FairPoint Communications 2004 Annual Report Download - page 63

facility would prohibit us from making dividend payments on our common stock. In addition, upon the occurrence of an event of default under
our credit facility, the lenders could elect to declare all amounts outstanding under our credit facility, together with accrued interest, to be
immediately due and payable. If we were unable to repay those amounts, the lenders could proceed against the security granted to them to
secure that indebtedness. If the lenders accelerate the payment of the indebtedness under our credit facility, our assets may not be sufficient
to repay in full the indebtedness under our credit facility and our other indebtedness, if any.

 
The offering resulted in an "ownership change" within the meaning of the U.S. federal income tax laws addressing net operating loss
carry forwards, alternative minimum tax credits and other similar tax attributes. As a result of such ownership change, there are specific
limitations on our ability to use our net operating loss carry forwards and other tax attributes from periods prior to the transactions. Although it
is not expected that such limitations will materially affect our U.S. federal and state income tax liability in the near-term, it is possible in the
future that such limitations could limit our ability to utilize such tax attributes and, therefore, result in an increase in our U.S. federal and state
income tax liability. In addition, in the future we may be required to pay cash income taxes because all of our net operating loss carry forwards
have been used or have expired. Limitations on our usage of net operating loss carry forwards, and other factors requiring us to pay cash
taxes in the future, would reduce the funds available for the payment of dividends and might require us to reduce or eliminate the dividends
on our common stock.

It is possible that an active trading market for our common stock will not develop or be sustained. Even if an active trading market
develops, the market price of our common stock may fluctuate widely as a result of various factors, such as period-to-period fluctuations in
our operating results, sales of our common stock by principal stockholders, developments in the communications industry, the failure of
securities analysts to cover our common stock or changes in financial estimates by analysts, competitive factors, regulatory developments,
economic and other external factors, general market conditions and market conditions affecting the stock of communications companies in
particular. Communications companies have in the past experienced extreme volatility in the trading prices and volumes of their securities,
which has often been unrelated to operating performance. Any such market volatility may have a significant adverse effect on the market
price of our common stock.


Future sales, or the availability for sale in the public market, of substantial amounts of our common stock could adversely affect the
prevailing market price of our common stock, and could impair our ability to raise capital through future sales of equity securities.
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