Exhibit 10.14
AMENDED EMPLOYMENT AGREEMENT
Xxxx X. Xxxxxxxxxxx
This AMENDED EMPLOYMENT AGREEMENT (the "Agreement") is dated as of December
29, 2008 (the "Effective Date") by and between Frontier Communications
Corporation (the "Company") and Xxxx X. Xxxxxxxxxxx ("Executive").
WHEREAS, Executive and the Company entered into an employment agreement
(the "Original Agreement") as of November 1, 2004 (the "Original Effective
Date"), embodying the terms of Executive's employment and pursuant to which
Executive has been serving as President and Chief Executive Officer of the
Company;
WHEREAS, this Agreement amends and restates the Original Agreement as of
the Effective Date in order, inter alia, to evidence formal compliance with
Section 409A of the Internal Revenue Code of 1986, as amended, and the guidance
thereunder (such Section, referenced herein as "Section 409A"; and such code,
referenced herein as the "Code");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties agree as
follows:
1. Term of Employment. Subject to the provisions of Section 8 of this
Agreement, Executive shall be employed by the Company, and any of its
subsidiaries that the Board of Directors of the Company (the "Board") shall
designate for a period commencing on the Original Effective Date and ending on
the fifth anniversary thereof (the "Initial Term"), on the terms and subject to
the conditions set forth in this Agreement. Following the Initial Term, the term
of employment under this Agreement shall automatically be renewed for additional
terms of one year on the last day of the Initial Term and each anniversary of
the last day of the Initial Term (the Initial Term and any annual extensions of
the term of this Agreement, referenced together herein as the "Employment
Term"), subject to Section 8 of this Agreement, unless the Company or the
Executive gives the other party written notice of non-renewal at least 90 days
prior to such last day or anniversary. A written notice of non-renewal given by
the Company to the Executive shall be considered a Notice of Termination
(pursuant to Section 8(e) of this Agreement) of a termination without Cause by
the Company and shall constitute a termination without Cause under Section 8(c)
of this Agreement at the expiration of such Employment Term for all purposes
hereunder.
2. Position.
a. During the Employment Term, Executive shall serve as President and Chief
Executive Officer of the Company and shall report directly to the Board. In such
position, Executive shall have such duties and authority commensurate with the
position of chief executive officer of a company of similar size and nature. As
soon as practicable after the Original Effective Date, Executive shall become a
member of the Board.
b. During the Employment Term, Executive will devote Executive's full
business time and best efforts (excluding any periods of vacation or sick leave)
to the performance of Executive's duties hereunder and will not engage in any
other business, profession or occupation for compensation or otherwise which
would conflict or interfere with the rendition of such services either directly
or indirectly, without the prior written consent of the Board; provided that
nothing herein shall preclude Executive (i) subject to the prior approval of the
Board, from accepting appointment to or continue to serve on any board of
directors or trustees of any business corporation or any charitable
organization, or (ii) from making personal or family investments; provided,
however, in each case under this Section 2(b)(i) or (ii) that such activities,
in the aggregate, do not conflict or interfere with the performance of
Executive's duties hereunder or conflict with Section 10 of this Agreement.
3. Base Salary. During the Employment Term, the Company shall pay Executive
a base salary at the annual rate of $700,000, payable by payroll check in
substantially equal periodic payments in accordance with the Company's practices
for other executive employees, as such practices may be determined from time to
time. Executive shall be entitled to such increases in Executive's base salary,
if any, as may be determined from time to time in the sole discretion of the
Board. Executive's annual base salary, as in effect from time to time, is
hereinafter referred to as the "Base Salary".
4. Annual Bonus. During the Employment Term, Executive shall be eligible to
earn an annual cash bonus award (an "Annual Bonus"), payable by payroll check,
with a target bonus amount equal to 100% of the Base Salary (the "Target
Bonus"), with adjustments based on the schedules set forth in the Citizens
Incentive Plan or any successor plan, as each may be amended from time to time
(the "Incentive Plan") but the adjustments shall in no event be less favorable
to Executive than those set forth in such Plan for the 2004 calendar year;
provided, however, that in no event shall the Annual Bonus in respect of the
2004 calendar year be less than $700,000. The Annual Bonus for a calendar year
shall be paid no later than permitted under the Incentive Plan and no later than
the date that other senior executive officers of the Company are paid their
annual bonuses for such calendar year.
5. Long-Term Incentive. As soon as practicable after the Original Effective
Date, Executive shall upon commencement of her employment hereunder, receive a
grant of 150,000 restricted shares of Common Stock (with the other grants
hereunder, the "Restricted Shares"). With respect to each fiscal year during the
Employment Term after 2004, the Company shall grant no later than each March of
the following year (commencing with March, 2006) to Executive a number of
Restricted Shares with an aggregate value on the date of each grant equal to
between $1,000,000 and $2,000,000, as determined by the Compensation Committee
of the Board (the "Compensation Committee"). Subject to Section 8(b)(ii)(D) and
Section 8(c)(iii)(E), below, each annual grant of Restricted Shares shall vest
and become non-forfeitable as to 20% (25%, commencing with the grant in
February, 2007) of the shares initially granted, on each anniversary of the date
of grant and shall be fully vested and 100% non-forfeitable upon the fifth
anniversary (fourth anniversary, commencing with the grant in February, 2007) of
the date of grant; provided, however, that Executive shall be entitled to
participate in any program the Company maintains to allow employees to use
vested shares for the payment of applicable taxes at the time of such vesting.
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6. Employee Benefits; Business Expenses.
a. Employee Benefits. During the Employment Term, Executive (and her
eligible dependents) shall be entitled to participate in the Company's pension,
profit sharing, medical, dental, life insurance and other employee benefit plans
(other than severance plans) (the "Company Plans"), as in effect from time to
time (collectively the "Employee Benefits") on the same basis as those benefits
are generally made available to other senior executives of the Company, at a
level of participation commensurate with her position.
b. Business Expenses and Perquisites.
(i) Expenses. During the Employment Term, reasonable business expenses
incurred by Executive in the performance of Executive's duties hereunder
shall be reimbursed by the Company in accordance with the Company's
policies.
(ii) Perquisites. During the Employment Term, Executive shall be
entitled to receive such perquisites as are generally made available to
other senior executives of the Company at a level that is commensurate with
her position.
7. Relocation Period. During the period commencing on the Original
Effective Date and ending no later than the first anniversary thereof (the
"Relocation Period"), Executive is expected to arrange relocation from
California to Connecticut on a permanent basis for her, her spouse and her
dependents. The Company shall, during the Relocation Period, pay or reimburse
Executive for all reasonable expenses incurred for temporary housing, local
ground transportation, travel to and from California for her, her spouse and her
dependents, closing costs and moving expenses in connection with the purchase
and sale of permanent housing and other costs and expenses during the Relocation
Period related to her maintaining a residence separate from her family and
relocating to Connecticut; provided, however, that no later than November 1,
2005, Executive shall have relocated to Connecticut and no further payments for
expenses under this Section 7 that are incurred after the end of the Relocation
Period shall be borne by the Company. The Company shall pay or reimburse
Executive under this Section 7 for all costs and expenses incurred during the
Relocation Period in an aggregate amount up to $500,000.
8. Termination. Executive's employment hereunder may be terminated by
either party at any time and for any reason; provided that Executive will be
required to give the Company at least 60 days advance written notice of any
resignation of Executive's employment (30 days if such resignation is for "Good
Reason" (as hereinafter defined)). Notwithstanding any other provision of this
Agreement other than Section 13(l) through (p), the provisions of this Section 8
shall exclusively govern Executive's rights upon termination of employment with
the Company.
a. By the Company for Cause or by Executive Resignation Without Good
Reason.
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(i) The Employment Term and Executive's employment hereunder may be
terminated by the Company for Cause (as defined below) and shall terminate
automatically upon Executive's resignation without Good Reason; provided
that Executive will be required to give the Company at least 60 days
advance written notice of such resignation. For purposes of this Agreement,
a failure by Executive to have effected a relocation to Connecticut,
reasonably acceptable to the Board before November 1, 2005, shall be deemed
to be a resignation without Good Reason by Executive for all purposes
hereunder, effective as of November 1, 2005; provided, however, if the
Board does not accept that such relocation has occurred before November 1,
2005, Executive shall be given written notice of that fact by the Board as
soon as reasonably practicable upon such determination and the resolution
of such issue shall be dealt with using the same procedures as would be
used in the last two sentences of Section 8(a)(ii).
(ii) For purposes of this Agreement, "Cause" shall mean Executive's
(A) willful and continued failure (other than as a result of physical or
mental illness or injury) to perform her material duties (provided such
duties are as described in Section 2) to the Company or its subsidiaries
which continues beyond 10 days after a written demand for substantial
performance is delivered to Executive by the Company (the "Cure Period"),
which demand shall identify and describe such failure with sufficient
specificity to allow Executive to respond; (B) willful or intentional
conduct that causes material and demonstrable injury, monetarily or
otherwise, to the Company; (C) conviction of, or a plea of nolo contendere
to, a crime constituting (x) a felony under the laws of the United States
or any state thereof, or (y) a misdemeanor involving moral turpitude; or
(D) material breach of a material provision of this Agreement, including,
without limitation, engaging in any action in breach of Section 9 or
Section 10 of this Agreement, which continues beyond the Cure Period (to
the extent that, in the Board's reasonable judgment, such breach can be
cured). For purposes of this Section 8(a)(ii), no act, or failure to act,
on the part of Executive shall be considered "willful" or "intentional"
unless it is done, or omitted to be done, by Executive in bad faith and
without reasonable belief that Executive's action or inaction was in the
best interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or based
upon the advice of counsel for the Company shall be conclusively presumed
to be done, or omitted to be done, by Executive in good faith and in the
best interests of the Company. Any determination that Executive has engaged
in conduct for which the Board wishes to terminate Executive's employment
shall be made after a meeting of the nonemployee directors of the Board at
which Executive shall be invited to appear, with counsel, to respond to the
allegations set forth in the written notice to the Executive of such
meeting (which notice shall provide sufficient specificity to allow
Executive to respond to such allegations). The Board may terminate the
Executive for "Cause" hereunder following such meeting only upon the
affirmative vote of at least 60 percent of the nonemployee directors.
(iii) If Executive's employment is terminated by the Company for
Cause, or if Executive resigns without Good Reason, Executive shall be
entitled to receive:
(A) the Base Salary through the date of termination, paid in substantially
equal periodic installments on the schedule specified in Section 3 (but not less
frequently than monthly);
(B) any Annual Bonus earned but unpaid as of the date of termination for
any previously completed fiscal year, paid no later than permitted under the
Incentive Plan and no later than the date that other senior executive officers
of the Company are paid their annual bonuses for any such year;
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(C) reimbursement for any unreimbursed business expenses properly incurred
by Executive in accordance with Company policy prior to the date of Executive's
termination, paid at the time specified in Section 13(m);
(D) any accrued but unpaid vacation, paid in accordance with the terms of
the Company's vacation policy; and
(E) such Employee Benefits, if any, to which Executive may be entitled
under the applicable Company Plans or hereunder (including, without limitation,
if applicable, any Restricted Shares) upon termination of employment hereunder
(the payments and benefits described in clauses (A) through (E) hereof being
referred to, collectively, as the "Accrued Rights").
As necessary for compliance with the requirements of the Code and
notwithstanding any contrary provision of this subsection, payments under this
subsection are subject to Section 13(l) through (p). Following such termination
of Executive's employment by the Company for Cause or resignation by Executive,
except as set forth in this Section 8(a)(iii) and Section 8(g), Executive shall
have no further rights to any compensation or any other benefits under this
Agreement.
b. Disability or Death.
(i) Executive's employment hereunder shall terminate upon Executive's
death and may be terminated by the Company if Executive becomes physically
or mentally incapacitated and is therefore unable for a period of six
consecutive months or for an aggregate of nine months in any 12 consecutive
month period to perform Executive's duties (such incapacity is hereinafter
referred to as "Disability"). Any question as to the existence of the
Disability of Executive as to which Executive and the Company cannot agree
shall be determined in writing by a qualified independent physician
mutually acceptable to Executive and the Company. If Executive and the
Company cannot agree as to a qualified independent physician, each shall
appoint such a physician and those two physicians shall select a third who
shall make such determination in writing. The determination of Disability
made in writing to the Company and Executive shall be final and conclusive
for all purposes of the Agreement.
(ii) Upon termination of Executive's employment hereunder for either
Disability or death, Executive or Executive's estate (as the case may be)
shall be entitled to receive:
(A) the Accrued Rights;
(B) continued payment of Executive's Base Salary during the period
commencing on the date of Executive's termination of employment and ending on
the date that is six months after the date of Executive's termination of
employment (applying the definition of such term in Section 13(n)), paid in
substantially equal periodic installments on the schedule specified in Section
3, but not less frequently than monthly (such continued Base Salary shall only
be subject to the six-month delay to the extent applicable under Section 13(o)
and (p));
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(C) a pro rata portion of the Annual Bonus, equal to the product of (I) the
Annual Bonus that Executive would have received pursuant to the Incentive Plan
for the calendar year of Executive's termination of employment if her employment
had continued indefinitely, and (II) a fraction whose numerator equals the
number of days the Executive was employed during such year and whose denominator
is 365, payable as a cash lump sum no later than permitted under the Incentive
Plan and no later than the date that other senior executive officers of the
Company are paid their annual bonuses for such year; and
(D) all Restricted Shares that have been granted as of the date of
Executive's termination shall be fully vested and non-forfeitable as of such
date, and all options granted to Executive that are not vested as of such date
shall become vested and fully exercisable, and Executive shall not be entitled
to any further annual grants of Restricted Shares under Section 5 of this
Agreement.
(iii) Upon termination of Executive's employment hereunder due to
Executive's death or Disability, in addition to the benefits described in
Section 8(b)(ii) above, the Company shall provide Executive (in the event
of her Disability) and Executive's spouse with medical, dental, life
insurance and other health benefits (pursuant to the same Company Plans
that are medical, dental, life insurance and other health benefit plans and
that are in effect for active employees of the Company), until the second
anniversary of the date of Executive's death or Disability.
(A) To the extent that such medical, dental or other health benefit plan
coverage is provided under a self-insured plan maintained by the Company (within
the meaning of Section 105(h) of the Code):
(I) the charge to Executive for each month of coverage will equal the
monthly COBRA charge established by the Company for such coverage in which
the Executive or the Executive's spouse (as applicable) is enrolled from
time to time, based on the coverage generally provided to salaried
employees (less the amount of any administrative charge typically assessed
by the Company as part of its COBRA charge), and Executive will be required
to pay such monthly charge in accordance with the Company's standard COBRA
premium payment requirements; and
(II) on the date of Executive's termination of employment within the
meaning of Section 13(n), the Company will pay Executive a lump sum in cash
equal, in the aggregate, to the monthly COBRA charge established by the
Company on the payment date for family coverage with respect to the highest
value health coverage provided to salaried employees under such
self-insured plan for each month of coverage in the two year period. For
this purpose, the Company's monthly COBRA charge for family coverage will
be increased by 10% on each January in the projected payment period and
such increased amount shall apply to each successive month in the calendar
year in which the increase became applicable.
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(B) To the extent that such medical, dental or other health benefit plan
coverage is provided under a fully-insured medical reimbursement plan (within
the meaning of Section 105(h) of the Code), there will be no charge to Executive
for such coverage.
As necessary for compliance with the requirements of the Code and
notwithstanding any contrary provision of this subsection, payments under this
subsection are subject to Section 13(l) through (p). Following Executive's
termination of employment due to death or Disability, except as set forth in
this Section 8(b) and Section 8(g), Executive shall have no further rights to
any compensation or any other benefits under this Agreement.
c. By the Company Without Cause or by Executive Resignation with Good
Reason.
(i) Executive's employment hereunder may be terminated (A) by the
Company without Cause (which shall not include Executive's termination of
employment due to her death or Disability) or (B) by Executive with Good
Reason (as defined below).
(ii) For purposes of this Agreement, "Good Reason" shall mean:
(A) the material failure of the Company to pay or cause to be paid
Executive's Base Salary or Annual Bonus, or grant the Restricted Shares when due
hereunder,
(B) any substantial and continuing diminution in Executive's position,
authority or responsibilities from those described in Section 2 hereof,
(C) a material relocation of Executive's principal office location, for
this purpose, a relocation more than 50 miles from the Company's Stamford,
Connecticut headquarters area will be automatically deemed material, or
(D) any other material breach of a material provision of this Agreement;
provided that any of the events described in subparagraphs (A), (B), (C) or (D)
of this Section 8(c)(ii) shall constitute Good Reason only if (I) the Company
fails to cure such event within 30 days after receipt from Executive of written
notice of the existence of the event or circumstances constituting Good Reason
specified in any of the preceding clauses, which notice must be provided to the
Board within 90 days after Executive learns of the initial existence of such
event or circumstances with sufficient specificity from Executive for the
Company to respond to such claim, and (II) Executive terminates employment with
the Company within two years after the initial existence of such event or
circumstances.
(iii) If Executive's employment is terminated by the Company without
Cause (other than by reason of death or Disability) or by Executive with
Good Reason, subject to Executive's satisfaction of the release
requirements set forth in Section 8(f)(ii), the Company (1) shall then pay
or provide to the Executive the compensation and benefits described in
subparagraphs (A) and (D) below, (2) shall begin paying to the Executive
the compensation described in subparagraphs (B) and (C), and (3) the
vesting provided for by subparagraph (E) below shall apply, in each case on
the Expiration Date (as defined in Section 8(f)(ii)):
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(A) the Accrued Rights;
(B) subject to Executive's continued compliance with the provisions of
Section 9 and Section 10 of this Agreement, the amount that is equal to 1/36th
of the sum of -
(I) three times Executive's annual Base Salary in effect on the date
of Executive's termination of employment (the "Termination Date"), and
(II) two times Executive's annual Target Bonus in effect on the
Termination Date,
shall be paid each month for the 36-month period commencing on the Termination
Date (it being understood that Executive shall receive no payment until the
Expiration Date at which time Executive shall receive a catch-up payment on the
Expiration Date that includes all monthly installments due for the period from
the Termination Date through the Expiration Date) (with such 36-month period
constituting the "Severance Period") (such catch-up payment and continued
installments shall be subject to a six-month delay only to the extent applicable
under Section 13(o) and (p)); provided, however, that payments described in this
subparagraph (B) that are exempt from Section 409A shall be reduced or offset
entirely, at the time such payments are otherwise required to be made under this
subparagraph (B), by any amounts due and owing by Executive to the Company for
funds borrowed from or advanced by the Company (to the extent permitted under
applicable law);
(C) continuation of medical, dental, life insurance and other health
benefits (pursuant to the same Company Plans that are medical, dental, life
insurance and other health benefit plans and that are in effect for active
employees of the Company) with health benefit coverage retroactive to the
Termination Date (once the Expiration Date is reached and the release is in
effect), and then continuing until the earlier to occur of the end of the
Severance Period and the date on which Executive becomes eligible to receive
comparable benefits from any subsequent employer.
(I) To the extent that such medical, dental or other health benefit
plan coverage is provided under a self-insured plan maintained by the
Company (within the meaning of Section 105(h) of the Code):
(1) the charge to Executive for each month of coverage will equal
the monthly COBRA charge established by the Company for such coverage
in which the Executive or the Executive's spouse (as applicable) is
enrolled from time to time, based on the coverage generally provided
to salaried employees (less the amount of any administrative charge
typically assessed by the Company as part of its COBRA charge), and
Executive will be required to pay such monthly charge in accordance
with the Company's standard COBRA premium payment requirements; and
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(2) upon termination of employment, the Company will pay
Executive a lump sum in cash equal, in the aggregate, to the monthly
COBRA charge established by the Company on the payment date for family
coverage with respect to the highest value health coverage provided to
salaried employees under such self-insured plan for each month of
coverage in the 36-month period. For this purpose, the Company's
monthly COBRA charge for family coverage will be increased by 10% on
each January in the projected payment period, and such increased
amount shall apply to each successive month in the calendar year in
which the increase became applicable.
(II) To the extent that such medical, dental or other health benefit
plan coverage is provided under a fully-insured medical reimbursement plan
(within the meaning of Section 105(h) of the Code), there will be no charge
to Executive for such coverage; and
(D) a lump sum equal to the full-year annual Target Bonus in effect on the
Termination Date.
(E) All Restricted Shares shall be vested and non-forfeitable as of the
Expiration Date, and all options granted to Executive that are not vested as of
the Termination Date shall become vested, non-forfeitable and fully exercisable
on the Expiration Date, and Executive shall not be entitled to any further
annual grants of Restricted Shares under Section 5 of this Agreement.
As necessary for compliance with the requirements of the Code and
notwithstanding any contrary provision of this subsection, payments under this
subsection are subject to Section 13(l) through (p). Following Executive's
termination of employment by the Company without Cause (other than by reason of
Executive's death or Disability) or Executive with Good Reason, except as set
forth in Section 8(c)(iii) above and Section 8(g), Executive shall have no
further rights to any compensation or any other benefits under this Agreement.
d. Change in Control.
(i) Subject to Executive's satisfaction of the release requirements
set forth in Section 8(f)(ii), Executive shall also be entitled to the
benefits set forth in Section 8(c)(iii) above if, within one year following
a Change in Control (defined below), Executive terminates her employment as
a result of: (A) any material decrease by the Company of the Base Salary or
Target Bonus; (B) any material decrease in Executive's pension benefit
opportunities or any material diminution in the aggregate employee
benefits; or (C) any material diminution in Executive's reporting
relationships, duties or responsibilities - including, without limitation,
ceasing to be a chief executive officer who reports directly to the board
of directors of a public company (each, a "Constructive Termination
Event"); provided that any of the events described above shall constitute a
Constructive Termination Event only if (X) the Company fails to cure such
event within 30 days after receipt from Executive of written notice of the
existence of the event or circumstances constituting the Constructive
Termination Event, which notice must be provided to the Board within 90
days after Executive learns of the initial existence of such event or
circumstances with sufficient specificity from Executive for the Company to
respond to such claim, and (Y) Executive terminates employment with the
Company within two years after the initial existence of such event or
circumstances. As necessary for compliance with the requirements of the
Code and notwithstanding any contrary provision of this subsection,
payments under this subsection are subject to Section 13(l) through (p).
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(ii) For purposes of this Agreement, a "Change in Control" shall be
deemed to have occurred:
(A) When any "person" as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and as used in Section
13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) of the
Exchange Act (but excluding the Company and any subsidiary and any employee
benefit plan sponsored or maintained by the Company or any subsidiary (including
any trustee of such plan acting as trustee)), directly or indirectly, becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding securities; or
(B) Upon the consummation of any merger or other business combination
involving the Company, a sale of substantially all of the Company's assets,
liquidation or dissolution of the Company or a combination of the foregoing
transactions (the "Transactions") other than a Transaction immediately following
which the shareholders of the Company immediately prior to the Transaction own,
in the same proportion, at least 51% of the voting power, directly or
indirectly, of (i) the surviving corporation in any such merger or other
business combination; (ii) the purchaser of or successor to the Company's
assets; (iii) both the surviving corporation and the purchaser in the event of
any combination of Transactions; or (iv) the parent company owning 100% of such
surviving corporation, purchaser or both the surviving corporation and the
purchaser, as the case may be.
(iii) Excess Parachute Payments.
(A) If it is determined (as hereafter provided) that any payment, benefit
or distribution by the Company to or for the benefit of Executive, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement, including without limitation any stock option,
restricted stock award, stock appreciation right or similar right, or the lapse
or termination of any restriction on or the vesting or exercisability of any of
the foregoing (a "Severance Payment"), would be subject to the excise tax
imposed by Section 4999 of the Code (or any successor provision thereto) by
reason of being "contingent on a change in ownership or control" of the Company,
within the meaning of Section 280G of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such excise tax (such tax or taxes, together with any
such interest and penalties, are hereafter collectively referred to as the
"Excise Tax"), then Executive shall receive the greater of (x) the aggregate
amount of the Severance Payments, after payment by Executive of the Excise Tax
imposed on the aggregate Severance Payments, and (y) the aggregate amount of the
Severance Payments which could be paid to Executive under Section 280G of the
Code without causing any loss of deduction to the Company under such Section
(the "Capped Payments"); provided, however, that if the aggregate amount in
clause (x) of this subparagraph (A) is at least 125% of the aggregate amount
determined under clause (y) of this subparagraph (A), the Company shall make
additional payments (each, a "Gross-Up Payment") to Executive such that, after
payment of all Excise Taxes and any other taxes payable in respect of such
Gross-Up Payment, Executive shall retain the same amount as if no Excise Tax had
been imposed. Notwithstanding the preceding sentence, the Company's obligation
to make a Gross-Up Payment shall be subject to Executive's satisfaction of the
release requirements set forth in Section 8(f)(ii) to the extent the Gross-Up
Payment is related to a Severance Payment that is payable upon termination of
Executive's employment. If the Executive will be paid the Capped Payments
pursuant to clause (y) of this subparagraph (A), then the Executive's aggregate
Severance Payments shall be reduced in the following order (i) cash severance
pay that is exempt from Section 409A, (ii) any lump sum described in Section
8(c)(iii)(C)(I)(2), (iii) any other cash severance pay, (iv) any other cash
payable that is a Severance Payment other than stock appreciation rights, (v)
any stock appreciation rights, (vi) any restricted stock, and (vii) stock
options.
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(B) Subject to the provisions of Section 8(d)(iii)(A) hereof, all
determinations required to be made under this Section 8(d), including whether an
Excise Tax is payable by Executive and the amount of such Excise Tax, shall be
made by the nationally recognized firm of certified public accountants (the
"Accounting Firm") used by the Company prior to the relevant "change in
ownership or control" (or, if such Accounting Firm declines to serve, the
Accounting Firm shall be a nationally recognized firm of certified public
accountants selected by Executive). The Accounting Firm shall be directed by the
Company or Executive to submit its preliminary determination and detailed
supporting calculations to both the Company and Executive within 15 calendar
days after the date of Executive's termination of employment, if applicable, and
any other such time or times as may be requested by the Company or Executive. If
the Accounting Firm determines that any Excise Tax is payable by Executive, the
Company shall either (x) make payment of the Severance Payments, less all
amounts withheld in respect of the Excise Tax, as required by applicable law,
(or, if applicable, the Gross-Up Payment) or (y) reduce the Severance Payments
(as described in the last sentence of subparagraph (A) above) by the amounts
which, based on the Accounting Firm's determination and calculations, would
provide Executive with the Capped Payments, and pay to Executive such reduced
amounts. If the Accounting Firm determines that no Excise Tax is payable by
Executive, it shall, at the same time as it makes such determination, furnish
Executive with an opinion that she has substantial authority not to report any
Excise Tax on her federal, state, local income or other tax return. All fees and
expenses of the Accounting Firm shall be paid by the Company in connection with
the calculations required by this Section.
(C) If the Company is obligated to make a Gross-Up Payment, it will be paid
to Executive, or remitted by the Company to the appropriate tax authorities to
the extent subject to withholding, in a lump sum (I) in the case of Gross-Up
Payment that is subject to the release requirements set forth in Section
8(f)(ii), on the later of (x) the date that the Excise Tax is due (through
withholding or otherwise) or (y) the first day following the Expiration Date, or
(II) in the case of any other Gross-Up Payment, on the date that the Excise Tax
is due (through withholding or otherwise), but subject in each case to any
six-month delay that is applicable in accordance with Section 13(p).
11
(D) The federal, state and local income or other tax returns filed by
Executive (or any filing made by a consolidated tax group which includes the
Company) shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
Executive. Executive shall make proper payment of the amount of any Excise Tax,
and at the request of the Company, provide to the Company true and correct
copies (with any amendments) of her federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment.
(E) It is possible that, after the determinations made pursuant to this
Section 8(d)(iii), Executive will receive Severance Payments and Gross-Up
Payments that are, in the aggregate, either more or less than the amounts
provided in subparagraph (A) of this Section 8(d)(iii) (hereafter referred to as
an "Excess Payment" or "Underpayment", respectively). If it is established,
pursuant to a final determination of a court or an Internal Revenue Service
proceeding, that an Excess Payment has been made, then Executive shall refund
the Excess Payment to the Company promptly on demand, together with an
additional payment in an amount equal to the product obtained by multiplying the
Excess Payment times the applicable annual federal rate (as determined in and
under Section 1274(d) of the Code) times a fraction whose numerator is the
number of days elapsed from the date of Executive's receipt of such Excess
Payment through the date of such refund and whose denominator is 365. In the
event that it is determined (x) by arbitration under Section 12 below, (y) by a
court of competent jurisdiction, or (z) by the Accounting Firm upon request by
Executive or the Company, that an Underpayment has occurred, the Company shall
pay an amount equal to the Underpayment to Executive within 10 days of such
determination together with an additional payment in an amount equal to the
product obtained by multiplying the Underpayment times the applicable annual
federal rate (as determined in and under Section 1274(d) of the Code) times a
fraction whose numerator is the number of days elapsed from the date of the
Underpayment through the date of such payment and whose denominator is 365.
e. Notice of Termination. Any purported termination of employment by the
Company or by Executive (other than due to Executive's death) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 13(h) hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of employment under the provision so indicated.
f. Board/Committee Resignation; Execution of Release of all Claims.
(i) Upon termination of Executive's employment for any reason,
Executive agrees to resign, as of the date of such termination and to the
extent applicable, from the Board (and any committees thereof) and the
board of directors (and any committees thereof) of any of the Company's
subsidiaries or affiliates.
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(ii) Upon termination of Executive's employment for any reason other
than death or Disability, Executive agrees to execute a release of all then
existing claims against the Company, its subsidiaries, affiliates,
shareholders, directors, officers, employees and agents in relation to
claims relating to or arising out of her employment or the business of the
Company; provided, however, that any such release shall not bar or prevent
Executive from responding to any litigation or other proceeding initiated
by a released party and asserting any claim or counterclaim she has in such
litigation or other proceeding as if no such release had been given as to
such party, nor shall it bar Executive from claiming her rights that arise
under, or that are preserved by, this Agreement. Notwithstanding anything
set forth in this Agreement to the contrary, upon termination of
Executive's employment for any reason other than death or Disability,
Executive shall not receive any payments or benefits to which she may be
entitled hereunder (other than those which by law cannot be subject to the
execution of a release, which shall be paid without regard to any release
either (A) at the time when due, or (B) as of Executive's Termination Date,
if the specific payment or benefit is subject to Section 409A and a payment
date sufficient to satisfy Section 409A is not otherwise stated for such
payment or benefit) unless Executive satisfies the release requirements of
this Section 8(f)(ii). The release required by this Section 8(f)(ii) shall
be provided to the Executive not later than the Termination Date and shall
be substantially identical to the release attached to this Agreement as
Exhibit A. To comply with this Section 8(f)(ii), Executive must sign and
return the release within 45 days of the Termination Date, and Executive
must not revoke it during a seven-day revocation period that begins when
the release is signed and returned to the Company. Then following the
expiration of this revocation period, there shall occur the "Expiration
Date," which is the 53rd day following the Executive's termination of
employment.
g. Indemnification. While employed hereunder and thereafter, with respect
to the period during which she was employed hereunder, Executive shall be
indemnified by the Company to the fullest extent permitted by its charter,
by-laws or the terms of any insurance or other indemnity policy applicable to
officers or directors of the Company (including any rights to advances or
reimbursement of legal fees thereunder). The Company shall provide that
Executive's right to indemnification hereunder by the Company or any insurance
or indemnity policy shall at no time be less than the right of any officer or
director of the Company, in the same or similar circumstances. The Company's
obligation under this Section 8(g) shall survive any termination of Executive's
employment hereunder or the expiration or termination of this Agreement.
9. Non-Competition/Non-Solicitation/Non-Disparagement.
a. Executive acknowledges and recognizes the highly competitive nature of
the businesses of the Employer and its affiliates and accordingly agrees that,
during the Employment Term and, for a period of one year following any
termination of Executive's employment with the Company (the "Restricted
Period"), Executive will not, whether on Executive's own behalf or on behalf of
or in conjunction with any person, firm, partnership, joint venture,
association, corporation or other business organization, entity or enterprise
whatsoever ("Person"), directly or indirectly engage in any business that
directly or indirectly competes in any material way with the primary business of
the Company:
(i) During the Restricted Period, Executive will not, whether on
Executive's own behalf or on behalf of or in conjunction with any Person,
directly or indirectly:
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(A) solicit or encourage any employee of the Company or its affiliates to
leave the employment of the Company or its affiliates; or
(B) hire any such employee who was employed by the Company or its
affiliates as of the date of Executive's termination of employment with the
Company or who left the employment of the Company or its affiliates coincident
with, or within one year prior to or after, the termination of Executive's
employment with the Company.
b. Executive shall not at any time issue any press release or make any
public statement about the Company or any director, officer, employee,
successor, parent, subsidiary or agent or representative of, or attorney to the
Company (any of the foregoing, a "Company Affiliate") regarding (i) any of the
foregoing's financial status, business, services, business methods, compliance
with laws, or ethics or otherwise, or (ii) regarding Company personnel,
directors, officers, employees, attorneys, agents, that, in either case, is
intended or reasonably likely to disparage the Company or any Company Affiliate,
or otherwise degrade any Company Affiliate's reputation in the business,
industry or legal community in which any such Company Affiliate operates and,
the Company shall not at any time issue any press release or make any public
statement about Executive or her spouse that is intended or reasonably likely to
disparage Executive's reputation in the business, industry or legal community or
otherwise degrade her or his reputation or standing in their community;
provided, that, Executive and the Company shall be permitted to (a) make any
statement that is required by applicable securities or other laws to be included
in a filing or disclosure document, subject to prior notice to the other
thereof, and (b) defend herself or itself against any statement made by the
other party (including those made by any Company Affiliate or by any person
affiliated with the Executive or her spouse) that is intended or reasonably
likely to disparage or otherwise degrade that party's reputation, only if there
is a reasonable belief that the statements made in such defense are not false
statements, (c) while employed as an officer of the Company, make any statement
that Executive determines in good faith is necessary or appropriate to the
discharge of her duties as an officer of the Company, and (d) provide truthful
testimony in any legal proceeding.
c. It is expressly understood and agreed that although Executive and the
Company consider the restrictions contained in this Section 9 to be reasonable,
if a final judicial determination is made by a court of competent jurisdiction
that the time or territory or any other restriction contained in this Agreement
is an unenforceable restriction against Executive, the provisions of this
Agreement shall not be rendered void but shall be deemed amended to apply as to
such maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any court
of competent jurisdiction finds that any restriction contained in this Agreement
is unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.
10. Confidentiality.
a. Executive will not at any time (whether during or after Executive's
employment with the Company) (i) retain or use for the benefit, purposes or
account of Executive or any other Person; or (ii) other than in the course of
performing services for the Company and in accordance with the Company's
policies from time to time, disclose, divulge, reveal, communicate, share,
transfer or provide access to any Person outside the Company (other than its
professional advisers who are bound by confidentiality obligations), any
non-public, proprietary or confidential information -- including without
limitation rates, trade secrets, know-how, research and development, software,
databases, inventions, processes, formulae, technology, designs and other
intellectual property, information concerning finances, investments, profits,
pricing, costs, products, services, vendors, customers, clients, partners,
investors, personnel, compensation, recruiting, training, advertising, sales,
marketing, promotions, government and regulatory activities and approvals --
concerning the past, current or future business, activities and operations of
the Company, its subsidiaries or affiliates and/or any third party that has
disclosed or provided any of same to the Company on a confidential basis
("Confidential Information") without the prior written authorization of the
Board.
14
b. "Confidential Information" shall not include any information that is (i)
generally known to the industry or the public other than as a result of
Executive's breach of this covenant or any breach of other confidentiality
obligations by third parties; (ii) after Executive's employment with the
Company, made legitimately available to Executive by a third party without
breach of any confidentiality obligation; or (iii) required by law to be
disclosed; provided that Executive shall give prompt written notice to the
Company of such requirement, disclose no more information than is so required,
and cooperate with any attempts by the Company to obtain a protective order or
similar treatment.
c. Upon termination of Executive's employment with the Company for any
reason, Executive shall immediately destroy, delete, or return to the Company,
at the Company's option, all originals and copies in any form or medium
(including memoranda, books, papers, plans, computer files, letters and other
data) in Executive's possession or control (including any of the foregoing
stored or located in Executive's office, home, laptop or other computer, whether
or not Company property) that contain Confidential Information or otherwise
relate to any material aspects of the business (that are not otherwise available
to the public) of the Company, its affiliates and subsidiaries, except that
Executive may retain only those portions of any documents, personal notes,
notebooks and diaries that do not contain any Confidential Information.
d. The provisions of this Section 10 shall survive the termination of
Executive's employment for any reason.
11. Specific Performance. Executive acknowledges and agrees that the
Employer's remedies at law for a breach or threatened breach of any of the
provisions of Section 9 or Section 10 of this Agreement would be inadequate and
the Company would suffer irreparable damages as a result of such breach or
threatened breach. In recognition of this fact, Executive agrees that, in the
event of such a breach or threatened breach, in addition to any remedies at law,
the Company, without posting any bond, shall be entitled to cease making any
payments or providing any benefit otherwise required by this Agreement and
obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable
remedy which may then be available. In the event of an alleged breach of Section
9(b) by the Company, Executive shall not be required to post a bond in order to
seek equitable relief or any other equitable remedy.
15
12. Arbitration. Except as provided in Section 11, any other dispute
arising out of or asserting breach of this Agreement, or any statutory or common
law claim by Executive relating to her employment under this Agreement or the
termination thereof (including any tort or discrimination claim), shall be
exclusively resolved by binding statutory arbitration in accordance with the
Employment Dispute Resolution Rules of the American Arbitration Association.
Such arbitration process shall take place in New York, New York. A court of
competent jurisdiction may enter judgment upon the arbitrator's award. All costs
and expenses of arbitration (including fees and disbursements of counsel) shall
be borne by the respective party incurring such costs and expenses, unless the
arbitrator shall award costs and expenses to the prevailing party in such
arbitration.
13. Miscellaneous.
a. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut, without regard to
conflicts of laws principles thereof.
b. Entire Agreement/Amendments. This Agreement contains the entire
understanding of the parties with respect to the employment of Executive by the
Company. There are no restrictions, agreements, promises, warranties, covenants
or undertakings between the parties with respect to the subject matter herein
other than those expressly set forth herein. This Agreement may not be altered,
modified or amended except by written instrument signed by the parties hereto.
c. No Waiver. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver of such
party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
d. Severability. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.
e. Assignment. This Agreement, and all of Executive's rights and duties
hereunder, shall not be assignable or delegable by Executive. Any purported
assignment or delegation by Executive in violation of the foregoing shall be
null and void ab initio and of no force and effect. This Agreement may be
assigned by the Company to a person or entity which is an affiliate or a
successor in interest to substantially all of the business operations of the
Company. Upon such assignment, the rights and obligations of the Company
hereunder shall become the rights and obligations of such affiliate or successor
person or entity.
f. Set Off; Mitigation. The Company's obligation to pay Executive the
amounts provided and to make the arrangements provided hereunder shall not be
subject to set-off, counterclaim or recoupment of amounts owed by Executive to
the Company or its affiliates, other than any amounts due and owing as provided
for under Section 8(c)(iii)(C) hereof. Executive shall not be required to
mitigate the amount of any payment provided for pursuant to this Agreement by
seeking other employment or otherwise and the amount of any payment provided for
pursuant to this Agreement shall not be reduced by any compensation earned as a
result of Executive's other employment or otherwise.
16
g. Successors; Binding Agreement. This Agreement shall inure to the benefit
of and be binding upon the Company and its subsidiaries and Executive and any
personal or legal representatives, executors, administrators, successors,
assigns, heirs, distributees, devisees and legatees. Further, the Company will
require any successor (whether, direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company and any successor to its business and/or assets
which is required by this Section 13(g) to assume and agree to perform this
Agreement or which otherwise assumes and agrees to perform this Agreement;
provided, however, in the event that any successor, as described above, agrees
to assume this Agreement in accordance with the preceding sentence, as of the
date such successor so assumes this Agreement, the Company shall cease to be
liable for any of the obligations contained in this Agreement.
h. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand or overnight courier or
three days after it has been mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below in this Agreement, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
If to the Company:
Frontier Communications Corporation
Three Xxxx Xxxxx Xxxx
Xxxxxxxx 0
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
If to Executive:
To the most recent address of Executive set forth in the personnel
records of the Company.
With a copy to:
Xxxxxxxx Xxxxx LLP
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
17
i. Executive Representation. Executive hereby represents to the Company
that the execution and delivery of this Agreement by Executive and the Company
and the performance by Executive of Executive's duties hereunder shall not
constitute a breach of, or otherwise contravene, the terms of any employment
agreement or other agreement or policy to which Executive is a party or
otherwise bound, whether with the Prior Employer or otherwise.
j. Prior Agreements. This Agreement supercedes all prior agreements and
understandings (including verbal agreements) between Executive and the Company
and/or its affiliates regarding the terms and conditions of Executive's
employment with the Company and/or its affiliates.
k. Cooperation. Executive shall provide Executive's reasonable cooperation
in connection with any action or proceeding (or any appeal from any action or
proceeding) which relates to events occurring during Executive's employment
hereunder. This provision shall survive any termination of this Agreement.
l. Withholding Taxes. The Company may withhold from any amounts payable
under this Agreement such Federal, state and local taxes as may be required to
be withheld pursuant to any applicable law or regulation.
m. Expense Reimbursements. To the extent that any expense reimbursement
provided for by this Agreement does not qualify for exclusion from Federal
income taxation, the Company will make the reimbursement only if Executive
incurs the corresponding expense during the term of this Agreement and submits
the request for reimbursement no later than two months prior to the last day of
the calendar year following the calendar year in which the expense was incurred
so that the Company can make the reimbursement on or before the last day of the
calendar year following the calendar year in which the expense was incurred; the
amount of expenses eligible for such reimbursement during a calendar year will
not affect the amount of expenses eligible for such reimbursement in another
calendar year; and the right to such reimbursement is not subject to liquidation
or exchange for another benefit from the Company.
n. Meaning of Termination of Employment. Solely as necessary to comply with
Section 409A and to this extent for purposes of Section 8(b)(ii), Section
8(b)(iii), Section 8(c)(iii), Section 8(d)(i), Section 8(f)(ii), Section 13(o),
Section 13(p) and any other provision where this definition is specifically
referenced, "termination of employment" shall have the same meaning as
"separation from service" under Section 409A(a)(2)(A)(i) of the Code. In
addition, to avoid having such a separation from service occur after the
Executive's termination of employment, the Executive shall not have (after the
Executive's termination of employment) any duties or responsibilities that are
inconsistent with the termination of employment being treated as such a
separation from service as of the date of such termination.
o. Installment Payments. For purposes of Section 8(b)(ii)(B) with respect
to amounts payable in the event of termination of employment on account of
Disability and Section 8(c)(iii)(C) with respect to amount payable in the event
of termination of Executive's employment by the Company without Cause or by
Executive with Good Reason or Constructive Termination Event, each such payment
is a separate payment within the meaning of the final regulations under Section
409A. Each such payment that is made within 2-1/2 months following the end of
the year that contains the date of Executive's termination of employment is
intended to be exempt from Section 409A as a short-term deferral within the
meaning of the final regulations under Section 409A, each such payment that is
made later than 2-1/2 months following the end of the year that contains the
date of Executive's termination of employment is intended to be exempt under the
two-times exception of Treasury Reg. ss. 1.409A-1(b)(9)(iii) up to the
limitation on the availability of such exception specified in such regulation,
and each such payment that is made after the two-times exception ceases to be
available shall be subject to delay in accordance with Section 13(p) below.
18
p. Section 409A. This Agreement will be construed and administered to
preserve the exemption from Section 409A of payments that qualify as a
short-term deferral or that qualify for the two-times exception. With respect to
other amounts that are subject to Section 409A, it is intended, and this
Agreement will be so construed, that any such amounts payable under this
Agreement and the Company's and Executive's exercise of authority or discretion
hereunder shall comply with the provisions of Section 409A and the treasury
regulations relating thereto so as not to subject Executive to the payment of
interest and additional tax that may be imposed under Section 409A. As a result,
in the event Executive is a "specified employee" on the date of Executive's
termination of employment (with such status determined by the Company in
accordance with rules established by the Company in writing in advance of the
"specified employee identification date" that relates to the date of Executive's
termination of employment or, if later, by December 31, 2008, or in the absence
of such rules established by the Company, under the default rules for
identifying specified employees under Section 409A), any payment that is subject
to Section 409A, that is payable to Executive in connection with Executive's
termination of employment, shall not be paid earlier than six months after such
termination of employment (if Executive dies after the date of Executive's
termination of employment but before any payment has been made, such remaining
payments that were or could have been delayed will be paid to Executive's estate
without regard to such six-month delay). This Section 13(p) is an absolutely
superseding provision under this Agreement. This means that it will apply
notwithstanding other provisions in the Agreement that permit or require payment
at an earlier time (and notwithstanding terms in such other provisions that may
provide for their application without regard to other provisions of the
Agreement).
q. Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
FRONTIER COMMUNICATIONS CORPORATION:
------------------------------------
Frontier Communications Corporation
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Senior Vice President & General Counsel
EXECUTIVE:
/s/ Xxxx Xxxxx Xxxxxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxxxxx
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