Exh 10-c
MANAGEMENT AGREEMENT
AGREEMENT made as of June 1, 2006 by and among ULTRADATA SYSTEMS,
INCORPORATED, a Delaware corporation (the "Company"), RW DATA, INC., a
Delaware corporation ("Subsidiary"), and the following individuals
(collectively, the "Managers," and each individually, a "Manager"):
XXXXX XXXX, XXXXXX XXXXXX AND XXXX XXXXXXXX.
WHEREAS, the Company owns all of the shares of capital stock of
the Subsidiary; and
WHEREAS, at the time this Agreement becomes effective, the
Assignment and Assumption Agreement between the Company and the
Subsidiary (the "Assignment and Assumption") shall also become
effective; and
WHEREAS, under the terms of the Assignment and Assumption, the
Company assigns all of its assets to the Subsidiary, and the Subsidiary
assumes all of the Company's obligations and liabilities and, as a
result of the consummation of the Assignment and Assumption, all of the
business of the Company will be transferred to the Subsidiary; and
WHEREAS, each of the Managers is currently employed by the
Company and is an officer and director of the Company; and
WHEREAS, on the date of and immediately following the
consummation of the Assignment and Assumption, the Company intends to
issue and sell certain shares of preferred stock to an investor
pursuant to the terms of the Series B Preferred Stock Purchase
Agreement dated June1, 2006 (the "Stock Purchase Agreement"); and
WHEREAS, as a condition to consummation of the Stock Purchase
Agreement, the Managers must resign from their positions in management
of the Company; and
WHEREAS, the Subsidiary wishes to engage the Managers, and the
Managers wish to be engaged, to manage and operate the business of the
Subsidiary, effective upon the closing of the sale of shares
contemplated by the Stock Purchase Agreement ("Share Closing") and upon
the terms and conditions and for the consideration set forth herein;
NOW, THEREFORE, it is agreed:
1. Termination of Employment Agreements. Each of the Managers
agrees to terminate his employment with the Company and to resign
as a director and officer of the Company, effective fourteen days
after the Company mails an information statement to the
shareholders of record notifying them of the resignations (the
"Termination Date"). Each of the Managers further agrees to
terminate his employment agreement with the Company, and to
forfeit and waive, effective upon the Share Closing, any and all
rights arising after the Share Closing to which he would be
entitled as an employee of the Company under any written or oral
agreement or understanding with the Company relating to his
employment. Each of the Managers hereby surrenders and forfeits
all options to purchase common stock of the Company previously
issued to him. The foregoing notwithstanding, the Managers do
not waive any rights that shall have accrued as of the Share
Closing, including, without limitation, rights to receive wages,
benefits, reimbursements and other compensation for services.
(The Managers acknowledge, however, that all obligations of the
Company to the Managers with respect to the period prior to the
Share Closing shall be assumed by the Subsidiary under the
Assignment and Assumption, and each Manager hereby agrees to seek
recovery for such accrued obligations solely from the Subsidiary.)
2. Titles; Duties.
(a) The Subsidiary hereby engages each of the Managers to manage
and operate its business. The Managers shall serve as
officers and directors of the Subsidiary and shall have the
following titles:
Chief Executive Officer - Xxxxx Xxxx
President - Xxxxxx Xxxxxx
Vice President - Xxxx Xxxxxxxx
Secretary - Xxxx Xxxxxxxx
(b) Each of the Managers agrees that he will manage and operate
the business of the Subsidiary to the best of his abilities
and will devote such time and effort as he deems necessary to
fulfill his duties under this Agreement. The Company and the
Subsidiary acknowledge that the amount of time devoted by each
Manager to the Subsidiary will be determined by that Manager
within his sole discretion.
(c) In addition to their general duties, the Managers agree to
use their best efforts to satisfy and perform and/or to obtain
a release of the Company's obligations to Golden Gate
Investors, Inc. under the terms of a convertible debenture
previously issued by the Company to Golden Gate Investors,
Inc. The undertaking in this paragraph shall not, however,
impose any personal liability on any Manager.
(d) The Managers further agree to use their best efforts to
effect a sale of the assets or the stock of the Subsidiary by
December 31, 2006 on terms that are as favorable to the
Subsidiary as reasonably possible. The proceeds of the sale
of the Subsidiary will first be applied to pay the obligations
of the Subsidiary retained in the sale, including any
obligations of the Company assumed by the Subsidiary under the
Assignment and Assumption. The terms of the sale shall be
subject to the approval of the Subsidiary's Board of Directors.
3. Operation of the Subsidiary. The Company agrees that the
Managers will have exclusive authority over the operations of the
Subsidiary, except that the Company shall be entitled to intervene in
the event that a breach of the covenants in this Agreement threatens the
Company with material injury. The Company shall not cause any funds or
assets of the Subsidiary to be paid or transferred to the Company. The
Managers shall maintain such books and records of the operations of the
Subsidiary as are required by the Rules of the Securities and Exchange
Commission, and shall prepare quarterly and annual financial statements
promptly so as to permit the Company to file periodic reports with the
SEC according to SEC Rules.
4. Compensation.
(a) Salary. The Subsidiary shall pay to each of the Managers a
salary for services hereunder on terms determined by the
Subsidiary's Board of Directors.
(b) Benefits. The Managers shall be entitled to participate in
such benefit programs as the Subsidiary makes available for
employees in general.
(c) Reimbursement of Business Expenses. The Managers shall be
entitled to reimbursement of all reasonable business expenses
actually incurred by them in the discharge of their duties
hereunder, including expenses for entertainment, travel, and
similar items, upon submission of the related invoice or other
sufficient documentation.
5. Consideration to be Given by Company. In consideration
of the termination by the Managers of their respective employment
agreements and their undertaking of the duties described herein,
the Company agrees as follows:
(a) Series C Stock. To issue, upon the Share Closing, to Xxxxx
Xxxx 33,334 and to Xxxxxx Xxxxxx and Xxxx Xxxxxxxx each 33,333
shares of the Company's Series C Convertible Preferred Stock
("Series C Stock"), which stock shall have the preferences and
rights, and be subject to the limitations, set forth in the
Certificate of Designation of such Series adopted by
resolution of the Board of Directors of the Company on May 20,
2006. The Managers shall not be entitled to transfer or
assign any shares of Series C Stock other than by will or laws
of descent.
(b) Purchase Option. Xxxxx Xxxx and Xxxxxx Xxxxxx shall be
entitled to purchase an additional 16,667 shares of Series C
Stock and Xxxx Xxxxxxxx shall be entitled to purchase an
additional 16,666 shares of Series C Stock (collectively, the
"Purchase Options"). Each Purchase Option may be exercised,
in whole or in part, by delivering to an officer of the
Company at its executive offices a written notice of exercise
accompanied by payment of $3.00 per share of Series C Stock
being purchased. The Purchase Options shall terminate on
December 31, 2007 and may not be exercised after that date.
(c) Put Option. Each of the Managers shall have the right to
sell to the Company all or part of his shares of Series C
Stock for a per share price ("Purchase Price") equal to the
sum of (a) $2.75 less (b) 0.00001 times the Residual
Liabilities. "Residual Liabilities" means the sum of (x) all
liabilities of the Subsidiary at December 31, 2006 and (y) all
liabilities of the Company accrued prior to the Share Closing
that must be reported in accordance with GAAP on the December
31, 2006 balance sheet of the Company less (z) all amounts
held in escrow by counsel for the specific purpose of
satisfying such liabilities. The Put Option may be exercised
during the period beginning on April 1, 2007 and ending on
June 30, 2007 by giving notice of exercise, in writing, to the
Company. Upon receipt of such notice, the Company shall
tender payment of the Purchase Price to the Manager who
exercised the Put Option, together with a copy of the
Company's balance sheet on December 31, 2006 showing the
Residual Liabilities.
(d) Surrender of Shares. In the event that the Residual
Liabilities exceed Two Hundred Seventy-Five Thousand Dollars
($275,000), then the Company shall notify the Managers of the
amount of the excess in a writing accompanied by a copy of the
Company's balance sheet on December 31, 2006 showing the
Residual Liabilities. Upon receipt of said notice, the
Managers shall surrender to the Company shares of Series C
Preferred Stock. The number of shares to be surrendered shall
equal (a) the excess of the Residual Liabilities over $275,000
divided by (b) $2.75. Each Manager shall be required to
surrender one-third of the total number of shares to be
surrendered.
6. Corporate Acquisition. The Company intends that during
2006 it will acquire, by merger or share exchange, an operating company
(a "Corporate Acquisition"). The Certificate of Designation of
the Series C Stock provides that no Corporate Acquisition may be
completed unless approved by the holders of the majority of the
outstanding shares of Series C Stock. The Managers (for the
benefit of the holder of the Series B Preferred Stock) agree that
the Managers shall consent to any Corporate Acquisition in which
(a) the acquired company had not less than $2.5 million in
revenue and not less than $700,000 in net pre-tax income in the
year ended September 30, 2005, (b) the shareholders of the
Company on this date and the holders of the Series C Preferred
Stock will, on closing of the acquisition, own not less than five
percent of the equity in the Company, and (c) there are no other
material terms of the Corporate Acquisition that are objectionable
to the Managers.
7. Term. The term of this Agreement ("Term") and of the Managers'
engagement hereunder shall commence upon the Share Closing and shall
terminate on December 31, 2006.
8. No Assignment. The Subsidiary and Manager acknowledge that
the relationship established hereby is unique and personal and that
neither the Subsidiary nor the Manager may assign or delegate any
of their respective rights and/or obligations hereunder without
the prior written consent of the other party.
9. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York
applicable to contracts made and to be performed therein.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
ULTRADATA SYSTEMS, INCORPORATED RW DATA, INC.
By: /s/ Xxxxx Xxxx By: /s/ Xxxxxx Xxxxxx
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Xxxxx Xxxx, Chief Executive Officer Xxxxxx Xxxxxx, President
MANAGERS:
/s/ Xxxxx Xxxx /s/ Xxxxxx Xxxxxx
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Xxxxx Xxxx Xxxxxx Xxxxxx
/s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
