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Exhibit
10.8
EXECUTIVE CONFIDENTIALITY,
NON-SOLICITATION,
NON-COMPETITION AND
SEVERANCE AGREEMENT
THIS EXECUTIVE
CONFIDENTIALITY, NON-SOLICITATION, NON-COMPETITION AND SEVERANCE
AGREEMENT (together with the annexes and exhibit attached hereto,
this “Agreement”) is entered into as of the date set
forth on the signature page hereto between PAETEC Holding Corp., a
Delaware corporation (“PAETEC Holding”), and
(“you”).
WHEREAS, the Company (as
defined herein) has developed and expects to continue to develop
confidential and proprietary materials and highly sensitive
information of significant value, which you recognize must be
carefully protected as set forth below for the Company to be
successful;
NOW, THEREFORE, to induce the
Company to continue to employ you, and in consideration of your
continued employment by the Company and for other good and valuable
consideration, the receipt and sufficiency of which you hereby
acknowledge, PAETEC Holding and you hereby agree, intending to be
legally bound, as follows:
For purposes of this
Agreement, the following capitalized terms have the meanings
ascribed to such terms in this Section 1:
“Affiliate” shall have the meaning ascribed
to such term in Rule 12b-2 promulgated under the Exchange
Act.
“Board”
shall mean the board of directors of PAETEC Holding.
“Cause”
shall mean termination of your employment with the Company due to
any of the following: (a) your material failure or refusal to
perform the duties assigned to you, provided that the
Company gives you a written notice of your failure or refusal to
perform such duties and 20 days to remedy such failure or refusal,
and provided, further , that such duties are not materially
inconsistent with those of other individuals who report directly to
the officer of the Company to whom you directly report (or
materially inconsistent with those of other individuals reporting
directly to the Board, if you are the Chief Executive Officer of
PAETEC Holding); (b) your refusal to follow the reasonable
directives of the Board, the Chief Executive Officer or the other
officer to whom you directly report, provided that the
Company gives you a written notice of your refusal to perform such
directives and 20 days to remedy such refusal, and provided
, further , that such directives are not materially
inconsistent with those of other individuals who report directly to
the officer of the Company to whom you directly report (or the
Board, if you are the Chief Executive Officer of PAETEC Holding);
or (c) your conviction of a felony.
“ Change of Control
Transaction ” shall mean any of the following:
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(a) |
the dissolution or liquidation of PAETEC Holding; |
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(b) |
a merger, consolidation, reorganization or similar transaction
involving PAETEC Holding (i) in which PAETEC Holding is not
the surviving corporation or other surviving Person or
(ii) which results in PAETEC Holding becoming the wholly-owned
subsidiary of another corporation or other Person (any transaction
of the type specified in this clause (ii), a “Parent
Transaction”), unless the Existing Stockholders beneficially
own (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in the aggregate immediately following the
consummation of such transaction more than 50% of the combined
voting power of all classes of outstanding Voting Securities of the
successor to PAETEC Holding (in the case of a transaction referred
to in clause (i) above) or of the corporation or other Person
whose Voting Securities are issued to the Existing Stockholders in
such transaction (in the case of a transaction referred to in
clause (i) or (ii) above); |
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(c) |
a sale of all or substantially all of the assets of PAETEC
Holding to another corporation or other Person, as determined in
accordance with the applicable law of the State of
Delaware; |
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(d) |
any other transaction (including a merger, consolidation,
reorganization or similar transaction) that results in any
corporation or other Person, other than the Arunas A. Chesonis and
his controlled Affiliates, beneficially owning (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) immediately
following the consummation of such transaction more than 50% of the
combined voting power of all classes of outstanding Voting
Securities of (i) the corporation (including, to the extent
applicable, PAETEC Holding) or other Person whose Voting Securities
are issued to the Existing Stockholders in such transaction or
(ii) if no such issuance is made in such transaction, PAETEC
Holding; or |
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(e) |
the Incumbent
Board Members ceasing for any reason to constitute (i) at any
time prior to the consummation of a Parent Transaction, a majority
of the Board or a majority of the board of directors, board of
managers or other governing body of any successor to PAETEC Holding
or (ii) at any time following the consummation of a Parent
Transaction, a majority of the board of directors, board of
managers or other governing body of the corporation or other Person
whose Voting Securities are issued to the Existing Stockholders in
such transaction; provided , however , that any
individual becoming a member of the Board or of such board of
directors, board of managers or other governing body, as the case
may be, subsequent to the date of this Agreement whose appointment
or nomination for election was approved by a vote of at least a
majority of the Incumbent Board Members shall be deemed to be an
Incumbent Board Member for purposes of this
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clause (e), but excluding,
for such purposes, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors (or
managers or other members of any such governing body) or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board or such board of directors,
board of managers or other governing body, as the case may
be.
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“Code”
shall mean the Internal Revenue Code of 1986, as amended, as in
effect on the date hereof or as hereafter amended.
“Company”
shall mean (a) collectively, PAETEC Holding and its
Subsidiaries, or (b) when express reference in this Agreement
is made to your employment with the Company or when reference in
this Agreement is made to any notice or other communication you are
required or permitted to provide hereunder, PAETEC Holding, if you
are employed by PAETEC Holding, or any Subsidiary of PAETEC
Holding, if you are employed by such Subsidiary, and shall include
the successors and assigns of PAETEC Holding and each
Subsidiary.
“Company’s
Business” shall mean the businesses in which PAETEC
Holding and its Subsidiaries engage or plan to engage (even if they
have not yet begun to engage in such businesses) at any time during
the term of your employment with the Company, which businesses
shall include research, development, manufacture, sale, resale
and/or licensing of products and services related to
communications, integrated communications, long-distance services,
Internet access, eCommerce, hardware and software (whether owned or
licensed by the Company), wireless networking and wireless last
mile services, and data services, on a wholesale, resale and/or
retail basis, including local, domestic, and international
long-distance services, local exchange services, IP/ISP services,
high-speed Internet access, MPLS services, DSL services, eCommerce,
web hosting, ASP services, data networking, systems integration
services, telecommunications hardware manufacturing and sale,
internet telephony (VOIP) equipment and services,
telecommunications expense management software and managed
services, and data communications services.
“Disability” shall mean your
“permanent and total disability” within the meaning of
Section 22(e)(3) of the Code.
“Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended, as in effect on the date hereof or as hereafter
amended.
“Existing
Stockholders ” shall mean, with respect to
any transaction, all holders of all classes of Voting Securities of
PAETEC Holding as of the time immediately preceding the
consummation of such transaction.
“Good
Reason” shall mean termination of your employment with
the Company due to any of the following: (a) any action by the
Company to reduce your base salary by a material amount at any
time; (b) any action by the Company to reduce your
“target”
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annual bonus opportunity (as opposed to
your minimum or maximum annual bonus opportunity), expressed as a
percentage of your annual base salary, by a material amount at any
time; or (c) a requirement by the Company that you be based
anywhere other than within 50 miles of your current location
without your consent; provided , however , you must
give written notice to the Company within 90 days of the occurrence
of the condition that is the basis for such Good Reason;
provided , further , that, if the basis for such Good
Reason is correctible and the Company has corrected the basis for
such Good Reason within 30 days after receipt of such notice, you
may not then terminate your employment for Good Reason with respect
to the matters addressed in such notice, and therefore your notice
of termination with respect to such basis for Good Reason shall
automatically become null and void.
“Incumbent Board
Members” shall mean the individuals who, as of the date
of this Agreement, constitute the Board.
“Person”
shall mean an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an
agency or instrumentality thereof.
“Subsidiary” shall mean any corporation,
partnership, limited liability company, association or other
business entity of which more than 50% of the voting power of the
outstanding Voting Securities is owned, directly or indirectly, by
PAETEC Holding and one or more other Subsidiaries of PAETEC
Holding.
“Voting
Securities” shall mean, with respect to any Person,
capital stock of any class or kind ordinarily having the power to
vote for the election of directors, managers or other voting
members of the governing body of such Person.
(a) You acknowledge that you
have been and shall be provided access to the Company Confidential
Information and occupy and shall occupy a position of trust and
confidence with respect to the Company’s affairs and
business. For purposes of this Agreement, “Company
Confidential Information” shall have the meaning ascribed to
such term on Annex A-1 attached hereto and made a
part hereof.
(b) You acknowledge and agree
that: (i) during your employment with the Company, you shall
have access to and become acquainted with the Company Confidential
Information and materials, including its trade secrets, and shall
occupy a position of trust and confidence with respect to the
Company’s affairs, business and customer goodwill, and the
Company Confidential Information; (ii) the interests afforded
protection by this Agreement are the Company’s legitimate
business interests, deserving of protection; and (iii) the
Company would not have entered into or continued its employment
relationship with you without your execution of this Agreement. You
agree to take the steps set forth on Annex A-2
attached hereto and made a part hereof to preserve the confidential
and proprietary nature of the Company Confidential Information and
materials and to preserve the Company’s goodwill.
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Non-Competition and Non-Solicitation |
(a) Unless the following
covenants are waived in whole or in part by the Company in
accordance with Section 7, for a period of one (1) year
after the effective date of termination of your employment with the
Company (the “Termination Date) (irrespective of the reason
for, or manner of, such termination), you shall not, directly or
indirectly:
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(i) |
solicit, recruit or hire, or in any manner assist in the
soliciting, recruitment or hiring of (A) any of the employees
of PAETEC Holding or any Subsidiary or any individuals who were
employed by PAETEC Holding or any Subsidiary within 12 months
before the Termination Date, or (B) any of the sales agents or
independent sales agents of PAETEC Holding or any Subsidiary, or
any individual or Person that was a sales agent or independent
sales agent of PAETEC Holding or any Subsidiary within 12 months
before the Termination Date; |
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(ii) |
individually or as an officer, director, employee, shareholder
or equity owner (other than as a shareholder or other equity owner
of less than 1% of the outstanding capital stock of a publicly
traded company), consultant, contractor, partner, joint venturer,
agent, manager, or other representative, work for, become employed
by or perform services for any corporation or other Person that is
competitive with the Company’s Business or that would divert
business from PAETEC Holding or any Subsidiary in any geographical
area in which PAETEC Holding or any Subsidiary is then conducting
operations (such competitive corporation or other Person, an
“Other Enterprise”), provided that you shall not be
restricted from working for, becoming employed by or performing
services for any Other Enterprise, even if another division,
subsidiary or Affiliate of such Other Enterprise is competitive
with the Company’s Business or would divert business from
PAETEC Holding or any Subsidiary, so long as you do not perform any
services for such division, subsidiary or Affiliate, and provided,
further, that you shall not be restricted under this
Section 3(b)(ii) from competing with any business of PAETEC
Holding or any Subsidiary if you did not provide any services to
such business of PAETEC Holding or such Subsidiary or did not
possess or have knowledge of Company Confidential Information
within the 24-month period before the Termination Date; |
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(iii) |
solicit on behalf of any Other Enterprise, or accept on behalf
of any Other Enterprise, business from any individual, business or
organization that was known by you to be a customer of PAETEC
Holding or any Subsidiary, or identified by PAETEC Holding or any
Subsidiary as a prospective customer of PAETEC Holding or such
Subsidiary, in each case as of or within 12 months before the
Termination Date; or |
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(iv) |
take any action to influence or attempt to influence customers,
prospective customers, vendors or suppliers of PAETEC Holding or
any Subsidiary known to you to divert their business to any Other
Enterprise or take any action which is intended, or would
reasonably be expected, to affect adversely PAETEC Holding or any
Subsidiary, the Company’s Business, the reputation of PAETEC
Holding or any Subsidiary, or the relationship of PAETEC Holding or
any Subsidiary with its customers, prospective customers, vendors
or suppliers. |
(b) The parties agree that if
a court of competent jurisdiction finds that any term of this
Section 3 is for any reason unenforceable because it is overly
broad in scope or duration, such term shall be modified to the
minimum extent necessary to make it enforceable. Further, the
covenants in this Section 3 shall be deemed to be a series of
separate covenants and agreements, one for each and every region of
each state, territory, possession or other political division of
the United States of America and each other political division
worldwide. If, in any judicial proceeding, a court of competent
jurisdiction shall refuse to enforce any of the separate covenants
deemed included herein, then, at the option of the Company, wholly
unenforceable covenants shall be deemed eliminated from this
Section 3 for the purpose of such proceeding to the extent
necessary to permit the remaining separate covenants to be enforced
in such proceeding. In addition, if a court or other enforcement
body finds that any provision of this Section 3 may not be
enforced as written because of a public policy, you agree that such
court or enforcement body shall modify and construe such provision
to permit its enforcement to the maximum extent permitted by
law.
(c) You acknowledge the
highly competitive nature of the industry in which the Company is
involved and further as follows: (i) your services to the
Company are special and unique; (ii) your work for the Company
shall allow you access to Company Confidential Information,
including trade secrets, and customers; (iii) the
Company’s business is conducted throughout the United States
and over the Internet and World Wide Web, enabling the Company and
you to regularly provide services to customers nationwide;
(iv) PAETEC Holding would not have entered into this Agreement
but for the covenants and agreements contained in this
Section 3; and (v) the agreements and covenants contained
in this Section 3 are reasonable and are necessary and
essential to protect the business, Company Confidential
Information, including trade secrets, and goodwill of the Company.
You further acknowledge that this Agreement does not restrict your
ability to be gainfully employed, and you acknowledge that the
geographic boundaries, scope of prohibited activities, and duration
of the covenants set forth in this Section 3 are reasonable in
nature and no broader than are necessary to protect the legitimate
business interests of the Company. You agree not to raise any
objection to the reasonableness of this Section 3 in any
action or proceeding to enforce the terms of this
Agreement.
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Certain IP and Inventions |
(a) During your employment
with the Company, you agree that you shall not knowingly improperly
use or disclose any proprietary information or trade secrets of any
former employer or other Person intended by such employer or other
Person not to be
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disclosed to the Company. You further
agree that you shall not bring onto the Company’s premises
any unpublished document or proprietary information belonging to
any former employer or other Person unless consented to in writing
by such employer or other Person. You agree to inform the Company
of any conflicts between your work for the Company and any
obligations you may have to preserve the confidentiality of another
Person’s proprietary information or materials. If you do not
so inform the Company, the Company may conclude that no such
conflicts exist, and you agree that thereafter you shall make no
claim against the Company that any such conflicts exist. The
Company shall receive any such disclosures about any such conflicts
in confidence and consistent with the objectives of avoiding any
conflict of obligations and rights or the appearance of any
conflict of interest.
(b) Inventions directly
relating and applicable and useful to the Company’s Business,
if any, patented or unpatented, which you made prior to the
commencement of your employment with the Company are excluded from
the scope of this Agreement. To preclude any possible uncertainty,
you have set forth on Exhibit 1 attached hereto a
complete list of all such Inventions that you have, alone or
jointly with others, conceived, developed or reduced to practice or
caused to be conceived, developed or reduced to practice prior to
the commencement of your employment with the Company, that you
consider to be your property or the property of third parties and
that you wish to have excluded from the scope of this Agreement
(collectively referred to as “Prior Inventions”). If
disclosure of any such Prior Invention would cause you to violate
any prior confidentiality agreement, you understand that you are
not to list such Prior Inventions in Exhibit 1
attached hereto but are only to disclose a cursory name for each
such invention, a listing of the party or parties to whom it
belongs and the fact that full disclosure as to such inventions has
not been made for that reason. A space is provided on Exhibit
1 attached hereto for such purpose. If no such disclosure
is attached, you represent that there are no such Prior Inventions.
If, in the course of your employment with the Company, you
incorporate a Prior Invention into a Company product, test, service
or process, the Company is hereby granted and shall have a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide
license (with rights to sublicense through multiple tiers of
sublicensees) to make, have made, modify, use and sell such Prior
Invention. Notwithstanding the foregoing, you agree that you shall
not incorporate, or permit to be incorporated, Prior Inventions in
any Company Inventions without the Company’s prior written
consent.
(c) You represent that, to
the best of your knowledge, your performance of all of the terms of
this Agreement and as an employee of the Company does not and shall
not breach any agreement to keep in confidence proprietary
information acquired by you prior to your employment by the
Company. Further, you represent that, to the best of your
knowledge, the performance of your duties with the Company shall
not breach any contractual or other legal obligation you have to
any third Person.
(d) You agree that any and
all intellectual properties, including all ideas, concepts, themes,
inventions, designs, tests, procedures, research methods,
improvements, discoveries, developments, formulas, patterns,
devices, processes, software programs,
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hardware information, engineering and
other information related to the integration of hardware and
software, software program codes, logic diagrams, flow charts,
decision charts, drawings, procedural diagrams, coding sheets,
documentation manuals, technical data, client, customer and
supplier lists, and compilations of information, records, and
specifications, and other matters constituting Company Confidential
Information (including trade secrets), that relate in any way to
the actual or prospective business of the Company or to any
experimental or developmental work carried on by the Company, and
that are conceived, developed or written by you, individually or in
collaboration with others during your employment, and all designs,
plans, reports, specifications, drawings, inventions, processes,
test data and/or other information or items produced by you while
performing your duties for the Company, shall belong to and be the
sole and exclusive property of the Company, and are “works
for hire” by you in your capacity as an employee of the
Company. To the extent any such tangible or intangible work product
of yours is not a “work for hire,” you hereby assign
and transfer to the Company, to the fullest extent permitted by
law, all of your rights, title and interest in such intellectual
properties, including all patent, copyright or trade secret rights
therein.
(e) You further agree to
assist the Company in obtaining patents on all inventions, designs,
improvements and discoveries that are patentable, or copyright
registrations on all works of authorship, and to execute all
documents and do all things necessary to vest the Company with full
and exclusive title and protect against infringement by others. You
agree to give the Company or its designees all assistance
reasonably requested to perfect such rights, provided that
following termination of your employment, the Company shall
reimburse you for your reasonable time and expense in assisting
with such matters. You further agree that if the Company is unable,
after reasonable effort, to secure your signature on any such
documents, any officer of the Company shall be entitled to execute
any such documents as your agent and attorney-in-fact, and you
hereby irrevocably designate and appoint each officer of PAETEC
Holding and each Subsidiary as your agent and attorney-in-fact to
execute any such documents on your behalf, and to take any and all
actions as the Company may deem necessary or desirable in order to
protect its rights and interests in any work, under the conditions
described in this sentence. You agree that you shall promptly and
fully inform the Company of and disclose to the Company all
intellectual properties described in this Agreement that you make
during your employment with the Company, whether individually or
jointly in collaboration with others, that pertain or relate to the
actual or potential business of the Company or to any experimental
or developmental work carried on by the Company, whether or not
conceived during regular working hours. You agree to make full
disclosure to the Company immediately after creating or making any
of the intellectual properties identified in this Agreement, and
shall thereafter keep the Company fully informed at all times of
all progress in connect
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