FairPoint Communications 2004 Annual Report Download - page 126

long as THL Equity Fund and its affiliates, Kelso Investment Associates and Kelso Equity Partners own in the aggregate at least 40% of the
shares of our common stock which they owned immediately prior to the closing of the offering or (ii) THL Equity Fund will be entitled to
designate one Class III director to be nominated for election to our board of directors as long as THL Equity Fund and its affiliates, Kelso
Investment Associates and Kelso Equity Partners own in the aggregate less than 40% and at least 20% of the shares of our common stock
which they owned immediately prior to the closing of the offering. In addition, at any time after Kelso Investment Associates and Kelso Equity
Partners no longer own any of our common stock, as long as THL Equity Fund and its affiliates own at least 40% of the shares of our
common stock which THL Equity Fund and its affiliates, Kelso Investment Associates and Kelso Equity Partners owned immediately prior to
the closing of the offering, THL Equity Fund will be entitled to designate one Class II director to be nominated for election to our board of
directors in addition to its right to designate one Class III director to be nominated for election to our board of directors.
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Our board of directors has standing audit, compensation and corporate governance committees.
Audit Committee
Our audit committee consists of Claude C. Lilly and David L. Hauser. Claude C. Lilly is the chair of the audit committee and David L.
Hauser is the audit committee financial expert serving on the audit committee for purposes of the Exchange Act. One additional independent
director will be appointed to the audit committee within one year of the closing of the offering. Among other functions, the principal duties and
responsibilities of our audit committee are to:
•have direct responsibility for the selection, compensation, retention and oversight of the work of our independent auditors;
•set clear hiring policies for employees or former employees of the independent auditors;
•review, at least annually, the results and scope of the audit and other services provided by our independent auditors and
discuss any audit problems or difficulties and management's response;
•review our annual audited financial statement and quarterly financial statements and discuss the statements with
management and the independent auditors (including our disclosure in "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations");
•review and evaluate our internal control functions;
•review our compliance with legal and regulatory independence;
•review and discuss our earnings press releases, as well as financial information and earnings guidance provided to analysts
and rating agencies;
•review and discuss our risk assessment and risk management policies;
•prepare an audit committee report required by the Securities and Exchange Commission to be included in our annual proxy
statement; and
•establish procedures regarding complaints received by us or our employees regarding accounting, accounting controls or
accounting matters.
The audit committee is required to report regularly to our board of directors to discuss any issues that arise with respect to the quality or
integrity of our financial statements, our compliance with legal or regulatory requirements, the performance and independence of our
independent auditors, or the performance of the internal audit function.
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