EXHIBIT 10.2
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement"), made this 19th day of October,
2004, by and between Xila Communications, LLC ("Xila") and eGIX, Inc. ("eGIX").
WHEREAS, Xila operates as a telecommunications carrier within the State of
Indiana pursuant to certificates of territorial authority issued by the Indiana
Utility Regulatory Commission (the "IURC") for facilities-based and resold
interexchange and local exchange service, and provides joint tenant, dedicated
access and caller ID services to customers (the "Business");
WHEREAS, concurrently herewith, Xila and eGIX are entering into a certain
Asset Purchase Agreement (the "Purchase Agreement"), wherein Xila agrees to sell
to eGIX, and eGIX agrees to purchase from Xila substantially all of the assets
used by Xila in the operation of its Business; and
WHEREAS, Xila desires to retain eGIX to provide the Services defined
herein, and eGIX desires to provide such Services, all upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and mutual covenants and
agreements set forth herein, Xila and eGIX agree as follows:
AGREEMENT
1. Term. The term of this Agreement shall commence on the date hereof and
continue until the earlier of (a) February 28, 2005, unless extended thereafter
pursuant to the agreement of the parties, or (b) the Closing Date, as such term
is defined in the Purchase Agreement (the "Term").
2. Operational Control and Performance of Services.
(a) Notwithstanding any provision in this Agreement to the contrary,
during the Term, Xila shall maintain ultimate and complete control and
authority over the operations of the Business, and eGIX shall provide the
Services described below.
(b) Upon the execution of this Agreement, eGIX will undertake the
following responsibilities ((i), (ii) and (iii) below, collectively, the
"Services").
(i) diligently, faithfully and ardently promote and solicit
individuals and business entities with operations located at Market Tower,
the Illinois Building, Lockerbie Marketplace and the Century Building in
Indianapolis, Indiana, to become customers of Xila or increase the type or
breadth of telecommunications services they obtain from Xila and only from
Xila;
(ii) monitor and make recommendations to Xila with respect to
the day-to-day activities of the Business consistent with the terms
herein; and
(iii) during the Term, eGIX shall be solely responsible for
all financial aspects of the Business including, but not limited to, the
billing and collection of receivables and the payment and discharge of all
current obligations, including without limitation, trade accounts payable,
in a manner consistent with Xila's past practice, and shall forward to
Xila the sum of fifteen thousand dollars ($15,000.00) on or before the
last day of each month, beginning October 31, 2004 ("Monthly Payment"),
regardless of the profitability of the Business. No portion of the Monthly
Payment shall apply to the Purchase Price under the Purchase Agreement. In
the event the parties continue to operate under this Agreement for the
billing period beginning February 1, 2005 and provided eGIX has completed
all conditions precedent under the Asset Purchase Agreement, the entire
amount of the Monthly Payment that is paid for the period beginning
February 1, 2005 will be credited against the last payment required to
complete the payment of the Purchase Price. Under no circumstances shall
the Monthly Payment be credited against the first payments due under the
Purchase Price after Closing as defined by the Asset Purchase Agreement.
As consideration, eGIX will be entitled to the revenues of the Business
earned and the expenses and liabilities generated by the Business in its
books and records commencing October 1, 2004. eGix shall have the right to
retain the profits thereof, and shall be liable for the losses and
liabilities thereof. Xila will be responsible to remit all receipts
related to revenues earned after October 1, 2004 to eGix correspondingly
all expenses incurred after October 1, 2004
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in connection with the Business are to be assumed by eGix and if to be
reimbursed to Xila if paid.
(c) The parties will reconcile the accounts payable and the accounts
receivables of Xila as of October 1, 2004. All accounts payable and
accounts receivable and cash as of October 1, 2004 are for the benefit and
the responsibility of Xila without regard to eGIX. All revenues earned and
liabilities incurred after October 1, 2004 in connection with the Business
are for the benefit and responsibility of eGIX without regard to Xila.
(d) In performing the Services, eGIX shall at all times: (i) conduct
such marketing and monitoring activities in a lawful and professional
manner and in accordance with all of the rules and regulations of the
State of Indiana and the IURC; (ii) exercise sound business judgment in
promoting and marketing the Business; (iii) refrain from taking any action
with respect to the Business without the prior written consent of Xila
including, but not limited to (x) incurring any indebtedness on behalf of
Xila outside of the ordinary course of the Business; (y) entering into,
amending, or terminating any written contract or agreement of Xila; and
(z) acquiring or disposing of any assets of Xila; and (iv) immediately
notify Xila of any events outside the normal course of the Business.
(e) Concurrent with the execution of this Agreement, eGIX and Xila
shall enter into a Telecommunications Services Agreement in substantially
the form attached hereto as Exhibit A, pursuant to which:
(i) eGIX will provide to Xila local, long distance and
international connectivity services;
(ii) eGIX will, on behalf of and in the name of Xila and only
Xila, move customers of Xila from Xila's present service providers to
eGIX's network in an orderly manner when appropriate and provided that (a)
no penalties or liabilities will be incurred by Xila, eGIX, or any
customer of Xila; (b) there will be no interruption in services provided
by Xila to any customer; and (c) such migration is performed in accordance
with all applicable laws; and
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(iii) the existing agreements between Xila and its
connectivity providers will be terminated in an orderly manner without
incurring any penalties or liabilities to eGIX, Xila, or any customer of
Xila.
(f) eGIX and Xila will work together to secure a long-term
agreement between Xila and The Hawthorns such that Services
will be provided as per the terms of this Agreement.
(g) Employees of the Business will remain employees of Xila but
will be directed and managed by eGIX in accordance with item
2) above. Employees will continue to be compensated at and
receive benefits through the term of this agreement. eGix will
reimburse Xila for the compensation and benefits provided to
such employees and the specific related employer costs,
including but not limited to employer taxes, workers
compensation premiums, insurance premiums and other related
costs. eGIX agrees to offer and secure employment to such
individuals at a level of compensation or benefits
commensurate with existing levels by the expiration of the
term of this agreement. eGix indeminifies Xila for actions
which incur during the oversight of such employees.
3. Termination. In the event the transactions contemplated by the Purchase
Agreement are not consummated, Xila has the following options:
(a) Continuation of this Agreement and all its terms and conditions,
(b) Terminate this Agreement with Xila having the right to continue
to take Services from eGIX as Xila's underlying carrier, or
(c) Terminate this Agreement and all Services to Customers and eGIX
shall, within ten (10) days of the termination of this Agreement, deliver to
Xila, or its designated agents, all books and records maintained by eGIX with
respect to the Services performed and the operation of the Business.
4. Restrictive Covenants. During the Term and for a period of eighteen
(18) months thereafter in the event the transactions contemplated by the
Purchase Agreement are not consummated,
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eGIX, on its own behalf or on behalf of any entity in competition with Xila, in
any capacity, may not, directly or indirectly, solicit or obtain any competing
business from any present customer of Xila with whom eGIX had contact during the
Term of this Agreement. It is understood and agreed that a "present customer"
means any entity with whom Xila had an "ongoing business relationship" at the
time of termination of this Agreement. An "ongoing business relationship" is
generally understood and agreed to mean: (a) Services were provided by Xila to
the entity during the Term of this Agreement; (b) Services had been contracted
for or ordered by the entity during the Term, or (c) Negotiations were in
progress between the entity and Xila for the provision of Services at the time
of such termination.
5. No Assignment; Binding upon Successors. This Agreement may not be
assigned by eGIX or Xila to any other party without the prior written consent of
the other party. The rights and obligations created by this Agreement shall be
binding upon and inure to the benefit of their respective successors and
personal representatives.
6. Governing Law. This Agreement is subject to and shall be construed
under the laws of the State of Indiana. The parties further agree that any
dispute arising under this Agreement and/or any action brought to enforce this
Agreement shall be brought in a state or federal court of competent jurisdiction
in Xxxxxx County, Indiana.
7. Entire Agreement. This instrument contains the entire agreement between
the parties with respect to this Agreement. It may be executed in several
counterparts, each of which shall be deemed an original, and all of such
counterparts shall together constitute one and the same instrument.
8. Relationship of Parties. The sole relationship of eGIX and Xila under
this Agreement shall be that of an independent contractor. eGIX shall not be
construed as a joint venturer, partner or employee of Xila or the Business, and
shall not have any power or authority to bind or obligate Xila or the Business
in any manner except as expressly set forth herein.
9. IURC Approval Process. Xila recognizes the sole reasons for the
potential termination of this Agreement, during the term will be the inability
to obtain approval by the IURC related to the execution of the aforementioned
agreements or the material breech of the agreements by eGIX. Xila will
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give its best efforts to secure the approval of the IURC and complete that
transaction and will, at all times, deliver to eGIX pertinent updates and
information regarding the IURC approval process.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
eGIX, INC. XILA COMMUNICATIONS, LLC.
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxxxxx Xxxxxxxxx
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Printed Name: Xxxxxx Xxxxx Printed Name: Xxxxxxx Xxxxxxxxx
Print Title: President Print Title: Chief Financial Officer
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