form8k.htm
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):
June
27, 2008
___________
BROADPOINT
SECURITIES GROUP, INC.
(Exact
name of registrant as specified in its charter)
___________
New
York
(State
or other jurisdiction of incorporation)
0-14140
(Commission
File Number)
22-2655804
(IRS
Employer Identification No.)
One
Penn Plaza
New
York, New York
(Address
of Principal Executive Offices)
10119
(Zip
Code)
(212) 273-7100
(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:
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
o
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
o
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Item
1.01. Entry
into Material Definitive Agreement.
On June
27, 2008 Broadpoint Securities Group, Inc. (the “Company”) entered into a
Preferred Stock Purchase Agreement (the “Preferred Stock Purchase Agreement”)
with Mast Credit Opportunities I Master Fund Limited, a Cayman Islands
corporation (“Mast”) for the issuance and sale of (i) 1,000,000 newly-issued
unregistered shares of Series B Mandatory Redeemable Preferred Stock of the
Company, par value $1.00 per share (the “Series B Preferred Stock”) and (ii)
warrants to purchase 1,000,000 shares of the Company’s common stock, par value
$0.01 per share (the “Common Stock”), at an exercise price of $3.00 per share,
for an aggregate cash purchase price of $25 million (the “Preferred Private
Placement”).
In
connection with the Preferred Private Placement, the Company entered into the
following material agreements effective on June 27, 2008, the material terms of
which are briefly described below.
Preferred Stock Purchase
Agreement
Pursuant
to the terms of the Preferred Stock Purchase Agreement, the Company issued and
sold 1,000,000 shares of Series B Preferred Stock (the “Shares”) to
Mast. The Shares were sold for an aggregate purchase price of $25
million, with the proceeds from the sale to be used for working
capital. The Preferred Stock Purchase Agreement includes, among other
things, certain negative covenants with respect to the operations, actions and
financial condition of the Company and its subsidiaries so long as Mast owns
Series B Preferred Stock. Such covenants include, but are not limited
to, the following:
o Neither
the Company nor any of its subsidiaries will merge with another entity or
dispose of all or substantially all of the assets of the Company and its
subsidiaries taken as a whole (other than, in each case, to the Company or any
of its wholly-owned subsidiaries); provided that this restriction shall not
apply to any transaction in which the shares of capital stock of the Company
outstanding prior to the transaction continue to represent at least a majority
(by voting power) of the capital stock of the surviving
corporation. Additionally, with certain exceptions, neither the
Company nor its subsidiaries will transfer all or a substantial part of its
assets, except for (i) sale of inventory in the ordinary course, (ii)
dispositions of surplus or worn-out equipment in the ordinary course, (iii)
dispositions to wholly-owned subsidiaries, or (iv) dispositions of assets of
less than $50,000 in a fiscal year.
o No
indebtedness may be incurred by the Company or its subsidiaries other than
Permitted Indebtedness (as defined in the Preferred Stock Purchase Agreement),
which includes among other things, indebtedness incurred in the ordinary course
of the Company’s business.
o Neither
the Company nor its subsidiaries may pay down any indebtedness (other than
intercompany indebtedness or Permitted Indebtedness), except for regularly
scheduled or required payments.
o The
Company shall not restrict the ability of any subsidiary to make or pay
dividends or other upstream payments unless required by applicable
law.
o Except
for the Preferred Private Placement, or transactions approved in accordance with
the Company’s Related Party Transactions Policy, neither the Company nor its
subsidiaries may enter into any transaction with any of its
affiliates.
o Neither
the Company nor its subsidiaries will, by any voluntary action, avoid or seek to
avoid the performance of any of the terms of the Preferred Private Placement
transaction documents and will at all times in good faith carry out such terms
and take all action as may be required to protect the rights of Mast as a holder
of Series B Preferred Stock and warrants under this provision.
o Except
with respect to acquisitions of, or investments in, entities in the industry in
which the Company or any of the subsidiaries operates (and so long as the
Company is not in breach of the net tangible book value covenant described
below), the Company and its subsidiaries shall not, (i) make any investment, or
acquire the capital shares, assets or business of, any entity for a price in
excess of $2,000,000 in the aggregate, or (ii) make any investments in any other
entity other than contributions by the Company to the capital of any
wholly-owned subsidiary, or by any wholly-owned subsidiary to the capital of any
other wholly-owned subsidiary. The Company shall not transfer any
portion of its assets to any of its foreign subsidiaries unless the fair market
value of the assets is less than $5,000,000 in the aggregate and each of the
foreign subsidiaries receiving funds has pledged at least 65% of its capital
stock to Mast, provided that the Company may transfer up to $1,000,000 of the
$5,000,000 to foreign subsidiaries whose capital stock is not pledged to
Mast. The Company shall not transfer any portion of its assets to any
of its domestic subsidiaries unless and until such subsidiary is a direct or
indirect wholly-owned domestic subsidiary.
o For any
fiscal quarter ending, the Company will not permit its net tangible book value
to be less than 50% of the highest fiscal year end net tangible book value that
has been reported by the Company beginning December 31, 2007.
Because
Mast is a “related party” as defined by Nasdaq and the Company’s Related Party
Transactions Policy (the “Policy”), the Preferred Stock Purchase Agreement was
submitted to and approved by the Audit Committee of the Board of Directors in
accordance with the Policy and Nasdaq Marketplace Rule 4350(h) governing related
party transactions. The Shares were issued in reliance upon
exemptions from registration pursuant to Section 4(2) of the Securities Act of
1933, as amended (the “Securities Act”). A copy of the Preferred Stock Purchase
Agreement is attached as exhibit 10.1 hereto and incorporated by reference
herein.
The
foregoing description of the terms of the Preferred Stock Purchase Agreement is
not complete and is qualified in its entirety by reference to the Preferred
Stock Purchase Agreement, a copy of which is attached as Exhibit 10.1 to
this Current Report on Form 8-K and incorporated herein by
reference.
Warrant
Concurrently
with the execution of the Preferred Stock Purchase Agreement, the Company issued
to Mast a Common Stock Purchase Warrant, dated as of June 27, 2008 (the
“Warrant”), entitling Mast to purchase 1,000,000 shares of Common Stock at an
exercise price of $3.00 per share, subject to customary anti-dilution provisions
as described therein. The Warrant expires after June 27,
2012.
The
foregoing description of the terms of the Warrant is not complete and is
qualified in its entirety by reference to the Warrant, a copy of which is
attached as Exhibit 10.2 to this Current Report on Form 8-K and
incorporated herein by reference.
Registration Rights
Agreement
The
Registration Rights Agreement also contains customary indemnification provisions
that obligate the Company to indemnify and hold harmless Mast, and if
applicable, their controlling persons and their officers, directors, partners
and employees and any underwriter for losses caused by (i) any untrue
statement of material fact or omission of a material fact in any such
registration statement or any prospectus included therein, (ii) the
violation by the Company of the Securities Act or the Exchange Act of 1934, as
amended (the “Exchange Act”), or any rule or regulation thereunder relating to
the Company’s acts or omissions in connection with any such registration
statement. The Registration Rights Agreement also contains other customary terms
found in such agreements, including provisions concerning registration
procedures and payments to Mast in the event the registration statement is not
filed and declared effective by the respective dates set forth in the
Registration Rights Agreement.
The
foregoing description of the terms of the Registration Rights Agreement is not
complete and is qualified in its entirety by reference to the Registration
Rights Agreement, a copy of which is attached as Exhibit 10.3 to this
Current Report on Form 8-K and incorporated herein by reference.
Preemptive Rights
Agreement
Concurrently
with the execution of the Preferred Stock Purchase Agreement, the Company and
Mast entered into a Preemptive Rights Agreement (the “Preemptive Rights
Agreement”). The Preemptive Rights Agreement provides that in the
event that the Company proposes to offer or sell any equity securities of the
Company below the current market price, the Company shall first offer such
securities to Mast to purchase; provided, however, that in the case of equity
securities being offered to MatlinPatterson, Mast shall only have the right to
purchase its pro rata share of such securities (based upon Common Stock
ownership on a fully diluted basis). If Mast exercises such right to
purchase the offered securities, Mast must purchase all (but not a portion) of
such securities for the price, terms and conditions so proposed.
The
preemptive rights do not extend to (i) Common Stock issued to employees or
directors pursuant to a plan or agreement approved by the Board of Directors,
(ii) issuance of securities pursuant to a conversion of convertible securities,
(iii) stock splits or stock dividends or (iv) issuance of securities in
connection with a bona fide business acquisition of or by the Company, whether
by merger, consolidation, sale of assets, sale or exchange of stock or
otherwise.
The
foregoing description of the terms of the Preemptive Rights Agreement is not
complete and is qualified in its entirety by reference to the Preemptive Rights
Agreement, a copy of which is attached as Exhibit 10.4 to this Current
Report on Form 8-K and incorporated herein by reference.
Item
3.02. Unregistered Sales of
Equity Securities.
On June
27, 2008, upon execution and closing of the Preferred Private Placement, the
Company issued to Mast (i) the Shares and (ii) the Warrant, for an aggregate
purchase price of $25 million. The Shares were distributed to Mast
pursuant to the Preferred Stock Purchase Agreement.
These
issuances were made in reliance upon exemptions from registration pursuant to
Section 4(2) of the Securities Act. Mast provided
representations to the Company of its accredited investor status as defined in
Rule 501 of Regulation D.
Item
3.03. Material Modification
to Rights of Security Holders.
In
connection with the Preferred Private Placement, on and effective June 27, 2008,
the Company amended its certificate of incorporation (the “Amendment to the
Certificate of Incorporation”) pursuant to Section 502 of the New York Business
Corporation Law to designate the Series B Preferred Stock under the Company’s
existing “blank check” preferred stock pursuant to the terms of the Certificate
of Designations, Relative Rights, Preferences and Limitations of the Series B
Preferred Stock filed therewith (the “Series B Certificate of
Designations”).
Pursuant
to the Series B Certificate of Designations, 1,000,000 shares of Series B
Preferred Stock were authorized. The holders of Series B Preferred
Stock are entitled to receive cash dividend of 10% per annum, payable quarterly,
as well as dividends at rate of 4% per annum which accrue and are
cumulative. The Company cannot declare, pay or set aside any
dividends on shares of any other class of stock of the Company unless holders of
Series B Preferred Stock receive all of their accrued and unpaid
dividends.
In the
event of any liquidation, dissolution or winding up of the Company (as well as
certain other business combinations or asset dispositions), holders of Series B
Preferred Stock are entitled to receive, prior to any other class of stock of
the Company, $25 per share plus all accrued and unpaid dividends (the
“Redemption Price”).
The
Company is required to redeem all of the Series B Preferred Stock on or before
June 27, 2012 at the Redemption Price. The Company may redeem the
Series B Preferred Stock in whole or in part, at a price in cash equal to the
Redemption Price multiplied by the applicable Premium Call Factor as
follows:
Date Premium Call
Factor
|
o
|
Prior
to June 26,
2009: 1.07
|
|
o
|
From
June, 27 2009 to December 27,
2009: 1.06
|
|
o
|
From
December 28, 2009 to June 27,
2010: 1.05
|
|
o
|
From
June 28, 2010 to December 27,
2011: 1.04
|
|
o
|
From
December 28, 2011 to June
2012: 1.00
|
Upon the
breach by the Company of any of the special voting provisions of the Series B
Certificate of Designations (which are briefly described below), or the failure
by the Company to pay the cash dividends or accruing dividends described above
when due, if such failure is not cured within thirty (30) calendar days of such
due date, the holders of a majority of the Series B Preferred Stock may demand
redemption at a price equal to the Redemption Price multiplied by the applicable
Premium Call Factor described above. In the case of payment defaults
by the Company, default interest accrues at 16%.
Pursuant
to the Series B Certificate of Designations, the Company shall not, without the
consent of at least a majority of the outstanding shares of Series B Preferred
Stock, voting as a single class:
o Amend its
certificate of incorporation or bylaws to change the rights of the Series B
Preferred Stock;
o Increase
the number of authorized shares of Series B Preferred Stock;
o Create
any new class or series, or reclassify any existing class or series, having a
preference over, or on a parity with, the Series B Preferred Stock with respect
to dividends, redemptions, or upon liquidation, whether by merger, consolidation
or otherwise;
o Redeem or
repurchase shares of the Company’s capital stock other than (i) the Series
Preferred Stock or (ii) Common Stock at a price not greater than fair market
value from employees or officers upon termination of service to the
Company;
o Permit
the Company or any subsidiary to operate its business outside of its
current industry;
o Directly
or indirectly declare or pay any dividend or make any payment on its capital
stock (including any payment in connection with any merger or consolidation
involving the Company or any subsidiary) other than dividends or distributions
payable to holders of Series B Preferred Stock or the Company or its
subsidiaries;
o Increase
the size of the Board of Directors to more than nine (9) directors;
and
o Terminate
its status as an issuer required to file reports under the Exchange
Act.
Upon
failure of the Company to pay the Redemption Price on a given redemption date,
if not cured within 30 days of written notice, the holders of Series B Preferred
Stock acting separately from all other classes of capital stock of the Company
shall have the right, but not the obligation, to elect (i) three (3) directors
to the Board of Directors of the Company if such default has not been cured
within the thirty (30) day cure period (the “Cure Period”), (ii) an additional
three (3) directors to the Board of Directors of the Company at the end of the
first three month period following the Cure Period during which such default
continues uncured and (iii) an additional four (4) (or such greater number so
that the directors elected by the holders of the Series B Preferred Stock shall
constitute a majority of the directors) directors to the Board of Directors of
the Company at the end of the second three month period following the Cure
Period during which such default continues uncured. Once the default
is cured, the term of such directors shall terminate.
The
foregoing description of the terms of the Amendment to the Certificate of
Incorporation (including the Series B Certificate of Designations) is not
complete and is qualified in its entirety by reference to the Amendment to the
Certificate of Incorporation (which includes the Series B Certificate of
Designations), a copy of which is attached as Exhibit 3.1 to this Current
Report on Form 8-K and incorporated herein by reference.
Item
5.03. Amendments to
Articles of Incorporation or Bylaws.
The
description contained in Item 3.03 above is incorporated in this Item 5.03 by
reference thereto.
Item
8.01. Other
Events.
On June
30, 2008, the Company issued a press release announcing that it has closed the
Preferred Private Placement. See the press release, which is
furnished with this Form 8-K as Exhibit 99.1, for more information.
Item
9.01. Financial Statements
and Exhibits.
(d) Exhibits.
3.1 – Certificate of
Amendment to the Certificate of Incorporation of the Company
10.1 –
Preferred Stock Purchase Agreement, dated as of June 27, 2008, by and between
the Company and Mast
10.2 –
Common Stock Purchase Warrant, dated as of June 27, 2008, issued by the Company
to Mast
10.3 –
Registration Rights Agreement, dated as of June 27, 2008, by and between the
Company and Mast
10.4 –
Preemptive Rights Agreement, dated as of June 27, 2008, by and between the
Company and Mast
99.1 –
Press Release of the Company dated June 30, 2008.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BROADPOINT
SECURITIES GROUP, INC.
By: /s/ Robert I.
Turner
Name:
Robert I. Turner
Title:
Chief Financial Officer
Dated:
July 1, 2008