MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") made, entered into this 3rd day of
October, 2006 (the "Effective Date"), by and between Xxxxxxxx X. Xxxxxxxxxx and
Xxxxxxx X. Xxxx, each an individual (hereinafter referred to collectively as
"Manager"), and National Investment Managers Inc., a Florida corporation
(hereinafter referred to as "Corporation").
W I T N E S S E T H:
WHEREAS, Manager has provided valuable services to LAMORIELLO & CO.,
INC., CIRCLE PENSION, INC. and SOUTHEASTERN PENSION SERVICES, INC.
(collectively, the "Companies"), which Companies the Corporation has this date
purchased from THE LAMCO GROUP, INC., and the Corporation recognizes that
Manager is fully cognizant of the Companies' operations such that it is
desirable to retain Manager's services to manage the business of the Companies;
WHEREAS, Manager desires to provide such management services for the
Companies as an independent contractor, with the understanding that the Manager
shall not be required to devote full time to the business of the Companies and
shall be free to pursue other personal and business interests on the terms and
subject to the conditions of this Agreement; and
NOW, THEREFORE, in consideration of the premises, the mutual covenants
of the parties herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each of the parties
hereto, it is agreed as follows:
1. MANAGEMENT SERVICES. (a) The Corporation hereby engages the Manager to manage
the business and operations of the Companies' retirement plan administration
services business (the "Companies Business") and Manager hereby agrees to
provide such services. The Corporation acknowledges and agrees that Manager will
not devote its full time to providing services hereunder and that such services
will be provided subject to Manager's reasonable availability and prior
commitments.
(b) The Manager shall have primary authority with respect to the
management, direction and operation of the Companies' Business, subject only to
the direction and oversight of the Corporation's Chief Executive Officer ("CEO")
and the Board of Directors (the "Board"). The Manager shall prepare and submit
to the Corporation for final approval an annual budget ("Budget") for each of
the Companies, setting forth the estimated receipts and expenditures (capital,
operating, and other) of each Company for the balance of the current fiscal year
and annually thereafter at least sixty (60) days prior to the end of each fiscal
year. After review and agreement by the Corporation, the Manager shall implement
the Budget for each of the Companies and shall be authorized, without the need
for further approval, to incur the obligations provided for in each such Budget.
In the event of any material change in any item indicated in the Budget for any
of the Companies, Manager shall promptly prepare and submit to the Corporation a
revised Budget reflecting such material change for review and agreement by the
Corporation. The Manager shall have the authority to take actions reasonably
necessary to carry out such budgeted and agreed upon expenditures.
2. RELATIONSHIP BETWEEN PARTIES. During the term of this Agreement, Manager
shall be deemed to be an independent contractor. Manager shall not be considered
as having an employee status vis-a-vis the Corporation, or by virtue of the
management relationship hereunder (the "Management Arrangement") being entitled
to participate in any plans, arrangements or distributions by the Corporation
pertaining to or in connection with any pension, stock, bonus, profit sharing,
welfare benefits, or similar benefits for the regular employees of the
Corporation. The Corporation shall not withhold any taxes in connection with any
compensation due Manager hereunder, and Manager will be responsible for the
payment of any such taxes and hereby agrees to indemnify the Corporation against
nonpayment thereof.
3. EXPENSE REIMBURSEMENT. The Manager shall not receive any compensation for
services provided hereunder. However, the Corporation agrees to reimburse the
Manager for all of its expenses incurred in connection with the provision of
services hereunder.
4. TERM OF MANAGEMENT ARRANGEMENT. (a) Management Arrangement shall begin
effective as of the Effective Date and shall continue for a period of
twenty-four (24) months from the Effective Date (the "Management Period"). The
Corporation may, upon written notice to Manager, immediately terminate Manager's
services for Cause and thereby terminate the Management Period. "Cause" shall
exist if (i) Manager materially breaches any provision of this Agreement, and
such breach remains unremedied to the reasonable satisfaction of the Board for
forty five (45) days after notice thereof is given to Manager; (ii) Manager is
convicted of or pleads "no contest" to, a felony, or any other conduct of a
criminal nature (other than traffic violations); (iii) Manager is found guilty
of a material violation of laws related to retirement plan administration by any
judicial, governmental or professional organization having jurisdiction and,
based on that violation, is suspended or barred from doing business in the
retirement plan administration industry; (iv) Manager is grossly negligent in
the performance of, or willfully disregards, his obligations hereunder, (v)
Manager intentionally imparts material confidential information relating to the
Corporation or any affiliate to competitors or to other third parties other than
in the course of carrying out Manager's duties; (vi) Manager fails to obey the
lawful directions of the CEO or the Board or willfully violates any Corporation
policy known to Manager or (vii) Manager engages in conduct that brings the
Corporation or its affiliated into public disgrace or disrepute and does not
correct such conduct within ten (10) days of notice thereof from Corporation.
(b) Reference is hereby made to that certain Stock Purchase Agreement
pursuant to which the Corporation acquired ownership of the Companies (the
"Purchase Agreement"). Capitalized terms used in this Section 4(b) that are not
otherwise defined in this Agreement shall have the meanings ascribed to them in
the Purchase Agreement. The Corporation acknowledges and agrees that if it
should attempt to terminate this Agreement without CAUSE, then the Companies
shall be deemed to have attained the "Target EBITDA" for both of the first two
(2) 12-month periods following the Closing Date under the Purchase Agreement,
and the Corporation shall immediately pay to the Seller and its employees an
aggregate Bonus of $200,000. In such event, the Corporation shall further
instruct the Escrow Agent under the Purchase Agreement to release the Escrowed
Shares to the Seller.
5. CONFIDENTIALITY COVENANTS.
5.1 Acknowledgments by the Manager. The Manager acknowledges that (a)
during the Management Period and as a part of the Management Arrangement, the
Manager will be afforded access to Confidential Information (as defined below);
(b) public disclosure of such Confidential Information could have an adverse
effect on the Corporation and its business; and (c) the provisions of this
Section 5 are reasonable and necessary to prevent the improper use or disclosure
of Confidential Information.
2
5.2 Agreements of the Manager. In consideration of the compensation and
benefits to be paid or provided to the Manager by the Corporation under this
Agreement, the Manager covenants as follows:
(a) During and following the Management Period, the Manager
will hold in confidence the Confidential Information and will not disclose it to
any person except with the specific prior written consent of the Corporation or
except as otherwise expressly permitted by the terms of this Agreement.
(b) Any trade secrets of the Corporation will be entitled to
all of the protections and benefits under New York law and any other applicable
law. If any information that the Corporation deems to be a trade secret is found
by a court of competent jurisdiction not to be a trade secret for purposes of
this Agreement, such information will, nevertheless, be considered Confidential
Information for purposes of this Agreement. The Manager hereby waives any
requirement that the Corporation submit proof of the economic value of any trade
secret or post a bond or other security.
(c) None of the foregoing obligations and restrictions applies
to any part of the Confidential Information that the Manager demonstrates was or
became generally available to the public other than as a result of a disclosure
by the Manager.
(d) The Manager will not remove from the Corporation's
premises (except to the extent such removal is for purposes of the performance
of the Manager's duties at home or while traveling, or except as otherwise
specifically authorized by the Corporation) any document, record, notebook,
plan, model, component, device, or computer software or code, whether embodied
in a disk or in any other form (collectively, the "Proprietary Items"). The
Manager recognizes that, as between the Corporation and the Manager, all of the
Proprietary Items, whether or not developed by the Manager, are the exclusive
property of the Corporation. Upon termination of this Agreement by either party,
or upon the request of the Corporation during the Management Period, the Manager
will return to the Corporation all of the Proprietary Items in the Manager's
possession or subject to the Manager's control, and the Manager shall not retain
any copies, abstracts, sketches, or other physical embodiment of any of the
Proprietary Items.
5.3 Disputes or Controversies. The Manager recognizes that should a
dispute or controversy arising from or relating to this Agreement be submitted
for adjudication to any court, arbitration panel, or other third party, the
preservation of the secrecy of Confidential Information may be jeopardized. All
pleadings, documents, testimony, and records relating to any such adjudication
will be maintained in secrecy and will be available for inspection by the
Corporation, the Manager, and their respective attorneys and experts, who will
agree, in advance and in writing, to receive and maintain all such information
in secrecy, except as may be limited by them in writing.
5.4 Definitions. For the purposes of this Section 5, "Confidential
Information" shall mean any and all:
(a) trade secrets concerning the business and affairs of the
Corporation, product specifications, data, know-how, formulae, compositions,
processes, designs, sketches, photographs, graphs, drawings, samples, inventions
and ideas, past, current, and planned research and development, current and
planned manufacturing or distribution methods and processes, customer lists,
current and anticipated customer requirements, price lists, market studies,
business plans, computer software and programs (including object code and source
code), computer software and database technologies, systems, structures, and
architectures (and related formulae, compositions, processes, improvements,
devices, know-how, inventions, discoveries, concepts, ideas, designs, methods
and information, and any other information, however documented, that is a trade
secret under New York law;
3
(b) information concerning the business and affairs of the
Corporation (which includes historical financial statements, financial
projections and budgets, historical and projected sales, capital spending
budgets and plans, the names and backgrounds of key personnel, personnel
training and techniques and materials, however documented; and
(c) notes, analysis, compilations, studies, summaries, and
other material prepared by or for the Corporation containing or based, in whole
or in part, on any information included in the foregoing.
6. INTENTIONALLY LEFT BLANK.
7. NOTICES. All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by facsimile
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
(a) if to the Corporation, to it at: with a copy to:
National Investment Managers Inc. Xxxxxxx Xxxxxxxxx, Esq.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000 Xxxxxxxxx Xxxx Xxxxxxxx Xxxxxxx XXX
Xxx Xxxx, Xxx Xxxx 00000 1065 Avenue of the Americas
Attn: Xxxxxxx Xxxxxxx, COO/CFO Xxx Xxxx, XX 00000
Phone: (000) 000-0000 Fax: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to Manager, to them at: with a copy to:
x/x Xxxxxxxx X. Xxxxxxxxxx X. Xxxxx Xxxxxxx, Xxx.
00000 Xxxxxxxx Xxx Xxxxxxx & Xxxxxxxxx XXX
Xxxxxxxxx, Xxxxxxx 00000 00 Xxxxxxxx Xxxxxxx
Phone: (000) 000-0000 Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Facsimile: (000) 000-0000 Phone: (000) 000-0000
Facsimile: (000) 000-0000
4
8. BINDING EFFECT. This Agreement shall extend to, shall inure to the benefit of
and shall be binding upon all the parties hereto and upon all of their
respective heirs, successors and representatives.
9. ENTIRE AGREEMENT. This Agreement, including the agreements incorporated by
reference, contains the entire Agreement among the parties hereto with respect
to the matters contemplated hereby and supersedes all prior agreements and
undertakings between the parties with respect to such matters. This Agreement
may not be amended, modified or terminated in whole or in part, except in
writing, executed by each of the parties hereto.
10. SEVERABILITY. Should any part of any provision of this Agreement be declared
invalid by a court of competent jurisdiction, such decision or determination
shall not affect the validity of any remaining portion of such provision or any
other provision and the remainder of the Agreement shall remain in full force
and effect and shall be construed in all respects as if such invalid or
unenforceable provision or portion thereof were not contained herein. In the
event of a declaration of invalidity, the provision or portion thereof declared
invalid shall not necessarily be invalidated in its entirety, but shall be
observed and performed by the parties to the Agreement to the extent such
provision is valid and enforceable.
11. SECTION HEADINGS. The section headings contained herein are for convenience
of reference only and shall not be considered any part of the terms of this
Agreement.
12. CHOICE OF LAW. This Agreement shall be interpreted and performed in
accordance with the laws of the State of New York, and the parties agree,
notwithstanding the principles of conflicts of law, that the internal laws of
the State of New York shall govern and control the validity, interpretation,
performance, and enforcement of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
IN WITNESS WHEREOF, Manager has hereunto put his hand, and the
Corporation has caused this instrument to be executed in its corporate name by
its duly authorized officer, all as of the day and year first above written.
MANAGER:
/s/Xxxxxxxx X. Xxxxxxxxxx
Xxxxxxxx X. Xxxxxxxxxx
/s/Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
CORPORATION:
National Investment Managers Inc.
By: /s/Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx, COO.CFO
6
