FairPoint Communications 2010 Annual Report Download - page 11

Table of Contents
On the Effective Date, in accordance with the Plan, (i) certain of our employees and a consultant of ours received (a) Success Bonuses of approximately
$1.8 million in the aggregate pursuant to the terms of the Success Bonus Plan and/or (b) New Common Stock awards, consisting of restricted shares of New
Common Stock and/or options to purchase shares of New Common Stock, pursuant to the terms of the Long Term Incentive Plan, and (ii) members of the
New Board received restricted shares of New Common Stock and options to purchase New Common Stock pursuant to the terms of the Long Term Incentive
Plan. The Success Bonuses were earned by our employees and were primarily based upon achieving certain performance measures. 3,134,603 shares of New
Common Stock are reserved for awards under the Long Term Incentive Plan, of which stock options and restricted share awards were granted to certain of our
employees, a consultant of ours, and members of the New Board on the Effective Date. Specifically, on the Effective Date, (a) 460,294 shares of stock were
distributed to management-level and other employees and a consultant of ours, with 120,000 restricted shares issued to our Chief Executive Officer, 34,000
restricted shares issued to our Chief Financial Officer, 161,800 restricted shares issued to other members of our senior management and 66,794 unrestricted
shares issued to David L. Hauser, our former Chief Executive Officer, who is currently a consultant, (b) 87,498 shares of restricted stock were awarded to
the members of the New Board and (c) stock options were granted with an exercise price of $24.29 for the purchase of (1) 859,000 shares of New Common
Stock by management-level and other employees, with 125,000 options to purchase New Common Stock granted to our Chief Executive Officer, 42,000
options to purchase New Common Stock granted to our Chief Financial Officer and 236,500 options to purchase New Common Stock granted to other
members of our senior management and (2) 132,012 shares of New Common Stock by members of the New Board. Except for the unrestricted shares
awarded to David L. Hauser, these stock option and restricted share awards vested to the extent of 25% on the Effective Date, and the remainder of these
awards is expected to vest in three equal annual installments, commencing on the first anniversary of the Effective Date, with accelerated vesting upon (x) a
change in control, or (y) a termination of an award holder’s employment either without cause (but only to the extent the vesting becomes at least 50%, plus an
additional 25% for each year of the award holder’s employment after the first year after the Effective Date) or due to the award holder’s death or disability (but,
for stock options, only to the extent vesting would have otherwise occurred within one year following such termination of employment). Mr. Hauser’s shares
were 100% vested on the Effective Date.

In connection with the Chapter 11 Cases, we negotiated with representatives of the state regulatory authorities in each of Maine, New Hampshire and
Vermont with respect to (i) certain regulatory approvals relating to the Chapter 11 Cases and the Plan and (ii) certain modifications to the requirements imposed
by state regulatory authorities as a condition to approval of the Merger (each a “Merger Order,” and collectively, the “Merger Orders”). We agreed to regulatory
settlements with the representatives for each of Maine, New Hampshire and Vermont regarding modification of each state’s Merger Order (each a “Regulatory
Settlement,” and collectively, the “Regulatory Settlements”). For more information regarding the Regulatory Settlements, see “Item 1. Business — State
Regulation — Regulatory Conditions to the Merger, as Modified in Connection with the Plan.”

In connection with the Chapter 11 Cases, regardless of the Effective Date having occurred, we are required to continue to file quarterly operating reports
with the Bankruptcy Court until the Chapter 11 Cases have closed. Such reports have been and will be prepared according to requirements of federal
bankruptcy law and related rules. While these reports accurately provide then-current information required under the Bankruptcy Code, they are nonetheless
unaudited, are prepared in a format different from that used in our consolidated financial statements filed under the securities laws and certain of this financial
information may be prepared on an unconsolidated basis. Accordingly, we believe that the substance and format of these reports do not allow meaningful
comparison with our regular publicly-disclosed consolidated financial statements. Moreover, the quarterly operating reports filed with the Bankruptcy Court
are not prepared for the purpose of providing a basis for an investment decision relating to our securities, or for comparison with other financial information
filed by us with the SEC.

Except as otherwise provided in the Plan, the Confirmation Order enjoined, or stayed, the continuation of any judicial or administrative proceedings or
other actions against us or our properties to recover on, collect or secure a claim arising prior to the Effective Date. Thus, for example, creditor actions to obtain
possession of property from us, or to create, perfect or enforce any lien against our property, or to collect on monies owed or otherwise exercise rights or
remedies with respect to a claim arising prior to the Effective Date are enjoined except as provided in the Plan.
10