To: Mr. Nick Winchester Senior Vice President From: Curtis Garner, CFO Re: Otelco Employment Agreement and IRS Section 409A Compliance
![OTELCO LOGO](https://www.sec.gov/Archives/edgar/data/1288359/000118811209000520/img002.jpg)
December
16, 2008
Memorandum
To:
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Xx.
Xxxx Xxxxxxxxxx
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Senior
Vice President
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From:
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Xxxxxx
Xxxxxx, CFO
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Re:
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Otelco
Employment Agreement and IRS Section 409A
Compliance
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Dear
Xxxx:
In order
to comply with recent changes to the final Treasury Regulations issued under
Internal Revenue Code Section 409A, your employment agreement must be amended by
December 31, 2008. By amending the agreement as described below, any severance
payments under the agreement will be exempt from the 409A deferred compensation
rules. In order to avoid the application of these rules, your agreement must be
amended to specifically state that any severance to be paid must be paid no
later than March 15 of the year following your termination. Currently, the
agreement does not specify that the amounts will be paid within a certain time
period. By making this change, your agreement will comply with the rules under
409A that make it exempt from their application. I have attached a copy of your
current agreement for your reference. Failure to amend the agreement by December
31, 2008, to be exempt from 409A, could result in the amounts being subject to a
20% penalty tax.
Please
sign and return to me by December 31, 2008, this letter evidencing your
agreement with the following amendment to your employment
agreement:
Section
5(a)(iii) is amended to read as follows: “The Company shall pay to the Employee
a lump sum in the amount of one-half (1/2) of his Annual Base Salary within six
(6) months following termination but not later than March 14 of the calendar
year following termination; and”
/s/
Xxxxxx X. Xxxxxx
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Xxxxxx
X. Xxxxxx, Chief Financial
Officer
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I hereby
agree to the above amendment to my employment agreement.
/s/
Xxxxxxxx X. Xxxxxxxxxx
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December
31, 2008
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Xxxxxxxx
X. Xxxxxxxxxx
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