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:


 

















 


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 


 


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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,


 


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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

















 


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


 


 


2

















 


                                                              ,
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
















 


EXHIBIT A


 


TERM SHEET


 

















 


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.


 






(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.


 

















 


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

















 


·                  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

















 


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

















 


(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 1⁄4 at exit and  1⁄4  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,

  



 

















 


	
   

  	
   

  	
  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 

  
	
   

  	
   

  	
   

  


















 


	
   

  	
   

  	
  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 

  
				



 

















 


	
   

  	
   

  	
  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

  



 

















 


	
   

  	
  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 

  



 

















 


	
   

  	
  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 

  



 

















 


	
   

  	
  “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

  



 

















 


	
   

  	
  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)

  



 

















 


	
   

  	
  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 

  



 

















 


	
   

  	
  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.