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EMPLOYMENT AND STOCK REPURCHASE AGREEMENT
THIS EMPLOYMENT AND STOCK REPURCHASE AGREEMENT (the "Agreement") is made
and entered into as of the 9th day of March, 1998, by and between MGC
COMMUNICATIONS, INC., a Nevada corporation (the "Company") and XXXXX X. XXXXXX,
III ("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 President-Midwest
Region, 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, overseeing all sales, sales support
and installation and repair functions in the Chicago area and in subsequent
markets in the Midwest and Northeast, United States 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 9,
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.
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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 One Hundred Twenty Thousand Dollars
($120,000.00), 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.
C. A signing bonus of Thirty Thousand Dollars ($30,000) payable
$15,000 within thirty (30) days after the Effective Date and $15,000 within six
(6) months after the Effective Date. Employee must be employed by the Company on
the date of payment in order to be entitled to receive same. Each $15,000
payment of the signing bonus shall be earned one-eighth (1/8) per month for each
full month of Employee's employment after the payment of such amount. In the
event Employee's employment with the Company terminates prior to eight (8)
months after the payment of either portion of the signing bonus, then any
unearned signing bonus shall be repaid to the Company within ten (10) days after
the date of termination of employment.
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.
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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.
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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 six (6) months after the date of
his termination of employment in the event Employee's employment hereunder is
terminated within six (6) months after a "change of control" of the Company (as
defined in Item 13H).
G. 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.
H. 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 specifically excluded from this definition of
"Confidential Information."
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2. "Prohibited Geographic Area" shall mean the greater Chicago
metropolitan area.
3. "Prohibited Time Period" shall mean the period beginning on
the date of execution hereof and ending on the date that is six (6) months after
the termination of this Agreement for any reason whatsoever.
4. "Prohibited Business" shall mean the provision of local,
long-distance and related telephone and data transmission services.
B. Employee agrees that during the Prohibited Time Period, Employee
shall not, for any reason, without the prior written consent of Company, on his
own behalf or in the service or on behalf of others, participate, whether as an
owner, stockholder, partner, employee, consultant, agent, independent contractor
or otherwise, in any entity involved in the Prohibited Business in the
Prohibited Geographic Area.
C. Employee hereby acknowledges and agrees that (i) Company has
expended considerable and substantial time, effort and capital resources to
develop the Confidential Information, (ii) the Confidential Information is
innovative and must receive confidential treatment to protect Company's
competitive position in the market and Company's proprietary interest therein
from irreparable damage, (iii) Employee, by virtue of his relationship with
Company, has had and will have access to the Confidential Information, and (iv)
the Confidential Information and all physical embodiments or other repositories
of the same shall be and at all times remain the sole and exclusive property of
Company. Employee covenants and agrees that throughout the period of Employee's
employment with Company and at any time after the termination of Employee's
employment with Company for any reason whatsoever, Employee shall not directly
or indirectly use, publish, disseminate, divulge or otherwise disclose to any
person or entity any of Company's Confidential Information, other than in the
performance of his duties hereunder. In the event of a breach or threatened
breach by Employee of the provisions of this Item, Company shall be entitled to
an injunction restraining Employee from disclosing, in whole or in part, the
list of Company's clients or any other Confidential Information, or from
rendering any services to any person, firm, corporation, association or other
entity to whom such list or other Confidential Information, in whole or in part,
has been disclosed or is threatened to be disclosed. Upon receipt of a written
request by Company, Employee agrees to surrender and return to Company all
documents, records, memoranda, notebooks and similar repositories of
Confidential Information of every character or description.
D. The parties hereto acknowledge and agree that (i) the covenants
contained in Paragraphs A, B and C of this Item are reasonably necessary to
protect the interest of Company in whose favor said covenants are imposed; (ii)
the restrictions imposed by Paragraphs A, B and C of this Item are not greater
than are necessary for the protection of Company in light of the substantial
harm that Company will suffer should Employee breach any such covenant; (iii)
the period of restriction and geographical area of restriction contained in
Paragraphs A, B and C of this Item are fair and reasonable in that they are
reasonably required for the protection of Company; (iv) the nature, kind and
character of the activities Employee is prohibited to engage in as described in
Paragraphs A, B and C of this Item are reasonable and necessary to protect
Company and shall not be interpreted or construed as prohibiting Employee from
rendering any other services or performing any other activities not referenced
therein,
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and (v) the covenants and agreements of Employee contained in Paragraphs A, B
and C of this Item have been specifically negotiated by the parties and are
material inducements to Company to enter into this Agreement, and, but for such
covenants made by Employee herein, Company would not have entered into this
Agreement.
E. Employee acknowledges and agrees that each of the covenants and
agreements contained in Paragraphs A, B and C of this Item of this Agreement is
made by him in consequence of and as a specific inducement to Company to enter
into this Agreement and to protect and preserve the benefit of this Agreement to
Company; that each of the covenants contained in Paragraphs A, B and C of this
Item is reasonable and necessary to protect and preserve the benefits received
by Company under this Agreement; irreparable loss and damage will be suffered by
Company should Employee breach any of such covenants and agreements; each of
such covenants and agreements is separate, distinct and severable not only from
the other of such covenants and agreements but also from the other and remaining
provisions of this Agreement; that the unenforceability of any such covenant or
agreement shall not affect the validity or enforceability of any other such
covenant or agreements or any other provision or provisions of this Agreement;
and that, in addition to other remedies available to it, Company shall be
entitled to both temporary and permanent injunctions to prevent a breach or
contemplated breach by Employee of any of such covenants or agreements. In the
event Company should seek an injunction hereunder, Employee hereby waives any
requirement that Company submit proof of the economic value of any Confidential
Information or that Company post a bond or any other security.
F. If the provisions of this Item should ever be adjudicated to
exceed the time, geographic or other limitations permitted by applicable law in
any jurisdiction, then such provisions shall be deemed reformed in such
jurisdiction to the maximum time, geographic or other limitation permitted by
applicable law.
G. The covenants and agreements on the part of Employee contained in
Paragraphs A, B and C of this Item shall be construed as agreements independent
of any other agreement between Company and Employee. The existence of any claim
or cause of action of Employee against Company, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Company of each of such covenants and agreements.
H. Nothing contained in this Item shall restrict Employee from being
a stockholder of any corporation that directly or indirectly competes with
Company provided the stock of such competing corporation is publicly held and
listed on a regional or national stock exchange.
13. Purchase Rights and Company Option to Repurchase Employee's Shares.
A. Until the date that is sixty (60) days after the Effective Date,
Employee may purchase up to 50,000 shares of the Company (the "Purchase Shares")
at a purchase price of $5.00 per share.
B. Until the date that is ninety (90) days after the Effective Date,
Employee may purchase additional shares of Common Stock of the Company at $5.00
per share (the "Note Shares"), up to the lesser of: (i) 75,000 shares, or (ii)
two times the number of Purchase Shares purchased under
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Paragraph A above. At Employee's election, the Company will finance the purchase
price of the Note Shares, in which event, Employee will execute a full recourse
promissory note (the "Note") in favor of the Company. The Note will be secured
by the Note Shares. 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 two (2) years after the date 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 the Company for cause or by
Employee without cause. The Note may be repaid prior to the maturity thereof at
Employee's discretion. Employee 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. As a condition to the purchase of the Purchase Shares or the Note
Shares, Employee shall be: (i) employed by the Company as of the date of
purchase, and (ii) required to sign an investment letter in such form as may be
reasonably requested by the Company.
D. The Company shall have the option to repurchase certain shares of
stock in the Company owned by Employee upon the terms set forth in this Item.
The terms of Paragraph E below shall apply to: (i) all Note Shares purchased by
Employee, and (ii) a prorated portion of all Purchase Shares purchased by
Employee; provided, however, that the Note Shares shall be deemed to be Purchase
Shares for these purposes in an amount equal to the number of Note Shares
multiplied by the percentage of the principal portion of the Note paid by
Employee prior to the Termination Date (as hereinafter defined). The prorated
portion of the Purchase Shares subject to repurchase shall be equal to: (i) 100%
if the Termination Date occurs prior to the date that is one (1) year after the
Effective Date, or (ii) otherwise, the number of Purchase Shares (including any
Note Shares deemed to be Purchase Shares as set forth above) multiplied by a
fraction the numerator of which is the number of days from and after the
Termination Date until the date that is three (3) years after the Effective Date
and the denominator of which is 730. The number of Purchase Shares and Note
Shares subject to repurchase are referred to herein as the "Restricted Shares."
E. If Employee is at any time prior to the date that is three (3)
years after the Effective Date, not an employee of the Company for any reason
whatsoever other than as a result of a "change of control" as defined in
Paragraph H below (the date of his termination of employment being referred to
herein as the "Termination Date"), then the Company shall have the option to
purchase, whereupon Employee or his legal representative shall be obligated to
sell, any portion or all of the Restricted Shares in the Company owned by
Employee or any Affiliate of his on the Termination Date. In such event, such
Restricted Shares shall be sold free and clear of any and all liens and
encumbrances. The purchase price for all of the Restricted Shares shall be the
amount per share paid by Employee for such Restricted Shares (excluding any
interest paid as a result of Employee's making deferred payments for such
Shares).
F. The option provided herein shall be exercised, if at all, by
delivery of written notice by the Company within ninety (90) days after the
Termination Date.
G. 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 the Company may designate by written notice to Employee at least five (5)
days in advance of such closing. The parties hereto hereby
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agree to execute any and all instruments and documents to transfer full and
complete title to such Restricted 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 Restricted Shares being
repurchased with the balance of such purchase price payable in cash.
H. For purposes of this Agreement, a "change of control" shall mean:
(i) the sale by the Company of all or substantially all of its assets to a third
party or a transaction (by sale of stock, merger or otherwise) after which the
stockholders of the Company immediately prior to the transaction own less than
fifty percent (50%) of the Company or continuing entity immediately after the
transaction, and (ii) a material change in Employee's responsibilities
hereunder, a material reduction in pay or a requirement that Employee relocate
in order to retain his position with the Company, such material change or
requirement occurring within one year of the date of such change of control.
I. The number of Restricted Shares and the purchase 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 the
Company. The Board of Directors of the Company shall make the determination of
any such adjustments and shall provide Employee with written notice thereof.
J. All certificates representing Restricted 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 the Company pursuant to the terms of an
Employment/Stock Repurchase Agreement dated March 9, 1998,
a copy of which is on file with the Company.
14. Assignment: This Agreement, as it relates to the employment of
Employee, is a personal contract and the rights and interests of Employee
hereunder may not be sold, transferred, assigned, pledged or hypothecated.
However, this Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns including, without limitation, any
corporation or other entity into which the Company is merged or which acquires
all or substantially all of the outstanding common stock or assets of the
Company.
15. Breach by Company. If there is a dispute regarding the payment of any
sum by Company hereunder, Company shall not be deemed to have failed to have
made a payment hereunder if pending the resolution of such dispute, Company pays
the amount in dispute into court or into an escrow account at Company's bank or
with Company's corporate counsel.
16. Remedies Not Exclusive. The rights, remedies and benefits herein
expressly specified are cumulative and not exclusive of any rights, remedies or
benefits which any party may otherwise have.
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17. Invalid Provisions: The invalidity of any one or more of the clauses
or words contained in this Agreement shall not affect the reasonable
enforceability of the remaining provisions of this Agreement, all of which are
inserted herein conditionally upon being valid in law; and in the event that one
or more of the words or clauses contained herein shall be invalid, this
instrument shall be construed as if such invalid words or clauses had not been
inserted or, alternatively, said words or clauses shall be reasonably limited to
the extent that the applicable court interpreting the provisions of this
Agreement considers to be reasonable.
18. Specific Performance: The parties hereby agree that any violation by
Employee of the covenants and agreements contained herein shall cause
irreparable damage to Company, and Company may, as a matter of course, enjoin
and restrain said violation by Employee by process issued out of a court of
competent jurisdiction, in addition to any other remedies that said court may
see fit to award.
19. Binding Effect: All the terms of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
20. Jurisdiction: Each of the undersigned further agrees that any action
or proceeding brought or initiated in respect of this Agreement may be brought
or initiated in the State Court of Xxxxx County, Nevada, and each of the
undersigned consents to the exercise of personal jurisdiction and the placement
of venue in any of such courts, or in any jurisdiction allowed by law, in any
such action or proceeding and further consents that service of process may be
effected in any such action or proceeding in such manner as may be permitted by
law. Each of the undersigned further agrees that no such action shall be brought
against any party hereunder except in one of the courts above named.
21. Attorney's Fees: In the event an action is taken by either party to
enforce this Agreement or resolve a dispute in connection herewith, the
prevailing party shall be entitled to recover the costs incurred with the
prosecution and defense of such action, including reasonable attorney's fees.
22. Waiver of Breach or Violation Not Deemed Continuing: The waiver by
either party of any provision of this Agreement shall not operate as, or be
construed to be, a waiver of any subsequent breach hereof.
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23. Entire Agreement; Law Governing: This Agreement supersedes any and all
other agreements, either oral or in writing, between the parties hereto with
respect to the subject matter hereof, by and between Company and Employee, and
contains all the covenants and agreements among the parties with respect to such
subject matter. This Agreement, along with a Share Option Agreement of even date
herewith, supersede the terms of an employment letter dated February 20, 1998,
between the parties hereto. This Agreement shall be construed in accordance with
the laws of the State of Nevada.
24. Item Headings: The item headings contained in this Agreement are for
convenience only and shall in no manner be construed as a part of this
Agreement.
25. CERTIFICATION BY EMPLOYEE: EMPLOYEE CERTIFIES THAT HE HAS READ THE
ENTIRE CONTENTS OF THIS AGREEMENT BEFORE SUBSCRIBING HIS NAME HERETO; THAT HE
WAS ENCOURAGED AND AFFORDED SUFFICIENT OPPORTUNITY BY COMPANY TO OBTAIN
INDEPENDENT LEGAL ADVICE PRIOR TO HIS EXECUTING THIS AGREEMENT; THAT HE FULLY
UNDERSTANDS ALL THE TERMS, CONDITIONS, RESTRICTIONS AND PROVISIONS SET FORTH IN
THIS AGREEMENT, PARTICULARLY INCLUDING, BUT NOT LIMITED TO THE RESTRICTIVE
COVENANTS CONTAINED HEREIN, AND THAT HE ACKNOWLEDGES THAT EACH SAID TERM,
CONDITION, RESTRICTION AND PROVISION IS FAIR AND REASONABLE INSOFAR AS IT
PERTAINS TO HIM; THAT HE HAS RECEIVED A COPY OF THIS AGREEMENT AS SIGNED BY HIM;
AND THAT HIS BEING BOUND BY THIS AGREEMENT IS A CONDITION PRECEDENT TO THE
EXECUTION HEREOF BY COMPANY.
IN WITNESS WHEREOF, Company has hereunto caused this Agreement to be
executed by a duly authorized officer and its seal to be affixed and Employee
has hereunto set his hand and seal as of the day and year first above written.
EMPLOYEE:
/s/ Xxxxx X. Xxxxxx III (SEAL)
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XXXXX X. XXXXXX, III
EMPLOYER:
MGC COMMUNICATIONS, INC.
By: Xxxxx X. Xxxxxxxxxx
-------------------------
President
(CORPORATE SEAL)
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PROMISSORY NOTE
$100,000 Las Vegas
March 20, 1998
FOR VALUE RECEIVED, the undersigned ("Maker") does hereby promise to pay to the
order of MGC Communications, Inc. a Nevada corporation, or its successors or
assigns (hereinafter, together with any subsequent holder hereof, referred to as
"Holder") at 0000 Xxxxx Xxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000, or at such other
place as the Holder may from time to time designate in writing, the principle
sum of One Hundred Thousand and 00/100 Dollars ($100,000), together with
interest thereon, or on so much thereof as is from time to time outstanding and
unpaid, from date, at the rate of seven and one-half percent (7.5%) per annum
until paid in full. Interest and outstanding principal shall be paid as follows:
A. Accrued interest on the principal balance of this Note shall be due
and payable on the second anniversary of this Note and on the same
date of each subsequent year until such time as this Note has been
paid in full.
B. The principal amount of this Note shall be due and payable on the
date that is three (3) years after the date of this Note, subject to
acceleration, in full, at the option of Holder, in the event of the
termination of Maker's employment with MGC Communications, Inc., by
MGC for cause or by Maker voluntarily, in which event the entire
principal amount of this Note shall become due and payable within
thirty (30) days after demand by Holder.
Maker shall have the right to prepay this Note in full or in part at any
time without the imposition of any prepayment fee or penalty. Any partial
prepayments shall be applied first to any accrued and unpaid interest due under
this Note and the balance, if any, to the outstanding principal balance of this
Note.
Should Maker fail to pay any installment otherwise due under this Note
within ten (10) days after the due date thereof, or should Maker default in his
obligations to Holder under that certain Stock Pledge Agreement securing payment
under this Note, the entire principal sum evidenced by this Note with all
accrued and unpaid interest, shall, at the option of the Holder, and without
further notice to Maker, become due and payable and may be collected forthwith.
It is further agreed that the failure of Holder to exercise this right of
accelerating the maturity of this debt, or indulgence granted from time to time,
shall in no event be considered a waiver of such right of acceleration or stop
Holder from exercising such right.
All amounts not paid when due hereunder shall bear interest at the rate of
twelve percent (12%) per annum from and after the due date thereof.
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Time is of the essence of this Note, and, in the event this Note is
collected by law or through an attorney at law or under advice therefrom, Maker
agrees to pay all costs of collection, including reasonable attorney's fees
actually incurred.
Maker hereby waives presentment, demand for payment and notice of
nonpayment.
This Note shall be construed in all respects and enforced according to the
laws of the State of Nevada.
Any and all notices required or permitted to be given under this Note will
be sufficient if furnished in writing, sent by registered mail in the case of
the Maker to 000 Xxxxxxx Xxx., Xxxxxxxx, XXX 00000, or in the case of Holder to
0000 Xxxxx Xxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000, Attention: President.
IN WITNESS WHEREOF, Maker has signed this Note as of the day and year
first above written.
/s/ XXXXX X. XXXXXX III (SEAL)
-------------------------------
XXXXX X. XXXXXX III
