MANAGEMENT AND OPERATIONS AGREEMENT
BACKGROUND
Whereas Digital Learning Management Corporation ("DLMC) is a Corporation which
provides post secondary adult education to the public;
Whereas Global Computer Systems, Inc. ("Global"), is a corporation duly licensed
to conduct post secondary education in California and operates a school under
the business name of Xxxxxxxxxxxx.xxx ("Techconsults") in the city of Irvine;
Whereas DLMC has agreed under an Agreement ("Stock Agreement") dated April 30,
2004, to purchase 100% of the outstanding stock of MCC from its Shareholders;
Whereas consummation of the Sock Agreement is that subject to approval of the
DLMC Board of Directors, the completion of satisfactory due diligence by DLMC of
the affairs of Global and the approval by the Bureau of Private Postsecondary
and Vocational Education of the change of control that will result from such
consummation: and
Whereas pending the consummation of the Stock Agreement, the parties wish to
ensure the continuing viability of Techconsults as going business and in order
to achieve this goal, DLMC has agreed and has advanced funds to Techconsults
pending the closing of the Stock Agreement and the parties to the Stock
Agreement have agreed that DLMC shall assume the management and operations of
Techconsults during the period pending such consummation of the Stock Agreement;
NOW THEREFORE the parties agree to the following terms and conditions.
TERMS
(a) Term of the Agreement. This agreement shall be for a period of six
months from the date hereof or until such time as the Stock
Agreement is consummated, or is otherwise terminated under the terms
of this Agreement, which ever of these conditions first occurs.
(b) Management and Operation. DLMC will assume complete and absolute
control of all management and operation of Xxxxxxxxxxxx.xxx. Without
limiting the generality of this provision such management shall
include complete control of the Global/Xxxxxxxxxxxx.xxx bank
accounts, accounts receivables, accounts payables, employees
compensation, marketing and other matters necessary to operate the
school as a viable going business.
(c) Techconsults Rights and Responsibilites.
i) Techconsults agrees to make its best efforts to ensure that all
present employees, including Xxxxxx Xxxxxxx shall continue their
employment with Tecconsults and continue to perform all their
present duties, including the enrolment of students, collection of
fees, scheduling of classes, maintaining accounting records and all
administrative functions. Techconsults shall notify all employees
that DLMC has assumed control of the management and operations of
Techconsults and that they will be under the direct control and
supervision of DLMC appointed manager.
ii) Techconsults agrees that in consideration of the responsibilities
assumed by DLMC and funds advanced it hereby irrevocably assign to
DLMC all the ownership rights in its Accounts Receivables existing
at the time and arising after the effective date of this Agreement,
and agrees immediately to notify all its debtors in the manner and
in the form requested by DLMC.
iii)Techconsults represents that the schedules attached to Stock Agreement
are true and correctly reflect the information contained therein.
Such schedules are the following; 1, Techconsults Balance Sheet as
of April 30, 2004; 2, MCC Profit and Loss Statement as of April 30,
2004; 3, Schedule of Accounts Receivables as of April 30, 2004;
4,Schedule of Accounts Payables as of April 30, 2004; 5, Schedule of
Monthly Commitments to Third Parties for contracted obligations as
of April 30, 2004; 6, Schedule of obligations owed to Federal and
/or State Government departments for income taxes as well as
deductions made or required to be made by law and forwarded to
divisions of the Federal, State and local governments.
(d) DLMC Rights and responsibilities.
i) DLMC will be responsible for Overall policy decisions and
agrees to appoint one of its employees to oversee the
operation and supervision of the school.
ii) DLMC agrees to advance funds to Techconsults for working
capital
iii). DLMC will make its best efforts to collect all accounts
receivables that are due to techconsults at the time of this
Agreement. As such funds are collected DLMC shall have the
first right to be repaid the monies advanced for working
capital in priority to any payment to other creditors. All
sales and receivables arising there from after coming into
effect of this Agreement shall be the property of DLMC and
will be applied first to meet the financial needs of operating
the school. Any surplus remaining after payment of
Techconsults expenses and obligations above will be retained
by DLMC as its management fee.
iv). All sales made by Techconsults after September 1, 2004 shall
become the property of DLMC. Such sales will be invoiced by
Techconsults and assigned to DLMC. All receipts from such
sales and receivables arising from such sales will be paid to
DLMC. DLMC agrees to invoice Techconsults in a monthly basis
in an amount equivalent to the sales made by Techconsults. All
receipts from such sales shall be paid over to DLMC. DLMC for
its part agrees that it will it will pay all expenses for
operating Techconsults, including all items listed
v). It is understood that for undertaking the management and
funding obligations hereunder DLMC shall be entitled to retain
all profits derived from Techconsults' operations during the
period pending closing of the Stock Agreement.
(e) Action to Implement. Techconsults agrees to take all corporate
action necessary to implement the terms of this Agreement. Such
action shall include; (1) consent of the Board of Directors to the
adoption of this Agreement; (2) election of DLMC designated
individuals to the Board of Directors; (3) appointment by the Board
of Directors of a Chief Financial Officer designated by DLMC with
full and sole powers to manage the financial affairs of Techconsults
and; (4) adoption of a bank resolution authorizing who ever DLMC
designates to be the only signatories for the operation of all
Techconsults' bank accounts.
(f) Mutual Idemnification. Each party agrees that it will indemnify and
hold harmless the other party, its officers, directors, controlling
persons, agents and employees from losses, claims, damages,
liabilities or expenses, and any action in respect thereof to which
any such person may become subject, due to or arise out of any
breach or failure to perform any commitment under the terms of this
Agreement.
(g) Successors and Assigns. Neither party shall have the right to assign
any of the burdens or benefits of this Agreement to a third party.
(h) Cancellation of Agreement. DLMC shall the right to cancel and
terminate this agreement with a 15 day written notice to Xx. Xxxxxx
Xxxxxxx if in the operation of the school it discovers that the
information provided in the schedules to the Stock Agreement are are
incorrect. In the event of such premature cancellation all parties
agree that they will cooperate and execute any documents or take
such other action as may be necessary to permit the parties to
return to their pre-Agreement positions. Such action shall include;
(1) an accounting of monies received and disbursed and; (2)
submission of resignations to elected or appointed offices
effectuated pursuant to the requirements of this Agreement. Any
losses sustained by DLMC as a result of incorrect information
supplied in the schedules shall be repaid to DLMC by Techconsults.
(i) BPPVE Standards. Each of the parties agrees to use its best efforts
to perform its obligations hereunder in accordance with all
applicable accreditation standards of the Bureau of Private and
Postsecondary Vocational Education.
(j) Temporary Arrangement. Each party acknowledges that this Agreement
is a transitional arrangement pending approval by BPPVE to the
change of ownership in techconsuts under the Stock Agreement
heretofore described. If the Stock Agreement is not consummated
within thirty days after approval of such change has been received,
then this Agreement shall be cancelled pursuant to the manner
designated in paragraph (h) above.
(k) Dispute Resolution. Parties agree that any disputes arising out of
or relating to this Agreement shall be resolved by binding
arbitration by a single arbitrator appointed under the commercial
arbitration rules of the American Arbitration Association. The venue
of such arbitration shall be County of Orange.
(l) General Power of Attorney
By executing this agreement Global Computer Systems, Inc., dba
Xxxxxxxxxxxx.xxx hereby grants to Digital Learning Management Corporation a
general power of attorney to sign on its behalf to give effect to all the
provisions of this Agreement on its behalf.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of
September 1, 2004.
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Signature Signature:
Xxxxx Xxxxx Xxxxxx Xxxxxxx
Vice President President and CEO
DLMC Global computer Systems, Inc
Torrance, California Irvine, California
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