EXHIBIT 10.20
CONSULTING AGREEMENT
This Agreement (this "Agreement") is entered into as of February 16, 1999
by and between CS Wireless Systems, Inc. (the "Company") and David E. Webb (the
"Consultant").
The parties hereto agree as follows:
1. ENGAGEMENT. Company hereby engages Consultant and Consultant hereby agrees
to hold himself available to render, and to render at the request of Company,
independent advisory and consulting services, as more specifically described in
SECTION 4 below, for Company and its affiliates, to the best of his ability,
upon the terms and conditions hereinafter set forth.
2. TERM. The term of this Agreement shall begin as of the date of this
Agreement and continue in accordance with the terms hereof for fourteen (14)
months ("The Term").
3. COMPENSATION. As compensation for all services rendered by Consultant
under this Agreement, Company shall pay Consultant the following sums:
(a) During the term of this Agreement, Company shall pay to Consultant
each month the sum of Twenty Thousand and no/100 Dollars and No/100 ($20,000)
per month, which shall be paid in advance on the seventeenth (or next business
day) of each month, commencing February 17, 1999 and thereafter until and
through March 16, 2000, at which time the final payment hereunder shall be made.
(b) The Company shall pay to Consultant success fees (collectively,
"Success Fees") in connection with the matters set forth on SCHEDULE 1 attached
hereto and incorporated herein by reference.
(c) In addition to the above described compensation and Success Fees,
Company shall pay to Consultant certain transaction fees as set forth on
SCHEDULE 2 attached hereto and incorporated herein by reference.
(d) All compensation payable hereunder shall be paid without deduction,
including no deduction for federal income, withholding, social security, or
state payroll, unemployment or income taxes. Consultant shall be solely
responsible for paying all such taxes and any other amounts required by federal,
state or local law as a result of the compensation paid to Consultant hereunder.
4. DUTIES. Consultant shall hold himself available to render, and shall
render to the Company and its affiliates from time to time, consulting services,
including, without limitation, advice and assistance relating to the following:
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(a) Provide operational and technical assistance to the Company in
connection with the negotiating, preparation and filing of applications with
the Federal Communications Commission ("FCC") for authority for two-way use
of Multipoint Distribution Services ("MDS"), Multipoint Multichannel
Distribution Services (which, together with MDS, shall be collectively
referred to as "MMDS") and Instructional Television Fixed Services ("ITFS");
(b) Assist the Company in preserving and enhancing the value of its
interests, rights and obligation relative to ITFS leases and MMDS licenses and
leases in the Target Markets as defined and specified in SCHEDULE 2;
(c) Assist the Company with respect to its operations; and
(d) Assist the Company with respect to such transition matters as the
Company may reasonably request.
Consultant shall render all services conscientiously and shall devote his
reasonable commercial efforts and abilities thereto, at such times during the
term hereof, and in such manner, as Company and Consultant shall mutually agree,
it being acknowledged that Consultant's services shall be non-exclusive and
performed at such places and at such times as mutually agreed upon by the
Company and Consultant. Consultant shall be available at least sixty (60) hours
each month, at such times as reasonably requested by the Company to provide such
consulting services at such locations in the Target Markets as may be reasonably
requested by the Company. Consultant shall observe all policies and directives
promulgated from time to time by Company's Officers and Board of Directors.
5. EXPENSES AND SUPPORT. Consultant shall be reimbursed by Company for all
reasonable business expenses (including, without limitation, mileage,
telephone, data communication, etc.) which are deductible by Company for U.S.
federal income tax purposes and which were incurred by Consultant during the
performance of his services hereunder. Company's obligation to reimburse
Consultant pursuant to this Section shall be subject to the presentation to
Company by Consultant of an itemized account of such expenditures, together
with supporting vouchers, in accordance with Company's policies as in effect
from time to time. The Company shall reimburse Consultant's expenses within
ten (10) days of Company's receipt of the itemized account of expenditures.
Expenses incurred by Consultant in excess of $500 per month must be approved
in advance by the Company or Consultant shall not receive reimbursement from
the Company. Each month, the Company shall pay to Consultant on the first
business day, an allowance of One Thousand Dollars ($1,000) to cover the cost
of such office space, office equipment, telephone lines, facsimile lines and
equipment and secretarial support as may reasonably be necessary for
Consultant to perform the services described herein. During the Term, the
Company shall provide to Consultant a lap-top computer selected by the
Company. Consultant shall not procure or occupy office space in any premises
leased or owned by the Company, without the prior written consent of the
Company.
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6. LITIGATION. Consultant shall cooperate reasonably with the Company,
including the giving of truthful testimony, in the course of present or
future litigation about which Consultant has knowledge, and shall use his
best efforts to be available for depositions and other activities concerning
such matter or other matters without the necessity of a subpoena, provided
that once that services are requested by the Company, the Company shall
reimburse Consultant for all reasonable out-of-pocket expenses in providing
such services and shall pay Consultant a per diem based on the compensation
payable pursuant to SECTION3(A), or such other reasonable per diem as may be
mutually agreed upon between Consultant and the Company based upon the then
current industry standards. The parities agree that this section shall not
apply to litigation in which the Company is, or may reasonably be expected to
become, adverse to Consultant.
7. TERMINATION. Either party may terminate this Agreement in the event the
other party breaches any material term hereof and such breaching party does not
cure such default within thirty (30) days following receipt of notice of such
breach. Upon such termination, the Company shall pay Consultant all
compensation due through the effective date of termination, pro rated for any
partial month in which Consultant rendered services. In the event the Company
terminates this Agreement in the absence of any breach by Consultant of a
material term hereof, (i) the Company shall immediately pay to Consultant, in
cash, all compensation payable for the remainder of the Term (without giving
effect to the early termination), (ii) all rights of Consultant to the Success
Fees (defined herein) shall immediately vest and become immediately due and
payable and (iii) Consultant shall be released from all obligations hereunder
other than the obligations set forth in SECTION 9. In the event of death or
disability resulting in the inability of Consultant to perform the duties of
Consultant set forth herein, this Agreement may be terminated at the option of
Company immediately and all compensation due hereunder shall cease as of the
date of death or disability, provided that the Company pays to Consultant all
sums then due. Consultant shall have no rights to the Success Fees or
Transaction Fees, if any, payable with respect to a Triggering Event or
Disposition Transaction occurring subsequent to death or disability.
8. NON-COMPETITION. Because Consultant's services to the Company are special
and because Consultant had access to and been responsible for developing a
portion of the Company's confidential information, Consultant covenants and
agrees that, except (i) as may be otherwise agreed by the Company or (ii) as may
be addressed in the definitive documents evidencing the terms of a Disposition
Transaction, from the date hereof through the termination of the Agreement that
he will not, directly or indirectly, either on his own behalf or on behalf of
any person, partnership, corporation or otherwise, (i) engage in any business or
undertaking directly competitive with the wireless cable television, cable
television, subscription television, direct broadcast satellite, direct-to-home,
wired video programming, non-wired video programming, wireless Internet access,
wireless fixed telephony or other fixed wireless information businesses (the
"Related Business") being carried on by the Company or its subsidiaries in any
market serviced by the Company or any such subsidiary or (ii) be employed by or
provide
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consulting services to or be an investor, limited partner or shareholder in,
any entity or other person engaged in the Related Business within 35 miles
from the originally listed and approved FCC broadcast point for each
operating entity from which the Company or any of its subsidiaries does
business at the Effective Date. The parties agree that the time period and
geographical area of non-competition specified above are applicable to the
restrictions set forth in (i) and (ii) of the preceding sentence and are
reasonable and necessary in light of the transactions entered into in this
Agreement. If, however, it shall be determined at any time by a court of
competent jurisdiction that either the time period restriction or the
geographical area restriction, or both, are invalid or unenforceable, the
parties agree that any such invalid restriction shall be amended and reformed
to the extent necessary to make same valid and enforceable in the
determination of said court, and such restriction, as so amended, shall be
enforceable between the parties to the same extent as if such amendment had
been made as of the date of this Agreement. This Section shall not apply to
investments constituting not more than 5% of the common equity of a publicly
traded or privately held company.
9. CONFIDENTIAL INFORMATION.
(a) In connection with this Agreement, the Company may desire to
disclose to Consultant certain proprietary information on a confidential
basis. This proprietary information ("Information") includes any and all
technical and non-technical information, including without limitation,
information concerning financial, accounting or marketing reports, business
plans, analyses, forecasts, predictions, projections, intellectual property,
trade secrets and know-how. Information may take the form of documentation,
drawings, specifications, software, technical or engineering data, and other
forms, and may be communicated orally, in writing, by electronic or magnetic
media, by visual observation and by other means.
(b) With respect to Information disclosed under this Agreement, Consultant
and its Representatives (defined below) shall:
(i) hold the Information in confidence, exercising a degree of care
not less than the care used by Consultant to protect its own proprietary or
confidential information that it does not wish to disclose, and in no event
exercise less than a reasonable degree of care;
(ii) restrict disclosure of the Information solely to those
Representatives with a need to know and not disclose it to any other person;
(iii) advise those Representatives to whom the Information is
disclosed of their obligations as set out herein with respect to the
Information; and
(iv) use the Information only in connection with the performance of
its duties under this Agreement, except as may otherwise be mutually agreed upon
in writing, and reproduce such Information only to the extent necessary for such
purpose.
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(c) "Representatives" means the controlled and controlling affiliates of
Consultant, and the directors, officers, employees, attorneys, consultants and
other agents and advisors of Consultant or of the controlled and controlling
affiliates of Consultant. Consultant shall take all reasonably necessary
measures to restrain its Representatives from unauthorized disclosure or use of
Information.
(d) Information shall be deemed the property of the Company and, within
five (5) business days upon written request from the Company, Consultant will
return all such Information received in tangible form to the Company, or at the
Company's written request, will destroy all such Information; Consultant shall
deliver to the Company written certification that the documents have been
destroyed. If Consultant loses or makes an unauthorized disclosure of the
Company's Information, it shall notify the Company immediately and use
reasonable efforts to retrieve and protect the lost or wrongfully disclosed
Information.
(e) Consultant shall have no obligation to preserve the proprietary nature
of any Information which:
(i) was known to Consultant before the date of this Agreement free of
any obligation to keep it confidential except for Information provided by
Company to Consultant prior to the execution of this Agreement, which
Information shall be deemed confidential;
(ii) is or becomes publicly available by means other than unauthorized
disclosure;
(iii) is developed by or on behalf of Consultant independent of
any Information furnished by Company or at its request;
(iv) is received from a third party whose disclosure does not violate
any confidentiality obligation; or
(v) is required to be disclosed pursuant to order of a court of
competent jurisdiction or a governmental agency (but only for the purpose and to
the extent of such required disclosure). In such circumstances, Consultant
shall provide the Company notice and a reasonable opportunity to object to such
proposed disclosure.
10. INDEPENDENT CONTRACTOR. It is expressly agreed that Consultant is
acting as an independent contractor in performing his services hereunder.
Company shall carry no Workmen's Compensation insurance for the benefit of
Consultant. Company shall not pay any contributions to Social Security,
unemployment insurance, federal or state withholding taxes, nor provide any
other contributions or benefits which might be expected in an
employer-employee relationship. Notwithstanding the foregoing, the
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parties acknowledge the existence of that certain Separation Agreement dated
of even date herewith which provides for certain rights and obligations of
the parties hereto.
11. ASSIGNMENT. This Agreement is a personal one, being entered into in
reliance upon and in consideration of the singular personal skill and
qualifications of Consultant. Consultant shall therefore not voluntarily or
by operation of law assign or otherwise transfer the obligations incurred on
its part pursuant to the terms of this Agreement without the prior written
consent of the Company. Any attempted assignment or transfer by Consultant
of its obligation without such consent shall be wholly void. Company may
assign this Agreement to an affiliate provided that the Company shall remain
liable for all sums due Consultant.
12. MODIFICATION OF AGREEMENT. This Agreement may be modified by the
parties hereto only by a written supplemental agreement executed by both
parties.
13. NOTICE. Any notice required or permitted to be given hereunder shall be
sufficient if in writing, and if sent by registered or certified mail,
postage prepaid, by overnight courier, or by facsimile, addressed as follows:
IF TO COMPANY: CS Wireless Systems, Inc.
Attn: Chief Executive Officer
1101 Summit Avenue
Plano, Texas 75074
Facsimile (972) 398-1110
IF TO CONSULTANT: David E. Webb
4004 Sycamore Lane
Parker, Texas 75002
or to such other address as the parties hereto may specify, in writing, from
time to time. Such notice shall be effective as of the date of receipt in the
event of certified mail, overnight courier or facsimile.
14. WAIVER OF BREACH. The waiver by either party of any breach of any
provision of this Agreement shall not operate to be construed as a waiver of
any subsequent breach.
15. TITLES. The titles of the Sections herein are for convenience of
reference only and are not be to be considered in construing this Agreement.
16. GOVERNING LAW. This Agreement and its interpretation, validity and
performance shall be construed and enforced in accordance with the laws of
the State of Delaware.
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17. ENTIRE AGREEMENT. This Agreement contains the entire contract of the
parties with respect to the subject matter hereof and supersedes all
agreements and understandings between the parties concerning the subject
matter hereof.
18. ADDITIONAL COVENANT OF THE COMPANY. In the event the Company commences a
proceeding under the applicable bankruptcy laws of the United States, the
Company shall assume this Consulting Agreement
Executed as of the date first above written.
COMPANY: CONSULTANT:
CS WIRELESS SYSTEMS, INC. DAVID E. WEBB
By: _____________________ _____________________
Name:____________________
Title:___________________
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