Agreement dated as of July 24, 1996 by and between The MicroCap Fund, Inc. (the
"Fund") and Xxxxxxx X. Xxxxxx (the "Consultant").
Fund engages the Consultant (1) to provide management services to the Fund in
connection with its liquidation and dissolution pursuant to the Plan of
Liquidation (the "Plan") attached to the Fund's Proxy Statement dated June 26,
1996 and (2) upon transfer by the Fund of its remaining assets to the
Liquidating Trust (the "Trust") contemplated by the Plan, to act as Trustee
under the Trust. Consultant's responsibilities pursuant to clause (1) above will
include managing the disposition of the Fund's remaining assets, assessing
maximization of the action brought by the Fund against Commonwealth Associates
and others and acting on such assessment, assessing the liabilities of the Fund
and appropriate provision therefor, making recommendations to the Board of
Directors regarding distributions to shareholders, resolution of and reserves
for liabilities and other matters affecting liquidation of the Fund,
coordinating with the Fund's administrator, custodian and other service
providers, serving as a director of the Fund and such other tasks as the Board
shall assign to him. In performing the foregoing services Consultant shall
report to the Board and be subject to its guidance. Consultant's
responsibilities pursuant to clause (2) above will be to act in accordance with
the terms of the Trust and to exercise the full powers of the Trustee
thereunder.
Consultant accepts such engagement.
The Fund (during the period prior to funding of the Trust) and the Trust (after
its funding) will pay Consultant for his services hereunder at the rate of
$8,500 per month plus, at the time of each distribution to shareholders in
respect of the Plan, an amount equal to 1.0% of the amount of such distribution
(other than the initial distribution to shareholders out of available cash)
plus, at the time any proceeds of sale or other revenues are received by the
Fund in excess of the Fund's investment in a particular asset, an amount equal
to 5% of such excess received in 1996 or 1997, 4% of any incremental excess
received in 1998, 2% of any incremental excess received in 1999 and 0% of any
incremental excess received thereafter; provided, however, that (subject to
Section 6 below) in no event shall the total compensation to Consultant
hereunder be less than $250,000.
It is understood and agreed that Consultant will devote such time and effort to
the faithful performance of services hereunder and under the Trust as shall be
appropriate but that it is not anticipated that such services will require his
full working time.
This Agreement shall expire on the earlier of (1) December 31, 1999 or (2) the
making of the final distribution to shareholders after resolution of all
liabilities of the Fund.
If Fund terminates this Agreement without cause or breaches this Agreement in
any other material respect, Consultant will be entitled to a single lump sum
payment, in addition to any amounts earned hereunder, of $200,000. If Consultant
terminates this Agreement without cause or breaches this Agreement in any other
material respect, Fund will be entitled to a single lump sum payment of
$200,000. For purposes of this Agreement, Fund will have cause only for
dereliction of duty, gross incompetence, self dealing, violation of law that
would render Consultant unable to act as an officer of a registered investment
company under Section 9 of the Investment Company Act of 1940 in the absence of
an exemptive order by the SEC or disability on the part of Consultant for more
than six consecutive months. For purposes of this Agreement, Consultant will
have cause only if Fund prevents him from carrying out his responsibilities
hereunder and fails to cure such prevention within 30 days after notice of such
prevention by Consultant.
Consultant will be entitled to prompt reimbursement from Fund of all reasonable
business expense incurred by Consultant in performing services hereunder other
than general office overhead such as rent, utilities, secretarial services,
supplies and the like, provided such expenses are properly accounted for in
accordance with the normal practices of Fund. The foregoing shall include
reimbursement of reasonable expenses for valuations and other expert advice
sought by Consultant on behalf of the Fund and not billed directly to the Fund.
The Fund will indemnify Consultant to the maximum extent permitted under
Maryland law, the Investment Company Act of 1940 and the Articles of
Incorporation and by-laws of the Fund as in effect on the date hereof.
Any disputes hereunder shall be settled by arbitration before a single
arbitrator acceptable to each party under the rules of the American Arbitration
Association.
This Agreement shall be construed under and governed by the laws of the State of
New York without giving effect to the principles of conflicts of law thereunder.
The MicroCap Fund, Inc.
By: /s/ XXXXXX X. XXXXXXXX
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman
/s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
