-month
intervals from June 2001 through January 2002.
In monthly closings during the three months ended December 31, 2001,
investors purchased 269,467 additional shares of the Series E Preferred for an
aggregate amount $4,012,005.
The Series E Preferred Stock is entitled to certain preferences over
existing classes of the Company's stock in the event of liquidation, sale of
assets or merger involving the Company equal to twice its purchase price plus
80% of proceeds above that amount up to $200 million, plus 76.56% of proceeds
above $200 million up to and including $304.5 million, plus 56% of amounts in
excess of $304.5 million. The Series E Preferred Stock will vote together with
the Company's common stock and have 32 votes per share. Calculated based on
shares outstanding as of December 31, 2001, the Series E Preferred Stock
represents 34.6 % of the votes of the outstanding common stock (and shares
entitled to vote with the common stock) and, in the aggregate, if fully
subscribed to, could represent up to 36.4% of the votes of the outstanding
common stock (and shares entitled to vote with the common stock). Holders of the
Series E Preferred Stock are entitled to preemptive and registration rights.
In connection with the settlement of litigation of the action
captioned "Transamerica Business Credit Corporation, Wells Fargo Equipment
Finance, Inc., Diamond Lease (U.S.A.), Inc. and Linc Capital, Inc. v. OptiMark
US Equities, Inc. f/k/a OptiMark Technologies, Inc., OptiMark, Inc. and OptiMark
Holdings, Inc.", Holdings authorized and issued 300,000 shares of a new Series G
Preferred Stock of OptiMark Holdings, Inc. to the plaintiffs that ranks junior
to the existing Series E Preferred Stock and Series F Preferred Stock but senior
to all other classes or series of capital stock with respect to liquidation. In
particular, the Series G Preferred Stock is entitled to receive an amount, in
the event of a in the event of liquidation, sale of assets or merger involving
the Company, equal to 4.30% of the total amount distributed in excess of
$200,000,000 up to and including $304,500,000.
14
The issuance of the Series E Preferred Stock and the Series G
Preferred Stock was solely to accredited investors and exempt from registration
pursuant to Rule 506 of Regulation D of the Securities Act of 1933, as amended.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
15
PART III
The information called for by this Part III is incorporated by
reference to specified portions of the Registrant's definitive Proxy Statement
to be issued in conjunction with the Registrant's 2002 Annual Meeting of
Stockholders, which is expected to be filed not later than 120 days after the
Registrant's fiscal year ended December 31, 2001.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Except for the information concerning executive officers provided
below, the information regarding directors and officers required by Item 10 is
incorporated by reference from the Company's definitive proxy statement for its
annual stockholders' meeting to be held on June 13, 2002.
The executive officers serve at the discretion of the Board of
Directors. The following table sets forth certain information concerning the
executive officers of the Company as of March 1, 2002 (none of whom has a family
relationship with another executive officer).
Name Age Position
- ---- --- --------
Robert J. Warshaw 48 Chief Executive Officer and Director
Neil G. Cohen 35 Executive Vice President, General Counsel,
and Corporate Secretary
James S. Pak 33 Executive Vice President
Trevor B. Price 33 Executive Vice President
Selected biographical information with respect to executive officers
is set forth hereafter.
Robert J. Warshaw (48), Chief Executive Officer since March 14, 2001.
Mr. Warshaw also serves as Chief Executive Officer of OptiMark, Inc. Mr. Warshaw
previously served as Co-Chief Executive Officer, Executive Vice President and
Chief Technology Officer of OptiMark, Inc. From November 1999 through June 2000,
Mr. Warshaw served as Executive Vice President and Chief Technology Officer of
OptiMark Technologies, Inc. From October 1993 to October 1999, Mr. Warshaw was
Chief Information Officer at Lazard Freres & Co. LLC, an international
investment banking firm. Mr. Warshaw received his bachelor's degree in English
from the University of Pennsylvania and a Masters in Management from
Northwestern University's Kellogg School of Management.
Neil G. Cohen (35), General Counsel and Corporate Secretary since May
18, 2001. Prior to joining OptiMark, Mr. Cohen was associated with the law firms
of Cummings & Lockwood from 1997-1999, Rogers & Wells from 1994-1997, and
Cushman Darby & Cushman from 1992-1994. While at these law firms Mr. Cohen's
practice concentrated on intellectual property litigation, licensing, and
procurement. Mr. Cohen received his law degree from Hofstra University and his
undergraduate degree in electrical engineering, with a concentration in computer
science, from The George Washington University.
James S. Pak (32), Executive Vice President of OptiMark, Inc. since
December 1, 2001. From September 2001 through November 2001, Mr. Pak was a
consultant to OptiMark. Between March 2001 and August 2001, Mr. Pak was an
independent consultant. From October 1998 through March 2001, Mr. Pak was an
investment banker at Lazard Freres & Co. LLC, an international investment
banking firm, focused on mergers and acquisitions. Prior to working at Lazard,
Mr. Pak worked from August 1992 through October 1998 for Merrill Lynch & Co. in
various groups including investment banking and debt capital markets in New York
and London. Mr. Pak has an undergraduate degree from New York University.
16
Trevor B. Price (33), Executive Vice President of OptiMark, Inc. since
April 16, 2001. Prior to joining OptiMark, Mr. Price was, from January 2000
through April 2001, Chairman, CEO and founder of SavvyJack, Inc. a
business-to-business e-commerce application services provider. During the period
from January 2000 through May 2000, while founding SavvyJack, Mr. Price also
consulted with Continuous Software Corporation where he led the business
transition process for the acquisition of Pagoda Corporation, a company that he
founded and built. From June 1998 through January 2000, Mr. Price was co-founder
Co-CEO and director of Pagoda Corporation with primary responsibility for
product marketing and development. Pagoda successfully developed and deployed an
enterprise knowledge management solution to Fortune 500 companies. From March
1992 through June 1998, Mr. Price served in different management positions at
Software Services International, Inc, a global services capital firm. Mr. Price
has an undergraduate degree from the University of Pennsylvania.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from
the Company's definitive proxy statement for its annual stockholders' meeting to
be held on June 13, 2002.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated by reference from
the Company's definitive proxy statement for its annual stockholders' meeting to
be held on June 13, 2002.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by reference from
the Company's definitive proxy statement for its annual stockholders' meeting to
be held on June 13, 2002.
17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. FINANCIAL STATEMENTS
To be filed by amendment.
2. REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K on December 26, 2001,
reporting the settlement of litigation with Transamerica Business
Credit Corporation and others under Item 5.
3. EXHIBITS
The exhibits listed on the accompanying index to exhibits immediately
following are filed as part of, or incorporated by reference into, this Form
10-K and are numbered in accordance with the Exhibit Table of Item 601 of
regulation S-K:
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2.1 Agreement and Plan of Merger dated June 12, 2000 (incorporated by
reference to Exhibit 2.1 to Registrant's Registration Statement on
Form 10/A-1 (No. 000-30527)).
2.2 Subscription Agreement dated December 31, 2001 between SOFTBANK
Capital Partners LP, SOFTBANK Capital LP, SOFTBANK Capital Advisors
Fund LP and OptiMark Innovations Inc. (f/k/a OTSH, Inc.)
(incorporated by reference to Exhibit 2.1 to Registrant's Current
Report on Form 8-K dated December 31, 2001 (Commission File No.
000-30527)).
2.3 Subscription Agreement dated December 31, 2001 between OptiMark,
Inc. and OptiMark Innovations Inc. (f/k/a OTSH, Inc.) (incorporated
by reference to Exhibit 2.2 to Registrant's Current Report on Form
8-K dated December 31, 2001 (Commission File No. 000-30527)).
2.4 Investors' Rights Agreement dated December 31, 2001 by and among
OptiMark Innovations Inc. (f/k/a OTSH, Inc.), OptiMark Holdings,
Inc., OptiMark, Inc., SOFTBANK Capital Partners LP, SOFTBANK
Capital LP and SOFTBANK Capital Advisors Fund LP (incorporated by
reference to Exhibit 2.3 to Registrant's Current Report on Form 8-K
dated December 31, 2001 (Commission File No. 000-30527)).
2.5 Novation to Series E Preferred Stock Purchase Agreement dated as of
June 29, 2001 (as amended on August 16, 2001 and November 16,
2001), dated December 31, 2001, by and among OptiMark Holdings,
Inc., SOFTBANK Capital Partners LP, SOFTBANK Capital LP and
SOFTBANK Capital Advisors Fund LP (incorporated by reference to
Exhibit 2.4 to Registrant's Current Report on Form 8-K dated
December 31, 2001 (Commission File No. 000-30527)).
2.6 Securities Purchase Agreement, dated as of February 4, 2002, by and
between The Ashton Technology Group, Inc. and OptiMark Innovations
Inc. (f/k/a OTSH, Inc.).
18
(incorporated by reference to Exhibit 2.1 to Registrant's Current
Report on Form 8-K dated February 4, 2002 (Commission File No.
000-30527)).
2.7 Amendment to Securities Purchase Agreement dated as of February 4,
2002, dated March 6, 2002, by and between The Ashton Technology
Group, Inc. and OptiMark Innovations Inc. (f/k/a OTSH, Inc.).
3.1 Certificate of Incorporation of OptiMark Holdings, Inc. as amended
to December 14, 2001 (incorporated by reference to Exhibit 3(i) to
Registrant's Current Report on Form 8-K dated December 20, 2001
(Commission File No. 000-300527)).
3.2 By-Laws of OptiMark Holdings, Inc. (incorporated by reference to
Exhibit 3.2 to Registrant's Registration Statement on Form 10/A-1
(No. 000-30527)).
4.1 Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to Registrant's Registration Statement on Form 10 (No.
000-30527)).
4.2 Specimen Preferred Stock Certificate (incorporated by reference to
Exhibit 4.2 to Registrant's Registration Statement on Form 10 (No.
000-30527)).
4.3 Series A Stock Purchase Agreement, dated August 27, 1996, by and
among OptiMark and the parties named therein (incorporated by
reference to Exhibit 4.3 to Registrant's Registration Statement on
Form 10 (No. 000-30527)).
4.4 Registration Rights Agreement, dated August 27, 1996, by and among
OptiMark and the parties names therein (incorporated by reference
to Exhibit 4.4 to Registrant's Registration Statement on Form 10
(No. 000-30527)).
4.5 Amendment to Stock Purchase Agreement and Registration Rights
Agreement, dated March 19, 1997, by and among OptiMark and the
parties named therein (incorporated by reference to Exhibit 4.5 to
Registrant's Registration Statement on Form 10 (No. 000-30527)).
4.6 Amendment to Stock Purchase Agreement, Stockholders Agreement and
Registration Rights Agreement, dated May 29, 1997, by and among
OptiMark and the parties named therein (incorporated by reference
to Exhibit 4.6 to Registrant's Registration Statement on Form 10
(No. 000-30527)).
4.7 Amendment to Series A Registration Rights Agreement, dated January
1999, by and among OptiMark and the parties named therein
(incorporated by reference to Exhibit 4.7 to Registrant's
Registration Statement on Form 10 (No. 000-30527)).
4.8 Series B Stock Purchase Agreement, dated December 22, 1998, by and
among OptiMark and parties named therein (incorporated by reference
to Exhibit 4.8 to Registrant's Registration Statement on Form 10
(No. 000-30527)).
4.9 Registration Rights Agreement, dated April 23, 1998, by and among
OptiMark and the parties named therein (incorporated by reference
to Exhibit 4.9 to Registrant's Registration Statement on Form 10
(No. 000-30527)).
4.10 Series C Stock Purchase Agreement, dated June 11, 1999, by and
among OptiMark and the parties named therein (incorporated by
reference to Exhibit 4.10 to Registrant's Registration Statement on
Form 10 (No. 000-30527)).
19
4.11 Registration Rights Agreement, dated July 26, 1999, by and among
OptiMark and the parties named therein (incorporated by reference
to Exhibit 4.11 to Registrant's Registration Statement on Form 10
(No. 000-30527)).
4.12 Series D Stock Purchase Agreement, dated July 30, 1999, by and
between OptiMark and BancBoston Capital Inc. (incorporated by
reference to Exhibit 4.12 to Registrant's Registration Statement on
Form 10 (No. 000-30527)).
4.13 Registration Rights Agreement dated, July 30, 1999, by and between
OptiMark and BancBoston Capital Inc. (incorporated by reference to
Exhibit 4.13 to Registrant's Registration Statement on Form 10 (No.
000-30527)).
4.14 Registration Rights Agreement, dated September 19, 1998, by and
between OptiMark and The NASDAQ Stock Market, Inc. (incorporated by
reference to Exhibit 4.14 to Registrant's Registration Statement on
Form 10 (No. 000-30527)).
4.15 Amended and Restated Stockholders Agreement, dated April 23, 1998,
by and among OptiMark and the parties named therein (incorporated
by reference to Exhibit 4.15 to Registrant's Registration Statement
on Form 10 (No. 000-30527)).
4.16 Series E Stock Purchase Agreement, dated as of June 29, 2001, by
and among OptiMark Holdings, Inc. and the entities set forth in the
Schedule of Purchasers thereto (incorporated by reference to
Exhibit 4.1 to Registrant's Quarterly Report on Form 10-Q for the
period ended June 30, 2001 (Commission File No. 000-30527)).
4.17 Registration Rights Agreement, dated as of June 29, 2001, by and
among OptiMark Holdings, Inc. and the holders of Series E
Cumulative Preferred Stock (incorporated by reference to Exhibit
4.2 to Registrant's Quarterly Report on Form 10-Q for the period
ended June 30, 2001 (Commission File No. 000-30527)).
4.18 Amendment to the Series E Stock Purchase Agreement, dated as of
August 16, 2001, by and among OptiMark Holdings, Inc. and the
entities set forth in the Schedule of Purchasers thereto
(incorporated by reference to Exhibit 4.1 to Registrant's Quarterly
Report on Form 10-Q for the period ended September 30, 2001
(Commission File No. 000-30527)).
4.19 Amendment to the Registration Rights Agreement, dated as of August
16, 2001, by and among OptiMark Holdings, Inc. and the holders of
Series E Cumulative Preferred Stock (incorporated by reference to
Exhibit 4.2 to Registrant's Quarterly Report on Form 10-Q for the
period ended September 30, 2001 (Commission File No. 000-30527)).
10.1 OptiMark 1999 Stock Plan (adopted November 29, 1999) (incorporated
by reference to Exhibit 10.5(a) to Registrant's Registration
Statement on Form 10 (No. 000-30527)).
10.2 Amendment No. 1 to OptiMark 1999 Stock Plan (incorporated by
reference to Exhibit 10.5(b) to Registrant's Registration Statement
on Form 10/A-1 (No. 000-30527)).
10.3 Amendment No. 2 to OptiMark 1999 Stock Plan (incorporated by
reference to Exhibit 10.5(c) to Registrant's Amendment No. 2 to
Annual Report on Form 10-K for the year ended December 31, 2000
(Commission File No. 000-30527)).
10.4 OptiMark Stock Option Plan (Amended & Restated January 27, 1999)
(incorporated by reference to Exhibit 10.6 to Registrant's
Registration Statement on Form 10 (No. 000-30527)).
20
10.5 Form of Stock Option Agreement (1999 Stock Plan) (incorporated by
reference to Exhibit 10.7 to Registrant's Registration Statement on
Form 10 (No. 000-30527)).
10.6 Form of Stock Option Agreement (Amended and Restated Stock Option
Plan) (incorporated by reference to Exhibit 10.8 to Registrant's
Registration Statement on Form 10 (No. 000-30527)).
10.7 Form of Amendment No. 1 to Stock Option Agreements (incorporated by
reference to Exhibit 10.8(b) to Registrant's Amendment No. 2 to
Annual Report on Form 10-K for the year ended December 31, 2000
(Commission File No. 000-30527)).
10.8 Form of Non-Employee Director Option Agreement(incorporated by
reference to Exhibit 10.9 to Registrant's Registration Statement on
Form 10 (No. 000-30527)).
10.9 Employment, Trade Secret and Non-Competition Agreement, dated
August 27, 1996, by and between OptiMark and William A. Lupien
(incorporated by reference to Exhibit 10.11 to Registrant's
Registration Statement on Form 10 (No. 000-30527)).
10.10 Severance Agreement dated January 5, 2001 by and between John T.
Rickard and OptiMark, Inc. (incorporated by reference to Exhibit
10.12(b) to Registrant's Amendment No. 2 to Annual Report on Form
10-K for the year ended December 31, 2000 (Commission File No.
000-30527)).
10.11 Consulting Agreement dated January 15, 2001 by and among Orincon
Industries, Inc., John T. Rickard and OptiMark, Inc. (incorporated
by reference to Exhibit 10.12(c) to Registrant's Amendment No. 2 to
Annual Report on Form 10-K for the year ended December 31, 2000
(Commission File No. 000-30527)).
10.12 Restricted Stock Purchase Agreement, dated December 1, 1998, by and
between OptiMark and Phillip J. Riese (incorporated by reference to
Exhibit 10.14 to Registrant's Registration Statement on Form 10
(No. 000-30527)).
10.13 Stock Purchase Agreement, dated December 18, 1998, by and between
OptiMark and Phillip J. Riese (incorporated by reference to Exhibit
10.15 to Registrant's Registration Statement on Form 10 (No.
000-30527)).
10.14+ Services Agreement, dated January 1, 1999, by and between OptiMark
and ISM Information Systems Management Corporation (incorporated by
reference to Exhibit 10.18 to Registrant's Registration Statement
on Form 10/A-1 (No. 000-30527)).
10.15+ OptiMark/IBM Ops Agreement, dated February 2, 1999, by and between
OptiMark and the parties named therein (incorporated by reference
to Exhibit 10.19 to Registrant's Registration Statement on Form
10/A-1 (No. 000-30527)).
10.16 License Termination Agreement, dated March 19, 1999, by and between
OptiMark and High Performance Markets, Ltd. (incorporated by
reference to Exhibit 10.21 to Registrant's Registration Statement
on Form 10 (No. 000-30527)).
10.17 Common Stock Purchase Warrant, dated August 27, 1996, in favor of
The Pacific Exchange, Inc. (incorporated by reference to Exhibit
10.22 to Registrant's Registration Statement on Form 10 (No.
000-30527)).
10.18 Common Stock Purchase Warrant, dated December 31, 1996, in favor of
The Chicago Board Options Exchange, Inc. (incorporated by reference
to Exhibit 10.23 to Registrant's Registration Statement on Form 10
(No. 000-30527)).
21
10.19 Common Stock Purchase Warrant, dated April 23, 1998, in favor of
Virginia Surety Company, Inc. (incorporated by reference to Exhibit
10.24 to Registrant's Registration Statement on Form 10 (No.
000-30527)).
10.20 Common Stock Purchase Warrant, dated June 19, 1998, in favor of
Transamerica Business Credit Corporation (incorporated by reference
to Exhibit 10.25 to Registrant's Registration Statement on Form 10
(No. 000-30527)).
10.21 Common Stock Purchase Warrant, dated August 24, 1998, by and
between OptiMark and Francis X. Egan (incorporated by reference to
Exhibit 10.26 to Registrant's Registration Statement on Form 10
(No. 000-30527)).
10.22 NASDAQ Warrant Agreement, dated September 1, 1998, by and between
OptiMark and The NASDAQ Stock Market, Inc. (incorporated by
reference to Exhibit 10.27 to Registrant's Registration Statement
on Form 10 (No. 000-30527)).
10.23 Common Stock Purchase Warrant, dated January 27, 1999, by and
between OptiMark and BIOS Group LP (incorporated by reference to
Exhibit 10.28 to Registrant's Registration Statement on Form 10
(No. 000-30527)).
10.24 Warrant Agreement, dated October 27, 1999, by and between OptiMark
and Knight/Trimark Group, Inc. (incorporated by reference to
Exhibit 10.29 to Registrant's Registration Statement on Form 10
(No. 000-30527)).
10.25+ Development, Subcontract, and Operations Agreement, dated May 17,
1999, by and among OptiMark, Inc. and Japan OptiMark Systems, Inc.,
as amended (incorporated by reference to Exhibit 10.31) to
Registrant's Amendment No. 2 to Annual Report on Form 10-K for the
year ended December 31, 2000 (Commission File No. 000-30527)).
10.26 Letters, dated May 23, 2001, amending OptiMark, Inc.'s agreement
with Japan OptiMark Systems, Inc. (incorporated by reference to
Exhibit 9.1 to Registrant's Quarterly Report on Form 10-Q for the
period ended June 30, 2001 (Commission File No. 000-30527)).
10.27 Employment Agreement, dated August 16, 2001, by and between
OptiMark Holdings, Inc. and Robert J. Warshaw (incorporated by
reference to Exhibit 10.1 to Registrant's Quarterly Report on Form
10-Q for the period ended September 30, 2001 (Commission File No.
000-30527)).
10.28 Amendment No.1 to Employment Agreement, dated August 16, 2001, by
and between OptiMark Holdings, Inc. and Robert J. Warshaw
(incorporated by reference to Exhibit 10.2 to Registrant's
Quarterly Report on Form 10-Q for the period ended September 30,
2001 (Commission File No. 000-30527)).
10.29 Separation Agreement, dated August 15, 2001, by and between
OptiMark, Inc. and James G. Rickard (incorporated by reference to
Exhibit 10.3 to Registrant's Quarterly Report on Form 10-Q for the
period ended September 30, 2001 (Commission File No. 000-30527)).
10.30 OptiMark Holdings, Inc. 2001 Series F Preferred Stock Plan
(incorporated by reference to Registrant's Registration Statement
on Form S-8 (No. 333-73356)).
10.31 Second Amended and Restated Promissory Note, dated October 12,
2002, executed by OptiMark Holdings, Inc. in favor of Robert J.
Warshaw.
10.32 Employment Letter, dated June 19, 2001, from OptiMark, Inc. to Neil
G. Cohen.
22
10.33 Employee Agreement, dated December 1, 2002, by and between
OptiMark, Inc. and James Pak.
10.34 Employment Letter, dated April 9, 2001, from OptiMark, Inc. to
Trevor B. Price.
10.35 Employee Agreement, dated May 16, 2001, by and between OptiMark,
Inc. and Trevor B. Price.
10.36 Amendment to Employee Agreement, dated June 19, 2001, by and
between OptiMark, Inc. and Trevor B. Price.
10.37 Employment Letter, dated April 17, 2001, by and between OptiMark,
Inc. and Gary Meshell.
10.38 Employee Agreement, dated May 15, 2001, by and between OptiMark,
Inc. and Gary B. Meshell.
10.39 Amendment to Employee Agreement, dated June 19, 2001, by and
between OptiMark, Inc. and Gary B. Meshell.
10.40 Separation Agreement, dated February 16, 2002, by and between
OptiMark, Inc. and Gary B. Meshell.
10.41 Employment Letter, dated January 16, 2002, from OptiMark, Inc. to
James Pak.
21.1 Subsidiaries of OptiMark Holdings, Inc.
+ Confidential treatment has been requested for certain confidential
portions of this exhibit pursuant to Rule 24b-2 under the Exchange Act. In
accordance with Rule 24b-2, these confidential portions have been omitted from
this exhibit and filed separately with the Commission.
23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
OPTIMARK HOLDINGS, INC.
Dated April 1, 2002
By: /s/ Ronald D. Fisher
------------------------------
Name: Ronald D. Fisher
Title: Director
By: /s/ William A. Lupien
------------------------------
Name: William A. Lupien
Title: Chairman
By: /s/ Phillip J. Riese
------------------------------
Name: Phillip J. Riese
Title: Director
By: /s/ Robert J. Warshaw
------------------------------
Name: Robert J. Warshaw
Title: Chief Executive Officer, Director,
Principal Financial and Accounting
Officer