FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") is made
and entered into as of the 31st day of December 2003 ("Effective Date") by
and between Madison River Telephone Company LLC, a Delaware limited liability
company ("Holdings"), and Xxxx X. Xxxx ("Executive").
WITNESSETH:
WHEREAS, Holdings and Executive entered into that certain Employment
Agreement dated as of November 1, 2002 (the "Employment Agreement"); and
WHEREAS, Holdings and Executive desire to amend the Employment Agreement
upon the terms and conditions enumerated below.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
herein contained, and other good and valuable consideration, including the
continued employment of Executive by Holdings, continued provision of
services by Executive to Holdings and the compensation received by Executive
from Holdings from time to time, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Amendment to Employment Agreement. Section 3.3 of the Employment
Agreement shall be null, void, and of no further effect, and is deleted and
replaced in its entirety with the following text:
"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 Holdings generally on terms taking
into account Executive's title and position with Holdings.
Executive's short-term incentive award target is $175,000.
(a) Provided that Executive remains an employee of Holdings on the
date of each such Special Award Bonus (as defined below), and
in addition to any other compensation plan or program, annual
or long-term as described in this Section 3.3, Executive shall
be paid a special annual award (the "Special Award Bonus") on
the Effective Date and each of the next four anniversary dates
of the Effective Date in the amount per year equal to
$153,049.40 plus all interest then accrued on the outstanding
balance of that certain Non-Recourse Demand Note dated December
31, 2001 executed by Executive in favor of Holdings in the
principal amount of $298,579.78 (the "MRTC Note") and all
interest then accrued on the outstanding balance of that
certain Non-Recourse Demand Note dated January 4, 2002 executed
by Executive in favor
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of Madison River Capital, LLC ("MRC") in the principal amount
of $466,667.00 (the "MRC Note" and together with the MRTC Note,
the "Notes"), all as is more fully described on the attached
Schedule A. The Special Award Bonus shall be withheld by
Holdings and directly applied as a payment of interest and
reduction of principal owed by Executive to Holdings or MRC
pursuant to the Notes. The amount of the Special Award Bonus
shall be applied first to the payment of accrued but unpaid
interest on, and then to the outstanding principal balance of,
the MRTC Note. After payment in full of all amounts owing on
the MRTC Note, the amount of any additional Special Award
Bonuses shall be applied next to the payment of accrued but
unpaid interest on, and then to the outstanding principal
balance of, the MRC Note. Notwithstanding the foregoing, in
the event that (i) Executive's employment is terminated by
Holdings other than for Cause (as defined herein), by Executive
for Good Reason (as defined herein), or due to the death or
Disability (as defined herein) of Executive, or (ii) on or
before December 31, 2005, Holdings does not offer to extend
Executive's employment pursuant to this Agreement for a period
of not less than two years on terms not less favorable than the
terms set forth herein (and provided Executive's employment has
not previously been otherwise terminated on or prior to that
date), then Executive shall be entitled to receive a special
termination award bonus (the "Special Termination Bonus" and
together with the Special Award Bonus, each a "Bonus") as of
the date of such termination or non-renewal in the amount equal
to the full principal balance then outstanding on the Notes and
all accrued but unpaid interest thereon, which Special
Termination Bonus shall be withheld by Holdings and directly
applied as a payment of interest and principal owed by
Executive to Holdings or MRC under the Notes. Upon any paydown
of any principal and interest under the Notes as provided for
in this Section, Holdings and MRC hereby agree that a pro rata
portion of the Pledged Securities (as defined in each of the
Notes) shall be released from the lien and security interest
granted in favor of each of them to secure repayment of the
Notes.
(b) On each date on which Executive receives either a Special Award
Bonus or the Special Termination Bonus pursuant to Section
3.3(a) above, Executive shall be entitled to receive from
Holdings, or its wholly-owned subsidiary Madison River
Management LLC, a payment in an amount equal to 45% of the
aggregate amount of the Bonus paid on such date (the "Tax
Offset Payment"), all as is more fully described on the
attached Schedule A. Holdings, or Madison River Management
LLC, as applicable, shall withhold from the Tax Offset Payment
the amount which Holdings determines to be its withholding
obligations for federal, state and local income and employment
taxes on the amount of any Bonus and the amount of the Tax
Offset Payment. If the amount that Holdings determines that it
is required to withhold for such taxes exceeds the amount of
the Tax Offset Payment, the balance shall be paid to Executive
promptly following such determination. If, on the other hand,
the amount that Holdings determines that it is required to
withhold for such
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taxes does not exceed the amount of the Tax Offset Payment,
Executive shall promptly pay to Holdings an amount equal to
such shortfall."
2. Termination of Existing Bonus. Executive hereby acknowledges and
agrees that he shall not hereafter be entitled to all or any portion of the
$23,333.35 bonus described in Section 3.3 of the Employment Agreement.
3. Effect on Employment Agreement. Except as specifically provided
herein, the Employment Agreement, as amended to date, shall remain in full
force and effect in accordance with their terms.
4. Effect on the Notes. This Amendment shall not be deemed to amend,
modify or change the provisions of the Notes, which Notes shall remain in
full force and effect in accordance with their terms.
5. Counterparts; Facsimile Signatures. This Amendment may be executed
in any number of counterparts, each of which shall constitute an original,
but which, when taken together, shall constitute by one instrument. One or
more counterparts of this Amendment or any exhibit hereto may be delivered
via facsimile, with the intention that they shall have the same effect as an
original counterpart hereof.
6. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of North Carolina, without regard to
the conflict of laws provisions thereof.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties have executed this First Amendment to the
Employment Agreement effective as of the day and year first above written.
MADISON RIVER TELEPHONE COMPANY LLC
By: /s/ J. XXXXXXX XXXXXXXXXXX
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Name: J. Xxxxxxx Xxxxxxxxxxx
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Title: Chairman & CEO
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MADISON RIVER CAPITAL, LLC
By: /s/ J. XXXXXXX XXXXXXXXXXX
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Name: J. Xxxxxxx Xxxxxxxxxxx
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Title: Chairman & CEO
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/s/ XXXX X. XXXX (SEAL)
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Xxxx X. Xxxx
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