Exhibit 10.1
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (the "Agreement") is made this 26th day of
January, 2009, by and among Advanced Technologies Group, Ltd. ("Seller"), a
Nevada corporation, having its principal place of business at 000 Xxxxxxxxxx
Xxxxxx, Xxxxxx Xxxx, XX 00000, FX Direct Dealer, LLC ("Purchaser"), a Delaware
limited liability company, having its principal place of business at 00 Xxxx
Xxxxx, 0xx xxxxx, Xxx Xxxx, XX 00000 (Seller and Purchaser are hereinafter
sometimes referred to individually as a "Party" or collectively as the
"Parties"), MaxQ Investments, LLC., a Delaware limited liability company, having
a principal place of business at 00 Xxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 (MaxQ Investments LLC ("MaxQ") is sometimes referred to as the "Majority
MEMBER"), and Tradition, N.A., having its principal place of business at 00 Xxxx
Xxxxx, 0xx xxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Tradition"), but with respect to
Tradition only as to Section 5 (e) of this Agreement.
WHEREAS, the Parties, MaxQ and Tradition agree and acknowledge that,
although this Agreement is being executed as of the date hereof and a Closing
with respect to the purchase and sale transaction referenced herein is proposed
to occur hereafter, the Parties reached substantial agreement subject to the
closing conditions contained herein, and intend such Closing to have occurred,
as of December 31, 2008;
WHEREAS, Purchaser desires to purchase substantially all of Seller's
Membership Interest in an amount equal to 99.96% of Seller's Percentage Interest
(as defined in that certain Operating Agreement of Purchaser, dated March 20,
2002 (the "Operating Agreement") in Purchaser (which 99.96% of Seller's
Percentage Interest purchased hereunder shall be the "Interest Purchased"), such
that Seller shall retain a Membership Interest equal to a .01% Percentage
Interest in Purchaser (such Percentage Interest as calculated after the purchase
is consummated) (which retained Units owned by Seller are the "Retained
Interest");
WHEREAS, the Parties desire to resolve any and all claims that the Seller
Parties (those parties as defined in the "Mutual General Release" attached
hereto as Exhibit A) and the Purchaser Parties (as defined in the Mutual General
Release) may each have as against the others, as set forth in such Mutual
General Release;
WHEREAS, in connection with Seller's sale of the Interest Purchased, Seller
and Purchaser shall agree to the terms of an Amended and Restated Operating
Agreement, on or before the Closing Date (defined in Section 1 (b) below) of the
sale of the Interest Purchased, which Amended and Restated Operating Agreement
shall amend the Operating Agreement in recognition of the Sale Transaction as
defined in Section 1(b) below;
WHEREAS, in accordance with the terms hereof, the Purchaser will make a
cash down payment and will execute a subordinated note and cash subordinated
note agreement in favor of Seller (which subordinated note and agreement shall
comply with all applicable regulatory guidelines), the payment of which cash as
set forth in Section 1 hereof, and the issuance, execution and delivery of which
documents, in addition to satisfaction or waiver of the closing conditions set
forth in Section 5 hereof, shall operate to transfer the Interest Purchased to
Purchaser;
WHEREAS, Seller desires to sell the Interest Purchased and Purchaser,
acting by authority conferred by the Majority Member as reflected by its
execution hereof, desires to purchase the Interest subject to the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the premises, promises and covenants
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. PURCHASE AND SALE.
(a) Recitals. The Recitals hereto are incorporated by reference in this
Agreement and made a part hereof.
(b) Sale of Interest. Effective upon the closing of this transaction as
hereinafter provided (the "Closing" and such date the "Closing Date"),
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Seller shall irrevocably sell, convey, assign and transfer to Purchaser,
and Purchaser shall purchase, acquire and accept from Seller, all of
Seller's right, title and interest in and to the Interest (the "Sale
Transaction") free and clear of any liens, charges, security interests,
pledges, mortgages or other encumbrances (other than restrictions on
transfer generally arising under the Securities Act of 1933, as amended or
other applicable laws) (collectively, "Liens").
(c) Purchase Price. The purchase price for the Interest Purchased is TWENTY
SIX MILLION U.S. DOLLARS ($26,000,000) (the "Purchase Price"). The Purchase
Price is payable on the Closing Date by means of a cash down payment equal
to NINE MILLION U.S. DOLLARS ($9,000,000) (the "Down Payment") made to
Seller as indicated in Section 5(c)(ii) hereof, and the duly authorized and
executed Subordinated Note attached hereto as Exhibit B ("Note") in the
amount of SEVENTEEN MILLION U.S. DOLLARS ($17,000,000) (the
"Indebtedness"), pursuant to the terms and conditions of a Cash
Subordinated Loan Agreement attached hereto as Exhibit C (the "CSLA") and
the Note.
2. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and
warrants to Purchaser that, as of the date of this Agreement and at and as
of the Closing Date:
(a) Seller is a publicly-traded corporation duly registered under the
Securities Exchange Act of 1934 and incorporated, validly existing and in
good standing under the laws of the State of Nevada. Seller has full
corporate power and authority necessary for the execution, delivery and
performance by Seller of this Agreement and the transactions and agreements
contemplated hereby.
(b) This Agreement has been duly authorized by all requisite corporate acts
or proceedings of the Seller in accordance with applicable laws, including
all federal and state securities laws (subject to the requirements of
Regulation 14C of the Securities Exchange Act of 1934), and has been duly
executed and delivered by Seller and, assuming due authorization, execution
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and delivery hereof by Purchaser, is the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its
terms.
(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation the Sale Transaction (subject to compliance with applicable
securities law requirements), does not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under: (i) the articles of incorporation or by-laws of Seller, or, as of
the Closing Date, the Amended and Restated Operating Agreement, (ii) any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which Seller is a party or by which Seller is bound, or to
which any of the property or assets of Seller is subject, or (iii) any law,
order, rule judgment, decree or regulation of any court or governmental
agency or body having jurisdiction over Seller or the property of Seller.
(d) Seller is the sole record and beneficial owner of, and has good and
valid title to, the Interest, free and clear of all Liens.
(e) No claim, legal action, suit, arbitration, governmental investigation
or other legal or administrative proceeding is pending or, to the knowledge
of the Seller, threatened in writing against the Seller that would enjoin
or delay the consummation of the transactions contemplated hereby.
(f) Seller is not a party to any agreement with any finder or broker, or in
any way obligated to any finder or broker for any commissions, fees or
expenses, in connection with the origin, negotiation, execution or
performance of this Agreement for which any of the Purchaser or the
Majority Member would be liable.
(g) Seller has received and reviewed the financial statements and business
plans of the Purchaser (including audited financial statements dated
12/31/07 Form 1-FR prepared in accordance with regulations of the U.S.
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Commodity Futures Trading Commission ("CFTC Regulations") as of 11/30/08),
has had the opportunity to ask questions of Purchaser and its management
regarding the financial and operating status of the Purchaser and the
current status of all material facts affecting the business or operations
of Purchaser, and has considered all this information thoroughly prior to
executing this Agreement. Seller has sought appropriate legal, tax and
investment advice regarding sale of its Interest Purchased to Purchaser and
is selling the Interest Purchased freely, voluntarily and with all
reasonable information to make an informed decision.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby represents
and warrants to Seller that, as of the date of this Agreement and at and as
of the Closing Date:
(a) Purchaser is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Purchaser has full limited power and authority necessary for the execution,
delivery and performance by Seller of this Agreement and the transactions
contemplated hereby.
(b) This Agreement has been duly authorized by all requisite acts or
proceedings of the Purchaser and has been duly executed and delivered by
Purchaser and is the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms. The Sale
Transaction has been duly authorized by all requisite acts or proceedings
of the Purchaser prior to the Closing Date.
(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including without
limitation the Sale Transaction (subject to appropriate approvals by
applicable regulatory authorities, including the Regulators) does not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under: (i) any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
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Purchaser is a party or by which Purchaser is bound, or to which any of the
property or assets of Purchaser is subject, or (ii) any law, order, rule
judgment, decree or regulation of any court or governmental agency or body
having jurisdiction over Purchaser or the property of Purchaser.
(d) No claim, legal action, suit, arbitration, governmental investigation
or other legal or administrative proceeding is pending or, to the knowledge
of the Purchaser, threatened in writing against the Purchaser that would
enjoin or delay the consummation of the transactions contemplated hereby.
(e) Purchaser is not a party to any agreement with any finder or broker, or
in any way obligated to any finder or broker for any commissions, fees or
expenses, in connection with the origin, negotiation, execution or
performance of this Agreement.
(f) The Majority Member, Seller and Tradition, N.A., constitute all of the
members of Purchaser. By its execution of this Agreement, the Majority
Member hereby confirms that (i) the Purchaser's Board of Managers has
approved such Agreement; and (ii) Purchaser has the authority to execute
this Agreement and consummate the transaction contemplated hereunder.
(g) (A) The audited financial statements of the Purchaser as of and for the
year ended December 31, 2007, together with the related notes and
schedules, if any and the most recent Form 1-FR prepared by the Purchaser
(collectively, the "Available Financial Statements"), attached hereto as
Schedule 3(g) are true, correct and complete in all respects, (B) have been
prepared in accordance with GAAP; (C) subject to normal auditing
adjustments, present fairly, and are true, correct and complete statements
in all material respects of the financial condition and the results of
operations, retained earnings, members' equity and cash flows of the
Purchaser as at and for the periods therein specified; and (D) have been
prepared from and are in accordance with the books and records of the
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Purchaser. For the purposes of this subsection, "GAAP" means United States
generally accepted accounting principles.
(h) Except as disclosed on Schedule 3(h), since December 31, 2007, there
has not been any material adverse change in the condition, operations,
assets, liabilities, earnings, business, results of operations or the
Adjusted Net Capital (defined below) of the Purchaser or its ability to
repay its obligations. "Adjusted Net Capital" means: (i) an amount of
capital held by Purchaser, if such Purchaser were registered to engage in
the business of foreign exchange under CFTC Regulations, which would be
required to be reported on a Form 1-FR by the National Futures Association
("NFA"); less (ii) haircuts related to risks associated with carrying
positions in currencies; less (iii) non-allowable assets, all determined
pursuant to the CFTC Regulations.
(i) Purchaser and the Majority Member are not aware of any pending actions
or proceedings, nor are they aware of any facts which would reasonably form
the basis of an action or proceeding, which action or proceeding would
materially and adversely effect the business of Purchaser, its Adjusted Net
Capital or its ability to repay its obligations.
(j) Except for (i) Liabilities (defined below) expressly reflected or
reserved for in the Financial Statements, (ii) Liabilities incurred in the
ordinary course of business consistent with past practice of Purchaser
since the date of the Form 1-FR incorporated in the Financial Statements,
(iii) Liabilities which individually or in the aggregate are not material
to the Purchaser, and (iv) Liabilities set forth on Schedule 3(j) hereto,
the Purchaser does not have any Liabilities, subordinated or otherwise,
which are material to the condition (financial or otherwise) of the assets,
properties, or business of the Purchaser and which would materially and
adversely effect the business of the Purchaser, its Adjusted Net Capital or
its ability to repay its obligations. For the purposes of this Section 3
(j), "Liabilities" means all liabilities and obligations, known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued,
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liquidated or unliquidated, whether due or to become due, which relate to
the operation of the Purchaser's business prior to the Closing.
(k) The Purchaser has available to it sufficient funds to pay Seller the
Down Payment without violating its minimum capital requirements established
by the NFA.
(l) Purchaser and the Majority Member represent and warrant that, if
Purchaser were a registered entity as of the date hereof, it would
currently comply with the minimum capital requirements established by
applicable regulatory authorities.
4. COVENANTS OF THE PARTIES.
(a) Waiver. Effective immediately as of the date of this Agreement, each
Party hereby waives any and all rights arising or existing under the
Operating Agreement, the Purchaser's Certificate of Organization or any
other agreement that would in any way prohibit or restrict the consummation
of the Sale Transaction.
(b) Non-Solicitation; Non-Interference; Non-Use; Non-Competition. From and
after the date of execution of this Agreement, the Seller and the Purchaser
shall not: (i) hire, recruit, solicit or otherwise attempt to employ or
engage any person employed by the other Party, or induce or attempt to
induce any person to leave such employment, other than soliciting
employment by placement of general advertisements for such persons in
newspapers or other media of general circulation, (ii) in any way interfere
with the relationship between Purchaser or Seller, as the case may be, and
any employee, customer, sales representative, broker, supplier, licensee or
other business relation (or any prospective customer, supplier, licensee or
other business relationship) of the other Party (including, without
limitation, by making any negative or disparaging statements or
communications regarding the other Party or any of its operations,
officers, managers or members); (iii) use, display or distribute any
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intellectual property or other assets or attributes of the other Party; or
(iv) directly or indirectly engage in any business that competes with the
business of the other Party; provided, however, Seller may engage in the
business of software development but not for the purpose of supplying or
serving businesses principally engaged in the exchange or ownership of
currencies, or trading in spot, Over The Counter ("OTC") foreign exchange
transactions.
(c) The Parties acknowledge their respective obligations under this
Agreement, the CSLA and the Note shall continue following Closing and
further acknowledge that references to the Agreement, to the CSLA and to
the Note shall, where the context requires, include reference to the other
transaction documents. To the extent, if any, there is a conflict between
the terms and conditions of this Agreement and either the terms and
conditions of the CSLA or the terms and conditions of the Note, the terms
and provisions of the Agreement shall control; provided, however, if
applicable regulatory authorities require otherwise, the provisions of the
CSLA shall control in any event.
(d) On or before the Note is paid in full, subject to all applicable
regulatory requirements, Purchaser will use its commercially reasonable
efforts to:
(i) pay and discharge, as the same shall become due and payable, all its
obligations and liabilities, including (A) all material tax liabilities,
assessments and governmental charges or levies upon it or its properties or
assets, and (B) all lawful claims (including, without limitation, claims of
landlords, warehousemen, customs brokers, and carriers) which, if unpaid,
would by law become a lien upon its property;
(ii) preserve, renew and maintain in full force and effect its legal
existence and good standing under the laws of the jurisdiction of its
organization and take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
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normal conduct of its business, except to the extent that failure to do so
could not reasonably be expected to have a material and adverse effect on
its business and operations; and preserve or renew all of its intellectual
property, except to the extent such intellectual property is no longer used
or useful in the conduct of the business of the Purchaser;
(iii) maintain, preserve and protect all of its material properties and
equipment necessary in the operation of its business in good working order
and condition, ordinary wear and tear excepted; and make all necessary
repairs thereto and renewals and replacements thereof, except where the
failure to do so could not reasonably be expected to have a material and
adverse effect on its business and operations;
(iv) maintain with financially sound and reputable insurance companies,
insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by persons engaged in the
same or similar business and operating in the same or similar locations or
as is required by applicable law, of such types and in such amounts (after
giving effect to any self-insurance compatible with the following
standards) as are customarily carried under similar circumstances by such
other persons;
(v) comply in all material respects with the requirements of all U.S. laws
and all U.S. orders, writs, injunctions and decrees applicable to it or to
or property, except in such instances in which (A) such requirement of law
or order, writ, injunction or decree is being contested in good faith by
proceedings diligently conducted and with respect to which adequate
reserves have been set aside and maintained in accordance with GAAP; and
(B) such contest effectively suspends enforcement of the contested laws,
and (C) the failure to comply therewith would not reasonably be expected to
have a material and adverse effect on its business, operations and Adjusted
Net Capital;
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(vi) maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied shall be made
of all financial transactions and matters involving its assets and
business; and maintain such books of record and account in material
conformity with all applicable requirements of it Regulators (defined in
Section 5(a)(i) below), as the case may be;
(vii) make available to Seller within 20 days of completion to Purchaser's
satisfaction: (a) copies of Form 1-FR statements filed monthly with the NFA
upon registration therewith, and (b) audited financial statements of the
Purchaser for each fiscal year of Purchaser's business until the Purchase
Price is paid in full.
(viii) execute any and all further documents, agreements and instruments,
and take all such further actions that may be required under any applicable
law, or which Seller may reasonably request, to effectuate the transaction
contemplated by this Agreement.
(e) Until the Purchase Price has been paid in full to Seller, Purchaser
shall use commercially reasonable efforts in its sole discretion,
consistent with industry norms in the foreign currency exchange business,
to maintain net capital in an amount which is materially greater than that
which is required by applicable regulatory authorities.
(f) One (1) business day following payment in full of the Purchase Price by
Purchaser to Seller in accordance with CFTC Regulations, Seller hereby
agrees to sell the Retained Interest to Purchaser, conditioned only upon
payment of $5,000 by Purchaser to Seller in consideration thereof.
(g) (i) Purchaser represents and covenants, as the case may be, that (A)
Purchaser is in the process of registering as a Foreign Exchange Dealer
("FED") pursuant to CFTC Regulations with the NFA, (B) the CSLA and the
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Note must be approved by the NFA as a condition to achieving such
registration, (C) there exists a remote possibility that the NFA may
require that the terms of the CSLA and/or the Note be amended to conform to
its interpretation of CFTC Regulations, and (D) Purchaser is willing to
close the Sale Transaction without approval of the CSLA and the Note by the
NFA.
(ii) In consideration of the foregoing, in the event that: (A) the NFA
requires any amendments to the Note or the CSLA (which amendments if
required shall be the "NFA Amendments") as a condition to FED registration,
the effect of which NFA Amendments would deny Seller the benefit of any
portion of the economic bargain made by it pursuant to this Agreement, the
CSLA and Note, and (B) Seller has a resulting, reasonable good faith belief
that it has been denied the economic benefit, or any portion, of its
bargain as set forth in this Agreement, the Note and the CSLA, then the
Parties agree to use their good faith efforts to (x) obtain the referenced
FED registration and not to obstruct or prevent same, and (y) thereafter to
settle any differences they may have for a period of no less than 30 days
from the date of notification by the NFA as to its final position regarding
such CSLA or Note. After such 30 day period, in the event Seller continues
to have a reasonable good faith belief that it is being denied any portion
thereof of the economic benefit bargained for based upon reasonably
demonstrable facts, then it shall provide notice to Purchaser describing in
reasonable detail the economic benefit lost and explaining the causal
effect between the NFA Amendments required and the alleged loss of economic
benefit. Purchaser shall promptly compensate Seller for actual lost
economic benefit based upon reasonably detailed evidence thereof.
(h) In the event that Seller is charged with any tax liability by
applicable taxing authorities relating to the Interest Purchased and/or the
Retained Interest which liability is attributable to any period during or
after the 2009 calendar year (such period during or after 2009 is the "Tax
Stub Period"), resulting from income allocated by such authority or
authorities to the Seller for such Tax Stub Period, Purchaser shall take
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responsibility for payment of, and shall make payment with respect to, such
tax liability charged to Seller during such Tax Stub Period.
5. CLOSING CONDITIONS; DELIVERABLES AT CLOSING; ISSUES WITH THE REGULATORS.
(a) Preparations for Closing.
(i) Prior to the Closing Date:
(A) Purchaser shall take all necessary steps as soon as
practicable following the execution of this Agreement to secure approval of
this transaction by the NFA and such other U.S. regulatory agencies having
jurisdiction over Purchaser's business, from which Purchaser would have an
obligation to secure prior approval if it were a registered FED (the
"Regulators"); provided, however, the approval of the Regulators shall not
be a condition to the Closing.
(B) Seller shall prepare and file with the Securities and
Exchange Commission ("SEC") as promptly as practical following the date of
this Agreement, but in no event later than thirty (30) days following
execution of this Agreement, an information statement meeting the
requirements of Regulation 14C under the Securities Exchange Act of 1934,
as amended, with respect to approval of this Agreement by written consent
of the holders of a majority of Seller's outstanding shares of common
stock.
(C) Purchaser shall draft an Amended and Restated Operating
Agreement and shall deliver same to Seller for its review and approval
prior to the Closing Date, which approval shall not be unreasonably
withheld.
(b) Mutual Conditions to Closing
(i) At the Closing Date:
(A) there shall not be in effect any injunction, restraining
order or decree of any nature of any governmental entity that prohibits or
materially restricts the consummation of the transactions contemplated
hereby; provided, however, that the benefits of this Section 5(b) shall not
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be available to a Party whose failure to fulfill its obligations hereunder
shall have been the cause of, or shall have resulted in, such injunction,
restraining order or decree; and
(B) the conditions set forth below shall have been met by both
Parties.
(c) Conditions to the Obligations of the Purchaser. The obligations of the
Purchaser to consummate the Sale Transaction shall be subject to the
satisfaction or waiver by Purchaser at or prior to the Closing Date of the
following conditions:
(i) the representations and warranties of the Seller contained in this
Agreement shall be true and correct at and as of the date hereof and as of
the Closing Date (except that those representations and warranties which
address matters only as of a particular date shall remain true and correct
as of such date);
(ii) Seller shall have performed and complied in all material respects with
all of its obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date; and
(iii) the Seller shall have delivered to Purchaser:
(A) a certificate executed by an executive officer of Seller,
dated as of the Closing Date, certifying that the conditions specified in
subsection 5 (b)(i) above have been satisfied and that the representations
in Section 2 hereof are true and correct as of the Closing Date;
(B) any existing certificate or certificates representing the
Interest owned by Seller;
(C) the Mutual General Release duly authorized and executed by
the Seller Parties as defined therein in the form attached hereto as
Exhibit A;
(D) the CSLA and the Note duly authorized and executed by Seller;
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(E) evidence of approval of the sale of the Interest by the
Seller reasonably satisfactory to Purchaser, including: (i) a resolution of
the board of directors of the Seller approving the sale of the Interest,
(ii) appropriate disclosure, solicitation of the stockholders of Seller and
evidence of approval of the sale of the Interest by the stockholders of
Seller, in accordance with applicable law, including an executed written
consent with respect to this Agreement and the CSLA and Note from the
majority of Seller's shares outstanding and written notice that Seller has
complied with all requirements of Regulation 14C of the Securities Exchange
Act of 1934, as amended, with respect to timely distribution of an
information statement to its stockholders at least twenty (20) days prior
to the Closing Date ;
(F) a legal opinion from counsel to the Seller reasonably
satisfactory to the Purchaser opining: (i) as to the valid, binding and
enforceable nature of this Agreement; (ii) that due corporate authorization
has been obtained by Seller; and (iii) that all corporate acts have been
taken thereby in accordance with applicable law to consummate the Sale
Transaction;
(G) written evidence of approval by the shareholders of Seller of
this Agreement, the CSLA, the Note and this Agreement;
(H) a signed joinder to the Amended and Restated Operating
Agreement of the Company; and
(I) other documentation reasonably requested which is reasonably
satisfactory to the Purchaser reducing Seller's interest in Purchaser to
the Retained Interest, the nature of which documentation Purchaser shall
describe to Seller in writing no less than two (2) business days before the
scheduled Closing Date.
(d) Conditions to the Obligations of Seller. The obligations of the Seller
to consummate the Sale Transaction shall be subject to the satisfaction or
waiver by Seller at or prior to the Closing Date of the following
conditions:
(i) the Purchaser shall have delivered to Seller:
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(A) the Mutual General Release duly executed by Purchaser,
Tradition North America, Inc, Max Q Investments, LLC, Xxxx Xxxxxxxxx and
Xxxxxx Botkier, in the form attached hereto as Exhibit A;
(B) the CSLA duly executed by the Purchaser;
(C) the Note duly executed by the Purchaser;
(D) a certificate executed by the Managing Member of the
Purchaser certifying to the approval of the Sale Transaction by the
Purchaser's Board of Managers;
(E) legal opinion from counsel to the Purchaser reasonably
satisfactory to the Seller opining: (i) as to the valid, binding and
enforceable nature of this Agreement; (ii) that due authorization has been
obtained by Purchaser; and (iii) that all required corporate actions and
approvals have been taken thereby in accordance with applicable law to
consummate the Sale Transaction, with the exception of obtaining approval
of the Note, the CSLA, and if necessary this Agreement, by the Regulators;
(F) a certificate signed by an executive officer of the Purchaser
certifying that the representations and warranties set forth in Section 3
hereof are true and correct as of the Closing Date;
(G) other documentation reasonably requested which is reasonably
satisfactory to Seller reducing Seller's equity interest in Purchaser to
the Retained Interest, the nature of which documentation Seller shall
describe to Purchaser in writing no less than two (2) business days before
the scheduled Closing Date.
(ii) Purchaser shall have delivered to Seller the Down Payment in
accordance with Section 1(b) hereof, to Seller's account as follows:
XX Xxxxxx Xxxxx Bank
0 Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, XX 00000
ABA # 000000000 For the Account of:
Advanced Technologies Group Ltd.
Account # 217502352165
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(iii) The Closing shall be held at the offices of Seller's counsel
upon the third business day after a date on which all of the following
conditions have been met: (A) all terms and conditions set forth in
Sections 5(a)-(d) above have been satisfied; and (B) twenty (20) days has
lapsed following the date Seller has distributed an information statement
to its stockholders in accordance with Regulation 14C of the Securities
Exchange Act of 1934, as amended.
(e) Tradition's Covenant re Closing. Tradition covenants to execute the
General Mutual Release if all the Closing conditions in Sections 5 (a)-(d)
are met in its reasonable discretion.
6. INDEMNIFICATION.
(a) Indemnification by Seller. Seller shall fully indemnify, protect and
hold harmless the Purchaser Parties (as defined in the Mutual General
Release), from and against all liabilities, losses, costs, damages and
expenses, whether direct or indirect (including, without limitation,
reasonable attorneys' and accountants' fees and expenses, court costs and
reasonable out-of-pocket expenses) (collectively, "Losses") incurred by any
of the Purchaser Parties arising from or as a result of: (i) any inaccuracy
or misrepresentation in any representation or warranty of the Seller made
herein or (ii) any breach of or failure to perform any covenant, agreement
or obligation of the Seller in this Agreement or any agreement, document or
certificate delivered hereunder.
(b) Indemnification by Purchaser. Purchaser shall fully indemnify, protect
and hold harmless the Seller and the Seller Parties from and against all
Losses incurred by the Seller or the Seller Parties arising from or as a
result of: (i) any inaccuracy or misrepresentation in any representation or
warranty of the Purchaser made herein or (ii) any breach of or failure to
17
perform any covenant, agreement or obligation of the Purchaser in this
Agreement or any agreement, document or certificate delivered hereunder.
(c) Procedures for Indemnification -- Third Party Claims.
(i) Promptly after receipt by an indemnified party under Section 6(a)
or 6(b), as the case may be, of notice of the commencement of any suit or
legal proceeding against it or them (a "Proceeding"), such indemnified
party will, if a claim is to be made against an indemnifying party under
such Section 6(a) or 6(b), as the case may be, give notice to the
indemnifying party of the commencement of such claim, but the failure to
notify the indemnifying party will not relieve such indemnifying party of
any liability that it may have to any indemnified party, except to the
extent that the indemnifying party demonstrates that the defense of such
action is prejudiced by the indemnified party's failure to give such
notice.
(ii) If any Proceeding is brought against an indemnified party, and
such indemnified party gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the
claim involves taxes only, be entitled to participate in such Proceeding
and, to the extent that it wishes (unless (A) the indemnifying party is
also a party to such Proceeding and the indemnified party determines in
good faith that joint representation would be inappropriate, or (B) the
indemnifying party fails to provide reasonable assurance to the indemnified
party of its financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding), to assume the defense of
such Proceeding with counsel satisfactory to the indemnified party and,
after notice from the indemnifying party to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party
will not, as long as it diligently conducts such defense, be liable to the
indemnified party for any fees of other counsel or any other expenses with
respect to the defense of such Proceeding, in each case subsequently
incurred by the indemnified party in connection with the defense of such
Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding: (x) it will be
conclusively established for purposes of this Agreement that the claims
18
made in that Proceeding are within the scope of and subject to
indemnification under Section 6(a) or 6(b) hereof, as the case may be; (y)
no compromise or settlement of such claims may be effected by the
indemnifying party without the indemnified party's written consent unless
there is no finding or admission of any violation of law or any violation
of the rights of any Person and no effect on any other claims that may be
made against the indemnified party, and the sole relief provided is
monetary damages that are paid in full by the indemnifying party; and (z)
the indemnified party will have no liability with respect to any compromise
or settlement of such claims effected without its consent. If notice is
given to an indemnifying party of the commencement of any Proceeding and
the indemnifying party does not, within ten (10) days after such notice is
given, give notice to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will be bound by any
determination made in such Proceeding or any compromise or settlement
effected by the indemnified party. Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its affiliates
other than as a result of monetary damages for which it would be entitled
to indemnification under this Agreement, the indemnified party may, by
notice to the indemnifying party, assume the exclusive right to defend,
compromise, or settle such Proceeding, but the indemnifying party will not
be bound by any determination of a Proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld).
(d) Service of Process. Seller hereby consents to the non-exclusive
jurisdiction of any court in which a Proceeding is brought against any
indemnified party for purposes of any claim that an indemnified party may
have under this Agreement with respect to such Proceeding or the matters
alleged therein, and agree that process may be served on Seller with
respect to such a claim anywhere in the world.
(e) Setoff Right. In the event that an indemnification obligation of the
Seller under Section 6(a) hereof is not satisfied, to the extent that
Seller refuses to defend or indemnify Purchaser as required hereunder upon
19
prior notice to Seller of not less than ten (10) business days, Purchaser
shall have the right to setoff the amount of such unpaid obligation in
accordance with Section 13 of the Note, including any expenses incurred by
Purchaser arising out of Seller's refusal to defend or indemnify. In the
event that Purchaser desires to exercise its rights to set-off herein, the
Parties agree as follows:
(i) Purchaser shall notify Seller in writing of an indemnification
obligation that Purchaser believes Seller has and Seller shall respond in
writing within ten (10) days of receipt of such notice as to whether it
will defend and indemnify Purchaser pursuant to such claimed obligation.
(ii) If Seller refuses to defend and indemnify Purchaser, or Purchaser
has reason to believe that Seller does not have the financial ability to
satisfy such an obligation, Purchaser shall have the option to cease making
principal and interest payments hereunder and to set aside all such
payments in an amount equal to all fees and expenses paid by Purchaser
related thereto and the amount of the claimed obligation, in an escrow
account at a commercial bank in the City of New York, New York established
pursuant to terms which are mutually agreeable to both Parties hereto,
which agreement as to the bank and such terms shall not be unreasonably
withheld, pending resolution of the third party claim against Purchaser
giving rise to the claimed indemnification obligation of Seller ("Third
Party Claim"). Upon resolution of the Third Party Claim, the Purchase Price
shall be reduced to the extent that Seller is liable therefor. If Seller
has no liability for such Third Party Claim, those amounts of principal and
interest not paid to Seller under the Note shall be deemed past due
payments and Seller shall be entitled to receive from the Purchaser all
such past due payments plus the Default Rate of interest related thereto,
as defined in the Note, with respect to such past due payments from the
date Purchaser ceased making such payments to the date of payment by
Purchaser of all past due payments in full, in addition to any other
amounts due and owing under the Note.
(iii) The provisions of Sections 6 (a) or (b) shall otherwise govern
the disposition of any Proceeding hereunder and any Third Party Claim.
20
(f) Survival of Representations and Warranties. The representations and
warranties of the Purchaser and the Seller in Sections 2 and 3 hereof shall
survive the Closing until the Note is paid in full.
7. SATISFACTION OF OUTSTANDING PAYABLE TO SELLER. Upon the execution of this
Agreement, the Purchaser shall make payment via wire transfer to Seller of
immediately available U.S. funds in an amount of TWO-HUNDRED AND FIFTY TWO
THOUSAND FOUR HUNDRED AND FIFTY DOLLARS ($252,450) (representing payment of
an account payable, originally incurred by Purchaser in the amount of One
Hundred and Sixty Eight Thousand and Three Hundred Dollars ($168,300), plus
ten per cent (10%) per annum simple interest from January 1, 2004 through
December 31, 2008), in full and final satisfaction of such payable to
Seller in such amount carried on the books and records of Purchaser.
8. MISCELLANEOUS.
(a) Amendments and Parties in Interest. This Agreement may be amended,
modified or waived only by written instrument executed by all the Parties
hereto. This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Parties hereto.
(b) Effective Date. Notwithstanding anything to the contrary, the effective
date of Seller's sale of the Interest Purchased for all purposes shall be
December 31, 2008.
(c) Notices. All notices and other communications provided for hereunder
shall be in writing and deemed given if (i) delivered personally, or (ii)
sent by Federal Express, DHL, UPS or other similar commercial overnight
courier (providing proof of delivery) to the Parties at the address above
aforesaid. Such notices or other communications shall be deemed effective
on the date received, if personally delivered during normal business hours,
or if delivered by overnight courier, on the date delivered as established
by return receipt or courier service confirmation or the date on which the
21
return receipt or courier service confirms that acceptance of delivery was
returned by the addressee. Each of the Parties hereto shall be entitled to
specify a different address by giving written notice as aforesaid to each
of the other Parties hereto.
(d) Governing Law and Venue. The interpretation, validity and performance
of this Agreement shall be construed and governed in accordance with the
laws of the State of New York, without regard to any of its conflict of
laws rules, and enforcement of this Agreement shall be had in any court
sitting within the City of New York (the "Court"), and each party hereto
irrevocably consents to such Court's exclusive jurisdiction of any dispute
relating to or arising from this Agreement. Unless ordered otherwise by the
Court, service of process may be had by Federal Express, DHL, UPS or
overnight courier (providing proof of delivery) followed by regular mail
and service shall be deemed affected within three (3) days of such mailing
by regular mail.
(e) Third Parties. This Agreement does not create any rights, claims or
benefits inuring to any person that is not a party hereto nor does it
create or establish any third party beneficiary hereto. (f) Specific
Performance. In addition to any other remedies provided in this Agreement,
Purchaser shall be entitled to a decree compelling specific performance,
and without the necessity of filling a bond, to the restraint by injunction
of any actual or threatened violation of Seller's obligations under this
Agreement, it being understood that monetary damages are not an adequate
remedy for the breach of Seller's obligations hereunder and that such
remedies are specifically contemplated and consented to by the parties
hereto.
(g) Language. The Parties agree that the language used in this Agreement is
the language chosen by the Parties to express their mutual intent, and that
no rule of strict construction is to be applied against Seller or
Purchaser. Each Party and its respective counsel have reviewed and
negotiated the terms of this Agreement.
22
(h) Counterparts; Facsimile Signature. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original
and all of which together shall be deemed to be one and the same
instrument. This Agreement may be executed by facsimile signatures, which
shall be sufficient to bind the Parties hereto.
(i) Entire Agreement. This Agreement and the exhibits hereto contains the
entire understanding of the Parties with respect to the subject matter
hereof and supersedes all prior agreements and representations, oral or
otherwise, express or implied, with respect to the subject matter hereof
previously made by any Party, hereto.
(j) Recitals. The recitals which appear below the introductory section of
this Agreement are incorporated herein by reference and made a part hereof.
[Signature Page Follows]
23
IN WITNESS WHEREOF, the parties hereto have caused this Purchase and Sale
Agreement to be executed as of the date first above written.
Advanced Technologies Group, Ltd.
/s/ Xxxx Xxxxxx
----------------------------------------------------
By: Xxxx Xxxxxx, President
/s/ Xxxx Xxxxxxx
----------------------------------------------------
By: Xxxx Xxxxxxx, Chairman and Chief Financial Officer
FXDirectDealer, LLC
/s/ Xxxx Xxxxxxxxx
----------------------------------------------------
By: Xxxx Xxxxxxxxx, Chairman
MaxQ Investments LLC
/s/ Xxxx Xxxxxxxxx
----------------------------------------------------
By: Xxxx Xxxxxxxxx, Controlling Member
Tradition, N.A.
(only as to Section 5 (e) of the Agreement)
/s/ Xxxx Xxxxxxxxx
----------------------------------------------------
By: Xxxx Xxxxxxxxx, Vice-President
24
EXHIBIT A
Form of Mutual General Release
25
MUTUAL GENERAL RELEASE
The undersigned, in consideration of the mutual promises and covenants set forth
below and in that certain Purchase and Sale Agreement dated as of even date
herewith (the "Purchase Agreement") by and among Advanced Technologies Group,
Ltd. (the "Seller"), and FXDirectDealer, LLC and MaxQ Investments LLC (the
"Purchaser") transferring to Purchaser Seller's entire membership interest in
Purchaser (which date of transfer shall be referred to as the "Closing Date"),
and for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, each intending to be legally bound, hereby agree as
follows:
(1) Release by Seller Parties. Except for the obligations of the parties set
forth in the Agreement, the Seller and Xxxx Xxxxxx, Xxxx Mashov and Xxxx
Xxxxxxx, which individuals constitute Seller's controlling stockholders
(collectively such controlling stockholders are, with the Seller, the "Seller
Parties") for themselves and their respective, heirs, executors, personal
representatives, successors and assigns, do hereby release, quitclaim and
forever discharge each of the Purchaser Parties (as hereinafter defined) and any
of their respective successors and/or assigns and any and all other persons,
firms, partnerships and corporations which are or might be claimed to be liable,
and their respective current, future and former heirs, executors, personal
representatives successors and assigns, of and from any and all debts, claims,
counterclaims, rights, demands, costs, damages, losses, liabilities, actions and
causes of action, including attorneys' fees and court costs, of every nature and
description, whether known or unknown, suspected or unsuspected, foreseen or
unforeseen, real or imaginary, actual or potential, and whether arising at law
or in equity, under the common law, state law, federal law, or any other law, or
otherwise, arising out of or relating to any events, occurrences or
circumstances existing on or before the Closing Date, it being the Seller
Parties' intention to effect a general release of all such claims. Excepted from
the foregoing release are all continuing obligations arising by virtue of the
Purchase Agreement after the Closing Date.
(2) Release by Purchaser Parties. Except for the obligations of the parties set
forth in the Agreement, the Purchaser and Tradition, N.A., MaxQ Investments LLC,
Xxxx Xxxxxxxxx, and Xxxxxx Botkier, (collectively with each Purchaser, the
"Purchaser Parties"), for themselves and their respective, heirs, executors,
personal representatives, successors and assigns, do hereby release, quitclaim
and forever discharge each of the Seller Parties and any of their respective
successors, and/or assigns and any and all other persons, firms, partnerships
and corporations which are or might be claimed to be liable, and their
respective current, future and former heirs, executors, personal representatives
successors and assigns, of and from any and all debts, claims, counterclaims,
rights, demands, costs, damages, losses, liabilities, actions and causes of
action, including attorneys' fees and court costs, of every nature and
description, whether known or unknown, suspected or unsuspected, foreseen or
unforeseen, real or imaginary, actual or potential, and whether arising at law
or in equity, under the common law, state law, federal law, or any other law, or
otherwise, arising out of or relating to any events, occurrences or
circumstances existing on or before the Closing Date, it being the Purchaser
Parties' intention to effect a general release of all such claims. Excepted from
the foregoing release are all continuing obligations arising by virtue of the
Purchase Agreement after the Closing Date.
(3) Governing Law. This Mutual General Release shall be governed by and
construed in accordance with the laws of the State of New York law, without
regard to any of its conflict of laws rules.
(4) No Admission. This Agreement shall not constitute or be construed as an
admission of any wrongdoing by any party hereto.
(5) Interpretation. Except for the obligations of the parties set forth in the
Purchase Agreement, this Mutual General Release is intended to be interpreted
and construed in its broadest and most inclusive meaning so as to release any
and all individuals and entities associated or affiliated in any manner with
either the Seller Parties or the Purchaser Parties from any liability to the
Seller Parties or to the Purchaser Parties, as the case may be.
2
(5) Representations and Warranties. The parties hereto each represent and
warrant that, as of the date hereof, they each have the full power, capacity,
and authority to enter into this Agreement; and that no other releases or
settlements are necessary from any other person or entity to release and
discharge the Parties from the claims specified above. Each party hereto
declares and represents that, in executing this Mutual General Release, it has
received legal advice as to its respective legal rights and hereby certifies
that it has read all of this Mutual General Release and fully understands the
same.
(6) Defined Terms. All capitalized terms used but not otherwise defined herein
have the meanings given to such terms in the Purchase Agreement.
[Signature Pages Follow]
3
IN WITNESS WHEREOF, the Parties have caused this Mutual General Release to
be executed this __________ day of ____________, 200_.
Advanced Technologies Group, Ltd.
/s/ Xxxx Xxxxxx
--------------------------------------------------
By: Xxxx Xxxxxx, President
/s/ Xxxx Xxxxxxx
--------------------------------------------------
By: Xxxx Xxxxxxx, Chairman and Chief Financial Officer
FXDirectDealer, LLC
/s/ Xxxx Xxxxxxxxx
--------------------------------------------------
By: Xxxx Xxxxxxxxx, Chairman
/s/ Xxxxxx Botkier
--------------------------------------------------
By: Xxxxxx Botkier, President
MaxQ Investments LLC
/s/ Xxxx Xxxxxxxxx
--------------------------------------------------
By: Xxxx Xxxxxxxxx, Controlling Member
Tradition (North America), Inc.
/s/ Xxxxxx Xxxxxxxxx
--------------------------------------------------
By: Xxxxxx Xxxxxxxxx, Vice President
4
Signature Page to Mutual General Release (Cont.)
/s/ Xxxx Xxxxxxxxx
--------------------------------------------------
Xxxx Xxxxxxxxx
/s/ Xxxxxx Botkier
--------------------------------------------------
Xxxxxx Botkier
/s/ Xxxx Xxxxxxx
--------------------------------------------------
Xxxx Xxxxxxx
/s/ Xxxx Mashov
--------------------------------------------------
Xxxx Mashov
/s/ Xxxx Xxxxxx
--------------------------------------------------
Xxxx Xxxxxx
5
EXHIBIT B
Form of Subordinated Note
SUBORDINATED NOTE
DATE: January __, 2009
Borrower: FXDirectDealer, LLC (the "Borrower")
Borrower's Address: 00 Xxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000
Lender: Advanced Technology Group Ltd, Inc. (the "Lender")
Lender's Address: 000 Xxxxxxxxxx Xxxxxx, Xxxxxx Xxxx, XX 00000
Principal Amount Borrowed: Seventeen Million Dollars ($17,000,000)
("Principal Amount")
Terms of this Subordinated Note are as follows:
1. PAYMENT TERMS
(a) This Subordinated Note is a part of the purchase price paid by Borrower
pursuant to a Purchase and Sale Agreement dated the date hereof ("Purchase and
Sale Agreement"), to which Lender and Borrower are also parties, pertaining to
the sale of substantially all of Lender's right, title and interest in certain
membership units in the Borrower. The terms of this Subordinated Note are
subject to the terms of a Cash Subordinated Loan Agreement ("CSLA") also dated
the date hereof to which Lender and Borrower are also parties. Capitalized terms
not defined in this Subordinated Note shall be given the meaning set forth in
such CSLA.
(b) Subject to the CSLA, the Capital Requirements and the CFTC Regulations, this
Note represents a loan from Borrower to Lender in the Principal Amount and is
due in thirty six (36) consecutive and equal monthly payments of principal in
the amount of $472,222.22 with interest payable on a monthly basis in arrears in
the amount of ten percent (10%) per annum of the declining balance, calculated
based upon a 365 day year, (which interest rate shall be referred to as the
"Contract Rate"), subject to Section 1 (c) hereof, commencing on March 1, 2009
and thereafter payable on the first Business Day of each succeeding month. Total
unpaid principal and interest shall be referred to as "Indebtedness". Subject to
the CSLA, all Indebtedness, including interest accrued on outstanding amounts of
Indebtedness but not paid, is payable in full no later than three (3) years from
the date hereof (such three year period is the "Term" and the last day of the
Term is the "Maturity Date"). "Business Day" means any day, other than a
Saturday, a Sunday or a day on which the banks are closed in New York City.
(c) Notwithstanding the foregoing, any monthly payments made hereunder shall not
be deemed to be past due and payable to the Borrower until the 10th day
following the date that each such payment is due (which 10 day period is
referred to as the "Grace Period" during which no obligation shall exist
hereunder with respect to the referenced monthly payment obligation in arrears).
The outstanding amount due and payable under this Subordinated Note, including
any interest payable pursuant to Sections 1 and 3 hereof (referred to as
"Interest"), shall be referred to as the "Indebtedness".
2. BORROWER'S PRE-PAYMENT RIGHT AND CASH SUBORDINATED LOAN AGREEMENT
Subject to CFTC Regulations, Borrower reserves the right to prepay, in whole or
in part, this Subordinated Note prior to the last day of the Term, subject in
all respects to the CSLA.
3. PAST DUE INSTALLMENTS
All past due monthly payments due hereunder shall bear interest at the Contract
Rate plus two percent (2%) per annum for such time that such payments remain
past due and unpaid (which per annum Contract Rate plus two per cent shall be
the "Default Rate") The Default Rate shall be applied to such past due payments
and shall be calculated on a per diem basis as long as Borrower is in default
with respect thereto.
4. FORBEARANCE NOT A WAIVER
Lender's forbearance in enforcing a right or remedy as set forth herein shall
not be deemed a waiver of said right or remedy for a subsequent cause, breach or
default of the Borrower's obligations herein; provided, however, Borrower's
ability to pay principal and/or interest hereunder shall be subject to CFTC
Regulations, the Capital Requirements as a part thereof, and the rules and
regulations of the applicable DSRO all as more fully set forth in the CSLA.
5. FORM OF PAYMENT
Any check, draft, money order, or other instrument given in payment of all or
any portion hereof shall be accepted by the Lender and handled in collection in
the customary manner, but the same shall not constitute payment hereunder except
to the extent that actual cash proceeds are unconditionally received by such
Lender and applied to the Indebtedness in the manner elsewhere herein provided
and in accordance with this Subordinated Note and the CSLA. Payments shall be
made to the Lender at the address set forth above or at such other address as is
provided to Borrower by Lender in writing.
6. ATTORNEY'S FEES
If (a) suit for breach or non-payment of this Subordinated Note is brought for
collection or enforcement hereof, or if an action for collection is brought
through probate, bankruptcy, or other judicial proceeding, and (b) Lender
prevails in its claim of breach or non-payment, then Borrower shall pay Lender
all costs of collection and enforcement, including reasonable attorney's fees
and court costs in addition to other amounts due.
2
7. SEVERABILITY
If any provision of this Subordinated Note shall, for any reason and to any
extent, be invalid or unenforceable, the other valid provisions of this
Subordinated Note shall not be affected thereby, but instead shall be enforced
to the maximum extent permitted by applicable law.
8. BINDING EFFECT
The covenants, obligations and conditions herein contained shall be binding on
and inure to the benefit of the heirs, legal representatives, and assigns of the
parties hereto.
9. DESCRIPTIVE HEADINGS
The descriptive headings used herein are for convenience of reference only and
they are not intended to have any effect whatsoever in determining the rights or
obligations under this Note.
10. CONSTRUCTION
The pronouns used herein shall include, where appropriate, either gender or
both, singular and plural.
11. GOVERNING LAW
This Note shall be governed, construed and interpreted by, through and under the
Laws of the State of New York, subject to the CFTC Regulations, the Capital
Requirements and the rules and regulations of the applicable DSRO.
12. NON-TRANSFER
The holder of this Subordinated Note agrees not to sell, transfer, assign,
pledge or otherwise dispose of any interest in this Note to any person or
entity. Any transfer or attempted transfer of this Subordinated Note shall be
void, and neither Borrower nor Lender shall record such transfer on its books or
treat any purported transferee of this Subordinated Note as the owner thereof
for any purpose.
13. SETOFF
The Purchase and Sale Agreement sets forth specific conditions upon which
Borrower may be entitled to set off amounts owed to Lender pursuant to this Note
representing matured indemnification obligations of Lender to and in favor of
Borrower under Section 6(a) of the Purchase and Sale Agreement.
[Signature Page Follows]
3
EXECUTED this __________ day of January 2009.
FX DIRECT DEALER LLC
BY:
-------------------------------------------------
NAME:
-----------------------------------------------
TITLE:
----------------------------------------------
Agreed and Acknowledged:
ADVANCED TECHNOLOGIES GROUP, LTD.
BY:
----------------------------------
NAME:
--------------------------------
TITLE:
-------------------------------
[Signature Page to Subordinated Note]
4
EXHIBIT C
Form of Cash Subordinated Loan Agreement
CASH SUBORDINATED LOAN AGREEMENT
This Cash Subordinated Loan Agreement (the "Agreement") is effective as of
the __ day of January __, 2009 by and between Advanced Technologies Group, Ltd.
(the "Lender"), and FX Direct Dealer LLC (the "Borrower"), which parties
mutually agree as follows:
WHEREAS, Lender is selling substantially all of its membership interests in
Borrower, i.e. 99.96% of such membership interests (the "Sold Interest") to
Borrower in accordance with the terms of a Purchase and Sale Agreement dated of
even date hereof ("Purchase Agreement") and is retaining membership interests
which will represent a .01 percentage interest in Borrower after closing of such
sale transaction (the "Retained Interest"); and in consideration of the sale of
the Sold Interest is accepting $26,000,000 (the "Purchase Price"), comprised of
$9,000,000 in cash paid upon the Closing Date established pursuant to the
Purchase Agreement and a subordinated note in the principal amount of
$17,000,000;
WHEREAS, the $17,000,000 in loan obligations made a part of such Purchase
Price shall be represented by a "Subordinated Note" attached hereto as Exhibit A
and incorporated herein by reference, which obligation including accrued
interest shall be referred to as the "Indebtedness" and shall be payable
pursuant to the terms and conditions thereof and of this Agreement;
WHEREAS, the parties hereto agree and acknowledge that the terms of the
Subordinated Note and this Agreement are governed by the rules and regulations
of the U.S. Commodities Futures Exchange Commission and the Capital Requirements
of the Designated Self-Regulatory Organization as defined below, and as such are
subject to certain restrictions; and that said Indebtedness shall qualify as
equity capital pursuant to CFTC Regulations as defined below; and
WHEREAS, the parties agree and acknowledge that Borrower is entering into
this Agreement and the Purchase Agreement in reliance upon the condition that
the Indebtedness, shall be included as Adjusted Net Capital pursuant to
Commodity Futures Trading Commission Regulation 1.17 (c) (5); and that this
Agreement shall qualify as a Subordination Agreement as defined in Section 2
hereof.
1. The recitals hereto are incorporated herein by reference as if fully set
forth herein.
2. Capitalized terms that are undefined herein are defined in the Subordinated
Note attached as Exhibit A. The following are certain definitions that are
used in this Agreement:
(a) The term "Designated Self-Regulatory Organization" or "DSRO" shall
mean the Exchange(s) and/or other Self-Regulatory Organizations which
is (are) a party to the Joint Audit Agreement and which has (have)
been designated by the Joint Audit Committee as the Borrower's DSRO.
The Borrower's DSRO is subject to change from time to time at the
Joint Audit Committee's discretion.
(b) The term "Commission" shall mean the U.S. Commodity Futures Trading
Commission.
(c) The term "Capital Requirements" shall mean the rules, regulations, and
requirements of the Designated Self-Regulatory Organization which were
adopted pursuant to CFTC Regulations 1.17 and 1.52.
(d) The term "CFTC Regulations" shall mean the minimum financial
requirements set forth in CFTC Regulation 1.17 (a) (1).
(e) The term "Adjusted Net Capital" shall mean adjusted net capital as
defined in Commodity Futures Trading Commission Regulation 1.17(c)(5).
(f) The term "Subordination Agreement" shall mean either a subordinated
loan agreement or a secured demand note agreement, as those terms are
defined in Commodity Futures Trading Commission Regulation 1.17(h)(1).
(g) "Business Day" means any day, other than a Saturday, a Sunday or a day
on which the banks are closed in New York City.
2
3. Lender hereby agrees to lend the sum of SEVENTEEN MILLION DOLLARS
($17,000,000) to Borrower which loan shall be repaid in thirty-six equal
monthly installments of principal in the amount of $472,222.22 each with
interest thereon at the rate of ten percent (10%) per annum on the
declining balance, due on the first Business Day of each month after the
date hereof, with the final payment due three (3) years from the date
hereof (the "Maturity Date"), in accordance with terms and conditions set
forth herein and in the Subordinated Note. Any conflict or perceived
conflict between this Agreement and the Subordinated Note shall be resolved
in favor of this Agreement.
4. The Lender hereby subordinates any right to receive payment with respect to
this Agreement and the Subordinated Note to the prior payment or provision
for payment in full of all claims of all present and future creditors of
the Borrower arising out of any matter occurring prior to the Maturity
Date, except for claims which are the subject of subordination agreements
which rank on the same priority as or are junior to the claim of the Lender
under this Agreement and the Subordinated Note.
5. The proceeds of the subordinated loan evidenced by the Subordinated Note
shall be used by the Borrower and be a part of its capital and shall be
subject to the risks of its business.
6. The Borrower shall have the right to deposit any cash proceeds of this
Agreement in an account or accounts in its own name in any bank or trust
company.
7. Borrower, at its option, but not at the option of Lender, may make a
payment of all or any portion of the Indebtedness prior to the scheduled
Maturity Date (hereinafter referred to as a "Prepayment"); provided,
however, no Prepayment may be made before the expiration of one year from
the date this Agreement becomes effective. In addition, no Prepayment shall
be made if, after giving effect thereto (and to all payments of payment
obligations under any other subordination agreements then outstanding, the
maturity or accelerated maturities of which are scheduled to fall due
within six months after the date such Prepayment is to occur pursuant to
this provision, or on or prior to the date on which the payment obligation
with respect to such Prepayment is scheduled to mature disregarding this
provision, whichever date is earlier) without reference to any projected
profit or loss of the Borrower, the Adjusted Net Capital of the Borrower is
less than the greatest of (a) 120% of the appropriate minimum dollar amount
required by CFTC Regulations, or (b) 120% of the firm's risk based capital
requirement calculated in accordance with CFTC Regulations, or (c) if the
Borrower is a securities broker or dealer, the amount of net capital
specified in Rule 15c3-1d(b)(7) of the Regulations of the Securities and
Exchange Commission 17C.F.R.240.15c3-1d(b)(7) or (d) the minimum capital
requirement as defined by the DSRO; provided, notwithstanding the above, no
Prepayment shall occur without the prior written approval of the DSRO.
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8. In the event that Borrower fails to make a payment required in accordance
with the Subordinated Note, subject to the terms of this Agreement and the
Capital Requirements, the parties agree as follows: if the Indebtedness
obligation of the Borrower has not matured or been paid in full pursuant to
the terms of the Subordinated Note and: (i) such obligation is suspended
pursuant to Section 11 hereof for a six month period or (ii) if Borrower
fails to make three payments during any six month period regardless of the
reason for such failure, then, upon the date that such six month period in
(i) or (ii) above lapses, Borrower shall commence the orderly liquidation
of its business and the right of the Lender to receive payment, together
with accrued interest, shall remain subordinate to all other rights to
receive payment from the Borrower, as required by the provisions of this
Agreement.
9. Subject to CFTC Regulations and the Capital Requirements and the terms of
any senior indebtedness outstanding, on or before payment in full of the
Indebtedness, if: (a) Borrower sells an equity interest equal to fifty per
cent (50%) or less of its fully diluted capitalization to a third party
investor (a "Minority Sale") for cash proceeds which Borrower is free to
use for its internal purposes (hereinafter any such cash proceeds are
"Proceeds"), then fifty per cent (50%) of such Proceeds will be utilized to
pay down the Indebtedness, but only to the extent that said Indebtedness
remains outstanding.
10. Subject to CFTC Regulations, the Capital Requirements and the terms of any
senior indebtedness outstanding, on or before payment in full of the
Indebtedness, if Borrower undergoes a "Change of Control" (defined below),
and cash proceeds, net of transaction expenses, are received by the
Borrower upon the consummation of such Change of Control, such cash
proceeds shall be used to repay the Indebtedness, promptly. In the event
and to the extent that Borrower receives non-cash proceeds as consideration
in such Change of Control such that insufficient cash proceeds are
available to repay the Indebtedness in full, Borrower shall repay such
Indebtedness in full on or before a date which is the later of: (a) 190
days after consummation of the Change of Control, or (b) no more than 10
days after any "lock up period" required to be observed by Borrower with
respect to such non-cash proceeds shall have lapsed (which date of payment
is the "Required Payment Date"); provided, however, in any event, any
unencumbered cash proceeds received by Borrower resulting from a Change in
Control shall first be used to repay the Indebtedness, to the extent
thereof and subject to the terms of any senior indebtedness. "Change of
Control" means any consolidation, exchange or merger of the Borrower with
or into any corporation or other entity or person (or group of entities or
person), or any other corporate reorganization or transfer of capital stock
or units, in which the stockholders or unit holders of Borrower immediately
prior to such consolidation, exchange, merger or reorganization, own less
than fifty per cent (50%) of the Borrower's voting power immediately after
such consolidation, exchange, merger or reorganization, or any transaction
or series of related transactions to which the Borrower is a party in which
in excess of fifty per cent (50%) of the Borrower's voting power is
transferred.
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11. The payment obligation of the Borrower in respect of this Agreement shall
be suspended and shall not mature if, after giving effect to payment of
such payment obligation (and to all payments of payment obligations of the
Borrower under any other subordination agreements then outstanding which
are scheduled to mature on or before such payment obligation), the Adjusted
Net Capital of the Borrower would be less than the greatest of 1) 120% of
the appropriate minimum dollar amount required by CFTC Regulations, or 2)
120% of the firm's risk based capital requirement calculated in accordance
with CFTC Regulations, or 3) if the Borrower is a securities broker or
dealer, the amount of net capital specified in Rule 15c3-1d(b)(8)(i) of the
Regulations of the Securities and Exchange Commission, [17C.F.R.
240.15c3-1d(b)(8)(i)] or 4) the minimum capital requirement as defined by
the DSRO. Upon any such suspension, interest shall continue to accrue
pursuant to the terms of the Subordinated Note.
12. Notwithstanding any terms or conditions herein to the contrary, no default
in the payment of interest or in the performance of any covenant or
condition of this Agreement or the Subordinated Note shall have the effect
of accelerating the date on which the Borrower's payment obligation is
scheduled to mature. Any and all remedies of the Lender hereunder or
pursuant to the Subordinated Note shall be subject to CFTC Regulations and
the Capital Requirements.
13. Notwithstanding the provisions of paragraph 11 of this Agreement, the
payment obligation of the Borrower with respect to this Agreement, together
with accrued interest and compensation, shall mature in the event of any
receivership, insolvency, liquidation pursuant to the Securities Investor
Protection Act of 1970 or otherwise, bankruptcy, assignment for the benefit
of creditors, reorganization whether or not pursuant to the bankruptcy
laws, or any other marshalling of the assets and liabilities of the
Borrower, but the right of the Lender to receive payment, together with
accrued interest or compensation, shall remain subordinate as required by
the provisions of this Agreement.
14. The Borrower shall immediately notify the DSRO and the Commission if, after
giving effect to all payments of payment obligations under this Agreement
or other subordination agreements then outstanding which are then due or
mature within the following six months without reference to any projected
profit or loss of the Borrower, its adjusted net capital would be less than
the greatest of: 1) 120% of the appropriate minimum dollar amount required
by CFTC Regulations, or 2) 120% of the firm's risk based capital
requirement calculated in accordance with CFTC Regulations, or 3) if
Borrower is a securities broker or dealer, the amount of net capital
specified in Rule 15c3-1d(c)(2) of the Regulations of the Securities and
Exchange Commission, [17C.F.R.240.15c3-1d(b)(c)(2] or 4) the minimum
capital requirement defined by the DSRO.
15. Neither this Agreement nor any note or other instrument made hereunder is
entered into in reliance upon the standing of the Borrower as a member
organization of any commodity exchange or securities exchange or upon any
such exchange's surveillance of the Borrower or its capital position. The
Lender is not relying upon any such exchange to provide any information
concerning or relating to the Borrower. No such exchange has a
5
responsibility to disclose to the Lender any information concerning or
relating to the Borrower which it may have now or at any future time.
Neither any such exchange nor any officer or employee of any such exchange
shall be liable to the Lender with respect to this Agreement, the
Indebtedness, the repayment thereof, any interest or compensation thereon
or any damages resulting from the breach of this Agreement. Neither the
DSRO nor the Commission is a guarantor of this Agreement.
16. This Agreement shall be binding upon the Lender and the Borrower and their
respective heirs, executors, administrators, successors and assigns. The
parties hereto represent and warrant that they are duly authorized to enter
into this Agreement and that there exists no contract, agreement,
understanding, law, judgment or regulation that does or would conflict with
or which does or would prevent either party's entering into such Agreement.
17. Any note or other written instrument evidencing the Indebtedness shall bear
on its face an appropriate legend stating that such note or instrument is
issued subject to the provisions of this Agreement, which shall be
adequately referred to and incorporated by reference herein.
18. This Agreement shall not be subject to cancellation by either party; no
payment shall be made with respect hereto and this Agreement shall not be
terminated, rescinded or modified by mutual consent or otherwise, if the
effect thereof would be inconsistent with the Capital Requirements or, if
applicable, the CFTC Regulations.
19. This Agreement is governed by the laws of the State of New York, exclusive
of conflicts of laws principles; provided, however, notwithstanding
anything contained herein to the contrary, the parties hereto shall comply
with the rules and regulations of the DSRO and the rules and regulations of
the Commission.
20. Any notice required or provided for herein shall be deemed to have been
given or received when it has been delivered in person or has been
deposited, postage prepaid, by United States certified or registered mail,
addressed to the intended person:
(a) If for Borrower:
c/o Xxxxxx Botkier
FX Direct Dealer LLC
00 Xxxx Xxxxx, 0xx xxxxx, Xxx Xxxx, N. Y. 10007
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(b) If for Lender:
c/o Xxxx Xxxxxxx
Advanced Technologies Group, Ltd.
000 Xxxxxxxxxx Xxxxxx, Xxxxxx Xxxx, X.X. 00000
(c) If for Borrower's DSRO:
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21. This Agreement supersedes all prior agreements of the parties with respect
to the Indebtedness or any agreements or understandings related thereto and
any amendments or modifications hereto shall be made only by a written
agreement executed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have set their hands on the date
above written.
Lender: Advanced Technologies Group, Ltd.
By: ___________________________
Name (Printed):_________________
Title: _________________________
Borrower: FX Direct Dealer LLC
By: __________________________
Name (Printed): _________________
Title: _________________________
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