Document:

Settlement Agreement

 Exhibit 10.7 
 SETTLEMENT AGREEMENT AND FULL AND FINAL RELEASE 
 This Settlement Agreement and Full and Final
Release (“Settlement Agreement”) is entered into effective September 10, 2007, by and between Michael H. Schoeffler, an individual (“Schoeffler”) and Quantum Fuel Systems Technologies Worldwide, Inc., a Delaware corporation,
(“Quantum”) with respect to the following facts: 
 A. On March 5, 2007, Quantum commenced arbitration (the
“Arbitration”) against Schoeffler with the American Arbitration Association (“AAA”), seeking an award that Quantum is not liable to Schoeffler. Schoeffler has counterclaimed against Quantum in the Arbitration. 
 B. Quantum and Schoeffler (collectively referred to as the “Parties”), without admitting any liability or fault, now wish to settle and
compromise their dispute in accordance with the terms set forth below. 
 NOW, THEREFORE, in consideration of the following mutually agreed
covenants and other valuable consideration, the receipt and sufficiency of which is acknowledged, the Parties agree as follows: 
 1.
Definitions. For purposes of this Settlement Agreement, the following definitions shall apply: 
 A.
“Quantum” means and includes its predecessors, successors, assigns, parents, subsidiaries, affiliates, officers, directors, employees, shareholders, attorneys, agents, representatives and heirs, and any person or entity who may claim by or
through any of them. 
 B. “Schoeffler” means and includes his predecessors, successors, assigns, affiliates,
employees, employers, attorneys, agents, representatives and heirs, any entity in which Schoeffler has an ownership interest, and any person or entity who may claim by or through any of them. 
 2. Settlement Amount. Quantum shall pay Schoeffler the total sum of Six Hundred Thousand ($600,000) dollars (the “Settlement Amount”).
Upon execution of this Agreement, the parties shall enter a Consent Arbitration Award, in the form attached to this Agreement as Exhibit A. The Settlement Amount shall be paid to Schoeffler and his counsel, with normal employee withholding for all
payments to Schoeffler, as follows: 
 A. The Settlement Amount shall be paid to Schoeffler in five installments as follows.

  

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 B. The first installment shall be paid upon execution of this Agreement on
September 10, 2007, in the amount of $150,000, $50,000 of which shall be paid directly to the order of Schoeffler’s counsel. The payment to Schoeffler’s counsel shall not be subject to employee deductions and withholdings, shall not
be included on Schoeffler’s W2 but, instead, Quantum will issue an IRS Form 1099 (misc) to Schoefler’s counsel, the law firm of Boveri Murphy Rice & LaDue, LLP. Schoeffler agrees to indemnify if Quantum incurs under-withholding
liability as a result of this single $50,000 payment to Schoeffler’s counsel. 
 C. The second installment shall be paid
on October 10, 2007, in the amount of $100,000. 
 D. The third installment shall be paid on November 10, 2007, in
the amount of $100,000. 
 E. The fourth installment shall be paid on December 10, 2007, in the amount of $100,000.

 F. The fifth installment shall be paid on January 10, 2008, in the amount of $150,000. 
 3. Default. 
 A. If
Quantum fails to pay any of the installment amounts within seven (7) calendar days of the date that the installment is due under Section 2 of this Agreement, Schoeffler may make email demand to Quantum and its counsel that it pay the
installment by sending an e-mail demand to the following e-mail addresses: klombardo@tecstarinc.com; pmc@krwlaw.com. 
 B. If Quantum fails to pay the installment by the close of the third business day after Schoeffler’s demand for payment, Quantum shall be in Default. 
 C. In the event of Default, the Arbitrator shall, upon verification of the fact of Default, enter an Award in Schoeffler’s favor in the amount of One Million One Hundred Thousand ($1,100,000) dollars, less any
installment payments made by Quantum, which Award shall be inclusive of costs, attorney fees, and interest to the date of the Award. The Arbitration Award may be enforced by filing an action to confirm the award and reduce it to judgment in the U.S.
District Court for the Northern District of Indiana. Quantum hereby consents to the exclusive jurisdiction of the U.S. District Court for the Northern District of Indiana, for any action filed by Schoeffler to enforce the terms of this Agreement,
the Settlement Agreement or any action to enforce the Arbitration Award. Quantum further waives its right to file any action to vacate or modify an arbitration award entered pursuant to Quantum’s default as described in this paragraph and
verified by the Arbitrator as required in the Consent Arbitration Award. 
  

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 4. Schoeffler’s Release of Quantum. Schoeffler hereby releases and forever discharges Quantum
from any and all liabilities, damages, costs, expenses, contracts, obligations, accounts, torts, causes of action, suits or claims of every nature, whether known or unknown, contingent or otherwise, or which may accrue in the future, arising from or
in consequence of all transactions, dealings and undertakings between the parties, including but not limited to all claims asserted or assertable in the Arbitration. This release, however, shall not apply to claims arising out of the enforcement of
this Settlement Agreement. Schoeffler acknowledges that, in making this unconditional release, he is not relying upon any oral or written representations or warranties from anyone so that there can be no claim that this Settlement Agreement was
procured or induced by fraud or any other similar claim that would attack the validity of the terms of this Settlement Agreement. 
 5.
Quantum’s Release of Schoeffler. Quantum hereby releases and forever discharges Quantum from any and all liabilities, damages, costs, expenses, contracts, obligations, accounts, torts, causes of action, suits or claims of every nature,
whether known or unknown, contingent or otherwise, or which may accrue in the future, arising from or in consequence of all transactions, dealings and undertakings between the parties, including but not limited to all claims asserted or assertable
in the Arbitration and any claims arising from or related to Schoeffler’s employment and other associations with Quantum and Quantum’s subsidiaries and affiliates. Quantum acknowledges that, in making this unconditional release, it is not
relying upon any oral or written representations or warranties from anyone so that there can be no claim that this Settlement Agreement was procured or induced by fraud or any other similar claim that would attack the validity of the terms of this
Settlement Agreement. 
 6. Confidentiality. All terms and provisions of this Settlement Agreement shall remain strictly confidential
and shall not be divulged to any other person, except to the Parties’ attorneys, Quantum’s employees on a need to know basis, and except to the extent which may be reasonably necessary for operational, banking, accounting or tax purposes,
or as otherwise required by law. 
 7. No Parol Evidence. This Settlement Agreement is a complete integration of the Parties’
agreement and constitutes the entire agreement between them with respect to the subject matter hereof. This Settlement Agreement supersedes any and all other oral or written communications, representations, understandings, agreements, negotiations
and discussions between the Parties and their attorneys. No parol evidence shall be admissible to interpret, explain, vary or supplement this Settlement Agreement. 
 8. Modification. No provision of this Settlement Agreement may be changed, altered, modified, or waived except in writing signed by the Parties. 
 9. Choice of Law. This Settlement Agreement shall be governed in all respects by the laws of the State of Indiana, including as to interpretation,
enforceability, validity and construction. 
  

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 10. Construction. Because this Settlement Agreement was the result of arms-length negotiations
between the Parties and their respective attorneys, no party shall be considered the drafter; consequently, the rule of construction that all conflicts and ambiguities should be construed against the drafter shall not be employed in the
interpretation of this Settlement Agreement. 
 11. Successors and Assigns. This Settlement Agreement shall be binding upon and inure
to the benefit of the Parties’ successors, assigns, agents, heirs and personal representatives. 
 12. Third Parties. This
Settlement Agreement shall not confer any rights or remedies upon any third party other than the Parties to this Settlement Agreement and their respective successors, assigns, agents, heirs, and personal representatives. The Parties have not
transferred, by assignment or otherwise, any of the claims released in this Settlement Agreement. 
 13. Counterparts. This Settlement
Agreement may be executed in one or more counterparts, all of which shall be considered one instrument, and a copy or facsimile of each will be deemed an original and shall be binding when one or more counterparts have been signed by each of the
parties. 
 14. Advice of Counsel. The Parties acknowledge and represent that they have read this Settlement Agreement in full and
understand and voluntarily consent to each provision in it and that they have consulted with their respective attorneys before signing this Settlement Agreement. 
 By signing below, each Party acknowledges and represents that this Settlement Agreement is executed on its or his behalf by a person with authority to bind the Party to it. 
 “Quantum”: 
 Quantum Fuel Systems Technologies
Worldwide, Inc. a Delaware corporation. 
  

									
	By: 	 	/S/ KENNETH R. LOMBARDO	 		 	Date: 	 	September 10, 2007
					
	Its:	 	General Counsel	 		 		 	
			
	“Schoeffler”:	 		 	
		 	/S/ MICHAEL H. SCHOEFFLER	 		 	Date: 	 	September 10, 2007
					
		 	Michael H. Schoeffler	 		 		 	

  

 4 of 4Exhibit 10.1

 Exhibit 10.1 
 FORM OF VOTING AGREEMENT 
 This Voting Agreement (this “Agreement”) is entered into
as of September 17, 2007, by and among PAETEC Holding Corp., a Delaware corporation (“Buyer”), McLeodUSA Incorporated, a Delaware corporation (“Seller”), and the stockholder of Buyer identified on the signature
pages hereto (the “Buyer Stockholder”). 
 WHEREAS, as of the date of this Agreement, Buyer, Seller and PS Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of Buyer (“Merger Sub”), are entering into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which, and subject to the terms and
conditions of which, Merger Sub will merge with and into Seller and each share of common stock, par value $0.01 per share, of Seller will be converted into the right to receive 1.30 shares of common stock, par value $0.01 per share, of Buyer (the
“Buyer Common Stock”) (such transaction, the “Merger”). Capitalized terms used herein without being defined have the same meanings given to such terms in the Merger Agreement; 
 WHEREAS, the Buyer Stockholder beneficially owns, and has sole voting power or (together with one or more affiliates controlled by the Buyer Stockholder)
shared voting power with respect to, the outstanding shares of Buyer Common Stock identified as being held by the Buyer Stockholder on Exhibit A hereto (such shares of Buyer Common Stock, together with any voting securities of Buyer issued or
exchanged with respect to such shares of Buyer Common Stock upon any recapitalization, reclassification, merger, consolidation, spin-off, partial or complete liquidation, stock dividend, split-up or combination of the securities of Buyer or any
other change in Buyer’s capital structure, the “Covered Outstanding Shares”); 
 WHEREAS, the Buyer Stockholder owns of
record the options to purchase shares of Buyer Common Stock (the “Buyer Options”) and the stock units representing Buyer Common Stock (the “Buyer Stock Units”) identified as being held by the Buyer Stockholder on
Exhibit A hereto (the shares of Buyer Common Stock subject to such Buyer Options and Buyer Stock Units, together with any voting securities of Buyer issued or exchanged with respect to such shares of Buyer Common Stock upon any
recapitalization, reclassification, merger, consolidation, spin-off, partial or complete liquidation, stock dividend, split-up or combination of the securities of Buyer or any other change in Buyer’s capital structure, together with the Covered
Outstanding Shares, the “Covered Shares”); and 
 WHEREAS, in connection with the execution of the Merger Agreement, the
Seller has requested that the Buyer Stockholder and certain other holders of Buyer Common Stock execute and deliver this Agreement; 
 NOW,
THEREFORE, in consideration of the premises, the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt of which are hereby acknowledged, the Buying Stockholder, Buyer and Seller hereby agree as
follows: 

 1. Cooperation by Buyer Stockholder. Unless and until this Agreement shall be terminated pursuant
to paragraph 4, the Buyer Stockholder agrees that, solely in such Buyer Stockholder’s capacity as a stockholder of Buyer: (a) at the Buyer Stockholders Meeting to be held pursuant to Section 5.1(c) of the Merger Agreement, the Buyer
Stockholder shall cause all Covered Shares which are outstanding and beneficially owned by Buyer Stockholder on the record date of the Buyer Stockholders Meeting (the “Eligible Shares”) to be counted as present thereat for the
purpose of establishing a quorum and voted in person or by proxy in favor of the issuance of shares of Buyer Common Stock in the Merger pursuant to the Merger Agreement; (b) the Buyer Stockholder shall not take or permit the Buyer
Stockholder’s representatives to take actions inconsistent with his or their obligations under this Agreement; and (c) the Buyer Stockholder agrees that, if requested by Seller, the Buyer Stockholder shall appoint and authorize one or more
persons designated by Seller as the agent, proxy and attorney-in-fact for the Buyer Stockholder, with full power of substitution and resubstitution, solely to cause the Eligible Shares to be counted as present and to vote the Eligible Shares prior
to the termination of this Agreement in accordance with clause (a) above. With respect to the agreement to grant proxy and power of attorney granted by the Buyer Stockholder under clause (c) above: (i) the Buyer Stockholder shall take
such further action or execute such other instruments, at Buyer’s sole cost and expense, as may be reasonably necessary to effectuate the intent of such proxy; (ii) such proxy and power of attorney shall be irrevocable during the term of
this Agreement, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any and all prior proxies granted by the Buyer Stockholder inconsistent with such proxy; (iii) such power of
attorney is a durable power of attorney; and (iv) such proxy and power of attorney shall terminate upon the termination of this Agreement. 
 2. Agreement to Retain. Unless and until this Agreement shall be terminated pursuant to paragraph 4, unless authorized in advance by Buyer’s Board of Directors and by Seller’s Board of Directors, the Buyer Stockholder,
solely in the Buyer Stockholder’s capacity as a stockholder of Buyer, agrees (a) not to sell or otherwise transfer any of the Covered Shares or any economic, voting or other direct or indirect interest therein, and (b) not to grant a
proxy or enter into any voting agreement concerning any of the Covered Shares (except, in each case, for the voting agreement and agreement to appoint proxy under paragraph 1 and the fulfillment of all other agreements and obligations of the Buyer
Stockholder hereunder); provided that, notwithstanding the foregoing, the Buyer Stockholder shall be permitted to sell or otherwise transfer up to 33% [or 3,000,000 in the case of Arunas A. Chesonis] of the Covered Shares in the aggregate during
such period. 
 3. Representations and Warranties. The Buyer Stockholder hereby represents and warrants to Buyer and Seller that:
(a) the Buyer Stockholder has the power and authority to enter into and deliver this Agreement and perform its obligations under this Agreement; (b) this Agreement is binding on the Buyer Stockholder and enforceable in accordance with its
terms, except as enforceability may be limited by Creditors’ Laws; (c) the execution and delivery of this Agreement and the performance by the Buyer 

  

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Stockholder of his obligations hereunder do not require the authorization, consent, approval, license, exemption or other action by any third party or
governmental authority, do not violate applicable law or conflict with or result in a breach of any of the Buyer Stockholder’s contractual obligations; (d) the Buyer Stockholder beneficially owns and has sole voting power or (together with
one or more affiliates controlled by the Buyer Stockholder) shared voting power with respect to the Covered Outstanding Shares identified as being held by the Buyer Stockholder on Exhibit A to this Agreement, and such shares are free and
clear of any liens, claims or encumbrances of any kind other than those arising from the Buyer Stockholder’s obligations under this Agreement; and (e) other than the Covered Outstanding Shares that are identified as to the Buyer
Stockholder on Exhibit A to this Agreement, the Buyer Stockholder does not own, of record or beneficially, any outstanding voting securities of Buyer, other than voting securities for which the Buyer Stockholder does not have shared voting
power together with one or more affiliates controlled by the Buyer Stockholder. 
 4. Termination of Agreement. This Agreement shall
remain in full force and effect until, and the provisions of paragraphs 1 through 3 (inclusive) shall terminate upon, the earliest to occur of any of the following: (a) the Merger Agreement, as it may be amended or modified from time to time,
is terminated in accordance with its terms; (b) the Merger is consummated; (c) the parties hereto execute a written agreement to terminate this Agreement; and (d) the Outside Date (as defined in the Merger Agreement in effect on the
date hereof). 
 5. Notice. All notices, requests, claims, demands and other communications (“Notices”) under this
Agreement shall be in writing and sent by certified or registered mail, return receipt requested, a recognized overnight courier service, telecopier or personal delivery, as follows: (a) if to Buyer or to the Buyer Stockholder, to: PAETEC
Holding Corp., One PAETEC Plaza, 600 Willowbrook Office Park, Fairport, New York 14450, Attention: General Counsel, Telecopier: (585) 340-2563, with a required copy to: Hogan & Hartson L.L.P., 8300 Greensboro Drive, McLean, Virginia
22102, Attention: Richard J. Parrino and Thomas E. Repke, Telecopier: (703) 610-6200 and (b) if to Seller, to: McLeodUSA Incorporated, 16479 Dallas Pkwy, Suite 700, Bent Tree Towers II, Dallas, Texas 75248, Attention: Bernie Zuroff,
Telecopier: (469) 341-3211, with a required copy to: Ropes & Gray LLP, One International Place, Boston, Massachusetts 02110, Attention: Robert L. Nutt and Keith F. Higgins, Telecopier: (617) 951-7050. All Notices shall be deemed
to have been duly given: when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial overnight courier service; five business days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied. A party may change its address for purposes of this Agreement by Notice in accordance with this paragraph 5. 
 6. Entire Agreement. This Agreement supersedes all prior agreements between the parties with respect to its subject matter and constitutes a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. 
  

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 7. No Other Rights. Nothing in this Agreement shall be considered to give any person other than
the parties any legal or equitable right, claim or remedy under or in respect of this Agreement or any provision of this Agreement. This Agreement and all of its provisions are for the sole and exclusive benefit of the parties and their respective
successors and permitted assigns. 
 8. Equitable Relief. Each of the parties hereto acknowledges that a breach by it of any provision
contained in this Agreement will cause the other parties to sustain damage for which they would not have an adequate remedy at law for money damages, and therefore each of the parties hereto agrees that in the event of any such breach, the aggrieved
party shall be entitled to the remedy of specific performance of such agreement and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. 
 9. Severability. If any provision of this Agreement is held invalid or unenforceable by a court of competent jurisdiction, the other provisions of
this Agreement shall remain in full force and effect. Any provision of this Agreement which is held invalid or unenforceable only in part shall remain in full force and effect to the extent not held invalid or unenforceable. 
 10. Headings. All references in this Agreement to “paragraph” or “paragraphs” refer to the corresponding numbered paragraph or
paragraphs of this Agreement. All words used in this Agreement shall be construed to be of the appropriate gender or number as the context requires. Unless otherwise expressly provided, the word “including” does not limit the preceding
words or terms. 
 11. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be considered an
original copy of this Agreement and all of which, when taken together, shall be considered to constitute one and the same agreement. 
 12.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to that state’s conflicts of laws principles. 
 13. Amendments; Waivers. Any amendment or modification of or to any provision of this Agreement, and any consent to any departure of any party
from the terms of any provision of this Agreement, shall be effective only if it is made or given in writing and signed by each party. Notwithstanding the foregoing sentence, any failure of any of the parties to comply with any obligation, covenant,
agreement or condition herein may be waived by any party entitled to the benefits thereof only by a written instrument signed by such party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. The failure of any party to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of
those rights. 
  

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 14. Successors and Assigns. This Agreement shall apply to, be binding in all respects upon and
inure to the benefit of the parties and their respective successors and permitted assigns. No party may assign any of its rights under this Agreement without the prior written consent of each of the other parties. 
  

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 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above
written. 
  

			
	 PAETEC HOLDING CORP.

		
	By:	 	  

	Name:	 	
	Title:	 	

			
	 MCLEODUSA INCORPORATED

		
	 By:
	 	  

	 Name:
	 	
	 Title:
	 	

			
	 BUYER STOCKHOLDER:

		
	 By:

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