EXHIBIT 10.5
LIMITED LIABILITY COMPANY
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BUY-SELL AGREEMENT and CONTROL AGREEMENT
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AGREEMENT made and entered into as of the 5th day of December, 2000
effective as of December 1, 2000, by and among: FIRST MERIDIAN CAPITAL, LLC,
("FMC") a Delaware Limited Liability Company having an office at ▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; STOCKTRADE NETWORK, INC., ("STN"), a Delaware
Corporation having an office at ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; and
▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ SECURITIES, LLC., ("L&W"), a New York Limited Liability
Company having an office at ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
R E C I T A L S
A. WHEREAS, STN is the sole Class A Member of L&W and
B. WHEREAS, Simultaneously herewith, FMC is becoming a Class A Member of L&W,
with an investment of $750,000 (consisting of $500,000 of capital and
$250,000 of subordinated loans); and
C. WHEREAS, The parties wish to provide for the orderly management of L&W by
the Class A members.
NOW, THEREFORE, in consideration of the premises, ten dollars each to the
other in hand paid, receipt of which is hereby acknowledged, and other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
parties hereto agree and covenant as follows:
1) Investment By FMC. Simultaneously with the execution of this Agreement, FMC
will make a contribution of $500,000 to the Capital of L&W and shall make a
subordinated loan of $250,000 to L&W. Said subordinated loan shall be
represented by a Promissory Note (in form attached and made a part hereof
as Exhibit A).
2) Class A Membership. Simultaneously herewith FMC shall execute the L&W
Operating Agreement (a copy of which is attached and made a part hereof as
Exhibit B) and thereupon shall be deemed to have satisfied the
pre-condition to membership set forth therein in ss.1.02(a). As the present
sole Class A Member, STN hereby consents (within the meaning of ss.9.02 of
the Operating Agreement) to the admission of FMC as a Class A member. Upon
making the investments provided for in ss.1 above FMC shall be a Class A
member of L&W without any other or further act on the part of any party.
3) Management of L&W. The parties hereto hereby agree that all voting and
management rights delegated to or exercisable by the Class A Members shall
be exercised by FMC in its sole discretion without any requirement for
consultation with or notification of STN. In furtherance of this provision,
STN hereby grants to FMC its Irrevocable Proxy (in form attached and made a
part hereof as Exhibit C). Simultaneously herewith, STN will deliver the
resignation of ▇▇▇▇▇▇▇ ▇▇▇▇▇ as a Manager of L&W.
4) Sharing of Class A Profits. So long as this Agreement continues in effect,
STN and FMC agree, as the only Class A members, the Class A Members' share
of profits and losses shall be divided between STN and FMC in the following
manner:
a) Before any allocation of profits to FMC, STN shall receive:
i) 13.8% of the first $150,000 monthly Net Override Profits
("hereinafter defined) - for a maximum of $20,700 per month
ii) 9.2% of the next $50,000 monthly Net Override Profits - for a
maximum of $4,600 per month
iii) 4.5% of the next $550,000 monthly Net Override Profits - for a
maximum of $24,750 per month
b) All remaining Class A Profits, and any net loss allocable to Class A
members, after giving effect to the allocation to STN provided for in
ss.4(a) above, shall be allocated to FMC.
c) "Net Override Profits" are defined as all revenues received by L&W
from any Clearing Firm less any trader rebates (including amounts
allocated to Class B members) after deducting a provision for New York
City Unincorporated Business Tax and before allocation of other
expenses, all of which other expenses are chargeable to FMC's share of
Class A profits pursuant to 4(b) above..
d) Class A Profits allocated to STN shall be distributed monthly, within
20 days after the end of the month of accrual.
5) Withdrawal and Adjustment of STN Capital.
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a) Transfer of Capital. Upon execution of this Agreement, STN's net
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equity in fixed assets will be transferred from its capital account to
FMC's capital account. As per Exhibit L.
b) Withdrawal of Capital. Notwithstanding ss.'s 6.08 and 12.02(c) of the
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Operating Agreement, after the date hereof STN will be permitted to
withdraw its' cash assets from its Capital Account, an amount
determined in accordance with Exhibit D. STN hereby waives all rights
it may have under the Certificate of Formation, Operating Agreement,
applicable law, or otherwise to withdrawal of capital except in
accordance with this provision and except for the withdrawal of its
share of profits in accordance with ss.4. This ss.5 shall not apply to
STN's Class B Membership capital account(s), if any.
6) Restrictions on Transfer. Neither STN nor FMC will sell, assign,
hypothecate, encumber or otherwise transfer all or any part of its Class A
Membership Interest in L&W without the prior written consent of the other,
except as hereinafter provided.
7) STN's option to Acquire FMC's Class A Membership Interest. STN shall have
the option ("STN's Call") to purchase FMC's Class "A" Membership Interest
in L&W, as follows:
a) STN's right to exercise the STN Call shall accrue upon the happening
of either of the following:
i) If the amount of Net Override Profits allocated to STN falls
below $10,000 per month for three months during the term hereof
(whether or not consecutive), in which event the option shall be
exercisable at any time up to 60 days after such event occurs. If
STN fails to exercise its option within such 60- day period, no
new option shall accrue until a new period of three such months
shall occur after the accrual of the expired option.
ii) If FMC's capital (including subordinated loans) in L&W falls
below $250,000 and FMC does not cure this capital deficiency
within 60 days, the option shall be exercisable at any time such
capital deficiency continues. If STN fails to exercise its option
and FMC cures the deficiency, a new option will accrue if as and
when FMC's capital shall again fall below $250,000 and such
deficiency continues uncured for a 60-day period.
b) Exercise price and Terms. The Exercise Price shall be $1 (one) dollar
provided however that FMC shall be permitted to withdraw the full
balance of its capital account immediately upon exercise.
8) FMC's options to Acquire STN's Class A membership A Interest.
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a) Call at Any Time. FMC shall have the option ("FMC's Call") to purchase
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STN's Class "A" Membership Interest in L&W at any time it may choose.
The Option Price shall be (i) $3,291,763; less (ii) an amount equal to
100% of Class A Profits allocable to STN from the date of this
Agreement through the effective date of exercise of the Option. (iii)
Such net amount shall be discounted (at the then prime rate as
published in the Wall Street Journal) to present value as if such
amount was a stream of equal monthly payments over a period of 120
months, reduced by the number of full months elapsed between the date
hereof and the date of the Notice of excercise. The Option Price shall
be payable in full upon the effective date of exercise, except that if
FMC shall exercise its Option in contemplation of a sale or merger of
FMC or a sale of substantially all of its assets, or of its Class A
Membership Interest in L&W, then the Option Price shall be payable,
pro rata, in the same form and with the valuation as the consideration
received by FMC, whether cash, debt, equity, or other consideration,
or some combination thereof and any non-cash portion shall not be
subject to the discount set forth in clause (iii) hereof.
b) Call after Ten Years. FMC shall have the option (FMC's $100 Call") to
purchase STN's Class "A" Membership Interest in L&W, at any time after
ten years from the date of this Agreement for an Option Price of $100.
The Option Price shall be payable in full simultaneously with the
Notice of exercise of the option (in the manner provided in ss.9),
which may specify as the effective date any date on or after the tenth
anniversary of the date of this Agreement.
9) Exercise of Options. The Options hereinbefore provided shall be exercisable
by Notice (given in the manner hereinafter provided) to the other party,
which Notice shall specify a Closing date, which shall be not more than 30
days after the date of the Notice, except that in connection with the
exercise of FMC's Call Option given in contemplation of a sale or merger
referred to in the Notice, the Closing date may be specified in the Notice
as "not later than the closing date of the said sale or merger".
10) Trading Account for STN. So long as STN is a Class A Member of L&W, STN,
and/or either of its officers, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, shall be
permitted to maintain trading accounts with L&W, as Class A or Class B
members, as the case may be. They shall be permitted to continue to
maintain such account(s) so long as they conduct trading and other
activities in conformity with the rules and standards generally applied to
the activities of other Class B Members. In such event, the transaction
rates will be set at 20% above L&W's cost rates. STN and FMC further agree
that for purposes of computing STN's share of Class A Profits pursuant to
ss.4(a) no part of revenue from such accounts or transactions shall be
included in Net Override Profits allocable to the STN Class "A" membership.
11) Conversion of STN Membership Interests. At any time this Agreement is in
effect, FMC may, in its sole and exclusive discretion, and for any reason,
or no reason, cause L&W to create a new class of membership having the same
right to share profits as herein above provided in ss.4, for the benefit of
STN, in which event STN shall exchange its Class A Membership interest for
Membership interests in the new class, provided (i) all rights applicable
to STN's Class A membership interests under this Agreement shall inure to
its benefit as a Member holding interests in the new class; and (ii) STN
shall be the sole Member in the new class.
12) Representations of FMC. FMC warrants and represents to STN that:
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a) Organization. FMC was duly organized and presently exists in good
standing under the laws of its state of formation.
b) Agreement Binding on FMC. This Agreement constitutes a valid and
legally binding obligation of FMC and is enforceable against it in
accordance with its terms. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will violate, or conflict with, or result in a breach of any
provisions of, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, or result
in the termination, or accelerate the performance required by, or
result in the creation of any lien, security interest, charge or
encumbrance upon any of its properties or assets.
c) No Reliance on STN. FMC and its members have had full and free access
to L&W independent of STN to the full extent deemed necessary by them,
and they have made such independent examination as they deemed
necessary of the business, records, information, and physical assets
of L&W. They have not relied on any representations of STN or its
officers, directors, attorneys, or accountants except such
representation as are expressly set forth in this agreement.
13) Representations of STN. STN warrants and represents to FMC that:
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a) Organization. STN and L&W were duly organized and presently exist in
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good standing under the laws of their respective states of formation.
b) Agreement Binding on L&W and STN. Both STN and L&W have full power to
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enter into this Agreement and to carry out its obligations hereunder.
This Agreement constitutes a valid and legally binding obligation of
STN and of L&W and is enforceable against each of them in accordance
with its terms. Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will
violate, or conflict with, or result in a breach of any provisions of,
or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
termination, or accelerate the performance required by, or result in
the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of either of them.
c) L&W Documentation. Exhibit E constitutes a true copy of the
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Certificate of Formation of L&W, including all amendments, if any, and
is presently in full force and effect. Exhibit F constitutes a true
copy of the Operating Agreement of L&W, including all amendments, if
any. The Operating Agreement is presently in effect, and, to the best
of STN's knowledge and belief, no party is presently in default
thereunder.
d) Compliance With Laws. During the period STN was sole Class A Member,
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L&W was not in violation of any applicable foreign, federal, state or
local law, statute, ordinance, rule, regulation or court or
administrative order or process.
e) Licenses. During the period STN was sole Class A Member, L&W
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maintained in good standing all licenses and exchange memberships and
complied with all requirements of governmental and self-regulation
agencies having jurisdiction.
f) Taxes and Regulatory Reports. During the period STN was sole Class A
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Member, L&W, filed all federal, state, local and foreign tax returns,
reports, statements and other similar filings, and all reports to
regulatory agencies, required to be filed by the L&W were filed timely
with the appropriate governmental or regulatory and/or taxing agencies
in all jurisdictions in which any such tax returns and/or reports were
required to be filed. All federal, state, local or foreign taxes,
assessments, interest, penalties, deficiencies, fees and other
governmental charges or impositions (the "Taxes") have been paid.
There are no present or potential, disputes as to Taxes payable or
regulatory agency impositions known to STN.
g) Contracts. There are no executory leases, contracts and agreements to
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which L&W is a party except as disclosed in Exhibit F.
h) Financial Data. To the best of STN's knowledge and belief, the
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December 31, 1999 Financial Statements of L&W and the FOCUS report for
September, 2000, appended to the Agreement as Exhibit G, are true,
correct and complete
i) No Liens. L&W owns and has good and marketable title to all of the
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assets and properties reflected in the documents comprising Exhibit G,
free and clear (except as disclosed in Exhibit G) of all debts,
obligations, leases, conditional sales contracts, licenses, security
interests, liens, mortgages, pledges, and encumbrances of any nature
whatsoever and of charges or title retention or any other security
arrangement.
j) Liabilities. L&W had no liabilities or obligations of any kind, nature
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or description which were not fully disclosed, reflected or reserved
against in the documents comprising Exhibit G on the respective dates
of those documents . Since the date of the documents included in
Exhibit G, the L&W has operated in the normal course of business in
the same manner as in prior periods, and has not incurred any debts or
other liabilities except in the ordinary course of business.
k) No Claims. There are no contingent liabilities of L&W nor actions,
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suits or proceedings pending or threatened against or affecting L&W or
any of its properties or activities, at law or in equity, or before or
by any federal, state, municipal or other governmental department,
domestic or foreign. STN has no knowledge of any state of facts or
contemplated event which may be reasonably be expected to give rise to
any such claim, action, suit, proceeding or investigation
l) Compliance With Laws. To the STN's knowledge and belief, the conduct
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and the carrying on by L&W of its businesses and affairs have not been
and are not now in violation of any applicable foreign, federal,
state, local or regulatory agency law, statute, ordinance, rule,
regulation or court or administrative order or process.
m) Copyrights, Trademarks, Trade Names. L&W has used the trade name
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"▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ SECURITIES" (the "Trade Name") since inception.
STN has no knowledge of any claims of third parties to the Trade Name
nor of any potential claims. STN and L&W have not registered,
trademarked nor otherwise sought protection of the Trade Name and does
not own or hold any patents, trademarks, or copyrights.
n) No Subsidiaries. Other than investment securities held in its trading
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accounts, L&W owns no capital stock or any other proprietary interest
directly or indirectly in any other corporation, association, trust,
partnership, limited liability company, joint venture or other entity,
and has no agreement to acquire any such capital stock or proprietary
interests.
o) Authorizations. The execution and delivery of this Agreement by STN
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and by L&W and the performance by STN its covenants and agreements
hereunder have been duly authorized by all necessary corporate action.
Performance of this Agreement will not violate any provisions of the
Certificate of Incorporation, Certificate of Formation, Operating
Agreement, Bylaws or any statute, ordinance, regulation, order,
judgement, etc. binding on STN or L&W.
p) No material Change. To the best of STN's knowledge and belief, there
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has not been any material adverse change or prospective change, in L&W
or its business during the term of STN's ownership of 100% of the
Class A Membership Interests. There has not been any other event or
condition of any character known to STN not disclosed in this
Agreement (including attached Exhibits) pertaining to and materially
adversely affecting L&W's business except the change in computation of
net capital requirements as disclosed in Exhibit H..
q) Insurance. As of the date of this Agreement, L&W maintains property
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and casualty insurance at reasonable policy limits against risks
customarily insured against by similar business entities. STN has no
reason to believe that any such insurance policy will not be renewed
by the Insurance Company upon expiration upon substantially the same
terms, subject to premium increases, none of which are presently
known.
r) Bank Accounts. All bank accounts maintained in the name of the L&W and
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a list of the persons having the power to sign on behalf of the
Corporation with respect to such accounts are set forth in Exhibit I.
s) Powers of Attorney. L&W does not have outstanding any Powers of
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Attorney authorizing any persons, firm or corporation to act for it
for any purpose whatsoever except the power issued to L&W's payroll
service which authorized that company to sign checks for payroll and
payroll taxes..
t) Employment Contracts. L&W is not a party to any collective bargaining
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agreement covering or relating to any of its employees, and it has not
recognized and has not received a demand for recognition any
collective bargaining representative; nor is it a party to any
contract with any of its employees, agents, consultants, officers,
salesmen, sales representatives, distributors, or dealers, that is not
cancel-able by L&W without penalty or premium on not more than (30)
days' notice except as disclosed in Exhibit J. Copies of all such
contracts are attached in Exhibit J.
u) Proceedings. There are no actions, suits proceedings or investigations
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pending or threatened against or affecting L&W, its licenses and/or
exchange membership(s) before or by any federal, state, municipal or
other governmental department, domestic or foreign or regulatory
agency. STN has no knowledge of any state of facts or contemplated
event which may be reasonably be expected to give rise to any such
action, suit, proceeding or investigation, except an inquiry by the
New York State Attorney General's office described in Exhibit K.
14) Indemnification of L&W for Claims .
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a) STN shall indemnify and hold L&W and FMC harmless from and against any
claim, loss or damage arising out of or resulting from any breach of
the representations set forth in ss.13.00 of this Agreement. including
without limitation, the following:
i) Misrepresentation. Any and all damage, loss, expense, claim or
deficiency, resulting from any misrepresentation, breach of
warranty, or non-fulfillment of any obligation on the part of STN
contained herein or in an Exhibit to this Agreement or from any
misrepresentation in or omission from any certificate, schedule
or other instrument furnished to FMC hereunder.
ii) Actions. All demands, assessments, judgements, costs and legal
and other expenses, including without limitation, reasonable
attorney's fees, arising from, or in connection with, any action,
suit, proceeding, settlement, or claim incident to any of the
forgoing
iii) Tax Liabilities. Any federal, state, city and foreign income,
profits, franchise, personal property, sales, occupation,
property, excise, or other taxes due in connection with the
business or the property of L&W for any period prior to the date
hereof which have not been fully paid and/or any fine, surcharge,
penalty or other charge imposed by any regulatory agency having
jurisdiction relating to any period prior to the date hereof or
imposed as a result of actions or conduct of or on behalf of L&W
which occurred prior to the date hereof.
b) FMC's Obligations. FMC agrees to give to STN prompt written notice of
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each such claim made by a person not a party to this Agreement with
respect to any matter to which the foregoing immediately relates, and
FMC agrees to cooperate with STN in defense of any such claim provided
any expenses incurred in so doing are borne by STN. Ten (10) days
shall be deemed reasonable notice except in situations where FMC can
reasonably determine from the nature of the claim asserted that more
prompt Notice to STN is necessary. Failure to give timely notice shall
not constitute a defense, in whole or in part, to any claim by FMC,
except and only to the extent that such failure by FMC shall result in
prejudice, damage or loss to STN. FMC shall cooperate with and assist
STN, to the maximum extent reasonably possible. Any payment resulting
from such defense or settlement, together with the total expense
thereof, shall be borne solely by STN. Notwithstanding the above, this
shall not include standard routine examinations by the SEC or the
PHLX, which are undertaken by such organizations in the ordinary
course of business.
c) Defense of Claims. STN may at its option defend any such claim
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asserted against L&W, at its own expense with legal counsel of STN's
choice. If STN fails to so defend a claim after notice, FMC may cause
L&W to defend such claim and charge STN for the reasonable costs of
such defense, which costs shall be deemed part of the claim.
d) Settlement by L&W. Notwithstanding the forgoing provisions, if any
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claim be made by a person not a party to this Agreement with respect
to any matter to which the foregoing indemnity relates, and STN has
not proceeded to defend such claim, FMC, on not less than ten days'
notice to STN, may reasonably defend, settle and/or compromise any
such claim, and any such settlement, including reasonable legal fees,
shall be binding on the STN and shall be chargeable to STN..
e) Reimbursement of L&W. In the event STN fails to settle or successfully
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defend a claim, L&W shall be reimbursed by STN, on demand, for any
payment made by L&W for loss, damage, cost or expense suffered by it
with respect to any liability or claim to which the foregoing
indemnity relates, including reasonable legal fees, provided however
L&W shall not make any voluntary payment without STN's consent so long
as STN is defending such claim.
f) Withholding and Offset. Upon receipt of any claim, FMC, may, at it
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option, withhold amounts otherwise payable to STN (including, without
limitation, profits distributable underss.4) up to the amount
reasonably necessary to cover such claim and the cost of defense of
such claim. In the event STN fails to defend the claim and/or
reimburse L&W in accordance with its obligations under thisss.14, FMC
shall be permitted to offset any such amounts against profit shares
next accruing underss.4, and/or in FMC's discretion, against STN's
capital account(s) except for the capital accounts of ▇▇▇▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇. Upon disposition of the claim, FMC shall remit to
STN the amounts withheld not used to reimburse FMC or satisfy the
claim and the costs thereof.
15) Indemnification of STN by FMC. FMC, shall indemnify and hold STN harmless
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from and against any claim, loss or damage arising out of or resulting from
their respective actions or omissions in the course of their exercise of
the management rights and obligations of Class A shareholders, except that
this provision shall not apply to losses incurred in the course of business
operations.
16) Restrictive Covenant.
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a) Restrictions on STN. STN will not, at any time during the three year
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period commencing on the date hereof, re-establish, re-open, become
engaged in, employed or in any manner whatsoever become interested,
directly or indirectly, either as employee, as owner, as partner, as
agent, or as stockholder, director or officer of a corporation, member
of a limited liability company, or otherwise, in any business, trade
or occupation similar to or competing with L&W.
b) Restrictions on STN's Officers. STN's officers, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
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▇▇▇▇▇ ▇▇▇▇▇▇, agree that neither of them will, at any time during the
two year period commencing on the date hereof, re-establish, re-open,
become engaged in, employed or in any manner whatsoever become
interested, directly or indirectly, either as employee, as owner, as
partner, as agent, or as stockholder, director or officer of a
corporation, member of a limited liability company, or otherwise, in
any business, trade or occupation engaged in the business of
facilitating Day Traders, located within (A) four blocks of L&W's New
York Office (B) within the Boro Park area of Brooklyn; or (C) within
twenty-five miles of L&W's Pennsylvania office, except that this
geographical restriction shall not preclude such competition anywhere
within the city limits of Philadelphia. Notwithstanding the above, the
foregoing restrictions shall not be deemed to prevent STN officers
from engaging in the business of facilitating Options Day-traders
(defined for the purposes hereunder as a business in which not less
than 75% of gross revenues are derived from options trading - as
distinguished from trading in stocks or other securities) subject to
the geographical limitations set forth herein above, except that such
business may be operated at either ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ or 39 Broadway,
both in New York City. In addition, STN's officers, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇ can also trade for their own account or engage in
proprietary trading for their own account at any firm.
c) No Solicitation. STN's officers, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, agree
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than none of them will, at any time that STN is a Class A member of
L&W and for a 2 year period thereafter: (i) solicit, or enter into, a
business relationship with any trader who is then doing business with
L&W or who had been doing business with L&W at any time during the one
year period immediately preceding such solicitation (excluding ▇▇▇▇▇▇
▇▇▇▇▇▇); or (ii) solicit, recruit or hire, directly or indirectly, any
employee or independent contractor of L&W or who was an employee or
independent contractor during the one year period immediately
preceding such solicitation, recruitment or hiring.
d) Confidentiality. STN and its officers, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇,
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acknowledge that they acquired "Confidential Information" (as
hereinafter defined) concerning the operations of L&W, the use or
disclosure of which could cause the Company substantial loss and
damages which could not be readily calculated, and for which no remedy
at law would be adequate. Accordingly, STN and its officers, ▇▇▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ hereby covenant and agree that none of them
will at any time, directly or indirectly, disclose any secret or
Confidential Information that any of them has learned or may learn by
reason of its or his association with L&W. For purposed of this
Agreement, "Confidential Information" is defined as information not
previously disclosed to the public or to the trade by L&W's management
with respect to its business plans, prospects and opportunities, the
identity of any suppliers, proprietary information regarding
customers, operational strengths and weaknesses, trade secrets,
know-how and other intellectual property, systems, procedures,
manuals, confidential reports, pricing, marketing plans or strategies,
and financial information. e) Remedies. STN and its officers
acknowledge that in the event of any breach, or threat of breach, by
any of them of the provisions of ss.16, damages at law will be
difficult to assess and will not constitute an adequate remedy to FMC.
The parties therefore agree that in addition to such other and further
remedies as FMC may have in the event of any such breach, FMC and L&W
shall also be entitled to temporary and permanent injunctive relief.
e) Remedies. STN and its officers acknowledge that in the event of any
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breach, or threat of breach, by any of them of the provisions of
Section 16, damages at law will be difficult to assess and will not
constitute an adequate remedy to FMC. The parties therefore agree that
in adition to such other and further remedies as FMC may have in the
event of any breach, FMC and L&W shall also be entitled to temporary
and permanent injunctive relief.
f) Invalidity. In the event that any provisions of this ss.16 shall be
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held invalid or unenforceable by reason the geographic or business
scope, or the duration of such provision, then such invalidity or
un-enforceability shall attach only to such provision, and shall not
effect or render invalid or un-enforceable any other provisions of
this Agreement, and this Agreement shall be construed as if the
geographic or business scope for the duration of such provisions have
been more narrowly drawn so as not to be invalid or unenforceable.
17) Additional Documents and Cooperation. STN hereby agrees to make, execute
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and deliver such other or further consents, acknowledgments, certificates,
documents, instruments or other documents ("Additional Documents"), and to
cooperate in such manner, as FMC may request from time to time, in order to
effectuate the intent of this Agreement, including without limitation, such
Documents and cooperation as may be necessary or appropriate (i) to enforce
FMC's rights to exercise solely and without consultation with STN, the
management, voting and control rights with respect to L&W which are vested
in the Class A members; and (ii) to create a new class of membership and to
convert STN's Class A membership interest to Membership in the new class,
in accordance with ss.11 above.
18) Notices.
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a) Addresses and Means of Delivery. All Notices required or permitted
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hereunder shall be sent to the other parties at the addresses herein
above provided, or at such other address as any party may designate by
a notice in accordance with the terms of this provision, by (i)
registered or certified mail, return receipt requested, postage
prepaid; or (ii) by personal delivery, telefax, messenger, private
express carrier, or other personal, electronic or mechanical means
whereby a receipt or other record of delivery is obtained.
b) Effective Date of Notice. Notices in accordance with this provision
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shall be deemed given (i) if mailed by registered or certified mail,
as of the date of mailing; or (ii) if transmitted by any other means,
as of the date of receipt.
19) Choice of Law. It is the intention of the parties hereto that this
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Agreement and the performance hereunder and all suits and special
proceedings hereunder be construed in accordance with and under and
pursuant to the laws of the State of New York and that in any action,
special proceedings or other proceedings that may be brought arising out
of, in connection with, or by reason of this Agreement, the laws of the
State of New York shall be applicable and shall govern to the exclusion of
the law of any other forum, without regard to the jurisdiction in which any
action or special proceeding may be instituted. Venue for any action or
proceeding arising out of or pursuant to this Agreement, or the subject
matter hereof, shall be in the Courts of the State of New York, or of the
Untied States, in each case, sitting in the City of New York.
20) Entire Agreement. This Agreement sets forth the entire Agreement and
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understanding among the parties hereto concerning the subject matter hereof
and cancels and supersedes all prior discussions, agreements and
understandings among them; and there are no representations or warranties
except as contained herein.
21) Waiver. Waiver by any party of any breach of this Agreement or the failure
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of any party to exercise any right hereunder, shall not be deemed to be a
waiver of any breach or right. The failure of any party to take action by
reason of any such breach or to exercise any such right, shall not deprive
such party of the right to take action at any time while such breach, or
conditions giving rise to such right, continues.
22) Benefit of Parties. This Agreement shall be binding upon the parties
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hereto, and their respective heirs, legal representatives, successors and
assigns. This Agreement may not be assigned by any party hereto. The Estate
of a deceased Owner shall be bound under this Agreement as if a party
hereto.
23) Counterparts. This Agreement may be executed in any number of counterparts,
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all of which, taken together, shall constitute one and the same instrument.
24) Headings. The paragraph headings of this Agreement are intended only for
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convenience in locating the subject matter and do not constitute part of
the text of this Agreement and shall not be considered in the
interpretation of this Agreement or any of its provisions
25) Modification of Contract. No waiver or modification of this Agreement or
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any covenant, condition or limitation herein contained shall be valid
unless in writing and duly executed by the party to be charged therewith,
and shall not be offered in evidence in any proceeding, arbitration, or
litigation between the parties hereto arising out of or affecting this
Agreement, or the rights or obligations of the parties hereunder, unless
such waiver or modification is in writing, duly executed as aforesaid, and
the parties further agree that the provisions of this Section may not be
waived except in writing as herein set forth.
26) Recitals. The recitals contained herein shall be read as and
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deemed to be an integral part of this Agreement.
27) Severability. All agreements and covenants contained herein are severable,
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and in the event any of them shall be held to be invalid by any competent
court, this contract shall be interpreted as if such invalid agreements or
covenants were not contained herein.
28) Arbitration. Any dispute or controversy arising out of or under this
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Agreement or the subject matter hereof shall be resolved by Arbitration, in
New York City, under the rules of the American Arbitration Association.
Notwithstanding the forgoing, any party may apply to a Court having
jurisdiction for temporary relief pending Arbitration in any situation
where the unavailability of such temporary relief would be prejudicial to
such party's interests.
IN WITNESS WHEREOF, the Parties hereto have hereunto set their hands and seals
on the day and year first above written
STOCKTRADE NETWORK, INC First Meridian Capital, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇, President ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Managing Member
Consent of officers of STN to be bound by the provisions of ss.16:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
LIST OF EXHIBITS
Exhibit
A. Form of Subordinated Note
B. Amended and Restated Operating Agreement of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities, LLC, dated November 11, 1998
C. Irrevocable Proxy by STN to FMC
D. Amount of Capital to be Withdrawn by STN
E. Certificate of Formation
F. Contracts
G. 12/31/99 Financial Statements and October, 2000 FOCUS Report
H. Philadelphia Exchange Change in Net Capital Computation
I. Bank Accounts
J. Employment Contracts
K. New York Attorney General Inquiry
L. Fixed Assets transferred from from the STN Capital Account to the
FMC Capital Account