FairPoint Communications 2003 Annual Report Download - page 51

7.00 250,000 8.00 — —
4,413,700 13,725 $3.28
The weighted average remaining contractual life for the options outstanding at December 31, 2003 is 4.8 years.
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In May 2000, the Company adopted the 2000 Plan. The 2000 Plan provided for grants to members of management of up to 10,019,200
options to purchase Class A common stock, at the discretion of the compensation committee. During 2002, the Company amended the 2000
Plan to limit the number of shares available for grant to 2,365,510. In December 2003, the Company amended the 2000 Plan to allow for the
grant to members of management of up to 10,019,200 shares of restricted stock in addition to shares available for stock options. Options
granted under the 2000 Plan may be of two types: (i) incentive stock options and (ii) nonstatutory stock options. Unless the compensation
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committee shall otherwise specify at the time of grant, any option granted under the 2000 Plan shall be a nonstatutory stock option.
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, 3,274,935 options were canceled. The remaining shares outstanding under this plan were forfeited during 2001. On
March 13, 2002, 880,819 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,
144,506 restricted stock units were awarded with an aggregate value of $890,000. The Company has recognized a compensation charge of
$15,000 during 2003 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 January 1, 2001 3,997,141 $13.12
Granted — —
Exercised — —
Canceled or forfeited (3,997,141) 13.12
Outstanding at December 31, 2001 — —
Granted 1,337,109 7.00
Exercised — —
Canceled or forfeited (116,368) 7.00
Outstanding at December 31, 2002 1,220,741 7.00
Granted 478,025 7.00
Exercised — —
Canceled or forfeited (111,758) 7.00
Outstanding at December 31, 2003 1,587,008 7.00
Stock options available to grant at December 31, 2003 778,502
The remaining contractual life for the options outstanding at December 31, 2003 was 8.75 years, and 422,715 options were exercisable.
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