0001104659-07-020473.txt : 20070319 0001104659-07-020473.hdr.sgml : 20070319 20070319172637 ACCESSION NUMBER: 0001104659-07-020473 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20070314 ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070319 DATE AS OF CHANGE: 20070319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FAIRPOINT COMMUNICATIONS INC CENTRAL INDEX KEY: 0001062613 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 133725229 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32408 FILM NUMBER: 07704331 BUSINESS ADDRESS: STREET 1: 521 EAST MOREHEAD ST STREET 2: STE 250 CITY: CHARLOTTE STATE: NC ZIP: 28202 BUSINESS PHONE: 7043448150 FORMER COMPANY: FORMER CONFORMED NAME: MJD COMMUNICATIONS INC DATE OF NAME CHANGE: 19980527 8-K 1 a07-8470_18k.htm 8-K

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FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported ) March 14, 2007

FairPoint Communications, Inc.

(Exact name of registrant as specified in its charter)

Delaware		333-56365		13-3725229
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

521 East Morehead Street,
Suite 250,
Charlotte, North Carolina		28202
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (704) 344-8150

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers: Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

2007 Bonus Criteria for Executive Officers

On March 14, 2007, the Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Board”) of FairPoint Communications, Inc. (the “Company”) established the 2007 target bonuses and related performance goals for certain members of the Company’s senior management under the FairPoint Communications, Inc. Annual Incentive Plan (the “Incentive Plan”).

Eugene B. Johnson, the Company’s Chief Executive Officer, is entitled to a target bonus of up to 100% of his 2007 annual base salary. The target bonus for Mr. Johnson will be based on the following performance criteria (weighted as indicated): (i) 50% - supporting the Company’s acquisition of Verizon Communications Inc.’s local exchange assets in Maine, New Hampshire and Vermont (the “Acquisition”), including the achievement of all major project goals; (ii) 20% - the Company achieving a specified Adjusted EBITDA target for 2007; (iii) 20% - providing Company and industry leadership to the rural local exchange carrier public policy debate and facilitating approval of the Acquisition by regulatory entities; (iv) 5% - leading succession planning efforts in the Company; and (v) 5% - continuing to foster a culture that places a premium on high standards of ethical behavior and integrity in the Company’s business relationships.

Peter G. Nixon, the Company’s Chief Operating Officer, is entitled to a target bonus of up to 50% of his 2007 annual base salary. The target bonus for Mr. Nixon will be based on the following performance criteria (weighted as indicated): (i) 75% - overseeing the integration process for the Acquisition, including the achievement of all major project goals; (ii) 10% - the Company achieving a specified Adjusted EBITDA target for 2007 and meeting certain budget expectations; (iii) 5% - effecting certain operational improvements; (iv) 2.5% - developing the Company’s employees; (v) 2.5% - achieving customer service objectives; (vi) 2.5% - supporting public policy initiatives and the Company complying with the internal controls requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”); and (vii) 2.5% - promoting workers’ safety and reducing workers’ compensation claims.

John P. Crowley, the Company’s Executive Vice President and Chief Financial Officer, is entitled to a target bonus of up to 50% of his 2007 annual base salary. The target bonus for Mr. Crowley will be based on the following performance criteria (weighted as indicated): (i) 50% - supporting the Acquisition, including the achievement of all major project goals; (ii) 40% - the Company achieving a specified Adjusted EBITDA target for 2007; (iii) 5% - improving the Company’s investor relations efforts; (iv) 2.5% - - the Company complying with the internal controls requirements of the Sarbanes-Oxley Act; and (v) 2.5% - developing a plan for the Company’s post-Acquisition finance and accounting staff requirements.

Walter E. Leach, Jr., the Company’s Executive Vice President, Corporate Development, is entitled to a target bonus of up to 50% of his 2007 annual base salary. The target bonus for Mr. Leach will be based on the following performance criteria (weighted as indicated): (i) 25% -

the Company obtaining regulatory approvals for the Acquisition; (ii) 25% - the Company closing the Acquisition; (iii) 20% - the Company achieving a specified Adjusted EBITDA target for 2007; (iv) 15% - creating new product lines; and (v) 15% - coordinating and monitoring all activities related to planning, budgeting and reporting for the Acquisition.

Shirley J. Linn, the Company’s Executive Vice President and General Counsel, is entitled to a target bonus of up to 50% of her 2007 annual base salary. The target bonus for Ms. Linn will be based on the following performance criteria (weighted as indicated): (i) 50% - supporting the Acquisition, including the achievement of all major project goals; (ii) 20% - the Company achieving a specified Adjusted EBITDA target for 2007 and meeting certain budget expectations; (iii) 10% - meeting the needs of the Company’s various departments; (iv) 10% - assessing the performance and cost of the Company’s outside legal advisors and in-house professional staff; and (v) 10% - developing a plan for the Company’s post-Acquisition legal department staff requirements.

Lisa R. Hood, the Company’s Chief Operating Officer — FairPoint Telecom Group, is entitled to a target bonus of up to 40% of her 2007 annual base salary. The target bonus for Ms. Hood will be based on the following performance criteria (weighted as indicated): (i) 60% - the Company achieving a specified Adjusted EBITDA target for 2007 and meeting certain budget expectations; (ii) 10% - supporting the Acquisition, including the achievement of all major project goals; (iii) 10% - effecting certain operational improvements; (iv) 10% - achieving certain service objectives; (v) 5% - completing certain employee training initiatives; and (vi) 5% - promoting workers’ safety and reducing certain workers’ compensation claims.

Thomas E. Griffin, the Company’s Treasurer, is entitled to a target bonus of up to 20% of his 2007 annual base salary. The target bonus for Mr. Griffin will be based on the following performance criteria (weighted as indicated): (i) 50% - supporting the Acquisition, including the achievement of all major project goals; (ii) 30% - the Company achieving a specified Adjusted EBITDA target for 2007; (iii) 5% - further developing relationships with lenders and rating agencies and coordinating financing activities; (iv) 5% - managing cash, interest rates and non-core assets; (v) 5% - developing a plan for the Company’s post-Acquisition treasury staff requirements; and (vi) 5% - overseeing successful implementation of billing and financial reporting objectives.

The Compensation Committee, in its sole discretion, will determine whether or not individual performance goals have been satisfied.

Any bonus awards are subject to the terms of the Incentive Plan.

Change in Control and Severance Agreements

On March 14, 2007, the Company entered into Change in Control and Severance Agreements (“Severance Agreements”) with Walter E. Leach, Jr., Peter G. Nixon, Shirley J. Linn and John P. Crowley. Each Severance Agreement provides that the Company will pay severance and provide benefits to the subject employee (i) in the event of such employee’s termination without cause or following a change in control, or (ii) within two years of a change in control, upon such employee’s resignation within 45 days following (A) a significant or material reduction of such employee’s key responsibilities or duties, (B) a reduction in such employee’s overall compensation opportunities, (C) the diminishment or elimination of such

employee’s rights to “Severance Benefits” as defined in the Severance Agreement, or (D) any material breach by the Company of the Severance Agreement. The severance payable and benefits required to be provided include unpaid base salary, lump sum cash payments equal to two times such employee’s annual base salary and annual bonus, COBRA premiums and life insurance premiums for 24 months, and the vesting of all non-performance based, non-vested and/or unearned long-term incentive awards, among others. The payments and benefits are subject to “golden parachute” provisions and Section 409A of the Internal Revenue Code and are not triggered if the employee is terminated for cause, on account of death or disability or upon resignation for reasons not listed in clauses (A) through (D) above.

The Severance Agreements also contain provisions pursuant to which the subject employees, for a period of 12 months following termination of employment, promise to refrain from certain activities including (1) soliciting any of the Company’s employees or consultants to leave the Company or to perform services for another company, or (2) accepting any employment or similar arrangements with certain of the Company’s competitors.

The foregoing description of the terms that the Company believes are material in the Severance Agreements is qualified in its entirety by reference to the full text of such agreements, copies of which are filed, respectively, as Exhibits 10.1, 10.2, 10.3 and 10.4 hereto and incorporated herein by reference.

Director Compensation

On March 14, 2007, upon a recommendation of the Compensation Committee, the Board granted increases in certain components of compensation for nonemployee members of the Board. The Compensation Committee retained an independent compensation consultant to perform an analysis of the Board’s compensation practices and those of the Company’s “peers” and make recommendations with respect to the Board’s compensation practices.

This new compensation arrangement is effective as of April 1, 2007 and supersedes the compensation arrangement with respect to the Board that was in effect immediately prior to this date. Compensation for the Board is composed of retainer fees, lead director and chairpersonship fees and equity awards.

Effective as of April 1, 2007, the compensation program is as follows:

	CURRENT		NEW
Annual Board Retainer	$	45,000	$	55,000
Lead Director	$	5,000	$	10,000
Annual Restricted Stock/ Restricted Stock Units Award	$	30,000	$	45,000
Committee Chairs:
Audit Committee	$	10,000	$	20,000
Compensation Committee	$	5,000	$	10,000

Corporate Governance	$	5,000	$	10,000
Committee Members:
Audit Committee	$	5,000	$	0
Compensation Committee	$	2,500	$	0
Corporate Governance	$	2,500	$	0
Per Meeting Fees	$	0	$	0

Appointment of Peter G. Nixon and Lisa R. Hood

Effective as of April 1, 2007, Peter G. Nixon, the Company’s current Chief Operating Officer, will serve as Chief Operating Officer in connection with the Acquisition, responsible for integrating the acquired business operations into the Company. In addition, effective as of April 1, 2007, Lisa R. Hood, the Company’s current Senior Vice President and Controller, will serve as Chief Operating Officer — FairPoint Telecom Group, responsible for the day to day management of the Company’s current operations. Until April 1, 2007, Ms. Hood will continue to serve in her role as the Company’s Senior Vice President and Controller.

Item 8.01 Other Events.

On March 14, 2007, the Board approved certain changes to the charter of the Compensation Committee. A copy of the new charter of the Compensation Committee is attached to this Current Report as Exhibit 99.1. In addition, the new charter of the Compensation Committee will be posted to the Company’s website under the Investor Relations link.

Item 9.01 Financial Statements and Exhibits.

Exhibit Number		Description
10.1		Change in Control and Severance Agreement, dated as of March 14, 2007, by and between FairPoint Communications, Inc. and Walter E. Leach, Jr.

10.2		Change in Control and Severance Agreement, dated as of March 14, 2007, by and between FairPoint Communications, Inc. and Peter G. Nixon

10.3		Change in Control and Severance Agreement, dated as of March 14, 2007, by and between FairPoint Communications, Inc. and Shirley J. Linn


10.4		Change in Control and Severance Agreement, dated as of March 14, 2007, by and between FairPoint Communications, Inc. and John P. Crowley

99.1		Charter of Compensation Committee

The information in Item 8.01 of this Current Report, including the exhibits attached hereto with respect to such item, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section. Such information in this Current Report, including the exhibits, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FAIRPOINT COMMUNICATIONS, INC.


By:	/s/ John P. Crowley
	Name:	John P. Crowley
	Title:	Executive Vice President and
		Chief Financial Officer

Date: March 19, 2007

EX-10.1 2 a07-8470_1ex10d1.htm EX-10.1

Exhibit 10.1

March 14, 2007

Mr. Walter E. Leach, Jr.
6419 Sharon Hills Rd.
Charlotte NC 28210

Re: Change in Control and Severance Agreement

Dear Walt:

This letter agreement (the “Agreement”) between you and FairPoint Communications, Inc. (the “Company”) sets forth certain rights and obligations with respect to the payment of severance and receipt of certain benefits (the “Severance Benefits”) in the event of the termination of your employment for any of the circumstances described in Paragraph 1, below. This Agreement shall supersede any prior agreements or other arrangements between you and the Company or its affiliates concerning the receipt of payment or benefits upon your employment termination, including those described in that certain letter agreement dated as of December 15, 2003, or in accordance with the Company’s published or unpublished policies.

1. Events That Trigger Severance Benefits

(a) Termination After a Change in Control. You will receive Severance Benefits under this Agreement if, within two years after a Change in Control has occurred, the Company terminates your employment without Cause.

(b) Termination Without Cause. You will receive Severance Benefits under this Agreement if the Company terminates your employment without Cause (as defined herein below) from and after the date hereof prior to a Change in Control or after the second anniversary of a Change in Control.

(c) Resignation for Good Reason After a Change in Control. You will receive Severance Benefits under this Agreement if, within two years after a Change in Control has occurred, you resign your employment for Good Reason (as defined herein below).

2. Events That Do Not Trigger Severance Benefits

You shall not be entitled to receive Severance Benefits under this Agreement if the Company terminates your employment for Cause or your employment terminates on account of death or Disability (as defined herein below), or if you resign without Good Reason.

3. Obligations of the Company Upon Termination

(a) Severance Benefits Following a Change in Control. Subject to the provisions of Paragraphs 5 and 6 below, if you become entitled to Severance Benefits under Paragraphs 1(a) or 1(c) of this Agreement, the Company will provide you the following:

(i) any unpaid base salary as of the date of separation, expense reimbursements, accrued benefits, and any earned but unpaid bonus or incentive payment for the fiscal year before the year of termination, provided that any unpaid vested amounts or benefits under the Company’s compensation, incentive or benefits plans will be paid in accordance with the terms of those plans;

(ii) a lump sum cash payment of two times your Annual Base Salary (as defined herein below) in effect as of the termination date;

(iii) a lump sum cash payment of two times your Annual Incentive Payment (as defined herein below);

(iv) a lump sum cash payment equivalent to twenty-four (24) months of COBRA premiums (as customarily charged to other individuals who have terminated from the Company), grossed up for applicable federal and state taxes. The COBRA premiums shall be based on your coverage election in effect as of the date of termination. If you elect to continue coverage under the Company’s health care plans pursuant to COBRA, you hereby agree that such coverage will continue only for so long as allowed under COBRA or until you become eligible for another group health plan by virtue of employment; and you shall notify the Company as soon as you become eligible for coverage under another group health plan;

(v) a lump sum cash payment equivalent to twenty-four (24) months of LTD and Group Term Life Insurance and any other benefit plan premiums, grossed up for applicable federal and state taxes. The LTD and Group Term Life Insurance and other benefit plan premiums shall be based on your coverage election in effect as of the date of termination; and

(vi) all non-vested and/or unearned long-term incentive awards previously granted to you, including but not limited to restricted stock units, deferred share awards, and stock options shall fully vest and become nonforfeitable; provided, however, that any applicable performance requirement under any long-term incentive awards must be satisfied and will not be deemed waived as a result of this provision.

(b) Severance Benefits Prior to or Two Years after a Change in Control. Subject to the provisions of Paragraphs 5 and 6 below, if you become entitled to Severance Benefits under Paragraph 1(b) of this Agreement, the Company will provide you with all of the same Severance Benefits as described in Paragraph 3(a) above.

(c) Timing of Payment. The payment of the Severance Benefits will occur no later than ten (10) days after the effective date of the Release (as specified therein), unless the Company institutes a 409A Suspension Period (as defined below).

(d) Release. The Severance Benefits are conditioned upon your signing and making effective a general release of claims in a form designated by the Company in its sole discretion (the “Release”). The Company shall not have any obligation to provide the Severance Benefits in the event you do not sign and make effective the Release.

(e) Other Amounts. Regardless of whether you sign and make effective the Release, the Company shall pay you any unpaid base salary, expense reimbursements, and any earned but unpaid bonus or incentive payment for the fiscal year before the year of termination within ten (10) days of your termination date. Any unpaid vested amounts or benefits under the Company’s compensation, incentive or benefits plans will be paid in accordance with the terms of those plans.

4. Definitions

(a) “Annual Base Salary” shall mean the average monthly salary in effect during the twelve (12) months immediately preceding the date of termination, multiplied by a factor of twelve (12).

(b) “Cause” shall mean, as reasonably and in good faith determined by the Company’s Board of Directors, (i) misappropriating any funds or any material property of the Company; (ii) obtaining or attempting to obtain any material personal profit from any transaction in which you have an interest which is adverse to the interest of the Company unless the Company shall first give its consent to such transaction; (iii)(x) the willful taking of actions which directly impair your ability to perform the duties required by the terms of your employment; or (y) taking any action detrimental to the Company’s goodwill or damaging to the Company’s relationships with its customers, suppliers or employees; provided that such neglect or refusal, action or breach shall have continued for a period of twenty (20) days following written notice thereof; (iv) being convicted of or pleading nolo contendere to any crime or offense constituting a felony under applicable law or any crime or offense involving fraud or moral turpitude; or (v) any material failure to comply with applicable laws or governmental regulations within the scope of your employment or any material breach of Company policies and procedures, including a material breach of the Company’s Code of Business Conduct and Ethics.

(c) “Change in Control” shall have the same meaning as in section 13.1 of the FairPoint Communications, Inc. 2005 Stock Incentive Plan as in effect on January 1, 2006; provided, however, that there shall be no provision for any threatened or anticipated Change in Control that does not actually occur.

(d) “Disability” shall mean a long-term disability within the meaning of the long-term disability or other similar program applicable to employees at the Company. At any time the Company does not sponsor a long-term disability plan for its employees, “Disability” shall mean your inability to perform, with reasonable accommodation, the essential functions of your position for a period of 180 days in any 360 consecutive day period due to mental or physical incapacity, and determined by an independent physician, selected by joint agreement by you and the Company.

(e) “Good Reason” means your resignation from employment within forty-five days after notice of the occurrence of any of the following without your express written consent:

(i) Your key responsibilities or duties as Executive Vice President, Corporate Development (and ignoring for such purpose any temporary responsibilities) are significantly and materially reduced or if you are downgraded to a career band level that is lower than the career band level you are currently in; provided, however, that a “Good Reason’ shall not occur merely because of a change in the individual (or position) to whom (or to which) you report.

(ii) A reduction in your overall compensation opportunities (as contrasted with overall compensation actually paid or awarded), other than if the Company for business reasons has to reduce bonus opportunities or base salaries of all executives;

(iii) The diminishment or elimination of your rights hereunder to the Severance Benefits; or

(iv) any material breach by the Company of this Agreement.

You may resign from your employment for Good Reason so long as you tender your written resignation to the CEO or to the Board of Directors within forty-five (45) days after the occurrence of the event that forms the basis for your resignation for Good Reason, and as long as your resignation describes in reasonable detail your objection to any of the matters described in this paragraph 4(e) and provides the Company an opportunity to cure such action or breach within fourteen (14) calendar days after receiving your written resignation.

(f) “Annual Incentive Payment” shall mean the average of the incentive payments made to you in each of the two (2) calendar years immediately preceding the date of termination.

5. Golden Parachute

Your total payments and benefits under this Agreement may exceed the relevant limitations under the “golden parachute” provisions of Code Section 280G. However, nothing in this Agreement will cause the Company to be required to pay to you any amount in excess of the Severance Benefits provided for in this Agreement. Notwithstanding the foregoing, in the event any payment or benefit to you under this Agreement or otherwise would (a) constitute a “parachute payment” within the meaning of Code Section 280G and (b) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (or any comparable successor or state law provision) and any related interest or penalties (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then you shall receive either (i) the largest portion of such payments and benefits that would result in no portion of such payments and benefits being subject to the Excise Tax or (ii) the full amount of such payments and benefits; whichever of the amounts under (i) and (ii), when taking into account all applicable federal, state, local and foreign income and employment taxes, the Excise Tax and any other applicable taxes (all computed at the highest applicable marginal rate), results in your receipt, on an after-tax basis, of the greatest amount of payments and benefits, notwithstanding that all or some portion thereof may be subject to the Excise Tax. In the event of a reduction hereunder, you will be given the choice of which payments or benefits to reduce to the extent practicable for the Company. The foregoing calculations shall be made at the Company’s

expense by an accounting firm selected by the Company. You shall remain solely liable for all income taxes, Excise Taxes, or other amounts assessed on any payments or benefits to which you are entitled and nothing in this Agreement or otherwise shall be interpreted as obligating the Company to pay (or reimburse you for) any income taxes, Excise Taxes, or other taxes or amounts assessed against or incurred by you in connection with your receipt of such payments and benefits.

6. 409A

The terms of this Agreement (and the terms of any and all other agreements which cover you and are deferred compensation plans subject to Code Section 409A) are intended to be, and shall be interpreted so as to, comply with Code Section 409A so as to not subject you to any excise tax or penalty under Code Section 409A by virtue of any payment or benefit related to that agreement. In the event it is determined that any term or provision of this Agreement (and/or of any other agreements covering you which are subject to Code Section 409A) does not so comply with Code Section 409A, then any and all such non-compliant terms or provisions are amended so as to delay payments and benefits (of whatever kind, including stock options, dividends and any other equity-related payments that may be subject to Code Section 409A) in a manner that will comply with all of the following three requirements: (1) conform to Section 409A of the Code; (2) to the extent possible under Code Section 409A, preserve the original intent of that provision; and (3) otherwise be without any reduction in the amount of such payments or benefits ultimately paid or provided to you. Without limitation of the foregoing, if you are a ‘specified employee’ under Code Section 409A(a)(2)(B), then, except as permitted by Code Section 409A, any payments subject to Code Section 409A will be delayed until the date that is six months after your separation from service (the “409A Suspension Period”), and any such payments or benefits to which you would otherwise be entitled during the first six months after your separation from service will be accumulated and paid or provided on the date that is six months after such separation form service.

7. Non-Competition/Non-Solicitation

(a) Acknowledgements. You acknowledge and agree that in the course of your employment with the Company, you have been and will be given access to, become familiar with, develop, maintain, and acquire knowledge of the Company’s client, employment and other relationships and confidential information relating to those relationships. You acknowledge and agree that you will comply with the Company’s confidentiality policies.

(b) Non-competition. You agree that for a period of twelve (12) months after you leave the employ of the Company for any reason, you shall not, directly or indirectly, for your own benefit or for the benefit of any other person or entity, whether as an owner, director, officer, partner, employee, agent, consultant, for pay or otherwise, perform any supervisory, managerial, marketing, sales, administrative, executive, financial, or research and development or similar services for a rural local exchange carrier business headquartered in the Southeastern United States, which shall mean the states of Florida, Georgia, North Carolina and South Carolina.

(c) Non-solicitation. You agree that for a period of twelve (12) months after you leave the employ of the Company for any reason, you shall not, directly or indirectly, for your own benefit or for the benefit of any other person or entity, whether as an owner, director, officer, partner, employee, agent, consultant, for pay or otherwise solicit the service of or solicit, induce, encourage, identify or target any person who was employed by the Company during the last year of your employment with the Company, to terminate his or her employment with the Company.

(d) Injunctive Relief. You recognize that breach of this paragraph 7 may severely and irreparably injure the Company in an amount that cannot be readily calculated. Therefore, you agree that the Company may, in addition to all other remedies to which it is entitled (including recovery of attorneys’ fees), obtain equitable relief, including a temporary restraining order and/or preliminary injunction, from any court having personal jurisdiction over you.

(e) Reasonable Restrictions. You acknowledge and agree that the restrictions and covenants contained in this paragraph 7 are reasonably necessary to protect the goodwill and legitimate business interests of the Company, including without limitation the Company’s confidential information and customer, employment and other relationships and that the restrictions are not overbroad, overlong, or unfair (including in duration or scope).

(f) Reformation. Whenever possible, each provision of this paragraph 7 will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this paragraph 7 is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this paragraph 7 or this Agreement. If a Court determines that at the time this Agreement is presented for enforcement any provisions are overly broad or unenforceable, the parties agree that the Court shall reform paragraph 7 to make it enforceable to the maximum extent possible and shall enforce the other terms as written.

8. Severability

If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable, this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement.

9. Entire Agreement

This Agreement is the entire agreement between you and the Company and its affiliates with respect to any payments or benefits upon termination of employment. This Agreement supersedes any prior or contemporaneous oral or written agreements or understandings on the subject. No party is relying on any representations, oral or written, on the subject of the effect, enforceability or meaning of this Agreement, except as specifically set forth in this Agreement.

10. Governing Law

The statutes and common law of the State of North Carolina (excluding its choice of laws provisions) will apply to this Agreement, its interpretation and enforceability, except as provided by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

We look forward to your and the Company’s continued success.

	Sincerely,

	/s/ Eugene B. Johnson
	Eugene B. Johnson
	Chief Executive Officer


	Agreed:	/s/ Walter E. Leach, Jr.
		Walter E. Leach, Jr.

EX-10.2 3 a07-8470_1ex10d2.htm EX-10.2

Exhibit 10.2

March 14, 2007

Peter G. Nixon
21720 Junco Ct.
Cornelius, North Carolina 28031

Re: Change in Control and Severance Agreement

Dear Peter:

This letter agreement (the “Agreement”) between you and FairPoint Communications, Inc. (the “Company”) sets forth certain rights and obligations with respect to the payment of severance and receipt of certain benefits (the “Severance Benefits”) in the event of the termination of your employment for any of the circumstances described in Paragraph 1, below. This Agreement shall supersede any prior agreements or other arrangements between you and the Company or its affiliates concerning the receipt of payment or benefits upon your employment termination, including those described in that certain letter agreement dated as of November 11, 2002, or in accordance with the Company’s published or unpublished policies.

1. Events That Trigger Severance Benefits

2. Events That Do Not Trigger Severance Benefits

3. Obligations of the Company Upon Termination

(ii) a lump sum cash payment of two times your Annual Base Salary (as defined herein below) in effect as of the termination date;

(iii) a lump sum cash payment of two times your Annual Incentive Payment (as defined herein below);

4. Definitions

(a) “Annual Base Salary” shall mean the average monthly salary in effect during the twelve (12) months immediately preceding the date of termination, multiplied by a factor of twelve (12).

(e) “Good Reason” means your resignation from employment within forty-five days after notice of the occurrence of any of the following without your express written consent:

(i) Your key responsibilities or duties as Chief Operating Officer (and ignoring for such purpose any temporary responsibilities) are significantly and materially reduced or if you are downgraded to a career band level that is lower than the career band level you are currently in; provided, however, that a “Good Reason’ shall not occur merely because of a change in the individual (or position) to whom (or to which) you report.

(iii) The diminishment or elimination of your rights hereunder to the Severance Benefits; or

(iv) any material breach by the Company of this Agreement.

(f) “Annual Incentive Payment” shall mean the average of the incentive payments made to you in each of the two (2) calendar years immediately preceding the date of termination.

5. Golden Parachute

income taxes, Excise Taxes, or other amounts assessed on any payments or benefits to which you are entitled and nothing in this Agreement or otherwise shall be interpreted as obligating the Company to pay (or reimburse you for) any income taxes, Excise Taxes, or other taxes or amounts assessed against or incurred by you in connection with your receipt of such payments and benefits.

6. 409A

7. Non-Competition/Non-Solicitation

8. Severability

9. Entire Agreement

10. Governing Law

We look forward to your and the Company’s continued success.

	Sincerely,

	/s/ Eugene B. Johnson
	Eugene B. Johnson
	Chief Executive Officer


	Agreed:	/s/ Peter G. Nixon
		Peter G. Nixon

EX-10.3 4 a07-8470_1ex10d3.htm EX-10.3

Exhibit 10.3

March 14, 2007

Shirley J. Linn, Esq.
2124 Kenmore Ave.
Charlotte NC 28204

Re: Change in Control and Severance Agreement

Dear Shirley:

This letter agreement (the “Agreement”) between you and FairPoint Communications, Inc. (the “Company”) sets forth certain rights and obligations with respect to the payment of severance and receipt of certain benefits (the “Severance Benefits”) in the event of the termination of your employment for any of the circumstances described in Paragraph 1, below. This Agreement shall supersede any prior agreements or other arrangements between you and the Company or its affiliates concerning the receipt of payment or benefits upon your employment termination, including those described in that certain letter agreement dated as of November 13, 2002, or in accordance with the Company’s published or unpublished policies.

1. Events That Trigger Severance Benefits

2. Events That Do Not Trigger Severance Benefits

3. Obligations of the Company Upon Termination

(ii) a lump sum cash payment of two times your Annual Base Salary (as defined herein below) in effect as of the termination date;

(iii) a lump sum cash payment of two times your Annual Incentive Payment (as defined herein below);

4. Definitions

(a) “Annual Base Salary” shall mean the average monthly salary in effect during the twelve (12) months immediately preceding the date of termination, multiplied by a factor of twelve (12).

(e) “Good Reason” means your resignation from employment within forty-five days after notice of the occurrence of any of the following without your express written consent:

(i) Your key responsibilities or duties as Executive Vice President, General Counsel and Secretary (and ignoring for such purpose any temporary responsibilities) are significantly and materially reduced or if you are downgraded to a career band level that is lower than the career band level you are currently in; provided, however, that a “Good Reason’ shall not occur merely because of a change in the individual (or position) to whom (or to which) you report.

(iii) The diminishment or elimination of your rights hereunder to the Severance Benefits; or

(iv) any material breach by the Company of this Agreement.

(f) “Annual Incentive Payment” shall mean the average of the incentive payments made to you in each of the two (2) calendar years immediately preceding the date of termination.

5. Golden Parachute

6. 409A

7. Non-Competition/Non-Solicitation

8. Severability

9. Entire Agreement

10. Governing Law

We look forward to your and the Company’s continued success.

	Sincerely,

	/s/ Eugene B. Johnson
	Eugene B. Johnson
	Chief Executive Officer


	Agreed:	/s/ Shirley J. Linn
		Shirley J. Linn

EX-10.4 5 a07-8470_1ex10d4.htm EX-10.4

Exhibit 10.4

March 14, 2007

John P. Crowley
1320 Fillmore Ave.
Apt. 516
Charlotte NC 28203

Re: Change in Control and Severance Agreement

Dear John:

This letter agreement (the “Agreement”) between you and FairPoint Communications, Inc. (the “Company”) sets forth certain rights and obligations with respect to the payment of severance and receipt of certain benefits (the “Severance Benefits”) in the event of the termination of your employment for any of the circumstances described in Paragraph 1, below. This Agreement shall supersede any prior agreements or other arrangements between you and the Company or its affiliates concerning the receipt of payment or benefits upon your employment termination, including those described in that certain letter agreement dated as of May 16, 2005, or in accordance with the Company’s published or unpublished policies.

1. Events That Trigger Severance Benefits

2. Events That Do Not Trigger Severance Benefits

3. Obligations of the Company Upon Termination

(ii) a lump sum cash payment of two times your Annual Base Salary (as defined herein below) in effect as of the termination date;

(iii) a lump sum cash payment of two times your Annual Incentive Payment (as defined herein below);

4. Definitions

(a) “Annual Base Salary” shall mean the average monthly salary in effect during the twelve (12) months immediately preceding the date of termination, multiplied by a factor of twelve (12).

(e) “Good Reason” means your resignation from employment within forty-five days after notice of the occurrence of any of the following without your express written consent:

(i) Your key responsibilities or duties as Executive Vice President and Chief Financial Officer (and ignoring for such purpose any temporary responsibilities) are significantly and materially reduced or if you are downgraded to a career band level that is lower than the career band level you are currently in; provided, however, that a “Good Reason’ shall not occur merely because of a change in the individual (or position) to whom (or to which) you report.

(iii) The diminishment or elimination of your rights hereunder to the Severance Benefits; or

(iv) any material breach by the Company of this Agreement.

(f) “Annual Incentive Payment” shall mean the average of the incentive payments made to you in each of the two (2) calendar years immediately preceding the date of termination.

5. Golden Parachute

6. 409A

7. Non-Competition/Non-Solicitation

8. Severability

9. Entire Agreement

10. Governing Law

We look forward to your and the Company’s continued success.

	Sincerely,

	/s/ Eugene B. Johnson
	Eugene B. Johnson
	Chief Executive Officer


	Agreed:	/s/ John P. Crowley
		John P. Crowley

EX-99.1 6 a07-8470_1ex99d1.htm EX-99.1

EXHIBIT 99.1

FAIRPOINT COMMUNICATIONS, INC.

Charter of the Compensation Committee of the Board of Directors

PURPOSE

The purpose of the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) is to oversee the compensation of executive officers and senior management, including plans and programs relating to cash compensation, incentive compensation, equity-based awards and other benefits and perquisites and to administer any such plans or programs as required by the terms thereof.

MEMBERSHIP

The Committee shall be comprised of not less than three members of the Board. Members of the Committee shall be appointed by the Board and may be removed by the Board in its discretion. All members of the Committee shall be independent under the rules of the New York Stock Exchange. The Board shall designate a chairperson of the Committee.

DUTIES AND RESPONSIBILITIES

The Committee shall have the following authority, duties and responsibilities:

· Chief Executive Officer Compensation. The Committee shall review and approve corporate goals and objectives relevant to the compensation of the Chief Executive Officer (the “CEO”), evaluate the CEO’s performance in light of those goals and objectives, and either as a committee or together with the other independent directors (as directed by the Board) exercise sole authority to determine and approve the CEO’s compensation level based on this evaluation. In determining the long-term incentive component of the CEO’s compensation, the Committee shall consider, among other factors selected by the Committee, the Company’s performance and relative shareholder return, the value of similar incentive awards to chief executive officers at comparable companies, and the awards given to the CEO in past years.

· Senior Management Compensation. The Committee shall review and approve corporate goals and objectives relative to the compensation of all senior management and shall determine and approve (after consideration of the recommendations of the CEO) all senior management’s compensation. For purposes of this Charter, senior management (“Senior Management”) shall include any and all Executive Vice Presidents, the Chief Operating Officer(s), the Chief Financial Officer, the Controller and the Treasurer.

· Incentive and Equity-Based Compensation Plans. The Committee shall review and make recommendations to the Board with respect to incentive compensation plans and equity-based compensation plans or material changes to any such

existing plans and shall discharge and administer any such plans as required by the terms thereof.

· Compensation Discussion & Analysis. The Committee shall oversee the drafting and review and discuss with management the Compensation Discussion & Analysis (“CD&A”) and related disclosures required by the Securities and Exchange Commission (“SEC”), including specific Committee review and input regarding:

· The discussion of factors important to understanding the objectives, policies and philosophy underlying the executive compensation programs;

· The allocation of various types of compensation, including short-term and long-term compensation;

· The specific items of corporate performance taken into account in setting compensation policies and decisions;

· The factors considered in decisions to increase or decrease executive compensation;

· The information presented in the Summary Compensation Table and other supporting tabular disclosures, including narrative descriptions as required; and

· Information and descriptive narrative provided in other disclosures, including post-employment payments, director compensation and Committee governance.

· Annual Compensation Committee Report. The Committee shall prepare and approve an annual report of the Committee for inclusion in the Company’s annual report or proxy statement in accordance with applicable SEC regulations. The Compensation Committee Report should include:

· A statement providing whether the Committee reviewed and discussed the CD&A with management;

· A statement providing whether, based on the aforementioned review and discussion, the Committee recommended to the Board that the CD&A be included in the Company’s annual report or proxy statement; and

· A list of the Committee members below the Compensation Committee Report disclosure.

· Compliance. The Committee shall, in consultation with management, oversee regulatory compliance with respect to compensation matters, including overseeing the Company’s policies on structuring compensation programs to preserve tax deductibility, and, as and when required, establishing performance goals and confirming that performance goals have been attained for purposes of Section 162(m) of the Internal Revenue Code.

· Review Compensation Programs.Periodically review, as and when determined appropriate, executive compensation programs and total compensation levels, including:

· Determining whether program elements are properly coordinated and achieve intended objectives;

· Conducting comparative analyses of total compensation relative to market;

· Quantifying maximum payouts to executives under performance-based incentive plans and total payments under a variety of termination conditions, including upon a Change in Control (“CIC”);

· The impact of the tax and accounting treatment of the various forms of compensation.

· Termination Payments. The Committee shall review and approve any severance, change in control, or similar termination payments proposed to be made to any current or former executive officer of the Company.

· Stock Ownership Guidelines. Review and approve, after consultation with the Corporate Governance Committee, Board compensation programs and stock ownership guidelines.

· Approve Benefits. Approve or recommend to the Board for approval, any plan, program, policy or grant which confers a benefit on any member of Senior Management.

· Other Duties. The Committee shall perform any other duties or responsibilities expressly delegated to the Committee by the Board from time to time relating to the Company’s compensation programs.

DELEGATION TO SUBCOMMITTEE

The Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Committee. In particular, the Committee may delegate the approval of certain transactions to a subcommittee consisting solely of members of the Committee who are (i) “Non-Employee Directors” for the purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as in effect from time to time, and (ii) “outside directors” for the purposes of Section 162(m) of the Internal Revenue Code, as in effect from time to time.

RESOURCES AND AUTHORITY OF THE COMMITTEE

The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the authority to retain counsel and other experts or consultants as it deems appropriate, without obtaining the approval of the Board or management. The Committee shall have the sole authority to select and retain a compensation consultant to assist in the evaluation of CEO compensation.

COMMITTEE STRUCTURE AND OPERATIONS

The Committee shall meet at least twice annually and as often as necessary to carry out its responsibilities, and when necessary or desirable, may take action by unanimous written consent. Members of management may participate in Committee meetings at the invitation of the Committee. The CEO shall not attend any meeting where the CEO’s performance or compensation is discussed, unless specifically invited by the Committee. Any action of the Committee (other than actions for which the Committee has sole authority as set forth herein) shall be subject to review and modification by the Board. The Committee shall report promptly to the Board on any significant matters arising from the Committee’s work, including awards for the CEO and Senior Management and special executive employment, compensation and retirement arrangements. Minutes will be kept of each meeting of the Committee and will be available to each member of the Board.

PERFORMANCE EVALUATION

The Committee shall prepare and provide to the Board an annual performance evaluation of the Committee, including an assessment of the performance of the Committee based on the duties and responsibilities set forth in this charter and such other matters as the Committee may determine. The evaluation to the Board may take the form of an oral report by the Committee chairman or any other member of the Committee designated by the Committee to make the report, and shall be undertaken under the supervision of the Corporate Governance Committee in accordance with the Corporate Governance Guidelines adopted by the Board. The Committee shall review and assess the adequacy of the Committee charter annually, propose any necessary changes to the Corporate Governance Committee for review and ultimate recommendation for approval to the Board.