Fairpoint Communications 8-K 2006
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Item 1.01 Entry into a Material Definitive Agreement
On March 17, 2006, FairPoint Communications, Inc. (the Company) entered into an employment agreement (the Employment Agreement) with Eugene B. Johnson. The Employment Agreement extends the term of Mr. Johnsons employment as the Companys chairman of the board and/or chief executive officer until December 31, 2008. The Employment Agreement provides that Mr. Johnson will receive an annual base salary of $460,000, an annual discretionary bonus, and Mr. Johnson shall be entitled to participate in all incentive, savings, stock option, restricted stock and retirement plans, practices, policies and programs applicable generally to other members of senior management. If Mr. Johnsons employment is terminated without cause during the term of his Employment Agreement he is entitled to receive payment of his salary as of the termination date for the remainder of the employment period, subject to suspension for a breach of Mr. Johnsons covenant not to compete with the Company. Upon the expiration of the term of Mr. Johnsons Employment Agreement at December 31, 2008, unless extended, he is entitled to receive payment of his salary as of such expiration date for one year thereafter, subject to suspension for a breach of Mr. Johnsons covenant not to compete with the Company. The Employment Agreement also provides that upon the earlier of (i) the expiration of Mr. Johnsons employment period or (ii) the termination of Mr. Johnsons employment as chief executive officer and as chairman of the board of directors without cause, Mr. Johnson is entitled to receive certain benefits. These benefits include continued medical coverage for Mr. Johnson and his wife for the life of each under the Companys medical benefits plans and continued vesting of all restricted stock granted as of the termination date under the FairPoint Communications, Inc. 2005 Stock Incentive Plan (the 2005 Plan). If the Company terminates Mr. Johnson for cause or he voluntarily resigns, he is not entitled to any such benefits under the Employment Agreement. The Employment Agreement supersedes and terminates all prior Employment Agreements and severance arrangements between Mr. Johnson and the Company.
As additional consideration for Mr. Johnson entering into the Employment Agreement, the Company simultaneously granted to Mr. Johnson 50,000 shares of restricted stock (the "Restricted Stock") under the 2005 Plan pursuant to the terms of a restricted stock agreement entered into by the Company and Mr. Johnson on March 17, 2006. The Restricted Stock will vest in three equal annual installments beginning on March 17, 2007, and Mr. Johnson will be entitled to receive dividends on such Restricted Stock prior to vesting. The Employment Agreement also provides that, so long as Mr. Johnson has not been terminated for cause and/or has not voluntarily resigned, he will receive an additional grant of 50,000 shares of restricted stock on each of January 1, 2007 and January 1, 2008, each then vesting in three equal annual installments and also entitled to receive dividends prior to vesting.
In addition, on March 15, 2006, the Board of Directors of the Company (the Board) named Claude C. Lilly as lead director. In connection therewith, Mr. Lilly will receive an additional fee of $5,000 per year. As the Boards lead director, Mr. Lilly will chair Board meetings of the non-management and/or independent directors and will review Board and Board Committee meeting agendas to be sure all items to be brought to the full Board from such bodies are included in the agendas.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 20, 2006