EXHIBIT 10.6
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of December 1, 2002 by and among Madison River
Telephone Company LLC, a Delaware limited liability company ("Holdings"), and
Xxxxx X. Xxx ("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.
From November 1, 2002 to November 30, 2002, Holdings and Executive continued
employment based on the terms in effect under the June 4, 1996 agreement
including all amendments.
Holdings has acquired and operates rural telephone companies and other
operations in telecommunications.
Holdings has the following classes of equity: Class A equity, Class B equity
and Class C equity. The 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 serve as Managing Director-Chairman-
Local Telecommunications Division (hereafter "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) Deleted
(c) Subject to the terms and conditions of this Agreement, Executive hereby
accepts employment as Managing Director of Holdings and agrees to devote
approximately 25 hours per week but less than 30 hours per week and provide his
best 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 December 1,
2002 (the "Approval Date") and, subject to the terms hereof, shall terminate on
January 31, 2004 (unless and until extended from time to time by mutual written
agreement of the parties, the "Termination Date"); provided that,
notwithstanding the foregoing, the Termination Date shall be the date that the
enterprise contemplated by the LOI is abandoned or otherwise terminated in
accordance with the terms of the LOI, if the Termination Date has not
previously occurred.
3. Compensation.
3.1 Initial Base Salary. Beginning on the Approval Date through December 31,
2002, Executive will be paid at an annual rate of $160,000. From January
1, 2003 and continuing until the Termination Date Executive shall be paid a
base salary ("Base Salary") at the annual rate of $120,000. 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. Upon advanced approval from the chief executive
officer of Holdings, Executive shall be paid $1,000 per Meeting. Meeting
shall be defined as either an in-person or telephonic gathering of more
than one person scheduled in advance without regard to any duration in
length or number of subject matters discussed where the objectives of
Holdings may be advanced. Meeting shall not include in-person or
telephonic gatherings of the Board of Holdings, USTA matters, retirement
plans, bankruptcy matters, directory publishing and regulatory matters for
Holdings and/or its subsidiaries. It is contemplated that a Meeting would
include such activities as an off-site due diligence or review of due
diligence materials. However, a multiple day trip or a trip with more than
one gathering or topic would still be considered as one Meeting.
3.3 Compensation Plans and Programs. Executive will not be entitled to any
short term incentive, annual bonus or long term incentive plans. However,
Executive shall be paid an annual amount equal to $23,333.35 which shall be
withheld and directly paid as interest on a certain note owed by Executive
to a subsidiary of Holdings.
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. Executive's principle place of business expenses related
to rent, communications (other than directly charged long distance)shall be
the responsibility of Executive and not reimbursed by the Company. Further,
reimbursement of expenses related to travel shall be for Executive only and
any other travel related expenses for otherthan Executive shall be approved
in advance by the chief executive officer of Holdings. Holdings will
reimburse Executive for all such expenses upon presentation by Executive
from time totime 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 travel between
Executive's residence and Holdings' principal place of business shall be
reimbursed.
3.5 Deleted.
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
retirement, pension and profit-sharing, life insurance and travel accident
coverage. However, Executive does not qualify for medical, dental,
hospitalization, short-and long-term disability or accidental death and
dismemberment coverage of Holdings.
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 15% of the total Class B equity of Holdings
for an aggregate purchase price of $1,500 and Class C equity of Holdings
equal to 11.50% of the total Class C equity of Holdings for an aggregate
purchase price of $1,150. Hereafter, Class B and Class C equity
collectively shall be referred to as ("Incentive Equity"). Within 30 days
after such purchase of Incentive Equity, 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
the purchase price for Incentive Equity at the time of purchase was at
fair market value and: for Class B is $1,500 and for Class C is $1,150
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 will 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 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 in effect (payable in
accordance with the last sentence of Section 3.1 hereof) for three months after
date of the termination. There would be no short term, annual bonus or other
long term incentive payments to Executive in whole or part since Executive is
not a participant in these plans or programs.
(ii) deleted
(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
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 set forth in
this agreement and 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 tothe 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:
for the lesser of the period from the date of termination Disability
to the Termination Date or a period of six months 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.
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 the lesser of a period of three months
after his date of death or from the date of death to the Termination Date;
(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 Permanent 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. Xxx
000 Xxxxxxx Xxxxx
Xxxxxxxxxxx, 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 to an 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 other than as a
passive stockholder of The Grand Oaks Corporation 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 requests, 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 under the
ordinary practices of Holdings 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 to the extent no such practices are available,
then Executive may make such election 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 already acquired or that 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/ J. XXXXXXX XXXXXXXXXXX
---------------------------------
/s/ XXXXX X. XXX
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Executive
