THIS
NOTE AND THE SECURITIES UNDERLYING THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR QUALIFIED UNDER APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND
QUALIFICATION WITHOUT, EXCEPT AS OTHERWISE AGREED BY NYFIX,
INC., AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO NYFIX,
INC. THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT
REQUIRED.
CONVERTIBLE
PROMISSORY NOTE
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$2,500,000
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October
1, 2007
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FOR VALUE RECEIVED, the undersigned, NYFIX, INC., a Delaware
corporation (the “Maker”), hereby promises to pay to
the order of Whitebox Convertible Arbitrage Partners L.P., a
British Virgin Islands limited partnership, or its assigns (the
“Payee”), at such place as the Payee may designate in
writing, the principal sum of Two Million Five Hundred Thousand
Dollars ($2,500,000), or such lesser amount as shall equal the
outstanding principal amount hereof, under the terms set forth
herein.
1.
INTEREST.
Except as otherwise provided herein, the unpaid principal balance
hereof from time to time outstanding shall bear interest from the
date hereof at the rate of five percent (5%) per
annum.
2.
PAYMENT
OF INTEREST AND PRINCIPAL. Except as otherwise provided herein, and
subject to any default hereunder, the principal and interest hereof
is payable as follows:
(a)
Interest
is payable in cash semi-annually in arrears on December 30 and June
30 of each year (each, a “Scheduled Interest Payment”),
beginning December 30, 2007.
(b)
The
entire outstanding principal amount of the Note together with all
accrued but unpaid interest shall be due in cash on December 30,
2009 (the “Maturity Date”).
(c)
Except
as provided in Section 5 below, the Maker will have no right of
early prepayment on this Note.
3.
OPTIONAL
PAYMENT IN STOCK.
(a)
In
lieu of making a cash payment under Section 2(a), Maker may pay the
Scheduled Interest Payment, or any portion thereof, by the issuance
of shares of its common stock, par value $0.001 per share (the
“Common Stock”), based on the per share value of the
Common Stock. For purposes of this Section 3(a), the per share
value of the Common Stock as of a particular Scheduled Interest
Payment date is 95% (rounded to the nearest $.01) of the average of
the closing prices of Maker’s Common Stock on the Trading
System for the 10 consecutive trading days ending on the first
trading day prior to the particular Scheduled Interest Payment date
(such 10 consecutive trading days being referred to as the
“Scheduled Interest Computation Period”). For purposes
of this Note, the term “Trading System” means the
Nasdaq National Market or, if the securities are not then quoted on
the Nasdaq National Market, the OTC Bulletin Board as reported by
bigcharts.com or, if this service is discontinued, such other
reporting services as is mutually acceptable to Maker and
Payee.
(b)
Payment
in shares of Common Stock shall be deemed to be made by the Maker
by giving written notice to Payee of the number of shares being
issued in such Scheduled Interest Payment and the Maker’s
calculation of the per share value under Section 3(a) above;
provided that certificates representing those shares are delivered
to Payee within 10 business days after the due date of such
Scheduled Interest Payment.
(c)
Despite
the foregoing, the Maker may not issue shares of its Common Stock
as payment pursuant to this Section 3 unless:
(i)
the
Maker gives the Payee written notice at least one business day
prior to the commencement of the relevant Scheduled Interest
Computation Period of the Maker’s intention to make a payment
using shares of Common Stock (and specifying the payment amount to
be settled by the issuance of shares) and
(ii)
on
the date that the relevant payment is due, the Maker has, pursuant
to the terms of a Registration Rights Agreement dated as of
December 30, 2004 between the Maker and the Payee (the
“Registration Rights Agreement”), an effective
registration statement under the Act and applicable state
securities laws covering the public resale of such shares by
Payee.
4.
CONVERSION
AT THE OPTION OF PAYEE.
(a)
At
any time while any portion of the principal or interest of this
Note is outstanding, the Payee may give the Maker written notice of
its intention to convert all or any portion of the outstanding
principal and/or accrued but unpaid interest on this Note into such
number of shares of the Maker’s Common Stock equal to the
amount to be converted divided by the Conversion Rate in effect at
such time. In connection with an election to convert pursuant to
Section 4(d)(i), such written notice shall be given no later than
10 business days after the Maker gives written notice to the Payee
of the proposed effective date of the Fundamental Change (as
defined below). Upon receipt of the Payee’s written notice,
the Maker shall cause certificates representing those shares to be
delivered to Payee within 10 business days of Maker’s receipt
of such notice, and payment shall be deemed to have been made on
the date of such notice.
(b)
The
“Conversion Rate” initially shall be
$5.65. The Conversion Rate shall be adjusted
proportionally for any subsequent stock dividend or split, stock
combination or other similar recapitalization, reclassification or
reorganization of or affecting Maker’s Common Stock. In case
of (i) any consolidation or merger to which the Maker is a party
other than a merger or consolidation in which the Maker is the
continuing corporation, (ii) any sale, transfer or other
disposition to another corporation of all or substantially all of
the Maker’s assets or (iii) any statutory exchange of
securities with another corporation (including any exchange
effected in connection with a merger of a third corporation into
the Maker), then instead of receiving shares of Maker’s
Common Stock, Payee shall have the right thereafter to receive the
kind and amount of shares of stock and other securities and
property which the Payee would have owned or have been entitled to
receive immediately after such consolidation, merger, statutory
exchange, sale or transfer had the same portion of this Note been
converted immediately prior to the effective date of such
consolidation, merger, statutory exchange, sale or transfer and, in
any such case, if necessary, appropriate adjustment shall be made
in the application of the provisions set forth in this Section with
respect to the rights and interests thereafter of the Payee, to the
end that the provisions set forth in this Section shall thereafter
correspondingly be made applicable, as nearly as may reasonably be,
in relation to any shares of stock and other securities and
property thereafter deliverable in connection with this Note. The
provisions of this subsection shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or
transfers.
(i)
If
the Maker, at any time prior to the payment of the Note in full,
shall issue any Additional Shares of Common Stock (otherwise than
as provided in the foregoing Section 4(b)) at a price per share
less than the applicable Conversion Rate then in effect or without
consideration, then the applicable Conversion Rate upon each such
issuance shall be adjusted to that price (rounded to the nearest
$.01) determined by multiplying the applicable Conversion Rate then
in effect by a fraction, (x) the numerator of which shall be equal
to the sum of (A) the number of shares of Maker’s Common
Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock PLUS (B) the number of shares of
Common Stock (rounded to the nearest whole share) which the
aggregate consideration for the total number of such Additional
Shares of Common Stock so issued would purchase at a price per
share equal to the applicable Conversion Rate then in effect, and
(y) the denominator of which shall be equal to the number of shares
of Maker’s Common Stock outstanding immediately after the
issuance of such Additional Shares of Common Stock. The provisions
of this subsection (c)(i) shall not apply under any of the
circumstances for which an adjustment is provided in Section
4(b).
(ii)
For
purposes of this Section 4(c), the consideration received by the
Maker for any Additional Shares of Common Stock shall be computed
as follows:
(A)
if
it consists of cash, the consideration shall be computed at the
aggregate amount of cash received by the Maker;
(B)
if
it consists of securities and the value of such securities is not
determinable by reference to a separate agreement, then the value
shall be computed based on the average of the closing prices of the
securities on the Trading System over the 30 trading-day period
ending on the date of receipt by the Maker; and if there is no
active public market for such securities, then the value shall be
computed based on the fair market value thereof on the date of
receipt by the Maker, as determined in good faith by the
Maker’s board of directors;
(C)
if
it consists of property other than cash and securities, the
consideration shall be computed at the fair market value thereof at
the time of such issuance, as determined in good faith by the
Maker’s board of directors; and
(D)
if
shares of Common Stock are issued together with other shares or
securities or oth
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