SECURITIES PURCHASE AGREEMENT BY AND BETWEEN THE INVESTORS LISTED ON EXHIBIT A HERETO AND NYFIX, INC. DATED AS OF SEPTEMBER 4, 2006
Exhibit
10.1
BY
AND BETWEEN
THE
INVESTORS LISTED ON EXHIBIT A HERETO
AND
NYFIX,
INC.
DATED
AS OF SEPTEMBER 4,
2006
TABLE
OF CONTENTS
|
SECTION
1.
|
INTERPRETATION
OF THIS AGREEMENT
|
2
|
|
1.1.
|
Defined
Terms
|
2
|
|
SECTION
2.
|
AUTHORIZATION
OF SHARES; PURCHASE AND SALE OF SHARES
|
7
|
|
2.1.
|
Authorization
of Shares
|
7
|
|
2.2.
|
Issuance
of Shares
|
7
|
|
2.3.
|
Closing
and Closing Date
|
8
|
|
2.4.
|
Delivery
|
8
|
|
SECTION
3.
|
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
|
8
|
|
3.1.
|
Corporate
Organization
|
8
|
|
3.2.
|
Subsidiaries
|
8
|
|
3.3.
|
Capitalization
|
9
|
|
3.4.
|
Corporate
Proceedings, etc.
|
10
|
|
3.5.
|
Consents
and Approvals
|
11
|
|
3.6.
|
Absence
of Defaults, Conflicts, etc.
|
11
|
|
3.7.
|
Financial
Statements
|
12
|
|
3.8.
|
Absence
of Certain Developments
|
12
|
|
3.9.
|
Compliance
with Law
|
12
|
|
3.10.
|
Litigation
|
13
|
|
3.11.
|
Absence
of Undisclosed Liabilities
|
13
|
|
3.12.
|
Employees
|
13
|
|
3.13.
|
Tax
Matters
|
14
|
|
3.14.
|
Intellectual
Property
|
14
|
|
3.15.
|
Material
Contracts
|
17
|
|
3.16.
|
Title
to Tangible Assets
|
17
|
|
3.17.
|
Condition
of Properties
|
18
|
|
3.18.
|
Transactions
with Related Parties
|
18
|
|
3.19.
|
Registration
Rights
|
18
|
|
3.20.
|
Brokerage
|
18
|
|
3.21.
|
Illegal
or Unauthorized Payments; Political Contributions
|
18
|
|
3.22.
|
Takeover
Statute
|
18
|
|
3.23.
|
No
Manipulation of Common Stock
|
19
|
|
3.24.
|
Accountants
|
19
|
|
3.25.
|
Internal
Accounting Controls
|
19
|
|
3.26.
|
Environmental
Matters
|
19
|
|
3.27.
|
Insurance
|
20
|
|
3.28.
|
Transfer
Taxes
|
20
|
|
3.29.
|
Investment
Company
|
20
|
|
3.30.
|
No
Integration; General Solicitation
|
20
|
|
3.31.
|
Officers,
Directors and 5% Stockholders
|
20
|
|
3.32.
|
Vote
Required.
|
21
|
|
SECTION
4.
|
REPRESENTATIONS
AND WARRANTIES OF THE INVESTORS
|
21
|
|
SECTION
5.
|
PRE-CLOSING
COVENANTS
|
22
|
|
5.1.
|
Resale
of Shares
|
22
|
|
5.2.
|
Covenants
Pending Closing
|
22
|
|
5.3.
|
Further
Assurances
|
23
|
|
5.4.
|
Access
to Information
|
24
|
|
5.5.
|
Exclusivity
|
24
|
|
5.6.
|
Public
Disclosure
|
24
|
|
5.7.
|
HSR
Act Filing
|
25
|
|
5.8.
|
Consents
and Approvals
|
25
|
|
5.9.
|
Use
of Proceeds
|
25
|
|
5.10.
|
Takeover
Statute
|
25
|
|
5.11.
|
Form
D and Blue Sky
|
25
|
|
SECTION
6.
|
INVESTORS’
CLOSING CONDITIONS
|
26
|
|
6.1.
|
Representations
and Warranties
|
26
|
|
6.2.
|
Compliance
with Agreement
|
26
|
|
6.3.
|
Injunction
|
26
|
|
6.4.
|
Regulatory
Approvals; Third Party Consents
|
26
|
|
6.5.
|
Counsel’s
Opinion
|
26
|
|
6.6.
|
Adverse
Development
|
27
|
|
6.7.
|
Convertible
Preferred Directors
|
27
|
|
6.8.
|
Chief
Executive Officer
|
27
|
|
6.9.
|
Registration
Rights Agreement
|
27
|
|
6.10.
|
Issuance
of Warrant
|
27
|
|
6.11.
|
Filing
of Certificate of Designations
|
27
|
|
6.12.
|
Officer’s
Certificate
|
27
|
|
6.13.
|
Secretary’s
Certificate
|
27
|
|
SECTION
7.
|
COMPANY
CLOSING CONDITIONS
|
28
|
|
7.1.
|
Representations
and Warranties
|
28
|
|
7.2.
|
Compliance
with Agreement
|
28
|
|
7.3.
|
Regulatory
Approvals
|
28
|
|
7.4.
|
Investors’
Certificates
|
28
|
|
7.5.
|
Injunction
|
28
|
|
SECTION
8.
|
POST-CLOSING
COVENANTS
|
29
|
|
8.1.
|
Inspection
|
29
|
|
8.2.
|
Confidentiality
|
29
|
|
8.3.
|
Lost,
etc. Certificates Evidencing Shares; Exchange
|
29
|
|
8.4.
|
Insurance
|
30
|
|
8.5.
|
Board
Seats
|
30
|
|
8.6.
|
Subscription
Rights
|
31
|
|
8.7.
|
Standstill
|
32
|
|
8.8.
|
No
Manipulation or Hedging
|
33
|
|
8.9.
|
Listing
|
34
|
|
8.10.
|
Authorization
of Additional Stock
|
34
|
|
8.11.
|
Stock
Option Pool
|
35
|
|
SECTION
9.
|
MISCELLANEOUS
|
35
|
|
9.1.
|
Notices
|
35
|
|
9.2.
|
Expenses
and Taxes
|
36
|
|
9.3.
|
Reproduction
of Documents
|
36
|
|
9.4.
|
Termination
and Survival
|
36
|
|
9.5.
|
Successors
and Assigns
|
37
|
|
9.6.
|
Severability
|
37
|
|
9.7.
|
Governing
Law
|
37
|
|
9.8.
|
Waiver
of Jury Trial
|
37
|
|
9.9.
|
Consent
to Jurisdiction
|
37
|
|
9.10.
|
Paragraph
and Section Headings
|
38
|
|
9.11.
|
Limitation
on Enforcement of Remedies
|
38
|
|
9.12.
|
Counterparts
|
38
|
|
9.13.
|
Entire
Agreement; Amendment and Waiver
|
38
|
|
Exhibit
A
|
Schedule
of Investors
|
|
Exhibit
B
|
Certificate
of Designations
|
|
Exhibit
C
|
Form
of Warrant
|
|
Exhibit
D
|
Restated
Certificate of Incorporation
|
|
Exhibit
E
|
Amended
Bylaws
|
|
Exhibit
F-1
|
Form
of General Counsel Legal Opinion
|
|
Exhibit
F-2
|
Form
of Xxxxxxxxx & Xxxxxxx LLP Legal Opinion
|
|
Exhibit
G
|
Registration
Rights Agreement
|
|
Exhibit
H
|
Indemnification
Agreement
|
NYFIX, INC.
Dated
as
of September 4, 2006
TO
THE
INVESTORS LISTED
ON EXHIBIT A HERETO
Ladies
and Gentlemen:
NYFIX,
Inc., a Delaware corporation (the “Company”),
hereby agrees with each of the Investors (each an “Investor”
and
collectively the “Investors”)
listed
on Exhibit
A
hereto
as follows:
SECTION
1.
INTERPRETATION
OF THIS AGREEMENT
1.1.
Defined
Terms
As
used
in this Agreement, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
Affiliate:
shall
mean any Person or entity, directly or indirectly, controlling, controlled
by or
under common control with such Person or entity.
Agreement:
shall
mean this Securities Purchase Agreement, as the same may be amended or modified
from time to time in accordance with its terms.
Antitrust
Division:
shall
have the meaning set forth in Section
5.7.
Board:
shall
have the meaning set forth in Section
3.3(c).
Business
Day:
shall
mean a day other than a Saturday, Sunday or other day on which banks in the
State of New York are required or authorized to close.
Certificate
of Designations:
shall
mean the Certificate of Designations, Number, Voting Powers, Preferences
and
Rights of Convertible Preferred Stock of the Company, a copy of which is
attached hereto as Exhibit
B.
Change
of Control:
shall
have the meaning set forth in the Certificate of Designations.
Closing:
shall
have the meaning set forth in Section
2.3.
Closing
Date:
shall
have the meaning set forth in Section
2.3.
Code:
shall
mean the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
Common
Stock:
shall
mean the common stock, par value $0.001 per share, of the Company.
Company:
shall
have the meaning set forth in the Introduction hereto.
Company
Stockholder Meeting:
shall
have the meaning set forth in Section
8.10(b).
Competition
Laws:
shall
mean the HSR Act, the Xxxxxxx Antitrust Act, as amended, the Xxxxxxx Antitrust
Act, as amended, the Federal Trade Commission Act, as amended, and all other
applicable laws issued by a Governmental Authority that are designed or intended
to prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade or lessening of competition through
merger
or acquisition, including any foreign antitrust laws.
Contract:
shall
mean any material agreement, contract, indenture, indebtedness, mortgage,
commitment, understanding, arrangement, restriction or other instrument to
which
the Company or one of its Subsidiaries is a party or by which its properties
or
assets are subject, and which is or would be required to be filed as an exhibit
to any filing by the Company with the SEC pursuant to the Exchange Act (assuming
for this purpose that the Company had complied with all of its filing
obligations under the Exchange Act).
Conversion:
shall
mean the conversion of the Convertible Preferred Stock or the Exchange Preferred
Stock for shares of Common Stock in accordance with the terms of the Certificate
of Designations.
Conversion
Shares:
shall
mean those shares of Common Stock to be issued upon conversion of the
Convertible Preferred Stock or the Exchange Preferred Stock.
Convertible
Preferred Director:
shall
have the meaning set forth in the Certificate of Designations.
Convertible
Preferred Stock:
shall
have the meaning set forth in Section
2.1.
DGCL:
shall
mean the Delaware General Corporation Law.
Disclosure
Schedule:
shall
mean the Disclosure Schedule of the Company delivered concurrently herewith
and
incorporated herein by reference.
Environmental
Laws:
shall
mean federal, state, local and foreign laws, regulations and codes, as well
as
orders, decrees, judgments or injunctions, issued, promulgated, approved
or
entered thereunder relating to pollution, hazardous or toxic substances,
wastes
or contaminants, protection of the environment or public health and
safety.
Exchange
Act:
shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
-3-
Exchange
Preferred Shares:
shall
mean the shares of Exchange Preferred Stock to be issued upon exchange of
the
Convertible Preferred Stock or Common Stock Owned by the Investors in excess
of
45% of the Common Stock (on an as converted basis) on the terms and conditions
set forth in Section
8.7(b)
of this
Agreement.
Exchange
Preferred Stock:
shall
have the meaning set forth in Section
2.1.
FTC:
shall
have the meaning set forth in Section
5.7.
GAAP:
shall
have the meaning set forth in Section
3.7.
Governmental
Authority:
shall
mean the government of any nation, state, city, locality or other political
subdivision thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and
any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
HSR
Act:
shall
mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
Indemnification
Agreement:
shall
have the meaning set forth in Section
8.5(b).
Independent
Director:
shall
mean a member of the Board (i) who is not an officer or employee of the Company,
the Investors or any of their respective Affiliates, or of an entity that
derived more than 5% of its revenues or earnings in its most recent fiscal
year
from transactions involving the Company, the Investors or any of their
respective Affiliates and (ii) who has no relationship or affiliation or
compensation, consulting or contracting arrangement with the Company, the
Investors or any of their respective Affiliates or any other entity such
that a
reasonable person could regard such director as likely to be unduly influenced
by the Company, the Investors or their respective Affiliates.
Intellectual
Property:
means
all of the following owned or used by the Company and its Subsidiaries: (a)
trademarks and service marks, trade dress, product configurations, trade
names
and other indications of origin, applications or registrations in any
jurisdiction pertaining to the foregoing and all goodwill associated therewith;
(b) patentable inventions, discoveries, improvements, ideas, know-how, formula
methodology, models, algorithms, systems, processes, technology, software
(including Proprietary Software) and applications and patents in any
jurisdiction pertaining to the foregoing, including re-issues, continuations,
divisions, continuations-in-part, renewals or extensions; (c) trade secrets,
including confidential information and the right in any jurisdiction to limit
the use or disclosure thereof; (d) copyrights in writings, designs, software,
mask works or other works, applications or registrations in any jurisdiction
for
the foregoing and all moral rights related thereto; (e) database rights;
(f) Internet Web sites, domain names and applications and registrations
pertaining thereto and all intellectual property used in connection with
or
contained in all versions of the Company’s and its Subsidiaries’ Web sites; (g)
rights under all agreements relating to the foregoing; and (h) claims or
causes
of action arising out of or related to past, present or future infringement
or
misappropriation of the foregoing.
-4-
Investor(s):
shall
have the meaning set forth in the Introduction hereto.
Licensed
Software:
shall
have the meaning set forth in Section
3.14(g).
Listed
Intellectual Property:
shall
have the meaning set forth in Section
3.14(b).
Material
Adverse Effect:
shall
mean an event, change or occurrence that individually, or together with any
other event, change or occurrence, has had or reasonably could be expected
to
have a material adverse effect on (a) the business, properties, operations,
assets, liabilities or condition (financial or otherwise) of the Company
and its
Subsidiaries, taken together as a whole, or (b) the ability of the Company
to
perform its obligations pursuant to the transactions contemplated by this
Agreement. Notwithstanding the foregoing, none of the following shall be
deemed
(either alone or in combination) to constitute, and none of the following
shall
be taken into account in determining whether there has been or will be, a
Material Adverse Effect: (i) any adverse change, event or effect arising
from or
relating to general business or economic conditions; (ii) any adverse change,
event or effect relating to or affecting the financial services industry
generally; and (iii) any legal action, suit or proceeding, brought or threatened
by any shareholder or employee of the Company against the Company, its officers
or directors, arising out of or relating to this Agreement or the transactions
contemplated hereby (other than, in the case of clauses (i) and (ii) above,
any
such change, event or effect that affects the Company or its Subsidiaries
in a
materially disproportionate manner when compared to the impacts of such changes,
events or effects on other Persons engaged in the same industry as the Company
and its Subsidiaries).
Material
Contract:
shall
have the meaning set forth in Section
3.15.
Meeting
Deadline:
shall
have the meaning set forth in Section 8.10(b).
NASD:
shall
mean the National Association of Securities Dealers, Inc.
Organizational
Documents:
shall
mean the Restated Certificate of Incorporation and the Amended Bylaws of
the
Company.
Owns,
Own,
Owned:
shall
mean the aggregate beneficial ownership, within the meaning of Rule 13d-3
under
the Exchange Act, of an Investor and any of its Affiliates.
Person:
shall
mean an individual, partnership, joint-stock company, corporation, limited
liability company, trust or unincorporated organization, and a government
or
agency or political subdivision thereof.
Preference
Share Purchase Rights:
shall
mean the preference share purchase rights that the Board declared as a dividend
to the holders of outstanding Common Stock on September 19, 1997 at a rate
of
one preference share purchase right per share of Common Stock, each right
representing the right to purchase one one-hundredth of a share of Series
A
Preferred Stock, par value $1.00 per share, of the Company upon the terms
and
conditions set forth in the Rights Plan.
-5-
Preferred
Stock:
shall
mean the preferred stock, par value $1.00 per share, of the
Company.
Principal
Market:
shall
have the meaning set forth in Section
8.9.
Proposed
Securities:
shall
have the meaning set forth in Section
8.6(a)(1).
Proprietary
Software:
means
all operating and applications computer software programs and databases
including password unprotected interpretive code or Source Code, object code,
development documentation, programming tools, drawings, specifications and
data
created by or on behalf of or owned by the Company or its
Subsidiaries.
Proxy
Statement:
shall
have the meaning set forth in Section
8.10(a).
Registration
Rights Agreement:
shall
have the meaning set forth in Section
6.9.
Rights
Plan:
shall
have the meaning set forth in Section
3.22.
Xxxxxxxx-Xxxxx
Act:
shall
mean the Xxxxxxxx-Xxxxx Act of 2002, and the rules and regulations promulgated
thereunder.
SEC:
shall
mean the Securities and Exchange Commission.
Securities
Act:
shall
mean the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
Shares:
shall
mean the shares of Convertible Preferred Stock to be purchased by the Investors
hereunder.
Software:
shall
have the meaning set forth in Section
3.14(g).
Source
Code:
means,
collectively, any software source code, or any material portion or aspect
of the
software source code of (i) any Intellectual Property owned by the Company
or
any of its Subsidiaries or (ii) any other product or service marketed or
currently proposed to be marketed by the Company or any of its
Subsidiaries.
Standstill
Period:
shall
have the meaning set forth in Section
8.7(a).
Stock
Option Plans:
shall
mean following plans of the Company: (i) the 2001 Stock Option Plan, (ii)
the
Javelin 1999 Stock Option Plan and (iii) the Amended and Restated 1991 Incentive
and Nonqualified Stock Option Plan.
Subsidiary:
shall
mean an entity of which a Person owns, directly or indirectly, more than
50% of
the Voting Stock.
Subsidiary
Organizational Documents:
shall
have the meaning set forth in Section 3.2(a).
-6-
Takeover
Statute:
shall
mean any corporate takeover provision under laws of the State of Delaware
or any
other state or federal “fair price”, “moratorium”, “control share acquisition”
or other similar antitakeover statute or regulation.
Unaudited
Financial Statements:
shall
have the meaning set forth in Section
3.7.
Voting
Proposal:
shall
have the meaning set forth in Section 8.10(a).
Voting
Stock:
shall
mean securities of any class or classes of an entity, the holders of which
are
ordinarily, in the absence of contingencies, entitled to elect a majority
of the
corporate directors (or Persons performing similar functions).
Warrant:
shall
mean the Warrant to acquire an aggregate of 2,250,000 shares of Common Stock,
substantially in the form of Exhibit
C.
Warrant
Shares:
shall
mean the shares of Common Stock issuable upon exercise of the
Warrant.
Works:
shall
have the meaning set forth in Section
3.14(f).
WP:
shall
mean Warburg Pincus Private Equity IX, L.P., a Delaware limited
partnership.
WP
Board Members:
shall
have the meaning set forth in Section
8.5(a).
SECTION
2. AUTHORIZATION
OF SHARES; PURCHASE AND SALE OF SHARES
2.1.
Authorization
of Shares
On
or
prior to the Closing, the Company shall have authorized the sale and issuance
of
up to an aggregate of 1,500,000 shares of Series B Voting Convertible Preferred
Stock, par value $1.00 per share (the “Convertible
Preferred Stock”),
on
the terms and conditions set forth in this Agreement. On or prior to the
Closing, the Company shall have authorized the issuance of up to an aggregate
of
500,000 shares of Series C Non-Voting Convertible Preferred Stock, par value
$1.00 per share (the “Exchange
Preferred Stock”),
on
the terms and conditions set forth in this Agreement. The terms, limitations
and
relative rights and preferences of the Convertible Preferred Stock and the
Exchange Preferred Stock shall be as set forth in the Certificate of
Designations.
2.2.
Issuance
of Shares
Subject
to the terms and conditions set forth in this Agreement, and in reliance
upon
the Company’s and the Investors’ representations set forth below, at the
Closing, (i) the Company shall sell to the Investors, and the Investors shall
purchase from the Company, the number of shares of Convertible Preferred
Stock
set forth opposite each Investor’s respective name on Exhibit
A,
at a
purchase price per share equal to $50.00, for an aggregate purchase price
of $75
million and (ii) the Company shall issue to the Investors the Warrant, in
the
amount set forth opposite each Investor’s respective name on Exhibit
A.
-7-
2.3.
Closing
and Closing Date
The
closing of the transactions contemplated by Section
2.2
(the
“Closing”)
shall
take place at 10:00 A.M., New York City time, on the second Business Day
following the date on which the last to be fulfilled or waived of the conditions
set forth in Sections 6 and 7 hereof shall have been fulfilled or waived
in
accordance with this Agreement (excluding conditions that by their terms,
cannot
be satisfied until the Closing but subject to the satisfaction or waiver
of such
conditions at the Closing), or on such earlier date as may be mutually agreed
by
the Company and the Investors (the “Closing
Date”),
at
the offices of Xxxxxxx Xxxx & Xxxxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, or such other location as the Investors and the Company shall
mutually select. The Company’s agreement with each Investor is a separate
agreement and the sales to each Investor are separate sales.
2.4. Delivery
The
sale
and purchase of the Shares shall be effected on the applicable Closing Date
by
the Company executing and delivering to each Investor, duly registered in
such
Investor’s name, duly executed stock certificates evidencing the Shares being
purchased by it, against payment of the purchase price therefor by wire transfer
of immediately available funds to such account as the Company shall designate
in
writing at least three Business Days prior to the Closing.
SECTION
3.
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except
as
set forth in correspondingly numbered sections of the Disclosure Schedule
delivered by the Company to the Investors on the date hereof, the Company
represents and warrants to the Investors that:
3.1.
Corporate
Organization
(a) The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Attached hereto as Exhibits
D
and
E,
respectively, are
true
and complete copies of the Restated Certificate of Incorporate and Amended
By-laws of the Company, as amended through the date hereof.
(b) The
Company has all requisite corporate power and authority to carry on its business
as now conducted. The Company has all requisite power and authority to execute
and deliver this Agreement and to perform its obligations
hereunder.
(c) The
Company has filed all necessary documents to qualify to do business as a
foreign
corporation in each jurisdiction in which the conduct of the Company's business
or the nature of the property owned requires such qualification, except where
the failure to so qualify would not be reasonably likely to have a Material
Adverse Effect.
3.2.
Subsidiaries
(a) Each
of
the Company’s Subsidiaries is duly formed, validly existing and in good standing
under the laws of its jurisdiction of organization, with full corporate power
and
-8-
authority
to conduct its business as currently conducted, except where the failure
of any
Subsidiary to be duly organized, validly existing and in good standing,
individually or in the aggregate, would not be reasonably likely to have
a
Material Adverse Effect. The Company has made available to the Investors
the
articles of incorporation and bylaws (or comparable organizational documents)
of
each of the Company’s Subsidiaries (the “Subsidiary
Organizational Documents”).
The
Company owns all of the capital stock or membership interests of each Subsidiary
free and clear of any and all liens, security interest and any other
encumbrances or restrictions, and all of the outstanding shares of capital
stock
of each Subsidiary are validly issued and are fully paid, non-assessable
and
free of preemptive and similar rights. The Company has no Subsidiaries except
as
set forth on Section
3.2
of the
Disclosure Schedule.
(b) Each
of
the Company’s Subsidiaries is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted
by
it or property owned by it makes such qualification necessary, except where
the
failure to be so qualified or in good standing, as the case may be, would
not be
reasonably likely to have a Material Adverse Effect and, to the knowledge
of the
Company, no proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such corporate
power and authority or qualification.
|
3.3.
|
Capitalization
|
(a) The
authorized capital stock of the Company, immediately prior to the Closing,
shall
consist of (i) 60,000,000 shares of Common Stock and (ii) 5,000,000 shares
of
Preferred Stock. As of the date hereof, the issued and outstanding shares
of
capital stock of the Company consisted of 36,654,986 shares of Common Stock
and
no shares of Preferred Stock.
(b) All
the
outstanding shares of capital stock of the Company have been duly and validly
issued and are fully paid and non-assessable, and were issued in accordance
with
the registration or qualification requirements of the Securities Act and
any
relevant state securities laws or pursuant to valid exemptions therefrom.
As of
the Closing Date, the Shares will be duly authorized and, upon issuance,
sale
and delivery as contemplated by this Agreement, the Shares will be validly
issued, fully paid and non-assessable securities of the Company. As of the
Closing Date, the Exchange Preferred Shares will be duly authorized and,
upon
issuance and delivery as contemplated by this Agreement, the Exchange Preferred
Shares will be validly issued, fully paid and non-assessable securities of
the
Company. Upon their issuance in accordance with the terms of the Convertible
Preferred Shares, the Exchange Preferred Shares and the Warrant, the Conversion
Shares and the Warrant Shares will be free and clear of any and all security
interests, pledges, liens, charges, claims, options, restrictions on transfer,
preemptive or similar rights, proxies and voting or other agreements, or
other
encumbrances of any nature whatsoever, except for those provided for herein
or
otherwise created or imposed upon the Investors and other than restrictions
on
transfer imposed by federal or state securities laws.
(c) Except
for (i) 4,581,838 shares of Common Stock outstanding under the Stock Option
Plans, (ii) 747,678 shares of Common Stock reserved for issuance and not
yet
granted under the Stock Option Plans, (iii) 1,325,088 shares of Common Stock
issuable at a conversion rate of $5.66 upon conversion of the Company’s $7.5
million Convertible Note, (iv) 100,000 shares of Series A Preferred Stock
reserved for issuance pursuant to the Preference
-9-
Share
Purchase Rights, (v) the Conversion Shares, (vi) the Exchange Preferred Shares,
(vii) the Warrant Shares and (viii) 9,450,000 shares of Common Stock that
will
be reserved for issuance pursuant to Section
8.11
herein,
there will be no shares of Common Stock or any other equity security of the
Company issuable upon conversion, exchange or exercise of any outstanding
security of the Company, nor will there be any rights, options, calls or
warrants outstanding or other agreements to acquire shares of Common Stock
nor
will the Company be contractually obligated to purchase, redeem or otherwise
acquire any of its outstanding shares. Except
to
the
extent otherwise provided in this Agreement, (i) no stockholder of the Company
is entitled to any preemptive or similar rights to subscribe for shares of
capital stock of the Company and no stockholder of the Company has any rights,
contractual or otherwise, to designate members of the Company’s Board of
Directors (the “Board”),
other
than in accordance with the DGCL, (ii) there are no stockholder, voting or
other
agreements relating to the rights and obligations of the Company’s
stockholders,
and
(iii) there are no securities or instruments containing antidilution or similar
provisions that will be triggered by the issuance of the shares of Convertible
Preferred Stock, Conversion Shares or Exchange Preferred Stock.
(d) None
of
the Company or any of its Subsidiaries (i) has issued or is bound by any
outstanding subscriptions, options, warrants, calls, convertible or exchangeable
securities, rights, commitments or agreements of any character providing
for the
issuance or disposition of any shares of capital stock, voting securities
or
equity interests of any Subsidiary of the Company, and (ii) there are no
outstanding obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock, voting securities
or
equity interests (or any options, warrants or other rights to acquire any
shares
of capital stock, voting securities or equity interests) of any Subsidiary
of
the Company. There are no stockholder, voting or other agreements relating
to
the rights and obligations of the stockholders of any of the Company’s
Subsidiaries. None of the Company or any of its Subsidiaries is bound to
provide
any funds to or make any investment in any Subsidiary of the Company that
is not
wholly owned by the Company or any other Person.
|
3.4.
|
Corporate
Proceedings, etc.
|
The
Company has authorized the execution, delivery and performance of this Agreement
and each of the transactions and agreements contemplated hereby, including,
without limitation, the Registration Rights Agreement, the Warrant and the
Certificate of Designations. No other corporate action is necessary to authorize
such execution, delivery and performance of this Agreement, the Registration
Rights Agreement, the Warrant or the Certificate of Designations, and upon
such
execution and delivery, this Agreement, the Registration Rights Agreement,
the
Warrant and the Certificate of Designations shall constitute the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except that such enforcement may be subject
to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or
hereafter in effect relating to creditors’ rights and general principles of
equity. The Company has authorized the issuance and delivery of the Shares
and
the Exchange Preferred Shares in accordance with this Agreement and the
Certificate of Designations and, subject to the issuance of the Shares, the
Company has reserved for issuance shares of Common Stock initially issuable
upon
conversion of the Shares and the Exchange Preferred Shares. The Company has
authorized the issuance and delivery of the Warrant Shares in accordance
with
the terms of the Warrant and, subject to issuance of the
-10-
Warrant
Shares, the Company has reserved for issuance shares of Common Stock initially
issuable upon exercise of the Warrant.
|
3.5.
|
Consents
and Approvals
|
Except
as
otherwise provided in this Agreement, the execution and delivery by the Company
of this Agreement, the Registration Rights Agreement, the Warrant and the
Certificate of Designations, the issuance of any of the Shares, the Warrant
Shares, the Conversion Shares or the Exchange Preferred Shares, the performance
by the Company of its obligations hereunder and the consummation by the Company
of the transactions contemplated hereby do not require the Company or any
of its
Subsidiaries to obtain any consent, approval, clearance or action of, or
make
any filing, submission or registration with, or give any notice to, any
Governmental Authority or judicial authority.
|
3.6.
|
Absence
of Defaults, Conflicts, etc.
|
(a) The
execution and delivery of this Agreement by the Company does not, and the
fulfillment of the terms hereof by the Company, and the issuance, sale and
delivery of the Shares, the Warrant Shares, the Conversion Shares or the
Exchange Preferred Shares will not, (i) violate or conflict with the
Organizational Documents or the Subsidiary Organizational Documents;
(ii) result in a breach of any of the terms, conditions or provisions of,
or constitute a default (with or without the giving of notice or the passage
of
time (or both)) under, or result in the modification of, or permit the
acceleration of rights under or amendment, cancellation or termination of,
any
Contract; (iii) violate any law, ordinance, standard, judgment, rule,
regulation, order or decree of any court or federal, state or foreign regulatory
board or body or administrative agency having jurisdiction over the Company
or
any of its Subsidiaries or any of their respective properties, assets or
business; or (iv) result in the creation or imposition of any lien, encumbrance,
claim, security interest or restriction whatsoever upon any of the material
properties or assets of the Company or any of its Subsidiaries.
The
execution, delivery and performance of this Agreement by the Company and
the
consummation by the Company of the transactions contemplated hereby (including
the issuance of the Shares) will not be deemed a change of control under
any
Contract.
(b) Neither
the Company nor any of its Subsidiaries is in default under or in violation
of
(and no event has occurred and no condition exists which, upon notice or
the
passage of time (or both), would constitute a default under) (i) the Company’s
Organizational Documents or the Subsidiary Organizational Documents, (ii)
any
Contract, (iii) any license, permit or authorization to which the Company
or any of its Subsidiaries is a party or by which they or any of their
respective properties or assets may be bound or (iv) any judgment, order,
writ,
injunction or decree of any court or any Federal, state, municipal or other
domestic or foreign governmental department, commission, board, bureau, agency
or instrumentality, except, in the case of each of the foregoing clauses
(ii),
(iii), and (iv), where such default or violation, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
Each Contract is valid, binding and enforceable in all material respects
against
the Company or any of its Subsidiaries that is a party thereto and, to the
Company’s knowledge, the other parties thereto, in accordance with its terms,
and in full force and effect on the date hereof.
-11-
3.7.
Financial
Statements
The
Company has furnished or made available to the Investors true and complete
copies of the Company’s unaudited consolidated balance sheet as of December 31,
2005 and December 31, 2004 and its unaudited statements of income, cash flows
and stockholders’ equity for the fiscal years ended December 31, 2005, December
31, 2004 and December 31, 2003 and for the six month period ended June 30,
2006
(the “Unaudited
Financial Statements”).
The
Unaudited Financial Statements (i) have been prepared in accordance with
U.S.
generally accepted accounting principles (“GAAP”)
applied on a consistent basis throughout the periods indicated, except as
disclosed therein, (ii) present fairly, in all material respects, the financial
position of the Company as at the dates thereof and the results of its
operations and cash flow for the periods then ended, and (iii) have been
prepared based on the books and records of the Company. The Company is not
aware
of any reason why its independent public accountants are unable or unwilling
to
furnish an unqualified audit opinion with respect to the financial statements
for the years ended December 31, 2005, December 31, 2004 and December 31,
2003.
|
3.8.
|
Absence
of Certain Developments
|
Since
December 31, 2005, there has been no (i) change or event which has had or
is
reasonably likely to have a Material Adverse Effect, (ii) declaration, setting
aside or payment of any dividend or other distribution with respect to the
capital stock of the Company or any of its Subsidiaries, (iii) issuance of
capital stock (other than pursuant to (1) the exercise of options, warrants
or
convertible securities or (2) employee benefit plans) or options, warrants
or
rights to acquire capital stock (other than the rights granted pursuant to
employee benefit plans or as disclosed in Section
3.3
of this
Agreement or Section
3.3
of the
Disclosure Schedule), (iv) material loss, destruction or damage to any property
of the Company or any of its Subsidiaries, whether or not insured,
(v) default with respect to any indebtedness for borrowed money or the
refunding of any such indebtedness, (vi) labor trouble involving the
Company or any of its Subsidiaries or any material change in the Company’s or
any of its Subsidiaries’ respective personnel or the terms and conditions of
employment, (vii) waiver of any valuable right in favor of the Company or
any of
its Subsidiaries, (viii) loan or extension of credit to any officer or employee
of the Company or any of its Subsidiaries in an amount in excess of $25,000
or
(ix) acquisition or disposition of any material assets (or any contract or
arrangement therefore) or any other material transaction by the Company or
any
of its Subsidiaries otherwise than for fair value in the ordinary course
of
business.
|
3.9.
|
Compliance
with Law
|
(a) Neither
the Company nor any of its Subsidiaries or any of their respective businesses
is, and since January 1, 2004 has not been, in violation of any laws,
ordinances, governmental rules or regulations to which it is subject, including
without limitation laws or regulations relating to the environment or to
occupational health and safety, except for violations that would not be
reasonably likely to have a Material Adverse Effect, and no material
expenditures are known to be or expected to be required in order to cause
the
Company’s or any of its Subsidiaries’ current operations or properties to comply
with any such laws, ordinances, governmental rules or regulations.
-12-
(b) Each
of
the Company and its Subsidiaries has all licenses, permits, franchises or
other
governmental authorizations necessary to the ownership of its property or
to the
conduct of its business, which if violated or not obtained would be reasonably
likely to have a Material Adverse Effect. Neither the Company nor any of
its
Subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such licenses, permits, franchises or authorizations,
nor
has the Company or any of its Subsidiaries been finally denied any application
for any such licenses, permits, franchises or other governmental authorizations
necessary to its business.
(c) Since
January 1, 2004, neither the Company nor any of its Subsidiaries has received
any written notice from any Governmental Authority questioning its compliance
with (i) any laws, ordinances, governmental rules or regulations to which
it is
subject, or (ii) any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its property or to the conduct
of
its business, and the Company is not aware of any intent to deliver any such
written notice.
(d) The
Company and its Subsidiaries are in material compliance with and are taking
all
action required to remain in material compliance with all provisions of the
Xxxxxxxx-Xxxxx Act. The Company has made all certifications and statements
required by Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act.
|
3.10.
|
Litigation
|
There
is
no legal action, suit, arbitration or other legal, administrative or other
governmental investigation, inquiry or proceeding (whether federal, state,
local
or foreign) pending or, to the best of the Company's knowledge, threatened
against or affecting the Company or any of its Subsidiaries, or any of their
respective properties, assets, businesses or officers or directors in their
capacities as such which would be reasonably likely to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is subject to any
order,
writ, judgment, injunction, decree, determination or award of any court or
of
any Governmental Authority.
|
3.11.
|
Absence
of Undisclosed Liabilities
|
Since
June 30, 2006, neither the Company nor any of its Subsidiaries has incurred
any
liability or obligation, direct or contingent, or entered into any transaction,
not in the ordinary course of business, that is material to the Company taken
as
a whole, and there has not been any change in the capital stock, or material
increase in the short-term or long-term debt, of the Company or any of its
Subsidiaries taken as a whole.
|
3.12.
|
Employees
|
(a) Neither
the Company nor any of its Subsidiaries is engaged in any unfair labor practice
or discriminatory employment practice and no complaint of any such practice
against the Company or any of its Subsidiaries has been filed or, to the
best of
the Company’s knowledge, threatened to be filed with or by the National Labor
Relations Board, the Equal Employment Opportunity Commission or any other
Governmental Authority that regulates labor or employment practices, nor
is any
grievance filed or, to the best of the Company's knowledge,
-13-
threatened
to be filed, against the Company or any of its Subsidiaries by any employee
pursuant to any employment agreement to which the Company or any of its
Subsidiaries is a party or is bound which, in any such case, would be reasonably
likely to have a Material Adverse Effect. The Company and its Subsidiaries
are
in compliance with all applicable foreign, federal, state and local laws
and
regulations regarding occupational safety and health standards except to
the
extent that noncompliance would not be reasonably likely to have a Material
Adverse Effect, and have received no complaints from any Governmental Authority
alleging such violations of any such laws and regulations.
(b) Neither
the Company nor any of its Subsidiaries is involved in any union labor dispute
nor, to the knowledge of the Company or any of its Subsidiaries, is any such
dispute threatened. None of the Company’s or its Subsidiaries’ employees is a
member of a union, neither the Company nor any of its Subsidiaries is a party
to
a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relations with their employees are good.
(c) Neither
the Company nor any of its Subsidiaries is aware that any officer or key
employee, or that any group of key employees, intends to terminate their
employment with the Company or a Subsidiary of the Company, nor does the
Company
or any of its Subsidiaries have a present intention to terminate the employment
of any of the foregoing.
|
3.13.
|
Tax
Matters
|
There
are
no foreign, federal, state, county or local taxes due and payable by the
Company
or any of its Subsidiaries which have not been paid or will not be paid prior
to
the time they become delinquent. The Company and its Subsidiaries have duly
filed (except in cases where valid extensions have been obtained) all foreign,
federal, state, county and local tax returns, reports and declarations required
to have been filed by them and there are in effect no waivers of applicable
statutes of limitations with respect to taxes for any year. No tax deficiency
has been determined adversely to the Company or any of its Subsidiaries which
would be reasonably likely to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is currently subject to a foreign, federal
or state tax audit of any kind.
|
3.14.
|
Intellectual
Property
|
(a) The
Company and its Subsidiaries own all right, title and interest in and to,
or
have valid and enforceable licenses or other rights to use, all Intellectual
Property, including, without limitation, all Proprietary Software, used or
held
for use by them in and material to the conduct of their businesses as currently
conducted and as contemplated to be conducted. The Company and its Subsidiaries
are in material compliance with all contractual obligations relating to the
protection of such of the Intellectual Property as they use pursuant to license
or other agreement. To the knowledge of the Company, no third party is
infringing the Intellectual Property owned by the Company and its Subsidiaries.
The conduct of the businesses of the Company and its Subsidiaries as currently
conducted and as contemplated to be conducted (i) do not conflict with or
infringe any intellectual property or other proprietary right (other than
rights
under issued patents) of any third party and (ii) to the knowledge of the
Company, do not conflict with or infringe any issued patents of any third
party.
There is no claim, suit, action or
-14-
proceeding
pending against the Company or any of its Subsidiaries of which the Company
has
received written notice nor, to the knowledge of the Company, is there any
claim, suit, action or proceeding threatened against the Company or any of
its
Subsidiaries: (i) alleging any such conflict or infringement with any third
party’s intellectual property or other proprietary rights; or (ii) challenging
the Company’s or such Subsidiary’s ownership or use, or the validity or
enforceability, of any Intellectual Property.
(b) Section
3.14(b)
of the
Disclosure Schedule sets forth a true, accurate and complete list of all
Proprietary Software constituting current product offerings, patents, trademark
registrations, service xxxx registrations, copyright registrations, domain
name
registrations, and all applications for any of the foregoing, that are owned
by
the Company or any of its Subsidiaries anywhere in the world (“Listed
Intellectual Property”),
and
the owner of record, date of application or issuance, registration or
application number, and relevant jurisdiction as to each. All Listed
Intellectual Property is owned by the Company and its Subsidiaries free and
clear of all liens, encumbrances, claims and security interests. No Listed
Intellectual Property is the subject of any proceeding before any Governmental
Authority, registrar or other authority in any jurisdiction challenging or
examining the right to ownership (excluding office actions or other forms
of
preliminary or final refusals of registration), of the Listed Intellectual
Property by the Company or its Subsidiaries, including any opposition,
cancellation, interference or other ex-parte legal challenges. The consummation
of the transactions contemplated hereby will not materially impair the rights
of
the Company and its Subsidiaries in any Listed Intellectual
Property.
(c) Section
3.14(c)
of the
Disclosure Schedule sets forth a true, accurate and complete list of all
third
party software and Source Code compiled with, bundled with, incorporated
into or
integrated with any Proprietary Software or any software currently under
development owned by the Company including, without limitation, open source
software, freeware, and proprietary software of third parties used under
a
license granted to the Company or its Subsidiaries.
(d) The
present employees, officers and directors of the Company or any of its
Subsidiaries, and any agents, consultants or outside contractors or
subcontractors of the Company or any of its Subsidiaries who conduct inventive
work in connection with their employment or engagement have entered into
written
agreements with the Company or a Subsidiary whereby they have assigned all
right, title and interest in their inventive work to the Company or a
Subsidiary. Except as set forth on Section
3.14(d)
of the
Disclosure Schedule, all inventors named on any patents or patent applications
constituting Intellectual Property executed assignments to the Company or
its
Subsidiaries of their rights to such patents and patent
applications.
(e) To
the
knowledge of the Company: (i) none of the Intellectual Property
constituting trade secrets or confidential information has been used, disclosed
or appropriated to the detriment of the Company or any of its Subsidiaries
for
the benefit of any Person other than the Company or its Subsidiaries; and
(ii)
no employee, independent contractor or agent of the Company or any of its
Subsidiaries has misappropriated any trade secrets or other confidential
information of any other Person in the course of the performance of his or
her
duties as an employee, independent contractor or agent of the Company or
any of
its Subsidiaries. The
-15-
Company
and its Subsidiaries have taken commercially reasonable steps (including,
without limitation, entering into confidentiality and nondisclosure agreements,
inventor agreements and work for hire agreements with all officers and employees
of and consultants to the Company and its Subsidiaries, if any, with access
to
or knowledge of any Intellectual Property) necessary to safeguard and maintain
the secrecy and confidentiality of, and its and its Subsidiaries’ proprietary
rights in, all trade secrets and other confidential information of the Company
and its Subsidiaries.
(f) The
Proprietary Software was developed by employees of the Company or its
Subsidiaries within the scope of their employment and such development was
conducted within the United States. Section
3.14(f)
of the
Disclosure Schedule identifies those present employees, directors, officers
and
consultants of which the Company is aware have created or developed Intellectual
Property, including Proprietary Software and Source Code, not pursuant to
a work
for hire agreement or agreement assigning ownership rights in the
Company.
(g) Neither
the Company nor any of its Subsidiaries has granted an exclusive license
to any
Proprietary Software to any third party.
(h) Section
3.14(h)
of the
Disclosure Schedule lists all licenses granted by the Company or its
Subsidiaries to third parties for use of Source Code of Proprietary Software,
all customer agreements pursuant to which any Source Code is held in escrow,
and
all escrow agents holding any Source Code pursuant to such customer agreements.
There have not been any instances in which any Source Code has been released
by
an escrow agent to a customer of the Company or its Subsidiaries. To the
knowledge of the Company, no event has occurred, and no circumstance or
condition exists, that (with or without notice or lapse of time) will, or
would
reasonably be expected to, result in the disclosure or delivery by the Company,
any of its Subsidiaries or any other party acting on behalf of the Company
or
any of its Subsidiaries, of any Source Code. No third party owns any right,
title or interest in or to any Source Code, except for such Source Code
identified in Section
3.14(c)
of the
Disclosure Schedule.
(i) The
Company and its Subsidiaries have purchased a sufficient number of license
seats
for all third party software for which paid licenses are required in order
to be
in compliance with the obligation to obtain such licenses. Neither the Company
nor its Subsidiaries (i) has modified any “open source” software utilized in
Proprietary Software or (ii) is subject to any obligation (1) to refrain
in any
way from use, disclosure or distribution of the Proprietary Software as used,
disclosed or distributed in their businesses as currently conducted and as
contemplated to be conducted or (2) to disclose any Source Code of Proprietary
Software arising from any “open source” software used by the Company or its
Subsidiaries.
(j) Reasonable
steps have been taken to back up electronically stored information used in
the
businesses, and the Company and its Subsidiaries have in place disaster recovery
and security arrangements in relation to the Proprietary Software and third
party operating software, all of which match or exceed good industry practice
and which comply with any specific obligation entered into by the Company
and
its Subsidiaries with any of its customers.
-16-
(k) The
practices of the Company and its Subsidiaries respecting maintenance of the
confidentiality of customer data and secure electronic storage of such data
(i)
match or exceed good industry practice, (ii) comply with any specific obligation
entered into by the Company and its Subsidiaries with any of its customers,
and
(iii) are in accordance with applicable laws, rules and
regulations.
|
3.15.
|
Material
Contracts
|
Except
for those documents filed prior to the date hereof in unredacted form with
the
SEC, Section
3.15
of the
Disclosure Schedule sets forth a true and complete list of the following
contracts, agreements, instruments, commitments and other arrangements to
which
the Company or any of its Subsidiaries is a party: (i) employment or severance
agreements with any director or officer and consulting agreements with any
consultant that provide for annual payments in excess of $100,000 and are
for a
term of one year or more (excluding such agreements that are cancelable without
penalty or further payment with 90 days’ notice or less); (ii) any shareholder
agreement or agreement relating to the issuance, voting or transfer of any
securities of the Company or any subsidiary; (iii) loan, bridge loan, credit
or
security agreements; (iv) joint venture agreements; (v) any contract, agreement
or understanding limiting or restraining the Company or its subsidiaries
from
engaging or competing in any lines of business or with any Person; (vi) any
contract, agreement, understanding or arrangement with the top ten customers
(and their respective Affiliates) of the Company, by revenue for the period
from
June 1, 2005 through May 31, 2006; (vii) any agreement or other arrangement for
the future sale or purchase of any material assets, property or rights, or
for
the grant of any options or preferential rights to purchase any material
assets,
property or rights; and (viii) any other Contract that is required to be
or has
been filed with the SEC but has not yet been filed (each, a “Material
Contract”).
Each
Material Contract is valid, binding and enforceable in all material respects
against the Company or such Subsidiary and, to the Company's knowledge, the
other parties thereto, in accordance with its terms, and in full force and
effect on the date hereof. Neither the Company nor its Subsidiaries is in
default or breach under any of the Material Contracts, nor is any other party
thereto in default or breach thereunder, nor are there facts or circumstances
which have occurred which, with or without the giving of notice or the passage
of time or both, would constitute a default or breach under any of the Material
Contracts, except for such breaches or defaults that would not, individually
or
in the aggregate, be reasonably expected to have a Material Adverse
Effect.
|
3.16.
|
Title
to Tangible Assets
|
The
Company and its Subsidiaries have good and marketable title to their respective
material properties and assets and good and enforceable title to all of their
respective material leasehold estates, in each case subject to no mortgage,
pledge, lien, lease, encumbrance, defect or charge, other than or resulting
from
taxes which have not yet become delinquent and minor liens and encumbrances
which do not in any case materially detract from the value of the property
subject thereto or materially impair the operations of the Company or any
of its
Subsidiaries as currently conducted and as contemplated to be conducted and
which have not arisen otherwise than in the ordinary course of
business.
-17-
3.17.
Condition
of Properties
Except
for matters that would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect, the property and assets of the
Company
and its Subsidiaries are in good operating condition and repair (ordinary
wear
and tear excepted).
|
3.18.
|
Transactions
with Related Parties
|
Neither
the Company nor any of its Subsidiaries is a party to any agreement with
any of
the Company’s or any of its Subsidiaries’ directors, officers or stockholders or
any Affiliate or family member of any of the foregoing under which it: (i)
leases any real or personal property (either to or from such Person); (ii)
licenses Intellectual Property, Software or other technology (either to or
from
such Person); (iii) is obligated to purchase any tangible or intangible
asset from or sell such asset to such Person; (iv) purchases products or
services from or furnishes products or services to such Person; or (v) has
borrowed money from or lent money to such Person. Neither the Company nor
any of
its Subsidiaries employs as an employee or engages as a consultant any family
member of any of the Company’s or any of its Subsidiaries’ directors, officers
or stockholders. To the knowledge of the Company, there exist no agreements
among stockholders of the Company or of any of its Subsidiaries to act in
concert with respect to the voting or holding of the Company’s
securities.
|
3.19.
|
Registration
Rights
|
Except
as
pursuant to the Registration Rights Agreement, the Company will not, as of
the
Closing Date, be under any obligation to register any of its securities under
the Securities Act.
|
3.20.
|
Brokerage
|
There
are
no claims for brokerage commissions or finder’s fees or similar compensation in
connection with the transactions contemplated by this Agreement based on
any
arrangement made by or on behalf of the Company or any of its Subsidiaries,
and
the Company agrees to indemnify and hold the Investors harmless against any
costs or damages incurred as a result of any such claim.
|
3.21.
|
Illegal
or Unauthorized Payments; Political
Contributions
|
Neither
the Company nor any of its Subsidiaries, nor, to the best of the Company’s
knowledge (after reasonable inquiry of its officers and directors), any of
the
officers, directors, employees, agents or other representatives of the Company,
any of its Subsidiaries or any other business entity or enterprise with which
the Company or any of its Subsidiaries is or has been affiliated or associated,
has, directly or indirectly taken any action prohibited by Section 30A of
the
Exchange Act.
|
3.22.
|
Takeover
Statute
|
The
Board
has taken all action necessary to render inapplicable, as it relates to the
Investors, (i) the provisions of Section 203 of the DGCL and (ii) the provisions
of the
-18-
Company’s
Rights Agreement with Xxxxx Xxxxxx Shareholder Services, L.L.C., as Rights
Agent, dated September 1, 1997, as amended from time to time (the “Rights
Plan”),
in
each case, however,
solely
with respect to transactions (x) contemplated hereby or (y) as would be
permitted under Section
8.7.
To the
Company’s knowledge, no other Takeover Statute is applicable to the transactions
contemplated hereby.
|
3.23.
|
No
Manipulation of Common Stock
|
Neither
the Company nor any of its Subsidiaries has taken action outside the ordinary
course of business designed to or that might reasonably be expected to cause
or
result in unlawful manipulation of the price of the Common Stock to facilitate
the sale or resale of the Shares, the Conversion Shares or the Exchange
Preferred Shares.
|
3.24.
|
Accountants
|
Xxxxxxxx
LLP has advised the Company that it is, and to the knowledge of the Company
it
is, an independent accountant as required by the Xxxxxxxx-Xxxxx Act, the
Securities Act and the Exchange Act.
|
3.25.
|
Internal
Accounting Controls
|
Each
of
the Company and its Subsidiaries maintains a system of internal accounting
controls sufficient, in the judgment of the management of the Company or
such
Subsidiary, to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
|
3.26.
|
Environmental
Matters
|
The
Company and its Subsidiaries are in compliance with all applicable Environmental
Laws, except where any failure to comply would not be reasonably likely to
have
a Material Adverse Effect. There is no civil, criminal or administrative
judgment, action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending or to the Company’s
knowledge threatened against the Company or any of its Subsidiaries pursuant
to
Environmental Laws. To the Company’s knowledge, there are no past or present
events, conditions, circumstances, activities, practices, incidents, agreements,
actions or plans which could reasonably be expected to prevent compliance
with,
or which have given rise to or will give rise to liability which would have
a
Material Adverse Effect, under Environmental Laws. The Company and its
Subsidiaries have received all permits, licenses or other approvals required
of
them under applicable Environmental Laws to conduct their respective businesses,
and are in compliance with all terms and conditions of any such permits,
licenses and approvals except where the failure to so comply would not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect.
-19-
3.27.
Insurance
The
Company and its Subsidiaries have made available to WP copies of all material
insurance policies maintained by the Company’s and its Subsidiaries’ with
respect to their respective businesses and properties, all of which are in
full
force and effect. Since December 31, 2005, neither the Company nor its
Subsidiaries have been refused insurance coverage sought or applied for by
the
Company or its Subsidiaries. Neither the Company nor its Subsidiaries have
received notice from, and the Company has no knowledge of any threat by,
any
insurer that has issued any insurance policy to the Company or any of its
Subsidiaries that such insurer intends to deny coverage under or cancel,
discontinue or not renew any insurance policy presently in force.
|
3.28.
|
Transfer
Taxes
|
On
the
Closing Date, all stock transfer or other taxes (other than income taxes)
which
are required to be paid in connection with the sale and issuance of the Shares
hereunder will be, or will have been, fully paid or provided for by the Company
and the Company will have complied with all laws imposing such
taxes.
|
3.29.
|
Investment
Company
|
The
Company is not an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for an investment company, within the
meaning of the Investment Company Act of 1940, as amended.
|
3.30.
|
No
Integration; General Solicitation
|
Neither
the Company nor any of its Affiliates, nor any Person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any security
or
solicited any offers to buy any security, under circumstances that would
cause
the issuance of the Shares to be integrated with any prior offering by the
Company for purposes of the Securities Act or any applicable stockholder
approval provisions. Neither the Company nor any of its Affiliates, nor any
Person acting on its or their behalf, has offered or sold, or authorized
the
offer or sale of, any of the Shares by any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the Securities
Act.
The Company has not publicly distributed and will not publicly distribute
prior
to the Closing Date any offering material in connection with the issuance
of the
Shares. The Company has offered the Shares for sale only to the Investors.
The
Company shall not directly or indirectly take, and shall not permit any of
its
directors or officers indirectly to take, any action (including any offering
or
sale to any Person of the Shares) that will make unavailable the exemption
from
registration under the Securities Act being relied upon by the Company for
the
offer and sale to the Investors of the Shares as contemplated by this
Agreement.
|
3.31.
|
Officers,
Directors and 5% Stockholders
|
Each
of
the Company’s officers and directors and Persons known to the Company to
beneficially own (within the meaning of Rule 13d-3 under the Exchange Act)
5% or
more of the Common Stock is listed on Section
3.31
of the
Disclosure Schedule.
-20-
3.32.
Vote
Required.
No
vote
of the holders of any class or series of the Company’s capital stock, including
the Common Stock, is necessary to approve the issuance of the Shares or the
Warrant and any other transactions contemplated by this Agreement including,
without limitation, the establishment of the new stock option plan contemplated
by Section
8.11
hereof.
SECTION
4.
REPRESENTATIONS
AND WARRANTIES OF THE INVESTORS
Each
Investor severally represents and warrants to the Company that:
(a) It
is
acquiring the Shares and the Warrant for its own account for investment and
not
with a view towards the resale, transfer or distribution thereof, nor with
any
present intention of distributing the Shares or the Warrant, but subject,
nevertheless, to any requirement of law that the disposition of the Investor’s
property shall at all times be within the Investor’s control, and without
prejudice to the Investor’s right at all times to sell or otherwise dispose of
all or any part of such securities under a registration under the Securities
Act
or under an exemption from said registration available under the Securities
Act.
(b) It
has
full power and legal right to execute and deliver this Agreement and to perform
its obligations hereunder.
(c) It
is a
validly existing partnership, limited liability company, trust or corporation,
as the case may be, duly organized under the laws of its jurisdiction of
organization or formation.
(d) It
has
taken all action necessary for the authorization, execution, delivery, and
performance of this Agreement and its obligations hereunder, and, upon execution
and delivery by the Company, this Agreement shall constitute the valid and
binding obligation of such Investor, enforceable against such Investor in
accordance with its terms, except that such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or
hereafter in effect relating to creditors' rights and general principles
of
equity.
(e) There
are
no claims for brokerage commissions or finder's fees or similar compensation
in
connection with the transactions contemplated by this Agreement based on
any
arrangement made by or on behalf of such Investor and such Investor agrees
to
indemnify and hold the Company harmless against any costs or damages incurred
as
a result of any such claim.
(f) It
has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its investment in the Company
as
contemplated by this Agreement, and is able to bear the economic risk of
such
investment for an indefinite period of time. It has been furnished access
to
such information and documents as it has requested and has been afforded
an
opportunity to ask questions of and receive answers from representatives
of the
Company concerning the terms and conditions of this Agreement and the purchase
of the Shares contemplated hereby. It is a “qualified institutional buyer”
within the meaning of Rule 144A(a) of the Securities Act or an “accredited
investor” within the meaning of Rule 501(a) of Regulation D under the Securities
Act.
-21-
(g) Except
as
contemplated by Section
5.7
and
except for such consents, approvals and filings, the failure to obtain or
make
would not, individually or in the aggregate, have a material adverse effect
on
the ability of the Investor to consummate the transactions contemplated by
this
Agreement, the execution and delivery by it of this Agreement and the
performance by such Investor of its obligations hereunder and the consummation
by such Investor of the transactions contemplated hereby do not require such
Investor to obtain any consent, approval, clearance or action of, or make
any
filing, submission or registration with, or give any notice to, any Governmental
Authority or judicial authority.
(h) The
execution and delivery of this Agreement by such Investor do not, and the
fulfillment of the terms hereof and thereof by such Investor will not, (i)
violate or conflict with its partnership agreement, trust agreement, the
articles of incorporation, other constitutive documents or by-laws (or other
similar applicable documents) of the Investor, as applicable; (ii) result
in a breach of any of the terms, conditions or provisions of, or constitute
a
default (with or without the giving of notice or the passage of time (or
both))
under, or result in the modification of, or permit the acceleration of rights
under or termination of, any material contract to which such Investor is
a party
or (iii) violate any law, ordinance, standard, judgment, rule or regulation
of
any court or federal, state or foreign regulatory board or body or
administrative agency having jurisdiction over such Investor or over its
respective properties or businesses; except, in the cases of clauses (ii)
and
(iii) where such event would not be reasonably likely to have a material
adverse
effect on the Investor’s ability to consummate the transactions contemplated by
this Agreement.
SECTION
5.
PRE-CLOSING
COVENANTS
|
5.1.
|
Resale
of Shares
|
Each
Investor severally covenants that it will not sell or otherwise transfer
the
Shares, the Warrant, the Warrant Shares, the Conversion Shares or the Exchange
Preferred Shares, except pursuant to an effective registration under the
Securities Act or in a transaction which qualifies as an exempt transaction
under the Securities Act and the rules and regulations promulgated
thereunder.
|
5.2.
|
Covenants
Pending Closing
|
Pending
the Closing, each of the Company and its Subsidiaries will conduct its business
in the ordinary course, and will not, without the Investors’ prior written
consent, such consent not to be unreasonably withheld, delayed or conditioned,
take any action which would result in any of the representations or warranties
contained in this Agreement not being true at and as of the time immediately
after such action, or in any of the covenants contained in this Agreement
becoming incapable of performance. Pending the Closing, the Company will
promptly advise the Investors of any action or event of which it becomes
aware
which has the effect of making materially incorrect any of such representations
or warranties or which has the effect of rendering any of such covenants
incapable of performance. Without limiting the generality of the foregoing,
and
except as otherwise expressly contemplated by this Agreement, between the
date
hereof and the earlier of termination of this Agreement or the Closing Date,
the
-22-
Company
shall not, and shall cause each of its Subsidiaries not to, without the prior
written consent of the Investors:
(a) make
any
change in its charter documents or bylaws or issue any additional shares
of
capital stock or equity securities or grant any option, warrant or right
to
acquire any capital stock or equity securities or issue any security convertible
into or exchangeable for its capital stock or alter any term of any of its
outstanding securities or make any change in its outstanding shares of capital
stock or other ownership interests or in its capitalization, whether by reason
of a reclassification, recapitalization, stock split or combination, exchange
or
readjustment of shares, stock dividend or otherwise;
(b) incur,
assume or guarantee any indebtedness for borrowed money (other than ordinary
course trade payables or pursuant to existing facilities in the ordinary
course
of business consistent with past practice), issue any notes, bonds, debentures
or other corporate securities or grant any option, warrant or right to purchase
any thereof, (B) issue any securities convertible or exchangeable for debt
securities of the Company, or (C) issue any options or other rights to acquire
from the Company, directly or indirectly, debt securities of the Company
or any
security convertible into or exchangeable for such debt securities;
(c) make
any
sale, assignment, transfer, abandonment or other conveyance of any of its
assets
or any part thereof, except transactions pursuant to existing contracts set
forth in the Disclosure Schedule and dispositions of inventory or of worn-out
or
obsolete equipment for fair or reasonable value in the ordinary course of
business consistent with past practices;
(d) redeem,
retire, purchase or otherwise acquire, directly or indirectly, any shares
of its
capital stock or declare, set aside or pay any dividends or other distribution
in respect of such shares;
(e) enter
into any new (or amend any existing) employee benefit plan, program or
arrangement or any new (or amend any existing) employment, severance or
consulting agreement, grant any general increase in the compensation of officers
or employees (including any such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment) or grant any increase in the
compensation payable or to become payable to any employee, except in accordance
with pre-existing contractual provisions or as contemplated by Section
8.11
herein;
or
(f) commit
to
do any of the foregoing.
|
5.3.
|
Further
Assurances
|
The
Company and each Investor shall execute such documents and other papers and
take
such further actions as may be reasonably required or desirable to carry
out the
provisions hereof and the transactions contemplated hereby. The Company and
each
Investor shall use its reasonable efforts to fulfill or obtain the fulfillment
of the conditions to the Closing as promptly as practicable.
-23-
5.4.
Access
to Information
The
Company shall, and shall cause each of its Subsidiaries to, throughout the
period from the date hereof until the Closing has been made, (i) provide
each Investor and its representatives with full access, upon reasonable prior
notice and during normal business hours, to all officers, employees, agents
and
accountants of the Company and its Subsidiaries and their respective assets,
properties and material books and records, but only to the extent that such
access does not unreasonably interfere with the business and operations of
the
Company and its Subsidiaries, and (ii) furnish promptly to such persons
(x) a copy of each report, statement, schedule and other document filed or
received by the Company or any of its Subsidiaries pursuant to the requirements
of federal or state securities laws and each material report, statement,
schedule and other document filed with any other Governmental Authority and
(y) all other information and data (including, without limitation, copies
of Contracts, employee benefit plans and other material books and records
and
environmental assessments, investigations or studies concerning the properties
of such party or the business or operations conducted thereon) concerning
the
business and operations of the Company and its Subsidiaries as the other
party
or any of such other persons reasonably may request. No investigation pursuant
to this paragraph or otherwise shall affect any representation or warranty
contained in this Agreement or any condition to the obligations of the parties
hereto.
|
5.5.
|
Exclusivity
|
From
and
after the date hereof to the Closing Date or the earlier termination of this
Agreement in accordance with its terms, neither the Company nor any Subsidiary,
nor their respective officers or directors or any Person acting on their
behalf,
shall directly or indirectly encourage, solicit or, except as may be required
by
law, engage in discussions or negotiations with, or provide any information
to,
any Person, firm, or other entity or group (other than the Investors or their
representatives) concerning any merger, sale of substantial assets, purchase
or
sale of shares of capital stock of the Company or similar transaction involving
the Company or any division, Subsidiary or Affiliate thereof. The Company
shall
promptly notify the Investors if it, or to its knowledge any of its
Subsidiaries, receives any such inquiries or communications.
|
5.6.
|
Public
Disclosure
|
Before
issuing any press release or otherwise making any public statement with respect
to the transactions contemplated by this Agreement, the Company and the
Investors agree to consult with each other as to its form and substance,
and
agree not to issue any such press release or make any public statement prior
to
obtaining the consent of the other (which shall not be unreasonably withheld
or
delayed), except to the extent that the Company or the Investors, as the
case
may be, is advised by outside counsel that such public statement is required
by
applicable law. On or before the fourth Business Day following the Closing
Date,
the Company shall file a Current Report on Form 8-K with the SEC describing
the
terms of the transactions contemplated by this Agreement and attach as an
exhibit to such Current Report on Form 8-K this Agreement, the Registration
Rights Agreement, the Certificate of Designations and any other agreements
relating to the transactions contemplated by this Agreement that are required
to
be filed pursuant to the Exchange Act.
-24-
5.7.
HSR
Act Filing
The
Company and WP shall, as soon as practicable after the date of this Agreement,
but in no event later than ten (10) Business Days after the date hereof,
file
Notification and Report Forms under the HSR Act with the Federal Trade
Commission (the “FTC”)
and
the Antitrust Division of the Department of Justice (the “Antitrust
Division”)
relating to the transaction contemplated by this Agreement and shall use
their
reasonable best efforts to respond as promptly as practicable to all inquiries
received from the FTC or the Antitrust Division for additional information
or
documentation.
|
5.8.
|
Consents
and Approvals
|
From
and
after the date hereof, the Company shall use its reasonable best efforts
to
obtain as promptly as practicable any consent or approval of any Person,
including any Governmental Authority, required in connection with the
transactions contemplated hereby, including an application that meets the
requirements of NASD Rule 1017(b) (the “1017
Application”),
and
the Investors shall cooperate reasonably with the Company with respect
thereto.
|
5.9.
|
Use
of Proceeds
|
The
proceeds received by the Company from the issuance and sale of the Shares
shall
be used by the Company for general corporate purposes and business development
activities.
5.10. Takeover
Statute
If
any
Takeover Statute shall become applicable to the transactions contemplated
hereby, including without limitation any takeover provision under the laws
of
the State of Delaware, the Company and the members of the Board shall, to
the
extent consistent with its fiduciary duties, grant such approvals and take
such
actions as are necessary so that the transactions contemplated hereby may
be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise use their reasonable best efforts to act to eliminate or minimize
the
effects of such statute or regulation on the transactions contemplated hereby.
|
5.11.
|
Form
D and Blue Sky
|
The
Company agrees to timely file a Form D with the SEC with respect to the Shares
to the extent required under Regulation D of the Securities Act and to provide,
upon request, a copy thereof to each Investor. The Company shall, on or before
the Closing Date, take such action as the Company shall reasonably determine
is
necessary in order to obtain an exemption for, or to qualify the Shares for,
sale to the Investors at the Closing pursuant to this Agreement under applicable
securities and “blue sky” laws of the states of the United States (or to obtain
an exemption from such qualification), and shall provide evidence of any
such
action so taken to the Investors on or prior to the Closing Date. The Company
shall make all timely filings and reports relating to the offer and sale
of the
Shares required under applicable securities and “blue sky” laws of the states of
the United States following the Closing Date. The Company
-25-
shall
pay
all fees and expenses in connection with satisfying its obligations under
this
Section
5.11.
SECTION
6.
INVESTORS’
CLOSING CONDITIONS
The
Investors’ obligations to purchase the Shares at the Closing shall be subject to
the performance by the Company of its agreements theretofore to be performed
hereunder and to the satisfaction (or waiver), prior thereto or concurrently
therewith, of the following further conditions:
|
6.1.
|
Representations
and Warranties
|
The
representations and warranties of the Company contained in Section 3 of this
Agreement shall be true and correct on and as of the Closing Date in all
material respects (except for such representations and warranties that are
qualified as to materiality, which shall be true and correct in all respects)
as
though such representations and warranties were made at and as of such
date.
|
6.2.
|
Compliance
with Agreement
|
The
Company shall have performed and complied in all material respects with all
agreements, covenants and conditions contained in this Agreement which are
required to be performed or complied with by the Company prior to or on the
Closing Date.
|
6.3.
|
Injunction
|
There
shall be no effective injunction, writ, preliminary restraining order or
any
order of any nature issued by a court of competent jurisdiction directing
that
the transactions provided for herein or any of them not be consummated as
herein
provided.
|
6.4.
|
Regulatory
Approvals; Third Party Consents
|
The
waiting period under the HSR Act shall have been terminated or expired, or
approval under the HSR Act shall have been received, and any consents or
approvals under any other Competition Laws shall have been received. The
Company
shall have received written NASD approval of the 1017 Application, or there
shall elapsed at least 31 days since the Company shall have filed the 1017
Application with the NASD and the Company shall not have received any comment
or
notice, written or otherwise, from the NASD that in the view of Investors’
counsel could result in denial or disapproval of the 1017
Application.
|
6.5.
|
Counsel’s
Opinion
|
Each
Investor shall have received an opinion, dated the Closing Date from the
Company’s General Counsel and Xxxxxxxxx & Xxxxxxx LLP, substantially in the
form of Exhibits
F-1
and
F-2
attached
hereto.
-26-
6.6.
Adverse
Development
There
shall have been no developments in the business of the Company or any of
its
Subsidiaries which would be reasonably likely to have a Material Adverse
Effect.
|
6.7.
|
Convertible
Preferred Directors
|
Effective
as of the Closing Date, Xxxxxxx Xxxxxxx and Xxxx Xxxxx shall have been appointed
to the Board as the initial Convertible Preferred Directors and written evidence
of such appointments shall be provided to the Investors.
|
6.8.
|
Chief
Executive Officer
|
Effective
as of the Closing Date, Xxxxxx Xxxxxxxxx shall have been appointed Chief
Executive Officer of the Company and written evidence of such appointment
shall
be provided to the Investors. The Company shall have entered into an employment
agreement with Xx. Xxxxxxxxx, the terms of which are acceptable to WP.
|
6.9.
|
Registration
Rights Agreement
|
The
Company shall have executed the Registration Rights Agreement, the form of
which
is attached as Exhibit
G
hereto
(the “Registration
Rights Agreement”).
|
6.10.
|
Issuance
of Warrant
|
The
Company shall have executed and delivered the Warrant to the Investors in
accordance with the terms hereof.
|
6.11.
|
Filing
of Certificate of Designations
|
The
Certificate of Designations shall have been filed with the Secretary of State
of
the State of Delaware and shall be in full force and effect as of the Closing
Date.
|
6.12.
|
Officer’s
Certificate
|
Each
Investor shall have received a certificate, dated the Closing Date, signed
by a
duly authorized executive officer of the Company, certifying that the conditions
specified in the foregoing Sections
6.1,
6.2,
6.3,
and
6.6
hereof
have been fulfilled.
|
6.13.
|
Secretary’s
Certificate
|
Each
Investor shall have received a certificate, dated the Closing Date, of the
Secretary of the Company attaching: (i) a true and complete copy of the Restated
Certificate of Incorporation of the Company, with all amendments thereto;
(ii)
true and complete copies of the Company's By-laws, as amended, in effect
as of
such date; (iii) a certificate from the Secretary of State of the State of
Delaware as to the good standing of the Company as of a date not more than
three
(3) Business Days prior to the Closing Date; (iv) certificates of good standing
from the appropriate officials of the jurisdictions in each state in which
the
Company is qualified to do
-27-
business
as a foreign corporation, each as of a recent date; and (v) resolutions of
the
Board authorizing the execution and delivery of this Agreement, the transactions
contemplated hereby, and the issuance of the Shares.
SECTION
7.
COMPANY
CLOSING CONDITIONS
The
Company’s obligation to issue and sell the Shares at the Closing shall be
subject to the performance by each Investor of its agreements theretofore
to be
performed hereunder and to the satisfaction (or waiver), prior thereto or
concurrently therewith, of the following further conditions:
|
7.1.
|
Representations
and Warranties
|
The
representations and warranties of the Investors contained in Section 4 of
this
Agreement shall be true and correct in all material respects on and as of
the
Closing Date (except for such representations and warranties that are qualified
as to materiality, which shall be true and correct in all respects) as though
such representations and warranties were made at and as of such
date.
|
7.2.
|
Compliance
with Agreement
|
The
Investors shall have performed and complied in all material respects with
all
agreements, covenants and conditions contained in this Agreement which are
required to be performed or complied with by them prior to or on the Closing
Date.
|
7.3.
|
Regulatory
Approvals
|
The
waiting period under the HSR Act shall have been terminated or expired, or
approval under the HSR Act shall have been received, and any consents or
approvals under any other Competition Laws shall have been received. The
Company
shall have received written NASD approval of the 1017 Application, or there
shall elapsed at least 31 days since the Company shall have filed the 1017
Application with the NASD and the Company shall not have received any comment
or
notice, written or otherwise, from the NASD that in the view of the Company’s
counsel could result in denial or disapproval of the 1017
Application.
|
7.4.
|
Investors’
Certificates
|
The
Company shall have received a certificate from each Investor, dated the Closing
Date, signed by a duly authorized representative of the Investor, certifying
that the conditions specified in the foregoing Sections
7.1
and
7.2
hereof
have been fulfilled.
|
7.5.
|
Injunction
|
There
shall be no effective injunction, writ, preliminary restraining order or
any
order of any nature issued by a court of competent jurisdiction directing
that
the transactions provided for herein or any of them not be consummated as
herein
provided.
-28-
SECTION
8.
POST-CLOSING
COVENANTS
|
8.1.
|
Inspection
|
As
long
as an Investor Owns at least five percent (5%) of the outstanding Common
Stock
(including the Conversion Shares issuable upon the Conversion, if the Conversion
has not occurred), the Company, upon reasonable prior notice and during normal
business hours, shall permit the Investor, its nominee, assignee, and its
representative to visit and inspect any of the properties of the Company
and any
of its Subsidiaries, to examine all its books of account, records, reports
and
other papers, to make copies and extracts therefrom, and provide reasonable
access to and the right to consult with, its officers, directors, key employees
and independent public accountants or any of them (and by this provision
the
Company authorizes said accountants to discuss with such Investor, its nominees,
assignees and representatives the finances and affairs of the Company and
its
Subsidiaries), all at such reasonable times and as often as may be reasonably
requested; provided,
however, that
the
Company shall not be obligated under this Section
8.1
with
respect to information the Company is contractually obligated to keep
confidential or secret or which the Board determines in good faith is
confidential and should not, therefore, be disclosed.
|
8.2.
|
Confidentiality
|
As
to so
much of the information and other material furnished under or in connection
with
this Agreement (including without limitation information furnished pursuant
to
Section
8.1
hereof)
as constitutes or contains confidential business, financial or other information
of the Company, each Investor covenants for itself and its members and officers
that it will use due care to prevent its officers, members, employees, counsel,
accountants, consultants, advisors and other representatives from disclosing
such information to Persons other than their respective authorized employees,
counsel, accountants, stockholders, partners, limited partners and other
authorized representatives or from using such information except as an Investor
or for the benefit of the Company; provided,
however,
that
such Investor may disclose or deliver any information or other material
disclosed to or received by it should the Investor be advised by its counsel
that such disclosure or delivery is required by law, regulation or judicial
or
administrative order. For purposes of this Section
8.2,
“due
care”
means
at least the same level of care that such Investor would use to protect the
confidentiality of its own sensitive or proprietary information, and this
obligation shall survive termination of this Agreement.
|
8.3.
|
Lost,
etc. Certificates Evidencing Shares;
Exchange
|
Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of any certificate evidencing any Shares,
Warrant Shares, Conversion Shares or Exchange Preferred Shares owned by an
Investor, and (in the case of loss, theft or destruction) of an unsecured
indemnity satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation
of
such certificate, if mutilated, the Company will make and deliver in lieu
of
such certificate a new certificate of like tenor and for the number of
securities evidenced by such certificate which remain outstanding. Each
Investor's agreement of indemnity shall constitute indemnity satisfactory
to the
Company for purposes of this Section
8.3.
Upon
surrender of any certificate
-29-
representing
any Shares, Warrant Shares, Conversion Shares or Exchange Preferred Shares,
for
exchange at the office of the Company, the Company at its expense will cause
to
be issued in exchange therefor new certificates in such denomination or
denominations as may be requested for the same aggregate number of Shares,
Warrant Shares, Conversion Shares or Exchange Preferred Shares represented
by the certificate so surrendered and registered as such holder may request.
The
Company will also pay the cost of all deliveries of certificates for such
Shares, Warrant Shares, Conversion Shares or Exchange Preferred Shares to
the
office of the Investor (including the cost of insurance against loss or theft
in
an amount satisfactory to the holders) upon any exchange provided for in
this
Section
8.3.
|
8.4.
|
Insurance
|
The
Company will use its reasonable best efforts to maintain directors and officers
insurance with responsible and reputable insurance companies or associations
in
at least such amounts and covering such risks as the Company has previously
maintained.
|
8.5.
|
Board
Seats
|
(a) At
such
time as WP and its Affiliates have converted 50% of the Convertible Preferred
Stock initially issued to WP pursuant to this Agreement, and for as long
as WP
and its Affiliates own at least (i) two thirds (2/3) of the Common Stock
issued
upon conversion of all shares of the Convertible Preferred Stock converted
on or
before such time, the Company shall use its reasonable best efforts to nominate
and cause to be elected two (2) representatives designated by WP (herein
referred to as the “WP
Board Members”)
to the
Board and (ii) one third (1/3) of the Common Stock issued upon conversion
of all
shares of the Convertible Preferred Stock converted on or before such time,
the
Company shall use its best efforts to nominate and cause to be elected one
(1)
WP Board Member. All such WP Board Members shall be duly appointed in accordance
with the Company’s Amended Bylaws and Restated Certificate of Incorporation and
the DGCL. Each WP Board Member so elected shall serve until his or her successor
is elected and qualified. In the event the Board establishes any committee
thereof, including, without limitation, a Compensation Committee or an Audit
Committee, at least one of the WP Board Members shall have the right, but
not
the obligation, to be a member of each such committee, unless prohibited
by law
or applicable rules of any stock exchange on which the Common Stock is listed,
excluding any committee formed to consider a transaction between WP and the
Company.
(b) The
Company’s proxy statement for the election of directors shall include the WP
Board Members and the recommendation of the Board in favor of election of
the WP
Board Members. The WP Board Members shall be given notice of (in the same
manner
that notice is given to other members of the Board) all meetings (whether
in
person, telephonic or otherwise) of the Board, including all committee meetings
with respect to committees on which the WP Board Members serve. The WP Board
Members shall be provided with the same information, and access thereto,
provided to other members of Board. In addition to any other indemnification
rights the WP Board Members have under law or pursuant to the Restated
Certificate of Incorporation of the Company, the Amended Bylaws of the Company
or any other agreements or policies of the Company providing for indemnification
of members of the Board, each WP Board Member that serves on the Board shall
have the right to enter into, and the
-30-
Company
agrees to enter into, the Director and Officer Indemnification Agreement
in the
form attached hereto as Exhibit
H
(the
“Indemnification
Agreement”),
relating to claims against such WP Board Member resulting from, arising out
of,
or based upon, any events or actions that have occurred prior to the effective
date of such WP Board Member’s appointment to the Board, with such changes as
the WP Board Member and the Company may agree to at the time of execution
of
such Agreement. The Company agrees to negotiate any changes to the
Indemnification Agreement by a WP Board Member in good faith. The Company
shall
reimburse the reasonable expenses incurred by the WP Board Members in connection
with attending (whether in person or telephonically) all meetings of the
Board
or committees thereof or other Company related meetings to the same extent
as
all other members of the Board are reimbursed for such expenses (or, in case
any
such expense reimbursement policy shall apply only to non-employee directors,
to
the same extent as all other non-employee directors).
|
8.6.
|
Subscription
Rights
|
(a) If
at any
time after the Closing Date, the Company determines to issue equity securities
of any kind (for these purposes, the term “equity
securities”
shall
include, without limitation, Common Stock, warrants, options or other rights
to
acquire equity securities convertible or exchangeable into equity securities)
of
the Company (other than: (i) to the public in a firm commitment underwriting
pursuant to a registration statement filed under the Securities Act; (ii)
the
issuance of equity securities to employees, officers or directors of, or
consultants or advisors to the Company or any Subsidiary of the Company,
in such
amounts as are approved by the Board; (iii) any equity securities issued
as
consideration in connection with a bona fide acquisition, merger or
consolidation by the Company provided such acquisition, merger or consolidation
has been approved by the Board; (iv) securities issued in connection with
licensing, marketing or distribution arrangements or similar strategic
transactions approved by the Board; (v) any equity securities issued upon
conversion, exchange or exercise of any outstanding equity securities as
disclosed in Section
3.3
of this
Agreement or Section
3.3
of the
Disclosure Schedule; (vi) shares of Common Stock issued as dividends with
respect to the Shares purchased by the Investors hereunder; or (vii) the
Conversion Shares) then, for so long as WP and its Affiliates Own at least
a
majority of (i) the aggregate number of Shares (including any Conversion
Shares)
acquired by it on the Closing Date, or (ii) in the event the Conversion of
all
of the Convertible Preferred Stock occurs, the Conversion Shares, the Company
shall:
(1) give
written notice to WP setting forth in reasonable detail (A) the designation
and
all of the terms and provisions of the securities proposed to be issued (the
“Proposed
Securities”),
including, where applicable, the voting powers, preferences and relative
participating, optional or other special rights, and the qualification,
limitations or restrictions thereof and interest rate and maturity; (B) the
price and other terms of the proposed sale of such securities; (C) the amount
of
such Proposed Securities; and (D) such other information as WP may reasonably
request in order to evaluate the proposed issuance; and
(2) offer
to
issue to WP upon the terms described in the notice delivered pursuant to
Section
8.6(a)(1)
above, a
portion of the Proposed Securities equal
to
(i) the percentage of the Common Stock (including the Conversion Shares issuable
upon the Conversion, if the Conversion has not occurred) Owned by WP and
its
Affiliates
-31-
immediately
prior to the issuance of the equity securities relative to the total number
of
shares of Common Stock (including the Conversion Shares issuable upon the
Conversion, if the Conversion has not occurred) outstanding immediately prior
to
the issuance of the equity securities, multiplied by (ii) the total number
of
Proposed Securities.
(b) WP
must
exercise its purchase rights hereunder within ten (10) Business Days after
receipt of such notice from the Company. To the extent that the Company offers
two or more securities in units, WP must purchase such units as a whole and
will
not be given the opportunity to purchase only one of the securities making
up
such unit.
(c) Upon
the
expiration of the offering period described above, the Company will be free
to
sell such Proposed Securities that WP has not elected to purchase during
the 90
days following such expiration on terms and conditions no more favorable
to the
purchasers thereof than those offered to WP.
(d) The
election by WP not to exercise its subscription rights under this Section
8.6
in any
one instance shall not affect its right (other than in respect of a reduction
in
its percentage holdings) as to any subsequent proposed issuance. Any sale
of
such securities by the Company without first giving WP the rights described
in
this Section
8.6
shall be
void and of no force and effect.
(e) The
subscription rights established by this Section
8.6
shall
not apply to, and shall terminate upon a consolidation, merger, reorganization
or other form of acquisition of or by the Company in which the Company’s
stockholders immediately prior to the transaction retain less than 50% of
the
voting power of or economic interest in the surviving or resulting entity
(or
its parent), or a sale of the Company’s assets in excess of a majority of the
Company’s assets (valued at fair market value as determined in good faith by the
Board).
(f) The
Company and WP hereby declare that it is impossible to measure in money the
damages which will accrue to the parties hereto by reason of the failure
of any
party to perform any of its obligations set forth in this Section
8.6.
Therefore, the Company and WP shall have the right to specific performance
of
such obligations, and if any party hereto shall institute any action or
proceeding to enforce the provisions hereof, each of the Company and WP hereby
waive the claim or defense that the party instituting such action or proceeding
has an adequate remedy at law.
|
8.7.
|
Standstill
|
(a) Each
Investor agrees that until the expiration of five (5) years from the Closing
Date (the “Standstill
Period”),
without the prior written consent of the Independent Directors of the Board,
the
Investor shall not, alone or as part of a “group” (within
the meaning of Sections 13(d)(3) of the Exchange Act)
or in
concert with others, (i) in any manner acquire or make any public proposal
to
acquire, directly or indirectly, any securities of the Company that would
result
in the Investor or its Affiliates Owning more
than
40% of the outstanding shares of Common Stock of the Company on an as converted
basis,
except
as permitted by the immediately following sentence, (ii) publicly make or
offer
to make any tender offer for
-32-
securities
of the Company or propose to enter into, directly or indirectly, any merger
or
business combination involving the Company, or to purchase, directly or
indirectly, a material portion of the assets of the Company, (iii) make or
propose any “solicitation” of “proxies” (as such terms are used in the proxy
rules of the SEC) with respect to any securities of the Company, including
without limitation to vote any securities of the Company or to provide or
withhold consents with respect to any securities of the Company, (iv) otherwise
act to seek representation on the Board or seek to control or influence the
Board or policies of the Company to a greater extent than expressly provided
for
in this Agreement and the Certificate of Designations (including without
limitation Section
8.5
of this
Agreement and Section 6 of the Certificate of Designations), or (v) initiate,
propose or otherwise solicit stockholders for the approval of any stockholder
proposal. Notwithstanding
anything contained herein to the contrary, this Section
8.7(a)
shall
not prohibit or limit the ability of the Investors to (i) acquire shares
of
Common Stock of the Company upon (x) the conversion of any shares of Convertible
Preferred Stock or Exchange Preferred Stock held by the Investors or upon
exercise of the Warrant or (y) the issuance or conversion of any additional
shares of preferred stock of the Company or Common Stock acquired by the
Investors as a result of a dividend or other distribution on or exchange
of the
shares of preferred stock of the Company held by the Investors from time
to
time, or (ii) acquire any shares of capital stock of the Company issued to
the
Investors as a dividend or other distribution in respect of or in exchange
for
any shares of capital stock of the Company held by the Investors (or acquired
by
the Investors (A) as a result of a dividend or other distribution in respect
of
or in exchange for any shares of capital stock of the Company held by the
Investors from time to time or (B) upon the conversion of any shares of
preferred stock of the Company held by the Investors from time to time).
(b) In
the
event at any time during the Standstill Period, an Investor becomes an Owner
of
45% or more of the Common Stock of the Company on an as converted fully diluted
basis, the Investor shall exchange the shares of capital stock of the Company
Owned by the Investor in excess of 45% for Exchange Preferred Shares. The
Investor shall have the right, at its election, to exchange shares of Common
Stock or Convertible Preferred Stock pursuant to this Section
8.7(b).
The
exchange rate (i) for the Convertible Preferred Stock to the Exchange Preferred
Stock shall be one (1) share of Exchange Preferred Stock for each one share
of
Convertible Preferred Stock surrendered for exchange and (ii) for the Common
Stock to the Exchange Preferred Stock shall be equal to the quotient obtained
by
dividing (x) one by (y) the number of shares of Common Stock into which such
share of Exchange Preferred Stock is convertible at the date of exchange.
No
cash or other payment beyond the surrender for exchange of the shares of
Convertible Preferred Stock or Common Stock, as applicable, shall be required
in
connection with such exchange.
|
8.8.
|
No
Manipulation or Hedging
|
(a) Neither
the Company, any of its Subsidiaries, nor the Investors shall take any action
designed to or that might reasonably be expected to cause or result in unlawful
manipulation of the price of the Common Stock.
(b) So
long
as the Investor owns any shares of Convertible Preferred Stock, it will not,
directly or indirectly, transfer or hedge, in whole or in part, any of the
economic
-33-
consequences
of ownership of Convertible Preferred Stock, Exchange Preferred Stock or
shares
of Common Stock.
|
8.9.
|
Listing
|
The
Company shall promptly secure the listing of all the Registrable Securities
(as
defined in the Registration Rights Agreement) upon each national securities
exchange and automated quotation system, if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so listed,
such
listing of all Registrable Securities from time to time issuable under the
terms
of Convertible Preferred Stock or Exchange Preferred Stock, including any
Conversion Shares. Subject to meeting applicable listing requirements (it
being
understood that the Company does not currently satisfy such listing
requirements), the Company shall use reasonable business efforts to obtain
authorization of the Common Stock for quotation on the Nasdaq Global Market,
the
Nasdaq Capital Market, The New York Stock Exchange, Inc. or The American
Stock
Exchange, Inc., as applicable (the “Principal
Market”).
Once
listed for quotation on the Principal Market, neither the Company nor any
of its
Subsidiaries shall take any action which would be reasonably expected to
result
in the delisting or suspension of the Common Stock on the Principal Market.
The
Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section
8.9.
|
8.10.
|
Authorization
of Additional Stock
|
(a) As
promptly as practicable after the date hereof but in any event no later than
30
days after the Closing, the Company shall prepare and file with the SEC a
preliminary proxy statement, as may be amended or supplemented (as amended
and
supplemented, the “Proxy
Statement”),
by
which the Company’s stockholders will be asked to approve an amendment and
restatement to the Restated Certificate of Incorporation whereby the authorized
capital stock of the Company shall be increased to not less than 100 million
shares of capital stock (the “Voting
Proposal”).
The
Company shall use its reasonable best efforts to respond to any comments
of the
SEC, and to cause the Proxy Statement to be mailed to the Company’s stockholders
at the earliest practicable time. The Company will notify the Investors of
the
receipt of any comments from the SEC or its staff and of any request by the
SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply the Investors with copies of all
correspondence between the Company or any of its representatives, on the
one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement. The Proxy Statement shall comply in all material respects with
all
applicable requirements of law. The Investors shall provide the Company all
information about the Investors required to be included or incorporated by
reference in the Proxy Statement and shall otherwise reasonably cooperate
with
the Company in taking the actions described in this Section
8.10.
Whenever
any event occurs which is required to be set forth in an amendment or supplement
to the Proxy Statement, the Company shall inform the Investors of such
occurrence and cooperate in filing with the SEC or its staff, and/or mailing
to
stockholders of the Company, such amendment or supplement. The Proxy Statement
shall include the recommendation of the Board that the stockholders of the
Company vote in favor of and approve the Voting Proposal. The Company shall
use
its reasonable best efforts to obtain such stockholder approval.
-34-
(b) The
Company shall call a meeting of its stockholders (the “Company
Stockholders Meeting”)
no
later than 120 days after the date which it files with the SEC its audited
financial statements for the year ended December 31, 2005 but in no event
later
than June 15, 2007 (the “Meeting
Deadline”),
for
the purpose of voting on the Voting Proposal, provided that should a quorum
not
be obtained at such meeting of the stockholders, the meeting of the stockholders
shall be postponed or adjourned in order to permit additional time for
soliciting and obtaining additional proxies or votes. At such meeting, the
Company shall use its reasonable best efforts to solicit from holders of
Common
Stock proxies in favor of the Voting Proposal. The Investors agree that they
shall vote, or cause to be voted, in favor of the Voting Proposal all Shares
and
all shares of Common Stock directly or indirectly owned by them.
(c) In
the
event that the Voting Proposal is approved by the Company stockholders, the
Company shall promptly file with the Secretary of State of the State of Delaware
the applicable amended and restated certificate of incorporation effecting
such
capital stock increase.
|
8.11.
|
Stock
Option Pool
|
As
promptly as practicable after the Closing, the Company shall institute a
new
stock option plan constituting 9,450,000 shares of Common Stock (in addition
to
the existing Stock Option Plans), representing approximately 15% of the
aggregate shares of Common Stock then outstanding on a fully diluted basis,
effective as of the Closing Date.
SECTION
9. MISCELLANEOUS
|
9.1.
|
Notices
|
(a) All
communications under this Agreement shall be in writing and shall be delivered
by hand or facsimile or mailed by overnight courier or by registered mail
or
certified mail, postage prepaid:
(1) if
to an
Investor, at the address or facsimile number set forth on Exhibit
A,
or at
such other address or facsimile number as such Investor may have furnished
the
Company in writing; and
(2) if
to the
Company, at: NYFIX, Inc., 000 Xxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, XX 00000 (facsimile: 212-809-1013), Attention: General Counsel,
or at
such other address or facsimile number as it may have furnished the Investors
in
writing, with copies (which shall not constitute notice) to Xxxxxxxxx &
Xxxxxxx LLP, 0000 Xxxxxxxxxxxx Xxxxxx XX, Xxxxxxxxxx, XX 00000, Attention:
Xxxxxx Xxxx (facsimile: 202-662-6291) and Xxxxxxx Xxxxxxxxx (facsimile:
000-000-0000).
(b) Any
notice so addressed shall be deemed to be given: if delivered by hand or
facsimile, on the date of such delivery; if mailed by overnight courier,
on the
first Business Day following the date of such mailing; and if mailed by
registered or certified mail, on the third Business Day after the date of
such
mailing.
-35-
9.2.
Expenses
and Taxes
(a) At
the
Closing, the Company shall reimburse WP for all of WP’s reasonable out-of-pocket
fees and expenses incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the transactions contemplated
hereby, including, without limitation, the reasonable fees and expenses of
WP’s
attorneys, accountants and consultants employed in connection with WP’s
consideration, negotiation and consummation of the transactions contemplated
hereby, WP’s due diligence on the Company, any costs associated with clearance
under the HSR Act and any documentation relating to the transactions
contemplated hereby. Reimbursement of such fees, disbursements and expenses
shall be made by wire transfer of immediately available funds to an account
or
accounts designated by WP and thereafter the Company will pay, promptly (but
in
any event within 10 days) upon receipt of a supplemental statement therefor,
such additional reasonable fees, disbursements and expenses, if any, as may
be
incurred by or on behalf of WP in connection with such
transactions.
(b) The
Company will pay, and save and hold each Investor harmless from any and all
liabilities (including interest and penalties) with respect to, or resulting
from any delay or failure in paying, stamp and other taxes (other than income
taxes), if any, which may be payable or determined to be payable on the
execution and delivery or acquisition of the Shares, the Conversion Shares
or
the Exchange Preferred Shares.
|
9.3.
|
Reproduction
of Documents
|
This
Agreement and all documents relating thereto, including, without limitation,
(i)
consents, waivers and modifications which may hereafter be executed, (ii)
documents received by the Investors on the Closing Date (except for certificates
evidencing the Shares), and (iii) financial statements, certificates and
other
information previously or hereafter furnished to the Investors, may be
reproduced by the Company and the Investors by any photographic, photostatic,
microfilm, micro-card, miniature photographic or other similar process and
the
Company and the Investors may destroy any original document so reproduced.
All
parties hereto agree and stipulate that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not
such
reproduction was made by the Company or any such Investor in the regular
course
of business) and that any enlargement, facsimile or further reproduction
of such
reproduction shall likewise be admissible in evidence.
|
9.4.
|
Termination
and Survival
|
Notwithstanding
anything to the contrary contained herein, this Agreement may be terminated
at
any time (i) by mutual consent of the Company and the Investors, (ii) by
either
the Company or WP if the Closing shall not have occurred on or prior
to November
30, 2006 (unless
such date is extended by mutual written consent); (iii) by the Investors,
for
any material breach of this Agreement by the Company which remains uncured
for a
period of ten (10) Business Days after notice is received by the Company;
and
(iv) by the Company, for any material breach of this Agreement by the Investors
which remains uncured for a period of ten (10) Business Days after notice
is
received by the Investors. In the event of termination pursuant
-36-
to
this
Section
9.4,
this
Agreement shall become null and void and have no effect, with no liability
on
the part of the Company or the Investors, or their members, partners, directors,
officers, agents or stockholders, with respect to this Agreement, except
for the
(i) liability of the Company for expenses pursuant to Section
9.2
and (ii)
liability for any breach of any representation, warranty or covenant contained
in this Agreement.
|
9.5.
|
Successors
and Assigns
|
Except
as
otherwise expressly provided herein, this Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties.
The
Company may not assign its rights or obligations hereunder without the prior
written consent of the Investors. WP may assign its rights and obligations
hereunder to its Affiliates; provided,
that
the assignee provides the Company with written representations and warranties
substantially similar to those provided in Section 4.
|
9.6.
|
Severability
|
In
the
event that any part or parts of this Agreement shall be held illegal or
unenforceable by any court or administrative body of competent jurisdiction,
such determination shall not affect the remaining provisions of this Agreement
which shall remain in full force and effect.
|
9.7.
|
Governing
Law
|
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York applicable to contracts made and to be performed entirely
within such State.
|
9.8.
|
Waiver
of Jury Trial
|
Each
of
the parties hereto hereby irrevocably waives any and all rights to trial
by jury
in any legal proceeding arising out of or related to this Agreement or the
transactions contemplated hereby.
9.9. Consent
to Jurisdiction
Each
of
the parties hereto (i) consents to submit itself to the personal
jurisdiction of the state and federal courts in the State of New York in
any
action or proceeding arising out of or relating to this Agreement or any
of the
transactions contemplated by this Agreement, (ii) agrees that all claims in
respect of such action or proceeding may be heard and determined in any such
courts, (iii) agrees that it shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such courts, and
(iv) agrees not to bring any action or proceeding arising out of or
relating to this Agreement or any of the transaction contemplated by this
Agreement in any other courts. Each of the parties hereto further waives
any
defense of inconvenient forum to the maintenance of any action or proceeding
so
brought and waives any bond, surety or other security that might be required
of
any other party with respect thereto. Any party hereto may make service on
another party by sending or delivering a copy of the process to the party
to be
served in the manner provided for the giving of notices in Section
9.1.
Nothing
in
-37-
this
Section
9.9,
however, shall affect the right of any party to serve legal process in any
other
manner permitted by law.
|
9.10.
|
Paragraph
and Section Headings
|
The
headings of the sections and subsections of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part
thereof.
|
9.11.
|
Limitation
on Enforcement of Remedies
|
The
Company hereby agrees that it will not assert against the limited partners
of
any members of any Investor any claim it may have under this Agreement by
reason
of any failure or alleged failure by such Investor to meet its obligations
hereunder.
|
9.12.
|
Counterparts
|
This
Agreement may be executed in one or more counterparts (including by facsimile),
each of which shall be deemed an original and all of which together shall
be
considered one and the same agreement.
|
9.13.
|
Entire
Agreement; Amendment and Waiver
|
This
Agreement, the schedules and exhibits attached hereto constitute the entire
understandings of the parties hereto and supersede all prior agreements or
understandings with respect to the subject matter hereof among such parties.
This Agreement may be amended, and the observance of any term of this Agreement
may be waived, with (and only with) the written consent of the Company and
the
Investors.
[Signature
Page to Follow]
-38-
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement by their
duly
authorized officers as of the date first written above.
| NYFIX, INC. | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |
|
Name: Xxxxxx X. Xxxxxxxxx Title: Chief Financial Officer |
||
| WARBURG PINCUS PRIVATE EQUITY IX, L.P. | ||
| By: | Warburg Pincus IX LLC, its General Partner | |
| By: Warburg Pincus Partners LLC, its Managing Member | ||
| By: Warburg Pincus & Co., its Managing Member | ||
| |
|
|
| By: | /s/ Xxxx X. Xxxxx | |
|
Name: Xxxx X. Xxxxx Title: Managing Director |
||
EXHIBIT
A
SCHEDULE
OF INVESTORS
|
INVESTOR
NAME AND ADDRESS
|
SHARES
OF CONVERTIBLE PREFERRED STOCK
|
WARRANT
TO PURCHASE
COMMON
STOCK
|
|
Warburg
Pincus Private Equity IX, L.P.
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Facsimile:
(000) 000-0000
Attention:
Xxxx X. Xxxxx and Xxxxxx Xxxxx
with
a copy (which shall not constitute notice) to:
Xxxxxxx
Xxxx & Xxxxxxxxx LLP
000
Xxxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxx X. Xxxxxxx, Esq. and Xxxxxxx X. Xxxx, Esq.
|
1,500,000
|
2,250,000
|
EXHIBIT
B
CERTIFICATE
OF
DESIGNATIONS
CERTIFICATE
OF DESIGNATIONS, NUMBER, VOTING POWERS, PREFERENCES AND RIGHTS OF
SERIES
B VOTING CONVERTIBLE PREFERRED STOCK AND
SERIES
C NON-VOTING CONVERTIBLE PREFERRED STOCK
OF
NYFIX,
INC.
Pursuant
to Section 151 of the
General
Corporation Law of the State of Delaware
The
undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted
by the Board of Directors of NYFIX, Inc., a Delaware corporation (hereinafter
called the “Company”),
with
the preferences and rights set forth therein relating to dividends, conversion,
redemption, dissolution and distribution of assets of the Company having been
fixed by the Board of Directors pursuant to authority granted to it under
Article IV of the Company's Restated Certificate of Incorporation and in
accordance with the provisions of Section 151 of the General Corporation Law
of
the State of Delaware:
RESOLVED:
That, pursuant to authority conferred upon the Board of Directors by the
Restated Certificate of Incorporation of the Company, the Board of Directors
hereby authorizes the issuance of 1,500,000 shares of Series B Voting
Convertible Preferred Stock, par value $1.00 per share, of the Company (the
“Series
B Preferred Stock”),
and
the issuance of 500,000 shares of Series C Non-Voting Convertible Preferred
Stock, par value $1.00 per share, of the Company (the “Series
C Preferred Stock”
and
together with the Series B Preferred Stock, the “Convertible
Preferred Stock”),
and
hereby fixes the designations, powers, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, of such shares, in addition to those set forth in the
Restated Certificate of Incorporation of the Company, as follows:
1. DESIGNATION.
The
shares of such series shall be designated (i) “Series B Voting Convertible
Preferred Stock” and the number of shares constituting such series shall be
1,500,000 and (ii) “Series C Non-Voting Convertible Preferred Stock” and the
number of shares constituting such series shall be 500,000. The number of shares
of Series B Preferred Stock and Series C Preferred Stock may be increased or
decreased by resolution of the Board of Directors of the Company (the
“Board”)
and
the approval by the holders of a majority of the shares of the outstanding
Convertible Preferred Stock voting together as a single class; provided, that
no
decrease shall reduce the number of shares of Convertible Preferred Stock to
a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the payment of dividends pursuant to Section 4
hereof.
2. CURRENCY.
All
Convertible Preferred Stock shall be denominated in United States currency,
and
all payments and distributions thereon or with respect thereto shall
be
made
in United States currency. All references herein to “$” or “dollars” refer to
United States currency.
3. RANKING.
The
Convertible Preferred Stock shall, with respect to dividend rights and rights
upon liquidation, winding up or dissolution, rank prior to each other class
or
series of shares of the Company ranking junior to the Convertible Preferred
Stock, including, without limitation, the common stock of the Company, par
value
$0.001 per share (the “Common
Stock”)
(such
junior stock being referred to hereinafter collectively as “Junior
Stock”).
The
Series B Preferred Stock shall, with respect to dividend rights and rights
upon
liquidation, winding up or dissolution, rank pari passu with the Series C
Preferred Stock.
4. DIVIDENDS.
(a) The
holders of Convertible Preferred Stock shall be entitled to receive dividends
per share equal to 7% per annum (the “Dividend Rate”) of the Stated Value (as
herein defined) of such Convertible Preferred Stock then in effect, before
any
dividends shall be declared, set apart for or paid upon the Junior Stock. All
dividends declared upon the Convertible Preferred Stock shall be declared pro
rata per share and shall compound semi-annually to the extent unpaid. For
purposes hereof, the term (i) “Series
B Stated Value”
shall
mean $50.00 per share of Series B Preferred Stock, subject to appropriate
adjustment in the event of any stock dividend (excluding dividends paid in
shares of Common Stock), stock split, stock distribution or combination with
respect to the Series B Preferred Stock and (ii) “Series
C Stated Value”
shall
mean $50.00 per share of Series C Preferred Stock, subject to appropriate
adjustment in the event of any stock dividend (excluding dividends paid in
shares of Common Stock), stock split, stock distribution or combination with
respect to the Series C Preferred Stock. For
purposes hereof, the term “Stated
Value”
shall
mean with respect to the (i) Series B Preferred Stock, the Series B Stated
Value
and (ii) Series C Preferred Stock, the Series C Stated Value. Except as
otherwise provided herein, dividends shall be paid in additional shares of
Common Stock.
(b) Dividends
payable pursuant to Section 4(a) shall be payable semi-annually in arrears
on
June 30 and December 31 of each year, with the first payment to be made on
December 31, 2006 (unless such day is not a Business Day, in which event such
dividends shall be payable on the next succeeding Business Day) (each such
payment date being a “Dividend
Payment Date”
and
the
period from the Closing Date to the first Dividend Payment Date and each such
semi-annual period thereafter being a “Dividend
Period”).
The
amount of dividends payable on the Convertible Preferred Stock for any period
shorter or longer than a full Dividend Period shall be computed on the basis
of
a 360-day year of twelve 30-day months.
(c) Dividends
on the Convertible Preferred Stock provided for in Section 4(a) shall be
cumulative and shall continue to accrue daily whether or not declared and
whether or not in any fiscal year there shall be net profits or surplus legally
available for the payment of dividends in such fiscal year, so that if in any
Dividend Period, dividends contemplated by Section 4(a) in whole or in part
are
not paid upon the Convertible Preferred Stock, unpaid dividends shall accumulate
as against the holders of the Junior Stock.
2
(d) Except
as
otherwise provided herein, if at any time the Company pays less than the total
amount of dividends then accrued with respect to the Convertible Preferred
Stock, such payment shall be distributed pro rata among the holders thereof
based upon the aggregate accrued but unpaid dividends on all shares of
Convertible Preferred Stock held by each such holder.
(e) Dividends
on the Convertible Preferred Stock shall be paid in shares of Common Stock.
The
number of shares of Common Stock to be issued in payment of such dividend with
respect to each outstanding share of Convertible Preferred Stock shall be
determined by dividing (i) the amount of the dividend that would have been
payable with respect to such share of Convertible Preferred Stock had such
dividend been paid in cash by (ii) the applicable Conversion Price (as defined
in Section 7(c) below) then in effect. To the extent that any such dividend
would result in the issuance of a fractional share of Common Stock (which shall
be determined with respect to the aggregate number of shares of Common Stock
held of record by each holder) then the amount of such fraction multiplied
by
the Conversion Price shall be paid in cash (unless there are no legally
available funds with which to make such cash payment, in which event such cash
payment shall be made as soon as possible).
(f) In
addition to the dividends referred to in Section 4(a), the Company shall not
declare or pay any dividends on shares of Junior Stock unless the holders of
the
Convertible Preferred Stock then outstanding shall simultaneously receive a
dividend on a pro rata basis as if the shares of Convertible Preferred Stock
had
been converted into shares of Common Stock pursuant to Section 7 immediately
prior to the record date for determining the stockholders eligible to receive
such dividends.
(g) Each
dividend shall be payable to the holders of record of shares of Convertible
Preferred Stock as they appear on the stock records of the Company at the close
of business on such record dates (each, a “Dividend
Payment Record Date”),
which
(i) with respect to dividends payable pursuant to Section 4(f), shall be the
same day as the record date for the payment of dividends or distributions to
the
holders of shares of Common Stock, and (ii) with respect to dividends payable
pursuant to Section 4(a), shall be not more than 30 days nor less than 10 days
preceding the applicable Dividend Payment Date.
(h) From
and
after the time, if any, that the Company shall have failed to pay on any
Dividend Payment Date any dividend in accordance with this Section 4, no
dividends shall be declared or paid or set apart for payment, or other
distribution declared or made, upon any Junior Stock, nor shall any Junior
Stock
be redeemed, purchased or otherwise acquired (other than a redemption, purchase
or other acquisition of shares of Common Stock at cost made pursuant to any
employee or director incentive or benefit plans or arrangements of the Company
or any subsidiary of the Company or the payment of cash in lieu of fractional
shares in connection therewith) for any consideration (nor shall any moneys
be
paid to or made available for a sinking fund for the redemption of any shares
of
any such Junior Stock) by the Company, directly or indirectly (except by
conversion into or exchange for Junior Stock or the payment of cash in lieu
of
fractional shares in connection therewith) until all such dividends have been
paid in full.
3
(i) In
the
event that the Company (i) fails to file the Proxy Statement within 30 days
of
the Initial Issuance Date (the “Proxy
Deadline”)
or
(ii) within one business day of the Meeting Deadline the Company fails to duly
increase and reserve for issuance a number of its authorized shares of Common
Stock in an amount sufficient to provide for: (x) the conversion of, and payment
of dividends upon, the Convertible Preferred Stock; (y) the exercise of the
warrants issued on the date hereof to the holders of the Convertible Preferred
Stock; and (z) the exercise of all options granted or available for grant under
any then outstanding options or option plans of the Company (collectively,
the
“Share Capital Condition”), then the Dividend Rate shall be increased by two (2)
percentage points effective on the date of such Proxy Deadline or Meeting
Deadline, as applicable (each, a “Default
Date”),
with
further annual Dividend Rate increases of two (2) percentage points effective
each succeeding anniversary of the Default Date for as long as the Share Capital
Condition remains unsatisfied; provided, however, that with effect from the
date
of filing and acceptance of the amended certificate of incorporation with the
Secretary of State of the State of Delaware satisfying the Share Capital
Condition, the Dividend Rate shall be reset such that any increases pursuant
to
this Section 5(i) shall be of no further force or effect.
5. LIQUIDATION,
DISSOLUTION OR WINDING UP.
(a) Upon
any
voluntary or involuntary liquidation, dissolution or winding up of the Company
(each, a “Liquidation”),
before any distribution or payment shall be made to holders of any Junior Stock,
each holder of Convertible Preferred Stock shall be entitled to receive an
amount in cash per share of Convertible Preferred Stock equal to the greater
of
(i) the Stated Value per share, plus an amount equal to the greater of (x)
any
dividends accrued but unpaid thereon (whether or not declared) through the
date
of Liquidation and (y) the amount in cash that each holder would have received
if all accrued but unpaid dividends (whether or not declared) had been paid
in
shares of Common Stock immediately prior to such Liquidation (the amount payable
pursuant to this Section 5(a)(i) is referred to as the “Redemption
Price”)
and
(ii) the payment such holders would have received had such holders, immediately
prior to such Liquidation, (a) converted their shares of Convertible Preferred
Stock into shares of Common Stock (pursuant to, and at a conversion rate
described in, Section 7) immediately prior to such Liquidation and (b) received
all accrued but unpaid dividends (whether or not declared) through the date
of
Liquidation in shares of Common Stock immediately prior to such Liquidation
(the
greater of (i) and (ii) is referred to herein as the “Liquidation
Preference”).
If,
upon any such Liquidation, the assets of the Company shall be insufficient
to
make payment in full to all holders of Convertible Preferred Stock of the
Liquidation Preference set forth in this Section 5(a), the holders of
Convertible Preferred Stock shall share equally and ratably in any distribution
of such assets in proportion to the full Liquidation Preference to which each
such holder would otherwise be entitled.
(b) After
the
payment of all preferential amounts required to be paid to the holders of
Convertible Preferred Stock and any other series of Preferred Stock upon a
Liquidation, the holders of shares of Common Stock then outstanding shall be
entitled to receive the remaining assets and funds of the Company available
for
distribution to its stockholders.
(c) In
connection with any Change of Control (as defined below), the holders of the
Convertible Preferred Stock may, at their election, (i) treat the Convertible
Preferred Stock as if converted into Common Stock and receive the consideration
due to the holders of Common
4
Stock
in
connection with the Change of Control, pursuant to provision to be made in
accordance with Section 8(c) or 8(d), as applicable, or (ii) receive the
Liquidation Preference; provided that if a Change of Control occurs within
three
(3) years after the Closing Date (as defined herein), the Liquidation Preference
payable to the holders of outstanding shares of Convertible Preferred Stock
shall be an amount in cash per share equal to the sum of the then current
Liquidation Preference plus the greater of (x) the per share amount of all
dividends that would have been payable on the Convertible Preferred Stock during
the period commencing on the date of the Change of Control through and including
the date that is the third anniversary of the Closing Date (the amount of such
dividends is referred to as the “Future
Dividends”)
and
(y) the amount in cash that each holder would have received if all Future
Dividends had been paid in shares of Common Stock immediately prior to the
Change of Control. A “Change
of Control”
shall
mean (i) the
acquisition by any person, directly or indirectly, through a purchase, merger
or
other acquisition transaction, or series of purchases, mergers or other
acquisition transactions, of shares of Common Stock representing 50% or more
of
the total shares of Common Stock then outstanding; (ii) a
consolidation, merger, reorganization or other form of acquisition of or by
the
Company or other transaction in which the Company’s shareholders retain less
than 40% (by vote or value) of the surviving entity upon consummation of such
transaction or (iii) a sale or other transfer of all or substantially all of
the
Company’s assets; provided, however that any such event described in clauses
(i), (ii) or (iii) above shall not be deemed a Change of Control unless approved
by the Company’s Board of Directors.
6. VOTING
RIGHTS.
(a) The
holders of the shares of Series B Preferred Stock shall be entitled to (i)
vote
with the holders of the Common Stock on all matters submitted for a vote of
holders of Common Stock other than the election of directors (as to which the
holders of Series B Preferred Stock shall have rights voting separately as
a
class as set out in Sections 6(b) and (c), (ii) a number of votes equal to
the
number of shares of Common Stock into which each such share of Series B
Preferred Stock is then convertible at the time of the related record date
and
(iii) notice of all stockholders’ meetings (or pursuant to any action by written
consent) in accordance with the Restated Certificate of Incorporation and Bylaws
of the Company as if the holders of Series B Preferred Stock were holders of
Common Stock; provided,
however,
that
solely for the purpose of determining the number of votes pursuant to subsection
(ii) above, and effective only upon and following the date that the Common
Stock
is relisted, if ever, on the Nasdaq National Market (“Nasdaq”),
the
Conversion Price used to determine the number of shares of Common Stock issuable
upon conversion of the Series B Preferred Stock pursuant to subsection (ii)
above shall be deemed to be the greater of (x) the then applicable Conversion
Price and (y) the closing bid price of the Common Stock as quoted on the Pink
Sheets on the Closing Date, it being understood that this adjustment to the
Conversion Price for the purpose of determining the voting rights of the holders
of Series B Preferred Stock shall have no effect prior to the Company’s
re-listing on Nasdaq. Except as provided by law, by the provisions of Sections
6(b), 6(c) and 6(d) below or by the provisions establishing any other series
of
Preferred Stock, holders of Convertible Preferred Stock shall vote together
with
the holders of Common Stock as a single class. Except as provided by law, the
holders of Series C Preferred Stock shall have no voting rights.
5
(b) For
as
long as Warburg Pincus Private Equity IX, L.P. and its Affiliates (as defined
herein) (collectively, “Warburg
Pincus”)
Beneficially Own at least fifty percent (50%) of the shares of the Series B
Preferred Stock initially issued to Warburg Pincus pursuant to the Securities
Purchase Agreement (for these purposes treating any shares of Series C Preferred
Stock as if they were outstanding shares of Series B Preferred Stock): (i)
the
holders of the Series B Preferred Stock shall have the exclusive right, voting
separately as a class, to appoint and elect two (2) directors (herein referred
to as the “Series
B Directors”)
to the
Board, which Series B Directors shall be duly appointed in accordance with
the
Company’s bylaws and Certificate of Incorporation and the General Corporation
Law of the State of Delaware; (ii) each Series B Director so elected shall
serve
until his or her successor is elected and qualified; (iii) any vacancy in
the position of a Series B Director may be filled only by the holders of a
majority of the then outstanding shares of Series B Preferred Stock and not
by
the holders of any other class or series of capital stock; and (iv) each such
Series B Director may, during his or her term of office, be removed at any
time,
with or without cause, by and only by the holders of a majority of the then
outstanding shares of Series B Preferred Stock, at a special meeting called
for
such purpose or by written consent of such holders, and any vacancy created
by
such removal may also be filled by such holders at such meeting or by such
consent. In the event the Board establishes any committee thereof, including,
without limitation, a Compensation Committee or an Audit Committee, at least
one
of the Series B Directors shall have the right, but not the obligation, to
be a
member of each such committee, unless prohibited by law or applicable rules
of
any stock exchange on which the Common Stock is listed, excluding any committee
formed to consider a transaction between Warburg Pincus and the
Company.
(c) Upon
written notice to the Company given by the holders of a majority of the then
outstanding shares of Series B Preferred Stock at any time following and during
the continuance of any Financial Statement Filing Default (as defined herein)
or
Financial Statement Breach (as defined herein) (collectively, a “Default”),
the
holders of Series B Preferred Stock shall as a class become entitled to Special
Voting Rights (as hereinafter defined). Failure by the holders of Series B
Preferred Stock to exercise their Special Voting Rights promptly upon the
occurrence of a Default shall not be deemed to be a waiver of such rights,
such
rights being exercisable at any time that a Default shall have occurred or
be
continuing. For purposes of this Section 6(c), the term “Special
Voting Rights”
shall
mean the right to elect, upon the occurrence and during the continuance of
a
Default as provided in the foregoing paragraph, one (1) additional director
to
the Board (the “Default
Director”).
Immediately
upon the accrual of the Special Voting Rights, the number of directors of the
Company shall, ipso facto,
be
increased by one and the Default Director shall be elected only by vote of
the
holders of a majority of the then outstanding shares of Series B Preferred
Stock, voting together as a class. If (x) a Financial Statement Breach shall
occur or (y) any Financing Statement Filing Default shall occur and be
continuing:
(i) the
holders of a majority of the then outstanding shares of Series B Preferred
Stock
may at their option at any time exercise the Special Voting Rights to elect
the
Default Director either at a special meeting of the holders of Series B
Preferred Stock or by written consent of the holders of a majority of the then
outstanding shares of Series B Preferred Stock without a meeting in accordance
with the DGCL;
6
(ii) any
vacancy in the position of a Default Director may be filled only by the holders
of a majority of the then outstanding shares of Series B Preferred
Stock;
(iii) the
Default Director may, during his or her term of office, be removed at any time,
with or without cause, by and only by the affirmative vote, at a special meeting
of holders of a majority of the then outstanding shares of Series B Preferred
Stock called for such purpose, or the written consent, of the holders of a
majority of the then outstanding shares of Series B Preferred Stock;
and
(iv) any
vacancy created by such removal may also be filled at such meeting or by such
consent.
(d) In
addition to any other rights provided by law, so long as at least fifty percent
(50%) of the aggregate shares of Series B Preferred Stock issued prior to the
date of determination remain outstanding (for these purposes treating any shares
of Series C Preferred Stock as if they were outstanding shares of Series B
Preferred Stock), the Company shall not and shall not permit any direct or
indirect subsidiary of the Company to, whether by reclassification, merger,
acquisition or otherwise, without first obtaining the written consent or
affirmative vote at a meeting called for that purpose by holders of at least
a
majority of the then outstanding shares of Series B Preferred
Stock:
(i) amend,
alter or repeal any provision of the Company’s bylaws or certificate of
incorporation so as to adversely affect the rights, preferences or privileges
of
the Series B Preferred Stock, or split, reverse split, subdivide, reclassify
or
combine the Series B Preferred Stock;
(ii) amend,
alter or repeal any provision of the Company’s bylaws or certificate of
incorporation so as to adversely affect the rights, preferences or privileges
of
the Series C Preferred Stock, or split, reverse split, subdivide, reclassify
or
combine the Series C Preferred Stock;
(iii) adopt
any
“shareholder rights plan” or similar instrument that would have the effect of,
or amend any “shareholder rights plan” in effect on the date hereof, which as
amended would have the effect of, diluting the economic or voting interest
in
the Company of the holders of the Convertible Preferred Stock resulting from
the
ownership of the Convertible Preferred Stock;
(iv) incur
or
guarantee, directly or indirectly, or permit any subsidiary to incur or
guarantee, directly or indirectly, any indebtedness, distribute or permit any
non-wholly owned subsidiary to distribute to any securityholders any asset,
purchase or permit any subsidiary to purchase any securities issued by the
Company or any subsidiary or pay or permit any non-wholly owned subsidiary
to
pay any dividend, if following such transaction, (x) net debt (including any
debt to be incurred in connection with any such transactions) as of such date
divided by (y) EBITDA for the twelve months preceding such date would be in
excess of 3.0;
(v) create,
authorize or issue any Senior Securities (as defined herein) or any Parity
Securities (as defined herein) or make any payment of dividends on Senior
7
Securities
or Parity Securities other than pursuant to the terms of the certificate or
other instrument authorizing such securities or increase the issued or
authorized number of shares of Convertible Preferred Stock; or
(vi) except
to
the extent required by Section 6(c), increase the number of members of the
Board
to greater than twelve (12).
7. CONVERSION.
(a) Conversion
by the Company.
Following the date that is the 18-month anniversary of the Closing Date, subject
to the provisions of this Section 7, the Company shall have the right to require
the holders of shares of Convertible Preferred Stock, from time to time, at
the
Company’s option, to convert the holders’ shares of Convertible Preferred Stock,
in whole or in part, into the number of fully paid and non-assessable shares
of
Common Stock obtained by multiplying (a) with respect to the Series B Preferred
Stock, the number of shares of Series B Preferred Stock subject to conversion
pursuant to this Section
7(a)
by the
quotient obtained by dividing (i) the Redemption Price for the Series B
Preferred Stock by (ii) the Series B Conversion Price (as defined below) then
in
effect (such quotient is referred to herein as the “Series
B Conversion Rate”)
and
(b) with respect to the Series C Preferred Stock, the number of shares of Series
C Preferred Stock subject to conversion pursuant to this Section 7(a) by the
quotient obtained by dividing (i) the Redemption Price for the Series C
Preferred Stock by (ii) the Series C Conversion Price (as defined below) then
in
effect (such quotient is referred to herein as the “Series
C Conversion Rate”;
the
Series B Conversion Rate and the Series C Conversion Rate are sometimes referred
to herein as the “Conversion
Rate”
and
where used herein, shall mean the Conversion Rate of the applicable series
of
Convertible Preferred Stock); provided,
however,
the
Company’s right to require shares of Convertible Preferred Stock to be converted
pursuant to this Section 7(a) is subject to the requirement that the average
closing price of a share of Common Stock for the 30 consecutive trading days
preceding the date which is five Business Days prior to the Convertible
Preferred Notice Date is greater than the price obtained by multiplying (x)
the
Applicable Multiple (as defined herein) by (y) the then applicable Conversion
Price for the shares of Convertible Preferred Stock then being converted. The
“Applicable
Multiple”
is
determined as follows: (a) for the period beginning on the day following the
18-month anniversary of the Closing Date and ending on the 36-month anniversary
of the Closing Date, the Applicable Multiple shall be 3.5; (b) for the period
beginning on the day following the 36-month anniversary of the Closing Date
and
ending on the 60-month anniversary of the Closing Date, the Applicable Multiple
shall be 3.0; and (c) for any date following the 60-month anniversary of the
Closing Date, the Applicable Multiple shall be 2.5.
(b) Conversion
by the Holders.
Subject
to the provisions of this Section 7, each holder of shares of Convertible
Preferred Stock shall have the right, at any time and from time to time, at
such
holder’s option, to convert any or all of such holder’s shares of Convertible
Preferred Stock, in whole or in part, into the number of fully paid and
non-assessable shares of Common Stock obtained at the Conversion Rate then
in
effect. Notwithstanding the foregoing, a holder of shares of Series C Preferred
Stock shall not have the right to convert any of such holder’s shares of Series
C Preferred Stock, if, after giving effect to such conversion, the holder
thereof would Beneficially Own 45% or more of the Common Stock of the Company
on
an as converted basis, provided,
however,
that a
holder of shares of Series C Preferred Stock shall have
8
the
right
at such holder’s option to convert any or all of such holder’s shares of Series
C Preferred Stock in connection with a Change of Control.
(c) Conversion
Price.
The
initial conversion price for each share of (i) Series B Preferred Stock is
initially equal to $5.00 per share (subject to adjustment as provided herein,
the “Series
B Conversion Price”)
and
(ii) Series C Preferred Stock is initially equal to $5.00 per share (subject
to
adjustment as provided herein, the “Series
C Conversion Price”).
The
Series B Conversion Price and the Series C Conversion Price are sometimes
referred to herein as the “Conversion
Price”
and
where used herein, shall mean the Conversion Price of the applicable series
of
Convertible Preferred Stock. The initial (i) Series B Conversion Rate for the
Series B Preferred Stock shall be ten (10) shares of Common Stock for each
one
share of Series B Preferred Stock surrendered for conversion and (ii) Series
C
Conversion Rate for the Series C Preferred Stock shall be ten (10) shares of
Common Stock for each one share of Series C Preferred Stock surrendered for
conversion. The applicable Conversion Rate and Conversion Price from time to
time in effect is subject to adjustment as hereinafter provided.
(d) Mechanics
of Conversion.
(i) In
order
to exercise the conversion privilege set forth in Section 7(a) above, the
Company shall deliver to the holder of any Convertible Preferred Stock written
notice (the “Convertible
Preferred Conversion Notice”)
of
such conversion, at least 10 Business Days and no more than 20 Business Days
prior to the Conversion Date, specifying: (i) the number of shares of
Convertible Preferred Stock to be converted and, if fewer than all the shares
held by such holder are to be converted, the number of shares to be converted
by
such holder; (ii) the Mandatory Conversion Date (as defined below); (iii) the
number of shares of Common Stock to be issued in respect of each share of
Convertible Preferred Stock that is converted; (iv) the place or places where
certificates for such shares are to be surrendered for issuance of certificates
representing shares of Common Stock; and (v) that dividends on the shares to
be
converted will cease to accrue on such Mandatory Conversion Date. The holder
of
the Convertible Preferred Stock to be converted shall promptly surrender his
or
its certificate or certificates therefor to the principal office of the transfer
agent for the Convertible Preferred Stock (or if no transfer agent be at the
time appointed, then the Company at its principal office). If fewer than all
of
the outstanding shares of Convertible Preferred Stock are to be converted
pursuant to Section 7(a), the shares shall be converted on a pro rata basis
(according to the number of shares of Convertible Preferred Stock held by each
holder, with any fractional shares rounded to the nearest whole share). For
the
purposes of this section, the “Mandatory
Conversion Date”
shall
be the date specified as the conversion date in the Company’s Convertible
Preferred Conversion Notice.
(ii) In
order
to exercise the conversion privilege set forth in Section 7(b) above, the holder
of any Convertible Preferred Stock to be converted shall surrender the
certificate or certificates representing such shares at the principal office
of
the Company (or any transfer agent of the Company previously designated by
the
Company to the holders of Convertible Preferred Stock for this purpose) with
a,
irrevocable and unconditional written notice of election to convert, completed
and signed, specifying the number of shares to be converted (it being
understood, that in connection with a Change
9
of
Control of the Company, a holder of Convertible Preferred Stock may make a
conversion notice conditional upon the Change of Control, and may rescind any
such conversion notice prior to the effective time thereof specified in any
such
conversion notice). Unless the shares issuable upon conversion are to be issued
in the same name as the name in which such shares of Convertible Preferred
Stock
are registered, each share surrendered for conversion shall be accompanied
by
instruments of transfer, in forms reasonably satisfactory to the Company, duly
executed by the holder thereof or such holder’s duly authorized attorney, and an
amount sufficient to pay any transfer or similar tax in accordance with Section
7(g). For the purposes of this section, the “Optional
Conversion Date”
shall
be the date of receipt by the transfer agent (or by the Company if the Company
serves as its own transfer agent) of the certificates and notice.
(iii) Unless
the shares issuable upon conversion are to be issued in the same name as the
name in which such shares of Convertible Preferred Stock are registered, each
share surrendered for conversion shall be accompanied by instruments of
transfer, in forms reasonably satisfactory to the Company, duly executed by
the
holder thereof or such holder’s duly authorized attorney, and an amount
sufficient to pay any transfer or similar tax in accordance with Section 7(g).
Within two Business Days after the surrender by the holder of the certificates
for shares of Convertible Preferred Stock as aforesaid, the Company shall issue
and shall deliver to such holder, or on the holder’s written order to the
holder’s transferee, a certificate or certificates for the number of full shares
of Common Stock issuable upon conversion of such shares, cash in an amount
corresponding to any fractional interest in a share of Common Stock as provided
in Section 7(h) and, if less than all shares of Convertible Preferred Stock
represented by the certificate or certificates so surrendered are being
converted, a residual certificate or certificates representing the shares of
Convertible Preferred Stock not converted.
(iv) At
such
time on the Mandatory Conversion Date or Optional Conversion Date, as
applicable,
(1) the
person in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder of record of the shares of Common Stock represented thereby
at
such time; and
(2) such
shares of Convertible Preferred Stock so converted shall no longer be deemed
to
be outstanding, and all rights of a holder with respect to such shares (x)
in
the event of conversion pursuant to Section 7(a), covered by the Convertible
Preferred Conversion Notice and (y) in the event of conversion pursuant to
Section 7(b), surrendered for conversion, shall immediately terminate except
the
right to receive the Common Stock and other amounts payable pursuant to this
Section 7.
(e) All
shares of Common Stock delivered upon conversion of the Convertible Preferred
Stock will, upon delivery, be duly and validly authorized and issued, fully
paid
and non-assessable, free from all preemptive rights and free from all taxes,
liens, security interests and charges (other than liens or charges created
by or
imposed upon the holder or taxes in respect of any transfer occurring
contemporaneously therewith). The Company will procure, at
10
its
sole
expense, the listing of the shares of Common Stock, subject to issuance or
notice of issuance on the principal domestic stock exchange or inter-dealer
quotation system on which the Common Stock is then listed or traded. The Company
will take all commercially reasonable action as may be necessary to ensure
that
the shares of Common Stock may be issued without violation of any applicable
law
or regulation or of any requirement of any securities exchange or inter-dealer
quotation system on which the shares of Common Stock are listed or traded.
(f) Upon
any
such conversion, all accrued but unpaid dividends (whether or not declared),
through the date of such conversion, on the Convertible Preferred Stock
surrendered for conversion shall be paid at the election of the Company, in
cash
or in shares of Common Stock. In the event such dividends are paid in additional
shares of Common Stock, the number of shares of Common Stock to be issued in
payment of the dividend with respect to each outstanding share of Common Stock
shall be determined by dividing the amount of the dividend that would have
been
payable had such dividend been paid in cash by an amount equal to the Conversion
Price. To the extent that any such dividend would result in the issuance of
a
fractional share of Common Stock (which shall be determined with respect to
the
aggregate number of shares of Common Stock held of record by each holder) then
the amount of such fraction multiplied by the Conversion Price shall be paid
in
cash (unless there are no legally available funds with which to make such cash
payment, in which event such cash payment shall be made as soon as
possible).
(g) Issuances
of certificates for shares of Common Stock upon conversion of the Convertible
Preferred Stock shall be made without charge to any holder of shares of
Convertible Preferred Stock for any issue or transfer tax (other than taxes
in
respect of any transfer occurring contemporaneously therewith or as a result
of
the holder being a non-U.S. person) or other incidental expense in respect
of
the issuance of such certificates, all of which taxes and expenses shall be
paid
by the Company; provided,
however,
that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance or delivery of shares of Common Stock
in a name other than that of the holder of the Convertible Preferred Stock
to be
converted, and no such issuance or delivery shall be made unless and until
the
person requesting such issuance or delivery has paid to the Company the amount
of any such tax or has established, to the satisfaction of the Company, that
such tax has been paid.
(h) The
Company shall not issue fractions of shares of Common Stock upon conversion
of
Convertible Preferred Stock or scrip in lieu thereof. If any fraction of a
share
of Common Stock would, except for the provisions of this Section 7(h), be
issuable upon conversion of any Convertible Preferred Stock, the Company shall
in lieu thereof pay to the person entitled thereto an amount in cash equal
to
the current value of such fraction, calculated to the nearest one-hundredth
(1/100) of a share, to be computed (i) if the Common Stock is listed on any
national securities exchange, on the basis of the last sales price of the Common
Stock on such exchange (or the quoted closing bid price if there shall have
been
no sales) on the date of conversion, or (ii) if the Common Stock shall not
be
listed, on the basis of the mean between the closing bid and asked prices for
the Common Stock on the date of conversion as reported by Nasdaq, or its
successor, and if there are not such closing bid and asked prices, on the basis
of the fair market value per share as determined in good faith by the
Board.
11
(i) Any
shares of Convertible Preferred Stock so converted shall be retired and canceled
and shall not be reissued, and the Company may from time to time take such
appropriate action as may be necessary to reduce the authorized Convertible
Preferred Stock accordingly.
8. ANTI-DILUTION
PROVISIONS.
The
Series B Conversion Price and the Series C Conversion Price shall be subject
to
adjustment from time to time in accordance with this Section 8. For purposes
of
this Section 8, the term “Common
Stock Outstanding”
at
any
given time shall mean the number of shares of Common Stock outstanding at such
time on a fully diluted basis (including (i) all options, warrants and
securities convertible into or exchangeable for shares of Common Stock (other
than the Convertible Preferred Stock) and (ii) without duplication, the number
of shares of the Common Stock deemed to be outstanding under paragraphs 8(a)(i)
to (iii), inclusive, at such time).
(a) Common
Stock Issued at Less than Conversion Price.
If
after the Initial Issuance Date the Company issues or sells any Common Stock
without consideration or for consideration per share less than the then
applicable Conversion Price in effect as of the date of such issuance or sale,
the applicable Conversion Price in effect immediately prior to each such
issuance or sale will immediately (except as provided below) be reduced to
the
price determined by multiplying (i) the applicable Conversion Price at which
shares of Convertible Preferred Stock were theretofore convertible by (ii)
a
fraction of which the numerator shall be the sum of (a) the number of shares
of
Common Stock Outstanding immediately prior to such issuance or sale plus (b)
the
number of additional shares of Common Stock that the aggregate consideration
received by the Company for the number of shares of Common Stock so issued
or
sold would purchase at the Conversion Price in effect immediately preceding
such
issuance or sale, and of which the denominator shall be the sum of (x) the
number of shares of Common Stock Outstanding immediately prior to such issuance
or sale, plus (y) the number of additional shares of Common Stock so issued.
For
the purposes of any adjustment of the applicable Conversion Price pursuant
to
this Section 8(a), the following provisions shall be applicable:
(i) In
the
case of the issuance of Common Stock for cash, the amount of the consideration
received by the Company shall be deemed to be the amount of the cash proceeds
received by the Company for such Common Stock after deducting therefrom any
discounts or commissions allowed, paid or incurred by the Company for any
underwriting or otherwise in connection with the issuance and sale
thereof.
(ii) In
the
case of the issuance of Common Stock (otherwise than upon the conversion of
shares of capital stock or other securities of the Company) for a consideration
in whole or in part other than cash, including securities acquired in exchange
therefor (other than securities by their terms so exchangeable), the
consideration other than cash shall be deemed to be the fair value thereof
as
determined by the Board, provided, however, that such fair value as determined
by the Board shall not exceed the aggregate Market Price of the shares of Common
Stock being issued as of the date the Board authorizes the issuance of such
shares.
(iii) In
the
case of the issuance of (I) options, warrants or other rights to purchase or
acquire Common Stock (whether or not at the time exercisable) or (II)
12
securities
by their terms convertible into or exchangeable for Common Stock (whether or
not
at the time so convertible or exchangeable) or options, warrants or rights
to
purchase such convertible or exchangeable securities (whether or not at the
time
exercisable):
(1) the
aggregate maximum number of shares of Common Stock deliverable upon exercise
of
such options, warrants or other rights to purchase or acquire Common Stock
shall
be deemed to have been issued at the time such options, warrants or rights
are
issued and for a consideration equal to the consideration (determined in the
manner provided in Section 8(a)(i) and (ii)), if any, received by the Company
upon the issuance of such options, warrants or rights plus the minimum purchase
price provided in such options, warrants or rights for the Common Stock covered
thereby;
(2) the
aggregate maximum number of shares of Common Stock deliverable upon conversion
of or in exchange for any such convertible or exchangeable securities, or upon
the exercise of options, warrants or other rights to purchase or acquire such
convertible or exchangeable securities and the subsequent conversion or exchange
thereof, shall be deemed to have been issued at the time such securities were
issued or such options, warrants or rights were issued and for a consideration
equal to the consideration, if any, received by the Company for any such
securities and related options, warrants or rights (excluding any cash received
on account of accrued interest or accrued dividends), plus the additional
consideration (determined in the manner provided in Section 8(a)(i) and (ii)),
if any, to be received by the Company upon the conversion or exchange of such
securities, or upon the exercise of any related options, warrants or rights
to
purchase or acquire such convertible or exchangeable securities and the
subsequent conversion or exchange thereof;
(3) on
any
change in the number of shares of Common Stock deliverable upon exercise of
any
such options, warrants or rights or conversion or exchange of such convertible
or exchangeable securities or any change in the consideration to be received
by
the Company upon such exercise, conversion or exchange, the applicable
Conversion Price as then in effect shall forthwith be readjusted to such
Conversion Price as would have been obtained had an adjustment been made upon
the issuance of such options, warrants or rights not exercised prior to such
change, or of such convertible or exchangeable securities not converted or
exchanged prior to such change, upon the basis of such change;
(4) on
the
expiration or cancellation of any such options, warrants or rights (without
exercise), or the termination of the right to convert or exchange such
convertible or exchangeable securities (without exercise), if the Conversion
Price shall have been adjusted upon the issuance thereof, the Conversion Price
shall forthwith be readjusted to such Conversion Price as would have been
obtained had an adjustment been made upon the issuance of such options,
warrants, rights or such convertible or exchangeable securities on the basis
of
the issuance of only the number of shares of Common Stock actually issued upon
the exercise of such options, warrants or rights, or upon the conversion or
exchange of such convertible or exchangeable securities; and
13
(5) if
the
Conversion Price shall have been adjusted upon the issuance of any such options,
warrants, rights or convertible or exchangeable securities, no further
adjustment of the Conversion Price shall be made for the actual issuance of
Common Stock upon the exercise, conversion or exchange thereof.
(b) Stock
Splits, Subdivisions, Reclassifications or Combinations.
If the
Company shall (i) declare a dividend or make a distribution on its Common Stock
in shares of Common Stock, (ii) subdivide or reclassify the outstanding shares
of Common Stock into a greater number of shares, or (iii) combine or reclassify
the outstanding Common Stock into a smaller number of shares, the applicable
Conversion Price in effect at the time of the record date for such dividend
or
distribution or the effective date of such subdivision, combination or
reclassification shall be adjusted to the number obtained by multiplying the
Conversion Price at which the shares of Convertible Preferred Stock were
theretofore convertible by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such action,
and the denominator of which shall be the number of shares of Common Stock
outstanding immediately following such action.
(c) Reorganizations,
Reclassifications, Etc.
If any
capital reorganization or reclassification of the capital stock of the Company,
or consolidation or merger of the Company with another corporation, or the
sale
of all or substantially all of its assets to another corporation shall be
effected in such a way that holders of Common Stock shall be entitled to receive
stock, securities, cash or other property with respect to or in exchange for
Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provision shall be made
whereby the holders of the Convertible Preferred Stock shall have the right
to
acquire and receive upon conversion of the Convertible Preferred Stock, which
right shall be prior to the rights of the holders of Junior Stock, such shares
of stock, securities, cash or other property issuable or payable (as part of
the
reorganization, reclassification, consolidation, merger or sale) with respect
to
or in exchange for such number of outstanding shares of Common Stock as would
have been received upon conversion of the Convertible Preferred Stock at the
Conversion Price then in effect. The Company, the Person formed by the
consolidation or resulting from the merger or which acquires or leases such
assets or which acquires the Company’s shares, as the case may be, shall make
provisions in its certificate or articles of incorporation or other constituent
documents to establish such rights and to ensure that the dividend, liquidation
preference, voting and other rights of the holders of Convertible Preferred
Stock established herein are unchanged, except as permitted herein or as
required by applicable law, rule or regulation. The certificate or articles
of
incorporation or other constituent documents shall provide for adjustments,
which, for events subsequent to the effective date of the certificate or
articles of incorporation or other constituent documents, shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
8.
(d) Tender
Offers, Exchange Offers, Etc.
If a
purchase, tender or exchange offer is made to and accepted by the holders of
more than 50% of the outstanding shares of Common Stock, the Corporation shall
not effect any consolidation, merger or sale with the person having made such
offer or with any Affiliate of such person, unless prior to the consummation
of
such consolidation, merger or sale the holders of the Convertible Preferred
Stock shall have been given a reasonable opportunity to then elect to receive
upon conversion of the Convertible Preferred Stock either the stock, securities
or assets then issuable with respect to
14
the
Common Stock or the stock, securities or assets, or the equivalent, issued
to
previous holders of the Common Stock in accordance with such offer.
(e) Successive
Adjustments.
Successive adjustments in the Conversion Price shall be made, without
duplication, whenever any event specified in Section 8(a), (b), (c) or (d)
shall
occur.
(f) Rounding
of Calculations; Minimum Adjustments.
All
calculations under this Section 8 shall be made to the nearest one-tenth
(1/10th) of a cent. No adjustment in the Conversion Price is required if the
amount of such adjustment would be less than $0.01; provided, however, that
any
adjustments which by reason of this Section 8(f) are not required to be made
will be carried forward and given effect in any subsequent
adjustment.
(g) Statement
Regarding Adjustments.
Whenever the Conversion Price shall be adjusted as provided in this Section
8 or
in Section 9, the Company shall forthwith file, at each office designated for
the conversion of Convertible Preferred Stock, a statement, signed by the
Chairman of the Board, the President, or the Chief Financial Officer of the
Company, showing in reasonable detail the facts requiring such adjustment and
the Conversion Price that shall be in effect after such adjustment and the
Company shall also cause a copy of such statement to be sent by mail, first
class postage prepaid, to each holder of shares of Convertible Preferred Stock
at the address appearing in the Company’s records.
(h) Notices.
In the
event that the Company shall give notice or make a public announcement to the
holders of Common Stock of any action of the type described in Section 8(a)-(d)
and (i), the Company shall, at the time of such notice or announcement, and
in
the case of any action which would require the fixing of a record date, at
least
twenty (20) days prior to such record date, give notice to each holder of shares
of Convertible Preferred Stock, in the manner set forth in Section 8(g) above,
which notice shall specify the record date, if any, with respect to any such
action and the approximate date on which such action is to take place. Such
notice shall also set forth the facts with respect thereto as shall be
reasonably necessary to indicate the effect on the applicable Conversion Price
and the number, kind or class of shares or other securities or property which
shall be deliverable upon conversion of the Convertible Preferred
Stock.
(i) Purchase
Rights.
If at
any time or from to time after the Initial Issuance Date the Company shall
grant, issue or sell any (i) options, warrants or other rights to purchase
or
acquire Common Stock, (ii) securities by their terms convertible into or
exchangeable for Common Stock or options, warrants or other rights to purchase
or acquire such convertible or exchangeable securities or (iii) rights to
purchase property (collectively, the “Purchase
Rights”)
pro
rata to the record holders of any class of Common Stock and both (1) such
Purchase Rights are not distributed with respect to the Convertible Preferred
Stock pursuant to Section 4(f) and (2) such grants, issuance or sales do not
result in an adjustment of the Conversion Price under Section 8, then each
holder of Convertible Preferred Stock shall be entitled to acquire (within
thirty (30) days after the later to occur of the initial exercise date of such
Purchase Rights or receipt by such holder of the notice concerning Purchase
Rights to which such holder shall be entitled under Section 8(g)) upon the
terms
applicable to such Purchase Rights either:
15
(1) the
aggregate Purchase Rights which such holder could have acquired if it had held
the number of shares of Common Stock acquirable upon conversion of the
Convertible Preferred Stock immediately before the grant, issuance or sale
of
such Purchase Rights; provided that if any Purchase Rights were distributed
to
holders of Common Stock without the payment of additional consideration by
such
holders, corresponding Purchase Rights shall be distributed to the exercising
holders of the Convertible Preferred Stock as soon as possible after such
exercise and it shall not be necessary for the exercising holder of the
Convertible Preferred Stock specifically to request delivery of such rights;
or
(2) in
the
event that any such Purchase Rights shall have expired or shall expire prior
to
the end of such thirty (30) day period, the number of shares of Common Stock
or
the amount of property which such holder could have acquired upon such exercise
at the time or times at which the Corporation granted, issued or sold such
expired Purchase Rights.
(j) The
provisions of this Section 8 shall not apply to any Common Stock issued,
issuable or deemed outstanding under paragraphs 8(a)(i) to (iii) inclusive:
(i)
to any person pursuant to any stock option, stock purchase or similar plan
or
arrangement for the benefit of employees of the Company or its subsidiaries
in
effect on the Initial Issuance Date or thereafter adopted by the Board;
(ii) any equity securities issued as consideration in connection with a
bona fide acquisition, merger or consolidation by the Company provided such
acquisition, merger or consolidation has been approved by the Board; (iii)
securities issued in connection with licensing, marketing or distribution
arrangements or similar strategic transactions approved by the Board; (iv)
pursuant to options, warrants and conversion rights in existence on the Initial
Issuance Date; (v) on conversion of the Convertible Preferred Stock or the
sale
of any additional shares of Convertible Preferred Stock; or
(vi)
to any issuance of additional shares of Common Stock as a dividend pursuant
to
Section 4 hereof.
(k) If
any
event occurs as to which, in the opinion of the Board, the provisions of this
Section 8 are not strictly applicable or if strictly applicable would not fairly
protect the rights of the holders of the Convertible Preferred Stock in
accordance with the essential intent and principles of such provisions, then
the
Board shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
rights as aforesaid, but in no event shall any adjustment have the effect of
increasing the applicable Conversion Price as otherwise determined pursuant
to
any of the provisions of this Section 8 except in the case of a combination
of
shares of a type contemplated in Section 8(b) hereof and then in no event to
an
amount larger than the applicable Conversion Price as adjusted pursuant to
Section 8(b) hereof.
(l) Before
taking any action that would cause an adjustment reducing the applicable
Conversion Price below the then par value of the shares of Common Stock issuable
upon conversion of the Convertible Preferred Stock, the Company will take any
corporate action that may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully-paid and nonassessable
shares of such Common Stock at such adjusted Conversion Price.
16
(m) Except
as
provided in this Section 8 and Section 9, no adjustment in respect of any
dividends or other payments or distributions made to holders of Convertible
Preferred Stock of securities issuable upon the conversion of the Convertible
Preferred Stock will be made during the term of the Convertible Preferred Stock
or upon the conversion of the Convertible Preferred Stock.
9. ADJUSTMENT
UPON DEFAULT.
(a) In
the
event that the Company fails for any reason to file with the SEC its audited
financial statements for each of the three years ended December 31, 2003, 2004
and 2005 and its unaudited financial statements for the six month period ended
June 30, 2006 (collectively, the “Financial
Statements”)
prior
to February 15, 2007 (any such event, a “Financial
Statement Filing Default”),
the
Series B Conversion Price and the Series C Conversion Price shall each be
automatically adjusted to be the lowest average closing price of a share of
Common Stock for each consecutive thirty (30) consecutive Business Day period
from February 15, 2007 to and including the Filing Date (as defined below)
(such
price, the “Lowest
Average Price”);
provided,
however,
that in
no event shall the Conversion Price be adjusted to greater than the then current
Series B Conversion Price or Series C Conversion Price, as applicable. In the
event that fewer than 30 Business Days elapse between February 15, 2007 and
the
Filing Date, the Lowest Average Price shall be computed on the basis of the
average closing price of a share of Common Stock for the thirty (30) consecutive
Business Days preceding the Filing Date. As used herein, “Filing
Date”
means
the date on which the Company files its Financial Statements with the SEC (the
“Filing
Date”).
(b) In
the
event that the representation and warranty of the Company in Section 3.7 of
the
Securities Purchase Agreement proves to have been incorrect in any material
respect as of the date it was made (such inaccuracy, a “Financial
Statement Breach”),
the
Series B Conversion Price and the Series C Conversion Price shall each be
automatically adjusted to be the lesser of (i) the average closing price of
a
share of Common Stock for the thirty (30) consecutive Business Days following
the date of public announcement by the Company that its audited results of
operations for each of the three years ended December 31, 2003, 2004 and 2005
and the six month period ended June 30, 2006 are complete and (ii) the average
closing price of a share of Common Stock for the thirty (30) consecutive
Business Days following the Filing Date (such price, the “Filing
Date Average Price”);
provided,
however,
that in
no event shall the Conversion Price be adjusted to greater than the then current
applicable Conversion Price. In the event the Company does not make a public
announcement as contemplated in (i) above prior to the Filing Date, the
Conversion Price shall be automatically adjusted to the Filing Date Average
Price; provided,
however,
that in
no event shall the Conversion Price be adjusted to be greater than the then
current Conversion Price.
(c) In
the
event the Conversion Price is required to be adjusted pursuant to both clauses
(a) and (b) above, the Conversion Price shall equal the lower of (i) the
Conversion Price obtained pursuant to Section 9(a) and (ii) the Conversion
Price
obtained pursuant to Section 9(b).
(d) Notwithstanding
clauses (a), (b) and (c) above, in no event shall the then current applicable
Conversion Price be reduced pursuant to this Section 9 by more than 25%
17
(calculated
by reference to the applicable Conversion Price before giving effect to any
such
adjustment).
10. ISSUE
TAXES.
The
Company shall pay all issue taxes, if any, incurred in respect of the issue
of
Common Stock on conversion. If a holder of shares surrendered for conversion
specifies that the Common Stock to be issued on conversion is to be issued
in a
name or names other than the name or names in which such surrendered shares
stand, the Company shall not be required to pay any transfer or other taxes
incurred by reason of the issuance of such Common Stock to the name of
another.
11. RESERVATION
OF SHARES.
The
Company shall at all times when the Convertible Preferred Stock shall be
outstanding reserve and keep available, free from preemptive rights, for
issuance upon the conversion of Convertible Preferred Stock, such number of
its
authorized but unissued Common Stock as will from time to time be sufficient
to
permit the conversion of all outstanding Convertible Preferred Stock, including
all dividends payable thereon in shares of Common Stock. Prior to the delivery
of any securities which the Company shall be obligated to deliver upon
conversion of the Convertible Preferred Stock, the Company shall comply with
all
applicable laws and regulations which require action to be taken by the Company.
All Common Stock delivered upon conversion of the Convertible Preferred Stock
will upon delivery be duly and validly issued and fully paid and nonassessable,
free of all liens and charges and not subject to any preemptive
rights.
12. STATUS
OF SHARES.
All
shares of Convertible Preferred Stock that are at any time converted pursuant
to
Section 7 and all shares of Convertible Preferred Stock that are otherwise
reacquired by the Company shall be prohibited from being reissued as Series
B
Preferred Stock or Series C Preferred Stock and shall (upon compliance with
any
applicable provisions of the laws of the State of Delaware) have the status
of
authorized but unissued shares of Preferred Stock, without designation as to
series, subject to reissuance by the Board of Directors as shares of any one
or
more other series.
13. CERTAIN
DEFINITIONS.
As used
in this Certificate of Designations, the following terms shall have the
following meanings, unless the context otherwise requires:
“Affiliate”
with
respect to any given person shall mean any person controlling, controlled by
or
under common control with the given person.
“Beneficially
Own”
or
“Beneficial
Ownership”
shall
mean the aggregate beneficial ownership, within the meaning of Rule 13d-3 under
the Exchange Act.
“Business
Day”
shall
mean any day except a Saturday, Sunday or day on which banking institutions
are
legally authorized to close in the City of New York.
“Closing
Date”
shall
mean the date of consummation of the transactions contemplated by the Securities
Purchase Agreement.
“closing
price”
means,
with respect to a particular security, on any given day, the closing price
on
the Nasdaq National Market or, if not listed on the Nasdaq National Market,
on
any other principal national securities exchange on which the applicable
security is listed or
18
admitted
to trading, as applicable, or if not quoted on the Nasdaq National Market or
listed or admitted to trading on any other national securities exchange, (a)
the
average of the highest and lowest sale prices for such day reported by the
Nasdaq Stock Market if such security is traded over-the-counter and quoted
in
the Nasdaq Stock Market, or (b) if such security is so traded, but not so
quoted, the average of the highest reported asked and lowest reported bid prices
of such security as reported by the Nasdaq Stock Market, the Pink Sheets or
any
comparable system, or (c) if such security is not listed on the Nasdaq Stock
Market, the Pink Sheets or any comparable system, the average of the highest
asked and lowest bid prices as furnished by two members of the NASD, Inc.
selected from time to time by the Company for that purpose.
“Convertible
Preferred Directors”
shall
mean the Series B Directors and the representatives designated by Warburg Pincus
upon the conversion of 50% of the Series B Preferred Stock as set forth in
the
Securities Purchase Agreement.
“Convertible
Preferred Notice Date”
shall
mean the date on which the Company shall deliver to the holders of the
Convertible Preferred Stock notice of conversion of the Convertible Preferred
Stock pursuant to Section 7(a) hereto.
“EBITDA”
shall
mean earnings before interest, taxes, depreciation and amortization as
calculated in accordance with U.S. generally accepted accounting
principles.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Initial
Issuance Date”
means
the date that is the Closing Date.
“Initial
Purchase Price”
means
$50.00 per share of Series B Preferred Stock or Series C Preferred Stock, as
applicable.
“Market
Price”
means,
with respect to a particular security, on any given day, the volume weighted
average price or, in case no such reported sales take place on such day, the
average of the highest asked and lowest bid prices regular way, in either case
on the Nasdaq National Market or, if not listed on the Nasdaq National Market,
on any other principal national securities exchange on which the applicable
security is listed or admitted to trading, as applicable, or if not quoted
on
the Nasdaq National Market or listed or admitted to trading on any other
national securities exchange, (a) the average of the highest and lowest sale
prices for such day reported by the Nasdaq Stock Market if such security is
traded over-the-counter and quoted in the Nasdaq Stock Market, or (b) if such
security is so traded, but not so quoted, the average of the highest reported
asked and lowest reported bid prices of such security as reported by the Nasdaq
Stock Market or any comparable system, or (c) if such security is not listed
on
the Nasdaq Stock Market or any comparable system, the average of the highest
asked and lowest bid prices as furnished by two members of the NASD, Inc.
selected from time to time by the Company for that purpose. If such security
is
not listed and traded in a manner that the quotations referred to above are
available for the period required hereunder, the Market Price per share of
Common Stock shall be deemed to be the fair value per share of such security
as
determined in good faith by the Board of Directors.
19
“Meeting
Deadline”
means
no later than 120 days after the date which the Company files with the SEC
its
audited financial statements for the year ended December 31, 2005 but in no
event later than June 15, 2007.
“Parity
Securities”
means
each class or series of equity securities of the Company, whether currently
issued or issued in the future, that does not by its terms expressly provide
that it ranks senior to or junior to the Convertible Preferred Stock (whether
with respect to payment of dividends or rights upon liquidation, dissolution
or
winding up of the Company).
“Pink
Sheets”
shall
mean the daily publication compiled by the National Quotation Bureau with bid
and ask prices of over-the-counter stocks.
“Proxy
Statement”
shall
mean the proxy statement filed with the SEC, as contemplated by the Securities
Purchase Agreement.
“SEC”
means
the United States Securities and Exchange Commission.
“Securities
Purchase Agreement”
means
the Securities Purchase Agreement, dated as of [ ], 2006, by and between the
Company and each of the Investors named therein, as amended from time to time
in
accordance with its terms.
“Senior
Securities”
means
each class or series of equity securities of the Company, whether currently
issued or issued in the future, that by its terms ranks senior to the
Convertible Preferred Stock (whether with respect to payment of dividends or
rights upon liquidation, dissolution or winding up of the Company).
14. HEADINGS.
The
headings of the paragraphs of this Schedule are for convenience of reference
only and shall not define, limit or affect any of the provisions
hereof.
15. WAIVERS.
Any of
the rights of the holders of (i) Series B Preferred Stock set forth herein
may
be waived by any holder of Series B Preferred Stock with respect to such holder
or by the affirmative consent or vote of the holders of a majority of the shares
of Series B Preferred Stock then outstanding, voting together as a separate
class, and such waiver shall be binding on all holders of Series B Preferred
Stock, (ii) Series C Preferred Stock set forth herein may be waived by any
holder of Series C Preferred Stock with respect to such holder or by the
affirmative consent or vote of the holders of a majority of the shares of Series
C Preferred Stock then outstanding, voting together as a separate class, and
such waiver shall be binding on all holders of Series C Preferred Stock or
(iii)
Convertible Preferred Stock together as a class set forth herein may be waived
by any holder of Convertible Preferred Stock with respect to such holder or
by
the affirmative consent or vote of the holders of a majority of the shares
of
Convertible Preferred Stock then outstanding, voting together as a separate
class, and such waiver shall be binding on all holders of Convertible Preferred
Stock.
20
IN
WITNESS WHEREOF, NYFIX, Inc. has caused this Certificate of Designations to
be
duly executed by its authorized corporate officer this ___ day of _____________,
2006.
| NYFIX, INC. | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title | ||
EXHIBIT
C
FORM
OF WARRANT
R
_________
THIS
WARRANT AND THE WARRANT SHARES HAVE NOT BEEN REGISTERED
UNDER
THE SECURITIES ACT OF 1933, AS
AMENDED,
NOR REGISTERED OR QUALIFIED UNDER ANY STATE
SECURITIES
LAWS, AND MAY NOT BE PLEDGED, HYPOTHECATED,
SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SO
REGISTERED
OR AN EXEMPTION THEREFROM IS AVAILABLE
WARRANT
TO PURCHASE COMMON STOCK
OF
NYFIX, INC.
THIS
CERTIFIES THAT, for value received, NYFIX, Inc., a Delaware corporation (the
"Company"),
promises to issue to ____________, the holder of this Warrant, its nominees,
successors or assigns (the "Holder"),
2,250,000 nonassessable shares of Common Stock, par value $0.001 per share,
of
the Company ("Common
Stock"),
upon
the payment by the Holder to the Company of the Warrant Price (as defined
herein) and to deliver to the Holder a certificate or certificates representing
the Common Stock purchased. The number of shares of Common Stock purchasable
upon exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time as provided herein. The initial Warrant Price
(the
"Warrant
Price")
per
share of Common Stock shall equal $7.75 per share, subject to adjustment as
provided herein.
For
the
purpose of this Warrant, the term "Common
Stock"
shall
mean (i) the class of stock designated as the Common Stock at the date of this
Warrant, or (ii) any other class or classes of stock resulting from successive
changes or reclassifications of such class of stock, and the term "Business
Day"
shall
mean any day other than a Saturday or Sunday or a day on which commercial banks
in New York, New York are required or authorized to be closed.
Section
1. Term
of Warrant, Exercise of Warrant.
(a) Subject to the terms of this Warrant, the Holder shall have the right,
at its option, which may be exercised in whole or in part, at any time, and
from
time to time, commencing at the time of the issuance of this Warrant and until
5:00 p.m. Eastern Time on ________, 20161
to
purchase from the Company the number of fully paid and nonassessable shares
of
Common Stock which the Holder may at the time be entitled to purchase on
exercise of this Warrant ("Warrant
Shares").
Notwithstanding the foregoing, if the Holder shall have given the Company
written notice of its intention to exercise this Warrant on or before 5:00
p.m.
Eastern Time on ___________, 2016, the Holder may exercise this Warrant at
any
time through (and including) the Business Day next following the date that
all
applicable required regulatory holding periods have expired and all applicable
required governmental approvals have been obtained in connection with such
exercise of this Warrant by the Holder, if such Business Day is later than
on
___________, 2016 (_________,
|
1
|
Tenth
anniversary of Closing Date.
|
2016
or such later date being herein referred to as
the "Warrant
Expiration Date").
After
the Warrant Expiration Date, this Warrant will be void.
(b) The
purchase rights evidenced by this Warrant shall be exercised by the Holder
surrendering this Warrant, with the form of subscription at the end hereof
duly
executed by the Holder, to the Company at its office in Stamford, CT (or, in
the
event the Company’s principal office is no longer in Stamford, CT, its then
principal office in the United States (the “Principal Office”)), accompanied by
payment, of an amount (the "Exercise
Payment")
equal
to the Warrant Price multiplied by the number of Warrant Shares being purchased
pursuant to such exercise, payable as follows: (i) by payment to the Company
in
cash, by certified or official bank check, or by wire transfer of the Exercise
Payment, (ii) by surrender to the Company for cancellation of securities of
the
Company having a Market Price (as hereinafter defined) on the date of exercise
equal to the Exercise Payment; or (iii) by a combination of the methods
described in clauses (i) and (ii) above. In lieu of exercising the Warrant,
the
Holder may elect to receive a payment equal to the difference between (i) the
Market Price on the date of exercise multiplied by the number of Warrant Shares
as to which the payment is then being elected and (ii) the Exercise Payment
with
respect to such Warrant Shares, payable by the Company to the Holder only in
shares of Common Stock valued at the Market Price on the date of exercise (a
“Net
Exercise”).
For
purposes hereof, the term "Market
Price"
shall
mean, with respect to any day, the average closing price of a share of Common
Stock or other security for the fifteen (15) consecutive trading days preceding
such day on the principal national securities exchange on which the shares
of
Common Stock or securities are listed or admitted to trading or, if not listed
or admitted to trading on any national securities exchange, the average of
the
reported bid and asked prices during such fifteen (15) trading day period on
Nasdaq or, if the shares are not listed on Nasdaq, in the over-the-counter
market or pink sheets or, if the shares of Common Stock or securities are not
publicly traded, the Market Price for such day shall be the fair market value
thereof determined jointly by the Company and the Holder; provided,
however,
that if
such parties are unable to reach agreement within a reasonable period of time,
the Market Price shall be determined in good faith by an independent investment
banking firm selected jointly by the Company and the Holder or, if that
selection cannot be made within fifteen (15) days, by an independent investment
banking firm selected by the American Arbitration Association in accordance
with
its rules. All costs and expenses incurred in connection with the determination
of Market Price shall be borne by the Company.
(c) Upon
any
exercise of this Warrant, the Company shall issue and cause to be delivered
with
all reasonable dispatch, but in any event within three (3) Business Days, to
or
upon the written order of the Holder and, subject to Section 3, in such name
or
names as the Holder may designate, a certificate or certificates for the number
of full Warrant Shares issuable upon such exercise together with such other
property, including cash, which may be deliverable upon such exercise. If fewer
than all of the Warrant Shares represented by this Warrant are purchased, a
new
Warrant of the same tenor as this Warrant, evidencing the Warrant Shares not
purchased will be issued and delivered by the Company at the Company's expense,
to the Holder together with the issue of the certificates representing the
Warrant Shares then being purchased. All Warrant Certificates surrendered upon
exercise of Warrants shall be canceled by the Company.
Section
2. Warrant
Register, Registration of Transfers
2
Section
2.1. Warrant
Register.
The
Company shall keep at its Principal Office, a register (the "Warrant
Register")
in
which the Company shall record the name and address of the Holder from time
to
time and all transfers and exchanges of this Warrant. The Company shall give
the
Holder prior written notice of any change of the address at which such register
is kept.
Section
2.2. Registration
of Transfers, Exchanges or Assignment of Warrants.
The
Holder shall be entitled to assign its interest in this Warrant in whole or
in
part to any person upon surrender thereof accompanied by a written instrument
or
instruments of transfer in the form of assignment at the end hereof duly
executed by the Holder. This Warrant may also be exchanged or combined with
warrants of like tenor at the option of the Holder for another Warrant or
Warrants of like tenor and representing in the aggregate the right to purchase
a
like number of Warrant Shares upon presentation thereof to the Company as its
Principal Office together with a written notice signed by the Holder specifying
the denominations in which the new Warrant is or the new Warrants are to be
issued.
Upon
surrender for transfer or exchange of this Warrant to the Company at its
Principal Office for transfer or exchange, in accordance with this Section
2,
the Company shall, without charge (subject to Section 3), execute and deliver
a
new Warrant or Warrants of like tenor and of a like aggregate amount of Warrant
Shares in the name of the assignee named in such instrument of assignment and,
if the Holder's entire interest is not being assigned, in the name of the Holder
with respect to that portion not transferred, and this Warrant shall promptly
be
canceled.
Section
3. Payment
of Taxes.
The
Company shall pay all documentary stamp taxes, if any, attributable to the
initial issuance of any Warrant Shares upon the exercise of this Warrant;
provided,
however,
that
the Company shall not be required to pay any tax or taxes which may be payable
in respect of any transfer involved in the issue or delivery of any Warrant
or
certificate for Warrant Shares in a name other than that of the Holder as such
name is then shown on the books of the Company.
Section
4. Certain
Covenants.
Section
4.1. Reservation
of Warrant Shares.
Promptly following the date on which the Company amends its Restated Certificate
of Incorporation to increase the number of authorized shares of Common Stock,
the Company shall at all times keep reserved, out of its authorized but unissued
Common Stock, free from any preemptive rights, rights of first refusal or other
restrictions (other than pursuant to the Securities Act of 1933, as amended
(the
"Act"))
a
number of shares of Common Stock sufficient to provide for the exercise of
the
rights of purchase represented by this Warrant. The transfer agent, if any,
for
the Common Stock, and every subsequent transfer agent for any shares of its
Common Stock issuable upon the exercise of any of the rights of purchase as
set
out in this Warrant, shall be irrevocably authorized and directed at all times
to reserve such number of authorized shares as shall be requisite for such
purpose.
Section
4.2. No
Impairment.
The
Company shall not by any action including, without limitation, amending its
Restated Certificate of Incorporation, any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of
the terms of this Warrant, but shall at all times in good faith assist in the
carrying out of all such terms and in the taking of
3
all
such
action, as may be necessary or appropriate to protect the rights of the Holder
against impairment. Without limiting the generality of the foregoing, the
Company shall take all such action as may be necessary or appropriate in order
that the Company may validly issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant at the then Warrant Price
therefor.
Section
4.3. Notice
of Certain Corporate Action.
In case
the Company shall propose (a) to offer to the holders of its Common Stock rights
to subscribe for or to purchase any shares of Common Stock or shares of stock
of
any class or any other securities, rights or options, or (b) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision, or combination, of outstanding shares of Common Stock),
or
(c) to effect any capital reorganization, or (d) to effect any consolidation,
merger or sale, transfer or other disposition of all or substantially all of
its
property, assets or business, or (e) to effect the liquidation, dissolution
or
winding up of the Company or (f) to offer to the holders of its Common Stock
the
right to have their shares of Common Stock repurchased or redeemed or otherwise
acquired by the Company, or (g) to take any other action which would require
the
adjustment of the Warrant Price and/or the number of Warrant Shares issuable
upon exercise of this Warrant, then in each such case (but without limiting
the
provisions of Section 5), the Company shall give to the Holder, a notice of
such
proposed action, which shall specify the date on which a record is to be taken
for purposes of such dividend, distribution of offer of rights, or the date
on
which such reclassification, reorganization, consolidation, merger, sale,
transfer, disposition, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of Common Stock, if any
such date is to be fixed and shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such action
on the Common Stock. Such notice shall be so given at least ten (10) Business
Days prior to the record date for determining holders of the Common Stock for
purposes of participating in or voting on such action, or at least ten (10)
Business Days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of Common Stock, whichever shall
be
the earlier. Such notice shall specify, in the case of any subscription or
repurchase rights, the date on which the holders of Common Stock shall be
entitled thereto, or the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon any reorganization, reclassification, consolidation, merger,
sale or other action, as the case may be. Such notice shall also state whether
the action in question or the record date is subject to the effectiveness of
a
registration statement under the Act or to a favorable vote of security holders,
if either is required, and the adjustment in Warrant Price and/or number of
Warrant Shares issuable upon exercise of this Warrant as a result of such
reorganization, reclassification, consolidation, merger, sale or other action.
Section
5. Adjustment
of Warrant Price and Warrant Shares.
Section
5.1. Subdivision
or Combination of Stock.
In case
the Company shall at any time (i) issue a dividend payable in Common Stock
or
convertible securities or any rights to subscribe for or to purchase, or any
options for the purchase of, Common Stock or convertible securities or (ii)
subdivide its outstanding shares of Common Stock into a greater number of shares
or combine its outstanding shares of Common Stock into a smaller number of
shares, the Warrant Price in effect immediately prior to such subdivision or
combination shall be adjusted to an amount that bears the same relationship
to
the Warrant Price in effect immediately prior to such action as the total amount
of shares of Common Stock outstanding immediately prior to
4
such
action bears to the total number of shares of Common Stock outstanding
immediately after such action, and the number of shares of Common Stock
purchasable upon the exercise of any Warrant shall be that number of shares
of
Common Stock obtained by multiplying the number of shares of Common Stock
purchasable immediately prior to such adjustment upon the exercise of such
Warrant by the Warrant Price in effect immediately prior to such adjustment
and
dividing the product so obtained by the Warrant Price in effect after such
adjustment.
Section
5.2. Reorganization,
Reclassification, Consolidation, Merger or Sale.
(a) If
any capital reorganization or reclassification of the capital stock of the
Company, or any consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets to another corporation
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization, reclassification,
consolidation, exercise, merger or sale, lawful and adequate provision shall
be
made whereby the Holder shall thereafter have the right to receive upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore receivable upon the exercise
of
this Warrant, the highest amount of shares of stock, securities or assets
(including cash) as may be issued or payable with respect to or in exchange
for
a number of outstanding shares of such Common Stock equal to the number of
Warrant Shares for which this Warrant could have been exercised immediately
prior to such reorganization, reclassification, consolidation, merger or sale,
and in any such case appropriate provision shall be made with respect to the
rights and interests of such Holder to the end that the provisions hereof shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets (including cash) thereafter deliverable upon the
exercise of this Warrant. The Company will not effect any consolidation, merger
or sale, unless prior to the consummation thereof the successor corporation
(if
other than the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume, by written instrument executed
and mailed or delivered to the Holder at the last address of such Holder
appearing on the books of the Company, the obligation to deliver to such Holder
such shares of stock, securities or assets (including cash) as, in accordance
with the foregoing provisions, the Holder may be entitled to receive.
(b) Notwithstanding
the foregoing:
(i) In
the event
of a merger or consolidation of the Company approved by the Board of Directors
of the Company (the “Board”)
in
which the consideration otherwise receivable in such merger or consolidation
by
the Holder upon exercise of the Warrant consists solely of securities
(“Merger
Securities”),
the
Holder shall be entitled to receive, at such Holder's option, upon exercise
hereof, (x) the consideration the Holder would be entitled to receive pursuant
to Section 5.2(a) or (y) the Merger Securities issuable per share of Common
Stock multiplied by the number of shares of Common Stock the Holder would
receive if the Holder exercised this Warrant in full by Net Exercise immediately
prior to such merger or consolidation.
(ii) In
the event
of a merger or consolidation of the Company approved by the Board in which
the
consideration otherwise receivable in such merger or consolidation by
5
the
Holder upon exercise of the Warrant consists solely of cash, the Holder shall
be
entitled to receive at such Holder's option, upon exercise hereof, in lieu
of an
amounts payable pursuant to Section 5.2(a) hereof, an amount in cash equal
to
the number of Warrant Shares for which the Warrant is then exerciseable
multiplied by the difference between the amount in cash per share of Common
Stock payable in such merger or consolidation less the Exercise Payment for
such
Warrant Shares.
Section
5.3. Fractional
Shares.
The
Company shall not issue fractions of shares of Common Stock upon exercise of
this Warrant or scrip in lieu thereof. If any fraction of a share of Common
Stock would, except for the provisions of this Section 5.3, be issuable upon
exercise of this Warrant, the Company shall in lieu thereof pay to the person
entitled thereto an amount in cash equal to the current value of such fraction,
calculated to the nearest one-hundredth (1/100) of a share, to be computed
on
the basis of the Market Price for a share of Common Stock as of the date of
exercise.
Section
5.4. Notice
of Adjustment.
Upon
any adjustment of the Warrant Price, and from time to time upon the request
of
the Holder the Company shall furnish to the Holder the Warrant Price resulting
from such adjustment or otherwise in effect and the number of Warrant Shares
then available for purchase under this Warrant, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation
is
based.
Section
5.5. Certain
Events.
If any
event occurs as to which, in the good faith judgment of the Board the other
provisions of this Section 5 are not strictly applicable or if strictly
applicable would not fairly protect the exercise rights of the Holder in
accordance with the essential intent and principles of such provisions, then
the
Board in the good faith, reasonable exercise of its business judgment shall
make
an adjustment in the application of such provisions, in accordance with such
essential intent and principles so as to protect such exercise rights as
aforesaid.
SECTION
6. No
Rights as a Stockholder; Notice to Holder.
Nothing
contained in this Warrant shall be construed as conferring upon the Holder
the
right to vote or to consent or to receive notice as a stockholder in respect
of
any meeting of stockholders for the election of directors of the Company or
any
other matter, or any rights whatsoever as a stockholder of the
Company.
SECTION
7. Replacement
of Warrant.
Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and (in the case of loss, theft or
destruction) upon delivery of an indemnity agreement (with, in the case of
a
Holder which is not a qualified institutional buyer within the meaning of Rule
144A under the Act, surety) in an amount reasonably satisfactory to it, or
(in
the case of mutilation) upon surrender and cancellation thereof, the Company
will issue, in lieu thereof, a new Warrant of like tenor.
SECTION
8. Notices.
All
notices and other written communications provided for hereunder shall be given
in writing and delivered in person or sent by overnight delivery service (with
charges prepaid) or by facsimile transmission, if the original of such facsimile
transmission is sent by overnight delivery service (with charges prepaid) by
the
next succeeding Business Day and (i) if to the Holder addressed to it at the
address or fax number specified for such Holder in
6
the
Warrant Register or at such other address or fax number as the Holder shall
have
specified to the Company in writing in accordance with this Section 8, and
(ii)
if to the Company, addressed to it at NYFIX, Inc., 000 Xxxx Xxxxxx,
00xx
Xxxxx,
Xxx Xxxx, XX 00000 (facsimile: 212-809-1013), Attention: General Counsel, or
at
such other address or fax number as the Company shall have specified to the
Holder in writing in accordance with this Section 8. Notice given in accordance
with this Section 8 shall be effective upon the earlier of the date of delivery
or the second Business Day at the place of delivery after dispatch.
SECTION
9. Applicable
Law.
This
Warrant shall be governed by and construed in accordance with the laws of the
State of New York without giving effect to principles of conflict of
laws.
SECTION
10. Warrant
Share Legend.
Each
certificate representing Warrant Shares, until such Warrant Shares have been
distributed pursuant to a registration statement effective under the Act or
sold
to the public through a broker, dealer or market maker in compliance with Rule
144 under the Act (or any similar rule then in force) shall bear the following
legend:
THE
SHARES REPRESENTED HEREBY ARE ENTITLED TO THE BENEFITS OF A
CERTAIN
REGISTRATION RIGHTS AGREEMENT DATED _________, 2006
BETWEEN
THE ISSUER AND WARBURG PINCUS PRIVATE EQUITY IX, L.P.,
A
COPY OF
WHICH WILL BE FURNISHED TO THE REGISTERED HOLDER
HEREOF
WITHOUT CHARGE BY THE ISSUER, UPON REQUEST.
SECTION
11. Captions.
The
captions of the Sections and subsections of this Warrant have been inserted
for
convenience only and shall have no substantive effect.
7
IN
WITNESS WHEREOF, the undersigned have executed this Warrant as of the __th
day
of ______, 2006.
| NYFIX, INC. | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title | ||
| Attest:________________________ | ||
| Secretary | ||
8
[To
be signed only upon exercise of Warrant]
To
NYFIX,
INC.:
The
undersigned, the holder (the “Holder”)
of the
within Warrant (the "Warrant"),
hereby irrevocably elects to exercise the purchase right represented by the
Warrant for, and to purchase thereunder,
shares
of Common Stock of NYFIX, Inc., a Delaware corporation (the “Company”),
and
herewith [makes payment of $
therefor
in full payment of the Exercise Payment][tenders securities having a Market
Price of $_____ in full payment of the Exercise Payment ] [elects to receive
a
payment equal to the difference between (i) the Market Price (as defined in
the
Warrant) multiplied by ________ (the number of Warrant Shares as to which the
payment is being elected) and (ii) ___________, which is the aggregate exercise
price with respect to such Warrant Shares, in full payment of the Exercise
Payment, payable by the Company to the Holder only in shares of Common Stock
valued at the Market Price in accordance with the terms of the Warrant] and
requests that the certificates for such shares be issued in the name of, and
be
delivered to ,
whose
address is .
[In
the
case of a merger or consolidation where Holder elects to receive consideration
pursuant to Section 5.2(b):
[Pursuant
to Section 5.2(b)(i) of the within Warrant (the “Warrant”),
the
undersigned, the holder (the “Holder”)
of the
Warrant, hereby elects to receive, in lieu of exercising the Warrant, the Merger
Securities issuable per share of Common Stock pursuant to the [Merger
Agreement], multiplied by the number of shares of Common Stock the Holder would
receive if the Holder exercised the Warrant in full by Net Exercise immediately
prior to such transaction.] or
[Pursuant
to Section 5.2(b)(ii) of the within Warrant, the undersigned, the holder of
the
within Warrant (the “Holder”),
hereby elects to receive, in lieu of exercising the within Warrant, an amount
in
cash equal to the number of Warrant Shares for which the Warrant is exerciseable
multiplied by the difference between the amount in cash per share of Common
Stock payable pursuant to the [Merger Agreement], less the Exercise Payment
for
such Warrant Shares.]]
Capitalized
terms used by not defined herein shall have the meaning assigned to them in
the
Warrant.
Dated:
_________________________
_________________________
(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)
(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)
_________________________
Address
2
[To
be signed only upon transfer of Warrant]
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
the
right represented by the within Warrant to purchase
shares
of the Common Stock of NYFIX, Inc. to which the within Warrant relates, and
appoints
attorney
to transfer said right on the books of NYFIX, Inc. with full power of
substitution in the premises.
Dated:
_________________________
(Signature
must conform in all respects to name of Holder as specified on the face of
the
Warrant)
_________________________
Address
In
the
presence of:
_____________________________
3
EXHIBIT
G
REGISTRATION
RIGHTS AGREEMENT
NYFIX,
INC.
REGISTRATION
RIGHTS AGREEMENT
REGISTRATION
RIGHTS AGREEMENT, dated as of _________ ____, 2006 (this “Agreement”), among the
investors whose names and addresses appear from time to time listed on
Schedule
I
hereto
(the “Investors”) and NYFIX, Inc., a Delaware corporation (the “Company”).
Capitalized terms used in this Agreement but not otherwise defined herein
shall
have the meaning set forth in the Purchase Agreement (as defined
herein).
R
E C
I T A L S
WHEREAS,
the Investors have, pursuant to the terms of the Purchase Agreement, agreed
to
purchase shares of Series B Voting Convertible Preferred Stock, par value
$1.00
per share (the “Convertible Preferred Stock”), of the Company;
WHEREAS,
the Company has authorized the issuance of Series C Non-Voting Convertible
Preferred Stock, par value $1.00 per share (the “Exchange Preferred
Stock”);
WHEREAS,
the shares of Convertible Preferred Stock and Exchange Preferred Stock are
convertible into shares of Common Stock;
WHEREAS,
the Company has agreed to grant the Investors certain registration rights;
and
WHEREAS,
the Company and the Investors desire to define the registration rights of
the
Investors on the terms and subject to the conditions herein set
forth.
NOW,
THEREFORE, in consideration of the foregoing premises and for other good
and
valuable consideration, the parties hereby agree as follows:
SECTION
1. DEFINITIONS
As
used
in this Agreement, the following terms have the respective meanings set forth
below:
Agreement:
shall mean this Registration Rights Agreement among the Investors and the
Company, as the same may be amended or modified from time to time in accordance
with its terms;
Commission:
shall mean the Securities and Exchange Commission or any other federal agency
at
the time administering the Securities Act;
Demanding
Holders:
shall have the meaning set forth in Section 2(b)(ii);
Exchange
Act:
shall mean the Securities Exchange Act of 1934, as amended (or any successor
act), and the rules and regulations promulgated thereunder;
Holder:
shall mean each Investor that holds Registrable Securities, any transferee
or
assignee thereof to whom an Investor assigns its rights under this Agreement
and
who agrees to become bound by the provisions of this Agreement in accordance
with Section 3(f) and any transferee or assignee thereof to whom a transferee
or
assignee assigns its rights under this Agreement and who agrees to become
bound
by the provisions of this Agreement in accordance with Section
3(f);
Indemnified
Party:
shall have the meaning set forth in Section 2(f)(iii);
Indemnifying
Party:
shall have the meaning set forth in Section 2(f)(iii);
Initiating
Holder(s):
shall mean the Investors who in the aggregate are the Holders of more than
50%
of all the outstanding Registrable Securities held by the
Investors;
Other
Stockholders:
shall have the meaning set forth in Section 2(a);
Purchase
Agreement:
shall mean the Purchase Agreement, dated as of the date hereof, among the
Company and the Investors (as defined therein), as the same may be amended
or
modified from time to time in accordance with its terms;
Person:
shall mean an individual, partnership, joint-stock company, corporation,
limited
liability company, trust or unincorporated organization, and a government
or
agency or political subdivision thereof;
Register,
Registered
and
Registration:
shall mean a registration effected by preparing and filing a registration
statement in compliance with the Securities Act (and any post-effective
amendments filed or required to be filed) and the declaration or ordering
of
effectiveness of such registration statement by the Commission;
Registrable
Securities:
shall mean (A) shares of Common Stock issuable upon conversion of the shares
of
Convertible Preferred Stock or Exchange Preferred Stock, (B)
any
other shares of Common Stock held or hereafter acquired by the Investors,
including any shares of Common Stock issuable upon exchangeable or convertible
Securities and
(C)
any Common Stock of the Company issued as a dividend or other distribution
with
respect to, or in exchange for or in replacement of, the shares of Convertible
Preferred Stock, Exchange Preferred Stock or Common Stock referred to in
clause
(A); provided,
however, that the foregoing definition shall exclude in all cases any
Registrable Securities sold by a Person in a transaction in which such Person’s
rights under this Agreement are not assigned or any Registrable Securities
for
which registration rights have terminated pursuant to Section 2(j); provided,
further, that
-2-
“Registrable
Securities” shall not at any time include any Securities (i) registered and sold
pursuant to the Securities Act or (ii) sold pursuant to Rule 144 under the
Securities Act.
Registration
Expenses:
shall mean all expenses incurred by the Company in compliance with Sections
2(a), (b) and (c) hereof, including, without limitation, all registration
and
filing fees, printing expenses, reasonable fees and disbursements of counsel
for
the Company, reasonable fees and expenses of one counsel for all the Holders
(which counsel shall be chosen by the Initiating Holder(s)), reasonable blue
sky
fees and expenses and the reasonable expense of any special audits incident
to
or required by any such Registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the
Company);
Registration
Period:
shall have the meaning set forth in Section 2(e)(i);
Rule
144:
shall have the meaning set forth in Section 2(h)(i);
Security,
Securities:
shall have the meaning set forth in Section 2(1) of the Securities
Act;
Securities
Act:
shall mean the Securities Act of 1933, as amended (or any successor act),
and
the rules and regulations promulgated thereunder; and
Selling
Expenses:
shall mean all underwriting discounts and selling commissions applicable
to the
sale of Registrable Securities, all stamp duty and transfer taxes, if any,
and
all fees and disbursements of counsel for each of the Holders other than
the
reasonable fees and expenses of one counsel for all the Holders.
SECTION
2. REGISTRATION
RIGHTS
(a) Requested
Registration.
(i) Request
for Registration.
If the
Company shall receive
a
written request that the Company effect any Registration with respect to
all or
a part of the Registrable Securities from an Initiating Holder, at any time
on
or after the first anniversary of the date hereof, the Company
will:
(1) promptly
give written notice of the proposed Registration to all other Holders;
and
(2) as
soon
as practicable, use its reasonable best efforts to effect such Registration
as
may be so requested and as would permit or facilitate the sale and distribution
of all or such portion of such 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 received by the Company within ten (10) business days after written
notice from the Company is given
-3-
under
Section 2(a)(i)(1) above; provided
that the
Company shall not be obligated to effect, or take any action to
effect:
(A) any
such
Registration pursuant to this Section 2(a) in any particular jurisdiction
in
which the Company would be required to execute a general consent to service
of
process in effecting such Registration, unless the Company is already subject
to
service in such jurisdiction and except as may be required by the Securities
Act
or applicable rules or regulations thereunder;
(B) any
such
Registration pursuant to this Section 2(a), if the Company has effected two
(2)
such Registrations pursuant to this Section 2(a) and such Registrations have
been declared or ordered effective;
(C) any
such
Registration pursuant to this Section 2(a) if the Registrable Securities
requested by all Holders to be registered pursuant to any such request have
an
anticipated aggregate public offering price (before
deduction
of any
Selling Expenses) of less than $5,000,000;
(D) any
such
Registration pursuant to this Section 2(a) during the period starting with
the
date sixty (60) days prior to the Company’s good faith estimate of the date of
filing of, and ending on the date six (6) months immediately following the
effective date of, any registration statement pertaining to Securities of
the
Company (other than a registration of Securities in a Rule 145 transaction
under
the Securities Act or with respect to an employee benefit plan), provided
that the
Company is actively employing in good faith all reasonable efforts to cause
such
registration statement to become effective; provided,
however,
that
the Company may only delay an offering pursuant to this Section 2(a)(i)(2)(D)
for a period of not more than sixty (60) days, if a filing of any other
registration statement is not made within that period, and the Company may
only
exercise this right once in any twelve (12) month period; or
(E) any
such
Registration pursuant to this Section 2(a) if the Company shall furnish to
the
Holders a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors it would
be
seriously detrimental to the Company or its stockholders for a registration
statement to be filed in the near future, in which case the Company’s obligation
to use its reasonable best efforts to comply with this Section 2 shall be
deferred for a period not to exceed ninety (90) days from the date of receipt
of
written request from the Holders; provided,
however,
that
the Company shall not exercise such right more than once in any twelve (12)
month period.
-4-
The
registration statement filed pursuant to the request of the Initiating Holder(s)
pursuant to Section 2(a)(i) may, subject to the provisions of Section 2(a)(ii)
below, include other Securities of the Company which are held by Persons
who, by
virtue of agreements with the Company, are entitled to include their Securities
in any such Registration (“Other Stockholders”). In the event any Holder
requests a Registration pursuant to this Section 2(a) in connection with
a
distribution of Registrable Securities to its partners or members, the
Registration shall provide for the resale by such partners or members, if
requested by such Holder.
(ii) Underwriting.
If the
Initiating Holder(s) intend to distribute the Registrable Securities covered
by
their request by means of an underwriting, they shall so advise the Company
as a
part of their request made pursuant to Section 2(a).
In such
event, the right of any Holder to include such Holder’s Registrable Securities
in such Registration shall be conditioned upon such Holder’s participation in
the underwriting to the extent provided herein. If Other Stockholders request
inclusion of their Securities in the underwriting, the Holders shall offer
to
include the Securities of such Other Stockholders in the underwriting and
may
condition such offer on their acceptance of the further applicable provisions
of
this Section 2. The Holders whose shares are to be included in such Registration
and the Company shall (together with all Other Stockholders proposing to
distribute their Securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for such underwriting by the Initiating
Holder(s) and reasonably acceptable to the Company; provided,
however,
that
such underwriting agreement shall not provide for indemnification or
contribution obligations on the part of the Holders materially greater than
the
obligations of the Holders under Section 2(f)(ii) hereof. Notwithstanding
any
other provision of this Section 2(a), if the representative of the underwriter
advises the Holders in writing that marketing factors require a limitation
on
the number of shares to be underwritten, the Securities held by Other
Stockholders shall be excluded from such Registration to the extent so required
by such limitation. If, after the exclusion of such Securities held by Other
Stockholders, further reductions are still required, the number of Registrable
Securities included in the Registration by each Holder shall be reduced on
a pro
rata basis (based on the number of Registrable Securities held by such Holder),
by such minimum number of Registrable Securities as is necessary to comply
with
such request. No Registrable Securities or any other Securities excluded
from
the underwriting by reason of the underwriter’s marketing limitation shall be
included in such Registration. If any Other Stockholder who has requested
inclusion in such Registration as provided above disapproves of the terms
of the
underwriting, such Person may elect to withdraw therefrom by providing prompt
written notice to the Company, the underwriter and the Initiating Holder(s).
The
Securities so withdrawn shall also be withdrawn from Registration. In addition
to the other rights of the Holders contained herein, if the underwriter has
not
limited the number of Registrable Securities or other Securities to be
underwritten, the Company and officers and directors of the Company may include
its or their Securities for its or their own account in such Registration
if the
representative of the underwriter so agrees and if the number of Registrable
Securities and other Securities which would otherwise have been included
in such
Registration and underwriting will not thereby be limited.
-5-
(b) Company
Registration.
(i) Inclusion
in Registration.
If at
any time on or after the first anniversary of the date hereof, the Company
shall
determine to register any of its equity Securities either for its own account
or
for the account of any Other Stockholder in any public offering solely for
cash,
other than a registration relating solely to employee benefit plans, or a
registration relating solely to a Rule 145 transaction under the Securities
Act,
or a registration on any registration form which does not permit secondary
sales
or does not include substantially the same information as would be required
to
be included in a registration statement covering the sale of Registrable
Securities, the Company will:
(1) promptly
give to each of the Holders a written notice thereof (which shall include
a list
of the jurisdictions in which the Company intends to attempt to qualify such
Securities under the applicable blue sky or other state securities laws);
and
(2) include
in such Registration (and any related qualification under blue sky laws or
other
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made by the Holders
within fifteen (15) days after mailing of the written notice from the Company
described in Section 2(b)(i)(1) above, except as set forth in Section 2(b)(ii)
below. Such written request may specify to include in such Registration all
or a
part of the Holders’ respective Registrable Securities. In the event any Holder
requests inclusion in a Registration pursuant to this Section 2(b) in connection
with a distribution of Registrable Securities to its partners or members,
the
Registration shall provide for the resale by such partners or members, if
requested by such Holder. Notwithstanding the foregoing, the Company shall
have
the right to terminate or withdraw any Registration initiated by it under
this
Section 2(b) prior to effectiveness of such Registration whether or not any
Holder has elected to include Securities in such Registration.
(ii) Underwriting.
If the
Registration of which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so advise each of the
Holders as a part of the written notice given pursuant to Section 2(b)(i)(1).
In
such event, the right of each of the Holders to Registration pursuant to
this
Section 2(b) shall be conditioned upon such Holders’ participation in such
underwriting and the inclusion of such Holders’ Registrable Securities in the
underwriting to the extent provided herein. The Holders whose shares are
to be
included in such Registration shall (together with the Company and the Other
Stockholders distributing their Securities through such underwriting) enter
into
an underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for underwriting by the Company;
provided,
however,
that
such underwriting agreement shall not provide for indemnification or
contribution obligations on the part of the Holders materially greater than
the
obligations of the Holders under Section 2(f)(ii) hereof. Notwithstanding
any
other provision of this Section 2(b), if the representative determines that
marketing factors require a limitation on the number of shares to be
underwritten, the Company shall promptly advise all holders of Securities
requesting Registration of such limitation,
-6-
and
the
number of such shares of Securities that are entitled to be included in the
Registration and underwriting shall be allocated in the following manner:
the
Securities of the Company held by officers, directors and Other Stockholders
of
the Company (other than Registrable Securities and other than Securities
held by
holders who by contractual right demanded such Registration (“Demanding
Holders”)) shall be excluded from such Registration and underwriting to the
extent required by such limitation, and, if a limitation on the number of
shares
is still required, the number of shares that may be included in the Registration
and underwriting by each of the Holders and Demanding Holders shall be reduced,
on a pro rata basis (based on the number of shares of Common Stock of the
Company beneficially held by such Holder), by such minimum number of shares
as
is necessary to comply with such limitation. If any of the Holders or any
officer, director or Other Stockholder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by providing prompt written
notice to the Company and the underwriter. Any Registrable Securities or
other
Securities excluded or withdrawn from such underwriting shall be withdrawn
from
such Registration.
(c) Form
S-3.
At any time on or after the first anniversary of the date hereof, the Initiating
Holder(s) shall have the right to request three (3) Registrations on Form
S-3
(such requests shall be in writing and shall state the number of shares of
Registrable Securities to be disposed of and the intended method of disposition
of shares by such holders), provided
that the
Company shall not be obligated to effect, or take any action to effect, any
such
Registration pursuant to this Section 2(c):
(i) unless
the Holder or Holders requesting Registration propose to dispose of shares
of
Registrable Securities having an aggregate price to the public (before deduction
of any Selling Expenses) of more than $5,000,000;
(ii) within
one hundred eighty (180) days of the effective date of the most recent
Registration pursuant to this Section 2(c) in which Securities held by the
requesting Holder could have been included for sale or
distribution;
(iii) in
any
particular jurisdiction in which the Company would be required to execute
a
general consent to service of process in effecting such Registration,
qualification or compliance, unless the Company is already subject to service
in
such jurisdiction and except as may be required by the Securities Act or
applicable rules or regulations thereunder;
(iv) during
the period starting with the date sixty (60) days prior to the Company’s good
faith estimate of the date of filing of, and ending on the date six (6) months
immediately following the effective date of, any registration statement
pertaining to Securities of the Company (other than a Registration of Securities
in a Rule 145 transaction under the Securities Act or with respect to an
employee benefit plan), provided
that the
Company is actively employing in good faith all reasonable efforts to cause
such
registration statement to become effective; provided,
however,
that
the Company may only delay an offering pursuant to this Section 2(c)(iv)
for a
period of not more than sixty (60) days, if a filing of any other registration
statement is not made
-7-
within
that period, and the Company may only exercise this right once in any twelve
(12) month period;
(v) if
the
Company shall furnish to the Holder(s) requesting a registration certificate
signed by the Chief Executive Officer of the Company stating that in the
good
faith judgment of the Board of Directors it would be seriously detrimental
to
the Company or its stockholders for a registration statement to be filed
in the
near future, in which case the Company’s obligation to use its reasonable best
efforts to comply with this Section 2(c) shall be deferred for a period not
to
exceed ninety (90) days from the date of receipt of written request from
the
Initiating Holder(s); provided,
however,
that
the Company shall not exercise such right more than once in any twelve (12)
month period; or
(vi) if
Form
S-3 is not then available for such offering by the Holders.
The
Company shall give written notice to all Holders of the receipt of a request
for
Registration pursuant to this Section 2(c) and shall provide a reasonable
opportunity for other Holders to participate in the Registration, provided
that if
the Registration is for an underwritten offering, the terms of Section 2(a)(ii)
shall apply to all participants in such offering. Subject to the foregoing,
the
Company will use its reasonable best efforts to effect promptly the Registration
of all shares of Registrable Securities on Form S-3 to the extent requested
by
the Holder or Holders thereof for purposes of disposition. In the event any
Holder requests a Registration pursuant to this Section 2(c) in connection
with
a distribution of Registrable Securities to its partners or members, the
Registration shall provide for the resale by such partners or members, if
requested by such Holder.
(d) Expenses
of Registration.
All
Registration Expenses incurred in connection with any Registration,
qualification or compliance pursuant to this Section 2 shall be borne by
the
Company, and all Selling Expenses shall be borne by the Holders of the
Securities so registered pro rata on the basis of the number of their shares
so
registered other than fees and expenses of counsel, which, to the extent
not
included in Registration Expenses, shall be borne by the Holder incurring
such
fees and expenses of counsel (or if incurred by a Holder or Holders on behalf
of
one or more Holders, pro rata on the basis of the amounts of their shares
so
Registered). The Company shall not, however, be required to pay for expenses
of
any Registration begun pursuant to Section 2(a) or 2(c), the request for
which
has been subsequently withdrawn by the Initiating Holders unless (a) the
withdrawal is based upon material adverse information concerning the Company
of
which the Initiating Holders were not aware at the time of such request or
(b)
the Holders of 66⅔% of Registrable Securities agree to forfeit their right to
one requested Registration pursuant to Section 2(a) or Section 2(c), as
applicable, in which event such right shall be forfeited by all
Holders.
(e) Registration
Procedures.
In the
case of each Registration effected by the Company pursuant to this Section
2,
the Company shall advise the Holders, as applicable, in writing as to the
initiation of each Registration and as to the completion thereof. At its
expense, the Company will:
-8-
(i) keep
such
Registration effective for a period of one hundred twenty (120) days or until
the Holders (or in the case of a distribution to the partners or members
of such
Holder, such partners or members), as applicable, have completed the
distribution described in the registration statement relating thereto, whichever
first occurs; provided,
however,
that,
in the case of any Registration of Registrable Securities on Form S-3 which
are
intended to be offered on a continuous or delayed basis, such one hundred
and
twenty (120) day period shall be extended until all such Registrable Securities
are sold, provided
that
Rule 415, or any successor rule under the Securities Act, permits an offering
on
a continuous or delayed basis, and provided
further
that applicable rules under the Securities Act governing the obligation to
file
a post-effective amendment permit, in lieu of filing a post-effective amendment
which (y) includes any prospectus required by Section 10(a) of the Securities
Act or (z) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation by reference of information required to be included in (y)
and (z)
above to be contained in periodic reports filed pursuant to Section 12 or
15(d)
of the Exchange Act in the registration statement;
provided,
however, that the Company shall not be required to keep any registration
statement effective for a period in excess of twenty-four (24) months (such
period, the “Registration Period”); provided,
further, that at any time, upon written notice to the Holders and for a period
not to exceed sixty (60) days thereafter (the “Suspension
Period”),
the
Company may delay the filing or effectiveness of any registration statement
or
suspend the use or effectiveness of any registration statement (and the Holders
hereby agree not to offer or sell any Registrable Securities pursuant to
such
registration statement during the Suspension Period) if (1) the Board of
Directors of the Company reasonably determines that the Company may, in the
absence of such delay or suspension hereunder, be required under state or
federal securities laws to disclose any corporate development the disclosure
of
which could reasonably be expected to have a material adverse effect upon
the
Company, its stockholders, a potentially significant transaction or event
involving the Company, or any negotiations, discussions, or proposals directly
relating thereto or (2) the Company delivers a notice to the applicable Holders
pursuant to Section 2(e)(iv). No more than two (2) such Suspension Periods
shall
occur in any twelve (12) month period. The Company may extend the Suspension
Period for an additional consecutive sixty (60) days with the consent of
the
Holders of a majority of the Registrable Securities registered under the
applicable registration statement, which consent shall not be unreasonably
withheld.
(ii) permit
one legal counsel to the Holders (which counsel shall be chosen by the Holders)
to review and comment upon a registration statement filed pursuant to Section
2
and all amendments and supplements thereto at least three (3) days prior
to
their filing with the Commission, and not file any document in a form to
which
such legal counsel to the Holders reasonably objects;
(iii) furnish
to each Holder whose Registrable Securities are included in any registration
statement, without charge, (a) promptly after the same is prepared and filed
with the Commission, at least one copy of such registration statement and
any
amendment(s) thereto, including financial statements and schedules, and if
requested by a
-9-
Holder,
all documents incorporated therein by reference and all exhibits thereto,
(b)
upon the effectiveness of any registration statement, ten (10) copies of
the
prospectus included in such registration statement and all amendments and
supplements thereto (or such other number of copies as such Holder may
reasonably request) and (c) such other documents, including copies of any
preliminary or final prospectus, as such Holder may reasonably request form
time
to time in order to facilitate the disposition of the Registrable Securities
owned by such Holder;
(iv) notify
each Holder of Registrable Securities covered by such Registration at any
time
when a prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to
be
stated therein or necessary to make the statements therein, in the light
of the
circumstances under which they were made, not misleading, and, subject to
Section 2(e)(i), promptly prepare a supplement or amendment to such registration
statement to correct such untrue statement or omission, and deliver ten (10)
copies of such supplement or amendment to each Holder (or such other number
of
copies as such Holder may reasonably request). The Company shall also promptly
notify each Holder in writing (a) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and when a registration statement
or
any post-effective amendment has become effective (notification of such
effectiveness shall be delivered by facsimile on the same day of such
effectiveness and by overnight mail), (b) of any request by the Commission
for
amendments or supplements to a registration statement or related prospectus
or
related information, and (c) of the Company’s determination that a
post-effective amendment to a registration statement would be appropriate;
(v) prevent
the issuance of any stop order or other suspension of effectiveness of a
registration statement, or the suspension of the qualification of any of
the
Registrable Securities for sale in any jurisdiction. If such an order or
suspension is issued, the Company shall procure the withdrawal of such order
or
suspension at the earliest possible moment and shall notify each Holder who
holds Registrable Securities being sold of the issuance of such order and
the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose;
(vi) cause
all
Registrable Securities covered by a registration statement to be listed
continuously throughout the Registration Period on each securities exchange
or
market, if any, on which equity Securities issued by the Company are then
listed;
(vii) reasonably
cooperate with the Holders who hold Registrable Securities being offered
to
facilitate the timely preparation and delivery of certificates (not bearing
any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a registration statement and enable such certificates to be in
such
denominations or amounts, as the case may be, as the Holders may reasonably
request and registered in such names as the Holders may request;
-10-
(viii)
appoint
a
transfer agent and registrar with respect to all such Registrable Securities
not
later than the effective date of such registration statement;
(ix) provide
each Holder with contact information for the Company’s transfer agent and
registrar for all Registrable Securities registered pursuant to a registration
statement hereunder and a CUSIP number for all such Registrable Securities,
in
each case not later than the effective date of such registration
statement;
(x) cause
the
Registrable Securities covered by the applicable registration statement to
be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities;
(xi) make
generally available to its security holders as soon as possible, but not
later
than 90 days after the close of the period covered thereby, an earning statement
(in form complying with the provisions of Rule 158 under the Securities Act)
covering a twelve-month period beginning not later than the first day of
the
Company’s fiscal quarter next following the effective date of the registration
statement;
(xii)
otherwise
comply in all material respects with all applicable rules and regulations
of the
Commission in connection with any Registration hereunder;
(xiii)
within
two (2) business days after the registration statement which includes the
Registrable Securities is ordered effective by the SEC, the Company shall
deliver to the transfer agent for such Registrable Securities (with copies
to
the Holders whose Registrable Securities are included in such registration
statement) confirmation that the registration statement has been declared
effective by the Commission;
(xiv) in
connection with any underwritten Registration, furnish, on the date that
such
Registrable Securities are delivered to the underwriters for sale, (1) an
opinion, dated as of such date, of the counsel representing the Company for
the
purposes of such Registration, in form and substance as is customarily given
to
underwriters in an underwritten public offering and reasonably satisfactory
to
the underwriters, addressed to the underwriters and (2) a letter, dated as
of
such date, from the independent certified public accountants of the Company,
in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering and reasonably
satisfactory to the underwriters, addressed to the underwriters;
and
(xv)
take
all
other reasonable actions necessary to expedite and facilitate disposition
by the
Holders of Registrable Securities pursuant to a registration statement.
-11-
(f) Indemnification.
(i) To
the
fullest extent permitted by law, the Company will indemnify each of the Holders,
each of its officers, directors, partners and members, and each Person, if
any,
who controls each of the Holders within the meaning of the Securities Act
or
Exchange Act, with respect to each Registration which has been effected pursuant
to this Section 2, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement
(or
alleged untrue statement) of a material fact contained in any registration
statement filed with the Commission in connection with such Registration,
including any preliminary prospectus or final prospectus contained therein,
any
amendments or supplements thereto or any issuer free writing prospectus related
thereto, or based on any omission (or alleged omission) to state therein
a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the Securities
Act or
the Exchange Act or any rule or regulation thereunder applicable to the Company
and relating to action or inaction required of the Company in connection
with
any such Registration, and will reimburse each of the Holders, each of its
officers, directors, partners or members, and each Person, if any, who controls
each of the Holders within the meaning of the Securities Act or the Exchange
Act, for any legal and any other expenses reasonably incurred in connection
with
investigating and defending any such claim, loss, damage, liability or action,
provided
that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company
by
the Holders or underwriter or controlling Person or other aforementioned
Person
and stated to be specifically for use therein.
(ii) To
the
fullest extent permitted by law, each of the Holders will, if Registrable
Securities held by it are included in the Securities as to which any
Registration pursuant to Section 2 is being effected, indemnify the Company,
each of its directors and officers, each Person who controls the Company
within
the meaning of the Securities Act or the Exchange Act, each Other Stockholder
and each of their officers, directors, partners or members, and each Person
who
controls such Other Stockholder within the meaning of the Securities Act
or the
Exchange Act against all claims, losses, damages and liabilities (or actions
in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration statement
filed in connection with such Registration, including any preliminary prospectus
or final prospectus contained therein, any amendments or supplements thereto
or
any issuer free writing prospectus related thereto, or any omission (or alleged
omission) to state therein a material fact required to be stated therein
or
necessary to make the statements by such Holder therein not misleading, or
any
violation by the Company of the Securities Act or the Exchange Act or any
rule
or regulation thereunder applicable to the Company and relating to action
or
inaction required of the Company in connection with any such Registration,
and
will reimburse the Company and such Other Stockholders, and their respective
directors, officers, partners, members, Persons or control persons for any
legal
or any other expenses reasonably incurred in connection with investigating
or
defending any such claim, loss, damage, liability or
-12-
action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is actually
made
in such registration statement, including any preliminary or final prospectus
contained therein, any amendments or supplements thereto or any issuer free
writing prospectus related thereto, or such violation by the Company of the
Securities Act or Exchange Act or any rule or regulation thereunder applicable
to the Company occurs, in reliance upon and in conformity with written
information furnished to the Company by such Holder and stated to be
specifically for use in connection with such Registration (including, without
limitation, any information relating to such Holder’s partners or members);
provided,
however,
that
the obligations of each of the Holders hereunder shall be limited to an amount
equal to the net proceeds to such Holder of securities sold in such Registration
as contemplated herein.
(iii) Each
party entitled to indemnification under this Section 2(f) (the “Indemnified
Party”) shall give notice to the party required to provide indemnification (the
“Indemnifying Party”) promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom; provided
that
counsel for the Indemnifying Party, who shall conduct the defense of such
claim
or any litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld) and the Indemnified
Party may participate in such defense at such party’s expense (unless the
Indemnified Party shall have reasonably concluded that there may be a conflict
of interest between the Indemnifying Party and the Indemnified Party in such
action, in which case the reasonable fees and expenses of counsel shall be
at
the expense of the Indemnifying Party), and provided
further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
2
unless the Indemnifying Party is materially prejudiced thereby. No Indemnifying
Party, in the defense of any such claim or litigation shall, except with
the
prior written consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified
Party
of a release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the
claim
in question as an Indemnifying Party may reasonably request in writing and
as
shall be reasonably required in connection with the defense of such claim
and
litigation resulting therefrom.
(iv) If
the
indemnification provided for in this Section 2(f) is held by a court of
competent jurisdiction to be unavailable to an Indemnified Party with respect
to
any loss, liability, claim, damage or expense referred to herein, then 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 of the Indemnified Party on the other in connection with the
statements or omissions which resulted in such loss, liability, claim, damage
or
expense, as well as any other relevant equitable considerations. The
relative
-13-
fault
of
the Indemnifying Party and of 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.
(v) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with any underwritten public offering contemplated by this Agreement are
in
conflict with the foregoing provisions, the provisions in such underwriting
agreement shall be controlling.
(vi) The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar right of any Indemnified Party against the Indemnifying
Party
or others and (ii) any liabilities the Indemnifying Party may be subject
to
pursuant to law.
(g) Obligations
of the Holders.
(i) It
shall
be a condition precedent to the obligation of the Company to effect any
Registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Holder that such Holder furnish to the Company
such
information regarding such Holder and the distribution proposed by such Holder
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any such Registration.
(ii) In
the
event that, either immediately prior to or subsequent to the effectiveness
of
any registration statement, any Holder shall distribute Registrable Securities
to its partners or members, such Holder shall so advise the Company and provide
such information as shall be necessary to permit an amendment to such
registration statement to provide information with respect to such partners
or
members, as selling security holders. Promptly following receipt of such
information, the Company shall file an appropriate amendment to such
registration statement reflecting the information so provided. Any incremental
expense to the Company resulting from such amendment shall be borne by such
Holder.
(iii) Each
Holder by such Holder’s acceptance of the Registrable Securities agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration hereunder, unless such
Holder has notified the Company in writing of such Holder’s election to exclude
all of such Holder’s Registrable Securities from such
Registration.
(iv) Each
Holder agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 2(e)(iv) or the commencement
of any
-14-
Suspension
Period pursuant to Section 2(e)(i), such Holder will immediately discontinue
disposition of Registrable Securities pursuant to any registration statement(s)
covering such Registrable Securities until such Holder’s receipt of the copies
of the supplemented or amended prospectus contemplated by Section 2(e)(iv)
or the termination of the Suspension Period, and, if so directed by the Company,
such Holder shall deliver to the Company (at the expense of the Company),
or
destroy all copies in such Holder’s possession of, any prospectus covering such
Registrable Securities current at the time of receipt of such notice.
(h) Rule
144 Reporting.
With
a
view to making available to Holders the benefits of certain rules and
regulations of the Commission which may permit the sale of restricted Securities
to the public without registration, the Company agrees, subject to Section
2(j),
to use reasonable best efforts to:
(i) make
and
keep public information available as those terms are understood and defined
in
Rule 144 under the Securities Act (“Rule 144”), at all times from and after the
first anniversary of the date of this Agreement;
(ii) file
with
the Commission in a timely manner all reports and other documents required
of
the Company under the Securities Act and the Exchange Act at any time after
it
has become subject to such reporting requirements; and
(iii) so
long
as a Holder owns any Registrable Securities, furnish to such Holder upon
request, a written statement by the Company as to its compliance with the
reporting requirements of Rule 144, and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements),
a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed as such Holder may reasonably request
in
availing itself of any rule or regulation of the Commission allowing the
Holder
to sell any such Securities without registration.
(i) Additional
Registration Rights.
The
Company shall not, without first obtaining the written consent of the Holders
who are Holders of more than 50% of the then outstanding Registrable Securities,
grant registration rights on terms more favorable than the registration rights
granted pursuant to this Agreement.
(j) Termination.
The
registration rights set forth in this Section 2 shall not be available to
any
Holder, and the obligations of the Company set forth in Section 2(h) shall
not
pertain to any Holder, if, (i) in the written opinion of counsel to the Company,
all of the Registrable Securities then owned by such Holder could be sold
in any
90-day period pursuant to Rule 144 (without giving effect to the provisions
of
Rule 144(k)) or (ii) all of the Registrable Securities held by such Holder
have
been sold in a Registration pursuant to the Securities Act or pursuant to
Rule
144.
SECTION
3. MISCELLANEOUS
-15-
(a) Directly
or Indirectly.
Where
any provision in this Agreement refers to action to be taken by any Person,
or
which such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such Person.
(b) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York applicable to contracts made and to be performed entirely
within such State.
(c) Section
Headings.
The
headings of the sections and subsections of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part
thereof.
(d) Notices.
(i) All
communications under this Agreement shall be in writing and shall be delivered
by hand or facsimile or mailed by overnight courier or by registered or
certified mail, postage prepaid:
(1) if
to the
Company, to NYFIX, Inc., 000 Xxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, XX 00000, Attention: General Counsel, or at such other address
as it
may have furnished to the Holders in writing.
(2) if
to the
Investors, at the address or facsimile number listed on Schedule
I
hereto,
or at such other address or facsimile number as may have been furnished the
Company in writing.
(ii) Any
notice so addressed shall be deemed to be given: if delivered by hand or
facsimile, on the date of such delivery, if a business day and delivered
during
regular business hours, otherwise the first business day thereafter; if mailed
by overnight courier, on the first business day following the date of such
mailing; and if mailed by registered or certified mail, on the third business
day after the date of such mailing.
(e) Reproduction
of Documents.
This
Agreement and all documents relating thereto, including, without limitation,
any
consents, waivers and modifications which may hereafter be executed may be
reproduced by the Holders by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and the Holders
may
destroy any original document so reproduced. The parties hereto agree and
stipulate that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or
not the
original is in existence and whether or not such reproduction was made by
the
Holders in the regular course of business) and that any enlargement, facsimile
or further reproduction of such reproduction shall likewise be admissible
in
evidence.
(f) Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties. The registration rights set forth
in
this Agreement may be assigned, in whole or in part, to any transferee
of
-16-
Registrable
Securities (provided such transferee shall agree to be bound by all obligations
of this Agreement).
(g) Entire
Agreement; Amendment and Waiver.
This
Agreement and the Purchase Agreement constitute the entire understanding
of the
parties hereto relating to the subject matter hereof and supersede all prior
understanding and agreements among such parties with respect to the subject
matter hereof. This Agreement may be amended, and the observance of any term
of
this Agreement may be waived, with (and only with) the written consent of
the
Company and the Investors holding a majority of the then outstanding Registrable
Securities held by Investors.
(h) Severability.
In the
event that any part or parts of this Agreement shall be held illegal or
unenforceable by any court or administrative body of competent jurisdiction,
such determination shall not affect the remaining provisions of this Agreement
which shall remain in full force and effect.
(i) Counterparts.
This
Agreement may be executed in two or more counterparts (including by facsimile),
each of which shall be deemed an original and all of which together shall
be
considered one and the same agreement.
-17-
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first set forth above.
|
NYFIX,
INC.
|
||
|
By:
|
||
|
Name:
Title:
|
||
|
|
||
|
WARBURG
PINCUS PRIVATE EQUITY IX, L.P.
|
||
|
By:
|
Warburg
Pincus IX LLC, its General Partner
|
|
|
By:
|
Warburg
Pincus Partners LLC, its Managing Member
|
|
|
By:
|
Warburg
Pincus & Co., its Managing Member
|
|
|
By:
|
||
|
Name:
Title:
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[Registration
Rights Agreement Signature Page]
Schedule
I
Investors
|
Investor
Name and Address
|
|
Warburg
Pincus Private Equity IX, L.P.
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Facsimile:
(000) 000-0000
Attention:
Xxxx X. Xxxxx and Xxxxxx Xxxxx
Copy
to:
Xxxxxxx
Xxxx & Xxxxxxxxx LLP
000
Xxxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxx X. Xxxxxxx, Esq. and Xxxxxxx X. Xxxx
|
