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EXHIBIT 10.6
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is entered into effective as of
the 24th day of May, 1996, between MIDCOM COMMUNICATIONS INC. ("MIDCOM" or
"Company"), having its principal place of business at 1600 MIDCOM Tower, 0000
Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, and XXXXXX X. XXXXX ("Consultant"),
whose address is 0000 Xxxxxxxx Xxx Xxxxx, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000.
WITNESSETH
WHEREAS, MIDCOM seeks experienced leadership and advice in its
telecommunications endeavors, particularly in the areas of mergers and
acquisitions, strategic and investor relationships as well as in regard to its
financial affairs; and
WHEREAS, Consultant has for a long period of time been principally
engaged in senior management of telecommunications services providers; and
WHEREAS, MIDCOM desires to obtain the services of Consultant as an
independent contractor to MIDCOM on the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained and other good and valuable consideration, receipt of
which each of the parties hereto acknowledges, it is hereby agreed as follows:
AGREEMENT
1. Consulting Period. MIDCOM shall retain the Consultant and Consultant
hereby agrees to furnish consulting services to MIDCOM for a period of five (5)
years, commencing on June 1, 1996 ("Consulting Period").
2. Consultant's Duties and Obligations. During the Consulting Period,
Consultant will render advisory services as an independent contractor to MIDCOM
and any of its affiliates with respect to (a) identifying and assisting in the
renegotiating and closing of new business acquisitions, (b) establishing sound
investor and other strategic relationships, and (c) advising the Company's Board
of Directors on critical strategic financial matters.
2.2 Availability. Commencing September 1, 1996, Consultant
shall make himself reasonably available to the Board of Directors through the
offices of the Company's Chief Executive Officer, wherein on a quarterly basis
it is anticipated Consultant will devote approximately twenty-five percent (25%)
of his time and efforts to the affairs of the Company to furnish the consulting
services as set forth in this Agreement. Consultant shall make his reports to
and receive assignments from the Chief Executive Officer of MIDCOM for the
benefit of the Board of Directors. MIDCOM and Consultant shall schedule
Consultant's consulting service time in such manner so as to reasonably
accommodate any other employment, business
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or other activities or obligations Consultant may have. Prior to September 1,
1996, Consultant shall make himself reasonably available for special projects.
2.3 Termination. MIDCOM shall have the right to terminate this
consulting relationship at any time in the event of (a) willful and continuous
failure by the Consultant to perform his material obligations hereunder upon
thirty (30) days written notice and the failure by Consultant to cure the
default within thirty (30) days of such notice, or (b) without notice in the
event of the willful engaging by the Consultant in criminal misconduct that is
materially injurious to MIDCOM or any other affiliate of MIDCOM ("Termination
For Cause"). Upon a Termination For Cause, MIDCOM's obligation to pay the
Retainer, as defined hereafter, shall immediately cease.
Upon sixty (60) days prior notice, either party may
terminate this Agreement or reduce the amount of time Consultant shall be
required to devote to the Company. Upon such event, the Retainer and unvested
options shall also be reduced in the same proportion. Thus, for example, if
Consultant gives notice to MIDCOM effecting this Consulting Agreement for the
period commencing on May 25, 1998 that Consultant shall be required to spend
only ten percent (10%) of his time rather than twenty-five percent (25%) on
MIDCOM matters, then the Retainer defined hereafter in Section 3.1 shall be
reduced to forty (40%) for the forthcoming period and sixty percent (60%) of
unvested options, determined as of May 25, 1998, shall be surrendered by
Consultant for cancellation.
3. Compensation.
3.1 Retainer. MIDCOM shall pay Consultant for services
rendered pursuant to this Agreement for approximately twenty-five percent (25%)
of his time at a retainer of $8,333 per month, payable on or before the fifth
day of the applicable month commencing on September 5, 1996, and at $1,000 per
month for June, July and August, 1996, payable on or before the fifth day of the
applicable month commencing on June 5, 1996, plus coverage under the Company's
qualified health care plan as a director of the Company, subject to the same
terms and conditions as are available to full-time employees of the Company.
Because Consultant is employed as an independent contractor, no withholding of
federal or state deductions shall be made. Consultant hereby agrees to pay all
federal and state taxes and other withholding required as a result of
compensation received pursuant to this Agreement. The compensation payable under
this paragraph shall not be subject to setoff or deduction for any reason.
3.2 Stock Options. In addition to the Retainer, the Board of
Directors has approved the grant of a non-qualified stock option to Consultant
pursuant to the Company's Stock Option Plan on the effective date of this
Agreement of May 24, 1996, at the fair market value of the Company's stock on
such date of $8 per share for 253,681 shares vesting ratably over a 5-year
period (20% per year). A copy of the Company's Stock Option Plan is attached
hereto as Exhibit A and incorporated by this reference.
4. Litigation. If any suit or action (including any appeal therefrom)
is brought to enforce this Agreement, the most prevailing party shall be
entitled to receive from the other party ordinary, necessary and reasonable
attorney fees and costs incurred in such litigation.
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5. Reimbursement of Expenses. MIDCOM shall reimburse Consultant for all
ordinary, necessary and reasonable travel expenses incurred by Consultant in
connection with providing consulting services under this Agreement; provided,
however, that all travel expenses exceeding $2,500 must be approved in writing
by the Chief Executive Officer or Chief Financial Officer of MIDCOM (or their
designees) prior to the time such expenses are incurred.
6. Hold Harmless. MIDCOM shall indemnify, protect and hold Consultant
harmless from and against all losses, liabilities, damages, and expenses
(including attorney's fees) of whatever nature, by or to any person or entity
regardless of the basis, arising from or any way relating to: (a) a failure by
MIDCOM to perform or observe any term, provision, covenant, agreement, or
condition to be performed or observed by it hereunder, (b) any action or
omission by Consultant if taken or omitted to be taken at MIDCOM's direction or
within the scope of his engagement hereunder. Consultant shall indemnify,
protect and hold MIDCOM harmless from and against all losses, liabilities,
damages, and expenses (including attorney's fees) of whatever nature, by or to
any person or entity regardless of the basis, arising from or any way relating
to: (a) a failure by Consultant to perform or observe any term, provision,
covenant, agreement, or condition to be performed or observed by him hereunder,
(b) any action or omission by Consultant if Consultant exceeds the scope of his
engagement hereunder or binds MIDCOM to any contractual obligation without
MIDCOM's consent. Nothing herein is intended to change the indemnification and
hold harmless provisions provided by the Company as it applies to its directors
and Consultant's position as a director.
7. Independent Contractor. MIDCOM appoints and Consultant agrees that
Consultant shall perform all services required hereunder in such manner as
Consultant deems appropriate and effective without the direct supervision by
MIDCOM as an independent contractor and not as an agent or employee of MIDCOM.
8. Proprietary Rights. Consultant agrees that any ideas, inventions,
processes, software designs or programs, improvements, technical information and
other data resulting from services being provided hereunder in the field of
enhanced facsimile services are works made for hire and shall be the sole
property of MIDCOM, whether or not subject to patent or copyright protection.
MIDCOM shall also be entitled to reduce any communication or material to a form
or medium eligible for copyright protection if such communication or material is
not so eligible in its original form. Consultant agrees to execute assignments
or other documents and do all things necessary to prosecute, perfect and enforce
such right, title and interest in MIDCOM and to allow MIDCOM to obtain patent,
trade name or service xxxx registration or copyright protection therefor.
Consultant agrees that the provisions of RCW 49.44.140 do not apply because
Consultant is not an employee of MIDCOM.
9. Entire Agreement. This writing represents the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes any and all prior negotiations, representations or understandings,
whether written or oral.
10. No Waiver. The forbearance of any party to this Agreement to pursue
any right or exercise any remedy hereunder shall not constitute a waiver of any
subsequent or similar right or remedy.
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11. Severability. If any non-material provision of this Agreement is
deemed to be illegal or otherwise void, invalid, or unenforceable, such
provision shall be disregarded and the remainder of this Agreement without such
non-material provision shall not be affected and shall remain in full force and
effect.
12. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of all of the parties, as well as their respective
successors, representatives and assigns. This Agreement may not be assigned by
either party; provided, however, that Consultant may assign this Agreement to a
corporation, limited liability company or other entity in which he owns 100% of
the equity interests; provided, however, that the consulting relationship shall
always be based upon the personal services of Consultant, and the Agreement may
be assigned only if the consulting services to be rendered by him may not be
assigned to another individual, although the services may be rendered through
the assignee-entity.
13. Governing Law. This Agreement, including all matters of
construction, validity and performance, shall be governed by and construed and
enforced in accordance with the laws of the State of Washington, without regard
to its conflict of law provisions which might otherwise require the application
of the law of any other jurisdiction. The parties agree that the exclusive
jurisdiction and venue of any lawsuit between them arising under this Agreement
or out of the transactions contemplated herein shall be the Superior Court of
Washington for King County, or the United States District Court for the Western
District of Washington at Seattle, and each of the parties hereby irrevocably
agrees, acknowledges and submits itself to the exclusive jurisdiction and venue
of such courts for the purposes of such lawsuit. The terms of this Agreement are
deemed to have been mutually agreed upon by all parties hereto, and
interpretation will not be for or against any party if any ambiguity exists.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
MIDCOM COMMUNICATIONS INC. CONSULTANT
By: /s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxx
__________________________ ___________________________________
Xxxxxxx X. Xxxxxxx XXXXXX X. XXXXX
Its: President & Chief
Executive Officer
_________________________
Attachment: Exhibit A, MIDCOM Stock Option Plan
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WITH COPY TO:
MIDCOM Communications Inc.
Attn: General Counsel
1600 MIDCOM Tower
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
TO: AT&T CORP.
Attn: Xxxxxxx Oyster
Division Manager
Xxxx 00X00
Xxxxxxxxxxx, Xxx Xxxxxx 00000
WITH COPY TO:
AT&T CORP.
Xxxxxxx X. Xxxxx, Xxx.
Xxxx 0000X0
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
17. Amendments
Any amendments, modifications or supplements to this Agreement shall be
valid only if all such amendments, modifications, or supplements are in writing
and are signed by an authorized representative of all parties.
18. Waiver
No waiver of any covenant, condition or limitation herein contained
shall be valid unless the same is made in writing and duly executed by the party
making the waiver. No waiver of any provision of this Agreement shall constitute
a waiver of any other provision, whether or not similar. The failure or neglect
of either party on any occasion to enforce any provision of this Agreement shall
not restrain or limit such party from enforcing such provisions upon any other
occasion or occasions if such party elects to do so, and no written waiver of
any breach of this Agreement shall be deemed to be a continuing waiver of such
breach unless so expressly stated. Any waiver shall be null and void if the
party requesting such waiver has not provided a full and complete disclosure of
all material facts relevant to the waiver requested.
19. Assignment
This Agreement is not assignable by any party.
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AT&T/MIDCOM Confidential and Proprietary
