MANAGEMENT
CONSULTING SERVICES AGREEMENT
This Management Consulting Services Agreement ("Agreement") is entered into
by and between Enron Capital & Trade Resources Corp., a Delaware corporation
("Consultant"), and SpectraNet International, a California corporation (the
"Company"). Consultant and the Company are sometimes referred to herein
individually as a "Party" and collectively as the "Parties".
W I T N E S S E T H:
WHEREAS, contemporaneously with the execution of this Agreement, the
Company, Consultant and Colorado Spectra 3, L.L.C. ("Spectra 3") have entered
into certain definitive agreements, including that certain Common Stock Purchase
Agreement, providing for (a) the investment by Consultant and Spectra 3 in the
Company in the amount of $30 million cash and (b) the execution and delivery of
this Agreement;
WHEREAS the Company is engaged in the development, installation and
operation of city-wide, broadband, fiber-optic telecommunication networks that
are designed to replace local exchange carriers and provide voice, data, and
video services to all end-users within such city, and desires to engage
Consultant to render general management consulting services to the Company in
connection with its business;
WHEREAS, Consultant desires to accept such engagement upon the terms and
conditions set forth in this Agreement; and
WHEREAS, the Company will, contemporaneously with the execution of this
Agreement, enter into a management consulting services agreement with Corporate
Managers, L.L.C. ("Corporate Managers"), a Colorado limited liability company
and an affiliate of Spectra 3, containing terms substantially similar to the
terms of this Agreement and by which Corporate Managers also will provide
management consulting services to the Company as therein set forth;
NOW, THEREFORE, in consideration of the premises, the investment by
Consultant in the Company, and the mutual covenants and promises contained
herein, and with the intention of being bound hereby, Consultant and the Company
hereby agree as follows:
1. TERM.
The performance of the Services (as hereinafter defined) by Consultant
under this Agreement shall commence on January 1, 1998 and shall continue until
January 1, 2001 unless earlier terminated by Consultant as provided herein (the
"Term"). Consultant may terminate this Agreement at any time with or without
cause by providing ten (10) days prior written notice to the Company. The
provisions in Sections 3, 4, 5, 6 and 7 hereof shall survive any termination of
this Agreement.
2. SERVICES.
(a) In consideration of the compensation being paid to Consultant
hereunder, Consultant shall (i) familiarize itself, to the extent necessary,
with the business, operations, management, properties, financial condition, and
prospects of the Company necessary to perform the services required by this
Agreement; (ii) provide general management consulting and advisory services to
the Company in connection with the performance of the Company's business; (iii)
coordinate the foregoing services with the Board of Directors of the Company and
Corporate Managers so as to promote the efficient delivery and use of such
Services; and (iv) provide other consulting services as may from time to time be
agreed by Consultant and the Board of Directors of the Company (the foregoing
collectively, the "Services").
(b) When requested by the Company, Consultant will consult with the
officers and employees of the Company concerning matters relating to this
engagement. Consultant agrees to provide such manpower and technical expertise
to the performance of the Services as it deems reasonably necessary in order to
perform the Services hereunder. The particular amount of time Consultant may
spend in fulfilling its obligations under this Agreement may vary from day to
day or week to week.
(c) Consultant shall secure, at its sole cost and expense, any and all
licenses, permits, and registrations necessary for performance of the Services.
Consultant also shall control the means and methods of work necessary for
performance of the Services.
(d) The Company has advised Consultant that the Company also has engaged
Corporate Managers to perform management consulting services for the Company.
Consultant acknowledges and agrees that its engagement hereunder is not
exclusive. The Company acknowledges and agrees that Consultant and its
Representatives (as hereinafter defined) may provide management consulting,
advisory or other services similar or identical to those to be provided by
Consultant to the Company pursuant to this Agreement to other persons or
entities at any time during the Term. The Company hereby agrees that nothing
set forth in this Agreement, or in any other oral or written agreement to which
the Company and Consultant are parties, shall prohibit or in any way affect the
right of Consultant and its Representatives to provide any management
consulting, advisory or other services whatsoever to any third party or for the
benefit of any third party.
(e) At all times during the term of this Agreement the Company shall
retain ownership and control of, and operational responsibility with respect to,
all of its properties and assets, both tangible and intangible. The Parties
agree that the Services to be provided by Consultant to the Company hereunder
will be strictly recommendations and of an advisory nature only, and that the
Company may, in its sole discretion, reject or accept any such recommendations
or advice.
3. PAYMENT AND REIMBURSEMENT TO CONSULTANT.
(a) During each calendar year during the Term, the Company shall pay
Consultant an annual consulting fee of Five Hundred Thousand Dollars ($500,000)
in cash, which fee shall be paid in advance in equal quarterly installments of
$125,000 on March 31st, June 30th, September 30th and December 31st of each year
commencing March 31, 1998. All consulting fees payable by the Company to
Consultant under this Agreement shall be prorated for any partial Term.
(b) The Company shall reimburse Consultant for all reasonable
out-of-pocket expenses incurred by Consultant in performance of the Services
requested by the Company under this Agreement. On or before the thirtieth
(30th) day of each calendar month during the Term, Consultant shall submit to
the
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Company a monthly statement setting forth reimbursable expenses incurred during
the prior calendar month. Consultant shall furnish to the Company with such
statement all records, receipts or other evidence in substantiation of
Consultant's reimbursable expense statement as may be requested by the Company.
The Company shall reimburse Consultant in cash within thirty (30) days of the
Company's receipt of such statement.
4. CONFIDENTIALITY AND PROPRIETARY INFORMATION.
(a) In conjunction with the performance of this Agreement, Consultant and
the Company may, from time to time, furnish the other Party or its
Representatives (as defined below) with Confidential Information of the
furnishing Party or its Representatives. Each Party agrees that it shall not
disclose the other Party's Confidential Information without such other Party's
prior written consent; PROVIDED, HOWEVER, a Party may disclose: (i) the other
Party's Confidential Information to the receiving Party's directors, officers,
employees, advisors, representatives, agents and affiliates, and their
respective directors, officers, employees, advisors, representatives, agents and
affiliates (collectively, "Representatives"), who need to know the Confidential
Information for performance or coordination of the Services hereunder and who
agree to maintain the confidentiality of such Confidential Information in
accordance with the terms hereof; and (ii) any of the other Party's Confidential
Information that: (A) becomes generally available to the public; (B) which a
Party can demonstrate is already known to such Party or its Representatives at
the time of disclosure by the furnishing Party or its Representatives; (C) is
acquired from a third party whom such receiving Party does not reasonably
believe is prohibited from making disclosure; (D) is independently developed by
a Party or its Representatives without use of any of the Confidential
Information; or (E) subject to Section 5 hereof, is required to be disclosed to
comply with any applicable law, order, regulation or ruling (collectively,
"Law").
(b) A Party shall not use the other Party's Confidential Information other
than for the purpose of providing or coordinating the Services under this
Agreement. Each Party shall be responsible for any breach of this Agreement by
it or any of its Representatives. Upon a Party's request, the other Party shall
return all written Confidential Information of the requesting Party, except for
that portion of such Confidential Information that may be found in analyses,
compilations, studies or other documents prepared by, or for, the returning
Party, and the returning Party and its Representatives shall not retain any
copies of such written Confidential Information. The portion of written
Confidential Information that may be found in analyses, compilations, studies or
other documents prepared by, or for, the returning Party, and any written
Confidential Information furnished by the requesting Party not so requested or
returned, will be destroyed. Any oral Confidential Information furnished to a
Party shall be kept confidential subject to the terms of this Agreement.
Notwithstanding any provision in this Agreement to the contrary, neither Party
shall be required to return, destroy or alter any of its computer archival and
computer backup tapes and files ("Computer Tapes"), PROVIDED that such Computer
Tapes shall be kept confidential in accordance with the terms of this Agreement.
If requested by a Party, the other Party shall deliver a certificate duly
executed by an authorized officer of such Party certifying as to the return or
destruction of such Confidential Information. Notwithstanding the provisions of
this Section 4(b), however, the receiving Party may retain in the possession of
its legal counsel one copy of the analyses, compilations, studies or other
documents prepared by or for the receiving Party solely to substantiate the
Services rendered or coordinated under this Agreement.
(c) The provisions of this Section 4 shall survive the termination of this
Agreement. Money damages would not be sufficient remedy for any breach of this
Section 4 by a Party, and the non-breaching Party shall be entitled to specific
performance and injunctive relief as remedies for such breach or any
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threatened breach. Such remedies shall not be deemed the exclusive remedies for
a breach of this Section 4 by a Party, but shall be in addition to all remedies
available at Law or in equity to such Party.
5. NOTICE PRECEDING COMPELLED DISCLOSURE.
If a Party is requested or required (by oral question, interrogatories,
requests for information or documents, subpoena, civil investigative demand
or similar process) to disclose any Confidential Information of the other
Party contemplated by Section 4 hereof, such Party will promptly notify the
other Party of such request or requirement so that the other Party may seek
an appropriate protective order or waiver in compliance with the provisions
of this Agreement. If, in the absence of a protective order or the receipt of
a waiver hereunder, such Party is, in the opinion of its counsel, compelled
to disclose any Confidential Information, such Party may disclose only such
of the information to the person compelling disclosure as is required by Law,
and will exercise reasonable efforts to obtain a protective order or other
reliable assurance that confidential treatment will be accorded the
Confidential Information.
6. RELIANCE BY CONSULTANT ON COMPANY SUPPLIED INFORMATION.
The Company acknowledges and agrees that Consultant may rely on
information and data supplied by or on behalf of the Company in the
performance of the Services and, except for any breach by Consultant of the
provisions of Section 4 hereof with respect to Confidential Information of
the Company, neither Consultant nor any Representative of Consultant shall
have any liability to the Company resulting from the use of any such
information or data.
7. INDEMNIFICATION; LIMITATION OF LIABILITY.
(a) The Company hereby agrees to indemnify, defend (at the request of
Consultant) and hold harmless Consultant and its officers, directors,
employees, representatives, agents and affiliates (collectively, the
"Indemnified Parties") from and against any and all claims, demands, causes
of actions, losses, damages, liabilities, costs and expenses (including
reasonable attorneys' fees and expenses) of any and every kind or nature
whatsoever asserted against or incurred by any of the Indemnified Parties by
reason of, arising out of, or in any way related to the properties and
businesses of the Company and the performance of the Services hereunder,
except to the extent caused by the gross negligence or willful misconduct of
the Indemnified Parties, IT BEING THE INTENTION OF THE COMPANY TO INDEMNIFY
THE INDEMNIFIED PARTIES FOR THEIR OWN ORDINARY NEGLIGENCE.
(b) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR
INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES INCURRED BY EITHER
PARTY IN CONNECTION WITH THE PERFORMANCE OF ANY OF ITS OBLIGATIONS HEREUNDER,
WHETHER ARISING UNDER CONTRACT, TORT, STATUTE OR OTHERWISE.
8. INDEPENDENT CONTRACTOR.
(a) The Parties agree that the Services rendered by Consultant in the
fulfillment of the terms and obligations of this Agreement shall be as an
independent contractor and not as an employee. Further, Consultant is not an
agent, partner, or joint venturer of the Company. Consultant shall not offer
or agree to incur or assume any obligations or commitments in the name of the
Company or for the Company without the prior written consent and authorization
of the Company. Consultant shall not subcontract or assign any of the Services
to be performed hereunder without obtaining the prior written consent of the
Company.
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(b) Consultant shall be responsible for payment of all taxes, including
Federal, State and local taxes, arising out of the Consultant's activities in
accordance with this Agreement, including, but not limited to, Federal and
State income tax, Social Security tax, Unemployment Insurance taxes, and any
other taxes or business license fees as required.
9. NOTICES.
Any and all notices or other communications required or permitted under
this Agreement shall be given in writing and delivered in person or sent by
United States certified or registered mail, postage prepaid, return receipt
requested, or by overnight express mail, or by telex, facsimile or telecopy
to the address of such Party set forth below. Any such notice shall be
effective upon receipt or three days after placed in the mail, whichever is
earlier.
IF TO CONSULTANT: Enron Capital & Trade Resources Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxx
Telecopy No.: 713/646-4043
IF TO THE COMPANY: SpectraNet International
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Chairman
Telecopy No.: 619/552-8006
Any Party may, by notice so delivered, change its address for notice
purposes hereunder.
10. WAIVER.
Failure of either Party at any time to require performance by the
other Party of any provision of this Agreement shall in no way affect the right
of the other Party hereafter to enforce the same. Nor shall any waiver by a
Party of any breach of any provision of this Agreement be taken or held to be a
waiver of any succeeding breach of such provision or as a waiver of this
provision itself.
11. APPLICABLE LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAWS.
12. SEVERABILITY.
It is the desire and intent of the Parties that the terms, provisions and
covenants contained in this Agreement shall be enforceable to the fullest extent
permitted by Law. If any such term, provision or covenant or the application
thereof to any person or circumstances shall, to any extent, be construed to be
invalid or unenforceable in whole or in part, then such term, provision or
covenant shall be construed in a manner as to permit its enforceability under
the applicable Law to the fullest extent permitted by Law. In any case, the
remaining provisions of this Agreement or the application thereof to any person
or
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circumstances, other than those to which they have been held invalid or
unenforceable, shall remain in full force and effect.
13. SUCCESSORS AND ASSIGNMENT.
This Agreement shall not be assigned, in whole or in part, by either Party
without the prior written consent of the other Party. Any assignment of this
Agreement or the rights or obligations of a Party hereunder without such consent
shall be null and void and of no force and effect.
14. OTHER AGREEMENTS / MODIFICATIONS.
(a) This Agreement modifies and supersedes all other prior or
contemporaneous agreements between the Parties regarding the performance of the
Services and constitutes the entire agreement of the Parties regarding the
performance of Services by Consultant to the Company.
(b) This Agreement may be amended, modified, superseded, canceled, renewed
or extended and the terms and conditions hereof may be waived only by a written
instrument executed by both Parties hereto or, in the case of a waiver, by the
Party waiving compliance.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
as of the 30th day of December, 1997.
"CONSULTANT"
ENRON CAPITAL & TRADE
RESOURCES CORP.
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxxx X. Xxxx
--------------------------------------
Title: Vice President
-------------------------------------
"COMPANY"
SPECTRANET INTERNATIONAL
By: /s/ Xxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxx X. Xxxx
-------------------------------------
Title: CEO
------------------------------------
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