The Company expects to utilize the $7.2 million net proceeds of the Note for working capital and general corporate purposes.

At the option of the lender, the Note is convertible into NYFIX common stock at $6.94 per share, a 20% premium over the average of the Company's closing common stock price on the Nasdaq National System for the five trading days preceding December 30, 2004. At the option of the Company, the Note is convertible into NYFIX common stock according to a formula based on the market price of that stock during the term of the Note which requires among other things for the Company's common stock to exceed 150% of the price at which the lender can convert the Note (or $10.41 per share). If the Company converts the Note prior to December 30, 2007, there is an additional make whole interest payment in either cash or the Company's stock at the Company's discretion. The Company may elect to make semi-annual interest payments by issuing NYFIX common stock in lieu of cash. If the Company issues its common stock to convert the Note or make interest payments, the conversion of cash to stock is to be based on 95% of the preceding ten day average closing price of its stock. The Note is subordinated to all existing and future secured indebtedness of the Company. The lender has certain rights to require that the Company register the common stock issuable upon conversion of the Note or for payment of interest under the Securities Act of 1933, as amended. Such registration statement is to be effective by September 30, 2005 and if it is not, the Company will pay additional monthly interest, in cash, for each month the effectiveness is delayed. The additional interest varies by month and totals $150,000 for the first three months of delay, with an aggregate cap of $500,000 in such additional monthly interest for the duration of the Note. In addition, at the option of the lender, the Company may issue to the lender by March 30, 2005 up to an additional $2.5 million note under terms substantially similar to those of the Note.

The Note and common stock issuable upon conversion of the Note and for payment of interest have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws, and unless so registered, may not be offered or sold in the United States, except pursuant to an applicable exemption from the registration requirements of the Securities Act of 1933, as amended, and applicable state securities laws.