MANAGEMENT SERVICES AGREEMENT (WITH RESPECT TO SPECIFIED STATE CUSTOMER BASES)
Exhibit
10.5
MANAGEMENT
SERVICES
AGREEMENT
(WITH
RESPECT TO SPECIFIED STATE CUSTOMER BASES)
THIS
MANAGEMENT SERVICES AGREEMENT (“Agreement”) is made and entered into as of
September 30, 2005 at 11:59 p.m. Eastern Time (“Effective Date”) by and among
Acceris Management and Acquisition LLC, a Minnesota limited liability company
(“Manager”), Acceris Communications Corp., a Delaware corporation (“Company”),
and C2 Global Technologies Inc. f/k/a Acceris Communications Inc., a Florida
corporation (“ACI” and, together with Company, the “Seller Parties”), and
Counsel Corporation, a Canadian company organized under the laws of the province
of Ontario (“Counsel”) (collectively the Company, ACI and Counsel are the
“Company Parties”) and, for the sole purpose of making the guaranty contained in
Section 21, North Central Equity, a Minnesota limited liability company.
BACKGROUND
WHEREAS,
the Seller Parties have agreed to retain the Manager to manage the customer
accounts in certain states specified on Exhibit
A
hereto
(“Specified States”) during the interim period from the Closing Date to the date
of final regulatory approval for the transfer of control of such customer
assets
under applicable state PUC rules and regulations as provided for under the
Asset
Purchase Agreement (the “Purchase Agreement”) among the Company Parties and the
Manager; and
WHEREAS,
the Closing under the Purchase Agreement is occurring as of the Effective
Date,
however, the receipt of all governmental consents required by the Purchase
Agreement has not yet been finalized in the Specified States; and
WHEREAS,
the Seller Parties desire to utilize Manager’s services on an exclusive basis to
manage, to fullest extent permissible under Law (as defined below), the
operations of the customer accounts in the Specified States pending receipt
of
the foregoing consents and approvals and Manager desires to provide such
services to the customers in the Specified States on the terms and subject
to
the conditions stated herein.
NOW,
THEREFORE, in consideration of the above recitals and mutual promises and
other
good and adequate consideration, the receipt and sufficiency of which are
hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
1. Compliance
with Applicable Laws and Regulations.
1.1 The
Company Parties and Manager desire that this Agreement and the obligations
performed hereunder be in substantial and good faith compliance with (i)
all
applicable rules, regulations and policies of the Federal Communications
Commission (“FCC”) and any state public utility commission(s) (the “State
PUC(s)”); (ii) the Communications Act of 1934, as amended (the “Act”), 47 X.X.X
000, et seq., (iii) applicable state and provincial laws applicable to the
Company Parties and (iv) any other applicable Canadian or US federal, state
and
local law, regulation or policy (collectively, “Law(s)”).
1.2 It
is
expressly understood by the parties that nothing in this Agreement is intended
to give Manager any right that would be deemed to constitute a transfer of
control (as is defined in the Act and/or any applicable FCC or other relevant
Law) of any of the applicable licenses from the Company to Manager to the
extent
prohibited by applicable Law in the Specified States. Each party shall perform
its obligations under this Agreement in accordance with applicable
Law.
1.3 If
any
State PUC or other governmental body of competent jurisdiction with regard
to
the customers in the Specified States determines that a provision of this
Agreement violates any applicable Law, or if any State PUC governing the
customers in the Specified States has advised the parties, orally or in writing,
that the review of any request by the parties for authority for the transactions
contemplated hereby will be inordinately delayed or will likely be determined
adversely to the parties, the parties will use their respective reasonable
efforts to negotiate in good faith to modify this Agreement to the minimum
extent necessary so as to comply with such order, decree, action or
determination and/or remove any controversy identified by a State PUC without
material economic detriment or effect to either party, and to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated
as
originally contemplated to the fullest extent possible. This Agreement, as
so
modified, shall then continue in full force and effect. If change of control
approval cannot be obtained in any particular state, Manager shall assist
the
Company Parties to obtain a buyer for such customers for up to a one year
period
after the Closing Date. Any proceeds of the sale of such customer base shall
be
paid to the Manager as additional compensation under this Management Agreement.
2. Appointment
of Manager.
The
Seller Parties hereby appoint Manager, to the fullest extent permissible
under
Law, as the sole and exclusive provider of all services necessary or appropriate
for the supervision and management of the customers in the Specified States,
as
described more fully in Section 3 (the “Services”) up until the date of the
approval by the applicable state PUC of the change of control approval and
the
approval of the certifications of the Manager to provide telecommunications
services in the applicable states. The Company Parties consent to and agree
to
the appointment of the Manager. Manager hereby accepts such appointment on
the
terms and subject to the conditions stated herein.
3. Scope
of the Services.
3.1 Management.
During
the Term (defined below), and under the supervision, control and direction
from
time to time of the Company and the Company’s Board of Directors and by its
Designated Executive (as defined below), Manager shall establish and implement
operational policies and provide general management and direction of the
day-to-day operations of the customer bases in the Specified States and shall
exercise general supervision and direction of all affairs related to the
customer accounts in the Specified States to the fullest extent permissible
under Law and shall make decisions with respect to the establishment,
provisioning, contracting, billing, customer service and collection of the
customer accounts in the Specified States, subject to the reporting duties
to
the Designated Executive (defined below) and the Company’s Board of Directors.
(a) Manager
agrees to report regularly at mutually agreeable times to the Company’s chief
executive officer or a designee of the chief executive officer (“Designated
Executive”) concerning the status of the management of the customers in the
Specified States, but no less frequently than monthly, unless such update
is
waived by the Company or the Company Parties.
2
(b) Manager
shall manage the customers in the Specified States and report to the Designated
Executive from time to time as provided for in this Agreement and shall use
its
best efforts to manage the customers in the Specified States in substantial
good
faith compliance with its obligations under this Agreement. Manager shall
use
its good faith best efforts to manage the responsibilities of operating and
managing the Company’s operations under this Agreement. Day to day operations
shall include customer billing, management of accounts receivables and cash
collections relating to the customer accounts in the Specified States and
providing working capital to fund the customer accounts receivables with
respect
to the customer accounts in the Specified States. Manager
will be responsible for all costs associated with management of the customer
accounts in the Specified States until this Agreement has been terminated
or has
expired.
4. Responsibilities
of the Company.
During
the Term the Company Parties shall assist and fully cooperate on a timely
basis
with Manager in its performance of the Services. Time is of the essence under
this Agreement and all Company Parties will work diligently to make decisions
and execute any agreements or action plans for the Company in as reasonably
expeditious manner as reasonably possible to allow Manager to perform the
Services. The Company Parties shall have the Designated Executive available
either on site or by telephone during all regular business hours and such
Designated Executive shall have full and complete authority to bind the Company
to decisions regarding the customer accounts in the Specified States. Without
limiting the foregoing, the Company Parties shall undertake the following
responsibilities to assist the Manager and to allow the Manager to manage
the
day to day operations of the Company:
(a) shall
provide Manager with all information and materials in their possession or
subject to their control to enable Manager to provide the Services under
this
Agreement;
(b) shall
perform any acts reasonably necessary to manage the customer accounts in
the
Specified States, excluding those acts that are to be performed by Manager
in
connection with the Services, pursuant to and in accordance with the request
of
Manager;
(c) shall
continue to communicate with third parties, including state regulatory
commissions, in cooperation with Manager, including responding to their
inquiries, requests and correspondence;
(d) shall
promptly inform Manager, and provide Manager with copies of, all correspondence
and communications relating to the Company from third parties; and
(e) At
the
request of Manager, they shall cause the Company to timely exercise rights
it
has under any of the contracts or agreements of the Company with the customers
in the Specified States, including, but not limited to, rights, whether in
law
or equity, with respect to breach, termination, set-off, indemnity, waiver,
sub-contracting and assignment and shall execute commitments, agreements,
contracts, instruments or agreements as are reasonable for the management
of the
customer base in the Specified States as requested by the Manager.
3
5. Independent
Contractor Status of Manager.
Manager
is an independent contractor in the performance of the Services under this
Agreement and shall determine the method, details and means of performing
the
Services. Without limiting the generality of the foregoing, Manager shall
be
permitted, in its sole discretion, but in no way shall be required to (i)
enter
into and perform contracts and agreements in its own name for the furnishing
of
services, equipment, parts and supplies in connection with the Services,
and
(ii) recruit and hire and terminate its own employees and independent
contractors to provide the Services. Manager shall solely establish the terms
and conditions of employment for its employees and shall pay all salaries
and
other compensation due to such employees.
6. Compensation.
As its
compensation for the Services, the Company shall pay Manager a fee equal
to the
gross collections from customer accounts in the Specified States (determined
according to GAAP) during the Term (the “Fee”). The Company Parties shall have
no obligation to pay or refund to Manager any amount spent or paid by Manager
in
its performance of this Agreement, including to or on behalf of a Company
Party.
7. Expenses.
Except
as may be otherwise specifically provided herein, the parties hereto shall
pay
their own legal fees, accounting and other expenses incurred in connection
with
the negotiation and consummation of the transactions contemplated by this
Agreement.
8. Term.
The
term of this Agreement (the “Term”) shall commence on the Effective Date hereof
and shall expire upon the earlier of: (i) one year from the Effective Date;
or
(ii) the date on which the last state PUC in the Specified States approves
the
change of control of the customer base to Manager and the telecommunication
carrier certifications of the Manager. Upon the termination of this Agreement,
neither party shall be further obligated under this Agreement except for
the
parties’ obligations under the last two sentences of Section 1.3 and their
respective indemnification obligations set forth in Section 9. The customer
base
for each Specified State shall be deemed transferred and all of the Seller
Parties right title and interest to such customer accounts shall transfer
to the
Manager, free and clear of any Encumbrances of the Seller Parties (as that
term
is defined in the Purchase Agreement) on the applicable date of the order
of the
applicable state approving the transfer of such customer base from the Company
to the Manager and the Manager’s approval of certifications to offer
telecommunications services in such Specified States.
9. Indemnification.
(a) Subject
to the other terms and conditions contained in this Agreement, the Company
Parties will indemnify, defend and hold harmless the Manager and any of its
Affiliates from and against any and all damages, liabilities, losses, costs
and
expenses (including all reasonable attorneys’, fees and costs) (collectively,
“Losses”) incurred by the Manager arising our of or related to (i) the Company
Parties’ breach of this Agreement, or (ii) the defense or disposition of any
action, claim, suit, demand, litigation, arbitration, mediation or other
proceeding initiated by a third party by or before any governmental entity
or
arbitral forum (each, an “Action”), whether civil, administrative, investigative
or criminal, out of or related to the Manager’s performance under this
Agreement. In the event Manager requests indemnification from the Company
Parties with respect to the defense of any Action, the Company Parties shall
advance such defense costs as Manager may reasonably request. If the Company
Parties do not advance such defense costs, Manager shall have no obligation
to
cooperate or provide information to the Company Parties with respect to their
defense of such claims.
4
(b) The
Company Parties expressly agree that Manager will have no liability to them
or
any third party based on the failure of the customers in the Specified Sates
to
achieve profitability, minimize losses, or based upon Manager’s lawful
decision-making with respect to management of the customers in the Specified
States under this Agreement. Any claim of either party arising under or relating
to this Agreement shall be made only against the other party as a corporation
or
limited liability company, as the case may be, and any liability relating
thereto shall be enforceable only against the corporate or limited liability
company assets of the party. No party shall seek to xxxxxx the corporate
veil or
otherwise seek to impose any liability relating to, or arising from, this
Agreement against any parent company, Affiliated company, subsidiary,
shareholder, employee, officer or director of the other party.
(c) Notwithstanding
anything to the contrary contained in this Section 9 (except for the exception
provided for with respect to Manager in 9(a)), the parties shall cooperate
with
each other in connection with any Action, including keeping each other
reasonably informed with respect to the status of any Action and to obtain
the
benefits of any insurance coverage for third party claims that may be in
effect
at the time a third party claim is asserted.
10. Notices.
All
notices, requests, demands and other communications under this Agreement
shall
be in writing and shall be deemed to have been duly given (i) on the date
of
service if served personally on the party to whom notice is to be given;
(ii) on
the day of transmission if sent via facsimile transmission to the facsimile
number given below, and confirmation of receipt is obtained promptly after
completion of transmission; (iii) on the day after delivery to Federal Express
or similar overnight courier or the Express Mail service maintained by the
United States Postal Service; or (iv) on the fifth calendar day after mailing,
if mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid and properly addressed, to the party
as
follows:
| If to the Company Parties: |
Acceris
Communications Corp.
x/x
Xxxxxxx Xxxxxxxxxxx
Xxxxxx
Xxxxx, Xxxxx 0000
00
Xxxx Xxxxxx Xxxx
Xxxxxxx,
Xxxxxxx X0X 0X0
Xxxxxx
Attn:
Chief Executive Officer
Facsimile:
000-000-0000
|
5
| Copy to: |
Xxxxxxx
Xxxxxx Xxxx Xxxxxxx & Manner,
P.C.
000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx,
XX 00000-0000
Attn:
Xxxxxx Xxxxxxxx
Facsimile:
000-000-0000
|
| If to Manager: |
Acceris
Management and Acquisition LLC
00
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx,
XX 00000
Attention:
Xxxx X. Xxxxxxxxxx, Esq. and Xxxx Xxxx
Facsimile:
000-000-0000
|
Any
party
may change its address for the purpose of this Section by giving the other
party
written notice of its new address in the manner set forth above.
11. Entire
Agreement.
This
Agreement constitutes the entire agreement among the parties hereto relating
to
the subject matter hereof (the management services agreement with respect
to
only the customer bases in the Specified States), and all prior agreements,
correspondence, discussions and understandings of the parties (whether oral
or
written) relating to the subject matter hereof are merged herein and superseded
hereby, it being the intention of the parties hereto that this Agreement
and the
instruments and agreements contemplated hereby shall serve as the complete
and
exclusive statement of the terms of their agreement. The Management Services
Agreement dated May 19, 2005 is expressly terminated as of the Effective
Date.
12. Assignment.
Neither
this Agreement nor any of the rights or obligations hereunder may be assigned
by
any party (by contract, operation of law, change of control or otherwise)
without the prior written consent of the other parties. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit
of the
parties hereto and their respective successors and permitted
assigns.
13. Section
and Paragraph Headings.
The
section and paragraph headings in this Agreement are for reference purposes
only
and shall not affect the meaning or interpretation of this
Agreement.
14. Severability.
Each
provision of this Agreement is intended to be severable. Should any provision
of
this Agreement or the application thereof be judicially, or by arbitral award,
declared to be or become illegal, invalid, unenforceable or void, the remainder
of this Agreement will continue in full force and effect and the application
of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties.
15. Governing
Law; Venue and Jurisdiction.
This
Agreement shall be governed by and construed according to the laws of the
State
of Illinois, without regard to the conflict of law rules of Illinois or any
other state. The parties hereto consent to the exclusive venue and jurisdiction
of an appropriate federal or state court in Xxxx County, Illinois for any
suit
or action arising out of or related to this Agreement. The parties hereto
waive
any arguments of forum non conveniens in any matter relating to this
Agreement.
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16. Parties
in Interest—No Third Party Beneficiaries.
Nothing
in this Agreement is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement is
intended to relieve or discharge the obligations or liability of any third
persons to the Company Parties or Manager. No provision of this Agreement
shall
give any third parties any right of subrogation or action over or against
the
Company Parties or Manager.
17. Amendments;
Waivers.
This
Agreement may be amended or modified, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, only by a
written instrument executed by the parties hereto, or in the case of a waiver,
by the party waiving compliance. Any waiver by any party of any condition,
or of
the breach of any provision, term, covenant, representation or warranty
contained in this Agreement, in any one or more instances, shall not be deemed
to be nor construed as a further or continuing waiver of any such condition,
or
of the breach of any other provision, term, covenant, representation or warranty
of this Agreement.
18. Counterparts.
This
Agreement may be executed in one or more original or facsimile counterparts,
all
of which shall be considered but one and the same agreement, and shall become
effective when one or more such counterparts have been executed by each of
the
parties and delivered to the other parties. This Agreement may be executed
in
facsimile copy with the same binding effect as an original.
19. Interpretation.
Except
as otherwise provided or if the context otherwise requires, whenever used
in
this Agreement, (a) any noun or pronoun shall be deemed to include the plural
and the singular, (b) the terms “include” and “including” shall be deemed to be
followed by the phrase “without limitation,” (c) unless the context otherwise
requires, all references to Sections refer to Sections of this Agreement,
(d)
the words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular Section or other
subdivision, (e) any definition of or reference to any Law, agreement,
instrument or other document herein will be construed as referring to such
Law,
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified, (f) any definition of or reference to
any
statute will be construed as referring also to any rules and regulations
promulgated thereunder, and (g) any use of “Dollars” or “$” shall refer to
United States dollars and any component thereof. The parties have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement
shall
be construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
20. WAIVER
OF JURY TRIAL.
COMPANY PARTIES AND THE MANAGER EACH ACKNOWLEDGE THAT, AS TO ANY AND ALL
DISPUTES THAT MAY ARISE BETWEEN THE PARTIES, THE COMMERCIAL NATURE OF THE
TRANSACTION OUT OF WHICH THIS AGREEMENT ARISES WOULD MAKE ANY SUCH DISPUTE
UNSUITABLE FOR TRIAL BY JURY. ACCORDINGLY, THE PARTIES BY THEIR ACCEPTANCE
OF
THIS AGREEMENT WAIVE ANY RIGHT TO TRIAL BY JURY AS TO ANY AND ALL DISPUTES
THAT
MAY ARISE RELATING TO THIS AGREEMENT OR TO ANY OF THE OTHER INSTRUMENTS OR
DOCUMENTS EXECUTED IN CONNECTION HEREWITH.
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21. Guaranty.
Guarantor hereby guarantees to the Company Parties the full and prompt
performance and payment of the Manager’s obligations under Section 3.1 (b) of
this Agreement (the “Guaranteed Obligations”). Any act of the Company Parties
consisting of a waiver of any of the terms, covenants or conditions of the
Guaranteed Obligations, or the giving of any consent to any matter or thing
relating to the Guaranteed Obligations, or the granting of any indulgences
or
extensions of time to the Manager or Guarantor, may be done without notice
to
Guarantor and without releasing the obligations of Guarantor hereunder. The
obligations of Guarantor hereunder shall not be released by any of the Company
Parties’ receipt, application or release of any security given for the payment,
performance and observance of any of the Guaranteed Obligations. Similarly,
the
obligations of Guarantor hereunder shall not be released by any modification
of
any of the terms of the Guaranteed Obligations made by the Company Parties
and
the Manager, but in the case of any such modification, the liability of
Guarantor shall be deemed modified in accordance with the terms of any such
modification. The liability of Guarantor hereunder shall in no way be affected
by (a) the release or discharge of the Manager in any creditors’ receivership,
bankruptcy or other proceedings, (b) the impairment, limitation or modification
of the liability of the Manager or the estate of the Manager in bankruptcy,
or
of any remedy for the enforcement of any of the Guaranteed Obligations resulting
from the operation of any present or future provision of the Federal bankruptcy
law or any other statute or the decision of any court, (c) the rejection
or
disaffirmance of any instrument, document or agreement evidencing any of
the
Guaranteed Obligations in any such proceedings, (d) the assignment or transfer
of any of the Guaranteed Obligations by the Company Parties, (e) the cessation
from any cause whatsoever of the liability of the Manager with respect to
the
Guaranteed Obligations. This is a guaranty of payment and performance and
not of
collection. The liability of Guarantor hereunder shall be direct and immediate
and not conditional or contingent upon the pursuit of any remedies against
the
Manager or any other person, nor against any collateral available to the
Company
Parties. Guarantor hereby waives any right to require that an action be brought
against Manager or any other person or to require that resort be had to any
collateral in favor of the Company Parties prior to discharging its obligations
hereunder.
8
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
| MANAGER: | ||
|
ACCERIS
MANAGEMENT AND
ACQUISITION
LLC
|
||
|
Name: Xxxx
Xxxx
Title:
Chief
Executive Officer
|
||
| COMPANY PARTIES: | ||
| COUNSEL CORPORATION | ||
|
Name:
_________________________________________________________________
Title: __________________________________________________________________
|
||
|
C2
GLOBAL TECHNOLOGIES INC. F/K/A
ACCERIS
COMMUNICATIONS INC.
|
||
|
Name:
_________________________________________________________________
Title: __________________________________________________________________
|
||
| ACCERIS COMMUNICATIONS CORP. | ||
|
Name:
_________________________________________________________________
Title: __________________________________________________________________
|
||
| GUARANTOR: | ||
| NORTH CENTRAL EQUITY LLC | ||
|
Name: Xxxx
Xxxx
Title:
Chief
Executive Officer
|
||
(SIGNATURE
PAGE TO MANAGEMENT SERVICES AGREEMENT
WITH
RESPECT TO SPECIFIED STATE CUSTOMER BASES)]
9
EXHIBIT
A
SPECIFIED
STATE CUSTOMER BASES MANAGED UNDER MANAGEMENT SERVICES
AGREEMENT
| 1. |
CONNETICUT
|
| 2. |
FLORIDA
|
| 3. |
HAWAII
|
| 4. |
LOUISIANA
|
| 5. |
NEVADA
|
| 6. |
NEW
YORK
|
|
(with
respect solely to the filing and effectiveness of the Manager’s Tariff at
the NY PUC)
|
| 7. |
NEW
JERSEY
|
| 8. |
PENNSYLVANIA
|
| 9. |
SOUTH
CAROLINA
|
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