FairPoint Communications 2004 Annual Report Download - page 115

Under the 2000 Plan, unless otherwise determined by the compensation committee at the time of grant, participating
employees are granted options to purchase Class A common stock at exercise prices not less than the market value of the
Company's Class A common stock at the date of grant. Options have a term of 10 years from date of grant. Options vest in
increments of 10% on the first anniversary, 15% on the second anniversary, and 25% on the third, fourth, and fifth
anniversaries of an individual grant. Subject to certain provisions, in the event of a change of control, the Company will cancel
each option in exchange for a payment in cash of an amount equal to the excess, if any, of the highest price per share of
Class A common stock offered in conjunction with any transaction resulting in a change of control over the exercise price for
such option.
On August 3, 2001, the Company made an offer to its employees to cancel their existing options issued under the 2000
Plan in exchange for new options to be granted on the date that is on or after six months and one day following the expiration
date of the offer. As a result of this offer, 620,562 options were canceled. The remaining shares outstanding under this plan
were forfeited during 2001. On March 13, 2002, 166,905 stock options were issued under this exchange offer.
Restricted stock units vest in increments of 33% on each of the third, fourth, and fifth anniversaries of the award. In
December 2003, 27,382 units were awarded with an aggregate value of $890,000. At December 31, 2004, 26,442 units
remain outstanding as 940 units were forfeited in 2004. The Company recognized compensation expense of $177,000 and
$15,000 during 2004 and 2003, respectively, related to these awards and will recognize the balance of compensation expense
over the remaining vesting period.
Stock option activity under the 2000 Plan is summarized as follows:
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Outstanding at December 31, 2001 — $ —
Granted 253,381 36.94
Exercised — —
Canceled or forfeited (22,050) 36.94
Outstanding at December 31, 2002 231,331 36.94
Granted 90,580 36.94
Exercised — —
Canceled or forfeited (21,177) 36.94
Outstanding at December 31, 2003 300,734 36.94
Granted — —
Exercised — —
Canceled or forfeited (60,096) 36.94
Outstanding at December 31, 2004 240,638 36.94
Stock options available to grant at December 31, 2004 1,631,441
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