FairPoint Communications 2007 Annual Report Download - page 29

Table of Contents
certain institutional investors that may be required to maintain portfolios reflecting these indices, these index funds, exchange-traded
funds and institutional investors may be required to sell shares of our common stock that they receive in the merger. These sales may
negatively affect the price of our common stock.
 
 
A number of provisions in our certificate of incorporation and by-laws make it difficult for another company to acquire us and for
our stockholders to receive any related takeover premium for their securities. For example, our certificate of incorporation provides that
certain provisions of the 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, that stockholders generally may not act by written consent, and only stockholders representing at
least 50% in voting power may request that the board of directors call a special meeting. Our 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 are 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.
In addition, the tax sharing agreement entered into in connection with the merger may limit another party’s ability to acquire us
following the consummation of the transactions.

 
Our certificate of incorporation provides that so long as we hold any authorization, license, permit, order, filing or consent from the
FCC 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.

 

We generate revenue primarily by delivering voice and data services over access lines. We have experienced net voice access line
losses in the past few years. We experienced a 15.3% decline in the number of voice access lines (adjusted for acquisitions and
divestitures) for the period from January 1, 2003 through December 31, 2007 and a 5.2% decrease for the period from January 1, 2007
through December 31, 2007. These losses resulted mainly from competition and use of alternative technologies and, to a lesser degree,
challenging economic conditions and the offering of DSL services, which prompts some customers to cancel second line service. Our
2007 revenues from switched access lines comprised approximately 80% of our total 2007 revenues, down from 89% in 2003. Our
revenues from switched access lines have declined by 2.2% from 2003 to 2007, while the number of access lines has declined by 13.9%
excluding acquisitions. We may continue to experience net access line losses in our markets. Our inability to retain access lines could
adversely affect our business, financial condition and results of operations.
In addition, the local exchange business and related landline activities in Maine, New Hampshire and Vermont as historically
operated by the Verizon Group have experienced net voice access line losses in the past few years. The Northern New England business’s
2007 revenues from switched access lines comprised 77% of
27