UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 22, 2007
Optionable, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 000-51837 52-2219407
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) Identification No.)
555 Pleasantville Road, South Building, Suite 110 Briarcliff Manor, NY 10150
(Address of Principal Executive Offices, Including Zip Code)
(914) 773-1100
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 1.01. Entry into a Material Definitive Agreement
Item 8.01. Other Events
Item 9.01. Financial Statements and Exhibits
Signature
Exhibit Index
Page 1 of 6
Item 1.01. Entry into a Material Definitive Agreement
On January 22, 2007, Optionable, Inc. (the "Company"), Mark Nordlicht, its
Chairman of the Board, Kevin Cassidy, its Vice Chairman and Chief
Executive Officer, and Edward O'Connor, its President (collectively, the
"Founding Stockholders"), and NYMEX Holdings, Inc. (the "Investor")
entered into a binding term sheet (the "Term Sheet") pursuant to which
Messrs. Nordlicht, Cassidy and O'Connor have agreed to sell 7,000,000,
1,491,448 and 1,800,000 shares, respectively, of common stock of the
Company, par value $0.0001 per share (the "Common Stock"), to the
Investor. This aggregate of 10,291,448 shares (the "Purchased Shares")
represents nineteen percent (19%) of the currently outstanding shares of
Common Stock on a fully diluted basis (without giving effect to the
warrant discussed below). The purchase price to be paid by the Investor
for the Purchased Shares is $2.69 per share. Pursuant to the Term Sheet,
the Company has agreed to issue the warrant described below to the
Investor, in consideration of the Investor's agreement to engage in
certain joint marketing and cobranding activities and to provide hosting
of Company servers and assistance in joint technology development. In
addition, the Investor and the Company agreed to certain arrangements with
respect to OTC products which the Company clears through the clearport
system.
The warrant to be issued by the Company (the "Warrant") will permit the
Investor to purchase a number of shares of Common Stock sufficient to
increase the Investor's ownership of the Company's Common Stock to an
amount not to exceed 40% of the Company's then outstanding Common Stock on
a fully diluted basis, based on the assumption that the Investor has
retained ownership of the Purchased Shares. The Warrant will be
exercisable from time to time for a period of 18 months from the closing
date of the transactions contemplated by the Term Sheet at an exercise
price per share equal to $4.30 (the "Exercise Price"). The Warrant will
not contain a cashless exercise feature. The Exercise Price will be
subject to certain customary adjustments to protect against dilution.
The transactions contemplated by the Term Sheet will be evidenced by
definitive agreements (the "Definitive Agreements") which will contain
representations, warranties, covenants, indemnities and conditions
precedent customary and appropriate for this type of transaction
including, but not limited to, representations, warranties, covenants and
indemnities from each of the Founding Stockholders, the Company and the
Investors.
The closing of the transactions contemplated by the Term Sheet is subject
to certain conditions precedent set forth in the Term Sheet, including,
(i) the Investor being satisfied, in its sole and reasonable discretion,
with its legal, accounting, regulatory, business and other due diligence
investigation of the Company, which will be completed prior to the
execution of the Definitive Agreements, (ii) the execution and delivery of
mutually acceptable Definitive Agreements within sixty (60) days of the
date of the execution of the Term Sheet, (iii) the delivery of mutually
acceptable employment agreements with key Company management and
executives, other than Mr. Cassidy, which will include customary
non-competition and non-solicitation provisions, and the delivery of a
mutually acceptable non-competition agreement with Mr. O'Connor and (iv)
Mr. Nordlicht's agreement to waive any obligation on the part of the
Company to make any prepayment of principal or to begin paying interest
upon amounts due to Mr. Nordlicht under the Loan Agreement between him and
the Company, dated March 22, 2004, as a result of any exercise by the
Investor of the Warrant.
If the Investor does not inform the Company within 3 weeks of being
provided substantial access to due diligence that it is satisfied with its
due diligence review and that it intends to proceed with the transaction,
the Company and the Founding Stockholders will be entitled, in their sole
discretion, to terminate the transaction by written notice to the
Investor.
Effective upon closing of the transactions contemplated by the Term Sheet
and for so long as the Investor owns at least 5,145,724 shares of Common
Stock, the Investor will be entitled to designate one (1) person
(reasonably acceptable to the Company) that the Company is required to
nominate as a member of the Company's board of directors (the "Investor
Director"), and each of the Founding Stockholders shall be required to
vote their shares in favor of the election of the Investor's designation.
For so long as the Investor owns at least 5,145,724 shares of Common
Stock, the Investor will be required to vote its shares in favor of each
individual nominated for election as a member of the Company's board of
directors by the nominating committee of the Company. For so long as the
Investor owns at least 5,145,724 shares of Common Stock and subject to
certain permitted threshold amounts, the consent of the Investor Director
(which may not be unreasonably withheld) will be required before the
Company may take certain actions including (i) issuances of shares of a
class of stock ranking senior to the Common Stock, (ii) acquisitions of
businesses or assets, (iii) entry into related party transactions, (iv)
the payment of dividends on, or the optional redemption of, capital stock
or the issuance of debt and (v) entry into any business which is not
similar, ancillary or related to any of the businesses in which the
Company is currently engaged.
Page 2 of 6
For so long as the Investor owns at least 5,145,724 shares of Common
Stock: (i) each of the Founding Stockholders and the Investor will have a
right of first refusal to purchase or subscribe for their pro rata
percentage of shares in certain subsequent sales by the Company of Common
Stock and/or certain other securities convertible into or exchangeable for
Common Stock, (ii) each of the Founding Stockholders and the Investor will
have certain rights of first refusal with respect to proposed sales of
Common Stock by the others and (iii) before they may accept any offer by
an independent third party to acquire fifty percent (50%) or more of the
total voting power of the Common Stock or voting stock of the Company, the
Founding Stockholders and the Company will be required to provide notice
of such offer to the Investor and permit the Investor a period of 10 days
to make its own offer.
In connection with the Purchased Shares, the Company will enter into a
registration rights agreement with the Investor which, among other things,
will provide the Investor, subject to standard exceptions, with (i)
unlimited "piggyback" rights subject to standard underwriter lock-up and
cutback provisions and (ii) the right to two demand registrations for
underwritten offerings or take downs off of a shelf registration
statement, provided that (A) a minimum of $5,000,000 of Common Stock are
offered in such a demand registration or take down and (B) the Company
shall not be obligated to effectuate more than one underwritten offering
pursuant to a demand registration by the Investor in any six-month period.
In addition, if the Company is eligible to register its securities on Form
S-3 (or any successor form then in effect), the Investor will be entitled
to unlimited registrations on Form S-3 (or any successor form then in
effect), including shelf registrations, provided that (x) a minimum of
$5,000,000 of Common Stock are offered in such an S-3 registration and (y)
the Company will not be obligated to effect more than two S-3
registrations in any twelve month period. An S-3 registration will not
count as a demand registration, unless such registration is for an
underwritten offering.
The Investor will enter into a standstill agreement with the Company
pursuant to which the Investor, with certain limited exceptions, will
agree not to purchase any additional shares of the Company's Common Stock
until the one year anniversary of the closing date of the transactions
contemplated by the Term Sheet.
The closing of the transactions contemplated by the Term Sheet is expected
to occur as soon as reasonably practicable after the date of execution of
the Term Sheet. The provisions of the Term Sheet are subject to, among
other things, satisfactory completion of due diligence by the Investor.
There can be no assurance that the transactions contemplated by the Term
Sheet will close.
Page 3 of 6
Item 8.01. Other Events
On January 22, 2007, Optionable, Inc. issued a press release announcing
that it entered into the Term Sheet. A copy of that press release is
filed as Exhibit 99.1 hereto.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
The following exhibits are furnished as part of this report:
Exhibit 99.1 Press Release dated January 22, 2007, announcing that
Optionable, Inc. entered into the Term Sheet
Page 4 of 6
SIGNATURE
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereto duly authorized.
Dated: January 22, 2007
Optionable, Inc.
By: /s/ Marc-Andre Boisseau
By: Marc-Andre Boisseau
Chief Financial Officer
Page 5 of 6
EXHIBIT INDEX
Exhibit 99.1 Press Release dated January 22, 2007, announcing that
Optionable, Inc. entered into the Term Sheet
Page 6 of 6