Exhibit 10.1

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and
entered into as of April 1, 2008, by and between FAIRPOINT COMMUNICATIONS, INC.,
a Delaware corporation (together with its successors and assigns permitted
hereunder, the “Company”), and EUGENE B. JOHNSON (the “Executive”).

 

RECITALS:

 

WHEREAS, the Executive is currently employed by the Company as its Chief
Executive Officer pursuant to an Employment Agreement dated as of December 31,
2002, as amended on March 17, 2006 to extend the term through December 31, 2008
(as so amended, the “Existing Employment Agreement”);

 

WHEREAS, immediately prior to the execution of this Agreement, the Company
consummated a series of transactions resulting in the Company’s acquisition of
certain wireline telecommunications businesses formerly conducted by Verizon
Communications Inc. in Maine, New Hampshire and Vermont; and

 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that
it is desirable and in the best interests of the Company to amend and restate
the Existing Employment Agreement to insure that the Company will continue to
have the exclusive benefit of the Executive’s knowledge and experience during
the integration of the acquired businesses with the Company’s existing
operations;

 

NOW, THEREFORE, in consideration of the agreements and covenants set forth
herein and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
that the Existing Employment Agreement is amended and restated in its entirety
to read as follows:

 

1.             Employment Period.  The Company hereby agrees to continue to
employ the Executive, and the Executive hereby agrees to continue his employment
with the Company for a period commencing on the date hereof and ending on
December 31, 2009 unless terminated earlier in accordance with Section 3 (the
“Employment Period”).  In the event the Executive continues to perform services
for the Company as an employee after the Employment Period for any reason, such
services shall constitute employment for an unspecified term, terminable at
will, with or without cause or reason, with or without advance notice, and with
or without pay in lieu of advance notice.

 

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2.             Terms of Employment.

 

(a)           Position and Duties.

 

(i)            During the Employment Period through the date the Board appoints
a successor to the Executive (the “Transition Date”), the Executive shall serve
as the Chairman and/or Chief Executive Officer of the Company and shall perform
and have the normal duties and responsibilities associated with such positions. 
For the remainder of the Employment Period following the Transition Date, the
Executive shall perform and have such duties and responsibilities as shall be
assigned to him from time to time by the Board.

 

(ii)           During the Employment Period (excluding any periods of vacation
and other leave to which the Executive is entitled), the Executive agrees to
devote substantially all his business time to the business and affairs of the
Company and to use the Executive’s best efforts to perform faithfully,
effectively and efficiently his duties and responsibilities.

 

(iii)          Notwithstanding Section 2(a)(ii) hereof, it shall not be a
violation of this Agreement for the Executive to (1) serve on industry, trade,
civic, educational or charitable boards or committees, (2) deliver lectures or
fulfill speaking engagements, or (3) manage personal investments, so long as
none of such activities interfere with the performance of the Executive’s duties
and responsibilities as an employee of the Company.

 

(iv)          Executive agrees to observe and comply with the Company’s
rules and policies as adopted by the Company from time to time.

 

(b)           Compensation.

 

(i)            Base Salary.  During the Employment Period, the Executive shall
receive base salary at an annual rate of $600,000 (the “Annual Base Salary”),
which shall be paid in substantially equal installments in accordance with the
customary payroll practices of the Company but no less frequently than monthly.

 

(ii)           Bonus.  Executive shall be eligible for a bonus each year (up to
200% of Executive’s Annual Base Salary), which bonus shall be paid if fully
earned, all as provided in an objective bonus arrangement set and documented by
the Compensation Committee of the Board each year.

 

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(iii)          Incentive, Savings and Retirement Plans.  During the term of the
Executive’s employment, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other senior executives of the Company, as amended from
time to time.

 

(iv)          Performance Unit Award.  Concurrently with the execution of this
Agreement, the Company shall award the Executive a target award of 245,000
performance units under the 2008 FairPoint Long Term Incentive Plan, the terms
of which award shall be set forth in a separate award agreement between the
Company and the Executive.  The actual number of performance units that shall be
earned by the Executive and paid in shares of the Company’s common stock shall
be determined by the terms of the award agreement and the 2008 FairPoint Long
Term Incentive Plan.

 

The Executive acknowledges that the performance unit award shall be subject to
approval of the 2008 FairPoint Long Term Incentive Plan by the stockholders of
the Company at the 2008 annual stockholders meeting, provided that in the event
such approval is not obtained, the Company shall pay to the Executive in cash
the value of the performance units that would have been earned by the Executive
and paid in shares of the Company’s common stock.

 

(v)           Welfare Benefit Plans.  During the Employment Period, the
Executive and the Executive’s eligible dependents shall be eligible for
participation in and shall receive all benefits under the welfare benefit plans,
practices, policies and programs provided by the Company, including medical,
prescription, dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs, as amended
from time to time, to the extent applicable generally to other employees of the
Company.

 

(vi)          Perquisites.  During the Employment Period, the Executive shall be
entitled to receive, in addition to the benefits described above, such
perquisites and fringe benefits appertaining to his position in accordance with
any policies, practices and procedures established by the Board, as amended from
time to time.

 

(vii)         Expenses.  During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable employment expenses
incurred by the Executive in accordance with the Company’s policies, practices
and procedures, as amended from time to time.

 

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3.             Termination of Employment and Employment Period.

 

(a)           Death or Disability.  The Executive’s employment and the
Employment Period shall terminate automatically upon the Executive’s death.  If
a Disability (as defined below) of the Executive occurs, the Company may give to
the Executive written notice in accordance with Section 8(e) hereof of its
intention to terminate the Executive’s employment and the Employment Period.  In
such event, the Executive’s employment with the Company and the Employment
Period shall terminate effective on the ninetieth (90th) day after receipt of
such notice by the Executive (the “Disability Effective Date”), if, within
ninety (90) days after such receipt, the Executive shall not have returned to
perform, with reasonable accommodation, the essential functions of his
position.  For purposes of this Agreement, at any time the Company or any of its
affiliates sponsors a long-term disability plan for the Company’s employees,
“Disability” shall mean disability as defined in such long-term disability
plan.  The determination of whether the Executive has a Disability shall be made
by the person or persons required to render disability determinations under the
long-term disability plan.  At any time the Company does not sponsor a long-term
disability plan for its employees, “Disability” shall mean the Executive’s
inability to perform, with reasonable accommodation, the essential functions of
his position hereunder for a period of 180 days in any 360 consecutive day
period due to mental or physical incapacity, as determined by a physician
selected by the Company or its insurers.

 

(b)           Cause or Without Cause.  The Company may terminate the Executive’s
employment and the Employment Period for Cause or without Cause.  For purposes
of this Agreement, “Cause” shall mean (a) misappropriating any funds or any
material property of the Company, (b) obtaining or attempting to obtain any
material personal profit from any transaction in which the Executive has an
interest which is adverse to the interest of the Company unless the Company
shall first give its consent to such transaction, (c) (i) the willful taking of
actions which directly impair the Executive’s ability to perform the duties
required by the terms of his employment, or (ii) 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, (d) 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 (e) any material intentional
failure to comply with applicable laws or governmental regulations within the
scope of employment as defined by this Agreement.  For purposes of this
Agreement, “without Cause” shall mean a termination by the Company of the
Executive’s employment and the Employment Period for any reason other than a
termination based upon Cause, death or Disability.

 

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(c)           Notice of Termination.  Any termination by the Company for Cause
or without Cause shall be communicated by a Notice of Termination to the
Executive given in accordance with Section 8(e).  For purposes of this
Agreement, the term “Notice of Termination” means a written notice which
(i) indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the Date of Termination.  The failure by the Company to set forth in
the Notice of Termination any fact or circumstance which contributes to a
showing of Cause shall not waive any right of the Company hereunder or preclude
the Company from asserting such fact or circumstance in enforcing the Company’s
rights hereunder.

 

(d)           Date of Termination.  The term “Date of Termination” means (i) if
the Executive’s employment is terminated by the Company for Cause, the date of
receipt of the Notice of Termination or any later date specified therein
pursuant to Section 3(c), as the case may be, (ii) if the Executive’s employment
is terminated by the Executive, thirty (30) days from the date of receipt of the
Notice of Termination, (iii) if the Executive’s employment is terminated by the
Company other than for Cause, the date on which the Company notifies the
Executive of such termination, and (iv) if the Executive’s employment is
terminated by reason of death or Disability, the date of death of the Executive
or the Disability, as the case may be.

 

4.             Obligations of the Company upon Termination.

 

(a)           If the Company shall terminate the Executive’s employment for
Cause or the Executive shall voluntarily resign, the Executive shall not be
entitled to any future benefits pursuant to this Agreement.

 

(b)           Upon the earlier of (1) expiration of the Employment Period, or
(2) termination of the Executive’s employment without Cause, the Executive shall
be entitled to receive from the Company the following, effective as of the date
of occurrence of such event (the “Termination Event”), subject to the following
being suspended for a breach of the Executive’s covenant not to compete set
forth in Section 6 hereof:

 

(i)            Continued medical coverage for Executive and Executive’s spouse,
at Executive’s election, for the life of each under the Company’s then existing
health insurance plan upon continued timely payment by Executive or Executive’s
spouse of the then applicable employee and spouse premium.  This coverage shall
continue to be available to Executive’s spouse upon the death of Executive. 
Following the time each of which Executive or Executive’s spouse is eligible for
Medicare,

 

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ongoing retiree health coverage shall be calculated on the assumption that each
of Executive or Executive’s spouse had enrolled in all available parts of
Medicare.

 

(ii)           Extension of the Executive’s right to exercise all of his vested
options under the Company’s 2000 Employee Stock Option Plan until the earlier of
(A) March 12, 2012, or (B) a Sale of the Company (as defined in the Company’s
1998 Stock Incentive Plan).

 

(iii)          Continued vesting of all restricted stock granted through the
Termination Event under the Company’s 2005 Stock Incentive Plan as provided in
the restricted stock agreement applicable to each grant of such restricted
stock.  The Executive acknowledges that this Section 4(b)(iii) shall not apply
to any of the performance units awarded to the Executive pursuant to
Section 2(b)(iv).

 

5.             Protection of Confidential Information.  Executive acknowledges
that by reason of his position with the Company, he has had and will continue to
have complete access to and knowledge of the Company’s Confidential
Information.  The Company’s “Confidential Information”, as used in this
Agreement, means any form of data or information in the possession or control of
the Company which relates to its business affairs, including but not limited to
trade secrets, proprietary information or other information not in the public
domain.  Confidential Information includes but is not limited to product or
service concepts and designs, marketing insights, technology related to the
Company’s business, business methods and strategies, all financial information
and plans of the Company, acquisition targets and potential targets, strategic
business plans, pricing terms and methods, growth, expansion or acquisition
plans, financing or venture capital sources and plans, and all similar
information that the Company holds in confidence or that competitors of the
Company would be desirous of obtaining.  Executive agrees to use the
Confidential Information only for the purpose of or in connection with the
business of the Company, and to keep the Company’s Confidential Information in
strictest confidence and secrecy and not to use or disclose Confidential
Information to any person or entity except for purposes of conducting the
business of the Company, both during the term of Executive’s employment with the
Company (both during the Employment Period and any continuation period
thereafter) and thereafter for a period of five (5) years.  Executive will
return all Confidential Information to the Company immediately upon termination
of his employment with the Company.

 

6.             Non-Competition.

 

(a)           Non-Competition Agreement.  Executive agrees that, without the
prior written consent of the Company’s Board of Directors, during the term of
his employment with the Company, including any continued employment after the
Employment Period, and for a period of one (1) year thereafter, he will not
“Compete” with the Company in the “Prohibited Territory.”

 

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(b)           Definition of “Compete”.  For purposes of this Section 6, the term
“Compete” means to be employed or engaged in any capacity, whether as an
employee, as a consultant, or by self-employment, individually or on behalf of
others, or to have any ownership interest in, any business or entity engaged in
business in the “Communications Industry”; provided, however, that the purchase
and ownership of capital stock of less than two percent (2%) in a publicly
traded entity within the Communications Industry shall not constitute
competing.  As used herein, the term “Communications Industry” shall have its
broadest definition, as generally understood by the investing public, and
includes, but is not necessarily limited to the ownership, acquisition or
operation of, investment in, or the provision of services or technology related
to Rural Local Exchange Carriers (RLECs), Incumbent Local Exchange Carriers
(ILECs), Competitive Local Exchange Carriers (CLECs), Internet Service Providers
(ISPs), cable television services, retail or wholesale distribution of long
distance services, Internet portal services, web casting and web hosting,
dedicated service lines (DSL), broadband, voice or video conferencing, voice
mail services, voice, data or video transmissions, cellular or wireless
telephone, data, paging or Internet access services, prepaid calling cards and
other prepaid communication services, electronic mail services, directory and
operator assistance services, facsimile and data services, and other similar and
related services and products.

 

(c)           Definition of “Prohibited Territory”.  For purposes of this
Section 6, the term “Prohibited Territory” shall mean and include each of the
following defined areas: (i) the United States, and (ii) any State within the
United States where the Company is engaged in business in the Communications
Industry.  For purposes of this Section 6, a person or entity is considered to
be Competing in the Prohibited Territory if it is engaged in offering or
providing products or services related to the Communications Industry within the
Prohibited Territory, regardless of the geographic location of the Competing
individual or entity.

 

(d)           Acknowledgments by Executive.  Executive acknowledges that the
terms of this Section 6, including the definitions of Compete, Communications
Industry and Prohibited Territory, and the three (3) year post employment term
are reasonable, and are no broader than necessary to protect the Company’s
legitimate business interests.  Executive specifically acknowledges and agrees
that (i) he has received adequate and valuable consideration for entering into
this noncompetition agreement, (ii) the Company is currently engaged in business
in the Communications Industry, and is either actively engaged in each aspect
thereof set out in the definition set forth in Section 6(b) above, or it
reasonably anticipates that it will be engaged in each such aspect or activity
competitive with it, during the Employment Period, and that part of Executive’s
responsibilities as Chief Executive Officer of the Company and as Chairman of
the Board of Directors of the Company are and will continue to be to explore and
expand the Company into each aspect of the Communications Industry where it can

 

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profitably do so, (iii) the nature of the Communications Industry is such that
the range of business and competition is not necessarily contained within easily
definable geographic territories, and that, in many respects, otherwise
unrelated aspects of the Communications Industry are competitive with each other
(for example, cable television providers, telephone companies and ISPs all
compete with each other to provide Internet access and services to consumers and
businesses), (iv) the business of investing in and operating RLECs, ILECs, CLECs
and/or ISPs is highly competitive, and (v) by reason of his responsibilities as
Chief Executive Officer of the Company and/or as Chairman of the Board of
Directors of the Company, he will be intimately familiar with and engaged in
developing the Company’s business, financial and growth plans and other
Confidential Information, and that if he engages in any of the activity
prohibited by this Section 6, it is inevitable that he would use or disclose
Confidential Information of the Company.

 

(e)           Governing Law; Enforcement; Survival.  Notwithstanding the
provisions of Section 8(c), the provisions of Section 5 and the provisions of
this Section 6 shall be construed and enforced in accordance with the laws of
the State of North Carolina, without regard to principles of conflict of laws. 
Executive agrees that the Company would suffer irreparable harm in the event of
any violation of Sections 5 or 6 hereof, and the Company is therefore entitled
to injunctive relief to enforce the provisions thereof.  The provisions of
Sections 5 and 6 shall survive the termination of this Agreement in accordance
with their terms, and shall inure to the benefit of the Company and its
affiliates, and each of their successors and assigns.

 

(f)            Severability.  In the event that any provision contained in this
Section 6 is held to be invalid, prohibited or unenforceable because of the
scope, duration or area of applicability, such provision shall be ineffective
only to the extent of such invalidity, prohibition or unenforceability. 
Executive and the Company agree that it is each of their intent and desire that
the provisions of Section 6 be enforced to the absolute greatest extent
permissible by law, and they each therefore agree and request that, to the
extent a court determines these provisions or any part thereof are unenforceable
to any extent, such court may and should limit the enforcement to discrete
geographic territories set forth in Section 6(c), or to specific states in which
the Company is doing business, or to specific aspects of the Communications
Industry as listed in Section 6(b), as the court deems necessary to the
enforceability of the letter and intent of this Agreement.

 

7.             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

 

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affected by the illegal, invalid or unenforceable provision or by its severance
from this Agreement.  This Section 7 is intentionally in addition to but not in
replacement of Section 6(f) above.

 

8.             Miscellaneous.

 

(a)           Counterparts.  This Agreement may be executed in several
counterparts each of which is an original.  This Agreement and any counterpart
so executed shall be deemed to be one and the same instrument.  It shall not be
necessary in making proof of this Agreement or any counterpart hereof to produce
or account for any of the other counterparts.

 

(b)           Contents of Agreement; Parties-In-Interest.  This Agreement sets
forth the entire understanding of the parties regarding the subject matter
hereof.  Any previous agreements or understandings between the parties regarding
the subject matter hereof are merged into and superseded by this Agreement.  All
representations, warranties, covenants, terms, conditions and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective heirs, legal representatives, successors and permitted assigns
of the Company and the Executive.  Neither this Agreement nor any rights,
interests or obligations hereunder may be assigned by any party without the
prior written consent of the other party hereto.

 

(c)           NEW YORK LAW TO GOVERN.  EXCEPT AS PROVIDED IN SECTION 6(e), THIS
AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.

 

(d)           Section Headings.  The section headings herein have been inserted
for convenience of reference only and shall in no way modify or restrict any of
the terms or provisions hereof.

 

(e)           Notices.  All notices, requests, demands and other communications
which are required or permitted hereunder shall be sufficient if given in
writing and delivered personally or by registered or certified mail, postage
prepaid, or by facsimile transmission (with a copy simultaneously sent by
registered or certified mail, postage prepaid), as follows (or to such other
address as shall be set forth in a notice given in the same manner):

 

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If to the Company, to:

 

FairPoint Communications, Inc.

521 East Morehead Street, Suite 250

Charlotte, North Carolina 28202

Facsimile:       (704) 344-1594

Attn:     Shirley J. Linn, Esq.

 

If to the Executive, to:

 

Eugene B.  Johnson

Most recent address on the Company’s

employment records for the Executive

 

(f)            Modification and Waiver.  Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof, and this Agreement may be modified or amended at any time
by the Company and the Executive.  No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by each of the
parties hereto.  No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof nor shall such
waiver constitute a continuing waiver.

 

(g)           Third Party Beneficiaries.  Except as otherwise expressly set
forth herein, no individual or entity shall be a third-party beneficiary of the
representations, warranties, covenants and agreements made by any party hereto.

 

(h)           Termination of Prior Arrangements.  The parties hereto acknowledge
and agree that this Agreement supersedes and terminates all existing employment
and severance agreements or arrangements between the Company or any of its
affiliates and the Executive, including but not limited to the Existing
Employment Agreement.

 

(i)            Executive’s Legal Fees.  The reasonable costs and expenses for
legal services incurred by Executive in the negotiation and execution of this
Agreement shall be paid by the Company.

 

(j)            Compliance with Code Section 409A.  Notwithstanding anything in
this Agreement to the contrary, if any amount or benefit that the Company
determines would constitute non-exempt “deferred compensation” for purposes of
Section 409A of the Internal Revenue Code of 1986 (the “Code”) would otherwise
be payable or distributable under this Agreement by reason of the Executive’s
separation from service, then to the extent necessary to comply with Code
Section 409A:  (i) if the payment or distribution is payable in a lump sum,

 

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the Executive’s right to receive payment or distribution of such non-exempt
deferred compensation will be delayed until the earlier of the Executive’s death
or the first day of the seventh month following the Executive’s separation from
service, and (ii) if the payment, distribution or benefit is payable or provided
over time, the amount of such non-exempt deferred compensation or benefit that
would otherwise be payable or provided during the six-month period immediately
following the Executive’s separation from service will be accumulated, and the
Executive’s right to receive payment or distribution of such accumulated amount
or benefit will be delayed until the earlier of the Executive’s death or the
first day of the seventh month following the Executive’s separation from service
and paid or provided on the earlier of such dates, without interest, and the
normal payment or distribution schedule for any remaining payments,
distributions or benefits will commence.  For purposes of this Agreement, the
term “separation from service” shall be defined as provided in Code Section 409A
and applicable regulations.

 

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IN WITNESS WHEREOF, the parties hereto have executed or have caused this
Agreement to be duly executed as of the date first above written.

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

 

/s/ Eugene B. Johnson

 

 

Eugene B. Johnson

 

 

 

 

 

FAIRPOINT COMMUNICATIONS, INC.

 

 

 

 

 

 

 

 

By:

/s/ John P. Crowley

 

 

Name:

John P. Crowley

 

 

Title:

Executive Vice President and
Chief Financial Officer

 

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