EXHIBIT 10.2
PURCHASE AGREEMENT
Purchase Agreement, dated as of September 26, 2003 (the "Effective
Date"), by and between NYFIX, Inc., a New York Corporation (the "Buyer"), and
the other signatories hereto (each individually a "Seller" and collectively, the
"Sellers").
WHEREAS, after conversion of that certain $1.5 million Convertible
Secured Promissory Note, dated as of October 2, 2002, payable by Renaissance
Trading Technologies, LLC (the "Company") to Buyer, into 6,400,000 units of the
Company's membership interests ("Units"), occurring simultaneously with the
purchase contemplated by this Agreement, the Buyer owns 8,200,000 outstanding
Units;
WHEREAS, taking into account the conversion described in the
immediately preceding "whereas" clause, the Sellers in the aggregate own 50%, or
8,200,000, of the outstanding Units, which constitute all the outstanding Units
not owned by Buyer; and
WHEREAS, the Sellers desire to sell, and the Buyer wishes to
purchase, all of such 8,200,000 Units owned by Sellers, upon the terms and
subject to the conditions hereafter set forth.
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
Section 1. SALE OF SECURITIES.
1.1 AGREEMENT TO PURCHASE AND SELL. The Buyer hereby agrees to
purchase an aggregate of 8,200,000 Units, constituting all the outstanding Units
not currently owned by Buyer (the "Purchased Units"), and the Sellers hereby
agree to sell all of their Purchased Units, for $5,972,500 ($6,000,000 less an
adjustment of $27,500 in accordance with Section 8.7) in aggregate consideration
(approximately $.72835 per Unit), as follows:
(a) that number of shares of NYFIX common stock, par value $0.001
per share ("NYFIX Common Stock, which, when multiplied by the price per share
determined in accordance with the Valuation Method (as defined in Section 1.1(e)
below), constitutes the equivalent value of approximately 33.3% of the
consideration for the Purchased Units for each Seller electing to receive such
shares, with the number of shares of NYFIX Common Stock to be distributed to
each such Seller noted below such Seller's signature line, and with all such
shares subject to the selling restrictions noted in Section 5.1(b) below;
(b)(i) an unsecured promissory note for $663,611.11 payable to
Xxxxxx X. Xxxx on December 31, 2004 (in the form attached as Exhibit A) and an
unsecured promissory note for $663,611.11 payable to Xxx XxXxxxxx payable on
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December 31, 2004 (in the form attached as Exhibit A) in either, at NYFIX's sole
discretion: (w) cash; or (x) that number of shares of NYFIX Common Stock which,
when multiplied by the price per share determined in accordance with the
Valuation Method constitutes the equivalent value of $663,611.11, constituting
the balance of the consideration, respectively, for the 1,366,666.67 Units owned
by Xx. Xxxx and the 1,366,666.67 Units owned by Xx. XxXxxxxx; and (ii) an
unsecured promissory note (in the form attached as Exhibit B) payable to each
Seller electing to receive such note in the amount listed below the signature
line for each such Seller, payable in equal installments (before rounding) on
each of July 1, 2004, July 1, 2005, July 1, 2006 and July 1, 2007, in either, at
NYFIX's sole discretion: (y) cash; or (z) that number of shares of NYFIX Common
Stock which, when multiplied by the price per share determined in accordance
with the Valuation Method constitutes the equivalent value of the cash payment
otherwise due on each such payment date, constituting approximately 33.3% of the
consideration for the Purchased Units set forth below the signature line of each
such Seller.
(c) 462,286 shares of NYFIX Common Stock, which, when multiplied by
the price per share determined in accordance with the Valuation Method
constitutes the equivalent value of $2,654,444.44, to be placed in trust with
The Bank of New York ("Trustee") in accordance with the Trust Agreement attached
as Exhibit C, with the redistribution and selling restrictions set forth in
Section 5.1(b) below for such shares while held in trust, and thereafter
redistributed in accordance with such Trust Agreement, constituting the balance
of the consideration for the 5,466,666.66 Units owned by Sellers other than
Messrs. Xxxx and XxXxxxxx as noted below the signature lines for such Sellers.
(d) The Buyer and the Sellers acknowledge and agree that the
consideration referred to in subsections 1.1(a) through (c) is solely
consideration for purchase by the Buyer of the 8,200,000 Purchased Units
referred to in such subsections and is not consideration for employment either
before or after the Buyer's purchase of such Units.
(e) "Valuation Method" means a price per share of NYFIX Common Stock
equal to the average of the last reported sale price of such stock on the
primary exchange on which such stock is traded, including Nasdaq, (or, if there
is no last reported sale price, then the midpoint between the bid and the ask )
for the five most immediately prior trading (or bid and ask quotation) days
ending on: (i) August 8, 2003 for purposes of Sections 1.1(a) and (c), namely
$5.742, which is the average of the last reported sale price of NYFIX Common
Stock on Nasdaq of $5.75 on August 4, 2003, $5.74 on August 5, 2003, $5.72 on
August 6, 2003, $5.79 on August 7, 2003 and $5.71 on August 8, 2003; (ii)
December 31, 2004 for purposes of Section 1.1(b)(i); and July 1, 2004, July 1,
2005, July 1, 2006 and July 1, 2007 for purposes of shares of NYFIX Common Stock
to be distributed on each such date for purposes of Section 1.1(b)(ii).
(f) Whenever a calculation of the number of shares of NYFIX Common
Stock results in a fraction, the number of such shares will be rounded to the
nearest whole number, whether up or down.
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Section 2. REPRESENTATIONS AND WARRANTIES OF THE NON-MANAGEMENT SELLERS.
Each of the Sellers, except Xxxxxx Xxxxxxxx, Xxxxxx Xxxx and Xxxxxxx
XxXxxxxx (the three collectively the "Management Sellers"), severally and not
jointly, hereby represents and warrants to the Buyer that:
2.1. VALIDITY. This Agreement has been duly and validly executed and
delivered by such Seller and constitutes a legal, valid and binding agreement of
such Seller, enforceable against such Seller in accordance with its terms,
except as enforceability may be affected by applicable bankruptcy, insolvency or
similar laws relating to or affecting creditors' rights generally or by
equitable principles.
2.2. NO CONSENTS; NO CONTRAVENTION. The execution, delivery and
performance by such Seller of this Agreement does not require any authorization,
consent, approval or action by or in respect of, or filing with, any
governmental body, agency, official or other person and does not contravene, or
constitute a default under, any provision of applicable law or regulation or of
any agreement, judgment, order, decree or other instrument to which such Seller
is a party or by which such Seller is bound.
2.3. GOOD AND TRANSFERABLE TITLE. Such Seller has good and
transferable title to his or her Units, and such Units will be transferred free
and clear of any lien, pledge, mortgage, charge, security interest or
encumbrance of any kind ("Encumbrances"), except for Encumbrances imposed by
federal and state securities laws.
2.4. INVESTOR STATUS. (a) With respect to the acquisition of NYFIX
Common Stock contemplated under Sections 1.1(a) through (c) above as
consideration for the sale to NYFIX of Units, each of Sellers Xxxxxx Xxxxx
Diamond, Xxxxxxx Xxxxxxxx-Xxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxx Xxxx, Xxxxx Xxxxxxxx
and Xxxx Xxxxx is acquiring such Common Stock for himself or herself and not for
resale or redistribution to another Person and is an "accredited investor"
within the meaning of Rule 501 of Regulation D of the Rules and Regulations
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
(b) With respect to the acquisition of NYFIX Common Stock contemplated under
Sections 1.1(a) through (c) above as consideration for the sale to NYFIX of
Units, each of Sellers Xxxxxx Xxxx, Xxxxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxx,
Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxxxx Xxxxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxx
and Xxxxxxx Xxxxx is acquiring such Common Stock for himself or herself and not
for resale or redistribution to another Person and has such knowledge and
experience in financial and business matters that such Seller is capable of
evaluating the merits and risks of the acquisition of NYFIX Common Stock
pursuant to this Agreement.
2.5. RESTRICTED SECURITIES. Each Seller understands that the shares
of NYFIX Common Stock being acquired by such Seller pursuant to this Agreement
are characterized as "restricted securities" as defined under Rule 144 of the
Rules and Regulations promulgated under the Securities Act, and understands the
resale limitations imposed by such rule.
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2.6 NO UNDISCLOSED COMPENSATION OR PAYMENTS. Except as disclosed on
the Buyer's, the Management Sellers' and such Seller's copy of Schedule 2.6 and
except for compensation reflected in the Company's payroll system and payroll
checks, the Company has made no agreements, promises or commitments, whether
written or oral, with or to such Seller regarding salary, bonuses, guarantees,
securities options, benefits or any other compensation or payment of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise.
2.7. DISCLOSURE. No representation, warranty or statement by any
Seller made in this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
herein, in light of the circumstances under which they were made, not
misleading.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT SELLERS.
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Each of the Management Sellers, jointly and severally, hereby
represents and warrants to the Buyer that:
3.1. ORGANIZATION; GOOD STANDING. The Company is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware and has all requisite limited liability company power and
authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify would have a
material adverse effect on its business or properties.
3.2. VALIDITY. This Agreement has been duly and validly executed and
delivered by such Seller and constitutes a legal, valid and binding agreement of
such Seller, enforceable against such Seller in accordance with its terms,
except as enforceability may be affected by applicable bankruptcy, insolvency or
similar laws relating to or affecting creditors' rights generally or by
equitable principles.
3.3. NO CONSENTS; NO CONTRAVENTION. The execution, delivery and
performance by such Seller of this Agreement does not require any authorization,
consent, approval or action by or in respect of, or filing with, any
governmental body, agency, official or other person and does not contravene, or
constitute a default under, any provision of applicable law or regulation or of
any agreement, judgment, order, decree or other instrument to which such Seller
is a party or by which such Seller is bound.
3.4. CAPITALIZATION. The outstanding capital of the Company, taking
into account the conversion described in the first "whereas" clause above,
consists of 16,400,000 Units, 50% of which are owned by Buyer and the remaining
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50% of which are owned, in the aggregate, by the Sellers. Except as set forth on
the copies of the Buyer's and Management Sellers' Schedule 3.4, there are no
other Units or Company securities and there are no outstanding options,
warrants, rights (including conversion or preemptive rights) or agreements for
the purchase or acquisition from the Company of any membership interests or
other securities of the Company. The Company is not a party or subject to any
agreement or understanding of any kind, and there is no agreement or
understanding of any kind between any individual, corporation, partnership,
limited liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof (a "Person"), which affects or relates to the acquisition, disposition
or voting or giving of written consents with respect to any security of the
Company. The Company has no subsidiaries and does not currently own or control,
directly or indirectly, any interest in any Person, except for ownership of
60,000 shares of NYFIX Common Stock.
3.5. GOOD AND TRANSFERABLE TITLE. Such Seller has good and
transferable title to his or her Units, and such Units will be transferred free
and clear of any Encumbrance, except for Encumbrances imposed by federal and
state securities laws.
3.6. NO LITIGATION. (a) There is no action, suit, proceeding, review
or investigation pending or to the Management Sellers' knowledge currently
threatened against or affecting the Company (nor, to their knowledge, is there
any reasonable basis therefore); (b) the Company is not a party or subject to
the provisions of any rule, order, writ, injunction, judgment or decree of any
court, arbitrator or government agency or instrumentality; and (c) there is no
action, suit, proceeding, review or investigation involving the Company or any
of the Sellers which such parties intend to initiate.
3.7. INVESTOR STATUS. With respect to such Seller's acquisition of
NYFIX Common Stock contemplated under Sections 1.1(a) through (c) above as
consideration for the sale to NYFIX of such Seller's Units, such Seller is
acquiring such Common Stock for himself or herself and not for resale or
redistribution to another Person and is: (a) an "accredited investor" within the
meaning of Rule 501 of Regulation D of the Rules and Regulations promulgated
under the Securities Act of 1933, as amended (the "Securities Act"); or (b) has
such knowledge and experience in financial and business matters that such Seller
is capable of evaluating the merits and risks of the acquisition of NYFIX Common
Stock pursuant to this Agreement.
3.8. RESTRICTED SECURITIES. Each Seller understands that the shares
of NYFIX Common Stock being acquired by such Seller pursuant to this Agreement
are characterized as "restricted securities" as defined under Rule 144 of the
Rules and Regulations promulgated under the Securities Act, and understands the
resale limitations imposed by such rule.
3.9. FINANCIAL STATEMENTS. Attached as Exhibit D is a copy of the
Company's unaudited financial statements as of and for the eight-month period
ending August 31, 2003 (the "Financial Statements"). The Financial Statements
were prepared in accordance with GAAP, applied on a consistent basis during the
periods involved and fairly present in accordance with applicable requirements
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of GAAP (subject, in the case of the unaudited statements, to normal year-end
adjustments and the absence of footnotes) the position of the Company as of
August 31, 2003 and the results of operations and the cash flow of the Company
for the periods presented therein. Except for transactions undertaken by NYFIX
on behalf of the Company and not disclosed to the Company's CEO or CFO, the
Financial Statements do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
3.10. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
Schedule 3.10 or as disclosed in or reflected on the Company's Financial
Statements, since August 31, 2003, there has not been (a) any declaration,
setting aside or payment of any distribution of any kind whatsoever (whether in
cash or other property) with respect to any of the Company's capital; (b) any
amendment of any material term of any outstanding equity security of the
Company; (c) any repurchase, redemption or other acquisition by the Company of
any outstanding Units or other ownership interests in the Company; (d) any
material change in any method of accounting or accounting practice by the
Company; or (e) a Material Adverse Effect. A "Material Adverse Effect" means any
effect or change that is or would be materially adverse to the business,
operations, assets, condition (financial or otherwise) or results of operations
of the Company (other than changes in the United States economy generally).
3.11. NO DEFAULT. Except as disclosed in Schedule 3.11, the Company
is not in default or violation (and no event has occurred which, with notice or
the lapse of time or both, would constitute a default or violation) of any term,
condition or provision of (a) its Articles of Organization or Operating
Agreement, as amended from time to time, (b) any note, bond, mortgage,
indenture, license, agreement or other obligation to which the Company is now a
party or by which any of its property or assets may be bound or (c) any order,
writ, injunction, decree, statute, rule or regulation applicable to the Company.
3.12. COMPLIANCE WITH APPLICABLE LAWS. The Company holds all
permits, licenses, variances, exemptions, orders, franchises and approvals of
all Governmental Entities necessary for the lawful conduct of its business (the
"Company Permits") and is in material compliance with the terms of the Company
Permits. The business of the Company is not being conducted in violation of any
law, ordinance or regulation of any Governmental Entity, except for any such
violation that would not have a Material Adverse Effect on the Company's
business, operations or financial conditions. "Governmental Entity" means any
U.S. or non-U.S. court, administrative agency or commission or other
governmental authority or instrumentality.
3.13. NO UNDISCLOSED MATERIAL LIABILITIES AND NO DEBT SECURITIES.
Except as disclosed in the copies of the Buyer's and Management Sellers'
Schedule 3.13 or in the Company's Financial Statements, the Company has not
issued any debt securities and there are no material liabilities of the Company
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise.
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3.14. PAYMENT OF ALL TAX LIABILITIES; NO UNDISCLOSED TAX
LIABILITIES.
With respect to Sections 3.14(a) through (i), to the best of
Management Sellers' knowledge and information:
(a) The Company has (i) timely (taking into account any extensions)
filed in correct form all federal and all material state, local and non-U.S.
returns, declarations, reports, estimates, information returns and statements
("Returns") required to be filed by or with respect to it in respect of any
Taxes ( as defined below), (ii) timely paid all Taxes that are due and payable,
(iii) established reserves that are included in the July 31, 2003 balance sheet
in the Financial Statements that are adequate for the payment of all Taxes not
yet due and payable with respect to the results of operations of the Company
through the date of such balance sheet, and (iv) complied in all respects with
all applicable laws, rules and regulations relating to the payment and
withholding of Taxes and has in all respects timely withheld from employee wages
and paid over to the proper governmental authorities all amounts required to be
so withheld and paid over.
(b) The Company has not been the subject of any audit or
investigation by any federal, state, local or non-U.S. taxing authority. No
federal, state, local or non-U.S. Tax audits or other administrative proceedings
or court proceedings are presently pending with regard to any Taxes for which
the Company would be liable, and no notice of any deficiency for any such Taxes
has been proposed, asserted or assessed in writing against and delivered to the
Company by any federal, state, local or non-U.S. taxing authority with respect
to any period.
(c) The Company (i) has not executed or entered into with the
Internal Revenue Service ("IRS") or any other taxing authority (x) any agreement
or other document extending or having the effect of extending the period for
assessments or collection of any Taxes for which the Company would be liable or
(y) a closing agreement pursuant to Section 7121 of the Internal Revenue Code of
1986, as amended (the "Code") or any similar provision of state, local or
non-U.S. Tax law that relates to the assets or operations of the Company, (ii)
has not made a change in method of accounting for a taxable period ending on or
prior to the Effective Date and (iii) has not sold assets on the installment
method.
(d) There are no liens or security interests on any of the Company's
assets that arose in connection with any failure or alleged failure to pay any
Tax other than for Taxes which are not yet delinquent.
(e) The Company is not a party to an agreement that provides for the
payment of any amount that would constitute a "parachute payment" within the
meaning of Section 280G of the Code, a copy of which is attached as part of
Exhibit E.
(f) The Company has not made an election under Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of
a subsection (f) asset (as such term is defined in Section 341(f)(4) of the
Code) owned by the Company. A copy of all Code sections referred to in the
immediately preceding sentence is attached as part of Exhibit E.
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(g) The Company is not bound by nor has any obligation under any tax
sharing agreement, tax indemnity agreement or similar agreement or arrangement.
(h) The Company has not participated in any international boycott
within the meaning of Section 999 of the Code, a copy of which is attached as
part of Exhibit E.
(i) The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code, a copy of
each such section being attached as part of Exhibit E.
(j) "Taxes" means all federal, state, local, non-U.S. and other
taxes, charges, fees, levies, imposts, duties, licenses or other assessments,
together with any interest, penalties, additions to tax or additional amounts
imposed by any taxing authority.
3.15 NO UNDISCLOSED COMPENSATION OR PAYMENTS. Except as disclosed in
the copies of the Buyer's and the Management Sellers' Schedule 3.13 and except
for compensation reflected in the Company's payroll system and matters reflected
in the Financial Statements, the Company has not entered into or made any
agreements, promises or commitments, whether written or oral, with any Person
regarding salary, bonuses, guarantees, securities options, benefits or any other
compensation or payment of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise.
3.16. DISCLOSURE. No representation, warranty or statement by any
Management Seller made in this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein, in light of the circumstances under which they were made, not
misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
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The Buyer hereby represents and warrants to the Seller that:
4.1. VALIDITY. This Agreement has been duly and validly executed and
delivered by the Buyer and constitutes a legal, valid and binding agreement of
the Buyer, enforceable against the Buyer in accordance with its terms, except as
enforceability may be affected by applicable bankruptcy, insolvency or similar
laws relating to or affecting creditors' rights generally or by equitable
principles.
4.2. NO CONSENTS; NO CONTRAVENTION. The execution, delivery and
performance by the Buyer of this Agreement does not require any authorization,
consent, approval or action by or in respect of, or filing with, any
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governmental body, agency, official or other Person and does not contravene, or
constitute a default under, any provision of applicable law or regulation or of
any agreement, judgment, order, decree or other instrument to which the Buyer is
a party or by which the Buyer is bound.
4.3. RESTRICTED SECURITIES. The Buyer understands that the Units are
characterized as "restricted securities" as defined under Rule 144 of the Rules
and Regulations promulgated under the Securities Act, and understands the resale
limitations imposed by such rule.
4.4 INVESTOR STATUS. With respect to Buyer's acquisition of the
Units from Sellers contemplated in this Agreement, Buyer is acquiring such Units
for itself and not for resale or redistribution to another Person and is an
"accredited investor" within the meaning of Rule 501 of Regulation D of the
Rules and Regulations promulgated under the Securities Act.
4.5. TITLE TO SHARES OF NYFIX COMMON STOCK. Assuming the validity of
the Seller representations and warranties in Sections 2.3, 2.4, 2.5, 3.5, 3.7
and 3.8, the shares of NYFIX Common Stock, when issued in compliance with the
provisions of this Agreement and with the provisions of the Trust Agreement,
will have been authorized and validly issued, will be fully paid and
nonassessable, will have been issued in compliance with all applicable laws
concerning the issuance of securities, and will be free and clear of any
Encumbrances; provided, however, that such shares may be subject to restrictions
on transfer under applicable securities laws, Section 5.1(b) of this Agreement
and Section 11(a) of the Trust Agreement.
4.6. DISCLOSURE. No representation, warranty or statement by Buyer
made in this Agreement contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements contained herein, in
light of the circumstances under which they were made, not misleading.
SECTION 5. REGISTRATION RIGHTS.
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5.1. REGISTRATION OF THE SHARES; LOCK-UP. (a) The shares of NYFIX
Common Stock received by the Sellers as consideration for the Units ("Shares")
shall not be initially registered under the Securities Act and shall bear a
legend in the following form or as otherwise reasonably determined by Buyer:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHICATED IN THE ABSENCE
OF A REGISTRATION STATEMENT UNDER THE ACT IN EFFECT WITH
RESPECT TO THESE SECURITIES OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
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The Buyer hereby agrees to file a registration statement pursuant to the
Securities Act, covering the resale of all of the Shares (the "Registration
Statement") by the Sellers (each a "Selling Stockholder" and collectively the
"Selling Stockholders") before the first date (as listed below in Section
5.1(b)) on which any Seller may distribute or offer for sale any Shares. The
Buyer will use its reasonable best efforts to cause such Registration Statement
to be declared effective by the U.S. Securities and Exchange Commission (the
"SEC") as soon as practicable after such filing. The Buyer also agrees to use
its reasonable best efforts to keep the Registration Statement effective
(including the preparation and filing of any amendments and supplements
necessary for that purpose) during the period from the date that the
Registration Statement is declared effective by the SEC until the earlier of (i)
the date on which the Selling Stockholders shall have sold all of the Shares and
(ii) the date on which all of the Shares are eligible to be sold or transferred
without holding period or volume limitations, pursuant to Rule 144 of the Rules
and Regulations promulgated under the Securities Act (the "Effective Period").
The Buyer agrees to provide to each Selling Stockholder the number of copies of
the final prospectus and any amendments or supplements thereto as are reasonably
requested by such Selling Stockholder. The Buyer shall promptly notify the
Selling Stockholders of any threatened stop order by the SEC or if the
Registration Statement ceases to be effective for any reason at any time during
the Effective Period, and Buyer shall use its reasonable best efforts and take
all reasonable actions required to prevent the entry of such stop order or to
obtain the prompt withdrawal of any order suspending the effectiveness thereof.
(b) Notwithstanding the effectiveness of the Registration Statement,
each of the Sellers hereby agrees that he or she shall not, directly or
indirectly, sell, offer to sell, contract to sell, transfer, pledge, hypothecate
or otherwise transfer, distribute or dispose (each a "Transfer") of any of the
Shares, except pursuant to the following schedule or any of Sections 5.1(c)
through (f) below:
% of Shares Permitted to be
Dates Transferred
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Prior to July 1, 2004 0%
Commencing July 1, 2004 and prior to
July 1, 2005 up to 25% of the Shares of such
Seller set forth in Section 1.1(a)
and up to 50% of the Shares of such
Seller set forth in Section 1.1(c)
Commencing July 1, 2005 and prior to
July 1, 2006 up to an aggregate of 50% of the
Shares of such Seller set forth in
Section 1.1(a) and up to an
aggregate of 100% of the Shares of
such Seller set forth in Section
1.1(c)
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Commencing July 1, 2006 and prior to up to an aggregate of 75% of the
July 1, 2007 Shares of such Seller set forth in
Section 1.1(a) and up to an
aggregate of 100% of the Shares of
such Seller set forth in Section
1.1(c)
Commencing July 1, 2007 up to an aggregate of 100% of the
Shares of such Seller set forth in
Section 1.1(a) and up to an
aggregate of 100% of the Shares of
such Seller set forth in Section
1.1(c)
(c) Notwithstanding the provisions of Section 5.1(b), if a
Registration Statement for the Shares has not been declared effective by the SEC
on or before July 1, 2004 for any reason, except for the action by NYFIX under
Section 5.2, five percent (5%) of the Shares of each Seller under Section 1.1(a)
that otherwise are not Transferable before July 1, 2005 shall become
Transferable, to the extent permitted by applicable securities laws, at the end
of each month that the effectiveness of such Registration Statement is delayed
beyond July 1, 2004. Shares subject to the Transfer provisions of the
immediately preceding sentence shall first be those Shares not otherwise
Transferable until July 1, 2007, then those Shares not otherwise Transferable
until July 1, 2006 and finally those Shares not otherwise Transferable until
July 1, 2005.
(d) Notwithstanding the provisions of Section 5.1(b), if a
Registration Statement for the Shares has not been declared effective by the SEC
on or before July 1, 2004 for any reason, except for the action by NYFIX under
Section 5.2, five percent (5%) of the Shares placed in the Trust pursuant to
Section 1.1(c) above, and remaining in the Trust after the distribution made by
the Trustee in accordance with Section 5 of the Trust Agreement, shall be sold
by the Trustee for each month that the effectiveness of the Registration
Statement is delayed beyond July 1, 2004; provided that each such sale is made
upon the prior written instructions of the persons who, at the time of such
instructions, meet the eligibility requirements set forth in Exhibit B to the
Trust Agreement (the "Eligibility Requirements") and represent at least
two-thirds of the Units set forth in Exhibit A to the Trust Agreement and
provided further that each such sale is permissible under applicable securities
laws.
(e) Notwithstanding the provisions of Section 5.1(b), with respect
to the shares placed in the Trust pursuant to Section 1.1(c) above and upon the
prior written instructions of the persons who, at the time of such instructions,
meet the Eligibility Requirements and represent at least two-thirds of the Units
set forth in Exhibit A of the Trust Agreement, the Trustee shall sell or
exchange all or any portion of the Shares then held in the Trust: (i) in a
merger or consolidation involving the Buyer, where the Buyer is not the
continuing or surviving corporation; or (ii) in a tender offer for at least 50%
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of the capital stock of the Buyer; provided that the Trustee shall participate
in any such sale or exchange only: (x) in the event that the Buyer's Board of
Directors approves, and Buyer's shareholders holding a majority of the voting
power -- or such greater percentage as is specified in the Buyer's then-current
certificate of incorporation or bylaws or the law of the Buyer's state of
incorporation -- of Buyer's capital stock approve, of any such transaction; and
(y) to the extent permitted under applicable securities laws.
(f) Notwithstanding the provisions of Section 5.1(b), with respect
to the shares issued by the Buyer pursuant to Section 1.1(a) above, each Seller
shall be permitted to sell or exchange all or a portion of such Seller's Shares:
(i) in a merger or consolidation involving the Buyer, where the Buyer is not the
continuing or surviving corporation or (ii) in a tender offer for at least 50%
of the capital stock of the Buyer; provided that such Seller shall participate
in any such sale or exchange only: (x) in the event that the Buyer's Board of
Directors approves, and Buyer's shareholders holding a majority of the voting
power -- or such greater percentage as is specified in the Buyer's then-current
certificate of incorporation or bylaws or the law of the Buyer's state of
incorporation -- of Buyer's capital stock approve, of any such transaction; and
(y) to the extent permitted under applicable securities laws.
(g) Notwithstanding the provisions of Section 5.1(b) and with the
prior written consent of Buyer with respect to each transaction, such consent
not to be unreasonably withheld or delayed with respect to Sellers who are not
subject to NYFIX's policy on xxxxxxx xxxxxxx at the time of such transaction,
any Seller shall have the right to purchase and sell put and call options solely
for the purpose of hedging risk with respect to the Shares in which such Seller
has an interest by reason of the provisions of Sections 1.1(a) through (c);
provided that neither any Seller nor any other party to any such hedging
transaction engages, directly or indirectly, in selling Buyer's stock short in
connection therewith.
5.2. RESTRICTIONS OF REGISTRATION. Notwithstanding anything to the
contrary contained in Section 5.1 above, if the Board of Directors of the Buyer
determines reasonably and in good faith that (i) such filing would jeopardize or
delay any plan by the Buyer to engage in any acquisition of assets (other than
in the ordinary course of business) or any merger, consolidation, tender offer
or other significant transaction, (ii) such filing would require the disclosure
of material information that the Buyer has a bona fide business purpose for
preserving as confidential or (iii) at such time the Buyer is unable to comply,
for reasons beyond its reasonable control, with the filing requirements
applicable to the requested registration, then the Buyer may postpone the filing
or the effectiveness of such registration statement until the earlier of the
date that is 60 days from the Filing Date or (x) the date upon which the
contemplated transaction is completed or abandoned, (y) the date the material
information is otherwise disclosed to the public or ceases to be material or (z)
the date the Buyer is able to comply with the applicable filing requirements.
5.3. BUYER INDEMNIFICATION. The Buyer agrees to indemnify, to the
fullest extent permitted by law, each Seller against all losses, claims,
damages, liabilities and expenses (including, but not limited to, reasonable
attorneys' fees) to which such indemnified party may become subject insofar as
they are caused by, or arise out of, or are based upon any untrue or alleged
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untrue statement of a material fact contained in any registration statement, any
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances in which they were made not misleading, except
insofar as the same are (i) caused by or contained in any written information
furnished to the Buyer by a Seller expressly for use therein, (ii) caused by
such Seller's failure to deliver a copy of the registration statement or
prospectus or any amendment or supplement thereto as required by the Securities
Act or (iii) caused by the use of a prospectus or preliminary prospectus or any
amendment or supplement thereto after receipt of notice from the Buyer that it
should no longer be used.
5.4 SELLER INFORMATION; SELLER INDEMNIFICATION. Each Seller shall
furnish to the Buyer in writing such information and affidavits as the Buyer
reasonably requests for use in connection with any such registration statement
or prospectus and, to the fullest extent permitted by law, severally but not
jointly, will indemnify the Buyer, its directors, officers and employees, each
underwriter (if any) and each Person who controls the Buyer or such underwriter
(within the meaning of the Securities Act or the Securities Exchange Act of
1934, as amended) against any losses, claims, damages, liabilities and expenses
(including, but not limited to reasonable attorneys' fees) to which such
indemnified party may become subject insofar as they are caused by, or arise out
of, or are based upon any untrue or alleged untrue statement of a material fact
contained in the registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto, or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances in which they were
made not misleading, but only to the extent that such untrue statement or
omission is contained in any written information or affidavit so furnished in
writing by such Seller expressly for use therein or the failure by such Seller
to deliver a copy of the registration statement or prospectus or amendment or
supplement thereto as required by the Securities Act. The liability of any
Seller under this Section 5.4 shall not in any event exceed the net proceeds
received by such Seller from the sale of Shares covered by the Registration
Statement.
5.5. INDEMNIFICATION PROCEDURE. Any Person entitled to
indemnification under Sections 5.3 or 5.4 above, will (i) use reasonable efforts
to give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that the failure of
any Person entitled to indemnification hereunder to give such notice to the
indemnifying party shall not constitute a waiver of, or a defense of the
indemnifying party to, such Person's right to indemnification hereunder unless
such failure has a material adverse effect upon the indemnifying party's ability
to defend such action. If such defense is assumed, the indemnifying party will
not be subject to any liability for any settlement made by the indemnified party
without its consent (which consent will not be unreasonably withheld). An
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indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party will pay the fees and expenses of up to one additional
counsel.
SECTION 6. FURNISHING OF INFORMATION REGARDING NYFIX TO SELLERS.
----------------------------------------------------
6.1. PUBLIC INFORMATION PROVIDED NYFIX SHAREHOLDERS. Each Seller
acknowledges and agrees that NYFIX at a reasonable time before execution of this
Agreement has provided to such Seller financial and other information that NYFIX
is required to provide its shareholders and file with the SEC in accordance with
the Securities and Exchange Act of 1934, as amended, and the Rules and
Regulations promulgated thereunder, including NYFIX's Proxy Statement for the
June 10, 2003 Annual Shareholders' Meeting, 2002 Annual Report on Form 10-K and
First Quarter 2003 Form 10-Q.
6.2. OPPORTUNITY TO HAVE NYFIX ANSWER SELLERS' QUESTIONS. Each
Seller acknowledges and agrees that NYFIX at a reasonable time before the
execution of this Agreement has provided such Seller the opportunity to ask
questions and receive answers concerning the terms and conditions of the
transactions contemplated by this Agreement and to obtain any additional
information that NYFIX has or can acquire without unreasonable effort or expense
to verify the accuracy of information furnished to Seller as set forth in
Section 6.1.
SECTION 7. CONDITIONS PRECEDENT.
--------------------
7.1. CONDITIONS OF OBLIGATIONS OF EACH PARTY. The respective
obligation of each party to execute this Agreement and deliver a copy of it to
each party on the other side is subject to the satisfaction of the following
conditions on or prior to the Effective Date, any or all of which may be waived
in whole or in part by agreement of all parties: (i) execution and delivery of
the Trust Agreement; (ii) execution and delivery of that certain Agreement on
Conversion of Secured Promissory Note to Equity, made as of July 1, 2003 and of
the certificate of Units referred to therein and the delivery of the October 2,
2002 Convertible Secured Promissory Note referred to therein; and (iii)
execution and delivery of that certain Agreement on Contribution to Capital made
as of July 1, 2003 and the delivery of the March 12, 2003 note referred to
therein.
7.2. CONDITIONS OF OBLIGATIONS OF NYFIX. The obligation of NYFIX to
execute and deliver a copy of this Agreement to each Seller is subject to the
satisfaction of the following conditions on or prior to the Effective Date, any
or all of which may be waived in whole or in part by NYFIX: (i) execution and
delivery to NYFIX of valid and binding resolutions of the Board of Directors of
the Company approving the Term Sheet, approving the transfer of the Purchased
14
Units from the Sellers to NYFIX, approving and ratifying that certain Agreement
on Conversion of Secured Promissory Note to Equity, made as of July 1, 2003, and
appointing Xxxxx X. Xxxxxx and Xxxx X. Xxxx as officers of the Company and
granting each of them authority to open bank accounts on behalf of the Company
and to have signing authority on Company bank accounts as of the Effective Date;
(ii) execution and delivery to NYFIX by all members of the Company of that
certain Second Amendment to Amended & Restated Limited Liability Company
Operating Agreement of Renaissance Trading Technologies, LLC, effective
September 26, 2003; (iii) delivery to NYFIX of a copy of the executed
resignations of Xxxxxx Xxxxxxxx, Xxxxxxx XxXxxxxx, Xxxxx Xxxxxxxx and Paolo Aloe
as directors of the Company, effective September 26, 2003; (iv) delivery to
NYFIX of a copy of the executed resignation of Xxxxxx Xxxx as Executive Vice
President and Chief Financial Officer of the Company and Secretary of the
Company, effective September 26, 2003; (v) delivery to NYFIX of a copy of the
executed resignation of Xxxxxxx XxXxxxxx as Executive Vice President and Chief
Technology Officer of the Company, effective September 26, 2003; (vi) delivery
to NYFIX of a copy of the executed Separation Agreement and General Release
between Xxxxxx Xxxx and the Company dated as of September 26, 2003; (vii)
delivery to NYFIX of a copy of the executed Separation Agreement and General
Release between Xxxxxxx XxXxxxxx and the Company dated as of September 26, 2003;
(viii) execution and delivery to NYFIX by each Seller of this Agreement; (ix)
evidence satisfactory to NYFIX of the execution by each Company employee and
consultant of an assignment to the Company of intellectual property rights,
satisfactory to NYFIX, and a confidentiality, non-competition and
non-solicitation agreement with the Company, satisfactory to NYFIX; (x)
execution and delivery to NYFIX by Renaissance employees and consultants, as
designated by NYFIX, of employment or consultant agreements with NYFIX
satisfactory to NYFIX; and (xi) a certificate of the Secretary of Renaissance
attaching: (y) certificates of good standing of Renaissance from Delaware and
New York as of a date no earlier than September 1, 2003; (z) the Certificate of
Formation (or the equivalent) of Renaissance and true and correct copies of the
Renaissance Operating Agreement and Bylaws, if any, and all Renaissance Board of
Director meeting minutes and resolutions with a statement that none of the above
have been amended or modified since the dates thereof and, as of the date of the
Secretary's certificate, are in full force and effect.
7.3. CONDITIONS OF OBLIGATIONS OF SELLERS. The obligation of each
Seller to execute and deliver a copy of this Agreement to NYFIX is subject to
the satisfaction of the following conditions on or prior to the Effective Date,
any or all of which may be waived in whole or in part by the Sellers: (i)
execution and delivery to Xxxxxx Xxxx by NYFIX of that certain Unsecured
Conditional Promissory Note as of September 26, 2003 of NYFIX payable to Xxxxxx
Xxxx; (ii) execution and delivery by NYFIX to Xxxxxxx XxXxxxxx of that certain
Unsecured Conditional Promissory Note as of September 26, 2003 of NYFIX payable
to Xxxxxxx XxXxxxxx; (iii) execution and delivery by NYFIX to each Seller so
electing an unsecured conditional promissory note as of September 26, 2003 in
the amount listed below the signature line for such Seller; (iv) execution and
delivery by the Company to Xxxxxx Xxxx of that certain Separation Agreement and
General Release between Xxxxxx Xxxx and NYFIX dated as of September 26, 2003;
15
(v) execution and delivery by the Company to Xxxxxxx XxXxxxxx of that certain
Separation Agreement and General Release between Xxxxxxx XxXxxxxx and NYFIX
dated as of September 26, 2003; (vi) execution and delivery by NYFIX to Xxxxxx
Xxxxxxxx of that certain Release of Security Interest Securing March 12, 2003
Renaissance Trading Technologies, LLC Secured Promissory Note; and (vii)
execution and delivery to each Seller by NYFIX of this Agreement.
SECTION 8. MISCELLANEOUS.
-------------
8.1. ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
No Seller may assign this Agreement or his or her rights, interests or
obligations under this Agreement without the prior written consent of the Buyer.
Any transfer or assignment of any rights, interests or obligations hereunder in
violation of the terms hereof shall be void and of no force or effect.
8.2. SURVIVAL. All representations, warranties and agreements made
in Section 2 of this Agreement shall survive the execution hereof for a period
of 12 months and made in Sections 3 and 4 of this Agreement shall survive the
execution hereof for a period of 24 months; provided, however, the
representations and warranties in Sections 2.3, 2.7, 3.5. 3.16 and 4.6 shall
survive indefinitely and the representations and warranties in Section 3.14
shall survive until the expiration of the longest statute of limitations period
applicable to an action brought by the appropriate taxing authority with respect
to a breach of such representations.
8.3. ENTIRE AGREEMENT. This Agreement (together with any other
documents and instruments referred to herein) supersedes any and all prior
contracts, understandings, discussions and agreements between the parties
hereto, and constitutes the complete understanding between the parties, with
respect to the subject matter hereof. No statement, representation, warranty or
covenant has been made by any party with respect thereto except as expressly set
forth herein.
8.4. MODIFICATION; WAIVER. This Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by all the undersigned, or in the case of a waiver, by the
party against whom the waiver is to be effective. No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and shall
not be exclusive to any rights or remedies by law or at equity.
8.5. APPLICABLE LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York,
regardless of the law that might be applied under principles of conflicts of
laws.
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8.6. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as to be enforceable.
8.7. EXPENSES OF TRANSACTION. Buyer shall pay all costs and expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby and the Company shall pay the costs and expenses incurred by
it and the Sellers in connection with this Agreement and the transactions
contemplated hereby up to an amount not exceeding $17,500, exclusive of fees
paid to Xxxxxx Xxxxxx pursuant to the engagement letter between the Company and
Xxxxxx Xxxxxx dated December 12, 2002. In the event that such costs and expenses
incurred by the Company and the Sellers exceed the $17,500 limit set forth in
the immediately preceding sentence, the $6,000,000 consideration set forth in
Section 1.1 shall be reduced dollar for dollar for every dollar in excess of
$17,500. The parties agree that the excess costs and expenses referred to in the
immediately preceding sentence are $27,500 and that the $6,000,000 consideration
set forth in Section 1.1 shall for all purposes be reduced to $5,972,500.
8.8. FURTHER ASSURANCES. From time to time, at the request of any
party hereto or as required under applicable law and without further
consideration, each party hereto will execute and deliver to such requesting
party or other Person or Persons, as appropriate, such documents and take such
other action (but without incurring any financial obligation except as otherwise
required by this Agreement) as such requesting party may reasonably request in
order to consummate more effectively and in accordance with applicable law the
transactions contemplated hereby.
8.9. NOTICES. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given and made
if served either by personal delivery to the party for whom intended (which
shall include delivery by a reputable overnight courier) or three business days
after being deposited, postage prepaid, certified or registered mail, return
receipt requested, in the United States mail bearing the follow address shown
for, or such other address as may be designated in writing hereafter by, such
party:
If to the Sellers: at the addresses set forth opposite their
respective names on the signature pages
hereto
with a copy to: Drinker Xxxxxx & Xxxxx LLP
Suite 300
105 College Road East
X.X. Xxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
17
If to the Buyer: NYFIX, Inc.
Stamford Harbor Park
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, CEO
with a copy to: NYFIX, Inc.
Stamford Harbor Park
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, General Counsel
8.10. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument. A facsimile copy of
a signature page shall be deemed an original signature for purposes of this
Agreement.
8.11. FORM 1065 FOR SHORT-YEAR TAX RETURN. If the Company files a
Form 1065 for short-year tax return upon termination of the Company as a
partnership for tax purposes, Buyer shall cause the Company to provide such
return to the Management Sellers for review prior to such filing.
8.12. TAX TREATMENT OF SHARES IN TRUST. The parties hereto agree
that the issuance of shares of NYFIX Common Stock pursuant to Section 1.1(c) and
their subsequent distribution, if any, pursuant to the Trust Agreement shall be
characterized as a capital transaction for tax purposes. Each of the parties
shall report such issuance and subsequent distribution as a capital transaction
on all of his, her or its federal, state and local tax returns and no party
hereto shall take any position that is inconsistent therewith on any such tax
return, in dealing with any taxing authority or otherwise. Notwithstanding the
foregoing, no party hereto shall be prohibited from compromising or settling any
claim with any taxing authority based on the reporting of the issuance of the
NYFIX Common Stock pursuant to Section 1.1(c) and their subsequent distribution,
if any, pursuant to the Trust Agreement as a capital transaction for tax
purposes.
8.13. ACKNOWLEDGEMENT AND ADOPTION OF AGREEMENTS. Each Seller, for
the consideration received by such Seller from NYFIX and/or Renaissance in
connection with the purchase by NYFIX of the Purchased Units, hereby
acknowledges and adopts, as of the date of such Seller's initial hire by
Renaissance as an employee or consultant, each of the Renaissance Trading
Technologies Confidentiality Agreement, Renaissance Trading Technologies
Non-Competitive Agreement, Employee Nondisclosure and Development Agreement and
the Consulting Agreement, forms of which are attached as Exhibit F, that such
Seller has executed.
[SIGNATURE PAGES, EXHIBITS AND SCHEDULES OMITTED]
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