EXHIBIT 10.9
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT, dated as of November 1, 2002 by and among Madison River
Telephone Company LLC, a Delaware limited liability company ("Holdings"), and
Xxxxx X. Xxxxxx ("Executive").
RECITALS
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Holdings and Executive entered into an employment agreement dated as of
September 28, 1999 and such agreement would expire on September 29, 2003.
Holdings and Executive desire to extend employment and enter into an agreement.
Holdings has acquired and operates rural telephone companies and other
telecommunications operations.
Holdings has the following classes of equity: Class A equity, Class B equity and
Class C equity. Class A equity will be entitled to distributions prior to the
Class B and Class C equities.
In order to induce Executive to agree to continue to serve as Managing Director-
Chief Technology Officer of Holdings (hereinafter "Managing Director"), Holdings
desires to provide Executive with compensation and other benefits on the terms
and conditions set forth in this Agreement.
Executive is willing to enter into such employment and perform services for
Holdings on the terms and conditions set forth in this Agreement.
It is therefore hereby agreed by the parties as follows:
1. Employment.
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(a) Subject to the terms and conditions of this Agreement, Holdings agrees to
employ Executive during the term hereof as Managing Director. In his
capacity as Managing Director of Holdings, Executive shall have the
customary powers, responsibilities and authorities of Managing Director
of corporations of the size, type and nature of Holdings, as they exist
from time to time. Executive shall also be Managing Director of all of
Holdings' subsidiaries unless otherwise agreed by Executive.
Compensation and expenses of Executive shall be allocated based on the
procedures agreed upon by and between Holdings and subsidiaries.
(b) Subject to the terms and conditions of this Agreement, Executive hereby
accepts employment as Managing Director of Holdings and agrees to devote
his full working time and efforts, to the best of his ability, experience
and talent, to the performance of services, duties and responsibilities
in connection therewith. Nothing in this Agreement shall preclude
Executive from engaging, consistent with his duties and responsibilities
hereunder, in charitable and community affairs, from managing his
personal investments or, except as otherwise provided in Section 12
hereof, from serving as a member of boards of directors or as a trustee
of other companies, associations or entities.
2. Term of Employment.
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Executive's term of employment under this Agreement shall commence on
November 1, 2002 (the "Approval Date") and, subject to the terms hereof,
shall terminate on December 31, 2005 (unless and until extended from time
to time by mutual written agreement of the parties, the "Termination
Date").
3. Compensation.
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3.1 Initial Base Salary. Beginning on the Approval Date and continuing until
the Termination Date, Holdings shall pay Executive a base salary ("Base
Salary") at the annual rate of $180,000. The Base Salary shall be
payable in accordance with the ordinary payroll practices of Holdings but
in no event less often than monthly in arrears.
3.2 Adjustments to Base Salary. The Base Salary shall be increased from time
to time as the Board shall determine taking into account the success of
Holdings, the performance of Executive, the size, revenues, and earnings
of the businesses held or operated, or contemplated to be held or
operated, by Holdings and other market factors. Once so increased, the
increased amount shall constitute Executive's Base Salary hereunder.
3.3 Compensation Plans and Programs. Executive shall participate in any
compensation plan or program, short-term (annual) or long-term,
maintained by Holdings and participated in by senior executives of the
Company generally on terms taking into account Executive's title and
position with the Company. Executive's short-term incentive award target
is $70,000.
3.4 Expenses. Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities on behalf of the Company
under this Agreement, including, without limitation, expenses for travel
and similar items related to such responsibilities which are consistent
with Holdings' policies in effect from time to time with respect to
travel and other business expenses. Holdings will reimburse Executive
for all such expenses upon presentation by Executive from time to time of
an itemized account of such expenditures; provided that such expenses are
in compliance with any other Holdings' policies in effect from time to
time with respect to reporting and documentation of such expenses; it
being understood, furthermore, that the cost of commuting between
Executive's residence and Holdings' principal place of business shall not
be reimbursed.
4. Employee Benefits.
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4.1 Employee Benefit Programs, Plans and Practices. During the term of his
employment hereunder, Holdings shall provide to Executive coverage under
any employee benefit programs, plans and practices (commensurate with his
position in Holdings and to the extent possible under any employee
benefit plan), in accordance with the terms hereof, which Holdings makes
available to its senior executive officers generally, including but not
limited to (i) retirement, pension and profit-sharing, and (ii) medical,
dental, hospitalization, life insurance, short-and long-term disability,
accidental death and dismemberment and travel accident coverage.
4.2 Vacation and Fringe Benefits.
(a) Executive shall be entitled to paid vacation each calendar year of no
less than 20 working days. Holdings may grant additional vacation
time to Executive.
(b) In addition, Executive shall be entitled to all of the other
perquisites and fringe benefits accorded the senior officers of
Holdings generally.
5. Incentive Equity.
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5.1 Purchase Rights; Vesting.
(a) As of the date hereof, Executive has purchased from Holdings Class C
equity of Holdings equal to 7.70% of the total Class C equity of
Holdings for an aggregate purchase price of $770 (hereafter,
"Incentive Equity"). Within 30 days after such purchase of Incentive
Equity, the Executive made an election with the Internal Revenue
Service under Section 83(b) of the Internal Revenue Code and the
regulations promulgated thereunder. The parties agree that purchase
price for Incentive Equity at the time of purchase was at fair market
value, specifically 7.70% of the total Class C equity for $770 and
that parties shall use and have used such value for all Federal
income tax purposes.
(b) As long as Executive is employed by Holdings, Executive's Incentive
Equity shall vest (except in the case of vesting pursuant to Section
5.3(a)) on a daily basis over a four-year period beginning with the
September 29, 1999, the Commencement Date pursuant to the September
28, 1999 employment agreement. As of December 31, 2002, vested
percentage of Class C Incentive Equity for Executive is 81.44%. All
unvested Incentive Equity will become fully vested immediately prior
to the occurrence of a Liquidity Event. "Liquidity Event" means (i)
any sale of all or substantially all of the assets of Holdings on a
consolidated basis in one transaction or series of related
transactions (but excluding sales to affiliates) for cash or
marketable securities, (ii) any sale of 50% or more of the Investor
Equity (as defined in the LOI) in one transaction or series of
related transactions (but excluding sales to affiliates and, with
respect to individuals, related persons) for cash or marketable
securities or (iii) a merger, share exchange or similar transaction
which accomplishes one of the foregoing.
5.2 Distributions. Executive's unvested Incentive Equity outstanding at the
time of any dividend or other distribution to Incentive Equity will be
entitled to receive the same distributions per unit as vested Incentive
Equity.
5.3 Repurchase.
(a) Executive's unvested Incentive Equity will be subject to repurchase
in whole by Holdings, at its option (which option to repurchase must
be elected in writing by Holdings within ten days of termination and,
subject to such repurchase option being suspended as provided below,
consummation of such repurchase must be effected within 80 days
thereafter), at the lower of its original cost (less all amounts
distributed in respect of Executive's unvested Incentive Equity) or
its Fair Market Value at the time of termination if Executive ceases
to be employed by Holdings for any reason. Notwithstanding anything
in this agreement to the contrary, in the event that Executive's
employment is terminated for any reason including due to death or
Disability (but other than by the Executive without Good Reason) and
(i) at or prior to such termination Holdings has entered into an
agreement or agreements regarding a transaction or has publicly
announced its intention to consummate a transaction (including, but
not limited to, a public announcement of an intention to seek to
consummate a transaction), which upon consummation would trigger a
Liquidity Event (as defined in the LOI), or (ii) at or within six
months prior to such termination is or was in active negotiations
regarding a transaction, which upon consummation would trigger a
Liquidity Event, then in either case Holdings' repurchase right
pursuant to the foregoing sentence will be suspended and if any such
transaction is consummated then Executive's unvested Incentive Equity
shall immediately prior to the consummation of such transaction
become fully vested and all distributions that would have been
payable to Executive on account of such unvested Incentive Equity
subsequent to Executive's termination and prior to such vesting shall
be made to Executive, with interest on each such distribution at a
rate per annum equal to the prime rate in effect at the time of each
such distribution, at such time (and any repurchase by Holdings of
such Incentive Equity in connection with Executive's termination of
employment shall be governed by Section 5.3(b)), it being understood
and agreed that, upon exercise of the repurchase option, during such
suspension and prior to any such vesting hereunder, distributions
that would have been payable to Executive on account of such unvested
Incentive Equity shall not be for the account of Executive unless and
until such Incentive Equity shall become vested; provided that if
none of such transactions is consummated within two years after
Executive's termination of employment, or within such two-year period
another transaction is consummated which constitutes a Liquidity
Event, then Holdings' above repurchase rights shall be reinstated.
"Fair Market Value" shall mean, with respect to any security, the
amount that would be paid to the holder thereof with respect to such
security if all of the assets of Holdings were sold for fair value to
a willing buyer in exchange for cash, all of the debt and other
liabilities not assumed by the buyer were paid in full, all of the
convertible debt and other convertible securities were repaid or
converted (whichever yields more cash to the holders), and then
Holdings were completely liquidated.
(b) Executives vested Incentive Equity will not be subject to repurchase
in whole or in part by Holdings.
5.4 Investors' Agreement. Holdings has entered into an investors' agreement
(the "Investors' Agreement"), registration agreement, and certain other
agreements with Executive and the other members of Holdings
(collectively, the "Investors") embodying the relevant terms set forth in
the LOI.
5.5 Restrictions on transfer of Incentive Equity. Other than pursuant to Tag-
Along Rights, Registration Rights, and other Exit Rights with respect to
his vested Incentive Equity (as such terms are defined in the LOI and as
such concepts may be incorporated in the agreements referred to in
Section 5.4) Executive may not transfer his Incentive Equity at any time
(other than transfers of Incentive Equity for estate planning purposes to
immediate family members and trusts and/or other vehicles for the benefit
of immediate family members) without the approval of members of the Board
holding a majority of the votes of all members of the Board who do not
have a pecuniary interest in such transfer, which majority shall
include approval by members of the Board holding a majority of the votes.
6. Termination of Employment.
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6.1 Termination Not for Cause or Termination for Good Reason.
(a)
(i) Holdings may terminate Executive's employment at any time, and
Executive may terminate his employment at any time. If
Executive's employment is terminated by Holdings other than for
Cause (as defined herein) or due to Executive's death or
Disability (as defined herein) or Executive terminates his
employment for Good Reason prior to the Termination Date,
Executive shall be entitled to receive from Holdings continued
Base Salary (payable in accordance with the last sentence of
Section 3.1 hereof) for six months after date of the termination
plus, on the sixtieth day following the end of the fiscal year
during which the termination of Executive's employment pursuant to
this Section 6.1(a) occurs, an amount in respect of any bonus for
the period employed for the fiscal year in which Executive's
employment is terminated calculated on a pro rata basis.
(ii) In addition, Executive shall (1) be entitled to receive, within a
reasonable period of time after the date of termination, a cash
lump sum equal to (A) any compensation payments deferred by
Executive, together with any applicable interest or other accruals
thereon; and (B) any unpaid amounts, as of the date of such
termination, in respect of any bonus for the fiscal year ending
before the fiscal year in which such termination occurs; (2) for
the period from the date of termination of Executive's employment
until the one year anniversary of the Termination Date (as then in
effect), continue to be covered under and participate in Holdings'
employee benefit programs, plans and practices with respect to
medical, dental, hospitalization, life insurance and disability
benefits described in Section 4.1 hereof or under such other plans
of Holdings which provide for equivalent coverage to the extent
and on the terms in effect on the Executive's last day of
employment; and (3) have such rights to payments under applicable
plans or programs, accrued to Executive on date of termination
including, without limitation, those described in Section 3.3
hereof as may be determined pursuant to the terms of such plans or
programs.
(b) For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any of the following events without Executive's express
prior written consent:
(i) the assignment to Executive by Holdings of duties not appropriate
to Executive's positions, responsibilities, titles and offices as
set forth in Section 1 hereof, or any material reduction by
Holdings of Executive's duties or responsibilities or any removal
of Executive as the Managing Director, except in connection with
the termination of Executive's employment (and not cured after 15
days prior notice to all of the members of the Board);
(ii) a reduction by Holdings in Executive's Base Salary as in effect at
the commencement of employment hereunder or as the same may be
increased from time to time during the terms of this Agreement;
(iii) any material breach by Holdings of any provision of this Agreement
(not cured after 15 days' prior notice);
(iv) requiring Executive to relocate his primary residence or locating
the principal executive office of the Company outside the United
States of America.
6.2 Disability. If (i) Executive shall fail for a period of six consecutive
months during the term of his employment hereunder, because of illness,
physical or mental disability or other similar incapacity, to effectively
and actively render the services provided for by this Agreement or (ii)
at such earlier time as Executive submits satisfactory medical evidence
that he has or the Board in its reasonable judgment determines that
Executive has an illness, physical or mental disability or other
incapacity which is expected to prevent him from returning to the
performance of his work duties for six months or longer ("Disability"),
Holdings or Executive may terminate Executive's employment upon written
notice thereof, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under this Section 6.2, and Executive shall receive or
continue to receive, as the case may be:
(a) as soon as practicable after the date of termination of Executive's
employment pursuant to this Section 6.2, a cash lump sum equal to any
compensation payments deferred by Executive, together with any
applicable interest or other accruals thereon;
(b) any unpaid amounts, as of the date of such termination, in respect of
any bonus for the fiscal year ending before such termination, which
shall be payable on the date on which such bonus would otherwise be
payable;
(c) on the sixtieth day following the end of the fiscal year during which
the termination of Executive's employment pursuant to this Section
6.2 occurs, an amount in respect of any bonus for the period employed
for such fiscal year calculated on a pro rata basis;
(d) for a period of one year after termination for Disability, amounts,
payable on Holdings' regular payroll schedule, equal to no less than
60% of Executive's then annual Base Salary, reduced by any amounts
received by Executive under any disability insurance policies with
respect to which Holdings paid the premiums;
(e) such rights to payments under applicable plans or programs, accrued
to Executive on the date of termination including, without
limitation, those described in Section 3.3 hereof, as may be
appropriate pursuant to the terms of such plans or programs.
6.3 Death. In the event of Executive's death during the term of his
employment hereunder, Executive's estate or designated beneficiaries
shall receive:
(a) payments of Base Salary for a period of six months after his date of
death;
(b) as soon as practicable after the date of Executive's death, a cash
lump sum equal to any compensation payments deferred by Executive,
together with any applicable interest or other accruals thereon;
(c) any unpaid amounts, as of the date of Executive's death, in respect
of any bonus for the fiscal year ending before his death, which shall
be payable on the date on which such bonus would otherwise be
payable;
(d) on the sixtieth day following the end of the fiscal year during which
Executive's death occurs, an amount in respect of any bonus during
period employed for such fiscal year calculated on a pro rata basis;
(e) any death benefits provided under the employee benefit programs,
plans and practices described in Section 4.1 hereof, in accordance
with their terms; and
(f) such other payments under applicable plans or programs accrued to
Executive on date of termination, including, but not limited to those
described in Section 3.3 hereof, as may be appropriate pursuant to
the terms of such plans or programs.
6.4 Voluntary Termination by Executive; Discharge for Cause.
(a) In the event that Executive's employment is terminated by Holdings
for Cause, as hereinafter defined, or by Executive other than for
Good Reason or other than as a result of Disability or death, prior
to the Termination Date, Executive shall be entitled to receive all
salary and benefits to which Executive is entitled up to and
including the date of Executive's termination of employment
hereunder. The obligations of Holdings under this Agreement to make
any further payments, or provide any benefits specified herein, to
Executive shall cease and terminate on the date on which Executive's
employment is terminated by Holdings for Cause or by Executive other
than for Good Reason or other than as a result of Disability or
death. Termination of Executive in accordance with this Section 6.4
shall be communicated to Executive pursuant to a notice of a
resolution of a majority of the Board determining that Executive is
subject to discharge for Cause as defined herein.
(b) As used herein, the term "Cause" shall mean commission of a felony or
crime involving moral turpitude, repeated failure to comply with the
Board's instructions (after 30 days' prior notice), and any other
material breach of this Agreement by Executive (after 30 days' prior
notice).
6.5 Deleted.
7.0 Notices. All notices or communications hereunder shall be in writing,
addressed as follows:
To Holdings:
Madison River Telephone Company LLC
X.X. Xxx 000
000 Xxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Board of Members
Facsimile: (000) 000-0000
Confirmation: (000) 000-0000
To Executive:
Xxxxx X. Xxxxxx
0000 Xxxx Xxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Confirmation: (000) 000-0000
Any such notice or communication shall be sent certified or registered mail,
return receipt requested, postage prepaid, or by facsimile (with confirmation of
receipt) addressed as above (or to such other address as such receiving party
may have designated in a notice duly delivered as described above), and the
actual date of mailing shall constitute the time at which notice was given
(except, in the case of facsimile, the time and date of confirmation shall be
the time at which notice was given).
8.0 Separability; Legal Fees; Arbitration. If any provision of this
Agreement shall be declared to be invalid or unenforceable, in whole or
in part, such invalidity or unenforceability shall not affect the
remaining provisions hereof, which shall remain in full force and effect.
Any controversy or claim arising out of or relating to this Agreement or
the breach of this Agreement (other than Section 12 hereof) that cannot
be resolved by Executive on the one hand and Holdings on the other,
including any dispute as to the calculation of Executive's benefits or
any payments hereunder, shall be submitted to arbitration in Raleigh-
Durham metropolitan area of North Carolina in accordance with Delaware
law and the procedures of the American Arbitration Association. The
determination of the arbitrators shall be conclusive and binding on
Holdings and Executive, and judgment may be entered on the arbitrators'
award in any court having jurisdiction. The expense of such arbitration
including reasonable legal fees in connection therewith shall be borne in
accordance with the direction of the arbitrators.
9.0 No Obligation to Mitigate Damages. Executive shall not be required to
mitigate damages or the amount of any payment provided for under this
Agreement by seeking other employment or otherwise.
10. Assignment. This contract shall be binding upon and inure to the benefit
of the heirs and representatives of Executives and the assigns and
successors of Holdings, but neither this Agreement nor any rights
hereunder shall be assignable or otherwise subject to hypothecation by
Executive (except by will or by operation of the laws of intestate
succession) or by Holdings, except that Holdings may assign this
Agreement to any successor (whether by merger, purchase or otherwise) to
all or substantially all of the stock, assets or businesses of Holdings
or affiliate of Holdings.
11. Amendment. This Agreement may only be amended by written agreement of
the Board and Executive.
12. Nondisclosure of Confidential Information; Non-Competition.
(a) From and after the date hereof and at all times thereafter (except
as otherwise provided in Section 12(e)), Executive shall not,
without the prior written consent of Holdings, at any time divulge,
disclose, use to the detriment of Holdings or make accessible to any
other person, firm, partnership, corporation or other entity any
Confidential Information, except (i) while employed by Holdings, in
the business of and for the benefit of Holdings and to the extent
such use or disclosure is required or deemed advisable by Executive
in the performance of his assigned duties (provided that any
Confidential Information disclosed pursuant to this clause (i) shall
remain Confidential Information hereunder, except as provided
below), or (ii) when required to do so by a court of competent
jurisdiction, by any governmental agency having supervisory
authority over the business of Holdings, or by any administrative
body or legislative body (including a committee thereof) with
purported or apparent jurisdiction to order Executive to divulge,
disclose or make accessible such information. Executive agrees to
notify Holdings if Executive discloses such information and to take
reasonable efforts to preserve the confidential nature of such
information. For purposes of this Section 12(a), "Confidential
Information" shall mean information concerning Holdings' and its
subsidiaries' financial data, strategic business plans, business
development (or other proprietary product data), marketing plans,
know-how, customer lists, information about potential acquisition
targets, acquisition strategies and targets and other non-public,
proprietary and confidential information of Holdings, provided that
Confidential Information shall not include information if and solely
to the extent that such information is or has become publicly
available through no wrongful act or breach of confidentiality by
Executive.
(b) Executive agrees that he shall not directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner,
member, investor, lender or employee or in any other capacity, carry
on, be engaged in or have any financial interest in, (i) during the
time that Executive is employed hereunder and for a period of three
months thereafter, any business that is engaged in the telephone or
telecommunications industry and (ii) for a period of 12 months after
such three-month period, any business which is in competition with
the business of Holdings and/or its subsidiaries in a geographic
market where Holdings and/or its subsidiaries do business. In
addition, during the time that Executive is employed hereunder and
for a period of 15 months thereafter, Executive agrees that, without
the prior written consent of Holdings, he shall not solicit for
employment any person who at any time during Executive's employment
hereunder was an employee of Holdings or any of its subsidiaries.
(c) For purposes of Section 12(b)(ii) hereof, a business shall be deemed
in competition with Holdings and/or its subsidiaries if at the time
of Executive's proposed relationship with such business, such
business is rendering services being rendered by Holdings and/or its
subsidiaries in one or more areas that, at the time of Executive's
termination hereunder, in the aggregate accounted for more than 5% of
operating gross annual sales of Holdings and its subsidiaries.
Nothing in this Section 12 shall be construed so as to preclude
Executive from investing in publicly traded securities of any company
provided Executive's beneficial ownership of any class of such
company's securities does not exceed 5% of the outstanding securities
of such class.
(d) Executive and Holdings agree that the foregoing covenant not to
compete is a reasonable covenant under the circumstances, and further
agree that if in the opinion of any court of competent jurisdiction
such restraint is not reasonable in any respect, such court shall
have the right, power and authority to excise or modify such
provision or provisions of such covenant as to the court shall appear
not reasonable and to enforce the remainder of the covenant as so
amended. Executive agrees that any breach of the covenants contained
in this Section 12 would irreparably injure Holdings. Accordingly,
Holdings may, in addition to pursuing any other remedies it may have
in law or in equity, obtain an injunction against Executive from any
court having jurisdiction over the matter, restraining any further
violation of this Section 12 by Executive.
(e) Executive hereby assigns and from time to time assigns to Holdings
all right, title and interest in and to any Intellectual Property
conceived, contributed to or made by Executive at any time during his
employment with Holdings (whether alone or jointly with others) to
the extent such Intellectual Property is not owned by Holdings as a
matter of law. Executive shall thereafter promptly and fully
communicate to Holdings all such Intellectual Property and shall
cooperate with Holdings to protect Holdings' interests in such
Intellectual Property. Any copyrightable work prepared in whole or
in part by Executive in the course of his employment with Holdings
shall be deemed "a work made for hire" under the copyright laws, and
Holdings shall own all of the rights comprised in the copyright
therein. This cooperation shall include providing assistance in
securing patent protection and copyright registrations and signing
all documents reasonably requested by Holdings, even if such request
occurs after termination of his employment with Holdings. Executive
understands that this Agreement does not apply to an invention for
which no equipment, supplies, facilities or trade secret information
of Holdings was used and which was developed entirely on his own
time, unless: (a) the invention relates (i) to the business (actual
or reasonably proposed) of Holdings or its subsidiaries, or (ii) to
Holdings' or its subsidiaries' research or development (actual or
reasonably proposed); or (b) the invention results from any work
performed by Executive for Holdings or its subsidiaries.
"Intellectual Property" shall mean patent applications, copyrightable
works, mask works and applications for registration related thereto,
all Confidential Information, and all other intellectual property
rights created, conceived or owned by, Holdings or any of its
subsidiaries or for the benefit of an enterprise similar to Holdings
or any of its subsidiaries.
(f) Executive shall deliver to Holdings or at any other time Holdings may
request, all Intellectual Property in his possession and control, and
all copies thereof, in whatever form or medium. Upon Holdings
request, Executive shall sign a written confirmation that Executive
has returned all such materials. Executive agrees that the
limitations in this Section 12 are reasonable and necessary to
protect the legitimate business interests of Holdings and its
affiliates.
13. Indemnification; Director and Officer Insurance.
(a) Holdings hereby agrees, commencing on the date hereof, to indemnify
and hold harmless Executive to the maximum extent permitted by the
General Corporation Law of the State of Delaware (the "DGCL"), as the
same now exists or may hereafter be amended, substituted or replaced
(but, in the case of any such amendment, only to the extent that such
amendment permits Holdings to provide broader indemnification rights
than DGCL permitted prior to such amendment), and to the extent
permitted under the charter and Bylaws of Holdings, against all
expenses, liabilities and losses (including attorneys' fees,
judgments, fines, settlements, excise taxes or penalties) reasonably
incurred or suffered by Executive in connection with serving as an
officer, director, employee or agent of Holdings or for serving at the
request of Holdings as an officer, director, manager, member, partner,
employee, trustee or agent of another corporation, partnership, joint
venture, limited liability company, trust or other enterprise.
Expenses, including attorneys' fees, incurred by Executive in
defending a proceeding shall be paid by Holdings in advance of the
final disposition of such proceeding, including any appeal therefrom,
upon receipt of an undertaking by or on behalf of Executive to repay
such amount if it shall ultimately be determined that he is not
entitled to be indemnified by Holdings. This Section 13(a) shall
survive termination of this Agreement. The right of indemnification
provided herein shall inure to the benefit of the heirs and legal
representatives of Executive and shall be applicable to proceedings
commenced or continuing after the date hereof, whether arising from
acts or omissions occurring before or after the date hereof.
(b) Holdings agrees it will maintain director and officer liability
insurance for the purpose of covering all actions taken by Executive
as an officer, director, employee or agent of Holdings which insurance
is reasonably deemed necessary by Executive and is approved by the
Board (which approval shall not be unreasonably withheld).
14. Beneficiaries; References. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary
or beneficiaries to receive any compensation or benefit payable
hereunder in accordance with the terms hereof following Executive's
death, and may change such election, in either case by giving Holdings
written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to
Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
15. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
The provisions of this Section 15 are in addition to the survivorship
provisions of any other section of this Agreement.
16. Governing Law. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of Delaware, without
reference to rules relating to conflict of laws.
17. Withholding. Holdings shall be entitled to withhold from any payment
hereunder any amount required by law to be withheld.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original.
19. Executive Representations. Executive hereby represents and warrants to
Holdings that (i) the Incentive Equity acquired or may be acquired will
be for the Executive's own account and not with a view to, or intention
of, distribution thereof in violation of the Securities Act of 1933, as
amended (the "Securities Act"), or any applicable state securities laws,
and the Incentive Equity will not be disposed of in contravention of the
Securities Act or any applicable state securities laws, (ii) the
Executive is an executive officer of Holdings, is sophisticated in
financial matters and is able to evaluate the risks and benefits of the
investment in the Incentive Equity, (iii) the Executive is able to bear
the economic risk of his investment in the Incentive Equity for an
indefinite period of time and the Executive understands that the
Incentive Equity has not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available and
all other applicable restrictions on transfer have been satisfied, (iv)
the Executive has participated significantly in the structuring of the
equity of Holdings, has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of the
Incentive Equity and has had full access to such other information
concerning Holdings as he has requested, (v) the execution, delivery,
and performance of this Agreement by Executive does not and will not
conflict with, breach, violate or cause a default under any contract,
agreement, instrument, order, judgment or decree to which Executive is a
party or by which he is bound, (vi) Executive is not a party to or bound
by any employment agreement, non-compete agreement or confidentiality
agreement with any other Person and (vii) upon the execution and
delivery of this Agreement by the Company, this Agreement shall be the
valid and binding obligation of Executive, enforceable in accordance
with its terms. Executive hereby acknowledges and represents that he
has consulted with independent legal counsel regarding his rights and
obligations under this Agreement and that he fully understands the terms
and conditions contained herein.
20. Executive agrees that (i) in the event that any of Executive's equity
interest in Holdings is evidenced by a certificate, such certificate
shall contain an appropriate legend referring to this Agreement and (ii)
no transfers of any equity interest or portion thereof in Holdings shall
be made except in compliance with applicable securities laws.
21. Complete Agreement. This Agreement, those documents expressly referred
to herein (including, without limitation, the LOI and the employment
agreement of June 4, 1996 and amendments thereto) embody the complete
agreement and understanding among the parties and supersede and preempt
any prior understandings, agreements or representations by or among
Holdings and Executive, written or oral, which may have related to the
subject matter hereof in any way. No waiver of this Agreement or of any
of the terms or provisions hereof shall be binding upon either party
hereto unless confirmed by a written instrument signed by such party.
No waiver by Executive or Holdings of any term or provision of this
Agreement or of any default hereunder, nor any failure or delay in
exercising any right, option, power or privilege hereunder, shall affect
Executive's or Holdings' respective rights hereafter to enforce such
term or provision or to exercise any such right, option, power or
privilege, or to exercise any right or remedy in the event of any other
default, whether or not similar.
IN WITNESS WHEREOF, Executive and Holdings have caused this Employment Agreement
to be executed as of the date first written above.
MADISON RIVER TELEPHONE COMPANY LLC
By: J. XXXXXXX XXXXXXXXXXX
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XXXXX X. XXXXXX
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Executive