Exhibit 99.3
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made and entered
into as of August 19, 2004 by and between RCN Corporation, a Delaware
corporation, having its principal offices located at 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000 (hereinafter referred to as "RCN" or the "Company")
and the PDA Group, LLC ("PDA" or "Consultant"), having a principal office
located at 00000 Xxxxx Xxxxx Xxxx, Xxxxxxx, XX 00000 for consulting and
business advisory services. RCN's performance of its obligations hereunder
shall be subject to the approval of the United States Bankruptcy Court,
Southern District of New York (the "Court Approval") (the "Bankruptcy Court")
in conjunction with the chapter 11 bankruptcy cases captioned In re RCN
Corporation, et. al., Case No. 04-13638 (RDD) (Jointly Administered) (the
"Bankruptcy Cases").
In consideration of the mutual promises and agreements herein
contained, other good and valuable consideration, the receipt of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Duties of Consultant
Consultant will provide, for the benefit of RCN and RCN's
affiliated entities (together with RCN, the "Companies"), consulting services
for the Company's market operations, and the execution of sales and marketing
strategies (hereinafter referred to as "Services").
2. Duties of Consultant Personnel.
Unless otherwise approved by the Company, Xxxxx X. Xxxxxx,
("Xxxxxx"), shall be the only person who shall perform the Services and report
directly to the RCN Chairman of the Board or his successor.
3. Other Agreements
It is understood that (a) during the term of this agreement
Xxxxxx shall devote such time, attention and energies as required to perform
the Services for RCN and may not enter into any other consulting engagements
with competitors or otherwise relating to the Companies or the Bankruptcy Case,
(b) irrespective of whether or not there occurs a Court Approval, PDA shall and
shall cause its subsidiaries, affiliates, managers, officers or employees
(collectively, "PDA Entities") to, immediately terminate any engagements (other
than as contemplated by this Agreement) in connection with, arising from or
otherwise related to the Companies and the Bankruptcy Cases, including, without
limitation any engagement by Capital & Technology Advisors LLC ("CTA") or its
affiliates, (c) Xxxxxx is free to accept and comply with the terms of this
Agreement, and the performances of Services will not constitute a breach by
Xxxxxx or PDA Entities of any other contractual obligation to any other party.
However, nothing herein shall restrict PDA from making investments in or
serving as a director of any business entity that does not compete with the
Company and will not interfere with PDA's ability to provide the Services
contemplated herein; (d) if Court Approval is not obtained, the Company shall
not oppose any motion filed by PDA for a claim for substantial contribution
under Section 503 (b) Bankruptcy Code on account of Services up to $90,000, and
neither PDA Entities nor Xxxxxx shall engage in any assignment in connection
with, arising from, or otherwise related to the Companies or the Bankruptcy
Cases until the earlier of (i) 6 months following the termination of this
Agreement or (ii) 30 days following the effective date of RCN's plan of
reorganization and, (e) if Court Approval is obtained, and Xxxxxx is
subsequently terminated without cause, Xxxxxx agrees not to engage in any
assignment in connection with, arising from, or otherwise related to the
Companies or the Bankruptcy Cases until the earlier of (i) 6 months following
the termination of this Agreement or (ii) 30 days following the effective date
of RCN's plan of reorganization.
4. Consulting Fees
In consideration of the Services, the Company shall pay PDA a
monthly fee of forty-five thousand dollars ($45,000) beginning on the
Commencement Date, as defined below, for the Term of the engagement. All
payments contemplated hereunder shall be made on or before the first of each
month (1st) of the month to which such payment relates. A payment amount of
ninety thousand dollars ($90,000) for the months of August and September 2004
shall become payable upon Court Approval, partial months worked thereafter
shall be pro-rated accordingly. Additional service performed beyond the
Company's standard workweek and on Company established holidays shall be billed
at $650.00 per hour. All payments due hereunder shall be made by wire transfer
to the account listed below:
PDA Group, LLC
Bank: Wachovia
Account: 205 0000 472 521
Routing Number: 051 400 549
Attn: Xxxxx Xxxxxx
(000) 000-0000
5. Expenses
In addition to the monthly fees contemplated above, the
Company shall reimburse PDA for reasonable legal fees associated with the
drafting and defense of this Agreement up to $20,000 and all
reasonable-out-of-pocket travel and business expenses, including voice and data
usage, incurred by Xxxxxx in connection with PDA's obligations under this
Agreement upon presentation to the Company of appropriate supporting
documentation relating to such expenses. From the effective date of this
Agreement through September 30, 2004, the Company shall cover all airfare, car
rental and lodging directly through the Company's Business Travel Account
whereby the Company shall directly pay all such expenses. All expense
reimbursement hereunder shall be paid to PDA within fifteen (15) calendar days
of the presentation of such documentation to the Company consistent with RCN's
established policies.
6. Invoicing
In the event RCN, in good faith, disputes any charges on an
invoice or similar documentation, RCN shall notify PDA of all disputes, and
shall pay all undisputed amounts within thirty (30) calendar days of receipt of
PDA's invoice. RCN and PDA shall make all reasonable efforts to resolve any
invoicing disputes within thirty (30) days of the due date of the invoice. If
RCN defaults in payment of any undisputed charges, then PDA may, in addition to
any other rights or remedies at law, petition the Bankruptcy Court for approval
of the payments due PDA and withhold further Services under this Agreement
until such time as the outstanding amounts due are paid.
7. Term
The initial term of this Agreement shall commence on the date
hereof (the "Commencement Date") and shall be in effect for a period of six (6)
months ("Term") from the Commencement Date and shall thereafter continue in
effect on a month-to-month basis provided that both parties approve such
extension in writing or electronic transmission within 7 days prior to the
expiration of the term (the "Renewal").
8. Termination
Either party may terminate this Agreement, without cause,
upon fifteen (15) days prior written notice to the other party, subject to the
provisions herein. In the event that RCN terminates Xxxxxx'x engagement for any
reason (other than for Cause (as defined below) or non-Renewal), RCN agrees to
give written notice to PDA of the Company's intention to terminate this
Agreement accompanied by payment of all billed and unpaid amounts due hereunder
from the Company to PDA for Services rendered through the date of termination,
plus all reimbursable amounts for which PDA has delivered to the Company an
invoice on or before the termination date (all unbilled amounts shall be billed
promptly, but shall not have bearing on the termination. Not later than ten
(10) days following the termination date, PDA shall provide the Company with an
itemized invoice for all reimbursable expenses incurred but not billed by PDA
prior to the termination date. In the event such termination occurs, and
provided that PDA and Xxxxxx have executed a release of all claims against RCN
and the Companies in a form substantially similar to the form used by the
Company with respect to other executives, and provided further that PDA and
Xxxxxx have not revoked such release within the time permitted therein for such
revocation, the Company shall pay a termination fee equal to ninety-hundred
thousand dollars ($90,000) within 15 days of the termination of this Agreement.
RCN may additionally terminate this Agreement at anytime upon
the occurrence of any of the following, each of which shall be "Cause",
provided a period of not less than ten (10) days in which to cure such
deficiencies has elapsed (other than with respect to clause (v); (i) Xxxxxx'x
repeated refusal or failure to perform the Services in a xxxxxxx-like manner;
(ii) Xxxxxx'x recklessly negligent, willful or intentional misconduct in the
performance of the Services; (iii) Xxxxxx'x continued or repeated absence from
the Company, unless due to performance of Services offsite, serious illness or
disability; (iv) Xxxxxx'x use of illegal drugs or impairment due to other
substances; (v) Xxxxxx'x conviction of a felony; (vi) Xxxxxx'x commission of an
act of gross misconduct, fraud, embezzlement or theft against the Companies;
(vii) Xxxxxx'x violation of a material Company policy known or provided to
Xxxxxx; or (viii) PDA's or Xxxxxx'x material breach of this Agreement. Cause
for termination of this Agreement shall include RCN's termination in accordance
with Section 13 hereof.
Upon termination of this Agreement, all documents, working
papers and other pertinent information relating to the Services being performed
hereunder in Xxxxxx'x or PDA's possession, custody or control, at the direction
of RCN, shall be forwarded to RCN, and RCN shall make payment, in accordance
with paragraph three (3) and six (6) hereof, if applicable, in compliance with
provisions contained herein.
9. Independent Contractor
Parties agree and acknowledge that Xxxxxx shall (a) provide
Services hereunder on a professional basis as an independent contractor and
during the performance of Services under this Agreement, Xxxxxx shall not be
considered an employee of RCN within the meaning or the application of any
Federal, State or local laws or regulations including, but not limited to, laws
or regulations covering Unemployment Insurance, Old Age Benefits, Workmen's
Compensation, Industrial Accident, Labor or Taxes, (b) not be considered an RCN
employee within the meaning or application of RCN's employees fringe benefit
programs for the purpose of vacations, holidays, pension, group life insurance,
accidental death, medical, hospitalization, and surgical benefits and (c) not
be eligible to participate in the Key Employee Retention Plan or any similar
plans, agreements or arrangements.
RCN shall not be responsible for any acts, omissions or
negligence of Xxxxxx, nor shall RCN have any responsibility for wages,
benefits, insurance, taxes or other liabilities of any nature whatsoever to
Xxxxxx. PDA agrees and acknowledges that in all matters relating to this
Agreement, Xxxxxx shall be acting as an independent contractor.
10. Proprietary Information
PDA and Xxxxxx shall promptly disclose to RCN, in writing,
any and all improvements, techniques, processes, concepts and ideas, conceived
by Xxxxxx during the scope of this Agreement, whether alone or with others and
whether during regular working hours and through the use of facilities and
property of the Companies or otherwise, which in any way relate to the business
and procedures of the Companies. All such improvements, techniques, processes,
concepts and ideas shall be the sole and exclusive property of RCN, and, upon
its request at any time or from time to time during the term or after the
termination of this Agreement, PDA and Xxxxxx shall (a) deliver to RCN all
records relating to such improvements techniques, processes, concepts and ideas
that may be in his possession or otherwise available to him, and (b) execute
and deliver to RCN such applications and other documents as it may reasonably
require in order to vest in itself full title thereto.
11. Non-Disclosure of Information
Both during the term of this Agreement and thereafter, PDA
and Xxxxxx shall not, without the prior written consent of RCN, divulge to any
third party, or use for their own benefit or for any purpose other than the
exclusive benefit of the Companies, any confidential information concerning the
business and affairs of the Companies obtained by Xxxxxx during the term of
this Agreement, including but not limited to information relating to
restructuring strategy, inventions, improvements, processes, techniques and
other trade secrets and to relationships with actual or potential customers and
the needs and requirements of any such actual or potential customers; it being
the agreed and acknowledged that that Xxxxxx or PDA's employees, agents or
subcontractors shall not so divulge or use any such information which is
unpublished or not readily available to the general public (other than as
contemplated by this Agreement); provided, that upon prior approval of RCN, the
Xxxxxx may make such disclosures during the course of his service as may be
necessary or appropriate to the effective and efficient discharge of his duties
hereunder. Such approval is hereby given to PDA to make such disclosures during
the course of his service as may be necessary or appropriate to the Company
management team, Board of Directors, advisors, accountant, attorneys and other
professionals engaged by the Company; provided however that none of the
foregoing shall be construed to authorize such disclosure to any advisors,
financials advisors, accountants, attorneys or other professionals retained by,
or on behalf of any of the Companies creditors or creditors committees. PDA and
Xxxxxx agree to execute a Non-Disclosure Agreement in the form attached as
Exhibit A.
12. Conflicts of Interest
In performing the required Services under this Agreement, PDA
shall, and shall cause the Xxxxxx, to avoid: (a) any actual or apparent
conflict between Xxxxxx'x duties or obligations to other parties and such
duties and obligations assumed under this Agreement and (b) disclosure of
information which would, or would appear to, violate such duties and
obligations to third parties. However, nothing herein shall restrict PDA from
making such disclosures during the term of this agreement as may be necessary
or appropriate to provide the Services contemplated herein including consulting
to the Company management team, Board of Directors, advisors, accountant,
attorneys and other professionals engaged by the Company; provided however that
none of the foregoing shall be construed to authorize such disclosure to any
advisors, financials advisors, accountants, attorneys or other professionals
retained by, or on behalf of any of the Companies creditors or Creditors
committees.
It is agreed that, if subsequent to the execution of this
Agreement, PDA or Xxxxxx discover that a conflict develops because of a
relationship created or intended to be created between Xxxxxx and any third
party, PDA and Xxxxxx shall immediately notify RCN of such relationship and
upon such occurrence RCN shall have the right, at its sole discretion, to
terminate this Agreement for Cause. Upon exercise of such right of termination,
RCN's only obligation to PDA shall be to reimburse PDA in accordance with this
Agreement.
13. Representations and Warranties
PDA represents and warrants that: (i) all Services to be
performed under the terms of this Agreement shall be performed in a thorough
and professional manner in conformance with industry standards; (ii) Xxxxxx is
experienced in the type of Services which Xxxxxx is being engaged to provide
hereunder; (iii) all work performed hereunder shall be and remain the property
of RCN and that Xxxxxx will not use or disclose the same to others (except as
provided herein); and (iv) Xxxxxx is under no obligation or restriction nor
shall assume any such obligation or restriction, which would in any way
interfere or be inconsistent with the Services to be furnished by Xxxxxx under
this Agreement.
14. Indemnification
RCN agrees that if PDA or Xxxxxx is made a party or is
threatened to be made a party to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that he is or was a consultant to the Company, or is or was serving at the
request of the Company, pursuant to this Agreement, the Company shall indemnify
and hold harmless the Xxxxxx to the fullest extent authorized by applicable law
from and against any and all losses, claims, damages or liabilities or actions
related to or arising out of this engagement or the role the Xxxxxx incurs or
suffers in connection therewith, and will pay (or, if paid by PDA, reimburse
PDA) for all fees and expenses (including, without limitation, reasonable
attorney's fees) incurred by PDA in connection with investigating, preparing or
defending any such action or claim, whether or not in connection with pending
or threatened litigation in which PDA is a party, and such indemnification
shall continue as to Xxxxxx even if Xxxxxx has ceased to be a consultant. The
Company shall not indemnify Xxxxxx (a) if his conduct or actions relating to or
resulting in a Proceeding were not authorized by RCN or were otherwise outside
of the scope of his duties or resulted from the gross negligence or willful
misconduct of Xxxxxx or (b) in connection with any Proceeding arising from or
relating to the acts, omissions or events occurring prior to the date hereof.
15. Xxxx and Trade Name
Notwithstanding any other provision of this Agreement, PDA
and Xxxxxx shall have no right to use the xxxx or trade name of RCN, or refer
to RCN directly or indirectly, in connection with any product, promotion or
publication without the prior written approval of RCN, unless use by PDA is
restricted to soley list only the Company Trade Name as a PDA customer in
connection with marketing PDA's services.
16. Notices
All notices relating to this Agreement shall be in writing
and shall be deemed to have been given at the time when mailed, certified or
registered postpaid, addressed to the address of the other party stated above
or to such change address as the other party may have fixed by notice, provided
that any notice of change in address shall be effective only on receipt.
17. Binding Effect; Assignment
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. This
Agreement and the rights and obligations hereunder shall not be assignable or
delegable by PDA or Xxxxxx and any attempted assignment or delegation thereof
shall be void.
18. Waiver
Failure on the part of either party to insist upon strict
compliance by the other with any of the terms, covenants or conditions hereof
shall not be deemed a waiver of such term, covenant or condition nor shall such
be construed as a waiver of any subsequent breach.
19. Severability
The invalidity or unenforceability of any provision hereof,
or the application of any provision hereof to any circumstances, shall in no
way affect the validity or enforceability of any other provision or the
application of such provision to any other circumstances.
20. Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
21. Survival
The representations, rights and obligations hereof shall
survive and continue after any expiration or termination of this Agreement and
shall bind RCN and Xxxxxx and their legal representatives, successors, heirs
and assigns. PDA and Xxxxxx agree to comply, and do all things necessary for
RCN to comply, with all applicable Federal, State and Local laws, regulations
and ordinances.
22. Bankruptcy Court Approval
RCN shall promptly file and take commercially reasonable
steps to prosecute a motion in the Bankruptcy Cases seeking approval to enter
into this Agreement. The parties acknowledge that RCN's obligations under this
Agreement are subject to the approval of the Bankruptcy Court. The parties
further acknowledge that the obligations of PDA and Xxxxxx set forth in
articles 3 and 13 of this Agreement are immediately binding upon PDA and Xxxxxx
and shall remain binding on PDA and Xxxxxx and enforceable by RCN without
regard to whether or not the Agreement obtains Court Approval in the Bankruptcy
Cases so long as RCN has substantially complied with the first sentences of
this Article.
Entire Agreement
This Agreement constitutes the entire understanding of the
parties relating to the subject matter herein, and cannot be changed or
modified unless such change or modification is made in writing and signed by a
duly authorized representative of each party. This Agreement supersedes all
previous oral, written or other communication between them concerning the
subject matter.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and have hereunto set their hand and seal, all as of the day and
year first above written.
RCN CORPORATION
By: /s/ Xxxxx Xxx
-----------------------
Name: Xxxxx Xxx
Title: Senior Vice President
Employee Services
Date: 8/9/04
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PDA Group, LLC
By: /s/ Xxxxx Xxxxxx
-----------------------
Name: Xxxxx Xxxxxx
---------------------
Title: President
--------------------
Date: 8/9/04
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EXHIBIT A
NON-DISCLOSURE AGREEMENT
RCN Corporation, a Delaware Company, having its principal
offices at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 (hereinafter "RCN"
which term shall include its parent and all subsidiaries and affiliates
thereof) and PDA Group, LLC, having its principal offices at
___________________________________________________ (hereinafter "SIGNEE" which
term shall include PDA Entities), do hereby agree as follows:
1. To assist the parties hereto in their future discussions
and business dealings with each other, it may be necessary and desirable that
RCN, it affiliated entities and successors and assigns (collectively, "RCN")
disclose to SIGNEE certain confidential and proprietary information, including,
but not limited to, restructuring strategy, technical information, corporate
and operational information, customer information, business records, financial
records and statements, or any other similar or related information of RCN or
any of its subsidiaries or affiliates that are of a non-public nature
(hereinafter "Proprietary Information").
2. SIGNEE acknowledges that the Proprietary Information of
RCN constitutes trade secrets of RCN and agrees to keep such Proprietary
Information in confidence and prevent its disclosure to any third parties. It
is also understood that the contents of any conversation or discussion
concerning this Proprietary Information will likewise be treated as
confidential and proprietary, as if it had been formally transmitted. SIGNEE
agrees to hold the Proprietary Information in confidence by using the same
effort and degree of care it would take to maintain in confidence its own
confidential and proprietary information of a similar nature.
3. SIGNEE agrees not to use the Proprietary Information of
RCN except to the extent necessary for:
a. negotiations, discussions and consultations with
personnel or authorized representatives of RCN;
b. preparing proposals, bids or estimates for
submission to RCN; or
c. any other purpose that RCN may hereafter
authorize in writing; or such disclosures during the
course of his service as may be necessary or
appropriate to the Company management team, Board of
Directors, advisors, accountant, attorneys and other
professionals engaged by the Company; provided
however that none of the foregoing shall be
construed to authorize such disclosure to any
advisors, financials advisors, accountants,
attorneys or other professionals retained by, or on
behalf of any of the Companies creditors or
Creditors committees.
4. The obligations of Paragraphs 2 and 3 hereof shall
terminate with respect to any particular portion of the Proprietary Information
upon the following: (i) it was in the public domain at the time of RCN's
communication thereof to SIGNEE; (ii) it enters into the public domain through
no fault of SIGNEE subsequent to the time of RCN's communication thereof to
SIGNEE; (iii) it was in SIGNEE's possession free of any obligation of
confidence at the time of communication thereof; (iv) it is being developed by
employees or agents of SIGNEE independently of and without reference to any
Proprietary Information that RCN has disclosed in confidence to any third
party; or when it is rightfully obtained by SIGNEE from third parties not in
violation of a confidentiality agreement with RCN.
5. Notwithstanding the above, all materials including,
without limitation, documents, writings, designs, drawings, and specifications
furnished to SIGNEE and which are Proprietary Information of RCN hereunder
shall remain the sole property of RCN and shall be returned promptly at its
request with all copies made thereof. The obligations of Paragraphs 2 and 3
shall survive the return of Proprietary Information pursuant to this Paragraph.
6. Nothing in this Agreement shall be deemed to constitute,
create, give effect to, or otherwise recognize any agency relationship, joint
venture, partnership, formal business entity, or obligation of any kind between
the parties, except that specifically described herein.
7. Both parties hereto further agree that they shall not make
any news release, public announcements, or denial or confirmation of same
concerning all or any part of their discussions or negotiations with the other,
or in any manner advertise or publish the fact that they have entered
discussions or negotiations with each other or disclose any details connected
with such discussions or negotiations to any third party without the prior
approval of the other party.
8. This Agreement shall be construed in accordance with the
laws of the State of New Jersey.
9. The effective date of this Agreement is August 9, 2004.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first below written.
RCN Corporation PDA Group, LLC, SIGNEE
/s/ Xxxxx Xxx /s/ Xxxxx Xxxxxx
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By: Xxxxx Xxx By: Xxxxx Xxxxxx
Title: Senior Vice President Title: President
Employee Services
Date: 8/9/04 Date: 8/9/04
