FairPoint Communications 2010 Annual Report Download - page 151

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FairPoint has an employment agreement with Mr. Sunu and change in control and severance agreements with Messrs. Sabherwal and Nixon and Ms. Linn.
These agreements provide benefits to our NEOs in the event their employment is terminated under certain circumstances as summarized below.
Mr. Sunu
Under the employment agreement with Mr. Sunu, either party may terminate Mr. Sunu’s employment at any time. In the event the Company terminates
Mr. Sunu’s employment without cause (as defined in the employment agreement), if the Company delivers Mr. Sunu a non-extension notice or if Mr. Sunu
resigns his employment for good reason, Mr. Sunu will receive: (i) any accrued but unpaid base salary or bonuses, any unpaid or unreimbursed expense
reimbursements and any benefits to be provided under the Company’s employee benefits plans upon a termination of employment; (ii) an amount equal to the
sum of (A) two times the amount of Mr. Sunu’s then-current base salary, (B) two times the amount of his annual incentive plan bonus for the immediately
preceding fiscal year (or in the event such termination occurs prior to the payment of Mr. Sunu’s annual incentive plan bonus for 2011, if any, an amount
equal to $1,500,000) and (C) the cost of continued health and disability insurance coverage for Mr. Sunu and his covered dependents for a period of twenty-
four months.
Messrs. Sabherwal and Nixon and Ms. Linn
We entered into change in control and severance agreements, which we refer to collectively as the severance agreements, with Mr. Nixon and Ms. Linn, on
March 14, 2007, and with Mr. Sabherwal, on August 24, 2010. Each severance agreement provides, subject to certain other conditions, that we will pay
severance and provide benefits to the subject executive (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 the severance benefits detailed 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 severance agreements do not require the Company to provide any tax gross-up on the benefits paid
under the severance agreements. However, if the Company determines that reducing the benefits to just below the level that would trigger the “golden parachute”
excise tax payable by the executive will result in a greater after-tax benefit to the executive, the benefits will be reduced to that level.
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 our employees or consultants to leave us or to perform services for
another company, or (2) accepting any employment or similar arrangements with our competitors.
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