FairPoint Communications 2007 Annual Report Download - page 34

Table of Contents
exception of Eugene B. Johnson, our Chairman and Chief Executive Officer, are employed pursuant to an employment agreement.
Mr. Johnson is expected to continue as the Chairman and Chief Executive Officer of the Company following the transactions.
Mr. Johnson’s employment agreement expires on December 31, 2008. The loss of any member of our senior management team, 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.


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, and remediation of contaminated sites. 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 regulated materials at formerly owned or
operated 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 any violations of environmental laws. Changes in existing laws or
regulations, future acquisitions of businesses or any newly discovered information could require us to incur substantial costs in the
future relating to these matters.

As a public reporting company, we are required to comply with the Sarbanes-Oxley Act and the related rules and regulations of the
SEC, including expanded disclosures and accelerated reporting requirements. If our management identifies one or more material
weaknesses in our internal control over financial reporting in the future in accordance with the annual assessment required by the
Sarbanes-Oxley Act, we will be unable to assert that our internal control is effective. We have identified a material weakness in our
internal controls over financial reporting as of December 31, 2007, see “Item 1A. Risk Factors — We have identified a material weakness
in our internal controls over financial reporting as of December 31, 2007. If we fail to remedy this material weakness, such failure could
result in material misstatements in our financial statements, cause investors to lose confidence in our reported financial information and
have a negative effect on the trading price of our common stock.”
In addition, following the merger, we will begin evaluating our internal control systems with respect to the Spinco business to allow
management to report on, and our independent auditors to attest to, the internal controls of the Spinco business as required by Section 404
of the Sarbanes-Oxley Act. We will be performing the systems and process evaluation and testing (and any necessary remediation)
required to comply with the management certification and independent registered public accounting firm attestation requirements of
Section 404 of the Sarbanes-Oxley Act.
While we expect that we will be able to fully implement the requirements relating to internal controls and all other aspects of
Section 404 with respect to the Spinco business for the year ending December 31, 2009, due to the magnitude of the merger and the new
processes and controls being developed in conjunction with the integration of the Spinco business, we may not be able to successfully
perform this assessment for the year ending December 31, 2009.
If we are not able to implement the requirements of Section 404 with respect to the Spinco business in a timely manner or with
adequate compliance or if we are otherwise unable to assert that our internal control over financial reporting is effective for any fiscal year,
we might be subject to sanctions or investigation by regulatory authorities.
  
 
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