Exhibit 10.8.2
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:
|
|
(a)
|
the dissolution
or liquidation of PAETEC Holding;
|
|
|
(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);
|
|
|
(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;
|
|
|
(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
|
|
|
(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
|
2
|
|
Member for purposes of this 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.
|
“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”
3
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.
4
|
3.
|
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:
|
|
(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;
|
|
|
(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;
|
|
|
(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
|
5
|
|
(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.
|
4.
|
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
6
former employer or other Person intended by such
employer or other Person not to be 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,
7
software programs, 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 connection therewith. You also agree that you shall
promptly disclose to the Company all patent applications filed by
you or on your behalf within 12 months after the Termination Date
that relate to or concern the Company’s Business.
(f) You understand that the term
“moral rights” shall mean any rights of attribution or
integrity, including any right to claim authorship of a
copyrightable work,
8
to object to a modification of such
copyrightable work, and any similar right existing under the
judicial or statutory law of any country in the world or under any
treaty, regardless of whether or not such right is denom
