Purchase and Sale Agreement - National Association of Securities Dealers Inc. and NASDAQ Stock Market Inc.
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT made this 23rd day of March 2001
(this "Agreement"), by and among National Association of Securities
Dealers, Inc., a Delaware corporation (the "NASD"), and The Nasdaq Stock
Market, Inc., a Delaware corporation ("Nasdaq").
WHEREAS, the NASD is the owner of 95,454,209 shares of the
common stock, par value $.01 per share, of Nasdaq (the "Common Stock");
WHEREAS, in furtherance of enabling Nasdaq and the NASD to
meet a principal goal of the restructuring of Nasdaq--the reduction of the
NASD's ownership of Nasdaq--as well as to assist the NASD in fulfilling its
commitment to attempt to eliminate its ownership interest in Nasdaq by June
2002, the NASD desires to sell and Nasdaq desires to purchase, 18,461,538
shares of Common Stock (the "Shares") on the terms and subject to the
conditions provided for herein;
WHEREAS, Nasdaq and Hellman & Friedman Capital Partners IV,
L.P. and its affiliates (collectively, "H&F") have entered into a letter of
intent whereby Nasdaq has agreed to issue, and H&F has agreed to purchase
(the "H&F Transaction"), $240,000,000 aggregate principal amount of
Nasdaq's 4% convertible subordinated debentures (the "Debentures"); and
WHEREAS, Nasdaq intends to use substantially all the
proceeds from the H&F Transaction to purchase the Shares on the terms and
subject to the conditions provided for herein.
NOW, THEREFORE, in consideration of the provisions contained
herein, the parties hereto agree as follows:
1. PURCHASE AND SALE OF THE SHARES.
1.01 Sale of the Shares. On the terms and subject to the
conditions contained herein, the NASD agrees to sell to Nasdaq and Nasdaq
agrees to buy from the NASD the Shares at the Closing described in Section
2 hereof.
1.02 Delivery of the Shares. At the Closing, the NASD shall
deliver to Nasdaq validly issued certificates representing the Shares duly
endorsed in blank or accompanied by stock powers duly executed in blank,
with all necessary stock transfer stamps affixed thereto.
1.03 Purchase Price. The purchase price for the Shares shall
be $13 per Share for an aggregate purchase price of $239,999,994 (the
"Purchase Price").
1.04 Payment of the Purchase Price. At the Closing, Nasdaq
shall pay to the NASD the Purchase Price by wire transfer of immediately
available funds to an account specified by the NASD for such purpose.
2. THE CLOSING; COVENANTS.
2.01 Closing. The closing of the purchase and sale of the
Shares provided for in this Agreement (the "Closing") shall take place at
the offices of The Nasdaq Stock Market, Inc., 33 Whitehall Street, New
York, New York, 10004, at 10 a.m. on the third business day after
satisfaction of all the conditions provided for in Sections 5 and 6 hereof,
other than those that are satisfied on the Closing Date, or at such other
place and time as the parties hereto shall agree in writing (the time and
date of such Closing being referred to herein as the "Closing Date").
2.02 Further Actions. The parties hereto agree to use their
reasonable best efforts to have the Closing occur as soon as practicable
consistent with the provisions of this Agreement.
2.03 Charter Amendment. The NASD agrees that it shall, at
any meeting (whether annual or special and whether or not an adjourned or
postponed meeting) of stockholders of Nasdaq, however called, vote or
consent, in person or by proxy, all shares of Common Stock owned by it, in
favor of an amendment to the Restated Certificate of Incorporation of
Nasdaq to permit the holders of the Debentures to vote on an as-converted
basis on all matters that holders of Common Stock have the right to vote,
subject to the five percent voting limitation that applies to all other
stockholders.
2.04 Investor Rights Agreement. The parties hereto agree to
negotiate in good faith an investor rights agreement (the "Investor Rights
Agreement") having substantially the same terms as those set forth on the
term sheet attached hereto as Exhibit I (the "Term Sheet") as well as other
such customary terms as may be agreed upon by the parties.
2.05 Voting Agreement. At any meeting of Nasdaq's
stockholders held prior to the date upon which Nasdaq becomes registered to
operate as a national securities exchange by the Securities and Exchange
Commission, the NASD agrees to vote all shares of Common Stock held by it
in favor of the nominee for election to the Board of Directors of Nasdaq
designated by H&F in connection with the H&F Transaction.
3. REPRESENTATIONS AND WARRANTIES OF THE NASD. The NASD
represents and warrants to Nasdaq as follows:
3.01 Organization and Standing. The NASD is a corporation
duly incorporated, validly existing and in good standing under the laws of
the State of Delaware.
3.02 Binding Agreement. This Agreement will be duly and
validly executed and delivered on behalf of the NASD and, assuming due
authorization, execution and delivery by Nasdaq, will constitute the legal
and binding obligation of the NASD enforceable against the NASD in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and to
general equity principles (whether considered in a proceeding in equity or
at law).
3.03 Title to Shares. The NASD has good and valid title to
the Shares, free and clear of all liens, charges, claims, security
interests, restrictions, options, proxies, voting trusts or other
encumbrances (each an "Encumbrance"). Assuming Nasdaq has the requisite
power and authority to be lawful owner of the Shares, upon delivery to
Nasdaq at the Closing of certificates representing the Shares, and upon the
NASD's receipt of the Purchase Price for the Shares, Nasdaq will acquire
all of the NASD's right, title and interest in and to the Shares being sold
to it and will receive good and valid title to the Shares, free and clear
of any and all Encumbrances.
3.04 Required Approvals, Notices and Consents. No material
consent or approval of, other action by, or any notice to, any governmental
body or agency, domestic or foreign, or any third party is required in
connection with the execution and delivery by the NASD of this Agreement or
the consummation by the NASD of the transaction contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF NASDAQ. Nasdaq
represents and warrants to the NASD as follows:
4.01 Organization and Standing. Nasdaq is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware.
4.02 Binding Agreement. This Agreement will have been duly
and validly authorized, executed and delivered by Nasdaq and, assuming due
authorization, execution and delivery by the NASD, will constitute the
legal and binding obligation of Nasdaq enforceable against Nasdaq in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally and to general
equity principles (whether considered in a proceeding in equity or at law).
4.03 Required Approvals, Notices and Consents. No material
consent or approval of, other action by, or any notice to, any governmental
body or agency, domestic or foreign, or any third party is required in
connection with the execution and delivery by Nasdaq of this Agreement or
the consummation by Nasdaq of the transaction contemplated hereby.
5. CONDITIONS TO OBLIGATIONS OF THE NASD. The obligations of
the NASD are subject to the fulfillment on or prior to the Closing as
follows:
5.01 Representations, Warranties and Agreements. The
representations and warranties of Nasdaq shall be true and correct in all
material respects on the Closing Date as though made on and as of such date
and Nasdaq shall have performed all other obligations and agreements
contained in this Agreement to be performed prior to the Closing.
5.02 Statutes, Rules and Regulations. No statute, rule,
regulation or order of any court or administrative agency shall be in
effect which prohibits the consummation of the transactions contemplated
hereby.
6. CONDITIONS TO OBLIGATIONS OF NASDAQ. The obligations of
Nasdaq are subject to the fulfillment on or prior to the Closing as
follows:
6.01 Representations, Warranties and Agreements. The
representations and warranties of the NASD shall be true and correct in all
material respects on the Closing Date as though made on and as of such date
and the NASD shall have performed all other obligations and agreements
contained in this Agreement to be performed prior to the Closing.
6.02 Statutes, Rules and Regulations. No statute, rule,
regulation or order of any court or administrative agency shall be in
effect which prohibits the consummation of the transactions contemplated
hereby.
6.03 H&F Transaction. The H&F Transaction shall have been
consummated.
7. TERMINATION.
7.01 Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual written consent of the parties; and
(b) by either party in the event the Closing has not
occurred on or before May 1, 2001, unless the failure of such consummation
shall be due to a breach of this Agreement by the party seeking to
terminate this Agreement.
7.02 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 7.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto
(or any stockholder, director, officer, partner, employee, agent,
consultant or representative of such party) except that (a) nothing herein
shall relieve any party from liability for, or eliminate the rights of any
party relating to, any willful breach of this Agreement and (b) this
Section 7.02 and Section 8.02 shall survive termination of this Agreement.
8. MISCELLANEOUS.
8.01 Entire Agreement. This Agreement embodies the entire
agreement and understanding of the parties with respect to the subject
matter hereof and supersede any and all prior agreements, arrangements and
undertakings, whether written or oral, relating to matters provided for
herein and therein. There are no provisions, undertakings, representations
or warranties relative to the subject matter of this Agreement not
expressly set forth herein and therein.
8.02 Expenses. Except as otherwise specifically provided in
this Agreement, all costs and expenses, including, without limitation, fees
and disbursements of counsel, financial advisors and accountants, incurred
in connection with this Agreement and the transaction contemplated hereby
shall be paid by the party incurring such expense.
8.03 Notices. Any notice, demand, claim, notice of claim,
request or communication required or permitted to be given under the
provisions of this Agreement shall be in writing and shall be deemed to
have been duly given if delivered personally by facsimile transmission or
sent by first class or certified mail, postage prepaid to the following
addresses,
If to the NASD:
National Association of Securities Dealers, Inc.
1735 K Street, N.W.
Washington, D.C. 20006
Telecopier: (202) 728-8894
Attention: General Counsel
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopier: (212) 848-7179
Attention: Robert Mundheim, Esq. and
James B. Bucher, Esq.
If to Nasdaq:
The Nasdaq Stock Market, Inc.
33 Whitehall Street
New York, New York 10004
Telecopier: (202) 728-8321
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telecopier: (212) 735-2000
Attention: Matthew J. Mallow, Esq. and
Eric J. Friedman, Esq.
or to such other address as any party may request by notifying in writing
all of the other parties to this Agreement in accordance with this Section
8.03.
Any such notice shall be deemed to have been received on the
date of personal delivery, the date set forth on the Postal Service return
receipt, the date of delivery shown on the records of the overnight courier
or the date shown on the facsimile confirmation, as applicable.
8.04 Survival of Representations and Warranties. Each of the
representations and warranties made by the parties in this Agreement shall
terminate 12 months after the Closing.
8.05 Benefit and Assignment. This Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. There shall be no assignment of any
interest under this Agreement by any party. Nothing herein, express or
implied, is intended to or shall confer upon any other person any legal or
equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
8.06 Waiver. Any waiver of any provision of this Agreement
shall be valid only if set forth in an instrument in writing signed by the
party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of
the same term or condition, or a waiver of any other term or condition, of
this Agreement. The failure of any party to assert any of its rights
hereunder shall not constitute a waiver of any such rights.
8.07 Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by, or on behalf of, the
NASD and Nasdaq.
8.08 Construction of this Agreement. The language used in
this Agreement shall be deemed to be the language chosen by the parties
hereto to express their mutual agreement, and this Agreement shall not be
deemed to have been prepared by any single party hereto. The headings of
the sections and subsections of this Agreement are inserted as a matter of
convenience and for reference purposes only and in no respect define, limit
or describe the scope of this Agreement or the intent of any section or
subsection. This Agreement may be executed in one or more counterparts and
by the different parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
8.09 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws (as opposed to
the conflicts of law provisions) of the State of New York.
8.10 Public Announcements. No party hereto shall make any
public announcement concerning the transactions contemplated by this
Agreement without the prior approval of the other party hereto, except as
such announcement may be required by the applicable law. Notwithstanding
the foregoing, the parties hereto acknowledge that promptly after the
execution of this Agreement and the Closing, the parties will make public
disclosure, to be mutually agreed upon, of the transactions contemplated by
this Agreement.
8.11 Specific Performance. The parties recognize and agree
that if for any reason any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise
breached, immediate and irreparable harm or injury would be caused for
which money damages would not be an adequate remedy. Accordingly, each
party agrees that, in addition to any other available remedies, each other
party shall be entitled to an injunction restraining any violation or
threatened violation of the provisions of this Agreement without the
necessity of posting a bond or other form of security. In the event that
any action should be brought in equity to enforce the provisions of the
Agreement, no party will allege, and each party hereby waives the defense,
that there is an adequate remedy at law.
8.12 Further Assurances. The NASD hereby agrees that it
shall from time to time, at the request of Nasdaq, execute and deliver to
Nasdaq any and all instruments or documents as Nasdaq may reasonably
request for the purpose of vesting in Nasdaq the full right, title and
interest of the NASD in and to the Shares.
8.13 Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
8.14 Anti-dilution Rights. As of the date hereof, the NASD
hereby agrees that the anti-dilution rights contemplated by the Term Sheet
and to be included in the Investor Rights Agreement shall not apply to (i)
the issuance of the Debentures by Nasdaq to H&F in connection with the H&F
Transaction and (ii) the issuance of any shares of Common Stock by Nasdaq
upon conversion of all or any portion of the Debentures by the holders
thereof.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC.
By:
---------------------------------
Name:
Title:
THE NASDAQ STOCK MARKET, INC.
By:
---------------------------------
Name:
Title:
Exhibit I to
Purchase and Sale Agreement
Investor Rights Term Sheet
NASDAQ/NASD
DRAFT INVESTOR RIGHTS AGREEMENT
TERM SHEET
ELIGIBLE SECURITIES o Subject to legal requirements
prior to Exchange Registration,
all shares of Common Stock now
owned by the NASD (excluding
shares of Common Stock
underlying outstanding and
unexpired warrants)
("Registrable Common Shares")
o Shares of Common Stock returned
to the NASD by the Voting
Trustee upon the expiration of
unexercised warrants
TIMING o Nasdaq's initial underwritten
public offering will trigger
the NASD's registration rights.
Subject to the terms herein,
the NASD will have the right to
"piggyback" on the registration
statement filed in connection
with Nasdaq's initial public
offering and thereafter, the
NASD may exercise "demand"
registration rights.
DEMAND REGISTRATION o The NASD would have two
long-form demand registrations
(i.e., Form S-1), provided,
however, that if Nasdaq was S-3
eligible by July 1, 2002, the
NASD shall be entitled to only
one long-form demand
registration, and unlimited
short-form demand registrations
(i.e., Form S-3).
o The aggregate offering price
for the shares included in each
demand registration statement
must not be less than $50
million, unless otherwise
agreed to by the NASD and
Nasdaq
o A nationally-recognized
investment bank selected by the
NASD from a list of
underwriters to be agreed upon
mutually by the NASD and Nasdaq
must be used as an underwriter
in any demand registration in
which the aggregate offering
price exceeds $50 million and
the plan of distribution
involves the sale of shares
other than in open market
transactions
o Nasdaq is not required to file
a registration statement
pursuant to a demand by the
NASD within 90 days of the
effective date of any other
registration statement filed by
Nasdaq pursuant to the
Securities Act (180 days if the
registration statement filed by
Nasdaq is for the initial
public offering of Common
Stock), excluding registration
statements filed in connection
with benefit plans or
acquisitions
o Nasdaq may postpone for up to
120 days in any 12-month
period the filing or
effectiveness of a registration
statement pursuant to a NASD
demand if the Nasdaq Board
determines in good faith at the
time of the NASD demand that
the filing of such registration
statement would materially
interfere with any transaction
or event involving Nasdaq.
Nasdaq acknowledges that during
any such postponement it will
continue to cooperate with the
NASD so that Nasdaq will be
able to promptly file or
request effectiveness of the
registration statement, as the
case may be, upon termination
of any postponement period
o Nasdaq may include shares of
its own account in any
registration statement filed
pursuant to a NASD demand. The
number of shares to be included
by Nasdaq in a piggyback
registration is subject to
being "cut back" if the
managing underwriter of the
offer determines that the
inclusion of all the shares
requested to be registered by
Nasdaq will materially and
adversely affect the offering
based on marketing factors
SHELF REGISTRATION o The NASD may make one demand
for the filing of a shelf
registration statement covering
an offering of shares
underlying unexercised and
unexpired warrants to be made
on an continuous basis pursuant
to Rule 415. In addition, the
NASD may use a demand
registration to request a shelf
registration covering open
market resales of Registrable
Common Shares.
PIGGYBACK REGISTRATION o The NASD may include its
registrable Common Stock shares
in any offering of Common Stock
or other class of equity
securities registered under the
Securities Act other than a
registration of an employee
stock option or incentive plan,
etc., on Form S-8, and
registration on Form S-4 of
securities proposed to be
issued in exchange for
securities or assets of another
corporation or in connection
with a merger or consolidation
involving Nasdaq
o The number of shares to be
included by the NASD in a
piggyback registration is
subject to being "cut back" if
the managing underwriter of the
offer determines that the
inclusion of all the shares
requested to be registered by
the NASD will materially and
adversely affect the offering
based on marketing factors,
provided, however, that with
respect to any registration for
which a registration statement
is filed prior to the earlier
of (i) six months after the
consummation of the IPO and
(ii) December 31, 2002, any
shares requested to be included
by any other party exercising
piggyback registration rights
will be "cut-back" first before
any shares of the NASD are
"cut-back"
o Nasdaq has sole discretion in
determining the price of the
securities offered in a
piggyback offering, subject to
the NASD's right to withdraw
its securities if it disagrees
with the offering price set by
Nasdaq
TAG-ALONG RIGHT o If, prior to the initial public
offering of Common Stock,
Nasdaq proposes to sell shares
for cash in a private
transaction exempt from
registration under the
Securities Act, the NASD shall
have the right to include in
such sale the number of shares
of Common Stock it owns equal
to, unless otherwise agreed to
by the NASD and Nasdaq, the
product of (x) the number of
shares of Common Stock then
owned by the NASD and (y) a
fraction with the numerator
equal to the number of shares
to be sold by Nasdaq in the
private transaction and a
denominator equal to the number
of outstanding shares of Common
Stock
o The tag-along right would not
apply if (i) the aggregate
purchase price of the shares
being sold by Nasdaq in such
private transaction or series
of related transactions is less
than $10 million, (ii) the sale
is to any of the previously
identified possible purchasers
listed on an exhibit to the
Agreement, (iii) Nasdaq and the
NASD agree in writing for
Nasdaq to acquire from the NASD
a number of shares equal to the
number of shares that the NASD
would otherwise have been
entitled to include in such
private sale prior to
commencement of any such sale
by Nasdaq, (iv) the sale is in
connection with a joint
venture, strategic alliance or
other similar arrangement , in
any such case the primary
purpose of which is other than
for the Company to raise
capital and the consideration
involved in such transaction is
not predominantly comprised of
cash, in each case as
determined in good faith by the
Nasdaq Board; provided,
however, the parties agree that
any such transaction which
involves cross-shareholdings
obtained through substantially
similar cash investments shall
not be deemed primarily to
raise capital or to
predominantly involve cash
consideration, or (v) any
issuance of shares of Common
Stock (or securities
convertible into shares of
Common Stock) by Nasdaq
pursuant to equity plans or
arrangements for employees,
officers, directors or
consultants
o The tag-along right will
terminate automatically upon
the effectiveness of a
registration statement for the
initial public offering of
Common Stock
ANTI-DILUTION RIGHTS o In the event that, prior to
Nasdaq's registration as an
exchange, Nasdaq intends to
issue any shares of its Common
Stock (or securities
convertible into Common Stock)
and (i) the NASD would not
otherwise sell Nasdaq shares in
connection with such issuance
and (ii) as a result of such
issuance, the NASD's ownership
in Nasdaq would be diluted by
5% or more, then (x) Nasdaq
must provide written notice to
the NASD that Nasdaq intends to
make such issuance not less
than 30 day's prior to such
issuance and (y) such issuance
may not be consummated by
Nasdaq without the prior
consent of the NASD, which
consent may not be unreasonably
withheld or delayed, provided,
however, that the foregoing
provisions shall not apply with
respect to (i) the issuance of
$240,000,000 aggregate
principal amount of Nasdaq's 4%
convertible subordinated
debentures (the "Debentures")
to be issued by Nasdaq to
Hellman & Friedman Capital
Partners IV, L.P. and its
affiliates (collectively,
"H&F") as referred to in the
Purchase and Sale Agreement,
dated March 23, 2001, between
Nasdaq and the NASD (the
"Purchase and Sale Agreement")
and (ii) the issuance of any
shares of Common Stock by
Nasdaq upon conversion of all
or any portion of the
Debentures by the holders
thereof
o In the event that, after
Nasdaq's registration as an
exchange, Nasdaq intends to
issue any shares of its Common
Stock (or securities
convertible into Common Stock)
and (i) the NASD would not
otherwise sell Nasdaq shares in
connection with such issuance
and (ii) as a result of such
issuance, the NASD's ownership
in Nasdaq would be diluted by
5% or more, then Nasdaq must
provide prior written notice to
the NASD that Nasdaq intends to
make such issuance which
notice, to the extent
practicable in light of
commercial considerations,
should be not less than 15
day's prior to such issuance.
Nasdaq's obligation to provide
prior notice will terminate at
any time when the NASD ceases
to hold 5% of Nasdaq's
outstanding Common Stock
provided, however, that the
foregoing provisions shall not
apply with respect to (i) the
issuance of the Debentures to
be issued by Nasdaq to H&F as
referred to in the Purchase and
Sale Agreement and (ii) the
issuance of any shares of
Common Stock by Nasdaq upon
conversion of all or any
portion of the Debentures by
the holders thereof
o The notice and consent rights
described above will (x) not be
deemed to affect the parties'
obligations under any other
provisions of the Investor
Rights Agreement or under
applicable law or regulations
and (y) will not apply to
equity plans or arrangements
for employees, officers,
directors or consultants
LOCK-UP o The NASD shall not be permitted
to transfer any shares of
Common Stock for a period of
(i) 180 days (subject to a
longer period as may be
requested by the underwriters)
following the consummation of
the initial public offering of
the Common Stock, and (ii) 90
days (subject to a longer
period as may be requested by
the underwriters) following the
effectiveness of any other
registration statement filed by
Nasdaq pursuant to the
Securities Act, unless such
registration statement relates
to the registration of shares
of Common Stock issuable
pursuant to Nasdaq stock option
plans
REGISTRATION EXPENSES o All registration expenses
(other than underwriting
discounts and commissions on
the NASD's shares) shall be
borne by Nasdaq
INDEMNIFICATION o Nasdaq would be liable for any
false or misleading information
contained in a registration
statement except for any
information about the NASD
included in a registration
statement (for which the NASD
would be liable)
VOTING o Upon Exchange Registration, the
NASD will vote all shares owned
by it which are not subject to
the Voting Trust Agreement in
the same proportion as all
other holders of shares of
Common Stock
OTHER TERMS o In connection with any
underwritten public offering,
Nasdaq and the selling
shareholders shall enter into
an underwriting agreements
containing customary terms,
including indemnification.
o The Agreement would contain
other customary terms