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EXHIBIT 10.33
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Consulting Agreement") is made and
entered into as of the 4th day of May, 1998, by and Digital Teleport, Inc., a
Missouri corporation (the "Company"), and H.P. Xxxxx ("Consultant").
WITNESSETH:
WHEREAS, the Company and Consultant had previously entered into
that certain Consulting Agreement dated April 20, 1998, which this Consulting
Agreement supersedes in its entirety;
WHEREAS, the Company wishes to retain Consultant and Consultant
wishes to be retained by Company on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual promises
hereinafter set forth, it is hereby agreed as follows:
1. Engagement. Consultant is hereby engaged as a consultant
to the Company. The term of Consultant's services to the Company shall commence
on the date first set forth above and shall end on the first anniversary of such
date (the "Consulting Term").
2. Consulting Services. Consultant shall perform such
consulting services as Company requests in the area of carrier's carrier sales
and swaps by the Company and any other services as Company and Consultant
mutually agree ("Consulting Services"). During the Consulting Term, Consultant
shall devote such time, attention, skill, energy and efforts as may be necessary
for the faithful performance of the Consulting Services. The Company and
Consultant currently expect that Consultant shall spend approximately 15
calendar days each month performing the Consulting Services, provided that this
expectation imposes no independent legal obligation on Consultant or Company.
Consultant shall have the title "Senior Vice President".
3. Compensation.
(a) The Company shall pay Consultant $800 a day spent
performing Consulting Services within a week of submission of invoices.
(b) The Company shall pay to Consultant a commission equal to:
(i) One percent of any cash payments received for
sales of unlit fiber optic cable strands ("Dark Fiber") to telecommunications
companies, which sales are substantially negotiated or closed during the
Consulting Term, and for which Consultant provided substantive Consulting
Services with respect thereto. A sale shall be deemed to have been substantially
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negotiated if all material business terms have been agreed to definitively or in
principle during the Consulting Term, or such sale closes within one month
following the Consulting Term. Substantive Consulting Services shall be deemed
to have been rendered if Consultant negotiates directly in person or by phone
with representatives of the buyer of such dark fiber. Such commission shall be
paid when cash is actually received by the Company and shall be payable even if
received following the term hereof, provided that no amount shall be payable
with respect to any cash received with respect to such sales following five
years following the end of the Consulting Term.
(ii) $200 for each route mile of Dark Fiber
(regardless of the number of strands of fiber optic cable, but with a contract
term of at least 20 years) received by the Company in a swap for Dark Fiber
owned by the Company, which swap is substantially negotiated or closed during
the Consulting Term, and for which Consultant provided substantive Consulting
Services with respect thereto. A swap shall be deemed to have been substantially
negotiated if all material business terms have been agreed to definitively or in
principle during the Consulting Term, or such swap closes within one month
following the Consulting Term. A swap shall be deemed to be closed when a
definitive indefeasible right to use ("IRU") such Dark Fiber in favor of the
Company is executed. Substantive Consulting Services shall be deemed to have
been rendered if Consultant negotiates directly in person or by phone with
representatives of the other party to such swap. Such commission shall be paid
within one month following the later of (i) the time the Company becomes
eligible to use the Dark Fibers being received or (ii) the time at which there
are no significant conditions to the Company's continued use of such Dark
Fibers, including without limitation the completion of construction by the
Company of the Dark Fibers being swapped. If a swap involves the payment by the
Company of cash, then the Consultant shall nonetheless be eligible for the
commission provided in this Section 3(b)(ii) for the route miles of Dark Fibers
received by the Company, up to the number of routes miles of Dark Fiber given by
the Company in such transaction. If a swap involves the receipt by the Company
of both cash and Dark Fibers, then the Consultant would be entitled to the
commissions payable under both Section 3(b)(i) and Section 3(b)(ii).
(iii) One percent of any cash payments received from
sales of lighted bandwidth capacity at a rate of a DS-3 or above ("Bandwidth")
to telecommunications companies, which sales are substantially negotiated or
closed during the Consulting Term, and for which Consultant provided substantive
Consulting Services with respect thereto. A sale shall be deemed to have been
substantially negotiated if all material business terms have been agreed to
definitively or in principle during the Consulting Term, or such sale closes
within one month following the Consulting Term. Substantive Consulting Services
shall be deemed to have been rendered if Consultant negotiates directly in
person or by phone with representatives of the buyer of such bandwidth. Such
commission shall be paid when cash is actually received by the Company, and
shall be payable even if received following the term hereof, provided that no
amount shall be payable with respect to any cash received with respect to such
sales following five years following the end of the Consulting Term.
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(iv) One percent of the value of any bandwidth
received in exchange for Bandwidth with telecommunications companies, which
exchange is substantially negotiated or closed during the Consulting Term, and
for which Consultant provided substantive Consulting Services with respect
thereto. An exchange shall be deemed to have been substantially negotiated if
all material business terms have been agreed to definitively or in principle
during the Consulting Term, or such exchange closes within one month following
the Consulting Term. Substantive Consulting Services shall be deemed to have
been rendered if Consultant negotiates directly in person or by phone with
representatives of the other party to such exchange. Such commission shall be
paid quarterly as bandwidth is available for use by the Company, and shall be
payable even following the term hereof, provided that no amount shall be payable
with respect to any bandwidth available for use by the Company following five
years following the end of the Consulting Term. If an exchange involves the
payment by the Company of cash, then the Consultant shall nonetheless be
eligible for the commission provided in this Section 3(b)(iv) for the bandwidth
received by the Company, reduced by the amount of cash paid on a pro rata basis.
If an exchange involves the receipt by the Company of both cash and bandwidth,
then the Consultant would be potentially eligible for the commissions payable
under both Section 3(b)(iii) and Section 3(b)(iv).
(c) One percent of any rebates or credits to a customer
arising from a sale for which commissions are payable under Section 3(b) shall
be deducted from the commissions from such sale, or the commissions for any
other sale, payable under Section 3(b).
(d) Consultant shall be paid $100,000 upon the execution of
this Consulting Agreement.
(e) Consultant shall be reimbursed by the Company for his
reasonable expenses for travel from his home in Dallas, Texas on Company
business, including without limitation travel to the Company's headquarters in
St. Louis, Missouri and his reasonable living expenses while in St. Louis on
Company business, in accordance with the Company's general reimbursement
policies.
(f) The sale of Dark Fiber or Bandwidth, and the terms
thereof, must be approved by the chief executive officer of the Company, in his
sole and absolute discretion. This Consulting Agreement, and the retention by
Company of the Consultant, imposes no obligation on the Company or Chief
Executive Officer to approve any terms or any sale.
(g) Consultant at his sole discretion may elect to take up to
50% of any commissions payable under Section 3(b) in the form of common stock of
the Company, such stock to be valued at the fair market value thereof. Prior to
the listing of such common stock on a stock exchange or Nasdaq National Market,
the fair market value of the stock shall be determined by the Board of Directors
of the Company or the Compensation Committee, whose determination shall be final
and binding on the parties hereto. Following such listing of the
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common stock, the fair market value shall be the closing price on the date the
Company receives the cash payment giving rise to the obligation to pay
Consultant a commission hereunder (regardless of when Consultant makes an
election to receive such commission in the form of common stock). Consultant
may make the election provided herein with respect to any amount to be paid to
him as a commission upon written notice received by the Company prior to the
Company paying to a Consultant any such commission. Such election shall apply
only to the commissions specifically identified in such notice, and shall not
apply to any other commissions.
4. Third-Party Confidentiality. Consultant shall not disclose
to the Company or induce the Company to use any secret or confidential
information belonging to persons not affiliated with the Company. Consultant
acknowledges that the Company has disclosed that the Company is now, and may be
in the future, subject to duties to third parties to maintain information in
confidence and secrecy. By executing this Consulting Agreement, Consultant
consents to be bound by any such duty owed by the Company to any third party.
5. Inventions, Etc.; Confidentiality
(a) Any and all ideas, inventions, discoveries, patents,
patent applications, continuation-in-part patent applications, divisional patent
applications, technology, copyrights, derivative works, trademarks, service
marks, improvements, trade secrets and the like, which are developed, conceived,
created, discovered, learned, produced and/or otherwise generated by Consultant,
whether individually or otherwise, during the time that Consultant is retained
by the Company, whether or not during working hours, that relate to (i) the
business and/or activities of the Company, (ii) the Company's anticipated
research or development, or (iii) any work performed by Consultant for the
Company, shall be the sole and exclusive property of the Company, and the
Company shall own any and all right, title and interest to such property. The
Consultant assigns and agrees to assign to the Company any and all right, title
and interest in and to any such ideas, inventions, discoveries, patents, patent
applications, continuation-in-part patent applications, divisional patent
applications, technology, copyrights, derivative works, trademarks, service
marks, improvements, trade secrets and the like, whenever requested to do so by
the Company, at the Company's expense, and the Consultant agrees to execute any
and all applications, assignments or other instruments which the Company deems
desirable or necessary to protect such interests.
(b) Section 5(a) shall not apply to any invention for which no
equipment, supplies, facilities, or confidential and trade secret information of
the Company was used and which was developed entirely on the Consultant's own
time, unless (i) the invention relates (A) to the Company's business or (B) to
the Company's actual or demonstrably anticipated research or development or (ii)
the invention results from any work performed by the Consultant for the Company.
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(c) Consultant acknowledges that Consultant's work for the
Company is expected to bring him or her into close contact with various
confidential business data of the Company and its clients not readily available
to the public. Accordingly, Consultant:
(i) covenants and agrees that (A) during the
Consulting Term, except pursuant to appropriate safeguards on
confidentiality and only in connection with the business of the
Company, and (B) after the Consulting Term, on any basis for any
reason, Consultant shall not use or disclose to anyone except
authorized personnel of the Company, whether or not for his benefit or
otherwise, any confidential matters (collectively, "Confidential
Matters"), concerning the Company or its suppliers, consultants, agents
or clients, whether former, current or potential (collectively, the
"Clients"), including without limitation, all confidential technical
information of the Company, secrets, trade secrets, formulas,
proprietary software, copyrights, Client lists, lists of Consultants,
confidential evaluations, mailing lists, details of consultant
contracts, pricing policies, sales data and reports, margins,
operational methods and processes, marketing plans or strategies,
business acquisition plans, new personnel acquisition plans, financial
information and other confidential business affairs, learned by
Consultant concerning the Company, its Clients, or a third party,
including without limitation, any subsidiaries, partners, affiliates,
shareholders, Consultants, lenders, suppliers, consultants, agents or
joint venture partners of the Company (collectively, "Affiliates"); and
(ii) covenants and agrees that (A) all confidential
memoranda, notes, sketches, lists (including, without limitation,
mailing and customer lists), records, other confidential documents and
computer diskettes (and all copies thereof) made or compiled by
Consultant or made available to her concerning the Company, its Clients
and any Affiliates are the sole property of the Company, and (B) if
such documents are in the possession or control of Consultant,
Consultant shall deliver them, without retaining any copies thereof, to
the Company promptly at the end of the Consulting Term, or at any other
time upon request by the Company.
6. Non-Competition Agreement.
(a) Consultant covenants and agrees that Consultant shall not,
directly or indirectly, as a principal, employee, partner, consultant, agent or
otherwise, compete or assist in competitive activity with the Company, within
the areas in which the Company then operates, during the Consulting Term and for
a period of one year thereafter (the period of time during which Consultant is
restricted from such competition pursuant to the foregoing provisions is
hereinafter referred to as the "Restricted Period") without the express prior
written consent of the Company only if any payment is being made. Without
limiting the generality of what might constitute competitive activity,
Consultant acknowledges and agrees that any fiber-optic competitive access
provider, competitive or incumbent local exchange carrier or inter-exchange
carrier shall constitute competitive activity.
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(b) During the Restricted Period, Consultant shall not
directly or indirectly, alone or in concert with others, solicit or accept the
business of any customer (or any person or entity whom the Company or any of its
Consultants or agents has solicited as a prospective customer) ("Customer") (nor
provide any services to any Customer) which was a Customer of the Company at any
time during the Consulting Term.
(c) During the Restricted Period, Consultant shall not,
directly or indirectly, alone or in concert with others, solicit or encourage
any employee of the Company, or an employee of any person or entity with which
the Company has an agreement through which the Company and the person or entity
are to act in concert with respect to the business of the Company (an "
Employee"), to leave their respective employment or hire any Employee of the
Company or any person who was an Employee of the Company at any time within the
one (1) year period prior to the date first above written.
(d) During the Restricted Period, Consultant shall not,
directly or indirectly, alone or in concert with others, encourage any
third-party consultant which is then under contract with the Company to cease to
work for the Company or any third-party consultant.
(e) Notwithstanding anything in this Section 6 to the
contrary, Consultant may perform under the terms of that certain agreement dated
April 1, 1998 between Consultant and his former employer IXC Carrier, Inc.
7. Non-Waiver of Rights. The Company's failure to enforce at
any time any of the provisions of this Consulting Agreement or to require at any
time performance by the Consultant of any of the provisions hereof shall in no
way be construed to be a waiver of such provisions or to affect either the
validity of this Consulting Agreement, or any part of it, or the right of the
Company thereafter to enforce each and every provision in accordance with the
terms of this Consulting Agreement. The Consultant's failure to enforce at any
time any of the provisions of this Consulting Agreement or to require at any
time performance by the Company of any of the provisions hereof shall in no way
be construed to be a waiver of such provisions or to affect either the validity
of this Consulting Agreement, or any part of it, or the right of the Consultant
thereafter to enforce each and every provision in accordance with the terms of
this Consulting Agreement.
8. Other noncompetition obligations. Consultant represents
and warrants to the Company that Consultant is not a party to any agreement
containing a noncompetition provision or other restriction with respect to the
nature of any services or business that Consultant is entitled to perform or
conduct for the Company.
9. Limited Liability. With regard to the services to be
performed by Consultant pursuant to the terms of this Consulting Agreement,
neither Consultant nor any Consultants or agents of Consultant shall be liable
to DTI, or to anyone who may claim any
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right due to this relationship with DTI, for any action or omission in the
performance of said services on the part of Consultant or on the part of the
agents or Consultants of Consultant, except when said acts or omissions of
Consultant or such agents or Consultants are due to willful misconduct or gross
negligence. DTI shall hold Consultant free and harmless from any obligations,
costs, claims judgments attorneys fees and attachments arising from or growing
out of the services rendered to DTI pursuant to the terms of this Consulting
Agreement, except when the same shall arise due to the intentional misconduct or
gross negligence of Consultant, and Consultant is determined to have committed
intentional misconduct or gross negligence by the arbitration proceedings
provided herein.
10. Assignments. This Consulting Agreement shall be freely
assignable by the Company and shall inure to the benefit of, and be binding
upon, the Company, its successors and assigns and/or any other corporate entity
which shall succeed to the business presently being operated by the Company,
but, being a contract for personal services, neither this Consulting Agreement
nor any rights hereunder are assignable by Consultant.
11. Governing Law/Arbitration. This Consulting Agreement shall
be interpreted in accordance with and governed by the laws of the State of
Missouri without regard to its conflict of law rules. Any dispute arising out of
or relating to this Agreement or the breach, termination or validity hereof,
other than Section 5 and Section 6, shall be settled by arbitration in St. Louis
County, Missouri in accordance with the commercial arbitration rules then in
effect of the American Arbitration Association. The parties consent to the
jurisdiction of the Supreme Court of the State of Missouri, and of the United
States District Court for the Eastern District of the State of Missouri for
injunctive, specific enforcement or other relief in aid of the arbitration
proceedings or to enforce judgment of the award in such arbitration proceeding.
The award entered by the arbitrator(s) shall be final and binding on all parties
to arbitration. Each party shall bear its respective arbitration expenses and
shall each pay its pro rata portion of the arbitrator's charges and expenses.
[The arbitrator(s) shall not award punitive, exemplary or consequential
damages.]
With respect to disputes arising out of Section 5 and Section
6 of this Agreement, the parties agree that exclusive venue and jurisdiction for
any action brought under this Consulting Agreement shall lie in the County of
St. Louis, Missouri.
12. Amendments. No modification, amendment or waiver of any of
the provisions of this Consulting Agreement shall be effective unless in writing
and signed by the parties hereto.
13. Notices. Any notices to be given by either party hereunder
shall be in writing and shall be deemed to have been duly given if delivered or
mailed, certified or registered mail, postage prepaid, as follows: to the
Company at Digital Teleport, Inc., 00000 Xxxxxxx Xxxx, Xx. Xxxxx, Xxxxxxxx
00000, Attn.: Xxxxxxx X. Xxxxxxxxx, President; and to Consultant at 3 Wood
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Xxxx Xxxxx #00, Xxxxxxx, Xxxxx 00000; or to such other address as may have been
furnished to the other party in writing.
14. Reflection and Advice of Counsel Encouraged. This
Consulting Agreement places restrictions on Consultant's right to seek
employment or consult with certain employers or to engage in businesses
competitive with the Company's business. By signing this Consulting Agreement,
Consultant acknowledges that he or she has had ample time to reflect on these
restrictions and has sought the advice of counsel with respect to this
Consulting Agreement.
15. Entire Agreement. This Consulting Agreement is the entire
agreement between the parties and supersedes any previous oral or written
agreement or understanding between the Company and Consultant with respect to
the subject matter hereof, including without limitation that certain consulting
agreement dated April 20, 1998. There are no representations, warranties,
promises or undertakings other than those expressly contained in this Consulting
Agreement.
16. Severability. Subject to severability provisions integral
to any paragraph of this Agreement, the unenforceability, invalidity or
illegality of any provision of this Agreement shall not affect or impair the
continuing enforceability or validity of any other part of this Agreement, all
of which shall survive and be valid and enforceable.
17. Counterparts. This Consulting Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
18. Headings. The headings in this Consulting Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Consulting Agreement.
19. Relationship Consultant and the Company agree that the
relationship contemplated by this Agreement is that of a consultant and not an
employee. Consultant agrees to pay all applicable taxes with respect to the
compensation provided hereunder and hold Company harmless with respect to same
or with respect to any determination that Consultant should be considered an
employee of the Company. Consultant agrees that he is not entitled to any
benefits or remuneration from the Company other than as expressly set forth
herein, including without limitation any medical or vacation benefits, or any
options of the Company. The Company will issue the Consultant a Form 1099 with
respect to the compensation paid to him hereunder unless otherwise required by
law.
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IN WITNESS WHEREOF, the parties have executed this Consulting
Agreement as of the date first above written.
DIGITAL TELEPORT, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
Title: President
CONSULTANT
/s/ H. P. Xxxxx
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H.P. Xxxxx
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