MANAGEMENT AGREEMENT

This Management Agreement (this “Agreement”) is effective as of May 1, 2005, and
is made by and among

UCN, Inc., a Delaware corporation (“Buyer”),

 

And

 

Telephone Electronics Corporation, a Mississippi corporation (“TEC”),

Transtel Communications, Inc., a Delaware corporation and subsidiary of TEC
(“TCI”),

Tel-America of Salt Lake City, Inc., a Utah corporation and subsidiary of TCI
(“TAI”),

Extelcom, Inc., a Utah corporation and subsidiary of TCI (“ECI”),

Communication Recovery Services, Inc., a Utah corporation and subsidiary of

  TCI (“CRS”), and

National Network Corporation, a Colorado corporation and subsidiary of TCI
(“NNC”),

 

(TCI, TAI, ECT, CRS, and NNC are collectively referred to as the “Sellers” and
individually a “Seller”).

 

RECITALS

WHEREAS, pursuant to an Asset Purchase Agreement effective May 1, 2005 (the
“Asset Purchase Agreement”), the Sellers have agreed to sell to the Buyer, and
the Buyer has agreed to purchaser from the Sellers, the assets used by the
Sellers in its business of providing telecommunications (the “Business”);

WHEREAS, the Acquired Assets (as that term is defined in the Asset Purchase
Agreement) pertaining to the Business will be transferred from Sellers to Buyer
at the Closing (as defined in the Asset Purchase Agreement), which will not
occur until after the receipt of certain approvals and consents of governmental
authorities and others; and

WHEREAS, the Buyer desires to provide management services with respect to the
Acquired Assets and the Business related to the Acquired Assets, including
continued service to the customers of the Sellers, pending receipt of all
approvals (the “Approvals”);

AGREEMENT

NOW, THEREFORE, in consideration of the above recitals and mutual promises and
covenants contained herein, the parties, intending to be legally bound, agree as
follows:

 

ARTICLE I

DEFINITIONS

 

Any term capitalized herein and not otherwise defined shall have the meaning
assigned to it in the Asset Purchase Agreement.

 

 

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ARTICLE II

APPOINTMENT AND TERM OF THE AGREEMENT

 

Section 2.1       Appointment.   Each of the Sellers hereby grants to the Buyer
on the terms and conditions set forth herein, the right to manage the Business
related to the Acquired Assets, including, without limitation, the right to have
access to and use of the Acquired Assets during the Term (as defined below).

Section 2.2       Term.   The term of this Agreement (the “Term”) shall commence
on the Effective Date and shall expire with respect to any Acquired Assets upon
the earlier of (a) the Closing Date and (b) such time as the Buyer in its sole
discretion may determine to terminate this Agreement; provided, that the Buyer
may not terminate this Agreement prior to December 31, 2005.

 

ARTICLE III

MANAGEMENT OF THE BUSINESS

 

Section 3.1        Management.   During the Term, the Buyer shall have the right
to manage the Business related to the Acquired Assets, including, without
limitation, the following:

(a)        The Buyer shall administer all agreements and contracts with
customers and vendors, it being expressly agreed and understood, however, that
the Buyer shall not, and shall not have the power or authorization, to enter
into any new agreements, contracts or commitments in the name of the Sellers,
without Sellers’ approval;

(b)        The Buyer shall be responsible for customer service, at its expense;
and

(c)        The Buyer shall arrange for customer billing, at its expense, and
shall be responsible for the collection of all accounts receivable of the
Business related to the Acquired Assets with respect to periods prior to and
after the Effective Date.

Notwithstanding the foregoing, the parties agree that the Sellers retain the
right and ability to direct the day-to-day control of the Business related to
the Acquired Assets and that material documents, checks, budgets, non-recurring
expenses and major agreements will be subject to the Sellers’ review. The Buyer
agrees to report regularly to the Sellers’ chief executive officer or other
designee of the Sellers the status of the operations of the Business.

Section 3.2        Billing, Collections and Payments.

(a)        Commencing on the Effective Date, the Buyer shall assume
responsibility for billing customers of the Business for services rendered
during the Term, including bills related to services rendered, but unbilled,
prior to the Effective Date. In this connection, the Buyer shall issue invoices
on behalf of the Sellers in accordance with the Sellers’ existing billing
policies to Sellers’ customers and instruct such customers to make payment to
and in the name of a segregated bank account established by Buyer for collecting
all payments from Sellers’ customers and Sellers shall instruct all banking

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institutions at which it maintains accounts to direct any customer payments on
billings issued by the Buyer to the segregated bank account established by
Buyer.

(b)        The Buyer also hereby agrees to pay all actual costs and expenses of
the ongoing operations of the Business related to the Acquired Assets arising
after the Effective Date and during the Term. If the Asset Purchase Agreement is
terminated without Closing of the transactions contemplated thereby, Buyer shall
be entitled to recoup costs and expenses it advances to support the ongoing
operations of the Business related to the Acquired Assets arising after the
Effective Date only out of Monthly Interim Revenues, as defined below, and shall
have no recourse against any of the Sellers to recoup its advances of any such
costs and expenses.

(c)        The Buyer agrees to collect, on behalf of the Sellers, all accounts
receivable related to the Business outstanding as of the Effective Date and all
accounts receivable arising from the bills rendered by the Buyer pursuant to the
terms of this Agreement (collectively, the “Accounts Receivable”). On or before
the fifth day of June 2005, and on or before the fifth day of each month
thereafter during the Term, the Buyer shall furnish the Sellers with a detailed
statement of all revenues received from Sellers’ accounts receivable during the
prior month (the “Monthly Interim Revenues”), together with a detailed statement
of all the Buyer’s Costs (as that term is defined below) paid by Buyer for the
provisioning of service to Sellers’ customers. The detailed statements described
in this Section 3.2(c) shall be accompanied by payment by Buyer to the Sellers,
in a bank account designated by the Sellers, of an amount equal to the payroll
and benefit expense of Sellers’ employees from the Effective Date through the
earlier of the date of termination and May 30, 2005, plus the Monthly Interim
Revenues less the sum of (a) the Buyer’s Costs and (b) the Management Fee
described below. For the purposes of this Agreement, the term “Buyer’s Costs”
shall mean actual costs and expenses of the ongoing operations of the Business
(including the payroll and benefits expense of Sellers’ employees, including
employer matching contributions payable with respect to the 401(k) plan, paid by
Buyer to Sellers) and all of the accounts payable of the Business outstanding as
of the Effective Date that are included in the Assumed Liabilities.

Section 3.3       Management Fee.   In consideration for Buyer’s management of
the Business related to the Acquired Assets pursuant to this Agreement, the
Buyer shall receive a monthly management fee equal to fifteen percent (15%) of
the Monthly Interim Revenues (the “Management Fee”); provided, that the Monthly
Interim Revenues for the applicable month exceed the sum of (a) the Buyer’s
Costs and (b) the Management Fee. In no event shall the Sellers be liable for
the payment of the Management Fee, and Buyer may not withhold an amount equal to
the monthly Management Fee, should the Monthly Interim Revenues be less than the
sum of (a) the Buyer’s Costs and (b) the Management Fee.

Section 3.4       Compliance with Applicable Laws and Regulations.   The Sellers
and the Buyer desire that this Agreement and the obligations performed hereunder
be in full compliance with (i) all applicable rules, regulations and policies of
the FCC; (ii) the Communications Act of 1934, as amended (the “Act”), 47 U.S.C.
§ 151, et seq., and (iii) any other applicable federal, state and local law or
regulation. If the FCC or any state body of competent jurisdiction determines
that any provision of this Agreement violates any applicable rules, regulations,
or policies, both Parties shall make reasonable efforts to immediately bring
this Agreement into compliance, consistent with the terms of this Agreement.

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Section 3.5       Ongoing Rights and Obligations of the Sellers.   The Buyer
acknowledges and agrees that the Sellers have certain rights and obligations
pursuant to its state regulatory licenses with respect to the use of the various
operations authorized there under, which include compliance with the rules,
regulations, and policies of the state regulatory commissions. As a result, the
Buyer’s management of the Business related to the Acquired Assets is not
intended to diminish or restrict the Sellers’ compliance with its obligations
before any Governmental Entity, and this Agreement shall not be construed to
interfere with the Seller’s ability to comply with the rules, regulations or
directives of any Governmental Entity.

Section 3.6       Access.   Buyer shall grant to Sellers and their
representatives (which term shall be deemed to include its independent
accountants and counsel) reasonable access during normal business hours, upon
reasonable notice and in such manner as will not unreasonably interfere with the
business activities of the Buyer, to all of the employees, properties, books,
records, operating instructions and procedures, and all other information with
respect to the Business related to the Acquired Assets as the Sellers may from
time to time reasonably request in order to ensure compliance in all material
respects with applicable federal and state rules and regulations and with this
Agreement.

Section 3.7       Service to Customers.   During the Term, the Buyer shall be
responsible for providing a minimum level of care to Sellers’ customers of the
Business related to the Acquired Assets and shall provide services in compliance
with the Sellers’ existing tariffs and service contracts, and all applicable
law, including, without limitation, tariffs in effect from time to time. The
Buyer shall perform the management of the Business related to the Acquired
Assets during the Term in a professional manner and in accordance with
applicable professional or industry standards. Notwithstanding any thing to the
contrary contained herein or in the Asset Purchase Agreement, the Buyer shall
have no obligation hereunder to maintain service to any customer if the
termination of such service is the consequence of actions by a third party which
is not the result of a breach by the Buyer of its obligations hereunder.

Section 3.8       Use of Tradenames.   The Buyer shall be entitled to use the
brand name and other trademarks of the Sellers in its management of the Business
related to the Acquired Assets then being managed by the Buyer hereunder during
the Term.

Section 3.9       Employees.   Sellers shall not terminate any of their
employees prior to May 30, 2005 without Buyer’s prior approval. Sellers shall
direct their employees to operate under the direction of Buyer, but in no event
shall any of Sellers’ employees become employees of Buyer until they become
Accepting Employees. Sellers hereby authorize Buyer to terminate on behalf of
Sellers’ one or more of Sellers’ employees at any time as Buyer may reasonably
determine. With respect to terminated employees, Sellers shall pay to them the
pay value of all accrued and unused vacation as of the date of termination, and
a severance payment in an amount equal to (i) for a salaried Terminated
Employee, two weeks salary based on his or her salary for the month of April
2005, or (ii) for an hourly Terminated Employee, 80 work hours at his or her
hourly pay rate on April 15, 2005. Payment of accrued and unused vacation is an
Assumed Liability to be paid by Buyer to Sellers for payment to terminated
employees, and severance payments are a payroll expense included in Buyer’s
Costs. All payroll, withholding, and benefit payments shall be made by Sellers
to their employees in accordance with their

 

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customary practices. Sellers shall not increase the rate of pay or make any
other change in the employment terms or arrangements with any employee without
the prior written consent of Buyer.

ARTICLE IV

OBLIGATION TO RENEGOTIATE

 

In the event of any order or decree of an administrative agency or court of
competent jurisdiction that would cause this Agreement to be invalid or violate
any applicable law, and such order or decree has become effective and has not
yet been stayed, the parties will use their respective best efforts and
negotiate in good faith to modify this agreement to the minimum extent necessary
so as to comply with such order or decree without material economic detriment to
either party and this Agreement, as so modified, shall then continue in full
force and effect.

ARTICLE V

MISCELLANEOUS

 

Section 5.1       Amendment and Modification.   This Agreement may be amended,
modified or supplemented only by written agreement of the Sellers and the Buyer.

Section 5.2       Waiver of Compliance; Consents.   Except as otherwise provided
in this agreement, any failure of any of the parties to comply with any
obligation, covenant or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, or condition shall not operate as a waiver of or
estoppel with respect to any subsequent or other failure.

Section 5.3       Notices.   All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) when
delivered personally to the recipient, (ii) one Business Day after being sent to
the recipient by reputable overnight courier service (charges prepaid), (iii)
one Business Day after being sent to the recipient by facsimile transmission or
electronic mail, or (iv) four Business Days after being mailed to the recipient
by certified or registered mail, return receipt requested and postage prepaid,
and addressed to the intended recipient as set forth below:

 

If to any of Sellers

Telephone Electronics Corporation

Attn: Bob Healea, Chief Financial Officer

236 E. Capitol Street

Jackson, MS 39201

Telephone: (601) 354-9070

Fax No.: (601) 352-1394

Email: bhealea@tec.com

 

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If to Buyer:

UCN, Inc.

Attn: Paul Jarman, President

14870 Pony Express Road

Bluffdale, UT 84065

Telephone: (801) 715-5020

Fax No.: (801) 715-5022

Email: pj@ucn.net

 

Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.

Section 5.4       Power of Attorney.   Each of the Sellers hereby irrevocably
makes, constitutes, and appoints the Buyer (and any of the Buyer’s officers,
employees, or agents designated by the Buyer) as its true and lawful attorney,
with power to (a) to sign the name of the Sellers on any invoice or notices to
customers, (b) send requests for verification of accounts receivable, (c)
endorse the Sellers’ name on any checks, notes, instruments, and other items of
payment that may come into the Buyer’s possession and (d) settle and adjust
disputes and claims respecting accounts payable directly with customers, for
amounts and upon terms that the Buyer determines to be reasonable, and the Buyer
may cause to be executed and delivered any documents and releases that the Buyer
determines to be necessary. The appointment of the Buyer as the Sellers’
attorney, and each and every one of its rights and powers, being coupled with an
interest, is irrevocable during the Term of this agreement.

Section 5.5       Assignment.   This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any party
hereto, including by operation of law, without the prior written consent of the
other party. Any assignment of this Agreement or any of the rights, interests or
obligations hereunder in contravention of this Section 6.5 shall be null and
void and shall not bind or be recognized by either the Sellers or the Buyer.

Section 5.6       Third-Party Beneficiaries; Limitation of Liability.   Nothing
in this Agreement shall be construed as giving any person other than the parties
hereto any legal or equitable right, remedy or claim under or with respect to
this Agreement.

Section 5.7       Severability.   If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as 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.

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Section 5.8       Governing Law.   This agreement shall be governed by and
construed in accordance with the laws of the State of Utah (regardless of the
laws that might otherwise govern under applicable Utah principles of conflicts
of law) as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.

Section 5.9       Counterparts.   This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which, when executed
and delivered, shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.

Section 5.10        Entire Agreement.   This Agreement and the Asset Purchase
Agreement (including the Exhibits and Schedules) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings among the parties with respect thereto.

Section 5.11       Headings.   The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this agreement.

Section 5.12       No Partnership or Joint Venture Created.   Nothing in this
Agreement shall be construed or interpreted to make the Buyer and the Sellers
partners or joint venturers, or to make one an agent or representative of the
other, or to afford any rights to any third party other than as expressly
provided herein. None of the Buyer and the Sellers is authorized to bind the
other to any contract, agreement or understanding.

IN WITNESS WHEREOF, the parties hereto have executed this Management Agreement
effective the day and year first written above.

 

 

By:

    /s/  

 

    Paul Jarman, as President of:

    UCN, Inc.

 

 

By:

    /s/  

 

Joseph D. Fail, as President of:

Telephone Electronics Corporation

Transtel Communications, Inc.

Tel-America of Salt Lake City, Inc.

Extelcom, Inc.

Communication Recovery Services, Inc.

National Network Corporation

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