EXHIBIT 10.1
AGREEMENT REGARDING CERTAIN CLOSING
AND POST CLOSING MATTERS
This Agreement is made and entered into as of the 28th day of July,
1999, by and among National Capital Management Corporation, a Delaware
corporation ("NCMC"), and the persons and entities set forth on the signature
page attached hereto (collectively, the "Shareholders" and individually a
"Shareholder").
RECITALS
A. Concurrently with the execution of this Agreement, NCMC, FAC,
Inc. ("FAC"), a Delaware corporation and wholly-owned subsidiary of NCMC,
TeleScents, Inc., a New York corporation ("TeleScents"), and the Shareholders
have entered into an Agreement and Plan of Merger dated as of the date hereof
(the "Merger Agreement") pursuant to which the parties have agreed that
TeleScents will merge with and into FAC with TeleScents continuing as the
surviving corporation (the "Surviving Corporation").
B. In connection with and as a condition to the consummation of
the transactions contemplated in the Merger Agreement, the parties wish to enter
into this Agreement to set forth certain agreements reached at Closing and to
evidence certain undertakings of the parties from and after Closing. All defined
terms used but not otherwise defined in this Agreement shall have the respective
meanings ascribed hereto in the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties agree as follows:
1. SHAREHOLDERS ACTIONS. NCMC and the Shareholders agree NCMC
shall notice the Annual Meeting of the Shareholders (the "Annual Meeting") to be
held on such date as soon as practicable following the Effective Time (the
"Meeting Date") and the Board of Directors of NCMC shall recommend certain
proposals to be acted on by the NCMC shareholders at the Annual Meeting. Such
proposals and actions shall consist of the following matters:
a. ELECTION OF DIRECTORS: One of the proposals to be
acted on by the shareholders of NCMC shall be the election of nominees
to NCMC's Board of Directors (the "Board"). Such nominees shall be
Xxxxx X. Xxxxx, Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxxxx Xxxx and
shall be nominated to serve on NCMC's Board for one (1) year terms
subject to the terms and conditions of NCMC's Bylaws and Articles of
Incorporation. Such nominations shall be effective as of the Effective
Time. NCMC and the Shareholders agree that each shall support the
nominations of each of the nominees and that each shall use their best
efforts to ensure that such nominees are appointed to the Board and
elected by the shareholders of NCMC. The Shareholders further agree
that they shall take such other actions to assist NCMC in
preparing materials to be distributed to NCMC's shareholders prior to
the Meeting Date, such as timely providing NCMC with information
regarding Shareholders' nominees as may be requested periodically by
NCMC.
b. RATIFICATION OF ACCOUNTANTS: One of the proposals to
be acted on by the NCMC shareholders shall be the ratification of
independent accountants for NCMC as jointly selected by the
Shareholders. Shareholders agree that they shall timely provide
information to NCMC and shall take such other actions as requested by
NCMC to assist NCMC in preparing materials to be distributed to NCMC's
shareholders prior to the Meeting Date.
c. AMENDMENT TO NCMC CERTIFICATE OF INCORPORATION: One
of the proposals to be acted on by the shareholders shall be the
amendment of NCMC's Certificate of Incorporation to increase the
authorized capital stock of NCMC to 50 million shares, of which 47
million shares shall be Common Stock and 3 million shares shall be
Preferred Stock. If such amendment is approved by the NCMC
shareholders, NCMC and the Shareholders agree that it and they shall
take such further actions and file such additional documents as may be
necessary to effect such amendments to NCMC's Certificate of
Incorporation.
d. ADOPTION OF 1999 STOCK OPTION PLAN: One of the
proposals to be acted on by the shareholders shall be the adoption of a
stock option plan substantially in the form attached hereto as Exhibit
A, pursuant to which 3 million shares of common stock shall be reserved
for issuance thereunder.
2. SHAREHOLDER APPROVAL. The Shareholders individually and
jointly agree that , at any meeting of the shareholders of the Company, however
called, including the Annual Meeting, and at every adjournment thereof, and in
any action by written consent of the shareholders of the Company, each of the
Shareholders shall (i) vote all of the shares of capital stock of NCMC then
owned by such Shareholder in favor of the proposals set forth in paragraph 1
above and each of the other transactions contemplated thereby and any action
required in furtherance thereof, (ii) vote all of the shares of capital stock of
NCMC then owned by such Shareholder against any action or agreement that would
result in a breach in any material respect of any covenant, representation or
warranty or any other obligation of NCMC under the Merger Agreement, and (iii)
vote all of the shares of capital stock of NCMC then owned by such Shareholder
against any other action or agreement that, directly or indirectly, is
inconsistent with or that would, or is reasonably likely to, directly or
indirectly, impede, interfere with or attempt to discourage the Merger or any
other transaction contemplated by the Merger Agreement or this Agreement. Each
of the Shareholders further agree to take all such other actions as shall be
reasonably requested by NCMC in order to assist in, and shall cooperate with
NCMC in connection with, the consummation of the transactions contemplated by
the Merger Agreement, including (i) participating in meetings with shareholders
of the NCMC, (ii) soliciting proxies and (iii) providing information concerning
the Company to third parties.
3. COSTS AND EXPENSES. NCMC agrees that, in addition to the cash
contribution described in paragraph 4 below, it shall contribute $15,000 to the
Surviving Corporation to be used
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for expenses related to the Annual Meeting or the preparation of an
Information Statement to be provided to all shareholders of NCMC the
foregoing $15,000 will be offset by the prepayment through August 15, 1999 of
$7,300 for the D&O insurance premium. Furthermore, NCMC shall pay such costs
and expenses reflected in the attached EXHIBIT A. The parties hereto agree
that, except as provided in this paragraph, paragraphs 4 and 5 below or
pursuant to Section 7.13 of the Merger Agreement, the Surviving Corporation
shall be solely responsible for all costs and expenses arising after the
Effective Time, including without limitation all fees, costs and expenses
related to, in connection with or arising out of the conversion of NCMC's
existing Director and Officer insurance policy (which are estimated to be
approximately $20,000).
4. CASH DISTRIBUTIONS; WAIVER. NCMC agrees that as of the
Effective Time, it shall have transferred or otherwise contributed Five Hundred
Thousand Dollars ($500,000) in immediately available funds to the Surviving
Corporation. The Shareholders jointly and severally acknowledge and agree that
neither the Shareholders, FAC, TeleScents nor the Surviving Corporation shall be
entitled to any amount in addition to the $500,000 following the Effective Time,
whether as Shareholders of NCMC, or by virtue of, in connection with, or related
to the Merger, this Agreement or otherwise, except as provided in paragraphs 3,
4 and 5 of this Agreement and Section 7.13 of the Merger Agreement. Accordingly,
the Shareholders, individually and jointly, hereby waive, release and agree not
to xxx on any and all rights they currently, or in the future may, have to any
amounts of cash or other property of NCMC as of or after the Effective Time or
distributed by NCMC to its shareholders from time-to-time following the
Effective Time, whether such distribution is in the form of a dividend or
otherwise. The Shareholders hereby acknowledge and agree that prior to the
Effective Date, NCMC shall set a record date (the "Record Date") for one or more
distributions to all NCMC shareholders OTHER THAN THE SHAREHOLDERS, and that
from time-to-time thereafter, NCMC shall, in accordance with the Delaware
General Corporation Law, distribute cash to all NCMC shareholders as of the
Record Date in the form of a dividend or otherwise as contemplated in the
Resolutions of the Board of Directors of NCMC attached hereto as EXHIBIT B;
provided however that such distributions shall not reduce the Five Hundred
Thousand Dollars ($500,000) transferred or otherwise contributed to the
Surviving Corporation. As of the date of this Agreement, NCMC anticipates that
the aggregate amount of such cash distributions will be in the range of
$.58-$.63 per share, with the final amounts (whether within this range or not)
to be determined by Xxxxx X. Xxxxx in his sole discretion. The parties hereto
agree that Xxxxx X. Xxxxx shall have the sole power, authority and discretion to
effectuate a second cash distribution to the shareholders of NCMC as of the
Record Date as he determines is necessary or desirable.
5. ADMINISTRATIVE ACCOUNT. From the date of this Agreement
through October 31, 1999, NCMC shall maintain an administrative account
funded in the amount of not less than $125,000 (the "Administrative Account"
or "Account"). The Administrative Account shall be administered by Xxxxx X.
Xxxxx. The Account shall consist of an amount no less than $75,000 which
shall be used to pay the costs and expenses of NCMC arising prior to the
Effective Date (the "Pre- Merger Expenses") and an amount of $50,000 to be
used to indemnify and hold harmless NCMC, the Surviving Corporation and any
of the Shareholders against all damages, liabilities, costs and expenses,
including reasonable attorney's fees, in connection with a claim arising out
of (i) the disposition by NCMC of
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NCQ Realty, Inc. or (ii) the transfer by NCMC of the Xxxxxx accounts
receivables and the Oerlemans' guaranty (a "Claim").
a. The Shareholders shall promptly present for payment
to Xx. Xxxxx any bills, invoices or costs for Pre-Merger Expenses. Xx.
Xxxxx shall either cause NCMC to pay such Pre-Merger Expense or provide
the Shareholders with written notice of his dispute that such is a
Pre-Merger Expense. The parties agree that they shall proceed in good
faith to resolve any disputes between them concerning the payment of
Pre-Merger Expenses; provided however, if they are not able to come to
a resolution, the parties hereto agree that Xxxxxx Xxxx shall act as a
mediator for purposes of attempting to resolve such dispute. The
parties further agree that any tax rebates, credits or prepaid amounts
received or credited to NCMC after the Effective Date based on payments
made or events occurring prior to the Effective Date shall be provided
to Xxxxx X. Xxxxx to be deposited into the Account. The parties further
agree that in connection with his administration of the Account, Xxxxx
X. Xxxxx shall have the power, right and authority to engage in such
discussions regarding the use of the Account funds as he may deem
reasonable or appropriate (including, after October 31, 1999, (i) the
authority to pay to PFG Corp. and Resource Holdings Associates monies
out of the Account to support their respective indemnity obligations
and (ii) the power to negotiate with NCMC (and in such negotiations
NCMC shall be represented solely by Xxxxxx or Xxxxx Xxxxx) and PFG
Corp. and Resource Holdings Associates a release of the
indemnifications provided by PFG Corp. and Resource Holdings Associates
to NCMC) and shall further have the right, power and authority to
effectuate the same. The foregoing clause (ii) shall not imply any
obligation on behalf of NCMC to release such indemnifications.
b. In the event NCMC or the Surviving Corporation or any
of the Shareholders receive notice of any action, proceeding, claim or
potential claim (any of which is hereinafter referred to as a
"Circumstance"), which could give rise to the right to indemnification
pursuant to this paragraph 5, such parties shall give Xx. Xxxxx written
notice describing the Circumstance in reasonable detail. Pinto shall
have the right, at his option, to compromise or defend, at his own
expense and by his own counsel, any such matter involving the asserted
liability of the party seeking indemnification. Furthermore, the party
seeking indemnification agrees to cooperate fully with Xx. Xxxxx and
his counsel in the compromise of, or defense against, any such asserted
liability and, if he so elects to compromise or defend, the Surviving
Corporation, NCMC or any of the Shareholders shall have the right at
its own expense to participate in the defense of such asserted
liability. Under no circumstances shall NCMC, the Surviving Corporation
or the Shareholders compromise any asserted liability without the
written consent of Xx. Xxxxx.
c. Xx. Xxxxx, in his sole discretion and solely for the
purposes of winding up the Account may extend the maintenance of the
Account through December 15, 1999. Any amount remaining in the
Administrative Account after winding up the Account may be distributed
to the shareholders of NCMC as of the Record Date. After October 31,
1999, in furtherance of the administration of the Account, Xx. Xxxxx
shall be reimbursed out of such
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Account for any out-of-pocket costs or expenses he incurs.
6. OFFICERS AND DIRECTORS. The parties hereto agree that, to the
extent such individuals agree to serve in the capacities designated below, from
and after the Effective Date, the Directors and Officers of NCMC shall be as
follows:
Xxxxxx X. Xxxxx......................... Director, Vice Chairman of the Board,
Chief Financial Officer and Secretary
Xxxxx X. Xxxxx ......................... Director, President and Chief
Executive Officer
Xxxxxx Xxxx............................. Director and Chairman
Xxxxx X. Xxxxx.......................... Director
7. COVENANTS. The Shareholders covenant and agree that for a
period commencing on the date of this Agreement and ending on December 31, 1999,
such Shareholders will not:
a. cause NCMC to issue or sell any shares of the common
stock of NCMC, or securities convertible into or exercisable for, any
shares of the common stock of NCMC to the Shareholders at a price less
than $0.40 per share without obtaining the prior written approval of
Xxxxx X. Xxxxx; or
b. engage in any plan of action pursuant to which the
shareholders of NCMC (other than the Shareholders) are subject to a
"freeze-out" transaction whether by a short-form merger, a "going
private" transaction or otherwise; or
c. cause NCMC to issue or grant to any of the
Shareholders or their affiliates, any warrants, options or other rights
to the common or preferred stock of NCMC.
8. RELEASE; INDEMNIFICATION.
a. Each Shareholder, jointly and severally, (i) agrees
that NCMC and its officers and directors shall not have any liability
to Shareholder (sounding in tort, contract or otherwise) for losses
suffered by such Shareholder in connection with, arising out of, or in
any way related to taking the actions provided for in paragraphs 4 and
5 herein, unless it is determined that such loss is the result of acts
or omissions on the part of NCMC and its officers and directors
constituting willful misconduct or knowing violations of law and (ii)
waives, releases and agrees not to xxx upon any claim against NCMC and
its officers and directors with respect to (i) above (whether sounding
tort, contract or otherwise), except a claim based upon willful
misconduct or knowing violations of law. The provisions of this release
shall survive the termination of this Agreement.
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b. PFG Corp., a Delaware corporation, and Resource
Holdings Associates, a Delaware limited partnership, each severally but
not jointly agree that, in the event there is a claim against NCMC or
the Surviving Corporation or any of the Shareholders arising out of the
disposition by NCMC of National Capital Benefits Corporation, each of
PFG Corp. and Resource Holdings Associates shall severally but not
jointly indemnify and hold harmless NCMC and the Surviving Corporation
against all damages, liabilities, costs and expenses, including
reasonable attorney's fees arising out of such a claim whether such
claim is covered by a Director and Officer insurance policy, PROVIDED
HOWEVER that such indemnification shall not exceed $37,500 for each of
PFG Corp. and Resource Holdings Associates. The parties further agree
that each of PFG Corp. and Resource Holdings Associates may use the
funds in the Administrative Account to pay the $37,500 each for the
indemnification required in this paragraph; PROVIDED HOWEVER, that if
either of PFG Corp. or Resource Holdings Associates, or both, use funds
from the Administrative Account to indemnify the Surviving Corporation
as required herein, PFG Corp. and Resource Holdings Associates each
severally but not jointly agree to contribute additional funds to the
Administrative Account as may be necessary to pay from the
Administrative Account, pursuant to paragraph 5 herein, up to an
aggregate of $75,000 of Pre-Merger Expenses on or before October 31,
1999. Xxxxx X. Xxxxx and Xxxx X. Xxxx each hereby severally but not
jointly guarantee the performance of PFG Corp. and Resource Holdings
Associates, respectively, pursuant to this paragraph.
c. In the event NCMC or the Surviving Corporation or any
of the Shareholders receive notice of any action, proceeding, claim or
potential claim (any of which is hereinafter referred to as a
"Circumstance"), which could give rise to the right to indemnification
pursuant to this paragraph 8, such parties shall give PFG Corp. and
Resource Holdings Associates written notice describing the Circumstance
in reasonable detail. Each of PFG Corp. and Resource Holdings
Associates shall have the right, at its option, to compromise or
defend, at its own expense and by its own counsel, any such matter
involving the asserted liability of the party seeking indemnification
and the Surviving Corporation, NCMC or any of the Shareholders shall
have the right at its own expense to participate in the defense of such
asserted liability. Furthermore, the party seeking indemnification
agrees to cooperate fully with PFG Corp. and Resource Holdings
Associates and its counsel in the compromise of, or defense against,
any such asserted liability. Under no circumstances shall NCMC, the
Surviving Corporation or the Shareholders compromise any asserted
liability without the written consent of PFG Corp. and Resource
Holdings Associates.
9. FURTHER ASSURANCES. Each Shareholder, jointly and
severally, agrees to execute and deliver further transfers, assignments,
endorsements, consents and other instruments, and to perform such further
acts, as NCMC may reasonable request for the purpose of effectively carrying
out the transactions contemplated by this Agreement and the Merger Agreement.
In addition, the parties acknowledge that in connection with the Merger
Agreement, NCMC has disposed of substantially all of its non-cash assets,
including the disposition of its subsidiary National Capital Benefits
Corporation. Each Shareholder, jointly and severally, agrees to execute and
deliver any additional
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instruments or agreements, and to perform such further acts as may be
necessary to effectuate the disposition of NCMC's non-cash assets.
10. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by cable, telecopy,
telegram or telex or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following addresses (or at
such other address as shall be specified by notice given in accordance with this
paragraph 9:
a. IF TO NCMC, PFG CORP. OR RESOURCE HOLDINGS ASSOCIATES:
000 Xxxxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx and Xxxx X. Xxxx
with a copy to:
Robins, Kaplan, Xxxxxx & Xxxxxx L.L.P.
0000 XxXxxxx Xxxxx
000 XxXxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
b. IF TO SHAREHOLDERS TO:
0000 Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx and Xxxxx Xxxxx
and
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Growth Capital Partners, L.L.C.
with a copy to:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
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11. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
12. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby 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 to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof.
14. BINDING AGREEMENT. The Shareholders, jointly and severally,
represent, warrant and agree that each Shareholder has the legal capacity, power
and authority to enter into and perform all of the Shareholder's obligations
under this Agreement; that this Agreement has been duly executed and delivered
by each of the Shareholders and constitutes a legal, valid and binding
obligation of each of the Shareholders, enforceable against any or all of the
Shareholders in accordance with its terms.
15. AMENDMENTS. This Agreement may be amended, modified, or
supplemented only by written agreement of the parties.
16. ASSIGNMENT. This Agreement shall not be assigned by operation
of law or otherwise.
17. PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their successors, and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
18. INJUNCTIVE RELIEF. Shareholders agree, jointly and
severally, that in the event of a Shareholder's breach of any provision of
this Agreement, NCMC may be without any adequate remedy at law. Shareholders
therefore agree, jointly and severally, that in the event of a Shareholder's
breach of any provision of this Agreement, NCMC may elect to institute and
prosecute proceedings in any court of competent jurisdiction against the
Shareholders, jointly and severally, to enforce specific performance or to
enjoin the continuing breach of such provision, as well as to obtain damages
for breach of this Agreement. By seeking or obtaining any such relief, NCMC
will not be precluded from seeking or obtaining any other relief to which it
may be entitled.
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19. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any state or federal court located in the State of New York.
20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
* * * * * *
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The parties hereto have executed this Agreement as of the day and year
first above written.
NATIONAL CAPITAL MANAGEMENT
CORPORATION
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Xxxxx X. Xxxxx
Its: Director
By: /s/ Xxxx X. Xxxx
--------------------------------------
Xxxx X. Xxxx
Its: Chief Executive Officer
SHAREHOLDERS:
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx
By /s/ Xxxxx X. Xxxxx
------------------------------
Xxxxx X. Xxxxx
GROWTH CAPITAL PARTNERS, L.L.C.
By
------------------------------
Its:
--------------------
FOR PURPOSES OF AGREEMENT WITH PARAGRAPH 8 ONLY:
PFG CORP.
By:
---------------------------------
Its:
----------------------
RESOURCE HOLDINGS ASSOCIATES
By: Resource Holdings Limited, a New
York corporation, a partner
By:
---------------------------------
Its:
----------------------
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THE UNDERSIGNED GUARANTEES THE SPECIFIC OBLIGATIONS
SET FORTH FOR PFG CORP. UNDER PARAGRAPH 8.B. ONLY:
/s/ Xxxxx X. Xxxxx
--------------------------------
Xxxxx X. Xxxxx
THE UNDERSIGNED GUARANTEES THE SPECIFIC OBLIGATIONS
SET FORTH FOR RESOURCE HOLDINGS ASSOCIATES UNDER PARAGRAPH 8.b. ONLY:
/s/ Xxxx X. Xxxx
--------------------------------
Xxxx X. Xxxx
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EXHIBIT A
1. Costs of preparing and filing NCMC tax returns for fiscal year ended
December 31, 1998, and the stub period ending on the Closing Date.
2. Costs of the filing of the Form 8-K for NCMC in connection with the
announcement of the disposition of National Capital Benefits
Corporation.
3. Costs of the filing of the initial Form 8-K for NCMC in connection with
the execution of the Merger Agreement and consummation of the
transactions contemplated therein.
4. Costs and expenses incurred by Shareholders or the Surviving
Corporation to effectuate the transactions contemplated in the Merger
Agreement, other than legal costs and expenses of Shareholders or the
Surviving Corporation.
5. Costs of preparing and filing the Form 10-Q for NCMC for the period
ending June 30, 1999.
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EXHIBIT B
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