EMPLOYMENT
AGREEMENT
This Employment Agreement dated as
of November 15, 2006 (this “ Agreement ”), by
and between OTELCO INC., a Delaware corporation (the “
Company ”) and GARY B. ROMIG (the ‘
Employee ”).
WHERE
AS, 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) Duties
and Position . During the Employment Period, the Employee shall
serve as Vice President and General Manager-Mid-Missouri. As such,
the Employee shall have duties and responsibilities commensurate
with such position and such other duties and responsibilities as
may from time to time be assigned to or vested in the Employee by
the Company’s Board of Directors (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. 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 (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 in accordance with
this Agreement.
(c)
Compensation .
(i) Base
Salary . During the Employment Period, the Employee shall
receive an annual base salary of $106,500 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 25% 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 and shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company to the extent
applicable generally to other employees of the Company. 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)
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.
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 at any time, without prior
notice.
(c)
Termination by the Company. The Company may terminate the
Employee’s employment with the Company 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’s
welfare and benefit plans (the “ Benefits ”)
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 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
President of the Company 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 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. 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’s ownership of the Work Product
(including, without limitation, the execution and delivery of
assignments, consents, powers of attorney and other instruments)
and to provide reaso
