EXHIBIT 10.1
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December 11, 2002
GTS PREPAID, INC.
00 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Consignment and Agency Agreement
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Dear Sir/Madam:
This letter sets forth our agreement pursuant to which Cellular
Technical Services Company, Inc., a Delaware corporation ("Consignor"), will, as
of January 3, 2003 (i) provide GTS Prepaid, Inc., a Utah corporation
("Consignee") with the inventory set forth on Schedule A hereto (the
"Inventory"), (ii) authorize Consignee to sell such Inventory on a consignment
basis and (iii) authorize Consignee to act as its agent to collect the Accounts
Receivable set forth on Schedule B hereto (the "Accounts Receivable"). Consignor
has acquired the Inventory and Accounts Receivable pursuant to foreclosure under
a security agreement between Consignee and Isis Tele-Communications, Inc., a
Delaware corporation ("Isis").
1. Consignment of Inventory. Consignor is providing and Consignee is
receiving the Inventory on a consignment basis to hold and sell the Inventory in
accordance with this Agreement. Consignee may sell the Inventory at such price
it may determine but in any event, and irrespective of the sale price, Consignee
shall be liable to Consignor for the price of such Inventory on Schedule A (as
such price is mutually agreed to between Consignor and Consignee). Consignor is
and shall remain the owner of all Inventory and upon sale of Inventory by
Consignee, title thereto shall pass to such purchaser upon full payment for such
Inventory.
2. Sale of Inventory. Upon the sale of Inventory by Consignee, the
proceeds of such sale less the excess of the sales price above the price for
such Inventory (the "Proceeds") are and remain the property of Consignor and
shall be held in trust for and delivered to Consignor as hereinafter provided.
Consignee shall (i) maintain an accurate daily sales record of all Inventory
sold, (ii) advise Consignor of any disputes arising in respect of Inventory as
they arise, (iii) maintain a current list of all Inventory in its possession and
(iv) shall send copies of such records and list on a daily basis, by facsimile,
to Consignor at (000) 000-0000, Attention: Xxxxx York.
3. Collection of Accounts Receivable. Consignor hereby assigns and
Consignee accepts assignment of the Accounts Receivable and agrees to act as
Consignor's agent for collection of the Accounts Receivable. Consignee shall use
diligent and commercially reasonable efforts to collect the Accounts Receivable.
Consignee shall (i) maintain an accurate daily record of all Accounts Receivable
collected, (ii) advise Consignor of any disputes arising in respect of Accounts
Receivable as they arise, (iii) maintain a current list of all uncollected
Accounts Receivable in its possession and (iv) send copies of the daily record
of Accounts Receivable collected, disputes and uncollected Accounts Receivable
on a daily basis, by facsimile, to Xxxxx York, at the facsimile number set forth
in Section 2 above. Consignee shall
have no authority to compromise the amount of any Account Receivable without the
consent of Consignor.
4. Initial Meeting. On January 28, 2003, Consignor and Consignee shall
meet to discuss the status of sales of Inventory and collections of Accounts
Receivable and any problems or issues that have arisen to date in connection
therewith.
5. Payment for Inventory Sold and Remittance of Accounts Receivable
Collected. On February 21, 2003, Consignee shall pay Consignor by wire transfer
to a bank account specified by Consignor, the sum total of (i) all Proceeds then
collected for all Inventory sold less the excess of the sales price above the
price for such Inventory as set forth on Schedule A and (ii) all Accounts
Receivable then collected.
6. Report and Meeting. On February 27, 2003, Consignee shall provide
to Consignor a written report certified by its President setting forth (i) all
sales of Inventory made, set forth by date, the Proceeds permitted to Consignor
with respect to each item of Inventory sold and a list all remaining unsold
items of Inventory, and (ii) the Accounts Receivable collected, set forth by
date, the amount representing the collections remitted to Consignor and all
uncollected Accounts Receivable. On such date the parties shall determine
whether to extend the parties acting hereby or otherwise agree as to the
treatment of unsold items of Inventory and uncollected Accounts Receivable.
7. Continuing Security Interest. As security for the timely and full
payment and satisfaction of the payment and other obligations of Consignee under
this Agreement, Consignee hereby grants to Consignor a continuing security
interest in and to all of Consignee's right, title and interest in and to any
and all Accounts Receivable and Inventory, wherever located, and any and all
proceeds (including, without limitation, insurance proceeds), accounts, books
and records, instruments, documents, goods, chattel paper, inventory, contract
rights, litigation claims and rights, insurance policies and rights, and payment
intangibles and other general intangibles of Consignee arising out of such
Accounts Receivable and Inventory.
8. Financing Statements. Consignee authorizes Consignor to file, at
any time and from time to time, any financing statements and continuation
statements, in any applicable jurisdictions, in each case, as is necessary or
useful to perfect or continue the security interest granted by Consignee. Any
such statements may be filed by Consignor with or without the signature of
Consignee or Consignor or the further authorization of Consignee.
9. Customers. Set forth on Schedule C hereto is a list of the
customers of Isis (the "Customers"). To the extent that during the 16 months
following the date of this Agreement, Consignee (or any successor or assignee)
generates at least $8,000,000 in gross sales to the Customers, or Consignee
signs a minimum two year agreement with Store 24 for all prepaid products,
Consignor (or any successor or assignee) shall be entitled to receive 2,000
shares of Common Stock of Consignee or of any such successor or assignee. Within
60 days after the end of such 16 month period, Consignee shall provide a
certificate of its President certifying the gross sales to Customers during the
period and if the requisite sales have been met, the shares shall be promptly
issued to Consignor.
10. Employees. Set forth on Schedule D is a list of the names of those
employees of Consignor that Consignee plans to make offers of employment
following the execution of this Agreement for the purpose of, among other
things, employing said employees as salespeople to solicit the Customers.
Consignor consents to any subsequent hiring of such employees by the Consignee.
11. Miscellaneous. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey without giving effect to
its principles of conflicts of law. The parties agree that any action hereunder
shall be brought in the federal or state courts located in New Jersey and waive
any defense of forum non conveniens. This Agreement may be executed in
counterparts, each of which shall be an original, but all of such counterparts
shall constitute one and the same instrument. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision. This
Agreement expresses the entire understanding of the parties with respect to the
subject matter hereof and may not be modified, amended or resolved except by an
instrument in writing.
If the foregoing is acceptable to you, please so indicate by signing
in the space provided below and returning a signed copy of this letter to us for
our records.
Very truly yours,
CELLULAR TECHNICAL SERVICES COMPANY, INC.
By: /s/ Xxxxxxx Xxxx
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Name: Xxxxxxx Xxxx
Title: Chairman and Chief Executive
Officer
AGREED
GTS PREPAID, INC.
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: President
