FAIRPOINT COMMUNICATIONS, INC. INSIDER TRADING POLICY

Transcription

1 FAIRPOINT COMMUNICATIONS, INC. INSIDER TRADING POLICY and Guidelines with Respect t Certain Transactins in Cmpany Securities (January 24, 2011, as revised Octber 30, 2014) This Insider Trading Plicy (the Plicy ) prvides guidelines t emplyees, fficers and directrs f FairPint Cmmunicatins, Inc. (the Cmpany ) with respect t transactins in the Cmpany s securities. The Cmpany has adpted this plicy and the prcedures set frth herein t help prevent insider trading and t assist the Cmpany s emplyees, fficers and directrs in cmplying with their bligatins under the federal securities laws. Emplyees, fficers and directrs are individually respnsible t understand and cmply with this Plicy. Applicability f Plicy This Plicy applies t all transactins in the Cmpany s securities, including cmmn stck, restricted stck, restricted stck units, ptins and warrants t purchase cmmn stck and any ther debt r equity securities the Cmpany may issue frm time t time, such as bnds, preferred stck and cnvertible debentures, as well as t derivative securities relating t the Cmpany s securities, whether r nt issued by the Cmpany, such as exchange-traded ptins. It applies t all emplyees, fficers and directrs f the Cmpany and members f their immediate families wh reside with them r anyne else wh lives in their husehld and family members wh live elsewhere but whse transactins in Cmpany securities are directed by such emplyees, fficers and directrs r subject t their influence and cntrl (cllectively referred t as Family Members ). This Plicy als impses specific black-ut perid and pre-clearance prcedures n fficers, directrs and certain ther designated emplyees wh receive r have access t Material Nnpublic Infrmatin (as defined belw) regarding the Cmpany and/r are subject t the reprting prvisins and trading restrictins f Sectin 16 f the Securities Exchange Act f 1934 (the Exchange Act ). The current Insider Trading Cmpliance Officer referred t herein is the General Cunsel f the Cmpany. Definitin f Material Nnpublic Infrmatin It is nt pssible t define all categries f material infrmatin. Hwever, infrmatin shuld be regarded as material if there is a substantial likelihd that it wuld be cnsidered imprtant t a reasnable investr in making a vting decisin r an investment decisin t buy, hld r sell securities. Any infrmatin that culd be expected t affect the market price f the Cmpany s securities, whether such infrmatin is psitive r negative, shuld be cnsidered material. Because trading that receives scrutiny will be evaluated after the fact with the benefit f hindsight, questins as t the materiality f particular infrmatin shuld be reslved in favr f materiality, and trading shuld be avided. Officers, directrs and certain ther emplyees are subject t the Blackut Perid prvisins described in Sectin 8. CLT:

2 While it may be difficult under this standard t determine whether particular infrmatin is material, there are varius categries f infrmatin that are particularly sensitive and, as a general rule, shuld always be cnsidered material. Examples f such infrmatin may include: Financial results; Prjectins f future earnings r lsses; News f a pending r prpsed merger, acquisitin r tender ffer; News f a pending r prpsed acquisitin r dispsitin f significant assets; Actins f regulatry agencies; News f a pending r prpsed acquisitin r dispsitin f a subsidiary; Impending bankruptcy r financial liquidity prblems; Gain r lss f a significant custmer r supplier; Significant energy generatin r supply prblems; Significant pricing changes; Stck splits and stck repurchase prgrams; New equity r debt fferings; Significant litigatin expsure due t actual r threatened litigatin; and Changes in senir management. Material Nnpublic Infrmatin is material infrmatin that has nt been previusly disclsed t the general public thrugh a press release r securities filings and is therwise nt available t the general public. Statement f Plicy General Plicy It is the plicy f the Cmpany t ppse the unauthrized disclsure f any nnpublic infrmatin acquired in the wrkplace, the use f Material Nnpublic Infrmatin in securities trading and any ther vilatin f applicable securities laws. Specific Plicies 1. Trading n Material Nnpublic Infrmatin. N emplyee, fficer r directr f the Cmpany and its subsidiaries and n Family Member f any such persn, shall engage in any transactin invlving a purchase r sale f the Cmpany s securities, including any ffer t purchase r ffer t sell (ther than pursuant t a trading plan that cmplies with SEC Rule 10b5-1 pre-cleared by the Cmpany s Insider Trading Cmpliance Officer), during any perid cmmencing with the date that he r she pssesses Material Nnpublic Infrmatin cncerning the Cmpany and ending at the clse f business n the secnd Trading Day (as defined belw) fllwing the date f public disclsure f that infrmatin, r at such time as such nnpublic infrmatin is n lnger material. As used in this Plicy, the term Trading Day shall mean a day n which natinal stck exchanges are pen fr trading. If, fr example, the Cmpany were t make an annuncement n a Mnday, Designated Insiders (as defined belw) shall nt trade in the Cmpany s securities until Thursday. CLT:

3 2. Tipping. N emplyee, fficer r directr f the Cmpany shall disclse r pass n ( tip ) Material Nnpublic Infrmatin t any ther persn, including a Family Member r friend, nr shall such persn make recmmendatins r express pinins n the basis f Material Nnpublic Infrmatin as t trading in the Cmpany s securities. 3. Cnfidentiality f Nnpublic Infrmatin. Nnpublic infrmatin relating t the Cmpany is the prperty f the Cmpany and the unauthrized disclsure f such infrmatin is frbidden. Ptential Criminal and Civil Liability and/r Disciplinary Actin 4. Liability fr Insider Trading. Any emplyee, fficer r directr wh engages in a transactin in the Cmpany s securities at a time when they have knwledge f Material Nnpublic Infrmatin may be subject t penalties and sanctins, including: up t 20 years in jail; a criminal fine f up t $5,000,000; a civil penalty f up t $1,000,000 r, if greater, 3 times the prfit gained r lss avided; and SEC civil enfrcement injunctins. 5. Liability fr Tipping. Any emplyee, fficer r directr wh tips ( tippers ) a third party (cmmnly referred t as a tippee ) may als be liable fr imprper transactins by tippees t whm they have tipped Material Nnpublic Infrmatin regarding the Cmpany r t whm they have made recmmendatins r expressed pinins n the basis f such infrmatin as t trading in the Cmpany s securities. Tippers and tippees wuld be subject t the same penalties and sanctins as described abve, and the SEC has impsed large penalties even when the tipper r tippee did nt prfit frm the trading. The SEC, the stck exchanges and NASDAQ use sphisticated electrnic surveillance techniques t uncver insider trading. 6. Cntrl Persns. The Cmpany and its supervisry persnnel, if they fail t take apprpriate steps t prevent illegal insider trading, may in certain circumstances, be subject t the fllwing penalties: a civil penalty f up t 3 times the prfit gained r lss avided as a result f the emplyee s vilatin; and a criminal penalty f up t $25,000, Pssible Cmpany-Impsed Disciplinary Actins. Emplyees f the Cmpany wh vilate this Plicy shall als be subject t disciplinary actin by the Cmpany, which may include ineligibility fr future participatin in the Cmpany s equity incentive plans r terminatin f emplyment. CLT:

4 Mandatry Guidelines 8. Trading Blackut Perid. T ensure cmpliance with this Plicy and applicable federal securities laws, and t avid even the appearance f trading n the basis f inside infrmatin, the Cmpany requires that fficers, directrs and all emplyees in the accunting and finance departments f the Cmpany designated by the Cmpany s Insider Trading Cmpliance Officer as subject t the Blackut Perid (as defined belw) prhibitins because f their access t the Cmpany s internal financial statements r ther Material Nnpublic Infrmatin regarding the Cmpany s perfrmance during annual and quarterly fiscal perids (cllectively, Designated Insiders ) and Family Members f the freging, refrain frm cnducting transactins invlving the purchase r sale f the Cmpany s securities during the Blackut Perids established belw. Each f the fllwing perids will cnstitute a Blackut Perid : The perid cmmencing n the tenth calendar day f the third fiscal mnth f each f the first three fiscal quarters (i.e. March 10, June 10 and September 10, as applicable) and cmmencing n the first calendar day f the third fiscal mnth f the furth fiscal quarter (i.e. December 1) and, in each case, ending at the clse f business n the secnd Trading Day fllwing the date f public disclsure f the financial results fr such fiscal quarter (which is generally 30 t 75 days after the end f such quarter). If such public disclsure ccurs n a Trading Day befre the markets clse, then that day shall be cnsidered the first Trading Day. If such public disclsure ccurs after the markets clse n a Trading Day, then the date f public disclsure shall nt be cnsidered the first Trading Day fllwing the date f public disclsure. In additin t the Blackut Perids described abve, the Cmpany may annunce special Blackut Perids frm time t time. Typically, this will ccur when there are nnpublic develpments that wuld be cnsidered material fr insider trading law purpses, such as, amng ther things, develpments relating t regulatry prceedings r a majr crprate transactin. Depending n the circumstances, a special Blackut Perid may apply t all Designated Insiders r nly a specific grup f Designated Insiders. The Insider Trading Cmpliance Officer will prvide written ntice t Designated Insiders subject t a special Blackut Perid. Any persn made aware f the existence f a special Blackut Perid shuld nt disclse the existence f the Blackut Perid t any ther persn. The failure f the Cmpany t designate a persn as being subject t a special Blackut Perid will nt relieve that persn f the bligatin nt t trade while aware f Material Nnpublic Infrmatin. As used in this Plicy, the term Blackut Perid shall mean all peridic Blackut Perids and all special Blackut Perids annunced by the Cmpany. The purpse behind the Blackut Perid is t help establish a diligent effrt t avid any imprper transactins. Trading in the Cmpany s securities utside a Blackut Perid shuld nt be cnsidered a safe harbr, and all emplyees, fficers and directrs and ther persns subject t this Plicy shuld use gd judgment at all times. Even utside a Blackut Perid, any persn pssessing Material Nnpublic Infrmatin cncerning the Cmpany shuld nt engage in any transactins in the Cmpany s securities until such infrmatin has been knwn publicly fr at CLT:

5 least tw Trading Days after the date f annuncement. Althugh the Cmpany may frm time t time impse special Blackut Perids, because f develpments knwn t the Cmpany and nt yet disclsed t the public, each persn is individually respnsible at all times fr cmpliance with the prhibitins against insider trading. 9. Pre-clearance f Trades. The Cmpany has determined that all executive fficers and directrs and their Family Members must refrain frm trading in the Cmpany s securities, withut first cmplying with the Cmpany s pre-clearance prcess. Each executive fficer r directr must cntact the Cmpany s Insider Trading Cmpliance Officer nt less than tw (2) business days prir t cmmencing any trade in the Cmpany s securities. This preclearance requirement applies t any transactin r transfer invlving the Cmpany s securities, including a stck plan transactin such as an ptin exercise, r a gift, transfer t a trust r any ther transfer. The Insider Trading Cmpliance Officer must pre-clear each prpsed trade r transfer. The Insider Trading Cmpliance Officer is nt under any bligatin t apprve a trade submitted fr pre-clearance, and may determine nt t permit a trade. T facilitate the prcess, the Cmpany has prepared a pre-clearance frm, attached heret as Exhibit A, t be cmpleted and prvided t the Insider Trading Cmpliance Officer. The Insider Trading Cmpliance Officer will assist with the apprval prcess. N trade r transfer may be effected until the requesting emplyee, fficer r directr has received the apprved Pre- Clearance Request Frm, even if tw (2) business days have passed since the Pre-Clearance Request Frm was submitted. The Cmpany may als find it necessary, frm time t time, t require cmpliance with the pre-clearance prcess frm emplyees designated as Designated Insiders. Any executive fficer and directr wh wishes t implement a trading plan under SEC Rule 10b5-1 must first pre-clear the plan with the Insider Trading Cmpliance Officer. As required by Rule 10b5-1, an executive fficer r directr may enter int a trading plan nly when he r she is nt in pssessin f Material Nnpublic Infrmatin. In additin, a trading plan may nt be entered int during a Blackut Perid. Transactins effected pursuant t a pre-cleared trading plan will nt require further pre-clearance at the time f the transactin. 10. Individual Respnsibility. Every emplyee, fficer and directr has the individual respnsibility t cmply with this Plicy against insider trading, regardless f whether a transactin is executed utside a Blackut Perid r is pre-cleared by the Cmpany. The restrictins and prcedures are intended t help avid inadvertent instances f imprper insider trading, but apprpriate judgment shuld always be exercised by each emplyee, fficer and directr in cnnectin with any trade in the Cmpany s securities. An emplyee, fficer r directr may, frm time t time, have t freg a prpsed transactin in the Cmpany s securities even if he r she planned t make the transactin befre learning f the Material Nnpublic Infrmatin and even thugh the Insider believes he r she may suffer an ecnmic lss r freg anticipated prfit by waiting. CLT:

6 Certain Exceptins 11. Stck Optins Exercises. Fr purpses f this Plicy, the Cmpany cnsiders that the exercise f stck ptins under the Cmpany s stck ptin plans (but nt the sale f the underlying stck) t be exempt frm this Plicy. This Plicy des apply, hwever, t any sale f stck as part f a brker-assisted cashless exercise f an ptin, r any market sale fr the purpse f generating the cash needed t pay the exercise price f an ptin (k) Plan. This Plicy des nt apply t purchases f Cmpany stck in the Cmpany s 401(k) plan resulting frm peridic cntributins f mney t the plan pursuant t payrll deductin electins. This Plicy des apply, hwever, t certain electins that may be made under the 401(k) plan, including (a) an electin t increase r decrease the percentage f peridic cntributins that will be allcated t the Cmpany stck fund, if any, (b) an electin t make an intra-plan transfer f an existing accunt balance int r ut f the Cmpany stck fund, (c) an electin t brrw mney against a 401(k) plan accunt if the lan will result in a liquidatin f sme r all f a participant s Cmpany stck fund balance and (d) an electin t pre-pay a plan lan if the pre-payment will result in allcatin f lan prceeds t the Cmpany stck fund. 13. Emplyee Stck Purchase Plan. This Plicy des nt apply t purchases f Cmpany stck in the Cmpany s emplyee stck purchase plan, if any, resulting frm peridic cntributins f mney t the plan pursuant t the electins made at the time f enrllment in the plan. This Plicy als des nt apply t purchases f Cmpany stck resulting frm lump sum cntributins t the plan, prvided that the participant elected t participate by lump-sum payment at the beginning f the applicable enrllment perid. This Plicy des apply t a participant s electin t participate in r increase his r her participatin in the plan, and t a participant s sales f Cmpany stck purchased pursuant t the plan. 14. Dividend Reinvestment Plan. This Plicy des nt apply t purchases f Cmpany stck under the Cmpany s dividend reinvestment plan, if any, resulting frm reinvestment f dividends paid n Cmpany securities. This Plicy des apply, hwever, t vluntary purchases f Cmpany stck that result frm additinal cntributins a participant chses t make t the plan, and t a participant s electin t participate in the plan r increase his level f participatin in the plan. This Plicy als applies t his sale f any Cmpany stck purchased pursuant t the plan. Applicability f Plicy t Inside Infrmatin Regarding Other Cmpanies This Plicy and the guidelines described herein als apply t Material Nnpublic Infrmatin relating t ther cmpanies, including the Cmpany s custmers, vendrs r suppliers ( business partners ), when that infrmatin is btained in the curse f emplyment with, r ther services perfrmed n behalf f, the Cmpany. Civil and criminal penalties, and terminatin f emplyment, may result frm trading n inside infrmatin regarding the Cmpany s business partners. All emplyees shuld treat Material Nnpublic Infrmatin abut the Cmpany s business partners with the same care required with respect t infrmatin related directly t the Cmpany. CLT:

7 Sectin 16 Liability - Directrs and Officers Certain fficers and all directrs f the Cmpany must als cmply with the reprting bligatins and limitatins n shrt-swing prfit transactins set frth in Sectin 16 f the Securities Exchange Act f 1934 (the Exchange Act ). The practical effect f these prvisins is that any fficer r directr wh purchases and sells the Cmpany s securities within a sixmnth perid must disgrge all prfits t the Cmpany whether r nt he r she had knwledge f any Material Nnpublic Infrmatin. Under these prvisins, and s lng as certain ther criteria are met, neither the receipt f stck r stck ptins under the Cmpany s stck plans, nr the exercise f ptins nr the receipt f stck under the Cmpany s emplyee stck purchase plan, dividend reinvestment plan r the Cmpany s 401(k) retirement plan is deemed a purchase that can be matched against a sale fr Sectin 16(b) shrt-swing prfit disgrgement purpses; hwever, the sale f any such shares s btained is a sale fr these purpses. Mrever, n such fficer r directr may ever make a shrt sale f the Cmpany s cmmn stck which is unlawful under Sectin 16(c) f the Exchange Act. The Cmpany will prvide separate memranda and ther apprpriate materials t the affected fficers and directrs regarding cmpliance with Sectin 16 and its related rules. The rules n recvery f shrt-swing prfits are abslute and d nt depend n whether a persn has Material Nnpublic Infrmatin. Publicly Traded Optins A transactin in ptins is, in effect, a bet n the shrt-term mvement f the Cmpany s stck and therefre creates the appearance that the emplyee, fficer r directr is trading based n inside infrmatin. Transactins in ptins als may fcus the trader s attentin n shrtterm perfrmance at the expense f the Cmpany s lng-term bjectives. Accrdingly, transactins in puts, calls r ther derivative securities, n an exchange r in any ther rganized market, are prhibited. Optin psitins arising frm certain types f hedging transactins are gverned by the sectin belw captined Hedging r Mnetizatin Transactins. Hedging r Mnetizatin Transactins Certain frms f hedging r mnetizatin transactins, such as zer-cst cllars and frward sale cntracts, allw an emplyee, fficer r directr t lck in much f the value f his stck hldings, ften in exchange fr all r part f the ptential fr upside appreciatin in the stck. These transactins wuld allw an emplyee, fficer r directr t cntinue t wn the cvered securities, but withut the full risks and rewards f wnership. When that ccurs, their interests and the interests f the Cmpany and its sharehlders may be misaligned and may signal a message t the trading market that may nt be in the best interests f the Cmpany and its sharehlders at the time it is cnveyed. Accrdingly, hedging transactins and all ther frms f mnetizatin transactins are prhibited. Margin Accunts and Pledges Securities held in a margin accunt may be sld by the brker withut the custmer s cnsent if the custmer fails t meet a margin call. Similarly, securities pledged (r hypthecated) as cllateral fr a lan may be sld in freclsure if the brrwer defaults n the CLT:

8 lan. A margin sale r freclsure sale may ccur at a time when the pledgr is aware f Material Nnpublic Infrmatin r therwise is nt permitted t trade in Cmpany securities pursuant t Blackut Perid restrictins. Thus, emplyees, fficers and directrs are prhibited frm pledging Cmpany securities as cllateral fr a lan. Additinally, shares f Cmpany stck may nt be held in a margin accunt. Pst-Terminatin Transactins This Plicy cntinues t apply t transactins in Cmpany securities even after an emplyee, fficer r directr has resigned r terminated emplyment. If the persn wh resigns r separates frm the Cmpany is in pssessin f Material Nnpublic Infrmatin at that time, he r she may nt trade in Cmpany securities until that infrmatin has becme public r is n lnger material. Cmmunicatins with the Public The Cmpany is subject t the SEC s Regulatin FD and must avid selective disclsure f Material Nnpublic Infrmatin. The Cmpany has established prcedures fr releasing material infrmatin in a manner that is designed t achieve brad public disseminatin f the infrmatin immediately upn its release. Pursuant t Cmpany plicy, nly the executive fficers wh have been authrized t engage in cmmunicatins with the public may disclse infrmatin t the public regarding the Cmpany and its business activities and financial affairs. The public includes, withut limitatin, research analysts, prtfli managers, financial and business reprters, news media and investrs. In additin, because f the risks assciated with the exchange f infrmatin thrugh such cmmunicatins media, emplyees are strictly prhibited frm psting r respnding t messages cntaining infrmatin regarding the Cmpany n Internet bulletin bards, Internet chat rms r in similar nline frums. Emplyees wh inadvertently disclse any Material Nnpublic Infrmatin must immediately advise the Insider Trading Cmpliance Officer s the Cmpany can assess its bligatins under Regulatin FD and ther applicable securities laws. CLT:

9 Inquiries Please direct questins as t any f the matters discussed in this Plicy t the Cmpany s Insider Trading Cmpliance Officer at the fllwing address: General Cunsel FairPint Cmmunicatins, Inc. 521 E. Mrehead Street, Suite 500 Charltte, NC Telephne: (704) slinn@fairpint.cm and sswell@fairpint.cm Certificatins All emplyees, fficers and directrs f the Cmpany must certify their understanding f, and intent t cmply with, this Plicy. Please return the enclsed certificatin immediately t: General Cunsel FairPint Cmmunicatins, Inc. 521 E. Mrehead Street, Suite 500 Charltte, NC Fax: (704) CLT:

10 CERTIFICATIONS I certify that: 1. I have received, read and understand the Cmpany s Insider Trading Plicy, dated January 24, 2011, as revised Octber 30, I understand that the Insider Trading Cmpliance Officer is available t answer any questins I have regarding the Insider Trading Plicy. 2. I will cmply with the Insider Trading Plicy fr as lng as I am subject t the Plicy. Signature: Print Name: Date: CLT:

11 EXHIBIT A FAIRPOINT COMMUNICATIONS, INC. PRE-CLEARANCE REQUEST FORM T: FairPint Cmmunicatins, Inc. (the Cmpany ) Insider Trading Cmpliance Officer Frm: Re: Prpsed transactin in the Cmpany s Securities This is t advise yu that the undersigned intends t execute a transactin in the Cmpany s securities n, 20 and thereafter until the trading windw shall clse and des hereby request that the Cmpany pre-clear the transactin as required by the Cmpany s Insider Trading Plicy (the Plicy ). The general nature f the transactin is as fllws (i.e. pen market purchase f 10,000 shares f cmmn stck thrugh NASDAQ, privately negtiated sale f warrants fr the purchase f 5,000 shares f cmmn stck, etc.): The undersigned is nt in pssessin f Material Nnpublic Infrmatin (as defined in the Insider Trading Plicy) abut the Cmpany and will nt enter int the transactin if the undersigned cmes int pssessin f Material Nnpublic Infrmatin abut the Cmpany between the date heref and the prpsed trade executin date. The undersigned has read and understands the Plicy and certifies that the abve prpsed transactin will nt vilate the Plicy. The undersigned agrees t advise the Cmpany prmptly if, as a result f future develpments, any f the freging infrmatin becmes inaccurate r incmplete in any respect. The undersigned understands that the Cmpany may require additinal infrmatin abut the transactin, and agrees t prvide such infrmatin upn request. Dated: Very truly yurs, [Signature] [Print Name] Apprved: Insider Trading Cmpliance Officer CLT: