Document:

ex10-41.htm

    EXHIBIT
10.41

     

    
      EMPLOYMENT
AGREEMENT

       

      This
Employment Agreement (this “Agreement”)
is made by and between Salon.com,
a Delaware corporation (the
“Company”)
and Richard
Gingras (“Executive”).  This
Agreement is effective as of May 1, 2009 (the “Effective
Date”).

       

      1.           Employment
Period.  The Company
agrees to employ Executive, and Executive hereby agrees to accept such
employment, subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the date that Executive’s
employment with the Company terminates (the “Termination
Date”) (such period, the “Employment
Period”) pursuant to the provisions of Section 4 of this
Agreement.

       

      2.           Terms
of Employment.

       

      (a)           Position and
Duties.  During the Employment Period, Executive shall serve as
Chief Executive Officer of the Company, with such duty, authority and
responsibility as are commensurate with such position and assigned by the
Company’s board of directors.  During the Employment Period, Executive
will devote Executive’s best efforts and substantially all of Executive’s
business time and attention to the business of the Company (except for vacation
periods and reasonable periods of absence for illness or incapacity as permitted
by the Company’s general employment policies and the terms of this
Agreement).

       

      (b)           Compensation.

       

      (i)           Base Salary.  During
the Employment Period, Executive shall receive a base salary (“Base
Salary”) of $230,000, payable in accordance with the Company’s standard
payroll practices and subject to standard payroll deductions and
withholdings.

       

      (ii)          Annual Performance Bonus. For each fiscal year,
Executive will be eligible to receive a target annual bonus based upon the
Company’s achievement of revenue and profit goals (“Target Annual
Bonus”).  The Company’s Compensation Committee has the
discretion to interpret goals, performance, and final payment
amounts.  Executive’s initial Target Annual Bonus is 50% of
Executive’s Base Salary.  Executive will be eligible to receive a pro
rata performance bonus for fiscal 2010.

       

      (iii)         Stock Options.  It
is the intent of the parties that the Company grant Executive options to
purchase the Company’s common stock comprising 10% of the Company’s fully
diluted equity (the “Initial
Grant”) measured as of the closing of the Company’s next financing of
$3,000,000 or more (the “Financing”).  The
Initial Grant shall qualify as incentive stock options to the maximum extent
permitted under applicable law.

       

      (A)           First Component of the
Initial Grant.  The first component of the Initial Grant shall
be 1,416,211 stock options (i.e., 8% of the Company’s
fully diluted equity measured as of the date of grant), which shall be granted
as soon as reasonably practicable following Executive’s first date of employment
with the Company.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (B)           Completion of the Initial
Grant.  The remainder of the Initial Grant shall comprise such
amount of Company stock options as are necessary to ensure that the entire
Initial Grant comprises 10% of the Company’s fully diluted equity measured as of
the closing of the Financing, which grant shall be made as soon as reasonably
practicable following the closing of the Financing.

       

      (C)           Vesting.  Vesting
on the Initial Grant shall commence on Executives first date of employment with
the Company (the “Vesting
Commencement Date”) and one-fourth (1/4th) of the
shares subject to the Initial Grant shall vest and become exercisable on the
first anniversary of the Vesting Commencement Date and one-forty-eighth (1/48)
of the Initial Grant shall vest and become exercisable in a series of thirty-six
(36) successive equal monthly installments measured from the first anniversary
of the Vesting Commencement Date.  For the avoidance of doubt, all
stock options constituting the entire Initial Grant shall vest in accordance
with this schedule (i.e., a four-year period
starting on the Vesting Commencement Date) notwithstanding the actual date of
grant of the second component of the Initial Grant.

       

      (D)           Post-Termination Exercise
Period.  Notwithstanding anything to the contrary contained in
the Plan or any stock option agreement, the exercise period of the options
comprising the Initial Grant following Executive’s termination of employment
shall be twelve (12) months.

       

      (E)           Other
Terms.  Except as otherwise provided herein, the stock options
comprising the Initial Grant and the Company’s common stock purchased upon
exercise of such stock options shall be subject to the terms of the Plan and the
stock option agreement and such other agreements pursuant to which they may be
granted and/or exercised.

       

      (iv)           Consulting
Services.  The parties acknowledge that Executive has been
providing services to the Company in a consulting capacity prior to the
Effective Date.  In consideration for such services, the Company has
agreed to pay Executive (i) $32,000 within five (5) days following the Effective
Date and (ii) 110,345 shares of restricted stock vesting January 1, 2010
(the “Restricted
Stock”) to be granted as soon as reasonably practicable following the
Effective Date.

       

      (v)           Registration.  The
Company shall register the Initial Grant and the Restricted Stock on a Form S-8
as soon as reasonably practicable following the dates of grant of each component
of such equity awards.

       

      (vi)           Employee Benefit Plans. Except
as otherwise expressly provided herein, during the Employment Period, Executive
shall be entitled to participate in all employee benefit, vacation and other
plans, policies and programs for which Executive is eligible under the terms and
conditions of such plans, policies and programs which may be in effect from time
to time and which the Company generally makes available to its executives; provided, however, that
Executive shall be entitled to no less than four weeks (20 working days) of paid
days off during each calendar year.

       

      
        
           

        

        
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      (c)           Insurance.  During
the Employment Period and during any statute of limitations period thereafter,
the Company will maintain industry standard directors and officers insurance
coverage for its executives generally in an amount to be determined by the
Company’s board of directors.

       

      (d)           Other Terms and
Conditions.  The employment relationship between the parties
shall be governed by the general employment policies and procedures of the
Company, including (but not limited to) those relating to the protection of
confidential information and assignment of inventions; provided, however, that when
the terms of this Agreement differ from or are in conflict with the Company’s
general employment policies or procedures, this Agreement shall
control.  Executive agrees to abide by all of the Company’s policies
and procedures in effect from time to time, and further agrees to continue to
abide by the terms and conditions of the Employee Confidentiality and Inventions
Assignment Agreement between Executive and the Company, entered into on
contemporaneously herewith and attached hereto as Exhibit
A.  Executive’s duties under the Employee Confidentiality and
Inventions Assignment Agreement shall survive termination of Executive’s
employment with the Company.

       

      3.           Outside
Activities.

       

      (a)           Activities.  During
the Employment Period, Executive will not, without the Company’s express written
consent, (i) engage in any employment or business activity other than for the
Company or (ii) solicit the business of any client or customer of the Company
(other than on behalf of the Company); provided that Executive may
devote reasonable time and attention to (x) serving as a director, advisory
board member, trustee or member of any committee of any company or other entity
with the prior approval of the Company’s board of directors, which approval
shall not be unreasonably withheld, (y) engaging in charitable or community
activities and (z) managing his personal investments and affairs, to the
extent that such services or activities do not substantially interfere with the
performance of Executive’s duties under this Agreement.

       

      (b)           No
Conflicts.  During the Employment Period, Executive agrees not
to acquire, assume or participate in, directly or indirectly, any position,
investment or interest adverse to or in conflict with the interest of the
Company, its business or prospects, financial or otherwise; provided, however, that this provision
shall not prohibit Executive from making a passive investment not exceeding 1%
of the outstanding equity securities of any publicly-traded
company.

       

      
        
           

        

        
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      4.           Termination
Of Employment; Change in Control.

       

      (a)           At-Will
Employment.  Executive’s employment relationship with the
Company is at-will, and either Executive or the Company may terminate that
employment relationship at any time and for any reason, with or without Cause
(as defined below) upon giving ten (10) calendar days written notice to the
other party; provided, however, that the
Company may effect an immediate termination of this Agreement upon a termination
for Cause.  This at-will employment relationship cannot be changed
except in writing signed by the Executive and a duly authorized officer of the
Company.

       

      (b)           Cause.  For purposes
of this Agreement, Executive’s employment will be deemed to be terminated for
“Cause” if his termination occurs for any of the following reasons:

       

      (i)           his
conviction of any felony involving the Company or any crime involving fraud or
dishonesty;

       

      (ii)         any
unauthorized use or willful disclosure of the Company’s material proprietary
information which has a materially adverse effect on the Company’s business or
reputation;

       

      (iii)        any
intentional misconduct or gross negligence on Executive’s part which has a
materially adverse effect on the Company’s business or reputation;
or

       

      (iv)         Executive’s
willful and continued failure to substantially perform the duties, functions and
responsibilities of his executive position (other than any such failure
resulting from his incapacity due to Disability or any such actual or
anticipated failure resulting from his resignation for Good Reason) after a
written demand for substantial performance is delivered to Executive by the
Board, which demand specifically identifies the manner in which the Board
believes that he has not substantially performed his duties, and which
performance is not substantially corrected by him within 30 days of receipt of
such demand. For purposes of the previous sentence, no act or failure to
act on Executive’s part shall be deemed “willful” unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company.

       

      Notwithstanding the foregoing,
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to him a copy of a resolution duly adopted by
the affirmative vote of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice to Executive and
an opportunity for him, together with his counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, Executive was
guilty of conduct set forth above in clause (i), (ii), (iii) or (iv) of the
first sentence of this paragraph and specifying the particulars thereof in
detail.

       

      (c)           Good Reason.  For
purposes of this Agreement, “Good
Reason” means that Executive voluntarily resigns within ninety (90) days
following the expiration of any cure period (as discussed below) following the
occurrence of any of the following events, without Executive’s written
consent:

       

      
        
           

        

        
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      (i)           a
material reduction of Executive’s duties, title, authority or responsibilities,
provided, however, that a material reduction of Executive’s
duties, title, authority or responsibilities shall
exist if at any time he is no longer the Chief Executive Officer
of the Company or, at any time more than
six (6) months following a Change in
Control, he is not the Chief Executive Officer
of the combined or acquiring company;

       

      (ii)          a
material reduction by the Company of Executive’s Base Salary or Target Annual
Bonus as in effect immediately prior to such reduction, provided, however, that,
other than following a Change in Control, if the Company institutes a
company-wide reduction in salaries and target annual bonus rates (not exceeding
10%) for other executive management team members, such reduction shall not be
deemed “material” for this subsection;

       

      (iii)         Executive’s
relocation to a facility or a location more than fifty (50) miles from Company’s
current headquarters; or

       

      (iv)          In
the context of a Change in Control, the failure of the Company to obtain an
agreement from any successor to assume and agree to perform this Agreement, or,
if the business of the Company for which Executive’s services are principally
performed is sold at any time after a Change in Control, the failure of the
Company to obtain such an agreement from the purchaser of such
business.

       

      Executive
will not resign for Good Reason without first providing the Company with written
notice within ninety (90) days of the event that Executive believes constitutes
“Good Reason” specifically identifying the acts or omissions constituting the
grounds for Good Reason and a reasonable cure period of not less than thirty
(30) days following the date of such notice.

       

      (d)           Disability.  For
purposes of this Agreement, “Disability”
means Executive’s inability to perform his duties and responsibilities under
this Agreement for a period of more than 120 consecutive days, or for more than
180 days, whether or not continuous, during any 365-day period, due to physical
or mental incapacity or impairment.  A determination of Disability
will be made by a physician reasonably satisfactory to both Executive and the
Company and paid for by the Company whose decision shall be final and binding on
Executive and the Company; provided, however, that if
the parties cannot agree as to a physician, then each shall select and pay for a
physician and these two together shall select a third physician whose fee shall
be borne equally by Executive and the Company and whose determination of
Disability shall be binding on Executive and the Company.

       

      (e)           Involuntary Termination; Resignation
for Good Reason.  Should Executive be terminated pursuant to an
Involuntary Termination or resign for Good Reason, then subject to the
provisions of Section 5, Executive shall receive the following benefits:
(i) acceleration of any unvested equity award then held by Executive equal
to 24 months of vesting, (ii) extension of the post-termination exercise period
of Executive’s unvested equity awards to 24 months and (iii) provided that
Executive timely elects continued group health insurance participation following
the Termination Date pursuant to the federal Consolidated Omnibus Budget
Reconciliation Act of 1986, as amended, or similar state law (collectively,
“COBRA”),
then for a period of six (6) months following the Termination Date, the Company
will reimburse Executive’s COBRA premiums sufficient to continue group health
insurance coverage for Executive and Executive’s eligible dependents at the same
level of coverage in effect as of the Termination Date, to the extent such
coverage remains available.  For purposes of this Agreement, “Involuntary
Termination” shall mean the involuntary termination of Executive’s
employment with the Company (other than a termination for Cause).  For
the avoidance of doubt, Executive shall not be entitled to benefits hereunder in
the event Executive is terminated for Cause or resigns voluntarily.

       

      
        
           

        

        
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      (f)           Change in
Control.  For purposes of this Agreement, “Change in
Control” means (a) any consolidation or merger of the Company with
or into any other corporation or other entity or person, or any other corporate
reorganization in which the stockholders of the Company immediately prior to
such consolidation, merger or reorganization, own less than fifty percent (50%)
of the Company’s voting power immediately after such consolidation, merger or
reorganization, or any transaction or series of related transactions in which in
excess of fifty percent (50%) of the Company’s voting power is transferred, or
(b) any sale of all or substantially all assets of the Company.  In
the event of a Change in Control:

       

      (i)           Fifty
percent (50%) of Executive’s then unvested equity awards shall become
vested.

       

      (ii)          If
Executive’s employment is terminated pursuant to an Involuntary Termination or
Executive resigns for Good Reason within three (3) months before or twelve (12)
months after the closing of a Change in Control, then Executive’s remaining
unvested equity awards shall become vested.

       

      (iii)         The
Company (or its successor in interest) will pay Executive an amount in cash
equal to the excess, if any, of (A) 5% of the aggregate consideration
(including all cash and non-cash consideration) paid or exchanged by one or more
acquirers in connection with such Change in Control over (B) Executive’s
Option Gains (as defined below).  For purposes of this Agreement,
“Executive’s
Option Gains” means the sum of (x) for stock options held by
Executive on the date of the closing of the transactions constituting a Change
in Control (the “Change in Control
Date”), the excess, if any, of the aggregate fair market value of the
Company common stock underlying such stock options measured as of the Change in
Control Date over the aggregate exercise price of such stock options plus (y) for stock options
exercised by Executive prior to the Change in Control Date, the excess, if any,
of the aggregate fair market value of the Company common stock underlying such
stock options as of the date of each such exercise over the aggregate exercise
price of such stock options.  The cash payment described in this
Section 4(f)(iii) will be paid as soon as administratively practicable after the
Change in Control Date, but in no event later than the 15th day of
the third month following the end of the year in which the Change in Control
occurs.

       

      (g)           Release.  In order
for Executive to receive the benefits described in Sections 4(e) and 4(f)(ii) of
this Agreement, Executive shall execute and allow to become effective a complete
and general release of claims in the form set forth as Exhibit B.

       

      
        
           

        

        
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      5.           General
Provisions

       

      (a)           Integration.  This
Agreement, including all exhibits hereto, constitute the complete, final and
exclusive embodiment of the entire agreement between the parties with regard to
the subject matter hereof.  It is entered into without reliance on any
promise or representation, written or oral, other than those expressly contained
herein, and it supersedes any other such promises or representations, including,
but not limited to, any prior offer letters or employment agreements by or
between the Company or any of its subsidiaries and Executive.  This
Agreement cannot be modified except in writing signed by Executive and the
Company.

       

      (b)           Interpretation.  Whenever
possible, each provision of this Agreement will be interpreted in such a manner
as to be effective under applicable law.  The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement.  Any invalid or unenforceable provision shall be modified
so as to be rendered valid and enforceable in a manner consistent with the
intent of the parties insofar as possible.

       

      (c)           No
Waiver.  Executive’s or the Company’s failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right Executive or the Company may have hereunder shall not be deemed to be
a waiver of such provision or right or any other provision or right under this
Agreement.

       

      (d)           Governing Law.  This
Agreement will be governed by the internal substantive laws, but not the choice
of law rules, of the state of California.

       

      (e)           Arbitration.  In the
event of any dispute or claim relating to or arising out of Executive’s
employment with the Company or termination thereof (including, but not limited
to, any claims of breach of contract, wrongful termination, harassment, or age,
sex, race or other discrimination), Executive and the Company agree that to the
maximum extent allowable by law, any and all such disputes will be fully and
finally resolved only by binding arbitration conducted by the American
Arbitration Association (the “AAA”).  The
AAA will administer the arbitration in accordance with its National Employment
Dispute Resolution rules, as those rules are then in
effect.  Executive acknowledges that he has been encouraged to speak
with an attorney prior to signing this Agreement, and that by accepting this
Agreement Executive is waiving any right to a jury trial in any matter that the
law permits to be resolved by arbitration.  However, this Agreement
will not apply to any disputes or claims by Executive or the Company relating to
or arising out of the misuse or misappropriation of trade secrets or proprietary
information.  The Company will incur all of the costs of the
arbitration which would not ordinarily be borne by Executive had Executive filed
a lawsuit in court.

       

      (f)           Counterparts.  This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.  Facsimile signatures shall be deemed as effective as
originals.

       

      
        
           

        

        
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      (g)           No Assignment.  This
Agreement is intended to bind and inure to the benefit of and be enforceable by
Executive, the Company and their respective successors, assigns, heirs,
executives and administrators, except that Executive may not assign any of his
duties hereunder and he may not assign any of his rights hereunder without the
written consent of the Company.

       

      (h)           Notice.  Any notice
required to be given or delivered to the Company under the terms of this
Agreement shall be in writing and addressed to the board of directors of the
Company at its principal corporate offices.  Any notice required to be
given or delivered to Executive shall be in writing and addressed to Executive
at the address indicated herein or to the last known address provided by
Executive to the Company.  All notices shall be deemed to have been
given or delivered upon (i) personal delivery, (ii) three (3) days
after deposit in the United States mail by certified or registered mail (return
receipt requested), (iii) one (1) business day after deposit with any
return receipt express courier (prepaid) or (iv) one (1) business day after
transmission by facsimile.

       

      (i)           Section
280G

       

      (i)         Notwithstanding
anything herein to the contrary, if any payment or benefit hereunder or
otherwise payable to Executive constitutes a “parachute payment” (as defined in
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the “Code”)),
and the net after-tax amount of any such parachute payment is less than the net
after-tax amount if the aggregate payments and benefits to be made to Executive
were three times Executive's “base amount” (as defined in Section 280G(b)(3) of
the Code), less $1.00, then the aggregate of the amounts constituting the
parachute payments shall be reduced to an amount equal to three times
Executive's base amount, less $1.00.  If
a reduction in parachute payments is necessary, reduction will occur in the
following order: reduction of cash payments; reduction of employee
benefits; cancellation of accelerated vesting of equity awards.  In the event that acceleration of vesting
of equity award compensation is to be reduced, such acceleration of vesting will
be cancelled in the reverse order of the date of grant of Executive’s equity
awards.

       

      (ii)        The determinations to be made with respect to this
Section shall be made by the Company's
independent accountants or such other
person or entity to which the parties mutually agree, which shall be paid by the Company for the services to
be provided hereunder.  For purposes of making the calculations
required by this Section 5(j), the accountants may make reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of
the Code and make reasonable assumptions regarding Executive's marginal tax rate
in effect for such parachute payments, including the effect of the deductibility
of state and local taxes on such marginal tax rate.  Executive and the
Company shall furnish to the accountants such information and documents as the
accountants may reasonably request in order to make a determination under this
Section.

       

      

       

      [SIGNATURE
PAGE FOLLOWS]

       

      
        
           

        

        
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      In Witness
Whereof, the parties have executed this Agreement as of the Effective
Date written above.

       

       

      Salon.com

      

       

      By: /s/ Norman M.
Blashka                                                                        

       

      Name:
Norman M.
Blashka                                                                        

       

      Title:
Executive Vice
President & Chief Financial
Officer

       

      Date:
May 4,
2009                                                                        

       

       

      
        Executive:

      

      

       

      
        /s/ Richard
Gingras 

      

      Richard
Gingras

      

      Address:       
546 Covington Road

      Los
Altos, CA 94024

      

      

      Exhibit A
– Employee Confidentiality and Inventions Assignment Agreement

      Exhibit B
– Release

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      Exhibit
A

       

      EMPLOYEE
CONFIDENTIALITY AND INVENTIONS ASSIGNMENT AGREEMENT

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      Exhibit
B

      

      Release

      

      In
exchange for the consideration provided to me by this Agreement that I am not
otherwise entitled to receive, and subject to the Company’s compliance with its
post-termination obligations to Executive, I hereby generally and completely
release the Company and its directors, officers, employees, shareholders,
partners, agents, attorneys, predecessors, successors, parent and subsidiary
entities, insurers, affiliates, and assigns from any and all claims, liabilities
and obligations, both known and unknown, that arise out of or are in any way
related to events, acts, conduct, or omissions occurring prior to my signing
this Agreement.  This general release includes, but is not limited to:
(1) all claims arising out of or in any way related to my employment with the
Company or the termination of that employment; (2) all claims related to my
compensation or benefits from the Company, including salary, bonuses,
commissions, vacation pay, expense reimbursements, severance pay, fringe
benefits, stock, stock options, or any other ownership interests in the Company;
(3) all claims for breach of contract, wrongful termination, and breach of
the implied covenant of good faith and fair dealing; (4) all tort claims,
including claims for fraud, defamation, emotional distress, and discharge in
violation of public policy; and (5) all federal, state, and local statutory
claims, including claims for discrimination, harassment, retaliation, attorneys’
fees, or other claims arising under the federal Civil Rights Act of 1964 (as
amended), the federal Americans with Disabilities Act of 1990, the federal Age
Discrimination in Employment Act of 1967 (as amended) (“ADEA”),
the Family and Medical Leave Act; the Employee Retirement Income Security Act;
California Fair Employment and Housing Act (as amended ), any state labor code; the Equal
Pay Act, of 1963, as amended.

       

      Section
1542 Waiver.  I hereby acknowledge that I have read and
understand Section 1542 of the Civil Code of the State of California, which
reads as follows:

       

      A general
release does not extend to claims which the creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known by him
must have materially affected his settlement with the debtor.

       

      I hereby
expressly waive and relinquish all rights and benefits under that section and
any law or legal principle of similar effect in any jurisdiction with respect to
the release of any unknown or unsuspected claims I may have against the Company,
its affiliates, and the entities and persons specified above.

       

      ADEA Waiver and
Release.  I acknowledge that I am knowingly and voluntarily
waiving and releasing any rights I may have under the ADEA, as
amended.  I also acknowledge that the consideration given for the
waiver and release in the preceding paragraph hereof is in addition to anything
of value to which I was already entitled.  I further acknowledge that
I have been advised by this writing, as required by the ADEA,
that:  (a) my waiver and release does not apply to any rights or
claims that may arise after the execution date of this Agreement; (b) I have
been advised that I have the right to consult with an attorney prior to
executing this Agreement; (c) I have been given twenty-one (21) days to consider
this Agreement; (d) I have seven (7) days following the execution of this
Agreement by the parties to revoke the Agreement; and (e) this Agreement will
not be effective until the date upon which the revocation period has expired,
which will be the eighth day after this Agreement is executed by you, provided
that the Company has also executed this Agreement by that date (“Effective
Date”).  The
parties acknowledge and agree that revocation by you of the ADEA Waiver and
Release is not effective to revoke your waiver or release of any other claims
pursuant to this Agreement.

       

      By: ____________________________       
Date: ___________________________Exhibit 10.1

                                AMENDMENT NO. 2

This AMENDMENT NO. 2 dated as of, May 6, 2009, (this "Amendment") by and between
FRONTIER COMMUNICATIONS  CORPORATION,  a Delaware corporation (formerly Citizens
Communications Company) ("Borrower"), and RURAL TELEPHONE FINANCE COOPERATIVE, a
District of Columbia cooperative association ("Lender").

                                    RECITALS

     WHEREAS, Borrower and Lender have entered into a Loan Agreement dated as of
October  24,  2001,  as amended by  Amendment  No. 1 dated as of March 31,  2003
(jointly the "Loan Agreement");

     WHEREAS,  Borrower has requested Lender to consent to certain modifications
to the terms and  conditions of the Loan Agreement and Lender has agreed to such
modifications;

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

     1.   Definitions.  Terms not  specifically  defined  herein  shall have the
          meanings respectively assigned to them in the Loan Agreement.

     2.   Representations   and  Warranties.   Borrower  hereby  represents  and
          warrants  that as of the date  hereof  the Loan  Agreement  is in full
          force and effect, and Borrower is not in default of any Obligation.

     3.   Section 6.03 of the Loan  Agreement is hereby  deleted in its entirety
          and shall be replaced by the following:

               6.03 Financial Ratio. As of the end of each fiscal quarter of the
               Borrower,  the Borrower  shall have a Leverage  Ratio not greater
               than 4.50 to 1.00.

     4.   The following shall be added to Section 2.03 of the Loan Agreement:

               (d)  Notwithstanding  anything set forth herein to the  contrary,
               if, as of the end of any  fiscal  quarter  of the  Borrower,  the
               Borrower  has a  Leverage  Ratio  in  excess  of 4.00 to 1.00 the
               Applicable  Rate shall be increased  by 0.25% and such  increased
               rate shall apply to the next quarterly payment.

     5.   Merger and  Integration.  This  Amendment,  the Loan Agreement and the
          matters  incorporated by reference contain the entire agreement of the
          parties   hereto  with   respect  to  the  matters   covered  and  the
          transactions contemplated hereby.

     6.   Severability.  If any  term,  provision  or  condition,  or  any  part
          thereof,  of this  Amendment,  shall  for any  reason be found or held
          invalid or unenforceable such invalidity or unenforceability shall not
          affect the  remainder of such term,  provision  or  condition  nor any
          other term, provision or condition,  and this Amendment,  and the Loan
          Agreement  shall  survive  and be  construed  as if  such  invalid  or
          unenforceable  term,  provision  or condition  had not been  contained
          therein.

<PAGE>

     7.   Incorporation of Terms of Loan Agreement.  Except as otherwise amended
          or modified herein,  the terms,  conditions and provisions of the Loan
          Agreement are incorporated herein by reference as if set forth in full
          herein and remain in full force and effect.

          IN WITNESS WHEREOF,  the parties hereto have caused this Amendment No.
          2 to be duly executed as of the day and year first above written.

          FRONTIER COMMUNICATIONS CORPORATION

          By:     /s/ David R. Whitehouse
              -------------------------------------------
                      David R. Whitehouse
                      Senior Vice President and Treasurer

          Attest:    /s/ David G. Schwartz                            (SEAL)
                  ---------------------------------------
                         Assistant Secretary

         RURAL TELEPHONE FINANCE COOPERATIVE

         By: /s/ Barry Carroll
             ---------------------------------

         Name: Barry Carroll
               -------------------------------

         Title: Assistant Secretary-Treasurer
                ------------------------------

         Attest: /s/ William R. Knecht, III                           (SEAL)
                 -----------------------------
                  Assistant Secretary-Treasurer

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