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 Xxxxxxx Xxxxxxx ("Executive").
RECITALS
Holdings has acquired and operates rural telephone companies and other
telecommunications operations.
In order to induce Executive to agree to continue to serve as Managing
Director-Revenues 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) 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
January 1, 2003 (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 to December 31,
2002 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 $60,000.
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. Deleted
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:
Xxxxxxx Xxxxxxx
000 Xxxxxxx Xxxxx
Xxxxxx, 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 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,
(ii) Executive is not a party to or bound by any employment agreement, non-
compete agreement or confidentiality agreement with any other Person and
(iii) 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. Deleted.
21. Complete Agreement. This Agreement, those documents expressly
referred to herein, 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/ XXXXXXX XXXXXXX
-------------------------------------
Executive
