EXHIBIT 10.5
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of November 1, 2002 by and among Madison River
Telephone Company LLC, a Delaware limited liability company ("Holdings"), and
J. Xxxxxxx Xxxxxxxxxxx ("Executive").
RECITALS
Holdings and Executive entered into an employment agreement dated as of June
4, 1996 and such agreement has been amended on four occasions on or about
October 8, 1996, January 24, 1997, October 16, 1997 and September 15, 1999,
and such agreement with its amendments expired on October 31, 2002.
Holdings and Executive desire to renew an employment 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 Executive 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.
(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) Holdings shall, as long as Executive is employed in his capacity as
Managing Director, use its best efforts to cause the election and
retention of Executive to the Board of Members of Holdings (the "Board")
as a member of the Board and as Chairman of the Board of Member of
Holdings. Holdings shall, as long as Executive is employed in his
capacity as Managing Director, cause Executive to be elected a member and
chairman of the Board of Directors of all of Holdings' subsidiaries
unless otherwise agreed by Executive.
(c) 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.
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.
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 $300,000. 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 $300,000.
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.
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.
5.1 Purchase Rights; Vesting.
(a) As of the date hereof, Executive has purchased from Holdings Class B
equity of Holdings equal to 30% of the total Class B equity of
Holdings for an aggregate purchase price of $3,000 and Class C equity
of Holdings equal to 15.50% of the total Class C equity of Holdings
for an aggregate purchase price of $1,550. Hereafter, Class B and
Class C equity collectively shall be referred to as ("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:
for Class B is $3,000 and for Class C is $1,550 and that parties
shall use and have used such value for all Federal income tax
purposes.
(b) Twenty percent (20%) of Executive's Incentive Equity vested on
January 18, 1998, the First Acquisition Closing Date, and, provided
that (except in the case of vesting pursuant to Section 5.3(a))
Executive is still employed by Holdings, the remainder shall vest on
a daily basis over a four year period beginning with the First
Acquisition Closing Date and ending with September 29, 1999, the
Closing Date for Gulf Coast Services, Inc. ("Gulf Closing Date") and
any unvested remainder after the Gulf Closing Date shall vest on a
daily basis over a new four-year period beginning with the Gulf
Closing Date. As of December 31, 2002, vested percentage of Incentive
Equity for Executive is as follows: Class B is 91.45% and Class C 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
of all of the members of the Board designated by the Institutional
Investors.
6. Termination of Employment.
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:
J. Xxxxxxx Xxxxxxxxxxx
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxxxx, 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: /s/ XXXX X. XXXX
---------------------------------
/s/ J. XXXXXXX XXXXXXXXXXX
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Executive
