Exhibit 99.4 Employment Agreement dated January 7, 2000, between the Company
and Xxx X Xxxxxxx.
EMPLOYMENT AGREEMENT
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AGREEMENT made this 7th day of January, 2000, between McLeodUSA
Incorporated, a Delaware corporation, (the "Company"), and Xxx Xxxxxxx (the
"Executive").
The Board of Directors of the Company (the "Board") recognizes that
the Executive's contribution to the growth and success of the Company has been
and is expected to continue to be substantial. The Board desires to provide for
the employment of the Executive on a basis which the Board has determined will
reinforce and encourage the attention and dedication to the Company of the
Executive, as a member of the Company's management, in the best interest of the
Company and its shareholders. The Executive is willing to commit himself to
serve the Company, on the terms and conditions herein provided.
In order to effect the foregoing, the Company and the Executive wish
to enter into an employment agreement on the terms and conditions set forth
below. Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
SECTION 1. Employment. The Company hereby agrees to employ the
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Executive, and the Executive hereby agrees to serve the Company, on the terms
and conditions set forth herein.
SECTION 2. Term. The employment of the Executive by the Company as
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provided in Section 1 will commence on January 7, 2000 (the "Commencement Date")
and end on the third anniversary of the Commencement Date, unless sooner
terminated as hereinafter provided (as may be sooner terminated, the "Term").
SECTION 3. Position and Duties. The Executive shall serve as Chief
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Technology Officer of the Company and, upon consummation by the Company of the
acquisition of SplitRock Services Inc., the Executive shall also serve as
President and Chief Executive Officer of the data subsidiary of the Company
identified by the Board, in connection therewith (the "Subsidiary") and shall
have such responsibilities, duties and authority as may from time to time be
assigned to the Executive by the Board that are consistent with such positions.
The Executive shall devote substantially all of his working time and efforts to
the business and affairs of the Company; provided, however, that he may serve on
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boards of directors of civic and charitable organizations and other corporations
as long as such board participation does not interfere in any significant
respect with his obligations under this Agreement.
SECTION 4. Place of Performance. In connection with the Executive's
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employment by the Company, the Executive shall be based at the executive office
of the
Company the Subsidiary in Tulsa, Oklahoma, except for reasonably required travel
on the Company's and Subsidiary's business.
SECTION 5. Compensation and Related Matters. (a) Salary. During
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the period of the Executive's employment hereunder, the Company shall pay to the
Executive an annual base salary at a rate of $400,000, such salary to be paid in
substantially equal installments in accordance with the Company's payroll
practices for its other executives. This salary shall be subject to annual
increase, as determined by the Compensation Committee of the Board (the
"Compensation Committee") in its sole discretion, in order to provide the
Executive with annual base salary comparable to the annual base salary of
similarly situated executives at companies in similar industries having similar
revenues and compound annual growth rates. Compensation of the Executive by
salary payments shall not be deemed exclusive and shall not prevent the
Executive from participating in any other compensation or benefit plan of the
Company. The salary payments (including any increased salary payments)
hereunder shall not in any way limit or reduce any other obligation of the
Company hereunder, and no other compensation, benefit or payment hereunder shall
in any way limit or reduce the obligation of the Company to pay the Executive's
salary hereunder.
(b) Bonus Compensation. The Executive shall be entitled to receive
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annual bonus compensation based upon a target bonus opportunity of not less than
50% of the Executive's then current annual base salary in effect for such year.
Unless otherwise established for any given year by the Compensation Committee,
the target bonus opportunity shall be 50% as described above in this paragraph
and the applicable performance criteria (which may be based on individual or
corporate performance, or a combination thereof) to be achieved for such year to
earn the bonus shall be in accordance with the Company's bonus policy and
practices generally applicable to its other executives for each given year.
(c) Equity Compensation. On the Commencement Date, the Executive
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shall receive a grant of options to purchase 2,000,000 shares of Class A common
stock, par value $.01 per share, of the Company ("Common Stock") at an exercise
price (or option price as it is called in the Company's 1996 Employee Stock
Option Plan) per share equal to the fair market value per share of Common Stock
which shall be the closing price of the shares of Common Stock on the trading
day immediately preceding the Commencement Date (determined in accordance with
the Company's 1996 Employee Stock Option Plan) and shall contain such other
terms and conditions as are provided under such plan except as otherwise
specifically provided hereunder. The Executive shall also be eligible for
additional option grants during the Term on or about each anniversary of the
Commencement Date as the Compensation Committee, in its sole discretion, shall
determine. The initial grant of 2,000,000 options shall be fully exercisable no
later than the third anniversary of the Commencement Date (provided that the
Executive is then still in employment with the Company) or, if earlier, upon the
occurrence of a Change in Control (as defined herein) or as provided in Section
8(d)(iii).
(d) Expenses. During the term of the Executive's employment
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hereunder, the Executive shall be entitled to receive prompt reimbursement for
all reasonable and customary expenses incurred by the Executive in performing
services hereunder, including all expenses of travel and living expenses while
away from home on business or at the request of and in the
service of the Company, provided that such expenses are incurred and accounted
for in accordance with the policies and procedures established by the Company.
(e) Other Benefits. The Executive shall be entitled to participate
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in or receive benefits under any employee benefit plan or arrangement made
available by the Company in the future to its executives and key management
employees, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements. Nothing paid to the
Executive under any plan or arrangement presently in effect or made available in
the future shall be deemed to be in lieu of the salary payable to the Executive
pursuant to Section 5(a). Any payments or benefits payable to the Executive
under this Section 5(e) in respect of any calendar year during which the
Executive is employed by the Company for less than the entire such year shall,
unless otherwise provided in the applicable plan or arrangement, be prorated in
accordance with the number of days in such calendar year during which he is so
employed.
(f) Vacations. The Executive shall be entitled to no less than the
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number of vacation days in each calendar year, determined in accordance with the
Company's vacation policy in effect from time to time for its other executives.
The Executive shall also be entitled to all paid holidays and personal days
given by the Company to its other executives.
(g) Registration Rights. The Company shall file a Form S-8 or other
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applicable registration statement with the Securities and Exchange Commission,
to the extent such a registration statement is not otherwise already on file and
effective, in order to enable the Executive to sell or otherwise dispose of 15%
of his aggregate common equity ownership in the Company each year during the
Term. For purposes hereof, the Executive's annual 15% registration rights shall
be cumulative and determined on a fully diluted basis, including in such
determination all then outstanding unexercised options to acquire Common Stock
(whether or not vested) which the Executive has been granted by the Company.
SECTION 6. Offices. Subject to Sections 3 and 4, the Executive shall
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serve without additional compensation, if elected or appointed thereto, as a
director of the Company and any of its subsidiaries and in one or more executive
offices of any of the Company's subsidiaries.
SECTION 7. Termination. The Executive's employment hereunder may be
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terminated without any breach of this Agreement only under the following
circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon
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his death.
(b) Disability. If, as a result of the Executive's incapacity due to
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physical or mental illness, the Executive shall have been absent from his
duties hereunder on a full-time basis for the entire period of six
consecutive months, and within thirty (30) days after written notice of
termination is given (which may occur before or after the end of such six
month period) shall not have returned to the performance of his duties
hereunder on a full-time basis, the Company may terminate the Executive's
employment hereunder.
(c) Cause. The Company may terminate the Executive's employment
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hereunder for Cause. For purposes of this Agreement, the Company shall
have "Cause" to terminate the Executive's employment hereunder upon (i) the
willful and continued failure by the Executive to substantially perform his
duties hereunder (other than any such failure resulting from the
Executive's incapacity due to physical or mental illness or any such actual
or anticipated failure after the issuance of a Notice of Termination, as
defined in Section 7(e), by the Executive for Good Reason, as defined in
Section 7(d)(ii)), after demand for substantial performance is delivered by
the Company that specifically identifies the manner in which the Company
believes the Executive has not substantially performed his duties, (ii) the
willful engaging by the Executive in misconduct which is materially
injurious to the Company, monetarily or otherwise (including, but not
limited to, conduct that constitutes Competitive Activity, as defined in
Section 10), or (iii) the Executive's conviction of a felony or the
entering of a plea of no lo contendere to a felony charge. For purposes of
this Section 7(c), no act, or failure to act, on the Executive's part shall
be considered "willful" unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his action or omission was in
the best interest of the Company. Notwithstanding the foregoing, the
Executive may not be terminated for Cause pursuant to clause (i) or (ii)
above without (1) reasonable notice from the Board to the Executive setting
forth the reasons for the Company's intention to terminate for Cause, (2)
an opportunity for the Executive, together with his counsel, to be heard
before the Board, and (3) delivery to the Executive of a Notice of
Termination from the Board finding that, in the good faith opinion of
three-quarters (3/4) of the Board, the Executive was guilty of conduct set
forth above in clause (i) or (ii) above, as applicable, and specifying the
particulars thereof in detail. No such notice or meeting before the Board
shall be required if the termination for Cause is due to conduct described
in clause (iii) of the second sentence of this Section 7(c).
(d) Termination by the Executive. (i) The Executive may terminate
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his employment hereunder (A) for Good Reason, (B) if his health should
become impaired to an extent that makes his continued performance of his
duties hereunder hazardous to his physical or mental health or his life,
provided that the Executive shall have furnished the Company with a written
statement from a qualified doctor to such effect and provided, further,
that, at the Company's request, the Executive shall submit to an
examination by a doctor selected by the Company and such doctor shall have
concurred in the conclusion of the Executive's doctor or (C) for any other
reason.
(ii) For purposes of this Agreement, "Good Reason" shall
mean the occurrence (without the Executive's express written consent) of
any one of the following acts by the Company, or failures by the Company to
act, unless, in the case of any act or failure to act described in
paragraphs (A), (B), (D), (E) or (F) below, such act or failure to act is
corrected prior to the Date of Termination given in respect thereof:
(A) the assignment to the Executive of any duties
materially inconsistent with the Executive's status as a senior
executive officer of the Company or a material diminution in the
nature or status of the Executive's responsibilities from those in
effect as of the Commencement Date;
(B) a reduction by the Company in the Executive's annual base
salary or target bonus opportunity as in effect on the date hereof or
as the same may be increased from time to time;
(C) the relocation of the Company and Subsidiary's executive
office where the Executive is based to a location outside the Tulsa,
Oklahoma Metropolitan Area (or, if different, the metropolitan area in
which such offices are located immediately prior to a Change in
Control);
(D) the failure of the Company to obtain the written assumption
of its obligation to perform this Agreement by a successor to all or
substantially all of the assets of the Company within 15 days after a
merger, consolidation, sale or similar transaction;
(E) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 7(e); for purposes of this Agreement, no
such purported termination shall be effective;
(F) the failure by the Company to comply with any material
provision of this Agreement; or
(G) a Change in Control.
The Executive's right to terminate the Executive's employment for
Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
(iii) For purposes of this Agreement, a "Change in Control"
shall be deemed to have occurred if the conditions set forth in any one of
the following paragraphs shall have been satisfied:
(A) any "person" (within the meaning of Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) is
or becomes the "beneficial owner" (within the meaning of Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such
person any securities acquired directly from the Company or its
affiliates) representing 25% or more of the combined voting power of
the Company's then outstanding securities; excluding, however, the
following: (1) any acquisition directly from the Company, other than
an acquisition by virtue of the exercise of a conversion privilege
unless the security being so converted was itself acquired directly
from the Company, (2) any acquisition by the Company, or (3) any
acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or
(B) during any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board and any new
director (other than a director designated by a Person who has entered
into an agreement with the Company to effect a transaction described
in clause (A), (C) or (D) of this paragraph whose election by the
Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or
(C) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than
(i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, at
least 75% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no person acquires more than 50% of the combined voting power
of the Company's then outstanding securities; or
(D) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
(e) Notice of Termination. Any termination of the Executive's
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employment by the Company or by the Executive (other than termination
pursuant to Section 7(a)) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 13. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(f) Date of Termination. "Date of Termination" shall mean (i) if the
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Executive's employment is terminated by his death, the date of his death,
(ii) if the Executive's employment is terminated pursuant to Section 7(b),
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his duties on a
full-time basis during such thirty (30)-day period), (iii) if the
Executive's employment is terminated pursuant to Section 7(c) above, the
date specified in the Notice of Termination, and (iv) if the Executive's
employment is terminated for any other reason, the date on which a Notice
of Termination is given.
SECTION 8. Compensation Upon Termination or During Disability. (a)
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During any period that the Executive fails to perform his duties hereunder as a
result of incapacity due to physical or mental illness ("disability period"),
the Executive shall continue to receive his full salary at the rate then in
effect for such period until his employment is terminated pursuant to Section
7(b), provided that payments so made to the Executive during the first 180 days
of the disability period shall be reduced by the sum of the amounts, if any,
payable to the Executive at or prior to the time of any such payment under
disability benefit plans of the Company or under the Social Security disability
insurance program, and which amounts were not previously applied to reduce any
such payment. If the Executive's employment is terminated by reason of his
disability pursuant to Section 7(b), all of his then outstanding options to
purchase common stock of the Company shall become immediately vested and
exercisable in full upon the giving of Notice of Termination, irrespective of
whether such options were vested and exercisable on such date, and all such
options shall remain exercisable for one year following the Date of Termination
(but not beyond their original expiration dates).
(b) If the Executive's employment is terminated by his death, the
Company shall pay any amounts due to the Executive under Section 5 through the
date of his death. If the Executive's employment is terminated by reason of his
death, all of his then outstanding options to purchase common stock of the
Company shall become immediately vested and exercisable in full upon the date of
his death, irrespective of whether such options were vested and exercisable on
such date, and all such options shall remain exercisable for one year following
such date (but not beyond their original expiration dates).
(c) If the Executive's employment is terminated by the Company for
Cause or by the Executive for other than Good Reason, the Company shall pay the
Executive his full salary through the Date of Termination at the rate in effect
at the time Notice of Termination is given and the Company shall have no further
obligations to the Executive under this Agreement.
(d) If (A) in breach of this Agreement, the Company terminates the
Executive's employment (it being understood that a purported termination for
disability pursuant to Section 7(b) or for Cause which is disputed and finally
determined not to have been proper shall be a termination by the Company in
breach of this Agreement), or (B) the Executive terminates his employment for
Good Reason, then
(i) the Company shall pay the Executive his full salary through the
Date of Termination at the rate in effect at the time Notice of Termination
is given and all other unpaid amounts, if any, to which the Executive is
entitled as of the Date of Termination under any compensation plan or
program of the Company, at the time such payments are due; and
(ii) in lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, the Company shall pay as
liquidated damages to the Executive
an amount equal to the number of years (including partial years) remaining
in the Term had the Executive's employment not been terminated, times the
sum of (1) the Executive's annual salary rate in effect as of the Date of
Termination and (2) the higher of the annual bonus amount, if any, paid or
awarded by the Company to the Executive in respect of the calendar year
prior to the year in which such Date of Termination occurs or the
Executive's target bonus opportunity for the year in which Date of
Termination occurs; such payment to be made in a lump sum on or before the
fifth day following the Date of Termination;
(iii) all outstanding options to purchase common stock of the Company
granted to the Executive during the Term shall become immediately vested
and exercisable in full upon the giving of the Notice of Termination,
irrespective of whether such options were vested and exercisable on such
date, and all options granted on or after the Commencement Date shall
remain exercisable for four years after the Date of Termination (but not
beyond their original expiration dates); and
(iv) the Company shall maintain in full force and effect, for the
continued benefit of the Executive for the number of years (including
partial years) remaining in the original three-year Term had the
Executive's employment not been terminated, all medical, dental and life
insurance plans and programs in which the Executive was entitled to
participate immediately prior to the Date of Termination on the same basis
(including costs) then available to active employees provided that the
Executive's continued participation is possible under the general terms and
provisions of such plans and programs; provided, however, that in the event
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that the Executive's participation in any such plan or program is barred,
the Company shall arrange to provide the Executive with benefits
substantially similar to those which the Executive would otherwise have
been entitled to receive under such plans and programs from which his
continued participation is barred; and, further provided, that if (i) the
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Executive becomes reemployed after his Date of Termination and (ii) his new
employer offers medical and dental insurance plans or programs under which
he will be eligible to participate, any such continuing medical and dental
coverage shall be secondary to such new employer's coverage.
(e) If the Executive terminates his employment under Section
7(d)(i)(B), the Company shall pay the Executive his full salary through the Date
of Termination at the rate in effect at the time Notice of Termination is given.
(g) In the event that the Executive becomes entitled to the payments
provided in clauses (i)-(iii) of Section 8(d) (the "Severance Payments"), if any
of the Severance Payments will be subject to the excise tax imposed under
section 4999 of the Code (the "Excise Tax"), the Company shall pay to the
Executive an additional amount (the "Gross-Up Payment") such that the net amount
retained by the Executive, after deduction of any Excise Tax on the Severance
Payments and any Federal, state and local income and employment tax and Excise
Tax upon the payment provided for by this Section 8(g), shall be equal to the
Severance Payments. For purposes of determining whether any of the Severance
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(i) any other payments or benefits received or to be received by the Executive
in connection with a change in ownership or control (within the
meaning of section 280G of the Code and the regulations promulgated thereunder)
of the Company or the Executive's termination of employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in a change in control or any Person
affiliated with the Company or such Person) shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, and all "excess
parachute payment" within the meaning of section 280G(b)(1) of the Code shall be
treated as subject to the Excise Tax, unless in the opinion of tax counsel
selected by the Company's independent auditors and reasonably acceptable to the
Executive such other payments or benefits (in whole or in part) do not
constitute parachute payments, including by reason of Section 280G(b)(4)(A) of
the Code, or such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered, within the meaning of
section 280G(b)(4)(B) of the Code, in excess of the "base amount" allocable to
such reasonable compensation, or are otherwise not subject to the Excise Tax,
(ii) the amount of the Severance Payments which shall be treated as subject to
the Excise Tax shall be equal to the lesser of (A) the total amount of the
Severance Payments or (B) the amount of excess parachute payments within the
meaning of section 280(G)(b)(1) of the Code (after applying clause (i), above),
and (iii) the value of any non-cash benefits or any deferred payment or benefit
shall be determined by the Company's independent auditors in accordance with the
principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay Federal income taxes at the highest marginal rate of Federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on the Date of Termination, net of the
maximum reduction in Federal income taxes which could be obtained from deduction
of such state and local taxes.
(h) The compensation and benefits, if any, payable under this Section
8 shall be in addition to any vested accrued compensation or benefits to which
the Executive may be entitled under the Company's (or any of its Subsidiaries')
employee benefit plans and arrangements; provided, however, that the Executive
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shall not be entitled to any compensation or benefits under any severance plan
or arrangement of the Company or any of its subsidiaries to which he would
otherwise be entitled under the terms thereof.
SECTION 9. No Mitigation; No Right of Offset. The Executive shall
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have no duty to mitigate damages by seeking other employment. The Company shall
have no right of offset hereunder with respect to any compensation or benefits
received by the Executive from or in connection with any employment subsequent
to his employment termination with the Company.
SECTION 10. Noncompetition/Nonsolicitation. During the three-year
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period commencing on the Commencement Date (without regard to any termination of
the Executive's employment occurring prior thereto), and, through the fourth
anniversary of the Commencement Date if the Executive voluntary terminates
employment without Good Reason on or prior to the expiration of the Term, the
Executive shall not (i) directly or indirectly, own, manage, operate, join or
control, be employed by or participate in the ownership, management, operation
or control of, or be a consultant to or connected in any other manner with, any
business, firm or corporation which is similar to or competes with a principal
business of the Company or its
subsidiaries anywhere within the United States (a "Competitive Activity") or
(ii) hire or solicit, or cause others to hire or solicit, for employment by any
person other than the Company or its affiliates or any successor thereof, any
employee of or person employed by, or who had within six (6) months been an
employee of or employed by, the Company or its affiliates,or otherwise encourage
such persons to leave employment with the Company or its affiliates. For these
purposes, the Executive's ownership of securities or a public company not in
excess of three percent of any class of such securities shall not be considered
to be competition with the Company or its subsidiaries.
SECTION 11. Confidential Information; Personal Relationships. The
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Executive acknowledges that the Company has a legitimate and continuing
proprietary interest in the protection of its confidential information and has
invested substantial sums and will continue to invest substantial sums to
develop, maintain and protect confidential information. The Executive agrees
that, during the Term and thereafter, without the prior written consent of the
Board of Directors of the Company, the Executive shall keep secret and retain in
strictest confidence, and shall not knowingly use for the benefit of himself or
others all confidential matters relating to the Company's business including,
without limitation, operational methods, marketing or development plans or
strategies, business acquisition plans, joint venture proposals or plans, and
new personnel acquisition plans, learned by the Executive heretofore or
hereafter (such information shall be referred to herein collectively as
"Confidential Information"); provided, however, that nothing in this Agreement
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shall prohibit the Executive from disclosing or using any Confidential
Information (A) in the performance of his duties hereunder, (B) as required by
applicable law, regulatory authority, recognized subpoena power or any court of
competent jurisdiction, (C) in connection with the enforcement of his rights
under this Agreement or any other agreement with the Company, or (D) in
connection with the defense or settlement of any claim, suit or action brought
or threatened against the Executive by or in the right of the Company.
Notwithstanding any provision contained herein to the contrary, the term
"Confidential Information" shall not be deemed to include any general knowledge,
skills or experience acquired by the Executive or any knowledge or information
known or available to the public in general (other than as a result of a breach
of this provision by the Executive). Notwithstanding the foregoing, in the
event of (i) a Change in Control, (ii) the involuntary termination of the
Executive's employment by the Company without Cause or (iii) the termination by
the Executive of his employment for Good Reason, the provisions of this first
sentence of this Section 10 extending the noncompetition and nonsolicitation
restrictive covenants for an additional year through the fourth anniversary of
the Commencement Date shall be null and void and of no further force or effect.
SECTION 12. Successors; Binding Agreement. (a) The Company will
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require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to compensation
from the Company in the same amount and on the same terms as he would be
entitled to hereunder if he terminated his employment for Good
Reason, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section
12 or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would
still be payable to him hereunder if he had continued to live, all such amounts
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee, or other designee or, if
there be no such designee, to the Executive's estate.
SECTION 13. Notice. For the purposes of this Agreement, notices,
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demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
0000 Xxxxxxxx Xxxx
Xxxxx, XX 00000
If to the Company:
McLeodUSA Incorporated
0000 X Xxxxxx XX
P. O. Xxx 0000
Xxxxx Xxxxxx, XX 00000-0000
Attn: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
SECTION 14. Miscellaneous. No provisions of this Agreement may be
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modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and such officer of the Company as
may be specifically designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement.
SECTION 15. Governing Law. The validity, interpretation,
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construction and performance of this Agreement shall be governed by the laws of
the State of Iowa without regard to its conflicts of law principles.
SECTION 16. Validity/Pooling Condition. The invalidity or
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unenforceability of any provision or provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect. If (a) the Board approves a merger
or consolidation of the Company which is intended by the Board to satisfy the
accounting rules related to the pooling of interest method of accounting (the
"Pooling Rules") and (b) any provision of this Agreement would violate the
Pooling Rules, then such provision shall be deemed null and void ab initio. In
such event, the Company and the Executive shall negotiate, in good faith, a
replacement provision of equivalent value which does not cause such a violation,
provided, and to the extent, that the Company's outside auditors determine that
any such replacement provision is permissible without violating the Pooling
Rules.
SECTION 17. Counterparts. This Agreement may be executed in one or
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more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
SECTION 18. Entire Agreement. This Agreement sets forth the entire
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agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and canceled.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
MCLEODUSA INCORPORATED
By: _____________________
Name:
Title:
EXECUTIVE
_________________________
Xxx X. Xxxxxxx
Attest:
By: _____________________
