Exhibit 10.19
EXECUTION COPY
SERVICES AGREEMENT
THIS SERVICES AGREEMENT is executed as of June 15, 2000, by and between
FIRSTMARK COMMUNICATIONS INTERNATIONAL L.L.C., a Delaware limited liability
company ("FMCI") with principal executive offices at 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and FIRSTMARK COMMUNICATIONS EUROPE S.A., a
SOCIETE ANONYME duly organized and validly existing under the laws of Luxembourg
(the "COMPANY") with principal executive offices at 0, xxx Xxxx Xxxxx, 0000
Xxxxxxxxxx, X.X. Xxxxxxxxxx X00. 610.
W I T N E S S E T H:
WHEREAS, the principal officers of FMCI have substantial familiarity
with the operations of the Company, its subsidiaries and joint ventures and have
previously provided corporate advisory services to the Company, its subsidiaries
and joint ventures;
WHEREAS, the Company desires to retain FMCI to provide corporate
advisory services, and FMCI is willing to be so retained and to perform such
services during the term hereof and any extension thereof on behalf of the
Company, its subsidiaries and joint ventures;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE ONE
ENGAGEMENT OF FMCI
1.1 APPOINTMENT.
(a) The Company hereby retains FMCI, and FMCI hereby accepts such
retention, on the terms and conditions herein set forth, to provide corporate
advisory services with respect to the Company, its subsidiaries and joint
ventures in accordance with the terms of this Agreement.
(b) FMCI shall at all times during the term of this Agreement be
controlled and majority-owned, directly or indirectly, by Xxxx Xxxxxxxx and
Xxxxxxx Xxxxx and/or their respective immediate family members and trusts or
foundations established by or for the benefit of one or more of the foregoing
and/or one or more entities which are wholly-owned by one or more of the
foregoing. Xxxx Xxxxxxxx and Xxxxxxx Xxxxx shall be employees of FMCI and,
together with the other employees of FMCI and its majority owners, shall
participate in fulfilling the obligations of FMCI hereunder.
- 1 -
1.2 SERVICES OF FMCI.
(a) Subject to the direction and review of the Board of Directors of
the Company (the "Board"), FMCI shall provide such corporate advisory services
to the Company, its subsidiaries and joint ventures relating to the business and
financial affairs of the Company, its subsidiaries and joint ventures as the
Company shall reasonably request.
(b) Without limiting the services to be provided by FMCI hereunder,
during the term of this Agreement, for so long as Xxx Xx Xxxxx is an employee of
FMCI or any of its affiliates, FMCI shall make or cause to be made available to
the Company the services of Xxx Xx Xxxxx to serve as an executive officer of the
Company with such titles and performing such services as the Chief Executive
Officer of the Company may determine.
1.3 PERFORMANCE.
(a) FMCI shall perform its duties in a prudent and businesslike
manner. FMCI shall seek to realize the goals of the Company, its subsidiaries
and joint ventures in accordance with their respective organizational documents
and stockholders documents as in effect from time to time and the directives of
the Board.
(b) Nothing herein shall constitute a representation, warranty or
covenant by FMCI concerning the future performance of the Company or any of its
subsidiaries and joint ventures. Without limitation of the foregoing, FMCI has
not made any representation, warranty or covenant concerning the fair market
value of the Company's, its subsidiaries' or joint ventures' assets, or future
revenues, cash flows or costs (including finance costs) of the Company, its
subsidiaries or joint ventures.
ARTICLE TWO
COMPENSATION
2.1 ANNUAL FEE. (a) As compensation for its services hereunder,
commencing as of April 1, 2000, FMCI shall receive a fee equal to $9,000,000 per
year, subject to adjustment as provided below (the "ANNUAL FEE"). Beginning June
1, 2000, the Annual Fee shall be payable monthly in advance, in equal
installments, on the first business day of each month. It is understood that for
the period from April 1, 2000 through the date hereof, the Company may have made
or may make certain payments to FMCI in respect of corporate advisory services
provided by FMCI and its employees. Such payments shall be offset against the
portion of the Annual Fee payable for the period from April 1, 2000 through May
31, 2000, and the balance of the portion of the Annual Fee payable for such
period shall be paid no later than July 1, 2000. If this Agreement is terminated
in accordance with this Agreement on a date other than the last
- 2 -
business day of the month, then the fee shall be pro rated for such month.
(b) It is the intention of the parties that the Annual Fee shall
reimburse FMCI for the Company's allocable percentage of the aggregate salary,
benefit, overhead and other expenses fairly and reasonably incurred by or on
behalf of FMCI (collectively, the "FMCI CORPORATE EXPENSES") and provide FMCI
with a profit margin that is equal to the profit margin earned by the Company
and its subsidiaries on amounts charged by the Company or any subsidiary for
services to affiliated companies (the "MARGIN"). No later than April 1 of each
calendar year, FMCI and the Company shall (i) conduct an annual review (the
"ANNUAL REVIEW") to determine whether the Annual Fee paid by the Company for the
preceding calendar year is greater or less than the Company's allocable
percentage of the FMCI Corporate Expenses for such year plus the Margin, (ii)
review the FMCI Corporate Expenses actually incurred during the previous
calendar year, and (iii) establish an official expense policy for the current
calendar year. Any balance due from FMCI to the Company or from the Company to
FMCI shall be paid to the other within ten days following such determination;
provided that in lieu of paying cash to the Company, FMCI shall have the right
to make such payment (and the Company shall have the right to require such
payment to be made) by pro rata offset against each monthly installment of the
Annual Fee for the current year, by written notice to the Company on or before
the date such payment is otherwise due.
(c) The Company's "allocable percentage" of the FMCI Corporate
Expenses shall be equal to 90% of such expenses for the year 2000 and for each
succeeding calendar year shall be determined during the Annual Review using such
appropriate allocation methodology as the Company and FMCI mutually agree, and
the Annual Fee for each calendar year subsequent to the year 2000 shall be
adjusted, retroactively to January 1 of such calendar year, as appropriate to
take into account such allocable percentage.
(d) In establishing the official expense policy for the current
calendar year, FMCI and the Company shall establish guidelines for various
categories of expense which FMCI shall endeavor to follow in incurring expenses.
(e) Payment of all amounts due to FMCI under this Agreement shall be
made free and clear of any deduction for or on account of any present or future
taxes, charges, deductions or withholdings, except to the extent that the
Company is obliged by law to make payment subject to such taxes, charges,
deductions or withholdings. If any amount must be deducted or withheld from the
amounts payable or paid by the Company, the Company shall pay such amounts as
may be necessary to ensure that FMCI receives a net amount equal to the full
amount which it would have received had payment not been made subject to tax or
other applicable deductions. To the extent FMCI actually realizes any tax
benefit as a result of any payment of taxes, charges, deductions or withholdings
for which it has received additional payments under this paragraph, FMCI shall
remit an
- 3 -
amount equal to the amount of such benefit to the Company.
ARTICLE THREE
TERM
3.1 The term of this Agreement shall commence as of April 1, 2000 and
shall terminate on the earlier of:
(a) March 31, 2003 (the "INITIAL TERM"); or
(b) the earlier termination of this Agreement by the Company in
accordance with Article Six hereof.
3.2 Notwithstanding the foregoing, the Initial Term shall be deemed
automatically extended for additional twelve-month periods (each, an "EXTENDED
TERM"), unless the Company or FMCI shall deliver written notice of such
non-extension not later than ninety (90) days prior to the end of the Initial
Term or the then current Extended Term.
ARTICLE FOUR
RETENTION OF CONSULTANT AND OTHER ADVISORS
4.1 RETENTION OF THIRD PARTY ADVISORS. FMCI may retain such third
party consultants and professional advisors as FMCI shall reasonably deem
necessary or appropriate in order to enable FMCI to perform the corporate
advisory services undertaken by FMCI hereunder. Such third party consultants and
professional advisors may include, without limitation, attorneys, accountants,
financing placement agents, insurance consultants, engineers, management and
political consultants, telecommunications, computer hardware and software and
management information system consultants.
ARTICLE FIVE
RELATIONSHIP AND AUTHORITY
The Company and FMCI shall not, by virtue of this Agreement or the
performance thereof by either party, constitute a partnership, joint venture or
joint enterprise in the performance of FMCI's duties hereunder. FMCI may, at its
election, so inform third parties with whom it deals on behalf of the Company
and may take other steps to carry out the intent of this Article Five.
ARTICLE SIX
- 4 -
EVENTS OF DEFAULT: TERMINATION
6.1 DEFAULTS. Each of the following events shall constitute an "EVENT
OF DEFAULT" by FMCI under this Agreement:
(a) The failure by FMCI to perform any material duty or obligation
imposed upon it under this Agreement or any other material breach of this
Agreement by FMCI; provided, however, that no such failure or breach shall be
deemed to constitute an Event of Default unless such failure or breach continues
for a period of sixty (60) days after FMCI's receipt of written notice from the
Company of such failure or breach or, if such failure or breach is not capable
of being cured within said sixty (60)-day period, FMCI shall have failed
diligently and in good faith to commence to cure the same within said sixty
(60)-day period and to have diligently continued to prosecute the same;
(b) FMCI's liquidation, bankruptcy or insolvency, including:
(A) the filing of a voluntary petition seeking liquidation,
reorganization, arrangement or readjustment, in any form, of its debts under
Title 11 of the United States Code or any other federal or state insolvency law,
or its filing an answer consenting to or acquiescing in any such petition; or
(B) the expiration of ninety (90) days after the filing of
an involuntary petition under the Title 11 of the United States Code, or any
involuntary petition seeking liquidation, reorganization, rearrangement or
readjustment of its debts under the federal or state insolvency law, provided
that the same shall not have been vacated, set aside or stayed within such
90-day period; or
(C) The commitment by FMCI of any act of fraud or willful
misconduct in connection with the performance of its duties hereunder.
6.2 TERMINATION UPON DEFAULT. The occurrence of an Event of Default
shall entitle the Company to terminate this Agreement upon two (2) days prior
written notice to FMCI, without any further obligation or liability to FMCI
other than the Company's liability for any compensation or right to
reimbursement accrued or otherwise payable under Article II hereof through the
date of termination only and any liability under Article VII below.
ARTICLE SEVEN
INDEMNIFICATION
7.1 The Company shall indemnify FMCI and any present or former
officer, member, director, employee or agent of FMCI or the personal
representatives thereof ("AFFILIATES"), made or threatened to be made a party in
any civil or criminal
- 5 -
action or proceeding by any person arising out of or in connection with the
execution and performance of this Agreement by FMCI and/or any Affiliate against
judgments, fines, amounts paid in settlement and reasonable expenses, including,
without limitation, court costs, attorneys' fees and disbursements and those of
accountants and other experts and consultants incurred as a result of such
action or proceeding or any appeal therein, all of which expenses as incurred
shall be advanced by the Company pending the final disposition of such action or
proceeding, it being understood that such advances shall be returned by FMCI
and/or such Affiliate to the Company in the event that FMCI and/or such
Affiliate, as the case may be, is finally determined not to be entitled to
indemnification under the last sentence of this subsection. The Company shall
also provide such indemnification to any Affiliate and the heirs, successors or
assigns of such Affiliate and his or her representatives brought by reason of,
arising out of in connection with, or by virtue of the fact that such Affiliate
is or was a director or officer of the Company (including indemnification in
respect of any excise tax assessed on such a person in connection with service
to an employee benefit plan), or served any other company, partnership,
corporation, limited liability company, joint venture, employee benefit plan, or
other entity or enterprise in any capacity at the request of the Company or at
the request of FMCI in connection with the services provided by FMCI hereunder.
Such required indemnification shall be subject only to the exception that no
indemnification may be made to or on behalf of FMCI or an Affiliate in the event
and to the extent that a judgment or other final adjudication adverse to FMCI or
an Affiliate establishes that his or its acts were committed in bad faith or
were the result of active and deliberate dishonesty and were material to the
cause of action so adjudicated, or that he or it personally gained in fact a
financial profit or other advantage to which he or it was not legally entitled
(provided, however, that indemnification shall be made upon any successful
appeal of any such adverse judgment or final adjudication).
7.2 If any proceeding is commenced in which any relief is sought
against both the Company and FMCI and/or an Affiliate and FMCI or an Affiliate
seeks indemnification pursuant to this Article Seven, and FMCI or an Affiliate
reasonably determines that a conflict exists between the Company and FMCI or an
Affiliate, separate counsel may be selected by FMCI to defend FMCI or such
Affiliate, and the fees, costs and disbursements of such separate counsel shall
be advanced by the Company, subject, however, to reimbursement in the event that
FMCI and/or such Affiliate, as the case may be, is finally determined not to be
entitled to indemnification under the last sentence of subsection (a) above.
7.3 In no event shall any party to any such proceeding be entitled to
effect a settlement thereof without the written consent of all other parties to
such proceeding unless such settlement:
(i) results in a dismissal with prejudice as to all of the
claims in such proceeding with respect to a non-consenting party, and
- 6 -
(ii) does not require the non-consenting party to take any
affirmative action (other than ministerial steps in connection with such
settlement) and does not require the payment of any money by the non-consenting
party.
7.4 The foregoing right of indemnification shall not be deemed
exclusive of any and other rights to which FMCI or any Affiliate, or their
successors, assigns or the heirs or representatives, may be entitled apart from
this Article Seven under law or the Company's articles of association, including
such rights of indemnification as shall otherwise be available to FMCI or such
Affiliate by virtue of the fact that he or she previously served as an officer,
director, employee or agent of the Company.
7.5 Neither FMCI nor any Affiliate shall be liable to the Company or
any of the stockholders of the Company for any acts or omissions or for any
error of judgment or mistake of fact or law, except for fraud,willful misconduct
or gross negligence, but in no event shall the liability of FMCI or any
Affiliate exceed the personal liability which would be imposed upon an officer
of a corporation organized under the laws of the State of New York. In no event
shall FMCI or any Affiliate be liable in connection with the services hereunder
for indirect, consequential, special or punitive damages.
ARTICLE EIGHT
CONFIDENTIALITY
FMCI agrees and understands that in the course of FMCI's relationship
with the Company, FMCI will be exposed to and receive Confidential Information
(as defined in the Company's Second Amended and Restated Stockholders Agreement
dated April 7, 2000, (as amended, the "STOCKHOLDERS AGREEMENT")) relating to the
confidential affairs of the Company and its affiliates. The confidentiality
obligations set forth in the Stockholders Agreement are incorporated by
reference herein.
ARTICLE NINE
MISCELLANEOUS
9.1 WAIVER. The failure of either party to insist upon a strict
performance of any of the terms or provisions of this Agreement or to exercise
any option, right or remedy herein contained, shall not be construed as a waiver
or as a relinquishment for the future of such term, provision, option. right or
remedy, but the same shall continue and remain in full force and effect. No
waiver by either party of any term or provision hereof shall be deemed to have
been made unless expressed in writing and signed by such party.
- 7 -
9.2 PARTIAL INVALIDITY. In case any one or more of the provisions
contained in this Agreement should be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect against a
party hereto, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby
and such invalidity, illegality or unenforceability shall only apply as to such
party in the specific jurisdiction where such judgment shall be made.
9.3 ASSIGNMENT. Neither party shall assign or transfer or permit the
assignment or transfer this Agreement without the prior written consent of the
other party, except that FMCI shall have the right to assign its rights and
obligations hereunder to any entity that is controlled and majority-owned,
directly or indirectly, by Xxxx Xxxxxxxx and Xxxxxxx Xxxxx and/or their
respective immediate family members and trusts or foundations established by or
for the benefit of one or more of the foregoing and/or one or more entities
which are majority-owned by one or more of the foregoing.
9.4 NOTICES. All notices provided for in this Agreement shall be in
writing and shall be delivered personally or by postage-prepaid registered or
certified mail, at the following address of each party:
TO THE COMPANY:
FirstMark Communications Europe SA
0, xxx Xxxx Xxxxx
0000 Xxxxxxxxxx
R. C. Xxxxxxxxxx X00. 610
TO FMCI:
FirstMark Communications International L.L.C.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxxxx
Xxxxxxx Xxxxx
Notice shall be deemed given upon receipt thereof. Any party hereto may
change the address herein specified for notice purposes by ten (10) days' prior
written notice to the other party. With the exception of default notices or a
notice of the exercise of any right by a party to another party, copies of
notices to attorneys are an accommodation only and are not necessary for the
validity of a notice.
9.5 GOVERNING LAW. This Agreement is made and entered into in the
- 8 -
State of New York, and its interpretation, validity and performance shall be
governed by the laws of the State of New York, without regard to conflict of
laws principles.
9.6 ARBITRATION. Any dispute or controversy between FMCI or any of
its employees or Affiliates, and the Company or any of its affiliates arising in
connection with this Agreement, any amendment thereof, or the breach thereof
shall be determined and settled by arbitration in New York, New York, by a panel
of three arbitrators in accordance with the rules of the American Arbitration
Association. Any award rendered therein shall be final and binding upon the
Company, its affiliates and FMCI and any of its employees or Affiliates and
their respective legal representatives and judgment may be entered in any court
having jurisdiction thereof. The expenses of such arbitration shall be paid by
the party against whom the award shall be entered, unless otherwise directed by
the arbitrators.
9.7 MODIFICATION: COUNTERPARTS. Any change or modification of this
Agreement must be in writing signed by both parties hereto. This Agreement shall
be executed in one or more counterparts, each of which shall be deemed an
original.
9.8 HEADINGS. Heading of Articles and Sections are inserted only for
convenience and are in no way to be construed as a limitation of the scope of
the particular Articles or Sections to which they refer.
9.9 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
with respect to the subject matter hereof between the parties and supersedes all
prior understandings and writings, and may be changed only by a writing signed
by the parties hereto.
- 9 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
FIRSTMARK COMMUNICATIONS
INTERNATIONAL, L.L.C.
By: /s/
---------------------------
Name:
Title:
FIRSTMARK COMMUNICATIONS
EUROPE S.A.
By: /s/
---------------------------
Name:
Title:
- 10 -
