Document:

Exhibit 10.10

 

REGISTRATION RIGHTS AGREEMENT

 

THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of February 8, 2005,
by and among FairPoint Communications, Inc., a Delaware corporation (the “Company”), and those
persons listed on Schedule A attached
hereto, as the same may be amended from time to time (each an “Initial
Holder” and collectively, the “Initial Holders”).

 

WHEREAS, as set forth in this Agreement, the Company
has agreed to grant to the Holders certain registration rights with respect to
the shares of the Company’s common stock, par value $.01 per share (the “Common Stock”), owned by each Holder
as of the date hereof as set forth next to each Holders name on Schedule A hereto.

 

NOW, THEREFORE, BE IT RESOLVED, that the
parties hereto, in consideration of the mutual covenants and agreements
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, hereby agree as follows:

 

Section 1.               Definitions.  As used in this Agreement, the following
capitalized defined terms shall have the following meanings:

 

“Affiliate”
means, with respect to any Person, any other Person that, directly or
indirectly, controls, or is controlled by, or is under common control with,
such Person.  For the purposes of this
definition, “control,” when used with respect to any Person, means possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of the such Person, whether through the ownership of voting
securities, by contract or otherwise, and the terms “affiliated,” “controlling”
and “controlled” have meanings correlative to the foregoing.

 

“Business Day”
means a day, other than a Saturday, Sunday or other day on which banking
institutions in New York, New York are permitted or required by any applicable
law to close.

 

“Commission” means the
Securities and Exchange Commission.

 

“Common Stock” has the
meaning set forth in the Recitals.

 

“Company” has the
meaning set forth in the Preamble and also includes the Company’s successors.

 

“Delay Notice” has the
meaning set forth in Section 2(c) hereof.

 

 

“Delay Period” has the
meaning set forth in Section 2(c) hereof.

 

“Effectiveness Period”
has the meaning set forth in Section 2(b) hereof.

 

“Exchange Act” means
the Securities Exchange Act of 1934, as amended from time to time.

 

“Holder” or “Holders” means the
Initial Holder(s) or each Person to whom a Holder Transfers Registrable
Securities in accordance with Section 7(c) hereof.

 

“Initial Holder” or “Initial Holders” has
the meaning set forth in the Preamble.

 

“Person” means an
individual, partnership, corporation, limited liability company, joint venture,
trust, association, estate, or unincorporated organization, or other entity or
organization, or a government or agency or political subdivision thereof.

 

“Prospectus” means the
prospectus included in the Shelf Registration Statement, including any
preliminary prospectus, and any such prospectus amended or supplemented by any
prospectus supplement, including a prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
the Shelf Registration Statement, and by all other amendments and supplements
to a prospectus, including post-effective amendments, and, in each case,
including all documents incorporated by reference therein.

 

“Registrable Securities”
means (i) the shares of Common Stock held by the Holders as of the date hereof
as set forth next to each Holders name on Schedule A
hereto; (ii) any shares of Common Stock or other securities issued as (or
issuable upon the conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other distribution with respect to,
or in exchange by the Company generally for, or in replacement by the Company
generally of, such shares of Common Stock; and (iii) any securities issued
in exchange for such shares of Common Stock in any merger, combination or
reorganization of the Company; provided, however, that
Registrable Securities shall not include any securities which have theretofore
been registered and sold by a Holder pursuant to the Securities Act or which
have been sold by a Holder to the public pursuant to Rule 144 or any similar
rules promulgated by the Commission pursuant to the Securities Act, and, provided
further, that the Company shall have no obligation under Section 2
hereof to register any Registrable Securities of a Holder if the Company shall
deliver to the Holders requesting such registration an opinion of counsel reasonably
satisfactory to such Holders and their counsel to the effect that the proposed
sale or disposition of all of the Registrable Securities does not require
registration under the Securities Act for a sale or disposition in a single
public sale in accordance with the volume limitations contained in Rule
144(e)(1)(i) under the Securities Act, and if the Company shall offer to remove
any and all legends restricting transfer from the certificates evidencing such
Registrable Securities.  For purposes of
this Agreement, a

 

 

Person will be deemed to be a Holder of Registrable Securities whenever
such Person has the then-existing right to acquire such Registrable Securities
(by conversion, purchase or otherwise), whether or not such acquisition has
actually been effected.

 

“Rule 144” and “Rule 145” mean Rule
144 and Rule 145 promulgated under the Securities Act.

 

“Securities Act” means
the Securities Act of 1933, as amended from time to time.

 

“Shelf Registration”
means a registration effected pursuant to Section 2(a) hereof.

 

“Shelf Registration Statement”
means the “shelf” registration statement of the Company pursuant to the
provisions of Section 2 hereof which covers all of the Registrable Securities,
on an appropriate form under Rule 415 under the Securities Act, or any
successor or similar rule that may be adopted by the Commission, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all documents incorporated by reference
therein.  For the avoidance of doubt, the
“Shelf Registration Statement” will not cover any securities other than
Registrable Securities.

 

“Transfer” means and
includes the act of selling, giving, transferring, creating a trust (voting or
otherwise), assigning or otherwise disposing of (other than pledging,
hypothecating or otherwise transferring as security or any transfer upon any
merger or consolidation) (and correlative words shall have correlative meanings);
provided  however, that any transfer or other disposition upon
foreclosure or other exercise of remedies of a secured creditor after an event
of default under or with respect to a pledge, hypothecation or other transfer
as security shall constitute a Transfer.

 

Section 2.               Registration under the
Securities Act.

 

(a)           Registration Requirement.  The Company shall use commercially reasonable efforts to prepare and file with the
Commission on the 181st day following the date hereof a Shelf Registration Statement
meeting the requirements of the Securities Act and cause such Shelf
Registration Statement to be declared effective by the Commission as reasonably
practicable thereafter.  No Holder of
Registrable Securities shall be entitled to include any of its Registrable
Securities in any Shelf Registration pursuant to this Agreement unless and
until such Holder agrees in writing to be bound by all of the provisions of
this Agreement applicable to such Holder and furnishes to the Company in
writing, within 10 Business Days after receipt of a request therefor, such
information as the Company may, after conferring with counsel with regard to
information relating to Holders that would be required by the Commission to be
included in such Shelf Registration Statement or the Prospectus, reasonably
request for inclusion in any Shelf

 

 

Registration Statement or
the Prospectus.  Each Holder as to which
any Shelf Registration is being effected agrees to furnish to the Company all
information with respect to such Holder necessary to make the information
previously furnished to the Company by such Holder not materially misleading.

 

(b)           Effectiveness Requirement.  The Company agrees to use commercially
reasonable efforts to keep the Shelf Registration Statement continuously effective
and the Prospectus usable for resales for a period commencing on the date that
such Shelf Registration Statement is initially declared effective by the
Commission and terminating on the date when all of the Registrable Securities
covered by such Shelf Registration Statement have been sold pursuant to such
Shelf Registration Statement or cease to be Registrable Securities (the “Effectiveness Period”);
provided, however, that (i) the Company shall be permitted to defer
the filing and/or effectiveness of such Shelf Registration Statement, to
suspend the sale of securities pursuant to the Shelf Registration Statement and
to withdraw the Shelf Registration Statement during any Delay Period (as
defined below) and (ii) nothing contained herein shall require the Company to
prepare any financial statements for inclusion or incorporation by reference in
the Shelf Registration Statement prior to the time period such financial
statements would otherwise be required to be filed with the Commission pursuant
to the Exchange Act.

 

(c)           Delay Period.  The term “Delay Period” shall mean, with
respect to any obligation to keep the Shelf Registration Statement or the Prospectus
usable for resales pursuant to this Section 2, the shortest period of time
determined in good faith by the Company to be necessary for such purpose when
there exist circumstances relating to a material pending development, including
but not limited to a pending or contemplated material acquisition or merger or
other material transaction or similar event, which would require disclosure by
the Company in such Shelf Registration Statement or the Prospectus of material
information which the Company determines in good faith that it has a bona fide business purpose for keeping
confidential and non-public and the non-disclosure of which in the Shelf
Registration Statement or the Prospectus might cause such Shelf Registration
Statement or Prospectus to fail to comply with applicable disclosure
requirements.  A Delay Period shall
commence on and include the date that the Company gives written notice (a “Delay Notice”) to the
Holders that the Prospectus is no longer usable as a result of a material
pending development pursuant to Section 2(b) hereof and shall end on the date
when the Holders are advised in writing by the Company that the current Delay
Period has terminated (it being understood that the Company shall give such
notice to all Holders promptly upon making the determination that the Delay
Period has ended); provided, however, that the Company shall not
be entitled during any consecutive twelve (12)-month period to (i) more than
three (3) Delay Periods or (ii) to Delay Periods having durations that exceed
ninety (90) days in the aggregate.

 

(d)           Notice.  The Company shall, in the event the Shelf
Registration Statement is declared effective, provide to each Holder a
reasonable number of copies of the Prospectus which is a part of such Shelf
Registration Statement, notify each such

 

 

Holder when such Shelf Registration Statement has become effective and take
such other actions as are required to permit unrestricted resales of the
Registrable Securities.  The Company
further agrees to supplement or amend the Shelf Registration Statement if and
as required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration Statement or
by the Securities Act or by any other rules and regulations thereunder for
shelf registrations, and the Company agrees to furnish to the Holders of
Registrable Securities copies of any such supplement or amendment promptly
after its being used or filed with the Commission.

 

(e)           Effective Shelf Registration
Statement.  The Shelf Registration
Statement will not be deemed to have become effective unless it has been
declared effective by the Commission; provided, however, that if,
after it has been declared effective, the offering of Registrable Securities
pursuant to such Shelf Registration Statement is interfered with by any stop
order, injunction or other order or requirement of the Commission or any other
governmental agency or court, such Shelf Registration Statement will be deemed
not to have been effective during the period of such interference until the
offering of Registrable Securities pursuant to such Shelf Registration
Statement may legally resume.

 

(f)            Selection of Underwriter.  In any underwritten offering to be effected
pursuant to a Shelf Registration, Holders of a majority of the shares of Common
Stock to be included in such offering will have the right to select the
managing underwriter (which shall be of nationally recognized standing) to
administer the offering, but only with the approval of the Company, such
approval not to be unreasonably withheld.

 

(g)           Other Registration Rights.  The Company represents and warrants that as
of the date hereof it is not a party to, or otherwise subject to, any other
agreement granting registration rights to any other Person with respect to any
securities of the Company.  Except as
provided in this Agreement, prior to the date on which the Shelf Registration
Statement is initially declared effective by the Commission, the Company shall
not grant to any Person the right to request the Company to register any equity
securities of the Company, or any securities convertible or exchangeable into
or exercisable for equity securities of the Company, without the prior written
consent of the holders of a majority of the Registrable Securities.

 

Section 3.               Registration Procedures.

 

(a)           Obligations of the Company.  In connection with its obligations under
Section 2 hereof with respect to the Shelf Registration Statement, the Company
shall use commercially reasonable efforts, during the Effectiveness Period, to:

 

(i)            prepare
and file with the Commission the Shelf Registration Statement as prescribed by
Section 2(a) hereof on the appropriate form under the Securities Act, which
form shall (i) be selected

 

 

by
the Company, (ii) be available for the sale of the Registrable Securities by
the selling Holders thereof, and (iii) comply as to form in all material
respects with the requirements of the applicable form and include all financial
statements required by the Commission to be filed therewith; the Company shall
use commercially reasonable efforts to cause such Shelf Registration Statement to
become effective and remain effective and the Prospectus usable for resales in
accordance with Section 2 hereof, subject to the proviso contained in Section
2(b) hereof; provided, however, that, before filing the Shelf
Registration Statement or the Prospectus or any amendments or supplements
thereto, the Company shall furnish to and afford the Holders of the Registrable
Securities covered by such Shelf Registration Statement, their counsel and the
managing underwriters of an underwritten offering of Registrable Securities, if
any, a reasonable opportunity to review copies of all such documents (including
copies of any documents to be incorporated by reference therein and all
exhibits thereto) proposed to be filed; and the Company shall not file the Shelf
Registration Statement or the Prospectus or any amendments or supplements
thereto in respect of which the Holders must be afforded an opportunity to
review prior to the filing of such document, other than filings required under
the Exchange Act, if the Holders, their counsel or the managing underwriters of
an underwritten offering of Registrable Securities, if any, shall reasonably
object in a timely manner;

 

(ii)           prepare
and file with the Commission such amendments and post-effective amendments to
such Shelf Registration Statement as may be necessary to keep such Shelf
Registration Statement effective for the Effectiveness Period, subject to the
proviso contained in Section 2(b) hereof or as reasonably requested by the
Holders of a majority of Registrable Securities, and cause the Prospectus to be
supplemented, if so determined by the Company or requested by the Commission,
by any required prospectus supplement and as so supplemented to be filed
pursuant to Rule 424 (or any similar provision then in force), under the
Securities Act, respond within a reasonable time to any comments received from
the Commission with respect to such Shelf Registration Statement, or any
amendment, post-effective amendment or supplement relating thereto, and comply
with the provisions of the Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder applicable to it with respect to the
disposition of all Registrable Securities covered by such Shelf Registration
Statement during the Effectiveness Period in accordance with the intended
method or methods of distribution by the selling Holders thereof described in
this Agreement;

 

(iii)          register
or qualify the Registrable Securities under all applicable state securities or “blue
sky” laws of such jurisdictions by the

 

 

time
the Shelf Registration Statement is declared effective by the Commission as any
Holder of Registrable Securities covered by such Shelf Registration Statement
and each underwriter of an underwritten offering of Registrable Securities, if
any, shall reasonably request in writing in advance of such date of
effectiveness, and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Holder and any such underwriter to
consummate the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; provided, however, that the
Company shall not be required to (A) qualify as a foreign corporation or
as a dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(a)(iii) hereof, (B) file
any general consent to service of process in any jurisdiction where it would
not otherwise be subject to such service of process or (C) subject itself
to taxation in any such jurisdiction if it is not then so subject;

 

(iv)          promptly
notify each Holder of Registrable Securities, its counsel and the managing
underwriters of an underwritten offering of Registrable Securities, if any, and
promptly confirm such notice in writing (A) when the Shelf Registration
Statement covering such Registrable Securities has become effective and when
any post-effective amendments thereto become effective, (B) of any request
by the Commission or any state securities authority for amendments and
supplements to such Shelf Registration Statement or the Prospectus or for
additional information after such Shelf Registration Statement has become
effective, (C) of the issuance or threatened issuance by the Commission or any
state securities authority of any stop order suspending the effectiveness of
such Shelf Registration Statement or the qualification of the Registrable
Securities in any jurisdiction described in Section 3(a)(iii) hereof or
the initiation of any proceedings for that purpose, (D) if, between the
effective date of such Shelf Registration Statement and the closing of any sale
of Registrable Securities covered thereby, the representations and warranties
of the Company contained in any purchase agreement, securities sales agreement
or other similar agreement cease to be true and correct in all material
respects, (E) of the happening of any event or the failure of any event to
occur or the discovery of any facts, during the Effectiveness Period, which
makes any statement made in such Shelf Registration Statement or the  Prospectus untrue in any material respect or
which causes such Shelf Registration Statement or the Prospectus to omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and (F)
of the reasonable determination of the Company that a post-effective amendment
to such Shelf Registration Statement would be appropriate;

 

 

(v)           in
the event of the issuance of any stop order suspending the effectiveness of the
Shelf Registration Statement, use commercially reasonable efforts to obtain the
prompt withdrawal of such stop order;

 

(vi)          furnish
to each Holder of Registrable Securities included within the coverage of the
Shelf Registration Statement, without charge, a reasonable number of conformed
copies of such Shelf Registration Statement and any post-effective amendment
thereto (without documents incorporated therein by reference or exhibits
thereto, unless requested) as such Holder or managing underwriters of an underwritten
offering of Registrable Securities, if any, may reasonably request;

 

(vii)         deliver
to each selling Holder of Registrable Securities and each managing underwriter
participating in any such disposition of Registrable Securities, if any,
without charge, as many copies of the Prospectus (including any preliminary prospectus)
as such Holder or managing underwriters, if any, may reasonably request (it
being understood that the Company consents to the use of the Prospectus by each
of the selling Holders of Registrable Securities and the underwriter or
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the Prospectus), such other documents
incorporated by reference therein and any exhibits thereto as such selling
Holder or managing underwriter may reasonably request in order to facilitate
the disposition of the Registrable Securities by such Holder or underwriter;

 

(viii)        cooperate
with the selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any restrictive legends and registered in such names as
the selling Holders or any underwriters may reasonably request at least two
Business Days prior to the closing of any sale of Registrable Securities
pursuant to the Shelf Registration Statement;

 

(ix)           as
soon as practicable after the resolution of any matter or event specified in
Sections 3(a)(iv)(B), 3(a)(iv)(C), 3(a)(iv)(E) (subject to the proviso
contained in Section 2(b) hereof) and 3(a)(iv)(F) hereof), prepare a supplement
or post-effective amendment to the Shelf Registration Statement or the Prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein,

 

 

in
the light of the circumstances under which they were made, not misleading;

 

(x)            within
a reasonable time following the filing of any document which is to be
incorporated by reference into the Shelf Registration Statement or the
Prospectus after the initial filing of such Shelf Registration Statement,
provide a copy to the Holders and managing underwriters of an underwritten
offering of Registrable Securities, if any;

 

(xi)           if
requested by the Holders of Registrable Securities in connection with a firm
commitment underwritten offering of at least $1.0 million of Registrable
Securities: (i) enter into such agreements (including underwriting agreements)
as are customary in underwritten offerings, (ii) obtain an opinion of counsel
to the Company and updates thereof (which may be in the form of a reliance
letter) in form and substance reasonably satisfactory to the managing
underwriters covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such underwriters (it being agreed that the matters to be covered by such
opinion may be subject to customary qualifications and exceptions); (iii)
obtain a “cold comfort” letter or letters from the Company’s independent public
accountants in customary form and covering matters of the type customarily
covered in “cold comfort” letters in connection with underwritten offerings and
such other matters as reasonably requested by the underwriters in accordance
with Statement on Auditing Standards No. 72; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification provisions
and procedures customary for such agreements;

 

(xii)          provide
and cause to be maintained a transfer agent and registrar for all Registrable
Securities covered by the Shelf Registration Statement from and after a date
not later than the effective date of such Shelf Registration Statement;

 

(xiii)         list
or quote all Registrable Securities covered by the Shelf Registration Statement
on any securities exchange or quotation system on which the Common Stock is
then listed or quoted if such Registrable Securities are not already so listed
or quoted and if such listing is then permitted under the rules of such
exchange or quotation system;

 

(xiv)        cooperate
with each seller of Registrable Securities covered by the Shelf Registration
Statement and each underwriter, if any, participating in the disposition of
such Registrable Securities and their respective counsel in connection with any
filings required to be made with

 

 

any
securities exchange or quotation system on which the Common Stock is listed; and

 

(xv)         take
such other actions as are reasonably necessary to effect the registration of
the Registrable Securities covered by the Shelf Registration Statement
contemplated hereby.

 

In addition, each Holder
of Registrable Securities to be distributed by an underwriter in a firm
commitment underwritten offering may, at such Holder’s option, require that any
or all of the representations and warranties made by the Company to and for the
benefit of such underwriters be made to and for the benefit of such Holder of
Registrable Securities.

 

(b)           Holders’ Obligations.  In connection with any registration pursuant
to Section 2 hereof, each Holder agrees that:

 

(i)            upon
receipt of any notice from the Company of the occurrence of any event specified
in Sections 3(a)(iv)(B), 3(a)(iv)(C), 3(a)(iv)(E), 3(a)(iv)(F) hereof or any
Delay Notice, such Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the Shelf Registration Statement at issue until such
Holder’s receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(a)(ix) hereof or until it is advised in writing
by the Company that the use of the Prospectus may be resumed, and, if so
directed by the Company, such Holder will deliver to the Company (at the
Company’s expense) all copies in such Holder’s possession, other than permanent
file copies then in such Holder’s possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice; and

 

(ii)           the
Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish to it such information regarding such
seller as may be required by the staff of the Commission to be included in the
Shelf Registration Statement, the Company may exclude from such registration
the Registrable Securities of any seller who fails to furnish such information
within 10 Business Days after receiving such request, and the Company shall
have no obligation to register under the Securities Act the Registrable
Securities of a seller who so fails to furnish such information.

 

No Holder in its capacity
as a stockholder and/or controlling person of the Company (but not in its
capacity as director or officer of the Company) shall be required by any
underwriting agreement to make any representations or warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Holder, the ownership of such Holder’s
Registrable Securities and such Holder’s intended method or methods of
disposition and any other representation

 

 

required by law or to
furnish any indemnity to any Person which is broader than the indemnity furnished
by such Holder pursuant to Section 5 hereof.

 

(c)           Lock-Up Agreement.  If requested in writing by the Company, each
Holder agrees to execute a lock-up agreement pursuant to which such Holder
shall not effect any public or private sale or distribution (including sales
pursuant to Rule 144 of the Securities Act) of Registrable Securities, or any
securities convertible into or exchangeable or exercisable for such securities,
held by such Holder during the period starting with the date seven (7) days prior
to the Company’s good faith estimate, as certified in writing by an executive
officer of the Company to the Holders, of the date of the proposed pricing of
an underwritten public offering of equity securities of the Company initiated
by and for the account of the Company and ending on the date ninety (90) days
following the consummation of such underwritten public offering.  If requested by the managing underwriter, if
any, each Holder agrees to execute a lock-up agreement consistent with such
managing underwriter’s customary form of lock-up agreement.

 

Section 4.               Expenses of Registration.  The Company shall bear and pay all expenses
incurred by it in connection with any registration, filing, or qualification of
Registrable Securities with respect to the Shelf Registration Statement for
each selling Holder, including all registration, stock exchange listing,
accounting and filing fees, all fees and expenses of complying with securities
or blue sky laws, all word processing, duplicating and printing expenses,
messenger and delivery expenses, the reasonable fees and disbursements of
counsel for the Company, and of the Company’s independent public accountants,
including the expenses of “comfort letters” required by or incident to such
performance and compliance and reasonable fees and disbursements of one firm of
counsel and one firm of accountants for the Holders.  Holders shall be responsible for any
underwriting discounts and commissions and taxes of any kind (including without
limitation, transfer taxes) relating to any disposition, sale or transfer of
Registrable Securities.

 

Section 5.               Indemnification; Contribution.

 

(a)           Indemnification by the Company.  If any Registrable Securities are included in
the Shelf Registration Statement under this Agreement, to the extent permitted
by applicable law, the Company shall indemnify and hold harmless each selling
Holder, each Person, if any, who controls such selling Holder within the
meaning of the Securities Act, and each officer, director, trustee, partner,
and employee of such selling Holder and such controlling Person, against any
and all losses, claims, damages, liabilities, joint or several, and expenses (including
reasonable attorneys’ fees and reasonable expenses of investigation), to which
any of the foregoing Persons may become subject under the Securities Act, the
Exchange Act or other federal or state laws or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained

 

 

in such Shelf Registration Statement, including any
amendments or supplements thereto, any document incorporated by reference
therein and the Prospectus, or any omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading; provided, however,
that the indemnification required by this Section 5(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
expense if such settlement is effected without the consent of the Company,
which consent shall not be unreasonably withheld, nor shall the Company be
liable in any such case for any such loss, claim, damage, liability or expense
to the extent that it arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such Shelf
Registration Statement in reliance upon and in conformity with written
information furnished to the Company by a Holder, underwriter or the
indemnified party expressly for use in connection with such registration; provided,
further, that the indemnity agreement contained in this Section 5(a)
shall not apply to any loss, liability, claim or damage based on or arising out
of (i) an offer or sale of Registrable Securities during any Delay Period
pursuant to Section 2(c) hereof (provided that the Company has given the Holder
a Delay Notice pursuant to Section 2(c) hereof) or (ii) an untrue statement or
alleged untrue statement of a material fact, or an omission or alleged omission
to state a material fact, contained in or omitted from such Shelf Registration
Statement, any amendments or supplements thereto, any document incorporated by
reference therein or the Prospectus in conformity with information furnished to
the Company in writing by such Person specifically for use therein.

 

(b)           Indemnification by Holder.  If any of a selling Holder’s Registrable
Securities are included in the Shelf Registration Statement under this
Agreement, to the extent permitted by applicable law, such selling Holder shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who shall have signed such Shelf Registration Statement, each Person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, any other selling Holder, any
controlling Person of any such other selling Holder and each officer, director,
partner, and employee of such other selling Holder and such controlling Person,
against any and all losses, claims, damages, liabilities and expenses (joint
and several), including reasonable attorneys’ fees and disbursements and
expenses of investigation, incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation, or to which any of the
foregoing Persons may otherwise become subject under the Securities Act, the
Exchange Act or other federal or state laws, insofar as such losses, claims,
damages, liabilities and expenses arise out or are based upon any untrue
statement or alleged untrue statement of a material fact contained in such
Shelf Registration Statement, including the Prospectus, or any amendments or
supplements thereto or any document incorporated by reference therein, or any
omission or alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein (in light of the
circumstances under which they were made in the case of the Prospectus) not
misleading, but only to the

 

 

extent that such untrue statement or omission had been
contained in any information furnished in writing by such Holder to the Company
expressly for use in connection with such registration; provided, however,
that (i) the indemnification required by this Section 5(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
expense if settlement is effected without the consent of the relevant selling
Holder of Registrable Securities, which consent shall not be unreasonably
withheld, and (ii) in no event shall the amount of any indemnity under this
Section 5(b) exceed the net proceeds from the applicable offering received by
such selling Holder.  The Company and the
Holders of the Registrable Securities in their capacities as stockholders
and/or controlling persons (but not in their capacities as directors or
officers of the Company) hereby acknowledge and agree that the only information
furnished or to be furnished to the Company for use in any registration
statement or prospectus relating to the Registrable Securities or in any
amendment, supplement or preliminary materials associated therewith are
statements specifically relating to (A) the beneficial ownership of shares of
Common Stock by such Holder and its Affiliates and (B) the name and address of
such Holder.  If any additional
information about such Holder or the plan of distribution (other than for an
underwritten offering) is required by law to be disclosed in any such document,
then such Holder shall not unreasonably withhold its agreement referred to in
the immediately preceding sentence of this Section 5(b).  In no event shall a Holder be jointly liable
with any other Holder as a result of its indemnification obligations.

 

(c)           Conduct of Indemnification
Proceedings.  Promptly after receipt
by an indemnified party under this Section 5 of notice of the commencement of
any action, suit, proceeding, investigation or threat thereof made in writing
for which such indemnified party may make a claim under this Section 5, such
indemnified party shall deliver to the indemnifying party a written notice of
the commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties.  The failure to deliver written notice to the
indemnifying party within a reasonable time following the commencement of any
such action, if it prejudices or results in forfeiture of substantial rights or
defenses of the indemnifying party, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 5, to the extent of
any damage directly suffered by the indemnifying party as a result
thereof.  Any fees and expenses incurred
by the indemnified party (including any fees and expenses incurred in
connection with investigating or preparing to defend such action or proceeding)
shall be paid to the indemnified party, as incurred, within thirty (30) days of
written notice thereof to the indemnifying party.  Any such indemnified party shall have the
right to employ separate counsel in any such action, claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expenses of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses, (ii) the
indemnifying party shall have failed to promptly assume the defense of such
action, claim or

 

 

proceeding or (iii) the named parties to any such
action, claim or proceeding (including any impleaded parties) include both such
indemnified party and the indemnifying party, and such indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it which are different from or in addition to those available to
the indemnifying party (in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action, claim or proceeding on behalf of
such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action, claim or proceeding or
separate but substantially similar or related actions, claims or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
additional firm of attorneys (together with appropriate local counsel) at any
time for all such indemnified parties. 
No indemnifying party shall be liable to an indemnified party for any
settlement of any action, proceeding or claim without the written consent of
the indemnifying party, which consent shall not be unreasonably withheld.

 

(d)           Contribution.  If the indemnification required by this
Section 5 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to in this Section 5:

 

(i)            The
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations.  The relative
fault of such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any indemnifiable action has been
committed by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such indemnifiable
action.  The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 5(a) and Section 5(b), any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or proceeding.

 

(ii)           The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to in
Section 5(d)(i).

 

 

No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

 

(iii)          No
party shall be liable for contribution under this Section 5(d) except to the
extent and under such circumstances as such party would have been liable for
indemnification under this Section 5 if such indemnification were enforceable
under applicable law.

 

(e)           Full Indemnification.  If indemnification is available under this
Section 5, the indemnifying parties shall indemnify each indemnified party
to the full extent provided in this Section 5 without regard to the relative
fault of such indemnifying party or indemnified party or any other equitable
consideration referred to in Section 5(d)(i) hereof.

 

(f)            Survival.  The obligations of the Company and the
selling Holders of Registrable Securities under this Section 5 shall survive
the completion of any offering of Registrable Securities pursuant to the Shelf
Registration Statement under this agreement, and otherwise.

 

Section 6.               Covenants of the Company.  The Company hereby agrees and covenants as
follows:

 

(a)           The Company shall use commercially reasonable
efforts to file as and when applicable, on a timely basis, all reports required
to be filed by it under the Exchange Act. 
If the Company is not required to file reports pursuant to the Exchange
Act, upon the request of any Holder of Registrable Securities, the Company
shall use commercially reasonable efforts to make publicly available the
information specified in subparagraph (c)(2) of Rule 144.  The Company shall use commercially reasonable
efforts to take such further action as may be reasonably required from time to
time and as may be within the reasonable control of the Company to enable the
Holders to Transfer Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144 or
any other exemption from registration. 
Upon the request of any Holder of Registrable Securities, the Company
will deliver to such Holder a written statement as to whether it has complied
with such requirements and, if not, the specifics thereof.

 

(b)           In connection with any sale, transfer
or other disposition by a Holder of any 
Registrable Securities pursuant to Rule 144, the Company shall use
commercially reasonable efforts to cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any Securities Act legend, and enable
certificates for such Registrable Securities to be for such number of shares
and registered in such names as the Holder

 

 

may reasonably request at
least two Business Days prior to any sale of Registrable Securities.

 

Section 7.               Miscellaneous .

 

(a)           Amendments and Waivers.

 

(i)            The
provisions of this Agreement, including the provisions of this Section 7(a),
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given without the written
consent of the Company and the Holders of a majority of the outstanding
Registrable Securities.  Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
Holder, each future Holder of Registrable Securities, and the Company.

 

(ii)           Notice
of any amendment, modification or supplement to this Agreement adopted in
accordance with this Section 7 shall be provided by the Company to the
Holders prior to the effective date of such amendment, modification or
supplement.

 

(b)           Notices.  All notices or other communications under
this Agreement shall be sufficient if in writing and delivered by hand or sent,
postage prepaid by registered, certified or express mail, or by recognized
overnight air courier service and shall be deemed given when so delivered by
hand, or if mailed or sent by overnight courier service, on the third Business
Day after mailing (one Business Day in the case of express mail or overnight
courier service) to the parties at the following addresses:

 

(i)            if
to the Initial Holders, to the addresses set forth under their signatures on
the signature page hereof and if to any other Holder to the address contained
in the records of the Company;

 

(ii)           if
to the Company, to:

 

 

FairPoint Communications, Inc.

521 East Morehead Street, Suite 250

Charlotte, North Carolina 28202

Attention: Shirley J. Linn, Esq.

 

with a copy to:

 

Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, New York  10022

Attention: Jeffrey J. Pellegrino, Esq.

 

or at such other address as the addressee may have
furnished in writing to the sender as provided herein.

 

(c)           Assignment.

 

(i)            Except
as expressly provided in this Section 7(c), the rights of the parties hereto
cannot be assigned and any purported assignment or transfer to the contrary
shall be void ab initio.  So long as the
terms of this Section 7(c) are followed, any Holder may assign any of its
rights under this Agreement, without the consent of the Company, to any Person
to whom such holder Transfers any Registrable Securities or any rights to
acquire Registrable Securities so long as such Transfer is not made pursuant to
an effective Registration Statement or pursuant to Rule 144 or Rule 145 (or any
successor provisions) under the Securities Act or in any other manner or to any
Person the effect or consequences of which is to cause the Transferred
securities to be freely transferable without regard to the volume and manner of
sale limitations set forth in Rule 144 (or any successor provision) in the
hands of the transferee as of the date of such Transfer.

 

(ii)           Notwithstanding
Section 7(c)(i) hereof, no Holder may assign any of its rights under this
Agreement to any Person to whom such Holder Transfers any Registrable
Securities if the Transfer of such Registrable Securities requires registration
under the Securities Act.

 

(iii)          The
nature and extent of any rights assigned shall be as agreed to between the
assigning party and the assignee.  No
Person may be assigned any rights under this Agreement unless (x) the Company
is given written notice by the assigning party at the time of such assignment
stating the name and address of the assignee, identifying the securities of the
Company as to which the rights in question are being assigned, and providing a
detailed description of the nature and extent of the rights that

 

 

are
being assigned and (y) the assignee agrees in writing to be bound by and
subject to the terms and conditions of this Agreement, including, without
limitation, the provisions of this Section 7(c).

 

(d)           Successors and Assigns; No Third
Party Beneficiaries.  This Agreement
will be binding upon and inure to the benefit of the parties hereto and their
successors and permitted assigns.  Except
as set forth herein and by operation of law, no party to this Agreement may
assign or delegate all or any portion of its rights, obligations, or
liabilities under this Agreement without the prior written consent of the Company
in the case of a Holder or without the written consent of Holders holding a
majority of Registrable Securities in the case of the Company; provided, that
(i) such transferee acquires such Registrable Securities pursuant to an express
assignment from the transferor, and (ii) such transferee executes a joinder
agreement agreeing to be bound by all of the transferor’s obligations
hereunder, a copy of which shall have been delivered to the Company.  This Agreement shall not be construed so as
to confer any right or benefit upon any Person other than the parties hereto
and their respective successors and permitted assigns to the extent
contemplated herein.

 

(e)           Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

 

(f)            Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

(g)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

 

(h)           Specific Performance.  The parties hereto acknowledge that there
would be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that each party, in addition to
any other remedy to which it may be entitled at law or in equity, shall be
entitled to compel specific performance of the obligations of any other party
under this Agreement in accordance with the terms and conditions of this
Agreement in any court of the United States or any State thereof having
jurisdiction.

 

(i)            Entire Agreement.  This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. 
This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.

 

 

IN WITNESS WHEREOF, the Company
has executed this Agreement as of the date first written above.

 

 

	
   

  	
  FAIRPOINT COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Shirley J. Linn

  	
   

  
	
   

  	
   

  	
  Name: Shirley J. Linn

  
	
   

  	
   

  	
  Title: Senior Vice President and General

  Counsel

  

 

 

IN
WITNESS WHEREOF, the undersigned Holder has executed this Agreement as of the
date first written above.

 

	
   

  	
   

  	
  KELSO INVESTMENT ASSOCIATES V,

  
	
   

  	
   

  	
  L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  Kelso
  Partners V, L.P., its General

  
	
   

  	
   

  	
   

  	
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ George E. Matelich

  
	
   

  	
   

  	
  Name: George E. Matelich

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: Kelso & Company

  
	
   

  	
   

  	
  320 Park Avenue, 24th Floor

  
	
   

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KELSO EQUITY PARTNERS V, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ George E. Matelich

  
	
   

  	
   

  	
  Name: George E. Matelich

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: Kelso & Company

  
	
   

  	
   

  	
  320 Park Avenue, 24th Floor

  
	
   

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Eugene B. Johnson

  
	
   

  	
   

  	
  Name: Eugene B. Johnson

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 920 Berkley Avenue

  
	
   

  	
   

  	
  Charlotte, NC 28203

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Peter G. Nixon

  
	
   

  	
   

  	
  Name: Peter G. Nixon

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 21720 Junco Court

  
	
   

  	
   

  	
  Cornelius, NC 28031

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Timothy W. Henry

  
	
   

  	
   

  	
  Name: Timothy W. Henry

  

 

 

	
   

  	
   

  	
  Address: 2329 Keara Way

  
	
   

  	
   

  	
  Charlotte, NC 28270

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Lisa R. Hood

  
	
   

  	
   

  	
  Name: Lisa R. Hood

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: P.O. Box 486

  
	
   

  	
   

  	
  Bucklin, KS 67834

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PUTNAM INVESTMENTS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert T. Burns

  
	
   

  	
   

  	
   

  	
  Name: Robert T. Burns

  
	
   

  	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: One Post Office Square

  
	
   

  	
   

  	
  Boston, MA 02109

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THOMAS H. LEE FOREIGN FUND IV,

  L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Thomas H. Lee

  
	
   

  	
   

  	
  Name: Thomas H. Lee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THOMAS H. LEE FOREIGN FUND IV-B,

  L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Thomas H. Lee

  
	
   

  	
   

  	
  Name: Thomas H. Lee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THOMAS H. LEE CHARITABLE

  INVESTMENT LIMITED PARTNERSHIP

  

 

 

	
   

  	
   

  	
  /s/ Thomas H. Lee

  
	
   

  	
   

  	
  Name: Thomas H. Lee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THL-CCI INVESTORS LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Thomas H. Lee

  
	
   

  	
   

  	
  Name: Thomas H. Lee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1997 THOMAS H. LEE NOMINEE

  TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gerald R. Wheeler

  
	
   

  	
   

  	
   

  	
  Name: Gerald R. Wheeler

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  US Bank, N.A. (as successor to State Street

  Trust And Company), not personally but

  solely under a Trust Agreement dated as of

  August 18, 1997 and known as the Thomas

  H. Lee Nominee Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THOMAS H. LEE EQUITY FUND IV, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Thomas H. Lee

  
	
   

  	
   

  	
  Name: Thomas H. Lee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ David V. Harkins

  
	
   

  	
   

  	
  Name: David V. Harkins

  

 

 

	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE 1995 HARKINS GIFT TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Sheryll J. Harkins

  
	
   

  	
   

  	
  Name: Sheryll J. Harkins

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Scott A. Schoen

  
	
   

  	
   

  	
  Name: Scott A. Schoen

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ C. Hunter Boll

  
	
   

  	
   

  	
  Name: C. Hunter Boll

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Scott M. Sperling

  
	
   

  	
   

  	
  Name: Scott M. Sperling

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Anthony J. DiNovi

  
	
   

  	
   

  	
  Name: Anthony J. DiNovi

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  

 

 

	
   

  	
   

  	
  /s/ Thomas M. Hagerty

  
	
   

  	
   

  	
  Name: Thomas M. Hagerty

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Warren C. Smith, Jr.

  
	
   

  	
   

  	
  Name: Warren C. Smith, Jr.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Seth W. Lawry

  
	
   

  	
   

  	
  Name: Seth W. Lawry

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Kent R. Weldon

  
	
   

  	
   

  	
  Name: Kent R. Weldon

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Terrence M. Mullen

  
	
   

  	
   

  	
  Name: Terrence M. Mullen

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Todd M. Abbrecht

  
	
   

  	
   

  	
  Name: Todd M. Abbrecht

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  

 

 

	
   

  	
   

  	
  /s/ Charles A. Brizius

  
	
   

  	
   

  	
  Name: Charles A. Brizius

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Scott L. Jaeckel

  
	
   

  	
   

  	
  Name: Scott L. Jaeckel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ C. Hunter Boll

  
	
   

  	
   

  	
  Name: C. Hunter Boll

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Soren L. Oberg

  
	
   

  	
   

  	
  Name: Soren L. Oberg

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Thomas M. Shepherd

  
	
   

  	
   

  	
  Name: Thomas M. Shepherd

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Wendy L. Masler

  
	
   

  	
   

  	
  Name: Wendy L. Masler

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  

 

 

	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Andrew D. Flaster

  
	
   

  	
   

  	
  Name: Andrew D. Flaster

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RSL TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Charles W. Robins

  
	
   

  	
   

  	
  Name:

  	
  Charles W. Robins, as Trustee, not individually

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Stephen Zachary Lee

  
	
   

  	
   

  	
  Name: Stephen Zachary Lee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: c/o Thomas H. Lee Partners, L.P.

  
	
   

  	
   

  	
  100 Federal Street, 35th Floor

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
  Attn: Todd Link

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Charles W. Robins

  
	
   

  	
   

  	
  Name:
  Charles W. Robins, as Custodian for

  Nathan Lee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: c/o Weil, Gotshal & Manges LLP

  100 Federal Street

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Charles W. Robins

  
	
   

  	
   

  	
  Name:
  Charles W. Robins, as Custodian for

  Jesse Lee

  

 

 

	
   

  	
   

  	
  Address: c/o Weil, Gotshal & Manges LLP

  100 Federal Street

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Charles W. Robins

  
	
   

  	
   

  	
  Name: Charles W. Robins

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: c/o Weil, Gotshal & Manges LLP

  100 Federal Street

  
	
   

  	
   

  	
  Boston, MA 02110

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ James Westra

  
	
   

  	
   

  	
  Name: James Westra

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: c/o Weil, Gotshal & Manges LLP

  100 Federal Street

  
	
   

  	
   

  	
  Boston, MA 02110

  

 

 

SCHEDULE A

 

	
  Holder

  	
   

  	
  Number of Shares of

  Common Stock

  	
   

  
	
  Kelso Investment
  Associates V, L.P.

  	
   

  	
  3,112,861

  	
   

  
	
  Kelso Equity
  Partners V, L.P.

  	
   

  	
  335,729

  	
   

  
	
  Eugene B.
  Johnson

  	
   

  	
  90,945

  	
   

  
	
  Peter G. Nixon

  	
   

  	
  1,743

  	
   

  
	
  Timothy W. Henry

  	
   

  	
  3,372

  	
   

  
	
  Lisa R. Hood

  	
   

  	
  1,421

  	
   

  
	
  Putnam
  Investment Holdings, LLC

  	
   

  	
  55,864

  	
   

  
	
  Thomas H. Lee
  Foreign Fund IV, L.P.

  	
   

  	
  116,258

  	
   

  
	
  Thomas H. Lee
  Foreign Fund IV-B, L.P.

  	
   

  	
  329,936

  	
   

  
	
  Thomas H. Lee
  Charitable Investment Limited Partnership

  	
   

  	
  22,086

  	
   

  
	
  THL-CCI
  Investors Limited Partnership

  	
   

  	
  1,193

  	
   

  
	
  1997 Thomas H.
  Lee Nominee Trust

  	
   

  	
  52,401

  	
   

  
	
  Thomas H. Lee
  Equity Fund IV, L.P.

  	
   

  	
  3,397,096

  	
   

  
	
  David V. Harkins

  	
   

  	
  11,964

  	
   

  
	
  The 1995 Harkins
  Gift Trust

  	
   

  	
  1,341

  	
   

  
	
  Scott A. Schoen

  	
   

  	
  9,978

  	
   

  
	
  C. Hunter Boll

  	
   

  	
  9,978

  	
   

  
	
  Scott M.
  Sperling

  	
   

  	
  9,978

  	
   

  
	
  Anthony J.
  DiNovi

  	
   

  	
  9,978

  	
   

  
	
  Thomas M.
  Hagerty

  	
   

  	
  9,978

  	
   

  
	
  Warren C. Smith,
  Jr.

  	
   

  	
  9,978

  	
   

  
	
  Seth W. Lawry

  	
   

  	
  4,157

  	
   

  
	
  Kent R. Weldon

  	
   

  	
  2,777

  	
   

  
	
  Terrence M.
  Mullen

  	
   

  	
  2,213

  	
   

  
	
  Todd M. Abbrecht

  	
   

  	
  2,213

  	
   

  
	
  Charles A.
  Brizius

  	
   

  	
  1,663

  	
   

  
	
  Scott L. Jaeckel

  	
   

  	
  629

  	
   

  
	
  Soren L. Oberg

  	
   

  	
  629

  	
   

  
	
  Thomas R.
  Shepherd

  	
   

  	
  1,163

  	
   

  
	
  Wendy L. Masler

  	
   

  	
  288

  	
   

  
	
  Andrew D.
  Flaster

  	
   

  	
  250

  	
   

  
	
  RSL Trust

  	
   

  	
  723

  	
   

  
	
  Stephen Zachary
  Lee

  	
   

  	
  723

  	
   

  
	
  Charles W.
  Robins, as Custodian for Nathan Lee

  	
   

  	
  360

  	
   

  
	
  Charles W.
  Robins, as Custodian for Jesse Lee

  	
   

  	
  360

  	
   

  
	
  Charles W.
  Robins

  	
   

  	
  288

  	
   

  
	
  James Westra

  	
   

  	
  288Exhibit 10.21

 

FAIRPOINT COMMUNICATIONS, INC. 2005 STOCK
INCENTIVE PLAN

 

ARTICLE I

PURPOSES

 

This FairPoint Communications, Inc. 2005 Stock
Incentive Plan is intended to foster and promote the long-term financial
success of the Company and the Subsidiaries and increase total shareholder
returns by (i) motivating superior performance by means of
performance-related incentives, (ii) encouraging and providing for
the acquisition of an ownership interest in the Company by its employees and
directors and (iii) enabling the Company and its Subsidiaries to
attract and retain the services of outstanding employees, consultants and
directors upon whose judgment, interest and special effort the successful
conduct of its operations is largely dependent. 
Capitalized terms are defined in Article XIII.

 

ARTICLE II

POWERS OF THE COMMITTEE

 

2.1                                 Power
to Grant Awards.  The Committee shall
determine the Participants to whom Awards shall be granted, the type or types
of Awards to be granted and the terms and conditions of any and all such
Awards.  The Committee may establish
different terms and conditions for different types of Awards, for different
Participants receiving the same type of Award and for the same Participant for
each Award such Participant may receive, whether or not granted at different
times.

 

2.2                                 Administration.  The Committee shall be responsible for the
administration of the Plan, including, without limitation, determining which
Participants receive Awards, what kind of Awards are made under the Plan and
for what number of shares, and the other terms and conditions of each such
Award.  The Committee shall have the
responsibility of construing and interpreting the Plan and of establishing,
amending and rescinding such rules and regulations as it may deem necessary or
desirable for the proper administration of the Plan.  Any decision or action taken or to be taken
by the Committee, arising out of or in connection with the construction,
administration, interpretation and effect of the Plan and of its rules and regulations,
shall, to the greatest extent permitted by applicable law, be within its
absolute discretion (except as otherwise specifically provided herein) and
shall be conclusive and binding upon the Company and its Subsidiaries, all
Participants and any person claiming under or through any Participant.  No term of this Plan relating to ISOs shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
section 422 of the Code.

 

2.3                                 Delegation
by the Committee.  The Committee may
delegate its authority under this Plan; provided that the Committee
shall in no event delegate its authority with respect to the compensation of
the Chief Executive Officer of the Company, the other four most highly
compensated executive officers (as determined under Section 162(m) of the Code
and regulations thereunder) of the Company and any other individual whose

 

 

compensation the Board or
Committee reasonably believes may become subject to Section 162(m) of the Code.

 

2.4                                 Participants
Based Outside the United States.  The
Committee, in order to conform with provisions of local laws and regulations in
foreign countries in which the Company or its Subsidiaries operate, shall have
sole discretion to (i) modify the terms and conditions of Awards granted
to Participants employed outside the United States, (ii) establish
subplans with modified exercise procedures and such other modifications as may
be necessary or advisable under the circumstances presented by local laws and
regulations, and (iii) take any action which it deems advisable to
obtain, comply with or otherwise reflect any necessary governmental regulatory
procedures, exemptions or approvals with respect to the Plan or any subplan
established hereunder.

 

ARTICLE III

STOCK SUBJECT TO PLAN

 

3.1                                 Number.  Subject to the provisions of this Article
III, the number of Shares subject to Awards under the Plan may not exceed
947,441 Shares.  The Shares to be
delivered under the Plan may consist, in whole or in part, of treasury stock or
authorized but unissued Common Stock not reserved for any other purpose.  The maximum number of Shares with respect to
which Options or Stock Appreciation Rights may be granted to any one
Participant in any calendar year shall be 500,000.

 

3.2                                 Canceled,
Terminated, or Forfeited Awards; Awards Settled for Cash.  Any Shares subject to any Award granted
hereunder that for any reason is canceled, terminated or otherwise settled
without the issuance of any Common Stock after the effective date of this Plan
shall be available for further Awards under this Plan.

 

3.3                                 Adjustment
in Capitalization.  In the event of
any Adjustment Event such that an adjustment is required to preserve, or to
prevent enlargement of, the benefits or potential benefits made available under
this Plan, the Committee shall, in such manner as the Committee shall deem
equitable, adjust any or all of (a) the number and kind of Shares which
thereafter may be awarded or optioned and sold under the Plan (including,
without limitation, adjusting the limits on the number and types of certain
Awards that may be made under the Plan), (b) the number and kinds of
Shares subject to outstanding Options and other Awards and (c) the
grant, exercise or conversion price with respect to any of the foregoing, provided
that any adjustment to the exercise or conversion price of, or the number and
kind of Shares subject to, outstanding Options or Stock Appreciation Rights
that the Committee intends to be excluded from the coverage of Section 409A of
the Code shall be made in accordance with the requirements of Section 409A of
the Code.  In addition, the Committee may
make provisions for a cash payment to a Participant or a person who has an
outstanding Option or other Award.  The
number of Shares subject to any Option or other Award shall always be a whole
number.

 

2

 

ARTICLE IV

STOCK OPTIONS

 

4.1                                 Grant
of Options.  The Committee shall have
the power to grant Options that are “incentive stock options” within the
meaning of section 422 of the Code (“ISOs”) or that are non-statutory
stock options (“NSOs”) to any Participant and to determine (a) the
number of ISOs and the number of NSOs to be granted to each Participant and (b) the
other terms and conditions of such Awards. 
An Option shall be an NSO unless otherwise specified by the Committee at
the time of grant.  Each Option shall be
evidenced by an Option agreement that shall specify (a) the type of
Option granted, (b) the number of Shares to which the Option
pertains, (c) the exercise price, (d) the period in
which the Option may be exercised and (e) such terms and conditions
not inconsistent with the Plan as the Committee shall determine.  The maximum number of Shares that may be
issued under the Plan through ISOs is 947,441.

 

4.2                                 Exercise
Price.  Unless otherwise determined
by the Committee, Options granted pursuant to the Plan shall have an exercise
price that is not less than the Fair Market Value of a Share on the date the Option
is granted.

 

4.3                                 Vesting
and Exercisability.  Options awarded
under the Plan shall vest and become exercisable in accordance with the vesting
schedule determined by the Committee, subject to the Participant’s continuous
employment with the Company or a Subsidiary from the date of grant through the
applicable vesting date.  No Option shall
be exercisable for more than 10 years after the date on which it is granted.

 

4.4                                 Payment.  The Committee shall establish procedures
governing the exercise of Options. 
Without limiting the generality of the foregoing, the Committee may
provide that payment of the exercise price may be made (a) in cash
or its equivalent, (b) by exchanging Shares owned by the optionee
(which are not the subject of any pledge or other security interest), (c) through
an arrangement with a broker approved by the Company whereby payment of the
exercise price is accomplished with the proceeds of the sale of Common Stock or
(d) by any combination of the foregoing; provided that the
combined value of all cash and cash equivalents paid and the Fair Market Value
of any such Common Stock so tendered to the Company, valued as of the date of
such tender, is at least equal to such exercise price.  No Shares shall be delivered pursuant to any
exercise of an Option unless arrangements satisfactory to the Committee have
been made to assure full payment of the exercise price therefor and any
required withholding or other similar taxes or governmental charges.

 

4.5                                 Termination
of Employment.  Unless otherwise
determined by the Committee at or after the date of grant and except as
provided in Article XI, in the event a Participant’s employment terminates by
reason of death or a Qualifying Termination of Employment, the Participant (or
the Participant’s beneficiary or legal representative) may exercise any Options
(regardless of whether then exercisable) until the earlier of (a) the
twelve-month anniversary of the date of such termination of employment and (b) the
date such Options would otherwise expire but for the operation of this Section
4.5.  Unless otherwise determined by the
Committee at or after the date of grant, in the event a

 

3

 

Participant’s employment terminates for any reason other than death, a
Qualifying Termination of Employment or Cause, the Participant may exercise any
Option that is exercisable at the time of such termination of employment until
the earlier of (a) the 60-day anniversary of the date of such
termination of employment and (b) the date such Options would otherwise
expire but for the operation of this Section 4.5, and any Option that is not
then exercisable shall be forfeited and cancelled as of the date of such
termination of employment.  In the event
that a Participant’s employment is terminated for Cause (or, following the date
the Participant’s employment terminates, the Committee determines that
circumstances exist such that the Participant’s employment could have been
terminated for Cause), any Options granted to such Participant, whether or not
then vested, shall be forfeited and cancelled as of the date of such
termination of employment.

 

4.6                                 Certain
NSO’s. If at the time of grant the Committee intends a grant of NSOs to any
Participant to be excluded from the coverage of Section 409A of the Code, then,
notwithstanding any other provision of the Plan, such grant of NSOs shall (i)
have an exercise price that is not less than the Fair Market Value of a Share
on the date the NSOs are granted and (ii) not include any feature for
the deferral of compensation other than the deferral of recognition of income
until the exercise or other disposition of the NSOs.

 

ARTICLE V

RESTRICTED STOCK AND RESTRICTED UNITS

 

5.1                                 Grant
of Restricted Stock and Restricted Units. 
The Committee shall have the power to grant Restricted Stock or
Restricted Units to any Participant and to determine (a) the number
of shares of Restricted Stock and the number of Restricted Units to be granted
to each Participant, (b) the Period(s) of Restriction and (c) the
other terms and conditions of such Awards. 
The Committee shall require that the stock certificates evidencing any
Restricted Stock or Restricted Units be held in the custody of the Secretary of
the Company until the Period of Restriction lapses, and that, as a condition of
any Restricted Stock award, the Participant shall have delivered a stock power,
endorsed in blank, relating to the Shares covered by such award.  Each grant of Restricted Stock or Restricted
Units shall be evidenced by a written agreement setting forth the terms of such
Award.

 

5.2                                 Vesting
of Restricted Stock and Restricted Units. 
Restricted Stock or Restricted Units granted pursuant to Section 5.1
shall vest and become nonforfeitable, and the Period of Restriction with
respect to such Restricted Stock or Restricted Units will lapse, in accordance
with the vesting schedule determined by the Committee.

 

5.3                                 Dividend
Equivalents.

 

(a)                                  Restricted
Stock.  Unless otherwise determined
by the Committee at the time of grant, Participants holding outstanding
Restricted Stock shall not be entitled to receive any dividends or Dividend
Equivalents paid with respect to such shares of Restricted Stock.

 

4

 

(b)                                 Restricted
Units.  The Committee will determine
whether and to what extent to credit to the account of, or to pay currently to,
each recipient of a Restricted Unit, any Dividend Equivalents.  To the extent provided by the Committee at or
after the date of grant, any cash Dividend Equivalents credited to a
Participant’s account shall be deemed to have been invested in Shares on the
record date established for the related dividend and, accordingly, a number of
Restricted Units shall be credited to such Participant’s account equal to the
greatest whole number which may be obtained by dividing (i) the
value of such Dividend Equivalents on the record date by (ii) the
Fair Market Value of a Share on such date. 
Any additional Restricted Units credited in respect of Dividend
Equivalents shall become vested and nonforfeitable, if at all, on the same
terms and conditions as are applicable in respect of the Restricted Units with
respect to which such Dividend Equivalents were payable.

 

5.4                                 Termination
of Employment.  Unless otherwise
determined by the Committee at or after the date of grant and except as
provided in Article XI, in the event a Participant’s employment terminates by
reason of a Qualifying Termination of Employment during the Period of
Restriction, a pro rata portion of any Shares related to a Restricted Stock or
Restricted Unit held by such Participant shall become nonforfeitable, based
upon the percentage of which the numerator is the portion of the Period of
Restriction that expired prior to the Participant’s termination and the
denominator is the number of days in the Period of Restriction.  Unless otherwise determined by the Committee
at or after the date of grant, in the event a Participant’s employment
terminates because of the Participant’s death during the Period of Restriction,
any Shares related to a Restricted Stock or Restricted Unit held by such
Participant shall become nonforfeitable. 
Unless otherwise determined by the Committee at or after the date of
grant, in the event a Participant’s employment terminates for any reason other
than death or a Qualifying Termination of Employment during the Period of
Restriction, any Restricted Stock or Restricted Units held by such Participant
shall be forfeited and cancelled as of the date of such termination of
employment.

 

5.5                                 Settlement
of Restricted Units.  Unless
otherwise determined by the Committee at or after the date of grant, when a
Period of Restriction with respect to an Award of Restricted Units lapses and
the Restricted Units become vested and nonforfeitable, the Participant shall
receive (i) one Share for each such Restricted Unit (including
additional Restricted Units credited in respect of Dividend Equivalents) or (ii) if
the Committee so determines, the Committee may direct the Company to pay to the
Participant the Fair Market Value of such Shares as of such payment date.

 

ARTICLE VI

INCENTIVE AWARDS

 

6.1                                 Grant
of Incentive Stock and Incentive Units. 
The Committee shall have the authority to grant Incentive Stock or
Incentive Units to any Participant and to determine (a) the number
of Incentive Stock and the number of Incentive Units to be granted to each
Participant, (b) the restrictions pursuant to which such Award is
subject to forfeiture by reason of the Performance Criteria established by the
Committee pursuant to Section 6.2 not being met in whole or in part and (c) the
other terms and conditions of

 

5

 

such Awards.  Each grant of Incentive Stock or Incentive
Units shall be evidenced by a written agreement setting forth the terms of such
Award.

 

6.2                                 Performance
Criteria.

 

(a)                                  Within
90 days after each Performance Period begins (or such other date as may be
required or permitted under Section 162(m) of the Code, if applicable), the
Committee shall establish the performance objective or objectives for the
applicable Performance Period that must be satisfied in order for an Award to
be vested and nonforfeitable (the “Performance Criteria”).  Any such Performance Criteria will be based
upon the relative or comparative achievement of one or more of the following
criteria, or such other criteria, as may be determined by the Committee: (i)
revenue growth; (ii) earnings before interest, taxes, depreciation and
amortization; (iii) earnings before interest, taxes and amortization; (iv)
operating income; (v) pre- or after-tax income; (vi) cash flow; (vii)
cash flow per share; (viii) net earnings; (ix) earnings per
share; (x) return on equity; (xi) return on invested capital; (xii)
return on assets; (xiii) economic value added (or an equivalent metric);
(xiv) share price performance; (xv) total shareholder return; (xvi)
improvement in or attainment of expense levels; (xvii) improvement in or
attainment of working capital levels; or (xviii) debt reduction.

 

(b)  The
Performance Criteria related to Incentive Stock or Incentive Units shall be
achieved upon the determination by the Committee that the objective or
objectives for the applicable Performance Period have been attained, in whole
or in part.  The Committee may provide at
the time of grant that in the event the objective or objectives are attained in
part, a specified portion (which may be zero) of the Award will vest and become
nonforfeitable and the remaining portion shall be forfeited.

 

6.3                                 Dividend
Equivalents.

 

(a)                                  Incentive
Stock.  Unless otherwise determined
by the Committee at or after the date of grant, Participants granted Incentive
Stock shall not be entitled to receive cash dividends or Dividend Equivalents.

 

(b)                                 Incentive
Units.  The Committee will determine
whether and to what extent to credit to the account of, or to pay currently to,
each recipient of an Incentive Unit, any Dividend Equivalents.  To the extent provided by the Committee at or
after the date of grant, any cash Dividend Equivalents with respect to the
Incentive Units credited to a Participant’s account shall be deemed to have
been invested in Shares on the record date established for the related dividend
and, accordingly, a number of Incentive Units, as the case may be, shall be
credited to such Participant’s account equal to the greatest whole number which
may be obtained by dividing (i) the value of such Dividend
Equivalents on the record date by (ii) the Fair Market Value of a
Share on such date.  Any additional
Incentive Unit credited in respect of Dividend Equivalents shall become vested
and nonforfeitable, if at all, on the same terms and conditions as are
applicable in respect of the Incentive Unit with respect to which such Dividend
Equivalents were payable.

 

6

 

6.4                                 Termination
of Employment.  Unless otherwise
determined by the Committee at or after the date of grant and except as
provided in Article XI, in the event that a Participant’s employment terminates
by reason of a Qualifying Termination of Employment during the Performance
Period, any award of Incentive Stock or Incentive Units shall become vested and
nonforfeitable at the end of the Performance Period as to that number of such
Incentive Stock or Incentive Units, as the case may be, that is equal to that
percentage, if any, of such Award that would have been earned had the
Participant’s employment not so terminated prior to the expiration of the
Performance Period times a fraction, the numerator of which is the number of
days employed during the Performance Period and the denominator of which is the
total number of days during the Performance Period. Unless otherwise determined
by the Committee at or after the date of grant, in the event that a Participant’s
employment terminates because of death during the Performance Period, any award
of Incentive Stock or Incentive Units shall become vested and nonforfeitable at
the end of the Performance Period as to that number of such Incentive Stock or
Incentive Units, as the case may be, that is equal to that percentage, if any,
of such Award that would have been earned had the Participant’s employment not
so terminated prior to the expiration of the Performance Period. Unless
otherwise determined by the Committee at or after the date of grant, in the
event a Participant’s employment terminates for any reason other than death or
a Qualifying Termination of Employment during the Performance Period, any
Incentive Stock or Incentive Units held by such Participant shall be forfeited
and cancelled as of the date of such termination of employment.

 

6.5                                 Settlement
of Incentive Units.  Unless otherwise
determined by the Committee at or after the date of grant, when the Performance
Criteria with respect to an Award of Incentive Units is achieved and the
Incentive Units become vested and nonforfeitable, the Participant shall receive
(i) one Share for each such Incentive Unit (including additional
Incentive Units credited in respect of Dividend Equivalents, if any) or (ii) if
the Committee so determines, the Committee may direct the Company to pay to the
Participant the Fair Market Value of such Shares as of such payment date.

 

ARTICLE VII

STOCK APPRECIATION RIGHTS

 

7.1                                 Grant
of Stock Appreciation Rights.  Stock
Appreciation Rights may be granted to any Participants, all Participants or any
class of Participants at such time or times as shall be determined by the
Committee.  Stock Appreciation Rights may
be granted only on a freestanding basis, and not related to any Option.  A grant of a Stock Appreciation Right shall
be evidenced by a written agreement containing such provisions not inconsistent
with the Plan as the Committee shall approve.

 

7.2                                 Terms
and Conditions of Stock Appreciation Rights.  Unless otherwise determined by the Committee
at or after the date of grant, the terms and conditions (including, without
limitation, the exercise period of the Stock Appreciation Right, the vesting
schedule applicable thereto and the impact of any termination of service on the
Participant’s rights with respect to the Stock Appreciation Right) applicable
with respect to Stock Appreciation Rights shall be substantially identical (to
the extent possible taking

 

7

 

into account the differences related to the character of the Stock
Appreciation Right) to the terms and conditions that would have been applicable
under Article IV above were the grant of the Stock Appreciation Rights a grant
of an Option.

 

7.3                                 Payment
of Stock Appreciation Right Amount. 
Upon exercise of a Stock Appreciation Right, the holder shall be
entitled to receive payment, in cash, in Shares or in a combination thereof, as
determined by the Committee, of an amount determined by multiplying the excess,
if any, of the Fair Market Value of a Share at the date of exercise over the
Stock Appreciation Right’s base value or exercise price, by the number of
Shares with respect to which the Stock Appreciation Rights are then being
exercised.

 

7.4                                 Certain
Stock Appreciation Rights.  If at the
time of grant the Committee intends a grant of Stock Appreciation Rights to any
Participant to be excluded from the coverage of Section 409A of the Code, then,
notwithstanding any other provision of the Plan, such grant of Stock
Appreciation Rights shall (i) have a base value or exercise price that
is not less than the Fair Market Value of a Share on the date the Stock
Appreciation Rights are granted, (ii) be payable upon exercise only with Shares
and (iii) not include any feature for the deferral of compensation other
than the deferral of recognition of income until the exercise or other
disposition of the Stock Appreciation Rights.

 

ARTICLE VIII

DEFERRED SHARES

 

8.1                                 Deferred
Share Awards.  The Committee shall
have the authority to grant Deferred Shares to any Participant and to determine
(i) the number of Deferred Shares granted to each Participant, (ii) the
date such Deferred Shares shall become vested and (iii) the date such
Deferred Shares will be payable to the Participant.  In addition, on such date or dates as shall
be established by the Committee and subject to such terms and conditions as the
Committee shall determine, a Participant may be permitted to elect to defer
receipt of all or a portion of his annual compensation and/or annual incentive
bonus (“Deferred Amount”) payable by the Company or a Subsidiary and
receive in lieu thereof a number of Deferred Shares equal to the greatest whole
number which may be obtained by dividing (i) the Deferred Amount by
(ii) the Fair Market Value of a Share on the date such compensation
or bonus would otherwise have been payable to the Participant.  No Shares will be issued at the time an award
of Deferred Shares is made and the Company shall not be required to set aside a
fund for the payment of any such award. 
The Company will establish a separate account for the Participant and
will record in such account the number of Deferred Shares awarded to the
Participant.  To the extent the Committee
so determines, a Participant who elects to defer receipt of his or her
compensation or bonus and receive Deferred Shares may also receive that number
of supplemental Deferred Shares (“Supplemental Units”) equal to the
greatest whole number which may be obtained by dividing (i) such
percentage of the Deferred Amount as is determined by the Committee by (ii) the
Fair Market Value of a Share on the date of grant.  Each grant of Deferred Shares and
Supplemental Units shall be evidenced by a written agreement setting forth the
terms of such Award.

 

8

 

8.2                                 Vesting
of Deferred Shares and Supplemental Units. 
Unless otherwise determined by the Committee at or after the date of
grant, the Deferred Shares together with any Dividend Equivalents credited with
respect thereto, shall be fully vested at all times.  The Supplemental Units together with any Dividend
Equivalents credited with respect thereto, will
become vested in accordance with the vesting schedule determined by the
Committee, subject to the Participant’s continuous employment with the Company
or a Subsidiary through such vesting date.

 

8.3                                 Dividend
Equivalents.  The Committee will
determine whether and to what extent Dividend Equivalents will be credited to
the account of, or paid currently to, a recipient of Deferred Shares or
Supplemental Units.  To the extent
provided by the Committee at or after the date of grant, any cash Dividend
Equivalents with respect to the Deferred Shares and Supplemental Units deemed
credited to a Participant’s account shall be deemed to have been invested in
Shares on the record date established for the related dividend and,
accordingly, a number of Deferred Shares or Supplemental Units, as the case may
be, shall be credited to such Participant’s account equal to the greatest whole
number which may be obtained by dividing (i) the amount of such
Dividend Equivalent on the record date by (ii) the Fair Market
Value of a Share on such date.

 

8.4                                 Termination
of Employment.  Unless otherwise
determined by the Committee at or after the date of grant and except as
provided in Article XI, in the event that a Participant’s employment terminates
by reason of death or a Qualifying Termination of Employment during the vesting
period, any Supplemental Units (and related Dividend Equivalents, if any)
granted to a Participant shall become vested and nonforfeitable.  Unless otherwise determined by the Committee
at or after the date of grant, in the event a Participant’s employment
terminates for any reason other than death, a Qualifying Termination of
Employment or Cause during the vesting period, any Supplemental Units (and
related Dividend Equivalents, if any) held by such Participant, to the extent
unvested, shall be forfeited and cancelled as of the date of such termination
of employment.  In the event that a
Participant’s employment is terminated for Cause (or, following the date the
Participant’s employment terminates, the Committee determines that
circumstances exist such that the Participant’s employment could have been
terminated for Cause), any Supplemental Units (and related Dividend
Equivalents, if any) granted to such Participant, whether or not then vested,
shall be forfeited and cancelled as of the date of such termination of
employment.

 

8.5                                 Settlement
of Deferred Shares. Unless otherwise determined by the Committee at or
after the date of grant and except as provided in Article XI, a Participant
shall receive as of the date of such Participant’s termination of employment
(or such other date as may be elected by the Participant or required by the
Committee in accordance with the rules and procedures of the Committee) (i) one
Share for each Deferred Share credited to such Participant’s account and (ii) subject
to Section 8.4, one Share for each Supplemental Unit that shall have become
vested.  The Committee may provide in the
Award agreement applicable to any Deferred Shares or Supplemental Units that,
in lieu of issuing Shares, the Committee may direct the Company to pay to the
Participant the Fair Market Value of such Shares as of such payment date.

 

9

 

8.6                                 Further
Deferral Elections.  A Participant
may elect to further defer receipt of Shares issuable in respect of Deferred
Shares (or an installment of an Award) for a specified period or until a
specified event, subject in each case to the Committee’s approval and to such
terms as are determined by the Committee, all in its sole discretion.  Subject to any exceptions adopted by the
Committee, such election must generally be made at least 12 months prior to the
original settlement date of such Deferred Shares (or any such installment
thereof) and such election may not take effect until the expiration of such 12
month period.  A further deferral
opportunity does not have to be made available to all Participants, and
different terms and conditions may apply with respect to the further deferral
opportunities made available to different Participants.

 

ARTICLE IX

CHANGE IN CONTROL

 

9.1                                 Accelerated
Vesting and Payment.  Subject to the
provisions of Section 9.2 below, in the event of a Change in Control, each
Option shall be, at the discretion of the Committee, either canceled in
exchange for a payment in cash of an amount equal to the excess, if any, of the
Change in Control Price over the exercise price for such Option, or fully
exercisable regardless of the exercise schedule otherwise applicable to such
Option.  All other Awards shall become
nonforfeitable and be immediately transferable or payable, as the case may be.

 

9.2                                 Alternative
Awards.  Notwithstanding Section 9.1,
no cancellation, acceleration of exercisability, vesting, cash settlement or
other payment shall occur with respect to any Award or any class of Awards if
the Committee reasonably determines in good faith prior to the occurrence of a
Change in Control that such Award or Awards shall be honored or assumed, or new
rights substituted therefor (such honored, assumed or substituted award an “Alternative
Award”), by a Participant’s employer (or the parent or a Subsidiary of such
employer) immediately following the Change in Control, provided that any
such Alternative Award must:

 

(i)                                     be based on stock that is traded on an established U.S.
securities market, or that will be so traded within 60 days of the Change in
Control;

 

(ii)                                  provide
such Participant (or each Participant in a class of Participants) with rights
and entitlements substantially equivalent to or better than the rights, terms
and conditions applicable under such Award, including, but not limited to, an
identical or better exercise or vesting schedule and identical or better timing
and methods of payment;

 

(iii)                               have substantially equivalent economic value to such Award
(determined at the time of the Change in Control); and

 

(iv)                              have
terms and conditions which provide that in the event that the Participant’s
employment is involuntarily terminated or constructively terminated, any
conditions on a Participant’s rights under, or any restrictions on transfer or

 

10

 

exercisability
applicable to, each such Alternative Award shall be waived or shall lapse, as
the case may be.

 

For this purpose, a constructive termination shall
mean a termination by a Participant following (i) a material reduction
in the Participant’s base salary or a Participant’s incentive compensation
opportunity, (ii) a material reduction in the Participant’s
responsibilities or (iii) the relocation of the Participant’s principal
place of work to a location that is more than 50 miles from the Participant’s
principal place of work immediately prior to the Change in Control, in each
case without the Participant’s written consent.

 

9.3                                 Termination
of Employment Prior to Change in Control. 
In the event that any Change in Control occurs as a result of any
transaction described in subclause (iii) or (v) of the definition of such
term, any Participant whose employment is terminated due to death or Disability
or by the Company for any reason other than Cause on or after the date, if any,
on which the shareholders of the Company approve such transaction, but prior to
the consummation thereof, shall be treated, solely for purposes of this Plan
(including, without limitation, this Article IX), as continuing in the Company’s
employment until the occurrence of such Change in Control, and to have been
terminated immediately thereafter.

 

ARTICLE X

STOCKHOLDER RIGHTS

 

A Participant (or a Permitted Transferee) shall have
no rights as a stockholder with respect to any Shares covered by an Award until
he or she shall have become the holder of record of such Share(s), and no
adjustments shall be made for dividends in cash or other property or
distribution or other rights in respect to any such Shares, except as otherwise
specifically provided for in this Plan.

 

ARTICLE XI
 SECTION 409A OF THE CODE

 

In connection with a Participant’s termination of
employment, the payment, settlement or exercisability of an Award held by a
Participant who the Committee reasonably believes is a “specified employee”
(within the meaning of Section 409A of the Code) shall not be made before the
first business day that is six months and one day after the date of such
Participant’s termination of employment (or, if earlier, upon death) if the
Committee reasonably believes an Award to be subject to Section 409A(a)(2)(B)
of the Code.  Notwithstanding anything to
the contrary in the Plan, the Committee may in its absolute discretion alter or
amend any of the provisions of this Plan if such alteration or amendment would
be required to comply with Section 409A of the Code or any regulations
promulgated thereunder.

 

11

 

ARTICLE XII

AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN

 

The Board or the Committee at any time may terminate
or suspend the Plan, and from time to time may amend or modify the Plan, provided
that no amendment, modification, or termination of the Plan shall in any manner
adversely affect any Award theretofore granted under the Plan, without the
consent of the Participant.  Unless
earlier terminated, the Plan shall terminate on the day immediately prior to the
first meeting of the stockholders of the Company in 2009 at which directors
will be elected.

 

ARTICLE XIII

DEFINITIONS

 

13.1                           Certain
Definitions.  Capitalized terms used
herein without definition shall have the respective meanings set forth below:

 

“Act” means the Securities Exchange Act of 1934,
as amended.

 

“Adjustment Event” means any stock dividend,
stock split, share combination, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination,
exchange of shares or other similar event affecting the Common Stock.

 

“Affiliate” means, with respect to any person,
any other person controlled by, controlling or under common control with such
person.

 

“Alternative Award” has the meaning given in
Section 9.2.

 

“Award” means any Option, Restricted Stock,
Restricted Unit, Stock Appreciation Right, Incentive Stock, Incentive Unit,
Deferred Share, or Supplemental Unit granted under the Plan or any combination
thereof, including Awards combining two or more types of Awards in a single
grant.

 

“Board” means the Board of Directors of the
Company.

 

“Cause” means, unless otherwise provided in an
Award, (i) the refusal or neglect of the Participant to perform
substantially his or her employment-related duties, (ii) the Participant’s
personal dishonesty, incompetence, willful misconduct or breach of fiduciary
duty, (iii) the Participant’s conviction of a crime constituting a
felony (or a crime or offense of equivalent magnitude in any jurisdiction) or
his or her willful violation of any other law, rule, or regulation (other than
a traffic violation or other offense or violation outside of the course of
employment which in no way adversely affects the Company or its reputation or
the ability of the Participant to perform his or her employment related duties
or to represent the Company) or (iv) the material breach by the
Participant of any applicable written policy of the Company or any Subsidiary; provided
that, with respect to any Participant who is party to an employment agreement
with the Company or a Subsidiary, “Cause” shall have the meaning specified in
such

 

12

 

Participant’s
employment agreement. 
The determination as to whether “Cause” has occurred shall be made by
the Committee, which shall have the authority to waive the consequences under
the Plan of the existence or occurrence of any of the events, acts or omissions
constituting “Cause.”

 

“Change in Control” means the first occurrence
of any of the following events (other than a Public Offering):

 

(i)                                     the
members of the Board (the “Incumbent Directors”) cease for any reason
other than due to death to constitute at least a majority of the members of the
Board, provided that any director whose election, or nomination for
election by the Company’s stockholders, was approved by a vote of at least a
majority of the members of the Board other than as a result of a proxy contest,
or any agreement arising out of an actual or threatened proxy contest, shall be
treated as an Incumbent Director;

 

(ii)                                  the
acquisition by any person, entity or “group” (as defined in Section 13(d) the
Act), other than the Company, the Subsidiaries, any employee benefit plan of
the Company or the Subsidiaries, any Kelso Entity or any Affiliate of any Kelso
Entity, any THL Entity or any Affiliate of any THL Entity, of 50% or more of
the combined voting power of the Company’s then outstanding voting securities;

 

(iii)                               the
merger or consolidation of the Company, as a result of which persons who were
stockholders of the Company immediately prior to such merger or consolidation,
do not, immediately thereafter, own, directly or indirectly, more than 50% of
the combined voting power entitled to vote generally in the election of
directors of the merged or consolidated company;

 

(iv)                              the liquidation or dissolution of the Company other than a
liquidation into the Company or into any Subsidiary; and

 

(v)                                 the
sale, transfer or other disposition of all or substantially all of the assets
of the Company to one or more persons or entities that are not, immediately
prior to such sale, transfer or other disposition, Affiliates of the Company,
any Kelso Entity or any THL Entity.

 

Notwithstanding
the foregoing, a “Change in Control” shall not be deemed to occur in the event
the Company files for bankruptcy, liquidation or reorganization under the
United States Bankruptcy Code.

 

“Change in Control Price” means the price per
Share offered in conjunction with any transaction resulting in a Change in
Control on a fully-diluted basis (as determined in good faith by the Committee
as constituted before the Change in Control, if any part of the offered price
is payable other than in cash) or, in the case of a Change in Control occurring
solely by reason of a change in the composition of the Board, the highest Fair
Market Value of a Share

 

13

 

on
any of the 30 trading days immediately preceding the date on which a Change in
Control occurs.

 

“Code” means the Internal Revenue Code of 1986,
as amended, and the regulations thereunder.

 

“Committee” means the Compensation Committee of
the Board, or when section 162(m) of the Code or Rule 16b promulgated under the
Act would require action to be taken by a committee of “outside directors” or “Non-Employee
Directors,” as the case may be, the “Committee” shall, if appropriate, be
deemed to refer to a subcommittee of the Compensation Committee that consists
of two or more members meeting such requirements, or the full Board in the
absence of such a subcommittee.

 

“Common Stock” means the common stock of the
Company, par value $.01 per share.

 

“Company” means FairPoint Communications, Inc.,
a Delaware corporation, and any successor thereto.

 

“Deferred Amount” has the meaning given in
Section 8.1.

 

“Deferred Share” means
the deferred share units that confer upon a Participant the right to receive
Shares at the end of a specified deferral period as set forth in Article VIII.

 

“Disability” means, unless otherwise provided
in an Award, a long-term disability within the meaning of the long-term disability
or other similar program then applicable to a Participant or, in the absence of
any such program, as determined by the Committee; provided that with
respect to any Participant who is a party to an employment agreement with the
Company or a Subsidiary, “Disability” shall have the meaning, if any, specified
in such agreement.

 

“Dividend Equivalents” means dividends paid by
the Company with respect to Shares corresponding to Awards awarded under the
Plan.

 

“Employee” means any officer, employee or consultant
of the Company or any Subsidiary, or any director of the Company or any
Subsidiary.

 

“Fair Market Value” means, as of any date of
determination, the closing price of a Share on the New York Stock Exchange (or
on such other recognized market or quotation system on which the trading prices
of Common Stock are traded or quoted at the relevant time).  In the event that there are no Common Stock
transactions reported on such exchange or system on such date, Fair Market
Value shall mean the closing price of a Share on the immediately preceding day
on which Common Stock transactions were so reported.

 

14

 

“Incentive Stock” shall mean an award of Common
Stock that is forfeitable until the achievement of specified Performance
Criteria as provided for in Section 6.1.

 

“Incentive Unit” shall mean a contractual right
to receive Common Stock, or cash based on the Fair Market Value of Common
Stock, made pursuant to Section 6.1 that is forfeitable by the Participant until
the achievement of specified Performance Criteria or until otherwise determined
by the Committee or in accordance with the terms of the Plan.

 

“ISOs” has the meaning given in Section 4.1.

 

“Kelso” means Kelso Investment Associates V, L.P. and any successor
investment vehicle managed by Kelso.

 

“Kelso Entities” means collectively, Kelso and
Kelso Equity Partners V, L.P.

 

“Normal Retirement” means a termination of the
Participant’s employment under circumstances that the Committee determines as
qualifying as retirement at normal retirement age for purposes of the Plan.

 

“NSOs” has the meaning given in Section 4.1.

 

“Option” means the right to purchase Common
Stock at a stated price for a specified period of time.

 

“Participant” means any Employee or prospective
Employee of the Company designated by the Committee to receive an Award under
the Plan.

 

“Performance Criteria” has the meaning given in
Section 6.2(a).

 

“Performance Period” means the period, as
determined by the Committee, during which the performance of the Company, any
Subsidiary, any business unit and any individual is measured to determine
whether and the extent to which the applicable performance measures have been
achieved.

 

“Period of Restriction” means the period during
which a Restricted Stock or Restricted Unit is subject to forfeiture.

 

“Permitted Transferees” has the meaning given
in Section 14.1.

 

“Plan” means this FairPoint Communications,
Inc. 2005 Stock Incentive Plan, as the same may be amended from time to time.

 

“Public Offering” means a public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, that covers (together with prior registrations) (a) not
less than 20% of the outstanding Shares,

 

15

 

on a fully diluted basis,
or (b) Shares that, after the closing of such public offering, will
be traded on the New York Stock Exchange, the American Stock Exchange or the
National Association of Securities Dealers Automated Quotation System.

 

“Qualifying Termination of Employment” means a
termination of a Participant’s employment with the Company or any of its
Subsidiaries by reason of the Participant’s Disability, early retirement with
the consent of the Committee or Normal Retirement.

 

“Restricted Stock” means an award of Common
Stock made pursuant to Section 5.1 that is forfeitable by the Participant until
the completion of a specified period of future service or until otherwise
determined by the Committee or in accordance with the terms of the Plan.

 

“Restricted Unit” means a contractual right to
receive Common Stock, or cash based on the Fair Market Value of Common Stock,
made pursuant to Section 5.1 that is forfeitable by the Participant until the
completion of a specified period of future service or until otherwise
determined by the Committee or in accordance with the terms of the Plan.

 

“Share” means a share of Common Stock.

 

“Stock Appreciation Right” means the right to
receive a payment from the Company, in cash or Common Stock, in an amount to be
determined under Article VII of the Plan.

 

“Subsidiary” means any corporation in which the
Company owns, directly or indirectly, stock representing 50% or more of the
voting power of all classes of stock entitled to vote and any other business
organization, regardless of form, in which the Company possesses directly or
indirectly 50% or more of the total combined equity interests in such
organization.

 

“Supplemental Unit” has the meaning given in
Section 8.1.

 

“THL Entity” means Thomas H. Lee Equity Fund
IV, L.P. and its Affiliates.

 

13.2                           Gender
and Number.  Except when otherwise
indicated by the context, words in the masculine gender used in the Plan shall
include the feminine gender, the singular shall include the plural, and the
plural shall include the singular.

 

16

 

ARTICLE XIV

MISCELLANEOUS PROVISIONS

 

14.1                           Nontransferability
of Awards.  No Award shall be
assignable or transferable except by will or the laws of descent and
distribution; provided that the Committee may permit (on such terms and
conditions as it shall establish) a Participant to transfer an Award for no
consideration to the Participant’s child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Participant’s household (other than a tenant or employee), a trust in which
these persons have more than fifty percent of the beneficial interest, a
foundation in which these persons (or the Participant) control the management
of assets, and any other entity in which these persons (or the Participant) own
more than fifty percent of the voting interests (“Permitted Transferees”).  Except to the extent required by law, no
right or interest of any Participant shall be subject to any lien, obligation
or liability of the Participant.  All
rights with respect to Awards granted to a Participant under the Plan shall be
exercisable during the Participant’s lifetime only by such Participant or, if
applicable, his or her Permitted Transferee(s). 
The rights of a Permitted Transferee shall be limited to the rights
conveyed to such Permitted Transferee, who shall be subject to and bound by the
terms of the agreement or agreements between the Participant and the
Company.  Notwithstanding the foregoing,
no ISO shall be assignable or transferable except by will or the laws of descent
and distribution, and during a Participant’s lifetime, shall be exercisable
only by the Participant.

 

14.2                           Beneficiary
Designation.  Each Participant under
the Plan may from time to time name any beneficiary or beneficiaries (who may
be named contingently or successively) to whom any benefit under the Plan is to
be paid or by whom any right under the Plan is to be exercised in case of his
death.  Each designation will revoke all
prior designations by the same Participant, shall be in a form prescribed by
the Committee, and will be effective only when filed by the Participant in
writing with the Committee during his lifetime. 
In the absence of any such designation, benefits remaining unpaid at the
Participant’s death shall be paid to or exercised by the Participant’s
surviving spouse, if any, or otherwise to or by his or her estate.

 

14.3                           No
Guarantee of Employment or Participation. 
Nothing in the Plan shall interfere with or limit in any way the right
of the Company or any Subsidiary to terminate any Participant’s employment at
any time, nor to confer upon any Participant any right to continue in the
employ of the Company or any Subsidiary. 
No Employee shall have a right to be selected as a Participant, or,
having been so selected, to receive any future Awards.

 

14.4                           Tax
Withholding.  The Company shall have
the right to deduct from all amounts paid to a Participant in cash (whether
under this Plan or otherwise) any taxes required by law to be withheld in
respect of Awards under this Plan.  In
the case of any Award satisfied in the form of Shares, no Shares shall be
issued unless and until arrangements satisfactory to the Committee shall have
been made to satisfy any withholding tax obligations applicable with respect to
such Award.  Without limiting the

 

17

 

generality of the foregoing, the Company shall have the right to
retain, or the Committee may, subject to such terms and conditions as it may
establish from time to time, permit Participants to elect to tender Shares
(including Shares issuable in respect of an Award) to satisfy, in whole or in
part, the amount required to be withheld (but no greater amount).

 

14.5                           Compliance
with Legal and Exchange Requirements. 
The Plan, the granting and exercising of Awards thereunder, and any
obligations of the Company under the Plan, shall be subject to all applicable
federal and state laws, rules, and regulations, and to such approvals by any
regulatory or governmental agency as may be required, and to any rules or
regulations of any exchange on which the Shares are listed.  The Company, in its discretion, may postpone
the granting and exercising of Awards, the issuance or delivery of Shares under
any Award or any other action permitted under the Plan to permit the Company,
with reasonable diligence, to complete such stock exchange listing or
registration or qualification of such Shares or other required action under any
federal or state law, rule, or regulation and may require any Participant to
make such representations and furnish such information as it may consider
appropriate in connection with the issuance or delivery of Shares in compliance
with applicable laws, rules, and regulations. 
The Company shall not be obligated by virtue of any provision of the
Plan to recognize the exercise of any Award or to otherwise sell or issue
Shares in violation of any such laws, rules, or regulations, and any
postponement of the exercise or settlement of any Award under this provision
shall not extend the term of such Awards. 
Neither the Company nor its directors or officers shall have any
obligation or liability to a Participant with respect to any Award (or Shares
issuable thereunder) that shall lapse because of such postponement.

 

14.6                           Indemnification.  Each person who is or shall have been a
member of the Committee or of the Board shall be indemnified and held harmless
by the Company against and from any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him in connection with or resulting
from any claim, action, suit, or proceeding to which he may be made a party or
in which he may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him in
settlement thereof, with the Company’s approval, or paid by him in satisfaction
of any judgment in any such action, suit, or proceeding against him, provided
he shall give the Company an opportunity, at its own expense, to handle and
defend the same before he undertakes to handle and defend it on his own behalf.  The foregoing right of indemnification shall
not be exclusive and shall be independent of any other rights of
indemnification to which such persons may be entitled under the Company’s
Articles of Incorporation or By-laws, by contract, as a matter of law, or
otherwise.

 

14.7                           Legend.  To the extent any stock certificate is issued
to a Participant in respect of shares of Restricted Stock prior to the
expiration of the Period of Restriction, such certificate shall be registered
in the name of the Participant and shall bear such restrictive legend as the
Committee determines appropriate.  Upon
the lapse of the Period of Restriction with respect to such Restricted Stock,
the Company shall issue or have

 

18

 

issued in exchange for those
certificates previously issued new share certificates without such legend
herein in respect of any Shares that have become vested.

 

14.8                           Effective
Date.  The Plan shall be effective
immediately prior to the consummation date of the initial public offering of
Shares.

 

14.9                           No
Limitation on Compensation.  Nothing
in the Plan shall be construed to limit the right of the Company to establish
other plans or to pay compensation to its employees, in cash or property, in a
manner which is not expressly authorized under the Plan.

 

14.10                     Governing
Law.  The Plan shall be construed in
accordance with and governed by the laws of the State of Delaware, without
reference to principles of conflict of laws which would require application of
the law of another jurisdiction, except to the extent that the corporate law of
the State of Delaware specifically and mandatorily applies.

 

14.11                     Severability;
Blue Pencil.  In the event that any
one or more of the provisions of this Plan shall be or become invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not be affected thereby.  If, in the opinion of any court of competent
jurisdiction such covenants are not reasonable in any respect, such court shall
have the right, power and authority to excise or modify such provision or
provisions of these covenants as to the court shall appear not reasonable and
to enforce the remainder of these covenants as so amended.

 

14.12                     No
Impact On Benefits.  Except as may otherwise be specifically
stated under any employee benefit plan, policy or program, no amount payable in
respect of any Award shall be treated as compensation for purposes of
calculating a Participant’s right under any such plan, policy or program.

 

14.13                     No
Constraint on Corporate Action. 
Nothing in this Plan shall be construed (i) to limit, impair
or otherwise affect the Company’s right or power to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, or to merge or consolidate, or dissolve, liquidate, sell, or
transfer all or any part of its business or assets or (ii) to limit
the right or power of the Company, or any Subsidiary to take any action which
such entity deems to be necessary or appropriate.

 

14.14                     Headings and Captions.  The
headings and captions herein are provided for reference and convenience only,
shall not be considered part of this Plan, and shall not be employed in the
construction of this Plan.

 

19

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