Exhibit 10.1
FIRST MONTAUK FINANCIAL CORP.
STOCK REPURCHASE AGREEMENT
THIS STOCK REPURCHASE AGREEMENT (this "Agreement") is made and entered
into as of October 20, 2008 by and between FMFG OWNERSHIP INC. BY GERARD A.
McHALE, JR., AS CHAPTER 11 BANKRUPTCY TRUSTEE OF THE 1031 TAX GROUP LLC ET AL,
AS CHAPTER 11 DEBTORS (the "Selling Stockholder") and FIRST MONTAUK FINANCIAL
CORP., a New Jersey corporation (the "Company").
WHEREAS, the Selling Stockholder owns 3,300,308 shares (the "Shares")
of common stock of the Company, no par value (the "Common Stock"), as evidenced
by stock certificates nos. U2005303, U2005306, U2005309 and U5475 (the
"Certificates"); and
WHEREAS, on the terms and subject to the conditions set forth in this
Agreement, the Selling Stockholder desires to sell to the Company, and the
Company desires to purchase from the Selling Stockholder, the Shares.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Company agree as
follows:
1. Repurchase and Sale of Common Stock.
1.1 Sale and Purchase of Common Stock.
(a) Upon the terms and subject to the conditions of
this Agreement, (i) the Company agrees to repurchase the
Shares, and (ii) the Selling Stockholder agrees to
sell the Shares. The repurchase price of the Shares
to be paid by the Company under this Agreement shall
be $100,000 in the aggregate (the "Purchase Price")
which shall be payable in cash by wire transfer or
delivery of other immediately available funds.
1.2 Closing; Deliveries.
(a) The repurchase and sale of the Shares (the
"Closing") shall take place at the offices of Golenbock
Eiseman Asser Bell & Peskoe LLP ("Golenbock Eiseman"),
437 Madison Avenue, New York, New York 10022, or such
other location mutually agreeable to the parties
hereto, at 9:00 a.m. on the date hereof provided further
that in no event shall the Closing take place later than
four (4) business days after satisfaction or (subject
to applicable law) waiver of the conditions set forth in
Section 4 and Section 5 (excluding conditions that, by
their terms, cannot be satisfied until the Closing).
(b) Upon execution of this Agreement, the
Selling Stockholder shall deliver to Jonathan Flaxer,\
Esq. of Golenbock Eiseman as custodian (the
"Custodian"), the Certificates for the number of Shares
to be sold by the Selling Stockholder pursuant to
this Agreement.
(c) At the Closing:
(i) the Custodian on behalf of the Selling
Stockholder shall deliver the Certificates
to the Company against payment of the
Purchase Price by the Company; and
(ii) the Company shall deliver or cause to be
delivered the Purchase Price by wire
transfer in immediately available funds to
the account of the Custodian against
delivery of the shares by the Custodian on
behalf of the Selling Shareholder.
1.3 Condition Subsequent; Approval of the United States Bankruptcy
Court. Notwithstanding the provisions of Section 1.2(c), in the event that the
United States Bankruptcy Court (the "Bankruptcy Court") has not entered an order
approving the sale of the Shares by the Selling Stockholder to the Company (the
"Order") as of the date of Closing, the parties agree that the Certificates and
the Purchase Price shall be held in escrow by the Custodian pending approval of
the transactions contemplated by this Agreement by the Bankruptcy Court and the
entry of the Order to such effect. Upon the execution of this Agreement, the
Selling Stockholder and the Company shall each make best efforts and shall
cooperate to obtain approval of the Bankruptcy Court and the entry of the Order.
In the event the Bankruptcy Court has approved the sale of the Shares and
entered the Order on or before the 40th calendar day after the Closing, on the
next business day following the entry of the order the Custodian shall deliver
the Certificates to the Company and the Purchase Price to the Selling
Stockholder. In the event that the Bankruptcy Court has not entered the Order on
or before the 40th calendar day after the Closing, upon the written demand by
the Company delivered to the Selling Stockholder and the Custodian, the
Custodian shall return the Purchase Price to the Company on the next business
day and the Certificates to the Selling Stockholder.
2. Representations and Warranties of the Selling Stockholder. The
Selling Stockholder represents and warrants to the Company as of the date hereof
and as of the closing as follows:
2.1 Authorization; Enforcement. The Selling Stockholder has the full
right, power and authority to enter into this Agreement and to sell, transfer
and deliver the Shares to be sold by the Selling Stockholder hereunder. This
Agreement when executed and delivered by the Selling Stockholder, will
constitute a valid and legally binding obligation of the Selling Stockholder,
enforceable against the Selling Stockholder in accordance with its terms except
(A) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors' rights generally; and (B) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies. The execution and delivery of this Agreement and the sale
and delivery of the Shares to be sold by the Selling Stockholder and the
consummation of the transactions contemplated herein have been authorized by the
Selling Stockholder and do not and will not, whether with or without the giving
of notice or passage of time or both, conflict with or constitute a breach of,
default under, or result in the creation or imposition of any tax, lien, charge
or encumbrance upon the Shares to be sold by the Selling Stockholder or any
property or assets of the Selling Stockholder pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, license,
lease or other agreement or instrument to which the Selling Stockholder is a
party or by which the Selling Stockholder may be bound, or to which any of the
property or assets of the Selling Stockholder is subject, nor will such action
result in any violation of the provisions of the charter or bylaws or other
organization instrument of the Selling Stockholder, if applicable, or any law,
statute, rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Selling Stockholder or any of its properties.
2.2 Filing, Consents and Approvals. The Selling Stockholder is not
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other person, in connection with
the execution, delivery and performance by the Company of this Agreement,
including the sale and purchase of the Shares, other than (A) filings required
pursuant to this Agreement, and (B) those made or obtained prior to the date
hereof. Notwithstanding the foregoing sentence, the Selling Stockholder will be
required to obtain the entry of an order of the Bankruptcy Court approving the
sale of the Shares as provided in Section 1.3 hereof.
2.3 Valid Title. The Selling Stockholder has and will at the Closing
have valid title to, or a valid security entitlement with the meaning of
Section 8-501 of the New York Uniform Commercial Code in respect of, the Shares
to be sold by the Selling Stockholder hereunder, free and clear of any security
interest, mortgage, pledge, lien, charge, claim, equity or encumbrance of any
kind.
2.4 Certificates Suitable for Transfer. Certificates for all of the
Shares to be sold by the Selling Stockholder pursuant to this Agreement are
accompanied by duly executed instruments of transfer or assignment in blank with
signatures guaranteed have been placed in custody with the Custodian with
irrevocable conditional instructions to deliver such Shares to the Company
pursuant to this Agreement.
2
2.5 Access to Data. The Selling Stockholder has not been furnished with
nor relied upon any representations or other information (whether oral or
written) relating to the business or financial condition of the Company
or its representatives or agents other as described set forth in the Company's
publicly available documents.
3. Representations and Warranties of the Company. The Company
represents and warrants to each Selling Stockholder as of the date hereof and as
of the Closing as follows:
3.1 Authorization; Enforcement. The Company has the full right, power
and authority to enter into and deliver this Agreement, and this Agreement when
executed and delivered by the Company, and assuming this Agreement, is a valid
and legally binding obligation of the Selling Stockholder, this Agreement,
constitutes a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms except (A) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other laws of general application affecting enforcement of
creditors; rights generally; and (B) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies. The Company has the full legal right and power and all authority and
approval required to execute and deliver, or authorize execution and delivery
of, this Agreement, and all other instruments executed and delivered by or on
behalf of the Company in connection with the repurchase of the Shares to be
repurchased by the Company from the Selling Stockholder hereunder.
3.2 Compliance with Other Instruments. The execution, delivery
and performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby and thereby will not result in any violation or
be in conflict with or constitute, with or without the passage of time and
giving of notice, either a default under any provision of the governing
documents of the Company or any instrument, judgment, order, writ, decree or
contract to which the Company or any of its subsidiaries is a party or by which
it is bound, or any provision of any federal or state statute, rule or
regulation applicable to the Company or any of its subsidiaries.
3.3 Sufficient Funds. The Company has funds sufficient to pay the
Purchase Price at the Closing.
4. Conditions of the Company's Obligations at Closing. The obligations
of the Company to the Selling Stockholder under this Agreement are subject to
the fulfillment, on or before the closing, of each of the following conditions,
unless otherwise waived by the Company:
4.1 Delivery of Certificates. The Selling Stockholder (or the
Custodian on behalf of the Selling Stockholder) shall have presented and
delivered the Certificates representing the Shares to the Company.
5. Conditions of the Selling Stockholders' Obligations at Closing. The
obligations of the Selling Stockholder to the Company under this Agreement are
not subject to the fulfillment, on or before the Closing, of each of the
following any conditions, unless otherwise waived by the Selling Stockholder:
5.1 Delivery of the Purchase Price. The Company shall have
sufficient funds to pay the Purchase Price and shall pay the Purchase Price at
the Closing.
6. Miscellaneous.
6.1 Survival of Representations and Warranties. The
representations and warranties of the Selling Stockholder and the Company
contained herein shall terminate on the first anniversary of the Closing and
thereafter shall expire and have no further force and effect.
6.2 Transfer, No Third-Party Beneficiaries. This Agreement
shall not be assigned without the prior written consent of the Company and the
Selling Stockholder; provided, that either party may transfer its rights
hereunder to a third party, so long as such third party agrees in writing to be
bound by all obligations under this Agreement and confirms in writing the
representations and warranties set forth in Section 3 as if made by such third
party which writing shall be delivered to the non-transferring party prior to
the transfer becoming effective. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
6.3 Governing Law. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed by and construed in accordance with the laws of the
State of New York, without giving effect to principles of conflicts of laws.
3
6.4 Counterparts. This Agreement may be executed in two or
more counterparts, including by facsimile, each of which shall be deemed an
original and all of which together shall constitute one and the same instrument
and shall become effective when counterparts have been signed by each of the
parties and delivered to the other party; it being understood that all parties
need not sign the same counterpart.
6.5 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.6 Notices. Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient upon delivery, when
delivered personally or by overnight courier or sent by telegram or fax, or four
(4) business days after being deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, addressed to the party to be notified at
such party's address as set forth on the signature page hereto, or as
subsequently modified by written notice, and if to the Selling Stockholder c/o
Gerard A. McHale, Jr. P.A., 1601 Jackson Street, Suite 200, Fort Myers, FL,
Facsimile: (239) 337-1178, with a copy to Jonathan Flaxer, Esq., Golenbock
Eiseman Assor Bell & Peskoe LLP, 437 Madison Avenue, New York, NY 10022-7302,
Facsimile: (212) 754-0330, and if to the Company, Parkway 109 Office Center, 328
Newman Springs Road, Red Bank, NJ 07701, Attn.: Victor K. Kurylak, President &
CEO, with a copy to Victor J. DiGioia, Esq., Becker & Poliakoff, LLP, 45
Broadway, New York, NY 10006, Facsimile: (212) 557-0295.
6.7 Finder's Fee. Each party represent that it neither is nor
will be obligated for any finder's fee or commission in connection with this
transaction.
6.8 Fees and Expenses. Each of the Selling Stockholder and the
Company shall pay their respective fees and all other associated expenses
incurred by such party in connection with the negotiation, execution, delivery
and performance of the Agreement. The Company shall pay all transfer agent fees,
stamp taxes and other taxes and duties levied in connection with the delivery of
the Shares to the Company.
6.9 Amendments, Modifications and Waivers. No amendment,
modification or waiver in respect of this Agreement shall be effective against
any party unless it shall be in writing and signed by the Selling Stockholder
and the Company.
6.10 Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among or between any of the parties with respect to the subject matter hereof
and thereof.
6.11 Consent to Jurisdiction; Venue. Regardless of any
conflict of law or choice of law principles that might otherwise apply, the
parties agree that this Agreement shall be governed by and construed in all
respects in accordance with the laws of the State of New York. The parties all
expressly agree and acknowledge that the State of New York has a reasonable
relationship to the parties and/or this Agreement. As to any dispute, claim or
litigation arising out of or relating in any way to this Agreement or the
transaction contemplated hereby, the parties hereto hereby agree and consent to
be subject to the exclusive jurisdiction of any New York state court, or federal
court of the United States of America sitting in New York, and any appellate
court from any thereof. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by law, (a) any objection that it may now or hereafter
have to laying venue of any suit, action or proceeding brought in such court,
(b) any claim that any suit, action or proceeding brought in such court has been
brought in an inconvenient forum, and (c) any defense that it may now or
hereafter have based on lack of personal jurisdiction in such forum.
6.12 WAIVER OF JURY TRIAL. EACH OF THE PARTIES IRREVOCABLY
WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BETWEEN
THE PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.
6.13 Cooperation. Each of the Selling Stockholder and the
Company agrees to reasonably cooperate with the other party and to execute and
deliver such further documents, certificates, agreements and instruments and to
take such other actions as may be reasonably requested by such party to evidence
or reflect the transactions contemplated by this Agreement and to carry out the
intent and purpose of this Agreement.
4
6.14 Severability. If any term or other provision of this
Agreement is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement will remain in full force
and effect so long as the economic or legal substance of this Agreement is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the terms of this
Agreement remain as originally contemplated to the fullest extent possible.
6.15 Specific Performance; Injunctive Relief. The parties
hereto acknowledge that the parties shall be irreparably harmed and that there
shall be no adequate remedy at law for a violation of any of the covenants or
agreements of the other parties set forth in this Agreement. Therefore, each
party hereby agrees that, in addition to any other remedies that may be
available to the Selling Stockholder or the Company, as applicable upon any such
violation, such party shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other means to
which they are entitled at law or in equity.
6.16 Legal Representation. This Agreement was negotiated by
the parties with the benefit of legal representation and any rule of
construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any party shall not apply to any construction
or interpretation thereof.
(Signature Pages Follow)
5
IN WITNESS WHEREOF, the parties have executed this Stock Repurchase
Agreement as of the date first written above.
COMPANY:
FIRST MONTAUK FINANCIAL CORP.
A New Jersey corporation
By: /s/ Victor K. Kurylak
---------------------------------
Name: Victor K. Kurylak
Title: Chief Executive Officer
(Signature Page of the Selling Stockholder Follows on Next Page)
6
SELLING STOCKHOLDER
FMFG OWNERSHIP INC. BY GERARD A.
MCHALE, JR. AS THE CHAPTER 11
BANRUPTCY TRUSTEE FOR THE 1031
TAX GROUP, LLC, et al.
AS CHAPTER 11 DEBTORS
By: /s/ Gerard A. McHale, Jr.
---------------------------------
Name: Gerard A. McHale, Jr.
Title: Chapter 11 Bankruptcy
Trustee
7