Document:

Exhibit 10.2

 

	
  AMENDED AND RESTATED EMPLOYMENT
  AGREEMENT dated as of June 21, 2004 and effective as of the
  Effective Date (this “Agreement”), among OTELCO TELEPHONE LLC,  a
  Delaware limited liability company (the “Company”) and MICHAEL WEAVER (the “Executive”).

  

 

WHEREAS, Rural LEC Acquisition LLC, (together
with its successor in interest upon its conversion into a Delaware corporation
named “Otelco Inc.”, “Otelco”) or one of its wholly owned Subsidiaries
is the sole member of the Company.

WHEREAS, in connection with the proposed initial public offering of income
deposit securities by Otelco (the “Offering”), the Company and the
Executive desire to amend and restate the terms of the Employment Agreement
entered into by the Executive and the Company on January 5, 1999 (the “Prior
Agreement”).

NOW THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

Section 1.               Effective Date; Termination.

This Agreement shall become effective on the date of
the consummation of the Offering (the “Effective Date”).  Notwithstanding anything contained herein to
the contrary, this Agreement will terminate and be of no further force or
effect, and the Prior Agreement will remain in full force and effect, unaltered
by this Agreement, if the Offering is not consummated on or prior to December
31, 2004.

Section 2.               Employment Period.

Subject to Section 4, the Company hereby agrees
to employ the Executive, and the Executive hereby agrees to be employed by the
Company, in accordance with the terms and provisions of this Agreement, for the
period from the Effective Date through, subject to Section 4, the third
anniversary date of the Effective Date (the “Employment Period”); provided,
however, that on such third anniversary date and on each subsequent
anniversary date, the Employment Period shall automatically be extended for a
period of one year, unless either party shall have given written notice to the
other party not less than 60 days prior to the expiration of the Employment
Period that the Employment Period shall not be so extended.

Section 3.               Terms of Employment.

(a)           Position.  During the Employment Period, the Executive
shall serve as Chief Executive Officer and President of the Company, Otelco and
certain of its Subsidiaries (collectively, the “Company Entities”) and
shall report to the Board of Managers of Otelco (the “Board”) and each
such Subsidiary.  The Executive shall
have supervision and control over, and responsibility for, the management and
operational functions of the Company Entities and shall

 

 

have such other powers
and duties (consistent with the customary powers and duties of a chief
executive officer) as may from time to time be prescribed by the Board.

(b)           Full Time.  During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote his full business time and efforts, to the best of
his ability, experience and talent, to the business and affairs of the Company
Entities.  During the Employment Period,
it shall not be a violation of this Agreement for the Executive to serve on
corporate, civic or charitable boards or committees or manage personal
investments (including serving as a member of boards of directors or similar
bodies of entities not engaged in competition with the Company Entities (as
determined by the Board in its reasonable discretion)), in each case, so long
as such activities do not interfere with the performance of the Executive’s
responsibilities as an employee of the Company Entities in accordance with this
Agreement.

(c)           Compensation.

(i)            Base Salary.  During the Employment Period, the Executive
shall receive an annual base salary of $225,000, which Annual Base Salary shall
be subject to annual increase by an amount equal to reflect the increase in the
cost of living, if any, between the date of the immediately preceding increase
and the date of each such adjustment, based upon the Consumer Price Index for
the Birmingham, Alabama MSA, or if that index is discontinued, a similar index
prepared by a department or agency of the United States government (as so
adjusted, the “Annual Base Salary”). 
The Annual Base Salary shall be paid in accordance with the customary
payroll practices of the Company, subject to withholding and other payroll
taxes.

(ii)           Bonus.  For each fiscal year during the Employment
Period, the Executive will be entitled to receive a bonus (the “Bonus”)
of up to 33% of the Annual Base Salary then in effect.  The Bonus shall be based upon the Company
achieving operating and/or financial goals to be established by the Board or
any duly appointed committee thereof in good faith, in its sole discretion.

(iii)          Benefits.  During the Employment Period, the Executive
shall be entitled to participate in all incentive (including any long term
incentive plan), savings and retirement plans, practices, policies and programs
applicable generally to other executives of the Company Entities and shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company
Entities to the extent applicable generally to other executives of the Company
Entities.  In addition, the Executive
will be entitled to the benefits specified herein.

(iv)          Automobile.  During the Employment Period, the Company
shall continue to provide the Executive with the use of a Company automobile
(or, at the Company’s option, shall lease an automobile for the Executive’s
use) and shall reimburse the Executive for all reasonable expenses incurred by
the Executive in connection with the use and maintenance of such automobile.

 

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(v)           Expenses.  The Executive shall be entitled to receive
reimbursement for all reasonable expenses incurred by the Executive during the
Employment Period in connection with the performance of his duties hereunder,
in accordance with the policies, practices and procedures of the Company as in
effect from time to time.

(vi)          Vacation and Holidays.  During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the policies of the
Company applicable to other executives of the Company generally.

Section 4.               Termination of Employment.

(a)           Death or Disability.  The Executive’s employment shall terminate
automatically upon the Executive’s death or Disability.  If the Disability of the Executive has
occurred during the Employment Period, the Company may give to the Executive
written notice of its intention to terminate the Executive’s employment.  In such event, the Executive’s employment
with the Company shall terminate effective on the 30th day after receipt of
such notice by the Executive if, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive’s
duties.  For purposes of this Agreement,
“Disability” shall mean the Executive’s inability to perform his duties
and obligations hereunder for any 90 days during a period of 180 consecutive
days due to mental or physical incapacity as determined by a physician selected
by the Company or its insurers.

(b)           Cause.  The Executive’s employment may be terminated
at any time by the Company for Cause or Without Cause.  “Cause” will mean that any of the
following will have occurred: (i) the Executive has been convicted of a
felony, stolen funds or otherwise engaged in fraudulent conduct, (ii) the
Executive has engaged in willful misconduct or has been grossly negligent, in
each case, which has been materially injurious to the Company, (iii) the
Executive has failed or refused to comply with directions of the Board that are
reasonably consistent with the Executive’s current position, or (iv) the
Executive has breached the terms of this Agreement.  “Without Cause” shall mean a termination by the Company of
the Executive’s employment during the Employment Period for any reason other
than a termination based upon Cause, death or Disability.

(c)           Termination by the Executive.  The Executive may terminate his employment
with the Company at any time upon at least 60 days prior written notice
thereof.

(d)           Notice of Termination.  Any termination by the Company for Cause or
Without Cause or by the Executive for any reason shall be communicated by
Notice of Termination to the other party hereto.  For purposes of this Agreement, a “Notice of Termination”
means a written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated and
(iii) if the date of termination  is
other than the date of receipt of such notice, specifies the termination date
(the “Termination Date”).

Section 5.               Obligations of the Company
upon Termination.

 

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(a)           Without Cause; Death or Disability.  If, during the Employment Period, the
Company shall terminate the Executive’s employment Without Cause or due to
death or Disability, then the Company will provide the Executive with the
following severance payments and/or benefits:

(i)            The Company shall pay to the
Executive a lump sum in the amount of the Executive’s accrued but unpaid Annual
Base Salary through the Termination Date (“Accrued Obligations”);

(ii)           The Company shall continue to pay the
Executive his Annual Base Salary in accordance with customary payroll practices
until the first anniversary of the Termination Date;

(iii)          The Company shall pay to the
Executive  a lump sum amount equal to
the Bonus the Executive would have received had he remained employed by the
Company through the end of the fiscal year in which the termination occurred,
pro rated for the number of days Executive was employed by the Company during
such fiscal year, to be paid at the same time that similar bonuses are paid to
the Company’s other employees; and

(iv)          The Executive, if applicable, and
members of his family shall be entitled to continue their participation in the
Company Entities’ welfare and benefit plans until the first anniversary of the
Termination Date.

(b)           Cause; by the Executive.  If the Executive’s employment shall be
terminated by the Company for Cause or by the Executive for any reason, then
the Company shall have no further payment obligations to the Executive (or his
heirs or legal representatives) other than for (i) payment of Accrued
Obligations and (ii) the continuance of Benefits through the Termination
Date.

(c)           Condition; Remedies.  The Executive acknowledges and agrees that,
(a) the Company’s obligations to make payments under Section 5(a) will
be conditioned on the Executive executing and delivering a customary general
release in form and substance reasonably satisfactory to the Company.

Section 6.               Nondisclosure and Nonuse of
Confidential Information.

(a)           The Executive shall not disclose or
use at any time, either during the Employment Period or thereafter, any
Confidential Information (as hereinafter defined) of which the Executive is or
becomes aware as a consequence of or in connection with his employment with a
Company, whether or not such information is developed by him, except (i) to the
extent that such disclosure or use is in furtherance of the Executive’s
performance in good faith of his duties as Chief Executive Officer of the
Company Entities or (ii) to the extent required by law or legal process; provided
that (A) the Executive agrees to provide the Company with prompt written notice
of any such law or legal process and to assist the Company, at the Company’s
expense, in asserting any legal challenges to or appeals of such law or legal
process that the Company in its sole discretion pursues, and (B) in complying
with any such law or legal process, the Executive shall limit his disclosure
only to the Confidential Information that is expressly

 

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required to be disclosed
by such law or legal process.  The
Executive will take all commercially reasonable steps to safeguard Confidential
Information and to protect it against disclosure, misuse, espionage, loss and
theft.  The Executive shall deliver to
the Company at the termination of the Employment Period, or at any time the
Company may request, all memoranda, notes, plans, records, reports, computer
tapes and software and other documents and data (and copies thereof)
relating to the Confidential Information or the Work Product (as hereinafter
defined) of the Company Entities which the Executive may then possess or have
under his control.

(b)           The Executive agrees that all Work
Product belongs in all instances to the Company Entities.  The Executive will promptly disclose such
Work Product to the Board and perform all actions reasonably requested by the
Board (whether during or after the Employment Period) to establish and confirm
the Company Entities’ ownership of the Work Product (including, without
limitation, the execution and delivery of assignments, consents, powers of
attorney and other instruments) and to provide reasonable assistance to the
Company Entities (whether during or after the Employment Period), at the
Companies’ sole expense, in connection with the prosecution of any applications
for patents, trademarks, trade names, service marks or reissues thereof or in
the prosecution or defense of interferences relating to any Work Product.  The Executive recognizes and agrees that the
Work Product, to the extent copyrightable, constitutes works for hire under the
copyright laws of the United States.

(c)           “Confidential Information”
means information that is not generally known to the public and that is used,
developed or obtained by a Company Entity in connection with its business,
including, but not limited to, information, observations and data obtained by
the Executive while employed by the Company or any predecessors thereof
(including those obtained prior to the date of this Agreement) concerning (i)
the business or affairs of the Company Entities and their Affiliates and (ii)
products, services, fees, costs, pricing structures, analyses, drawings,
photographs and reports, computer software (including operating systems,
applications and program listings), data bases, accounting and business
methods, inventions, devices, new developments, methods and processes (whether
patentable or unpatentable and whether or not reduced to practice), customers
and clients and customer and client lists, all technology and trade secrets,
and all similar and related information in whatever form.  Confidential Information will not include
any information that (A) is or becomes generally available to the public other
than through disclosure by the Executive in violation of this Section 6,
(B) was provided to the Executive prior to the date hereof a nonconfidential
basis from a Person who was not otherwise bound by a confidentiality agreement
or duty with a Company Entity or an Affiliate thereof, or (C) becomes available
to the Executive on a nonconfidential basis from a Person who is not otherwise
bound by a confidentiality agreement or duty with a Company Entity or its
Affiliates or is not otherwise prohibited from transmitting the information to
the Executive.

“Work Product” means all inventions,
innovations, improvements, technical information, systems, software
developments, methods, designs, analyses, drawings, reports, service marks,
trademarks, trade names, trade dress, logos and all similar or related
information (whether patentable or unpatentable) which relates to a Company
Entity’s actual or anticipated business, research and development or existing
or future products or services and which are conceived, developed or made by
the Executive (whether or not during usual business hours and whether or not
alone or in conjunction with any other person) during the Employment Period

 

5

 

together with all patent applications, letters patent,
trademark, trade name and service mark applications or registrations,
copyrights and reissues thereof that may be granted for or upon any of the
foregoing.

Section 7.               Non-Compete and Non-Solicit.

(a)           The Executive acknowledges that, in
the course of his employment with the Company Entities, he has become familiar,
or will become familiar, with the Company Entities’ and their Affiliates’ trade
secrets and with other confidential information concerning the Company Entities
and their Affiliates and that his services have been and will be of special,
unique and extraordinary value to the Company Entities and their
Affiliates.  Therefore, the Executive
agrees that, during the Employment Period and for 1 year thereafter (the “Restricted
Period”), he shall not directly or indirectly (i) engage, within the
Restricted Territory, in any telephone or communications business, including,
but not limited to, incumbent local exchange carrier, long distance telephone
business, cable television, Internet access, or other business that the
Company’ or any of its Affiliates’ is engaged in during the Executive’s employment
by the Company (the “Company Business”), (ii) compete or participate as
agent, employee, consultant, advisor, representative or otherwise in any
enterprise engaged in a business which has any operations engaged in the
Company Business within the Restricted Territory; or (iii) compete or
participate as a stockholder, partner, member or joint venturer, or have any
direct or indirect financial interest, in any enterprise which has any material
operations engaged in the Company Business within the Restricted Territory; provided,
however, that nothing contained herein will prohibit the Executive from
(A) owning, operating or managing any business, or acting upon any business
opportunity, after obtaining approval of a majority of the Board; or (B) owning
no more than five percent (5%) of the equity of any publicly traded entity with
respect to which the Executive does not serve as an officer, director,
employee, consultant or in any other capacity other than as an investor.  The term “Restricted Territory” means
all states within the United States in which the Company or any of its
Affiliates conducts or is pursuing or analyzing plans to conduct Company
Business as of the Termination Date.

(b)           As a means reasonably designed to
protect Confidential Information, the Executive agrees that, during the period
commencing on the Effective Date and ending on the expiration of the Restricted
Period, he will not (i) solicit or make any other contact with, directly or
indirectly, any customer of a Company Entity or any of their Affiliates as of
the date that the Executive ceases to be employed by the Company with respect
to the provision of any service to any such customer that is the same or
substantially similar to any service provided to such customer by the Company Entities
or their Affiliates or (ii) solicit or make any other contact with, directly or
indirectly, any employee of a Company Entity or any of their Affiliates on the
date that the Executive ceases to be employed by the Company (or any person who
was employed by a Company Entity or any of their Affiliates at any time during
the three-month period prior to the Termination Date) with respect to any
employment, services or other business relationship.

Section 8.               Remedies.

The Executive acknowledges that irreparable damage
would occur in the event of a breach of the provisions of Section 6 or Section
7 by the Executive.  It is
accordingly agreed

 

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that, in addition to any other remedy to which its is
entitled at law or in equity, the Company will be entitled to an injunction or
injunctions to prevent breaches of such sections of this Agreement and to
enforce specifically the terms and provisions of such sections

Section 9.               Definitions.

“Accrued Obligations” has the meaning set forth
in Section 5(a)(i).

“Affiliate” means, with respect to any Person,
any other Person that is controlled by, controlling or under common control
with, such Person.  Notwithstanding
anything to the contrary contained herein, with respect to each Company Entity
(and each member thereof), the term “Affiliate” will include, without
limitation, each Person with an ownership interest in a Company Entity (and
each member, stockholder or partner of each such Person), each Person in which
the member of a Company Entity (and member, stockholder or Partner of each such
Person) holds or has the right to acquire, collectively, more than 25% of the
voting equity interests

“Agreement” has the meaning set forth in the
Caption.

“Annual Base Salary” has the meaning set forth
in Section 3(c)(i).

“Board” has the meaning set forth in Section
3(a).

“Bonus” has the meaning set forth in Section
3(c)(ii).

“Business Day” means any day that is not a
Saturday, Sunday, legal holiday or other day on which banks are required to be
closed in New York, New York.

“Cause” has the meaning set forth in Section
4(b).

“Company” has the meaning set forth in the
Caption.

“Company Business” has the meaning set forth in
Section 7(a).

“Company Entity” has the meaning set forth in Section
3(a).

“Confidential Information” has the meaning set
forth in Section 6(c).

“Disability” has the meaning set forth in Section
4(a).

“Employment Period” has the meaning set forth
in Section 1.

“Executive” has the meaning set forth in the
Caption.

“Notice of Termination” has the meaning set
forth in Section 4(d).

“Offering” has the meaning set forth in the
Recitals.

 

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“Person” means an individual, partnership,
corporation, limited liability company, trust or unincorporated organization,
or a government or agency or political subdivision thereof.

“Restricted Period” has the meaning set forth
in Section 7(a).

“Restricted Territory” has the meaning set
forth in Section 7(a).

“Termination Date” has the meaning set forth in
Section 4(d).

“Without Cause” has the meaning set forth in Section
4(b).

“Work Product” has the meaning set forth in 0.

Section 10.             General Provisions.

(a)           Severability.  It is the desire and intent of the parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. 
Accordingly, if any particular provision of this Agreement shall be
adjudicated by a court of competent jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.  Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction.

(b)           Entire Agreement.  This Agreement amends, restates and
supersedes the Prior Agreement and embodies the complete agreement and
understanding among the parties hereto with respect to the subject matter
hereof.  This Agreement supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way.

(c)           Survival.  Notwithstanding anything to the contrary
contained herein, the provisions of Section 6, Section 7 and Section
8 shall survive the termination of this Agreement.

(d)           Counterparts.  This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

(e)           Successors and Assigns;
Beneficiaries.  This Agreement is
personal to the Executive and without the prior written consent of the Company
shall not be assignable by the Executive other than by will or the laws of
descent and distribution.  This
Agreement shall inure to the benefit of and be enforceable by the Executive’s
heirs and legal representatives and the successors and assigns of the
Company.  The Company reserves the right
to assign this Agreement in whole or in part to any of its Affiliates and upon
any such assignment, the term “Company” will be deemed to be such Affiliate

 

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(f)            Governing Law.  THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED.  IN FURTHERANCE OF THE FOREGOING, THE
INTERNAL LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND
CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW
OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION
WOULD ORDINARILY APPLY.

(g)           Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES
HERETO RELATING TO THE SUBJECT MATTER HEREOF.

(h)           Amendment and Waiver.  The provisions of this Agreement may be
amended and waived only with the prior written consent of the Executive and the
Company and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall be construed as a waiver of such provisions
or affect the validity, binding effect or enforceability of this Agreement or
any provision hereof.

(i)            Notices.  All notices, requests, demands, claims,
consents and other communications which are required or otherwise delivered
hereunder shall be in writing and shall be deemed to have been duly given if
(i) personally delivered or transmitted by electronic mail, (ii) sent by
nationally recognized overnight courier, (iii) mailed by registered or
certified mail with postage prepaid, return receipt requested, or (iv)
transmitted by facsimile (with a copy of such transmission concurrently
transmitted by registered or certified mail with postage prepaid, return
receipt requested), to the parties hereto at the following addresses (or at
such other address for a party as shall be specified by like notice):

	
  (j)

  	
   

  	
  If to the Board
  or the Company, to:

  
	
   

  	
   

  	
   

  
	
   

  	
  Otelco Telephone LLC

  	
   

  
	
   

  	
  c/o CEA Capital Partners USA, L.P.

  	
   

  
	
   

  	
  1 Seaport Plaza

  	
   

  
	
   

  	
  199 Water Street, 20th Floor

  	
   

  
	
   

  	
  New York, New York 10038

  	
   

  
	
   

  	
  Attention:  Stephen McCall

  	
   

  
	
   

  	
  Telephone No.:  (212) 847-8905

  	
   

  
	
   

  	
  Facsimile No.:  (212) 425-1420

  	
   

  
				

 

9

 

	
   

  	
  with a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  O’Melveny & Myers LLP

  	
   

  
	
   

  	
  Times Square Tower

  	
   

  
	
   

  	
  7 Times Square

  	
   

  
	
   

  	
  New York, New York 10036

  	
   

  
	
   

  	
  Attention:  Adam K. Weinstein,
  Esq.

  	
   

  
	
   

  	
  Telephone No.: 
  (212) 480-2491

  	
   

  
	
   

  	
  Facsimile No.: 
  (212) 218-9491; and

  	
   

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  if to the Executive to:

  
	
   

  	
   

  	
   

  
	
   

  	
  Michael Weaver

  	
   

  
	
   

  	
  40 Chert Road

  	
   

  
	
   

  	
  Oneonta, AL 35121

  	
   

  
	
   

  	
  Telephone No.:  (205) 625-6340

  	
   

  
	
   

  	
  Facsimile No.:  (205) 625-3528

  	
   

  
				

 

 

or to such other address as the party to whom such
notice or other communication is to be given may have furnished to each other
party in writing in accordance herewith. 
Any such notice or communication shall be deemed to have been received
(i) when delivered, if personally delivered or transmitted by electronic mail,
with receipt acknowledgment by the recipient by return electronic mail, (ii)
when sent, if sent by facsimile on a Business Day during normal business hours
(or, if not sent on a Business Day during normal business hours, on the next
Business Day after the date sent by facsimile), (iii) on the next Business Day
after dispatch, if sent by nationally recognized, overnight courier
guaranteeing next Business Day delivery, and (iv) on the 5th
Business Day following the date on which the piece of mail containing such
communication is posted, if sent by mail

(k)           Descriptive Headings.  The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.

(l)            Construction.  Where specific language is used to clarify
by example a general statement contained herein, such specific language shall
not be deemed to modify, limit or restrict in any manner the construction of
the general statement to which it relates. 
The language used in this Agreement shall be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party.

(m)          Nouns and Pronouns.  Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice-versa.

[signature
page follows]

 

10

 

IN WITNESS WHEREOF, the parties hereto have executed this
Amended and Restated Employment Agreement as of the date first written above.

 

	
  OTELCO TELEPHONE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Curtis L. Garner, Jr.

  
	
   

  	
  Name:  Curtis L. Garner, Jr.

  
	
   

  	
  Title:  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Michael Weaver

  
	
  MICHAEL WEAVER

  

 

11Exhibit
10.3

 

	
   

  	
  EMPLOYMENT AGREEMENT

  
	
   

  	
  dated
  as of June 9, 2004 (this “Agreement”), among

  
	
   

  	
  OTELCO TELEPHONE LLC, a Delaware

  
	
   

  	
  limited
  liability company (the “Company”) and

  
	
   

  	
  CURTIS L. GARNER, JR. (the “Employee”).

  

 

WHEREAS, the Company and the Employee desire to enter into this Agreement.

 

NOW THEREFORE, in consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

Section
1.               Effective Date; Termination.

 

This
Agreement shall become effective on the date first written above (the “Effective
Date”).

 

Section 2.               Employment Period.

 

Subject to Section 4,
the Company hereby agrees to employ the Employee, and the Employee hereby
agrees to be employed by the Company, in accordance with the terms and
provisions of this Agreement, for the period from the Effective Date through
the Termination Date (the “Employment Period”).

 

Section
3.              Terms of Employment.

 

(a)           Position. During the Employment Period, the Employee shall serve as Chief
Financial Officer of the Company, RLEC and certain of RLEC’s Subsidiaries
(collectively, the “Company Entities”) and shall report to the Chief
Executive Officer and to the Board of Managers of RLEC (the “Board”) and
each such Subsidiary. The Employee shall have such powers and duties as may
from time to time be prescribed by the Board or the Chief Executive Officer.

 

(b)           Full Time. During the Employment Period, and excluding any periods of vacation
and sick leave to which the Employee is entitled, the Employee agrees to devote
his full business time and efforts, to the best of his ability, experience and
talent, to the business and affairs of the Company Entities. During the
Employment Period, it shall not be a violation of this Agreement for the
Employee to serve on corporate, civic or charitable boards or committees or
manage personal investments (including serving as a member of boards of
directors or similar bodies of entities not engaged in competition with the
Company Entities (as determined by the Board in its reasonable discretion)), in
each case, so long as such activities do not interfere with the performance of
the Employee’s responsibilities as an employee of the Company Entities in
accordance with this Agreement.

 

(c)           Compensation.

 

(i)            Base Salary.  During the Employment Period,
the Employee shall receive an annual base salary of $137,500 which Annual Base
Salary shall be subject to

 

 

annual increase by an amount
equal to at least the increase in the cost of living, if any, between the date
of the immediately preceding increase and the date of each such adjustment,
based upon the Consumer Price Index for the Birmingham, Alabama MSA, or if that
index is discontinued, a similar index prepared by a department or agency of
the United States government (as so adjusted, the “Annual Base Salary”).
The Annual Base Salary shall be paid in accordance with the customary payroll
practices of the Company, subject to withholding and other payroll taxes.

 

(ii)           Bonus.  For each fiscal year during
the Employment Period, the Employee will be entitled to receive a bonus (the “Bonus”)
of up to 30% of the Annual Base Salary. The Bonus shall be based upon the
Company achieving operating and/or financial goals to be established by the
Board or any duly appointed committee thereof in good faith, in its sole
discretion.

 

(iii)          Benefits.  During the Employment Period,
the Employee shall be entitled to participate in all incentive (including any
long term incentive plan), savings and retirement plans, practices, policies
and programs applicable generally to other employees of the Company Entities
and shall be eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by the Company
Entities to the extent applicable generally to other employees of the Company
Entities. In addition, the Employee will be entitled to coverage under any
directors’ and officers’ liability insurance maintained by the Company.

 

(iv)          Automobile.  During the Employment Period,
the Company shall provide the Employee with the use of a Company automobile
(or, at the Company’s option, shall lease an automobile for the Employee’s use)
and shall reimburse the Employee for all reasonable expenses incurred by the
Employee in connection with the use and maintenance of such automobile.

 

(v)           Expenses.  The Employee shall be
entitled to receive reimbursement for all reasonable expenses incurred by the
Employee during the Employment Period in connection with the performance of his
duties hereunder, in accordance with the policies, practices and procedures of
the Company as in effect from time to time.

 

(vi)          Moving Expenses.  The
Company shall reimburse the Employee’s reasonable out-of-pocket moving expenses
incurred by the Employee in connection with relocating close to the Company’s
headquarters in Oneonta, Alabama; provided that such reimbursement shall
be subject to providing an accounting and supporting documentation for such
expenses.

 

(vii)         Vacation and Holidays. 
During the Employment Period, the Employee shall be entitled to up to 5
weeks paid vacation per year in accordance with the policies of the Company
applicable to other employees of the Company generally.

 

2

 

Section 4.               Termination of
Employment.

 

(a)           Death or Disability.  The
Employee’s employment shall terminate automatically upon the Employee’s death
or Disability. For purposes of this Agreement, “Disability” shall mean
the Employee’s inability to perform his duties and obligations hereunder for
any 90 days during a period of 180 consecutive days due to mental or physical
incapacity as determined by a physician selected by the Company or its
insurers.

 

(b)           Termination by the Employee.  The
Employee may terminate his employment with the Company Entities at any time,
without prior notice.

 

(c)           Termination by the Company.  The
Company may terminate the Employee’s employment with the Company or any Company
Entity at any time, with or without Cause and without prior notice. “Cause”
will mean that any of the following will have occurred: (i) the Employee has
been convicted of a felony, stolen funds or otherwise engaged in fraudulent
conduct, (ii) the Employee has engaged in willful misconduct or has been
grossly negligent, in each case, which has been materially injurious to the
Company, (iii) the Employee has failed or refused to comply with directions of
the Board that are reasonably consistent with the Employee’s current position,
or (iv) the Employee has breached the terms of this Agreement. “Without
Cause” shall mean a termination by the Company of the Employee’s employment
during the Employment Period for any reason other than a termination based upon
Cause, death or Disability.

 

Section 5.               Obligations of the Company upon Termination.

 

(a)           Without Cause.  If,
during the Employment Period, the Company shall terminate the Employee’s
employment Without Cause, then the Company will provide the Employee with the
following severance payments and/or benefits:

 

(i)            The Company shall pay to the Employee a lump
sum in the amount of the Employee’s accrued but unpaid Annual Base Salary
through the Termination Date (“Accrued Obligations”);

 

(ii)           The Employee, if applicable, and members of his family shall be
entitled to continue their participation in the Company Entities’ welfare and
benefit plans until the Termination Date;

 

(iii)          The Company shall pay to the Employee a lump sum in the amount of 1/2
of his Annual Base Salary; and

 

(iv)          The Company shall pay to the Employee a lump sum amount equal to the
Bonus the Employee would have received had he remained employed by the Company
through the end of the fiscal year in which the termination occurred, pro rated
for the number of days Employee was employed by the Company during such fiscal
year, to be paid at the same time that similar bonuses are paid to the
Company’s other employees.

 

(b)           Cause; by the Employee; Death or Disability.  If
the Employee’s employment shall be terminated by the Company for Cause, by the
Employee for any reason, or due to death or Disability, then the Company shall
have no further payment obligations to the

 

3

 

Employee (or his heirs or
legal representatives) other than for (i) payment of Accrued Obligations and
(ii) the continuance of Benefits through the Termination Date.

 

(c)           Condition: Remedies.  The
Employee acknowledges and agrees that, (a) the Company’s obligations to make
payments under Section 5(a) will be conditioned on the Employee
executing and delivering a customary general release in form and substance
reasonably satisfactory to the Company.

 

Section
6.               Nondisclosure and Nonuse of Confidential
Information.

 

(a)           The Employee shall not disclose or use at any time, either during the
Employment Period or thereafter, any Confidential Information (as hereinafter
defined) of which the Employee is or becomes aware as a consequence of or in
connection with his employment with a Company, whether or not such information
is developed by him, except (i) to the extent that such disclosure or use is in
furtherance of the Employee’s performance in good faith of his duties as Chief
Financial Officer of the Company Entities or (ii) to the extent required by law
or legal process; provided that (A) the Employee agrees to provide the
Company with prompt written notice of any such law or legal process and to
assist the Company, at the Company’s expense, in asserting any legal challenges
to or appeals of such law or legal process that the Company in its sole
discretion pursues, and (B) in complying with any such law or legal process,
the Employee shall limit his disclosure only to the Confidential Information
that is expressly required to be disclosed by such law or legal process. The
Employee will take all commercially reasonable steps to safeguard Confidential
Information and to protect it against disclosure, misuse, espionage, loss and
theft. The Employee shall deliver to the Company at the termination of the
Employment Period, or at any time the Company may request, all memoranda,
notes, plans, records, reports, computer tapes and software and other documents
and data (and copies thereof) relating to the Confidential Information or the
Work Product (as hereinafter defined) of the Company Entities which the
Employee may then possess or have under his control.

 

(b)           The Employee agrees that all Work Product belongs in all instances to
the Company Entities. The Employee will promptly disclose such Work Product to
the Board and perform all actions reasonably requested by the Board (whether
during or after the Employment Period) to establish and confirm the Company
Entities’ ownership of the Work Product (including, without limitation, the
execution and delivery of assignments, consents, powers of attorney and other
instruments) and to provide reasonable assistance to the Company Entities
(whether during or after the Employment Period), at the Companies’ sole
expense, in connection with the prosecution of any applications for patents,
trademarks, trade names, service marks or reissues thereof or in the
prosecution or defense of interferences relating to any Work Product. The
Employee recognizes and agrees that the Work Product, to the extent
copyrightable, constitutes works for hire under the copyright laws of the
United States.

 

(c)           “Confidential Information” means information that is not
generally known to the public and that is used, developed or obtained by a
Company Entity in connection with its business, including, but not limited to,
information, observations and data obtained by the Employee while employed by
the Company or any predecessors thereof (including those obtained prior to the
date of this Agreement) concerning (i) the business or affairs of the Company
Entities and their Affiliates and (ii) products, services, fees, costs, pricing
structures,

 

4

 

analyses,
drawings, photographs and reports, computer software (including operating
systems, applications and program listings), data bases, accounting and
business methods, inventions, devices, new developments, methods and processes
(whether patentable or unpatentable and whether or not reduced to practice),
customers and clients and customer and client lists, all technology and trade
secrets, and all similar and related information in whatever form. Confidential
Information will not include any information that (A) is or becomes generally
available to the public other than through disclosure by the Employee in
violation of this Section 6, (B) was provided to the Employee prior to
the date hereof a nonconfidential basis from a Person who was not otherwise
bound by a confidentiality agreement or duty with a Company Entity or an
Affiliate thereof, or (C) becomes available to the Employee on a nonconfidential
basis from a Person who is not otherwise bound by a confidentiality agreement
or duty with a Company Entity or its Affiliates or is not otherwise prohibited
from transmitting the information to the Employee.

 

(d)           “Work Product” means all inventions, innovations, improvements,
technical information, systems, software developments, methods, designs,
analyses, drawings, reports, service, marks, trademarks, trade names, trade
dress, logos and all similar or related information (whether patentable or
unpatentable) which relates to a Company Entity’s actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by the Employee (whether or not
during usual business hours and whether or not alone or in conjunction with any
other person) during the Employment Period together with all patent
applications, letters patent, trademark, trade name and service mark
applications or registrations, copyrights and reissues thereof that may be
granted for or upon any of the foregoing.

 

Section
7.              Non-Compete and Non-Solicit.

 

(a)           The Employee acknowledges that, in the course of his employment with
the Company Entities, he has become familiar, or will become familiar, with the
Company Entities’ and their Affiliates’ trade secrets and with other
confidential information concerning the Company Entities and their Affiliates
and that his services have been and will be of special, unique and
extraordinary value to the Company Entities and their Affiliates. Therefore,
the Employee agrees that, during the Employment Period and for 6 months
thereafter (the “Restricted Period”), he shall not directly or
indirectly (i) engage, within the Restricted Territory, in any telephone or
communications business, including, but not limited to, incumbent local
exchange carrier, long distance telephone business, cable television, Internet
access, or other business that the Company’ or any of its Affiliates’ is
engaged in during the Employee’s employment by the Company (the “Company
Business”), (ii) compete or participate as agent, employee, consultant,
advisor, representative or otherwise in any enterprise engaged in a business
which has any operations engaged in the Company Business within the Restricted
Territory; or (iii) compete or participate as a stockholder, partner, member or
joint venturer, or have any direct or indirect financial interest, in any
enterprise which has any material operations engaged in the Company Business
within the Restricted Territory; provided, however, that nothing
contained herein will prohibit the Employee from (A) owning, operating or
managing any business, or acting upon any business opportunity, after obtaining
approval of a majority of the Board; or (B) owning no more than five percent
(5%) of the equity of any publicly traded entity with respect to which the
Employee does not serve as an officer, director, employee,

 

5

 

consultant
or in any other capacity other than as an investor. The term "Restricted
Territory" means all states within the United States in which the
Company or any of its Affiliates conducts or is pursuing or analyzing plans to
conduct Company Business as of the Termination Date.

 

(b)           As a means reasonably designed to protect Confidential Information, the
Employee agrees that, during the period commencing on the Effective Date and
ending on the expiration of the Restricted Period, he will not (i) solicit or
make any other contact with, directly or indirectly, any customer of a Company
Entity or any of their Affiliates as of the date that the Employee ceases to be
employed by the Company with respect to the provision of any service to any
such customer that is the same or substantially similar to any service provided
to such customer by the Company Entities or their Affiliates or (ii) solicit or
make any other contact with, directly or indirectly, any employee of a Company
Entity or any of their Affiliates on the date that the Employee ceases to be
employed by the Company (or any person who was employed by a Company Entity or
any of their Affiliates at any time during the three-month period prior to the
Termination Date) with respect to any employment, services or other business
relationship.

 

Section
8.              Remedies.

 

The Employee acknowledges
that irreparable damage would occur in the event of a breach of the provisions
of Section 6 or Section 7 by the Employee. It is accordingly
agreed that, in addition to any other remedy to which its is entitled at law or
in equity, the Company will be entitled to an injunction or injunctions to
prevent breaches of such sections of this Agreement and to enforce specifically
the terms and provisions of such sections.

 

Section
9.              Definitions.

 

“Accrued Obligations” has the meaning set forth in Section
5(a)(i).

 

“Affiliate” means,
with respect to any Person, any other Person that is controlled by, controlling
or under common control with, such Person. Notwithstanding anything to the
contrary contained herein, with respect to each Company Entity (and each member
thereof), the term “Affiliate” will include, without limitation, each Person
with an ownership interest in a Company Entity (and each member, stockholder or
partner of each such Person), each Person in which the member of a Company Entity
(and member, stockholder or Partner of each such Person) holds or has the right
to acquire, collectively, more than 25% of the voting equity interests.

 

“Agreement” has the
meaning set forth in the Caption.

 

“Annual Base Salary”
has the meaning set forth in Section 3(c)(i).

 

“Board” has the
meaning set forth in Section 3(a).

 

“Bonus” has the
meaning set forth in Section 3(c)(ii).

 

“Business Day” means
any day that is not a Saturday, Sunday, legal holiday or other day on which
banks are required to be closed in New York, New York.

 

6

 

“Cause” has the
meaning set forth in Section 4(c).

 

“Company” has the
meaning set forth in the Caption.

 

“Company Business”
has the meaning set forth in Section 7(a).

 

“Company Entity” has
the meaning set forth in Section 3(a).

 

“Confidential Information”
has the meaning set forth in Section 6(c).

 

“Disability” has the
meaning set forth in Section 4(a).

 

“Employment Period”
has the meaning set forth in Section 1.

 

“Employee” has the
meaning set forth in the Caption.

 

“Person” means an
individual, partnership, corporation, limited liability company, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.

 

“Restricted Period”
has the meaning set forth in Section 7(a).

 

“Restricted Territory”
has the meaning set forth in Section 7(a).

 

“RLEC” means Rural
LEC Acquisition LLC, a Delaware limited liability company (or upon its
corporate conversion, Otelco Inc., a Delaware corporation).

 

“Termination Date”
means the effective date of the termination of the Employee’s employment with
the Company, for any reason, by any party, or by death or Disability.

 

“Without Cause” has
the meaning set forth in Section 4(c).

 

“Work Product” has
the meaning set forth in Section 6(d).

 

Section
10.  General Provisions.

 

(a)           Severability.  It
is the desire and intent of the parties hereto that the provisions of this
Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be adjudicated
by a court of competent jurisdiction to be invalid, prohibited or unenforceable
for any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting
the validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn
so as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.

 

(b)           Entire Agreement. 
This Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof. This

 

7

 

Agreement
supersedes and preempts any prior understandings, agreements or representations
by or among the parties, written or oral, which may have related to the subject
matter hereof in any way.

 

(c)           Survival.  Notwithstanding anything to
the contrary contained herein, the provisions of Section 6, Section 7
and Section 8 shall survive the termination of this Agreement.

 

(d)           Counterparts. 
This Agreement may be executed in separate counterparts, each of which
is deemed to be an original and all of which taken together constitute one and
the same agreement.

 

(e)           Successors and Assigns; Beneficiaries. 
This Agreement is personal to the Employee and without the prior written
consent of the Company shall not be assignable by the Employee other than by
will or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Employee’s heirs and legal representatives
and the successors and assigns of the Company. The Company reserves the right
to assign this Agreement in whole or in part to any of its Affiliates and upon
any such assignment, the term “Company” will be deemed to be such Affiliate

 

(f)            Governing Law. 
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR
CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL
LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION
OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT
OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD
ORDINARILY APPLY.

 

(g)          Waiver of Jury Trial. 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT
MATTER HEREOF.

 

(h)          Amendment and Waiver.  The
provisions of this Agreement may be amended and waived only with the prior
written consent of the Employee and the Company and no course of conduct or
failure or delay in enforcing the provisions of this Agreement shall be
construed as a waiver of such provisions or affect the validity, binding effect
or enforceability of this Agreement or any provision hereof.

 

(i)           Notices.  All notices, requests,
demands, claims, consents and other communications which are required or
otherwise delivered hereunder shall be in writing and shall be deemed to have
been duly given if (i) personally delivered or transmitted by electronic mail,
(ii) sent by nationally recognized overnight courier, (iii) mailed by
registered or certified mail with postage prepaid, return receipt requested, or
(iv) transmitted by facsimile (with a copy of such transmission concurrently
transmitted by registered or certified mail with postage

 

8

 

prepaid,
return receipt requested), to the parties hereto at the following addresses (or
at such other address for a party as shall be specified by like notice):

 

(j)            If to the Board or the Company, to:

 

Otelco
Telephone LLC

c/o
CEA Capital Partners USA, L.P.

1
Seaport Plaza

199
Water Street, 20th Floor

New
York, New York 10038

Attention:
Stephen McCall

Telephone
No.: (212) 847-8905

Facsimile
No.: (212) 425-1420

 

with
a copy to:

 

O’Melveny
& Myers LLP

Times
Square Tower

7
Times Square

New
York, New York 10036

Attention:
Adam K. Weinstein, Esq.

Telephone
No.: (212) 480-2491

Facsimile
No.: (212) 218-9491; and

 

(b)  if to the Employee to:

 

Curtis
Garner, Jr.

1065
Admiral Crossing 

Alpharetta,
Georgia 30005 

Telephone
No.: (770) 752-0445 

Facsimile
No.: (770) 752-1832

 

or to such other address as
the party to whom such notice or other communication is to be given may have
furnished to each other party in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (i) when
delivered, if personally delivered or transmitted by electronic mail, with
receipt acknowledgment by the recipient by return electronic mail, (ii) when
sent, if sent by facsimile on a Business Day during normal business hours (or,
if not sent on a Business Day during normal business hours, on the next
Business Day after the date sent by facsimile), (iii) on the next Business Day
after dispatch, if sent by nationally recognized, overnight courier
guaranteeing next Business Day delivery, and (iv) on the 5th
Business Day following the date on which the piece of mail containing such
communication is posted, if sent by mail.

 

(k)           Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.

 

9

 

(l)            Construction. 
Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.

 

(m)          Nouns and Pronouns. 
Whenever the context may require, any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice-versa.

 

[signature page follows]

 

10

 

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the
date first written above.

 

 

	
   

  	
  OTELCO
  TELEPHONE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael D. Weaver

  	
   

  
	
   

  	
  Name: Michael D. Weaver

  
	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Curtis L. Garner, Jr.

  	
   

  
	
   

  	
  CURTIS L. GARNER, JR.

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