Exhibit 10.12
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT ("Agreement") is made and entered into as of
April 2, 1999 by and between Track Securities Corp. ("Securities"), as first
party and Track Data Corporation ("Data"), as second party.
RECITALS
A. Securities, a Florida corporation, engages in the business of a broker
and dealer in securities and is registered as such with the Securities and
Exchange Commission. Securities is willing to grant the option ("Option")
provided for in this Agreement, on the terms and conditions set forth herein,
for the consideration provided for below.
B. Data owns and operates an internet-based order entry/ communication
system which is currently licensed to Track Data Securities Corp. ("TDS"), a
Delaware corporation and wholly owned subsidiary of Securities. TDS has certain
limited rights to re-license said system to Securities. Data desires to acquire
the Option, on the terms and conditions provided for below.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual promises herein contained,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Adoption of Recitals. The parties hereto adopt the foregoing
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Recitals as an integral part of this Agreement and agree and affirm that
construction of this Agreement shall be guided thereby.
2. Grant of the Option.
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(a) Subject to the terms and conditions hereof, Securities hereby
grants to Data an option (exercisable as described below) to purchase from
Securities, one hundred percent (100%) of the shares of TDS now owned or
hereafter acquired by TDC (the "Shares"). The purchase price for the Shares to
be purchased by Data upon exercise of the Option (the "Option Price") shall be
ten thousand dollars ($10,000.00).
(b) The Option may be exercised by Data by giving written notice
thereof to Securities, stating that the Option is then being exercised; and
tendering full payment therefor in the form of a certified or bank cashier's
check payable to Securities (and/or its transferee(s), as the case may be) at
any time prior to the expiration date specified in sub-paragraph c, below.
Within three (3) business days of Securities' receipt of such notice and
payment, it shall cause delivery to Data, or its representatives, certificates
representing the Shares so purchased by Data, registered in the name of Data
or, to the extent provided below, its designee. During the Term of the Option,
all of the shares of TDS owned by Securities shall be delivered to and held by
an independent escrow agent as agreed by the parties of the shares; initially,
Xxxxx X. Xxxxxx, Esquire, of the Law Offices of Xxxxx Xxxxxx, New York, New
York, shall serve as the escrow agent.
(c) The Option shall expire, and be of no further force or effect,
if not exercised, in the manner set forth above, on or before the close of
business on August 31, 2005 ("expiration date"); unless such day is not a
business day in the State of New York, in which case the expiration date shall
be the last business day prior to August 31, 2005.
(d) Data may not transfer (i) its rights under this Agreement,
(ii) any right or interest in the Option or (iii) any right or interest in the
Shares except to an entity in which Data owns not less than a seventy five
Percent beneficial and record ownership interest.
(e) It is the intention of the parties pursuant to the foregoing
provisions of this Section 2 that, following Data's proper exercise of the
Option, Data shall own one hundred percent (100%) of all of the equity of TDS,
including all of the issued and outstanding shares of capital stock of TDS as
are then owned by Securities. Accordingly, during the term of this Agreement,
Securities hereby agrees that it shall not (i) hereafter cause or permit TDS
to issue any shares of capital stock to any person or entity (other than to
Data) without the written consent of Data or (ii) sell, assign, transfer or
otherwise dispose of any of the Shares to any person or entity, except upon
the prior written consent of Data, which consent may be given or withheld for
any reason or for no reason, in Data's sole discretion.
3. Employment Provisions Upon the direction of Data, Securities agrees to
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employ Xxxxx Xxxxx, Xxxxx Xxxx and up to five additional designees of Data as
registered representatives of Securities and provide them with such support and
sponsorship as is necessary to obtain and maintain any necessary licenses and
registrations. Securities further agrees, at the direction of Data, to
maintain and support up to seven employees in its securities broker/dealer
operations.
4. Non Recourse. The parties expressly understand and agree that
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nothing contained in this Agreement or in any other agreement or instrument
entered into by the parties in connection with this Agreement, shall be
construed as creating any liability with respect to Xxxxx Xxxxx, Xxxxx Xxxx or
any other representative of Data to personally perform any covenant, express or
implied, herein or therein contained (except for their personal
undertakings hereunder) it being understood that all such liability (other than
any liability relating to such personal undertakings) is hereby expressly waived
by Securities, its representatives and on behalf of every other person now or
hereafter claiming any right hereunder or thereunder).
5. Payment for Option. As consideration for the Option granted hereby,
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Data has paid to Securities the sum of one thousand dollars ($ 1,000.00).
By signing this Agreement, Securities acknowledges its receipt of such payment.
Representations and Warrantees.
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(a) Securities represents and warrants that:
(i) It is the sole record and beneficial owner and holder of any
and all equity interest(s) of TDS;
(ii) Except as provided herein, it has not assigned or transferred any
right or interest in TDS to any other person and has not granted any other
option in or to an equity interest in TDS to any other person.
(iii)Prior to the expiration of the term of this Agreement, as
provided in Section 2 (c) above, it shall cause TDS to operate in the manner in
which it has operated heretofore, conducting normal business operations; and
shall not permit or cause TDS to engage in any extraordinary transactions,
enter into any material contracts or effect any corporate reorganization,
except to the extent agreed to, in writing, by Data or, if applicable, her
designee. Notwithstanding the above, Securities' representatives may complete,
process and file any applications necessary for TDS to register and qualify
as a "broker dealer" to the extent provided under the Securities Act of 1934
and similar state law.
(iv) The current capitalization of TDS consists of 10,000 shares of
common stock, one dollar ($1.00) par value, all of which have been issued and
outstanding, and all of which are fully paid and nonassessable;
(v) Execution of this Agreement and consummation of the
transactions contemplated herein will not violate any law nor conflict with
its Articles of Incorporation, by-laws or with any contract or covenant to
which it is bound;
(vi) TDS is a domestic corporation in and is currently in good
standing in the State of Delaware.
(c) Data represents and warrants that:
(i) It is acquiring the Option and, upon exercise thereof (if
applicable), the Shares solely for its investment purposes and not for
purposes of resale or distribution;
(ii) The Shares, upon delivery, will bear a legend to the effect
that the Shares may not be sold or transferred except pursuant to effective
registration under the Securities Act of 1933 (or a valid exemption
therefrom) and compliance with any applicable state securities law;
(iii) Execution of this Agreement and consummation of the transactions
contemplated herein will not violate any law, nor conflict with any undertaking,
contract or covenant to which it is bound.
7. Miscellaneous.
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(a) All notices required or permitted to be given hereunder shall be in
writing and may be delivered by hand, by facsimile, by nationally recognized
private courier, or by United States mail. Notices delivered by mail shall be
deemed given five (5) business days after being deposited in the United States
mail, postage prepaid, registered or certified mail. Notices delivered by hand
by facsimile, or by nationally recognized private carrier shall be deemed given
on the first business day following receipt; provided, however, that a notice
delivered by facsimile shall only be effective if such notice is also delivered
by hand, or deposited in the United States mail, postage prepaid, registered or
certified mail, on or before two (2) business days after its delivery by
facsimile. All notices shall be addressed as follows:
If to Securities:
Track Securities Corporation
0000 Xxxxxxxxx Xxxxxxxxx; Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxxxx, President
Fax: (000) 000-0000
If to Data:
Track Data Corporation
00 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx, Vice President
Fax: (000) 000-0000
with a copy to:
Wildman, Harrold, Xxxxx & Xxxxx
000 Xxxxx Xxxxxx Xxxxx; Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 7(a).
(b) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and shall be binding upon
and inure to the benefit of the parties and their legal representatives,
successors and assigns.
(c) This Agreement shall not be modified or amended except pursuant
to an instrument in writing executed and delivered on behalf of
each of the parties hereto.
(d) The failure in any one or more instances of a party to insist upon
performance of any of the terms, covenants or conditions of this Agreement or to
exercise any right or privilege conferred by this Agreement shall not be
construed as a waiver of any terms, covenants, conditions, rights or privileges,
and no waiver of any of the terms, covenants or conditions of this Agreement
shall be construed as a subsequent waiver of any such terms, covenants,
conditions, rights or privileges, but the same shall continue and remain in full
force and effect as if no such forbearance or waiver had occurred.
(e) This Agreement, and the rights and obligations of the parties shall
expire, and be of no further force or effect on the earlier of (i) the date on
which the Option is exercised and appropriate Shares are issued by Securities to
Data or, if appropriate, its designee or (ii) the expiration date provided for
in section 2 (c), above.
(f) The section or paragraph headings or titles herein are for convenience
only and shall not be deemed to be a part of this Agreement.
(g) This Agreement shall be governed and controlled as to validity,
enforcement, interpretation, construction, effect and in all other respects by
the internal laws of the State of New York applicable to contracts made in that
State.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
TRACK DATA CORPORATION TRACK SECURITIES CORP.
By: By:
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Its Vice President Its President
