Attached files
file | filename |
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10-K - FORM 10-K - FAIRPOINT COMMUNICATIONS INC | g26634e10vk.htm |
EX-21 - EX-21 - FAIRPOINT COMMUNICATIONS INC | g26634exv21.htm |
EX-32.1 - EX-32.1 - FAIRPOINT COMMUNICATIONS INC | g26634exv32w1.htm |
EX-32.2 - EX-32.2 - FAIRPOINT COMMUNICATIONS INC | g26634exv32w2.htm |
EX-14.1 - EX-14.1 - FAIRPOINT COMMUNICATIONS INC | g26634exv14w1.htm |
EX-23.1 - EX-23.1 - FAIRPOINT COMMUNICATIONS INC | g26634exv23w1.htm |
EX-31.2 - EX-31.2 - FAIRPOINT COMMUNICATIONS INC | g26634exv31w2.htm |
EX-31.1 - EX-31.1 - FAIRPOINT COMMUNICATIONS INC | g26634exv31w1.htm |
Exhibit 99.5
FAIRPOINT COMMUNICATIONS, INC.
INSIDER TRADING POLICY
and Guidelines with Respect to
Certain Transactions in Company Securities
(January 24, 2011)
Certain Transactions in Company Securities
(January 24, 2011)
This Insider Trading Policy (the Policy) provides guidelines to employees, officers and
directors of FairPoint Communications, Inc. (the Company) with respect to transactions in the
Companys securities. The Company has adopted this policy and the procedures set forth herein to
help prevent insider trading and to assist the Companys employees, officers and directors in
complying with their obligations under the federal securities laws. Employees, officers and
directors are individually responsible to understand and comply with this Policy.
Applicability of Policy
This Policy applies to all transactions in the Companys securities, including common stock,
restricted stock, restricted stock units, options and warrants to purchase common stock and any
other debt or equity securities the Company may issue from time to time, such as bonds, preferred
stock and convertible debentures, as well as to derivative securities relating to the Companys
securities, whether or not issued by the Company, such as exchange-traded options. It applies to
all employees, officers and directors of the Company and members of their immediate families who
reside with them or anyone else who lives in their household and family members who live elsewhere
but whose transactions in Company securities are directed by such employees, officers and directors
or subject to their influence and control (collectively referred to as Family Members). This
Policy also imposes specific black-out period and pre-clearance procedures on officers, directors
and certain other designated employees who receive or have access to Material Nonpublic Information
(as defined below) regarding the Company and/or are subject to the reporting provisions and trading
restrictions of Section 16 of the Securities Exchange Act of 1934 (the Exchange Act).
The current Insider Trading Compliance Officer referred to herein is the General Counsel of
the Company.
Definition of Material Nonpublic Information
It is not possible to define all categories of material information. However, information
should be regarded as material if there is a substantial likelihood that it would be considered
important to a reasonable investor in making a voting decision or an investment decision to buy,
hold or sell securities. Any information that could be expected to affect the market price of the
Companys securities, whether such information is positive or negative, should be considered
material. Because trading that receives scrutiny will be evaluated after the
fact with the benefit of hindsight, questions as to the materiality of particular information
should be resolved in favor
of materiality, and trading should be avoided. Officers, directors and
certain other employees are subject to the Blackout Period provisions described in Section 8.
While it may be difficult under this standard to determine whether particular information is
material, there are various categories of information that are particularly sensitive and, as a
general rule, should always be considered material. Examples of such information may include:
o
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Financial results; | |
o
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Projections of future earnings or losses; | |
o
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News of a pending or proposed merger, acquisition or tender offer; | |
o
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News of a pending or proposed acquisition or disposition of significant assets; | |
o
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Actions of regulatory agencies; | |
o
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News of a pending or proposed acquisition or disposition of a subsidiary; | |
o
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Impending bankruptcy or financial liquidity problems; | |
o
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Gain or loss of a significant customer or supplier; | |
o
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Significant energy generation or supply problems; | |
o
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Significant pricing changes; | |
o
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Stock splits and stock repurchase programs; | |
o
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New equity or debt offerings; | |
o
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Significant litigation exposure due to actual or threatened litigation; and | |
o
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Changes in senior management. |
Material Nonpublic Information is material information that has not been previously
disclosed to the general public through a press release or securities filings and is otherwise not
available to the general public.
Statement of Policy
General Policy
General Policy
It is the policy of the Company to oppose the unauthorized disclosure of any nonpublic
information acquired in the workplace, the use of Material Nonpublic Information in securities
trading and any other violation of applicable securities laws.
Specific Policies
1. Trading on Material Nonpublic Information. No employee, officer or director of the
Company and its subsidiaries and no Family Member of any such person, shall engage in any
transaction involving a purchase or sale of the Companys securities, including any offer to
purchase or offer to sell (other than pursuant to a trading plan that complies with SEC Rule 10b5-1
pre-cleared by the Companys Insider Trading Compliance Officer), during any period commencing with
the date that he or she possesses Material Nonpublic Information concerning the Company and ending
at the close of business on the second Trading Day (as defined below) following the date of public
disclosure of that information, or at such time as such nonpublic information is no longer
material. As used in this Policy, the term Trading Day shall mean a day on which national stock
exchanges are open for trading. If, for example, the Company were
to make an announcement on a
Monday, Designated Insiders (as defined below) shall not trade in the Companys securities until
Thursday.
2. Tipping. No employee, officer or director of the Company shall disclose or pass on
(tip) Material Nonpublic Information to any other person, including a Family Member or friend,
nor shall such person make recommendations or express opinions on the basis of Material Nonpublic
Information as to trading in the Companys securities.
3. Confidentiality of Nonpublic Information. Nonpublic information relating to the
Company is the property of the Company and the unauthorized disclosure of such information is
forbidden.
Potential Criminal and Civil Liability
and/or Disciplinary Action
and/or Disciplinary Action
4. Liability for Insider Trading. Any employee, officer or director who engages in a
transaction in the Companys securities at a time when they have knowledge of Material Nonpublic
Information may be subject to penalties and sanctions, including:
| up to 20 years in jail; | ||
| a criminal fine of up to $5,000,000; | ||
| a civil penalty of up to $1,000,000 or, if greater, 3 times the profit gained or loss avoided; and | ||
| SEC civil enforcement injunctions. |
5. Liability for Tipping. Any employee, officer or director who tips (tippers) a
third party (commonly referred to as a tippee) may also be liable for improper transactions by
tippees to whom they have tipped Material Nonpublic Information regarding the Company or to whom
they have made recommendations or expressed opinions on the basis of such information as to trading
in the Companys securities. Tippers and tippees would be subject to the same penalties and
sanctions as described above, and the SEC has imposed large penalties even when the tipper or
tippee did not profit from the trading. The SEC, the stock exchanges and Nasdaq use sophisticated
electronic surveillance techniques to uncover insider trading.
6. Control Persons. The Company and its supervisory personnel, if they fail to take
appropriate steps to prevent illegal insider trading, may in certain circumstances, be subject to
the following penalties:
| a civil penalty of up to 3 times the profit gained or loss avoided as a result of the employees violation; and | ||
| a criminal penalty of up to $25,000,000. |
7. Possible Company-Imposed Disciplinary Actions. Employees of the Company who
violate this Policy shall also be subject to disciplinary action by the Company, which may include
ineligibility for future participation in the Companys equity incentive plans or termination of
employment.
Mandatory Guidelines
8. Trading Blackout Period. To ensure compliance with this Policy and applicable
federal securities laws, and to avoid even the appearance of trading on the basis of inside
information, the Company requires that officers, directors and all employees in the accounting and
finance departments of the Company designated by the Companys Insider Trading Compliance Officer
as subject to the Blackout Period (as defined below) prohibitions because of their access to the
Companys internal financial statements or other Material Nonpublic Information regarding the
Companys performance during annual and quarterly fiscal periods (collectively, Designated
Insiders) and Family Members of the foregoing, refrain from conducting transactions involving the
purchase or sale of the Companys securities during the Blackout Periods established below. Each
of the following periods will constitute a Blackout Period:
The period commencing on the tenth calendar day of the third fiscal month of each of
the first three fiscal quarters (i.e. March 10, June 10 and September 10, as
applicable) and commencing on the first calendar day of the third fiscal month of
the fourth fiscal quarter (i.e. December 1) and, in each case, ending at the close
of business on the second Trading Day following the date of public disclosure of the
financial results for such fiscal quarter (which is generally 30 to 75 days after
the end of such quarter). If such public disclosure occurs on a Trading Day before
the markets close, then that day shall be considered the first Trading Day. If such
public disclosure occurs after the markets close on a Trading Day, then the date of
public disclosure shall not be considered the first Trading Day following the date
of public disclosure.
In addition to the Blackout Periods described above, the Company may announce special
Blackout Periods from time to time. Typically, this will occur when there are nonpublic
developments that would be considered material for insider trading law purposes, such as, among
other things, developments relating to regulatory proceedings or a major corporate transaction.
Depending on the circumstances, a special Blackout Period may apply to all Designated Insiders or
only a specific group of Designated Insiders. The Insider Trading Compliance Officer will provide
written notice to Designated Insiders subject to a special Blackout Period. Any person made
aware of the existence of a special Blackout Period should not disclose the existence of the
Blackout Period to any other person. The failure of the Company to designate a person as being
subject to a special Blackout Period will not relieve that person of the obligation not to trade
while aware of Material Nonpublic Information. As used in this Policy, the term Blackout Period
shall mean all periodic Blackout Periods and all special Blackout Periods announced by the
Company.
The purpose behind the Blackout Period is to help establish a diligent effort to avoid any
improper transactions. Trading in the Companys securities outside a Blackout Period should not be
considered a safe harbor, and all employees, officers and directors and other persons subject to
this Policy should use good judgment at all times. Even outside a Blackout Period, any person
possessing Material Nonpublic Information concerning the Company should not engage in any
transactions in the Companys securities until such information has been known publicly for at
least two Trading Days after the date of announcement. Although the Company may from time to time
impose special Blackout Periods, because of developments known to the Company and not yet disclosed
to the public, each person is individually responsible at all times for compliance with the
prohibitions against insider trading.
9. Pre-clearance of Trades. The Company has determined that all executive officers
and directors and their Family Members must refrain from trading in the Companys securities,
without first complying with the Companys pre-clearance process. Each executive officer or
director must contact the Companys Insider Trading Compliance Officer not less than two (2)
business days prior to commencing any trade in the Companys securities. This pre-clearance
requirement applies to any transaction or transfer involving the Companys securities, including a
stock plan transaction such as an option exercise, or a gift, transfer to a trust or any other
transfer.
The Insider Trading Compliance Officer must pre-clear each proposed trade or transfer. The
Insider Trading Compliance Officer is not under any obligation to approve a trade submitted for
pre-clearance, and may determine not to permit a trade.
To facilitate the process, the Company has prepared a pre-clearance form, attached hereto as
Exhibit A, to be completed and provided to the Insider Trading Compliance Officer. The Insider
Trading Compliance Officer will assist with the approval process. No trade or transfer may be
effected until the requesting employee, officer or director has received the approved Pre-Clearance
Request Form, even if two (2) business days have passed since the Pre-Clearance Request Form was
submitted.
The Company may also find it necessary, from time to time, to require compliance with the
pre-clearance process from employees designated as Designated Insiders.
Any executive officer and director who wishes to implement a trading plan under SEC Rule
10b5-1 must first pre-clear the plan with the Insider Trading Compliance Officer. As required by
Rule 10b5-1, an executive officer or director may enter into a trading plan only when he or she is
not in possession of Material Nonpublic Information. In addition, a trading plan may not be
entered into during a Blackout Period. Transactions effected pursuant to a pre-cleared trading
plan will not require further pre-clearance at the time of the transaction.
10. Individual Responsibility. Every employee, officer and director has the
individual responsibility to comply with this Policy against insider trading, regardless of whether
a transaction is executed outside a Blackout Period or is pre-cleared by the Company. The
restrictions and procedures are intended to help avoid inadvertent instances of improper insider
trading, but appropriate judgment should always be
exercised by each employee, officer and director in connection with any trade in the Companys
securities.
An employee, officer or director may, from time to time, have to forego a proposed transaction
in the Companys securities even if he or she planned to make the transaction before learning of
the Material Nonpublic Information and even though the Insider believes he or she may suffer an
economic loss or forego anticipated profit by waiting.
Certain Exceptions
11. Stock Options Exercises. For purposes of this Policy, the Company considers that
the exercise of stock options under the Companys stock option plans (but not the sale of the
underlying stock) to be exempt from this Policy. This Policy does apply, however, to any sale of
stock as part of a broker-assisted cashless exercise of an option, or any market sale for the
purpose of generating the cash needed to pay the exercise price of an option.
12. 401(k) Plan. This Policy does not apply to purchases of Company stock in the
Companys 401(k) plan resulting from periodic contributions of money to the plan pursuant to
payroll deduction elections. This Policy does apply, however, to certain elections that may be
made under the 401(k) plan, including (a) an election to increase or decrease the percentage of
periodic contributions that will be allocated to the Company stock fund, if any, (b) an election to
make an intra-plan transfer of an existing account balance into or out of the Company stock fund,
(c) an election to borrow money against a 401(k) plan account if the loan will result in a
liquidation of some or all of a participants Company stock fund balance and (d) an election to
pre-pay a plan loan if the pre-payment will result in allocation of loan proceeds to the Company
stock fund.
13. Employee Stock Purchase Plan. This Policy does not apply to purchases of Company
stock in the Companys employee stock purchase plan, if any, resulting from periodic contributions
of money to the plan pursuant to the elections made at the time of enrollment in the plan. This
Policy also does not apply to purchases of Company stock resulting from lump sum contributions to
the plan, provided that the participant elected to participate by lump-sum payment at the beginning
of the applicable enrollment period. This Policy does apply to a participants election to
participate in or increase his or her participation in the plan, and to a participants sales of
Company stock purchased pursuant to the plan.
14. Dividend Reinvestment Plan. This Policy does not apply to purchases of Company
stock under the Companys dividend reinvestment plan, if any, resulting from reinvestment of
dividends paid on Company securities. This Policy does apply, however, to voluntary purchases of
Company stock that result from additional contributions a participant chooses to make to the plan,
and to a participants election to participate in the plan or increase his level of participation
in the plan. This Policy also applies to his sale of any Company stock purchased pursuant to the
plan.
Applicability of Policy to Inside Information
Regarding Other Companies
Regarding Other Companies
This Policy and the guidelines described herein also apply to Material Nonpublic Information
relating to other companies, including the Companys customers, vendors or suppliers (business
partners), when that information is obtained in the course of employment with, or other services
performed on behalf of, the Company. Civil and criminal penalties, and termination of employment,
may result from trading on inside information regarding the Companys business partners. All
employees should treat Material Nonpublic Information about the Companys business partners with
the same care required with respect to information related directly to the Company.
Section 16 Liability Directors and Officers
Certain officers and all directors of the Company must also comply with the reporting
obligations and limitations on short-swing profit transactions set forth in Section 16 of the
Securities Exchange Act of 1934 (the Exchange Act). The practical effect of these provisions is
that any officer or director who purchases and sells the Companys securities within a six-month
period must disgorge all profits to the Company whether or not he or she had knowledge of any
Material Nonpublic Information. Under these provisions, and so long as certain other criteria are
met, neither the receipt of stock or stock options under the Companys stock plans, nor the
exercise of options nor the receipt of stock under the Companys employee stock purchase plan,
dividend reinvestment plan or the Companys 401(k) retirement plan is deemed a purchase that can be
matched against a sale for Section 16(b) short-swing profit disgorgement purposes; however, the
sale of any such shares so obtained is a sale for these purposes. Moreover, no such officer or
director may ever make a short sale of the Companys common stock which is unlawful under Section
16(c) of the Exchange Act. The Company will provide separate memoranda and other appropriate
materials to the affected officers and directors regarding compliance with Section 16 and its
related rules.
The rules on recovery of short-swing profits are absolute and do not depend on whether a
person has Material Nonpublic Information.
Publicly Traded Options
A transaction in options is, in effect, a bet on the short-term movement of the Companys
stock and therefore creates the appearance that the employee, officer or director is trading based
on inside information. Transactions in options also may focus the traders attention on short-term
performance at the expense of the Companys long-term objectives. Accordingly, transactions in
puts, calls or other derivative securities, on an exchange or in any other organized market, are
prohibited. Option positions arising from certain types of hedging transactions are governed by
the section below captioned Hedging or Monetization Transactions.
Hedging or Monetization Transactions
Certain forms of hedging or monetization transactions, such as zero-cost collars and forward
sale contracts, allow an employee, officer or director to lock in much of the value of
his stock holdings, often in exchange for all or part of the potential for upside appreciation
in the stock. These transactions would allow an employee, officer or director to continue to own
the covered securities, but without the full risks and rewards of ownership. When that occurs,
their interests and the interests of the Company and its shareholders may be misaligned and may
signal a message to the trading market that may not be in the best interests of the Company and its
shareholders at the time it is conveyed. Therefore, any person wishing to enter into such an
arrangement must first pre-clear the proposed transaction with the Board of Directors. Any request
for pre-clearance of a hedging or similar arrangement must be submitted to the Board of Directors
and the Companys Insider Trading Compliance Officer at least two weeks prior to the proposed
execution of documents evidencing the proposed transaction and must set forth a justification for
the proposed transaction. This will allow the Company to consider the time and
circumstances of
the proposed transaction and if necessary direct how the transaction is disclosed to the public.
Margin Accounts and Pledges
Securities held in a margin account may be sold by the broker without the customers consent
if the customer fails to meet a margin call. Similarly, securities pledged (or hypothecated) as
collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. A margin
sale or foreclosure sale may occur at a time when the pledgor is aware of Material Nonpublic
Information or otherwise is not permitted to trade in Company securities pursuant to Blackout
Period restrictions. Thus, unless pre-cleared by the Insider Trading Compliance Officer, employees,
officers and directors are prohibited from pledging Company securities as collateral for a loan.
Any employee, officer or director preparing to pledge his Company securities must clearly
demonstrate his or her financial capacity to repay the loan without resort to the pledged
securities. Any person proposing to pledge Company securities as collateral for a loan must submit
a request for approval to the Insider Trading Compliance Officer at least two weeks prior to the
proposed execution of documents evidencing the proposed pledge.
Post-Termination Transactions
This Policy continues to apply to transactions in Company securities even after an employee,
officer or director has resigned or terminated employment. If the person who resigns or separates
from the Company is in possession of Material Nonpublic Information at that time, he or she may not
trade in Company securities until that information has become public or is no longer material.
Communications with the Public
The Company is subject to the SECs Regulation FD and must avoid selective disclosure of
Material Nonpublic Information. The Company has established procedures for releasing material
information in a manner that is designed to achieve broad public dissemination of the information
immediately upon its release. Pursuant to Company policy, only the executive officers who have
been authorized to engage in communications with the public may disclose information to the public
regarding the Company and its business activities and financial affairs. The public includes,
without limitation, research analysts, portfolio managers, financial and
business reporters, news media and investors. In addition, because of the risks associated
with the exchange of information through such communications media, employees are strictly
prohibited from posting or responding to messages containing information regarding the Company on
Internet bulletin boards, Internet chat rooms or in similar online forums. Employees who
inadvertently disclose any Material Nonpublic Information must immediately advise the Insider
Trading Compliance Officer so the Company can assess its obligations under Regulation FD and other
applicable securities laws.
Inquiries
Please direct questions as to any of the matters discussed in this Policy to the Companys
Insider Trading Compliance Officer at the following address:
General Counsel
FairPoint Communications, Inc.
521 E. Morehead Street, Suite 500
Charlotte, NC 28202
Telephone: (704) 227-3662
E-mail: slinn@fairpoint.com and ssowell@fairpoint.com
FairPoint Communications, Inc.
521 E. Morehead Street, Suite 500
Charlotte, NC 28202
Telephone: (704) 227-3662
E-mail: slinn@fairpoint.com and ssowell@fairpoint.com
Certifications
All employees, officers and directors of the Company must certify their understanding of, and
intent to comply with, this Policy. Please return the enclosed certification immediately to:
General Counsel
FairPoint Communications, Inc.
521 E. Morehead Street, Suite 500
Charlotte, NC 28202
Fax: (704) 344-1594
FairPoint Communications, Inc.
521 E. Morehead Street, Suite 500
Charlotte, NC 28202
Fax: (704) 344-1594
CERTIFICATIONS
I certify that:
1. I have received, read and understand the Companys Insider Trading Policy, dated January
24, 2011. I understand that the Insider Trading Compliance Officer is available to answer any
questions I have regarding the Insider Trading Policy.
2. I will comply with the Insider Trading Policy for as long as I am subject to the
Policy.
Signature:
Print Name:
Date:
EXHIBIT A
FAIRPOINT COMMUNICATIONS, INC.
PRE-CLEARANCE REQUEST FORM
PRE-CLEARANCE REQUEST FORM
To: FairPoint Communications, Inc. (the Company) Insider Trading Compliance Officer |
||
From: | ||
Re: Proposed transaction in the Companys Securities |
This is to advise you that the undersigned intends to execute a transaction in the Companys
securities on ___________ ____, 20__, and does hereby request that the Company pre-clear the
transaction as required by the Companys Insider Trading Policy (the Policy).
The general nature of the transaction is as follows (i.e. open market purchase of 10,000 shares of
common stock through NASDAQ, privately negotiated sale of warrants for the purchase of 5,000 shares
of common stock, etc.):
The undersigned is not in possession of Material Nonpublic Information (as defined in the Insider
Trading Policy) about the Company and will not enter into the transaction if the undersigned comes
into possession of Material Nonpublic Information about the Company between the date hereof and the
proposed trade execution date.
The undersigned has read and understands the Policy and certifies that the above proposed
transaction will not violate the Policy.
The undersigned agrees to advise the Company promptly if, as a result of future developments, any
of the foregoing information becomes inaccurate or incomplete in any respect. The undersigned
understands that the Company may require additional information about the transaction, and agrees
to provide such information upon request.
Dated:
|
Very truly yours, | |||||
Approved: |
||||||
LEGAL_US_E # 88315277.2
Charlotte #25974 v3
Charlotte #25974 v3