Exhibit 10.8


 


EMPLOYMENT  AGREEMENT


 


THIS
EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into
as of June 11, 2009, by and between FAIRPOINT
COMMUNICATIONS, INC., a Delaware corporation (together with its
successors and assigns permitted hereunder, the “Company”), and DAVID L. HAUSER (the “Executive”).


 


RECITALS:


 


WHEREAS, the Company desires to employ the Executive as the Chairman
and Chief Executive Officer of the Company; 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 enter into an Employment
Agreement with the Executive to insure that the Company will have the exclusive
benefit of the Executive’s knowledge and experience; and


 


WHEREAS, the Executive is willing to commit himself to serve the
Company in the capacities hereinafter stated, subject to the terms and
conditions herein provided; and


 


WHEREAS, this Agreement
reflects the business judgment of the Company and the Board that Executive’s
services and leadership are fully necessary to restoring the Company’s
profitability, growth and efficiency, and that the compensation, including the
inducement awards set forth herein, is fair, reasonable and necessary to induce
Executive to assume this role; and


 


WHEREAS, it is the intention
of the Company and the Board that the value of the compensation to Executive,
as set forth herein, including all inducement awards, be fully preserved,
including in the event of the restructuring or recapitalization of the Company
in any manner.


 


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 covenant and agree as
follows:


 


1.                                      Employment Period.  The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to accept employment with the
Company for a period commencing on July 1, 2009, or such later date (but
not later than August 1, 2009) as shall be mutually agreed upon by the
Company and the Executive (the “Employment Date”) and ending immediately
prior to the third anniversary of the Employment Date (the “Employment
Period”), unless terminated earlier in accordance with Section 3.  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, unless otherwise
mutually agreed in writing.


 


2.                                      Terms of Employment.


 


(a)                                  Position and Duties.


 


(i)                                     During the Employment
Period, the Executive shall serve as the Chairman and Chief Executive Officer
of the Company and shall perform and have the normal duties and
responsibilities associated with such positions.


 


(ii)                                  During the Employment Period
(excluding any periods of vacation and other leave to which the Executive is
entitled), the Executive shall devote substantially all his business time to
the business and affairs of the Company and shall use his 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 (A) serve
on industry, trade, civic, educational or


 

















 


charitable boards or
committees, (B) deliver lectures or fulfill speaking engagements, (C) manage
personal investments, (D) serve on the board of directors of one
additional public company selected by the Executive, or (E) serve on the
board of directors of other public companies, as approved in advance by the
Board, so long as none of such activities materially interferes with the
performance of the Executive’s duties and responsibilities as an employee of
the Company.


 


(iv)                              The Executive shall observe
and comply with the Company’s Code of Business Conduct and all other rules and
policies 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 $800,000 (the “Annual Base
Salary”), which shall be paid in substantially equal monthly or more
frequent installments in accordance with the customary payroll practices of the
Company.  The Executive’s Annual Base
Salary shall be reviewed for an increase within 60 days after the Company’s
fiscal year ending December 31, 2010 and annually thereafter.


 


(ii)                                  Annual Incentives.  The Executive shall be eligible to
participate in the FairPoint Communications, Inc. 2008 Annual Incentive
Plan as described in this Section 2(b)(ii).  For the period beginning on the Employment
Date and ending December 31, 2010, the Compensation Committee and the
Board, in discussion with the Executive, will develop a set of goals to be
accomplished within such period and the Executive shall be eligible to earn a
bonus (up to 200% of the total base salary paid to the Executive for such period)
which shall be paid, to the extent earned, within 2-1⁄2 months after the
Company’s fiscal year ending December 31, 2010.  Beginning January 1, 2011, Executive
shall be eligible to earn a bonus each year (up to 200% of the Executive’s
Annual Base Salary), which bonus shall be paid, to the extent earned, as
provided in an objective bonus arrangement set and documented by the
Compensation Committee of the Board each year. 
In the event the Executive resigns, retires or his employment terminates
for any reason other than Cause during a performance period under the 2008
Annual Incentive Plan after the third anniversary of the Employment Date, the
Executive shall be entitled to receive a pro-rata annual incentive for such
performance period and such pro-rata incentive shall be payable at the end of
such performance period.


 


(iii)                               Long Term Incentives.  The Executive shall be eligible to
participate in the FairPoint Communications, Inc. 2008 Long Term Incentive
Plan and receive awards of performance units for performance periods beginning
on or after January 1, 2010 on the same basis as other senior executives
of the Company.  The Executive’s
performance unit award for each performance period shall be equal to (A) 80%
of the Executive’s Annual Base Salary for threshold performance, (B) 200%
of the Executive’s Annual Base Salary for target performance, and (C) 400%
of the Executive’s Annual Base Salary for maximum performance.  In the event the Executive resigns, retires
or his employment terminates for any reason other than Cause during a
performance period under the 2008 Long Term Incentive Plan after the third
anniversary of the Employment Date, the Executive shall be entitled to receive
a pro-rata long term incentive for such performance period and such pro-rata incentive
shall be payable at the end of such performance period.


 


(iv)                              Employment Inducement Equity
Awards.  As additional consideration
for the Executive to enter into this Agreement, the Company shall grant to the
Executive (A) options to purchase 1,600,000 shares of the Company’s common
stock (the


 


2

















 


“Options”), (B) $4,000,000
in restricted shares of the Company’s common stock (the “Restricted Stock”)
and (C) performance units for two performance measurement periods
beginning on the Employment Date:  one
ending December 31, 2010 and one ending December 31, 2011.  The Options shall be granted on the
Employment Date and the exercise price of the Options shall be equal to the
average of the closing prices of the Company’s common stock during the thirty
calendar days immediately preceding the Employment Date.  The Options shall vest and become exercisable
in three equal annual installments commencing one year from the Employment
Date, provided the Executive’s employment shall continue through each such
date.  The Restricted Stock shall be
awarded in three installments as follows: 
(A) $500,000 on the Employment Date, (B) $1,750,000 on the
first anniversary of the Employment Date and (C) $1,750,000 on the second anniversary
of the Employment Date.  The value of the
Restricted Stock for purposes of determining the number of shares to be awarded
shall be equal to the average closing prices of the Company’s common stock
during the thirty calendar days immediately preceding each award date.  The Restricted Stock shall become fully
vested and released to the Executive immediately prior to the third anniversary
of the Employment Date, provided the Executive’s employment with the Company
shall continue through such date.  The
performance units shall be earned by the Executive and paid in shares of the
Company’s common stock based on the performance of the Company during the
performance periods.  The Executive’s
performance unit award for each of the performance periods shall be equal to (A) 80%
of the Executive’s Annual Base Salary for threshold performance, (B) 200%
of the Executive’s Annual Base Salary for target performance, and (C) 400%
of the Executive’s Annual Base Salary for maximum performance.  The other terms and conditions of the
Options, the Restricted Stock and the performance units shall be set forth in
separate award agreements entered into between the Company and the Executive.


 


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


 


(vi)                              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, group life, accidental death and travel accident insurance
plans and programs, as amended from time to time, on the terms applicable
generally to other employees or other senior executives of the Company.  If a Disability (as defined in Section 4)
of the Executive occurs during the first year of the Employment Period, the
Company shall pay to the Executive the cash equivalent of the long term
disability benefits the Executive would have received under the Company’s long
term disability plan if the Executive had been covered by such plan.  Upon the Executive’s retirement, resignation
or termination of employment with the Company after the third anniversary of
the Employment Date, the Executive shall be permitted to continue medical
coverage for the Executive and the Executive’s spouse, at the Executive’s
election and at the Executive’s sole cost and expense, until age 65 under the
Company’s then existing group medical plan.


 


(vii)                           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.


 


3

















 


(viii)                        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 in effect and as amended from time to time.  The Company shall also pay the reasonable
costs and expenses for legal services incurred by the Executive in the
negotiation and execution of this Agreement.


 


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 9(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
90th day after receipt of such notice by the Executive (the “Disability
Effective Date”), if, within 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 if the Executive
is a participant in such 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.  Prior to furnishing notice of termination for
Disability, the Company shall exercise its best efforts to provide the
Executive reasonable accommodation for any such impairment, as required by the
Americans With Disabilities Act, and shall, if requested by the Executive,
exercise its best efforts to assist the Executive in obtaining benefits under
any short-term or long-term disability plan sponsored by the Company and/or its
insurers.


 


(b)                                 Termination with 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 the Executive’s (i) knowing and willful misappropriation of any
funds or any material property of the Company, (ii) 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, (iii) willfully
and deliberately taking any action that is committed in bad faith, without
reasonable belief that such action is in the best interest of the Company,
which act is materially detrimental to the Company’s goodwill or materially
damaging to the Company’s relationships with its customers, suppliers or
employees, (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 that is detrimental to the
Company or its good will, or (v) intentional and continued failure (for a
period of at least 20 days) to comply with any material term of this Agreement,
applicable laws or governmental regulations within the scope of employment as
defined by this Agreement, which failure causes material and demonstrable
injury to the Company, after a demand for substantial performance is delivered
to the Executive by the Board that specifically identifies the manner in which
the Board believes the Executive has failed to so comply.  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 or the Executive’s death or Disability.


 


4

















 


(c)                                  Resignation with or without
Good Reason.  The
Executive may resign from the Executive’s employment and terminate the
Employment Period for Good Reason or without Good Reason.  For purposes of this Agreement, “Good
Reason” shall mean the Executive’s resignation from employment within 45
days after the occurrence of any of the following without the Executive’s
express written consent:  (i) the
Executive’s responsibilities or duties as Chairman and Chief Executive Officer  (and ignoring for such purpose any temporary
responsibilities) are significantly or materially reduced; (ii) a
reduction in the Executive’s overall compensation opportunities (as contrasted
with overall compensation actually paid or awarded); (iii) the material
diminishment or elimination of the Executive’s rights under this Agreement; (iv) the
relocation of the headquarters of the Company more than 50 miles from the
location of the Company’s headquarters on the Employment Date; or (v) any
material breach by the Company of this Agreement.  Executive may resign from employment for Good
Reason so long as Executive tenders his written resignation to the Board within
45 days after the occurrence of the event that forms the basis for the
Executive’s resignation for Good Reason, and as long as the Executive’s
resignation describes in reasonable detail the Executive’s objection to any of
the matters described in this Section 3(c) and provides the Company
an opportunity to cure such action or breach within 14 calendar days after
receiving the Executive’s written resignation.


 


(d)                                 Notice of Termination.  Any termination by the Company for Cause or
without Cause or by the Executive for Good Reason or without Good Reason shall
be communicated by a Notice of Termination to the Executive or the Company, as
the case may be, given in accordance with Section 9(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.


 


(e)                                  Date of Termination.  The term “Date of Termination” means (i) if
the Executive’s employment is terminated by the Company for Cause or without
Cause, the date of receipt of the Notice of Termination or any later date
specified therein pursuant to Section 3(d), (ii) if the Executive’s
employment is terminated by the Executive, 30 days from the date of receipt of
the Notice of Termination, and (iii) if the Executive’s employment is
terminated by reason of death or Disability, the date of death of the Executive
or the Disability Effective Date, as the case may be.


 


4.                                      Obligations of the Company upon Termination.


 


(a)                                  Events That Trigger
Severance Benefits.  The
Executive will receive severance benefits as described in Section 4(c) of
this Agreement (“Severance Benefits”) if (i) the Company terminates
the Executive’s employment without Cause or (ii) the Executive resigns his
employment for Good Reason.


 


(b)                                 Events That Do Not Trigger
Severance Benefits.  The
Executive shall not be entitled to receive Severance Benefits as described in Section 4(c) of
this Agreement if (i) the Company terminates the Executive’s employment
for Cause, (ii) the Executive’s employment terminates on account of the
Executive’s death or Disability, or (iii) the Executive resigns his
employment without Good Reason.


 


(c)                                  Severance Benefits.  Subject to the provisions of Sections 7 and 9(h) of
this Agreement, if the Executive becomes entitled to Severance Benefits as
provided in Section 4(a) of this Agreement, the Company will provide
the Executive the following:


 


5

















 


(i)                                     any unpaid Annual Base
Salary as of the Date of Termination, expense reimbursements, accrued benefits,
and any earned but unpaid bonus or incentive compensation for the fiscal year
before the year of the Date 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
equal to 2 times the sum of (A) the highest Annual Base Salary rate in
effect during the 12 month period immediately preceding the Date of
Termination, (B) the Executive’s target annual incentive award and (C) the
value of the long term incentive award the Executive would have been entitled
to receive for the performance period ending as of the next December 31
after the Date of Termination measured by the Company’s performance through the
Date of Termination;


 


(iii)                               accelerated vesting of the
Options; and


 


(iv)                              accelerated award of all
shares of Restricted Stock that have not been awarded pursuant to Section 2(b)(iv) of
this Agreement as of the Date of Termination and accelerated vesting of all
shares of Restricted Stock.


 


(d)                                 Timing of Payment.  The payment of the Severance Benefits will
occur no later than 10 days after the effective date of the Release described
in Section 4(e) (as specified therein), unless payment must be
delayed as provided in Section 9(h) to comply with the terms of
Internal Revenue Code Section 409A.


 


(e)                                  Release.  The Severance Benefits are conditioned upon
the Executive’s 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 Executive does not sign and make
effective the Release.


 


5.                                      Golden
Parachute.   The Executive’s total payments and benefits
under this Agreement may exceed the relevant limitations under the “golden
parachute” provisions of Section 280G of the Internal Revenue Code.  However, nothing in this Agreement will cause
the Company to be required to pay to the Executive any amount in excess of the
Severance Benefits provided for in this Agreement.  Notwithstanding the foregoing, in the event
any payment or benefit to the Executive under this Agreement or otherwise would
(a) constitute a “parachute payment” within the meaning of Internal
Revenue Code Section 280G and (b) but for this sentence, be subject
to the excise tax imposed by Section 4999 of the Internal Revenue 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 the
Executive 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 the Executive’s 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, the
Executive 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. 
The Executive shall remain solely liable for all income taxes, the
Excise Tax, or other amounts assessed on any payments or benefits to which the
Executive is entitled and nothing in this Agreement or otherwise shall be
interpreted as obligating the Company to pay (or reimburse the Executive for)
any income taxes, Excise Taxes, or other taxes or amounts assessed against or
incurred by the Executive in connection with the Executive’s receipt of such
payments and benefits.


 


6

















 


6.                                       Protection of Confidential Information.  The Executive acknowledges that by reason of
his position with the Company, he will 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.  The 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 the Executive’s employment
with the Company (both during the Employment Period and any continuation period
thereafter) and thereafter for a period of 5 years.  The Executive will return all Confidential
Information to the Company promptly following termination of his employment
with the Company.


 


7.                                      Non-Competition.


 


(a)                                  Non-Competition Agreement.  The Executive agrees that, without the prior
written consent of the Board, during the term of his employment with the
Company, including any continued employment after the Employment Period, and
for a period of 2 years thereafter, he will not “Compete” with the
Company in the “Prohibited Territory.”


 


(b)                                 Definition of “Compete”.  For purposes of this Section 7, 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 7, the term “Prohibited Territory” shall
mean and include each of the following defined areas: (i) the United
States, and/or (ii) any State within the United States where the Company
is engaged in business in the Communications Industry.  For purposes of this Section 7, 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.


 


7

















 


(d)                                 Acknowledgments by Executive.  The Executive acknowledges that the terms of
this Section 7, including the definitions of Compete, Communications
Industry and Prohibited Territory, and the 2 year post employment term are
reasonable, and are no broader than necessary to protect the Company’s
legitimate business interests.  The
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 7(b) above, or it
reasonably anticipates that it will be engaged in each such aspect or activity
during the Employment Period, and that part of the Executive’s responsibilities
as Chairman and Chief Executive Officer 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 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, wireless providers 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 Chairman and Chief Executive Officer of the Company, he
will be intimately familiar with and engaged in developing the Company’s
business, financial, strategic and growth plans and other Confidential
Information, and that if he engages in any of the activity prohibited by this Section 7,
it is inevitable that he would use or disclose Confidential Information of the
Company.


 


(e)                                  Enforcement; Survival.  The Executive agrees that the Company would
suffer irreparable harm in the event of any violation of Section 6 or 7
hereof, and the Company is therefore entitled to injunctive relief to enforce
the provisions thereof.  The provisions
of Sections 6 and 7 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.


 


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.                                      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 and the separate award agreements for the Options, the Restricted
Stock and the performance units described in Section 2(b)(iv) set
forth the entire understanding of the parties regarding the subject matter hereof
and thereof.  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.


 


8

















 


(c)                                  Governing Law.  This Agreement
shall be construed and enforced in accordance with the laws of the State of
North Carolina, without regard to 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 reputable overnight courier or
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):


 


If
to the Company, to:


 


FairPoint
Communications, Inc.


521
East Morehead Street, Suite 500


Charlotte,
North Carolina 28202


Facsimile:  (704) 344-1594


Attn:  Shirley J. Linn, Esq.


 


If to the Executive, to:


 


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)                                 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 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 Internal Revenue Code Section 409A:  (i) if the payment or distribution is
payable in a lump sum, 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, 


 


9

















 


distributions or benefits
will commence.  To the extent the Company
determines any expense reimbursement or in-kind benefit to which the Executive
is or may be entitled to receive under this Agreement constitutes non-exempt
“deferred compensation” for purposes of Section 409A of the Internal
Revenue Code, then (i) such reimbursement shall be paid to the Executive
as soon as administratively practicable after the Executive submits a valid
claim for reimbursement, but in no event later than the last day of the
Executive’s taxable year following the taxable year in which the expense was
incurred, (ii) the amount of expenses eligible for reimbursement, or
in-kind benefits provided, during any taxable year of the Executive shall not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year of the Executive, and (iii) the
Executive’s right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit. 
For purposes of this Agreement, the term “separation from service” shall
be defined as provided in Internal Revenue Code Section 409A and
applicable regulations.


 


[Signature
Page Follows]


 


10

















 


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/ David L. Hauser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FAIRPOINT
  COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Shirley J. Linn

  
	
   

  	
  Name: Shirley J. Linn

  
	
   

  	
  Title: Executive Vice
  President

  



 


11