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MEMORANDUM OF UNDERSTANDING
This Agreement, effective as of November 17, 1997 is entered into by and between
CTA INCORPORATED, a Colorado corporation having a principal place of business at
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 (hereinafter
referred to as "CTA" or "Company") and Capitol Securities Management
Incorporated, a Virginia corporation having a principal place of business at
0000 Xxxxxxxxxx Xxxxx, XxXxxx, Xxxxxxxx 00000 (hereinafter referred to as
"Capitol").
WHEREAS, CTA has filed a Registration Statement on Form S-1 under the Securities
Act of 1933 with the Securities and Exchange Commission and;
WHEREAS, CTA is trading the common stock of CTA among the shareholder universe
defined as current or former employees, consultants, and directors of CTA and;
WHEREAS, Capitol continues to provide its services as a broker/dealer for all of
CTA's stock transactions and in order to facilitate a "limited" market for CTA
common stock in the most economical fashion;
Now, therefore, in consideration of the mutual covenants and promises set forth
herein, the parties do hereby agree as follows:
ARTICLE I: RELATIONSHIP AND OBLIGATION OF THE PARTIES
1.1 CTA intends to effect a tender offer (the "Tender Offer") to repurchase up
to 200,000 shares of its common stock on November 26, 1997. This Tender Offer
will terminate on December 31, 1997, unless extended by CTA.
1.2 Capitol, as the exclusive broker and dealer for the limited market of CTA
common stock, agrees to the use of its name, Capitol Securities, by CTA in the
S-1 Registration Statement and the Schedule 13E-4 to be filed in connection with
the Tender Offer.
1.3 As broker/dealer for CTA, Capitol will provide the following services:
a) Each employee or shareholder who elects to buy or sell CTA common
stock will have an account established by Capitol;
b) On the trade day +1, a confirmation of purchases or sales will be
generated giving the price per share, number of shares, commission paid,
net dollars, transacted, and settlement date. Standard industry practice
is for settlement to occur three (3) business days after the trade date.
Cash to purchase stock or shares to be delivered for sale must be
received at Capitol by settlement day. Extensions of settlement can be
arranged, however, margin interest will be charged for late payment.
Money market interest will be paid on cash
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balances in excess of $1000 in accounts. A regular account will be
insured up to $500,000 by the SIPC. Additional insurance to
Correspondent Services Corporation limits.
c) During the internal market operation and during the period of the
Tender Offer (including any extensions thereof) Capitol will supply CTA
with special reports of activity as will be specified later.
d) In addition, Capitol agrees to provide at CTA's request, guidance and
consulting services relating to the regulations governing control,
restricted and shelf-registered stock and the filing of required reports
and forms.
e) Commissions and fees will be paid in accordance with the provisions
of Article II and will cover all costs associated with the accounts,
producing the confirmations, timely collection and disbursement of
funds, generating monthly statements and other reports to be specified.
For the one time repurchase transaction in connection with the
Tender Offer, CTA has agreed to pay all commissions; the seller shall
incur no costs/commissions.
1.4 Capitol will act as CTA's broker/dealer for all stock transactions including
the issuance of stock pursuant to the Company's existing and future stock option
programs and the replacement of lost or stolen certificates in accordance with
the by-laws of the Company. Stock issued will be in the same form as all other
CTA transactions.
1.5 CTA will close buyers indications of interest two (2) weeks following the
effective date of the S-1 Registration. In the event the effective date of the
S-1 Registration Statement changes, the above subsequent events will be adjusted
accordingly.
1.6 CTA will govern the extent to which Company employees have access to
financial advice from Capitol. In no case will CTA employees be solicited by
Capitol without prior written CTA approval for Capitol financial advice or
financial services or any other matter.
ARTICLE II: COSTS AND FEE PAYMENTS
2.1 Except as specifically identified below, each party will bear all costs,
risks and liabilities incurred by it arising out of its obligations and efforts
pursuant to this agreement.
2.2 CTA agrees to pay Capitol an annual fee of four thousand dollars, ($4000) to
cover the costs at the initial set-up of the administrative functions, guidance
and consulting advice, and special reports or filings in accordance with
paragraph 1.4. CTA agrees to pay Capitol Securities Management a one time
administrative fee of five thousand dollars ($5000) plus postage fees for
handling the Tender Offer transaction.
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2.3 Capitol is authorized to charge broker commissions of 1.5% of the value of
the transactions, to be paid by the seller except in connection with the Tender
Offer when commissions will be paid by CTA.
2.4 There will be no additional costs associated with the function of the
limited market beyond those specified in this Agreement
ARTICLE III: PROPRIETARY INFORMATION
3.1 During the term of this Agreement, the parties, to the extent of their right
to do so, and as is required for each to perform its obligations hereunder, may
exchange proprietary and confidential information.
3.2 Only that information disclosed in written form and identified by a xxxx
thereon as proprietary, or oral information which is identified as proprietary
at the time of disclosure and confirmed in writing within ten (10) days of its
disclosure, shall be considered proprietary and subject to this Agreement.
3.3. The exclusive points of contact with respect to the delivery and control of
proprietary information disclosed hereunder are designated by the parties as
follows:
Capitol Securities Management, Inc. CTA INCORPORATED
Attn: Xxxxxx Xxxxxx Attn: Xxxx Xxxxxx
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000 0000 Xxxxxxxxx Xxxx., Xxxxx 000
XxXxxx, Xxxxxxxx 00000 Xxxxxxxxx, Xxxxxxxx 00000
Either party may change its point of contact by written notice to the other.
3.4 Information identified and disclosed as provided in this Agreement shall be
held in confidence for a period of five (5) years from the date of receipt.
During such period, such information shall be used only for the purpose of this
Agreement and shall not be disclosed to any third party.
3.5 The parties shall have no obligation under this Agreement to hold
information in confidence which, although identified and disclosed as stated
herein, has been or is:
a. developed by the receiving party independently and without the
benefit of information disclosed hereunder by the disclosing party;
b. lawfully obtained by the receiving party from a third party without
restriction;
c. publicly available without breach of this Agreement;
d. disclosed without restriction by the disclosing party to a third
party; or
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e. known to the receiving party prior to its receipt from the disclosing
party.
3.6 Each party shall use not less than the degree of care used to prevent
disclosure of its own proprietary information to prevent disclosure of
information received in accordance with this Agreement.
3.7 All information received and identified in accordance with this Agreement
shall remain the property of the disclosing party and shall be returned upon
request.
ARTICLE IV: TERMINATION OF AGREEMENT
4.1 Except as otherwise expressly provided in Article III, "Proprietary
Information," of this agreement and unless extended by mutual written agreement
of the parties, this Agreement shall automatically expire December 31, 1998.
ARTICLE V: COMMITMENTS
5.1 Nothing in the Agreement shall grant to either party the right to make
commitments of any kind for or on behalf of the other party without prior
written consent of that party.
ARTICLE VI: PUBLICITY
6.1 Either party desiring to issue a news release, public announcement,
advertisement, or other form of publicity concerning its efforts in connection
with this Agreement shall obtain the prior written approval of the other party
before issuing any such publicity.
ARTICLE VII: WAIVER AND INVALIDITY
7.1 In the event that one party breaches this Agreement, the failure of the
other party to enforce any right under this Agreement shall not be deemed as a
waiver of any right hereunder. The rights and remedies of the parties as set
forth in this Agreement are not exclusive and are in addition to any other
rights and remedies provided by law; additionally, the invalidity in whole or in
part of any condition of this Agreement shall not affect the validity of any
other condition hereof.
ARTICLE VIII: FORCE MAJEURE
8.1 If either party is unable to perform any of its obligations under this
Agreement because of an event of Force Majeure, the party which is unable to
perform shall be excused from such performance only during the time of the
existence of such event.
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ARTICLE IX: ASSIGNMENT
9.1 Neither party shall sub-license, transfer, assign, hold in trust for
another, or otherwise dispose of any or all of its rights, obligations, or
interest under this Agreement without prior written consent of the other party.
ARTICLE X: GOVERNING LAW
10.1 This Agreement shall be construed and governed by the laws of the State of
Colorado except for its conflict or interest laws and shall be deemed executed
in said state.
ARTICLE XI: ATTORNEY'S FEES AND COSTS
11.1 Each party to this Agreement shall be responsible for its own attorney's
fees and costs should either party be required to employ the services of an
attorney to enforce any rights granted to it hereunder, or to seek damages for
the breach of any covenant contained in this Agreement.
ARTICLE XII: CAPTIONS
12.1 The captions for any Article herein are for identification purposes only
and are not a part of the substantive provisions of their respective Articles.
ARTICLE XIII: CHANGES
13.1 Changes to this Agreement shall be binding only after agreed to in writing
signed by both parties.
ARTICLE XIV: NOTICE
14.1 Should any notice be required to be given to the other party pursuant to
the terms of this Agreement, it shall be in writing and shall be given either by
personal delivery or by registered or certified mail to the parties entitled to
notice at its address identified in Paragraph 3.3 hereof, or as changed pursuant
to the provisions of Article III. Such notice shall be deemed to be given upon
personal delivery or three (3) days after posting in the United States mail.
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ARTICLE XV: ENTIRE AGREEMENT
15.1 The foregoing Articles contain the entire Agreement between the parties
which supersedes any prior oral or written agreements, commitments,
understandings, or communications with respect to the subject matter of this
agreement.
In consideration of the mutual promises contained herein, the parties have
caused this Agreement to be executed by its duly authorized representative.
CTA INCORPORATED CAPITOL SECURITIES MGMT., INC.
/s/ XXXX X. XXXXXX /s/ X. XXXXXXXXXXX
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By: Xxxx Xxxxxx By: X. Xxxxxxxxxxx
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Title: Director Date 11/26/97 Title: Chairman Date 11/26/97
Treasury, Mgmt.
