Exhibit 10.5
AGREEMENT TO PURCHASE
MEMBERSHIP UNITS
This Agreement to Purchase Membership Units ("Agreement") in X.X. Xxxxxxx &
Company, LLC (the "Company") is entered into and effective the 1st day of August
2004 by and among the Company, Kent Financial Services, Inc. ("Kent"), G. Xxxxx
Xxxxxxx ("Xxxxxxx") and Xxxx X. Xxxxxxxx, Xx. ("Xxxxxxxx").
Whereas, Kent, Xxxxxxx and Xxxxxxxx are the only Members and Unit Holders of the
Company, a Delaware limited liability company, with Kent owning Four Thousand
(4000) Membership Units, Xxxxxxx owning Five Thousand One (5001) Membership
Units and Galuchie owning Nine Hundred Ninety Nine (999) Membership Units; and
Whereas, Kent desires to sell its Four Thousand (4000) Membership Units in the
Company to Xxxxxxx and Xxxxxxxx pursuant to the terms of this Agreement; and
Whereas, Xxxxxxx and Galuchie desire to purchase the Four Thousand (4000)
Membership Units in the Company from Kent,
Now, Therefore the parties hereto intending to be bound agree to the following.
I
Purchase Of Units
X. Xxxxxxx and Xxxxxxxx xxxxx purchase from Kent and Xxxx xxxxx sells to Xxxxxxx
and Galuchie Kent's Four Thousand (4000) Membership Units in the Company.
B. The net purchase price for the Four Thousand (4000) Membership Units of Kent
is calculated as follows to be Five Hundred Twenty Thousand Dollars ($520,000)
(the "Purchase Funds") to be paid Kent at the Closing:
Gross purchase price $ 1,000,000
Less:
Additional capital contribution required by
Kent to fund payment of Galuchie's salary ( 90,000)
Cancellation of Galuchie Put Option ( 390,000)
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Net purchase price $ 520,000
C. On the day of the Closing the Company shall distribute to Xxxxxxx and
Xxxxxxxx Four Hundred Ninety Thousand Dollars ($490,000) representing a portion
of the Purchase Funds to pay Kent.
D. Of the Four Thousand (4000) Membership Units, Xxxxxxx will purchase Three
Thousand Two Hundred Ninety Nine (3299) Units and Galuchie Seven Hundred One
(701) Units.
E. The Closing will be held in the offices of the Company.
F. Effective with the Closing Kent will resign as a Member of the Company.
II
Galuchie Provisions
A. Effective with the Closing, Section 4.6(ii) of the Amended and Restated
Limited Liability Company Agreement of X.X. Xxxxxxx & Company, LLC (the "Winston
LLC agreement") that requires Kent to contribute twice monthly to the Company to
fund the Company's payment of Galuchie's salary is deleted in its entirety.
B. Effective with the Closing, Section 13.6 of the Winston LLC agreement that
provides Galuchie the right to require Kent to purchase all of Galuchie's Units
in the Company is deleted in its entirety.
C. Effective with the Closing, Kent agrees to transfer ownership of the
GenAmerica Financial (MetLife) insurance policy number 3 388 106 to Galuchie.
III
No Continuing Obligations or Liability of Kent Under
Winston LLC Agreement
A. In addition to the provisions of Section II (A) and (B) hereof, effective
with the Closing, Kent will have no continuing obligations or liabilities
whatsoever with respect to the Company and the Winston LLC agreement. Any
provision of the Winston LLC agreement which references Kent or any obligation
of Kent (including, without limitation, Section 4.6(iii) is deleted in its
entirety or amended to the maximum extent necessary to delete any agreements,
obligations or liabilities of any kind of Kent. The parties hereby waive the
application of any provisions of the Winston LLC agreement which may be deemed
to be inconsistent with the terms of this Agreement.
IV
Reaffirmation of Xxxxxxx Employment Agreement
A. The Company, Xxxxxxx and Galuchie hereby expressly reaffirm the obligations
of the Company currently set forth in Section 15.5 of the Winston LLC agreement
with respect to Xxxx X. Xxxxxxx ("Xxxxxxx"). Specifically, the Company agrees to
pay Xxxxxxx fees for brokerage and underwriting services rendered by Xxxxxxx to
the Company at the same rate as was the arrangement between Xxxxxxx and X.X.
Xxxxxxx & Company, Inc., a New Jersey corporation immediately prior to the
merger of X.X. Xxxxxxx & Company, Inc. with and into the Company on August 20,
2003 (the "Merger"), such arrangement consisting of X.X. Xxxxxxx & Company, Inc.
paying Xxxxxxx (a) a percentage of the commissions before deducting clearing
costs ("Commissions") for transactions executed on behalf of his customers as
follows: (i) 50% of Commissions earned for transactions involving listed
securities, and (ii) 60% of Commissions earned either for principal transactions
or for transactions involving over-the-counter securities or NASDAQ securities,
and (b) a percentage of compensation before deducting clearing costs (or other
applicable costs) as follows: (i) 60% of underwriting concessions, and (ii) 50%
of investment banking and/or advisory fees. The Company shall also continue to
pay Xxxxxxx'x reasonable costs and expenses per the arrangement between Xxxxxxx
and X.X. Xxxxxxx & Company, Inc. immediately prior to the effective time of the
Merger, including, without limitation payment for a quote machine, postage,
telephone expense, office supplies, investment related publications, dues and
internet charges. The Company shall enter into a superseding employment
agreement with Xxxxxxx containing substantially the same terms and conditions as
contained in this paragraph and per the arrangements immediately prior to the
Merger.
V
General Provisions
Amendments. No amendment to this Agreement shall be effective or binding upon
the parties unless the same shall have been in writing and approved by the
parties hereto.
Binding Effect. This agreement shall be binding upon and inure to the benefit of
all the parties hereto and to their successors, legal representatives and
assigns.
Severability. The invalidity or unenforceability of any particular provision of
this Agreement shall not effect the other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
Governing Law. This Agreement and the rights of the parties hereunder shall be
interpreted in accordance with the laws of the State of Delaware, and all rights
and remedies shall be governed by such laws without regard to principals of
conflict of laws.
Arbitration. The parties hereto agree that any and all controversies that my
arise pursuant to this Agreement shall be determined by Arbitration before a
panel of independent arbitrators set up by the National Association of
Securities Dealers, Inc. in New Jersey.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above stated.
Kent Financial Services, Inc. X.X. Xxxxxxx & Company, LLC
/s/ Xxxx X. Xxxxxxx /s/ Xxxx X. Xxxxxxxx, Xx.
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By: Xxxx X. Xxxxxxx, Chairman By: Xxxx X. Xxxxxxxx, Xx. President
Xxxx X. Xxxxxxxx, Xx. G. Xxxxx Xxxxxxx
/s/ Xxxx X. Xxxxxxxx,Xx. /s/ G. Xxxxx Xxxxxxx
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Xxxx X. Xxxxxxx
Solely with respect to Article IV.
/s/ Xxxx X. Xxxxxxx
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