EXHIBIT 2
MANAGEMENT AGREEMENT
AGREEMENT dated as of September 27, 1995 by and between
KIDSVIEW, INC., a New Jersey corporation with an office at One
Kalisa Way, Paramus, New Jersey 07652 ("KVI"), and DIRECT CONNECT
INTERNATIONAL INC., a Delaware corporation with offices at 700
Godwin Avenue, Midland Park, New Jersey 07432 ("DCI").
W I T N E S S E T H:
Preliminary Statement
Pursuant to an agreement of even date herewith (the
"Agreement"), KVI is concurrently herewith purchasing from DCI the
Assets (as defined in the Agreement). DCI has heretofore conducted
the business of dealing in and with the Assets (the "Business").
Amerawell Products Ltd. ("Amerawell") has acted as the sales and
procurement subsidiary of DCI for Business under instructions from
DCI, and from and after the date of this Management Agreement,
Amerawell will act exclusively as the agent of KVI with respect to
the Business in accordance with Section 1(b). Amerawell is a wholly
owned subsidiary of DCI.
Accordingly, in consideration of the foregoing and for other
good and valuable consideration, the parties hereto hereby agree as
follows:
1. DCI will manage the Business subject to the supervision of
KVI's chief executive officer and KVI's board of directors. DCI will
make Peter Schneider and the other members of the DCI management team
available to KVI for this purpose, and DCI will provide a level of
support at least equal to the level of support provided to date to the
Business.
(a) As part of its services on behalf of KVI, DCI will
employ Amerawell as KVI's exclusive Hong Kong agent with respect to
the Business, and DCI shall not permit Amerawell to conduct any other
business or to assume any other liabilities, except that Amerawell may
on behalf of DCI continue to conduct the same business which it has
heretofore conducted for DCI.
(b) DCI's service will be provided from DCI's own
facilities.
2. The term of this agreement shall commence effective as of
the date hereof and shall terminate on September 30, 1996.
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(a) Notwithstanding the foregoing:
(i) the term of this Agreement shall be automatically
extended to September 30, 1997 if during the 12 months ending
September 30, 1996, both:
(A) the net sales of KVI are at least equal to
$9,000,000 and
(B) the pre-tax earnings of KVI are at least
equal to $585,000;
(ii) if the term of this Agreement was extended under
clause (i), the term of this Agreement shall be automatically further
extended to September 30, 1998 if during the 12 months ending
September 30, 1997 both:
(A) the net sales of KVI are at least equal to
$9,000,000 and
(B) the pre-tax earnings of KVI are at least
equal to $585,000; and
(iii) this Agreement shall terminate immediately should
Peter Schneider no longer be employed by DCI, unless such termination
shall be by reason of his death.
(b) The determination of KVI's independent accountants
shall be conclusive on the calculation of net sales and pre-tax
earnings.
3. DCI shall make available to KVI such office and telephone,
secretarial and other administrative facilities as shall be requisite
for the Business.
(a) DCI shall itself pay all fixed charges of Amerawell
which are allocable to DCI sales (based on the proportion which DCI
sales are of total sales). Such fixed charges are set forth in a
schedule hereto.
(b) KVI will bear the variable charges of Amerawell which
are set forth in a schedule hereto and which are directly related to
the business of KVI. KVI shall also be responsible for costs of goods
sold, and sales, marketing and advertising costs. Except to the extent
that operating costs shall be reflected in the fees to DCI referred to
in Section 4, KVI shall not bear any other costs or expenses of the
Business, and all such other costs and expenses shall be borne by DCI.
4. To cover operating costs of DCI and fixed charges payable to
Amerawell, KVI shall pay to DCI a fee of $100,000 a month for the
first five months after the date of this Agreement and a
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monthly fee thereafter equal to the lesser of $100,000 or DCI's
documented operating costs in performing its services under this
Agreement. For this purposes, operating costs of Amerawell shall be
allocated between DCI and KVI based on the respective proportion of
the sales conducted on their behalf by Amerawell. KVI shall be
entitled to a $350,000 credit against the first amounts due under this
Section commencing August 1, 1995. The application of such credit will
on a dollar for dollar basis (applied first to interest and then to
principal) reduce the amounts owing by DCI to Evolutions, Inc. ("Evo")
under a note dated July 25, 1995. The balance of the fees will be
paid by KVI as follows: $50,000 on November 15, 1995 and $100,000 on
December 1, 1995.
(a) DCI's current operating costs to the extent related to
the operation of the Business are set forth in a schedule attached
hereto. The prior written consent of KVI shall be required for each
increase in any operating costs listed in the schedule. Without
limiting the generality of the foregoing, the prior written consent of
KVI shall be required for any increase in compensation to any employee
or consultant, for the hiring or retention of any employee or
consultant, and for any capital expenditure or commitment.
(b) Reference is made to the Agreement for "Earn-Up Stock"
which the corporate parent of KVI has agreed to issue to DCI as
further compensation under this Agreement.
(c) Further reference is made to the Agreement for the
terms and conditions of loans by Evo to DCI to cover operating
expenses not directly related to the operation of the Business.
5. During and after the term of this Agreement, neither DCI nor
any of its employees and agents shall directly or indirectly use any
confidential information relating to KVI or disclose any such
knowledge or information to any person, firm, corporation or other
entity, for any reason or purpose other than in furtherance of KVI's
purposes and other than as required by judicial process upon 10 days'
notice to KVI. Upon the termination of DCI's engagement, irrespective
of the time, manner, or reason of termination, DCI shall immediately
surrender and deliver to KVI all of KVI's confidential information in
tangible form, e.g., all originals and all copies of books, records,
summaries, lists, and other tangible data, in every form and every
kind, relating to KVI or its business other than to matters which in
any way relate to the subject of this agreement.
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6. This agreement may not be changed or terminated orally. All
disputes shall be conclusively determined by the American Arbitration
Association in New York City.
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement on the date and year set forth above.
KIDSVIEW, INC.
By /s/ Michael Nafash
DIRECT CONNECT INTERNATIONAL INC.
By /s/ Joseph Salvani