FairPoint Communications 2006 Annual Report Download - page 25

for your securities. For example, our restated certificate of incorporation provides that certain provisions of our restated certificate of incorporation can only be
amended by a vote of two-thirds or more in voting power of all the outstanding shares of capital stock and that stockholders generally may not act by written
consent and only stockholders representing at least 50% in voting power may request that our board of directors call a special meeting. Our restated certificate
of incorporation provides for a classified board of directors and authorizes the issuance of preferred stock without stockholder approval and upon such terms
as the board of directors may determine. The rights of the holders of shares of our common stock will be subject to, and may be adversely affected by, the
rights of holders of any class or series of preferred stock that may be issued in the future.


Our restated certificate of incorporation provides that so long as we hold any authorization, license, permit, order, filing or consent from the Federal
Communications Commission or any state regulatory commission having jurisdiction over us, we will have the right to request certain information from our
stockholders. If any stockholder from whom such information is requested should fail to respond to such a request or we conclude that the ownership of, or
the existence or exercise of any rights of stock ownership with respect to, shares of our capital stock by such stockholder, could result in any inconsistency
with, or violation of, any applicable communications law, we may suspend those rights of stock ownership the existence or exercise of which would result in
any inconsistency with, or violation of, any applicable communications law, and we may exercise any and all appropriate remedies, at law or in equity, in any
court of competent jurisdiction, against any stockholder, with a view towards obtaining such information or preventing or curing any situation which would
cause an inconsistency with, or violation of, any provision of any applicable communications law.
Risks Related to our Business


Our business generates revenue by delivering voice and data services over access lines. We have experienced net voice access line losses, adjusted for
acquisitions and divestitures, of 10.2% for the period from January 1, 2002 through December 31, 2006 and 3.5% for the period from December 31, 2005
through December 31, 2006, due mainly to challenging economic conditions and the introduction of digital subscriber line services. We may continue to
experience net access line losses in our markets. Our inability to retain access lines could adversely affect our business and results of operations.


There is a significant degree of difficulty and management distraction inherent in the process of closing the Merger and preparing to integrate our business
and Spinco’s business which could cause an interruption of, or loss of momentum in, the activities of our existing business. Prior to the closing of the Merger,
our management team may be required to devote considerable amounts of time to this integration process, which will decrease the time they will have to manage
our business, service existing customers, attract new customers and develop new products or strategies. One potential consequence of such distractions could
be the failure of management to realize opportunities to respond to the increasing forms of competition that our business is facing, which could increase the rate
of access line loss that our business has experienced in recent years. If our senior management is not able to effectively manage the process
23