Exhibit 10.1

 

PLAN SUPPORT AGREEMENT

 

THIS PLAN SUPPORT AGREEMENT (including the Term Sheet (as defined below) this
“Agreement”) is made and entered into as of October 25, 2009 by and among
(i) the parties signatory hereto which are Pre-Petition Lenders (as defined
below) (each such party, together with any Additional Lender Party (as defined
below) or Transferee Lender (as defined below) that becomes a party hereto in
accordance with the terms hereof, being referred to herein as a “Consenting
Lender”, and collectively as the “Consenting Lenders”), (ii) FairPoint
Communications, Inc., a Delaware corporation (“FairPoint”) and (iii) each of the
Subsidiaries of FairPoint (collectively with FairPoint, the “Company”).  Each of
the foregoing is referred to herein as a “Party” and collectively, the
“Parties”.

 

RECITALS

 

WHEREAS, FairPoint has entered into that certain Credit Agreement, dated as of
March 31, 2008 (as modified, amended or supplemented through the Effective Date
(as defined below), the “Pre-Petition Credit Agreement”; capitalized terms used
herein and not otherwise defined herein shall have the meanings set forth in the
Pre-Petition Credit Agreement), among FairPoint, the financial institutions from
time to time party thereto (including the Consenting Lenders)(the “Pre-Petition
Lenders”), Bank of America, N.A., as Administrative Agent (in such capacity, the
“Administrative Agent”) and the other Persons party thereto;

 

WHEREAS, the Company and the Consenting Lenders wish to reorganize and
recapitalize FairPoint and its Subsidiaries (the “Restructuring”) in accordance
with a proposed chapter 11 plan of reorganization (the “Plan”), the terms and
conditions of which are set forth in the term sheet attached hereto as
Exhibit “A” (the “Term Sheet”);

 

WHEREAS, in order to implement, expedite and consummate the Restructuring in
accordance with the Plan, the Company intends to file petitions commencing (the
date of commencement being the “Petition Date”) voluntary reorganization cases
(the “Bankruptcy Cases”) under Chapter 11 of Title 11 of the United States Code
(the “Bankruptcy Code”) with the United States Bankruptcy Court for the Southern
District of New York (the “Bankruptcy Court”);

 

WHEREAS, the Company intends to file the Plan within 45 days after the Petition
Date, and to seek Bankruptcy Court approval of the Plan;

 

WHEREAS, the Company intends to use its commercially reasonable efforts to
obtain Bankruptcy Court approval of the Plan in accordance with the Bankruptcy
Code and on terms consistent with this Agreement and each Consenting Lender
intends to use commercially reasonable efforts to cooperate in that regard; and

 

NOW, THEREFORE, in consideration of the promises and mutual covenants and
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereto
covenant and agree as follows:

 

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AGREEMENT

 

SECTION 1.                                          AGREEMENT EFFECTIVE DATE. 
THIS AGREEMENT SHALL BECOME EFFECTIVE AND BINDING ON EACH PARTY UPON THE
EXECUTION BY, AND RECEIPT BY THE ADMINISTRATIVE AGENT OF, SIGNATURE PAGES SIGNED
BY THE COMPANY AND THE CONSENTING LENDERS (THE DATE OF SUCH RECEIPT OF SIGNATURE
PAGES, THE “EFFECTIVE DATE”).

 

SECTION 2.                                          TERM SHEET.  THE SUBSTANTIVE
TERMS AND CONDITIONS OF THE PLAN ARE SET FORTH IN THE TERM SHEET.  THE PLAN
SHALL EMBODY THE TERMS CONTAINED IN, AND SHALL BE CONSISTENT WITH, THE TERM
SHEET, AND SHALL ONLY BE AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME BY
WRITTEN APPROVAL OF EACH OF THE PARTIES.

 

SECTION 3.                                          COMMITMENTS REGARDING THE
RESTRUCTURING.

 

3.01.                        COMMITMENT OF EACH OF THE PARTIES.

 

(A)                                  AGREEMENT TO SUPPORT THE RESTRUCTURING AND
PLAN.  EACH OF THE PARTIES AGREES THAT IT SHALL USE ITS COMMERCIALLY REASONABLE
EFFORTS AND SHALL NEGOTIATE IN GOOD FAITH THE DEFINITIVE AGREEMENTS AND OTHER
DOCUMENTS NECESSARY TO EFFECTUATE THE CONSUMMATION OF THE PLAN.

 

(B)                                 AGREEMENT TO SUPPORT AND VOTE.  AS LONG AS
NO AGREEMENT TERMINATION EVENT (AS DEFINED BELOW) SHALL HAVE OCCURRED, EACH
PARTY AGREES THAT, SUBJECT TO THE TERMS OF THIS AGREEMENT, IT SHALL TAKE SUCH
STEPS AS REASONABLY NECESSARY TO SUPPORT AND ACHIEVE APPROVAL OF THE
CONFIRMATION OF THE PLAN (FOR THE AVOIDANCE OF DOUBT, IT BEING UNDERSTOOD AND
AGREED BY THE PARTIES THAT THE “PLAN” AS USED IN THIS SECTION 3.01(B) SHALL
INCLUDE ANY AMENDMENTS OR MODIFICATIONS TO THE PLAN SOLELY TO THE EXTENT SUCH
AMENDMENTS OR MODIFICATIONS HAVE BEEN CONSENTED TO IN WRITING BY THE REQUISITE
CONSENTING LENDERS (AS DEFINED BELOW) IN THEIR SOLE DISCRETION), INCLUDING:

 

(I)                                     WHEN SOLICITED WITH A DISCLOSURE
STATEMENT APPROVED BY THE BANKRUPTCY COURT, THE TIMELY VOTING OF (OR CAUSING THE
TIMELY VOTING OF) ITS CLAIMS ARISING WITH RESPECT TO THE PRE-PETITION CREDIT
AGREEMENT (“CLAIMS”), TO ACCEPT THE PLAN;

 

(II)                                  CONSENTING TO THE TREATMENT OF ITS CLAIMS
AS SET FORTH IN THE PLAN;

 

(III)                               NOT CHANGING, REVOKING OR WITHDRAWING (OR
CAUSING TO BE CHANGED, REVOKED OR WITHDRAWN) SUCH VOTE; AND

 

(IV)                              VOTING AGAINST AND IN NO WAY OTHERWISE
AGREEING TO, CONSENTING TO OR PROVIDING ANY SUPPORT TO ANY OTHER PLAN OF
REORGANIZATION OTHER THAN THE PLAN.

 

(C)                                  AGREEMENT NOT TO INTERFERE.  FOR THE
AVOIDANCE OF DOUBT, EACH PARTY ALSO AGREES THAT, AS LONG AS NO AGREEMENT
TERMINATION EVENT (AS DEFINED BELOW) SHALL HAVE OCCURRED, (I) IT WILL NOT OBJECT
TO, DELAY, POSTPONE OR TAKE ANY OTHER ACTION TO INTERFERE, DIRECTLY OR
INDIRECTLY, IN ANY MATERIAL RESPECT WITH THE APPROVAL, ACCEPTANCE OR
IMPLEMENTATION OF THE PLAN, (II) DIRECTLY OR INDIRECTLY SOLICIT, PROPOSE, FILE
OR VOTE FOR ANY PLAN OF REORGANIZATION OF THE COMPANY OTHER THAN THE PLAN OR
(III) TAKE ANY OTHER ACTION, INCLUDING BUT NOT LIMITED TO, INITIATING ANY LEGAL

 

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PROCEEDING, THAT IS MATERIALLY INCONSISTENT WITH, OR THAT WOULD PREVENT OR DELAY
CONSUMMATION OF, THE PLAN.

 

SECTION 4.                                          REPRESENTATIONS, WARRANTIES,
AND COVENANTS.  EACH OF THE PARTIES REPRESENTS, WARRANTS, AND COVENANTS TO EACH
OTHER PARTY, AS OF THE DATE OF THIS AGREEMENT, AS FOLLOWS (EACH OF WHICH IS A
CONTINUING REPRESENTATION, WARRANTY, AND COVENANT):

 

4.01.                        ENFORCEABILITY.  IT IS VALIDLY EXISTING AND IN GOOD
STANDING UNDER THE LAWS OF THE STATE OF ITS ORGANIZATION, AND THIS AGREEMENT IS
A LEGAL, VALID, AND BINDING OBLIGATION OF SUCH PARTY, ENFORCEABLE AGAINST IT IN
ACCORDANCE WITH ITS TERMS, EXCEPT AS ENFORCEMENT MAY BE LIMITED BY APPLICABLE
LAWS RELATING TO OR LIMITING CREDITOR’S RIGHTS GENERALLY OR BY EQUITABLE
PRINCIPLES RELATING TO ENFORCEABILITY OR A RULING OF THE BANKRUPTCY COURT.

 

4.02.                        NO CONSENT OR APPROVAL.  EXCEPT AS EXPRESSLY
PROVIDED IN THIS AGREEMENT OR IN THE BANKRUPTCY CODE (INCLUDING THE CONSENT OF
THE BANKRUPTCY COURT), NO CONSENT OR APPROVAL IS REQUIRED BY ANY OTHER PERSON OR
ENTITY IN ORDER FOR IT TO CARRY OUT THE RESTRUCTURING IN ACCORDANCE WITH THE
PLAN AND PERFORM ITS RESPECTIVE OBLIGATIONS UNDER THIS AGREEMENT.

 

4.03.                        POWER AND AUTHORITY.  IT HAS ALL REQUISITE POWER
AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND, SUBJECT TO NECESSARY BANKRUPTCY
COURT APPROVAL, TO CARRY OUT THE RESTRUCTURING IN ACCORDANCE WITH THE PLAN AND
PERFORM ITS RESPECTIVE OBLIGATIONS UNDER THIS AGREEMENT.

 

4.04.                        AUTHORIZATION.  THE EXECUTION AND DELIVERY OF THIS
AGREEMENT AND THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER HAVE BEEN DULY
AUTHORIZED BY ALL NECESSARY ACTION ON ITS PART.  THE COMPANY FURTHER REPRESENTS
AND WARRANTS THAT ITS BOARD OF DIRECTORS HAS APPROVED BY ALL REQUISITE ACTION
ALL OF THE TERMS OF THE PLAN SET FORTH IN THE TERM SHEET.

 

4.05.                        NO CONFLICT.  THE EXECUTION, DELIVERY AND
PERFORMANCE BY IT OF THIS AGREEMENT DOES NOT AND SHALL NOT (A) VIOLATE ANY
PROVISION OF LAW, RULE OR REGULATION APPLICABLE TO IT OR ITS CERTIFICATE OF
INCORPORATION OR BY-LAWS (OR OTHER ORGANIZATIONAL DOCUMENT) OR (B) CONFLICT
WITH, RESULT IN A BREACH OF, OR CONSTITUTE (WITH DUE NOTICE OR LAPSE OF TIME OR
BOTH) A DEFAULT UNDER, ANY MATERIAL CONTRACTUAL OBLIGATION TO WHICH IT IS A
PARTY OR UNDER ITS CERTIFICATE OF INCORPORATION OR BY-LAWS (OR OTHER
ORGANIZATIONAL DOCUMENTS).

 

4.06.                        OWNERSHIP BY PARTIES.

 

(A)                                  EACH CONSENTING LENDER REPRESENTS AND
WARRANTS AS TO ITSELF ONLY, SEVERALLY AND NOT JOINTLY WITH ANY OTHER CONSENTING
LENDER, TO EACH OF THE OTHER PARTIES HERETO THAT, AS OF THE DATE SUCH PARTY
EXECUTES THIS AGREEMENT, (I) SUCH CONSENTING LENDER EITHER (A) IS THE SOLE LEGAL
AND BENEFICIAL OWNER OF THE AGGREGATE PRINCIPAL AMOUNT OF CLAIMS SET FORTH ON
ITS SIGNATURE PAGE, IN EACH CASE FREE AND CLEAR OF ALL CLAIMS, LIENS, AND
ENCUMBRANCES, OTHER THAN ORDINARY COURSE PLEDGES AND/OR SWAPS, OR (B) HAS
INVESTMENT OR VOTING DISCRETION OR CONTROL WITH RESPECT TO DISCRETIONARY
ACCOUNTS FOR THE HOLDERS OR BENEFICIAL OWNERS OF THE AGGREGATE PRINCIPAL AMOUNT
OF CLAIMS SET FORTH ON ITS SIGNATURE PAGE AND HAS THE POWER AND AUTHORITY TO
BIND THE BENEFICIAL OWNER(S) OF SUCH CLAIMS TO THE TERMS OF THIS AGREEMENT AND
(II) SUCH CONSENTING LENDER HAS FULL POWER AND AUTHORITY TO VOTE ON AND CONSENT
TO ALL MATTERS CONCERNING SUCH CLAIMS AND TO EXCHANGE, ASSIGN, AND TRANSFER SUCH
CLAIMS.

 

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(b)                                 Restrictions on Transfers.  Each Consenting
Lender party hereto agrees that it shall not sell, transfer, hypothecate or
assign (each, a “Transfer”) any of its Claims or any right or interest (voting
or otherwise) therein; provided, however, that any Consenting Lender may
(i) freely Transfer any of its Post-Effective Date Claims (as defined below) to
any Person without such Post-Effective Date Claims being or becoming subject to
this Agreement and (ii) Transfer any of its Claims that are not Post-Effective
Date Claims (so long as such Transfer is not otherwise prohibited by any order
of the Bankruptcy Court), to an entity (each, a “Transferee Lender”) that agrees
in writing, in the form attached hereto as Exhibit B (a “Transferee Joinder “),
to be bound by the terms of this Agreement.  Subject to the terms and conditions
of any order of the Bankruptcy Court, each Consenting Lender agrees to provide
FairPoint and the Administrative Agent with a copy of any Transferee Joinder
executed by such Party.  Any Consenting Lender that Transfers its Claims to its
Affiliate pursuant to a Transferee Joinder shall remain liable for breach of
this Agreement by such Affiliate.

 

(c)                                  Additional Interests.  Nothing herein
should be construed to restrict a Consenting Lender’s right to acquire Claims
after the Effective Date. To the extent any Consenting Lender acquires any
Claims after the Effective Date, each such Consenting Lender agrees that such
Claims shall be automatically treated consistent with this Agreement and that
such Consenting Lender shall be bound by and subject to this Agreement with
respect to such acquired Claims; provided, that from and after the Effective
Date any Consenting Lender may (i) acquire Claims that are not then subject to
the terms of this Agreement (i.e such Claims being acquired are not owned by a
Consenting Lender on the date of this Agreement) (such claims, the
“Post-Effective Date Claims”) and (ii) sell or assign any Post-Effective Date
Claims without such Post-Effective Date Claims being or becoming subject to this
Agreement; provided further, that during the time that any Post-Effective Date
Claim is owned by a Consenting Lender, such Consenting Lender shall not take any
action in respect of such Post-Effective Date Claim that is inconsistent with
this Agreement and shall treat such Post- Effective Date Claim in accordance
with this Agreement (other than the ability to sell or assign the same free of
the provisions of this Agreement), including voting such Post-Effective Date
Claim to accept the Plan if on the date which is seven (7) days prior to the
expiration of the solicitation period for the Plan, such Consenting Lender still
owns such Post-Effective Date Claim on such date.

 

(d)                                 Additional Lender Parties.  Any Pre-Petition
Lender may, at any time after the Effective Date, become a party to this
Agreement as a Consenting Lender (any such Pre-Petition Lender, an “Additional
Lender Party”) by executing a joinder agreement in the form attached as
Exhibit C hereto (an “Additional Lender Joinder”), pursuant to which such
Additional Lender Party will agree to be bound by the terms of this Agreement as
a Consenting Lender hereunder.

 

SECTION 5.                                          TERMINATION EVENTS.

 

5.01.                        CONSENTING LENDER TERMINATION EVENTS.  THIS
AGREEMENT AND THE OBLIGATIONS HEREUNDER SHALL BE TERMINATED, UNLESS WAIVED BY
THE REQUISITE CONSENTING LENDERS, UPON THE OCCURRENCE OF ANY OF THE FOLLOWING
EVENTS (EACH, A “CONSENTING LENDER TERMINATION EVENT”):

 

(A)                                  AT 5:00 P.M. EASTERN TIME ON OCTOBER 30,
2009 IF THE PETITION DATE HAS NOT OCCURRED ON OR BEFORE SUCH DATE;

 

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(B)                                 AT 5:00 P.M. EASTERN TIME ON THE 45TH DAY
AFTER THE PETITION DATE IF THE PLAN CONTAINING THE TERMS SET FORTH IN THE TERM
SHEET HAS NOT BEEN FILED BY THE COMPANY WITH THE BANKRUPTCY COURT ON OR BEFORE
SUCH DATE (THE DATE OF THE FILING OF THE PLAN WITH THE BANKRUPTCY COURT BEING
REFERRED TO HEREIN AS THE “PLAN FILING DATE”);

 

(C)                                  AT 5:00 P.M. EASTERN TIME ON THE 150TH DAY
AFTER THE PLAN FILING DATE IF THE PLAN HAS NOT BEEN CONFIRMED BY AN ORDER (THE
“CONFIRMATION ORDER”) OF THE BANKRUPTCY COURT ON OR BEFORE SUCH DATE (THE DATE
OF ENTRY OF THE CONFIRMATION ORDER BY THE BANKRUPTCY COURT BEING REFERRED TO
HEREIN AS THE “PLAN CONFIRMATION DATE”);

 

(D)                                 AT 5:00 P.M. EASTERN TIME ON THE 120TH DAY
AFTER THE PLAN CONFIRMATION DATE, UNLESS ON OR BEFORE SUCH DATE (X) THE
CONFIRMATION ORDER SHALL NOT HAVE BEEN STAYED, REVERSED, VACATED OR OTHERWISE
MODIFIED (UNLESS OTHERWISE CONSENTED TO IN WRITING BY THE REQUISITE CONSENTING
LENDERS); THERE SHALL BE NO APPEAL OR PETITION FOR REHEARING OR CERTIORARI
PENDING IN RESPECT OF THE CONFIRMATION ORDER AND THE TIME TO APPEAL AND FILE ANY
SUCH PETITION SHALL HAVE LAPSED AND (Y) SUBSTANTIAL CONSUMMATION (AS DEFINED IN
SECTION 1101 OF THE BANKRUPTCY CODE) OF THE PLAN SHALL HAVE OCCURRED (THE DATE
ON WHICH THE ITEMS IN CLAUSES (X) AND (Y) OCCUR BEING REFERRED TO HEREIN AS THE
“PLAN CONSUMMATION DATE”);

 

(E)                                  THE BANKRUPTCY COURT SHALL HAVE ENTERED AN
ORDER PURSUANT TO SECTION 1104 OF THE BANKRUPTCY CODE APPOINTING A TRUSTEE OR AN
EXAMINER WITH EXPANDED POWERS TO OPERATE AND MANAGE THE COMPANY’S BUSINESS;

 

(F)                                    THE BANKRUPTCY COURT SHALL HAVE ENTERED
AN ORDER DISMISSING ANY OF THE BANKRUPTCY CASES OR AN ORDER PURSUANT TO THE
BANKRUPTCY CODE CONVERTING ANY OF THE BANKRUPTCY CASES TO A CASE OR CASES UNDER
CHAPTER 7 OF THE BANKRUPTCY CODE;

 

(G)                                 THE FILING BY THE COMPANY OF ANY MOTION OR
PLEADING WITH THE BANKRUPTCY COURT THAT IS NOT CONSISTENT WITH THIS AGREEMENT OR
THE PLAN, AND SUCH MOTION OR PLEADING IS NOT WITHDRAWN WITHIN FIVE (5) BUSINESS
DAYS OF NOTICE THEREOF BY ANY CONSENTING LENDER TO FAIRPOINT (OR, IN THE CASE OF
A MOTION THAT HAS ALREADY BEEN APPROVED BY THE BANKRUPTCY COURT AT THE TIME
FAIRPOINT IS PROVIDED WITH SUCH NOTICE BY A CONSENTING LENDER, SUCH MOTION NOT
IS STAYED, REVERSED OR VACATED WITHIN FIVE (5) BUSINESS DAYS OF SUCH NOTICE);

 

(H)                                 THE COMPANY FILES, PROPOSES OR OTHERWISE
SUPPORTS, OR FAILS TO ACTIVELY OPPOSE ANY (X) PLAN OF REORGANIZATION CONTAINING
TERMS DIFFERENT THAN THOSE CONTAINED IN THE TERM SHEET OR (Y) AMENDMENT OR
MODIFICATION TO THE PLAN CONTAINING ANY TERMS THAT ARE INCONSISTENT WITH THE
TERM SHEET UNLESS SUCH AMENDMENT OR MODIFICATION IS OTHERWISE CONSENTED TO IN
WRITING BY THE REQUISITE CONSENTING LENDERS IN THEIR SOLE DISCRETION;

 

(I)                                     ON OR AFTER THE DATE HEREOF, THE COMPANY
ENGAGES IN ANY MERGER, CONSOLIDATION, DISPOSITION, ACQUISITION, INVESTMENT,
DIVIDEND, INCURRENCE OF INDEBTEDNESS OR OTHER SIMILAR TRANSACTION OUTSIDE THE
ORDINARY COURSE OF BUSINESS, OTHER THAN (X) THE COMMENCEMENT OF THE CASES,
(Y) THE INCURRENCE OF INDEBTEDNESS IN RESPECT OF DEBTOR-IN-POSSESSION FINANCING
ON THE TERMS SET FORTH IN EXHIBIT D HERETO OR (Z) DISPOSITIONS OF ASSETS WITH AN
AGGREGATE FAIR MARKET VALUE NOT IN EXCESS OF $5,000,000 FOR ALL SUCH
DISPOSITIONS;

 

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(J)                                     AN EXTRAORDINARY EVENT OCCURS THAT IS
NOT CONTEMPLATED IN THE COMPANY’S BUSINESS PLAN PROVIDED TO THE CONSENTING
LENDERS PRIOR TO THE DATE HEREOF, AND SUCH EVENT HAS A MATERIAL ADVERSE EFFECT
ON THE BUSINESS, ASSETS, FINANCIAL CONDITION OR PROSPECTS OF THE COMPANY;

 

(K)                                  THE MATERIAL BREACH BY THE COMPANY OF ANY
OF THE UNDERTAKINGS, REPRESENTATIONS, WARRANTIES OR COVENANTS OF THE COMPANY SET
FORTH IN THIS AGREEMENT AND SUCH BREACH SHALL CONTINUE UNREMEDIED BY THE COMPANY
FOR A PERIOD OF FIVE (5) BUSINESS DAYS AFTER NOTICE THEREOF HAS BEEN GIVEN BY A
CONSENTING LENDER TO FAIRPOINT;

 

(L)                                     THE BANKRUPTCY COURT GRANTS RELIEF THAT
IS INCONSISTENT WITH THIS AGREEMENT OR THE PLAN AND SUCH INCONSISTENT RELIEF IS
NOT DISMISSED, VACATED OR MODIFIED TO BE CONSISTENT WITH THIS AGREEMENT AND THE
PLAN WITHIN (5) BUSINESS DAYS AFTER NOTICE THEREOF HAS BEEN GIVEN BY A
CONSENTING LENDER TO FAIRPOINT; OR

 

(M)                               THERE SHALL OCCUR ANY OF THE FOLLOWING EVENTS
AFTER THE DATE HEREOF:  (X) THE REVOCATION OR REMOVAL OF THE OPERATING LICENSE
OF FAIRPOINT OR ANY OF ITS SUBSIDIARIES BY THE PUC OR THE FCC IN A STATE WHERE
THE COMPANY HAS MATERIAL OPERATIONS OR CONDUCTS A MATERIAL AMOUNT OF BUSINESS OR
(Y) THE ENTRY OF ANY ORDER OR THE TAKING OF ANY OTHER ACTION BY THE PUC OR THE
FCC THAT MATERIALLY IMPAIRS THE ABILITY OF THE COMPANY TO OPERATE ITS BUSINESS
IN THE MANNER IN WHICH IT OPERATES ON THE DATE HEREOF, AND IN THE CASE OF EACH
OF CLAUSES (X) AND (Y), SUCH ACTION BY THE PUC OR THE FCC IS NOT STAYED,
REVERSED OR VACATED WITHIN FIFTEEN (15) DAYS AFTER THE OCCURRENCE THEREOF.

 

THE COMPANY HEREBY ACKNOWLEDGES AND AGREES THAT THE TERMINATION OF THIS
AGREEMENT AND THE OBLIGATIONS HEREUNDER AS A RESULT OF A CONSENTING LENDER
TERMINATION EVENT, AND ANY NOTICE PROVIDED BY ANY CONSENTING LENDER TO FAIRPOINT
PURSUANT ANY OF THE PROVISIONS OF THIS SECTION 5.01, WILL NOT VIOLATE THE
AUTOMATIC STAY.

 

5.02.                        COMPANY TERMINATION EVENTS. THIS AGREEMENT AND THE
OBLIGATIONS HEREUNDER SHALL BE TERMINATED, UNLESS WAIVED BY THE COMPANY, UPON
THE OCCURRENCE OF ANY OF THE FOLLOWING EVENTS (EACH A “COMPANY TERMINATION
EVENT”; AND TOGETHER WITH THE CONSENTING LENDER TERMINATION EVENTS, EACH AN
“AGREEMENT TERMINATION EVENT” AND COLLECTIVELY, THE “AGREEMENT TERMINATION
EVENTS”) BY THE GIVING OF WRITTEN NOTICE THEREOF TO THE CONSENTING LENDERS:

 

(A)                                  IF ANY OF THE COVENANTS OF THE CONSENTING
LENDERS IN THIS AGREEMENT IS MATERIALLY BREACHED BY ANY CONSENTING LENDER, AND
SUCH BREACH (X) IS NOT CURED WITHIN FIVE (5) BUSINESS DAYS AFTER RECEIPT OF
WRITTEN NOTICE FROM FAIRPOINT TO THE CONSENTING LENDERS OF SUCH BREACH AND
(Y) HAS A MATERIAL ADVERSE EFFECT ON THE COMPANY OR ITS ABILITY TO CONSUMMATE
THE PLAN IN ACCORDANCE WITH THE TERMS OF THE TERM SHEET;

 

(B)                                 THE BOARD OF DIRECTORS OF THE COMPANY HAS
DETERMINED IN GOOD FAITH, AFTER CONSULTATION WITH LEGAL COUNSEL, THAT THE TAKING
OF ANY ACTION UNDER THIS AGREEMENT WOULD BE INCONSISTENT WITH ITS APPLICABLE
FIDUCIARY OBLIGATIONS;

 

(C)                                  IF THE BANKRUPTCY COURT ENTERS AN ORDER
DENYING THE CONFIRMATION OF THE PLAN; AND

 

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(D)                                 AT 5:00 P.M. EASTERN TIME ON THE 180TH DAY
AFTER THE PLAN FILING DATE IF THE PLAN CONFIRMATION DATE HAS NOT OCCURRED ON OR
PRIOR TO SUCH DATE; PROVIDED, THAT A COMPANY TERMINATION DATE SHALL NOT BE
DEEMED TO HAVE OCCURRED UNDER THIS CLAUSE (D) UNLESS THE COMPANY HAS USED ITS
BEST EFFORTS TO CAUSE THE PLAN CONFIRMATION DATE TO OCCUR ON OR PRIOR TO SUCH
DATE.

 

5.03.                        EFFECT OF AGREEMENT TERMINATION EVENT.  UPON THE
OCCURRENCE OF AN AGREEMENT TERMINATION EVENT, (I) THIS AGREEMENT SHALL BE OF NO
FURTHER FORCE AND EFFECT AND EACH PARTY HERETO SHALL BE RELEASED FROM ITS
COMMITMENTS, UNDERTAKINGS AND AGREEMENTS UNDER OR RELATED TO THIS AGREEMENT AND
THE PLAN AND SHALL HAVE THE RIGHTS AND REMEDIES THAT IT WOULD HAVE HAD IT NOT
ENTERED INTO THIS AGREEMENT, AND SHALL BE ENTITLED TO TAKE ALL ACTIONS, WHETHER
WITH RESPECT TO THE RESTRUCTURING OR OTHERWISE, THAT IT WOULD HAVE BEEN ENTITLED
TO TAKE HAD IT NOT ENTERED INTO THIS AGREEMENT, (II) ANY AND ALL CONSENTS
TENDERED BY THE PARTIES PRIOR TO SUCH TERMINATION SHALL BE DEEMED, FOR ALL
PURPOSES, TO BE NULL AND VOID FROM THE FIRST INSTANCE AND SHALL NOT BE
CONSIDERED OR OTHERWISE USED IN ANY MANNER BY THE PARTIES IN CONNECTION WITH THE
RESTRUCTURING, THIS AGREEMENT, THE PLAN OR OTHERWISE, AND (III) IF BANKRUPTCY
COURT PERMISSION SHALL BE REQUIRED FOR A PARTY TO CHANGE OR WITHDRAW (OR CAUSE
TO BE CHANGED OR WITHDRAWN) ITS VOTE IN FAVOR OF THE PLAN, NO PARTY TO THIS
AGREEMENT SHALL OPPOSE ANY ATTEMPT BY SUCH PARTY TO CHANGE OR WITHDRAW (OR CAUSE
TO BE CHANGED OR WITHDRAWN) SUCH VOTE.

 

SECTION 6.                                          MISCELLANEOUS.

 

6.01.                        COMPLETE AGREEMENT.  THIS AGREEMENT IS THE ENTIRE
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
SUPERSEDES ALL PRIOR AGREEMENTS, ORAL OR WRITTEN, BETWEEN THE PARTIES WITH
RESPECT THERETO, TO THE MAXIMUM EXTENT THEY RELATE IN ANY WAY TO THE SUBJECT
MATTER HEREOF.  NO CLAIM OF WAIVER, MODIFICATION, CONSENT OR ACQUIESCENCE WITH
RESPECT TO ANY PROVISION OF THIS AGREEMENT SHALL BE MADE AGAINST ANY PARTY,
EXCEPT ON THE BASIS OF A WRITTEN INSTRUMENT EXECUTED BY OR ON BEHALF OF SUCH
PARTY.

 

6.02.                        ADMISSIBILITY OF THIS AGREEMENT.  EACH OF PARTIES
HEREBY AGREES THAT THIS AGREEMENT, THE TERM SHEET AND ALL DOCUMENTS, AGREEMENTS
AND NEGOTIATIONS RELATING THERETO SHALL NOT, PURSUANT TO FEDERAL RULE OF
EVIDENCE 408 AND ANY APPLICABLE STATE RULES OF EVIDENCE, BE ADMISSIBLE INTO
EVIDENCE OR CONSTITUTE AN ADMISSION OR AGREEMENT IN ANY PROCEEDING INVOLVING A
PARTY, OTHER THAN A PROCEEDING TO ENFORCE THE TERMS OF THIS AGREEMENT AND/OR
SUPPORT THE CONFIRMATION OF THE PLAN.

 

6.03.                        SEVERAL, NOT JOINT, OBLIGATIONS.  THE AGREEMENTS,
REPRESENTATIONS, AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT ARE, IN ALL
RESPECTS, SEVERAL AND NOT JOINT.

 

6.04.                        PARTIES, SUCCESSION AND ASSIGNMENT.  THIS AGREEMENT
SHALL BE BINDING UPON, AND INURE TO THE BENEFIT OF, THE PARTIES AND THEIR
RESPECTIVE SUCCESSORS, ASSIGNS, HEIRS, EXECUTORS, ADMINISTRATORS AND
REPRESENTATIVES.  NO RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER THIS AGREEMENT MAY
BE ASSIGNED OR TRANSFERRED TO ANY OTHER PERSON OR ENTITY EXCEPT AS OTHERWISE
CONTEMPLATED HEREIN.  NOTHING IN THIS AGREEMENT, EXPRESS OR IMPLIED, SHALL GIVE
TO ANY PERSON OR ENTITY, OTHER THAN THE PARTIES, ANY BENEFIT OR ANY LEGAL OR
EQUITABLE RIGHT, REMEDY OR CLAIM UNDER THIS AGREEMENT.

 

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6.05.                        NO THIRD-PARTY BENEFICIARIES.  THIS AGREEMENT SHALL
NOT CONFER ANY RIGHTS OR REMEDIES UPON ANY PERSON OTHER THAN THE PARTIES AND
THEIR RESPECTIVE SUCCESSORS AND PERMITTED ASSIGNS AS EXPRESSLY SET FORTH IN THIS
AGREEMENT.

 

6.06.                        SPECIFIC PERFORMANCE.  EACH PARTY HERETO RECOGNIZES
AND ACKNOWLEDGES THAT A BREACH BY IT OF ANY COVENANTS OR AGREEMENTS CONTAINED IN
THIS AGREEMENT MAY CAUSE THE OTHER PARTIES TO SUSTAIN DAMAGES FOR WHICH SUCH
PARTIES WOULD NOT HAVE AN ADEQUATE REMEDY AT LAW FOR MONEY DAMAGES, AND
THEREFORE EACH PARTY HERETO AGREES THAT IN THE SOLE EVENT OF ANY BREACH THE
OTHER PARTIES SHALL BE ENTITLED TO SEEK THE REMEDY OF SPECIFIC PERFORMANCE OR
INJUNCTIVE RELIEF TO ENFORCE SUCH COVENANTS AND AGREEMENTS.

 

6.07.                        REMEDIES CUMULATIVE.  ALL RIGHTS, POWERS, AND
REMEDIES PROVIDED UNDER THIS AGREEMENT OR OTHERWISE AVAILABLE IN RESPECT HEREOF
AT LAW OR IN EQUITY SHALL BE CUMULATIVE AND NOT ALTERNATIVE, AND THE EXERCISE OF
ANY RIGHT, POWER, OR REMEDY THEREOF BY ANY PARTY SHALL NOT PRECLUDE THE
SIMULTANEOUS OR LATER EXERCISE OF ANY OTHER SUCH RIGHT, POWER, OR REMEDY BY SUCH
PARTY.

 

6.08.                        INTERPRETATION.  THIS AGREEMENT IS THE PRODUCT OF
NEGOTIATIONS BETWEEN THE PARTIES, AND THE ENFORCEMENT OR INTERPRETATION HEREOF
IS TO BE INTERPRETED IN A NEUTRAL MANNER, AND ANY PRESUMPTION WITH REGARD TO
INTERPRETATION FOR OR AGAINST ANY PARTY BY REASON OF THAT PARTY HAVING DRAFTED
OR CAUSED TO BE DRAFTED THIS AGREEMENT, OR ANY PORTION HEREOF, SHALL NOT BE
EFFECTIVE IN REGARD TO THE INTERPRETATION HEREOF.

 

6.09.                        COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED AND
DELIVERED IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH, WHEN EXECUTED AND
DELIVERED, SHALL BE DEEMED AN ORIGINAL, AND ALL OF WHICH TOGETHER SHALL
CONSTITUTE THE SAME AGREEMENT.  DELIVERY OF AN EXECUTED COPY OF THIS AGREEMENT
SHALL BE DEEMED TO BE A CERTIFICATION BY EACH PERSON EXECUTING THIS AGREEMENT ON
BEHALF OF A PARTY THAT SUCH PERSON AND PARTY HAS BEEN DULY AUTHORIZED AND
EMPOWERED TO EXECUTE AND DELIVER THIS AGREEMENT AND EACH OTHER PARTY MAY RELY ON
SUCH CERTIFICATION.  DELIVERY OF ANY EXECUTED SIGNATURE PAGE OF THIS AGREEMENT
BY TELECOPIER, FACSIMILE OR ELECTRONIC MAIL SHALL BE AS EFFECTIVE AS DELIVERY OF
A MANUALLY EXECUTED SIGNATURE PAGE OF THIS AGREEMENT.

 

6.10.                        FURTHER ASSURANCES.  SUBJECT TO THE OTHER TERMS OF
THIS AGREEMENT, THE PARTIES AGREE TO EXECUTE AND DELIVER SUCH OTHER INSTRUMENTS
AND PERFORM SUCH ACTS, IN ADDITION TO THE MATTERS HEREIN SPECIFIED, AS MAY BE
REASONABLY APPROPRIATE OR NECESSARY, FROM TIME TO TIME, TO EFFECTUATE, AS
APPLICABLE, THE INTENT OF THIS AGREEMENT.

 

6.11.                        AMENDMENTS AND WAIVERS.  NO AMENDMENT OF ANY TERM
OR PROVISION OF THIS AGREEMENT OR THE PLAN SHALL BE VALID UNLESS THE SAME SHALL
BE IN WRITING AND SIGNED BY THE COMPANY AND THE REQUISITE CONSENTING LENDERS. 
NO WAIVER OF ANY TERM OR PROVISION OF THIS AGREEMENT OR OF THE PLAN OR OF ANY
DEFAULT, MISREPRESENTATION, OR BREACH OF WARRANTY OR COVENANT HEREUNDER, WHETHER
INTENTIONAL OR NOT, SHALL BE VALID UNLESS THE SAME SHALL BE IN WRITING AND
SIGNED BY THE REQUISITE CONSENTING LENDERS (EXCEPT IN THE CASE OF A COMPANY
TERMINATION EVENT, THE WAIVER OF WHICH SHALL BE IN A WRITING SIGNED BY THE
COMPANY), NOR SHALL SUCH WAIVER BE DEEMED TO EXTEND TO ANY PRIOR OR SUBSEQUENT
DEFAULT, MISREPRESENTATION, OR BREACH OF WARRANTY OR COVENANT HEREUNDER OR
AFFECT IN ANY WAY ANY RIGHTS ARISING BY VIRTUE OF ANY PRIOR OR SUBSEQUENT
DEFAULT, MISREPRESENTATION, OR BREACH OF WARRANTY OR COVENANT.  THE FAILURE OF
ANY PARTY TO

 

8

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EXERCISE ANY RIGHT, POWER OR REMEDY PROVIDED UNDER THIS AGREEMENT OR OTHERWISE
AVAILABLE IN RESPECT HEREOF AT LAW OR IN EQUITY, OR TO INSIST UPON COMPLIANCE BY
ANY OTHER PARTY WITH ITS OBLIGATIONS HEREUNDER SHALL NOT CONSTITUTE A WAIVER BY
SUCH PARTY OF ITS RIGHT TO EXERCISE ANY SUCH OR OTHER RIGHT, POWER OR REMEDY OR
TO DEMAND SUCH COMPLIANCE.  AS USED IN THIS AGREEMENT, (A) “REQUISITE CONSENTING
LENDERS” SHALL MEAN (X) AT ALL TIMES PRIOR TO THE DATE (THE “THRESHOLD DATE”) ON
WHICH THE AGGREGATE AMOUNT OF CLAIMS OWNED AND/OR CONTROLLED BY CONSENTING
LENDERS (OTHER THAN STEERING COMMITTEE LENDERS (AS DEFINED BELOW)) IS GREATER
THAN OR EQUAL TO TWENTY PERCENT (20%) OF THE AGGREGATE AMOUNT OF CLAIMS OWNED
AND/OR CONTROLLED BY ALL PREPETITION LENDERS, ALL OF THE STEERING COMMITTEE
LENDERS AND (Y) AT ALL TIMES ON AND AFTER THE THRESHOLD DATE, (I) IN THE CASE OF
A MATERIAL AMENDMENT/WAIVER (AS DEFINED BELOW), ALL OF THE CONSENTING LENDERS,
(II) IN THE CASE OF ANY AMENDMENT OR WAIVER OF ANY OF THE PROVISIONS OF THE PLAN
SET FORTH IN SECTION 8(IV) OF THE TERM SHEET, ALL OF THE STEERING COMMITTEE
LENDERS AND (III) IN THE CASE OF ANY OTHER AMENDMENT OR WAIVER OF ANY TERM OR
PROVISION OF THIS AGREEMENT OR THE PLAN, ALL OF THE STEERING COMMITTEE LENDERS
AND THE MAJORITY NON-STEERING COMMITTEE CONSENTING LENDERS (AS DEFINED BELOW);
(B) “MATERIAL AMENDMENT/WAIVER” SHALL MEAN ANY AMENDMENT OR WAIVER OF (I) ANY
TERM OR PROVISION OF THIS AGREEMENT OR THE PLAN, THE EFFECT OF WHICH IS TO
MODIFY THE FORM OF, OR DECREASE THE AMOUNT OR PERCENTAGE OF, THE RECOVERY (OR
ANY COMPONENT THEREOF) TO BE PAID, ISSUED OR DISTRIBUTED TO THE PRE-PETITION
LENDERS (OR ANY ONE OF THEM) PURSUANT TO THE TERMS OF THE PLAN SET FORTH IN THE
TERM SHEET, (II) ANY TERM OR PROVISION OF THIS AGREEMENT OR THE PLAN (OTHER THAN
ANY OF THE PROVISIONS OF THE PLAN SET FORTH IN SECTION 8(IV) OF THE TERM SHEET),
THE EFFECT OF WHICH IS TO MODIFY THE FORM OF, OR INCREASE THE AMOUNT OR
PERCENTAGE OF, THE RECOVERY (OR ANY COMPONENT THEREOF) TO BE PAID, ISSUED OR
DISTRIBUTED TO ANY PERSON(S) (OTHER THAN THE PRE-PETITION LENDERS) PURSUANT TO
THE TERMS OF THE PLAN SET FORTH IN THE TERM SHEET, (III) ANY OF THE TERMS OR
PROVISIONS OF CLAUSES (A) — (D) OF SECTION 5.01 OF THIS AGREEMENT, THE EFFECT OF
WHICH IS TO EXTEND ANY OF THE TIME PERIODS SPECIFIED THEREIN FOR A PERIOD OF
GREATER THAN FIFTEEN (15) DAYS, (IV) ANY OF THE PROVISIONS OF THIS SECTION 6.11
OR (V) ANY OF THE OTHER MATERIAL TERMS OR PROVISIONS OF THIS AGREEMENT OR THE
PLAN (OTHER THAN ANY OF THE PROVISIONS OF THE PLAN SET FORTH IN SECTION 8(IV) OF
THE TERM SHEET); (C) “STEERING COMMITTEE LENDERS” SHALL MEAN THOSE PRE-PETITION
LENDERS THAT ARE MEMBERS OF THE STEERING COMMITTEE FORMED IN CONNECTION WITH THE
PRE-PETITION CREDIT AGREEMENT; AND (D) “MAJORITY NON-STEERING COMMITTEE
CONSENTING LENDERS” SHALL MEAN CONSENTING LENDERS (OTHER THAN STEERING COMMITTEE
LENDERS) HOLDING MORE THAN FIFTY PERCENT (50%) OF THE AGGREGATE AMOUNT OF CLAIMS
HELD BY THOSE CONSENTING LENDERS THAT ARE NOT STEERING COMMITTEE LENDERS.

 

6.12.                        NOTICES.  ALL NOTICES HEREUNDER SHALL BE IN WRITING
AND DELIVERED BY FACSIMILE, E-MAIL, COURIER OR REGISTERED OR CERTIFIED MAIL
(RETURN RECEIPT REQUESTED) TO THE ADDRESS, FACSIMILE NUMBER OR E-MAIL ADDRESS
(OR AT SUCH OTHER ADDRESS, FACSIMILE NUMBER OR E-MAIL ADDRESS AS SHALL BE
SPECIFIED BY LIKE NOTICE) SET FORTH ON THE SIGNATURE PAGE FOR SUCH PARTY.  ANY
NOTICE, IF MAILED AND PROPERLY ADDRESSED WITH POSTAGE PREPAID OR IF PROPERLY
ADDRESSED AND SENT BY PRE-PAID COURIER SERVICE, SHALL BE DEEMED GIVEN WHEN
RECEIVED; ANY NOTICE, IF TRANSMITTED BY FACSIMILE, SHALL BE DEEMED GIVEN WHEN
THE CONFIRMATION OF TRANSMISSION THEREOF IS RECEIVED BY THE TRANSMITTER; AND ANY
NOTICE, IF TRANSMITTED BY E-MAIL SHALL BE DEEMED GIVEN UPON THE SENDER’S RECEIPT
OF AN ACKNOWLEDGEMENT FROM THE INTENDED RECIPIENT (SUCH AS BY THE “RETURN
RECEIPT REQUESTED” FUNCTION, AS AVAILABLE, RETURN E-MAIL OR OTHER WRITTEN
ACKNOWLEDGEMENT), PROVIDED THAT IF SUCH NOTICE OR OTHER COMMUNICATION IS NOT
SENT DURING THE NORMAL BUSINESS HOURS OF THE RECIPIENT, SUCH NOTICE OR
COMMUNICATION SHALL BE DEEMED TO HAVE BEEN GIVEN AT THE OPENING OF BUSINESS ON
THE NEXT BUSINESS DAY FOR THE RECIPIENT,

 

9

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6.13.                        WAIVER.  IF THE PLAN IS NOT CONSUMMATED, OR
FOLLOWING THE OCCURRENCE OF AN AGREEMENT TERMINATION EVENT OR THE TERMINATION OF
THIS AGREEMENT, NOTHING SHALL BE CONSTRUED HEREIN AS A WAIVER BY ANY PARTY OF
ANY OR ALL OF SUCH PARTY’S RIGHTS AND THE PARTIES EXPRESSLY RESERVE ANY AND ALL
OF THEIR RESPECTIVE RIGHTS.

 

6.14.                        CONSTRUCTION.  EXCEPT WHERE THE CONTEXT OTHERWISE
REQUIRES, WORDS IMPORTING THE MASCULINE GENDER SHALL INCLUDE THE FEMININE AND
THE NEUTRAL, IF APPROPRIATE, WORDS IMPORTING THE SINGULAR NUMBER SHALL INCLUDE
THE PLURAL NUMBER AND VICE VERSA.

 

6.15.                        SEVERABILITY.  ANY TERM OR PROVISION OF THIS
AGREEMENT THAT IS INVALID OR UNENFORCEABLE IN ANY SITUATION IN ANY JURISDICTION
SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF OR THE VALIDITY OR
ENFORCEABILITY OF THE OFFENDING TERM OR PROVISION IN ANY OTHER SITUATION OR IN
ANY OTHER JURISDICTION THE REMAINING TERMS AND PROVISIONS HEREOF.

 

6.16.                        HEADINGS.  THE HEADINGS OF ALL SECTIONS OF THIS
AGREEMENT ARE INSERTED SOLELY FOR THE CONVENIENCE OF REFERENCE AND ARE NOT A
PART OF AND ARE NOT INTENDED TO GOVERN, LIMIT OR AID IN THE CONSTRUCTION OR
INTERPRETATION OF ANY TERM OR PROVISION HEREOF AND SHALL NOT AFFECT IN ANY WAY
THE MEANING OR INTERPRETATION OF THIS AGREEMENT.

 

6.17.                        INCORPORATION OF SCHEDULES AND EXHIBITS.  THE
EXHIBITS AND SCHEDULES ATTACHED HERETO AND IDENTIFIED IN THIS AGREEMENT ARE
INCORPORATED HEREIN BY REFERENCE AND MADE A PART HEREOF.

 

6.18.                        WAIVER OF TRIAL BY JURY.  EACH PARTY HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE RESTRUCTURING.

 

6.19.                        SUBMISSION TO JURISDICTION.  BY ITS EXECUTION AND
DELIVERY OF THIS AGREEMENT, SUBJECT TO THE COMMENCEMENT OF THE BANKRUPTCY CASES,
EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE BANKRUPTCY COURT FOR PURPOSES OF ANY ACTION, SUIT
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAWS, ANY OBJECTION IT MAY HAVE NOW OR HEREAFTER
TO THE VENUE OF ANY ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH COURT OR TO THE
CONVENIENCE OF THE FORUM.

 

6.20.                        GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK.

 

6.21.                        FEES AND EXPENSES.  THE COMPANY AGREES TO PAY ALL
REASONABLE OUT-OF-POCKET FEES AND EXPENSES (INCLUDING REASONABLE FEES AND
EXPENSES OF COUNSEL) OF THE ADMINISTRATIVE AGENT AND EACH CONSENTING LENDER
HOLDING MORE THAN 10% OF THE CLAIMS INCURRED IN CONNECTION WITH THIS AGREEMENT,
THE TERM SHEET, THE PLAN, THE RESTRUCTURING AND THE TRANSACTIONS CONTEMPLATED
THEREBY.

 

 

10

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
first above written.

 

FAIRPOINT COMMUNICATIONS, INC.

FAIRPOINT BROADBAND, INC.

MJD VENTURES, INC.

MJD SERVICES CORP.

S T ENTERPRISES, LTD.

FAIRPOINT CARRIER SERVICES, INC.

FAIRPOINT LOGISTICS, INC

BE MOBILE COMMUNICATIONS, INCORPORATED

BENTLEYVILLE COMMUNICATIONS CORPORATION

BERKSHIRE CABLE CORP.

BERKSHIRE CELLULAR, INC.

BERKSHIRE NET, INC.

BERKSHIRE NEW YORK ACCESS, INC.

BERKSHIRE TELEPHONE CORPORATION

BIG SANDY TELECOM, INC.

BLUESTEM TELEPHONE COMPANY

C & E COMMUNICATIONS, LTD.

CHAUTAUQUA & ERIE COMMUNICATIONS, INC.

CHAUTAUQUA AND ERIE TELEPHONE CORPORATION

CHINA TELEPHONE COMPANY

CHOUTEAU TELEPHONE COMPANY

COLUMBINE TELECOM COMPANY

COMERCO, INC.

COMMTEL COMMUNICATIONS INC.

COMMUNITY SERVICE TELEPHONE CO.

C-R COMMUNICATIONS, INC.

C-R LONG DISTANCE, INC.

C-R TELEPHONE COMPANY

EL PASO LONG DISTANCE COMPANY

ELLENSBURG TELEPHONE COMPANY

ELLTEL LONG DISTANCE CORP.

ENHANCED COMMUNICATIONS OF NORTHERN NEW ENGLAND INC.

EXOP OF MISSOURI, INC.

FAIRPOINT COMMUNICATIONS MISSOURI, INC.

FAIRPOINT COMMUNICATIONS SOLUTIONS CORP. — NEW YORK

FAIRPOINT COMMUNICATIONS SOLUTIONS CORP. — VIRGINIA

FAIRPOINT VERMONT, INC.

FREMONT BROADBAND, LLC

FREMONT TELCOM CO.

FRETEL COMMUNICATIONS, LLC

GERMANTOWN LONG DISTANCE COMPANY

GIT-CELL, INC.

GITCO SALES, INC.

GTC COMMUNICATIONS, INC.

 

--------------------------------------------------------------------------------

 

GTC FINANCE CORPORATION
GTC, INC.
MAINE TELEPHONE COMPANY
MARIANNA AND SCENERY HILL TELEPHONE COMPANY
MARIANNA TEL, INC.
NORTHERN NEW ENGLAND TELEPHONE OPERATIONS LLC
NORTHLAND TELEPHONE COMPANY OF MAINE, INC.
ODIN TELEPHONE EXCHANGE, INC.
ORWELL COMMUNICATIONS, INC.
PEOPLES MUTUAL LONG DISTANCE COMPANY
PEOPLES MUTUAL SERVICES COMPANY
PEOPLES MUTUAL TELEPHONE COMPANY
QUALITY ONE TECHNOLOGIES, INC.
RAVENSWOOD COMMUNICATIONS, INC.
SIDNEY TELEPHONE COMPANY
ST COMPUTER RESOURCES, INC.
ST LONG DISTANCE, INC.
ST. JOE COMMUNICATIONS, INC.
STANDISH TELEPHONE COMPANY
SUNFLOWER TELEPHONE COMPANY, INC.
TACONIC TECHNOLOGY CORP.
TACONIC TELCOM CORP.
TACONIC TELEPHONE CORP.
TELEPHONE OPERATING COMPANY OF VERMONT LLC
TELEPHONE SERVICE COMPANY
THE COLUMBUS GROVE TELEPHONE COMPANY
THE EL PASO TELEPHONE COMPANY
THE GERMANTOWN INDEPENDENT TELEPHONE COMPANY
THE ORWELL TELEPHONE COMPANY
UI COMMUNICATIONS, INC.
UI LONG DISTANCE, INC.
UI TELECOM, INC.
UNITE COMMUNICATIONS SYSTEMS, INC.
UTILITIES, INC.
YATES CITY TELEPHONE COMPANY
YCOM NETWORKS, INC.

 

 

By:

/s/ Shirley J. Linn

 

Name: Shirley J. Linn

 

Title: Executive Vice President

 

 

 

Address for the Company:

 

FairPoint Communications, Inc.

521 East Morehead Street

Suite 250

Charlotte, NC 28202

Attention:  Alfred Giammarino

Fax:
Email: agiammarino@fairpoint.com

 

 

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                                                              , a Consenting
Lender

 

 

By:

[Signature Pages of Consenting Lenders]

 

Name:

 

Title:

 

 

 

Total principal amount of Claims of such Consenting Lender (whether owned
directly by such Consenting Lender or for which such Consenting Lender has
investment or voting discretion or control):

 

$                                              

 

Address:

 

 

Attention:

Fax:
Email:

 

3

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EXHIBIT A

 

TERM SHEET

 

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FAIRPOINT COMMUNICATIONS, INC. AND AFFILIATES

CHAPTER 11 PLAN TERM SHEET

 

THIS TERM SHEET IS NOT AN OFFER OR A SOLICITATION WITH RESPECT TO ANY SECURITIES
OF FAIRPOINT COMMUNICATIONS, INC. OR ITS SUBSIDIARIES OR A SOLICITATION OF
ACCEPTANCES OF A CHAPTER 11 PLAN.  ANY SUCH OFFER OR SOLICITATION SHALL COMPLY
WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY CODE.

 

THIS TERM SHEET MAY NOT BE DISTRIBUTED WITHOUT THE EXPRESS WRITTEN CONSENT OF
FAIRPOINT COMMUNICATIONS, INC.  THIS TERM SHEET IS A SETTLEMENT PROPOSAL IN
FURTHERANCE OF SETTLEMENT DISCUSSIONS AND IS PROTECTED BY RULE 408 OF THE
FEDERAL RULES OF EVIDENCE AND ANY OTHER APPLICABLE STATUTES OR DOCTRINES
PROTECTING THE USE OR DISCLOSURE OF CONFIDENTIAL SETTLEMENT DISCUSSIONS.

 

1.             Summary of Transaction.  This term sheet (this “Term Sheet”)
describes a proposed restructuring (the “Restructuring”) for FairPoint
Communications, Inc. (“FairPoint Communications”), and each of its direct and
indirect subsidiaries (collectively, “FairPoint” or the “Company”) pursuant to a
joint plan of reorganization (the “Plan”) under chapter 11 of title 11 of the
United States Code (the “Bankruptcy Code”).  The Plan would be filed in
connection with FairPoint’s contemplated chapter 11 cases.  Subject to the
satisfaction or waiver of the conditions described below, the Restructuring
described herein is supported by the steering committee of lenders (the
“Steering Committee Lenders”)(1) party to the Credit Agreement dated as of
March 31, 2008 (as amended, the “Credit Agreement”) among FairPoint
Communications, Northern New England Spinco Inc. (“Spinco”), Bank of America,
N.A., as administrative agent (in such capacity, the “Agent”),(2) the Steering
Committee Lenders and the other lenders party thereto (collectively, the
“Lenders”), and certain other parties thereto.  This Term Sheet does not include
a description of all of the terms, conditions and other provisions that are to
be contained in the Plan and the related definitive documentation governing the
Restructuring.  The term “Consenting Lenders” as used herein shall mean
collectively the Steering Committee Lenders and any other Lenders that, with the
Company’s consent, subsequently become party to that certain Plan Support
Agreement, dated as of October 25, 2009 (the “PSA”).  The term “Effective Date”
as used herein shall mean the date on which the definitive documents for the
Plan become effective in accordance with their terms.

 

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(1)                                  The Steering Committee Lenders are Bank of
America, N.A., Angelo Gordon & Co., Paulson & Co., Inc., Lehman Brothers
Holdings, Inc., CoBank, ACB and Wachovia Bank, N.A., each in their individual
capacity and not in any other capacity

 

(2)                                  On January 21, 2009, FairPoint entered into
an amendment to the Credit Agreement under which Lehman Commercial Paper Inc.
resigned, as administrative agent and collateral agent, and was replaced by Bank
of America, N.A., as administrative agent and collateral agent.

 

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2.             Commencement of Chapter 11 Cases

 

(a)                  Chapter 11 Cases.  FairPoint shall file voluntary petitions
for reorganization under chapter 11 of the Bankruptcy Code on or before
October 31, 2009 (the “Petition Date”) in the United States Bankruptcy Court for
the Southern District of New York (the “Bankruptcy Court”).

 

(b)                  Chapter 11 Plan and Disclosure Statement.  Within
forty-five (45) days after the Petition Date (the “Plan Deadline”), FairPoint
shall file the Plan and the disclosure statement for the Plan (the “Disclosure
Statement”).

 

3.             Chapter 11 Financing.  Certain of the Steering Committee Lenders
have agreed to provide a senior secured debtor-in-possession revolving credit
facility (the “DIP Facility”) substantially on terms set forth in a term sheet
annexed as Exhibit C to the PSA (the “DIP Term Sheet”) providing for extensions
of credit in an aggregate principal amount not to exceed $75,000,000, with a
letter of credit subfacility in an aggregate amount of $30,000,000, subject to
certain conditions, including the receipt of credit approvals and the approval
of the Bankruptcy Court.  Letters of credit issued and outstanding under the
Credit Agreement as of the Petition Date may be replaced, at the Company’s
option, by letters of credit issued under the DIP Facility.

 

4.             Adequate Protection.  In connection with the approval of the DIP
Facility, the Company shall seek to grant the Lenders adequate protection in the
form of replacement liens and superpriority claims as set forth in the DIP Term
Sheet.  FairPoint has advised the Consenting Lenders that the Company does not
intend to pay interest under the Credit Agreement to the Lenders during the
Company’s chapter 11 cases.

 

5.             Reorganized Company Capital Structure.

 

(a)                  New Revolver.  On the Effective Date of the Plan all
borrowings and other extensions of credit under the DIP Facility will roll into
a revolving credit exit facility (the “New Revolving Facility”).  The terms of
the New Revolving Facility shall be set forth in a separate term sheet, and
shall include the following material terms:

 

·                  5 year maturity

·                  Interest at LIBOR + 4.5 %, with no LIBOR floor

·                  Letter of credit sub-limit of $30 million

·                  Covenants, reps and warranties and events of default as may
be mutually agreed to by the Agent, the Steering Committee Lenders and the
Company.

 

(b)                  New Term Loan.  On the Effective Date, reorganized
FairPoint Communications shall enter into a new $1 billion secured term loan
agreement (the “New Term Loan”), which shall be guaranteed by those subsidiaries
of FairPoint Communications that have guaranteed repayment of the DIP Facility. 
The New Term Loan shall include the following material terms:

 

·                  The New Term Loan shall be secured by the same collateral as
the collateral which secures the DIP Facility

·                  5 year maturity

 

2

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·                  Interest at LIBOR + 4.50%, with a LIBOR floor of 2.00%

·                  No upfront fee

·                  Mandatory prepayment at par, upon certain conditions to be
determined

·                  Optional prepayment at anytime at par

·                  Amortization Schedule — Year 1: 1% annually, Year 2: 1%
annually, Year 3: 5% annually, Year 4: 15% annually, and Year 5: 15% (5% per
quarter for the first 3 quarters) with 63% bullet payment in 4th quarter.

·                  Amortization occurs quarterly commencing upon the first full
quarter after the Company emerges from the chapter 11 cases.

·                  If the Company’s consolidated leverage ratio is above 2.0x at
the end of the fiscal year, the Company shall be subject to a sweep of 75% of
its Excess Cash Flow (to be defined in a manner reasonably satisfactory to the
Steering Committee Lenders) based upon an annual test and paid in the subsequent
quarter with the first test occurring for fiscal year 2010 and payable in fiscal
2011.  If the Company’s consolidated leverage ratio is below 2.0x at the end of
the fiscal year, such sweep shall be reduced to 50% of the Company’s Excess Cash
Flow.

·                  Any sweep of the Company’s Excess Cash Flow by the Lenders
shall be applied pro rata against obligations in accordance with the
Amortization Schedule.

·                  If the Company’s consolidated total leverage ratio is below
2.0x at the end of the fiscal year, the Company shall be permitted to pay
dividends with its share of Excess Cash Flow.

·                  Financial covenants will only include interest coverage and
leverage ratio tests.  Such tests will first occur in the first full quarter
following the Effective Date (as calculated in each case in accordance with
Schedule 1 hereto).

·                  Usual and customary affirmative and negative covenants as may
be mutually agreed to by the Agent, the Steering Committee Lenders and the
Company.

 

(c)                  New Common Stock.  Reorganized FairPoint Communications
shall issue a single class of common stock (the “New Common Stock”) on the
Effective Date of the Plan, which stock shall be deemed fully paid and
non-assessable.  All New Common Stock issued will be subject to dilution upon
the exercise of warrants, options and/or the granting of restricted stock in
connection with the Long Term Incentive Plan (as defined below) and the
Unsecured Warrants (as defined below).

 

(d)                  Options / Restricted Stock / Warrants. There shall be
reserved sufficient shares of New Common Stock to provide for the issuance of
securities pursuant to the Long Term Incentive Plan (as defined below), any
Unsecured Common Stock (as defined below) and any Unsecured Warrants (as defined
below).

 

6.             Plan Distributions/Treatment.

 

(a)                  Credit Agreement Claims:  All claims arising under the
Credit Agreement and all documents and agreements related thereto (including,
without limitation, swap obligations secured ratably therewith, collectively the
“Credit Agreement Claims”) shall be deemed allowed in an amount equal to
principal plus interest

 

3

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and all other amounts due under the Credit Agreement.  On the Effective Date,
each holder of a Credit Agreement Claim shall receive the following, in full and
complete satisfaction of such holder’s Credit Agreement Claim:

 

(i)                             its pro rata share of the New Term Loan;

 

(ii)                          its pro rata share of 98% of newly issued New
Common Stock, subject to the issuance of securities pursuant to the Long-Term
Incentive Plan, the Unsecured Common Stock and the Unsecured Warrants, as the
case may be; provided, however, that if the class of FairPoint Communications
Unsecured Claims does not accept the Plan, each holder of a Credit Agreement
Claim shall receive its pro rata share of 100% of newly issued New Common Stock,
subject to the securities to be issued under the Long-Term Incentive Plan; and

 

(iii)                       its pro rata share of cash in an amount equal to all
cash of the Company on the Effective Date in excess of $40 million after taking
into account all cash payments required to be paid under the Plan on or after
the Effective Date, including, but not limited to, amounts required to be paid
to satisfy allowed administrative expenses, allowed claims, payments due under
the KEIP (as defined below), and cure payments for assumed executory contracts.

 

(b)                  FairPoint Communications Unsecured Claims:  On the
Effective Date, each holder of an allowed unsecured claim against FairPoint
Communications (collectively, “FairPoint Communications Unsecured Claims”),
including but not limited to holders of claims arising under (a) the 131/8%
Senior Notes due April 1, 2018, and (b) the 131/8% Senior Notes due April 2,
2018 ((a) and (b) collectively, the “Senior Notes”), shall receive the
following, in full and complete satisfaction of such FairPoint Communications
Unsecured Claims:

 

(i)                                     If the class of FairPoint Communications
Unsecured Claims votes to accept the Plan, each holder of an allowed FairPoint
Communications Unsecured Claim shall receive its pro rata share of (A) 2% of the
newly issued New Common Stock (the “Unsecured Common Stock”), subject to the
issuance of securities pursuant to the Long-Term Incentive Plan, and the
Unsecured Warrants, and (B) warrants to purchase up to 5% of the New Common
Stock, which warrants shall have a seven-year term and be exercisable at a
strike price equal to a $2.25 billion total enterprise value (the “Unsecured
Warrants”), subject to the securities issued pursuant to the Long-Term Incentive
Plan; or

 

(ii)                                  If the class of FairPoint Communications
Unsecured Claims votes to reject the Plan, holders of FairPoint Communications
Unsecured Claims shall not receive any distributions under the Plan on account
of their claims.

 

(c)                  Capgemini Agreements.  Each Consenting Lender acknowledges
that the Company will seek to assume the agreements with Capgemini (as such
agreements have been modified pursuant to that certain Settlement Agreement and
Release, dated as of October 9, 2009) and waives any objection thereto.

 

4

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(d)                  NNE Operating Companies Unsecured Claims: The allowance of
unsecured claims and the treatment of unsecured claims against FairPoint
Logistics, Inc., Northern New England Telephone Operations LLC, Telephone
Operating Company of Vermont LLC, and/or Enhanced Communications of Northern New
England Inc. (collectively, the “NNE Operating Companies”), including any claims
held by state public utility commissions relating to the NNE Operating
Companies’ alleged failure to satisfy certain service quality indicators, shall
be determined at a later date on terms reasonably satisfactory to the Steering
Committee Lenders and the Company.

 

(e)                  “Legacy” Companies Unsecured Claims:  On the Effective Date
or as soon thereafter as is practicable, each holder of an allowed unsecured
claim against any subsidiary of FairPoint Communications that is not an NNE
Operating Company (collectively, “Legacy Unsecured Claims”) shall, in the
reorganized Company’s sole discretion, either (i) be paid in full in cash, or
(ii) receive a 24-month note payable after the Effective Date in the principal
amount of such allowed Legacy Unsecured Claim, with interest accruing at 5% per
annum, in full and complete satisfaction of such allowed Legacy Unsecured Claim.

 

(f)                    Convenience Claims:  For purposes of the Plan, the term
“Convenience Claim” shall include any FairPoint Communications Unsecured Claims
that are (i) allowed in an amount of ten-thousand ($10,000) dollars or less or
(ii) allowed in an amount greater than ten-thousand ($10,000) dollars but which
are reduced to ten-thousand ($10,000) dollars by an irrevocable written election
of the holders of such claims.  On the Effective Date or as soon thereafter as
is practicable, each holder of an allowed Convenience Claim shall be paid in
full in cash.

 

(g)                 Other Distributions.

 

(i)                                     Each holder of an allowed administrative
claim, including claims of the type described in section 503(b)(9) of the
Bankruptcy Code, shall receive payment in full (in cash) of the unpaid portion
of its allowed administrative claim on the Effective Date or as soon thereafter
as practicable (or, if payment is not then due, shall be paid in accordance with
its terms) or pursuant to such other terms as may be agreed to by the holder of
such claim and FairPoint.

 

(ii)                                  Allowed secured tax claims and allowed
other secured claims shall be unimpaired.

 

(iii)                               Intercompany claims will be (at the election
of FairPoint Communications or the entity holding such claim, in consultation
with the Steering Committee Lenders) (1) released, waived and discharged as of
the Effective Date, (2) contributed to the capital of the obligor corporation,
(3) dividended or (4) remain unimpaired.

 

(iv)                              Claims subject to section 510(b) of the
Bankruptcy Code shall not receive or retain any interest or property under the
Plan on account of such claims.

 

5

--------------------------------------------------------------------------------

 

(v)                                 Holders of existing equity interests in
FairPoint Communications shall not receive or retain any interest or property
under the Plan on account of such interests.

 

7.             Other Plan Provisions/Means for Implementation.

 

(a)                  Board of Directors of Reorganized FairPoint
Communications.  Reorganized FairPoint Communications shall have a nine-person
board of directors (the “Board”), initially seven of whom shall be nominated by
the Steering Committee Lenders (it being understood that the Steering Committee
Lenders will consider residents of New England among the candidates for certain
of the Board seats), one of whom shall be the CEO and one of whom shall be
nominated by the holders of Senior Notes if the class of FairPoint
Communications Unsecured Claims votes to accept the Plan.  If such class of
unsecured claims does not accept the Plan, then the Steering Committee Lenders
shall have the right to nominate eight persons to the Board.  Directors shall
have a three-year term and shall be classified so as to ensure that
approximately one third of the directors stand for election each year unless
otherwise decided by the Steering Committee Lenders in consultation with the
Company.  The Steering Committee Lenders shall have the option to reduce the
initial number of Board members they are entitled to nominate to five members,
it being understood that the overall size of the Board shall be reduced
commensurately.  At least a majority of the directors serving on the Board shall
be independent in accordance with the New York Stock Exchange listing manual
rules.

 

(b)                  Assumption of Senior Management Agreements.  The Consenting
Lenders will not object to the Company’s assumption of the existing executive
agreements with David L. Hauser, Peter G. Nixon, Alfred C. Giammarino, Shirley
J. Linn, Jeffrey Allen, and Susan L. Sowell, and acknowledge that the Company
intends to assume such agreements in accordance with their terms on the
Effective Date.

 

(c)                  Long Term Incentive Plan. The Reorganized Company shall
implement a management incentive plan for senior management and selected
employees of the Company, providing incentive compensation in the form of stock
options and/or restricted stock in the Reorganized Company, on a fully diluted
basis (the “Long-Term Incentive Plan”).  The Long-Term Incentive Plan shall be
effective as of the Effective Date and shall be on the terms set forth on
Schedule 2 hereto.

 

(d)                  KEIP.  The Consenting Lenders have agreed to support a key
employee incentive plan on the terms set forth on Schedule 3 hereto (the
“KEIP”).  The Company’s board of directors will consider approval of the KEIP at
its November 9, 2009 board meeting and may require that certain modifications to
the KEIP be made at that time.  The Company agrees that any such modifications
shall not increase the compensation set forth in, or improve (from the point of
view of the employees subject to the KEIP) the terms of, the KEIP set forth on
Schedule 3.

 

6

--------------------------------------------------------------------------------

 

(e)                  Releases, Indemnification and D&O Insurance. Effective as
of the date the Plan is confirmed, but subject to the occurrence of the
Effective Date, and in consideration of the services of (a) the present and
former directors, officers, members, employees, affiliates, agents, financial
advisors, restructuring advisors, attorneys and representatives of or to the
Company who acted in such capacities after the Petition Date; (b) the Agent and
its affiliates and the other Lenders and their affiliates, and each of their
respective directors, officers, affiliates, agents, partners, members,
representatives, employees, financial advisors, restructuring advisors,
attorneys and representatives who acted in such capacities after the Petition
Date (the parties set forth in subsections (a) and (b), being the “Released
Parties”), the Company, their respective chapter 11 estates and the reorganized
Company and all holders of claims that accept the Plan shall release, waive and
discharge unconditionally and forever each of the Released Parties from any and
all claims, obligations, suits, judgments, damages, rights, causes of action and
liabilities whatsoever (including those arising under the Bankruptcy Code),
whether known or unknown, foreseen or unforeseen, existing or hereinafter
arising in law, equity, or otherwise, based in whole or in part on any act,
omission, transaction, event or other occurrence: (i) taking place before the
Petition Date in connection with or relating to FairPoint Communications or any
of its direct or indirect subsidiaries; and (ii) in connection with, related to,
or arising out of the Company’s chapter 11 cases, the pursuit of confirmation of
the Plan, the consummation thereof, the administration thereof or the property
to be distributed thereunder; provided that the foregoing shall not operate as a
waiver of or release from any causes of action arising out of the willful
misconduct or gross negligence of any Released Party.  In addition, the
reorganized Company shall assume all existing indemnification obligations of the
Company in favor of the directors of the Company who held such position on
June 1, 2009, and the officers of the Company listed on Schedule 4  (whether in
the Company’s bylaws, contracts or otherwise).  The reorganized Company’s
indemnification obligation to such individuals shall be limited in the aggregate
to $20 million.

 

(f)                    Injunction. From and after the Effective Date, all
entities shall be permanently enjoined from commencing or continuing in any
manner against the Company or the reorganized Company, their successors and
assigns, and their assets and properties, as the case may be, any suit, action
or other proceeding, on account of or respecting any claim, demand, liability,
obligation, debt, right, cause of action, interest or remedy released or to be
released pursuant to the Plan or the order confirming the Plan.

 

Except as otherwise expressly provided for in the Plan, from and after the
Effective Date, all entities shall be precluded from asserting against the
Company, the debtors in possession, the Company’s chapter 11 estates, the
reorganized Company, the Agent and its affiliates and the other Lenders and
their affiliates, any of their successors and assigns, and each of their
respective current and former officers, directors, employees, partners,
attorneys, financial advisors, accountants, investment bankers, investment
advisors, actuaries, professionals, agents, affiliates and representatives (each
of the foregoing in its individual capacity as such), and their assets and
properties, any other claims or equity interests based upon any documents,
instruments, or any act or omission,

 

7

--------------------------------------------------------------------------------

 

transaction or other activity of any kind or nature relating to the Company that
occurred before the Effective Date.

 

The rights afforded in the Plan and the treatment of all claims and equity
interests therein shall be in exchange for and in complete satisfaction of
claims and equity interests of any nature whatsoever, including, without
limitation, any interest accrued on claims from and after the Petition Date,
against the Company or any of their assets, properties or estates.  On the
Effective Date, all such claims against, and equity interests in the Company
shall be fully released and discharged.  All entities shall be precluded from
asserting against the Company, the Company’s estates, the reorganized Company,
each of their respective successors and assigns, and each of their assets and
properties, any other claims or equity interests based upon any documents,
instruments or any act or omission, transaction or other activity of any kind or
nature that occurred before the Effective Date.

 

(g)                 Rothschild Engagement.  The Agent has been provided with a
copy of the letter agreement, dated May 12, 2009, whereby the Company engaged
Rothschild, Inc. as financial advisor and investment banker (the “Rothschild
Agreement”).  Each of the Consenting Lenders acknowledges the terms of the
Rothschild Agreement and waives any objection thereto.

 

(h)                 Charter; Bylaws. The charter and bylaws of each of the
Debtors shall have been restated in a manner consistent with section
1123(a)(6) of the Bankruptcy Code.

 

(i)                    Tax Issues. The terms of the Plan and the Restructuring
contemplated by this Term Sheet shall be structured to preserve favorable tax
attributes of the Company to the extent reasonably practicable. The Company
shall consult with the Steering Committee Lenders on tax issues and matters of
tax structure relating to the Plan and the restructuring contemplated by this
Term Sheet, and such matters shall be reasonably acceptable to the Steering
Committee Lenders.

 

(j)                    Registration Rights, Securities Listing, and Shareholder
Rights.

 

On the Effective Date, reorganized FairPoint Communications will enter into a
registration rights agreement (the “Registration Rights Agreement”) with each
holder of greater than 10% of the New Common Stock.  Holders of New Common Stock
entitled to demand such registrations shall be entitled to request an aggregate
of two such registrations (or such provisions that the Postconfirmation board
adopts); provided that, no such rights shall be demanded prior to the expiration
of 180 days from the Effective Date.  Moreover, if any holder who is otherwise
eligible to exercise rights under the Registration Rights Agreement becomes the
holder of less than 7.5% of the New Common Stock, such holder’s rights under the
Registration Rights Agreement shall terminate.  A form of the Registration
Rights Agreement, including a form of shelf registration agreement if necessary,
will be included in a supplement to the Plan.

 

Reorganized FairPoint Communications will use its reasonable best efforts to
obtain a listing for the New Common Stock on one of the following national

 

8

--------------------------------------------------------------------------------

 

securities exchanges:  New York Stock Exchange, NASDAQ, Russell or any other
comparable exchange.

 

(k)                Section 1145 Exemption.  The issuance of all securities under
the Plan will be exempt from SEC registration under section 1145 of the
Bankruptcy Code.

 

8.             Conditions Precedent.  The Plan shall include customary
conditions to the Effective Date, including that:

 

(i)                             the Bankruptcy Court shall have entered an order
confirming the Plan which has become final, or if not final, shall not be
stayed;

 

(ii)                          the terms of the Plan and Disclosure Statement
shall be reasonably satisfactory to the Consenting Lenders;

 

(iii)                               the treatment of inter-company claims and
the assumption of post-reorganization operating contracts to be reasonably
satisfactory to the Consenting Lenders; and

 

(iv)                              the Steering Committee Lenders’ obligations to
support the Plan shall be null and void unless, prior to the Plan Deadline, the
Company’s unions for the NNE Operating Companies agree to a minimum of $30
million in annualized cost reductions, which savings shall be ratified by such
unions during the chapter 11 cases and implemented upon the Effective Date.

 

9.             Definitive Documentation.  FairPoint and the Consenting Lenders
will negotiate in good faith to complete the documentation for the Plan
consistent with the terms hereof, including, without limitation, all documents
to consummate the Plan.  FairPoint and the Steering Committee Lenders agree that
the terms of the New Revolving Facility and the New Term Loan shall be in
substantially final form prior to the commencement of the hearing on the
Disclosure Statement.

 

9

--------------------------------------------------------------------------------

 

Schedule 1

 

Financial Covenant Tests

 

--------------------------------------------------------------------------------

 

FairPoint Communications Chapter 11 Plan Term Sheet

Schedule 1:  Term Loan Covenants

 

 

 

Term Loan Financial Covenants

 

 

 

LTM

 

LTM

 

LTM

 

LTM

 

LTM

 

LTM

 

LTM

 

LTM

 

LTM

 

LTM

 

LTM

 

LTM

 

LTM

 

2014 -

 

$000,000s

 

4Q10

 

1Q11

 

2Q11

 

3Q11

 

4Q11

 

1Q12

 

2Q12

 

3Q12

 

4Q12

 

1Q13

 

2Q13

 

3Q13

 

4Q13

 

2016

 

Total Debt / EBITDAR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Covenant

 

4.25

x

4.00

x

4.00

x

3.75

x

3.75

x

3.25

x

3.25

x

3.25

x

3.25

x

3.00

x

3.00

x

3.00

x

3.00

x

2.75

x

Company Plan

 

2.74

x

2.48

x

2.32

x

2.21

x

2.13

x

1.86

x

1.83

x

1.78

x

1.73

x

1.60

x

1.56

x

1.48

x

1.41

x

 

 

% Cushion

 

55

%

62

%

73

%

70

%

76

%

75

%

78

%

82

%

88

%

88

%

92

%

102

%

113

%

 

 

Sr. Debt / EBITDAR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Covenant

 

3.75

x

3.50

x

3.50

x

3.25

x

3.25

x

2.75

x

2.75

x

2.75

x

2.75

x

2.50

x

2.50

x

2.50

x

2.50

x

2.25

x

Company Plan

 

2.74

x

2.48

x

2.32

x

2.21

x

2.13

x

1.86

x

1.83

x

1.78

x

1.73

x

1.60

x

1.56

x

1.48

x

1.41

x

 

 

% Cushion

 

37

%

41

%

51

%

47

%

52

%

48

%

50

%

54

%

59

%

57

%

60

%

69

%

77

%

 

 

EBITDAR / Total Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Covenant

 

3.75

x

4.00

x

4.00

x

4.00

x

4.00

x

4.25

x

4.25

x

4.25

x

4.25

x

4.50

x

4.50

x

4.50

x

4.50

x

4.50

x

Company Plan

 

5.51

x

5.86

x

6.30

x

6.56

x

6.69

x

6.64

x

6.70

x

6.77

x

6.91

x

7.14

x

7.24

x

7.34

x

7.53

x

 

 

% Cushion

 

32

%

32

%

36

%

39

%

40

%

36

%

37

%

37

%

38

%

37

%

38

%

39

%

40

%

 

 

 

--------------------------------------------------------------------------------

 

Schedule 2

 

Long Term Incentive Plan Terms

 

--------------------------------------------------------------------------------

 

FairPoint Communications Chapter 11 Plan Term Sheet

Schedule 2:  Long Term Incentive Plan

 

·      1.625% in Restricted Stock to be granted at exit, vesting ¼ at exit and 
¼  at each yearly anniversary to the top 25-30 executives, with allocations TBD
by CEO and the new Board. To the extent that the CEO makes himself available to
serve as a board member beyond the termination of his contract, such
availability shall constitute service for purposes of vesting.

·      Additional Restricted Stock up to a total of 4% of the Company (including
1.625% to 1.75% at exit) to be available to the Board for future grants.

·      2.75% in Options struck at the higher of an enterprise value of $1.875
billion(1) and the weighted average trading price for the first 30 days upon
emergence (second metric included to address potential tax issues) to be
distributed to the top 75-80 executives (or more at new Board discretion in
consultation with the CEO).  0.25% in Options to be distributed to the new Board
at Exit, struck at the higher of an enterprise value of $1.875 billion(1) and
the weighted average trading price for the first 30 days upon emergence (second
metric included to address potential tax issues).  Vesting schedule will be the
same as with Restricted Stock.

·      0.125% of Restricted Stock plus up to an additional 0.5% in Options (each
the same as the Restricted Stock and Options described above) will be available
to the new Board for distribution at Exit. These additional grants are in the
new Board’s sole discretion, in consultation with the CEO, and are intended for
distribution to that group of executives who had a qualitative impact, in the
Board’s view, on an efficient and expeditious bankruptcy proceeding.

·      Additional Options up to 6% of the shares of the Company (including the
3%-3.5% granted at Exit) to be available to the Board for future grants.  All
future options would be issued at the money at the time of the grant.

·      Those receiving a grant at Exit, for either Restricted Stock, Options, or
both, would not be eligible for an additional grant until December 31, 2012;
provided, however, that the new Board may authorize additional grants prior to
that date for new hires or to incentivize officers who receive promotions or are
assigned expanded responsibilities.

·      All employees must be employed at the time of any grant or vesting in
order to receive such grant or vesting.  Any voluntary termination or
termination with cause prior to a grant or vest date will resort in the
forfeiture of such employee to receive such grant or vesting (except as in
respect of the CEO as set forth above).

·      Restricted Stock and Options vest with change in control or termination
without cause.

·      Options have a tenor of 10 years from grant date

 

--------------------------------------------------------------------------------

(1)           Or such lower amount as may be agreed upon during the pendency of
the Chapter 11 case by the Company and each of the Steering Committee members.

 

--------------------------------------------------------------------------------

 

Schedule 3

 

The KEIP has not been approved by the board of directors of FairPoint and
accordingly the schedule has been intentionally omitted.

 

--------------------------------------------------------------------------------

 

Schedule 4

 

List of Officers

 

Alfred C. Giammarino

Brian M. Lippold

D. Brett Ellis

David L. Hauser

Gary C. Garvey

James K. Weigert

Jeffrey W. Allen

Lisa R. Hood

Michael S. Brown

Peter G. Nixon

Rose B. Cummings

Shirley J. Linn

Susan L. Sowell

Thomas E. Griffin

Vicky L. Weatherwax

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

TRANSFEREE JOINDER

 

The undersigned (“Transferee”) hereby (i) acknowledges that it has read and
understands the Plan Support Agreement, dated as of October 25, 2009 (the
“Agreement”), by and among FairPoint Communications, Inc. (“FairPoint”), the
subsidiaries of FairPoint party thereto, [Transferor’s Name] (“Transferor”), and
certain other lenders party to the Pre-Petition Credit Agreement (as defined in
the Agreement) and (ii) agrees to be bound by the terms and conditions thereof
to the extent and in the same manner as if Transferee was a Consenting Lender
thereunder, and shall be deemed a “Consenting Lender” and a “Party” under the
terms of the Agreement.

 

Date Executed:             , 2009

 

 

 

 

[Transferee’s name]

 

 

 

 

 

By: 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

Total principal amount of Claims of such Transferee(whether owned directly by
such Transferee or for which such Transferee has investment or voting discretion
or control):

 

$

 

 

 

Date: 

 

 

 

 

 

 

[Address]

 

Attention:

 

Fax: [*]

 

Email:

 

--------------------------------------------------------------------------------

 

EXHIBIT C

 

ADDITIONAL LENDER JOINDER

 

The undersigned (“Additional Lender Party”) hereby (i) acknowledges that it has
read and understands the Plan Support Agreement, dated as of October 25, 2009
(the “Agreement”), by and among FairPoint Communications, Inc. (“FairPoint”),
the subsidiaries of FairPoint party thereto, [Additional Lender Party Name]
(“Additional Lender Party”), and certain other lenders party to the Pre-Petition
Credit Agreement (as defined in the Agreement) and (ii) agrees to be bound by
the terms and conditions thereof to the extent and in the same manner as if
Additional Lender Party was a Consenting Lender thereunder, and shall be deemed
a “Consenting Lender” and a “Party” under the terms of the Agreement.

 

Date Executed:             , 2009

 

 

 

 

[Additional Lender Party’s name]

 

 

 

 

 

By: 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

Total principal amount of Claims of such Additional Lender Party (whether owned
directly by such Additional Lender Party or for which such Additional Lender
Party has investment or voting discretion or control):

 

$

 

 

 

Date: 

 

 

 

 

 

 

[Address]

 

Attention:

 

Fax: [*]

 

Email:

 

--------------------------------------------------------------------------------

 

EXHIBIT D

 

DIP FINANCING

 

--------------------------------------------------------------------------------

 

FOR DISCUSSION PURPOSES ONLY

PRIVILEGED AND CONFIDENTIAL

NOT AN OFFER TO ENTER INTO A CONTRACT

 

FAIRPOINT COMMUNICATIONS, INC.

Outline of Terms and Conditions for Senior Secured
Debtor-In-Possession Revolving Credit Facility

 

The following Summary of Terms and Conditions (this “Term Sheet”) is intended
for discussion purposes only.  This document is neither an expressed nor implied
commitment by Bank of America, N.A., or any other Person to provide any
financing or assist in providing the financing described herein, which
commitment, if any, shall only be as set forth in a separate commitment letter
or other applicable agreement.

 

Borrowers:

FairPoint Communications, Inc. (“FairPoint Communications”) and FairPoint
Logistics, Inc. (together with FairPoint Communications, the “Borrowers”)  Each
Borrower will be a debtor and debtor-in-possession in a case (such cases,
collectively, the “Borrowers’ Cases”) commenced voluntarily under chapter 11 of
the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States
Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”).

 

 

Guarantors:

The obligations of the Borrowers shall be unconditionally guaranteed, on a joint
and several basis, by (i) each subsidiary of FairPoint Communications (the
“Subsidiary Guarantors”) that guaranteed the obligations of FairPoint
Communications under the Credit Agreement, dated as of March 31, 2008 (as
amended, the “Prepetition Credit Agreement”)(1), among FairPoint Communications,
the lenders party thereto (the “Prepetition Lenders”), Bank of America, N.A., as
administrative agent (in such capacity, the “Prepetition Agent”) and the other
Persons party thereto and (ii) each of the other subsidiaries of FairPoint
Communications that is not subject to regulation by a state public utility
commission (the subsidiaries referenced in the foregoing clauses (i) and (ii)
are collectively referred to herein as the “Guarantors”; the Guarantors and the
Borrowers shall be referred to herein collectively as the “DIP Credit
Parties”).  Each Guarantor will be a debtor and debtor-in-possession in a case
(such cases, collectively, the “Guarantors’ Cases”; the Guarantors’ Cases and
the Borrowers’ Cases are collectively referred to herein as the “DIP Credit
Parties’ Cases”) pending under chapter 11 of the Bankruptcy Code.  For the
purposes hereof, “Debtors” shall mean, collectively, the DIP Credit Parties and
each other subsidiary of a Borrower that is a debtor and debtor-in-possession in
a case (such cases, including, without limitation, the DIP Credit Parties’
Cases, collectively, the “Cases”) pending under chapter 11 of the Bankruptcy
Code.

 

--------------------------------------------------------------------------------

(1)           Capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Prepetition Credit Agreement.

 

--------------------------------------------------------------------------------

 

Administrative Agent:

Bank of America, N.A. (“Bank of America”), in its capacity as administrative
agent (in such capacity, the “DIP Agent”).

 

 

Sole Arranger:

Banc of America Securities LLC

 

 

Lenders:

Certain of the Prepetition Lenders (collectively, the “DIP Lenders”).

 

 

Petition Date:

The date of commencement of the Cases by the Debtors, which shall be no later
than October 31, 2009 (the “Petition Date”).

 

 

Closing Date:

The closing date in respect of the DIP Revolving Facility (as defined below)
(the “Closing Date”), which shall be no later than 5 days following the entry of
the Interim Order (as defined below).

 

 

DIP Credit Facilities:

A senior secured debtor-in-possession revolving credit facility (the “DIP
Revolving Facility”) providing for extensions of credit in an aggregate amount
not to exceed $75,000,000 (the “Maximum Amount”), with a letter of credit
subfacility in an aggregate amount of $30,000,000. Letters of credit issued and
outstanding under the Prepetition Credit Agreement as of the Petition Date (each
such letter of credit being a “Prepetition Letter of Credit”) may, at the
Borrowers’ option, be replaced by letters of credit issued under the DIP
Revolving Facility (and any such replaced Prepetition Letter of Credit shall be
cancelled)). As set forth in this Term Sheet, the DIP Revolving Facility will be
provided on a “super-priority” basis and secured by liens on the assets of the
DIP Credit Parties as described below under the heading “Priority and Liens;
Collateral”.

 

 

Availability:

Subject to all of the terms and conditions hereof, upon the entry of an order
(the “Interim Order”) by the Bankruptcy Court in form and substance satisfactory
to the DIP Agent and the DIP Lenders, availability under the DIP Revolving
Facility shall (a) prior to the entry of the Final Order (defined below) be in
an amount not to exceed $20,000,000 and (b) upon entry of the Final Order, be in
an amount not to exceed the Maximum Amount. Amounts available under the DIP
Revolving Facility may be borrowed, repaid and re-borrowed.

 

 

Purpose/Use of Proceeds:

Proceeds of loans under the DIP Revolving Facility may be used by Borrowers in
the Cases solely for (i) general working capital purposes; (ii) paying amounts
owed to the DIP Agent and the DIP Lenders from time to time under the DIP
Revolving Facility; (iii) paying reasonable professional fees and expenses
payable to the Prepetition Agent under the Prepetition Credit Agreement;
(iv) issuing letters of credit in the ordinary course of business (including
letters of credit issued, at the Borrowers’ request, to replace Prepetition
Letters of Credit); (v) paying cure amounts (including, without limitation,
settlement or cure payments to Capgemini, U.S., LLC); provided, that the
aggregate of any such cure amounts (other than the settlement or cure payments
to Capgemini, U.S., LLC) shall be reasonably acceptable to the DIP Agent and the
DIP Lenders; and (vi) paying fees and expenses of Professionals (as defined
below), subject to the Carve Out (as defined below), to the extent such
Professional fees and expenses are approved

 

--------------------------------------------------------------------------------

 

 

by final order of the Bankruptcy Court and, to the extent applicable, consistent
with the engagement letters of such Professionals in effect on the date hereof.
In no event shall any proceeds of the extensions of credit under the DIP
Revolving Facility be used to challenge or contest any of the Liens or claims of
the Prepetition Agent, the Prepetition Lenders, the DIP Agent or the DIP
Lenders.

 

“Professionals” means the professionals retained by the DIP Credit Parties and
any statutory committee appointed in the Cases and approved by the Bankruptcy
Court (the “Committee”).

 

 

Budget:

The Borrowers will provide the DIP Agent and the DIP Lenders with a budget (as
amended or modified from time to time, the “Budget”), in the form attached as
Exhibit A hereto, that shall set forth in reasonable detail receipts and
disbursements of the Debtors on a weekly basis for the 13-week period following
the Petition Date. At any time that either (i) the aggregate amount outstanding
under the DIP Revolving Facility is $25,000,000 or more (exclusive of letters of
credit) or (ii) the Budget, or any update to the Budget required to be delivered
by the Borrowers hereunder, forecasts that the aggregate amount outstanding
under the DIP Revolving Facility will be $25,000,000 or more (exclusive of
letters of credit) at any time during the period covered by the Budget or such
update, the Borrowers will provide the DIP Agent and the DIP Lenders with weekly
updates to the Budget (by no later than the third business day of each week). At
all other times, the Borrowers will provide the DIP Agent and the DIP Lenders
with monthly updates to the Budget within three business days after the previous
month end.

 

Maturity Date:

Borrowings and other extensions of credit under the DIP Revolving Facility shall
mature, be repayable in full, and the DIP Revolving Facility shall terminate on
such date (the “Maturity Date”) that is the earliest to occur of (i) the
effective date of a confirmed Plan (as defined below), (ii) nine (9) months
after the Petition Date (which date may, at the request of the Borrowers and
subject to the prior written consent of the Majority DIP Lenders (as defined
below), be extended by three (3) months (provided that the DIP Credit Parties
shall not be required to pay a fee in connection with any such three (3) month
extension)) and (iii) the date on which the obligations under the DIP Revolving
Facility are accelerated following the occurrence of an Event of Default. Upon
the satisfaction of customary conditions precedent reasonably satisfactory to
the Debtors and the DIP Lenders, all borrowings and other extensions of credit
under the DIP Revolving Facility will roll into a revolving credit exit facility
on terms reasonably satisfactory to the Debtors and the DIP Lenders providing
such revolving credit exit facility.

 

 

Priority and Liens; Collateral:

Subject to the Carve-Out (as defined below), all Obligations of the DIP Credit
Parties to the DIP Agent and the DIP Lenders, including, without limitation, all
principal, accrued interest, costs, fees and expenses, shall:

 

 

 

·

pursuant to Bankruptcy Code section 364(c)(1), be joint and several claims with
priority in payment over any and all administrative expenses of the kinds
specified or ordered pursuant to any provision of the Bankruptcy Code,
including, without limitation, Bankruptcy Code sections 105, 326, 328,

 

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330, 331, 503(b), 506(c), 507(a), 507(b), 546, 726, 1113 and 1114 (the
“Superpriority Claims”), which Superpriority Claims shall be payable from and
have recourse to all prepetition and postpetition property of the DIP Credit
Parties and all proceeds thereof, including, without limitation, subject to the
entry of the Final Order (as defined below), all proceeds or other amounts
received in respect of the DIP Credit Parties’ claims and causes of action
arising under state or federal law under chapter 5 of the Bankruptcy Code
(collectively, the “Causes of Action”);

 

 

 

 

·

pursuant to Bankruptcy Code section 364(c)(2), be secured by a perfected
first-priority lien on all now owned or hereafter acquired assets and property
of the DIP Credit Parties and proceeds thereof (including, without limitation,
all cash, cash equivalents, accounts, payment intangibles, promissory notes,
consignments, commercial tort claims, tax refunds, inventory, goods, chattel
paper, documents, deposit accounts, documents, instruments, investment property,
letter-of-credit rights, general intangibles, contracts, contract rights, all
causes of action and proceeds thereof, computer hardware and software, motor
vehicles, intellectual property, real and personal property, plant and equipment
of the DIP Credit Parties) that are not subject to valid, perfected and
non-avoidable liens as of the commencement of the Cases; provided, however that
such lien and security interest shall not include FCC licenses and PUC
authorizations to the extent (but only to the extent) that any DIP Credit Party
is prohibited from granting a lien and security interest therein pursuant to
applicable law, but such lien and security interest shall include, to the
maximum extent permitted by law, all rights incident or appurtenant to the FCC
licenses and PUC authorizations and the right to receive all proceeds derived
from or in connection with the sale, assignment or transfer of the FCC licenses
and the PUC authorizations (collectively, the “First Lien Collateral”);
provided, further that the First Lien Collateral shall not include the Causes of
Action but, subject to the entry of the Final Order, the First Lien Collateral
shall include any proceeds or property recovered in respect of any Causes of
Action; and

 

 

 

 

·

pursuant to Bankruptcy Code section 364(c)(3), be secured by a perfected junior
lien on all property of the DIP Credit Parties (including, without limitation,
all cash, cash equivalents, accounts, payment intangibles, promissory notes,
consignments, commercial tort claims, tax refunds, inventory, goods, chattel
paper, documents, deposit accounts, documents, instruments, investment property,
letter-of-credit rights, general intangibles, contracts, contract rights, all
causes of action and proceeds thereof, computer hardware and software, motor
vehicles, intellectual property, real and personal property, plant and equipment
of the DIP Credit Parties) that is subject to valid, perfected and non-avoidable
liens in existence at the time

 

 

 

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of the commencement of the Cases or to valid liens in existence at the time of
such commencement that are perfected subsequent to such commencement as
permitted by Section 546(b) of the Bankruptcy Code, other than as set forth
below (collectively, the “Second Lien Collateral”, and together with the First
Lien Collateral, the “DIP Collateral”); and

 

 

 

 

·

pursuant to Bankruptcy Code section 364(d)(1), be secured by a first-priority,
senior priming perfected lien on, and security interest in, all assets that are
subject to valid, perfected and non-avoidable liens in existence at the time of
the commencement of the Cases or to valid liens in existence at the time of such
commencement that are perfected subsequent to such commencement, in each case,
to the extent that such liens were granted pursuant to the Prepetition Credit
Agreement (collectively, the “Existing Primed Liens”).

 

 

 

 

The aforementioned Superpriority Claims and liens of the DIP Agent and the DIP
Lenders and the Adequate Protection Claims and Adequate Protection Liens (each
as defined below) shall be subject only to (1) in the event of the occurrence
and during the continuance of an Event of Default (as defined below), the
payment of allowed and unpaid fees and disbursements of Professionals after the
date of such Event of Default (and regardless of when such fees and expenses
become allowed by order of the Bankruptcy Court), in an aggregate amount not in
excess of $7,500,000 (plus all unpaid professional fees and expenses allowed by
the Bankruptcy Court that were incurred prior to the occurrence of such Event of
Default (regardless of when allowed by the Bankruptcy Court)) and (2) the
payment of fees pursuant to 28 U.S.C. § 1930 ((1) and (2), together, the
“Carve-Out”).  Notwithstanding the foregoing, so long as no Event of Default
shall have occurred and be continuing, the DIP Credit Parties shall be permitted
to pay compensation and reimbursement of fees and expenses allowed and payable
under Bankruptcy Code sections 328, 330 and 331, as the same may be due and
payable, and the same shall not reduce the Carve-Out.  No portion of the
Carve-Out or proceeds of the DIP Revolving Facility may be used for the payment
of the fees and expenses of any person incurred challenging, or in relation to
the challenge of, any liens or claims of the Prepetition Agent, the Prepetition
Lenders, the DIP Agent or the DIP Lenders, or the initiation or prosecution of
any claim or action against any of the foregoing or their respective advisors,
agents and sub-agents, including formal discovery proceedings in anticipation
thereof.

 

 

Adequate Protection:

The Prepetition Agent, on behalf of the Prepetition Lenders, shall be granted
the following as adequate protection:

 

 

 

·

effective and perfected as of the date of entry of the Interim Order and without
the necessity of the execution of mortgages, security agreements, pledge
agreements, financing statements or other agreements, (i) a valid, perfected
replacement security interest in and lien on the collateral to which they hold
Existing Primed Liens and (ii) a valid, perfected security interest in and lien
on all of the DIP Collateral (together, the “Adequate

 

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Protection Liens”), subject and subordinate only to (x) the Carve-Out and
(y) the liens securing the DIP Revolving Facility, which Adequate Protection
Liens shall rank in the same relative priority and right as do the respective
Existing Primed Liens (and any security interests granted with respect thereto)
as of the Petition Date;

 

 

 

 

·

a superpriority administrative expense claim as provided for in section
507(b) of the Bankruptcy Code (together, the “Adequate Protection Claims”),
subject and subordinate only to (x) the Carve-Out and (y) the Superpriority
Claims held by the DIP Agent and the DIP Lenders under the DIP Revolving
Facility.  Except for the Superpriority Claims held by the DIP Agent and the DIP
Lenders, no claims shall be permitted with priority pari passu with or senior to
the Adequate Protection Claims;

 

 

 

 

·

current cash payments of all fees and all reasonable professional fees and
expenses, in each case, payable to the Prepetition Agent under the Prepetition
Credit Agreement, promptly upon receipt of invoices therefor; and

 

 

 

 

·

copies of all financial statements (including, without limitation, the monthly
financial statements and cash forecasts referred to herein) furnished to the DIP
Agent, the DIP Lenders and the Financial Advisor (as defined below).

 

 

 

363 Sales:

Other than the sale or other disposition of assets having an aggregate value of
less than $5,000,000, no sale of assets of any Debtor under Section 363 of the
Bankruptcy Code, outside the ordinary course of business, will be authorized
without the DIP Agent’s and the requisite DIP Lenders’ consent, unless the
proceeds of such sale or other disposition will be sufficient to pay all of the
advances under the DIP Revolving Facility in full (and to cash collateralize in
a manner satisfactory to the DIP Agent, all letters of credit outstanding under
the DIP Revolving Facility).  Nothing herein will affect the right, if any, of
the Prepetition Agent or the Prepetition Lenders to give, or withhold, its
consent to any proposed sale or other disposition.

 

 

Unused Line Fee:

An unused line fee in the amount of 0.50% per annum, payable monthly in arrears
based on the average daily unused portion of the DIP Revolving Facility, which
fee will be deemed fully earned and non-refundable when due and payable.  The
unused line fee will be calculated for actual days elapsed in a 360-day year.

 

 

Letter of Credit Fees:

Customary fees for the issuance of letters of credit under the DIP Revolving
Facility, including a fee on each letter of credit payable monthly in arrears at
a per annum rate of 4.50% (the foregoing fee will be adjusted upwards by 200
basis points during any period that an Event of Default has occurred and is
continuing), and a fronting fee equal to 0.25% per annum multiplied by the face
amount of each letter of credit, payable monthly in arrears.  Such fees will be
calculated for

 

--------------------------------------------------------------------------------

 

 

actual days elapsed in a 360-day year.

 

 

Other Fees:

The Borrowers agree to pay to the DIP Agent for the account of each  DIP Lender
an upfront fee (the “Upfront Fee”) in an amount equal to 2.00% of the Maximum
Amount.  The Upfront Fee shall be fully earned on the date the Interim Order is
entered and shall be payable in two installments as follows:  (1) $400,000 shall
be due and payable on the date the Interim Order is entered and (2) the
remainder of the Upfront Fee shall be payable in full on the date the Final
Order is entered.

 

 

 

The Borrowers agree to pay to the DIP Agent, for its own account, an agency fee
in an amount set forth in a separate fee letter.

 

 

Interest Rate:

At the Borrowers’ option, at either (i) the Eurodollar Rate plus 4.50% or
(ii) the Base Rate (as defined below) plus 3.50%.  Upon the occurrence and
during the continuance of an Event of Default, at the election of the DIP Agent
or non-defaulting DIP Lenders holding more than a majority of the commitments
thereunder (the “Majority DIP Lenders”), all obligations under the DIP Revolving
Facility shall bear interest at a rate of 2.00% above the otherwise applicable
rate.  “Base Rate” shall mean the greatest of (a) the rate of interest announced
by Bank of America from time to time as its prime rate, (b) the Federal Funds
Rate for such day, plus 0.50%, or (c) the Eurodollar Rate plus 1.00%.

 

 

Funding Protection:

Customary for transactions of this type and reasonably acceptable to the DIP
Agent and the DIP Lenders, including breakage costs, gross-up for withholding
(subject to customary qualifications), compensation for increased costs and
compliance with any change in regulatory restrictions.

 

 

Representations and Warranties:

The documentation evidencing the DIP Revolving Facility (the “DIP Loan
Documents”) will include such representations and warranties that are
substantially similar to the equivalent provisions in the Prepetition Credit
Agreement and that are acceptable to the DIP Agent and the DIP Lenders, with
such changes as may be required to reflect the pendency of the Cases, including,
without limitation, continued effectiveness of orders of the Bankruptcy Court,
including the Interim Order and the Final Order, as applicable; full disclosure
and accuracy of the Budget; and other related matters.

 

 

Covenants:

The DIP Loan Documents will include such affirmative and negative covenants that
are substantially similar to the equivalent provisions in the Prepetition Credit
Agreement and that are acceptable to the DIP Agent and the DIP Lenders, with
such changes as may be required to reflect the pendency of the Cases, including,
without limitation, (a) other than for a purpose (and subject to the
limitations) described under “Purpose/Use of Proceeds” above, prohibiting the
use of funds for disbursements outside of the ordinary course of business (for
the avoidance of doubt, the Debtors may not use funds to (i) pay any PUC fines,
charges or other payments arising prior to the Petition Date or (ii) pay any
management bonuses except those explicitly provided for

 

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in the “KEIP” referred to in the “Term Sheet” annexed to the Plan Support
Agreement (as defined below)), (b) providing the DIP Lenders with the same types
of information required to be provided to the Prepetition Lenders under the
Prepetition Credit Agreement, (c) providing the DIP Lenders with (i) monthly
financial statements within thirty (30) days after the previous month-end (or,
in the case of the monthly financial statements for December 2009, within
forty-five (45) after December 31, 2009), (ii) the “Daily Operations Dashboard”
in substantially the form currently delivered to the Financial Advisor (as
defined below) on a bi-weekly basis, by no later than the third business day of
every other week (commencing with the first such day following the Closing Date)
and (iii) variance reports (in the same format as the Budget) showing actual
cash receipts and disbursements for the immediately preceding week(s), noting
therein all variances, on a line-item basis, from values set forth for such
period in the Budget (and updates thereto), which variance reports will be
provided on a weekly basis if the Borrowers are required to update the Budget
weekly as described above (by no later than the third business day of each
week); otherwise such variance reports shall be provided on a bi-weekly basis,
by no later than the third business day of every other week (in either case,
commencing with the first such day following the Closing Date), (d) cooperating
generally with FTI Consulting, Inc. (the “Financial Advisor”) and the DIP
Agent’s legal professionals and allowing the Financial Advisor full access to
the Borrowers’ premises, books, and records upon reasonable notice and during
normal business hours, (e) conducting a conference call on the first Tuesday of
every month or as soon as practicable thereafter (commencing with the first such
Tuesday following the Petition Date) with the DIP Agent, the DIP Lenders, the
Financial Advisor and the “Consenting Lenders” party to the Plan Support
Agreement (as defined below), for the purpose of discussing, inter alia, the
most recently delivered financial statements, the Debtors’ financial
performance, operations, current trends and other material events, (f) not
permitting capital expenditures for each period set forth on Exhibit B hereto to
exceed the amount set forth on Exhibit B for such period, (g) maintaining
EBITDAR (as defined on Exhibit C) for each period set forth on Exhibit C of not
less than the amount set forth on Exhibit C for such period and (h) within three
(3) Business Days after the occurrence thereof, notifying the DIP Agent if any
third party expresses an interest either formally or informally in acquiring all
or any substantial part of the Borrowers’ business, the distribution of such
information by the DIP Agent may be subject to certain confidentiality
arrangements as are appropriate and may be reasonably agreed upon.

 

 

Events of Default:

The DIP Loan Documents will include events of default that are substantially
similar to the equivalent provisions in the Prepetition Credit Agreement and
that are reasonably acceptable to the DIP Agent and the DIP Lenders, with such
changes as may be required to reflect the pendency of the Cases (subject to
grace, notice and cure periods to be agreed) (each, an “Event of Default”),
including, without limitation, the appointment of a trustee or examiner with
expanded powers, or

 

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dismissal or conversion to Chapter 7 of any of the Cases; confirmation of any
plan of reorganization or liquidation in any of the Cases other than the Plan
(defined below); filing of a Chapter 11 plan of reorganization or liquidation by
a person or entity other than Debtors that does not require the payment in full,
on the effective date thereof, of all extensions of credit under the DIP
Revolving Facility (or, in the case of letters of credit, cash collateralization
of such letters of credit to the extent of 105% of the aggregate face amount
thereof); Debtors’ failure to file the Plan as and when required by the terms
set forth below; failure to obtain entry of a confirmation order from the
Bankruptcy Court with respect to such Plan by July 31, 2010; amendment (other
than as consented to by DIP Agent and the requisite DIP Lenders) or stay of
either of the Financing Orders (described below) or reversal, modification, or
vacation of either of the Financing Orders, whether on appeal or otherwise; the
filing of any motion or other request with the Bankruptcy Court seeking
authority to use any cash proceeds of any of the DIP Collateral without DIP
Lenders’ consent or any Debtor seeking any financing under Section 364(d) of the
Bankruptcy Code secured by any of the DIP Collateral that does not require the
payment in full of all extensions of credit under the DIP Revolving Facility
(or, in the case of letters of credit, such collateralization of such letters of
credit to the extent of 105% of the aggregate face amount thereof); the
challenge by a Debtor of (i) the validity, extent, perfection, or priority of
any Liens of the Prepetition Agent with respect to any of the DIP Collateral or
(ii) the validity or enforceability of any of the Obligations (as defined in the
Prepetition Credit Agreement); any Person holding a Lien upon any pre-petition
or post-petition assets of any Debtor being granted relief from the automatic
stay with respect to any DIP Collateral or any other asset of a Debtor where the
aggregate value of the property subject to all such orders is greater than
$10,000,000; or Debtors’ and their Subsidiaries’ cessation of all or any
material part of their business operations (other than in connection with a sale
of assets consented to by the requisite DIP Lenders).

 

 

Remedies:

Customary remedies, including, without limitation, the right (after providing
five business days’ prior notice to the Borrowers, the Committee (if any) and
the U.S. Trustee) to realize on all DIP Collateral without the necessity of
obtaining any further relief or order from the Bankruptcy Court.  The Bankruptcy
Court shall retain exclusive jurisdiction with respect to all matters relating
to the exercise of rights and remedies hereunder with respect to the DIP Credit
Parties, and under the Interim Order and the Final Order, and with respect to
the DIP Collateral.

 

 

Chapter 11 Plan:

The Debtors shall (i) prepare a plan of reorganization and a disclosure
statement, which shall, among other things require the payment in full, on the
effective date thereof, of all extensions of credit under the DIP Revolving
Facility (or, in the case of letters of credit, cash collateralization of such
letters of credit to the extent of 105% of the aggregate face amount thereof)
(such plan of reorganization, the

 

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“Plan”) and (ii) file the Plan with the Bankruptcy Court within forty-five (45)
days after the Petition Date.

 

 

Conditions Precedent:

(a)           The conditions precedent to the obligation of the DIP Lenders to 
make extensions of credit under the DIP Revolving Facility will be customary and
appropriate for financings of this type and acceptable to the DIP Agent and the
DIP Lenders, including, without limitation, the execution and delivery by
FairPoint Communications and the Debtors of a Plan Support Agreement (the “Plan
Support Agreement”) in form and substance satisfactory to the “Consenting
Lenders” party thereto and the commencement of the Cases by the Debtors on or
before October 31, 2009 and the following:

 

 

 

 

(i)            DIP Agent’s and DIP Lender’s review of and reasonable
satisfaction with the Budget (it being agreed that the Budget delivered on or
about October 19, 2009 is satisfactory);

 

 

 

 

(ii)           Execution and delivery by all parties of definitive DIP Loan
Documents, in form and substance satisfactory to the DIP Agent and the DIP
Lenders;

 

 

 

 

(iii)          The absence of any Default or Event of Default under any of the
DIP Loan Documents;

 

 

 

 

(iv)          DIP Agent’s receipt of favorable legal opinions of Borrowers’ and
Guarantors’ counsel as to such matters as may be reasonably required by DIP
Agent;

 

 

 

 

(v)           The Bankruptcy Court’s entry of the Interim Order, as described
below;

 

 

 

 

(vi)          DIP Agent’s and DIP Lenders’ review of and reasonable satisfaction
with all “first day orders”;

 

 

 

 

(vii)         DIP Agent’s receipt of satisfactory evidence that there are no
Liens on or claims to any of the DIP Collateral as of the Petition Date other
than Liens that are Permitted Liens under the Prepetition Loan Agreement;

 

 

 

 

(viii)        Borrowers shall have paid to DIP Agent and the DIP Lenders all
fees and expenses payable to DIP Agent and the DIP Lenders on the Closing Date
pursuant to any of the DIP Loan Documents and the transactions contemplated
thereby;

 

 

 

 

(ix)           DIP Agent shall have received evidence, in form, scope and
substance, reasonably satisfactory to DIP Agent, of all insurance coverage as
required by the DIP Loan Documents;

 

 

 

 

(x)            All proceedings taken in connection with the execution of the DIP
Loan Documents and approval thereof by the Bankruptcy Court (including, without
limitation, the nature, scope and extent of notices to

 

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interested parties with respect to all hearings related to the DIP Revolving
Facility) shall be reasonably satisfactory in form, scope, and substance to the
DIP Agent and DIP Lenders;

 

 

 

 

(xi)           All representations and warranties made by the DIP Credit Parties
under the DIP Loan Documents shall be true and correct in all material respects
on and as of the date of each extension of credit under the DIP Revolving
Facility, except to the extent such representations or warranties relate solely
to an earlier date (in which case, they shall be true and correct in all
material respects as of such earlier date); and

 

 

 

 

(xii)          Receipt of a notice of borrowing, or to the extent letters of
credit are available, a letter of credit application from the Borrowers. The
request for and acceptance of each extension of credit by the Borrowers shall
constitute a representation and warranty that the conditions to each extension
of credit shall have been satisfied.

 

 

 

 

(b)           The following shall be the conditions precedent with respect to
all extensions of credit under the DIP Revolving Facility:

 

 

 

 

(i)            The Bankruptcy Court’s entry of the Interim Order or the Final
Order, as applicable, within the time periods set forth below;

 

 

 

 

(ii)           No Default or Event of Default under the DIP Loan Documents shall
exist;

 

 

 

 

(iii)          The representations and warranties contained in the DIP Loan
Documents shall be true and correct in all material respects on and as of the
date of each extension of credit thereunder as though made on and as of such
date, except to the extent such representations or warranties relate solely to
an earlier date (in which case, they shall be true and correct in all material
respects as of such earlier date); and

 

 

 

 

(iv)          Receipt of a notice of borrowing, or to the extent letters of
credit are available, a letter of credit application from the Borrowers. The
request for and acceptance of each extension of credit by the Borrowers shall
constitute a representation and warranty that the conditions to each extension
of credit shall have been satisfied.

 

 

 

Financing Orders:

A condition precedent to the DIP Lenders’ extension of credit under the DIP
Facility will be the entry of an interim financing order in form and substance
satisfactory to the DIP Agent and the DIP Lenders (the “Interim Order”) by the
Bankruptcy Court (which must occur no later than seven (7) business days after
the Petition Date), following proper notice and hearing thereon, which is in all
respects satisfactory to the DIP Agent and the DIP Lenders and which, among
other things, approves the form and substance of the definitive DIP Loan
Documents evidencing the DIP Revolving Facility; approves Borrowers’ stipulation
of the validity, extent, amount, perfection, priority, enforceability, and
non-avoidability of the Prepetition Agent’s and Prepetition Lenders’ claims and
Liens; grants adequate protection (as hereinabove provided)

 

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for the benefit of the Prepetition Agent and Prepetition Lenders; authorizes the
DIP Agent to enforce its Liens and loan documents upon the occurrence and during
the continuance of Events of Default, upon the giving of at least five days
notice to the Borrowers and their counsel, the U.S. Trustee and counsel for any
Committee; contains a Carve Out for Professional fees and expenses on terms and
conditions described herein; confers Section 364(c)(1) priority status on all
extensions of credit under the DIP Revolving Facility and provides for the
securing of all such extensions of credit by a Lien on all DIP Collateral having
the priority provided herein; finds that the DIP Agent and DIP Lenders have
acted in good faith in connection with the proposed financing and is entitled to
the benefits of Section 364(e) of the Bankruptcy Code; provides that the Liens
granted to the DIP Agent under the DIP Loan Documents and pursuant to the
Interim Order are deemed perfected without the necessity of the filing for
record of any documents, notices, or other filings (but the DIP Credit Parties
agree to execute and deliver to DIP Agent, and to authorize DIP Agent to file,
any such documents); and contains such other terms and conditions as DIP Agent
shall reasonably request or find acceptable.  The final financing order (the
“Final Order”) shall be entered, in form and substance satisfactory to DIP Agent
and DIP Lenders, not later than 45 days after the entry of the Interim Order,
shall contain provisions substantially the same as those in the Interim Order,
and shall provide that all pre-petition Liens of Prepetition Agent and
Prepetition Lenders shall be deemed finally allowed and approved as legal,
valid, binding and enforceable Liens that are not subject to any equitable
subordination, defense, or avoidance and the pre-petition claims of Prepetition
Agent and Prepetition Lenders shall be deemed allowed as claims that are not
subject to offset, equitable subordination, reduction, counterclaim, or defense,
in each case if the same are not challenged by the commencement of appropriate
proceedings by an interested party having standing to do so on the sooner to
occur of 60 days after the entry of the Final Order or confirmation of a plan of
reorganization or liquidation in any of the Cases.  The Final Order shall also
proscribe any surcharge on the collateral subject to the Prepetition Agent’s
Liens and the DIP Collateral pursuant to Section 506(c) of the Bankruptcy Code
or otherwise.

 

 

Governing Law:

New York, except as governed by the Bankruptcy Code.

 

 

Indemnity:

The DIP Credit Parties shall indemnify, pay and hold harmless the DIP Agent and
the DIP Lenders (and their respective directors, officers, employees and agents)
against any loss, liability, cost or expense incurred in respect of the
financing contemplated hereby or the use or the proposed use of proceeds thereof
(except to the extent resulting from the gross negligence or willful misconduct
of the indemnified party and except to the extent resulting from claims between
or among any DIP Lenders (other than the DIP Agent) in their capacity as such).

 

 

Expenses:

The Borrowers shall pay (a) all reasonable out-of-pocket expenses of the DIP
Agent associated with the preparation, execution, delivery and

 

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administration of the DIP Loan Documents and any amendments or waivers with
respect thereto (including the reasonable fees, disbursements and other charges
of counsel and the Financial Advisor) and (b) all reasonable out-of-pocket
expenses of the DIP Agent and the DIP Lenders (including the fees, disbursements
and other charges of counsel and the Financial Advisor) in connection with the
enforcement of the DIP Loan Documents; provided, that the Borrowers’ obligation
to pay the fees, disbursements and other charges of counsel to the DIP Lenders
(but not the DIP Agent) shall be limited to one outside counsel, currently
Wachtell, Lipton, Rosen & Katz for Angelo Gordon.

 

 

Counsel to DIP Agent:

Kaye Scholer LLP

 

 

Counsel to Debtors:

Paul, Hastings, Janofsky & Walker LLP

 

--------------------------------------------------------------------------------

 

Exhibit A

 

FairPoint Communications, Inc.
13 Week Cash Forecast
Summary - Terms

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forecast/Actual

 

F

 

F

 

F

 

F

 

F

 

F

 

F

 

F

 

F

 

F

 

F

 

F

 

F

 

Week #

 

1

 

2

 

3

 

4

 

5

 

6

 

7

 

8

 

9

 

10

 

11

 

12

 

13

 

Week Ending

 

10/30/2009

 

11/6/2009

 

11/13/2009

 

11/20/2009

 

11/27/2009

 

12/4/2009

 

12/11/2009

 

12/18/2009

 

12/25/2009

 

1/1/2010

 

1/8/2010

 

1/15/2010

 

1/22/2010

 

Beginning Cash Balance

 

$

49,920,640

 

$

59,278,719

 

$

64,145,492

 

$

69,925,110

 

$

77,343,476

 

$

72,629,761

 

$

68,059,418

 

$

70,615,529

 

$

69,843,856

 

$

67,404,988

 

$

35,143,007

 

$

37,920,252

 

$

43,461,754

 

Receipts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NNE

 

$

17,232,423

 

$

18,851,678

 

$

18,126,613

 

$

17,401,549

 

$

14,501,291

 

$

15,069,386

 

$

17,166,095

 

$

16,450,841

 

$

13,589,825

 

$

12,874,571

 

$

20,528,932

 

$

19,795,755

 

$

13,930,346

 

Telecom

 

$

4,571,746

 

$

5,149,552

 

$

4,951,493

 

$

4,753,433

 

$

3,961,194

 

$

4,152,482

 

$

4,743,275

 

$

4,545,638

 

$

3,755,093

 

$

3,557,456

 

$

5,616,069

 

$

5,415,495

 

$

3,810,904

 

ESG Initiative

 

$

830,789

 

$

774,007

 

$

1,151,308

 

$

679,565

 

$

190,733

 

$

175,226

 

$

166,617

 

$

140,357

 

$

134,738

 

$

251,020

 

$

423,277

 

$

408,160

 

$

287,224

 

Total Cash Receipts

 

$

22,634,958

 

$

24,775,238

 

$

24,229,414

 

$

22,834,547

 

$

18,653,218

 

$

19,397,094

 

$

22,075,987

 

$

21,136,836

 

$

17,479,656

 

$

16,683,048

 

$

26,568,277

 

$

25,619,410

 

$

18,028,474

 

COGS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NNE

 

$

0

 

$

620,674

 

$

2,926,512

 

$

814,635

 

$

931,358

 

$

804,906

 

$

938,210

 

$

2,697,671

 

$

863,136

 

$

3,506,670

 

$

878,414

 

$

2,175,219

 

$

467,462

 

Telecom

 

$

0

 

$

424,063

 

$

556,583

 

$

556,583

 

$

556,583

 

$

733,847

 

$

595,734

 

$

984,009

 

$

850,985

 

$

753,733

 

$

477,179

 

$

1,160,574

 

$

811,503

 

Total COGS

 

$

0

 

$

1,044,738

 

$

3,483,095

 

$

1,371,218

 

$

1,487,941

 

$

1,538,753

 

$

1,533,945

 

$

3,681,679

 

$

1,714,121

 

$

4,260,404

 

$

1,355,592

 

$

3,335,793

 

$

1,278,965

 

Operating Disbursements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee Expenses

 

$

9,369,010

 

$

6,749,487

 

$

8,434,003

 

$

7,078,925

 

$

10,894,134

 

$

7,087,785

 

$

8,856,876

 

$

7,501,799

 

$

8,982,433

 

$

7,703,236

 

$

8,140,982

 

$

6,861,823

 

$

7,779,380

 

Building Related Expenses

 

$

0

 

$

498,703

 

$

547,805

 

$

1,491,416

 

$

1,809,475

 

$

819,985

 

$

836,146

 

$

1,849,468

 

$

2,329,362

 

$

821,630

 

$

771,880

 

$

848,415

 

$

1,815,400

 

Billing Expenses

 

$

0

 

$

71,787

 

$

94,220

 

$

94,220

 

$

152,315

 

$

355,784

 

$

163,618

 

$

294,959

 

$

146,655

 

$

274,971

 

$

642,721

 

$

289,456

 

$

154,634

 

CapGemini

 

$

0

 

$

0

 

$

0

 

$

0

 

$

2,062,138

 

$

0

 

$

0

 

$

0

 

$

0

 

$

18,062,138

 

$

0

 

$

0

 

$

0

 

Restructuring

 

$

0

 

$

5,350,000

 

$

0

 

$

0

 

$

0

 

$

4,750,000

 

$

0

 

$

0

 

$

0

 

$

0

 

$

4,675,000

 

$

0

 

$

0

 

Operating Taxes

 

$

1,448,387

 

$

507,197

 

$

567,803

 

$

544,500

 

$

193,750

 

$

98,420

 

$

721,774

 

$

990,526

 

$

381,913

 

$

3,319,864

 

$

712,121

 

$

287,879

 

$

121,000

 

Contracted Services

 

$

0

 

$

762,605

 

$

634,115

 

$

600,027

 

$

624,789

 

$

751,272

 

$

804,815

 

$

663,183

 

$

600,583

 

$

548,455

 

$

1,156,197

 

$

760,018

 

$

710,174

 

Network Expenses

 

$

0

 

$

125,835

 

$

453,189

 

$

165,159

 

$

216,559

 

$

383,300

 

$

220,610

 

$

691,637

 

$

204,114

 

$

1,609,845

 

$

345,244

 

$

685,369

 

$

301,862

 

Marketing Expenses

 

$

0

 

$

192,861

 

$

308,919

 

$

308,919

 

$

324,796

 

$

330,712

 

$

307,626

 

$

300,395

 

$

296,227

 

$

245,458

 

$

271,255

 

$

433,281

 

$

429,492

 

Motor Vehicle

 

$

0

 

$

195,017

 

$

200,634

 

$

13,679

 

$

503,236

 

$

209,506

 

$

230,034

 

$

23,667

 

$

71,779

 

$

503,812

 

$

222,815

 

$

168,203

 

$

17,541

 

Computer

 

$

0

 

$

641,123

 

$

17,385

 

$

28,967

 

$

23,923

 

$

680,018

 

$

11,317

 

$

84,800

 

$

199,214

 

$

6,168,784

 

$

7,840

 

$

314,131

 

$

243,091

 

Customer Service

 

$

0

 

$

1,861

 

$

2,442

 

$

2,442

 

$

52,381

 

$

67,498

 

$

67,809

 

$

67,765

 

$

54,656

 

$

62,554

 

$

61,362

 

$

62,157

 

$

50,239

 

Non-Restructuring Legal Expenses

 

$

0

 

$

83,245

 

$

109,259

 

$

109,259

 

$

115,836

 

$

96,040

 

$

109,946

 

$

107,959

 

$

106,233

 

$

87,466

 

$

87,309

 

$

122,858

 

$

121,288

 

Insurance

 

$

0

 

$

41,650

 

$

47,000

 

$

57,500

 

$

32,400

 

$

37,555

 

$

43,318

 

$

53,818

 

$

29,455

 

$

29,455

 

$

42,932

 

$

86,317

 

$

51,105

 

Pass Through

 

$

739,751

 

$

761,644

 

$

761,644

 

$

761,644

 

$

609,315

 

$

703,152

 

$

688,529

 

$

688,529

 

$

550,823

 

$

550,823

 

$

791,900

 

$

791,900

 

$

633,520

 

Other Expenses

 

$

0

 

$

333,128

 

$

240,700

 

$

240,700

 

$

406,774

 

$

411,414

 

$

377,272

 

$

362,082

 

$

344,732

 

$

303,527

 

$

299,564

 

$

823,992

 

$

461,261

 

Total Operating Disbursements

 

$

11,557,148

 

$

16,316,142

 

$

12,419,118

 

$

11,497,378

 

$

18,021,822

 

$

16,782,441

 

$

13,439,689

 

$

13,680,587

 

$

14,298,178

 

$

40,292,019

 

$

18,229,120

 

$

12,535,797

 

$

12,889,987

 

NNE Vendor Deposits

 

$

633,930

 

$

633,930

 

$

633,930

 

$

633,930

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

Cash Collateral - Surety Program

 

$

567,500

 

$

567,500

 

$

567,500

 

$

567,500

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

LC Collateral

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

AP Catch-Up

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

Critical Vendor Payments

 

$

0

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

Bankruptcy Related Disbursements

 

$

1,201,430

 

$

2,547,584

 

$

2,547,584

 

$

2,547,584

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

$

1,346,154

 

DIP Interest Expense/Fees

 

$

518,301

 

$

0

 

$

0

 

$

0

 

$

118,301

 

$

1,100,000

 

$

0

 

$

0

 

$

0

 

$

118,301

 

$

0

 

$

0

 

$

0

 

Bank Interest

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

Bond Interest

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

Swap Payment

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

Total Interest Payments

 

$

518,301

 

$

0

 

$

0

 

$

0

 

$

118,301

 

$

1,100,000

 

$

0

 

$

0

 

$

0

 

$

118,301

 

$

0

 

$

0

 

$

0

 

CapEx - NNE

 

$

0

 

$

0

 

$

0

 

$

0

 

$

2,097,607

 

$

2,805,402

 

$

2,805,402

 

$

2,805,402

 

$

2,244,322

 

$

2,567,004

 

$

2,507,404

 

$

2,507,404

 

$

2,005,923

 

CapEx - Telecom

 

$

0

 

$

0

 

$

0

 

$

0

 

$

295,108

 

$

394,687

 

$

394,687

 

$

394,687

 

$

315,749

 

$

361,147

 

$

352,762

 

$

352,762

 

$

282,209

 

Total CapEx

 

$

0

 

$

0

 

$

0

 

$

0

 

$

2,392,716

 

$

3,200,089

 

$

3,200,089

 

$

3,200,089

 

$

2,560,071

 

$

2,928,150

 

$

2,860,166

 

$

2,860,166

 

$

2,288,133

 

Check Clearings

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

Ending Cash

 

$

59,278,719

 

$

64,145,492

 

$

69,925,110

 

$

77,343,476

 

$

72,629,761

 

$

68,059,418

 

$

70,615,529

 

$

69,843,856

 

$

67,404,988

 

$

35,143,007

 

$

37,920,252

 

$

43,461,754

 

$

43,686,989

 

Change In Cash

 

$

9,358,079

 

$

4,866,774

 

$

5,779,617

 

$

7,418,367

 

$

(4,713,716

)

$

(4,570,343

)

$

2,556,111

 

$

(771,672

)

$

(2,438,869

)

$

(32,261,980

)

$

2,777,245

 

$

5,541,501

 

$

225,236

 

 

--------------------------------------------------------------------------------

 

 

Exhibit B

 

Maximum Capital Expenditures

 

Period

 

Maximum Capital Expenditures

 

November 1, 2009 - November 30, 2009

 

$

29,250,000

 

November 1, 2009 - December 31, 2009

 

$

48,500,000

 

November 1, 2009 - January 31, 2010

 

$

66,352,000

 

November 1, 2009 - February 28, 2010

 

$

83,794,000

 

November 1, 2009 - March 31, 2010

 

$

101,236,000

 

November 1, 2009 - April 30, 2010

 

$

118,677,000

 

November 1, 2009 - May 31, 2010

 

$

136,119,000

 

November 1, 2009 - June 30, 2010

 

$

153,561,000

 

November 1, 2009 - July 31, 2010

 

$

169,336,000

 

November 1, 2009 - August 31, 2010

 

$

185,111,000

 

November 1, 2009 - September 30, 2010

 

$

200,886,000

 

November 1, 2009 - October 31, 2010

 

$

216,661,000

 

 

--------------------------------------------------------------------------------

 

Exhibit C

 

Minimum EBITDAR

(1)

 

Period

 

Minimum EBITDAR

 

November 1, 2009 - November 30, 2009

 

$

16,191,000

 

November 1, 2009 - December 31, 2009

 

$

24,403,000

 

November 1, 2009 - January 31, 2010

 

$

45,609,000

 

November 1, 2009 - February 28, 2010

 

$

70,163,000

 

November 1, 2009 - March 31, 2010

 

$

90,459,000

 

November 1, 2009 - April 30, 2010

 

$

111,399,000

 

November 1, 2009 - May 31, 2010

 

$

136,644,000

 

November 1, 2009 - June 30, 2010

 

$

159,992,000

 

November 1, 2009 - July 31, 2010

 

$

186,104,000

 

November 1, 2009 - August 31, 2010

 

$

215,671,000

 

November 1, 2009 - September 30, 2010

 

$

244,190,000

 

November 1, 2009 - October 31, 2010

 

$

274,586,000

 

 

--------------------------------------------------------------------------------

(1)           To be defined in the DIP Loan Documents.

 

--------------------------------------------------------------------------------