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EX-10
MANAGEMENT AGREEMENT
This Management Agreement (hereinafter referred to as "this Agreement")
is made and entered into on the latest date this Agreement is executed by either
party hereto, to be effective for all purposes as of May 31, 1998 (hereinafter
referred to as "the Effective Date"), by and between 2CONNECT EXPRESS, INC.
(hereinafter referred to as "2Connect"), a Florida corporation and XXXXX XXXXXXX
CELLULAR SYSTEMS OF FLORIDA, INC. (hereinafter referred to as "BAC"), a Florida
corporation. For the purposes of this Agreement, 2Connect and BAC are
hereinafter referred to as "the Parties", in the plural, and as "Party" in the
singular, wherever such terms appear.
WHEREAS, the Parties, 2CONNECT ACQUISITION CORP., a Florida
corporation, XXXXXX X. XxXXXXXX, and XXXXX X. XXXXX have executed that certain
merger agreement dated May 1, 1998 (hereinafter referred to as "the Merger
Agreement"); and
WHEREAS, subsection 1.05(f) of the Merger Agreement requires 2Connect
and BAC to use their best efforts to enter into a management agreement whereby
BAC agrees to manage 2Connect's operations at its Coral Square Mall Store until
the date upon which the articles of merger described in Article I of the Merger
Agreement are filed with the Florida Department of State; and
WHEREAS, subsection 1.05(f) of the Merger Agreement states that such
management agreement shall be mutually acceptable to 2Cconnect and BAC; and
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WHEREAS, subsection 1.05(f) of the Merger Agreement further states that
such management agreement shall be subject to the approval of the Untied States
Bankruptcy Court for the Southern District of Florida (hereinafter referred to
as "the Bankruptcy Court"); and
WHEREAS, 2Connect and BAC desire to execute this Agreement to satisfy
the requirements of subsection 1.05(f) of the Merger Agreement.
NOW, THEREFORE, in consideration of the terms hereinafter contained,
the adequacy of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:
1. FOREGOING STATEMENTS. The Parties acknowledge and agree that all of the
foregoing statements are true and accurate. The Parties further
acknowledge and agree that all of the foregoing statements constitute
integral parts of this Agreement.
2. BANKRUPTCY COURT APPROVAL. Upon the execution of this Agreement by the
Parties, 2Connect shall promptly cause this Agreement to be submitted
to the Bankruptcy Court for approval. The validity of this Agreement
shall be subject to the approval of the Bankruptcy Court. In the event
the Bankruptcy Court does not approve this Agreement, this Agreement
shall be void ab initio.
3. TERM. The term of this Agreement shall commence on the Effective Date
and shall expire on the date upon which the articles of merger
described in Article I of the Merger Agreement are filed with the
Florida Department of State. Notwithstanding the
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immediately preceding sentence, either Party may immediately terminate
this Agreement upon the material breach of this Agreement by the other
Party.
4. LOCATION TO BE MANAGED. As of the Effective Date, BAC shall commence to
manage and operate 2Connect's Coral Square Mall Store, located in Coral
Springs, Florida (hereinafter referred to as "the Store").
5. INVENTORY PROCEDURES. After the close of business with respect to the
Store on May 30, 1998, (i.e., after 9:00 P.M.) or on the Effective Date
at 7:00 A.M., whichever time and date are mutually agreed upon by
2Connect and BAC, a physical inventory shall be taken to determine all
merchandise located at the Store. 2Connect and BAC shall prepare a
mutually agreed upon inventory list showing in detail the quantities
and costs of each item of inventory (hereinafter referred to as "the
Inventory").
6. CONTRACTS. BAC will use its best efforts to maintain and preserve
2Connect's contracts with Nextel, PrimeCo, Sprint, Icanect, Beepers To
Go, World Com, and Trescom (hereinafter referred to as "the 2Connect
Contracts", in the plural, and as "2Connect Contract", in the
singular), unless BAC determines, in its sole discretion, that a
2Connect Contract will directly or indirectly conflict with BAC's
existing dealer agreement with AT&T. In the event BAC uses its best
efforts to maintain and preserve a 2Connect Contract, BAC shall not be
responsible for
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volume commitments required by such 2Connect Contract, where such
commitments, if not met, could directly or indirectly result in a
default with respect to, or termination of, such 2Connect Contract. BAC
shall not be required to become a party to any of the 2Connect
Contracts, and 2Connect shall remain as a party on all of the 2Connect
Contracts. With respect to any and all of the 2Connect Contracts with
respect to which BAC will use its best efforts to maintain and
preserve, 2Connect shall obtain from the applicable parties to such
2Connect Contracts any consents required by such parties to achieve the
intent of this Section 6; provided, further, such consents shall be in
writing, and shall be, in form and substance, satisfactory to BAC.
7. DISPOSITION OF INVENTORY. BAC and 2Connect, by mutual agreement, shall
segregate the Inventory into two (2) distinct categories. The first
category shall be comprised of items that BAC will endeavor to sell at
retail for 2Connect's account (hereinafter referred to as "the 2Connect
Inventory"). 2Connect shall remain the owner of the 2Connect Inventory.
The second category shall be comprised of items that BAC will endeavor
to sell at retail for BAC's account (hereinafter referred to as "the
BAC Assortment Inventory"). BAC shall become the owner of the BAC
Assortment Inventory upon identification of the same and upon payment
to 2Connect of an amount equal to 80% of 2Connect's original cost of
the BAC Assortment Inventory. Regarding any and all sales of
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the 2Connect Inventory, BAC shall, upon receipt of the sales proceeds
from the purchaser, remit to 2Connect on a weekly basis, an amount
equal to the Net Proceeds; moreover, for the purpose of this Agreement,
the Net Proceeds shall be equal to the result obtained by subtracting
from the sale proceeds both salesperson commissions pertaining to the
sale, sales tax, and any other direct selling expenses, such as
bankcard fees, check authorization fees, and the like. In connection
with the remittance of the Net Proceeds to 2Connect, BAC shall provide
a written report that substantiates the sales transactions generating
the Net Proceeds. Regarding any and all sales of the BAC Assortment
Inventory, and of any inventory acquired by BAC on or after the
Effective Date, BAC shall be entitled to retain all proceeds therefrom,
and shall be responsible for all commissions and all expenses attendant
with such sales; provided, further, 2Connect shall not have any
interest in such proceeds.
8. ACTIVATION AND RESIDUAL COMMISSIONS. 2Connect shall be entitled to
receive: (a) all activation and residual commissions arising from Xxxx
South cellular transactions, and any other transactions, consummated by
2Connect prior to the Effective Date; (b) 75% of AT&T activation
commissions pertaining to sales made by 2Connect prior to the Effective
Date and booked through BAC; and (c) all Xxxx South residual
commissions, and all residual commissions from other suppliers
(excluding any AT&T
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residual commissions), received before, on, or after the Effective
Date. BAC shall be entitled to receive and retain any and all
activation and residual commissions, other than those described in the
immediately preceding sentence, but only to the extent such commissions
arise from sales consummated on or after the Effective Date; provided,
however, BAC shall be entitled to receive 25% of AT&T activation
commissions pertaining to sales made by 2Connect prior to the Effective
Date and booked through BAC, and BAC shall be entitled to receive any
and all AT&T residual commissions resulting from sales made by 2Connect
prior to the Effective Date.
9. OUTSTANDING PURCHASE ORDERS. On the Effective Date, 2Connect shall
deliver to BAC all outstanding purchase orders pertaining to items of
inventory and merchandise not yet received from vendors. If such items
and such merchandise are of the identical kind and character as the
items constituting the BAC Assortment Inventory, BAC shall accept such
items and such merchandise as additions to the BAC Assortment
Inventory, and BAC shall be responsible for paying in total, the
purchase orders related to such additions to the BAC Assortment
Inventory. If such items and such merchandise are not of the identical
kind and character as the items constituting the BAC Assortment
Inventory, BAC shall not be obligated to accept such items and such
merchandise as additions to the BAC Assortment Inventory, and 2Connect
shall be
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responsible for either paying the purchase orders related to the same
or cancelling such orders, unless BAC agrees, in writing, to accept the
same as additions to the BAC Assortment Inventory, in which case BAC
shall be responsible for payment, in full, of such purchase orders. Any
items and merchandise described in this Section 9 that are accepted by
BAC as additions to the BAC Assortment Inventory shall be disposed of
in accordance with Section 7 hereinabove in the same manner, and with
the same consequences, as the disposition of the BAC Assortment
Inventory. As determined by 2Connect in its sole discretion, any items
and merchandise described in this Section 9 that are not accepted by
BAC as additions to the BAC Assortment Inventory shall either be
disposed of in accordance with Section 7 hereinabove in the same
manner, and with the same consequences, as the disposition of the
2Connect Inventory or delivered to 2Connect at 2Connect's sole cost and
expense.
10. EXPENSES TO BE ASSUMED AND PAID BY BAC. With respect to BAC's
management and operation of the Store, as of the Effective Date, BAC
shall be responsible for all operating costs related to such operation
and management, including but not limited to, payroll for the Store's
employees, fringe benefits for the Store's employees, sales taxes,
bankcard fees, check approval fees, merchandise payables, and freight.
As of the Effective Date, BAC, in its sole discretion, shall be
entitled to make all
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decisions regarding the retention, hiring, and dismissal of the Store's
employees. Any and all of the Store's employees that BAC elects to
employ shall become employees of BAC and any employees that BAC elects
not to employ shall be terminated by 2Connect. Notwithstanding any
contrary provision of this Agreement, in the event any CAM adjustments
are retroactively charged by the landlord with respect to the lease
pertaining to the Store, BAC shall not be responsible for any such
adjustments to the extent such adjustments are attributable, on a pro
rata basis, to any period of time before the Effective Date; provided,
further, BAC's responsibility for such adjustments shall be limited to
the pro rata portion of such adjustments attributable to periods of
time occurring on or after the Effective Date and prior to the earlier
of the expiration or termination of this Agreement. Notwithstanding any
contrary provision of this Section 10, BAC shall not be responsible for
any operating costs directly or indirectly related to proceeds or
revenues generated at the Store to which 2Connect is entitled.
11. EXPENSES TO BE PAID BY 2CONNECT AND REIMBURSED BY BAC. With respect to
the Store, 2Connect shall continue to be responsible for the payment of
rent and ancillary expenses, telephone, taxes described in this Section
11, and utilities incurred in connection with BAC's operation and
management of the Store on and after the Effective Date. BAC shall
reimburse 2Connect for
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such expenses in accordance with the succeeding provisions of this
Section 11. Notwithstanding any contrary provision of this Agreement,
in the event any CAM adjustments are retroactively charged by the
landlord with respect to the lease pertaining to the Store, BAC shall
not be responsible for any such adjustments to the extent such
adjustments are attributable, on a pro rata basis, to any period of
time before the Effective Date; provided, further, BAC's responsibility
for such adjustments shall be limited to the pro rata portion of such
adjustments attributable to periods of time occurring on or after the
Effective Date and prior to the earlier of the expiration or
termination of this Agreement. BAC shall reimburse 2Connect for
tangible personal property taxes imposed by the State of Florida with
respect to taxable items located in the Store to extent such taxes are
attributable, on a pro rata basis, to periods of time occurring after
the Effective Date and prior to the earlier of the expiration or
termination of this Agreement. Notwithstanding any contrary provision
of this Agreement, except for such personal property taxes, BAC shall
not be responsible for any other property taxes. BAC shall reimburse
2Connect for occupational license fees and similar fees to the extent
such fees are attributable, on a pro rata basis, to periods of time
occurring after the Effective Date and prior to the earlier of the
expiration or termination of this Agreement. Notwithstanding any
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contrary provision of this Section 11, BAC shall not be responsible for
reimbursing 2Connect for any expenses directly or indirectly related to
proceeds or revenues generated at the Store to which 2Connect is
entitled. Upon its payment of any expenses described in this Section 11
for which BAC is obligated to reimburse 2Connect, 2Connect shall submit
to BAC periodic invoices evidencing 2Connect's payment of such
expenses. BAC shall reimburse 2Connect for such expenses within five
(5) business days after the date of BAC's receipt of each invoice.
12. `REMOVAL OF SIGNAGE. In the event AT&T requires the removal of any Xxxx
South signage located at the Store, 2Connect shall promptly obtain any
required consent of its landlord to permit the removal of such signage.
The removal of such signage shall be the sole responsibility of BAC.
13. SALES RETURNS. BAC shall be responsible for any sales returns related
to sales made at the Store on or after the Effective Date, in
connection with BAC's operation and management of the Store; provided,
however, such sales returns shall be subject to the return policy
established by BAC. Any sales returns related to sales made at the
Store prior to the Effective Date (hereinafter referred to as "the
2Connect Return Sales", in the plural, and as "2Connect Return Sale",
in the singular) shall be dealt with by BAC pursuant to 2Connect's
return policy in existence before the Effective Date. 2Connect
acknowledges,
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agrees, represents, and warrants that such return policy requires each
customer to submit each sales return within thirty (30) days after
purchase and to present a sales receipt with respect to such sales
return; provided, however, any clearance merchandise sold by 2Connect
as is, without the right to refund, return, or exchange, does not
entitle the customer to return such merchandise, and BAC shall not be
obligated to accept the return of such merchandise. BAC shall not be
obligated to take possession of any 2Connect Return Sale, unless the
customer has satisfied all requirements of 2Connect's return policy. If
a 2Connect Return Sale received by BAC is of the identical kind and
character as an item constituting part of the BAC Assortment Inventory
and is saleable, 2Connect shall be obligated to reimburse BAC for an
amount equal to the excess of the sum returned to the customer by BAC
over 2Connect's original cost of the item returned by such customer;
provided further, BAC shall accept such 2Connect Return Sale as an
addition to the BAC Assortment Inventory, and BAC shall be entitled to
retain all proceeds from the resale thereof. If a 2Connect Return Sale
received by BAC is defective or damaged, it shall be deemed unsaleable,
and 2Connect shall be obligated to reimburse BAC for an amount equal to
the amount returned to the customer by BAC; provided, further, such
2Connect Return Sale shall be delivered to 2Connect, at 2Connect's sole
expense, for disposition by
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2Connect. Notwithstanding any contrary provision contained in the
immediately preceding sentence, 2Connect shall not incur any obligation
with respect to a particular defective or damaged 2Connect Return Sale
unless such 2Connect Return Sale is returned by the customer during the
period beginning on the Effective Date and ending thirty (30) days
thereafter. If a 2Connect Return Sale received by BAC is not of the
identical kind and character as an item constituting part of the BAC
Assortment Inventory and is saleable, 2Connect shall be obligated to
reimburse BAC for an amount equal to the amount returned to the
customer by BAC; provided, further, such 2Connect Return Sale shall
become an addition to the 2Connect Inventory, and shall be disposed of
in accordance with Section 7 hereinabove in the same manner, and with
the same consequences, as the disposition of the 2Connect Inventory.
BAC shall be entitled to offset against its reimbursement obligations
to 2Connect, as set forth in Section 11 hereinabove, 2Connect's
reimbursement obligations to BAC set forth in this Section 13, until
BAC fully recoups all such reimbursements due from 2Connect.
Notwithstanding any contrary provision of this Section 13, 2Connect's
reimbursement obligations pursuant to this Section 13 shall not exceed,
in the aggregate, an amount equal to ten percent (10%) of 2Connect's
gross sales at the Store during the thirty (30) day period immediately
preceding the Effective Date.
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14. 4-WALL OPERATING PROFIT. Except as otherwise provided in this
Agreement, as of the Effective Date, and continuing up until the
earlier of the expiration or termination of this Agreement, BAC shall
be entitled to retain all 4-wall operating profit of the Store and
shall be responsible for all 4-wall operating losses of the Store. For
the purpose of this Agreement, 4-wall operating profit and 4-wall
operating losses shall be determined pursuant to the principles set
forth in Exhibit "A", which is attached hereto, incorporated by
reference, and made an integral part of this Agreement. Except as
otherwise provided in this Agreement, BAC shall be entitled to retain
all revenue and income received on or after the Effective Date with
respect to its operation and management of the Store, and BAC shall be
responsible for all expenses incurred on or after the Effective Date
with respect to its operation and management of the Store.
15. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. Except for, and excluding, the Merger
Agreement, this Agreement contains all representations and the
entire understanding and agreement between the Parties. Except
for, and excluding, the Merger Agreement, correspondence,
memoranda or agreements, whether written or oral, originating
before the date of this Agreement are replaced in total by
this Agreement. In the event any conflict or inconsistency
exists between this Agreement and
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the Merger Agreement, this Agreement shall be controlling with
respect to the same.
(b) AMENDMENT. This Agreement may be amended only by a writing
signed by both of the Parties.
(c) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.
Unless pre-empted by the Bankruptcy Court, the state courts of
Florida shall have exclusive jurisdiction and venue over any
judicial proceeding relating to any dispute arising out of the
interpretation, performance or breach of this Agreement.
(d) SEVERABILITY. If any part of this Agreement is determined to
be illegal or unenforceable, all other parts shall be given
effect separately and shall not be affected.
(e) NOTICES. Notices given or permitted under this Agreement shall
be in writing and shall either be served personally or
delivered by certified mail, return receipt requested, postage
prepaid. Notices shall be effective upon actual receipt,
except as otherwise provided herein. Notices shall be directed
to the Parties at the following addresses:
If to 2Connect: 2Connect Express, Inc.
0000 Xxxxxxx Xx.
Xxx. 000
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
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With a copy to: Xxxxxx, Xxxx & Xxxxxx, LLP
000 X. Xxxxxxxx Xxxxxxxxx
0000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
If to BAC: Xxxxx Xxxxxxx Cellular Systems
of Florida, Inc.
0000 Xxxx Xxxxxx X.X., Xxxxx X
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. XxXxxxxx
With a copy to: Xxxxx & Associates, P.A.
000 Xxxxx Xxxx Xxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxxx, Esq.
Either Party may change such Party's address for purposes of this
Agreement by giving written notice of the new address to the other
Party in accordance with either medium described hereinabove. Rejection
or other refusal to accept delivery of a notice, or the inability to
deliver a notice because of changed address of which no notice was
given, shall cause such notice to be effective when sent.
(f) ADDITIONAL DOCUMENTS. Each Party agrees to execute and
acknowledge, if required, any and all other documents and
writings which may be necessary to carry out the purposes and
provisions of this Agreement.
(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
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(h) NONWAIVER. No assent or waiver, express or implied, of any
breach of any one or more of the covenants, conditions or
provisions of this Agreement shall be deemed a waiver of any
subsequent breach, or a waiver of any other covenant,
condition or provision of this Agreement.
(i) INTERPRETATION. The language used in this Agreement shall not
be construed in favor of or against either Party, but shall be
construed as if both of the Parties prepared this Agreement.
The language used in this Agreement shall be deemed to be the
language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against
either Party.
(j) ATTORNEYS' FEES. Except as otherwise provided in Section 15(k)
hereinbelow, TThe prevailing party to a dispute between, or
litigation between, the Parties, if said dispute or litigation
relates to this Agreement, shall be entitled to reimbursement
from the non-prevailing party for such prevailing party's
reasonable costs and expenses, including reasonable attorneys'
fees. For purposes of this Agreement, the "prevailing party"
shall be deemed to be that party who obtains substantially the
result sought, whether by settlement, mediated or otherwise,
dismissal, or judgment. For purposes of this Agreement, the
term "reasonable attorneys' fees" shall include, without
limitation, the
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actual attorneys' fees incurred in retaining counsel for
advice, negotiations, suit, appeal, or any other legal
proceeding, including mediation and arbitration.
(k) RESOLUTION OF DISPUTES WITH RESPECT TO ALLOCATION OF EXPENSES.
In the event the parties initially disagree as to the
allocation of expenses between 2Connect and BAC for the
purposes of Sections 10 and 11 hereinabove, the parties shall,
in good faith, use their respective best efforts to resolve
such disagreement within ten (10) days. If such efforts do not
result in a resolution of such disagreement prior to or upon
the expiration of such ten (10) day period, the parties shall
petition the Bankruptcy Court to resolve such disagreement.
Notwithstanding Section 15(j) hereinabove, each party shall
bear its own legal fees, accounting fees, and other
professional fees in connection with such a proceeding before
the Bankruptcy Court; provided, however, each party shall be
equally responsible for any court costs. Upon the Bankruptcy
Court's issuance of an order setting forth a resolution of
such disagreement, such resolution shall be binding and
conclusive once such order becomes non-appealable.
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the
date or dates set forth hereinbelow, to be effective for all purposes as of the
Effective Date.
2CONNECT EXPRESS, INC.
By: /s/ Xxxxxx X. Xxxxx
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Printed Name: Xxxxxx X. Xxxxx
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Title: President and CEO (Interim)
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Date: May 22, 1998
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XXXXX XXXXXXX CELLULAR SYSTEMS OF
FLORIDA, INC.
By: /s/ Xxxxxx XxXxxxxx
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Printed Name: Xxxxxx XxXxxxxx
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Title: CEO
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Date: May 22, 1998
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