MANAGEMENT AGREEMENT
Exhibit
10.5
THIS
MANAGEMENT AGREEMENT (this “Agreement”)
is
made as of this 18th day of July, 2007 (the “Effective
Date”)
by and
among MOBILEPRO
CORP.,
a
Delaware corporation having a place of business and mailing address of 0000
Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000 (the “Company”)
and
United
Systems Access Telecom, Inc.,
a
Delaware corporation (“Manager”),
and
United
Systems Access, Inc.,
d/b/a
USA TELEPHONE, a Delaware corporation and parent of Manager (“Parent”)
(Company, Manager and Parent each, a “Party”
and
collectively, the “Parties”).
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Purchase Agreement (as defined below).
RECITALS
WHEREAS,
the
Company owns all of the issued and outstanding capital stock of each of Close
Call America, a Delaware corporation (“CCA”)
and
American Fiber Networks, a Delaware corporation (“AFN”)
and
World Trade Network, Inc. (“WTN”)
(collectively, CCA, AFN and WTN are referred to as the “Operating
Corporations”
and
each as a “Operating
Corporation”);
WHEREAS,
the
Operating Companies are in the business of providing (i) local, long distance,
payphone and Internet services to business customers and traditional local
and
long distance phone services, as well as leading edge VoIP technology, cellular
and EVDO services to consumers in all fifty states (collectively, the
“Business”).
WHEREAS,
Company
as seller, and Parent, as buyer, have entered into that certain Purchase
Agreement of even or near even date herewith for the purchase of all outstanding
equity in the Operating Companies (the “Purchase
Agreement”);
and
WHEREAS,
pending
receipt of all necessary governmental and third party approvals necessary
to
consummate the transactions described in the Purchase Agreement (the
“Required
Approvals”),
the
Parties desire that Manager shall have exclusive authority to operate the
business of the Operating Companies, pursuant and subject to the terms of
this
Agreement.
AGREEMENT
NOW,
THEREFORE,
in
consideration of the foregoing, and in consideration of the representations,
warranties, covenants and agreements contained herein, the Parties hereby
agree
as follows:
ARTICLE
1. MANAGEMENT
SERVICES
1.1. Company
and Parent hereby appoint Manager, and Manager hereby accepts the appointment,
to manage the Business of the Operating Companies, which appointment includes
the right to manage, use, expend and have access to all property of the
Operating Companies, including cash on hand as of the Effective Date and
all
cash generated in the ordinary course of operations of the Operating Companies.
Except as expressly limited pursuant to this Agreement, the authority of
the
Manager with respect to the operation of the Business shall be exclusive,
even
as to the Company, and absolute.
1.2. Manager
shall manage the Operating Companies in such manner as the Manager deems
appropriate in the exercise of its reasonable business judgment.
1.3. All
employees of the Operating Companies shall remain as such, subject to the
right
and responsibility of the Manager to supervise, evaluate, discipline, let-go
and
hire such employees as it shall deem appropriate in the conduct of its
responsibilities hereunder.
1.4. Neither
Manager nor the Company shall be required to advance any funds to the Operating
Companies pursuant to this Agreement. No amount shall be paid to the Company
by
the Operating Companies during the Term of this Agreement, whether as
distributions, return of capital, dividends, compensation, repayment of advances
or loans or otherwise. The Manager may in its discretion withdraw funds from
the
Target Companies in addition to the management fee described in Article 3
below,
but subject to the terms of Article 5 hereof.
1.5. Neither
Manager nor Parent shall have liability to the Company or the Operating
Companies for their acts or omissions in connection with this Agreement unless
they are found to have acted fraudulently or in bad faith. In no event shall
Manager or Parent be liable for consequential, special, punitive or exemplary
damages.
1.6. Company
shall cause Xxxxxxx Xxxx to be appointed as CEO of the Operating
Corporations.
1.7. During
the term of this Agreement, the Manager shall cause the Target Companies
to pay
Cornell accrued interest on the obligations of the Company to Xxxxxx, on
the
following schedule and Manager shall fund such payments to the extent that
Manager has withdrawn or been paid funds from the Target Companies:
Accrued
Interest for the month of July 2007 by September 30, 2007
Accrued
Interest for the month of August 2007 by October 31, 2007
Accrued
Interest for the month of September 2007 by November 30, 2007
Accrued
Interest of the month of October 2007 by December 31, 2007 and
Continuing
on the same schedule thereafter
ARTICLE
2. TERM
This
Agreement shall become effective on the date of the ISP Closing and shall
terminate on the earlier of (i) the date of the Second Closing or (ii) the
date
that the Purchase Agreement is terminated by Parent pursuant to Section 9.1
(a)
thereof or by the Company pursuant to Section 9.1 (b) thereof or (iii) by
mutual
agreement of the Parties.
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ARTICLE
3. COMPENSATION
3.1. The
Manager shall be compensated for its services provided under and pursuant
to
this Agreement at the rate of One Hundred Thousand Dollars ($100,000) per
month,
which amount shall be pro-rated for any partial month. The Manager may also
be
reimbursed by the Operating Companies for the Manager’s reasonable out-of-pocket
expenses incurred in the performance of its duties hereunder.
ARTICLE
4. COVENANT
The
Company covenants with Parent and Manager to cooperate with Manager in its
management of the Business and to take such other actions, in its capacity
as
the record holder of all outstanding equity in the Operating Companies, as
may
be reasonably necessary to enable the Manager to manage the
Business.
ARTICLE
5. PURCHASE
AGREEMENT
Nothing
herein shall be deemed to limit or otherwise modify the rights and obligations
of the Parties under the Purchase Agreement, which rights and obligations
shall
have terminated or shall remain in effect in accordance with their terms.
The
parties acknowledge that during the term of this Agreement, the Manager intends
to cause substantial additional business from its customers or customers
of its
affiliates to be serviced by the Target Companies, which the parties expect
will
increase the profitability of the Target Companies. The parties further
acknowledge that during the term of this Agreement the Manager intends to
implement certain other efficiencies with respect to the operations of the
Target Companies, thereby improving their profitability. In the event that
the
Second Closing does not occur, the parties agree that the profits of the
Target
Companies shall be allocated between the Manager and the Company equitably
so as
to fairly compensate the Manager for the increased profitability of the Target
Companies caused by the Manager during the term of this Agreement. Following
such allocation, the parties shall true-up, with the Manager paying the Company
in the event that it has withdrawn funds in excess of its share of the profits
and the Company paying the Manager if the Manager has not withdrawn its full
share of the profits. Profits shall be determined after payment of the
management fee due to Manager and after accrual (or payment) of interest
due to
Cornell.
ARTICLE
6. ASSIGNMENT
No
Party
hereto may assign its rights or obligations under this Agreement without
the
prior written consent of the other Parties, which consent shall not be
unreasonably withheld, conditioned or delayed, except that Manager may assign
its rights and obligations under this Agreement to any parent, subsidiary
or
affiliate of Manager.
ARTICLE
7. MISCELLANEOUS
7.1. Notice.
All
notices or other communications hereunder shall be made in the same manner
and
subject to the same terms as set forth in the Purchase Agreement
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7.2. Amendment
Waiver.
Any
provision of this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment,
by
all of the Parties, or in the case of a waiver, by each Party against whom
the
waiver is to be effective. No failure or delay by any Party in exercising
any.
right, power or privilege hereunder shall operate as a waiver thereof, nor
shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
7.3. Governing
Law; Jurisdiction; Service of Process.
This
Agreement shall be
governed
by and construed in accordance with the laws of the State of Maine, its rules
of
conflict of laws notwithstanding. The Parties hereto irrevocably elect as
the
sole judicial forum for the adjudication of any matters arising under or
in
connection with this Agreement, and consent to the jurisdiction of, any state
or
federal court of competent jurisdiction within the State of Maine and waives
any
objection to venue laid therein. Process in any action or proceeding referred
to
in the preceding sentence may be served on such Party at the address and
in the
manner provided in the Purchase Agreement.
7.4. Relationship
of the Parties.
The
Manager is an independent contractor with respect to the Company. Nothing
contained herein shall be deemed to create any franchise, fiduciary, agency,
partnership, joint venture, employment or special relationship between
them.
7.5. Entire
Agreement.
This
Agreement and the documents referenced herein, including the Purchase Agreement,
contain the entire agreement between the Parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings,
oral or written, with respect to such matters.
7.6. Parties
in Interest.
Except
as otherwise provided in this Agreement, this
Agreement
shall inure to the benefit of and be binding upon the Parties hereto and
their
respective successors and permitted assigns. Nothing in this Agreement, express
or implied, is intended to confer upon any person other the Parties or their
any
of their respective successors or permitted assigns, any rights or remedies
under or by reason of this Agreement.
7.7. Headings.
Headings contained in this Agreement are for reference purposes only and
are not
intended to describe, interpret, define or limit the scope, extent or intent
of
this Agreement or any provision of this Agreement.
7.8. Counterparts.
This
Agreement may be executed in counterparts, each of which shall be an original,
and such counterparts shall together constitute but one and the same
instrument.
7.9. Severability.
Except
as set forth in Section 7.9, if any provision contained in this Agreement
is
held to be invalid, illegal or unenforceable in any respect by any court
or
other authority, then such provision shall be deemed limited to the extent
that
such court or other authority deems it reasonable and enforceable, and as
so
limited shall remain in full force and effect. In the event that such court
or
other authority shall deem any such provision wholly unenforceable, this
shall
not affect any other provision hereof; and this Agreement shall be construed
as
if such invalid, illegal or unenforceable provision or provisions had not
been
contained herein.
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IN
WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed
as
an instrument under seal in multiple counterparts as of the date set forth
above
by their duly authorized representatives.
| UNITED SYSTEMS ACCESS TELECOM, INC. | ||
| |
|
|
| By: | /s/ L. Xxxxxxx Xxxx | |
|
L. Xxxxxxx Xxxx, Chief Executive Officer |
||
| UNITED SYSTEMS ACCESS, INC. | ||
| |
|
|
| By: | /s/ L. Xxxxxxx Xxxx | |
|
L. Xxxxxxx Xxxx, Chief Executive Officer |
||
| MOBILEPRO CORP. | ||
| |
|
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| By: | /s/ Xxx X. Xxxxxx | |
|
Xxx X. Xxxxxx, Chairman and CEO |
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