FairPoint Communications 2004 Annual Report Download - page 68

of Section 404 of the Sarbanes-Oxley Act. See "—We will be exposed to risks relating to evaluations of controls required by Section 404 of the
Sarbanes-Oxley Act of 2002."
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Our provision of long distance services is dependent on underlying agreements with other carriers that provide us with transport and
termination services. These agreements are based, in part, on our estimate of future supply and demand and may contain minimum
volume commitments. If we overestimate demand, we may be forced to pay for services we do not need. If we underestimate demand, we
may need to acquire additional capacity on a short-term basis at unfavorable prices, assuming additional capacity is available. If additional
capacity is not available, we will not be able to meet this demand. In addition, if we cannot meet any minimum volume commitments, we
may be subject to underutilization charges, termination charges, or rate increases which may adversely affect our results of operations.
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We are dependent on rights-of-way and other permits from railroads, utilities, state highway authorities, local governments and transit
authorities to install conduit and related communications equipment for any expansion of our networks. We may need to renew current
rights-of-way for our networks and cannot assure you that we would be successful in renewing these agreements on acceptable terms. Some
of our agreements may be short-term, revocable at will, or subject to termination upon customary default provisions, and we may not have
access to existing rights-of-way after they have expired or terminated. If any of these agreements were terminated or could not be renewed,
we may be required to remove our existing facilities from under the streets or abandon our networks. Similarly, we may not be able to obtain
right-of-way agreements on favorable terms, or at all, in new service areas, and, if we are unable to do so, our ability to expand our networks,
if we decide to do so, could be impaired.
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Our success depends upon the talents and efforts of our senior management team. With the exception of Eugene Johnson, our
Chairman and Chief Executive Officer, none of these senior executives are employed by us pursuant to an employment agreement. The
loss of any such management personnel, due to retirement or otherwise, and the inability to attract and retain highly qualified technical and
management personnel in the future, could have a material adverse effect on our business, financial condition and results of operations.
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Our operations and properties are subject to federal, state and local laws and regulations relating to protection of the environment,
natural resources, and worker health and safety, including laws and regulations governing the management, storage and disposal of
hazardous substances, materials and wastes. Under certain environmental laws, we could be held liable, jointly and severally and without
regard to fault, for the costs of investigating and remediating any contamination at owned or operated properties; or for contamination arising
from the disposal by us or our predecessors of hazardous wastes at formerly-owned properties or at third-party waste disposal sites. In
addition, we could be held responsible for third-party property or personal injury claims relating to any such contamination or relating to
violations of environmental laws. Changes in existing laws or regulations or future acquisitions of businesses could require us to incur
substantial costs in the future relating to such matters.
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