Exhibit 10.1
CERTAIN CONFIDENTIAL INFORMATION, IDENTIFIED BY BRACKETED ASTERISKS “[*****]”, HAS BEEN OMITTED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
EXECUTION VERSION
MEMBERSHIP INTEREST PURCHASE AGREEMENT
by and among
MARKETAXESS HOLDINGS INC.,
PRAGMA WEEDEN HOLDINGS LLC,
PRAGMA FINANCIAL SYSTEMS LLC,
PRAGMA LLC
and
DAVID MECHNER (solely for purposes specified herein)
Dated as of August 5, 2023
TABLE OF CONTENTS
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ARTICLE I | PURCHASE AND SALE | 2 |
1.1 | Purchase and Sale | 2 |
1.2 | Closing | 2 |
1.3 | Closing Payment Statement | 2 |
1.4 | Closing Payments and Deliverables | 2 |
1.5 | Closing Adjustments | 4 |
1.6 | Closing Stock Consideration | 7 |
1.7 | Withholding | 8 |
1.8 | Cancellation of Seller Options | 8 |
1.9 | Payment Cooperation | 9 |
ARTICLE II | REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER | 11 |
2.1 | Organization; Standing | 11 |
2.2 | Authority; No Conflict; Required Filings and Consents | 11 |
2.3 | Title to Interests | 12 |
2.4 | Litigation | 12 |
2.5 | Securities Matters | 12 |
2.6 | Brokers | 13 |
2.7 | No Other Representations or Warranties; Reliance | 14 |
ARTICLE III | REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES | 14 |
3.1 | Organization, Standing and Power | 14 |
3.2 | Capitalization | 15 |
3.3 | Subsidiaries | 15 |
3.4 | Authority; No Conflict; Required Filings and Consents | 16 |
3.5 | Financial Statements | 17 |
3.6 | Absence of Certain Changes | 18 |
3.7 | Taxes | 19 |
3.8 | Owned and Leased Real Properties | 20 |
3.9 | Intellectual Property and Data Privacy | 20 |
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3.10 | Contracts | 24 |
3.11 | Litigation | 26 |
3.12 | Employee Benefit Plans | 27 |
3.13 | Compliance With Laws; Broker-Dealer and Regulatory Matters | 29 |
3.14 | Permits | 31 |
3.15 | Insurance | 32 |
3.16 | Labor and Employment | 32 |
3.17 | Title to Personal Properties | 34 |
3.18 | Sufficiency of Assets | 34 |
3.19 | Related Party Transactions | 34 |
3.20 | Customers and Suppliers | 35 |
3.21 | International Trade and Anti-Corruption Matters | 35 |
3.22 | Brokers | 36 |
3.23 | No Other Representations or Warranties | 36 |
ARTICLE IV | REPRESENTATIONS AND WARRANTIES OF THE BUYER | 36 |
4.1 | Organization, Standing and Power | 36 |
4.2 | Authority; No Conflict; Required Filings and Consents | 37 |
4.3 | Litigation | 37 |
4.4 | Financing | 38 |
4.5 | Brokers | 38 |
4.6 | SEC Documents | 38 |
4.7 | Capitalization | 39 |
4.8 | Investment Intent | 39 |
4.9 | R&W Insurance Policy | 40 |
4.10 | Investigation | 40 |
4.11 | No Other Representations or Warranties | 40 |
ARTICLE V | CONDUCT OF BUSINESS | 41 |
5.1 | Covenants of the Seller and Companies | 41 |
5.2 | Confidentiality | 43 |
ARTICLE VI | ADDITIONAL AGREEMENTS | 44 |
6.1 | No Solicitation | 44 |
6.2 | Access to Information | 45 |
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6.3 | Closing Efforts; Legal Conditions to the Purchase; Third-Party Consents | 45 |
6.4 | Public Disclosure | 47 |
6.5 | Employee Matters | 48 |
6.6 | Tax Matters | 49 |
6.7 | Non-Solicitation; Non-Competition | 52 |
6.8 | Transfer Restrictions | 53 |
6.9 | Public Information | 55 |
6.10 | Listing | 55 |
6.11 | Use of Names | 56 |
6.12 | R&W Policy | 56 |
6.13 | Seller Name Change | 56 |
6.14 | Access to Information Following the Closing | 56 |
6.15 | Pre-Closing Assignments | 57 |
6.16 | Termination of Intercompany Arrangements | 57 |
6.17 | Insurance Policies | 57 |
6.18 | Wrong Pockets; Further Assurances | 58 |
6.19 | Release | 58 |
ARTICLE VII | CONDITIONS TO PURCHASE | 60 |
7.1 | Conditions to Each Party’s Obligation to Effect the Closing | 60 |
7.2 | Additional Conditions to Obligations of the Buyer | 60 |
7.3 | Additional Conditions to Obligations of the Seller | 62 |
7.4 | Frustration of Closing Conditions | 63 |
ARTICLE VIII | INDEMNIFICATION | 63 |
8.1 | Indemnifiable Matters | 63 |
8.2 | Claims for Indemnification | 64 |
8.3 | Survival | 65 |
8.4 | Limitations; Priority of Payments | 66 |
8.5 | Indemnity Escrow | 69 |
8.6 | Cash Indemnification Payments | 70 |
ARTICLE IX | TERMINATION AND AMENDMENT | 71 |
9.1 | Termination | 71 |
9.2 | Effect of Termination | 72 |
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9.3 | Fees and Expenses | 72 |
9.4 | Amendment | 72 |
9.5 | Extension; Waiver | 72 |
ARTICLE X | DEFINITIONS | 73 |
10.1 | Definitions | 73 |
ARTICLE XI | MISCELLANEOUS | 90 |
11.1 | Notices | 90 |
11.2 | Entire Agreement; Non-Recourse | 91 |
11.3 | Waiver of Conflicts Regarding Representation; Non-Assertion of Attorney-Client Privilege | 92 |
11.4 | No Third-Party Beneficiaries | 93 |
11.5 | Assignment | 93 |
11.6 | Severability | 94 |
11.7 | Counterparts and Signature | 94 |
11.8 | Interpretation | 94 |
11.9 | Governing Law | 95 |
11.10 | Remedies | 95 |
11.11 | Submission to Jurisdiction | 95 |
11.12 | Disclosure Schedules | 96 |
11.13 | Waiver of Jury Trial | 96 |
Disclosure Schedule
Buyer Disclosure Schedule
Schedule 1.4(e)(iv) – Payoff Debt
Schedule 5.1 – Conduct between Signing and Closing
Schedule 6.6(e) – Purchase Price Allocation Methodology
Schedule 6.7 – Illustrative Examples of Restricted Businesses
Schedule 6.8(b) – Transfer Restrictions
Schedule 6.11 – Company Marks
Schedule 6.15(a) – Contracts to be Assigned
Schedule 6.15 (b) – Intellectual Property to be Assigned
Schedule 7.2(e)(i) – Continuing Affiliate Contracts
Schedule 7.2(h) – Extended Support Agreement
Schedule 10.1(a) – Buyer’s Knowledge
Schedule 10.1(b) – Seller’s Knowledge
Schedule 10.1(c) – Assets Included in Net Working Capital
Schedule 10.1(d) – Liabilities Included in Net Working Capital
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Exhibit A | Mechner Employment Agreement |
Exhibit B | Form of Interest Assignment |
Exhibit C | Form of Escrow Agreement |
Exhibit D | Form of Accredited Investor Questionnaire |
Exhibit E | Representation & Warranty Insurance Policy |
Exhibit F | Form of Assignment Agreement |
Exhibit G | Form of Release |
Exhibit H | Form of Option Cancellation and Release Agreement |
Exhibit I | Form of Joinder |
Exhibit J | Form of Intellectual Property Assignment Agreement |
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”) is entered into as of August 5, 2023, by and among (i) MarketAxess Holdings Inc., a Delaware corporation (the “Buyer”), (ii) Pragma Weeden Holdings LLC, a Delaware limited liability company (the “Seller”), (iii) Pragma Financial Systems LLC, a New York limited liability company (“PFS”), (iv) Pragma LLC, a New York limited liability company (“PLLC” and together with PFS, the “Companies” and individually, each a “Company”), and (v) David Mechner, solely for the purposes of Section 6.7, Section 6.19, Section 8.1(b), the remainder of Article VIII as it relates to Section 8.1(b) and Article XI as it relates to any of such provisions (“Mechner”). The Buyer, the Seller and the Companies (and, solely for the purposes of Section 6.7, Section 6.19, Section 8.1(b), the remainder of Article VIII as is relates to Section 8.1(b) and Article XI as it relates to any of such provisions, Mechner) are referred to, collectively, as the “Parties”. Capitalized terms used but not otherwise defined herein have the respective meanings ascribed to such terms in Article X.
WHEREAS, the Companies own and operate a business providing algorithmic trading solutions through PLLC, a FINRA-registered broker dealer, and related software and technology development and support services through PFS (such business, but excluding the Seller’s contingent contractual earnout rights relating to its former investment in Ogg Trading LLC, the “Business”), which Business comprises the entire business and operations of the Seller and its Subsidiaries other than the Seller’s contractual earnout rights relating to its former investment in Ogg Trading LLC;
WHEREAS, the Seller owns all of the issued and outstanding membership interests of each of PFS and PLLC (collectively, the “Interests”);
WHEREAS, the Board of Managers (as defined in the Operating Agreement) of the Seller (the “Seller Board”) has unanimously approved this Agreement, the execution, delivery and performance hereof by the Seller and the consummation by the Seller of the transactions contemplated hereby, including the transfer and sale by the Seller of the Interests to the Buyer on the terms and conditions of this Agreement, in accordance with the Operating Agreement and the Act (the “Seller Transaction Consent”);
WHEREAS, the Board of Directors of the Buyer (or a duly authorized committee thereof) has unanimously approved this Agreement, the execution, delivery and performance hereof by the Buyer and the consummation by the Buyer of the transactions contemplated hereby, including the purchase by the Buyer of the Interests on the terms and conditions of this Agreement, in accordance with the Buyer’s Organizational Documents and the Delaware General Corporation Law;
WHEREAS, concurrently herewith, Mechner is entering into an employment agreement with the Buyer, as attached hereto as Exhibit A (the “Mechner Employment Agreement”);
WHEREAS, Mechner is a founder of the Seller and has been affiliated with and integral to the business of the Seller and its Subsidiaries since their inception and will receive substantial consideration and other benefits in connection with the consummation of the transactions contemplated by this Agreement, including by virtue of his ownership interest in a member of the
Seller, and it is a material inducement and condition to the Buyer’s willingness to enter into this Agreement and to consummate the transactions contemplated hereby that Mechner enter into this Agreement; and
WHEREAS, upon the terms and subject to the conditions set forth herein, the Buyer desires to purchase from the Seller, and the Seller desires to sell to the Buyer, all of the Interests.
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
ARTICLE I
PURCHASE AND SALE
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ARTICLE II
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER
The Seller represents and warrants to the Buyer that, except as set forth in the corresponding section of the Disclosure Schedule (subject to Section 11.12), the statements contained in this Article II are true and correct as of the date of this Agreement and as of the Closing Date, except if a statement speaks as of a specific date, such statement was true and correct as of such specific date.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES
The Seller represents and warrants to the Buyer that, except as set forth in the corresponding section of the Disclosure Schedule (subject to Section 11.12), the statements contained in this Article III are true and correct as of the date of this Agreement and as of the Closing Date, except if a statement speaks as of a specific date, such statement was true and correct as of such specific date.
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For purposes of this Section 3.7, any reference to each Company shall be deemed to include any Person that merged with or was liquidated or converted into such Company, as applicable.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that, except as otherwise disclosed or identified in the SEC Reports (excluding any disclosures of factors or risks contained in any “Risk Factors” section or any “forward looking statements” or similar general disclosure included in such SEC Reports that is predictive or forward-looking in nature), or as set forth in the corresponding section of the Buyer Disclosure Schedule (subject to Section 11.12), the statements contained in this Article IV are true and correct as of the date of this Agreement and as of the Closing Date, except if a statement speaks as of a specific date, such statement was true and correct as of such specific date.
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ARTICLE V
CONDUCT OF BUSINESS
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Notwithstanding anything to the contrary contained herein, nothing contained in this Agreement will give the Buyer, directly or indirectly, rights to control or direct a Company prior to the Closing. During the Pre-Closing Period, the Seller and each Company will exercise, consistent with the terms and conditions of this Agreement, control of their businesses and operations.
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ARTICLE VI
ADDITIONAL AGREEMENTS
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If so requested by the holder, any certificates subject to legend removal hereunder may be surrendered in exchange for shares of Buyer Common Stock held in book-entry form and shall be transmitted by the Buyer’s transfer agent to the holder through the direct registration system.
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ARTICLE VII
CONDITIONS TO PURCHASE
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ARTICLE VIII
INDEMNIFICATION
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ARTICLE IX
TERMINATION AND AMENDMENT
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Article X
DEFINITIONS
“Accounting Principles” means GAAP applied on a basis consistent with the accounting principles, policies, methods, and procedures used in the preparation of the Seller Financial Statements as of, and for the year ended, December 31, 2022.
“Accredited Investor Questionnaire” has the meaning set forth in Section 1.6(d).
“Acquisition Proposal” means any written or oral proposal, inquiry, indication of interest or offer (a) for a merger, consolidation, dissolution, sale of a significant portion of the assets, recapitalization, or other business combination or similar transaction involving the Seller or a Company, (b) involving the issuance of any Equity Interests of a Company or representing 10% or more of the Equity Interests of the Seller or (c) to acquire in any manner, directly or indirectly, and whether in one transaction or a series of related transactions, any Equity Interests of a Company or 10% or more of the total combined assets of the Companies or of the Equity Interests or consolidated assets of the Seller, in each case other than the transactions contemplated by this Agreement.
“Act” means the Delaware Limited Liability Company Act.
“Additional Insured” means (a) with respect to any Company Insurance Policy under which the Seller is the named insured, the Companies and (b) with respect to any other Company Insurance Policy, to the extent covered by such policy as an additional insured as of the date of this Agreement, the Seller.
“Additional Option Cash Out Amount” means an amount equal to the aggregate value (based on the Buyer Closing Stock Price) of the portion of the Closing Stock Consideration (without giving effect to the deduction contemplated by clause (a)(ii) thereof and net of any exercise price applicable to such options) that would be payable to holders of Seller Options outstanding as of immediately prior to the Closing in consideration of the cancellation of all such Seller Options in accordance with Section 1.8 and to holders of Class B Units of Seller issued in respect of previously exercised Seller Options; provided that the Buyer shall not be responsible for or have any Liability in respect of such calculation or any errors therein and in no event shall the Additional Option Cash Out Amount exceed $2,834,295.
“Affiliate” means, with respect to a Person, any other Person who, at the time of determination, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Person. For purposes of this definition, “control” (including the terms “controlled by” and “under common control with”) means the power to, directly or indirectly, direct or cause the direction of the management and policies of such Person whether through ownership of voting securities or other ownership interests, by Contract or otherwise, including, with respect to a corporation, partnership or limited liability company, the
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direct or indirect ownership of more than 50% of the voting securities in such corporation or of the voting interest in a partnership or limited liability company.
“Affiliate Contract” has the meaning set forth in Section 3.19(b).
“Aggregate Closing Option Cash-Out Payment Amount” means the aggregate amount of the Option Cash-Out Payments payable in connection with the Closing to Seller Optionholders in accordance with Section 1.9.
“Agreement” has the meaning set forth in the preamble.
“Antitrust Laws” means the Hart-Scott-Rodino Act, as amended, the Sherman Act, as amended, the Clayton Act, the Federal Trade Commission Act and any other applicable federal, state or foreign law, regulation or decree designed to prohibit, restrict or regulate actions for the purpose or effect of monopolization or restraint of trade.
“Antitrust Order” means any judgment, injunction, order (whether temporary, preliminary or permanent) or decree issued under or with respect to any Antitrust Laws.
“Applicable Insurance Policies” means (a) with respect to any claim, act, omission, event, circumstance, occurrence or loss incurred by either Company (or its successors or permitted assigns), each Company Insurance Policy under which the Seller is the Primary Insured Party and (b) with respect to any claim, act, omission, event, circumstance, occurrence or loss incurred by the Seller, each Company Insurance Policy under which either Company is the Primary Insured Party and the Seller is an Additional Insured.
“Balance Sheet Date” has the meaning set forth in Section 3.5(b).
“Bankruptcy and Equity Exception” means the effects of bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles.
“Broker-Dealer Compliance Policies” has the meaning set forth in Section 3.13(o).
“Broker-Dealer Company” means Pragma LLC, a New York limited liability company.
“Business Day” means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions located in New York, New York are permitted or required by Law, executive order or governmental decree to remain closed.
“Business Employee” means each Person who is employed by a Company, including those employees on medical leave, family leave, military leave or personal leave under any policy of a Company or any of its Affiliates.
“Business Service Provider” means each individual who is not employed by a Company but who provides services to a Company, including any directors, independent consultants and/or contractors engaged by a Company.
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“Buyer” has the meaning set forth in the preamble.
“Buyer Applicable Stock Price” means the average of the volume weighted averages of the trading prices of Buyer Common Stock on the NASDAQ Global Select Market (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source mutually selected by the Parties), for the Trading Days during the period of 15 days ending on the Trading Day immediately prior to the date of determination.
“Buyer Capitalization Date” has the meaning set forth in Section 4.7(a).
“Buyer Closing Stock Price” means the average of the volume-weighted average of the trading prices of Buyer Common Stock on the NASDAQ Global Select Market (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source mutually selected by the Parties), for the Trading Days during the period of 15 days ending on, and including, the fifth Trading Day prior to the Closing Date.
“Buyer Common Stock” means the common stock, par value $0.003 per share, of the Buyer.
“Buyer Disclosure Schedule” means the disclosure schedule delivered by the Buyer to the Seller and the Companies concurrently with the execution of this Agreement.
“Buyer Employee Plan” means any Employee Benefit Plan for the benefit of, or relating to, any current employee of the Buyer or any of its Subsidiaries.
“Buyer Equity Awards” has the meaning set forth in Section 4.7(a).
“Buyer Fundamental Representations” means the representations and warranties set forth in Section 4.1(a) (Organization), Section 4.2(a) (Authority), Section 4.4 (Financing), Section 4.5 (Brokers) and Section 4.7 (Capitalization).
“Buyer Indemnified Persons” means the Buyer and its Affiliates (including, following the Closing, each Company) and, if applicable, their respective directors, officers, employees, agents and representatives, and each of their respective successors and assigns.
“Buyer Material Adverse Effect” means any Change that, individually or in the aggregate together with any other Changes, (i) would reasonably be expected to prevent or materially impair or delay the Buyer’s ability perform its obligations hereunder and to consummate the transactions contemplated by this Agreement or (ii) has had or would reasonably be expected to have, a material adverse effect on the business, financial condition or results of operations of the Buyer and its Subsidiaries, taken as a whole; provided, however, that none of the following shall constitute, or shall be considered in determining whether there has occurred, a Buyer Material Adverse Effect under the foregoing clause (ii): (a) Changes in applicable Law or GAAP or the authoritative interpretation thereof; (b) Changes generally affecting the industry in which the Buyer and its Subsidiaries operate; (c) Changes in general economic or political conditions or the financial or capital markets in general; (d) any action taken (or omitted) pursuant to the express requirements of this Agreement or at the written request of the Seller or a Company; (e) any earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters or any
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pandemics, epidemics or disease outbreaks (including COVID-19), or terrorism, military action or war (whether or not declared); (f) Changes arising out of or resulting from the pendency or announcement of the transactions contemplated by this Agreement, including actions of clients or vendors or losses of employees (except to the extent arising or resulting from any breach of this Agreement by the Buyer and without limiting Section 4.2(b)); (g) changes in the price or trading volume of the Buyer Common Stock or any other securities of the Buyer (provided that the exception in this clause (g) shall not prevent or otherwise affect any determination that the underlying cause of any such failure (to the extent not otherwise falling within any of the exceptions provided by clauses (a) through (f) or clause (h)) has had or would reasonably be expected to have a Buyer Material Adverse Effect); or (h) any failure by Buyer or its Subsidiaries to meet any internal or public projections, guidance, estimates or forecasts, or internal or published financial or operating predictions of revenue, earnings, cash flow or cash positions (provided that the exception in this clause (h) shall not prevent or otherwise affect any determination that the underlying cause of any such failure (to the extent not otherwise falling within any of the exceptions provided by clauses (a) through (g)) has had or would reasonably be expected to have a Buyer Material Adverse Effect); except that any Changes resulting from, arising out of or attributable to any of the foregoing matters referred to in any of the foregoing clauses (a), (b), (c) and (e) above shall be taken into account when determining whether a “Buyer Material Adverse Effect” has occurred or may, would or could reasonably be expected to occur to the extent such Change has a disproportionate adverse effect on the Buyer and its Subsidiaries, taken as a whole, as compared to other participants in the industries and markets in which the Buyer and its Subsidiaries conduct business.
“Buyer’s Knowledge” and words of similar effect or import mean the actual knowledge, after reasonable inquiry, of any of the Persons set forth on Schedule 10.1(a).
“Change” means any change, event, fact, circumstance, occurrence or development.
“Claim Notice” means a written notice which contains (a) a description in reasonable detail of the claim for indemnification (to the extent then known by the Indemnified Party), including a reasonable explanation of the basis therefor and a description (including an estimate of the amount) of any Damages incurred or reasonably expected to be incurred by an Indemnified Party, (b) a statement that the Indemnified Party is entitled to indemnification under Article VIII and (c) a demand for payment in the amount of such Damages.
“Closing” has the meaning set forth in Section 1.2.
“Closing Cash Amount” means the sum of the value of (a) all cash, cash equivalents and marketable securities (other than restricted cash) held by either Company as of 12:01 a.m., Eastern time on the Closing Date, minus (b) all outstanding (uncleared) checks and other negotiable instruments used like checks, drafts and wire transfers issued as of or prior to 12:01 a.m., Eastern time on the Closing Date, minus (c) $250,000 (representing PLLC’s minimum regulatory net capital requirement), minus (d) any other cash otherwise required to be held by either Company in order to comply with applicable Law (excluding cash that would be required for PLLC to meet its minimum regulatory net capital requirement), plus (e) the amount of cash held as collateral for PLLC’s letter of credit relating to its office lease, plus (f) the amount of cash held in PLLC’s deposit account with its clearing firm, if any, in the case of clauses (a) and (b), calculated in
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accordance with the Accounting Principles. For the avoidance of doubt, the “Closing Cash Amount” shall be calculated net of any amounts that are used to pay any Unpaid Company Transaction Expenses or Indebtedness following 12:01 a.m., Eastern time on the Closing Date until immediately prior to the Closing, and otherwise shall be calculated without giving effect to the consummation of the transactions contemplated by this Agreement.
“Closing Cash Consideration” means an amount in cash equal to (a) $75,000,000, plus (b) the Additional Option Cash Out Amount, plus (c) the Closing Cash Amount, minus (d) the Closing Debt Amount, plus (e) the Net Working Capital Adjustment (which, for the avoidance of doubt, may be a positive or negative number), minus (f) the Unpaid Company Transaction Expenses, minus (g) the Purchase Price Adjustment Escrow Amount.
“Closing Date” means the date on which the Closing actually occurs.
“Closing Debt Amount” means without duplication, all Indebtedness of the Companies as of immediately prior to the Closing, but without giving effect to the consummation of the transactions contemplated by this Agreement; except, for the avoidance of doubt, that the calculation of the Tax Liability Amount shall occur at the end of the day on the Closing Date.
“Closing Payment Statement” means a statement, which sets forth, in accordance with the Estimated Closing Statement, (i) the identity of each Person entitled to receive a cash payment pursuant to Section 1.4, (ii) the amount due to each such Person and (iii) the applicable wire instructions for the account or accounts of each such Person.
“Closing Stock Consideration” means a number of shares of Buyer Common Stock equal to the quotient of (a) the sum of (i) $53,000,000, minus (ii) the Additional Option Cash Out Amount, minus (iii) the Indemnity Escrow Amount divided by (b) the Buyer Closing Stock Price (rounded down to the nearest whole share), subject to any adjustments pursuant to Section 1.6(c).
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” has the meaning set forth in the preamble.
“Company B-D Regulatory Documents” has the meaning set forth in Section 3.13(m).
“Company Employee Plans” means Employee Benefit Plans that (i) provide benefits or compensation to any current or former Business Employee or Business Service Provider, (ii) are adopted, maintained, sponsored, contributed to, or required to be contributed to by a Company, or (iii) with respect to which a Company is a party, participates in, or has or could reasonably be expected to have any Liability with respect thereto, whether actual or contingent, or direct or indirect.
“Company ERISA Affiliate” means any entity that is a member of (a) a controlled group of corporations (as defined in Section 414(b) of the Code), (b) a group of trades or businesses under common control (as defined in Section 414(c) of the Code) or (c) an affiliated service group (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code), any of which includes or included a Company.
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“Company Fundamental Representations” means the representations and warranties set forth in Section 3.1(a) (Organization, Standing and Power), Section 3.2 (Capitalization) (excluding the last sentence of Section 3.2(c)), Section 3.3 (Subsidiaries) (excluding the last sentence of Section 3.3), Section 3.4(a) (Authority), and Section 3.22 (Brokers).
“Company Insurance Policies” means the insurance policies (including any self-insurance) covering, held by, maintained by or applicable to the Business or any Company or its properties, assets or personnel.
“Company Intellectual Property” means, individually or collectively, the Company Owned Intellectual Property and the Company Licensed Intellectual Property.
“Company IT Systems” means all computer systems, technology platforms, networks, hardware, software, databases, websites, and equipment used by or on behalf of a Company to process, store, maintain and operate data, information, and functions used in connection with the business of a Company.
“Company Lease” means any Contract pursuant to which any real property or any interest in any real property is leased or subleased to a Company.
“Company Leased Property” has the meaning set forth in Section 3.8(b).
“Company Licensed Intellectual Property” means all Intellectual Property that is used, practiced or held for use or practice by a Company, except for any Company Owned Intellectual Property.
“Company Marks” has the meaning set forth in Section 6.11.
“Company Material Adverse Effect” means any Change that, individually or in the aggregate with any other Changes, (i) has had or would reasonably be expected to have, a material adverse effect on the business, financial condition or results of operations of the Companies, taken as a whole, or (ii) would or would reasonably be expected to prevent or materially impair or delay the Company’s ability to perform its obligations under or to consummate the transactions contemplated by this Agreement; provided, however, that none of the following shall constitute, or shall be considered in determining whether there has occurred, a Company Material Adverse Effect under the foregoing clause (i): (a) Changes in applicable Law or GAAP or the authoritative interpretation thereof; (b) Changes generally affecting the industry in which the Companies operate; (c) Changes in general economic or political conditions or the financial or capital markets in general; (d) any action taken (or omitted) pursuant to the express requirements of this Agreement or at the written request of the Buyer; (e) any earthquakes, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters or any pandemics, epidemics or disease outbreaks (including COVID-19), or terrorism, military action or war (whether or not declared); (f) Changes arising out of or resulting from the pendency or announcement of the transactions contemplated by this Agreement, including actions of clients or vendors or losses of employees (except to the extent arising or resulting from any breach of this Agreement, including Section 5.1, by the Seller or any Company and without limiting Section 3.4(b)); or (g) any failure by the Companies to meet any internal or public projections, guidance, estimates or forecasts, or internal or published financial or operating predictions of revenue, earnings, cash flow or cash positions (provided that
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the exception in this clause (g) shall not prevent or otherwise affect any determination that the underlying cause of any such failure (to the extent not otherwise falling within any of the exceptions provided by clauses (a) through (f)) has had or would reasonably be expected to have a Company Material Adverse Effect); except that any Changes resulting from, arising out of or attributable to any of the foregoing matters referred to in any of the foregoing clauses (a), (b), (c) and (e) above shall be taken into account when determining whether a “Company Material Adverse Effect” has occurred or may, would or could reasonably be expected to occur to the extent such Change has a disproportionate adverse effect on the Companies, taken as a whole, as compared to other participants in the industries and markets in which the Companies conduct business.
“Company Material Contracts” means (i) the Contracts listed, or that are required by Section 3.10(a) to be listed (or, if entered into following the date hereof, would have been required to have been listed), in Section 3.10(a) of the Disclosure Schedule and (ii) to the extent entered into after the date hereof, any Contracts providing for the purchase, acquisition or sale of materials, goods, services, equipment or other assets providing for annual payments made by or to the Company of $50,000 or more (excluding (a) any such contract solely relating to a capital expenditure made without violation of clause (J) of Section 5.1) and (b) any such Contract that is a renewal of a then existing Contract so long as the consideration payable under such renewal does not fluctuate by more than 10% from the consideration payable under such Contract prior to such renewal).
“Company Owned Intellectual Property” means any Intellectual Property owned or purported to be owned by a Company, including all Company Software and Company Registered Intellectual Property.
“Company Permits” means all approvals, authorizations, consents, certificates, permits, franchises, certificates, concessions and licenses from Governmental Entities or Self-Regulatory Organizations required for the operation or conduct of the business of a Company.
“Company Registered Intellectual Property” has the meaning set forth in Section 3.9(a).
“Company Software” means any Software owned or purported to be owned by, or developed exclusively for or on behalf of, a Company.
“Confidentiality Agreement” means the mutual confidentiality agreement, dated as of September 14, 2021, by and between MarketAxess Corporation and the Seller, as amended.
“Continuing Employees” means each of the employees of the Buyer or any of its Subsidiaries immediately following the Closing who was a Business Employee immediately prior to the Closing.
“Contract” means any lease, license, contract, indenture, note, bond, mortgage, loan, instrument, commitment or other agreement, arrangement, instrument, undertaking or obligation, whether written or oral, in each case that is legally binding.
“Controlled Affiliate” means, with respect to a Person, any other Person (excluding any natural person) who, at the time of determination, directly or indirectly, through one or more intermediaries, is controlled by such Person. For purposes of this definition, “control” (including
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the terms “controlled by” and “under common control with”) means the power to, directly or indirectly, direct or cause the direction of the management and policies of such Person whether through ownership of voting securities or other ownership interests, by Contract or otherwise, including, with respect to a corporation, partnership or limited liability company, the direct or indirect ownership of more than 50% of the voting securities in such corporation or of the voting interest in a partnership or limited liability company.
“Copyrights” means copyrights and copyrightable works, works of authorship, database and design rights, whether or not registered or published, including all data collections, “moral” rights, and mask works, and all applications therefor and registrations and recordations, along with all reversions, extensions and renewals thereof, and corresponding rights in works of authorship.
“Damages” means all claims, causes of action, actions, losses, liabilities, monetary damages, judgments, awards, fines, fees, penalties, interest, Taxes, costs and expenses (including reasonable attorneys’ fees and expenses incurred in connection therewith, whether involving a Third-Party Claim or direct claim arising out of or in connection with this Agreement or the transactions contemplated hereby).
“Deficiency Amount” has the meaning set forth in Section 1.5(b)(iv).
“Disclosure Schedule” means the disclosure schedule delivered by the Seller and the Companies to the Buyer concurrently with the execution of this Agreement.
“Divestiture Action” has the meaning set forth in Section 6.3(e).
“Employee Benefit Plan” means each “employee benefit plan” (as defined in Section 3(3) of ERISA), as well as each other benefit, retirement, employment, consulting, compensation, profit sharing, commission, bonus, stock or other equity, equity-based, option, incentive compensation, restricted stock, stock appreciation right or similar right, phantom equity, profits interests, change in control, retention, severance, deferred compensation, vacation, paid time off, welfare, medical, dental, vision, flexible benefit, cafeteria, dependent care, and fringe-benefit agreement, plan, policy, arrangement and program, whether or not reduced to writing.
“Equity Interest” means, with respect to any Person, (a) any share, partnership or membership interest, unit of participation or other similar interest (however designated) in such Person and (b) any warrant, purchase right, conversion right, exchange right or other agreement which would entitle any other Person to acquire, or that is exchangeable for or convertible into, any such interest in such Person.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Excess Amount” has the meaning set forth in Section 1.5(b)(iv).
“Escrow Agent” means Citibank, N.A., as escrow agent pursuant to the Escrow Agreement, or any successor agent pursuant to the Escrow Agreement.
“Escrow Agreement” means the Escrow Agreement substantially in the form attached hereto as Exhibit C.
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“Estimated Closing Cash Consideration” has the meaning set forth in Section 1.5(a).
“Estimated Closing Statement” has the meaning set forth in Section 1.5(a).
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Extended Support Agreement Costs” means all fees payable pursuant to the Extended Support Agreement during the term thereof (whether or not payable prior to or following the Closing), together with (but without duplication of fees) any costs and expenses incurred thereunder prior to Closing.
“Final Closing Cash Consideration” has the meaning set forth in Section 1.5(b).
“Financial Statements” has the meaning set forth in Section 3.5(a).
“FINRA” means the Financial Industry Regulatory Authority, Inc., a Self-Regulatory Organization.
“Fraud” means, with respect to a Party, a knowing and intentional common law fraud (which includes the element of scienter) under the law of the State of Delaware in the making of a representation or warranty expressly stated in Article II (as qualified by the Disclosure Schedule), Article III (as qualified by the Disclosure Schedule) or Article IV (as qualified by the Buyer Disclosure Schedule) or contained in any certificate delivered by such Party at the Closing pursuant to Article VII; provided, that, without limiting the other elements required for Fraud to be deemed to exist, Fraud may only be deemed to exist if (a) such representation or warranty was materially false or materially inaccurate at the time such representation or warranty was made, (b) in the case of a representation or warranty made by the Buyer, the individuals listed on Schedule 10.1(a), or in the case of a representation or warranty made by the Seller or a Company, the individuals listed on Schedule 10.1(b), had actual knowledge (and not imputed or constructive knowledge), without any duty of inquiry or investigation except to the extent such representation or warranty is qualified by the Seller’s Knowledge or the Buyer’s Knowledge, that such representation or warranty was materially false or materially inaccurate when made by such Party, (c) such Party had the specific intent to deceive another Party and induce such other Party to enter into this Agreement or to consummate the transactions contemplated hereby. Notwithstanding anything to the contrary, “Fraud” shall not include equitable fraud, promissory fraud, unfair dealings fraud or any torts (including fraud), based on constructive or imputed knowledge, negligence or recklessness.
“GAAP” means United States generally accepted accounting principles.
“Governmental Entity” means any government, court, arbitrational tribunal, administrative agency or commission or other governmental, quasi-governmental, or regulatory body, authority, agency or instrumentality.
“Governmental Authorization” means all licenses, permits, registrations, memberships, certificates and/or other authorizations and approvals of Governmental Entities and Self-Regulatory Organizations.
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“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“ICE” has the meaning set forth in Section 3.16(h).
“Income Taxes” means any Tax imposed on or determined with reference to gross or net income, profits or receipts (however denominated or determined), including franchise and withholding Taxes imposed in lieu of Taxes denominated as “income” Taxes (including, for the avoidance of doubt, non-resident withholding Taxes).
“Indebtedness” means, with respect to each Company, and without duplication, any liability or obligation, including all obligations in respect of principal, accrued and unpaid interest, penalties, fees and premiums and other monetary obligations of (or assumed by) such Person (but excluding any liability or obligation to the extent owed to the other Company), (a) for borrowed money (including amounts outstanding under overdraft facilities), (b) evidenced by notes, bonds, debentures or other similar obligations, (c) for the reimbursement of any obligor on any drawn letter of credit, banker’s acceptance or similar credit transaction, (d) for the deferred purchase price for the acquisition of any business, securities, assets or other properties, including the amounts of any escrows, holdbacks, or other similar amounts, but excluding any accounts payable included in Net Working Capital (or, from time to time prior to 12:01 a.m., Eastern time, on the Closing Date, that would be included in Net Working Capital if Net Working Capital was measured at such time), (e) that are conditional sale obligations of such Person and all obligations of such Person under any title retention agreements, (f) for the liquidation value of all accrued and unpaid dividends, (g) the Tax Liability Amount, (h) accrued but unpaid severance amounts in respect of terminations of service occurring prior to the Closing and the employer’s portion of any employment, payroll or social security taxes with respect thereto, (i) in the nature of guarantees, direct or indirect, of the obligations described in clauses (a) through (h) above of any other Person or for which such Person is otherwise liable as obligor or otherwise and (j) of the type referred to in clauses (a) through (i) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien (other than a Permitted Lien) on any property or asset of such Person.
“Indemnified Party” means the applicable Buyer Indemnified Person(s) or Seller Indemnified Person(s).
“Indemnifying Party” means the Party from whom indemnification is sought under Article VIII.
“Indemnity Escrow Account” means the separate account established pursuant to the Escrow Agreement to hold the Indemnity Escrow Shares for disbursement by the Escrow Agent.
“Indemnity Escrow Amount” means $1,920,000.
“Indemnity Escrow Shares” means a number of shares of Buyer Common Stock equal to the quotient of the Indemnity Escrow Amount, divided by the Buyer Closing Stock Price (rounded up to the nearest whole share).
“Interim Financial Statements” has the meaning set forth in Section 3.5(a).
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“Intellectual Property” means all rights, title and interest in or relating to intellectual property, whether protected, created or arising under the Laws of the United States or any other jurisdiction throughout the world, including: (a) Patent Rights; (b) Trademarks; (c) Copyrights; (d) trade secrets and corresponding rights in confidential information, including ideas, Software, source code, data, processes, inventions, ideas, formulae, methods, schematics, technology, compositions, inventor’s notes, discoveries, improvements, know-how, plans, proposals, business and marketing plans, market surveys, and customer lists and information; (e) other tangible or intangible proprietary or confidential information and materials; (f) Software and technology, (g) all other intellectual property rights; (h) domain names, including registrations therefor, and social media accounts; and (i) all rights relating to or under the foregoing granted under any Contracts.
“Interests” has the meaning set forth in the recitals.
“International Trade Laws and Sanctions” means all trade, export control, economic or financial sanctions or anti-boycott requirements imposed, administered or enforced from time to time by the U.S. government (including the U.S. Department of Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce (including anti-boycott regulations), the U.S. Customs and Border Protection or the U.S. Census Bureau), the United Nations Security Council, Her Majesty’s Treasury of the United Kingdom, the European Union and all trade, export control, financial sanctions or anti-boycott requirements under all Laws in any other country in which a Company operates, except to the extent the requirements of such Laws are prohibited or penalized under U.S. Law.
“IRS” means the United States Internal Revenue Service.
“Law” means any federal, state, local, municipal, foreign, international, multinational or other administrative order, statute, law, constitution, rule, ruling, regulation, code, treaty, ordinance, principle of common law, judgment, injunction, order or decree of any Governmental Entity or Self-Regulatory Organization of which it is a member.
“Lease” has the meaning set forth in Section 3.8(b).
“Liability” means any debt, loss, damage, fine, penalty, liability or obligation (whether direct or indirect, known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, matured or unmatured, determined or determinable, liquidated or unliquidated, or due or to become due, and whether in contract, tort, strict liability or otherwise.
“Lien” means any mortgage, security interest, pledge, lien, charge, deed of trust, easement, option, right of first refusal, proxy, voting trust or agreement, transfer restriction under any shareholder or similar agreement, or encumbrance.
“Lock-Up Period” has the meaning set forth in Section 6.8(b).
“Major Customer” has the meaning set forth in Section 3.20.
“Major Supplier” has the meaning set forth in Section 3.20.
“Mechner” has the meaning set forth in the preamble.
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“Mechner Employment Agreement” has the meaning set forth in the recitals.
“Net Working Capital” means (a) the aggregate amount of all current assets of the Companies, on a combined basis, as of 12:01 a.m., Eastern time, on the Closing Date (determined by reference to the line items noted on Schedule 10.1(c)), less (b) the aggregate amount of all current liabilities of the Companies, on a combined basis, as of 12:01 a.m., Eastern time, on the Closing Date (determined by reference to the line items noted on Schedule 10.1(c)), in each case, calculated in accordance with the Accounting Principles but excluding any prepaid expense amounts relating to the Extended Support Agreement. For the avoidance of doubt, the determination of Net Working Capital shall exclude all items taken into account for the calculation of the Closing Cash Amount, the Closing Debt Amount, Unpaid Company Transaction Expenses (including any Extended Support Agreement Costs) and Income Tax assets and liabilities.
“Net Working Capital Adjustment” means an amount equal to (a) the Net Working Capital minus (b) negative $850,000. For the avoidance of doubt, the Net Working Capital Adjustment may be a positive or negative number.
“Neutral Accountant” has the meaning set forth in Section 1.5(b)(iii)(B). “Non-Recourse Persons” has the meaning set forth in Section 11.2(b).
“Objection Statement” has the meaning set forth in Section 1.5(b)(iii).
“Open Source Software” means any Software that is, or that contains or is derived in any manner (in whole or in part), from any Software that is distributed as free software, open source software, copyleft software, “freeware” or “shareware” or under similar licensing or distribution models, including Software licensed pursuant to: (a) the GNU General Public License, the GNU Library General Public License, the GNU Lesser General Public License, the Affero General Public License, the Mozilla Public License, the Common Development and Distribution License, the Eclipse Public License, any Creative Commons “sharealike” license, or any license that is, or is substantially similar to, a license now or in the future approved by the Open Source Initiative and listed at http://www.opensource.org/licenses or (b) any license under which any Software or other materials are distributed or licensed as “free software,” “open source software” or under similar terms.
“Operating Agreement” means the Second Amended and Restated Limited Liability Company Operating Agreement of the Seller, effective as of the Supercession Time (as defined therein).
“Option Cash-Out Payment” has the meaning set forth in Section 1.8.
“Option Payment Schedule” has the meaning set forth in Section 1.9.
“Organizational Documents” means, with respect to any Person (other than an individual), (a) the certificate or articles of incorporation, formation or organization and any joint venture, limited liability company, operating or partnership agreement and other similar documents adopted, entered into or filed in connection with the creation, formation or organization of such Person and (b) all by-laws, shareholders’ agreements, voting agreements, investment agreement
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and similar documents, instruments or agreements relating to the organization or governance of such Person or the voting or Transfer of its securities, in each case, as amended or supplemented.
“Outside Date” means the date that is six months after the date hereof.
“Parties” has the meaning set forth in the preamble.
“Patent Rights” means domestic and foreign patents and patent applications (including provisional, continuation, divisional, continuation-in-part, reexamination, substitution, revision, renewal, extension and reissue patent applications and any patents issuing therefrom), priority rights, utility models, design patents and other governmental grants for the protection of inventions or industrial designs, however denominated.
“PEO Agreements” has the meaning set forth in Section 3.12(a).
“PEO Plan” means each Company Employee Plan that is sponsored, provided, or maintained by a professional employer organization and to which a Company has an obligation to make contributions or pay premiums with respect to their employees or otherwise have any liability.
“Permitted Liens” means any (a) mechanic’s, materialmen’s, workers’ and similar Liens imposed by Law that are not material to the business, operations or condition of the property or assets of the Companies (and do not result from any breach or violation of any Contract or applicable Law), (b) Liens for Taxes not yet due and payable (c) Liens for Taxes the amount of which is being contested in good faith and by appropriate proceedings, (d) Liens arising under worker’s compensation, unemployment insurance, social security, retirement and similar legislation, (e) Liens created by the terms of any Lease or non-exclusive license agreement granted in the ordinary course of business (in each case, other than as a result of any breach, default or violation thereof), (f) Liens imposed by or upon the Buyer or (g) Liens referred to in Section 3.17 of the Disclosure Schedule or incurred pursuant to a lease agreement referred to on Schedule 5.1.
“Person” means any natural person, firm, limited liability company, general or limited partnership, association, corporation, unincorporated organization, company, joint venture, trust, Governmental Entity, Self-Regulatory Organization or other entity.
“Personal Information” means, in addition to any definition for any similar term (e.g., “personal data,” “personally identifiable information” or “PII”) provided by applicable Law, or by a Company in any of its privacy policies, notices or contracts, all information that identifies, could be used to identify or is otherwise related to an individual person or household (including any current, prospective, or former customer, end user or employee) of any Person and includes information in any form or media, whether paper, electronic, or otherwise.
“PFS” has the meaning set forth in the preamble.
“PFS Operating Agreement” means the amended and restated Limited Liability Company Operating Agreement of PFS, dated as of January 1, 2009.
“PLLC” has the meaning set forth in the preamble.
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“PLLC Operating Agreement” means the Amended and Restated Operating Agreement of Pragma LLC, dated as of January 1, 2009, as amended on July 9, 2019.
“Post-Closing Tax Returns” has the meaning set forth in Section 6.6(a).
“Pre-Closing Tax Returns” has the meaning set forth in Section 6.6(a).
“Pre-Closing Tax Period” means any taxable period or portion thereof ending on or before the Closing Date.
“Pre-Closing Period” means the period commencing on the date of this Agreement and ending at the Closing, or on such earlier date as this Agreement is terminated in accordance with its terms.
“Preliminary Closing Cash Consideration” has the meaning set forth in Section 1.5(b)(i).
“Preliminary Closing Statement” has the meaning set forth in Section 1.5(b)(i).
“Primary Insured Party” means, with respect to any Company Insurance Policy, the named insured or policyholder.
“Privacy Laws” means any and all applicable Laws, legal requirements and self-regulatory guidelines (including of any applicable foreign jurisdiction) relating to the receipt, collection, compilation, use, storage, processing, sharing, safeguarding, security (technical, physical or administrative), disposal, destruction, disclosure or transfer (including cross-border) of Personal Information, including the Federal Trade Commission Act, EU-U.S. Privacy Shield, Swiss-U.S. Privacy Shield, General Data Protection Regulation, Regulation 2016/679/EU on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (EU GDPR), the General Data Protection Regulation as defined by the DPA as amended by the Data Protection, Privacy and Electronic Communications (Amendments etc.) (EU Exit) Regulations 2019 (UK GDPR), the Controlling the Assault of Non-Solicited Pornography And Marketing Act (CAN-SPAM), Gramm-Leach-Bliley Act (GLBA) or Personal Information Protection and Electronic Documents Act (PIPEDA) and any and all applicable Laws relating to breach notification, the use of biometric identifiers or the use of Personal Information for marketing purposes.
“Privacy Requirements” has the meaning set forth in Section 3.9(l).
“Processing” has the meaning set forth in Section 3.9(l).
“Proposed Allocation” has the meaning set forth in Section 6.6(e).
“Purchase” means the purchase of the Interests by the Buyer from the Seller in accordance with the terms of this Agreement.
“Purchase Price Adjustment Escrow Account” means the separate account established pursuant to the Escrow Agreement to hold the Purchase Price Adjustment Escrow Shares for disbursement by the Escrow Agent.
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“Purchase Price Adjustment Escrow Amount” means $500,000.
“Qualified Company Employee Plan” has the meaning set forth in Section 3.12(b).
“Remaining Amount” has the meaning set forth in Section 1.5(b)(iv).
“Restricted Business” has the meaning set forth in Section 6.7(b).
“Restricted Period” has the meaning set forth in Section 6.7(a).
“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act and any successor rules thereto.
“R&W Insurance Expenses” means the total premium, underwriting fee owed to the R&W insurer, brokerage commission and Taxes related to the R&W Policy.
“R&W Insurer” means the insurance carrier under the R&W Policy.
“R&W Policy” means the buyer-side representation and warranty insurance policy to be purchased by the Buyer in connection with the transactions with coverage to be bound as of the date hereof.
“SEC” means the United States Securities and Exchange Commission.
“SEC Reports” has the meaning set forth in Section 4.6.
“Securities Act” means the Securities Act of 1933, as amended.
“Self-Regulatory Organization” means any U.S. or foreign commission, board, agency or body that is not a Governmental Entity but is charged with regulating its own members through the adoption and enforcement of financial, sales practice and other requirements for brokers, dealers, securities underwriting or trading, stock exchanges, electronic communications networks, insurance companies or agents, investment companies or investment advisers.
“Seller” has the meaning set forth in the preamble.
“Seller Financial Statements” has the meaning set forth in Section 3.5(a).
“Seller Fundamental Representations” means the representations and warranties set forth in the first sentence of Section 2.1 (Organization; Standing), Section 2.2(a) (Authority), Section 2.3 (Title to Interests), Section 2.5 (Securities Matters) and Section 2.6 (Brokers).
“Seller Indemnified Persons” means the Seller and its Affiliates and, if applicable, their respective directors, officers, employees, agents and representatives, and each of their respective successors and assigns.
“Seller Material Adverse Effect” means any Change that, individually or together with any other changes, would or would reasonably be expected to prevent or materially impair or delay any of the Seller’s ability to perform its obligations hereunder and consummate the transactions contemplated by this Agreement.
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“Seller Option” has the meaning set forth in Section 1.9.
“Seller Optionholder” has the meaning set forth in Section 1.9.
“Seller Released Claims” has the meaning set forth in Section 6.19(a).
“Seller Released Party” has the meaning set forth in Section 6.19(a).
“Seller Releasing Party” has the meaning set forth in Section 6.19(a).
“Seller’s Knowledge,” “Knowledge of the Seller” and words of similar effect or import mean the actual knowledge, after reasonable inquiry, of each of the individuals identified in Schedule 10.1(b).
“Software” means any and all: (a) software and computer programs of any type, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code; (b) data, databases and compilations of data, including any and all collections of data, whether machine readable or otherwise; (c) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons, images, videos, models and icons; and (d) documentation and other materials related to any of the foregoing, including user manuals and training materials.
“Stock Consideration” means the Closing Stock Consideration and the Indemnity Escrow Shares.
“Straddle Period” means a taxable period beginning on or before and ending after the Closing Date.
“Subsidiary” means, with respect to any Person, any corporation, partnership, trust, limited liability company or other non-corporate business enterprise in which such Person (or a Subsidiary of such Person) holds stock or other ownership interests representing (a) more than 50% of the voting power of all outstanding stock or ownership interests of such entity or (b) the right to receive more than 50% of the net assets of such entity available for distribution to the owners of outstanding stock or ownership interests upon a liquidation or dissolution of such entity.
“Survival Date” means the date that is 12 months following the Closing Date.
“Tax Liability Amount” means an amount (not less than $0) equal to the aggregate positive amount of the unpaid Income Taxes of the Companies (whether or not such Taxes are due and payable) for any Pre-Closing Tax Period, calculated (a) on a closing of the books basis as of the end of the Closing Date as if the taxable year of each Company ended as of the end of the Closing Date and (b) by excluding all Income Tax assets of the Companies (including any Tax refunds, credits or overpayments). The Tax Liability Amount shall be calculated without taking into account any payment of Taxes made after the 12:01am Eastern time on the Closing Date.
“Tax Proceeding” means any pending or threatened federal, state, local or foreign Tax audits, examinations, or assessments for the Pre-Closing Tax Period.
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“Tax Returns” means all reports, returns, declarations, statements or other information, including any schedules or attachments thereto, required to be supplied to a taxing authority in connection with Taxes.
“Taxes” means (i) all taxes, charges, fees, levies or other similar assessments or liabilities in the nature of a tax, including income, gross receipts, corporation, net worth, capital gains, documentary, recapture, recording, profits, severance, stamp, occupation, customs duties, ad valorem, premium, value-added, alternative minimum, excise, real property, personal property, sales, use, services, transfer, withholding, social security, employment, payroll, franchise and estimated taxes imposed by any Governmental Entity, (ii) any interest, fines, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection with any tax or any contest or dispute thereof, and (iii) any Liability in respect of items described in clauses (i) or (ii) payable by reason of Contract, assumption, transferee or successor liability, operation of Law, Treasury Regulations 1.1502-6(a) (or any similar provision of Law) or otherwise.
“Third-Party Action” means any pending or threatened claim or the commencement or threatened commencement of any action, suit or proceeding relating to, or any other matter or circumstance that arises that has given or could reasonably be expected to give rise to, a third-party claim for which indemnification may be sought by an Indemnified Party under Section 8.1.
“Third-Party Claim Notice” has the meaning set forth in Section 8.2(a).
“Trademarks” means trademarks, service marks, trade dress rights, logos, trade names, service names, brand names, corporate names, identifying symbols, trade styles slogans, other indicators of commercial source or business identifiers and generable intangibles of a like nature (whether registered, arising under common Law or statutory Law, or otherwise), together with the goodwill associated with any of the foregoing, along with all applications, registrations, renewals and extensions thereof.
“Trading Day” means any day on which the NASDAQ Global Select Market is open for the exchange of securities.
“Transaction Documents” means this Agreement, the Escrow Agreement, the Accredited Investor Questionnaire, the Mechner Employment Agreement, the Releases, the R&W Policy, the Interest Assignment Agreement, the Contract Assignment Agreement, the Intellectual Property Assignment Agreement and the other agreements, instruments, certificates and documents expressly contemplated hereby.
“Transfer” has the meaning set forth in Section 6.8(b).
“Transfer Taxes” has the meaning set forth in Section 6.6(c).
“Treasury Regulations” means the U.S. Treasury Regulations promulgated under the Code.
“Unpaid Company Transaction Expenses” means, in each case to the extent incurred prior to the Closing (whether payable prior to, at or following the Closing), but not paid in full as of 12:01 a.m. Eastern time on the Closing Date, the aggregate amount of all third-party costs and expenses incurred by or on behalf of, or paid or to be paid or payable by, a Company in connection
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with the negotiation, preparation and execution of this Agreement and the Transaction Documents or the transactions contemplated hereby or thereby, including the performance by the Companies (at or prior to the Closing) of their obligations hereunder or thereunder or the consummation hereof or thereof, including (a) any brokers’, finders’ or similar fees, (b) 50% of the filing fee for the any filings made prior to the Closing pursuant to FINRA 1017 in connection with the transactions contemplated hereby, (c) any sale, change of control, retention, transaction or similar bonuses, severance or other payment obligation that is or becomes payable to current or former employees of a Company on or following the Closing as a result of the consummation of the transactions contemplated by this Agreement(other than, for the avoidance of doubt, (i) any Post-Closing Option Cash-Out Payments and the payor’s portion of appliable payroll, employment or similar taxes in respect thereof, and (ii) the Aggregate Closing Option Cash-Out Payment Amount, in each case, in respect of any payments in respect of Seller Options to be made in accordance with Section 1.9), together with each Company’s portion of applicable payroll, employment or similar taxes and any “gross-up payments” (if any are due or payable as a result of or in connection with any of the foregoing), (d) fees and expenses of counsel, advisors, consultants, accountants, auditors, experts and other professionals, (e) an amount equal to 50% of the R&W Insurance Expenses (but subject to an aggregate cap on the amount to be included under this clause (e) equal to $150,000), (f) the amount of the payor’s portion of applicable payroll, employment or similar taxes payable in respect of the Aggregate Closing Option Cash-Out Payment Amount to be made in accordance with Section 1.9 and (g) any Extended Support Agreement Costs, in each case, to the extent such costs and expenses shall have been incurred by or on behalf of a Company prior to Closing (whether payable prior to, at or following the Closing), but shall not have not been paid in full as of 12:01 a.m. Eastern time on the Closing Date. Notwithstanding anything to the contrary, (i) Unpaid Company Transaction Expenses do not include any amounts included in Net Working Capital or Closing Debt Amount and (ii) “Unpaid Company Transaction Expenses” shall be reduced by any amounts that would otherwise constitute “Unpaid Company Transaction Expenses” that are paid following 12:01 a.m., Eastern Time on the Closing Date until immediately prior to the Closing and reduce the Closing Cash Amount.
“WARN” means the Worker Adjustment and Retraining Notification Act of 1988, as amended, and any similar state or local Law.
“Willful Breach” means a material breach of any covenant or agreement set forth in this Agreement that is a consequence of an act, or failure to act, undertaken by the breaching Party with the actual knowledge that the taking of such act, or failure to act, would result in or constitute a breach of this Agreement.
ARTICLE XI
MISCELLANEOUS
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MarketAxess Holdings Inc.
55 Hudson Yards, 15th Floor
New York, NY 10001
Attention: Christopher N. Gerosa; Scott Pintoff
E-Mail: [*****]; [*****]
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Michael J. Aiello; Michelle A. Sargent
Email: [*****]; [*****]
Pragma Weeden Holdings LLC
1370 Broadway, 10th Floor
New York, NY 10018
Attention: David Mechner
E-Mail: [*****]
with a copy (which shall not constitute notice) to:
Wilmer Cutler Pickering Hale and Dorr LLP
2100 Pennsylvania Avenue NW
Washington DC 20037
Attention: Stephanie C. Evans
E-Mail: [*****]
Any Party may give any notice or other communication hereunder using any other means (including personal delivery, messenger service, or ordinary mail), but no such notice or other communication shall be deemed to have been duly given unless and until it actually is received by the Party for whom it is intended. Any Party may change the address to which notices and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be duly executed as of the date first written above.
MARKETAXESS HOLDINGS INC. | |||
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By: |
| /s/ Christopher R. Concannon |
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| Name: Christopher R. Concannon |
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| Title: Chief Executive Officer |
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PRAGMA WEEDEN HOLDINGS LLC | |||
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By: |
| /s/ David Mechner |
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| Name: David Mechner |
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| Title: Chief Executive Officer |
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PRAGMA financial systems LLC | |||
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By: |
| /s/ David Mechner |
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| Name: David Mechner | �� |
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| Title: Chief Executive Officer |
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pragma llc | |||
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By: |
| /s/ David Mechner |
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| Name: David Mechner |
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| Title: Chief Executive Officer |
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david mechner (solely for the purposes of Section 6.7, Section 6.19, Section 8.1(b), the remainder of Article VIII as is relates to Section 8.1(b) and Article XI as it relates to any of such provisions) | |||
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/s/ David Mechner |
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