Exhibit 10.8
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into as of
the 7th day of February, 2002 by and between US LEC Corp., a Delaware
corporation with its principal office located in Charlotte, North Carolina, on
behalf of itself and its affiliates (collectively "US LEC"), and XXXXXXX X.
XXXXXXX, a resident of North Carolina ("Xxxxxxx") to be retroactively effective
as of January 1, 2002 (the "Effective Date").
WHEREAS, US LEC has identified a need for Xxxxxxx to provide, during the
time period specified below, consulting services regarding US LEC's business;
WHEREAS, Xxxxxxx has specialized knowledge and experience that qualify him
to provide the advice and consulting services required by US LEC he is a founder
and has served as both Chief Executive Officer and as a director of US LEC, and
Xxxxxxx, and at the time of the signing of this Agreement continues to be a
direct or indirect owner of 14.4% of US LEC's outstanding common stock; and
WHEREAS, Xxxxxxx and US LEC desire for Xxxxxxx, beginning on the Effective
Date, to provide consulting services, to receive a monthly payment for such
consulting services, as well as additional compensation for consulting services
in excess of a specified number of hours each month, and to be restricted in his
ability to use confidential information and knowledge about US LEC and its
business in competition with US LEC pursuant to this Agreement, as specified in
the terms and conditions set forth below;
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, obligations and rights hereinafter specified, US LEC and Xxxxxxx
mutually agree as follows:
1. Consulting Services. Beginning of the Effective Date, Xxxxxxx shall
provide consulting services to US LEC as requested by US LEC to further US LEC's
business, including, but not limited to providing advice and assistance with
respect to (a) the conduct of US LEC's business, (b) strategic business issues
related to competitive conditions in the telecommunications industry, (c)
strategies and plans for new business development, (d) development and
implementation of network systems, (e) relationships with other
telecommunications carriers, and (f) evaluation of and assistance with potential
future acquisitions.
(a) All consulting services provided by Xxxxxxx to US LEC will be
provided to US LEC's Board of Directors (the "Board") or such executive
officers of US LEC as the Board may designate from time to time.
(b) Xxxxxxx agrees to provide up to twenty (20) days of consulting
services each year during the Term of this Agreement (as defined below)
for which he shall receive the compensation set forth in subsection 2(a)
of this Agreement. Eight (8) hours of consulting services provided by
Xxxxxxx, whether provided in one (1) day or more than one day, shall be
deemed one day of consulting services.
(c) At the request of the Board, Xxxxxxx also agrees to provide
consulting services in excess of twenty (20) days each year during the
Term of this Agreement for which he shall receive the compensation set
forth in Paragraph 2(b) of this Agreement.
(d) At no time may US LEC request Xxxxxxx to provide more than four
(4) days of consulting services in any one-month period during each year.
However, Xxxxxxx may waive this maximum limitation on a month-to-month
basis.
(e) If the twenty (20) days of consulting services provided for in
Paragraph 1(b) are not used by US LEC in any year, they shall not be
accrued for future use in subsequent years.
2. Compensation. The compensation payable by US LEC to Xxxxxxx pursuant to
this Agreement shall be as follows:
(a) For the services he has agreed to provide pursuant to Paragraph
1(b) above, Xxxxxxx shall receive compensation at the rate of $50,000 per
year, paid in biweekly installments in accordance with US LEC's automatic
deposit payroll practices.
(b) For the services performed by Xxxxxxx pursuant to Paragraph 1(c)
above, Xxxxxxx shall receive $500 per hour for each hour of service in
excess of twenty (20) days per year. Xxxxxxx shall submit to US LEC,
monthly or quarterly, a reasonably itemized statement of the services he
performs for the compensation payable to him pursuant to this Paragraph
2(b). Any such statements shall be paid within thirty (30) days of by US
LEC.
3. Expenses. US LEC will reimburse Xxxxxxx for all reasonable
out-of-pocket expenses incurred in performing his consulting duties that are
approved in advance or are otherwise reimbursable under applicable US LEC
policies and procedures, including reimbursement for the annual cost (estimated
at $1,000) of a ISDN line installed at Xxxxxxx'x home in Charlotte, North
Carolina. Such reimbursement will be due within thirty (30) days of presentation
to US LEC by Xxxxxxx of a request for reimbursement with appropriate consistent
with Internal Revenue Service requirements. Xxxxxxx will render periodic
statements to US LEC accounting for all expenses.
4. Independent Contractor. The parties agree that Xxxxxxx shall perform
his duties and services as an independent contractor. Xxxxxxx shall be
responsible to US LEC only for his ultimate work product, and US LEC shall
neither have nor exercise any direction over the method or manner by which
Xxxxxxx performs his services and functions under this Consulting Agreement.
Xxxxxxx agrees, as an independent contractor, to be fully and completely
responsible for his appropriate self-employment tax payments as well as any
other required federal, state or local tax payments, and shall indemnify and
hold harmless US LEC, its officers, directors and employees from any liability,
costs or expenses incurred by reason of Xxxxxxx'x failure to report and/or pay
any such taxes. It is further agreed and understood that Xxxxxxx is not covered
by any of the fringe benefit programs of US LEC, nor is he covered by workers'
compensation inasmuch as he is not an employee of
US LEC; provided that Xxxxxxx shall be entitled to COBRA benefits in accordance
with applicable law.
5. Term and Termination. Unless terminated sooner as provided in this
Paragraph 5, the term of this Agreement shall be for seven (7) years, beginning
on the Effective Date and shall continue for seven (7) years thereafter (the
"Term").
(a) After the third anniversary of the date this Agreement, Xxxxxxx
shall have the right to discontinue providing services under this
Agreement by providing written notice to US LEC (addressed and delivered
to the Board). In the event that Xxxxxxx elects to discontinue providing
services under this Agreement, he will no longer be entitled to receive
the compensation specified in Paragraph 2. However, Xxxxxxx will remain
obligated to comply with the restrictive provisions contained in Paragraph
9 from the effective date of his election to discontinue his consulting
services, regardless of the fact that he is no longer providing consulting
services to US LEC or receiving biweekly or other compensation from US
LEC.
(b) US LEC will have the right to terminate this Agreement only
under the following circumstances: (1) Xxxxxxx'x disability, if such
disability has rendered Xxxxxxx unable to satisfactorily perform the
services that may be requested of him under this Agreement; or (2)
Xxxxxxx'x breach of this Agreement.
(c) In the event US LEC terminates Xxxxxxx'x consulting services by
reason of Xxxxxxx'x disability or breach of this Agreement, Xxxxxxx shall
no longer be entitled to receive biweekly or other compensation from US
LEC, but he shall remain obligated to comply with the restrictive
provisions contained in Paragraph 9 from the date of such termination,
regardless of fact that he is no longer providing consulting services to
US LEC or receiving biweekly or other compensation from US LEC. US LEC's
termination of this Agreement under this provision will in no way preclude
or limit its right to pursue any other remedies allowed by law, including
but not limited to damages and injunctive relief.
(d) Upon Xxxxxxx'x death, this Agreement shall automatically
terminate and Xxxxxxx'x estate shall be entitled to receive only the
amount of accrued but unpaid biweekly or other compensation specified in
Paragraph 2 through the date of Xxxxxxx'x death and any unpaid expenses
incurred by Xxxxxxx pursuant to Paragraph 3 prior to his death. Xxxxxxx'x
legal representative is authorized to make application for and receive on
behalf of Xxxxxxx'x estate payments for any such compensation and
expenses.
6. Recognition of US LEC's Legitimate Interests. Xxxxxxx understands and
acknowledges that US LEC and its affiliates compete in the United States in the
provision and sale of telecommunications products and services, including but
not limited to providing local, long distance, calling card, toll free,
dedicated internet, digital private line, and frame relay services to customers.
As part of Xxxxxxx'x prior employment with US LEC and in order for Xxxxxxx to
render consulting services to US LEC, Xxxxxxx has been and will continue to be
provided significant Confidential Information by US LEC (as defined below). In
addition, Xxxxxxx may have direct contact with US LEC's customers, employees,
vendors, and
representatives of companies US LEC considers for acquisition. Xxxxxxx
acknowledges that US LEC's competitors would obtain an unfair advantage if
Xxxxxxx disclosed the Confidential Information to a competitor, used it in a
competitor's behalf, or if he were able to exploit the relationships he
developed as an employee and consultant of US LEC to solicit business on behalf
of a competitor.
7. Definition of Confidential Information. As used in this Agreement,
"Confidential Information" means data or information which is of value to US LEC
and is not generally known to persons or entities outside of US LEC, including
but not limited to the following: (a) information about past, present or
potential customers; (b) information about past, present, or potential vendors
or suppliers; (c) information about other carriers with whom US LEC does
business; (d) network planning techniques and processes, past, present or
proposed network designs or configurations, network diagrams, trunking
arrangements, switch configurations, or other network information; (e)
information about the financial aspects of US LEC's business, such as costs,
financial statements, pricing, quoting procedures, sales, financial projections,
and other financial information; (f) business opportunities for new or
developing business for US LEC, and business and marketing plans, techniques,
and strategies of US LEC (including plans for new markets, products or
services); (g) technical information including training materials, inventions,
computer programs, techniques and network engineering concepts; (h) employee
lists, organizational charts, and private personnel information; (i) any
information received by US LEC from third parties in confidence (or subject to
non-disclosure or similar covenants) and the terms and conditions of
negotiations or confidential contracts between US LEC and third parties; (j)
information concerning any potential mergers or acquisitions of or by US LEC or
other business opportunities; (k) any documents, designs, files or other
information marked "Confidential"; and (l) any other information that is
proprietary to US LEC or constitutes a trade secret under applicable law.
8. Agreement to Maintain Confidentiality.
(a) Except as otherwise provided in this Agreement, during the Term
and at all times after the termination of this Agreement, Xxxxxxx
covenants and agrees to treat as confidential and not to negligently or
intentionally disclose, and to use only for the advancement of the
interests of US LEC, all Confidential Information received by Xxxxxxx
prior to this Agreement or received, compiled, developed, designed,
produced, accessed, or otherwise discovered by Xxxxxxx while providing
consulting services to US LEC. Xxxxxxx will not disclose or divulge the
Confidential Information to any person, entity, firm or company whatsoever
or use the Confidential Information for Xxxxxxx'x own benefit or for the
benefit of any person, entity, firm or company other than US LEC.
(b) Xxxxxxx specifically acknowledges that the Confidential
Information, whether reduced to writing or maintained in the mind or
memory of Xxxxxxx, and whether compiled or created by Xxxxxxx, US LEC, or
any of its affiliates or customers, derives independent economic value
from not being readily known to or ascertainable by proper means by others
who could obtain economic value from the disclosure or use of the
Confidential Information. Xxxxxxx also acknowledges that reasonable
efforts have been
put forth by US LEC to maintain the secrecy of the Confidential
Information, that the Confidential Information is and will remain the sole
property of US LEC or any of its affiliates or customers, as the case may
be, and that any retention and/or use of Confidential Information during
or after the termination of this Agreement (except in the regular course
of Xxxxxxx performing his services hereunder) will constitute a
misappropriation of the Confidential Information belonging to US LEC.
(c) For purposes of this Paragraph, information shall not be deemed
to be "Confidential Information" to the extent that the information (i) is
in the public domain; or hereafter becomes generally known or available
through no action or omission on the part of Xxxxxxx; (ii) is furnished to
any person by US LEC without restriction on disclosure; (iii) becomes
known to Xxxxxxx from a source other than US LEC, without a breach of any
agreement with US LEC and without any restriction on disclosure; or (iv)
is disclosed after written approval for the disclosure has been given by
US LEC.
9. Noncompetition and Nonsolicitation.
(a) Xxxxxxx hereby agrees that for so long as he is compensated for
consulting services pursuant to this Agreement and for one (1) year from
the effective date of his election to discontinue providing consulting
services pursuant to Paragraph 5(a) or one (1) year from the date from the
date US LEC terminates Xxxxxxx'x consulting services pursuant to Paragraph
5(c), whichever becomes applicable, Xxxxxxx will NOT, within the
Restricted Territory, do any of the following:
(1) Engage directly or indirectly (either as an owner,
employee, consultant, or in any similar capacity) in the research,
development, marketing, sale, or distribution of telecommunications
products or services which are the same as or similar to those in
development and/or sold by US LEC while Xxxxxxx is compensated for
consulting services pursuant to this Agreement or the last twelve
(12) months of Xxxxxxx'x employment with US LEC.
(2) Solicit or encourage any customers of US LEC (a) with whom
Xxxxxxx had direct contact while he is compensated for consulting
services pursuant to this Agreement or while he was employed with US
LEC, and (b) who remain US LEC customers at the time of
solicitation, to purchase telecommunications products or services
from any entity other than US LEC.
(b) Xxxxxxx agrees that for so long as he is compensated for
consulting services pursuant to this Agreement and for two (2) years from
the effective date of his election to discontinue providing consulting
services pursuant to Paragraph 5(a) or two (2) years from the date US LEC
terminates Xxxxxxx'x consulting services pursuant to Paragraph 5(c),
whichever becomes applicable, Xxxxxxx will NOT, within the Restricted
Territory, encourage, induce or attempt to induce any employees of US LEC
to end their employment relationship with US LEC and work for a competitor
of US LEC.
(c) As used in this Xxxxxxxxx 0, "Xxxxxxxxxx Xxxxxxxxx" shall mean
the following:
1. A sixty mile radius of the following: Philadelphia, Pa.;
Pittsburgh, Pa.: Baltimore, Md.; Washington, DC; Richmond, Va.;
Norfolk, Va.; Greensboro, NC; Raleigh, NC; Charlotte, NC;
Charleston, SC; Atlanta, Ga.; Jacksonville, Fla.; Orlando, Fla.;
Tampa, Fla.; Fort Xxxxx, Fla.; Xxxx Xxxx Xxxxx, Xxx.; Xxxxx, Xxx.;
Xxx Xxxxxxx, Xx.; Mobile, Ala.; Birmingham, Ala.; Memphis, Tenn.;
Chattanooga, Tenn.; Nashville, Tenn.; Knoxville, Kty.; Louisville,
Kty.;
2. A sixty mile radius of each city in which US LEC provides
telecommunication services, whether existing as of the date of this
Agreement or thereafter as a result of expansion, acquisition or
otherwise;
3. Any geographical area in the States of North Carolina,
South Carolina, Florida, Virginia, Tennessee, Georgia, Alabama,
Pennsylvania, Louisiana, Kentucky, Maryland, and the District of
Columbia in which US LEC conducts material telecommunications
business;
4. Any geographical area in any additional States in the
United States in which US LEC provides telecommunications products
and/or services to customers during the Term hereof, whether as a
result of expansion, acquisition or otherwise;
5. Any geographical area in any province of Canada in which US
LEC provides telecommunications products and/or services to
customers during the Term hereof;
6. Any geographical area in any State in the United States and
province of Canada in which US LEC's customers are located.
10. Return of Property. Xxxxxxx agrees that upon (a) the termination of
this Agreement, or (b) the written request of US LEC, Xxxxxxx (or in the event
of the death or disability of Xxxxxxx, Xxxxxxx'x heirs, successors, assigns and
legal representatives) shall return to US LEC any and all property of US LEC,
including but not limited to all Confidential Information, notes, data,
reference items, documents, sketches, drawings, software, forms, manuals, and
equipment, without retaining any copies or summaries of such property.
11. Enforcement. In addition to the rights specified in Paragraph 5, US
LEC will have all of the following remedies in the event of a breach by Xxxxxxx
of this Agreement:
(a) US LEC may enforce the provisions of this Agreement by
injunction to (i) restrain any violation by Xxxxxxx, Xxxxxxx'x partners,
agents, servants, employers, and employees, and all persons acting for or
with Xxxxxxx; and (ii) to compel specific performance of the terms and
conditions of this Agreement. Xxxxxxx agrees that a breach or violation of
any of the covenants under Paragraphs 7 through 10 will result in
immediate
and irreparable harm to US LEC in an amount which will be impossible to
ascertain at the time of the breach or violation and that the award of
monetary damages will not be adequate relief to US LEC.
(b) In the event that Xxxxxxx fails to fulfill the terms of the
consulting obligations contained in Paragraph 1 or fails to comply with
the restrictive provisions contained in Paragraphs 7 through 10, US LEC
may, at its discretion, declare the biweekly payments forfeited with
respect to any biweekly period during which Xxxxxxx is in breach of this
Agreement. US LEC may declare the biweekly payment forfeited if Xxxxxxx is
in breach of this Agreement for any portion of the biweekly period at
issue, and Xxxxxxx will not be entitled to any payment for that period. US
LEC may take this action without terminating the Agreement pursuant to
Paragraph 5.
(c) The remedies described in Subparagraphs (a) and (b) of this
Paragraph shall be cumulative and in addition to all other remedies US LEC
may have against Xxxxxxx at law or in equity. Further, the rights provided
by Subparagraph (b) of this Paragraph shall not be interpreted in any way
to limit US LEC's right to seek and obtain injunctive relief. Finally,
nothing contained in this Agreement shall limit, abridge, or modify the
rights of US LEC under any statutes or common law, including but not
limited to applicable trade secret, trademark, copyright, or patent law.
12. Reasonableness of Restrictions. Xxxxxxx has carefully considered the
nature and extent of the restrictions upon him and the rights and remedies
conferred upon US LEC under Paragraphs 7 through 10 and hereby acknowledges and
agrees that the same are reasonable in time and territory, are designed to
eliminate competition which would otherwise be unfair to US LEC, do not
interfere with Xxxxxxx'x exercise of his inherent skill and experience, are
reasonably required to protect the legitimate interests of US LEC, and do not
confer a benefit upon US LEC disproportionate to the detriment to Xxxxxxx.
Xxxxxxx certifies that he has had the opportunity to discuss this Agreement with
such legal advisors as he chooses and that he understands its provisions and has
entered into this Agreement freely and voluntarily. US LEC agrees to pay or
reimburse Xxxxxxx for the reasonable fees and out-of-pocket expenses of his
counsel for reviewing and advising Xxxxxxx regarding the terms of this
Agreement.
13. Severability. It is the intention of the parties to restrict the
activities of Xxxxxxx only to the extent reasonably necessary for the protection
of US LEC's legitimate interests. The parties specifically covenant and agree
that should any of the provisions in this Agreement be deemed by a court of
competent jurisdiction too broad for the protection of US LEC's legitimate
interests, the parties authorize the court to narrow, limit or modify the
restrictions herein to the extent reasonably necessary to accomplish such
purpose. In the event such limiting construction is impossible, such invalid or
unenforceable provision shall be deemed severed from this Agreement and every
other provision of this Agreement shall remain in full force and effect.
14. Applicable Law. This Agreement shall be interpreted, construed and
governed according to the laws of the State of North Carolina, regardless of
choice of law principles to the contrary. Further, US LEC and Xxxxxxx agree that
in any dispute between them jurisdiction and venue are appropriate in
Mecklenburg County, North Carolina.
15. Entire Agreement; Amendments. With the exception of any
Confidentiality Agreement previously entered into between US LEC and Xxxxxxx,
this Agreement discharges and cancels all previous agreements and constitutes
the entire agreement between the parties with regard to the subject matter
hereof. No agreements, representations, or statements of any party not contained
herein shall be binding on either party. Further, no amendment or variation of
the terms or conditions of this Agreement shall be valid unless in writing and
signed by both parties.
16. Assignability. This Agreement and the rights and duties created
hereunder shall not be assignable or delegable by Xxxxxxx. US LEC may, at its
option and without the consent of Xxxxxxx, assign its rights and duties
hereunder to any successor to US LEC or transferee of all or substantially all
of US LEC's assets. Any such successor or transferee shall be bound by this
Agreement in the same manner and to the same extent as US LEC as if no such
succession or transfer had taken place.
17. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of US LEC and Xxxxxxx and their respective successors, assigns, heirs
and legal representatives.
18. No Waiver. No failure or delay by any party to this Agreement to
enforce any right specified in this Agreement will operate as a waiver of such
right, nor will any single or partial exercise of a right preclude any further
or later enforcement of the right within the period of the applicable statute of
limitations.
19. Affiliates. Xxxxxxx and US LEC acknowledge and agree that all
affiliates of US LEC are specific, intended parties to this Agreement, and that
each shall be independently entitled to enforce US LEC's rights and benefits
under this Agreement against Xxxxxxx.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
US LEC CORP.
By: /s/ Xxxxxxx X. Xxxxx
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Its: Chief Executive Officer
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/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
