Exhibit 10.6


 


EXECUTION
COPY


 


 




 





DEBTOR-IN-POSSESSION CREDIT AGREEMENT


 


among


 


FAIRPOINT COMMUNICATIONS, INC.,


FAIRPOINT LOGISTICS, INC.,


as BORROWERS and as DEBTORS and DEBTORS-IN-POSSESSION,


 


VARIOUS LENDING INSTITUTIONS,


as LENDERS,


 


and


 


BANK OF AMERICA, N.A.,


as ADMINISTRATIVE AGENT


 




 





Dated as of October 27, 2009


 




 







 





 


BANC OF AMERICA SECURITIES LLC,


as SOLE LEAD ARRANGER


 

















 


TABLE OF
CONTENTS


 


 


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
   

  	
  Amount
  and Terms of Credit

  	
   

  	
  1

  
	
  1.01

  	
  Commitments

  	
   

  	
  1

  
	
  1.02

  	
  Minimum
  Borrowing Amounts, etc.

  	
   

  	
  2

  
	
  1.03

  	
  Notice
  of Borrowing

  	
   

  	
  2

  
	
  1.04

  	
  Disbursement
  of Funds

  	
   

  	
  2

  
	
  1.05

  	
  Notes

  	
   

  	
  3

  
	
  1.06

  	
  Conversions/Continuations

  	
   

  	
  4

  
	
  1.07

  	
  Pro
  Rata Borrowings

  	
   

  	
  4

  
	
  1.08

  	
  Interest

  	
   

  	
  4

  
	
  1.09

  	
  Interest
  Periods

  	
   

  	
  5

  
	
  1.10

  	
  Increased
  Costs, Illegality, etc.

  	
   

  	
  6

  
	
  1.11

  	
  Compensation

  	
   

  	
  7

  
	
  1.12

  	
  Change
  of Lending Office

  	
   

  	
  8

  
	
  1.13

  	
  Replacement
  of Lenders

  	
   

  	
  8

  
	
  1.14

  	
  Joint
  and Several Liability

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1A.

  	
   

  	
  Letters
  of Credit

  	
   

  	
  10

  
	
  1A.01

  	
  Letters
  of Credit

  	
   

  	
  10

  
	
  1A.02

  	
  Minimum
  Stated Amount

  	
   

  	
  12

  
	
  1A.03

  	
  Letter
  of Credit Requests; Notices of Issuance

  	
   

  	
  12

  
	
  1A.04

  	
  Agreement
  to Repay Letter of Credit Drawings

  	
   

  	
  12

  
	
  1A.05

  	
  Letter
  of Credit Participations

  	
   

  	
  13

  
	
  1A.06

  	
  Increased
  Costs

  	
   

  	
  16

  
	
  1A.07

  	
  Cash
  Collateral

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
   

  	
  Fees;
  Voluntary Reduction of Commitments and Mandatory Adjustments of Commitments,
  etc.

  	
   

  	
  16

  
	
  2.01

  	
  Fees

  	
   

  	
  16

  
	
  2.02

  	
  Voluntary
  Reduction of Revolving Commitments

  	
   

  	
  17

  
	
  2.03

  	
  Mandatory
  Adjustments of Revolving Commitments, etc.

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  Payments

  	
   

  	
  18

  
	
  3.01

  	
  Voluntary
  Prepayments

  	
   

  	
  18

  
	
  3.02

  	
  Mandatory
  Prepayments

  	
   

  	
  18

  
	
  3.03

  	
  Method
  and Place of Payment

  	
   

  	
  20

  
	
  3.04

  	
  Net
  Payments

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  Conditions
  Precedent

  	
   

  	
  22

  
	
  4.01

  	
  Conditions
  Precedent to Closing Date and the Initial Incurrence of Loans

  	
   

  	
  22

  
	
  4.02

  	
  Conditions
  Precedent to All Loans

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  Representations,
  Warranties and Agreements

  	
   

  	
  25

  
	
  5.01

  	
  Company
  Status

  	
   

  	
  26

  



 


i

















 


	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  5.02

  	
  Company
  Power and Authority

  	
   

  	
  26

  
	
  5.03

  	
  No
  Violation

  	
   

  	
  26

  
	
  5.04

  	
  Litigation

  	
   

  	
  26

  
	
  5.05

  	
  Use
  of Proceeds; Margin Regulations

  	
   

  	
  26

  
	
  5.06

  	
  Governmental
  Approvals

  	
   

  	
  27

  
	
  5.07

  	
  Investment
  Company Act

  	
   

  	
  27

  
	
  5.08

  	
  True
  and Complete Disclosure

  	
   

  	
  27

  
	
  5.09

  	
  Financial
  Condition; Financial Statements

  	
   

  	
  28

  
	
  5.10

  	
  Security
  Interests

  	
   

  	
  28

  
	
  5.11

  	
  Compliance
  With Statutes

  	
   

  	
  28

  
	
  5.12

  	
  Tax
  Returns and Payments

  	
   

  	
  28

  
	
  5.13

  	
  Compliance
  with ERISA

  	
   

  	
  29

  
	
  5.14

  	
  Subsidiaries

  	
   

  	
  30

  
	
  5.15

  	
  Intellectual
  Property

  	
   

  	
  30

  
	
  5.16

  	
  Environmental
  Matters

  	
   

  	
  30

  
	
  5.17

  	
  Labor
  Relations

  	
   

  	
  30

  
	
  5.18

  	
  Capitalization

  	
   

  	
  31

  
	
  5.19

  	
  Financing
  Orders

  	
   

  	
  31

  
	
  5.20

  	
  Certain
  Bankruptcy Matters

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
   

  	
  Affirmative
  Covenants

  	
   

  	
  33

  
	
  6.01

  	
  Information
  Covenants

  	
   

  	
  33

  
	
  6.02

  	
  Books,
  Records and Inspections

  	
   

  	
  35

  
	
  6.03

  	
  Insurance

  	
   

  	
  35

  
	
  6.04

  	
  Payment
  of Taxes

  	
   

  	
  35

  
	
  6.05

  	
  Company
  Franchises

  	
   

  	
  36

  
	
  6.06

  	
  Compliance
  with Statutes, etc.

  	
   

  	
  36

  
	
  6.07

  	
  ERISA

  	
   

  	
  36

  
	
  6.08

  	
  Good
  Repair

  	
   

  	
  37

  
	
  6.09

  	
  End
  of Fiscal Years; Fiscal Quarters; Etc.

  	
   

  	
  37

  
	
  6.10

  	
  Margin
  Stock

  	
   

  	
  37

  
	
  6.11

  	
  Special
  Covenant Regarding Cash Management Policy

  	
   

  	
  38

  
	
  6.12

  	
  Maintenance
  of Company Separateness

  	
   

  	
  38

  
	
  6.13

  	
  Further
  Assurances

  	
   

  	
  38

  
	
  6.14

  	
  Compliance
  with Financing Orders

  	
   

  	
  39

  
	
  6.15

  	
  Conference
  Calls

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
   

  	
  Negative
  Covenants

  	
   

  	
  39

  
	
  7.01

  	
  Changes
  in Business

  	
   

  	
  39

  
	
  7.02

  	
  Consolidation,
  Merger, Sale or Purchase of Assets, etc.

  	
   

  	
  39

  
	
  7.03

  	
  Liens

  	
   

  	
  40

  
	
  7.04

  	
  Indebtedness

  	
   

  	
  41

  
	
  7.05

  	
  Capital
  Expenditures

  	
   

  	
  42

  
	
  7.06

  	
  Advances,
  Investments and Loans

  	
   

  	
  42

  
	
  7.07

  	
  Limitation
  on Creation of Subsidiaries

  	
   

  	
  43

  
	
  7.08

  	
  Modifications

  	
   

  	
  43

  
	
  7.09

  	
  Restricted
  Payments, Etc.

  	
   

  	
  44

  



 


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  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  7.10

  	
  Transactions
  with Affiliates

  	
   

  	
  44

  
	
  7.11

  	
  Limitation
  On Issuance of Equity Interests

  	
   

  	
  45

  
	
  7.12

  	
  Minimum
  EBITDAR

  	
   

  	
  45

  
	
  7.13

  	
  Use
  of Proceeds

  	
   

  	
  45

  
	
  7.14

  	
  Chapter
  11 Claims

  	
   

  	
  46

  
	
  7.15

  	
  Revision
  of Orders; Applications to Bankruptcy Court

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
   

  	
  Events
  of Default

  	
   

  	
  46

  
	
  8.01

  	
  Payments

  	
   

  	
  46

  
	
  8.02

  	
  Representations,
  etc.

  	
   

  	
  46

  
	
  8.03

  	
  Covenants

  	
   

  	
  46

  
	
  8.04

  	
  Default
  Under Other Agreements

  	
   

  	
  46

  
	
  8.05

  	
  ERISA

  	
   

  	
  47

  
	
  8.06

  	
  Security
  Documents

  	
   

  	
  47

  
	
  8.07

  	
  Credit
  Documents

  	
   

  	
  47

  
	
  8.08

  	
  Judgments

  	
   

  	
  48

  
	
  8.09

  	
  Change
  of Control

  	
   

  	
  48

  
	
  8.10

  	
  Dissolution
  or Liquidation

  	
   

  	
  48

  
	
  8.11

  	
  Final
  Order; Interim Order

  	
   

  	
  48

  
	
  8.12

  	
  Certain
  Orders

  	
   

  	
  48

  
	
  8.13

  	
  Non-Compliance
  with any Financing Order

  	
   

  	
  48

  
	
  8.14

  	
  Filing
  of Unapproved Plan

  	
   

  	
  48

  
	
  8.15

  	
  Entry
  of Unapproved Order

  	
   

  	
  49

  
	
  8.16

  	
  Relief
  from the Automatic Stay

  	
   

  	
  49

  
	
  8.17

  	
  Unenforceability
  of the Interim Order, Final Order or Credit Documents

  	
   

  	
  49

  
	
  8.18

  	
  Motion
  against the Lenders or the Prepetition Agent

  	
   

  	
  49

  
	
  8.19

  	
  Prohibited
  Payment

  	
   

  	
  50

  
	
  8.20

  	
  Other
  Bankruptcy Matters

  	
   

  	
  50

  
	
  8.21

  	
  Failure
  to Conduct Business

  	
   

  	
  50

  
	
  8.22

  	
  Failure
  to File Plan

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
   

  	
  Definitions

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
   

  	
  The
  Administrative Agent

  	
   

  	
  72

  
	
  10.01

  	
  Appointment

  	
   

  	
  72

  
	
  10.02

  	
  Nature
  of Duties

  	
   

  	
  72

  
	
  10.03

  	
  Certain
  Rights of the Administrative Agent

  	
   

  	
  73

  
	
  10.04

  	
  Reliance
  by the Administrative Agent

  	
   

  	
  73

  
	
  10.05

  	
  Notice
  of Default, etc.

  	
   

  	
  73

  
	
  10.06

  	
  Nonreliance
  on the Administrative Agent and Other Lenders

  	
   

  	
  74

  
	
  10.07

  	
  Indemnification

  	
   

  	
  74

  
	
  10.08

  	
  The
  Administrative Agent in Its Individual Capacity

  	
   

  	
  75

  
	
  10.09

  	
  Holders

  	
   

  	
  75

  
	
  10.10

  	
  Resignation
  of the Administrative Agent

  	
   

  	
  75

  
	
  10.11

  	
  Collateral
  Matters

  	
   

  	
  76

  
	
  10.12

  	
  Delivery
  of Information

  	
   

  	
  77

  
	
  10.13

  	
  Removal
  of the Administrative Agent if it is a Defaulting Lender

  	
   

  	
  77

  



 


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  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
   

  	
  Miscellaneous

  	
   

  	
  78

  
	
  11.01

  	
  Payment
  of Expenses, etc.

  	
   

  	
  78

  
	
  11.02

  	
  Right
  of Setoff

  	
   

  	
  79

  
	
  11.03

  	
  Notices

  	
   

  	
  79

  
	
  11.04

  	
  Benefit
  of Agreement

  	
   

  	
  82

  
	
  11.05

  	
  No
  Waiver; Remedies Cumulative

  	
   

  	
  85

  
	
  11.06

  	
  Payments
  Pro Rata

  	
   

  	
  85

  
	
  11.07

  	
  Calculations;
  Computations

  	
   

  	
  85

  
	
  11.08

  	
  Governing
  Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial

  	
   

  	
  86

  
	
  11.09

  	
  Counterparts

  	
   

  	
  86

  
	
  11.10

  	
  Headings
  Descriptive

  	
   

  	
  86

  
	
  11.11

  	
  Amendment
  or Waiver

  	
   

  	
  86

  
	
  11.12

  	
  Survival

  	
   

  	
  87

  
	
  11.13

  	
  Domicile
  of Loans

  	
   

  	
  87

  
	
  11.14

  	
  Confidentiality

  	
   

  	
  87

  
	
  11.15

  	
  Lender
  Register

  	
   

  	
  88

  
	
  11.16

  	
  Patriot
  Act Notice

  	
   

  	
  89

  
	
  11.17

  	
  Impacted
  Lenders and Defaulting Lenders

  	
   

  	
  89

  
					



 


iv














 


DEBTOR-IN-POSSESSION
CREDIT AGREEMENT, dated as of October 27, 2009, among FAIRPOINT
COMMUNICATIONS, INC., a Delaware corporation and a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code (as hereinafter
defined)(“FairPoint”), FAIRPOINT LOGISTICS, INC., a South Dakota
corporation and a debtor and debtor-in-possession under Chapter 11 of the
Bankruptcy Code (“Logistics”; Logistics, together with FairPoint, each a
“Borrower” and, collectively, the “Borrowers”), the Lenders from
time to time party hereto, and BANK OF AMERICA, N.A., as Administrative Agent
(in such capacity, together with any successor administrative agent, the “Administrative
Agent”).


 


W I T N E S S E T H:


 


WHEREAS,
FairPoint, certain of the Subsidiary Guarantors, certain lenders (the “Prepetition
Lenders”), Bank of America, N.A., as administrative agent for such lenders
(the “Prepetition Administrative Agent”), and certain other Persons (as
hereinafter defined), are parties to a Credit Agreement, dated as of March 31,
2008, as amended (as so amended, the “Prepetition Credit Agreement”),
pursuant to which the Prepetition Lenders agreed, subject to the terms and
conditions therein contained, to make available to FairPoint certain credit
facilities as provided for therein;


 


WHEREAS,
on October 26, 2009 (the “Petition Date”), each of the Borrowers,
the Subsidiary Guarantors and their Subsidiaries has filed in the United States
Bankruptcy Court for the Southern District of New York (the “Bankruptcy
Court”) a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code and has continued in the possession of its assets and in the
management of its business pursuant to Sections 1107 and 1108 of the
Bankruptcy Code, and such reorganization cases are being jointly administered under
Case Number 09-16335-brl (each a “Chapter 11 Case” and,
collectively, the “Chapter 11 Cases”);


 


WHEREAS,
the Borrowers have requested the Lenders to make available to the Borrowers a
debtor-in-possession revolving line of credit for loans and letters of credit
in an aggregate amount not to exceed $75,000,000, including a letter of credit
subfacility in the aggregate amount of $30,000,000, which extensions of credit
the Borrowers may use for the purposes permitted hereunder; and


 


WHEREAS,
subject to and upon the terms and conditions set forth herein, the Lenders are
willing to make available to the Borrowers the revolving credit facility
provided for herein;


 


NOW,
THEREFORE, IT IS AGREED:


 


SECTION 1.              Amount
and Terms of Credit.


 


1.01         Commitments.  Subject to and upon the terms and conditions
set forth in this Agreement and the Financing Orders, each Lender severally,
and not jointly, agrees, upon a Borrower’s request, at any time and from time
to time on any Business Day during the period from the Closing Date and prior
to the Termination Date, to make and/or continue a loan or loans (each, a “Loan”
and, collectively, the “Loans”) to such Borrower in amounts not to
exceed (giving effect to any incurrence thereof and the use of the proceeds of
such incurrence) for any Lender in aggregate principal amount at any time
outstanding that amount which, when added to


 

















 


such
Lender’s Percentage of  the Letter of Credit Outstandings (exclusive of
Unpaid Drawings which are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective incurrence of Loans) at such time, equals the
Available Revolving Commitment, if any, of such Lender at such time.  Within the limits of each Lender’s Available
Revolving Commitment, and subject to the other terms and conditions hereof, the
Borrowers’ ability to obtain loans shall be fully revolving, and accordingly,
the Borrowers may borrow under this Section 1.01, prepay, without premium
or penalty (except as provided in Section 1.11), under Section 3.01
and reborrow under this Section 1.01. 
Loans may be Base Rate Loans or Eurodollar Loans, as further provided
herein.


 


1.02         Minimum
Borrowing Amounts, etc.  The
aggregate principal amount of each Borrowing shall not be less than the Minimum
Borrowing Amount.  More than one
Borrowing may be incurred on any day; provided that at no time shall
there be outstanding more than three (3) Borrowings of Eurodollar Loans.


 


1.03         Notice of
Borrowing.  (a) 
Whenever a Borrower desires to incur Loans, it shall give the Administrative
Agent at its Notice Office, (x) prior to 12:00 Noon (New York time), at
least three Business Days’ prior written notice (or telephonic notice promptly
confirmed in writing) of each proposed incurrence of Eurodollar Loans and (y) prior
to 12:00 Noon (New York time) on the proposed date thereof, written notice (or
telephonic notice promptly confirmed in writing) of each proposed incurrence of
Base Rate Loans.  Each such notice (each,
a “Notice of Borrowing”) shall be in the form of Exhibit A and
shall be irrevocable and shall specify (i) the aggregate principal amount
of the Loans to be made pursuant to such incurrence, (ii) the date of
incurrence (which shall be a Business Day) and (iii) whether the
respective Borrowing shall consist of Base Rate Loans or Eurodollar Loans.  The Administrative Agent shall promptly give
each Lender written notice (or telephonic notice promptly confirmed in writing)
of each proposed incurrence of Loans of such Lender’s proportionate share
thereof and of the other matters covered by the Notice of Borrowing.


 


(b)           Without in any way limiting
the obligation of the Borrowers to confirm in writing any telephonic notice
permitted to be given hereunder, the Administrative Agent and any Letter of
Credit Issuer, prior to receipt of written confirmation may act without
liability upon the basis of and consistent with such telephonic notice,
believed by the Administrative Agent or such Letter of Credit Issuer, as the
case may be, in good faith to be from an Authorized Officer.  In each such case, the Borrowers hereby waive
the right to dispute the Administrative Agent’s or such Letter of Credit Issuer’s
record of the terms of such telephonic notice, unless such record reflects
gross negligence or willful misconduct on the part of the Administrative Agent
or such Letter of Credit Issuer, as the case may be (as determined by a court
of competent jurisdiction in a final and nonappealable decision).


 


1.04         Disbursement of
Funds.  (a)  No later than 1:00 P.M.  (New York time) (3:00 P.M.  (New York time) in the case of Base Rate
Loans made pursuant to same day notice) on the date specified in each Notice of
Borrowing, each Lender will make available its pro rata
share of each Borrowing requested to be made on such date.  All such amounts shall be made available to
the Administrative Agent in Dollars and immediately available funds at the
Payment Office, and the Administrative Agent promptly will make available to
the Borrowers by depositing to a Borrower’s account at the Payment Office or as
otherwise directed in the 


 


2

















 


applicable
Notice of Borrowing the aggregate of the amounts so made available in the type
of funds received.  Unless the
Administrative Agent shall have been notified by any Lender prior to the date
of the proposed incurrence that such Lender does not intend to make available
to the Administrative Agent its portion of the Borrowing or Borrowings to be
made on such date, the Administrative Agent may assume that such Lender has
made such amount available to the Administrative Agent on such date, and the
Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrowers
a corresponding amount.  If such
corresponding amount is not in fact made available to the Administrative Agent
by such Lender and the Administrative Agent has made available same to the
Borrowers, the Administrative Agent shall be entitled to recover such
corresponding amount from such Lender. 
If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent’s demand therefor, the Administrative Agent may notify the
Borrowers, and, upon receipt of such notice, the Borrowers shall promptly pay
such corresponding amount to the Administrative Agent.  The Administrative Agent shall also be
entitled to recover on demand from such Lender or the Borrowers, as the case
may be, interest on such corresponding amount in respect of each day from the
date such corresponding amount was made available by the Administrative Agent
to the Borrowers to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (x) if paid by such
Lender, the overnight Federal Funds Effective Rate or (y) if paid by the
Borrowers, the then applicable rate of interest, calculated in accordance with Section 1.08,
for the respective Loans.


 


(b)           Nothing in this Section 1.04
shall be deemed to relieve any Lender from its obligation to fulfill its
commitments hereunder or to prejudice any rights which the Borrowers may have
against any Lender as a result of any default by such Lender hereunder.


 


1.05         Notes.  (a)  The Borrowers’ obligation to pay
the principal of, and interest on, the Loans made by each Lender shall be set
forth in the Lender Register maintained by the Administrative Agent pursuant to
Section 11.15 and, subject to the provisions of Section 1.05(d),
shall be evidenced (if requested by Lenders) by a promissory note substantially
in the form of Exhibit B with blanks appropriately completed in conformity
herewith (each, a “Note” and, collectively, the “Notes”).


 


(b)           Each Note, if any, issued to
a Lender shall (i) be executed by the Borrowers, (ii) be payable to
the order of such Lender and be dated the Closing Date (or, in the case of any
Note issued after the Closing Date, the date of issuance thereof), (iii) be
in a stated principal amount equal to the Revolving Commitment of such Lender
and be payable in the principal amount of the Loans evidenced thereby, (iv) mature
on the Maturity Date, (v) bear interest as provided in the appropriate
clause of Section 1.08 in respect of the Base Rate Loans and Eurodollar
Loans, as the case may be, evidenced thereby, (vi) be subject to mandatory
repayment as provided in Section 3.02 and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.


 


(c)           Each Lender will note on its
internal records the amount of each Loan made by it and each payment in respect
thereof and will, prior to any transfer of any of its Notes, endorse on the
reverse side thereof the outstanding principal amount of Loans evidenced
thereby.  Failure to make (or any error
in making) any such notation shall not affect the Borrowers’ obligations in
respect of such Loans.


 


3

















 


(d)           Notwithstanding anything to
the contrary contained above or elsewhere in this Agreement, Notes shall only
be delivered to Lenders that at any time specifically request the delivery of
such Notes.  No failure of any Lender to
request or obtain a Note evidencing its Loans to the Borrowers shall affect or
in any manner impair the obligations of the Borrowers to pay the Loans (and all
related Obligations) which would otherwise be evidenced thereby in accordance
with the requirements of this Agreement, and shall not in any way affect the
security or guaranties therefor provided pursuant to the various Credit
Documents.  Any Lender that does not have
a Note evidencing its outstanding Loans shall in no event be required to make
the notations otherwise described in preceding clause (c).  At any time when any Lender requests the
delivery of a Note to evidence any of its Loans, the Borrowers shall promptly
execute and deliver to the respective Lender the requested Note or Notes in the
appropriate amount or amounts to evidence such Loans.


 


1.06         Conversions/Continuations.  The Borrowers shall have the option to
convert on any Business Day all or a portion at least equal to the applicable
Minimum Borrowing Amount of the outstanding principal amount of the Loans into
a Borrowing or Borrowings of another Type of Loan; provided that (i) no
partial conversion of a Borrowing of Eurodollar Loans shall reduce the
outstanding principal amount of the Eurodollar Loans made pursuant to such
Borrowing to less than the Minimum Borrowing Amount applicable thereto, (ii) Base
Rate Loans may not be converted into Eurodollar Loans when a Default or an
Event of Default is in existence on the date of the proposed conversion and (iii) Borrowings
of Eurodollar Loans resulting from this Section 1.06 shall be limited in
number as provided in Section 1.02. 
In addition, the Borrowers may elect to continue a Borrowing of
Eurodollar Loan as a Eurodollar Loan. 
Each such conversion or continuation, as the case may be, shall be
effected by the Borrowers giving the Administrative Agent at its Notice Office,
prior to 12:00 Noon (New York time), at least three Business Days’ (or one
Business Day’s, in the case of a conversion into Base Rate Loans) prior written
notice (or telephonic notice promptly confirmed in writing) (each, a “Notice
of Conversion/Continuation”) in the form of Exhibit C, appropriately
completed to specify the Loans to be so converted or continued (as the case may
be) and the Type of Loans to be converted into. 
The Administrative Agent shall give each Lender prompt notice of any
such proposed conversion affecting any of its Loans.


 


1.07         Pro Rata
Borrowings.  All Loans
under this Agreement shall be made by the Lenders pro rata
on the basis of their Revolving Commitments. 
It is understood that no Lender shall be responsible for any default by
any other Lender in its obligation to make Loans hereunder and that each Lender
shall be obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Lender to fulfill its commitments
hereunder.


 


1.08         Interest.  (a)  The unpaid principal amount of each
Base Rate Loan shall bear interest from the date of the Borrowing thereof until
the earlier of repayment or conversion thereof and maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Base Rate Margin plus the Base Rate in effect from time to time.


 


(b)           The unpaid principal amount
of each Eurodollar Loan shall bear interest from the date of the Borrowing
thereof until the earlier of repayment or conversion thereof and maturity
(whether by acceleration or otherwise) at a rate per annum which shall at all
times be the Eurodollar Margin plus the relevant Eurodollar Rate.


 


4

















 


(c)           If any Event of Default
occurs and is continuing and the Administrative Agent or the Required Lenders
so elect, then, while any such Event of Default is continuing, all of the
applicable Obligations shall bear interest at the Default Rate applicable
thereto.


 


(d)           Interest shall accrue from
and including the date of any Borrowing to but excluding the date of any
repayment thereof and shall be payable (i) in respect of each Base Rate
Loan, monthly in arrears on the last Business Day of each month, (ii) in
respect of each Eurodollar Loan, on the last day of each Interest Period
applicable thereto and (iii) in respect of each such Loan, on any
prepayment or conversion (on the amount prepaid or converted), at maturity
(whether by acceleration or otherwise) and, after such maturity, on demand.


 


(e)           All computations of interest
hereunder shall be made in accordance with Section 11.07(b).


 


(f)            The Administrative Agent,
upon determining the interest rate for any Borrowing of Eurodollar Loans for
any Interest Period shall promptly notify the Borrowers and, upon their written
request, the Lenders thereof; provided that a failure to give such
notice shall not result in any liability to the Administrative Agent.


 


1.09         Interest
Periods.  (a)  Each Interest Period
applicable to a Borrowing of Eurodollar Loans shall be a one month period.  Notwithstanding the foregoing:


 


(i)            the initial Interest Period
for any Borrowing of Eurodollar Loans shall commence on the date of such
Borrowing (including the date of any conversion from a Borrowing of Base Rate
Loans) and each Interest Period occurring thereafter in respect of such
Borrowing shall commence on the day on which the immediately preceding Interest
Period expires;


 


(ii)           if any Interest Period
begins on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest Period shall
end on the last Business Day of such calendar month;


 


(iii)          if any Interest Period would
otherwise expire on a day which is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day; provided that if any
Interest Period would otherwise expire on a day which is not a Business Day but
is a day of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the immediately preceding Business Day;


 


(iv)          no Interest Period shall
extend beyond the Maturity Date; and


 


(v)           no Eurodollar Loans may be
elected at any time when a Default or an Event of Default is then in existence.


 


(b)           If upon the expiration of
any Interest Period, the Borrowers have failed to (or may not) elect to
continue the respective Borrowing of Eurodollar Loans as a Eurodollar Loan as
provided above, the Borrowers shall be deemed to have elected to convert such
Borrowing into a Borrowing of Base Rate Loans effective as of such expiration.


 


5

















 


1.10         Increased
Costs, Illegality, etc.  (a) 
In the event that (x) in the case of clause (i) below, the
Administrative Agent or (y) in the case of clauses (ii) and (iii) below,
any Lender shall have determined (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto):


 


(i)            on any date for determining
the Eurodollar Rate for any Interest Period that, adequate and fair means do
not exist for ascertaining the applicable interest rate on the basis provided
for in the definition of Eurodollar Rate or the making or continuance of any
Eurodollar Loan has become impracticable as a result of a contingency occurring
after the Closing Date;


 


(ii)           at any time, that such
Lender shall incur increased costs or reductions in the amounts received or
receivable hereunder with respect to any Eurodollar Loans because of (x) any
change since the Closing Date in any applicable law, governmental rule,
regulation, guideline or order (or in the interpretation or administration
thereof and including the introduction of any new law or governmental rule,
regulation, guideline or order) (including, but not limited to, a change in the
basis of taxation of payments to a Lender of the principal of or interest on
the Loans or any other amounts payable hereunder (except for (i) changes
in the rate of tax on, or determined by reference to, the net income or net
profits of such Lender imposed by the jurisdiction in which its principal
office or applicable lending office is located and (ii) any taxes for
which the Borrowers are not liable to pay under Section 3.04) or a change
in official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation of
the Eurodollar Rate) and/or (y) other circumstances affecting the
interbank Eurodollar market or the position of such Lender in such market; or


 


(iii)          at any time, that the making
or continuance of any Eurodollar Loan has become unlawful by compliance by such
Lender in good faith with any law, governmental rule, regulation, guideline or
order (or would conflict with any such governmental rule, regulation, guideline
or order not having the force of law but with which such Lender customarily
complies even though the failure to comply therewith would not be unlawful);


 


then,
and in any such event, such Lender (or the Administrative Agent in the case of
clause (i) above) shall (x) on such date and (y) within ten
Business Days of the date on which such event no longer exists give notice (by
telephone confirmed in writing) to the Borrowers and to the Administrative
Agent of such determination (which notice the Administrative Agent shall
promptly transmit to each of the other Lenders).  Thereafter (x) in the case of
clause (i) above, Eurodollar Loans shall no longer be available until
such time as the Administrative Agent notifies the Borrowers and the Lenders
that the circumstances giving rise to such notice by the Administrative Agent
no longer exist, and any Notice of Borrowing or Notice of
Conversion/Continuation given by the Borrowers with respect to Eurodollar Loans
which have not yet been incurred shall be deemed rescinded by the Borrowers, (y) in
the case of clause (ii) above, the Borrowers shall pay to such
Lender, within 10 Business Days after the Borrowers’ receipt of written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
reasonable discretion shall determine after consultation with the Borrowers) as
shall be required to compensate such Lender for such increased costs or
reductions in amounts receivable hereunder (a written notice as to the
additional amounts owed to such Lender, describing the basis for such increased
costs and showing the calculation thereof, submitted to the Borrowers by such
Lender 


 


6

















 


shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto) and (z) in the case of clause (iii) above, the Borrowers
shall take one of the actions specified in Section 1.10(b) as
promptly as possible and, in any event, within the time period required by law.


 


(b)           At any time that any
Eurodollar Loan is affected by the circumstances described in Section 1.10(a)(ii),
the Borrowers may (and in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii),
the Borrowers shall within the time period required by law) either (x) if
the affected Eurodollar Loan is then being made pursuant to a Borrowing, cancel
said Borrowing by giving the Administrative Agent telephonic notice (confirmed
promptly in writing) thereof on the same date that the Borrowers were notified
by a Lender pursuant to Section 1.10(a)(ii) or (iii), or (y) if
the affected Eurodollar Loan is then outstanding, upon at least three Business
Days’ notice to the Administrative Agent, require the affected Lender to
convert each such Eurodollar Loan into a Base Rate Loan (which conversion, in
the case of the circumstances described in Section 1.10(a)(iii), shall
occur no later than the last day of the Interest Period then applicable to such
Eurodollar Loan (or such earlier date as shall be required by applicable law));
provided, that if more than one Lender is affected at any time, then all
affected Lenders must be treated the same pursuant to this Section 1.10(b).


 


(c)           If any Lender shall have
determined that the adoption or effectiveness of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, in each case after the Closing Date, or compliance by
such Lender or its parent corporation with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency first made after the Closing Date, has or
would have the effect of reducing the rate of return on such Lender’s or its
parent corporation’s capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender or its parent
corporation could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Lender’s or its parent corporation’s
policies with respect to capital adequacy), then from time to time, within 10
Business Days after demand by such Lender (with a copy to the Administrative
Agent), the Borrowers shall pay to such Lender such additional amount or
amounts as will compensate such Lender or its parent corporation for such
reduction.  Each Lender, upon determining
in good faith that any additional amounts will be payable pursuant to this Section 1.10(c),
will give prompt written notice thereof to the Borrowers, which notice shall
describe the basis for such claim and set forth in reasonable detail the
calculation of such additional amounts, although the failure to give any such
notice shall not release or diminish any of the Borrowers’ obligations to pay
additional amounts pursuant to this Section 1.10(c) upon the
subsequent receipt of such notice.


 


1.11         Compensation.  (a)  The Borrowers shall, without
duplication, compensate each Lender, upon its written request (which request
shall set forth the basis for requesting such compensation and reasonably
detailed calculations thereof), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other
funds required by such Lender to fund its Eurodollar Loans but excluding in any
event the loss of anticipated profits) which such Lender may sustain:  (i) if for any reason (other than a
default by any Lender 


 


7

















 


or
the Administrative Agent) a Borrowing of Eurodollar Loans by any Borrower does
not occur on a date specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation (whether or not withdrawn by the Borrowers or deemed
withdrawn pursuant to Section 1.10(a)); (ii) if any prepayment,
repayment or conversion of any of its Eurodollar Loans occurs on a date which
is not the last day of an Interest Period applicable thereto; (iii) if any
prepayment of any of its Eurodollar Loans is not made on any date specified in
a notice of prepayment given by the Borrowers; or (iv) as a consequence of
(x) any other default by the Borrowers to repay Eurodollar Loans when
required by the terms of this Agreement or (y) an election made pursuant
to Section 1.10(b).


 


(b)           Notwithstanding anything in
this Agreement to the contrary, to the extent any notice or request required by
Section 1.10, 1.11, 1A.06 or 3.04 of this Agreement is given by any Lender
more than 120 days after such Lender obtained, or reasonably should have
obtained, knowledge of the occurrence of the event giving rise to the
additional costs, reductions in amounts, losses, taxes or other additional
amounts of the type described in such Section, such Lender shall not be entitled
to compensation under Section 1.10, 1.11, 1A.06 or 3.04 of this Agreement
for any amounts incurred or accruing prior to the giving of such notice to the
Borrowers.


 


1.12         Change of
Lending Office.  Each Lender
agrees that, upon the occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), 1.10(c), 1A.06 or 3.04 with respect to such Lender, it will, if
requested by the Borrowers, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any
Loans affected by such event; provided that such designation is made on
such terms that such Lender and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the event
giving rise to the operation of any such Section.  Nothing in this Section 1.12 shall
affect or postpone any of the obligations of the Borrowers or the right of any
Lender provided in Section 1.10, 1A.06 or 3.04.


 


1.13         Replacement of
Lenders.  (x) Upon the occurrence
of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 1A.06 or Section 3.04 with
respect to any Lender which results in such Lender charging to the Borrowers
increased costs in a material amount in excess of those being generally charged
by the other Lenders, (y) if any Lender becomes a Defaulting Lender or (z) in
the case of a refusal by a Lender to consent to a proposed change, waiver,
discharge or termination of or to any of the provisions of this Agreement as
contemplated by clauses (i) through (vii), inclusive, of the first proviso
to Section 11.11(a) of this Agreement which has been approved by the
Super-Majority Lenders as provided in Section 11.11(b), the Borrowers
shall have the right in accordance with Section 11.04(b), if no Default or
Event of Default then exists or would exist after giving effect to such
replacement, to replace such Lender (the “Replaced Lender”) with one or
more other Eligible Transferee or Eligible Transferees, none of whom shall
constitute a Defaulting Lender at the time of such replacement (collectively,
the “Replacement Lender”) and each of which shall be reasonably
acceptable to the Administrative Agent or, at the option of the Borrowers, and
subject to the consent of the Administrative Agent, not to be unreasonably
withheld, to replace the Revolving Commitment (and outstandings pursuant
thereto) of the Replaced Lender with an identical Revolving Commitment provided
by the Replacement Lender; provided that:


 


8














 


(i)            at the time of any
replacement pursuant to this Section 1.13, the Replacement Lender shall
enter into one or more Assignment Agreements pursuant to Section 11.04(b) (and
with all fees payable pursuant to said Section 11.04(b) to be paid by
the Replacement Lender and/or the Replaced Lender (as agreed between them))
pursuant to which the Replacement Lender shall acquire all of the Revolving
Commitments and outstanding Loans and participations in Letter of Credit
Outstandings of the Replaced Lender and, in connection therewith, shall pay to (x) the
Replaced Lender in respect thereof an amount equal to the sum of (A) an
amount equal to the principal of, and all accrued interest on, all outstanding
Loans (of the Replaced Lender, (B) an amount equal to all Unpaid Drawings
(unless there are no Unpaid Drawings) that have been funded by (and not
reimbursed to) such Replaced Lender, together with all then unpaid interest
with respect thereto at such time and (C) an amount equal to all accrued,
but theretofore unpaid, Fees owing to the Replaced Lender pursuant to Section 2.01
and, (y) each Letter of Credit Issuer an amount equal to such Replaced
Lender’s Percentage of any Unpaid Drawing relating to Letters of Credit issued
by such Letter of Credit Issuer (which at such time remains an Unpaid Drawing)
to the extent such amount was not theretofore funded by such Replaced Lender;
and


 


(ii)           all obligations of the
Borrowers then owing to the Replaced Lender (other than those (a) specifically
described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid, but including all
amounts, if any, owing under Section 1.11 or (b) relating to the
Loans and/or Revolving Commitments of the respective Replaced Lender which will
remain outstanding after giving effect to the respective replacement) shall be
paid in full to such Replaced Lender concurrently with such replacement.


 


Upon
the execution of the respective Assignment Agreements, the payment of amounts
referred to in clauses (i) and (ii) above, recordation of the
assignment on the Lender Register by the Administrative Agent pursuant to Section 11.15
and, if so requested by the Replacement Lender, delivery to the Replacement
Lender of the appropriate Note or Notes executed by the Borrowers, (x) the
Replacement Lender shall become a Lender hereunder and, unless the respective
Replaced Lender continues to have a Revolving Commitment hereunder, the
Replaced Lender shall cease to constitute a Lender hereunder, except with
respect to indemnification provisions under this Agreement (including, without
limitation, Sections 1.10, 1.11, 1A.06, 3.04, 11.01 and 11.06), which
shall survive as to such Replaced Lender and (y) the Percentages of the
Lenders shall be automatically adjusted at such time to give effect to such
replacement.


 


1.14         Joint and Several Liability.  Each of the
Borrowers shall be jointly and severally liable with the other Borrower(s) for
the Obligations, and each of the Obligations shall be secured by all of the
Collateral.  Each Borrower acknowledges
that it is a co-borrower hereunder and is jointly and severally liable under
this Agreement and the other Credit Documents. 
Any payment made by a Borrower in respect of Obligations owing by one or
more Borrowers shall be deemed a payment of such Obligations by and on behalf
of all Borrowers.  All Credit Events
extended to any Borrower or requested by any Borrower shall be deemed to be
Credit Events extended for each of the Borrowers, and each Borrower hereby
authorizes each other Borrower to effectuate Credit Events on its behalf.  Notwithstanding anything to the contrary
contained in this Agreement or any of the other Credit Documents, the
Administrative Agent and the Lenders shall be entitled to rely upon any
request, notice or other communication 


 


9

















 


received
by them from any Borrower on behalf of all Borrowers, and shall be entitled to
treat their giving of any notice hereunder to FairPoint in accordance with the
provisions of this Agreement as notice to each and all Borrowers.


 


Each
Borrower agrees that the joint and several liability of the Borrowers provided
for in this Section 1.14 shall not be impaired or affected by any
modification, supplement, extension or amendment or any contract or agreement
to which the other Borrower(s) may hereafter agree (other than an
agreement signed by the Administrative Agent and the Lenders specifically
releasing such liability), nor by any delay, extension of time, renewal,
compromise or other indulgence granted by the Administrative Agent or any
Lender with respect to any of the Obligations, nor by any other agreements or
arrangements whatsoever with the other Borrower(s) or with any other
person, each Borrower hereby waiving all notice of such delay, extension,
release, substitution, renewal, compromise or other indulgence, and hereby
consenting to be bound thereby as fully and effectually as if it had expressly
agreed thereto in advance.  The liability
of each Borrower is direct and unconditional as to all of the Obligations, and
may be enforced without requiring the Administrative Agent or any Lender first
to resort to any other right, remedy or security.  Each Borrower hereby expressly waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations, the Notes, this Agreement or any other Credit Document and any
requirement that the Administrative Agent or any Lender protect, secure,
perfect or insure any Lien or any property subject thereto or exhaust any right
or take any action against any Borrower or any other person or any collateral.


 


Until
the Termination of the DIP Financing, each Borrower hereby irrevocably waives
and releases each other Borrower from all “claims” (as defined in Section 101(5) of
the Bankruptcy Code) to which such Borrower is or would be entitled by virtue
of the provisions of the first paragraph of this Section 1.14 or the
performance of such Borrower’s obligations thereunder including, without
limitation, any right of subrogation (whether contractual, under Section 509
of the Bankruptcy Code or otherwise), reimbursement, contribution, exoneration
or similar right, or indemnity, or any right of recourse to security for any of
the Obligations.


 


SECTION 1A.           Letters of
Credit.


 


1A.01      Letters of
Credit.  (a)  Subject to and upon
the terms and conditions set forth in this Agreement and the Financing Orders,
the Borrowers may request that a Letter of Credit Issuer, at any time and from
time to time on or after the Closing Date and prior to the date which is thirty
Business Days prior to the Maturity Date, issue, for the account of the
Borrowers and in support of such obligations of the Borrowers and/or their
Subsidiaries that are incurred in the ordinary course of business or are
acceptable to the Administrative Agent and, subject to and upon the terms and
conditions herein set forth, such Letter of Credit Issuer agrees to issue from
time to time, irrevocable standby letters of credit (each such letter of
credit, a “Letter of Credit” and, collectively, the “Letters of
Credit”) denominated in Dollars and issued on a sight basis, in such form
as may be approved by such Letter of Credit Issuer and the Administrative
Agent.


 


(b)           Notwithstanding
the foregoing and subject to and upon the terms and conditions set forth in the
Financing Orders, (i) no Letter of Credit shall be issued if after giving
effect thereto (x) the Letter of Credit Outstandings would exceed
$30,000,000 or (y) the sum of 


 


10

















 


all
Letter of Credit Outstandings (less any portion thereof subject to Section 1A.01(c) Arrangements)
and the aggregate principal amount of all Loans then outstanding would exceed
the Total Revolving Commitment at such time, (ii) no Letter of Credit
shall by its terms expire more than 364 days after the date of such Letter of
Credit’s issuance and (iii) no Letter of Credit Issuer shall be under any
obligation to issue any Letter of Credit of the types described above if at the
time of such issuance:


 


(w)          any order, judgment or decree of any governmental
authority or arbitrator shall purport by its terms to enjoin or restrain such
Letter of Credit Issuer from issuing such Letter of Credit or any requirement
of law applicable to such Letter of Credit Issuer or any request or directive
(whether or not having the force of law) from any governmental authority with
jurisdiction over such Letter of Credit Issuer shall prohibit, or request that
such Letter of Credit Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon such
Issuing Lender with respect to such Letter of Credit any restriction or reserve
or capital requirement (for which such Letter of Credit Issuer is not otherwise
compensated under Section 1A.06) not in effect with respect to such Letter
of Credit Issuer on the Closing Date, or any unreimbursed loss, cost or expense
which was not applicable or in effect with respect to such Letter of Credit
Issuer as of the date hereof and which such Letter of Credit Issuer in good
faith deems material to it;


 


(x)           the issuance of such Letter of Credit would violate
one or more policies of the Letter of Credit Issuer applicable to letters of
credit generally;


 


(y)          such Letter of Credit contains any provisions for
automatic reinstatement of the stated amount after any drawing thereunder; or


 


(z)           such Letter of Credit Issuer shall have received
from the Borrowers, any other Credit Party, the Administrative Agent or the
Required Lenders prior to the issuance of such Letter of Credit notice of the
type described in the second sentence of Section 1A.03(c).


 


(c)           Notwithstanding
the foregoing, in the event that (i) a Lender Default exists or (ii) any
Letter of Credit Issuer determines in good faith or obtains actual knowledge
that any Lender is an Impacted Lender, the respective Letter of Credit Issuer
shall not be required to issue any Letter of Credit unless arrangements
satisfactory to the respective Letter of Credit Issuer shall have been entered
into (“Section 1 A.01(c) Arrangements”) to eliminate such
Letter of Credit Issuer’s risk with respect to the participation in Letters of
Credit of such Defaulting Lender or Impacted Lender or Lenders, which may
include requiring the Borrowers to cash collateralize each Defaulting Lender’s
or Impacted Lender’s Percentage of the Letter of Credit Outstandings; provided,
that, if at any time a Lender is deemed to no longer be an Impacted Lender in
accordance with Section 11.17(a), any cash collateral provided by
the Borrowers to collateralize such Lender’s Percentage of the Letter of Credit
Outstandings shall be released by each applicable Letter of Credit Issuer and
returned to the Borrowers.


 


(d)          Annex VII
hereto contains a description of certain letters of credit issued pursuant to
the Prepetition Credit Agreement and outstanding on the Closing Date.  Each such 


 


11

















 


letter
of credit (each, an “Existing Letter of Credit”) may, at the Borrowers’
option be replaced by a Letter of Credit issued under this Agreement (provided,
however, it shall be a condition precedent to the issuance of any such
replacement Letter of Credit that each such replaced Existing Letter of Credit
shall be cancelled in a manner satisfactory to the Letter of Credit Issuer,
unless such replaced Existing Letter of Credit expires, undrawn, simultaneously
with the issuance of the replacement Letter of Credit issued hereunder).


 


1A.02      Minimum Stated
Amount.  The initial Stated Amount of
each Letter of Credit shall be not less than $100,000 or such lesser amount as
is acceptable to the respective Letter of Credit Issuer.


 


1A.03      Letter of
Credit Requests; Notices of Issuance.  (a)  Whenever it desires that a Letter
of Credit be issued, the applicable Borrower shall give the Administrative
Agent and the respective Letter of Credit Issuer written notice (which may
include by way of facsimile transmission) in the form of a Letter of Credit
Application prior to 1:00 P.M. (New York time) at least three Business
Days (or such shorter period as may be acceptable to such Letter of Credit
Issuer in any given case) prior to the proposed date of issuance (which shall
be a Business Day), which Letter of Credit Application shall include any
documents that.  such Letter of Credit
Issuer customarily requires in connection therewith.


 


(b)           Each Letter of
Credit Issuer shall, promptly after the issuance of, or amendment to, a Letter
of Credit, give the Administrative Agent and the Borrowers a copy of such
Letter of Credit or such amendment, as the case may be.  The Administrative Agent shall notify each
Participant, including by posting such information on the Approved Electronic
Platform, of such issuance or amendment and if any Participant shall so
request, the Administrative Agent shall furnish said Participant with a copy of
such Letter of Credit or such amendment, as the case may be.


 


(c)           The giving of a
Letter of Credit Application shall be deemed to be a representation and
warranty by the Borrowers to the respective Letter of Credit Issuer and the
Lenders that such Letter of Credit may be issued or amended in accordance with,
and will not violate the requirements of, Section 1A.01(a) or
(b).  Unless the respective Letter of
Credit Issuer has received notice from the Borrowers, any other Credit Party,
the Administrative Agent or the Required Lenders before it issues or amends a
Letter of Credit that one or more of the conditions specified in Section 4
are not then satisfied, or that the issuance or amendment of such Letter of
Credit would violate Section 1A.01(a) or (b), then such Letter of
Credit Issuer shall, subject to the terms and conditions of this Agreement,
issue or amend the requested Letter of Credit for the account of the Borrowers
in accordance with such Letter of Credit Issuer’s usual and customary
practices.


 


1A.04      Agreement to
Repay Letter of Credit Drawings.  (a)  The Borrowers hereby agree, jointly
and severally, to reimburse the respective Letter of Credit Issuer, by making
payment to the Administrative Agent at the Payment Office, for any payment or
disbursement made by such Letter of Credit Issuer under any Letter of Credit
(each such amount so paid or disbursed until reimbursed, an “Unpaid Drawing”)
on the date on which the Borrowers are notified by such Letter of Credit Issuer
of such payment or disbursement with interest on the amount so paid or
disbursed by such Letter of Credit Issuer. 
To the extent not reimbursed prior 


 


12

















 


to
3:00 P.M. (New York time) on the date of such payment or disbursement, the
Borrowers shall be deemed to have requested a Borrowing of Base Rate Loans to
be disbursed on such date in an amount equal to the Unpaid Drawing, without
regard to the minimum and multiples specified in Section 1.02 for the
principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Total Revolving Commitment.


 


(b)           The Borrowers’
obligation under this Section 1A.04 to reimburse the respective Letter of
Credit Issuer with respect to Unpaid Drawings (including, in each case,
interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrowers may have or have had against any Letter of Credit
Issuer, the Administrative Agent or any Lender, including, without limitation,
any defense based upon the failure of any drawing under a Letter of Credit to
conform to the terms of the Letter of Credit or any non-application or misapplication
by the beneficiary of the proceeds of such drawing; provided, however,
that the Borrowers shall not be obligated to reimburse such Letter of Credit
Issuer for any wrongful payment made by such Letter of Credit Issuer under a
Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of such Letter of Credit Issuer as
determined by a final judgment issued by a court of competent jurisdiction.


 


1A.05      Letter of
Credit Participations.  (a) 
Immediately upon the issuance by any Letter of Credit Issuer of any Letter of
Credit, such Letter of Credit Issuer shall be deemed to have sold and
transferred to each other Lender, and each such Lender (each, a “Participant”)
shall be deemed irrevocably and unconditionally to have purchased and received
from such Letter of Credit Issuer, without recourse or warranty, an undivided
interest and participation, to the extent of such Participant’s Percentage, in
such Letter of Credit, each substitute letter of credit, each drawing made
thereunder and the obligations of the Borrowers under this Agreement with
respect thereto (although the Letter of Credit Fee shall be payable directly to
the Administrative Agent for the account of the Lenders as provided in Section 2.01(b) and
the Participants shall have no right to receive any portion of any Facing Fees)
and any security therefor or guaranty pertaining thereto.  Upon any change in the Revolving Commitments
pursuant to Section 1.13 or 11.04(b), it is hereby agreed that, with
respect to all outstanding Letters of Credit and Unpaid Drawings, there shall
be an automatic adjustment to the participations pursuant to this Section 1A.05
to reflect the new Percentages of the Lenders.


 


(b)           In determining
whether to pay under any Letter of Credit, the applicable Letter of Credit
Issuer shall not have any obligation relative to the Participants other than to
determine that any documents required to be delivered under such Letter of
Credit have been delivered and that they substantially comply on their face
with the requirements of such Letter of Credit. 
Any action taken or omitted to be taken by any Letter of Credit Issuer
under or in connection with any Letter of Credit if taken or omitted in the
absence of gross negligence or willful misconduct as determined by a final
judgment issued by a court of competent jurisdiction shall not create for such
Letter of Credit Issuer any resulting liability.


 


(c)           In the event
that any Letter of Credit Issuer makes any payment under any Letter of Credit
and the Borrowers shall not have reimbursed such amount in full to such Letter
of Credit Issuer pursuant to Section 1A.04(a), the Administrative Agent
shall promptly notify each Participant of such failure, and each Participant
shall promptly and unconditionally pay to 


 


13

















 


the
Administrative Agent for the account of such Letter of Credit Issuer, the
amount of such Participant’s Percentage of such payment in Dollars and in same
day funds; provided, however, that no Participant shall be
obligated to pay to the Administrative Agent its Percentage of such
unreimbursed amount for any wrongful payment made by such Letter of Credit
Issuer under a Letter of Credit as a result of acts or omissions constituting
willful misconduct or gross negligence on the part of such Letter of Credit
Issuer as determined by a final judgment issued by a court of competent
jurisdiction.  If the Administrative
Agent so notifies any Participant required to fund an Unpaid Drawing under a
Letter of Credit prior to 1:00 P.M. 
(New York time) on any Business Day, such Participant shall make
available to the Administrative Agent for the account of the respective Letter
of Credit Issuer such Participant’s Percentage of the amount of such payment on
such Business Day in same day funds.  If
and to the extent such Participant shall not have so made its Percentage of the
amount of such Unpaid Drawing available to the Administrative Agent for the
account of the respective Letter of Credit Issuer, such Participant agrees to
pay to the Administrative Agent for the account of such Letter of Credit
Issuer, forthwith on demand such amount, together with interest thereon, for
each day from such date until the date such amount is paid to the Administrative
Agent for the account of such Letter of Credit Issuer at the overnight Federal
Funds Effective Rate.  The failure of any
Participant to make available to the Administrative Agent for the account of
the respective Letter of Credit Issuer its Percentage of any Unpaid Drawing
under any Letter of Credit shall not relieve any other Participant of its
obligation hereunder to make available to the Administrative Agent for the
account of such Letter of Credit Issuer its Percentage of any payment under any
Letter of Credit on the date required, as specified above, but no Participant
shall be responsible for the failure of any other Participant to make available
to the Administrative Agent for the account of such Letter of Credit Issuer
such other Participant’s Percentage of any such payment.


 


(d)           Whenever any
Letter of Credit Issuer, through the Administrative Agent, receives a payment
of a reimbursement obligation (including interest on Unpaid Drawings) as to
which the Administrative Agent has received for the account of such Letter of
Credit Issuer any payments from any Participant pursuant to clause (c) above,
the Administrative Agent shall promptly pay to each Participant which has paid
its Percentage thereof, in Dollars and in same day funds, an amount equal to
such Participant’s Percentage of the amount of the payment of such
reimbursement obligation, including interest paid thereon to the extent
accruing after the purchase of the respective participations.


 


(e)           The obligations
of the Participants to make payments to the Administrative Agent for the
account of the respective Letter of Credit Issuer with respect to Letters of
Credit shall be irrevocable and not subject to counterclaim, set-off or other
defense or any other qualification or exception whatsoever (provided
that no Participant shall be required to make payments resulting from the
Administrative Agent’s gross negligence or willful misconduct as determined by
a final judgment issued by a court of competent jurisdiction) and shall be made
in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:


 


(i)            any lack of
validity or enforceability of this Agreement or any of the other Credit
Documents;


 


14

















 


(ii)           the existence
of any claim, set-off, defense or other right which the Borrowers or any of
their Subsidiaries (or the Participant or any of its Subsidiaries) may have at
any time against a beneficiary named in a Letter of Credit, any transferee of
any Letter of Credit (or any Person for whom any such transferee may be
acting), the Administrative Agent, any Letter of Credit Issuer, any Lender or
other Person, whether in connection with this Agreement, any Letter of Credit,
the transactions contemplated herein or any unrelated transactions (including
any underlying transaction between a Borrower and the beneficiary named in any
such Letter of Credit);


 


(iii)          any draft, certificate or
other document presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;


 


(iv)          the surrender or impairment
of any security for the performance or observance of any of the terms of any of
the Credit Documents; or


 


(v)           the occurrence of any
Default or Event of Default.


 


(f)            To the extent
the respective Letter of Credit Issuer is not indemnified by the Borrowers, the
Participants will reimburse and indemnify such Letter of Credit Issuer, in
proportion to their respective Percentages, for and against any and all
liabilities, obligations; losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by such Letter of Credit Issuer
in performing its respective duties in any way relating to or arising out of
its issuance of Letters of Credit; provided that no Participants shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Letter of Credit Issuer’s gross negligence or willful
misconduct as determined by a final judgment issued by a court of competent jurisdiction.


 


(g)           The Letter of Credit Issuer
shall act on behalf of the Lenders with respect to any Letters of Credit issued
by it and the documents associated therewith, and the Letter of Credit Issuer
shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Section 10 with respect to any acts taken or
omissions suffered by the Letter of Credit Issuer in connection with Letters of
Credit issued by it or proposed to be issued by it as fully as if the term “Administrative
Agent” as used in Section 10 included the Letter of Credit Issuer with
respect to such acts or omissions, and (B) as additionally provided herein
with respect to the Letter of Credit Issuer.


 


(h)           Unless otherwise expressly
agreed by the Letter of Credit Issuer and the Borrowers, when a Letter of
Credit is issued (including any such agreement applicable to an existing Letter
of Credit) the rules of the International Standby Practices, as
promulgated by the Institute for International Banking Law and Practice and the
International Chamber of Commerce at the time of issuance, shall apply to each
standby Letter of Credit.


 


(i)            Notwithstanding that a
Letter of Credit issued or outstanding hereunder is in support of any
obligations of, or is for the account of, a Subsidiary, the Borrowers shall be
obligated to reimburse the Letter of Credit Issuer hereunder for any and all
drawings under such 


 


15

















 


Letter
of Credit.  Each Borrower hereby
acknowledges that the issuance of Letters of Credit for the account of its
Subsidiaries inures to the benefit of such Borrower, and that such Borrower’s
business derives substantial benefits from the businesses of such Subsidiaries.


 


1A.06      Increased Costs.  If at any time after the Closing Date, the
adoption or effectiveness of any applicable law, rule or regulation, or
any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central lender or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Letter of Credit Issuer or any Participant with any request or directive
(whether or not having the force of law) by any such authority, central lender
or comparable agency shall either (i) impose, modify or make applicable
any reserve, deposit, capital adequacy or similar requirement against Letters
of Credit issued by any Letter of Credit Issuer or such Participant’s
participation therein, or (ii) impose on any Letter of Credit Issuer or
any Participant any other conditions affecting this Agreement, any Letter of
Credit or such Participant’s participation therein; and the result of any of
the foregoing is to increase the cost to any Letter of Credit Issuer or such
Participant of issuing, maintaining or participating in any Letter of Credit,
or to reduce the amount of any sum received or receivable by any Letter of
Credit Issuer or such Participant hereunder (other than, in the case of a
change in the basis of taxation of payments to a Letter of Credit Issuer or
Participant of the principal of or interest on the Loans or any other amounts
payable hereunder, changes in the rate of tax on, or determined by reference
to, the net income or net profits of such Letter of Credit Issuer or
Participant imposed by the jurisdiction in which its principal office or
applicable lending office is located), then, upon demand to the Borrowers by
any Letter of Credit Issuer or such Participant (a copy of which notice shall
be sent by such Letter of Credit Issuer or such Participant to the
Administrative Agent), the Borrowers shall pay to such Letter of Credit Issuer
or such Participant such additional amount or amounts as will compensate such
Letter of Credit Issuer or such Participant for such increased cost or reduction.  A certificate submitted to the Borrowers by
such Letter of Credit Issuer or such Participant, as the case may be (a copy of
which certificate shall be sent by such Letter of Credit Issuer or such
Participant to the Administrative Agent), setting forth the basis for the
determination of such additional amount or amounts necessary to compensate such
Letter of Credit Issuer or such Participant as aforesaid shall be conclusive
and binding on the Borrowers absent manifest error, although the failure to
deliver any such certificate shall not release or diminish any of the Borrowers’
obligations to pay additional amounts pursuant to this Section 1A.06 upon
the subsequent receipt thereof.


 


1A.07      Cash Collateral.  If, as of the Maturity Date any Letter of
Credit remains outstanding, the Borrowers shall immediately cash collateralize
such Letters of Credit by depositing with the Administrative Agent cash
collateral in an amount equal to 105% of the Stated Amount of such Letters of
Credit.


 


SECTION 2.              Fees; Voluntary Reduction of Commitments and Mandatory Adjustments of
Commitments, etc.


 


2.01         Fees.  (a)  The Borrowers agree, jointly and
severally, to pay to the Administrative Agent, for the account of each
Non-Defaulting Lender that is not an Impacted Lender, for the period from and
including the Closing Date to but not including the Termination Date, an unused
line fee (the “Unused Line Fee”) computed for each day at the rate per
annum 


 


16

















 


equal
to one half of one percent (0.50%) on the Unutilized Revolving Commitment of
such Lender on such day.  Such Unused
Line Fee shall be due and payable monthly in arrears on the last Business Day
of each calendar month and on the Termination Date.


 


(b)           So long as any Letter of
Credit is outstanding and has not been fully collateralized pursuant to Section 3.02(A)(a) and/or
Section 8, the Borrowers agree, jointly and severally, to pay to the
Administrative Agent, for the account of each Non-Defaulting Lender that is not
an Impacted Lender, pro rata on the basis of their
respective Percentages, a fee in respect of each such Letter of Credit (the “Letter
of Credit Fee”) computed for each day at a per annum rate equal to the
Eurodollar Margin multiplied by the Stated Amount of all Letters of Credit
outstanding on such day (less any amount thereof as to which Section 1A.01(c) Arrangements
are in place).  Accrued Letter of Credit
Fees shall be due and payable monthly in arrears on the last Business Day of
each calendar month and on the Termination Date.


 


(c)           So long as any Letter of
Credit is outstanding and has not been fully collateralized pursuant to Section 3.02(A)(a) and/or
Section 8, the Borrowers agree, jointly and severally, to pay to the
respective Letter of Credit Issuer a fee in respect of each such Letter of
Credit issued by it (the “Facing Fee”) computed for each day at the rate
of 0.25% per annum on the Stated Amount of all such Letters of Credit
outstanding on such day; provided that there will be a minimum Facing
Fee per year for each Letter of Credit of $500 (which is not an additional
fee).  Accrued Facing Fees shall be due
and payable monthly in arrears on the last Business Day of each calendar month
and on the Termination Date.


 


(d)           The Borrowers agree, jointly
and severally, to pay directly to the respective Letter of Credit Issuer upon
each issuance, renewal or extension of, payment under, and/or amendment of, a
Letter of Credit such amount, if any, as shall at the time of such issuance,
renewal, extension, payment or amendment be the sum of all administrative
charges, fees and expenses which such Letter of Credit Issuer then customarily
charges for issuances of, payments under or amendments of, letters of credit
issued by it.


 


(e)           The Borrowers agree, jointly
and severally, to pay to the Administrative Agent, for the account of each
Lender, pro rata on the basis of their respective
Percentages, an upfront fee (the “Upfront Fee”) in an aggregate amount
equal to $1,500,000.  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 ($1,100,000) shall be payable in full on the date
the Final Order is entered.


 


(f)            The Borrowers shall pay to
each of the Arranger and the Administrative Agent, in each case for its own
account, such other fees as agreed to among the Borrowers, the Arranger and the
Administrative Agent, when and as due.


 


(g)           All computations of Fees
shall be made in accordance with Section 11.07(b).


 


2.02         Voluntary Reduction of
Revolving Commitments.  Upon
at least three Business Days’ prior written notice (or telephonic notice
confirmed in writing) to the 


 


17

















 


Administrative
Agent at its Notice Office (which notice shall be deemed to be given on a
certain day only if given before 2:00 P.M. (New York time) on such day and
shall be promptly transmitted by the Administrative Agent to each of the
Lenders), the Borrowers shall have the right, without premium or penalty, to
reduce, in whole or in part, the Total Unutilized Revolving Commitment; provided
that (w) any such partial reduction shall apply to proportionately and
permanently reduce the Revolving Commitments of each Lender, (x) no such
reduction shall reduce any Lender’s Revolving Commitment by an amount greater
than the then Unutilized Revolving Commitment of such Lender and (y) any
partial reduction pursuant to this Section 2.02 shall be in integral
multiples of $500,000.


 


2.03         Mandatory Adjustments of
Revolving Commitments, etc.  The Total Revolving Commitment shall
terminate in its entirety on the Termination Date.


 


SECTION 3.              Payments.


 


3.01         Voluntary
Prepayments.  The Borrowers
shall have the right to prepay Loans, in whole or in part, from time to time on
the following terms and conditions:  (i) the
Borrowers shall give the Administrative Agent at the Payment Office written
notice (or telephonic notice promptly confirmed in writing) of its intent to
prepay the Loans, the amount of such prepayment and (in the case of Eurodollar
Loans) the specific Borrowing(s) pursuant to which made, which notice
shall be given by the Borrowers prior to 12:00 Noon (New York time) at least one
Business Day prior to the date of such prepayment with respect to Base Rate
Loans and at least three Business Days prior to the date of such prepayment
with respect to Eurodollar Loans, and which notice shall promptly be
transmitted by the Administrative Agent to each of the Lenders; (ii) each
partial prepayment of any Borrowing shall be in an aggregate principal amount
of at least $500,000; provided that no partial prepayment of Eurodollar
Loans made pursuant to a Borrowing shall reduce the aggregate principal amount
of the Loans outstanding pursuant to such Borrowing to an amount less than the
Minimum Borrowing Amount applicable thereto; (iii) the Borrowers may
designate the Types of Loans which are to be prepaid and the specific Borrowing(s) to
which made; provided that at the Borrowers’ election in connection with
any prepayment of Loans pursuant to this Section 3.01, such prepayment
shall not be applied to any Loans of a Defaulting Lender; and (iv) at the
time of any prepayment of Eurodollar Loans pursuant to this Section 3.01
on any date other than the last day of the Interest Period applicable thereto,
the Borrowers shall pay the amounts required pursuant to Section 1.11.


 


3.02         Mandatory Prepayments.


 


(A)          Requirements:


 


(a) (i) 
If on any date (and after giving effect to all other repayments on such date)
the sum of (I) the aggregate outstanding principal amount of Loans made by
Non-Defaulting Lenders and (II) the Letter of Credit Outstandings (less
any amount thereof as to which Section 1A.01(c) Arrangements are in
place) exceeds the Adjusted Total Available Revolving Commitment as then in
effect, the Borrowers shall repay on such date the principal of outstanding
Loans of Non-Defaulting Lenders in an aggregate amount equal to such excess.  If, after giving effect to such repayment or
repayments, the Letter of Credit Outstandings (less any amount thereof as to
which Section 1A.01(c) Arrangements are in place) exceeds the
Adjusted


 


18














 


Total
Available Revolving Commitment then in effect, the Borrowers shall pay to the
Collateral Agent an amount in cash and/or Cash Equivalents equal to such excess
and the Collateral Agent shall hold such payment as security for the
obligations of the Borrowers in respect of Letters of Credit owing to
Non-Defaulting Lenders pursuant to a cash collateral agreement to be entered
into in form and substance reasonably satisfactory to the Collateral Agent
(which shall permit certain investments in Cash Equivalents reasonably
satisfactory to the Collateral Agent, until all proceeds are applied to such
secured obligations or until all Letters of Credit so secured expire undrawn,
at which time such amount shall be returned to the Borrowers).


 


(ii)           On
any date on which the aggregate outstanding principal amount of the Loans made
by any Defaulting Lender exceeds the Available Revolving Commitment of such
Defaulting Lender, the Borrowers shall prepay on such date principal of
outstanding Loans of such Defaulting Lender in an amount equal to such excess.


 


(b)           To
the extent not theretofore repaid pursuant to the provisions of this Agreement,
all outstanding Loans, plus all accrued but unpaid interest thereon, shall be
repaid in full on the Termination Date.


 


(B)           Application:


 


With respect to each prepayment of Loans required by
Section 3.02(A), the Borrowers may designate the Types of Loans which are
to be prepaid; provided that (i) if any prepayment of Eurodollar
Loans made pursuant to a single Borrowing shall reduce the outstanding Loans
made pursuant to such Borrowing to an amount less than the Minimum Borrowing
Amount for such Borrowing, such Borrowing shall be immediately converted into
Base Rate Loans; (ii) except for the differing treatments of Defaulting
Lenders and Non-Defaulting Lenders as expressly provided in Section 3.02(A)(a),
each prepayment of any Loans made pursuant to a given Borrowing shall be
applied pro rata among such Loans; (iii) repayments of Eurodollar Loans
pursuant to this Section 3.02 may only be made on the last day of an
Interest Period applicable thereto unless (x) all Eurodollar Loans with
Interest Periods ending on such date of required repayment and all Base Rate
Loans have been paid in full and/or (y) concurrently with such repayment,
the Borrowers pay all breakage costs and other amounts owing to each Lender
pursuant to Section 1.11.  In the
absence of a designation by the Borrowers as described in the preceding
sentence, the Administrative Agent shall, subject to the above, make such
designation in its sole discretion with a view, but no obligation, to minimize
breakage costs owing under Section 1.11. 
Notwithstanding the foregoing provisions of this Section 3.02, if
at any time the mandatory repayment of Loans pursuant to this Section 3.02
would result, after giving effect to the procedures set forth in clause (iii) of
the second preceding sentence, in the Borrowers incurring breakage costs under Section 1.11
as a result of Eurodollar Loans being repaid other than on the last day of an
Interest Period applicable thereto (any such Eurodollar Loans “Affected
Loans”), the Borrowers may (in lieu of making such payment) elect, by
written notice to the Administrative Agent, to have the provisions of the
following sentence be applicable.  At the
time any Affected Loans are otherwise required to be prepaid, the Borrowers may
elect to deposit 100% (or such lesser percentage elected by the Borrowers as
not being repaid) of the principal amounts that otherwise would have been paid
in respect of the Affected Loans with the Administrative Agent to be held as
security for the obligations of the Borrowers hereunder pursuant to a cash
collateral agreement to be entered into in form and substance


 


19

















 


satisfactory
to the Administrative Agent, with such cash collateral to be released from such
cash collateral account (and applied to repay the principal amount of such
Eurodollar Loans) upon each occurrence thereafter of the last day of an
Interest Period applicable to Eurodollar Loans (or such earlier date or dates
as shall be requested by the Borrowers), with the amount to be so released and
applied on the last day of each Interest Period to be the amount of such
Eurodollar Loans to which such Interest Period applies (or, if less, the amount
remaining in such cash collateral account).


 


3.03         Method
and Place of Payment.  Except as
otherwise specifically provided herein, all payments under this Agreement shall
be made to the Administrative Agent for the ratable account of the Lenders
entitled thereto, not later than 1:00 P.M. 
(New York time) on the date when due and shall be made in immediately
available funds and in Dollars at the Payment Office, it being understood that
written notice by the Borrowers to the Administrative Agent to make a payment
from the funds in any Borrower’s account at the Payment Office shall constitute
the making of such payment to the extent of such funds held in such
account.  Any payments under this
Agreement which are made later than 1:00 P.M.  (New York time) shall be deemed to have been
made on the next succeeding Business Day. 
Whenever any payment to be made hereunder shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in
effect immediately prior to such extension.


 


3.04         Net
Payments.  (a)  All payments
made by the Borrowers hereunder and/or under any Note will be made without
setoff, counterclaim or other defense. 
Except as provided in Section 3.04(b) and Section 3.04(c),
and provided Section 3.04(b) and Section 3.04(c) are
complied with, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding, (i) any
tax imposed on or measured by the net income or net profits or franchise taxes
(in lieu of net income taxes or net profit taxes) of a Lender pursuant to the
laws of the jurisdiction in which it is organized or the jurisdiction in which
the principal office or applicable lending office of such Lender is located or
any subdivision thereof or therein and (ii) any branch profits taxes
imposed by the United States or any similar tax imposed by any other
jurisdiction in which any Borrower is located) and all interest, penalties or
similar liabilities with respect to such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges (all such non-excluded taxes,
levies, imposts, duties, fees, assessments or other charges being referred to
collectively as “Taxes”).  If any
Taxes are so levied or imposed, the Borrowers agree to (i) pay the full
amount of such Taxes to the applicable governmental authority, and (ii) pay
such additional amounts to the Lenders as may be necessary so that every
payment of all amounts due under this Agreement and/or under any Note, after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein or therein, provided this clause (ii) in
this Section 3.04(a) shall apply if Section 3.04(b) and Section 3.04(c) are
complied with.  The Borrowers will
furnish to the Administrative Agent within 45 days after the date the payment
of any Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by a Borrower. 
The Borrowers agree, jointly and severally, to indemnify and hold
harmless each Lender, and reimburse such Lender upon its written request,


 


20

















 


for
the amount of any Taxes so levied or imposed and paid by such Lender (other
than penalties and interest attributable to the gross negligence or willful
misconduct of the Administrative Agent or Lender).


 


(b)           Each
Lender that is not a United States person (as such term is defined in Section 7701(a)(30)
of the Code) for U.S. Federal income tax purposes agrees to deliver to the
Borrowers and the Administrative Agent on or prior to the Closing Date, or in
the case of a Lender that is an assignee or transferee of an interest under
this Agreement pursuant to Section 1.13 or 11.04 (unless the respective
Lender was already a Lender hereunder immediately prior to such assignment or
transfer), on the date of such assignment or transfer to such Lender, or in the
case of New Lending Office by a Lender, the date such New Lending Office is
designated (i) two accurate and complete original signed copies of
Internal Revenue Service Form W-8ECI or W-8BEN (with respect to a complete
exemption under an income tax treaty) (or successor form)) certifying to such
Lender’s entitlement as of such date to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, or (ii) if the Lender or beneficial owner is not (A) a
“bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a
10-percent shareholder of a Borrower within the meaning of Section 881(c)(3)(B) of
the Code, and (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of
the Code and cannot deliver either Internal Revenue Service Form W-8ECI or
W-8BEN (with respect to a complete exemption under an income tax treaty)
pursuant to clause (i) above, (x) a certificate substantially in
the form of Exhibit D (any such certificate, a “Section 3.04
Certificate”) and (y) two accurate and complete original signed copies
of Internal Revenue Service Form W-8BEN (with respect to the portfolio
interest exemption) (or successor form) certifying to such Lender’s entitlement
as of such date to a complete exemption from United States withholding tax with
respect to payments of interest to be made under this Agreement and under any
Note.  In addition, each Lender agrees
that from time to time after the Closing Date, when a lapse of time or change
in circumstances renders the previous certification obsolete or inaccurate in
any material respect, it will deliver to the Borrowers and the Administrative
Agent two new accurate and complete original signed copies of Internal Revenue
Service Form W-8ECI or W-8BEN (with respect to the benefits of any income
tax treaty), or Form W-8BEN (with respect to the portfolio interest
exemption) and a Section 3.04 Certificate, as the case may be, and such
other forms as may be required in order to confirm or establish the entitlement
of such Lender to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement and any Note, or
it shall immediately notify the Borrowers and the Administrative Agent of its
inability to deliver any such Form or Certificate, in which case such
Lender shall not be required to deliver any such Form or Certificate
pursuant to this Section 3.04(b). 
Notwithstanding anything to the contrary contained in Section 3.04(a),
but subject to Section 11.04(b) and the immediately succeeding
sentence, (x) the Borrowers shall be entitled, to the extent it is
required to do so by law, to deduct or withhold income or similar taxes imposed
by the United States (or any political subdivision or taxing authority thereof
or therein) from interest, Fees or other amounts payable by it hereunder for
the account of any Lender which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes to the extent that such Lender has not provided to the Borrowers U.S.
Internal Revenue Service Forms that establish a complete exemption from such
deduction or withholding and (y) the Borrowers shall not be obligated
pursuant to Section 3.04(a) hereof to gross-up payments to be made by
it to a Lender in respect of income or similar taxes imposed by the United
States (I) if such Lender has not


 


21

















 


provided
to the Borrowers the Internal Revenue Service Forms required to be provided to
the Borrowers pursuant to this Section 3.04(b) or Section 3.04(c) or
(II) in the case of a payment, other than interest, to a Lender described
in clause (ii) above, to the extent that such Forms do not establish
a complete exemption from withholding of such taxes.  If the Borrowers are required to pay any
additional amounts to a Lender or indemnify a Lender pursuant to this Section 3.04
(prior to the application of this sentence), notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this Section 3.04
and except as set forth in Section 11.04(b), the Borrowers agree, jointly
and severally, to pay any additional amounts and to indemnify each Lender in
the manner set forth in Section 3.04(a) (without regard to the
identity of the jurisdiction requiring the deduction or withholding) in respect
of any amounts deducted or withheld by it as described in the immediately
preceding sentence as a result of any changes after the Closing Date (or the
date a person becomes a Lender under this Agreement, as applicable) in any
applicable law, treaty, governmental rule, regulation, guideline or order, or
in the interpretation thereof, relating to the deducting or withholding of such
income or similar taxes.


 


(c)           Any Lender that is a
United States person and that may not be treated as an exempt recipient based
on the indicators described in Treasury Regulation Section 1.6049-4(c)(1)(ii) shall
deliver to the Borrowers on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter as prescribed by
applicable law or upon the request of the Borrowers), two duly executed and
properly completed copies of U.S. Internal Revenue Service Form W-9, or
any successor form that such Lender is entitled to provide at such time in
order to comply with United States back-up withholding requirements.  Notwithstanding any other provision in this Section 3.04,
no amount shall be required to be paid to any Lender under this Section 3.04
with respect to backup withholding if there has been a notified underreporting
pursuant to Section 3406(a)(1)(C) of the Code (or similar provision
or successor provision).


 


(d)           If the Borrowers pay
any additional amount under this Section 3.04 to a Lender and such Lender
determines in its sole discretion (but acting in good faith) that it has
actually received or realized in connection therewith any refund or any
reduction of, or credit against, its Tax liabilities in or with respect to the taxable
year in which the additional amount is paid (or would have been paid but for
the fact that such refund was netted against any additional Tax liability of
the Lender), such Lender shall pay to the Borrowers an amount that the Lender
shall, in its sole discretion (but acting in good faith), determine is equal to
such net benefit, after tax, which was obtained by the Lender in such year as a
consequence of such refund, reduction or credit.


 


SECTION 4.              Conditions Precedent.


 


4.01         Conditions
Precedent to Closing Date and the Initial Incurrence of Loans.  The obligation of the Lenders to make Loans
hereunder and the obligation of each Letter of Credit Issuer to issue Letters
of Credit hereunder, in each case on the Closing Date, are subject to the
satisfaction of each of the following conditions at such time:


 


(a)           Certain
Documents.  The Administrative Agent
shall have received each of the following, each dated the Closing Date unless
otherwise indicated or agreed to by the


 


22

















 


Administrative
Agent in its reasonable discretion, in form and substance reasonably
satisfactory to the Administrative Agent:


 


(i)            this
Agreement, duly executed and delivered by the Borrowers and, for the account of
each Lender requesting the same, a Note of the Borrowers conforming to the
requirements set forth herein;


 


(ii)           the Pledge
Agreement, in the form of Exhibit G (as modified, amended, restated and/or
supplemented from time to time in accordance with the terms thereof and hereof,
the “Pledge Agreement”) duly executed and delivered by FairPoint and
each Subsidiary listed on Annex IX;


 


(iii)          the Security
Agreement, in the form of Exhibit I (as modified, amended, restated and/or
supplemented from time to time in accordance with the terms thereof and hereof,
the “Security Agreement”) duly executed and delivered by the Borrowers
and the Guarantors, together with each of the following:


 


(A)          certified
copies of Requests for Information or Copies (Form UCC-11), or equivalent
reports, each of a recent date, listing all effective financing statements that
name any Credit Party as debtor and that are filed in the state or other
jurisdiction of incorporation or organization of such Credit Party, together
with copies of such other financing statements that name any Credit Party as
debtor (none of which shall cover any of the Collateral, except to the extent
evidencing Permitted Liens); and


 


(B)           evidence that all
other actions necessary or, in the reasonable opinion of the Collateral Agent,
desirable to create, maintain, effect, perfect, preserve, and protect the
security interests purported to be created by the Security Documents have been
taken; and


 


(iv)          the
Subsidiary Guaranty, in the form of Exhibit J hereto (as modified,
amended, restated and/or supplemented from time to time in accordance with the
terms hereof and thereof, the “Subsidiary Guaranty”) duly authorized and
executed by each Subsidiary of FairPoint listed on Annex X.


 


(b)           Opinions
of Counsel.  The Administrative Agent
shall have received from Paul, Hastings, Janofsky & Walker LLP,
special counsel to the Credit Parties, an opinion addressed to the
Administrative Agent, the Collateral Agent and each of the Lenders and dated
the Closing Date substantially in the form of Exhibit H.


 


(c)           Company
Proceedings.  The Administrative
Agent shall have received a certificate, dated the Closing Date, signed by an
Authorized Officer in the form of Exhibit K with appropriate insertions
and deletions, together with (x) copies of the certificate of incorporation,
by-laws or other organizational documents of each Credit Party and (y) the
resolutions of each Credit Party referred to in such certificate and all of the
foregoing (including each such organizational document) shall be reasonably
satisfactory to the Administrative Agent and (z) a statement that all of
the applicable conditions set forth in Section 4.02(b) have been
satisfied as of such date.


 


23

















 


(d)           Fees.  The Borrowers shall have paid to the Arranger,
the Administrative Agent and the Lenders all Fees and expenses agreed upon to
be paid on or prior to the Closing Date (for which, in the case of legal fees
and expenses, the Borrowers shall have received in advance a written invoice in
reasonable detail).


 


(e)           Patriot Act.  The Administrative Agent shall have received
all documentation and other information required by bank regulatory authorities
under applicable “know-your-customer” and anti-money laundering rules and
regulations, including the Patriot Act.


 


(f)            Insurance.  The Administrative Agent shall have received
evidence reasonably satisfactory to it that all insurance policies required to
be maintained pursuant to Section 6.03 are in full force and effect,
including, but not limited to, naming the Collateral Agent as additional
insured (in the case of liability insurance) or loss payee or mortgagee, as its
interest may appear (in the case of hazard insurance).


 


(g)           Budget.  The Administrative Agent and each Lender
shall have received and been reasonably satisfied with the budget (the “Budget”),
in the form of Exhibit L, which 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.


 


(h)           Plan Support
Agreement.  The Administrative Agent
and the Lenders shall have received the Plan Support Agreement (as modified,
amended, restated and/or supplemented from time to time in accordance with the
terms thereof, the “Plan Support Agreement”) duly executed and delivered
by FairPoint and the other Debtors, which Plan Support Agreement shall be in
form and substance satisfactory to the “Consenting Lenders” party thereto.


 


(i)            Proceedings.  All proceedings taken in connection with the
execution of this Agreement, all other Credit Documents and all documents and
papers related thereto 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 hereto and thereto) shall be
reasonably satisfactory in form, scope and substance to the Administrative
Agent and the Lenders.


 


(j)            First Day Orders.  All “First Day Orders” or other orders
entered or to be entered at the time of the Petition Date shall be reasonably
satisfactory in form and substance to the Administrative Agent and the Lenders
in all respects.


 


(k)           Interim Order.  The Interim Order shall have been entered by
the Bankruptcy Court, within seven (7) Business Days of the Filing Date
(but in any event not later than the Closing Date), which Interim Order shall
be in form and substance satisfactory to the Administrative Agent and the
Lenders and shall have been entered on such prior notice to such parties in
accordance with Bankruptcy Rule 4001 (as determined by the Administrative
Agent), and the Administrative Agent shall have received a copy of same, and
such order shall be in full force and effect and shall not have been (i) stayed,
vacated, revised or rescinded or (ii) without the prior written consent of
the Administrative Agent and the Lenders, in their sole discretion, amended or
modified.


 


24

















 


(l)            Good Standing
Certificates.  The Administrative
Agent shall have received such documents and certifications as the
Administrative Agent may reasonably require to evidence that each Credit Party
is duly organized or formed, and is validly existing, in good standing and
qualified to engage in business in its jurisdiction of incorporation or
organization and each other jurisdiction each jurisdiction where its ownership,
lease or operation of properties or the conduct of its business requires such
qualification, except to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect.


 


4.02             Conditions Precedent to All Loans.  The obligation of each Lender to make Loans,
and of each Letter of Credit Issuer to issue Letters of Credit, is subject, at
the time of the making of each such Loan and the issuance of each such Letter
of Credit, to the satisfaction of the following conditions:


 


(a)           Notice
of Borrowing.  The Administrative
Agent shall have received a Notice of Borrowing meeting the requirements of Section 1.03
or a Letter of Credit Application meeting the requirements of Section 1A.03.


 


(b)           Representations
and Warranties; No Default.  At the
time of each making of Loans and each issuance of a Letter of Credit and also
after giving effect thereto, (i) each of the representations and
warranties made by any Credit Party contained herein or in the other Credit
Documents shall be true and correct in all material respects, in each case on
and as of such date as if made on and as of such date, except to the extent
that such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall be true and correct as
of such earlier date and (ii) there shall exist no Default or Event of
Default.


 


(c)           Financing Orders.  The Interim Order or, following the entry of
the Final Order, shall be in full force and effect, and shall not have been
vacated, reversed or rescinded, and an appeal of such order shall not have been
timely filed and a stay of such order pending appeal shall not be presently
effective, and without the prior written consent of the Administrative Agent,
such order shall not have been amended or modified.


 


(d)           Fees.  The Borrowers shall have paid to the
Administrative Agent and the Lenders all Fees then due and payable as provided
for herein or in any of the other Credit Documents.


 


The occurrence of the Closing Date and the
acceptance of the benefits or proceeds of each Borrowing by and issuance of a
Letter of Credit on behalf of the Borrowers shall constitute a representation
and warranty by the Borrowers to the Administrative Agent, each Letter of
Credit Issuer and each of the Lenders that all the conditions specified in Section 4
and applicable to such Borrowing or issuance of such Letter of Credit have been
satisfied as of that time.


 


SECTION 5.              Representations, Warranties and
Agreements.  In order to
induce the Lenders to enter into this Agreement, to make the Loans and to issue
and/or participate in Letters of Credit, the Borrowers make the following
representations and warranties to, and


 


25

















 


agreements with, the Lenders, all of which shall
survive the execution and delivery of this Agreement, the making of the Loans
and the issuance of the Letters of Credit:


 


5.01         Company
Status.  Each Borrower and each of
its Subsidiaries (i) is a duly organized and validly existing Company and
is in good standing, in each case under the laws of the jurisdiction of its
organization and has the Company power and authority to own its property and
assets and to transact the business in which it is engaged, and (ii) is
duly qualified and is authorized to do business and, to the extent relevant, is
in good standing in all jurisdictions where it is required to be so qualified
except where the failure to be so qualified, authorized or in good standing
would not be reasonably likely to have a Material Adverse Effect.


 


5.02         Company
Power and Authority.  Each Credit
Party has the Company power and authority to execute, deliver and carry out the
terms and provisions of the Credit Documents to which it is a party and has
taken all necessary action to authorize the execution, delivery and performance
of the Credit Documents to which it is a party. 
Each Credit Party has duly executed and delivered each Credit Document to
which it is a party and each such Credit Document, subject to the Financing
Orders, constitutes the legal, valid and binding obligation of such Person
enforceable in accordance with its terms.


 


5.03         No
Violation.  Neither the execution,
delivery or performance by any Credit Party of the Credit Documents to which it
is a party nor compliance with the terms and provisions thereof, (i) will
contravene any applicable provision of any law, statute, rule, regulation,
order, writ, injunction or decree of any court or governmental instrumentality,
(ii) will violate, conflict or be inconsistent with or result in any
breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or (other than pursuant to the Financing Orders and
the other Security Documents) result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
the Borrowers or any of their Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust or other material agreement or instrument to
which any Borrower or any of their Subsidiaries is a party or by which it or
any of its property or assets are bound or to which it may be subject (other
than existing Indebtedness set forth on Annex XI) or (iii) will
violate any provision of the organizational documents (including by-laws) of
any Borrower or any of their Subsidiaries.


 


5.04         Litigation.  Except for the Chapter 11 Cases, there
are no actions, suits or proceedings pending or, to the knowledge of the
Borrowers, threatened (i) with respect to any Credit Document, (ii) with
respect to the Transaction or (iii) with respect to the Borrowers or any
of their Subsidiaries that have had, or that are reasonably likely to have, a
Material Adverse Effect.  Additionally,
there does not exist any judgment, order or injunction prohibiting or imposing
material adverse conditions upon the incurrence of any Credit Event.


 


5.05         Use
of Proceeds; Margin Regulations.  (a) 
The proceeds of the Loans shall be used by the Borrowers in the Chapter 11
Cases for (i) general working capital purposes of the Borrowers and their
Subsidiaries (including to fund Consolidated Capital Expenditures in compliance
with Section 7.05); (ii) paying amounts owed to the Administrative
Agent, the Collateral Agent and the Lenders from time to time under this
Agreement and the other Credit Documents; (iii) paying reasonable
professional fees and expenses payable to the Prepetition


 


26

















 


Agent
under the Prepetition Credit Agreement; (iv) 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 Administrative Agent and the Lenders; and (v) paying fees and
expenses of Professionals, subject to the Carve Out, 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 October 26, 2009.


 


(b)           The
Letters of Credit shall be issued for financing arising out of the general
corporate needs and purposes of the Borrowers and their Subsidiaries (including,
without limitation, to replace Existing Letters of Credit).


 


(c)           Neither the making
of any Loan hereunder, nor the use of the proceeds thereof, nor the occurrence
of any other Credit Event, will violate the provisions of Regulation T, U
or X of the Board of Governors of the Federal Reserve System.  No part of any Credit Event (or the proceeds
thereof) will be used to purchase or carry any Margin Stock or to extend credit
for the purpose of purchasing or carrying any Margin Stock.


 


(d)           The fair market
value of all Margin Stock owned by the Borrowers and their Subsidiaries (other
than the capital stock of the Borrowers held in treasury) on the Closing Date
does not exceed $5,000,000.


 


5.06         Governmental
Approvals.  Except for such consents,
approvals and filings as have been obtained or made on or prior to the Closing
Date and remain in full force and effect and, subject to the entry of the
Financing Orders, no order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
foreign or domestic governmental or public body or authority (including,
without limitation, the FCC and applicable PUCs), or any subdivision thereof,
is required to authorize or is required in connection with (i) the
execution, delivery and performance of any Credit Document or (ii) the
legality, validity, binding effect or enforceability of any Credit Document.


 


5.07         Investment
Company Act.  No Borrower or any of
its Subsidiaries is an “investment company” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as amended.


 


5.08         True
and Complete Disclosure.  All factual
information (taken as a whole), other than the projections, any budgets
(including the Budget), forecasts, estimates and other forward-looking
statements and any information of a general economic or industry nature, when
furnished by or on behalf of the Borrowers in writing to the Lenders for
purposes of or in connection with this Agreement or any transaction
contemplated herein is, and all other such factual information (taken as a
whole) hereafter furnished by or on behalf of any Credit Party in writing to
the Lenders hereunder does not or will not contain any untrue statement of
material fact or omit to state any material fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided.  The projections and pro forma financial
information contained in such materials are based on good faith estimates and
assumptions believed by the Borrowers to be reasonable at the time made (it
being recognized by the Lenders that such projections as to future events are
not to


 


27

















 


be
viewed as facts and that actual results during the period or periods covered by
any such projections may differ from the projected results and that such
assumptions and estimates may prove to be inaccurate).


 


5.09         Financial
Condition; Financial Statements.  (a) 
The audited consolidated statements of financial condition of FairPoint and its
Subsidiaries at December 31, 2008 and the related consolidated statements
of income and cash flows and changes in shareholders’ equity of FairPoint and
its Subsidiaries for the fiscal year of FairPoint ended on such date, furnished
to the Lenders prior to the Closing Date, present fairly in all material
respects the consolidated financial position of FairPoint and its Subsidiaries
at the date of said financial statements and the results for the period covered
thereby.  Such financial statements have
been prepared in accordance with GAAP and practices consistently applied except
to the extent provided in the notes to said financial statements.  Nothing has occurred since December 31,
2008 that has had, or is reasonably likely to have, a Material Adverse Effect
except (i) the commencement of the Chapter 11 Case, (ii) the
continuation of the circumstances giving rise to the filing thereof or as a
result thereof and (iii) such events that have been disclosed (in writing)
to the Lenders prior to the Closing Date or that have been publicly disclosed
by FairPoint.


 


(b)           After
giving effect to the making of the Loans to be made on the Closing Date, on the
Closing Date the Borrowers and their Subsidiaries have no Indebtedness except (a) the
Obligations and (b) Scheduled Existing Indebtedness.


 


5.10         Security
Interests. Subject to the entry of the Interim Order, the Security
Documents create as security for the obligations purported to be secured
thereby, a valid and enforceable Lien on all of the Collateral subject thereto
at such time, and such Liens constitute perfected and continuing Liens on all
such Collateral, having priority over all other liens on such Collateral, except
for Specified Liens, securing all the Obligations, and enforceable against such
Credit Party and all third parties. 
Pursuant to the terms of the Interim Order and the Final Order, no
filing or other action will be necessary to perfect or protect such Liens and
security interests.


 


5.11         Compliance
With Statutes.  The Borrowers and
their Subsidiaries are in compliance with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property, except such non-compliance as has not had, and is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect.


 


5.12         Tax
Returns and Payments.  The Borrowers
and their Subsidiaries have (a) filed all U.S. federal income tax returns
and all other material tax returns, domestic and foreign, required to be filed
by them and (b) have paid when due all U.S. federal, state and foreign
income taxes and all other material taxes and assessments payable by them that
have arisen after the Petition Date or that are the subject of a “First Day
Order”, except for those contested in good faith and adequately disclosed and
fully provided for on the financial statements of the Borrowers and their
Subsidiaries if and to the extent required by GAAP.  There is no action, suit, proceeding,
investigation, audit, or claim now pending and no Borrower has received any
notice by a taxing authority of any future proceeding, investigation, audit or
claim,


 


28














 


regarding
any taxes relating to a Borrower or any of its Subsidiaries which is reasonably
likely to have a Material Adverse Effect.


 


5.13         Compliance
with ERISA.  (i) Annex IV
sets forth each Plan and Multiemployer Plan; (ii) except as set forth on
Annex IV, each Plan (and each related trust, insurance contract or fund)
is in substantial compliance with its terms and with all applicable laws,
including without limitation ERISA and the Code; except as set forth on
Annex IV, each Plan which is intended to be qualified under Section 401(a) of
the Code has received a determination letter from the Internal Revenue Service
to the effect that it meets the requirements of Section 401(a) of the
Code; other than the commencement of the Chapter 11 Cases and except as set
forth on Annex IV, no Reportable Event has occurred with respect to a
Plan; to the knowledge of the Borrowers, no Multiemployer Plan is insolvent or
in reorganization; except as set forth on Annex IV, no Plan has an
Unfunded Current Liability which, when added to the aggregate amount of
Unfunded Current Liabilities with respect to all other Plans, would be
reasonably likely to have a Material Adverse Effect; no Plan which is subject
to Section 412 of the Code or Section 302 of ERISA has an accumulated
funding deficiency, within the meaning of such sections of the Code or ERISA,
or has applied for or received a waiver of an accumulated funding deficiency or
an extension of any amortization period, within the meaning of Section 412
of the Code or Section 303 or 304 of ERISA; all contributions required to
be made with respect to a Plan or a Multiemployer Plan have been timely made;
no Borrower or any Subsidiary thereof or any ERISA Affiliate has incurred any
material liability (including any indirect, contingent or secondary liability)
to or on account of a Plan or a Multiemployer Plan pursuant to Section 409,
502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29),
4971 or 4975 of the Code or reasonably expects to incur any such liability
under any of the foregoing sections with respect to any Plan or any
Multiemployer Plan; no condition exists which presents a material risk to the
Borrowers or any Subsidiary or any ERISA Affiliate of incurring a material
liability to or on account of a Plan or, to the knowledge of the Borrowers, of
any Multiemployer Plan pursuant to the foregoing provisions of ERISA and the
Code; no proceedings have been instituted to terminate or appoint a trustee to
administer any Plan which is subject to Title IV of ERISA; except as would
not result in any material liability, no action, suit, proceeding, hearing,
audit or investigation with respect to the administration, operation or the
investment of assets of any Plan (other than routine claims for benefits) is
pending, or to the best knowledge of the Borrowers expected or threatened;
using actuarial assumptions and computation methods consistent with Part 1
of subtitle E of Title IV of ERISA, the aggregate liabilities of the
Borrowers and their Subsidiaries and its ERISA Affiliates to all Multiemployer
Plans in the event of a complete withdrawal therefrom, as of the close of the
most recent fiscal year of each such Plan ended prior to the date of the most
recent Loan incurrence, would not exceed $500,000; except as would not result
in a material liability, each group health plan (as defined in Section 607(1) of
ERISA or Section 4980B(g)(2) of the Code) which covers or has covered
employees or former employees of any Borrower, any Subsidiary or any ERISA
Affiliate has at all times been operated in compliance with the provisions of Part 6
of subtitle B of Title I of ERISA and Section 4980B of the Code;
no Lien imposed under the Code or ERISA on the assets of any Borrower or any
Subsidiary or any ERISA Affiliate exists or is reasonably likely to arise on
account of any Plan; and the Borrowers and their Subsidiaries do not maintain
or contribute to any employee welfare benefit plan (as defined in Section 3(1) of
ERISA) which provides benefits to retired employees or other former employees
(other than as required by


 


29

















 


Section 601
of ERISA) or any Plan the obligations with respect to which could reasonably be
expected to have a Material Adverse Effect.


 


5.14         Subsidiaries.  On and as of the Closing Date, the Borrowers
have no Subsidiaries other than those Subsidiaries listed on Annex III,
which correctly sets forth, as of the Closing Date, the percentage ownership
(direct and indirect) of each Borrower in each class of capital stock or other
equity interests of each of its Subsidiaries and also identifies the direct
owner thereof.  All outstanding shares of
capital stock or other equity interests of each Subsidiary of the Borrowers
have been duly and validly issued, are fully paid and non-assessable and are
free of preemptive rights.  No Subsidiary
of the Borrowers has outstanding any securities convertible into or
exchangeable for its capital stock or other equity interests or outstanding any
right to subscribe for or to purchase, or any options or warrants for the
purchase of, or any agreement providing for the issuance (contingent or
otherwise) of or any calls, commitments or claims of any character relating to,
its capital stock or other equity interests or any stock appreciation or
similar rights.


 


5.15         Intellectual
Property.  Each Borrower and its
Subsidiaries owns or holds a valid transferable license to use all the patents,
trademarks, service marks, trade names, domain names, technology, know-how,
copyrights, licenses, franchises and formulas or rights with respect to the
foregoing, that are used in the operation of the business of such Borrower or
such Subsidiary as presently conducted and are material to such business where
the failure to own or hold a valid license is reasonably likely to have a
Material Adverse Effect.


 


5.16         Environmental
Matters.  The Borrowers and their
Subsidiaries are in material compliance with all applicable Environmental Laws
governing its business for which failure to comply is reasonably likely to have
a Material Adverse Effect, and no Borrower or any of its Subsidiaries is liable
for any material penalties, fines or forfeitures for failure to comply with any
of the foregoing in the manner set forth above. 
All licenses, permits, registrations or approvals required for the
business of the Borrowers and each of their Subsidiaries under any
Environmental Law have been secured and each Borrower and its Subsidiaries is
in substantial compliance therewith, except where the failure to secure or
comply with such licenses, permits, registrations or approvals the failure to
secure or to comply therewith is not reasonably likely to have a Material
Adverse Effect.  There are no
Environmental Claims pending or, to the knowledge of the Borrowers threatened,
against the Borrowers or any of their Subsidiaries with respect to which any
decision, ruling or finding is reasonably likely to have a Material Adverse
Effect.


 


5.17         Labor
Relations.  No Credit Party is
engaged in any unfair labor practice that is reasonably likely to have a
Material Adverse Effect.  There is (i) no
unfair labor practice complaint pending against the Borrowers or any of their
Subsidiaries or, to the Borrowers’ knowledge, threatened against any of them,
before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against any Borrowers or any of their Subsidiaries or, to the
Borrowers’ knowledge, threatened against any of them, (ii) no strike,
labor dispute, slowdown or stoppage pending against the Borrowers or any
of their Subsidiaries or, to the Borrowers’ knowledge, threatened against the
Borrowers or any of their Subsidiaries and (iii) no union representation
question, to the Borrowers’ knowledge, existing with respect to the employees
of any Borrowers or any of


 


30

















 


their
Subsidiaries and no union organizing activities, to the Borrowers’ knowledge,
are taking place, except with respect to any matter specified in
clause (i), (ii) or (iii) above, either individually or in the
aggregate, such as is not reasonably likely to have a Material Adverse Effect.


 


5.18         Capitalization.  On the Closing Date, the authorized capital
stock of FairPoint shall consist of (i) 200,000,000 shares of common
stock, $.01 par value per share, of which 90,015,551 shares are issued and
outstanding on the Closing Date and (ii) 100,000,000 shares of preferred
stock, $.01 per share, none of which is issued and outstanding on the Closing
Date.  All such outstanding shares have
been duly and validly issued, are fully paid and nonassessable and are free of
preemptive rights.  On the Closing Date,
the Borrowers do not have outstanding any securities convertible into or
exchangeable for its capital stock or outstanding any rights to subscribe for
or to purchase, or any options for the purchase of, or any agreement providing
for the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, its capital stock or any stock
appreciation or similar rights (other than as listed on Annex VIII).


 


5.19         Financing
Orders.  (a) The Credit Parties
are in compliance in all material respects with the terms and conditions of the
Interim Order or the Final Order, as applicable.


 


(b)           Each
of the Interim Order (with respect to the period prior to the entry of the
Final Order) or the Final Order (from after the date the Final Order is
entered) is in full force and effect and has not been vacated, reversed or
rescinded or, without the prior written consent of the Administrative Agent, in
its sole discretion, amended or modified and no appeal of such order has been
timely filed or, if timely filed, no stay pending such appeal is currently
effective.


 


5.20         Certain
Bankruptcy Matters.


 


(a)           Except
to the extent provided otherwise in the Interim Order or the Final Order (as
applicable), the Borrowers hereby agree that the Obligations shall (i) constitute
superpriority allowed administrative expense claims in the Chapter 11 Cases
having priority pursuant to Section 364(c)(1) of the Bankruptcy Code
over all administrative expense claims and unsecured claims against the
Borrowers now existing or hereafter arising, of any kind or nature whatsoever,
including, without limitation, all administrative expense claims of the kind
specified in Sections 503(b) and 507(b) of the Bankruptcy Code and
all superpriority administrative expense claims granted to any other Person,
subject, as to priority, only to the Carve Out, the establishment of which
superpriority shall have been approved and authorized by the Bankruptcy Court
and (ii) be secured pursuant to Sections 364(c)(2), (c)(3) and (d)(1) of
the Bankruptcy Code subject only to Specified Liens and, to the extent provided
in any of the Financing Orders, shall not be subject to claims against the
Collateral pursuant to Section 506(c) of the Bankruptcy Code.


 


(b)           The Collateral Agent’s
Liens and the administrative expense claim priority granted pursuant to clause (a) above
have been independently granted by the Credit Documents, and may be
independently granted by other Credit Documents heretofore or hereafter entered
into.  The Collateral Agent’s Liens and
the administrative expense claim priority granted


 


31

















 


pursuant
to clause (a) above, this Agreement, the Interim Order, the Final Order
and the other Credit Documents supplement each other, and the grants,
priorities, rights and remedies of the Lenders, the Administrative Agent and
the Collateral Agent hereunder and thereunder are cumulative.  In the event of a direct conflict between the
Interim Order or the Final Order, on the one hand, and any other Credit
Document, on the other hand, the Interim Order or the Final Order, as the case
may be, shall control.


 


(c)           Notwithstanding
anything to the contrary contained herein or elsewhere:


 


(i)            The
Collateral Agent’s Liens on the Collateral shall be deemed valid and perfected
by entry of the Interim Order and the Final Order, as the case may be, which
entry of the Interim Order shall have occurred on or prior to the Closing
Date.  The Collateral Agent, the
Administrative Agent and the Lenders shall not be required to file, register or
publish any financing statements, mortgages, hypothecs, notices of Lien or
similar instruments in any jurisdiction or filing or registration office, or to
take possession of any Collateral or to take any other action in order to
validate, render enforceable or perfect the Liens on Collateral granted by or
pursuant to this Agreement, the Interim Order, the Final Order or any other
Credit Document.  If the Collateral
Agent, the Administrative Agent or the Required Lenders shall, in its or their
sole discretion, from time to time elect to file, register or publish any such
financing statements, mortgages, hypothecs, notices of Lien or similar
instruments, take possession of any Collateral, or take any other action to
validate, render enforceable or perfect all or any portion of the Collateral
Agent’s Liens on the Collateral, all such documents and actions shall be deemed
to have been filed, registered, published or recorded or taken at the time and
on the date the Interim Order is entered.


 


(ii)           The Liens, lien
priorities, superpriority administrative expense claims and other rights and
remedies granted to the Collateral Agent and the Lenders pursuant to this
Agreement, the Interim Order, the Final Order or the other Credit Documents
(specifically including, but not limited to, the existence, perfection, enforceability
and priority of the Liens provided for herein and therein, and the
administrative expense claim priority provided herein and therein) shall not be
modified, altered or impaired in any manner by any other financing or extension
of credit or incurrence of debt by the Borrowers (pursuant to Section 364
of the Bankruptcy Code or otherwise), or by dismissal or conversion of the
Chapter 11 Cases, or by any other act or omission whatsoever.  Without limiting the generality of the
foregoing, notwithstanding any such order, financing, extension, incurrence,
dismissal, conversion, act or omission:


 


(A)          except
for the Carve Out, no costs or expenses of administration which have been or
may be incurred in the Chapter 11 Cases or any conversion of the same or in any
other proceedings related thereto, and no priority claims, are or will be prior
to or on a parity with any claim of any Lender, the Collateral Agent or the
Administrative Agent against the Borrowers in respect of any Obligation;


 


(B)           the Collateral Agent’s
Liens on the Collateral shall constitute valid, enforceable and perfected Liens
(subject only to Permitted Liens), which Liens shall be first priority Liens,
subject only to Specified Liens, to which such Liens shall or may be
subordinate


 


32

















 


and
junior, and shall be prior to all other Liens, now existing or hereafter
arising, in favor of any other creditor or other Person; and


 


(C)           the Collateral Agent’s
Liens on the Collateral shall continue to be valid, enforceable and perfected
without the need for the Collateral Agent, the Administrative Agent or any
Lender to file, register or publish any financing statements, mortgages,
hypothecs, notices of Lien or similar instruments or to otherwise perfect the
Collateral Agent’s Liens under applicable nonbankruptcy law.


 


SECTION 6.              Affirmative Covenants.  The Borrowers hereby covenant and agree that
until the Revolving Commitments have terminated, no Notes or Letters of Credit
are outstanding and the Loans, together with interest, Fees and all other
Obligations (other than any indemnities described in Section 11.12 which
are not then owing) incurred hereunder, are paid in full:


 


6.01         Information
Covenants.  The Borrowers will
furnish to each Lender (or, in the case of clause (j) below, to the
Administrative Agent for distribution to the Lenders):


 


(a)           [Intentionally
Omitted].


 


(b)           Quarterly
Financial Statements.  As soon as
available and in any event within 40 days after the close of every quarterly
accounting period in each fiscal year of FairPoint (provided that such 40 day
period shall be extended to 45 days if FairPoint is not subject to the SEC’s
large accelerated filer filing requirements and such 40 or 45 day period, as
applicable, shall be extended an additional 5 days if FairPoint has filed a Form 12b-25
with the SEC extending the date of the filing of the Quarterly Report on Form 10-Q
due on such 40th or 45th day, as applicable; provided, further, that with
respect to the quarterly accounting period ending December 31, 2009, such
period shall be extended to 75 days), (i) the consolidated balance sheet
of FairPoint and its Subsidiaries, as at the end of such quarterly period, and
the related consolidated statements of operations and of cash flows for such
quarterly period and for the elapsed portion of the fiscal year ended with the
last day of such quarterly period and (ii) consolidated balance sheets of
each Intermediary Holding Company and its Subsidiaries, as at the end of such
quarterly period, and the related consolidated statements of operations and of
cash flows for such quarterly period and for the elapsed portion of the fiscal
year ended with the last day of such quarterly period, and the case of each of
clauses (i) and (ii), setting forth comparative consolidated figures for
the related periods in the prior fiscal year, all of which shall be in
reasonable detail and certified by the chief financial officer or controller of
FairPoint, subject to changes resulting from audit and normal year-end audit
adjustments.


 


(c)           Monthly Financial
Statements.  As soon as available and
in any event within 30 days after the close of each fiscal month (provided that
such 30 day period shall be extended to 45 days in the case of the fiscal month
ending on the last day of a fiscal year of FairPoint; provided, further, that
with respect to the October 2009 fiscal month, such period shall be
extended to the date the schedules to FairPoint’s disclosure statement are
filed with the Bankruptcy Court), commencing with the first fiscal month ending
after the Closing Date, the consolidated balance sheet of FairPoint and its
Subsidiaries, as at the end of such monthly period and the related consolidated
statements of operations and of cash flows for such monthly period


 


33

















 


and
for the elapsed portion of the fiscal year ended with the last day of such
monthly period, in each case setting forth comparative consolidated figures for
the related periods in the prior fiscal year, all of which shall be in
reasonable detail and certified by the chief financial officer or controller of
FairPoint, subject to normal year-end audit adjustments.


 


(d)           Budgets; etc.  At any time that either (i) the
aggregate outstanding principal amount of the Loans is $25,000,000 or more or (ii) the
Budget, or any update to the Budget required to be delivered by the Borrowers
hereunder, forecasts that the aggregate outstanding principal amount of the
loans will be $25,000,000 or more at any time during the period covered by the
Budget or such update, weekly updates to the Budget by no later than the third
(3rd) Business Day of each week.  At all
other times, monthly updates to the Budget by no later than three Business Days
after the previous month end.


 


(e)           Compliance
Certificates.  At the time of the
delivery of the financial statements provided for in Sections 6.01(b) or
(c), a certificate (“Compliance Certificate”) of the chief financial
officer or other Authorized Officer of FairPoint to the effect that no Default
or Event of Default exists or, if any Default or Event of Default does exist,
specifying the nature and extent thereof, which certificate if delivered with
the financial statements required by Section 6.01(c), shall set forth the
calculations required to establish whether the Borrowers and their Subsidiaries
were in compliance with the provisions of Sections 7.05 and 7.12 as at the
end of such fiscal period.


 


(f)            Notice of
Default or Litigation.  Promptly, and
in any event within five Business Days after any officer of any Borrower
obtains knowledge thereof, notice of (x) the occurrence of any event which
constitutes a Default or Event of Default, which notice shall specify the
nature thereof, the period of existence thereof and what action the Borrowers
propose to take with respect thereto, and (y) the commencement of, or any
significant adverse development in, any litigation or governmental proceeding
pending against any Borrower or any of its Subsidiaries or their assets or
business (i) with respect to any Credit Document or (ii) which has
had, or is reasonably likely to have, a Material Adverse Effect and (iii) any
other event which has had, or is reasonably likely to have, a Material Adverse
Effect.


 


(g)           Other Information.  Promptly upon transmission thereof, copies of
any filings and registrations with, and reports to, the Securities and Exchange
Commission or any successor thereto (the “SEC”) (including any annual or
quarterly audited or unaudited financial statements), and with reasonable
promptness, such other information or documents (financial or otherwise) as the
Administrative Agent on its own behalf or on behalf of any Lender may
reasonably request from time to time.


 


(h)           “Daily Operations
Dashboard.”  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), the “Daily Operations Dashboard” in
substantially the form previously delivered to the Financial Advisor.


 


(i)            Variance Reports.  To the extent the Borrowers are required to
update the Budget weekly in accordance with the provisions of Section 6.01(d),
by no later than the third Business Day of each week, otherwise, on a bi-weekly
basis, by no later than the third Business


 


34

















 


Day
of every other week (in either case, commencing with the first such day
following the Closing Date), 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).


 


(j)            Expressions of
Interest.  Promptly, and in any event
within three (3) Business Days after the occurrence thereof, notice 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 Administrative Agent may be subject to certain
confidentiality arrangements as are appropriate and may be reasonably agreed
upon).


 


6.02         Books,
Records and Inspections.  Each
Borrower will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries in conformity with,
and as required by, GAAP and all material requirements of law shall be made of
all dealings and transactions in relation to such Person’s business and
activities.  Each Borrower will, and will
cause its Subsidiaries to, permit, upon reasonable notice to the chief
financial officer, controller or any other Authorized Officer of the Borrowers,
officers and designated representatives of the Financial Advisor, the
Administrative Agent or the Required Lenders to visit and inspect any of the
properties or assets of the Borrowers and any of their Subsidiaries in their
possession and to examine the books of account of any Borrower and any of its
Subsidiaries and discuss the affairs, finances and accounts of the Borrowers
and of any of their Subsidiaries with, and be advised as to the same by, its
and their officers and independent accountants, all at such reasonable times
and intervals during normal business hours (with reasonable notice) and to such
reasonable extent as the Administrative Agent or the Required Lenders may
desire.  The Borrowers will, and will use
reasonable efforts to cause their respective Subsidiaries, employees, agents,
auditors, advisors and consultants to, cooperate generally with the Financial
Advisor and any of the Administrative Agent’s attorneys.


 


6.03         Insurance.  Each Borrower will, and will cause each of
its Subsidiaries to, at all times maintain in full force and effect insurance
with reputable and solvent insurers in such amounts, covering such risks and
liabilities and with such deductibles or self-insured retentions as are in
accordance with normal industry practice and providing (a) for payment of
losses to the Collateral Agent as its interests may appear in respect of any
Collateral, (b) that such policies may not be canceled for any reason
without 30 days prior notice to the Collateral Agent, and (c) to provide
for any other matters specified in any applicable Security Document or which
the Collateral Agent may reasonably require (it being agreed that the insurance
in effect on the Closing Date is satisfactory). 
Each Credit Party will maintain any additional insurance coverage as
described in the respective Security Documents. 
Each Credit Party shall maintain, or cause to be maintained, with an
insurer reasonably acceptable to the Collateral Agent, flood insurance
sufficient for Lenders to comply with Regulation H of the Board of Governors of
the Federal Reserve System.  Each
Borrower will, and will cause each of its Subsidiaries to, furnish to the
Administrative Agent on the Closing Date and thereafter, upon request of the
Administrative Agent, a summary of the insurance carried.


 


6.04         Payment
of Taxes.  Each Borrower will pay and
discharge, and will cause each of its Subsidiaries to pay and discharge (i) all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits, or upon any


 


35

















 


properties
belonging to it, prior to the date on which penalties attach thereto, in each
case that arises after the Petition Date or are the subject of a “First Day
Order” and (ii) all lawful claims which, if unpaid, would become a Lien or
charge upon any material properties of such Borrower or any of its
Subsidiaries; provided that neither Borrower nor any Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim if being
contested in good faith and by proper proceedings if it has maintained adequate
reserves (in the good faith judgment of the management of the applicable
Borrower) with respect thereto in accordance with GAAP.


 


6.05         Company
Franchises.  Each Borrower will do,
and will cause each Subsidiary to do, or cause to be done, all things
reasonably necessary to preserve and keep in full force and effect its existence
and to preserve its material rights and franchises, other than those the
failure to preserve which could not reasonably be expected to have a Material
Adverse Effect.


 


6.06         Compliance
with Statutes, etc.  Each Borrower
will, and will cause each Subsidiary to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign (including all Environmental Laws), in
respect of the conduct of its business and the ownership of its property other
than those the non-compliance with which is not reasonably likely to have a
Material Adverse Effect.


 


6.07         ERISA.  As soon as possible and, in any event, within
10 days after any Borrower knows or has reason to know of the occurrence of any
of the following, the Borrower will deliver to each of the Lenders a
certificate of the chief financial officer of such Borrower setting forth the
full details as to such occurrence and the action, if any, that any Borrower,
any Subsidiary or any ERISA Affiliate is required or proposes to take, together
with any notices required or proposed to be given to or filed with or by any
Borrower, any Subsidiary, any ERISA Affiliate, the PBGC, a Plan or
Multiemployer Plan participant or the Plan administrator with respect
thereto:  that a Reportable Event (other
than the Chapter 11 Cases) has occurred (except to the extent that a
Borrower has previously delivered to the Lender a certificate and notices (if
any) concerning such event pursuant to the next clause hereof); that a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a
Plan subject to Title IV of ERISA is subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to
subparagraph (b)(1) thereof), and an event described in
subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043
is reasonably expected to occur with respect to such Plan within the following
30 days; that an accumulated funding deficiency, within the meaning of Section 412
of the Code or Section 302 of ERISA, has been incurred or an application
may reasonably be expected to be or has been made for a waiver or modification
of the minimum funding standard (including any required installment payments)
or an extension of any amortization period under Section 412 of the Code
or Section 303 or 304 of ERISA with respect to a Plan; that any
contribution required to be made with respect to a Plan or Multiemployer Plan
has not been timely made; that a Plan or Multiemployer Plan has been or may
reasonably be expected to be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA, where a Plan has an Unfunded Current
Liability which, when added to the aggregate amount of Unfunded Current
Liabilities with respect to all other Plans, exceeds the aggregate amount of
Unfunded Current Liabilities that would be reasonably likely to have a Material
Adverse Effect; that proceedings may reasonably be expected to be or have been
instituted to


 


36

















 


terminate
or appoint a trustee to administer a Plan which is subject to Title IV of
ERISA; that a proceeding has been instituted pursuant to Section 515 of
ERISA to collect a delinquent contribution to a Multiemployer Plan; that any
Borrower, any Subsidiary or any ERISA Affiliate will or may reasonably be
expected to incur any material liability (including any indirect, contingent,
or secondary liability) to or on account of the termination of or withdrawal
from a Plan or Multiemployer Plan under Section 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29),
4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(1) of
ERISA or with respect to a group health plan (as defined in Section 607(1) of
ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of
the Code; or that any Borrower or any Subsidiary may incur any material
liability pursuant to any employee welfare benefit plan (as defined in Section 3(1) of
ERISA) that provides benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or any Plan in addition
to the liability that existed on the Closing Date pursuant to any such plan or
plans.  Upon request by any Lender, the
Borrowers will deliver to such Lender a complete copy of the annual report (on
Internal Revenue Service Form 5500- series) of each Plan (including, to
the extent required, the related financial and actuarial statements and
opinions and other supporting statements, certifications, schedules and
information) required to be filed with the Internal Revenue Service.  In addition to any certificates or notices
delivered to the Lenders pursuant to the first sentence hereof, copies of any
records, documents or other information required to be furnished to the PBGC
(other than any PBGC Form 1), and any material notices received from the
PBGC by any Borrower, any Subsidiary or any ERISA Affiliate with respect to any
Plan or Multiemployer Plan shall be delivered to the Lender no later than 10
days after the date such records, documents and/or information has been
furnished to the PBGC or such notice has been received from the PBGC by such
Borrower, such Subsidiary or such ERISA Affiliate, as applicable.


 


6.08         Good
Repair.  Each Borrower will, and will
cause each of its Subsidiaries to, ensure that its material properties and
equipment used or useful in its business are kept in good repair, working order
and condition, normal wear and tear excepted, and, subject to Section 7.05,
that from time to time there are made in such properties and equipment all
needful and proper repairs, renewals, replacements, extensions, additions,
betterments and improvements thereto, to the extent and in the manner useful or
customary for companies in similar businesses.


 


6.09         End
of Fiscal Years; Fiscal Quarters; Etc. 
FairPoint will, for financial reporting purposes, cause (i) each of
its, and each of its Subsidiaries’, fiscal years and fourth fiscal quarters to
end on December 31 of each year and (ii) each of its, and each of its
Subsidiaries’, first three fiscal quarters to end on the last day of March, June and
September of each year.


 


6.10         Margin
Stock.  The Borrowers will take all
actions so that at all times the fair market value of all Margin Stock owned by
the Borrowers and their Subsidiaries (other than capital stock of the Borrowers
held in treasury) shall not exceed $5,000,000; provided that it shall
not constitute a violation of this Section 6.10 if at any time the fair
market value of all Margin Stock owned by the Borrowers and their Subsidiaries
(other than capital stock of the Borrowers held in treasury) exceeds $5,000,000
so long as (x) all Margin Stock owned by the Credit Parties (other than
capital stock of the Borrowers held in treasury) shall be pledged, and


 


37

















 


delivered
for pledge, pursuant to the Pledge Agreement, (y) the applicable Borrower
will execute and deliver to the Lenders appropriate completed forms (including,
without limitation, Forms G-3 and U-1, as appropriate) establishing compliance
with Regulations T, U and X of the Board of Governors of the Federal Reserve
System, and (z) the Borrowers take appropriate actions so that the fair
market value of all Margin Stock owned by the Borrowers and their Subsidiaries
(other than capital stock of the Borrowers held in treasury) does not exceed
$5,000,000 within ninety (90) days (or such longer period not to exceed one
year as maybe necessary to comply with Rule 144 under the Securities Act,
if applicable) of the date upon which the fair market value of the Margin Stock
owned by the Borrowers and their Subsidiaries first exceeded $5,000,000.  So long as the covenant contained in the text
of the first sentence of this Section 6.10 preceding the proviso contained
in such sentence is complied with, all Margin Stock at any time owned by the
Borrowers and their Subsidiaries will not constitute Collateral and no security
interest shall be granted therein pursuant to any Credit Document.  If at any time any Margin Stock is required
to be pledged as a result of the proviso contained in the first sentence of
this Section 6.10, repayments of outstanding Obligations shall be
required, and subsequent Credit Events shall be permitted, only in compliance
with the applicable provisions of Regulations T, U and X of the Board of
Governors of the Federal Reserve System.


 


6.11         Special
Covenant Regarding Cash Management Policy. 
The Borrowers shall, and shall cause their Subsidiaries to, at all times
comply with the cash management policy of FairPoint and its Subsidiaries
delivered to the Administrative Agent on the Closing Date, without giving
effect to any changes thereto, except to the extent such changes are not
adverse to the interests of the Lenders or are otherwise required to ensure
compliance with applicable law or regulation.


 


6.12         Maintenance
of Company Separateness.  (a) 
Each Borrower will, and will cause each of its Subsidiaries to, satisfy
customary Company formalities, including, as applicable, the holding of regular
board of directors’ and shareholders’ meetings or action by directors or
shareholders without a meeting and the maintenance of Company offices and
records.


 


(b)           The
Borrowers shall not permit any Non-Pledge Party Subsidiary, on the one hand, to
have any rights to draw down, whether as a joint account party or otherwise, on
any bank account of any Credit Party, on the other hand.


 


6.13         Further
Assurances.  Each Credit Party shall
take such action and execute, acknowledge and deliver, and cause each of its
Subsidiaries to take such action and execute, acknowledge and deliver, at its
sole cost and expense, such agreements, instruments or other documents as the
Collateral Agent may reasonably require from time to time in order (i) to
carry out more effectively the purposes of this Agreement, the Financing Orders
and the other Credit Documents, (ii) to obtain, maintain, continue,
validate or perfect its first priority Liens on any of the Collateral or any
other property of the Credit Parties, (iii) to establish and maintain the
validity and effectiveness of any of the Credit Documents and the validity,
perfection and priority of the Liens intended to be created thereby, and (iv) to
better assure, convey, grant, assign, transfer and confirm unto the Collateral
Agent for the ratable benefit of the Lenders the rights now or hereafter
intended to be granted to the Collateral Agent for the ratable benefit of the
Lenders under this Agreement or any other Credit Document.


 


38














 


6.14                                       Compliance with
Financing Orders.  Comply with
the Interim Order and the Final Order, as applicable, and each of the other
orders entered by the Bankruptcy Court.


 


6.15                                       Conference
Calls.  The Borrowers shall conduct 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 Administrative Agent, the Lenders, the Financial Advisor and the “Consenting
Lenders” party to the Plan Support Agreement, for the purpose of discussing, inter alia, the most recently delivered
financial statements, the Debtors’ financial performance, operations, current
trends and other material events.


 


SECTION 7.                                          Negative Covenants.  The Borrowers hereby covenant and agree that
until the Revolving Commitments have terminated, no Notes or Letters of Credit
are outstanding and the Loans, together with interest, Fees and all other
Obligations (other than any indemnities described in Section 11.12 which
are not then owing) incurred hereunder, are paid in full:


 


7.01                                       Changes in
Business.  (a) 
The Borrowers will not permit at any time the business activities taken as a
whole conducted by the Borrowers and their Subsidiaries to be materially
different from the business activities taken as a whole (including incidental
activities) conducted by the Borrowers and their  Subsidiaries on the Closing Date (the “Business”).


 


(b)                                 Notwithstanding
the foregoing, no Second-Tier Holdco will engage in any business or own any
significant assets (other than its ownership of (x) equity interests of
Subsidiaries existing on the date hereof or permitted to be created,
established or acquired pursuant to the terms of this Agreement and (y) intercompany
obligations owed to it and permitted to be extended by it pursuant to Section 7.06(c))
or have any liabilities (other than (x) those liabilities for which it is
responsible under this Agreement and the other Credit Documents to which it is
a party and (y) intercompany debt permitted to be incurred by it pursuant
to Section 7.06(c)); provided that any Second-Tier Holdco may
engage in those activities and incur related liabilities that are incidental to
(x) the maintenance of its corporate existence in compliance with
applicable law, (y) legal, tax and accounting matters in connection with
any of the foregoing activities and (z) the entering into, and performing
its obligations under, this Agreement and the other Credit Documents to which
it is a party.


 


7.02                                       Consolidation,
Merger, Sale or Purchase of Assets, etc.  The Borrowers will not, and will not permit
any Subsidiary to, wind up, liquidate or dissolve its affairs, or consummate
any transaction of merger or consolidation, or make any Asset Sale or purchase,
lease or otherwise acquire all or any part of the property or assets of any
Person (other than purchases or other acquisitions of inventory, leases,
materials and equipment in the ordinary course of business) or agree to do any
of the foregoing at any future time without a contingency relating to obtaining
any required approval hereunder, except that the following shall be permitted:


 


(a)                                  any Inactive
Subsidiary may be merged or consolidated with or into, or be liquidated into,
any Borrower or a Subsidiary Guarantor (so long as such Borrower or such Subsidiary
Guarantor is the surviving corporation), or all or any part of its business,
properties and assets may be conveyed, sold or transferred to any Borrower or
any Subsidiary Guarantor;


 


39

















 


(b)                                 Consolidated
Capital Expenditures to the extent within the limitations set forth in Section 7.05;


 


(c)                                  the
investments, acquisitions and transfers or dispositions of properties, shares
and assets permitted pursuant to Section 7.06;


 


(d)                                 any Borrower
and any Subsidiary may lease (as lessee) real or personal property in the
ordinary course of business (so long as such lease does not create a
Capitalized Lease Obligation not otherwise permitted by Section 7.04(c));


 


(e)                                  licenses or
sublicenses by the Borrowers and their Subsidiaries of intellectual property in
the ordinary course of business; provided, that such licenses or
sublicenses shall not interfere with the business of any Borrower or any
Subsidiary;


 


(f)                                    leases and
subleases permitted under Section 7.03(d) and (g); and


 


(g)                                 a sale of
assets under Section 363 of the Bankruptcy Code to the extent the Net Cash
Proceeds of such sale are sufficient to pay all Loans, together with interest,
Fees and all other Obligations incurred hereunder and under the other Credit
Documents in full (and to cash collateralize in a manner satisfactory to the
Administrative Agent, all outstanding Letters of Credit).


 


7.03                                       Liens.  The Borrowers will not, and will not permit
any Subsidiary to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets of any kind (real or personal, tangible
or intangible) of the Borrowers or any such Subsidiary whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable or notes with
recourse to the Borrowers or any of their Subsidiaries) or assign any right to
receive income, except the following Liens (to the extent, with respect to a
Borrower or any Subsidiary or any of its assets or properties, (x) if
created, incurred or assumed by such Person on or after the Petition Date, such
Liens have been approved and authorized by the Bankruptcy Court and (y) in
created, incurred or assumed by such Person before the Petition Date, such
Liens are valid, perfected and non-avoidable in accordance with applicable
Law):


 


(a)                                  Liens for taxes
not yet delinquent or Liens for taxes being contested in good faith and by
appropriate proceedings for which adequate reserves (in the good faith judgment
of the management of the Borrowers) have been established in accordance with
GAAP;


 


(b)                                 Liens in
respect of property or assets of the Borrowers or any of their Subsidiaries
imposed by law which were incurred in the ordinary course of business, such as
carriers’, warehousemen’s and mechanics’ Liens, statutory landlord’s Liens, and
other similar Liens arising in the ordinary course of business, and (x) which
do not in the aggregate materially detract from the value of such property or
assets or materially impair the use thereof in the operation of the business of
the Borrowers or any of their Subsidiaries or (y) which are being
contested in good faith by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property or asset subject to
such Lien;


 


40

















 


(c)                                  Liens created
by or pursuant to this Agreement or the other Credit Documents;


 


(d)                                 Liens created
pursuant to Capital Leases in respect of Capitalized Lease Obligations
permitted by Section 7.04(c);


 


(e)                                  Liens arising
from judgments, decrees or attachments and Liens securing appeal bonds arising
from judgments, in each case in circumstances not constituting an Event of
Default under Section 8.09;


 


(f)                                    Liens (other
than any Lien imposed by ERISA) incurred or deposits made in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money);


 


(g)                                 leases or
subleases granted to others not interfering in any material respect with the
business of any Borrower or any of its Subsidiaries;


 


(h)                                 easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances not interfering in any material respect with
the ordinary conduct of the business of any Borrower or any of its
Subsidiaries;


 


(i)                                     Liens arising
from precautionary UCC financing statement filings regarding operating leases
entered into by any Borrower or any of its Subsidiaries in the ordinary course
of business and statutory and common law landlords’ liens under leases to which
the Borrower or any of its Subsidiaries is a party;


 


(j)                                     purchase money
Liens securing payables arising from the purchase by any Borrower or any
Subsidiary Guarantor of any equipment or goods in the normal course of
business; provided that such payables shall not constitute Indebtedness;


 


(k)                                  any interest or
title of a lessor under any lease permitted by this Agreement; and


 


(l)                                     Liens in
existence on, and which are to continue in effect after, the Closing Date which
are listed, and the property subject thereto described in, Annex V.


 


7.04                                       Indebtedness.  The Borrowers will not, and will not permit
any of their Subsidiaries to, contract, create, incur, assume or suffer to
exist any Indebtedness, except:


 


(a)                                  Indebtedness
incurred pursuant to this Agreement and the other Credit Documents;


 


(b)                                 intercompany Indebtedness
permitted by Section 7.06(c);


 


41

















 


(c)                                  Capitalized
Lease Obligations initially incurred after the Closing Date; provided
that Borrowers are in compliance with Section 7.05;


 


(d)                                 Indebtedness
(the “Scheduled Existing Indebtedness”) in existence on, and which is to
continue in effect after, the Closing Date (excluding Intercompany Debt) and
which is listed on Annex VI hereto, without giving effect to any
subsequent extension, renewal or refinancing thereof; and


 


(e)                                  Indebtedness of
the Borrowers or any of their Subsidiaries which may be deemed to exist in
connection with agreements providing for indemnification, purchase price
adjustments and similar obligations in connection with sales of assets permitted
by this Agreement (so long as any such obligations are those of the Person
making the respective sale, and are not guaranteed by any other Person).


 


7.05                                       Capital
Expenditures.  The
Borrowers will not, and will not permit any of their Subsidiaries to, incur
Consolidated Capital Expenditures for each period set forth below to exceed the
amount set forth below for such period:


 


	
  Period

  	
   

  	
  Maximum Consolidated 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

  	
   

  



 


7.06                                       Advances,
Investments and Loans.  The
Borrowers will not, and will not permit any of their Subsidiaries to, lend
money or credit or make advances to any Person, or purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to any Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract (each of the
foregoing an “Investment” and, collectively, “Investments”),
except:


 


(a)                                  the Borrowers
or any Subsidiary may invest in cash and Cash Equivalents;


 


(b)                                 the Borrowers
and any Subsidiary may acquire and hold receivables owing to them, if created
or acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms and/or reasonable extensions thereof,


 


(c)                                  the Borrowers
and their Qualified Subsidiaries may make intercompany loans and advances between
and among one another (collectively, “Intercompany Loans”);


 


42

















 


provided that (i) each
such Intercompany Loan shall, at the request of the Administrative Agent be
evidenced by an intercompany note which, if held by a Credit Party, shall be
pledged to the Collateral Agent as, and to the extent required by, the Pledge
Agreement, (ii) each Intercompany Loan made pursuant to this clause (c) shall
be subject to subordination as, and to the extent required by, the Subsidiary
Guaranty (giving effect to exceptions required by applicable law or regulation
as contemplated thereby) and (iii) any Intercompany Loan made pursuant to this
clause (c) shall cease to be permitted hereunder if the obligor or obligee
thereunder ceases to be the Borrower or a Qualified Subsidiary as contemplated
above;


 


(d)                                 the Borrowers
and each Subsidiary may acquire and own investments (including debt
obligations) received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers arising in the ordinary course of
business;


 


(e)                                  Investments in
existence on the Closing Date (excluding Intercompany Debt), without giving
effect to any additions thereto or replacements thereof, shall be permitted;
and


 


(f)                                    prior to the
entry of the Final Order, the Borrowers and their Subsidiaries may incur
Excluded Intercompany Payables (and the Lenders, the Administrative Agent and
the Borrowers agree to negotiate in good faith the terms and conditions on
which intercompany receivables and payables may be incurred, settled and paid
following the entry of the Final Order).


 


7.07                                       Limitation on
Creation of Subsidiaries.  The
Borrowers will not, and will not permit any Subsidiary to, establish, create or
acquire any Subsidiary.


 


7.08                                       Modifications.  The Borrowers will not, and will not permit
any of their Subsidiaries to:


 


(a)                                  amend or modify
(or permit the amendment or modification of) any provisions of any Scheduled
Existing Indebtedness, in any such case other than amendments or modifications
that are not in any way adverse to the interests of the Lenders; provided
that in no event shall any amendment to the foregoing (i) increase the
applicable interest rate, (ii) shorten the maturity date from that
theretofore in effect, (iii) modify or change any subordination provisions
contained therein or (iv) make any covenant more restrictive than
previously existed thereunder;


 


(b)                                 amend or modify
(or permit the amendment or modification of) the Transition Services Agreement
other than amendments or modifications related to the provision of transition
services where such amendments or modifications are (i)(A) in the case of
material amendments or modifications as determined by the Borrowers in their
good faith judgment, furnished to the Administrative Agent no later than four
Business Days after the effectiveness thereof (it being understood that
compliance with Section 6.01(g) shall constitute compliance with this
Section 7.08(b)(i)(A)) and (B) in the case of immaterial amendments
or modifications as determined by the Borrowers in their good faith judgment,
furnished to the Administrative Agent at the time of delivery of the next
Compliance Certificate pursuant to Section 6.01(d) with


 


43

















 


respect to the quarter in
which such amendment became effective and (ii) not in any way materially
adverse to the interests of the Lenders; and/or


 


(c)                                  amend, modify
or change in any manner adverse to the interests of the Lenders the
organizational documents (including by-laws) of any Credit Party (including,
without limitation, by the filing or modification of any certificate or
articles of designation), any agreement entered into by any Borrower with
respect to its capital stock, or enter into any new agreement in any manner
adverse to the interests of the Lenders with respect to the capital stock of
any Borrower.


 


7.09                                       Restricted
Payments, Etc.  (a) 
The Borrowers will not, and will not permit any of their Subsidiaries to, make
any Restricted Payment; provided, however, that prior to the
entry of the Final Order, each Subsidiary of FairPoint may continue to pay
Dividends to its direct parent in the ordinary course of business consistent
with past practices (and the Lenders, the Administrative Agent and the
Borrowers agree to negotiate in good faith the terms and conditions on which
Dividends may be paid by Subsidiaries following the entry of the Final Order).


 


(b)                                 The Borrowers
will not, and will not permit any of their Subsidiaries to, create or otherwise
cause or suffer to exist (other than as a result of a requirement of law) any
encumbrance or restriction which prohibits or otherwise restricts (A) the
ability of any Subsidiary to (a) pay dividends or make other distributions
or pay any Indebtedness owed to a Borrower or any Subsidiary, (b) make
loans or advances to a Borrower or any Subsidiary, (c) transfer any of its
properties or assets to a Borrower or any Subsidiary or (B) the ability of
any Subsidiary to create, incur, assume or suffer to exist any Lien upon its
property or assets to secure the Obligations, other than (for purposes of
clauses (A) and (B)) prohibitions or restrictions existing under or
by reason of:  (i) this Agreement
and the other Credit Documents; (ii) law, order, regulation, or ruling
applicable to a Borrower or such Subsidiary; (iii) customary
non-assignment provisions entered into in the ordinary course of business and
consistent with past practices; (iv) any restriction or encumbrance with
respect to a Subsidiary imposed pursuant to an agreement which has been entered
into for the sale or disposition of all or substantially all of the capital
stock or assets of such Subsidiary, so long as such sale or disposition is
permitted under this Agreement; and (v) Liens permitted under
Sections 7.03(d) and any documents or instruments governing the terms
of any Indebtedness or other obligations secured by any such Liens; provided
that such prohibitions or restrictions apply only to the assets subject to such
Liens.


 


7.10                           Transactions
with Affiliates.  The
Borrowers will not, and will not permit any Subsidiary to, enter into any
transaction or series of transactions after the Closing Date whether or not in
the ordinary course of business, with any of its Affiliates other than on terms
and conditions substantially as favorable to such Borrower or such Subsidiary
as would be obtainable by such Borrower or such Subsidiary at the time in a
comparable arm’s length transaction with a Person other than an Affiliate; provided
that the foregoing restrictions shall not apply to (i) transactions solely
among Credit Parties and their 90%-Owned Subsidiaries, (ii) employment
arrangements (including severance and related arrangements) entered into in the
ordinary course of business with officers of the Borrowers and their
Subsidiaries, (iii) customary fees paid to members of the Board of
Directors of the Borrowers and of their Subsidiaries,


 


44

















 


(iv) arrangements
with directors, officers and employees not otherwise prohibited by this
Agreement and (v) Restricted Payments to the extent permitted by Section 7.09(a).


 


7.11                                       Limitation On
Issuance of Equity Interests.   (a)   The
Borrowers will not, and will not permit any of their Subsidiaries to, issue (i) any
Preferred Stock or any options, warrants or rights to purchase Preferred Stock
or (ii) any redeemable common equity interests unless, in either case, the
issuance thereof is, and all terms thereof are, satisfactory to the Required
Lenders in their sole discretion.


 


(b)                                 The Borrowers
will not permit any of their Subsidiaries, directly or indirectly, to issue any
shares of such Subsidiary’s capital stock, securities or other equity interests
(or warrants, rights or options to acquire shares or other equity interests),
except (i) for replacements of then outstanding shares of capital stock or
other equity interests and (ii) for stock splits, stock dividends and
similar issuances which do not decrease the percentage ownership of the
Borrowers and their Subsidiaries taken as a whole in any class of the capital
stock or other equity interests of such Subsidiary and to qualify directors to
the extent required by applicable law.


 


7.12                                       Minimum EBITDAR.  The Borrowers will not permit Consolidated
EBITDAR for each period set forth below to be less than the amount set forth
below for such period:


 


	
  Period

  	
   

  	
  Minimum Consolidated 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

  	
   

  



 


7.13                                       Use of Proceeds.  Except as otherwise provided herein or
approved by the Administrative Agent and the Required Lenders and other than
for a purpose (and subject to the limitations set forth in Section 5.05, the
Borrowers shall not, and shall not permit any of their Subsidiaries to, use
funds for disbursements outside of the ordinary course of business (for the
avoidance of doubt, funds may not be used by the Borrowers and their
Subsidiaries 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. 
No portion of the Carve Out or proceeds of Loans 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


 


45

















 


Lenders,
the Administrative Agent, the Collateral Agent or the 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.


 


7.14                                       Chapter 11
Claims.  The Borrowers will not, and
will not permit their Subsidiaries to, incur, create, assume, suffer to exist
or permit any administrative expense, unsecured claim or other Super-Priority
Claim or lien which is pari passu
with or senior to the claims or liens, as the case may be, of the
Administrative Agent against the Credit Parties hereunder, or apply to the
Bankruptcy Court for authority to do so, except for Specified Liens and the
Carve Out.


 


7.15                                       Revision of Orders;
Applications to Bankruptcy Court.


 


(a)                                  The Borrowers
will not, and will not permit their Subsidiaries to, seek, consent to or suffer
to exist any modification, stay, vacation or amendment of the Interim Order or
the Final Order, except for any modifications and amendments agreed to in
writing by the Administrative Agent and the Required Lenders.


 


(b)                                 The Borrowers
will not, and will not permit their Subsidiaries to, apply to the Bankruptcy
Court for authority to take any action prohibited by this Section 7
(except to the extent such application and the taking of such action is
conditioned upon receiving the written consent of the Administrative Agent and
the Required Lenders).


 


SECTION 8.                                          Events of Default.  Upon
the occurrence of any of the following specified events (each, an “Event of
Default”):


 


8.01                                       Payments.  The Borrowers shall (i) default in the
payment when due of any principal of the Loans or (ii) default, and such
default shall continue for three or more Business Days, in the payment when due
of any interest on the Loans or any Fees or any other amounts owing hereunder
or under any other Credit Document; or


 


8.02                                       Representations,
etc.  Any representation, warranty
or statement made by any Credit Party herein or in any other Credit Document or
in any statement or certificate delivered or required to be delivered pursuant
hereto or thereto shall prove to be untrue in any material respect on the date
as of which made or deemed made; or


 


8.03                                       Covenants.  Any Credit Party shall (a) default in
the due performance or observance by it of any term, covenant or agreement
contained in Section 6.05, 6.09, 6.11, 6.14, 6.15 or 7, or (b) default
in the due performance or observance by it of any term, covenant or agreement
(other than those referred to in Section 8.01, 8.02 or clause (a) of
this Section 8.03) contained in this Agreement or in any other Credit
Document and such default shall continue unremedied for a period of at least 20
days after written notice to the Borrowers by the Administrative Agent or the
Required Lenders; or


 


8.04                                       Default Under
Other Agreements.  (a) Any
Borrower or any of its Subsidiaries shall (i) default in any payment with
respect to any Indebtedness (other than the Obligations and Indebtedness
created or incurred prior to the Petition Date) beyond the period of grace, if
any, applicable thereto or (ii) default in the observance or performance
of any


 


46

















 


agreement
or condition relating to any such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause, any such
Indebtedness to become due prior to its stated maturity; or (b) any such
Indebtedness of a Borrower or any of its Subsidiaries shall be declared to be
due and payable (or shall be required to be prepaid as a result of a default
thereunder or of an event of the type that constitutes an Event of Default)
prior to the stated maturity thereof; provided that it shall not
constitute an Event of Default pursuant to this Section 8.04 unless the
aggregate principal amount of all Indebtedness referred to in clauses (a) and
(b) above (without duplication) exceeds $10,000,000 in the aggregate at
any one time; or


 


8.05                                       ERISA.  An event which meets all of the requirements
under (a), (b) and (c) of this Section:  (a) Any Plan or Multiemployer Plan shall
fail to satisfy the minimum funding standard required for any plan year or part
thereof under Section 412 of the Code or Section 302 of ERISA or a
waiver of such standard or extension of any amortization period is sought or
granted under Section 412 of the Code or Section 303 or 304 of ERISA,
a Reportable Event (other than the commencement of the Chapter 11 Cases) shall
have occurred, a contributing sponsor (as defined in Section 4001 (a)(13)
of ERISA) of a Plan subject to Title IV of ERISA shall be subject to the
advance reporting requirement of PBGC Regulation Section 4043.61 (without
regard to subparagraph (b)(1) thereof) and an event described in
subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043
shall be reasonably expected to occur with respect to such Plan within the
following 30 days, any Plan which is subject to Title IV of ERISA shall
have had or is likely to have a trustee appointed to administer such Plan, any
Plan or Multiemployer Plan which is subject to Title IV of ERISA is, shall
have been or is likely to be terminated or to be the subject of termination
proceedings under ERISA, any Plan shall have an Unfunded Current Liability, a
contribution required to be made with respect to a Plan or Multiemployer Plan
has not been timely made, any Borrower or any Subsidiary or any ERISA Affiliate
has incurred or is likely to incur any liability to or on account of a Plan or
Multiemployer Plan under Section 409, 502(i), 502(1), 515, 4062, 4063,
4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or
4975 of the Code or on account of a group health plan (as defined in Section 607(1) of
ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of
the Code, or any Borrower or any Subsidiary has incurred or is likely to incur
liabilities pursuant to one or more employee welfare benefit plans (as defined
in Section 3(1) of ERISA) that provide benefits to retired employees
or other former employees (other than as required by Section 601 of ERISA)
or Plans; (b) there shall result from any such event or events the
imposition of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and (c) such lien, security
interest or liability, individually, or in the aggregate, in the opinion of the
Required Lenders, has had, or is reasonably likely to have, a Material Adverse
Effect; or


 


8.06                                       Security
Documents.  Any
Security Document shall cease to be in full force and effect, or shall cease to
give the Collateral Agent the Liens, powers and privileges purported to be
created thereby in favor of the Collateral Agent; or


 


8.07                                       Credit
Documents.  (i) Any
provision of any Credit Document, at any time after its execution and delivery
and for any reason other than as expressly permitted


 


47

















 


hereunder
or thereunder or satisfaction in full of all the Obligations, ceases to be in
full force and effect; or any Credit Party or any other Debtor contests in any
manner the validity or enforceability of any provision of any Credit Document;
or any Credit Party denies that it has any or further liability or obligation
under any Credit Document, or purports to revoke, terminate or rescind any
provision of any Credit Document; or (ii) the Subsidiary Guaranty given by
the Guarantors or any provision thereof shall cease to be in full force and
effect, or any Guarantor thereunder or any Person acting by or on behalf of
such Guarantor shall deny or disaffirm such Guarantor’s obligations under its
Subsidiary Guaranty, or any Guarantor shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to its Subsidiary Guaranty; or


 


8.08                                       Judgments.  One or more judgments or decrees shall be
entered against any Borrower or any of its Subsidiaries involving a liability
(to the extent not paid or covered by insurance) in excess of $20,000,000 in
the aggregate for all such judgments and decrees for the Borrowers and their
Subsidiaries and all such judgments and decrees in excess of such amount shall
not have been vacated, discharged or stayed or bonded pending appeal within 60
days from the entry thereof; or


 


8.09                                       Change of
Control.  Any Change of Control occurs;
or


 


8.10                                       Dissolution or
Liquidation.  Any Credit
Party voluntarily or involuntarily dissolves or is dissolved, liquidates or is
liquidated or files a motion with the Bankruptcy Court seeking authorization to
dissolve or liquidate (except to the extent permitted by Section 7.02(a));
or


 


8.11                                       Final Order;
Interim Order.  The
Bankruptcy Court fails to enter the Final Order within forty-five (45) days of
the entry of the Interim Order (with such changes as the Administrative Agent
may agree to), or the Bankruptcy Court reverses, vacates or stays the
effectiveness of either the Interim Order or the Final Order; or


 


8.12                                       Certain Orders.  An order with respect to any of the
Chapter 11 Cases shall be entered by the Bankruptcy Court (or any of the
Credit Parties shall file an application or motion for entry of an order) (i) appointing
a trustee under Section 1104 of the Bankruptcy Code, (ii) appointing
an examiner with enlarged powers (beyond those set forth in Section 1106(a)(3) and
(4) of the Bankruptcy Code) relating to the operation of the business
under Section 1106(b) of the Bankruptcy Code, or (iii) dismissing
or converting the Chapter 11 Cases to a Chapter 7 case; or


 


8.13                                       Non-Compliance
with any Financing Order.  Any
Credit Party fails or neglects to comply with any provision of any Financing
Order; or


 


8.14                                       Filing of
Unapproved Plan.  (i) An
order shall be entered by the Bankruptcy Court confirming a plan of
reorganization in any of the Chapter 11 Cases which does not (x) contain a
provision for the Termination of the DIP Financing on or before the effective
date of such plan and (y) provide for the continuation of the Liens and
priorities in favor of the Collateral Agent until such effective date, (ii) any
Person shall file a plan of reorganization in any of the Chapter 11 Cases which
does not (x) contain a provision for the Termination of the


 


48














 


DIP
Financing on or before the effective date of such plan and (y) provide for
the continuation of the Liens and priorities in favor of the Collateral Agent
until such effective date or (iii) any Credit Party (or by any party with
the support of any of the Credit Parties) shall have filed a plan of
reorganization that violates this Section 8.14 in the Chapter 11 Cases; or


 


8.15                                    Entry of
Unapproved Order.  An order
with respect to the Chapter 11 Case shall be entered by the Bankruptcy
Court (i) to revoke, reverse, stay for a period in excess of ten (10) days,
vacate or rescind any provision of any Financing Order, (ii) to modify,
supplement or amend any provision of any Financing Order without the consent of
the Administrative Agent or (iii) to permit any administrative expense or
any claim (now existing or hereafter arising, of any kind or nature whatsoever)
to have administrative priority as to any of the Credit Parties, equal or
superior to the priority of the Lenders in respect of the Obligations, except for
allowed administrative expenses having priority over the Obligations only to
the extent set forth in the definition of Carve Out, or (iv) to grant or
permit the grant of a Lien on the Collateral (other than a Permitted Lien) or (v) an
order shall be entered by the Bankruptcy Court dismissing the Chapter 11 Cases
which does not contain a provision for the Termination of the DIP Financing
upon such dismissal; or


 


8.16                                    Relief from the
Automatic Stay.  The
Bankruptcy Court enters an order or orders granting relief from the automatic
stay applicable under Section 362 of the Bankruptcy Code for any reason to
any Person with respect to assets of any Credit Party where the aggregate value
of the property subject to all such order or orders is greater than $10,000,000;
or


 


8.17                                    Unenforceability
of the Interim Order, Final Order or Credit Documents.  Any provision of the Interim Order, the Final
Order, this Agreement or any other Credit Document shall for any reason cease
to be valid or binding or enforceable against any of the Credit Parties (other
than, in the case of the Interim Order, by virtue of the Final Order
superseding it), or any of the Credit Parties shall so state in writing; or any
of the Credit Parties shall commence or join in any legal proceeding to contest
in any manner that the Interim Order, the Final Order, this Agreement or any
other Loan Document constitutes a valid and enforceable agreement or any of the
Credit Parties shall commence or join in any legal proceeding to assert that it
has no further obligation or liability under the Interim Order, the Final
Order, this Agreement or any other Credit Document; or


 


8.18                                    Motion against
the Lenders or the Prepetition Agent.  Any of the Credit Parties shall seek to, or
shall support (whether by way of motion or other pleadings filed with the
Bankruptcy Court or any other writing executed by any Credit Party or by oral
argument) any other Person’s motion to, (1) disallow in whole or in part
any of the Obligations arising under this Agreement or any other Credit
Document, (2) disallow in whole or in part any of the Indebtedness owed by
the Credit Parties under the Prepetition Credit Agreement or any other “Credit
Document” (as defined in the Prepetition Credit Agreement), (3) challenge
the validity and enforceability of the Liens or security interests granted
under any of the Credit Documents or in any Financing Order in favor of the
Collateral Agent or (4) challenge the validity and enforceability of the
Liens or security interests granted under the Prepetition Credit Agreement and
related documents or in any Financing Order in favor of the Prepetition Agent
or Prepetition Lenders; or


 


49

















 


8.19                                    Prohibited
Payment.  Any of the Credit Parties
shall make any payment (as adequate protection or otherwise), or application
for authority to pay, on account of any claim or Indebtedness arising prior to
the Petition Date other than those payments in respect of “adequate protection
obligations” permitted pursuant to the terms of the Financing Orders and
payments authorized by the Bankruptcy Court in respect of (x) any such
payments required and/or permitted in the “First Day Orders” reasonably
satisfactory to the Administrative Agent, (y) accrued payroll and related
expenses as of the Petition Date or (z) payments of cure amounts expressly
permitted by the provisions of Section 5.05(a); or


 


8.20                                    Other
Bankruptcy Matters.  (i) An
order shall have been entered modifying the adequate protection obligations
granted in any Financing Order without the prior written consent of the
Administrative Agent, (ii) an order shall have been entered by the
Bankruptcy Court avoiding or requiring disgorgement by the Administrative Agent
or any of the Lenders of any amounts received in respect of the Obligations, (iii) a
motion or other request shall be filed with the Bankruptcy Court seeking
authority to use any cash proceeds of any of the Collateral without the consent
of the Required Lenders and the Administrative Agent or (iv) any Debtor
shall file a motion or other request with the Bankruptcy Court seeking any
financing under Section 364(d) of the Bankruptcy Code secured by any
of the Collateral that does not require the Termination of the DIP Financing;
or


 


8.21                                    Failure to
Conduct Business.  If any
Credit Party is enjoined, restrained or in any way prevented by court order
(other than an order of the Bankruptcy Court approved by the Required Lenders)
from continuing to conduct all or any material part of its business affairs; or


 


8.22                                    Failure to File
Plan.  The Borrowers shall fail to (a) file,
within forty-five (45) days after the Petition Date, a plan of reorganization
in the Chapter 11 Cases that contains a provision for the Termination of
the DIP Financing on the date of effectiveness of such plan and (b) obtain
entry of a confirmation order from the Bankruptcy Court with respect to a plan
of reorganization in the Chapter 11 Cases that contains a provision for the
Termination of the DIP Financing by July 31, 2010;


 


then,
and in any such event, and at any time thereafter, notwithstanding the
provisions of Section 362 of the Bankruptcy Code, but subject to the
Financing Orders, if any Event of Default shall then be continuing, the
Administrative Agent may, or upon the written request of the Required Lenders,
shall, take any or all of the following actions, without further order of or
application to the Bankruptcy Court and without prejudice to the rights of the
Administrative Agent, any Letter of Credit Issuer or any Lender to enforce its claims
against any Credit Party, except as otherwise specifically provided for in this
Agreement:  (i) declare the Total
Commitment terminated, whereupon the Commitment of each Lender shall forthwith
terminate immediately and any Fees shall forthwith become due and payable
without any other notice of any kind; (ii) declare the principal of and
any accrued interest in respect of all Loans and all Obligations owing
hereunder (including Unpaid Drawings) to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrowers; (iii) enforce,
as Collateral Agent (or direct the Collateral Agent to enforce), any and all of
the Liens and rights created pursuant the Security Documents; (iv) terminate
any Letter of Credit which may be terminated in accordance


 


50

















 


with
its terms; (v) direct the Borrowers to pay (and the Borrowers hereby agree
upon receipt of such notice they will pay) to the Collateral Agent at the
Payment Office such additional amounts of cash and/or Cash Equivalents, to be
held in a cash collateral account as security for the Borrowers’ reimbursement
obligations in respect of Letters of Credit then outstanding equal to the
aggregate Stated Amount of all Letters of Credit then outstanding (less
any amount thereof as to which Section 1A.01(c) Arrangements are in
place); and (vi) apply any cash collateral held by the Administrative
Agent as provided in Section 3.02(A)(a) to the repayment of the
Obligations; provided, that with respect to items (iii) and (vi) above,
the Administrative Agent shall provide the Borrowers (with a copy to counsel
for any Committee appointed in the Chapter 11 Cases and the United States
Trustee for the Southern District of New York with five (5) Business Days
prior written notice.


 


Upon
the occurrence and during the continuance of an Event of Default, the automatic
stay arising pursuant to Bankruptcy Code Section 362 shall be vacated and
terminated in accordance with the Interim Order or the Final Order, as
applicable, so as to permit the Administrative Agent, the Collateral Agent and
the Lenders full exercise of all of their rights and remedies based on the
occurrence of an Event of Default, including, without limitation, all of their
rights and remedies with respect to the Collateral.  With respect to the Administrative Agent’s,
the Collateral Agent’s and Lenders’ exercise of their rights and remedies, the
Credit Parties agree, waive and, release, and shall be enjoined from attempting
to contest, delay, or otherwise dispute the exercise by the Administrative
Agent, the Collateral Agent and the Lenders of their rights and remedies before
the Bankruptcy Court or otherwise.


 


SECTION 9.                                      Definitions.  As used
herein, the following terms shall have the meanings herein specified unless the
context otherwise requires.  Defined
terms in this Agreement shall include in the singular number the plural and in
the plural the singular:


 


“Adjusted
Total Available Revolving Commitment” shall mean, at any time, the Total
Revolving Commitment at such time less the aggregate Available Revolving
Commitments of all Defaulting Lenders at such time.


 


“Administrative
Agent” shall have the meaning provided in the first paragraph of this
Agreement and shall include any successor to the Administrative Agent appointed
pursuant to Section 10.10.


 


“Affected
Loans” shall have the meaning provided in Section 3.02(B).


 


“Affiliate”
shall mean, with respect to any Person, any other Person directly or indirectly
controlling (including but not limited to all directors and officers of such
Person), controlled by, or under direct or indirect common control with such
Person.  A Person shall be deemed to
control another Person if such Person possesses, directly or indirectly, the
power (i) to vote 10% or more of the securities having ordinary voting
power for the election of directors (or equivalent governing body) of such
Person or (ii) to direct or cause the direction of the management and
policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise.


 


51

















 


“Agreement”
shall mean this Credit Agreement, as modified, amended, restated and/or
supplemented.


 


“Approved
Electronic Platform” shall have the meaning provided in Section 10.13(a).


 


“Arranger”
shall mean Banc of America Securities LLC, in its capacity as sole lead
arranger.


 


“Asset
Sale” shall mean and include (x) the sale, transfer or other
disposition by any Borrower or any Subsidiary to any Person of any asset of
such Borrower or such Subsidiary (other than sales, transfers or other
dispositions (i) in the ordinary course of business of inventory and/or
obsolete or excess equipment no longer needed in the conduct of its business or
(ii) of assets having an aggregate fair value (as determined by the board
of directors of FairPoint in its reasonable business judgment) of less than
$5,000,000) and/or (y) the receipt by any Borrower or any Subsidiary of
any insurance, condemnation or similar proceeds in connection with a casualty
or taking of any of its assets in excess of the costs incurred by any Borrower
and its Subsidiaries in respect of such event and of repairing or replacing the
assets so damaged, destroyed or taken.


 


“Assignment
Agreement” shall mean the Assignment Agreement in the form of Exhibit F
(appropriately completed).


 


“Authorized
Officer” shall mean, with respect to (i) delivering Notices of
Borrowing, Notices of Conversion/Continuation, Letter of Credit Applications
and similar notices, any officer or officers of a Borrower that has or have
been authorized by the board of directors of such Borrower to deliver such
notices pursuant to this Agreement and that has or have appropriate signature
cards on file with the Administrative Agent; (ii) delivering financial
information and officer’s certificates pursuant to this Agreement, the chief
executive officer, the president, any vice president, the chief financial
officer, any treasurer or any controller of the applicable Borrower; and (iii) any
other matter in connection with this Agreement or any other Credit Document,
any officer (or a person or persons so designated by any two officers) of the
applicable Borrower.


 


“Available
Revolving Commitment” of any Lender at any time shall mean its Percentage
of the Total Revolving Commitment at such time.


 


“Bankruptcy
Code” shall mean Title 11 of the United States Code entitled “Bankruptcy,”
as now or hereafter in effect, or any successor thereto.


 


“Bankruptcy
Court” shall have the meaning provided in the recitals to this Agreement.


 


“Base
Rate” at any time shall mean the highest of (i) the rate which is 1/2
of 1% in excess of the Federal Funds Effective Rate, (ii) the Prime
Lending Rate and (iii) the Eurodollar Rate for a one-month interest period
as determined by the Administrative Agent at such time plus 1%.


 


52

















 


“Base
Rate Loan” shall mean each Loan bearing interest at the rates provided in Section 1.08(a).


 


“Base
Rate Margin” shall mean 3.50%.


 


“Borrower”
and “Borrowers” shall have the meanings provided in the first paragraph
of this Agreement.


 


“Borrowing”
shall mean the incurrence of  Base Rate Loans or Eurodollar Loans by a
Borrower from the Lenders on a pro rata basis on a given
date (or resulting from conversions on a given date), having in the case of
Eurodollar Loans the same Interest Period; provided that (x) Base
Rate Loans incurred pursuant to Section 1.10(b) shall be considered
part of any related Borrowing of Eurodollar Loans.


 


“Budget”
shall have the meaning provided in Section 4.01(g).


 


“Business”
shall have the meaning provided in Section 7.01(a).


 


“Business
Day” shall mean (i) for all purposes other than as covered by clause (ii) below,
any day excluding Saturday, Sunday and any day which shall be in the City of
New York a legal holiday or a day on which banking institutions are authorized
by law or other governmental actions to close and (ii) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, Eurodollar Loans, any day which is a Business Day described in
clause (i) and which is also a day for trading by and between banks
in Dollar deposits in the interbank Eurodollar market.


 


“Capital
Lease” as applied to any Person shall mean any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.


 


“Capitalized
Lease Obligations” shall mean all obligations under Capital Leases of the
Borrowers or any of their Subsidiaries in each case taken at the amount thereof
accounted for as liabilities in accordance with GAAP.


 


“Carrier
Services” shall mean the resale of long distance services.


 


“Carrier
Services Company” shall mean any Subsidiary of a Borrower that is an
operating company engaged in the Carrier Services business.


 


“Carve
Out” shall mean, collectively, (1) in the event of the occurrence and
during the continuance of an Event of Default, 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. 
Notwithstanding the foregoing, so long as no Event of Default shall have
occurred and by continuing, the Credit Parties shall be permitted to pay
compensation and


 


53

















 


reimbursement
of fees and expenses allowed and payable under Sections 328, 330 and 331 of the
Bankruptcy Code, and as the same may be due and payable, and the same shall not
reduce the Carve Out.


 


“Cash
Equivalents” shall mean (a) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b) Dollar
denominated certificates of deposit, time deposits, bankers acceptances,
eurodollar time deposits or overnight bank deposits having maturities of six
months or less from the date of acquisition issued by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof having combined capital and surplus of not less than
$350,000,000; (c) commercial paper of an issuer rated at least A-2 by
Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc.
(“S&P”) or P-2 by Moody’s Investors Service, Inc. (“Moody’s”),
or carrying an equivalent rating by a nationally recognized rating agency, if
both of the two named rating agencies cease publishing ratings of commercial
paper issuers generally, and maturing within 270 days from the date of
acquisition; (d) repurchase obligations of any Lender or of any commercial
bank satisfying the requirements of clause (b) of this definition,
having a term of not more than 30 days with respect to securities issued or
fully guaranteed or insured by the United States government; (e) securities
(including tax-exempt debt obligations) with maturities of one year or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A2 by Moody’s (or publicly traded or open-ended
bond funds that invest exclusively in such securities); (f) securities
with maturities of six months or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition; (g) Dollar
denominated debt obligations of corporations maturing within 12 months from the
date of the acquisition rated at least A by S&P or A2 by Moody’s; (h) shares
of bond funds rated at least A by S&P or A2 by Moody’s having weighted
average maturities of 12 months or less; and (i) shares of money market
mutual or similar funds which invest exclusively in assets satisfying the requirements
of clauses (a) through (h) of this definition.


 


“Cash
Proceeds” shall mean, with respect to any Asset Sale, the aggregate cash
payments (including any cash received by way of deferred payment pursuant to a
note receivable issued in connection with such Asset Sale, other than the
portion of such deferred payment constituting interest, but only as and when so
received) received by the Borrower(s) and/or any Subsidiary from such
Asset Sale.


 


“CERCLA”
shall mean the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq.


 


“Change
of Control” shall mean at any time and for any reason (a) any “person”
or “group” (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act or any successor provision) is or becomes the “beneficial
owner” (as defined in Sections 13(d) and 14(d) of the Exchange
Act or any successor provision) on a fully diluted basis of more than 35%


 


54

















 


of
the total voting interest in the capital stock of FairPoint or (ii) during
any period of two consecutive years individuals who at the beginning of such
period constituted the Board of Directors of FairPoint (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the stockholders of FairPoint was approved by a vote of a majority
of the directors of FairPoint then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of FairPoint then in office or (b) a “change of control”
or similar event shall occur as provided in, on and after the execution,
delivery and/or incurrence thereof, any agreements or instruments relating to
any Permitted Junior Capital (as defined in the Prepetition Credit Agreement)
or any agreement governing or evidencing any material Indebtedness of
FairPoint.


 


“Chapter 11
Case” and “Chapter 11 Cases” shall have the meanings provided
in the recitals to this Agreement.


 


“Closing
Date” shall mean October 30, 2009.


 


“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time, and
the regulations promulgated and rulings issued thereunder.  Section references to the Code are to
the Code, as in effect at the date of this Agreement and any subsequent
provisions of the Code, amendatory thereof, supplemental thereto or substituted
therefor.


 


“Collateral”
shall mean all of the “Collateral” as defined in the Security Documents.


 


“Collateral
Agent” shall mean Bank of America, N.A. in its capacity as collateral agent
for the Lenders, together with any successor collateral agent.


 


“Company”
shall mean any corporation, limited liability company, partnership or other
business entity (or the adjectival form thereof, where appropriate).


 


“Compensated
Absence Adjustment” shall mean, for any year in which annual vacation
expense is not recognized evenly over the course of that year, the normalization
of the annual vacation expense such that the annual vacation expense is
recognized evenly over the course of that year.


 


“Compliance
Certificate” shall have the meaning set forth in Section 6.01(e).


 


“Consolidated
Capital Expenditures” shall mean, for any period, the aggregate of all cash
expenditures (including in all events all amounts borrowed for the acquisition,
repair, improvement, substitution or replacement of any capital asset and all
amounts expended under Capital Leases but excluding any amount representing
capitalized interest) by FairPoint and its Subsidiaries during that period
that, in conformity with GAAP, are or are required to be capitalized or
otherwise included in the property, plant or equipment reflected in the
consolidated balance sheet of FairPoint and its Subsidiaries; provided
that Consolidated Capital Expenditures shall in any event exclude amounts
expended with insurance proceeds from the loss of or damage to property, plant
or equipment or other capitalized assets reflected in the balance sheet of
FairPoint and its Subsidiaries.


 


55

















 


“Consolidated
EBITDAR” shall mean, for any period, Operating EBITDA for such period
adjusted by adding thereto an amount equal to the sum, without duplication of: (i) professional
fees for advisors, legal counsel and US Trustee fees paid for by the Borrowers,
whether or not on behalf of the Borrowers (ii) Non-Cash Stock Based
Compensation, (iii) KEIP/Stay Bonus, (iv) regulatory penalties,
whether impacting revenue or expense, pursuant to regulatory commitments for
service quality indices and broadband availability, provided that the aggregate
amount added back pursuant to this clause (iv) shall not exceed
$29,500,000, (v) Pension expenses, (vi) OPEB expenses and (viii) Compensated
Absence Adjustment.


 


“Consolidated
Interest Expense” shall have the meaning provided in the Prepetition Credit
Agreement.


 


“Consolidated
Net Income” shall have the meaning provided in the Prepetition Credit
Agreement.


 


“Contingent
Obligations” shall mean as to any Person any obligation of such Person
guaranteeing or intending to guarantee any Indebtedness, leases, dividends or
other obligations (“primary obligations”) of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for
the purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof; provided,
however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business.  The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated maximum of the
Contingent Obligation or, if none, the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made or,
if there is no stated or determinable amount of the primary obligation, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.


 


“Credit
Documents” shall mean this Agreement, the Notes, the Financing Orders, the
Pledge Agreement, the Security Agreement, the Subsidiary Guaranty, and any
other agreements, instruments and documents heretofore, now or hereafter
evidencing, securing, guaranteeing or otherwise relating to the Obligations
(including, without limitation, the letter agreement, dated October 25,
2009, among FairPoint, Bank of America, N.A. and Banc of America Securities
LLC), the Collateral or any other aspect of the transactions contemplated by
this Agreement.


 


“Credit
Event” shall mean the making of a Loan or the issuance of a Letter of
Credit.


 


56

















 


“Credit
Party” shall mean FairPoint and each Subsidiary of FairPoint party to a
Credit Document.


 


“Debtors”
shall have the meaning provided in the Interim Order.


 


“Default”
shall mean any event, act or condition which with notice or lapse of time, or
both, would constitute an Event of Default.


 


“Default
Rate” shall mean a fluctuating per annum interest rate at all times equal
to the sum of (a) the otherwise applicable Interest Rate plus (b) two
percent (2%) per annum.  In addition, the
Default Rate shall result in an increase in the otherwise applicable Letter of
Credit Fee by two percentage points per annum.


 


“Defaulting
Lender” shall mean any Lender with respect to which a Lender Default is in
effect; provided, however, that notwithstanding the foregoing,
LCPI shall not be considered a Defaulting Lender by virtue of the fact that it
suffered a Distress Event prior to the Closing Date.


 


“Disqualified
Preferred Stock” shall mean any Preferred Stock of the Borrower (other than
Qualified Preferred Stock), all terms and conditions of which (including
covenants, defaults, remedies, redemption provisions, maturity, voting
provisions, dividend rate and cash-pay limitations), and the documentation
therefor, are on market terms for a placement of preferred equity securities
and are otherwise reasonably satisfactory to the Administrative Agent.


 


“Distress
Event” means, with respect to any Person (each, a “Distressed Person”),
a voluntary or involuntary case with respect to such Distressed Person under
the Bankruptcy Code or any similar bankruptcy laws of its jurisdiction of
formation, or a custodian, conservator, receiver or similar official is
appointed for such Distressed Person or any substantial part of such Distressed
Person’s assets, or such Distressed Person or any Person that directly or
indirectly controls such Distressed Person is subject to a forced liquidation,
merger, sale or other change of control supported in whole or in part by
guaranties or other support of (including without limitation the
nationalization or assumption of ownership or operating control by) the U.S.
government or other governmental authority, or such Distressed Person makes a
general assignment for the benefit of creditors or is otherwise adjudicated as,
or determined by any governmental authority having regulatory authority over
such Distressed Person or its assets to be, insolvent, bankrupt, or deficient
in meeting any capital adequacy or liquidity standard of any governmental
authority applicable to such Distressed Person.


 


“Dividend”
shall mean, as to any Person, the declaration or payment of any dividends
(other than dividends payable solely in capital stock or other equity interests
of such Person) or return of any capital to, its stockholders, members and/or
other owners or the authorization or the making of any other distribution,
payment or delivery of property or cash to its stockholders, members and/or
other owners as such, or the redemption, retirement, purchase or other
acquisition, directly or indirectly, for a consideration, of any shares of any
class of its capital stock or other ownership interests now or hereafter
outstanding (or any warrants for or options or stock appreciation rights in
respect of any of such shares), or the setting aside of any funds for any of
the foregoing purposes, or the purchase or other acquisition by any Subsidiary


 


57

















 


of
such Person for consideration of any shares of any class of the capital stock
or other ownership interests of the Borrower or any other Subsidiary, as the
case may be, now or hereafter outstanding (or any options or warrants or stock
appreciation rights issued by such Person with respect to its capital stock or
other ownership interests).


 


“Dollars”
and the sign “$” shall each mean freely transferable lawful money of the
United States.


 


“Domestic
Subsidiary” of any Person shall mean any Subsidiary of such Person
incorporated or organized in the U.S.


 


“Eligible
Transferee” shall mean and include a commercial bank, a financial
institution, a fund that regularly invests in bank loans or any other
institutional “accredited investor” as defined in SEC Regulation D.


 


“Environmental
Claims” means any and all administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigations (other than internal reports prepared by the
Borrowers or any of their Subsidiaries solely in the ordinary course of such
Person’s business and not in response to any third party action or request of
any kind) or proceedings relating to any Environmental Law or any permit
issued, or any approval given, under any such Environmental Law (hereafter, “Claims”),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (b) any
and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting
from Hazardous Materials arising from alleged injury or threat of injury to
health, safety or the environment.


 


“Environmental
Law” means any applicable federal, state, foreign or local statute, law,
rule, regulation, ordinance, code and rule of common law now or hereafter
in effect and in each case as amended, and any binding judicial or
administrative interpretation thereof, including any binding judicial or
administrative order, consent decree or judgment, relating to the environment
or Hazardous Materials, including, without limitation, CERCLA; RCRA; the
Federal Water Pollution Control Act, as amended, 33 U.S.C. § 1251 et seq.;
the Toxic Substances Control Act, 15 U.S.C. § 7401 et seq.;
the Clean Air Act, 42 U.S.C. § 2601 et seq.; the
Safe Drinking Water Act, 42 U.S.C. § 300F et seq.;
the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.;
and any applicable state and local or foreign counterparts or equivalents.


 


“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time, and the regulations promulgated and rulings issued
thereunder.  Section references to
ERISA are to ERISA, as in effect at the date of this Agreement and any
subsequent provisions of ERISA, amendatory thereof, supplemental thereto or
substituted therefor.


 


“ERISA
Affiliate” shall mean each person (as defined in Section 3(9) of
ERISA) which together with a Borrower or a Subsidiary would be deemed to be a “single
employer” within the meaning of Section 414(b) or (c) of the
Code and with respect to Sections 412 and


58

















 


4971
of the Code and Section 302 of ERISA, Section 414(b), (c), (m) or
(o) of the Code; provided that, solely for the purposes of Section 6.07
of this Agreement, the term “ERISA Affiliate” shall not include Verizon
Communications Inc. or members of its controlled group under Code § 414, except
for Spinco.


 


“Eurodollar
Loans” shall mean each Loan bearing interest at the rates provided in Section 1.08(b).


 


“Eurodollar
Margin” shall mean 4.50%.


 


“Eurodollar
Rate” shall mean with respect to each Interest Period for a Eurodollar Loan
(i) the offered quotation to first-class banks in the interbank Eurodollar
market by the Administrative Agent for dollar deposits of amounts in same day
funds comparable to the outstanding principal amount of the Eurodollar Loans
for which an interest rate is then being determined with maturities comparable
to the Interest Period to be applicable to such Eurodollar Loans, determined as
of 10:00 A.M.  (New York time) on
the date which is two Business Days prior to the commencement of such Interest
Period divided (and rounded upward to the next whole multiple of 1116 of 1%) by
(ii) a percentage equal to 100% minus the then stated maximum rate
of all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) applicable to any member
bank of the Federal Reserve System in respect of Eurocurrency liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D).


 


“Event
of Default” shall have the meaning provided in Section 8.


 


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


 


“Excluded
Intercompany Payables” shall mean (i) any intercompany payable
incurred in the ordinary course of business consistent with past practices by
FairPoint or any of its Wholly-Owned Subsidiaries and owing to FairPoint or a
Wholly-Owned Subsidiary of FairPoint, as applicable, and (ii) any payable
owing by a Subsidiary of FairPoint to its parent company (if FairPoint or
another Subsidiary of FairPoint) arising in connection with the tax sharing
arrangements entered into among FairPoint and its Subsidiaries, so long as the
amount of such payable relates to the taxes attributable to the operations of
such Subsidiary.


 


“Existing
Letter of Credit” shall have the meaning provided in Section 1A.01(d).


 


“Facing
Fee” shall have the meaning provided in Section 2.01(d).


 


“FairPoint”
shall have the meaning provided in the first paragraph of this Agreement.


 


“FairPoint
Carrier Services” shall mean FairPoint Carrier Services, Inc.
(formerly known as FairPoint Communications Solutions, Inc.), a
Wholly-Owned Subsidiary of the Borrower.


 


“FCC”
shall mean the Federal Communications Commission and any successor regulatory
body.


 


59














 


“Federal
Funds Effective Rate” shall mean for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if
such day is not a Business Day, for the immediately preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.


 


“Fees”
shall mean all amounts payable pursuant to, or referred to in, Section 2.01.


 


“Final
Order” shall mean the order or judgment of the Bankruptcy Court as entered
on the docket of the Bankruptcy Court approving this Agreement and the other
Credit Documents, in form and substance satisfactory to the Administrative Agent
and the Required Lenders, which order or judgment is in effect and not stayed,
and as to which the time to appeal, petition for certiorari, or move for
reargument or rehearing has expired and as to which no appeal, petition for
certiorari, or other proceeding for reargument or rehearing shall then be
pending, or, if pending, no stay pending appeal shall have been granted.


 


“Financial
Advisor” shall mean FTI Consulting, Inc., and its successors.


 


“Financing
Orders” shall mean, collectively, the Interim Order and the Final Order.


 


“First-Tier
Subsidiary” shall mean FairPoint Broadband, Inc., MJD Ventures, Inc.,
MJD Services Corp., STE, FairPoint Carrier Services, Inc., FairPoint
Logistics, Inc., Enhanced Communications of Northern New England Inc. and
Northern New England.  Telephone
Operations LLC and any other Subsidiary first acquired or created after the
Closing Date that is a direct Subsidiary of FairPoint.  Notwithstanding the foregoing, for purposes
of clarity, neither Enhanced Communications of Northern New England Inc. nor
Northern New England Telephone Operations, LLC shall be Subsidiary Guarantors
hereunder.


 


“GAAP”
shall mean generally accepted accounting principles in the United States of
America as in effect on the date of this Agreement; it being understood and
agreed that determinations in accordance with GAAP for purposes of Section 7,
including defined terms as used therein, are subject (to the extent provided
therein) to Section 11.07(a).


 


“Hazardous
Materials” shall mean (a) petroleum or petroleum products, radioactive
materials, asbestos in any form that is friable, urea formaldehyde foam
insulation, and radon gas; (b) any chemicals, materials or substance
defined as or included in the definition of “hazardous substances,” “hazardous
waste,” “hazardous materials,” “extremely hazardous substances,” restricted
hazardous waste,” “toxic substances,” “toxic pollutants,” “contaminants,” or “pollutants,”
or words of similar import, under any applicable Environmental Law; and (c) any
other chemical, material or substance, the release of which is prohibited,
limited or regulated by any governmental authority.


 


“Impacted
Lender” means any Lender (a) that has given verbal or written notice
to the Administrative Agent or any Lender or has otherwise publicly announced
that such Lender


 


60

















 


believes
it will become, or that fails following inquiry promptly to provide to the
Administrative Agent or a Letter of Credit Issuer making such inquiry
reasonably satisfactory assurance that such Lender will not become, a
Defaulting Lender, (b) as to which the Administrative Agent or a Letter of
Credit Issuer has a good faith belief that such Lender has defaulted more than
once in fulfilling its funding obligations (as a lender, letter of credit
issuer or issuer of bank guarantees and including, but not limited to, funding
or paying when due loan requests, swingline participations, letter of credit
participations, pro rata sharing obligations and expense and indemnification
obligations) under any other syndicated credit facility and such Lender shall
not have provided assurances satisfactory to the Administrative Agent and
Letter of Credit Issuer that despite such defaults such Lender will not become
a Defaulting Lender hereunder, or (c) with respect to which any Distress
Event has occurred with respect to any Affiliate of such Lender that directly
or indirectly controls such Lender; provided, however, that
notwithstanding the foregoing, LCPI shall not be considered an Impacted Lender (x) by
virtue of the fact that a Distress Event has occurred prior to the Closing Date
with respect to it or certain of its Affiliates or (y) by operation of
clause (b) of this definition.


 


“Inactive
Subsidiary” shall mean each Subsidiary listed on Annex XII.


 


“Indebtedness”
of any Person shall mean, without duplication, (i) all indebtedness of
such Person for borrowed money, (ii) the deferred purchase price of assets
or services which in accordance with GAAP would be shown on the liability side
of the balance sheet of such Person, (iii) the face amount of all letters
of credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder, (iv) all indebtedness of a second Person secured
by any Lien on any property owned by such first Person, whether or not such
indebtedness has been assumed (to the extent of the fair market value of such
property), (v) all Capitalized Lease Obligations of such Person, (vi) all
obligations of such Person to pay a specified purchase price for goods or
services whether or not delivered or accepted, i.e., take-or-pay and
similar obligations, (vii) all net obligations of such Person under
Interest Rate Agreements and (viii) all Contingent Obligations of such
Person (other than Contingent Obligations arising from the guaranty by such
Person of the obligations of the Borrowers and/or their Subsidiaries to the
extent such guaranteed obligations do not constitute Indebtedness and are
otherwise permitted hereunder); provided that Indebtedness shall not
include trade payables, accrued expenses and receipt of progress and advance
payments, in each case arising in the ordinary course of business.


 


“Indemnified
Person” shall have the meaning provided in Section 11.01(a).


 


“Intercompany
Debt” shall mean any Indebtedness, payables or other obligations (other
than prior to the entry of the Final Order, Excluded Intercompany Payables),
whether now existing or hereafter incurred, owed by a Borrower or any
Subsidiary of a Borrower to a Borrower or any other Subsidiary of a Borrower.


 


“Intercompany
Loans” shall have the meaning provided in Section 7.06(c).


 


“Interest
Period” with respect to any Eurodollar Loan shall mean the interest period
applicable thereto, as determined pursuant to Section 1.09.


 


61

















 


“Interest
Rate” shall mean each or any of the interest rates, including. to the
extent applicable, the Default Rate, set forth in Section 1.08.


 


“Interest
Rate Agreement” shall mean any interest rate swap agreement, any interest
rate cap agreement, any interest rate collar agreement or other similar
agreement or arrangement designed to protect a Borrower or any Subsidiary
against fluctuations in interest rates.


 


“Interim
Order” shall mean the order or judgment of the Bankruptcy Court as entered
on the docket of the Bankruptcy Court with respect to the Chapter 11 Cases
substantially in the form of Exhibit E hereto, approving, inter alia, this Agreement and the other
Credit Documents, and (a) authorizing the incurrence by the Credit Parties
of the post-petition secured indebtedness in accordance with this Agreement,
and (b) approving the payment by the Credit Parties of the Fees
contemplated by this Agreement and the other Credit Documents.


 


“Intermediary
Holding Company” shall mean each First-Tier Subsidiary that is (i) not
an operating company (but that owns directly or indirectly one or more
operating companies) and (ii) not subject to regulatory restrictions on
borrowings or issuances of guaranties of indebtedness for borrowed money.


 


“Investment”
shall have the meaning provided in the preamble to Section 7.06.


 


“KEIP/Stay
Bonus” shall have the meaning provided in Section 7.13(ii).


 


“LCPI”
shall mean Lehman Commercial Paper Inc. and its Affiliates.


 


“Lender”
shall mean each financial institution listed on Annex I, as well as any
Person that becomes a “Lender” hereunder pursuant to Section 1.13 or
11.04(b).


 


“Lender
Default” shall mean (i) the wrongful refusal (which has not been
retracted) or failure of a Lender to make available its portion of any
incurrence of Loans or a reimbursement of an Unpaid Drawing, (ii) a Lender
having notified the Administrative Agent and/or the Borrowers that it does not
intend to comply with the obligations under Section 1.01 or 1A.05, in
circumstances where such non-compliance will constitute a breach of such Lender’s
obligations under the respective Section, or (iii) any Distress Event has
occurred after the Closing Date with respect to such Lender.


 


“Lender
Register” shall have the meaning provided in Section 11.15.


 


“Letter
of Credit” shall have the meaning provided in Section 1A.01(a).


 


“Letter
of Credit Application” shall mean an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in
use by the Letter of Credit Issuer.


 


“Letter
of Credit Fee” shall have the meaning provided in Section 2.01(c).


 


“Letter
of Credit Issuer” shall mean Bank of America, N.A.


 


62

















 


“Letter
of Credit Outstandings” shall mean, at any time, the sum of, without
duplication, (i) the aggregate Stated Amount of all outstanding Letters of
Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of
all Letters of Credit.


 


“Lien”
shall mean any mortgage, pledge, security interest, encumbrance, lien or charge
of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement or any lease in the nature
thereof).


 


“Loan”
shall have the meaning provided in Section 1.01.


 


“Logistics”
shall have the meaning provided in the first paragraph of this Agreement.


 


“Margin
Stock” shall have the meaning provided in Regulation U.


 


“Material
Adverse Effect” shall mean (i) any state of facts, change,
development, event, effect, condition or occurrence that, individually or in
the aggregate, has had or would be reasonably likely to have a materially
adverse effect on the business, assets, properties, liabilities or condition
(financial or otherwise) of the Borrowers and their Subsidiaries, taken as a
whole, after giving effect to the Transaction, (ii) a material adverse
effect on the rights or remedies of the Agents or the Lenders under any Credit
Document or (iii) a material adverse effect on the ability of the Credit Parties
taken as a whole to perform their obligations under the Credit Documents.


 


“Maturity
Date” shall mean July 26, 2010, which date may, at the request of the
Borrowers and subject to the prior written consent of the Required Lenders, be
extended by up to three months (provided that the Credit Parties shall not be
required to pay a fee to the Lenders in connection with any such three month
extension).


 


“Minimum
Borrowing Amount” shall mean (i) in the case of Base Rate Loans,
$500,000 and (ii) in the case of Eurodollar Loans, $500,000.


 


“Moody’s”
shall have the meaning provided in the definition of “Cash Equivalents”.


 


“Multiemployer
Plan” shall mean any multiemployer plan as defined in section 4001(a)(3) of
ERISA which is contributed to by (or to which there is an obligation to
contribute of) a Borrower or any of its Subsidiaries or an ERISA Affiliate and
each such plan for the five year period immediately following the latest date
on which a Borrower, any such Subsidiary or ERISA Affiliate contributed to or
had an obligation to contribute to such plan.


 


“Net
Cash Proceeds” shall mean (i) with respect to any Asset Sale, the Cash
Proceeds resulting therefrom net (without duplication) of expenses of sale
(including payment of principal, premium and interest of Indebtedness secured
by the assets the subject of the Asset Sale and required to be, and which is,
repaid under the terms thereof as a result of such Asset Sale), and incremental
taxes paid or payable as a result thereof and (ii) with respect to any
issuance of Preferred Stock or Indebtedness, the cash proceeds received by the
Borrower from such issuance net (without duplication) of underwriting discounts
and commissions, private


 


63

















 


placement
and/or initial purchaser fees and other reasonable fees and expenses associated
therewith.


 


“New
Lending Office” shall mean the new lending office designated by a Lender
that is not a United States person (as defined in Section 3.05).


 


“90%-Owned
Subsidiary” shall mean (i) any Subsidiary to the extent at least 90%
of the capital stock or other ownership interests in such Subsidiary is owned
directly or indirectly by FairPoint and (ii) STE, to the extent at least
87.5% of the capital stock of STE is owned directly or indirectly by FairPoint.


 


“Non-Cash
Stock Based Compensation” shall mean the non-cash expense resulting from
the issuance of restricted shares, stock options and other amounts under the
Plans set forth on Annex VIII.


 


“Non-Defaulting
Lender” shall mean a Lender that is not a Defaulting Lender.


 


“Non-Pledge
Party Subsidiary” shall mean each Subsidiary of a Borrower which is not a
Pledge Party.


 


“Non-Pledged
Subsidiary” shall mean any Subsidiary that is not a Pledged Subsidiary.


 


“Non-Wholly
Owned Subsidiary” shall mean, as to any Person, each Subsidiary of such
Person which is not a Wholly-Owned Subsidiary of such Person.


 


“Northern
New England Business” means that certain business comprising the local
exchange businesses and related landline activities of Verizon Communications
Inc. in Maine, New Hampshire and Vermont, as such term is used in the Rule 424(b) Prospectus
filed with the SEC in connection with the Merger.


 


“Note”
shall have the meaning provided in Section 1.05(a).


 


“Notice
of Borrowing” shall have the meaning provided in Section 1.03(a).


 


“Notice
of Conversion/Continuation” shall have the meaning provided in Section 1.06.


 


“Notice
Office” shall mean such office of the Administrative Agent as the
Administrative Agent may designate to the Borrowers in writing from time to
time.


 


“Obligations”
shall mean all advances to, and debts, liabilities, obligations, covenants and
duties of, any Credit Party arising under this Agreement or any other Credit
Document or otherwise with respect to any Loan or Letter of Credit, including
those in respect of Letter of Credit Outstandings, whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest, expenses,
costs and fees that accrue before and after the Closing Date.  Any reference in this Agreement or in any
other Credit Document to the Obligations shall include all


 


64

















 


or
any portion thereof and any extensions, modifications, renewals or alterations
thereto. “Obligation” means any part of the Obligations.


 


“Operating
EBITDA” shall mean, for any period, Consolidated Net Income for such period
adjusted by (A) adding thereto, an amount equal to the sum, without duplication
(but only to the extent deducted in determining Consolidated Net Income for
such period), of: (i) provisions for taxes based on income, (ii) Consolidated
Interest Expense, (iii) amortization and depreciation expense, (iv) losses
on sales of assets (excluding sales in the ordinary course of business) and
other extraordinary losses, (v) any other non-cash charges (including
non-cash costs arising from implementation of SFAS 106 and SFAS 109) accrued by
FairPoint and its Subsidiaries during such period (except to the extent any
such charge will require a cash payment in a future period), (vi) fees
arising out of this Transaction, and (vii) deposits or prepayments to
certain vendors as a result of the bankruptcy and (B) subtracting
therefrom, an amount equal to the sum, without duplication (but only to the
extent included in determining Consolidated Net Income for such period), of: (i) gains
on sales of assets (excluding sales in the ordinary course of business) and
other extraordinary gains and (ii) all non-cash gains and non-cash income
accrued by FairPoint and its Subsidiaries during such period, all as determined
for FairPoint and its Subsidiaries on a consolidated basis in accordance with
GAAP. For the avoidance of doubt, it is understood and agreed that, to the
extent any net income (or loss) of any Subsidiary is excluded from the
calculation of Consolidated Net Income in accordance with the definition
thereof contained herein, any add-backs to, or deductions from, Consolidated
Net Income in determining Operating EBITDA as provided above shall be
calculated in a fashion consistent with the limitations and/or exclusions
provided in the definition of Consolidated Net Income contained herein.


 


“Participant”
shall have the meaning provided in Section 1A.05(a).


 


“Patriot
Act” shall mean the USA PATRIOT Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)).


 


“Payment
Office” shall mean such office of the Administrative Agent as the
Administrative Agent may designate to the Borrowers and the Lenders in writing
from time to time.


 


“PBGC”
shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002
of ERISA, or any successor thereto.


 


“Percentage”
shall mean at any time for each Lender, the percentage obtained by dividing
such Lender’s Revolving Commitment by the Total Revolving Commitment; provided
that if the Total Revolving Commitment has been terminated, the Percentage of
each Lender shall be determined by dividing such Lender’s Revolving Commitment
immediately prior to such termination by the Total Revolving Commitment
immediately prior to such termination.


 


“Permitted
Liens” shall mean Liens described in clauses (a) through (l),
inclusive, of Section 7.03.


 


65

















 


“Person”
shall mean any individual, partnership, joint venture, firm, corporation,
limited liability company, association, trust or other enterprise or any
government or political subdivision or any agency, department or
instrumentality thereof.


 


“Petition
Date” shall have the meaning provided in the recitals to this Agreement.


 


“Plan”
shall mean any pension plan as defined in Section 3(2) of ERISA
(other than a multiemployer plan as defined in Section 3(37) of ERISA),
which is maintained or contributed to by (or to which there is an obligation to
contribute of) any Borrower or any of its Subsidiaries or an ERISA Affiliate
and that is subject to Title IV of ERISA, and each such plan for the five
year period immediately following the latest date on which such Borrower, any
such Subsidiary of a Borrower or an ERISA Affiliate maintained, contributed to
or had an obligation to contribute to such plan.


 


“Plan
Support Agreement” shall have the meaning provided in Section 4.01(h).


 


“Pledge
Agreement” shall have the meaning provided in Section 4.01(a)(ii).


 


“Pledged
Subsidiary” shall mean (i) each Subsidiary the capital stock or other
equity interests of which is or are pledged pursuant to the Pledge Agreement
and (ii) Telephone Operating Company of Vermont LLC.


 


“Preferred
Stock” as applied to the capital stock of any Person, shall mean capital
stock of such Person (other than common stock of such Person) of any class or
classes (however designed) that ranks prior, as to the payment of dividends or
as to the distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of capital stock of any
other class of such Person, and shall include any Disqualified Preferred Stock
and any Qualified Preferred Stock.


 


“Prepetition
Administrative Agent” shall have the meaning provided in the recitals to
this Agreement.


 


“Prepetition
Credit Agreement” shall have the meaning provided in the recitals to this
Agreement.


 


“Prepetition
Lenders” shall have the meaning provided in the recitals to this Agreement.


 


“Prime
Lending Rate” shall mean the rate which Bank of America, N.A.  announces from time to time as its prime
lending rate, the Prime Lending Rate to change when and as such prime lending
rate changes.  The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer.  Bank
of America, N.A. may make commercial loans or other loans at rates of interest
at, above or below the Prime Lending Rate.


 


“Professionals”
shall mean the professionals retained by the Credit Parties and any statutory
committee appointed in the Chapter 11 Cases and approved by the Bankruptcy
Court (the “Committee”).


 


66

















 


“PUC”
shall mean a public utility commission, public service commission or any
similar agency or commission.


 


“Qualified
Preferred Stock” shall mean any Preferred Stock of FairPoint, the express
terms of which (a) shall provide for no voting rights (except for (x) voting
rights required by applicable law and (y) limited customary voting rights
on fundamental matters such as mergers, consolidations, sales of all or
substantially all of the assets of FairPoint, or liquidations involving the
Borrower) or covenants (other than customary information covenants and
inspection rights) (b) shall provide that dividends thereon shall not be
required to be paid at any time (and to the extent) that such payment would be
prohibited by the terms of this Agreement or any other agreement of the Borrower
relating to outstanding indebtedness and (c) by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable),
or upon the happening of any event (including any Change of Control), cannot
mature and is not mandatorily redeemable, pursuant to a sinking fund obligation
or otherwise, and is not redeemable, or required to be repurchased, at the sole
option of the holder thereof (including, without limitation, upon the
occurrence of a Change of Control), in whole or in part, on or prior to the
date that falls one year and one day after the date on which all Obligations
are repaid in full and all Revolving Commitments have terminated or expired.


 


“Qualified
Subsidiary” shall mean and include (i) each Wholly-Owned Domestic
Subsidiary of a Borrower that is a Pledged Subsidiary, (ii) each other
Pledged Subsidiary (x) that is a Domestic Subsidiary and (y) in which
the Investments of cash, property, services and/or other assets are made in
each class of equity interests of such Subsidiary by the Pledged Parties, on
the one hand, and the other holders of such class of equity interests, on the
other hand, in amounts which are proportional to the respective equity
percentages of the Pledged Parties, on the one hand, and such other holders, on
the other hand, for each class of equity interests of such Subsidiary (as
reasonably determined by senior management of FairPoint) and (iii) each
Wholly-Owned Domestic Subsidiary of a Borrower that is a Telco or Carrier
Services Company, the capital stock or other equity interests of which are not
permitted to be pledged pursuant to the Pledge Agreement as a result of
applicable regulatory law.


 


“RCRA”
shall mean the Resource Conservation and Recovery Act, as amended,
42 U.S.C. § 6901 et seq.


 


“Regulation
D” shall mean Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing reserve requirements.


 


“Regulation
T” shall mean Regulation T of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing margin requirements.


 


“Regulation
U” shall mean Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing margin requirements.


 


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“Regulation
X” shall mean Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing margin requirements.


 


“Replaced
Lender” shall have the meaning provided in Section 1.13.


 


“Replacement
Lender” shall have the meaning provided in Section 1.13.


 


“Reportable
Event” shall mean an event described in Section 4043(c) of ERISA
with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under any
subsection of PBGC Regulation Section 4043.


 


“Required
Lenders” shall mean Non-Defaulting Lenders the sum of whose Revolving
Commitments (or, after the termination thereof, outstanding Loans and
Percentages of Letter of Credit Outstandings) constitute greater than 50% of
the sum of the Total Revolving Commitment less the Revolving Commitments of all
Defaulting Lenders (or after the termination thereof, the sum of then total
outstanding Loans of Non-Defaulting Lenders and the aggregate Percentages of
all Non-Defaulting Lenders of the total outstanding Letter of Credit
Outstandings at such time).


 


“Restricted
Payment” shall mean, with respect to FairPoint or any of its Subsidiaries, (i) any
Dividend by such Person, (ii) any payment by such Person on account of any
Indebtedness that is subordinated in right of payment to the Obligations, (iii) any
payment by FairPoint or any of its Subsidiaries with respect to any
Intercompany Debt and (iv) the making of (or giving any notice in respect
of) any voluntary or optional payment or prepayment on or redemption,
repurchase or acquisition for value of (including, without limitation, by way
of depositing with the trustee with respect thereto or any other Person money
or securities before due for the purpose of paying when due), or any
prepayment, repurchase, redemption or acquisition for value as a result of any
asset sale or change of control or similar event of any Scheduled Existing
Indebtedness.


 


“Revolving
Commitment” shall mean, with respect to each Lender, the amount set forth
opposite such Lender’s name in Annex I hereto directly below the column
entitled “Revolving Commitment,” as the same may be (x) reduced or
terminated from time to time pursuant to Section 2.02, 2.03 and/or 8 or (y) adjusted
from time to time as a result of assignments to or from such Lender pursuant to
Section 1.13 and/or 11.04.


 


“Sarbanes
Oxley” shall mean the Sarbanes-Oxley Act of 2002, enacted on July 30,
2002, as now or hereafter in effect, or any successor thereto, and the rules related
thereto.


 


“Scheduled
Existing Indebtedness” shall have the meaning provided in Section 7.04(d).


 


“SEC”
shall have the meaning provided in Section 6.01(f).


 


“SEC
Regulation D” shall mean Regulation D as promulgated under the Securities
Act.


 


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“Second-Tier
Holdco” shall mean any indirect Subsidiary of FairPoint that is a holding
company formed to hold the capital stock or other equity interests of one or
more Subsidiaries (i.e., is not an operating company).


 


“Section 1A.01(c) Arrangements”
shall have the meaning provided in Section 1A.01(c).


 


“Section 3.04
Certificate” shall have the meaning provided in Section 3.04(b)(ii).


 


“Secured
Creditor” shall mean and include any “Secured Creditor” as defined in the
Security Documents.


 


“Securities
Act” shall mean the Securities Act of 1933, as amended, as the same may be
in effect from time to time.


 


“Security
Agreement” shall  have the meaning
provided in Section 4.01(a)(iii).


 


“Security
Documents” shall mean the Security Agreement and the Pledge Agreement.


 


“Specified
Lien” means those valid, perfected, enforceable and unavoidable, Liens on
the property of the Credit Parties in existence as of the Petition Date in the
respect to which the Collateral Agent has been granted a junior Lien pursuant
to Section 364(c)(3) of the Bankruptcy Code.


 


“Spinco”
shall mean Northern New England Spinco, Inc., a Delaware corporation.


 


“Stated
Amount” shall mean, with respect to any Letter of Credit at any time, the
stated amount of such Letter of Credit in effect at such time; provided,
however, that with respect to any Letter of Credit that, by its terms
provides for one or more automatic increases in the stated amount thereof, the
amount of such Letter of Credit shall be deemed to be the maximum stated amount
of such Letter of Credit after giving effect to all such increases, whether or
not such maximum stated amount is in effect at such time.


 


“STE”
shall mean ST Enterprises, Ltd., a Kansas corporation.


 


“Subsidiary”
of any Person shall mean and include (i) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such corporation shall
have or might have voting power by reason of the happening of any contingency)
is at the time owned by such Person directly or indirectly through Subsidiaries
and (ii) any partnership, association, joint venture or other entity in
which such Person directly or indirectly through Subsidiaries, has more than a
50% equity interest at the time.  Unless
otherwise expressly provided, all references herein to “Subsidiary” shall mean
a Subsidiary of the Borrowers.


 


“Subsidiary
Guarantors” shall mean each Subsidiary party to the Subsidiary Guaranty.


 


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“Subsidiary
Guaranty” shall have the meaning provided in Section 4.01(a)(iv).


 


“Super-Majority
Lenders” shall mean Non-Defaulting Lenders the sum of whose Revolving
Commitments (or, after the termination thereof, outstanding Loans and
Percentages of Letter of Credit Outstandings) constitute greater than 75% of
the sum of the Total Revolving Commitment less the Revolving Commitments of all
Defaulting Lenders (or after the termination thereof, the sum of then total
outstanding Loans of Non-Defaulting Lenders and the aggregate Percentages of
all Non-Defaulting Lenders of the total outstanding Letter of Credit
Outstandings at such time).


 


“Super-Priority
Claim” shall mean, in relation to the Credit Parties, a claim against the
Credit Parties in the Chapter 11 Cases which is an administrative expense claim
authorized and established by the Bankruptcy Court pursuant to Sections 364(c) and
507(b) of the Bankruptcy Code and having priority over any or all
administrative expenses of the kind specified in Sections 503(b), 507(b) and
546(c) of the Bankruptcy Code.


 


“S&P”
shall have the meaning provided in the definition of “Cash Equivalents”.


 


“Taxes”
shall have the meaning provided in Section 3.05(a).


 


“Telco”
shall mean any Subsidiary of FairPoint that is an operating company.


 


“Termination
Date” shall mean the earliest to occur of (i) the Maturity Date, (ii) the
effective date of a confirmation date of a plan of reorganization for any of
the Loan Parties, that is satisfactory to the Administrative Agent and the
Required Lenders (which plan of reorganization shall in any event provide for (A) the
termination of the DIP Financing on or before the effective date of such plan
of reorganization (as such term is used in Section 1129 of the Bankruptcy
Code) and (B) until the Termination of the DIP Financing, the continuity
and priority of the Liens of the Collateral Agent in the Collateral, the
superpriority administrative expense claim status of the claims of the
Administrative Agent and the Lenders under the Credit Documents and the other
rights and remedies of the Administrative Agent and the Lenders under the
Credit Documents, in each instance, to the same extent as is provided in the
Final Order), (iii) the date this Agreement is terminated either by the
Borrowers pursuant to Section 2.02 or by the Required Lenders pursuant to Section 8,
(iv) the date this Agreement is otherwise terminated for any reason
whatsoever pursuant to the terms of this Agreement.


 


“Termination
of the DIP Financing” shall mean, collectively, the termination of all
Lenders’ Revolving Commitments and payment in full in cash of all Obligations
and the return and cancellation (or expiration (undrawn)) of all Letters of
Credit (or the deposit with the Administrative Agent of cash collateral to the
extent of 105% of the Stated Amount of all Letters of Credit not so returned
and cancelled (or expired (undrwan)) in a manner satisfactory to the
Administrative Agent and the Lenders.


 


“Total
Revolving Commitment” shall mean, at any time, the sum of the Revolving
Commitments of each of the Lenders at such time.


 


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“Total
Unutilized Revolving Commitment” shall mean, at any time, (i) the
Total Revolving Commitment at such time less (ii) the sum of (x) the
aggregate principal amount of all Loans at such time plus (y) the
Letter of Credit Outstandings at such time.


 


“Transaction”
shall mean (i) the entering into of the Credit Documents and the
incurrence of all Loans and the issuance of all Letters of Credit on the Closing
Date and (ii) the payment of fees and expenses in connection with the
foregoing.


 


“Transition
Services Agreement” shall mean the Transition Services Agreement, dated as
of January 15, 2007, by and among Verizon Information Technologies LLC,
Northern New England Telephone Operations Inc., Enhanced Communications of
Northern New England Inc. and the Borrower, as amended by the amendment thereto
dated March 31, 2008 and as may be further amended or otherwise modified
from time to time in accordance with the terms thereof and hereof.


 


“Type”
shall mean any type of Loan determined with respect to the interest option
applicable thereto, i.e., a Base Rate Loan or Eurodollar Loan.


 


“UCC”
shall mean the Uniform Commercial Code as in effect from time to time in New
York.


 


“Unfunded
Current Liability” of any Plan shall mean the amount, if any, by which the
actuarial present value of the accumulated plan benefits under the Plan as of
the close of its most recent plan year, determined in accordance with actuarial
assumptions at such time consistent with Statement of Financial Accounting
Standards No. 87, exceeds the market value of the assets allocable
thereto.


 


“Unpaid
Drawing” shall have the meaning provided in Section 1A.04.


 


“Unused
Line Fee” shall have the meaning provided in Section 2.01(a).


 


“Unutilized
Revolving Commitment” for any Lender with a Revolving Commitment at any
time shall mean the excess of (i) the Revolving Commitment of such Lender
at such time over (ii) the sum of (x) the aggregate outstanding
principal amount of Loans made by such Lender at such time plus (y) an
amount equal to such Lender’s Percentage of the Letters of Credit Outstandings
at such time.


 


“U.S.”
shall mean the United States of America and any state or territory thereof or
the District of Columbia.


 


“Wholly-Owned
Domestic Subsidiary” shall mean, as to any Person, any Wholly-Owned
Subsidiary of such Person which is a Domestic Subsidiary.


 


“Wholly-Owned
Subsidiary” of any Person shall mean any Subsidiary of such Person to the
extent all of the capital stock or other ownership interests in such
Subsidiary, other than directors’ qualifying shares, is owned directly or
indirectly by such Person.


 


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“Written”
or “in writing” shall mean any form of written communication or a
communication by means of telex, facsimile transmission, telegraph or cable.


 


SECTION 10.                                    The Administrative Agent.


 


10.01                                 Appointment.


 


(a)                                  Each Lender
hereby irrevocably designates and appoints  Bank of America, N.A. as
Administrative Agent for such Lender (for purposes of this Section 10, the
term “Administrative Agent” shall mean Bank of America, N.A., in its capacities
as Administrative Agent and as Collateral Agent hereunder and pursuant to the
Security Documents), to act as specified herein and in the other Credit
Documents, and each such Lender hereby irrevocably authorizes the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and the other Credit Documents and to exercise such powers and
perform such duties as are expressly delegated to or required of the
Administrative Agent by the terms of this Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental
thereto.  The Administrative Agent may
perform any of its duties under this Agreement, the other Credit Documents and
any other instruments and agreements referred to herein or therein by or
through its respective officers, directors, agents, employees or affiliates (it
being understood and agreed, for avoidance of doubt and without limiting the
generality of the foregoing, that the Administrative Agent and/or Collateral
Agent may perform any of its duties under any Security Document by or through
one or more of its affiliates).


 


(b)                                 The provisions
of this Section 10 are solely for the benefit of the Administrative Agent
and the Lenders, and neither Borrower nor any of their respective Subsidiaries
shall have any rights as a third party beneficiary of any of the provisions
hereof.  In performing its functions and
duties under this Agreement, the Administrative Agent shall act solely as agent
for the Lenders, and the Administrative Agent does not assume (and shall not be
deemed to have assumed) any obligation or relationship of agency or trust with
or for any Borrower or any of their respective Subsidiaries.


 


10.02                                 Nature of
Duties.


 


(a)                                  The
Administrative Agent shall not have any duties or responsibilities except those
expressly set forth in this Agreement and in the other Credit Documents.  None of the Administrative Agent or any of
its officers, directors, agents, employees or affiliates shall be liable for
any action taken or omitted by it hereunder or under any other Credit Document
or in connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision).  The duties of the Administrative Agent shall
be mechanical and administrative in nature; the Administrative Agent shall not
have, by reason of this Agreement or any other Credit Document, a fiduciary
relationship in respect of any Lender or the holder of any Note and nothing in
this Agreement or in any other Credit Document, expressed or implied, is intended
to or shall be so construed as to impose upon the Administrative Agent any
obligations in respect of this Agreement or any other Credit Document except as
expressly set forth herein or therein.


 


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(b)                                 Notwithstanding
any other provision of this Agreement or any provision of any other Credit
Document, the Arranger is named as such for recognition purposes only, and in
its capacity as such shall have no powers, duties, responsibilities or
liabilities with respect to this Agreement or the other Credit Documents or the
transactions contemplated hereby and thereby; it being understood and agreed
that the Arranger shall be entitled to all indemnification and reimbursement
rights in favor of the “Administrative Agent” as, and to the extent provided
for under Sections 10.07 and 11.01. 
Without limitation of the foregoing, the Arranger shall not, solely by
reason of this Agreement or any other Credit Documents, have any fiduciary
relationship in respect of any Lender or any other Person.


 


10.03                                 Certain Rights
of the Administrative Agent.  The Administrative Agent shall have the right
to request instructions from the Required Lenders at any time.  If the Administrative Agent shall request
instructions from the Required Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other
Credit Document, the Administrative Agent shall be entitled to refrain from
such act or taking such action unless and until the Administrative Agent shall
have received instructions from the Required Lenders; and the Administrative
Agent shall not incur liability to any Lender by reason of so refraining.  Without limiting the foregoing, neither any Lender
nor the holder of any Note shall have any right of action whatsoever against
the Administrative Agent or any of its employees, directors, officers, agents
or affiliates as a result of the Administrative Agent or such other person
acting or refraining from acting hereunder or under any other Credit Document
in accordance with the instructions of the Required Lenders.


 


10.04                                 Reliance by the
Administrative Agent.  The
Administrative Agent shall be entitled to rely, and shall be fully protected
(and shall have no liability to any Person) in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or telecopier
message, cablegram, radiogram, order, telephone message or other document or
conversation that the Administrative Agent believed, in the absence of gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision), to be the proper Person,
and, with respect to all legal matters pertaining to this Agreement and any
other Credit Document and its duties hereunder and thereunder, upon advice of
counsel selected by the Administrative Agent (which may be counsel for the
Credit Parties) and, with respect to other matters, upon advice of independent
public accountants or other experts selected by it.


 


10.05                                 Notice of
Default, etc.  The
Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless the Administrative Agent
has actually received written notice from a Lender or the Borrowers referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a “notice of default.”  In
the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give prompt notice thereof to the Lenders.  The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or such other percentage of Lenders or all Lenders,
to the extent required by Section 11.11); provided that, unless and until
the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of


 


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Default
as it shall deem advisable in the best interests of the Lenders (as determined
by the Administrative Agent in its sole discretion).


 


10.06                                 Nonreliance on
the Administrative Agent and Other Lenders.  Independently and without reliance upon the
Administrative Agent, each Lender and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the
Borrowers and their Subsidiaries in connection with the making and the
continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of
the Borrowers and their Subsidiaries and, except as expressly provided in this
Agreement, the Administrative Agent shall not have any duty or responsibility,
either initially or on a continuing basis, to provide any Lender or the holder
of any Note with any credit or other information with respect thereto, whether
coming into its possession before the making of the Loans or at any time or
times thereafter.  None of the
Administrative Agent or its affiliates or any of their respective officers,
directors, agents or employees shall be responsible to any Lender or the holder
of any Note for, or be required or have any duty to ascertain, inquire or
verify the accuracy of, (i) any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith, (ii) the execution,
effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or any other Credit
Document, (iii) the financial condition of the Borrowers and any of their
Subsidiaries, (iv) the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Credit Document, (v) the
satisfaction of any of the conditions precedent set forth in Section 4
(other than the delivery of certain documents to the Administrative Agent as
provided in Section 4.01(a)), or (vi) the existence or possible
existence of any Default or Event of Default.


 


10.07                                 Indemnification.  (a)  To the extent the Administrative
Agent (or any affiliate thereof) is not reimbursed and indemnified by the
Borrowers, the Lenders will reimburse and indemnify the Administrative Agent
(and any affiliate thereof) pro rata (determined as if there
were no Defaulting Lenders), for and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, costs,
expenses or disbursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by the Administrative Agent (or any affiliate
thereof) in performing its respective duties hereunder or under any other
Credit Document or in any way relating to or arising out of this Agreement or
any other Credit Document; provided that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent’s gross negligence or willful misconduct (as determined by
a court of competent jurisdiction in a final and non-appealable decision).


 


(b)                                 The
Administrative Agent shall be fully justified in failing or refusing to take
any action hereunder and under any other Credit Document (except actions
expressly required to be taken by it hereunder or under the Credit Documents)
unless it shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.


 


(c)                                  The agreements
in this Section 10.07 shall survive the payment of all Obligations.


 


74

















 


10.08                                 The
Administrative Agent in Its Individual Capacity.  With respect to its obligation to make Loans,
or issue or participate in Letters of Credit, under this Agreement, the
Administrative Agent shall have the rights and powers specified herein for a “Lender”
and may exercise the same rights and powers as though it were not performing
the duties specified herein; and the term “Lender”, “Required Lenders”, “holders
of Notes” or any similar terms shall, unless the context clearly otherwise
indicates, include the Administrative Agent in its individual capacity.  The Administrative Agent and its affiliates
may accept deposits from, lend money to, and generally engage in any kind of
banking, investment banking, trust or other business with, or provide debt
financing, equity capital or other services (including financial advisory
services) to, any Credit Party or any Affiliate of any Credit Party (or any
Person engaged in a similar business with any Credit Party or any Affiliate
thereof) as if they were not performing the duties specified herein, and may
accept fees and other consideration from any Credit Party or any Affiliate of
any Credit Party for services in connection with this Agreement and otherwise
without having to account for the same to the Lenders.


 


10.09                                 Holders.  The Administrative Agent may deem and treat
the payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment, transfer or endorsement thereof, as
the case may be, shall have been filed with the Administrative Agent.  Any request, authority or consent of any
Person or entity who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee, assignee or endorsee, as the case may be,
of such Note or of any Note or Notes issued in exchange therefor.


 


10.10                     Resignation of
the Administrative Agent.  (a) 
The Administrative Agent may resign from the performance of all its functions
and duties hereunder and/or under the other Credit Documents (including,
without limitation, its functions and duties as Collateral Agent) at any time
by giving 15 Business Days’ prior written notice to the Lenders and the
Borrowers.  Any such resignation by the
Administrative Agent hereunder shall also constitute its resignation (if
applicable) as a Letter of Credit Issuer, in which case the resigning
Administrative Agent (x) shall not be required to issue any further
Letters of Credit hereunder and (y) shall maintain all of its rights as
Letter of Credit Issuer with respect to any Letter of Credit issued by it prior
to the date of such resignation.  Such
resignation shall take effect upon the appointment of a successor
Administrative Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.


 


(b)                                 Upon any such
notice of resignation by the Administrative Agent, the Required Lenders shall
appoint a successor Administrative Agent hereunder and/or under the other
Credit Documents who shall be a commercial bank or trust company acceptable to
the Borrowers, which acceptance shall not be unreasonably withheld or delayed (provided,
that the Borrowers’ consent shall not be required if a Default or an Event of
Default then exists).


 


(c)                                  If a successor
Administrative Agent shall not have been so appointed within such 15 Business
Day period, the Administrative Agent, after consulting with the Lenders and
with the consent of the Borrowers, which consent shall not be unreasonably
withheld or delayed (provided, that the Borrowers’ consent shall not be
required if a Default or an Event of Default then exists), shall then appoint a
successor Administrative Agent who shall serve as Administrative Agent
hereunder and/or under the other Credit Documents until such time, if any, as
the Required Lenders appoint a successor Administrative Agent as provided
above.


 


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(d)                                 If no successor
Administrative Agent has been appointed pursuant to clause (b) or (c) above
by the 15th Business Day after the date such notice of resignation was given by
the Administrative Agent, the Administrative Agent’s resignation shall become
effective and the Required Lenders shall thereafter perform all the duties of
the Administrative Agent hereunder and/or under any other Credit Document until
such time, if any, as the Required Lenders appoint a successor Administrative
Agent as provided above.


 


(e)                                  Upon a
resignation of the Administrative Agent pursuant to this Section 10.10,
the Administrative Agent shall remain indemnified to the extent provided in
this Agreement and the other Credit Documents and the provisions of this Section 10
shall continue in effect for the benefit of the Administrative Agent for all of
its actions and inactions while serving as the Administrative Agent.


 


10.11                                 Collateral
Matters.  (a)  Each Lender
authorizes and directs the Collateral Agent to enter into each Security
Document for the benefit of the Lenders and the other Secured Creditors.  Each Lender hereby agrees, and each holder of
any Note or participant in Letters of Credit by the acceptance thereof will be
deemed to agree, that, except as otherwise set forth herein, any action taken
by the Required Lenders (or such greater number of Lenders as required by Section 11.11)
in accordance with the provisions of this Agreement or any Security Document,
and the exercise by the Required Lenders (or such greater number of Lenders as
required by Section 11.11) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders. 
The Collateral Agent is hereby authorized on behalf of all of the
Lenders, without the necessity of any notice to or further consent from any
Lender, from time to time prior to an Event of Default, to take any action with
respect to any Collateral or any Security Document which may be necessary to
perfect and maintain perfected the security interest in and liens upon the
Collateral granted pursuant to the Security Documents.


 


(b)                                 The Lenders
hereby authorize the Collateral Agent, at its option and in its discretion, to
release any Lien granted to or held by the Collateral Agent upon any Collateral
(i) upon termination of the Revolving Commitments and payment and
satisfaction of all Loans and reimbursement obligations in respect of Letters
of Credit (whether or not any of such Obligations are due), the termination or
expiration (undrawn) of all outstanding Letters of Credit and the payment and
satisfaction in full of all other Obligations at any time arising under or in
respect of this Agreement or the Credit Documents or the transactions
contemplated hereby or thereby, (ii) constituting property being sold or
otherwise disposed of (to Persons other than the Borrowers and their
Subsidiaries) upon the sale or other disposition thereof in compliance with
Sections 7.02 and 11.11, (iii) if approved, authorized or ratified in
writing by the Required Lenders (or such other percent of Lenders or all of the
Lenders hereunder, to the extent required by Section 11.11) or (iv) as
otherwise may be expressly provided in the applicable Security Document.  Upon request by the Administrative Agent at any
time, the Lenders will confirm in writing the Collateral Agent’s authority to
release particular types or items of Collateral pursuant to this Section 10.11.


 


(c)                                  The Collateral
Agent shall have no obligation whatsoever to the Lenders or to any other Person
to assure that the Collateral exists or is owned by any Borrower or any of
their Subsidiaries or is cared for, protected or insured or that the Liens
granted to the Collateral


 


76

















 


Agent herein or in any
Security Document or pursuant hereto or thereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or to continue exercising
at all or in any manner or under any duty of care, disclosure or fidelity any
of the rights, authorities and powers granted or available to the Collateral
Agent in this Section 10.11 or in the Security Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission
or event related thereto, the Collateral Agent may act in any manner it may
deem appropriate, in its sole discretion, given the Collateral Agent’s own
interest in the Collateral as one of the Lenders and that the Collateral Agent
shall have no duty or liability whatsoever to the Lenders, except for its gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision).


 


10.12                                 Delivery of
Information.  The
Administrative Agent shall not be required to deliver to any Lender originals
or copies of any documents, instruments, notices, communications or other
information received by the Administrative Agent from the Borrowers, any
Subsidiary, the Required Lenders, any Lender or any other Person under or in
connection with this Agreement or any other Credit Document except (i) as
specifically provided in this Agreement or any other Credit Document and (ii) as
specifically requested from time to time in writing by any Lender with respect
to a specific document, instrument, notice or other written communication
received by and in the possession of the Administrative Agent at the time of
receipt of such request and then only in accordance with such specific request.


 


10.13                                 Removal of the
Administrative Agent if it is a Defaulting Lender.  If at any time any Lender serving as the
Administrative Agent becomes a Defaulting Lender or a Distress Event occurs
with respect to such Lender, or an Affiliate of a Defaulting Lender or a Lender
subject to a Distress Event is serving as the Administrative Agent (a “Defaulting
Agent”), and such Defaulting Agent fails to cure all Lender Defaults that
caused it to become a Defaulting Lender or to cure or enter into arrangements
reasonably satisfactory to the Required Lenders and, so long as no Default or
Event of Default has occurred and is continuing, the Borrowers to eliminate any
risk arising from such Defaulting Agent serving as the Administrative Agent
within 15 Business Days’ from the date it became a Defaulting Agent, then the
Borrowers, so long as no Default or Event of Default has occurred and is
continuing, or the Required Lenders may, but shall not be required to, direct
such Defaulting Agent to resign as the Administrative Agent (including, without
limitation, any functions and duties as Collateral Agent, and/or Letter of
Credit Issuer, as the case may be), and upon the direction of the Borrowers (so
long as no Default or Event of Default has occurred and is continuing) or the
Required Lenders, as the case may be, such Defaulting Agent shall be required
to so resign, in accordance with the terms of Section 10.10. Such
resigning Defaulting Agent shall cooperate reasonably and in good faith to
effectuate the transfer of the agency to the successor Administrative Agent
appointed in accordance with the terms of Section 10.10, including,
without limitation, the execution and delivery of such assignments,
modifications, documents, certificates and further assurances as such successor
Administrative Agent may reasonably request.


 


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SECTION 11.                                    Miscellaneous.


 


11.01                                 Payment of
Expenses, etc.  (a) 
Each Borrower agrees, jointly and severally, to:  (i) whether or not the transactions
herein contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses of the Administrative Agent and the Collateral Agent in connection
with the negotiation, preparation, execution, delivery, administration and
termination of the Credit Documents and the documents and instruments referred
to therein and any amendment, supplement, waiver, consent or subsequent closing
relating thereto (including the reasonable fees, disbursements and other
charges of (x) counsel to the Administrative Agent and the Collateral
Agent and (y) the Financial Advisor); (ii) pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent, the Collateral
Agent, the Letter of Credit Issuer and each of the Lenders in connection with
the enforcement of the Credit Documents and the documents and instruments
referred to therein (including the reasonable fees, disbursements and other
charges of (x) counsel to the Administrative Agent and the Collateral
Agent and (y) the Financial Advisor); provided, that the Borrowers’
obligation to pay the fees, disbursements and other charges of counsel to the
Lenders (but not of counsel to the Administrative Agent or the Collateral
Agent) shall be limited to one outside counsel, which, as of the Closing Date,
is Wachtell, Lipton, Rosen & Katz; (iii) pay and hold each of the
Lenders (including in its capacity as Administrative Agent, Collateral Agent
and/or Letter of Credit Issuer) harmless from and against any and all present
and future stamp and other similar taxes with respect to the foregoing matters and
save each of the Lenders harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to the extent
attributable to such Lender) to pay such taxes; and (iv) indemnify the
Arranger and each Lender (including in its capacity as Administrative Agent,
Collateral Agent and/or Letter of Credit Issuer) and each of their respective
affiliates, and each officer, director, trustee, employee, representative,
advisor and agent thereof (each, an “Indemnified Person”) from and hold
each of them harmless against any and all losses, liabilities, claims, damages
or expenses incurred by any of them as a result of, or arising out of, or in
any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not any Indemnified Person is a party thereto and
whether or not any such investigation, litigation or other proceeding is
between or among any Indemnified Person, any Credit Party or any third Person
or otherwise) related to the entering into and/or performance of any Credit
Document or the use of the proceeds of any Loans hereunder or the Transaction
or the consummation of any transactions contemplated in any Credit Document, or
(b) the actual or alleged presence of Hazardous Materials in the air,
surface water or ground water or on the surface or subsurface of any property
owned or operated at any time by any Borrower or any of their Subsidiaries or
the generation, storage, transportation, handling or disposal of Hazardous
Materials by any Borrower or any of their Subsidiaries at any location, or the
noncompliance by any Borrower or any of their Subsidiaries with any
Environmental Law or any Environmental Claim in connection with any Borrower or
any of their Subsidiaries or business or operations or any property owned or
operated at any time by any Borrower or any of their Subsidiaries, including,
in each case, without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation, litigation or other
proceeding (but excluding, in the case of this clause (iv), any such losses,
liabilities, claims, damages or expenses (x) of an Indemnified Person, to
the extent incurred by reason of the gross negligence or willful misconduct of
such Indemnified Person as determined by a court of competent jurisdiction in a
final and non-appealable decision, (y) for purposes of clause (b) only
and without limiting the indemnity in favor of such Indemnified Persons for
purposes of 


 


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clause (a),
to the extent incurred by any affiliate of the Administrative Agent, Collateral
Agent and/or Letter of Credit Issuer and any officer, director, trustee,
employee, representative, advisor and agent of any such affiliate, if such
Indemnified Person is not involved, directly or indirectly, in any of the
transactions contemplated by the Credit Documents and (z) for purposes of
clause (a) only, to the extent such losses, liabilities, claims,
damages or expenses arise out of or in connection with any investigation,
litigation or other proceeding that does not involve an act or omission by a
Borrower or any Affiliate thereof and that is brought by one Lender (in its
capacity as such) against any other Lender (in its capacity as such)).


 


(b)                                 To the full
extent permitted by applicable law, the Borrowers shall not assert, and hereby
waive, any claim against any Indemnified Person, on any theory of liability,
for special, indirect, consequential or incidental damages (as opposed to
direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or
the use of the proceeds thereof.  No
Indemnified Person shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed by it
through telecommunications, electronic or other information transmission
systems in connection with this Agreement or the other Credit Documents or the
transactions contemplated hereby or thereby, except to the extent the liability
of such Indemnified Person results from such Indemnified Person’s gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision).


 


11.02                                 Right of Setoff.  In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, if an Event of Default then exists, each Lender is hereby
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate
and apply any and all deposits (general or special but not trust accounts) and
any other Indebtedness at any time held or owing by such Lender (including,
without limitation, by branches and agencies of such Lender wherever located)
to or for the credit or the account of any Credit Party against and on account
of the Obligations and liabilities of such Credit Party to such Lender under
this Agreement or under any of the other Credit Documents, including, without
limitation, all interests in Obligations of such Credit Party purchased by such
Lender pursuant to Section 11.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Lender shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.


 


11.03                                 Notices.  (a)  Generally.  Except in the case of notices and other
communications expressly permitted to be given verbally or by telephone (and
except as provided in subsection (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by facsimile as follows, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:


 


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1)                     if to the
Administrative Agent, to the address, facsimile number, electronic mail address
or telephone number specified for such Person on Annex II hereto;


 


2)             if to the Borrowers, to:


 


c/o
FairPoint Communications, Inc.


521
East Morehead Street, Suite 500


Charlotte,
North Carolina 28202


Attn:
Shirley J. Linn, Executive Vice President and General Counsel


Telephone:
(704) 227-3662


Facsimile:
(704) 344-1594


 


with
a copy to:


 


Paul, Hastings, Janofsky &
Walker LLP

75 E. 55th Street


New York, New York 10022


Attn:
Richard S. Denhup, Esq.; and


 


3)             if to any other Lender, to
the address, facsimile number, electronic mail address or telephone number
specified on Annex II hereto.


 


Notices
and other communications sent by hand or overnight courier service, or mailed
by certified or registered mail, shall be deemed to have been given when
received; notices and other communications sent by facsimile shall be deemed to
have been given when sent (except that, if not given during normal business
hours for the recipient, shall be deemed to have been given at the opening of
business on the next business day for the recipient). Notices and other
communications delivered through electronic communications to the extent
provided in subsection (b) below shall be effective as provided in such
subsection (b).


 


(b)                                 Electronic
Communications.   Notices and other communications
to the Lenders and each Letter of Credit Issuer hereunder may be delivered or
furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved by the Administrative Agent,
provided that the foregoing shall not apply to notices to any Lender or
any Letter of Credit Issuer pursuant to Section 1 or Section 1A
if such Lender or such Letter of Credit Issuer, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such Section by
electronic communication. The Administrative Agent or any Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it, provided
that approval of such procedures may be limited to particular notices or
communications.


 


Unless the Administrative
Agent otherwise prescribes, (i) notices and other communications sent to
an e-mail address shall be deemed received 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


 


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communication shall be
deemed to have been sent at the opening of business on the next business day
for the recipient, and (ii) notices or communications posted to an
Internet or intranet website shall be deemed received upon the deemed receipt
by the intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is available
and identifying the website address therefor.


 


(c)                                  The Platform. The Borrowers
hereby acknowledge that (i) the Administrative Agent will make available
to the Lenders and each Letter of Credit Issuer materials and/or information
provided by or on behalf of the Borrowers hereunder (collectively, “Borrower
Materials”) by posting the Borrower Materials on IntraLinks or another
similar electronic system (the “Platform”) and (ii) certain of the
Lenders (each, a “Public Lender”) may have personnel who do not wish to
receive material non-public information with respect to the Borrowers or their
Affiliates, or the respective securities of any of the foregoing, and who may
be engaged in investment and other market-related activities with respect to
such Persons’ securities. The Borrowers hereby agree that they will use
commercially reasonable efforts to identify that portion of the Borrower
Materials that may be distributed to the Public Lenders and that (1) all
such Borrower Materials shall be clearly and conspicuously marked “PUBLIC”
which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently
on the first page thereof; (2) by marking Borrower Materials “PUBLIC,”
the Borrowers shall be deemed to have authorized the Administrative Agent, each
Letter of Credit Issuer and the Lenders to treat such Borrower Materials as not
containing any material non-public information (although it may be sensitive
and proprietary) with respect to the Borrowers or their securities for purposes
of United States federal and state securities laws; (3) all Borrower
Materials marked “PUBLIC” are permitted to be made available through a portion
of the Platform designated “Public Side Information;” and (4) the
Administrative Agent shall be entitled to treat any Borrower Materials that are
not marked “PUBLIC” as being suitable only for posting on a portion of the
Platform not designated “Public Side Information.”


 


THE
PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS
DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER
MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR
ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN
CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the
Administrative Agent or any of its Affiliates and the partners, directors,
officers, employees, agents, trustees and advisors of such Person and of such
Person’s Affiliates (collectively, the “Agent Parties”) have any
liability to the Borrowers, any Lender, each Letter of Credit Issuer or any
other Person for losses, claims, damages, liabilities or expenses of any kind
(whether in tort, contract or otherwise) arising out of the Borrowers’ or the
Administrative Agent’s transmission of materials and/or information provided by
or on behalf of the Borrowers under the Credit Documents through the Internet,
except to the extent that such losses, claims, damages, liabilities or expenses
are determined by a court of competent jurisdiction by a final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Agent Party; provided, however, that in no
event shall any Agent Party have any liability to


 


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any
Borrower, any Lender, each Letter of Credit Issuer or any other Person for
indirect, special, incidental, consequential or punitive damages (as opposed to
direct or actual damages).


 


(d)                                 Change of
Address, Etc. Each Borrower, the Administrative Agent and each
Letter of Credit Issuer may change its address, facsimile or telephone number
for notices and other communications hereunder by notice to the other parties
hereto. Each other Lender may change its address, facsimile or telephone number
for notices and other communications hereunder by notice to the Borrowers, the
Administrative Agent and each Letter of Credit Issuer. In addition, each Lender
agrees to notify the Administrative Agent from time to time to ensure that the
Administrative Agent has on record (i) an effective address, contact name,
telephone number, facsimile number and electronic mail address to which notices
and other communications may be sent and (ii) accurate wire instructions
for such Lender. Furthermore, each Public Lender agrees to cause at least one
individual at or on behalf of such Public Lender to at all times have selected
the “Private Side Information” or similar designation on the content
declaration screen of the Platform in order to enable such Public Lender or its
delegate, in accordance with such Public Lender’s compliance procedures and
applicable Law, including United States Federal and state securities Laws, to
make reference to Borrower Materials that are not made available through the “Public
Side Information” portion of the Platform and that may contain material
non-public information with respect to the Borrowers or their securities for
purposes of United States federal or state securities laws.


 


(e)                                  Reliance by
Administrative Agent, each Letter of Credit Issuer and Lenders. The
Administrative Agent, each Letter of Credit Issuer and the Lenders shall be
entitled to rely and act upon any notices (including telephonic notices)
purportedly given by or on behalf of the Borrowers even if (i) such
notices were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or (ii) the
terms thereof, as understood by the recipient, varied from any confirmation
thereof. The Borrowers shall, jointly and severally, indemnify the
Administrative Agent, each Letter of Credit Issuer, each Lender and each such
Person’s Affiliates and the partners, directors, officers, employees, agents,
trustees and advisors of such Person and of such Person’s Affiliates, of each
of them from all losses, costs, expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of the
Borrowers.


 


11.04                             Benefit of
Agreement.  (a) 
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto; provided
that no Borrower may assign or transfer any of its rights or obligations
hereunder without the prior written consent of each of the Lenders.  Each Lender may at any time grant
participations in any of its rights hereunder or under any of the Notes to
another financial institution; provided that in the case of any such
participation, the participant shall not have any rights under this Agreement
or any of the other Credit Documents (the participant’s rights against such
Lender in respect of such participation to be those set forth in the agreement
executed by such Lender in favor of the participant relating thereto) and all
amounts payable by the Borrowers hereunder shall be determined as if such
Lender had not sold such participation, except that the participant shall be
entitled to the benefits of Sections 1.10, 1A.06 and 3.04 of this
Agreement to the extent that such Lender would be entitled to such benefits if
the participation had not been entered into or sold, and; provided, further,
that no Lender shall transfer, grant or assign any participation under which
the participant shall have rights to approve


 


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any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan or Note in which such participant is participating (it
being understood that any waiver of any prepayment of, or the method of any
application of any prepayment to, the Loans shall not constitute an extension
of the Maturity Date therefor), or reduce the rate or extend the time of
payment of interest or Fees (except in connection with a waiver of the
applicability of any post-default increase in interest rates), or reduce the
principal amount thereof, or increase such participant’s participating interest
in any Commitment over the amount thereof then in effect (it being understood
that a waiver of any Default or Event of Default or of a mandatory reduction in
the Total Revolving Commitment or a mandatory prepayment shall not constitute a
change in the terms of any Commitment), (ii) release all or substantially
all of the Collateral, (iii) release all or substantially all of the
Subsidiaries from the Subsidiary Guaranty (except as provided therein) or (iv) consent
to the assignment or transfer by any Borrower of any of its rights and
obligations under this Agreement or any other Credit Document.


 


(b)                                 Notwithstanding
the foregoing, (x) any Lender may assign all or a portion of its
outstanding Commitment and its rights and obligations hereunder to (i)(A) its
parent company and/or any affiliate of such Lender which is at least 50% owned
by such Lender or its parent company or (B) to one or more other Lenders
or any affiliate of any such other Lender which is at least 50% owned by such
other Lender or its parent company (provided that any fund that invests
in loans and is managed or advised by the same investment advisor of another
fund which is a Lender (or by an affiliate of such investment advisor) shall be
treated as an affiliate of such other Lender for the purposes of this
sub-clause (x)(i)(B)), or (ii) in the case of any Lender that is a
fund that invests in loans, any other fund that invests in loans and is managed
and/or advised by the same investment advisor of such Lender or by an Affiliate
of such investment advisor and (y) with the consent of the Administrative
Agent (which consent shall not be unreasonably withheld or delayed), any Lender
(or any Lender together with one or more other related Lenders) may assign all,
or if less than all, a portion equal to at least $5,000,000 in the aggregate
for the assigning Lender or Lenders of such outstanding Loans and Revolving
Commitments and its or their related rights and obligations hereunder, and, in
each case such assigning Lender’s related rights and obligations hereunder to
one or more Eligible Transferees (treating any fund that invests in loans and
any other fund that invests in loans and is managed and/or advised by the same
investment advisor of such fund or by an Affiliate of such investment advisor
of such fund or by an Affiliate of such investment advisor as a single Eligible
Transferee).  If any Lender so sells or
assigns all or a part of its rights hereunder or under the Notes, any reference
in this Agreement or the Notes to such assigning Lender shall thereafter refer
to such Lender and to the respective assignee to the extent of their respective
interests and the respective assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights and benefits as
it would if it were such assigning Lender. 
Each assignment pursuant to this Section 11.04(b) shall be
effected by the assigning Lender and the assignee Lender executing an
Assignment Agreement and giving the Administrative Agent written notice
thereof.  At the time of any such
assignment, (i) either the assigning or the assignee Lender shall pay to
the Administrative Agent a nonrefundable assignment fee of $3,500 (provided
that only one assignment fee shall be payable in respect of any reasonably
contemporaneous assignment by a Lender to any one or more funds that invest in
loans and are managed and/or advised by the same investment advisor of such
Lender or by an Affiliate of such investment advisor), (ii) Annex I
shall be deemed to be amended to reflect the Revolving


 


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Commitments
and Loans of the respective assignee (which shall result in a direct reduction
to the Revolving Commitment of the assigning Lender) and of the other Lenders,
and (iii) upon surrender of the old Notes the Borrowers will, at their own
expense, issue new Notes to the respective assignee and to the assigning Lender
in conformity with the requirements of Section 1.05; provided, further,
that such transfer or assignment will become effective on the date set forth in
the respective assignment agreement as recorded by the Administrative Agent on
the Lender Register pursuant to Section 11.15.  To the extent of any assignment pursuant to
this Section 11.04(b) to a Person which is not already a Lender
hereunder and which is not a United States Person (as such term is defined in Section 7701(a)(30)
of the Code) for Federal income tax purposes, the respective assignee Lender
shall provide to the Borrowers and the Administrative Agent the appropriate
Internal Revenue Service Forms (and, if applicable, a Section 3.04
Certificate) described in Section 3.05(b)(ii).  To the extent that an assignment pursuant to
this Section 11.04(b) would, at the time of such assignment, result
in increased costs under Section 1.10 or 3.04 from those being charged by
the respective assigning Lender prior to such assignment, then the Borrowers
shall not be obligated to pay such increased costs (although the Borrowers
shall be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective assignment).  Nothing in this clause (b) shall
prevent or prohibit any Lender from pledging its Notes or Loans to a Federal
Reserve Bank in support of borrowings made by such Lender from such Federal
Reserve Bank and, with prior written notice to the Administrative Agent, any
Lender which is a fund may pledge all or any portion of its Notes or Loans to
its trustee or to a collateral agent or to another creditor providing credit or
credit support to such Lender in support of its obligations to such trustee,
such collateral agent or a holder of, or any other representative of a holder
of, such obligations, or such other creditor, as the case may be; provided
that no such pledge shall release the transferor Lender from any of its obligations
hereunder or substitute any such trustee, collateral agent or other assignee
for such Lender as a party hereto.


 


(c)                                  Notwithstanding
any other provisions of this Section 11.04, no transfer or assignment of
the interests or obligations of any Lender hereunder or any grant of
participation therein shall be permitted if such transfer, assignment or grant
would require the Borrowers or any of their Subsidiaries to (i) file a
registration statement with the SEC, (ii) qualify the Loans under the “Blue
Sky” laws of any State or (iii) integrate such transfer or assignment with
a separate securities offering of securities of the Borrowers or any of their
Subsidiaries.


 


(d)                                 Each Lender
initially party to this Agreement hereby represents, and each Person that
became a Lender pursuant to an assignment permitted by this Section 11
will, upon its becoming party to this Agreement, represent that it is an
Eligible Transferee which makes or invests in loans in the ordinary course and
that it will make or acquire Loans for its own account in the ordinary course; provided
that subject to the preceding clauses (a) and (b), the disposition of
any promissory notes or other evidences of or interests in Indebtedness held by
such Lender shall at all times be within its exclusive control.


 


(e)                                  Any Lender
which assigns all of its Revolving Commitments and/or Obligations hereunder in
accordance with Section 11.04(b) shall cease to constitute a “Lender”
hereunder, except with respect to indemnification provisions under this Agreement
(including, without limitation, Sections 1.10, 1.11, 1A.06, 3.04, 11.01
and 11.06), which shall survive as to such assigning Lender.


 


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11.05                             No Waiver;
Remedies Cumulative.  No failure
or delay on the part of the Administrative Agent, the Collateral Agent or any
Lender in exercising any right, power or privilege hereunder or under any other
Credit Document and no course of dealing between any Credit Party and the
Administrative Agent, the Collateral Agent or any Lender shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder.  The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Administrative Agent, the Collateral Agent or any
Lender would otherwise have.  No notice to
or demand on any Credit Party in any case shall entitle any Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent, the Collateral
Agent or the Lenders to any other or further action in any circumstances
without notice or demand.


 


11.06                             Payments Pro
Rata.  (a)  The Administrative
Agent agrees that promptly after its receipt of each payment from or on behalf
of any Credit Party in respect of any Obligations of such Credit Party
hereunder or under any of the other Credit Documents, it shall distribute such
payment to the Lenders (other than any Lender that has expressly waived its
right to receive its pro rata share thereof) pro rata based upon their
respective shares, if any, of the Obligations with respect to which such
payment was received.


 


(b)                                 Each of the
Lenders agrees that, if it should receive any amount hereunder (whether by
voluntary payment, by realization upon security, by the exercise of the right
of setoff or banker’s lien, by counterclaim or cross action, by the enforcement
of any right under the Credit Documents, or otherwise) which is applicable to
the payment of the principal of, or interest on, the Loans or Fees, of a sum
which with respect to the related sum or sums received by other Lenders is in a
greater proportion than the total of such Obligation then owed and due to such
Lender bears to the total of such Obligation then owed and due to all of the
Lenders immediately prior to such receipt, then such Lender receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Lenders an interest in the Obligations of the respective Credit Party to
such Lenders in such amount as shall result in a proportional participation by
all of the Lenders in such amount; provided that if all or any portion
of such excess amount is thereafter recovered from such Lender, such purchase
shall be rescinded and the purchase price restored to the extent of such
recovery, but without interest.


 


(c)                                  Notwithstanding
anything to the contrary contained herein, the provisions of the preceding
Sections 11.06(a) and (b) shall be subject to the express
provisions of this Agreement which require, or permit, differing payments to be
made to Non-Defaulting Lenders as opposed to Defaulting Lenders.


 


11.07                             Calculations;
Computations.  (a) 
The financial statements to be furnished to the Lenders pursuant hereto shall
be made and prepared in accordance with GAAP consistently applied throughout
the periods involved (except as set forth in the notes thereto or as otherwise
disclosed in writing by the Borrowers to the Lenders).


 


(b)                                 All
computations of interest and Fees hereunder shall be made on the actual number
of days elapsed over a year of 360 days.


 


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11.08                             Governing Law;
Submission to Jurisdiction; Venue; Waiver of Jury Trial.  (a)  This Agreement and the other Credit
Documents and the rights and obligations of the parties hereunder and
thereunder shall be construed in accordance with and be governed by the law of
the State of New York.  Except for
matters within the exclusive jurisdiction of the Bankruptcy Court, any legal
action or proceeding with respect to this Agreement or any other Credit Document
may be brought in the courts of the State of New York sitting in the Borough of
Manhattan or of the United States for the Southern District of New York, and,
by execution and delivery of this Agreement, each Credit Party hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts.  Each Credit Party further irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to each Credit Party located outside New York
City and by hand delivery to each Credit Party located within New York City, at
its address for notices pursuant to Section 11.03, such service to become
effective 30 days after such mailing. 
Nothing herein shall affect the right of the Administrative Agent or any
Lender to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against any Credit Party in any other
jurisdiction.


 


(b)                                 Except for
matters within the exclusive jurisdiction of the Bankruptcy Court, each Credit
Party hereby irrevocably waives any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement or any other Credit
Document brought in the courts referred to in clause (a) above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.


 


(c)                                  Each of the
parties to this Agreement hereby irrevocably waives all right to a trial by
jury in any action, proceeding or counterclaim arising out of or relating to
this Agreement, the other Credit Documents or the transactions contemplated
hereby or thereby.


 


11.09                             Counterparts.  This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.  A set of counterparts executed by all the
parties hereto shall be lodged with the Borrowers and the Administrative Agent.


 


11.10                             Headings
Descriptive.  The
headings of the several sections and subsections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.


 


11.11                             Amendment or
Waiver.  (a)  Neither this
Agreement nor any other Credit Document nor any terms hereof or thereof may be
changed, waived, discharged or terminated unless such change, waiver, discharge
or termination is in writing signed by the Borrowers and the Required Lenders; provided
that no such change, waiver, discharge or termination shall, without the
consent of each Lender (other than a Defaulting Lender) (with Obligations being
directly affected thereby in the case of the following clauses (i) and
(vii)), (i) extend the final scheduled maturity of any Loan or Note (it
being understood that any waiver


 


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of
any prepayment of, or the method of application of any prepayment to, the Loans
shall not constitute any such extension), or reduce the rate or extend the time
of payment of interest (other than as a result of waiving the applicability of
any post-default increase in interest rates) or Fees, or reduce (or forgive)
the principal amount thereof, or increase the Revolving Commitment of any
Lender over the amount thereof then in effect (it being understood that waivers
or modifications of conditions precedent, covenants, Defaults or Events of
Default or of a mandatory reduction in the Total Revolving Commitment shall not
constitute an increase of the Revolving Commitment of any Lender, and that an
increase in the available portion of any Revolving Commitment of any Lender
shall not constitute an increase in the Revolving Commitment of such Lender), (ii) amend,
modify or waive any provision of this Section 11.11, (iii) reduce the
percentage specified in, or (except to give effect to any additional facilities
hereunder) otherwise modify, either the definition of Required Lenders, (iv) consent
to the assignment or transfer by any Borrower of any of its rights and
obligations under this Agreement, (v) release all or substantially all of
the Collateral, (vi) release all or substantially all of the Guarantors
from the Subsidiary Guaranty (except as provided therein) or (vii) alter
the requirements set forth in Sections 3.02(B) and 11.06 that certain
payments with respect to Loans be applied or distributed on a pro rata basis to
the holders of such Loans; provided, further that (x) without
the consent of each Letter of Credit Issuer, amend, modify or waive any
provision of Section 1 A or alter its rights or obligations with respect
to Letters of Credit, (y) without the consent of the Administrative Agent,
amend, modify or waive any provision of Section 11 as Agent or any other
provision as same relates to the rights or obligations of the Administrative
Agent and (z) without the consent of the Collateral Agent, amend, modify
or waive any provision relating to the rights or obligations of the Collateral
Agent.


 


(b)                                 If, in
connection with any proposed change, waiver, discharge or termination of or to
any of the provisions of this Agreement as contemplated by clauses (i) through
(vii), inclusive, of the first proviso to Section 11.11(a), the consent of
the Super-Majority Lenders has been obtained, but the consent of one or more of
such other Lenders (other than the Administrative Agent) whose consent is
required is not obtained, then the Borrowers shall have the right to replace
each such non-consenting Lender or Lenders with one or more Replacement Lenders
pursuant to Section 1.13 so long as at the time of such replacement, each
such Replacement Lender consents to the proposed change, waiver, discharge or
termination.


 


11.12                             Survival.  All indemnities set forth herein including,
without limitation, in Section 1.10, 1.11, 3.04, 10.06 or 11.01 shall
survive the execution and delivery of this Agreement and the making and
repayment of the Loans.


 


11.13                             Domicile of
Loans.  Each Lender may transfer and
carry its Loans at, to or for the account of any branch office, subsidiary or
affiliate of such Lender; provided that the Borrowers shall not be
responsible for costs arising under Section 1.10 or 3.04 resulting from
any such transfer (other than a transfer pursuant to Section 1.12) to the
extent not otherwise applicable to such Lender prior to such transfer.


 


11.14                             Confidentiality.  (a)  Each of the Lenders agrees that it
will use its best efforts not to disclose without the prior consent of the
Borrowers (other than to its employees, trustees, auditors, counsel or other
professional advisors, to affiliates or to another Lender if the Lender or such
Lender’s holding or parent company in its sole discretion determines that any


 


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such
party should have access to such information) any information with respect to
the Borrowers or any of their Subsidiaries which is furnished pursuant to any
Credit Document and which is designated by the Borrowers or the Borrowers to
the Lenders in writing as confidential; provided, that any Lender may
disclose any such information (a) as has become generally available to the
public, (b) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state or Federal regulatory body having
or claiming to have jurisdiction over such Lender or to the Federal Reserve
Board or the Federal Deposit Insurance Corporation or similar organizations
(whether in the United States or elsewhere) or their successors or to the National
Association of Insurance Commissioners, (c) as may be required or
appropriate in response to any summons or subpoena or in connection with any
litigation (notice of which will be promptly sent to the Borrowers to the
extent permitted by law), (d) in order to comply with any law, order,
regulation or ruling applicable to such Lender, and (e) to any pledgee
referred to in Section 11.04(b) or any prospective transferee that is
an Eligible Transferee that is acceptable to the Borrowers in connection with
any contemplated transfer of any of the Notes or any interest therein by such
Lender to the extent that such prospective transferee is notified of the
confidentiality requirements relating thereto. 
No Lender shall be obligated or required to return any materials
furnished by the Borrowers or any Subsidiary. 
The Borrowers hereby agree that the failure of a Lender to comply with
the provisions of this Section 11.14 shall not relieve the Credit Parties
of any of their obligations to such Lender under this Agreement and the other
Credit Documents.


 


(b)                                 Each Borrower
hereby represents and acknowledges that, to the best of its knowledge, neither
any Lender, nor any employees or agents of, or other persons affiliated with,
any Lender, have directly or indirectly made or provided any statement (oral or
written) to such Borrower or to any of its employees or agents, or other
persons affiliated with or related to such Borrower (or, so far as such
Borrower is aware, to any other person), as to the potential tax consequences
of the Transaction.


 


11.15                             Lender Register.  The Borrowers hereby designate the
Administrative Agent to serve as the Borrowers’ agent, solely for purposes of
this Section 11.15, to maintain a register (the “Lender Register”)
on which it will record the Revolving Commitments from time to time of each of
the Lenders, the Loans made by each of the Lenders and each repayment in
respect of the principal amount of the Loans of each of the Lenders.  Failure to make any such recordation, or any
error in such recordation shall not affect the Borrowers’ obligations in
respect of such Loans.  With respect to
any Lender, the transfer of the Commitments or Loans of such Lender and the
rights to the principal of, and interest on, such Loans or any Loan made pursuant
to such Revolving Commitments shall be effective on the date set forth in the
respective assignment agreement as recorded on the Lender Register maintained
by the Administrative Agent with respect to ownership of such Revolving
Commitments and Loans and prior to such recordation all amounts owing to the
transferor with respect to such Revolving Commitments and Loans shall remain
owing to the transferor.  The
registration of assignment or transfer of all or part of any Revolving
Commitments and Loans shall be recorded by the Administrative Agent on the
Lender Register only upon the acceptance by the Administrative Agent of a
properly executed and delivered Assignment Agreement pursuant to Section 11.04(b).  The Borrowers agree, jointly and severally,
to indemnify the Administrative Agent from and against any and all losses,
claims, damages and liabilities of whatsoever nature which may be imposed on,
asserted against or incurred by the Administrative Agent in performing its
duties under this Section 11.15


 


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(but
excluding such losses, claims, liabilities or liabilities incurred by reason of
the Administrative Agent’s gross negligence or willful misconduct).


 


11.16                             Patriot Act
Notice.  Each Lender that is subject to
the Patriot Act, the Letter of Credit Issuer and the Administrative Agent (for
itself and not on behalf of any Lender) hereby notify the Borrowers that,
pursuant to the requirements of the Patriot Act, each of them is required to
obtain, verify and record information that identifies each Credit Party, which
information includes the name and address of such Credit Party and other
information that will allow such Lender, the Letter of Credit Issuer or the
Administrative Agent, as applicable, to identify such Credit Party in
accordance with the Patriot Act.


 


11.17                             Impacted
Lenders and Defaulting Lenders.  (a) If at any time after a Lender has
been deemed to be an Impacted Lender, such Lender fulfills its funding
obligations under and in accordance with this Credit Agreement, so long as no
Lender Default has occurred and is continuing with respect to such Lender, such
Lender shall no longer be deemed to be an Impacted Lender.


 


(b)                                 Without
limiting any of the rights of the Borrowers to replace any such Defaulting
Lender pursuant to Section 1.13, if any one or more Lender Defaults of the
type identified in clause (i) or (ii) of the definition of Lender
Default (each, a “Specified Lender Default”) occur with respect to any
Defaulting Lender, so long as no Lender Defaults of the type identified in
clause (iii) of the definition thereof shall have occurred with respect to
such Defaulting Lender, such Defaulting Lender shall have a one-time right
during the period commencing on the date such Lender became a Defaulting Lender
and ending on the 30th Business Day thereafter (the “Lender Cure
Period”) to cure all (but not less than all) of such Specified Lender
Defaults to the satisfaction of the Borrowers, the Administrative Agent and
each Letter of Credit Issuer. On the first Business Day after such Defaulting
Lender obtains written acknowledgment of the Borrowers, the Administrative
Agent and each Letter of Credit Issuer acknowledging the cure of all (but not
less than all) Specified Lender Defaults of such Lender (such date, the “Reinstatement
Date”), (a) such Lender will no longer be deemed to be a Defaulting
Lender under this Agreement, (b) all such Lender’s voting rights and
rights to payment under the Credit Documents that were suspended as a result of
its status as a Defaulting Lender shall be restored and (c) the Borrowers
shall no longer have the right to replace such Lender pursuant to Section 1.13
with respect to the cured Specified Lender Defaults. Prior to any Reinstatement
Date, each Defaulting Lender shall remain liable to the Borrowers and the other
Credit Parties for any and all damages arising out of, in connection with, or
as a result of, each Specified Lender Default, consistent with the terms of
this Agreement. If one or more additional Lender Defaults occur after the
Reinstatement Date with respect to such Lender, the prior written consent of
the Required Lenders in their sole discretion and, so long as no Event of
Default shall have occurred and be continuing, the Borrowers in their sole
discretion shall be required to restore such Lender as a Non-Defaulting Lender.


 


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