THIS EMPLOYMENT AND STOCK REPURCHASE AGREEMENT (the "Agreement") is made and entered into as of the 20th day of March, 1998, by and between MGC COMMUNICATIONS, INC., a Nevada corporation (the "Company") and David Clark ("Employee").
W I T N E S S E T H T H A T:
The parties, for and in consideration of the mutual and reciprocal covenants and agreements hereinafter contained, do contract and agree as follows:
1. Employment: Company hereby employs Employee and Employee hereby accepts employment by Company upon all of the terms and conditions as are hereinafter set forth.
2. Duties: Employee shall devote his full-time and effort to the business of Company. Employee shall serve Company in the capacity of Vice President-Marketing, and shall perform his assigned duties and carry out his responsibilities to the best of his skills and abilities. Employee's duties and responsibilities shall include, but shall not be limited to, directing the Company's marketing efforts in all markets, coordinating with sales, and customer service to assure company goals are reached and such further duties which are consistent with Employee's abilities and training as shall be reasonably assigned to him from time to time by the President or Board of Directors of the Company.
3. Term of Agreement: This Agreement shall be effective as of March 20, 1998 (the "Effective Date") and Employee's employment hereunder shall continue for one (1) year thereafter, 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. Limitations of Executive Duties: Employee shall not, without consent first being given by the President or Board of Directors of the Company:
A. Take part in activities detrimental to the best interests of Company, including rendering any services to any other firm or entity which conflict or interfere with the performance of Employee's duties hereunder.
B. Enter into any contract, oral or written, in the name of, for or on behalf of Company.
C. Use any money belonging to Company or pledge its credit.
D. Commit or suffer to be committed any act whereby Company's property may be subject to attachment or seizure.
E. Cause Company to become a guarantor, surety or endorser or give any note for the benefit of any other person whomsoever.
Employee shall indemnify and hold Company harmless from and against any and all damages, actions, causes of action, claims and other liabilities, contingent or otherwise, directed toward Company by others as a result of Employee's violation of any of the provisions hereof.
5. No Outside Employment: It is the specific intention of the parties that Employee shall devote 100% of his business time and energy as an employee of Company and shall not, during the term of this Agreement, either directly or indirectly, be employed by, actively engaged in or associated with any other business whether within Company's industry or not. Any such outside employment by Employee shall be a breach of this Agreement as a result of which Company shall have the right to terminate this Agreement as provided in Item 11 hereof.
6. Compensation: During the term of this Agreement, Company agrees to pay to Employee, and Employee agrees to accept from Company, in full payment for services rendered by Employee and work to be performed by him under the terms of this Agreement, the following:
A. An annual base salary of Ninety Two Thousand Five Hundred Dollars ($92,500.00), payable in installments in accordance with the Company's payroll practices. The base salary may be increased annually in the discretion of the Company based on the Company's performance and Employee's personal accomplishments.
B. Employee may be entitled to a bonus up to fifty percent (50%) of his Base Salary each calendar year based on Employee's performance as determined by the Company's Board of Directors, the performance of the employee's business unit, and the Company's overall financial performance.
7. Vacation and Fringe Benefits: Company shall provide Employee such vacation time, sick leave and fringe benefits, including but not limited to participation in any pension, medical reimbursement and employee benefit plans that may be maintained by Company from time to time as are made generally available to other employees of Company in accordance with Company policies. In connection therewith, the Company shall pay seventy-five percent (75%) of the cost of coverage of Employee and his family under the Company's medical/dental insurance plan. The Company reserves the right to change the benefits available under its benefit plans at any time or times.
8. Deductions: Deductions shall be made from Employee'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.
9. Fiduciary Relationship. Both parties acknowledge and agree that a fiduciary and confidential relationship has existed and will continue to exist between them and that said relationship will continue during the term of this Agreement.
10. Working Facilities and Expenses.
A. Company shall furnish to Employee an office supplied, furnished and equipped as may be reasonably necessary for the conduct of Company's business.
B. During the term of this Agreement, Company agrees to reimburse Employee, after presentation of receipts and other appropriate documentation, for all reasonable, ordinary and necessary travel costs and other necessary expenses incurred by Employee in performing his duties pursuant to this Agreement to the extent such expenses have been approved by the President of Company.
11. Termination:
A. Employee's employment hereunder shall be terminated upon his death or disability, in which event, Company shall not be liable for any compensation, bonus or fringe benefits after the date of Employee's death or disability.
B. Employee may, without cause, terminate this Agreement by giving to Company thirty (30) days written notice and such termination shall be effective on the date (the "Effective Termination Date"), which shall be the date specified by Employee but in no event earlier than the thirtieth (30th) day following the date of such notice or such earlier date specified by Company after receipt of Employee's notice of termination. In such event, Employee shall continue to render his services up to the Effective Termination Date if so requested by Company.
C. Company may, without cause, terminate this Agreement at any time by giving to Employee thirty (30) days written notice and such termination shall be effective on the date specified by Company but in no event earlier than the thirtieth (30th) day following the date of such notice. At the option of Company, Employee shall immediately cease performing his duties hereunder upon receipt of the notice. If terminated without cause pursuant to this Paragraph C, Employee shall continue to receive his full base salary and related fringe benefits for a period of thirty (30) days following the date of such notice.
D. Employee may terminate this Agreement immediately for "cause". Cause shall be defined as failure of Company to make any payment or provide any benefit to Employee hereunder, which failure is not cured within ten (10) days after Company's receipt of written notice of such default. Any termination under this Paragraph D shall take effect immediately upon Company's receipt of written notice from Employee.
E. Company may terminate this Agreement immediately for "cause". Cause shall be defined as any of the following: (i) Employee shall commit a felony or other act involving moral turpitude, (ii) Employee shall commit any act of prohibitive conduct as set forth in Item 4 of this Agreement, (iii) Employee shall commit any act, specifically including but not limited to drug or alcohol abuse, which act is materially harmful to Company, (iv) intentional or gross neglect of Employee's duties, (v) intentional disruption of or interference with Company's normal business operations, (vi) outside employment of Employee prohibited by Item 5 hereof, (vii) failure to comply with Company policies after receipt of written notice of the violation and failure to cure such violation within ten (10) days after receipt of such notice; (viii) repeated failure to comply with Company policies after receipt
of written notice of any prior violation of such policies; or (ix) breach of any other provision of this Agreement after receipt of written notice of the breach and failure to cure such breach within ten (10) days after receipt of such notice. Any termination under this Paragraph E shall take effect immediately upon Employee's receipt of written notice from Company to Employee. The failure of Company to terminate Employee's employment hereunder for cause as a result of any of the foregoing at any one or more times shall not affect Company's ability to terminate Employee's employment hereunder for cause as a result of the subsequent occurrence of any act giving rise to "cause" hereunder.
F. Notwithstanding the foregoing, Employee shall be entitled to the continuation of his base salary for a period of one (1) month after the date of his termination of employment in the event Employee's employment hereunder is terminated by the Company without cause.
G. Employee's rights to exercise his stock options with the Company shall become fully vested in the event Employee's employment hereunder is terminated within twelve (12) months after a "change of control" of the Company (as defined by Item 13H).
12. Specific Covenants and Agreements:
A. For purposes of this Agreement, the following terms and provisions shall have the following meanings:
1. "Confidential Information" shall mean all of the Company's technical information, trade secrets, training materials, notebooks, video tapes or discs, operating procedures, processes, business plans, financial information relating to or arising out of Company's business operations, computer programs, specialized software and databases, sales and marketing information, methods of organizing and financing Company's business, personnel records, pricing information and financial information concerning or relating to the business, accounts, employees, agents, customers, creditors, suppliers and affairs of Company, whether the same were produced by Employee as an employee of Company or any other employee or agent of Company and all physical embodiments or repositories of the foregoing, all of which are hereby agreed to be the property of and confidential to Company. Notwithstanding the foregoing, any and all such information as described in this Item 12A1, which may constitute common and/or public knowledge shall be specifica ...
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