Exhibit 10.15
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
RENAISSANCE TRADING TECHNOLOGIES, LLC
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(a Delaware limited liability company)
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
RENAISSANCE TRADING TECHNOLOGIES, LLC
This Amended and Restated Limited Liability Company Operating
Agreement of Renaissance Trading Technologies, LLC, a limited liability company
organized pursuant to the Act (as hereinafter defined), dated as of October 2,
2002, by and among the Company and the persons executing this Agreement (each a
"Member"), hereby amends and restates the Original Agreement (as hereinafter
defined).
ARTICLE I
DEFINITIONS
For purposes of this Agreement, unless the context clearly indicates
otherwise, terms used herein shall have the meaning set forth in the Act and the
following terms shall have the following meanings:
1.1 ACT. The Delaware Limited Liability Company Act and all
amendments thereto.
1.2 ADDITIONAL MEMBER. A Member who has been or becomes admitted as
a Member pursuant to Article XI hereof, other than Renaissance Members.
1.3 AFFILIATE. Affiliate shall have the meaning ascribed to such
term in Rule 12b-2 of the Securities Exchange Act of 1934, as amended.
1.4 AGREEMENT. This Amended and Restated Limited Liability Company
Operating Agreement, including all amendments adopted in accordance with this
Agreement and the Act.
1.5 ARTICLES. The Articles of Organization of the Company, as
amended from time to time, and filed with the Secretary of State of the State of
Delaware.
1.6 ASSIGNEE. A transferee of any Unit of Membership Interest who
has not been admitted as a Substitute Member.
1.7 BOARD OF DIRECTORS OR BOARD. Board of Directors or Board shall
mean the Board of Directors of the Company.
1.8 CAPITAL ACCOUNTS. Capital Accounts shall mean the capital
account of a Member as described in Section 7.2 hereof.
1.9 CAPITAL CONTRIBUTION. Any contribution of Property made by or on
behalf of a Member, Substitute Member, Additional Member or Assignee.
1.10 COMPANY. The company named at the beginning of this Agreement,
a limited liability company formed under the laws of the State of Delaware, and
any successor limited liability company.
1.11 DESIGNATED DIRECTORS. Shall have the meaning set forth in
Section 6.2 hereof.
1.12 FISCAL YEAR. The calendar year.
1.13 INITIAL MEMBERS. NYFIX and the Management Team.
1.14 MANAGEMENT TEAM. The management team of the Company, consisting
of Xxxxxx Xxxxxxxx, Xxxxxx Xxxx and Xxx XxXxxxxx.
1.15 MEMBERSHIP INTEREST. The rights of a Member to distributions
(liquidating or otherwise) and allocations of the Profits, Losses, gains,
deductions and credits of the Company and, to the extent permitted by this
Agreement, to possess and exercise voting rights.
1.16 NYFIX. NYFIX, Inc., a New York corporation.
1.17 ORIGINAL AGREEMENT. The Limited Liability Company Operating
Agreement of the Company, entered into by the Management Team, as of the
Original Effective Date.
1.18 ORIGINAL EFFECTIVE DATE. September 9, 2002, the effective date
of the Original Agreement.
1.19 PERSON. Any individual, partnership, corporation, limited
liability company, association, joint venture, organization, trust or other
entity.
1.20 PROPERTY. Any property, real or personal, tangible or
intangible including, without limitation, money, and any legal or equitable
interest in such property, but excluding services and promises to perform
services in the future.
1.21 RENAISSANCE MEMBER. The Management Team and each individual
that is an employee of the Company on the date hereof who becomes a Member by
receiving Units from the Management Team.
1.22 REQUIRED APPROVAL. The approval of all of the NYFIX Designees
and the Renaissance Designees.
1.23 SCHEDULE D. Schedule D to this Agreement setting forth the
name, address, Capital Contribution, Membership Interest and Units of each
Initial Member, and the Member designated as the Tax Matters Partner.
1.24 SUBSTITUTE MEMBER. An Assignee who has been admitted to all of
the rights of membership pursuant to Section 10.3 hereof.
1.25 TAX CHARACTERIZATION AND ADDITIONAL TAX TERMS. It is intended
that the Company be characterized and treated as a partnership for, and solely
for, federal, state and local income tax purposes. For such purpose, (i) the
Company shall be subject to all of the provisions of Subchapter K of Chapter 1
of Subtitle A of the Code, (ii) all references to a "Partner," to "Partners" and
to the "Partnership" in this Agreement and in the provisions of the Code and Tax
Regulations cited in this Agreement shall be deemed to refer to a Member, the
Members and the Company, respectively. In addition, the following terms shall
have the following meanings:
(a) CODE shall mean the Internal Revenue Code of 1986, as amended.
(b) PROFITS AND LOSSES shall mean, for each Fiscal Year, an amount
equal to the Company's taxable income or loss for such Fiscal Year,
determined in accordance with Section 703(a) of the Code (for this purpose,
all items of income, gain, loss, or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), with the following adjustments:
(i) Any income of the Company that is exempt from
federal income tax and not otherwise taken into account in computing
Profits or Losses pursuant to this Section 1.25 shall be added to such
taxable income or loss;
(ii) Any expenditures of the Company described in
Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of
the Code expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the
Tax Regulations, and not otherwise taken into account in computing
Profits or Losses pursuant to this Section 1.25, shall be subtracted
from such taxable income or loss;
(iii) In the event the agreed fair market value of
Company assets is adjusted pursuant to Section 1.704-1(b)(2)(iv)(f) of
the Tax Regulations or other pertinent sections of such Tax
Regulations, the amount of such adjustment shall be taken into account
as gain or loss for purposes of computing Profits and Losses; and in
lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or
loss, there shall be taken into account depreciation, amortization or
other cost recovery computed with reference to the value of Company
property approved by the Designated Directors (if different from its
adjusted tax basis) pursuant to Section 1.704-1(b)(2)(iv)(g) of the
Tax Regulations for such Fiscal Year; and
(iv) Notwithstanding any other provisions in this
Agreement, any items which are specially allocated pursuant to the
provisions of Schedule A and Item 8.1(c) below shall not be taken into
account in computing Profit or Loss.
1.26 UNIT. One of the units of Membership Interest that are
authorized to be issued under this Agreement. Each Unit represents a Membership
Interest with an initial ratio of one divided by the total number of Units
issued hereunder, subject to adjustment as provided herein.
ARTICLE II
FORMATION
2.1 ORGANIZATION. The Members hereby organize the Company as a
Delaware limited liability company pursuant to the provisions of the Act.
2.2 AGREEMENT. For and in consideration of the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Members executing this
Agreement hereby agree to the terms and conditions of this Agreement, as it may
from time to time be amended. Except as otherwise provided herein, it is the
express intention of the Members that this Agreement shall be the sole source of
agreement of the parties and, except to the extent a provision of this Agreement
expressly incorporates federal income tax rules by reference to sections of the
Code or Tax Regulations or is expressly prohibited or ineffective under the Act,
this Agreement shall govern, even when inconsistent with, or different than, the
provisions of the Act or any other law or rule. To the extent any provision of
this Agreement is prohibited or ineffective under the Act, this Agreement shall
be deemed to be amended to the least extent necessary in order to make this
Agreement effective under the Act. In the event the Act is subsequently amended
or interpreted in such a way to make any provision of this Agreement that was
formerly invalid valid, such provision shall be considered to be valid from the
effective date of such interpretation or amendment.
2.3 NAME. The name of the Company is the name set forth at the
beginning of this Agreement and all business of the Company shall be conducted
under that name.
2.4 TERM. The Company shall be dissolved and its affairs wound up in
accordance with the Act and this Agreement.
2.5 PRINCIPAL OFFICE. The principal office of the Company (the
"Principal Office") shall be located at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000. The Board of Directors may, from time to time, with Required Approval,
change the location of the Principal Office.
2.6 REGISTERED AGENT AND OFFICE. The name and address of the
registered agent for the service of process shall be Corporation Service
Company, 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000. The Board
of Directors, may, from time to time, change the registered agent or office
through appropriate filings with the Department of State of the State of
Delaware. In the event the registered agent ceases to act as such for any reason
or the registered office shall change, the Board of Directors shall promptly
designate a replacement registered agent or file a notice of change of address,
as the case may be.
2.7 NUMBER OF MEMBERS. The Company shall not at any time have more
than 100 Members or "beneficial owners" within the meaning of the Investment
Company Act of 1940.
ARTICLE III
PURPOSE; NATURE OF BUSINESS
The business purpose of the Company is to engage in the business of
developing, marketing and selling trading technologies and services (including
order management and routing, execution, risk and quote management, and
compliance) across the pre-trade, trade and post-trade process in the domestic
and international financial markets, and to engage in any lawful business
permitted by the Act or laws of any jurisdiction in which the Company may do
business, as approved by the Designated Directors, and to enter into any lawful
transaction and engage in any lawful activities in furtherance of the foregoing
purposes and as may be necessary, incidental or convenient to carry out the
business of the Company as contemplated by this Agreement. The authority granted
to the Board of Directors hereunder to bind the Company shall be limited to
actions necessary or convenient to this business.
ARTICLE IV
ACCOUNTING AND RECORDS
The Company shall prepare and timely file income tax returns of the
Company in all jurisdictions where such filings are required, and the Company
shall prepare and deliver to each Member, as soon as practicable following the
expiration of each Fiscal Year, and at the Company's expense, all information
returns and reports required by the Code and Tax Regulations and information in
respect of the Company necessary for the preparation of the Members' federal
income tax returns.
ARTICLE V
NAMES AND ADDRESSES OF MEMBERS
The names and addresses of the Members are as set forth on their
respective signature pages hereto.
ARTICLE VI
RIGHTS AND DUTIES OF MEMBERS
6.1 MANAGEMENT OF THE COMPANY. (a) The business affairs of the
Company shall be managed by the Board of Directors in accordance with this
Agreement. The Board may exercise all such powers of the Company and do all such
lawful acts and things as are not by statute or this Agreement directed or
required to be exercised or done by the Members. The Members, in their capacity
as such, shall not have any right of control or management power over the
business and affairs of the Company or to bind the Company in any respect;
provided, however, that nothing herein shall preclude any Member from serving
the Company as a director, officer or agent of the Company, following such
Member's election or appointment in accordance with the terms of this Agreement.
(b) The Board of Directors, with Required Approval, may
delegate any or all of its powers to committees of the Board and to officers and
agents elected or designated by the Board or a duly constituted committee
thereof.
(c) The Board of Directors shall be the "manager" as
defined in the Act; provided, however, that the directors shall only have the
rights, powers and authority set forth in this Agreement and, unless expressly
authorized by the Designated Directors, a director, acting alone in such
capacity, shall have no authority or right to act on behalf of or bind the
Company in connection with any matter.
6.2 BOARD MEMBERS. (a) The Board of Directors shall initially
consist of five voting directors (collectively, the "Voting Directors"), two to
be designated by NYFIX (the "NYFIX Designees"), two to be designated by the
Renaissance Members (the "Renaissance Designees" and together with all NYFIX
Designees, the "Designated Directors"), and one outside director to be mutually
agreed upon by the Designated Directors. The Renaissance Designees shall be
designated upon the affirmative vote of the Renaissance Members holding a
majority of the Units held by the Renaissance Members. Subject to Section 6.2(b)
below, the number of Voting Directors may be increased or decreased with
Required Approval. The NYFIX Designees shall initially consist of Xxxxx
Jamaities and Paolo Aloe, the Renaissance Designees shall initially consist of
Xxxxxx Xxxxxxxx and Xxx XxXxxxxx, and the initial outside director shall be
selected by the Designated Directors within 30 days of the date hereof. Any of
the Directors may be changed by the applicable designator(s) from time to time.
(b) If and when the number of Units owned by NYFIX is
greater than the number of Units owned by all of the Renaissance Members
combined, then NYFIX shall have the right to appoint a third NYFIX Designee as a
Voting Director, thereby increasing the total number of Voting Directors to six.
If and when the number of Units owned by NYFIX is equal to or greater than twice
the number of Units owned by all of the Renaissance Members combined, then NYFIX
shall have the right to appoint a fourth NYFIX Designee as a Voting Director,
thereby increasing the total number of Voting Directors to seven.
(c) The Voting Directors may appoint a number of
advisory board members (collectively, the "Advisory Directors") equal to the
number of Additional Members, such that one Advisory Director shall be
designated by each Additional Member. Each Advisory Director appointed shall
have the right to attend all Board meetings and to participate in all
discussions regarding the management of the Company and make recommendations to
the Voting Directors. All decisions relating to the management and operations of
the Company shall be made solely through a majority vote of the Voting
Directors, except as otherwise provided in this Agreement.
(d) The Company is required to carry Directors and
Officers liability insurance with coverage of at least $2,000,000, unless the
Board of Directors by the Required Approval determines that the cost of such
coverage is not reasonable in relation to the Company's annual budget, in which
case the Company is required to carry such lesser coverage as is reasonably
available on commercially reasonable terms as determined by the Board of
Directors.
6.3 MEETINGS. (a) The Board of Directors shall meet at least once
each calendar quarter, unless otherwise agreed by the Designated Directors. Such
meetings shall be held on such date as shall be determined by the president or a
majority of the Board of Directors.
(b) Other meetings of the Board of Directors shall be
held at such time as the Designated Directors shall from time to time determine.
(c) The Board of Directors shall select a secretary who
shall give written notice to each director of each meeting of the Board of
Directors, which notice shall state the place, date, time and purpose of such
meeting. Notice of each such meeting shall be given to each director, if by
mail, addressed to him at his residence or usual place of business, at least
five (5) days before the day on which such meeting is to be held, or shall be
sent to him at such place by telecopy, telegraph, cable, or other form of
recorded communication, or be delivered personally or by telephone not later
than two (2) days before the day on which such meeting is to be held. A written
waiver of notice, signed by the director entitled to notice, whether before or
after the time of the meeting referred to in such waiver, shall be deemed
equivalent to notice. Neither the business to be transacted at, nor the purpose
of any meeting of the Board of Directors need be specified in any written waiver
of notice thereof. Attendance of a director at a meeting of the Board of
Directors shall constitute a waiver of notice of such meeting.
(d) The Board of Directors may hold its meetings at such
place or places within or without the State of Delaware as the Designated
Directors may from time to time determine, or as shall be designated in the
respective notices or waivers of notice of such meetings.
(e) A majority of the directors then in office (or who
are members of any committee of the Board of Directors) shall be present in
person at any meeting of the Board of Directors (or a committee thereof, as the
case may be) in order to constitute a quorum for the transaction of business at
such meeting, and the vote of a majority of those directors (or members of such
committee) present at any such meeting at which a quorum is present shall be
necessary for the passage of any resolution or act of the Board of Directors (or
such committee), except as otherwise expressly required by this Agreement. In
the absence of a quorum for any such meeting, a majority of the directors
present thereat may adjourn such meeting from time to time until a quorum shall
be present.
6.4 DIRECTORS' CONSENT IN LIEU OF MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by all the members of the Board of Directors or such committee
and such consent is filed with the minutes of the proceedings of the Board of
Directors or such committee.
6.5 REQUIRED APPROVAL. Any decisions or actions set forth in the
following list must have the Required Approval:
(a) except as set forth in Article XI and Section 14.1 hereof,
the issuance by the Company of equity securities, any equity derivative
securities, securities convertible into equity securities or rights to acquire
equity securities;
(b) the sale, lease, transfer or other disposition (in a
transaction or related series of transactions) of any material assets of the
Company (including, without limitation, any material intellectual property
assets);
(c) any merger or consolidation involving the Company;
(d) the liquidation or dissolution of the Company;
(e) the filing for bankruptcy by the Company;
(f) any expenditure by the Company of any kind in excess of
$50,000, including but not limited to capital expenditures, consulting
agreements or pursuant to contracts (other than employment agreements)
obligating the Company to pay $50,000 or more during a 12-month period;
(g) the incurrence or repayment by the Company of any
indebtedness in excess of $50,000;
(h) the hiring by the Company of employees with annual salaries
of $100,000 or more;
(i) the payment by the Company of bonuses or other special
payments of any kind to the Management Team;
(j) the reduction or change in the Directors and Officers
liability insurance coverage; and
(k) the making of any plans or agreements to do any of the
foregoing.
6.6 OFFICERS. The Company shall have such officers as are designated
or appointed by the Board of Directors.
6.7 LIABILITY OF MEMBERS. Neither the Members nor the directors
serving on the Board of Directors shall be liable as such for the liabilities of
the Company.
6.8 RECORDS TO BE MAINTAINED. The Board of Directors shall maintain,
or cause to be maintained, the following records at the Principal Office:
(a) A current list of the full name and last known business or
residence address of each Member and former Member and the Capital Account of
each Member associated with their respective Membership Interests, as of a
recent practicable date;
(b) A copy of the Certificate and all amendments thereto;
(c) Copies of all past federal, foreign, state and local income
tax returns and reports of the Company;
(d) Copies of this Agreement, including all subsequent
amendments hereto; and
(e) Copies of all past financial statements of the Company.
6.9 REPORTS TO CERTAIN MEMBERS. (a) The Board of Directors shall
provide (or cause the Company to provide) the following reports to NYFIX, the
Management Team and certain Additional Members selected by the Board of
Directors:
(i) within 14 days of the end of each month, an unaudited
detailed balance sheet of the Company as of the close of the last completed
month, a statement of income showing the results of operations of the
Company during such month, and a statement of cash flows of the Company
during such month, each prepared in accordance with accounting principles
generally accepted in the United States of America (collectively,
"Financial Statements");
(ii) within 30 days of the end of each calendar quarter,
unaudited Financial Statements for such quarter;
(iii) within 30 days of the end of each calendar quarter, a
quarterly Financial Statement forecast for the current and following eight
quarters; and
(iv) within 60 days of the end of each calendar year, audited
Financial Statements, including footnotes thereto, for such year.
(b) The Board of Directors shall provide (or cause the
Company to provide) to all Members, within a timely manner, the information
necessary for the Members to prepare tax returns as required by the Code and the
laws of any applicable state.
(c) The Board of Directors shall provide to NYFIX,
within 5 days of the end of a month, a monthly sales pipeline.
6.10 EMPLOYEE HANDBOOK. The Company agrees to adopt, within 90 days
of the Original Effective Date, an Employee Handbook and Expense Policy
consistent with those adopted by NYFIX.
6.11 INDEMNIFICATION. (a) To the fullest extent permitted by
applicable law, the Company shall indemnify and hold harmless any Member,
director serving on the Board of Directors, officer, or Affiliate thereof
(individually, in each case, an "Indemnitee") from and against any loss, damage,
claim or liability incurred by such Indemnitee by reason of any act or omission
performed, or omitted to be performed, by such Indemnitee in good faith on
behalf of the Company and in a manner reasonably believed to be within the scope
of authority conferred on such Indemnitee by this Agreement, except that no
Indemnitee shall be entitled to be indemnified in respect of any loss, damage,
claim or liability incurred by such Indemnitee by reason of willful misconduct,
fraud, gross negligence or breach of this Agreement with respect to such acts or
omissions; provided, however, that any indemnity under this Section 6.11 shall
be provided out of and to the extent of Company assets only, and no Member shall
have any personal liability on account thereof.
(b) If any claim shall be asserted against an
Indemnitee, in respect of which such Indemnitee proposes to demand
indemnification under this Section 6.11 from the Company, such Indemnitee shall
notify the Company to that effect with reasonable promptness after such
assertion, and the Company shall have the right to assume the entire control of
the defense or settlement of any such claim, through its own attorneys and at
its expense, and in connection therewith, such Indemnitee shall cooperate fully
to make available to the Company all information under its control relating
thereto.
(c) All rights to indemnification provided herein shall
survive the termination of this Agreement and the withdrawal, removal or
insolvency of any Member; provided, that a claim for indemnification hereunder
is made by or on behalf of the Indemnitee seeking such indemnification prior to
the time that distribution in liquidation of the assets of the Company is made
pursuant to Article XII.
(d) The Board of Directors and the Company may enter
into indemnity contracts with Indemnitees and adopt written procedures pursuant
to which arrangements are made for the advancement of expenses and the funding
of obligations and containing such other procedures regarding indemnification as
are appropriate.
ARTICLE VII
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
7.1 CAPITAL CONTRIBUTIONS. Each Member shall, no later than upon his
execution and delivery of this Agreement, make the Capital Contribution set
forth on his signature page hereto, and each Member shall receive the Membership
Interests set forth on his signature page hereto. No further Capital
Contribution shall be required of a Member, except as agreed to by that Member.
No Member shall have the right to withdraw or be repaid any Capital Contribution
except as provided in this Agreement.
7.2 CAPITAL ACCOUNT. A separate capital account shall be maintained
for each Member throughout the term of the Company in accordance with the rules
of Section 1.704-1(b)(2)(iv) of the Tax Regulations as in effect from time to
time and, to the extent not inconsistent therewith, to which the following
provisions apply:
(a) To each Member's Capital Account there shall be
credited (i) the amount of money contributed by such Member to the
Company (including liabilities of the Company assumed by such Member
as provided in Section 1.704-1(b)(2)(iv)(c) of the Tax Regulations);
(ii) the fair market value of any Property contributed to the
Company by such Member (net of liabilities secured by such
contributed Property that the Company is considered to assume or
take subject to under Section 752 of the Code); and (iii) such
Member's share of Profits and items of income and gain that are
specially allocated.
(b) To each Member's Capital Account there shall be
debited (i) the amount of money distributed to such Member by the
Company (including liabilities of such Member assumed by the Company
as provided in Section 1.704-1(b)(2)(iv)(c) of the Tax Regulations)
other than amounts which are in repayment of debt obligations of the
Company to such Member; (ii) the fair market value of Property
distributed to such Member (net of liabilities secured by such
distributed Property that such Member is considered to assume or
take subject to under Section 752 of the Code); and (iii) such
Member's share of Losses and items of loss or deduction that are
specially allocated.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Section
1.704-1(b) of the Tax Regulations and Section 704(c) of the Code and shall be
interpreted and applied in a manner consistent with such Tax Regulations and the
provisions set forth in Schedule A attached hereto. In the event the Board of
Directors shall determine, with Required Approval, that it is prudent to modify
the manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities that
are secured by contributed or distributed Property or that are assumed by the
Company or any Member), are computed in order to comply with such Tax
Regulations, the Board may make such modification, provided that it is not
likely to have a material effect on the amounts distributable to any Member
pursuant to Article XII hereof upon the dissolution of the Company.
7.3 NO OBLIGATION TO RESTORE DEFICIT BALANCE. Except as required by
law, no Member shall be required to restore any deficit balance in its Capital
Account.
7.4 WITHDRAWAL. A Member shall not be entitled to withdraw any part
of its Capital Account or to receive any distribution from the Company, except
as specifically provided in Sections 8.2 or with Required Approval.
7.5 INTEREST. No Member shall be entitled to interest on such
Member's Capital Contribution or on any Profits retained by the Company.
ARTICLE VIII
ALLOCATIONS AND DISTRIBUTIONS
8.1 PROFITS AND LOSSES. Profits and Losses, and each item of Company
income, gain, loss, deduction, credit and tax preference with respect thereto,
for each Fiscal Year (or shorter period in respect of which such items are to be
allocated) shall be allocated among the Members as provided in this Article
VIII.
(a) PROFITS. Profits for any Fiscal Year shall be
allocated among the Members in proportion to their respective Membership
Interests; provided, however, that if a Member has previously had its Capital
Account reduced pursuant to Section 8.1(b)(i) below, then there shall first be
credited to such Capital Account a portion of the profits equal to the amount of
such reduction.
(b) LOSSES. Losses for any Fiscal Year shall be
allocated in the following order of priority:
(i) first, to the Members, in proportion to
their respective Membership Interests, but only to the extent of
their respective positive Capital Account balances; and
(ii) then, the balance, if any, among the
Members in proportion to their respective Membership Interests.
(c) SPECIAL ALLOCATION OF CERTAIN COMPENSATION EXPENSES.
Any expense attributable to the issuance of shares of NYFIX, Inc.'s common stock
("NYFIX Common Stock") by the Company to its employees shall be specially
allocated solely to those Members who contributed such shares to the Company,
and such expense shall not be reflected in the allocations of Profits and Losses
set forth in Sections 8.1(a) and 8.1(b), above.
8.2 DISTRIBUTIONS.
(a) Within a reasonable time after the end of each
Fiscal Year, the Company shall, to the extent of available cash, distribute to
each Member cash in an amount intended to provide each such Member with funds
for the payment of federal income taxes resulting from the allocations made
pursuant to Section 8.1 hereof to such Member for such Fiscal Year; provided,
however, any cash distribution to be paid to any Member pursuant to this clause
may be reduced by the amount of any cash distributions paid to such Member
during or in respect of such Fiscal Year. Any distributions paid pursuant to
this clause shall be based upon a notional tax rate determined by the Designated
Directors and applied to all such profit allocations regardless of the tax
status of the individual Member.
(b) Distributions shall be made pro rata to the Members
in accordance with their Membership Interests at such time or times as
determined by the Designated Directors consistent with the provisions of this
Agreement.
(c) In the case of a distribution of property, the Board
of Directors shall endeavor to the extent feasible to distribute to each Member
the Property which such Member had previously contributed to the Company.
8.3 NYFIX CONTRIBUTIONS AND SERVICES; REVENUE SHARING. NYFIX has
contributed to the Company the intellectual property rights relating to the
Company's Nasdaq market making/trading system (including all related source
code) described on Schedule B attached hereto (the "Intellectual Property") and
has agreed to provide the Company with the services set forth on Schedule C
attached hereto. In consideration thereof, NYFIX shall be entitled to receive,
in a non-Member capacity, 50% of the revenues (but excluding pass throughs not
paid by NYFIX) from sales of the Company's products or services. The remaining
50% shall go to the Company. The party that is responsible for collecting the
revenues shall remit 50% to the other party within five business days of
receipt. This revenue sharing arrangement shall remain in effect for thirty-six
months following the Original Effective Date and thereafter will be
automatically terminate.
8.4 OTHER ALLOCATION RULES.
(a) For purposes of determining the Profits, Losses, or
any other item allocable to any period (including allocations to take into
account any changes in any Member's Membership Interest during a Fiscal Year and
any transfer of any interest in the Company), Profits, Losses, and any such
other item shall be determined on a daily, monthly, or other basis, as
determined by the Board of Directors using any permissible method under Section
706 of the Code and the Tax Regulations thereunder.
(b) The Members are aware of the income tax consequences
of the allocations made by this Article VIII and hereby agree to be bound by the
provisions of this Article VIII in reporting their shares of Company income and
loss for income tax purposes.
ARTICLE IX
TAXES
9.1 TAX MATTERS PARTNER. The Member designated as such on Schedule D
shall be the Tax Matters Partner of the Company pursuant to Section 6231(a)(7)
of the Code. Such Member shall not resign as the Tax Matters Partner unless, on
the effective date of such resignation, the Company has designated another
Member as Tax Matters Partner and such Member has given its consent in writing
to its appointment as Tax Matters Partner. The Tax Matters Partner shall receive
no additional compensation from the Company for its services in that capacity,
but all expenses incurred by the Tax Matters Partner in such capacity shall be
borne by the Company. The Tax Matters Partner is authorized to employ such
accountants, attorneys and agents as he, in his sole discretion, determines is
necessary to or useful in the performance of his duties. In addition, such
Member shall serve in a similar capacity with respect to any similar tax related
or other election provided by state or local laws. The Tax Matters Partner shall
be required to obtain the Required Approval in the case of the extension of a
statute of limitations or a settlement of a tax audit or other tax controversy.
9.2 SECTION 754 ELECTION. The Board of Directors may agree to have
the Company make the election permitted by Section 754 of the Code with respect
to adjustments to the basis of Property of the Company. The cost of preparing
such election, and any additional accounting expenses of the Company occasioned
by such election, shall be borne by the transferees or distributees of the
interest in the Company.
ARTICLE X
TRANSFER OF MEMBERSHIP INTEREST
10.1 COMPLIANCE WITH SECURITIES LAWS. No Unit has been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or under
any applicable state securities laws. A Member may not transfer (a transfer, for
purposes of this Agreement, shall be deemed to include, but not be limited to,
any sale, transfer, assignment, pledge, creation of a security interest or other
disposition) all or any part of such Member's Unit, except upon compliance with
the applicable federal and state securities laws. The Company shall have no
obligation to register any Unit under the Securities Act or under any applicable
state securities laws, or to make any exemption therefrom available to any
Member.
10.2 TRANSFER OF ECONOMIC INTEREST. The right to receive allocations
of Profits and Losses and to receive distributions may not be transferred, in
whole or in part, unless the following terms and conditions have been satisfied:
(a) The Designated Directors shall have consented in
writing to the transfer, which consent may be arbitrarily withheld by such
directors;
(b) The transferor shall have assumed all costs incurred
by the Company in connection with the transfer;
(c) If requested by the Board, the transferor shall have
furnished the Company with a written opinion of counsel, satisfactory in form
and substance to counsel for the Company, that such transfer complies with
applicable federal and state securities laws and the Agreement and that such
transfer, for federal income tax purposes, will not cause the termination of the
Company under Section 708(b) of the Code, cause the Company to be treated as an
association taxable as a corporation for income tax purposes or otherwise
adversely affect the Company or the Members; and
(d) The transferor shall have complied with such other
conditions as the Board of Directors may reasonably require from
time to time.
Transfers will be recognized by the Company as effective only upon the close of
business on the last day of the calendar month following satisfaction of the
above conditions. Any transfer in contravention of this Article X shall be void
ab initio and without force and effect and shall not bind the Company or the
other Members. Transfers by Members to Affiliates shall not be subject to the
provisions of Section 10.2(a) hereof.
10.3 TRANSFER OF MEMBERSHIP INTEREST AND ADMISSION OF SUBSTITUTE
MEMBER. Except for the right to receive allocations of Profits and Losses and to
receive distributions, a Unit may not be transferred, in whole or in part, and a
transferee shall not have a right to become a Member unless, in addition to
satisfying the terms and conditions of Sections 10.2(b), (c) and (d), the
following terms and conditions have also been satisfied:
(a) The Designated Directors shall have consented in
writing to the transfer and substitution, which consent may be arbitrarily
withheld by such directors;
(b) The transferee shall have assumed the obligations,
if any, of the transferor to the Company; and
(c) The transferor and the transferee shall have
complied with such other requirements as the Board of Directors may reasonably
impose including, without limitation, the conditions that the transferee:
(i) adopt and approve in writing all the
terms and provisions of the Agreement then in effect; and
(ii) pay such fees as may be reasonable to
pay the costs of the Company in effecting such substitution.
Transfers by Members to Affiliates and transfers made pursuant to Section 14.3
below shall not be subject to the provisions of Section 10.3(a).
10.4 STATUS OF TRANSFEREE. A transferee of a Unit who is not a
Substitute Member shall be entitled only to receive that share of Profits,
Losses and distributions, and the return of Capital Contributions, to which the
transferor would otherwise be entitled with respect to the interest transferred,
and shall not have the rights of a Member of the Company under the Act or this
Agreement including, without limitation, the right to obtain any information on
account of the Company's transactions, to inspect the Company's books or to vote
with the Members on, or to grant or withhold consents or approvals of, any
matter. The Company shall, however, if a transferee and transferor jointly
advise the Company in writing of a transfer of a Unit, furnish the transferee
with pertinent tax information at the end of each Fiscal Year.
10.5 LEGEND ON CERTIFICATES. Certificates representing the Units, if
any, shall bear the following or similar legend:
"THE UNITS OF MEMBERSHIP INTERESTS REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO AN OPERATING
AGREEMENT, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY. THE UNITS MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED,
OR OTHERWISE DISPOSED OF EXCEPT AS EXPRESSLY PROVIDED
BY THE TERMS OF THE OPERATING AGREEMENT."
10.6 DISPOSITIONS NOT IN COMPLIANCE WITH THIS ARTICLE VOID. Any
attempted disposition of Unit, or any part thereof, not in compliance with this
Article X shall be void ab initio and without force and effect and shall not
bind the Company or the other Members.
ARTICLE XI
ADMISSION OF MEMBERS
11.1 ADMISSION OF MEMBERS. The Board of Directors may admit
Additional Members to the Company with the Required Approval, and may determine
the Capital Contributions and Membership Interests of such Additional Member or
Members; provided, however, that the aggregate number of Membership Interests
held by Additional Members shall not equal greater than 40% of all outstanding
Membership Interests; and provided, further, that no Person shall be admitted as
an Additional Member without the prior written consent of the Designated
Directors. To the extent that a NYFIX Designee does not consent to the admission
of an Additional Member, NYFIX shall have 30 business days to match (or find
someone else to match) the consideration and proposed terms of such investment
at which time if NYFIX does not match (or find someone else to match) the offer
then the NYFIX Designee shall consent to the admission of such Additional
Member; provided, however, that if such consideration and proposed terms are not
on financially reasonable terms, then the NYFIX Designee may withhold its
consent to the admission of such Additional Member and need not match (or find
someone else to match) the offer. A person so approved to be admitted as an
Additional Member shall be so admitted upon making a Capital Contribution to the
Company, executing a counterpart to this Agreement, and furnishing to the Board
of Directors an acceptance, in form satisfactory to the Board, of all the terms
and conditions of this Agreement and such other documents as the Board shall
require. Such admission shall become effective on the date that the Designated
Directors determine that such conditions have been satisfied. With respect to
any such Additional Member admitted to the Company, the Capital Accounts of
Members other than such Additional Member shall be adjusted, i.e. "booked up" or
"booked down" as the case may be, in accordance with Section
1.704-1(b)(2)(iv)(f) of the Tax Regulations to reflect the Capital Contribution
of the Additional Member, except as otherwise determined by the Designated
Directors.
ARTICLE XII
DISSOLUTION AND WINDING UP
12.1 DISSOLUTION. The Company shall be dissolved and its affairs
wound up upon receipt of Required Approval.
12.2 EFFECT OF DISSOLUTION. Upon dissolution, the Company shall not
be terminated and shall continue until the winding up of the affairs of the
Company is completed and a certificate of cancellation has been filed with the
Office of the Secretary of State of the State of Delaware.
12.3 DISTRIBUTION OF ASSETS ON DISSOLUTION. Subject to Section 12.5
below, upon the winding up of the Company, the Designated Directors (or such
Person(s) designated by such directors) shall take full account of the assets
and liabilities of the Company, shall liquidate the assets (unless such
directors determine that a distribution of any Company Property in-kind would be
more advantageous to the Members than the sale thereof, in which case the
adjustments to the Members' respective Capital Account pursuant to Section 7.2
shall be made immediately prior to such distribution) as promptly as is
consistent with obtaining the fair value thereof, and shall apply and distribute
the proceeds therefrom in the following order:
(a) first, to the payment of the debts and liabilities
of the Company to creditors, including Members who are creditors, to the extent
permitted by law, in satisfaction of such debts and liabilities, and to the
payment of necessary expenses of liquidation;
(b) second, to the setting up of any reserves which the
Designated Directors may deem necessary or appropriate for any anticipated
obligations or contingencies of the Company arising out of or in connection with
the operation or business of the Company. Such reserves may be paid over by the
Board to an escrow agent or trustee selected by the Designated Directors to be
disbursed by such escrow agent or trustee in payment of any of the
aforementioned obligations or contingencies and, if any balance remains at the
expiration of such period as the Board shall deem advisable, shall be
distributed by such escrow agent or trustee in the manner hereinafter provided;
(c) third, to the Members pro rata in accordance with
and to the extent of their positive capital account balances, if any; and
(d) then, to the Members in accordance with their
Membership Interests.
Liquidation proceeds shall be paid within 60 days of the end of the
Company's taxable year in which the liquidation occurs. Such distributions shall
be in cash or Property (which need not be distributed proportionately) or partly
in both, as determined by the Board. In the case of a distribution of Property,
the Board shall endeavor, to the extent feasible, to distribute to each Member
the Property which such Member had previously contributed to the Company.
If at the time of liquidation the Designated Directors determine
that an immediate sale of some or all Company Property would cause undue loss to
the Members, the Board may, in order to avoid such loss, defer liquidation.
12.4 WINDING UP AND FILING CERTIFICATE OF CANCELLATION. Upon the
commencement of the winding up of the Company, a certificate of cancellation
shall be delivered by the Company to the Secretary of State of the State of
Delaware for filing. The certificate of cancellation shall set forth the
information required by the Act. The winding up of the Company shall be
completed when all debts, liabilities and obligations of the Company have been
paid and discharged or reasonably adequate provision therefor has been made, and
all of the remaining Property of the Company has been distributed to the
Members.
12.5 PREFERENCE. Notwithstanding anything to the contrary contained
in this Article XII, upon dissolution and winding up of the Company, NYFIX shall
receive, in preference to all other Members, (i) a cash amount equal to $1.0
million and (ii) all of the rights to the Intellectual Property.
ARTICLE XIII
NYFIX PURCHASE OPTION
13.1 NYFIX PURCHASE OPTION. (a) NYFIX shall have the option (the
"NYFIX Option"), but not the obligation, to purchase Units of the other Members
as follows:
(i) Between the 24th and 30th months
following the Original Effective Date, NYFIX may purchase from the
other Members, on a pro rata basis, a minimum of 20%, and a maximum
of 40% of all of the outstanding Units, based on an implied
valuation for the Company of $48 million;
(ii) Between the 31st and 36th months
following the Original Effective Date, NYFIX may purchase additional
Units from the other Members, on a pro rata basis, based on an
implied valuation for the Company of $60 million; provided, however,
that if the NYFIX Option was not exercised pursuant to clause (i)
above and NYFIX elects to exercise the NYFIX Option pursuant to this
clause (ii), then NYFIX must purchase a minimum of 20% of all of the
outstanding Units; and
(iii) Between the 37th and 48th months
following the Original Effective Date, NYFIX may purchase additional
Units from the other Members, on a pro rata basis, based on an
implied valuation for the Company of $72 million; provided, however,
that if the NYFIX Option was not exercised pursuant to clauses (i)
or (ii) above and NYFIX elects to exercise the NYFIX Option pursuant
to this clause (iii), then NYFIX must purchase a minimum of 20% of
all of the outstanding Units.
Notwithstanding anything to the contrary contained in this Section 13.1(a), in
no event may NYFIX exercise the NYFIX Option for more than an aggregate of 40%
of all of the outstanding Units; provided, however, that if NYFIX has exercised
the NYFIX Option for the entire 40%, then it may negotiate with individual
Members for additional Units of such Members. Upon the expiration of the 48th
month following the Original Effective Date, the NYFIX Option shall
automatically lapse and expire and shall not thereafter afford NYFIX any rights
whatsoever.
(b) Upon the exercise of the NYFIX Option, a pro rata
portion of the outstanding Company Options (as defined in Section 14.1 below)
shall be deemed to have been exercised for Units and therefore will be subject
to the NYFIX Option.
(c) NYFIX may exercise the NYFIX Option by delivering
written notice (the "Exercise Notice") to the Company and the Members stating
NYFIX's election to exercise the NYFIX Option. The Exercise Notice shall include
the following: (i) the aggregate number of Units NYFIX intends to purchase; (ii)
the calculation of the aggregate amount of consideration to be paid to the
Members (the "Exercise Price"); (iii) whether the exercise is through the
exchange of cash or Shares; and (iv) the proposed Exercise Date (as defined
below). NYFIX shall deliver the Exercise Notice to the Company and the Members
at least three business days prior to the date of the closing of the purchase
and sale of the Units pursuant to this Section 13.1 (the "Exercise Date"). On
the Exercise Date, NYFIX shall pay the Exercise Price in cash or shares of NYFIX
Common Stock (the "Shares"). The fair market value of the Shares shall be based
on the five-day trading average ending on the day immediately prior to the
Exercise Date. Except as set forth in the proviso of the penultimate sentence of
Section 13.1(a) above, any Units purchased pursuant to the NYFIX Option shall be
purchased pro rata from all of the other Members according to their Membership
Interests. In connection with any purchase of Units by NYFIX pursuant to this
Section 13.1 using Shares, NYFIX agrees to grant to each Member receiving the
Shares, registration and indemnification rights on the following terms:
(i) NYFIX agrees to file a registration
statement pursuant to the Securities Act, covering the resale of all of the
Shares (the "Registration Statement") as soon as possible but in any event
within 60 days following the Exercise Date. NYFIX agrees to use its reasonable
best efforts to cause the Registration Statement to be declared effective by the
Securities and Exchange Commission (the "SEC") as soon as practicable after
filing it and will notify each Member when such Registration Statement has
become effective. NYFIX 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 Members shall have sold all of the
Shares and (ii) the date on which all of the Shares are eligible to be sold or
transferred under Rule 144 without holding period or volume limitations (such
period, the "Effective Period"). Upon seeking to offer and sell its Shares
pursuant to the Registration Statement, each Member agrees to provide in writing
in a timely manner, information regarding the proposed distribution by such
Member of the Shares and such other information reasonably requested by NYFIX in
connection with the preparation of and for the inclusion in the Registration
Statement. NYFIX agrees to provide to each Member the number of copies of the
final prospectus and any amendments or supplements thereto as are reasonably
requested by such Member. NYFIX shall promptly notify the Member 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 NYFIX
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.
(ii) NYFIX agrees to indemnify and hold
harmless, to the extent permitted by law and subject to the terms of this
Agreement, each Member, its directors, officers, employees and agents and each
person who controls such Member (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses (including
reasonable attorneys' fees and disbursements) arising out of or based upon any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto) or the prospectus (or any
amendment 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 made therein in the light of the circumstances under which they were
made not misleading; provided, however, that NYFIX shall not be liable to any
Member to the extent that any such loss, claim, damage, liability or expense
arises out of, or is based upon, any untrue or alleged untrue statement or any
omission, if such statement or omission shall have been made in reliance upon
and in conformity with information relating to such Member furnished in writing
to NYFIX by any such Member expressly for use in the preparation of the
Registration Statement (or any amendment thereto) or the prospectus (or any
amendment or supplement thereto).
(iii) In connection with the Registration
Statement, each Member agrees to indemnify, to the extent permitted by law and
subject to the terms of this Agreement, NYFIX, its directors, officers,
employees and agents and each person who controls NYFIX (within the meaning of
the Securities Act) against any losses, claims, damages, liabilities and
expenses (including reasonable attorneys' fees and disbursements) arising out of
or based upon any untrue or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereto) or the
prospectus (or any amendment 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 made therein in the light of the circumstances
under which they were made not misleading, to the extent that such untrue
statement or omission was made in reliance upon and in conformity with
information furnished in writing to NYFIX by such Member (in his or her capacity
as a shareholder of NYFIX) expressly for use in the preparation of the
Registration Statement (or any amendment thereto) or the prospectus (or any
amendment or supplement thereto). The liability of any Member under this Section
13.1(c)(iii) shall not in any event exceed the net proceeds received by such
Member from the sale of Shares covered by the Registration Statement.
(iv) Each party entitled to indemnification
under this Section 13.1(c) shall give notice to the party required to provide
indemnification 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 litigation, shall be approved by the indemnified
party (whose approval shall not be unreasonably withheld or delayed); and
provided, further, that the delay or failure of any indemnified party to give
notice as provided herein shall not relieve the indemnifying party of its
obligations under this Section 13.1(c), except to the extent that the
indemnifying party shall have been materially adversely affected by such delay
or failure. The indemnified party may participate in such defense at such
party's expense; provided, however, that the indemnifying party shall pay such
expense if the indemnified party shall have reasonably concluded that there may
be a conflict between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such claim or litigation
resulting therefrom. No indemnified party shall consent to entry of any judgment
or settle any claim or litigation without the prior written consent of the
indemnifying party. If the indemnification provided for in this Section 13.1(c)
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
therein as a result of a judicial determination that such indemnification may
not be enforced in such case notwithstanding this Agreement, the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expense, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of material fact or omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
ARTICLE XIV
MISCELLANEOUS
14.1 COMPANY OPTION PLAN. (a) The Company shall adopt an employee
incentive plan approved by the Designated Directors, pursuant to which the
Company can issue to its employees options to purchase Units, restricted Units
or other instruments to acquire Units or participate in the profits of the
Company, up to an aggregate of 10% of the outstanding Units (the "Company
Options") as follows:
(i) up to 2% prior to December 31, 2002;
provided that they may only be issued to employees who joined the
Company after the Original Effective Date;
(ii) up to an additional 4% between January
1, 2003 and December 31, 2003; provided that they may not be issued
to Renaissance Members until their annual reviews;
(iii) up to an additional 4% between January
1, 2004 and December 31, 2004; and
(iv) all remaining options up to the 10%
maximum after December 31, 2004.
Notwithstanding anything to the contrary contained in this Section 14.1(a),
under no circumstance shall Company Options be issued to the Management Team
without the prior written consent of the NYFIX Designees.
(b) Each Company Option shall have an exercise price
equal to the fair market value of a Unit on the date of grant, as determined by
the Designated Directors.
(c) Each Company Option shall vest in equal amounts
on the first four anniversaries of the date of grant; provided, however, that if
a holder of a Company Option has his employment with the Company terminated,
then such holder shall be credited with one additional vesting period.
14.2 EMPLOYMENT AGREEMENTS. Each Renaissance Member agrees to
execute an Employment Agreement as well as a Non-Competition, Non-Disclosure and
Non-Solicitation Agreement, in forms reasonably acceptable to the Management
Team.
14.3 REPURCHASE OF UNITS. To the extent a Renaissance Member's
employment with the Company is terminated, for any reason, prior to the fourth
anniversary of the Original Effective Date, such Renaissance Member shall
forfeit a portion of his Units to the Company, pursuant to the following
schedule:
Date of Termination % of Units Forfeited
------------------- --------------------
Prior to the first anniversary 100%
Between the first and second anniversaries 80%
Between the second and third anniversaries 50%
Between the third and fourth anniversaries 20%
After the fourth anniversary 0%
Such forfeited Units shall be automatically cancelled. At the time of such
forfeiture, the Company shall have the right (the "Company's Option") to
repurchase such Member's Units that were not forfeited, at their book value
(defined as the Members Equity as determined in accordance with accounting
principles generally accepted in the United States of America divided by the
number of Units outstanding) as of the end of the Company's previous
quarter-end. In addition, NYFIX shall have the option (at its sole discretion)
to require the Company to exercise the Company's Option, provided that NYFIX
purchases an equal number of Units from the Company for the book value.
14.4 NOTICES. Notices to the Company shall be sent to the Principal
Office of the Company. Notices to the Members shall be sent to their addresses
set forth on their signature pages hereto. Any Member may require notices to be
sent to a different address by giving notice to the other Members in accordance
with this Section 14.4. Any notice or other communication required or permitted
hereunder shall be in writing, and shall be deemed to have been given with
receipt confirmed if and when delivered personally, mailed first class (postage
prepaid), delivered to a nationally recognized overnight courier, or sent by
facsimile, to such addresses.
14.5 ENTIRE AGREEMENT. This Agreement, together with the Schedules
attached hereto, constitute the entire agreement between the parties and
supersedes any prior agreement or understanding between them respecting the
subject matter hereof.
14.6 SAVING CLAUSE. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
14.7 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. A facsimile copy of a
signature shall be deemed an original signature.
14.8 GOVERNING LAW. The Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
14.9 NO RIGHTS OF CREDITORS AND THIRD PARTIES UNDER AGREEMENT. The
Agreement is entered into among the Company and the Members for the exclusive
benefit of the Company, its Members and their successors and assignees. The
Agreement is expressly not intended for the benefit of any creditor of the
Company or any other person. Except and only to the extent provided by
applicable statute, no such creditor or any third party shall have any rights
under the Agreement or any agreement between the Company and any Member with
respect to any Capital Contribution or otherwise.
14.10 AMENDMENTS. All amendments to this Agreement shall require the
approval of the Members holding at least a majority of the Membership Interests.
After an amendment under this Section 14.10 becomes effective, the Company shall
mail to the Members a notice briefly describing such amendment.
14.11 GENERAL INTERPRETIVE PRINCIPLES. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Agreement include the
plural as well as the singular, and the use of any gender herein shall be deemed
to include the other gender;
(b) accounting terms not otherwise defined herein have
the meanings given to them in the United States in accordance with generally
accepted accounting principles consistently applied;
(c) references herein to "Sections," "paragraphs" and
other subdivisions without reference to a document are to designated Sections,
paragraphs and other subdivisions of this Agreement;
(d) a reference to a paragraph without further reference
to a Section is a reference to such paragraph as contained in the same Section
in which the reference appears, and this rule shall also apply to other
subdivisions;
(e) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have hereunto set
their hands as of the date first written above.
MEMBERS:
Entity Name (if applicable):
---------------------------------------------------
Signature: /s/ Xxxxx X. Xxxxxx
-------------------------------------------------------------------
Name:
Title (if applicable):
Address: 000 Xxxxxx Xx.
-------------------------------------------------------------------
Xxxxxxxx, XX 00000
-------------------------------------------------------------------
-------------------------------------------------------------------
Number of Membership Interests: 1,800,000
-----------------------------------------
Capital Contribution: Intellectual Property
--------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the
date first written above.
MEMBERS:
Entity Name (if applicable):
---------------------------------------------------
Signature: /s/ Xxxxxx Xxxxxxxx
-------------------------------------------------------------------
Name: Xxxxxx Xxxxxxxx
Title (if applicable):
Address: 0 Xxxx Xxxx Xxxxxxx
-------------------------------------------------------------------
Xxxxxxxxxxxx, XX 00000
-------------------------------------------------------------------
-------------------------------------------------------------------
Number of Membership Interests: 2,733,333
-----------------------------------------
Capital Contribution: 50,000 shares of NYFIX common stock
--------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the
date first written above.
MEMBERS:
Entity Name (if applicable):
---------------------------------------------------
Signature: /s/ Xxxxxx Xxxx
-------------------------------------------------------------------
Name: Xxxxxx Xxxx
Title (if applicable):
Address: 00 Xxxxx Xxxxxx
-------------------------------------------------------------------
Cornwall on Xxxxxx, XX 00000
-------------------------------------------------------------------
-------------------------------------------------------------------
Number of Membership Interests: 2,733,334
-----------------------------------------
Capital Contribution: 50,000 shares of NYFIX common stock
--------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the
date first written above.
MEMBERS:
Entity Name (if applicable):
---------------------------------------------------
Signature: /s/ Xxx XxXxxxxx
-------------------------------------------------------------------
Name: Xxx XxXxxxxx
Title (if applicable):
Address: 0 Xxxxxx Xxxxxxx Xx.
-------------------------------------------------------------------
Xxxxxxx, XX 00000
-------------------------------------------------------------------
-------------------------------------------------------------------
Number of Membership Interests: 2,733,333
-----------------------------------------
Capital Contribution: 50,000 shares of NYFIX common stock
--------------------------------------------------------
SCHEDULE A
Special Allocations. The following special allocations shall be made
in the following order:
1. MINIMUM GAIN CHARGEBACK. Except as otherwise provided in Section 1.704-2(f)
of the Tax Regulations, if there is a net decrease in Partnership Minimum
Gain during any Fiscal Year, each Member shall be specially allocated items
of Company income and gain for such Fiscal Year (and, if necessary,
subsequent Fiscal Years) in an amount equal to such Member's share of the
net decrease in Partnership Minimum Gain, determined in accordance with
Section 1.704-2(g) of the Tax Regulations. Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto. The items to be
so allocated shall be determined in accordance with Sections 1.704-2(f)(6)
and 1.704-2(j)(2) of the Tax Regulations. This paragraph is intended to
comply with the minimum gain chargeback requirement in Section 1.704-2(f)
of the Tax Regulations and shall be interpreted consistently therewith.
2. PARTNER MINIMUM GAIN CHARGEBACK. Except as otherwise provided in Section
1.704-2(i)(4) of the Tax Regulations, if there is a net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to a Partner Nonrecourse Debt
during any Fiscal Year, each Member who has a share of the Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Section 1.704-2(i)(5) of the Tax
Regulations, shall be specially allocated items of Company income and gain
for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an
amount equal to such Member's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Section 1.704-2(i)(4) of the Tax
Regulations. Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each
Member pursuant thereto. The items to be so allocated shall be determined
in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Tax
Regulations. This paragraph (2) is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(i)(4) of the Tax Regulations and
shall be interpreted consistently therewith.
3. QUALIFIED INCOME OFFSET. In the event any Member unexpectedly receives any
adjustments, allocations, or distributions described in Section
1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5), or Section
1.704-1(b)(2)(ii)(d)(6) of the Tax Regulations, items of Company income and
gain shall be specially allocated to the Member in an amount and manner
sufficient to eliminate, to the extent required by the Tax Regulations, the
Adjusted Capital Account Deficit of the Member as quickly as possible,
provided that an allocation pursuant to this paragraph (3) shall be made
only if and to the extent that the Member would have an Adjusted Capital
Account Deficit after all other allocations provided for in this schedule
have been tentatively made as if this paragraph (3) were not in this
schedule.
4. GROSS INCOME ALLOCATION. In the event any Member has a deficit Capital
Account at the end of any Fiscal Year which is in excess of the sum of the
amounts such Member is obligated to restore pursuant to the terms of the
Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Tax Regulations, each such Member shall be specially allocated items of
Company income and gain in the amount of such excess as quickly as
possible, provided that an allocation pursuant to this paragraph (4) shall
be made only if and to the extent that such Member would have a deficit
Capital Account in excess of such sum after all other allocations provided
for in this schedule have been made as if paragraph (3) and this paragraph
(4) were not in this Agreement.
5. NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any Fiscal Year shall be
specially allocated among the Members in proportion to their Membership
Interests.
6. PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse Deductions for any
Fiscal Year shall be specially allocated to the Member who bears the
economic risk of loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with
Section 1.704-2(i)(1) of the Tax Regulations.
7. MANDATORY ALLOCATIONS UNDER SECTION 704(C) OF THE CODE. In the event
Section 704(c) of the Code or Section 704(c) of the Code principles
applicable under Section 1.704-1(b)(2)(iv) of the Tax Regulations require
allocations of Profits or Losses in a manner different than that set forth
above, the provisions of Section 704(c) of the Code and the Tax Regulations
thereunder shall control such allocations among the Members. Any item of
Company income, gain, loss and deduction with respect to any property
(other than cash) that has been contributed by a Member to the capital of
the Company or which has been revalued for Capital Account purposes
pursuant to Section 1.704-l(b)(2)(iv) of the Tax Regulations) and which is
required or permitted to be allocated to such Member for income tax
purposes under Section 704(c) of the Code so as to take into account the
variation between the tax basis of such property and its fair market value
at the time of its contribution shall be allocated solely for income tax
purposes in a manner so required or permitted under Section 704(c) of the
Code; provided, however, that curative allocations -------- -------
consisting of the special allocation of gain or loss upon the sale or other
disposition of the contributed property shall be made in accordance with
Section 1.704-3(c) of the Tax Regulations to the extent necessary to
eliminate any disparity, to the extent possible, between the Members' book
and tax Capital Accounts attributable to such property.
8. CURATIVE ALLOCATIONS. The allocations set forth above (the "Regulatory
Allocations") are intended to comply with certain requirements of the Tax
Regulations and it is the intent of the Members that, to the extent
possible, all Regulatory Allocations shall be offset with other Regulatory
Allocations. Furthermore, notwithstanding any other provision of this
Schedule A, the Members shall make such offsetting special allocations of
Company income, gain, loss, or deduction in whatever manner it determines
appropriate so that, after such offsetting allocations are made, each
Member's Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Member would have had if the Regulatory
Allocations were not part of this Agreement and all Company items were
allocated pursuant to Article VIII. The Company (i) shall take into account
future Regulatory Allocations that, although not yet made, are likely to
offset other Regulatory Allocations previously made, and (ii) may
reallocate Profits and Losses for prior open years (or items of gross
income and deduction of the Company for such years) among the Members to
the extent it is not possible to achieve such result with allocations of
items of income (including gross income) and deduction for the current year
and future years. This paragraph 8 shall control notwithstanding any
reallocation or adjustment of taxable income, taxable loss, or items
thereof by the Internal Revenue Service or any other taxing authority.
9. DEFINITIONS:
a. ADJUSTED CAPITAL ACCOUNT DEFICIT shall mean, with
respect to any Member, the deficit balance, if any, in
such Member's Capital Account as of the end of the
relevant Fiscal Year, after giving effect to the
following adjustments:
(1) Credit to such Capital Account the minimum gain
chargeback that such Member is deemed to be obligated to
restore pursuant to the penultimate sentences of
Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Tax
Regulations; and
(2) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6) of
the Tax Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section
1.704-1(b)(2)(ii)(d) of the Tax Regulations and shall be
interpreted consistently therewith.
b. NONRECOURSE DEDUCTIONS has the meaning set forth in
Section 1.704-2(b)(1) of the Tax Regulations.
c. NONRECOURSE LIABILITY has the meaning set forth in
Section 1.704-2(b)(3) of the Tax Regulations.
d. PARTNER NONRECOURSE DEBT has the meaning set forth in
Section 1.704-2(b)(4) of the Tax Regulations.
e. PARTNER NONRECOURSE DEBT MINIMUM GAIN means an
amount, with respect to each Partner Nonrecourse Debt,
equal to the Partnership Minimum Gain that would result
if such Partner Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with
Section 1.704-2(i)(3) of the Tax Regulations.
f. PARTNER NONRECOURSE DEDUCTIONS has the meaning set
forth in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the
Tax Regulations.
g. PARTNERSHIP MINIMUM GAIN has the meaning set forth in
Sections 1.704-2(b)(2) and 1.704-2(d) of the Tax
Regulations.
h. TAX REGULATIONS shall mean any final, temporary or
proposed regulations promulgated by Treasury Department
pursuant to the Code as such Tax Regulations may be
amended from time to time. All references herein to a
specific section of the Tax Regulations shall be deemed
also to refer to any corresponding provision of
succeeding Tax Regulations.
SCHEDULE B
"Renaissance" is the Nasdaq Market Making /Trading system that was
developed at Xxxxxxxxx Xxxxxxxx as an alternative to the existing vendor
supplied system.
The basic scope of the Renaissance system can be summarized as
follows:
* Order Management and Routing
* Execution Management/AutoEx
* Position Management
* Real-time P&L
* Quote Management
* Nasdaq Compliance Rules
The Source Code and Supporting Documentation consists of the
following:
* All software versions for all platforms and
operating environments
* All specifications, technical or
programmers' notes, source code annotations,
user guides, manuals, files, instructions,
software architecture designs, flowcharts,
plans, drawings, diagrams, and documentation
that are exclusively related to the Software
SCHEDULE C
In return for the revenue sharing, NYFIX agrees that it will provide
the Company with the following services:
CORPORATE:
--------------------------------------------------------------------------------
NYFIX customer goodwill
Contract issuance & negotiation
Delivery planning
Tracking of staggered deliveries
Invoicing
Receivable collections
Liabilitity exposure
MARKETING:
------------------------
Exhibitions
Conferences
Web-site
Collateral Material
PR
Other
SALES:
------------------------
Executive Management
Sales Management
Sales Executives
Account Executives
Travel, Other
CORPORATE
INFRA-STRUCTURE:
--------------------------------------------------------------------------------
[NYFIX is not actually providing the Company directly
with these functions, but rather is allocating a portion
of NYFIX personnel's time to coordinate and assist the
Company and its personnel with these functions
Accounting
Facilities Management
Human Resource (MUST be Benefits)
Legal
General Support
Policy, Process Procedure implementation
DATA CENTER INFRASTRUCTURE/DEVELOPMENT:
----------------------
Sourcing, Installation, Networking
Fixtrader changes
Core Network allocation
Data Feeds and Services Network
Systems Management
Network Management
Comdisco remote hands
Installation of equipment and Rack
Cabling
Account Management
Technical Project Management
Special Development
Help Desk Support
NYFIX also agrees that it will purchase certain equipment and
services for use by the Company and in turn will charge the Company directly for
the actual cost incurred (the "Actual Costs"). Cash reimbursement to NYFIX shall
be made as follows: (i) upon determination by the Board of Directors of the
Company that the Company has sufficient capital to make the payments, then the
entire amount of the Actual Costs shall be paid to NYFIX, or (ii) at least 25%
(or such larger percentage as the Board of the Company deems appropriate) of all
additional equity investments received by the Company ("New Investments") shall
be paid to NYFIX upon receipt thereof; provided, however, that in no event may
the amount paid to NYFIX be greater than the Actual Costs, and provided further
that the entire amount of the Actual Costs must be paid to NYFIX upon the
Company receiving New Investments aggregating at least $8 million. A list of
equipment and services in this category is as follows:
CORPORATE
INFRA-STRUCTURE:
-----------------------------------------------
Space
Power, Cleaning, Security other
PC's, Telephone, Front-desk, fax,
internet General office
facilities and equipment
DATA CENTER INFRASTRUCTURE/DEVELOPMENT:
Equipment
Software
Dev Software & Hw Maintenance
Agreements
Rack space and facilities
Power install
Additional WAN equipment
Network Switches (core and RSC)
Telco Costs (# Full T3's)
NYFIX Edge routers and CSU
Tibco PC License
Health Benefits All health and insurance related
benefits that NYFIX employees
currently receive
SCHEDULE D
Name and Address Capital Membership
Contribution Interest Units
NYFIX, Inc. $0 (1) 18%(2) 1,800,000
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxxx Xxxxxxxx $0 (3) 27.3333% 2,733,333
0 Xxxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Xxxxxx Xxxx * $0 (3) 27.3334% 2,733,334
00 Xxxxx Xxxxxx
Xxxxxxxx xx Xxxxxx, XX 00000
Xxx XxXxxxxx $0 (3) 27.3333% 2,733,333
0 Xxxxxx Xxxxxxx Xx.
Xxxxxxx, XX 00000
(1) NYFIX contributed the Intellectual Property.
(2) Acquired pursuant to an Agreement between NYFIX and the Management Team,
dated as of the date hereof.
(3) Each of the Management Team members contributed 50,000 shares of NYFIX
common stock.
* This Member is designated as the Tax Matters Partner.