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EXHIBIT 10.4
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is made effective as of
September 1, 1999, regardless of its date of execution, between BIBD, LLC, a
Colorado limited liability company ("BIBD") and Optimal Communications, Inc., a
Delaware corporation (the "Company").
RECITALS
The Company was formed to acquire, own and operate various
communications and Internet services businesses. BIBD and the Company have
agreed that BIBD's business expertise will be valuable to the Company and that
such expertise is important to the Company's success. BIBD and the Company
desire to set forth their understanding pursuant to which BIBD has agreed to
provide certain consulting services to the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
I. DEFINITIONS
For purposes of this Agreement, the following terms shall be defined as
follows:
1.1 Affiliate means a person or entity, which controls, is controlled
by, or is under common control with another person or entity.
1.2 Consulting Fee means an annual amount based on the Company's sales
run rate determined per the following table (subject to annual adjustment as
provided below):
Sales Run Rate Monthly Consulting Fee
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Less than $10 million $12,000
$10 million $15,000
$15 million $18,000
$20 million $21,000
The Company's sales run rate means the Company's sales for the 12-month period
ending with the month preceding the month for which a payment of Consulting Fee
is being calculated. For that purpose, the Company's sales shall be deemed to
include the prior 12 month's sales of all entities acquired, or whose assets are
acquired, by the Company prior to the date of acquisition (excluding any sales
relating to portions of such entities or their assets which are not acquired),
even though the Company was not in existence or did not own the acquired entity
when those sales occurred.
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In January 2000, the annual amounts of the Consulting Fee reflected in the
foregoing table should be increased by a proportion equal to the proportionate
increase in the Index released in January 2000 over the Index released in
January 1999. In January of each succeeding year during the term of this
Agreement, the annual amounts of the Consulting Fee established in January of
the preceding year shall be increased by a proportion equal to the proportionate
increase in the Index released in January of that year over the Index released
in January of the preceding year. If the Index shall have decreased, the
Consulting Fee shall not decrease.
1.3 Index means the Consumer Price Index - All Urban Consumers, All
Items for the Denver-Boulder metropolitan area, as released from time to time.
II. CONSULTING SERVICES
BIBD shall provide management level consulting services concerning
acquisitions consistent with policies established by the Company's Board of
Directors (the "Board"), and shall report to the Board. BIBD and its partners,
employees and agents who provide services to the Company pursuant to this
Agreement shall be independent contractors as to the Company, and not its
employees. As independent contractors, neither BIBD nor its partners, agents or
employees shall, unless otherwise expressly granted by the Company's Board of
Directors, have the right or authority to execute documents in the name of the
company or to otherwise bind the Company; provided, however, that nothing
contained in this Article II shall limit or diminish any rights or powers which
any such partners, employees or agents may have as directors or officers of the
Company.
III. COMPENSATION
3.1 Compensation. BIBD shall be entitled to receive from the Company on
the first day of each calendar month a payment of the Consulting Fee then in
effect based on the Company's sales run rate for the 12-month period ending with
the preceding month.
3.2 Benefits and Expense Reimbursement. The Company shall reimburse
BIBD and its members and employees who perform services for or on behalf of the
Company hereunder for all reasonable out-of-pocket costs incurred by them,
including out-of-pocket costs incurred prior to the date hereof. The Company
shall provide or reimburse the members of BIBD for medical, dental, disability
and other similar insurance benefits for up to six members or employees of the
members of BIBD who are providing services for the Company hereunder on the same
basis as provided to Company officers.
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IV. TERM
4.1 Term. Unless previously terminated by mutual agreement of the
parties or unless terminated by the Company for cause pursuant to Section 4.2,
this Agreement shall continue until the earliest to occur of the following
events: (i) the Company sells all or substantially all of its assets on a
consolidated basis in any single transaction or series of related transactions
for cash to a person or entity that is not an Affiliate; (ii) the Company is
acquired for cash by a person or entity that is not an Affiliate of BIBD,
including without limitation, through the purchase for cash of all or
substantially all of the Company's outstanding stock or through a cash merger or
consolidation; or (iii) the Company files, or there is filed against the
Company, a proceeding under Chapter 11 of the Federal Bankruptcy Code.
4.2 Terminate for Cause. The Company may terminate this Agreement for
cause if (i) BIBD or any member, employee or authorized agent of BIBD commits
gross negligence in the performance of BIBD's duties hereunder, (ii) BIBD or any
member, employee or authorized agent of BIBD willfully engages in any improper
activity which is contrary to the best interests of the Company, (iii) BIBD or
any member, employee or authorized agent of BIBD willfully violates or
disregards written instructions from the Board with respect to BIBD's duties
hereunder, (iv) BIBD or any member, employee or authorized agent of BIBD engages
in any activity which has a direct material adverse effect upon the Company or
its business, or (v) if BIBD commits a material breach of a material provision
of this Agreement. BIBD shall be given 10 days' notice of any action which the
Company deems to be cause for termination hereunder and BIBD shall be terminated
only if BIBD fails to cure such action or offense within such 10-day period or
repeats or continues the action or offense after such notice. If the action of
offense was taken or committed by an employee or authorized agent of BIBD
without BIBD's express authorization or actual prior knowledge, solely for the
purpose of determining the Company's right to terminate this Agreement under
this Section 4.2, BIBD shall be deemed to have cured the action or offense if it
replaces the employee or agent within the 10-day period.
4.3 Termination. BIBD may terminate this agreement with 30 days written
notice to the Company.
V. NONCOMPETITION
BIBD expressly covenants and agrees that, during the term of this
Agreement and for one year thereafter, neither BIBD nor any member of BIBD will,
directly or indirectly, as an officer, agent, principal, employee, consultant,
or otherwise, engage in any activity which, at that time, competes to a material
extent with the Company. Nothing herein will preclude BIBD or any member from
acquiring or holding securities representing less than five-percent (5%) of
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the outstanding securities of any class of equity security registered under the
Securities Exchange Act of 1934, as amended.
VI. CONFIDENTIALITY AND NON-DISCLOSURE
BIBD acknowledges that information, observations and data obtained by
BIBD and its partners and other personnel during the term of this Agreement
concerning the business or affairs of the Company (the "Confidential
Information") are the property of the Company. BIBD will not disclose to any
person or use for its own account any Confidential Information without the
written consent of the Board. Nothing herein shall prevent the disclosure of
Confidential Information (i) which becomes generally known to and available for
use by the public other than as a result of a disclosure by BIBD, (ii) with
respect to which BIBD's duty of confidentiality is waived by the Company, (iii)
if required by applicable law, regulation or order of any governmental agency or
court of competent jurisdiction, (iv) which was known to the public when
received by BIBD or (v) which is lawfully obtained by BIBD from other sources.
BIBD agrees that upon termination of this Agreement, it will deliver to the
Company all memoranda, notes, plans, records, reports and other documents
containing Confidential Information, and all copies thereof, that BIBD may then
possess or have under its control.
VII. GENERAL PROVISIONS
7.1 Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by the parties hereto and their
respective permitted successors and assigns. BIBD may not assign any of its
rights or obligations hereunder, except to an Affiliate.
7.2 Notices. All notices hereunder shall be in writing and shall be
deemed to have been duly given when delivered in person, upon confirmation of
receipt if given by facsimile, or three days after being deposited in the United
States mail, certified mail, return receipt requested, postage prepaid, as
follows:
To the Company:
Optimal Communications, Inc.
0000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: CEO
Fax: 000-000-0000
To BIBD:
0000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Fax: 000-000-0000
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or to such other address as either party shall have specified by notice in
writing to the other party.
7.3 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or other jurisdiction, but
this Agreement will be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision had never been contained
herein.
7.4 Complete Agreement. This Agreement embodies the complete Agreement
and understanding between the parties and supersedes and preempts any prior
understandings, agreements or representations by or between the parties, written
or oral, which relate to the subject matter hereof.
7.5 CHOICE OF LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW, AND
NOT THE LAW OF CONFLICTS, OF THE STATE OF COLORADO.
7.6 Remedies. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of the provisions of this Agreement and to exercise all
other rights in its favor at law or in equity. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of Articles V and VI of this Agreement and that any party may in
its sole discretion apply for specific performance and injunctive relief in
order to enforce or prevent any violations of the provisions of Article V or VI.
7.7 Amendments and Waivers. This Agreement may be amended only pursuant
to a duly authorized written agreement signed by all of the parties hereto. No
waiver of rights hereunder shall be effective unless such waiver is set forth in
writing signed by the party whose rights are being waived.
7.8 Arbitration. Any disputes arising under this Agreement, including,
without limitation, those involving claims for specific performance or
injunctive relief, shall be submitted to binding arbitration under the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitration shall be conducted in Denver, Colorado, before a single arbitrator
selected by BIBD and the Company, or, if they are unable to agree on an
arbitrator, before a panel of three arbitrators, one selected by BIBD, one
selected by the Company and the third selected by the two arbitrators. Failing
the selection of any required arbitrator, the selection of any required
arbitrator, the selection shall be made by the American Arbitration Association.
The award of the arbitrators shall be final and
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binding and any court of competent jurisdiction may enter judgment on the award.
This submission and agreement to arbitrate shall be specifically enforceable.
7.9 Attorneys' Fees. The prevailing party or parties in any arbitration
or in any action to enforce or interpret this Agreement shall be entitled to all
reasonable out-of-pocket costs and expenses, including fees of the arbitrators
and reasonable attorneys' fees, incurred in connection therewith.
IN WITNESS WHEREOF, the parties have executed this Agreement as of day
and year first above written.
OPTIMAL COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Its: President
Date: August 10, 1999
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BIBD, LLC
BY: BACE Industries, LLC, Member
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Its: Member
Date: August 10, 1999
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