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EXHIBIT 10.19 EMPLOYMENT/STOCK REPURCHASE AGREEMENT

Stock Repurchase Agreement

EXHIBIT 10.19 EMPLOYMENT/STOCK REPURCHASE AGREEMENT | Document Parties: MPOWER HOLDING CORP | MGC COMMUNICATIONS, INC., You are currently viewing:
This Stock Repurchase Agreement involves

MPOWER HOLDING CORP | MGC COMMUNICATIONS, INC.,

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Title: EXHIBIT 10.19 EMPLOYMENT/STOCK REPURCHASE AGREEMENT
Governing Law: Nevada     Date: 3/1/2006
Industry: Communications Services    

EXHIBIT 10.19 EMPLOYMENT/STOCK REPURCHASE AGREEMENT, Parties: mpower holding corp , mgc communications  inc.
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EMPLOYMENT/STOCK REPURCHASE AGREEMENT

 

This Employment/Stock Repurchase Agreement (hereinafter “Agreement” is entered into on this 13 th day of October, 1999 by ROLLA P. HUFF (hereinafter “Executive”) and MGC COMMUNICATIONS, INC., a Nevada corporation (hereinafter the “Company”). Executive and Company are collectively designated herein as the “Parties” and “Party” shall mean either one of the Parties.

 

The Parties, for and in consideration of the promises, covenants, terms, conditions and obligations hereinafter set forth, agree as follows:

 

1. Employment . Company hereby employs Executive and Executive hereby accepts employment by Company upon all terms and conditions as are hereinafter set forth.

 

2. Scope of Service .

 

A. Executive shall be employed by Company no later than November 1, 1999, as its President and Chief Executive Officer. Executive shall report directly and solely to Company’s Board of Directors. The duties and responsibilities of Executive as President and Chief Executive Officer shall be those of the chief executive officer of similar companies and as defined in the by-laws of Company, and shall be without consideration of other positions Executive may hold with Company. Executive’s services are mutually agreed to be unique personal services. Executive acknowledges that Company is relying upon Executive’s experience, expertise and other qualifications in entering into this Agreement. Executive shall not assign or delegate any right, obligation or duty hereunder to any other person or entity without the express written consent of the Company.

 

B. During Executive’s period of service hereunder, Executive agrees to perform such services not inconsistent with his position as shall from time to time be assigned to him by Company’s Board of Directors. During the term of this Agreement, except for disability, illness and vacation periods, Executive shall devote his full productive time, attention and energies to the position of President and Chief Executive Officer of Company.

 

C. Executive’s expenditure of reasonable amounts of time in connection with outside activities, not competitive with the business of Company, such as outside directorships or charitable activities, shall not be considered in contravention of this Agreement so long as such activities do not materially interfere with his performance of this Agreement. Further, it is understood and agreed by the Parties hereto that Executive is entitled to engage in passive and personal investment activities not materially interfering with his performance of this Agreement.

 

D. Company shall cause Executive to be elected to Company’s Board of Directors and to be nominated for reelection to the Board so long as he continues to serve as President and Chief Executive Officer of Company.

 

3. Term of Agreement . This Agreement shall be effective as of a date, not later than November 1, 1999, mutually agreeable to the Parties (the “Effective Date”) and Executive’s employment hereunder shall continue until October 31, 2002, unless sooner terminated by either Party as provided in Item 11 herein. Thereafter, this Agreement shall be automatically renewed on a year-to-year basis after the expiration of the initial or any subsequent term of this Agreement unless terminated by either Party as provided in Item 11 hereof.

 

4. Compensation . During the term of this Agreement, Company agrees to pay to Executive, and Executive agrees to accept from Company, in full payment for services rendered by Executive and work to be performed by him under the terms of this Agreement, the following:

 

A. An annual base salary (“Base Salary”) of Five Hundred Thousand Dollars ($500,000.00), payable in installments in accordance with Company’s payroll practices. The base salary may be increased annually in the discretion of the Board of Directors of Company based on Company’s performance and Executive’s personal accomplishments.

 

B. Executive shall be entitled to a bonus of up to one hundred percent (100%) of his Base Salary each calendar year based on either (i) Company’s achievement of certain annual targets to be established by Company’s Board of Directors in conjunction with the establishment of Company’s operating budget each year, or (ii) in the event such targets are not met or an additional bonus is warranted, in the discretion of Company’s Board of Directors.

 

C. Company shall pay Executive a cash signing bonus of One Million Dollars ($1,000,000) payable within fifteen (15) days of Executive’s commencement of employment hereunder. The cash signing bonus shall be repaid by Executive to Company in full in the event of Executive’s resignation from Company without “Good Reason” (as defined in Item 11B) or termination for “Cause” (as defined in Item 11A) before completion of three (3) years of employment with Company. In such event, the repayment of the cash signing bonus shall be made within thirty (30) days of Executive’s termination of employment.

 

D. In the event Executive’s employment with Company shall cease within one (1) year after a “Change of Control” (as defined in Item 10), shall be terminated by Company without Cause or shall be terminated by Executive with Good Reason, Company shall pay to Executive severance pay in an aggregate amount (not less than One Million Dollars ($1,000,000)) equal to two (2) times the total amount of Base Salary and incentive bonus paid by Company to Executive during the twelve (12) month period immediately preceding the date of his termination of employment. Such amount shall be paid by Company to Executive in twenty-four (24) equal monthly installments beginning on the date that is one (1) month after the date of his termination of employment.

 

E. Company shall also reimburse Executive for all reasonable and necessary expenses actually incurred by Executive in performing services hereunder to the extent approved by Company. Executive shall prepare and submit to Company a periodic statement of charges in such detail and supported by such receipts, evidence and documentation as Company may reasonably require.

 

5. Fringe Benefits .

 

A. Company shall provide Employee such vacation time, sick leave and fringe benefits, including but not limited to participation in any pension, 401(k), health insurance and employee benefit plans that may be maintained by Company from time to time as are made generally available to other senior management employees of Company in accordance with Company policies. Company reserves the right to change the benefits available under its benefit plans at any time or times.

 

B. Company shall pay on behalf of Executive his automobile expenses and the annual dues for Executive’s membership in a country club which shall be subject to Company’s approval if the aggregate of such automobile expenses and dues are in excess of $3,000 per month, which approval shall not be unreasonably withheld.

 

C. Company shall pay Executive’s living expenses (including living quarters and local transportation costs) while Executive is in Las Vegas for business and shall pay Executive’s travel costs to and from Las Vegas on business. Any such amounts paid by Executive shall be reimbursed by Company upon presentation of receipts for such expenses.

 

6. Deductions . Deductions shall be made from Executive’s salary for social security, Medicare, federal and state withholding taxes, and any other such taxes as may from time to time be required by governmental authority.

 

7. Fiduciary Relationship . Both Parties acknowledge and agree that a fiduciary and confidential relationship has commenced and will continue to exist between them and that said relationship will continue during the term of this Agreement.

 

8. Stock Options .

 

A. Executive shall be eligible to participate in any stock option plans maintained by Company and any additional or successor plans created from time to time.

 

B. As of the date hereof, Executive shall be granted a stock option for the purchase of 400,000 shares of Company’s Common Stock. Such option shall: (i) have an exercise price equal to $20.00 per share; (ii) vest in four (4) equal annual installments at the rate of 25% on each of the first four anniversaries of the grant; (iii) accelerate and become fully vested in the event of a Change of Control (as defined in Item 10 hereof) or in the event Executive’s employment is terminated by him with Good Reason as provided in Item 11B; and (iv) be non-qualified options to the extent required by the Internal Revenue Code.

 

C. As of the first anniversary of the Effective Date, Executive shall, if he is then employed by Company, be granted a stock option for the purchase of an additional 200,000 shares of Company’s Common Stock. Such option shall: (i) have an exercise price equal to the greater of $30.00 per share or the closing price of Company’s Common Stock on the date of grant as reported in the Nasdaq National Market; (ii) vest in four (4) equal annual installments at the rate of 25% on each of the first four anniversaries of the grant; (iii) accelerate and become fully vested in the event of a Change of Control (as defined in Item 10 hereof) or in the event Executive’s employment is terminated by him with Good Reason as provided in Item 11B; and (iv) be non-qualified options to the extent required by the Internal Revenue Code.

 

D. In addition to the stock options grants pursuant to Paragraphs B and C above, Executive shall be eligible for additional grants on an annual basis.

 

9. Stock Sale and Company Option to Repurchase Executive’s Shares .

 

A. Upon the Effective Date, Company shall sell to Executive 150,000 shares of its common stock (the “Note Shares”) for a purchase price equal to 150,000 multiplied by the closing price of Company’s Common Stock as of the date of this Agreement as reported in the Nasdaq National Market.

 

B. The purchase price for the Note Shares shall be paid by Executive’s execution and delivery to Company of a non-recourse promissory note (the “Note”) in favor of Company. The Note will be secured by the Note Shares pursuant to a stock pledge agreement in a form reasonably agreeable to the Parties. The term of the Note will be three (3) years, and the Note will bear interest at the rate of 7.5% per annum on the unpaid balance, with no interest payment required prior to the maturity of the Note. The Note may be prepaid at any time without penalty, and prepayment will be required within 30 days after termination of employment by Company for Cause pursuant to Item 11A or by Executive’s resignation without Good Reason. Executive acknowledges that his holding period for Note Shares will not begin until he has paid for such shares for purposes of determining whether he has met the one-year holding period required before being able to sell such shares under Rule 144 under the Securities Act of 1933.

 

C. Company shall forgive the Note in full (principal and interest) in the event: (i) Executive is in the continuous employment of Company during the three (3) year period beginning on the Effective Date, (ii) Executive’s employment with Company is terminated by Company without Cause prior to the date that is three (3) years after the Effective Date, (iii) Executive’s employment with Company is terminated by Executive with Good Reason, (iv) Executive’s employment is terminated as a result of disability, or (v) of a Change of Control (as defined in Item 10 hereof).

 

D. If Executive is at any time prior to the date that is three (3) years after the Effective Date, not an employee of Company for any reason whatsoever other than as a result of termination of employment by Company without Cause, termination of employment by Executive with Good Reason, death, disability or a Change of Control (the date of such termination of employment being referred to herein as the “Termination Date”), then Company shall have the option to purchase, whereupon Executive shall be obligated to sell, any portion or all of the Note Shares in Company owned by Executive or any Affiliate of his on the Termination Date. In such event, such Note Shares shall be sold free and clear of any and all liens and encumbrances. The purchase price for the Note Shares shall be the amount per share paid by executive for such Note Shares (including any interest paid or accrued on the Note with respect to the Note Shares being repurchased).

 

E. The option provided herein shall be exercised, if at all, by delivery of written notice by Company within ninety (90) days after the Termination Date.

 

F. The closing of the purchase and sale hereunder shall occur within thirty (30) days following the exercise of said option and at a time and place as Company may designate by written notice to Executive at least five (5) days in advance of such closing. The parties hereto hereby agree to execute any and all instruments and documents to transfer full and complete title to such Note Shares to effectuate the foregoing. At the closing, the purchase price shall be paid by the cancellation of the Note up to but not in excess of the purchase price for the Note Shares being repurchased with the balance of such purchase price payable in cash.

 

G. The repurchase price per share set forth in this Item shall be adjusted appropriately in the event of any stock split, stock dividend or other similar change in the capitalization of Company. The Board of Directors of Company shall make the determination of any such adjustments and shall provide Executive with written notice thereof.

 

H. All certificates representing Note Shares shall bear the following restrictive legend (in addition to any other legends required to be placed thereon):

 

The Shares represented by this certificate are subject to repurchase by Company pursuant to the terms of an Employment/Stock Repurchase Agreement dated October 13, 1999, a copy of which is on file with Company.

 

10. Change of Control .

 

A. In the event of a Change of Control (as defined in Paragraph B below), Executive’s obligation to repay his cash signing bonus shall terminate, the stock options theretofore granted to Executive pursuant to Item 8B and 8C sh


 
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