Exhibit 10.11
MANAGEMENT
CONSULTING SERVICES AGREEMENT
This Management Consulting Services Agreement ("Agreement") is entered into
by and between Corporate Managers, LLC, a Colorado limited liability company
("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, Enron Capital & Trade Resources Corp., a Delaware corporation ("ECT"),
and Colorado Spectra 3, L.L.C., an affiliate of Consultant ("Spectra 3"), have
entered into certain definitive agreements, including that certain Common Stock
Purchase Agreement, providing for (a) the investment by ECT 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 ECT
containing terms substantially similar to the terms of this Agreement and by
which ECT 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
ECT 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
ECT 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 Six Hundred Twenty Thousand Dollars
($620,000) in cash, which fee shall be paid in arrears in equal quarterly
installments of $155,000 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 hereunder 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 Company a
monthly statement setting forth reimbursable expenses incurred during the prior
calendar month.
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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 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.
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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: Corporate Managers, LLC
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
Telecopy No.: 303/321-4444
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"
CORPORATE MANAGERS, LLC
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
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Title: Manager
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"COMPANY"
SPECTRANET INTERNATIONAL
By: /s/ Xxxxxx. E Xxxx
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Name: Xxxxxx X. Xxxx
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Title: CEO
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