Exhibit 10.2

Appendix A

Commonwealth Telephone Enterprises, Inc.

Key Employee Severance Plan

(Effective September 17, 2006)

 

1. Intent. Commonwealth Telephone Enterprises, Inc. (the “Company”) has
determined that in the event of a transaction or other event which might result
in a Change in Control (as defined below) of the Company, it is desirable and in
the best interest of the Company to have established arrangements to help ensure
that Key Employees remain focused and appropriately incented with respect to the
successful completion of such Change in Control and the transition and ongoing
activities thereafter regarding the continued business of the Company following
such Change in Control. In order to accomplish these objectives, the Company has
put a Key Employee Severance Plan (the “Plan”) in place as of the effective date
set forth above.

 

2. Scope. This Plan extends to those employees of the Company listed on Exhibit
I attached hereto (“Eligible Employees”).

 

3. Policy.

 

  (a) Severance Benefits Upon Termination Following a Change in Control.

If a Change in Control occurs and an Eligible Employee’s employment with the
Company (or a successor employer in connection with the Change in Control) is
terminated without Cause (as defined below), or an Eligible Employee terminates
employment with Good Reason (as defined below), in either case within one
(1) year following the effective date of such Change in Control, an Eligible
Employee will, in lieu of any other severance benefits which might or might not
otherwise be available to him or her, be eligible to receive the following
severance benefits (“Severance Benefits”):

 

  (i) A one-time cash payment equal to one (1) year’s base salary in effect
immediately prior to the termination; and

 

  (ii) Payment by Company of the Eligible Employee’s health care premiums (less
employee contribution) for the first twelve (12) months following the
termination; and

 

  (iii) Base salary through the date of such termination and any other accrued
benefits to which the Eligible Employee is entitled under the terms of the
Company’s employee benefit plans and programs.

 

  (b) The receipt of any Severance Benefits is conditioned upon the Eligible
Employee’s execution of a general release of claims against the Company in a
form acceptable to the Company.

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4. Definition of Cause. For purposes of this Plan, the term “Cause” shall mean
any one of the following:

 

  (a) A breach of the Eligible Employee’s fiduciary duty to the Company in his
or her capacity as an officer of the Company;

 

  (b) Any action or failure to act on the part of the Eligible Employee which
results in material injury to the assets, business prospects or reputation of
the Company or any Affiliate (as defined below) of the Company;

 

  (c) The appropriation of a material business opportunity of the Company or any
Affiliate of the Company, including attempting to secure or securing any
personal profit in connection with any transaction entered into by, or on behalf
of, the Company; or

 

  (d) The Eligible Employee’s indictment for a felony or breach of the Company’s
Code of Conduct or a material employment policy or rule of the Company governing
employee conduct.

 

5 Definition of Good Reason. For purposes of this Plan, “Good Reason” shall mean
any one of the following occurrences, unless consented to in writing by the
Eligible Employee:

 

  (a) The Eligible Employee’s base salary as in effect immediately prior to the
Change in Control, or as it may be increased subsequent to the Change in
Control, is reduced by more than fifteen (15%) percent;

 

  (b) The Eligible Employee’s business location is changed by more than 60 miles
from his or her present location;

 

  (c) Any successor to the Company in connection with a Change in Control does
not, prior to the Change in Control, expressly assume this Plan.

 

  (d) Under no circumstances shall death, disability or normal retirement
qualify as “Good Reason” for purposes of this provision.

 

6. Definition of Change in Control. For purposes of this Plan, “Change in
Control” shall mean any “change in the ownership or effective control” of the
Company within the meaning of Internal Revenue Code Section 409A and related
Treasury guidance and regulations (collectively, “Section 409A”).

 

7. Funding. The Company (or its successor) shall pay Severance Benefits from its
current operating funds. No property of the Company is or shall be, by reason of
this Plan, held in trust for any employee of the Company, nor shall any person
have any interest in or

 

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any lien or prior claim upon any property of the Company by reason of this Plan
or the Company’s obligations to make payments under this Plan.

 

8. Set-off. Any Severance Benefits to any Eligible Employee shall be reduced by
any other severance benefits, pay in lieu of notice or other similar benefits
payable to the Eligible Employee from or on behalf of the Company or any prior
employer of the Eligible Employee, which becomes payable on account of his or
her cessation of employment pursuant to:

 

  (a) any applicable law, statute, regulation, court order or other legal
requirement, including without limitation, the Worker Adjustment and Retraining
Notification Act, as amended from time to time;

 

  (b) any written employment, severance or similar agreement with the Company;

 

  (c) any Company policy providing for an employee to remain on the payroll for
a limited period of time after he or she is given notice of his or her
termination of employment; or

 

  (d) any other obligation by any other individual or entity other than the
Company to provide a payment to the Eligible Employee in the event of an
involuntary termination of his or her employment.

 

9. Tax Indemnity. If it is determined that any payments and benefits that the
Eligible Employee receives from the Company or an Affiliate under this Agreement
will result in him or her being subject to an excise tax under Section 4999 of
the Code, then the Company will make a Gross-Up Payment (as defined below) to or
on behalf of the Eligible Employee and when any such determination is made;
provided he or she takes such action (other than waiving his or her right to any
payments or benefits) as the Company reasonably requests under the circumstances
to mitigate or challenge such tax. Any such determination will be made in
accordance with Sections 280G and 4999 of the Code and any other applicable law,
regulations, rulings or case law. If the Company reasonably requests that he or
she takes action to avoid assessment of, or to mitigate or challenge, any such
tax or assessment, including restructuring, his or her rights to receive any
payments or benefits to which he or she is entitled (other than under this
paragraph), he or she agrees to consider such request (but in no event to waive
or limit his or her right to any payments or benefits in a manner that would not
be neutral to him or her from a financial point of view), and in connection with
any such consideration, the Company will provide such information and advice as
he or she may reasonably request and will pay for all reasonable expenses
incurred in effecting his or her compliance with such request and any related
taxes, fines, penalties, interest and other assessments. The term “Gross-Up
Payment” means an additional amount such that he or she will, on an after-tax
basis (including any income tax, payroll tax, further excise tax, interest,
penalties and other assessments levied on any payment or benefit) receive the
full amount of the payments and benefits for which the Company is liable, as if
there was no excise tax under Section 4999 of the Code on any of his or her
payments or benefits. To the extent

 

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permitted by applicable law, he or she agrees to return to the Company the
excess of any Gross-Up Payment made to him or her over the payment which would
have been sufficient to put him or her in such same after-tax position. Nothing
in this Section 13 is intended to violate the Sarbanes-Oxley Act and to the
extent that any advance or payment obligation hereunder would do so, such
obligation will be modified so as to make the advance a nonrefundable payment to
him or her and the payment obligation null and void. This Section 13 will
continue in effect until he or she agrees that all of the Company’s obligations
to him or her under this Section l3 have been satisfied in full or a court of
competent jurisdiction makes a final determination that the Company has no
further obligations to him or her under this Section 13, whichever comes first.

 

10. Administration. This Plan shall be administered by the Board of Directors of
the Company (“Board of Directors”). For purposes of the Employee Retirement
Income Security Act of 1974, as amended from time to time (“ERISA”), the Board
of Directors shall be the “administrator” and the “named fiduciary” with respect
to the general administration of this Plan. The Board of Directors may, in its
discretion, delegate its duties to a Committee of the Board of Directors or to
one or more named administrator or administrators.

The Board of Directors shall have absolute discretion to construe and interpret
any and all provisions of this Plan and to decide all matters of fact in
granting or denying benefit claims, including without limitation, the discretion
to resolve ambiguities, inconsistencies or omissions conclusively; provided,
however, that all such discretionary interpretations and decisions shall be
applied in a uniform and nondiscriminatory manner to all Eligible Employees who
are similarly situated. The decisions of the Board of Directors upon all matters
within the scope of its authority shall be binding and conclusive upon all
persons.

No member of the Board of Directors shall have any right to vote or decide upon
any matter relating solely to himself or herself under this Plan or to vote in
any case in which his or her individual right to claim any benefit under this
Plan is particularly involved.

In any case in which a member of the Board of Directors is so disqualified to
act, the Board of Directors shall appoint a temporary substitute member to
exercise all the powers of the disqualified member concerning the matter from
which he or she is disqualified.

The members of the Board of Directors shall not receive compensation with
respect to their services for the Board of Directors solely with respect to
administering this Plan. To the extent required by ERISA or other applicable
law, or required by the Company, members of the Board of Directors shall furnish
bond or security for the performance of their duties under this Plan, which
shall be paid pursuant to the last paragraph of this Section.

The reasonable expenses incident to the administration of this Plan, including
the compensation of legal counsel, advisors, other technical or clerical
assistance as may be required, the payment of any bond or security pursuant to
this Plan and any other expenses incidental to the operation of this Plan, which
the Board of Directors determines are proper, shall be paid by the Company (or
its successor).

 

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11. Indemnification. The Company shall indemnify and hold harmless each member
of the Board of Directors and each employee of the Company who is a fiduciary
under this Plan against any and all expenses and liabilities arising out of his
or her administrative functions or fiduciary responsibilities relating to this
Plan, including any expenses and liabilities that are caused by or result from
an act or omission constituting the negligence of such individual in the
performance of such functions or responsibilities, but excluding expenses and
liabilities arising out of such individual’s own gross negligence or willful
misconduct. Expenses against which such person shall be indemnified under this
Plan include, without limitation, the amounts of any settlement or judgment,
costs, counsel fees and related charges reasonably incurred in connection with a
claim asserted or a proceeding brought or settlement thereof.

 

12. Claims Procedures. The Board of Directors shall determine the rights of any
Eligible Employee to any Severance Benefits under this Plan. Any such individual
who believes that he or she has been denied Severance Benefits under this Plan
to which he or she believes that he or she is entitled may file a claim in
writing with the Board of Directors. The Board of Directors shall, within 90
days after receipt of a claim, either allow or deny the claim in writing. If a
claimant does not receive written notice of the decision on his or her claim
within 90 days, the claim shall be deemed to have been denied in full.

Within 60 days after any denial of a claim, the denial may be appealed by filing
a written request with the Board of Directors, which shall conduct a review and
file a written decision thereof. Written decisions shall be written in a manner
intended to be understood by the claimant and shall state the specific reasons
for the decision and the Plan provisions on which the decision was based and
shall, to the extent permitted by law, be binding on all interested persons.

 

13. Amendment or Termination of this Plan. Notwithstanding any communication,
either oral or written, made by the Company, the Board of Directors or any other
individual or entity, the Company reserves the absolute and unconditional right
to amend this Plan from time to time, including without limitation, the right to
reduce or eliminate benefits provided pursuant to the provisions of this Plan as
such provisions currently exist or may hereafter exist. All amendments to this
Plan shall be (a) authorized or ratified by the Board of Directors and (b) in
writing and signed by an authorized officer of the Company. Any oral statements
or representations made by the Company, the Board of Directors or any other
individual or entity that alter, modify, amend or are inconsistent with the
written terms of this Plan shall be invalid and unenforceable and may not be
relied upon by any person.

Notwithstanding any communication, either oral or written, made by the Company,
the Board of Directors or any other individual or entity, the Company reserves
the absolute and unconditional right to terminate this Plan, in whole or in part
with respect to some or all Eligible Employees. Any such termination of this
Plan shall be authorized or ratified by the Board of Directors.

In the event of an amendment to or termination of this Plan as provided under
this Section, no affected Eligible Employee shall have any further rights under
this Plan, and

 

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the Company shall have no further obligations under this Plan, except as
otherwise specifically provided under this Plan; provided, however, that no
amendment or termination shall be made that would reduce any accrued benefits
arising from incurred but unpaid claims of Eligible Employees existing prior to
the effective date of such amendment or termination and no amendment or
termination shall be made on or prior to the first anniversary of the effective
date of the Change of Control without the consent of affected Eligible
Employees.

 

14. Miscellaneous. Neither this Plan nor any provisions contained in this Plan
shall be construed to be a contract between the Company and an Eligible
Employee, or to be consideration for, or an inducement of, the employment of any
Eligible Employee by the Company. Nothing contained in this Plan shall grant any
Eligible Employee the right to be retained in the service of the Company or
limit in any way the right of the Company to discharge or to terminate the
service of any Eligible Employee at any time, without regard to the effect such
discharge or termination may have on any rights under this Plan.

Except as the Board of Directors may otherwise permit by rule or regulation, no
interest in or benefit payable under this Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any action by an Eligible Employee to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge the same shall be void and of no
effect, nor, subject to Section 8, shall any interest in or benefit payable
under this Plan be in any way subject to any legal or equitable process,
including without limitation, garnishment, attachment, levy or seizure, or to
the lien of any person. This provision shall be construed to provide each
Eligible Employee, or other person claiming any interest or benefit in this Plan
through an Eligible Employee, with the maximum protection permitted by law
against alienation, encumbrance and any legal and equitable process, including
without limitation, attachment, garnishment, levy, seizure or other lien,
afforded his or her interest in this Plan (and the benefits provided under this
Plan) by law and any applicable regulations. Notwithstanding the preceding
sentence, however, the Company may withhold from any amounts payable under this
Plan such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

Notwithstanding any provision of this Plan to the contrary, if at the time of
the termination of employment of an Eligible Employee, such Eligible Employee is
a “specified employee” as defined in Section 409A of the U.S. Internal Revenue
Code of 1986, as amended (the “Code”), no payment or benefit will be provided
under this Plan until the earliest of (a) the date which is 6 months after such
cessation of employment for any reason, other than death or “disability” (as
such term is used in Section 409A(a)(2)(C) of the Code, (b) the date of such
Eligible Employee’s death or “disability” (as such term is used in
Section 409A(2)(C) of the Code), or (c) the effective date of a Change in
Control. The provisions of this section shall only apply to the extent required
to avoid such Eligible Employee’s incurrence of any additional tax or interest
under Section 409A. In addition, if any provision of this Plan would cause such
Eligible Employee to incur any additional tax or interest under Section 409A,
the Company may reform such provision without violating the provisions of
Section 409A.

 

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In case any provision of this Plan is held to be illegal, invalid or
unenforceable for any reason, such illegal, invalid or unenforceable provision
shall not affect the remaining provisions of this Plan, but this Plan shall be
construed and enforced as if illegal, invalid or unenforceable provision had not
been included in this Plan.

Except to the extent that ERISA or any other federal law applies to this Plan
and preempts state law, this Plan shall be construed, enforced and administered
according to the laws of the state of Pennsylvania.

 

Commonwealth Telephone Enterprises, Inc. By:  

/s/ Michael J. Mahoney

  Michael J. Mahoney Title:   President and Chief Executive Officer

 

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Exhibit 1

 

Eligible Employee

  

Title

Eileen Odum    EVP and COO Donald Cawley    EVP and CAO Kevin O’Hare    Group VP
– Strategic Dev. Raymond Ostroski    SVP and General Counsel Rita Brown    SVP
and General Mgr, CTSI DG Gulati    SVP and General Mgr, CT Todd Hanson    SVP,
Network Services Steve Letts    VP and General Mgr, CC Scott Burnside    SVP –
Regulatory Joe Laffey    VP – Regulatory Darryl Varnado    VP – Human Resources
David Weselcouch    SVP – Investor Relations Tom M. Davis    VP – Information
Technology Christine Feeley    VP – Marketing Chris McCorkendale    VP –
Operations Strategy and Development

 

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