Exhibit 10.6


 


RESTRICTED STOCK AWARD AGREEMENT


 


THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”)
dated as of January 1, 2006 (“Grant Date”), is between McLeodUSA Incorporated,
a Delaware corporation (the “Company”), and Royce J. Holland (the “Participant”),
relating to restricted stock granted under the McLeodUSA Incorporated 2006 Omnibus Equity Plan (the “Plan”). Capitalized
terms used in this Agreement without definition shall have the meaning ascribed
to such terms in the Plan.


 


1.                                       Grant of Shares of Restricted
Stock and Vesting.


 


(a)           The Company grants to the Participant 750,000
shares of Restricted Stock, subject to the provisions of the Plan and the terms
and conditions herein. The grant of shares of Restricted Stock is in full
satisfaction of the obligations set forth in the first sentence of
Section 3(d) of the Employment Agreement between the Participant and the
Company, dated as of January 1, 2006 (the “Employment Agreement”) and the
parties hereby acknowledge that the vesting provisions set forth in this
Agreement shall govern the Restricted Stock in lieu of the vesting provisions
contemplated in the Employment Agreement.


 


(b)           The shares of Restricted Stock shall be subject to
the applicable vesting schedules set forth in this Agreement. All Shares of
Restricted Stock shall be unvested (“Unvested Shares”) unless and until they
become Vested Shares in accordance with this Section 1. The Shares of
Restricted Stock shall become vested with respect to 450,000 of the shares
subject thereto upon completion of an initial public offering of Company common
stock or a Change in Control (as defined in the Employment Agreement), and with
respect to the other 300,000 shares if the value of the Company’s equity is at
least $500 million at the completion of a Change in Control or initial public
offering (disregarding the value of any equity issued after January 1,
2006 in connection with any corporate acquisitions or similar transactions).


 


In the event that the Participant ceases to be
employed by the Company or any Subsidiary, any Unvested Shares shall be
forfeited as of the date the Participant ceases to be employed and the
Participant shall deliver to the Company any stock certificates evidencing such
Unvested Shares. If the Participant ceases to be employed by the Company or any
Subsidiary prior to the first anniversary of the Grant Date due to a
termination by the Company for Cause or by the Participant without Good Reason
(as each such term is defined in the Employment Agreement), the Participant
will forfeit all vested restricted stock.


 


(c)           Shares of Restricted Stock shall be evidenced in
such manner as the Administrator may deem appropriate, including book-entry
registration or issuance of one or more certificates (that may bear appropriate
legends referring to the terms, conditions and restrictions applicable to such
Award).


 


2.                                       Repurchase Rights. Vested Shares shall be subject to repurchase by
the Company in accordance with the provisions of Section 12 of the Plan.


 


3.                                       Payment of Withholding Taxes. If the Company or any other subsidiary is
obligated to withhold an amount on account of any tax imposed as a result of
the grant of the shares of Restricted Stock, the Participant shall be required
to pay such amount to the Company


 

















 


prior to the delivery of such shares of Restricted
Stock. The Participant acknowledges and agrees that he is responsible for the
tax consequences associated with the grant of the shares of Restricted Stock.


 


4.                                       Changes in Company’s Capital
Structure.
The existence of the shares of
Restricted Stock will not affect in any way the right or authority of the
Company or the holders of its voting securities to make or authorize
(a) any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business; (b) any merger
or consolidation of the Company’s capital structure or its business;
(c) any merger or consolidation of the Company; (d) any issue of
bonds, debentures, preferred or prior preference equity interests ahead of or
affecting the Shares or the rights thereof; (e) the dissolution or
liquidation of the Company; (f) any sale or transfer of all or any part of
the Company’s assets or business; or (g) any other corporate act or
proceeding, whether of a similar character or otherwise.


 


5.                                       Plan. The shares of Restricted Stock are granted
pursuant to the Plan, and, except as specifically set forth herein, the shares
of Restricted Stock and this Agreement are in all respects governed by the Plan
and subject to all of the terms and provisions thereof, whether such terms and
provisions are incorporated in this Agreement by reference or are expressly
cited. In the event of any inconsistency between the Plan, this Agreement, and
the Employment Agreement on matters regarding the rights and obligations of the
Company and the Optionee upon termination of employment or service, the
provisions of the Employment Agreement shall govern.


 


6.                                       Transfer Restrictions. Participant acknowledges and agrees that in
consideration of the grant of this Award the Participant will be bound and
abide by the provisions of Sections 12 of the Plan


 


7.                                       Employment Rights. No provision of this Agreement shall give the
Participant any right to continue in the employ of the Company or any
Subsidiary, create any inference as to the length of employment of the
Participant, affect the right of the Company or any Subsidiary to terminate the
employment of the Participant, with or without cause, or give the Participant
any right to participate in any employee welfare or benefit plan or other
program (other than the Plan) of the Company or any Subsidiary.


 


8.                                       Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware (other than
its laws respecting choice of law).


 


9.                                       Waiver; Cumulative Rights; Third
Party Beneficiary. The failure
or delay of either party to require performance by the other party of any
provision hereof shall not affect its right to require performance of such
provision unless and until such performance has been waived in writing. Each
and every right hereunder is cumulative and may be exercised in part or in
whole from time to time.


 


10.                                 Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to


 


2

















 


have been duly given if (i) delivered personally
to the recipient, (ii) sent to the recipient by reputable express
overnight courier service (charges prepaid), or (iii) telecopied to the
recipient (with hard copy sent to the recipient by reputable overnight courier
service (charges prepaid) that same day). Such notices, demands and other
communications shall be sent to the addresses indicated below:


 


	
  To the Company:

  	
  6400 C Street, SW

  
	
   

  	
  Cedar Rapids, Iowa 52406-3177

  
	
   

  	
  Attn: Optim Plan Administrator- HR

  
	
   

  	
   

  
	
  To Executive:

  	
  Royce J. Holland

  
	
   

  	
  17415 Pauma Valley Circle 

  
	
   

  	
  Dallas, Texas 75287

  



 


or to such other address or to the attention of such
other person as the recipient party shall have specified by prior written
notice to the sending party. Date of service of such notice shall be
(x) the date such notice is personally delivered, (y) one (1) day
after the date of delivery to the express overnight courier if sent by express
overnight courier or (z) the same day, if telecopied before 5:00 p.m.
Chicago, Illinois time on a business day, and otherwise on the next business
day after the date of transmittal by telecopy.


 


11.                                 Complete Agreement. This Agreement, those documents expressly referred
to herein and the Plan embody the complete agreement and understanding between
the parties and supersede and preempt any prior understandings, agreements or
representations by or between the parties, written or oral, which may have
related to the subject matter hereof in any way.


 


[Signature Page Follows]


 


3

















 


IN WITNESS WHEREOF,
the Company has caused this Agreement to be duly executed by an officer
thereunto duly authorized, and the Participant has hereunto set his hand, all
as of the day and year first above written.


 


 


	
  MCLEODUSA INCORPORATED

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Bernard L. Zuroff

  	
   

  	
   

  
	
  By: Bernard L. Zuroff

  	
   

  
	
  Its: General Counsel, GVP and Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  PARTICIPANT:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Royce J. Holland

  	
   

  	
   

  



 


4