Exhibit 10.1


 


October 13, 2010


 


VIA
ELECTRONIC MAIL AND HAND DELIVERY


Confidential — Subject to FRE 408


 


FairPoint
Communications, Inc.


521
East Morehead Street, Suite 500


Charlotte,
North Carolina 28202


Email:  slinn@fairpoint.com


Attention:  Shirley J. Linn, Esq.


 


Paul,
Hastings, Janofsky & Walker LLP


75
East 55th Street


New
York, New York 10022


Email:  lucdespins@paulhastings.com


Attention:  Luc Despins, Esq.


 


Re:          In re FairPoint
Communications, Inc., et al. (Case No. 09-16335
(BRL)):  Support Letter


 


Ladies
and Gentlemen:


 


Reference
is made to (i) the Debtors’ Modified Second
Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code [Docket
No. 1319] filed with the United States Bankruptcy Court for the Southern
District of New York (the “Bankruptcy Court”) on May 10, 2010,
together with the Plan Supplement and the exhibits and schedules thereto, as
amended or modified through the date hereof (collectively, the “Plan”),
and (ii) that certain Credit Agreement, dated as of March 31, 2008
(as amended, supplemented, restated or otherwise modified through the date
hereof, the “Prepetition Credit Agreement”), by and among FairPoint
Communications, Inc. (the “Company”), the financial institutions
from time to time party thereto (including the Consenting Lenders (as defined
below)), Bank of America, N.A., as Administrative Agent (in such capacity, the “Prepetition
Administrative Agent”), and the other parties thereto.  Capitalized terms that are used but not
defined herein shall have the meanings ascribed to them in the Plan.


 


The
undersigned members of the Lender Steering Committee (each acting in its
individual capacity as a lender under the Prepetition Credit Agreement) with
respect to the Prepetition Credit Agreement (each such party, together with any
Transferee Lender (as defined below) that becomes a party hereto in accordance
with the terms hereof, being referred to herein as a “Consenting Lender”;
the Consenting Lenders and the Company are each referred to herein as a “Party”
and collectively, the “Parties”) and the Company each hereby agree that,
subject to the terms of this letter agreement (the “Letter Agreement”)
and so long as, in the case of a Consenting Lender, no Termination Event (as
defined below) shall have occurred, it shall take such steps with respect to
its Specified Claims (as defined below) as are reasonably necessary to support,
recommend and achieve approval of the confirmation of the Plan as modified by,
and


 

















 


incorporating,
terms consistent with the terms contained in the term sheet (the “Term Sheet”)
attached hereto as Exhibit A (such Plan, as so modified, the “Modified
Plan”), including (i) the execution, delivery and modification of
documents relevant to the implementation of the Modified Plan; (ii) consenting
to the treatment of the prepetition Claims listed beside such Consenting Lender’s
name on its signature page hereto (as to each Consenting Lender, its “Specified
Claims”) as set forth in the Modified Plan; (iii) timely voting, if
required by the Bankruptcy Court, of its Specified Claims to accept the
Modified Plan; and (iv) in no way agreeing to, consenting to or providing
any support to any other plan of reorganization other than the Modified Plan in
respect of its Specified Claims.  For the
avoidance of doubt, each Party also agrees, in the case of any Consenting
Lender, as to its Specified Claims, that, as long as no Termination Event (as
defined below) shall have occurred, (a) it will not object to, delay,
postpone or take any other action to interfere, directly or indirectly, in any
material respect with the approval, acceptance or implementation of the
Modified Plan, (b) directly or indirectly solicit, propose, file or vote
for any plan of reorganization of FairPoint other than the Modified Plan or (c) take
any other action, including but not limited to, initiating any legal
proceeding, that is materially inconsistent with, or that would prevent or
delay consummation of, the Modified Plan.


 


In
addition, the Consenting Lenders have been advised by the Company that the
Company intends to seek an additional one hundred one (101) day extension of
its exclusive period under 11 U.S.C. § 1121 to file a plan of reorganization,
thereby extending such exclusive period from October 22, 2010 to January 31,
2011.  The Consenting Lenders agree, in
respect of their Specified Claims, to not oppose such a request by the Company
for an extension of the exclusive period; provided, however, the
Consenting Lenders shall have the right to subsequently seek (and the Company
shall have the right to oppose) a termination or reduction of such exclusive
period.


 


Each Consenting Lender represents and warrants as to
itself only, severally and not jointly with any other Consenting Lender, to
each of the other Parties hereto that, as of the date such party executes this
Letter Agreement, (i) such Consenting Lender either (A) is the sole
legal and beneficial owner of its Specified Claims, free and clear of all claims, liens, and
encumbrances, other than ordinary course pledges and/or swaps, or (B) has
investment or voting discretion or control with respect to discretionary
accounts for the holders or beneficial owners of its Specified Claims and has
the power and authority to bind the beneficial owner(s) of such Specified
Claims to the terms of this Letter Agreement and (ii) such Consenting
Lender has full power and authority to vote on and consent to all matters
concerning such Specified Claims and to exchange, assign, and transfer such
Specified Claims.


 


Each
Consenting Lender agrees that, so long as no Termination Event shall have
occurred, it shall not sell, transfer, hypothecate or assign (each, a “Transfer”)
any of its Specified Claims or any right or interest (voting or otherwise)
therein; provided, however, that, for the avoidance of doubt, any
Consenting Lender may (i) freely Transfer any of its Post-Effective Date
Claims (as defined below) to any Person without such
Post-Effective Date Claims being or becoming subject to this Letter Agreement and (ii) Transfer
any of its Specified Claims that are not Post-Effective Date Claims (so long as
such Transfer is not otherwise prohibited by any order of the Bankruptcy
Court), to an entity (each, a “Transferee Lender”) that agrees in
writing,


 


2

















 


in
the form attached hereto as Exhibit B (a “Transferee Joinder”),
to be bound by the terms of this Letter Agreement.  Subject to the terms and conditions of any
order of the Bankruptcy Court, each Consenting Lender agrees to provide the
Company and the Prepetition Administrative Agent with a copy of any Transferee
Joinder executed by such party.  Any
Consenting Lender that Transfers its Specified Claims to its Affiliate pursuant
to a Transferee Joinder shall remain liable for breach of this Letter Agreement
by such Affiliate.  For the avoidance of
doubt the provisions of this paragraph shall have no further force or effect
following the Effective Date (as defined in the Modified Plan) of the Modified
Plan (the “Plan Effective Date”).


 


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


 


Notwithstanding anything in this Letter Agreement to the
contrary, Claims currently held by a Consenting Lender or acquired after the
Effective Date of this Letter Agreement by a Consenting Lender, in each case in
its capacity as a market maker or dealer, are not and shall not be subject to
the provisions of this Letter Agreement. 
For the avoidance of doubt, Specified Claims held by any Consenting
Lender shall be subject to the provisions of this Letter Agreement.


 


Each
Party hereto recognizes and acknowledges that a breach by it of any covenants
or agreements contained in this Letter Agreement may cause the other Parties to
sustain damages for which such Parties would not have an adequate remedy at law
for money damages, and therefore each Party hereto agrees that in the sole
event of any breach the other Parties shall be entitled to seek the remedy of
specific performance or injunctive relief to enforce such covenants and
agreements.


 


This
Letter Agreement shall become effective as of the date first above written (the
“Effective Date”) upon receipt by the Prepetition Administrative Agent of
duly executed counterparts of this Letter Agreement from the Company and each
member of the Lender 


 


3

















 


Steering
Committee.  This Letter Agreement and the
obligations hereunder shall be terminated, unless waived or modified by the
Prepetition Administrative Agent with the consent of the Requisite Consenting
Lenders (as defined below), upon the occurrence of any event (each, a “Termination
Event”) listed on Exhibit C hereto.


 


Upon
the occurrence of any Termination Event or if the modifications to the Plan
contemplated by the Term Sheet are not consummated, (i) this Letter
Agreement shall be of no further force and effect and each Party hereto shall
be released from its commitments, undertakings and agreements under or related
to this Letter Agreement and the Modified Plan and shall have the rights and
remedies that it would have had had it not entered into this Letter Agreement,
and shall be entitled to take all actions, whether with respect to the
reorganization and recapitalization of the Company (the “Restructuring”)
or otherwise, that it would have been entitled to take had it not entered into
this Letter Agreement without the waiver of any rights or remedies, all of
which are expressly reserved, and (ii) any and all consents tendered by
the Parties prior to such termination shall be, for all purposes, voidable at
the sole discretion of the Requisite Consenting Lenders and shall not be
considered or otherwise used in any manner by the Parties in connection with
the Restructuring, this Letter Agreement or the Modified Plan.


 


Nothing
contained in this Letter Agreement shall constitute a waiver of any right,
power or remedy of the Prepetition Administrative Agent or any Prepetition
Credit Agreement Lender under the Prepetition Credit Agreement.


 


This
Letter Agreement is the entire agreement between the Parties with respect to
the subject matter hereof and supersedes all prior agreements, oral or written,
between the Parties with respect thereto, to the maximum extent they relate in
any way to the subject matter hereof.  No
claim of waiver, modification, consent or acquiescence with respect to any
provision of this Letter Agreement shall be made against any Party, except on the
basis of a written instrument executed by or on behalf of such Party.


 


Each
of Parties hereby agrees that this Letter Agreement, the Term Sheet and all
documents, agreements and negotiations relating thereto shall not, pursuant to
Federal Rule of Evidence 408 and any applicable state rules of
evidence, be admissible into evidence or constitute an admission or agreement
in any proceeding involving a Party, other than a proceeding to enforce the
terms of this Letter Agreement and/or support the confirmation of the Plan.


 


This
Letter Agreement shall be binding upon, and inure to the benefit of, the
Parties and their respective successors, assigns, heirs, executors,
administrators and representatives.  Each
of the signatories to this Letter Agreement represents and warrants that he or
she is authorized to execute this Letter Agreement and to bind the parties
hereto.  No rights or obligations of any Party under this Letter Agreement
may be assigned or transferred to any other Person or entity except as
otherwise contemplated herein.  The
agreements, representations, and obligations of the Parties under this Letter
Agreement are, in all respects, several and not joint.  Nothing in this Letter Agreement, express or
implied, shall give to any Person or entity, other than the Parties, any
benefit or any legal or equitable right, remedy or claim under this Letter
Agreement.


 


4

















 


All
rights, powers, and remedies provided under this Letter Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and not
alternative, and the exercise of any right, power, or remedy thereof by any
Party shall not preclude the simultaneous or later exercise of any other such
right, power, or remedy by such Party.


 


This
Letter Agreement is the product of negotiations between the Parties, and the
enforcement or interpretation hereof is to be interpreted in a neutral manner,
and any presumption with regard to interpretation for or against any Party by
reason of that Party having drafted or caused to be drafted this Letter
Agreement, or any portion hereof, shall not be effective in regard to the
interpretation hereof.


 


Subject
to the other terms of this Letter Agreement, the Parties agree to execute and
deliver such other instruments and perform such acts, in addition to the
matters herein specified, as may be reasonably appropriate or necessary, from
time to time, to effectuate, as applicable, the intent of this Letter
Agreement.


 


This
Letter Agreement may only be amended or modified by an agreement in writing and
signed by the Company and the Requisite Consenting Lenders.  For this
purposes of this Letter Agreement, “Requisite Consenting Lenders” shall
mean Consenting Lenders holding Specified Claims equal to or exceeding 50.1% of
the principal amount of Specified Claims owned and/or controlled by Consenting
Lenders, except that “Requisite Consent Lenders” shall mean all Consenting
Lenders with respect to their Specified Claims as to any modification or waiver
of the Termination Events (d), (e), (k) or (l) or a Material
Amendment/Waiver (as defined below).  “Material Amendment/Waiver”
shall mean (i) any amendment or waiver of any term or provision of this
Letter Agreement or the Modified Plan, the effect of which is to modify the
form of, or decrease the amount or percentage of, the recovery (or any
component thereof) to be paid, issued or distributed to the Prepetition Credit
Agreement Lenders (or any one of them) pursuant to the terms of the Modified
Plan, (ii) any amendment or waiver of any term or provision of this Letter
Agreement or the Modified Plan, the effect of which is to modify the form of,
or increase the amount or percentage of, the recovery (or any component
thereof) to be paid, issued or distributed to any Person(s) (other than
the Prepetition Credit Agreement Lenders) pursuant to the terms of the Modified
Plan, (iii) any amendment or waiver of any of Termination Events (a) —
(c), the effect of which is to extend any of the time periods specified therein
for a period of greater than fifteen (15) days, (iv) any amendment or
waiver of the amount, lien or payment priority, covenants, collateral,
maturity, rate or fees of the DIP Facility or the New Revolver or any other
substantive change to the terms of the DIP Facility or the New Revolver not
contemplated in this Letter Agreement or the attached Term Sheet or (v) any
amendment or waiver of any of the provisions of this paragraph.


 


All
notices hereunder shall be in writing and delivered by facsimile, e-mail,
courier or registered or certified mail (return receipt requested) to the
address, facsimile number or e-mail address (or at such other address,
facsimile number or e-mail address as shall be specified by like notice) set
forth on the signature page for such Party.  Any notice, if mailed and properly addressed
with postage prepaid or if properly addressed and sent by pre-paid courier
service, shall be deemed given when received; any notice, if transmitted by
facsimile, shall be deemed given when the confirmation of transmission thereof
is received by the transmitter; and any 


 


5

















 


notice,
if transmitted by e-mail shall be deemed given upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been given at the opening of business on
the next business day for the recipient.


 


Each Party hereto irrevocably waives any and all right to trial by jury
in any legal proceeding arising out of or relating to this Letter Agreement or
the Restructuring.  This Letter Agreement
shall be governed by and construed in accordance with the internal laws of the
State of New York, without regard to the conflict of laws principles
thereof.  The Bankruptcy Court for the Southern District of New York shall
retain exclusive jurisdiction over any and all disputes arising out of or
otherwise relating to this Letter Agreement and by its execution and delivery
of this Letter Agreement, each of the Parties hereby irrevocably and
unconditionally submits to the exclusive jurisdiction of the Bankruptcy Court
for purposes of any action, suit or proceeding arising out of or relating to
this Letter Agreement or any of the transactions contemplated hereby.  Each Party irrevocably waives, to the fullest
extent permitted by applicable laws, any objection it may have now or hereafter
to the venue of any action, suit or proceeding brought in such court or to the
convenience of the forum.


 


This
Letter Agreement may be executed in two or more counterparts, all of which
shall be considered one and the same agreement. 
Delivery of an executed counterpart of a signature page to this
Letter Agreement by facsimile or electronic mail shall be as effective as
delivery of a manually executed counterpart of this Letter Agreement.


 


The
Company agrees to pay all reasonable out-of-pocket fees and expenses (including
reasonable fees and expenses of counsel) of the Prepetition Administrative
Agent and each member of the Lender Steering Committee incurred in connection
with this Letter Agreement, the Term Sheet, the Modified Plan, the
Restructuring and the transactions contemplated thereby.


 


[The remainder of this page left blank intentionally]


 


6

















 


	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDER
  STEERING COMMITTEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ,
  as Consenting Lender and DIP/New Revolver Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Signature
  Pages of Consenting Lenders and DIP/New Revolver Lenders]

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Total
  principal amount of Specified Claims of such Consenting Lender (whether owned
  directly by such Consenting Lender or for which such Consenting Lender has investment or voting discretion or control):(1)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  Total
  pro rata percentages of Specified Claims of such Consenting Lender (whether
  owned directly by such Consenting Lender or for which such Consenting Lender
  has investment or voting discretion or control):

  	
   

  	
  Revolver

  	
   

  
	
   

  	
   

  	
  Term
  A

  	
   

  
	
   

  	
   

  	
  Term
  B

  	
   

  
	
   

  	
   

  	
   

  
	
  Pro
  rata percentage of the RC Facility referenced in the Term Sheet:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
   

  
	
  Fax:

  	
   

  	
   

  
	
  Email:

  	
   

  	
   

  



 






(1)                                 The total principal amounts
of Specified Claims of Consenting Lenders executing this Letter Agreement is
equal to or exceeds 45% of the total principal amount of Claims.


 

















 


	
   

  	
   

  	
  ,
  as Consenting Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Signature
  Pages of Consenting Lenders]

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  Total
  pro rata percentages of Specified Claims of such Consenting Lender (whether
  owned directly by such Consenting Lender or for which such Consenting Lender
  has investment or voting discretion or control):

  	
   

  	
  Revolver

  	
   

  
	
   

  	
   

  	
  Term
  A

  	
   

  
	
   

  	
   

  	
  Term
  B

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
   

  
	
  Fax:

  	
   

  	
   

  
	
  Email:

  	
   

  	
   

  



 


[Signature Page to Plan
Modification Letter Agreement]


 

















 


	
  ACKNOWLEDGED
  AND AGREED:

  	
   

  
	
   

  	
   

  
	
  FAIRPOINT
  COMMUNICATIONS, INC.,

  	
   

  
	
  for
  itself and its affiliated chapter 11 debtors

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/
  Shirley J. Linn

  	
   

  
	
  Name:
  Shirley J. Linn

  	
   

  
	
  Title:
  Executive Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address
  for the Company:

  	
   

  
	
   

  	
   

  
	
  FairPoint
  Communications, Inc.

  	
   

  
	
  521
  East Morehead Street, Suite 500

  	
   

  
	
  Charlotte,
  North Carolina 28202

  	
   

  
	
  Email:

  	
  slinn@fairpoint.com

  	
   

  
	
  Fax:

  	
  704-344-1594

  	
   

  
	
  Attention:
  Shirley J. Linn, Esq.

  	
   

  



 


[Signature Page to Plan
Modification Letter Agreement]


 

















 


EXHIBIT A


 


Term Sheet Regarding Modifications to
FairPoint DIP and

Exit Facilities and Plan of Reorganization Matters

October 13, 2010


 


DIP


 


·                  3 month extension (from October 26, 2010
until January 31, 2011)


·                  50 bps extension fee, payable on October 26,
2010


·                  Additional up to 2 month extension with
consent of Required Lenders — no fee


·                  Financial covenants to be eliminated
immediately for remaining term of DIP Facility—inclusion of financial covenants
for any further extension beyond January 31, 2011, if any, to be discussed
at the time of any such extension


 


Exit


 


·                  Exit Facilities will continue to be senior,
secured; RC facility would have first lien and payment waterfall priority and
term facility would have second lien


·                  RC Maturity of 5 years; provided that,
if, on or prior to the 3rd anniversary of the Plan Effective Date (as defined
in the Letter Agreement to which this term sheet is attached (the “Support
Letter”)), the Company elects in its sole discretion (subject to the
absence of Events of Default under the Exit Facilities) to continue the RC
Facility past 3 years, it will pay a continuation fee of 100 bps on the RC
commitment amount (as it exists on the Plan Effective Date) on the third
anniversary of the Plan Effective Date, and, if, on or prior to the 4th
anniversary of the Plan Effective Date, the Company elects in its sole
discretion (subject to the absence of Events of Default under the Exit
Facilities) to continue the RC Maturity past 4 years, it will pay a second
continuation fee of 100 bps on the RC commitment amount (as it exists on the
Plan Effective Date) on the fourth anniversary of the Plan Effective Date


·                  RC Commitment fee of 200 bps, payable in full
on the Plan Effective Date


·                  The modified definitions of Consolidated
EBITDAR and Excess Cash Flow and certain related terms set forth on Schedule I
hereto will be incorporated


·                  Total Leverage Ratio and Interest Coverage
Ratio to be adjusted to obtain 20% to 25% cushion to Forecast EBITDAR in
accordance with the ratios attached to this term sheet as Schedule II hereto;
Senior Leverage Ratio incurrence test for Permitted Unsecured Debt will remain,
with such test set at 0.5x below Total Leverage Ratio covenant levels.  Covenants will be tested beginning on March 31,
2011, regardless of date of exit.


·                  Capital Expenditures will be subject to the
following annual limits:


	
   

  	
  ·

  	
  2011

  	
   

  	
  $

  	
  200,000,000

  	
   

  	
   

  
	
   

  	
  ·

  	
  2012

  	
   

  	
  $

  	
  190,000,000

  	
   

  	
   

  
	
   

  	
  ·

  	
  2013

  	
   

  	
  $

  	
  170,000,000

  	
   

  	
   

  
	
   

  	
  ·

  	
  2014

  	
   

  	
  $

  	
  150,000,000

  	
   

  	
   

  
	
   

  	
  ·

  	
  2015

  	
   

  	
  $

  	
  150,000,000

  	
   

  	
   

  



·                  Principal of Term Loan will be paid in
quarterly installments in aggregate amounts as follows:


 
















 




	
   

  	
  ·

  	
  Year
  1:

  	
   

  	
  0%
  per annum

  	
   

  
	
   

  	
  ·

  	
  Year
  2:

  	
   

  	
  1%
  per annum

  	
   

  
	
   

  	
  ·

  	
  Year
  3:

  	
   

  	
  1%
  per annum

  	
   

  
	
   

  	
  ·

  	
  Year
  4:

  	
   

  	
  2.5%
  per annum

  	
   

  
	
   

  	
  ·

  	
  Year
  5:

  	
   

  	
  5%
  per annum rate for first 3 quarters; entire remainder at maturity 

  	
   

  






·                  Reporting requirements will be adjusted to
provide that monthly financials will be required prior to the Company’s
completion of public listing on NASDAQ or NYSE; thereafter only publicly-filed
quarterly and annual financials need be provided; at the time of delivery of
financial statements (either monthly or quarterly, as applicable), the Company
will deliver to private side lenders a supplement to such financial statements
in a form to be agreed (such agreement not to be unreasonably withheld or
delayed) by the Administrative Agent and the Company (prior to the Plan
Effective Date) containing additional operational metrics as reasonably
required by the Lender Steering Committee


·                  Lien covenant to be modified to permit liens
securing (a) prepetition taxes and other prepetition obligations and (b) the
postpetition obligations set forth on Schedule III hereto, which, in the case
of both clauses (a) and (b), remain unpaid following the Plan Effective
Date and which shall be treated and discharged following the Plan Effective
Date in accordance with the provisions of the Modified Plan


 


Other


 


·                  Revisions to LTIP:


·                  Strike price floor on option
pool to be reduced to $1.5 billion


·                  Eliminate prohibition on
persons granted shares or options on or in connection with the Plan Effective
Date from receiving additional shares or options on or prior to December 31,
2012


·                  The LTIP will be modified
(and the related provisions will be modified in the Modified Plan) to provide
for the following (which, for the avoidance of doubt, reflect numbers of shares
before giving effect to any reverse stock split) restricted stock to be
available under the LTIP (and no other shares of restricted stock shall be
available):  (a) subject to the
immediately succeeding sentence, 922,111 shares of restricted stock will be
distributed to management-level employees on the Plan Effective Date, including
133,588 shares of restricted stock to be issued to David L. Hauser, (b) 783,651
(reduced by the number of shares of restricted stock distributed on the Plan
Effective Date in accordance with the immediately succeeding sentence) shares
of restricted stock will be available to the post-emergence Board of Directors
for future potential equity grants to management, based on criteria to be
determined by the post-emergence Board of Directors in its sole discretion and (c) 175,000
shares of restricted stock will be reserved in a separate pool for allocation
of potential equity grants by the post-emergence Board of Directors as and to
whom it may determine in its sole discretion. 
Of the total number of shares of restricted stock referred to in clause (b) of
the immediately preceding sentence, up to 30,986 (before giving effect to any
reverse stock split) of such shares may, in the discretion of the CEO, be
accelerated and 


 


2

















 


be distributed on the Plan Effective Date to new senior executives
hired from outside the Company.


·                  Upon the termination of
employment by the Company without cause, options and shares of restricted stock
will be automatically vested 50% plus an additional 25% for each completed year
of service beyond the first year (but not more than 100%); otherwise vesting
terms remain unchanged


·                  Total payout under the
Success Bonus Plan will be calculated in a manner consistent with the existing
Success Bonus Plan and in all events will be capped at an amount not exceeding
$1.8 million in the aggregate.  No
current employee who was previously awarded a portion of the Success Bonus pool
will receive less than the amount originally earned by such employee under the
Success Bonus Plan, and any additional amounts may be awarded by the CEO in his
discretion (subject to the approval of the pre-emergence Board of Directors) to
new and existing employees (other than Paul Sunu, who is eligible to
receive 25% of the amount that David L. Hauser would have been
eligible to receive under the Success Bonus Plan, it being understood that
David L. Hauser shall not receive any amount under the Success
Bonus Plan).  Success Bonuses will
cease to accrue on December 31, 2010 and will be paid on the Plan
Effective Date based on a bonus “Scaler” (as defined in the Success Bonus Plan)
at the 80% level.


·                  Certain Board Compensation Matters—Divide the
existing 264,030 (before giving effect to any reverse stock split) options
granted to the post-emergence Board of Directors seven ways instead of six


·                  Stock Listing—Permit listing on NASDAQ or
NYSE


·                  Share Count—To be reduced by 50%


·                  As previously agreed, the proviso to the
first sentence of Section 8.16 of the previous Plan of Reorganization will
be amended in the Modified Plan to read: “provided that
Reorganized FairPoint’s indemnification obligation to and for the benefit of
the Indemnified Persons shall be limited in the aggregate to twenty million
dollars ($20,000,000) with respect to all Claims against such Indemnified
Persons that arose prior to the Petition Date.”


·                  The defined term “Executive Agreements” in
the previous Plan of Reorganization will be modified in the Modified Plan to
remove David L. Hauser from the list of named executives


·                  The previous Plan of Reorganization
provisions regarding the post-emergence Board of Directors will be modified in
the Modified Plan to provide for an 8 member board of directors with Edward
Horowitz as Chairman, with biographical summaries for such members updated in
the Plan Supplement as necessary


·                  The Litigation Trust Agreement will be
modified (and the previous Plan of Reorganization will be modified in the
Modified Plan) (a) to remove references to the Litigation Trust Board, (b) to
include appropriate governance provisions with respect to the Litigation
Trustee, (c) to extend the term of the Litigation Trust Agreement to 5
years and (d) to permit the Litigation Trustee to request additional
funding for the Litigation Trust from the Company following the Plan Effective
Date; provided that (x) any such 


 


3

















 


additional funding shall be subject to the approval of the
post-emergence Board of Directors in its sole discretion, (y) after giving
effect to such additional funding, the Company’s cash on hand shall not be less
than $20,000,000 (after taking into account the cash distributions to be made
pursuant to the Modified Plan) and (z) no proceeds of any borrowing under
the RC Facility may be used to fund such additional funding.


·                  This term sheet will be provided to the
lenders that are not members of the Lender Steering Committee.  Such lenders will be told that if no
objection to this term sheet is interposed, such lenders will be deemed to have
consented to the modified terms, and the Administrative Agent will report to
the Company (prior to the filing by the Company of its Motion to Supplement the
Record with the Vermont Public Service Board) regarding whether any lender has
objected to the proposed modifications.


·                  The lenders under the RC Facility will agree
by their execution of the Support Letter to provide the revolver portion of the
Exit Facilities substantially on the terms and conditions set forth in the
credit agreement filed with the Bankruptcy Court on May 7, 2010, subject
to (x) the modifications and amendments to the Exit Facilities which are
referenced above, (y) other modifications and amendments reasonably agreed
to between the Company and such lenders, each acting in good faith (which
modifications and amendments shall be finalized and agreed prior to the
commencement of the Company’s evidentiary hearing before the Vermont Public
Service Board) and (z) there not occurring any Termination Event (as
defined in the Support Letter) that has not been waived by the Lender Steering
Committee.


 


The modifications to the plan documents contemplated by this term sheet
(including the modifications to the Plan of Reorganization to be incorporated
into the Modified Plan) shall be incorporated into the relevant documents, and
such documents shall be finalized and agreed, prior to the commencement of the
Company’s evidentiary hearing before the Vermont Public Service Board.


 


4

















 


Schedule I


 


Modified
Definitions of Consolidated EBITDAR,

Excess Cash Flow and Certain Related Terms


 


“Consolidated
EBITDAR” means, at any date of determination, an amount equal to
Consolidated Net Income of FairPoint for the most recently completed
Measurement Period plus, without duplication (a) the following to the
extent deducted in calculating such Consolidated Net Income: (i) Federal,
state, local and foreign income tax expense, (ii) Consolidated Interest
Charges, (iii) amortization and depreciation expense, (iv)  aggregate
pension and OPEB expense, provided that for purposes of calculating
Consolidated EBITDAR, such amount shall be net of pension contributions and
OPEB cash payments to the extent such net amount is a positive number,
(v) Non-Cash Stock Based Compensation, (vi) losses on sale of assets
(excluding sales in the ordinary course of business) and other extraordinary
losses, (vii) any other non-cash charges (including non-cash costs arising
from implementation of SFAS 109) accrued by the Borrower and its Subsidiaries
during such period (except to the extent any such charge will require a cash
payment in a future period), (viii) professional fees for advisors
(including (A) fees payable to Third Law Sourcing, LLC, in an amount not
to exceed $6,500,000 in the aggregate through the Maturity Date, and (B) fees
payable to Altman Vilandrie & Company, in an amount not to exceed
$500,000 in the aggregate through the Maturity Date), accountants, legal
counsel and US Trustee fees paid for or incurred by FairPoint in connection
with and as a result of the Chapter 11 Cases, whether or not on behalf of
FairPoint, and fees payable in accordance with the Hauser Consulting Agreement,
(ix) Success Bonuses, (x) the negative effects of non-cash
adjustments from the application of fresh start reporting, (xi) costs and
expenses paid by the Borrowers associated with rejected contracts, in an amount
not to exceed $2,000,000 in the aggregate through the Maturity Date, but only
to the extent not included in the Reserve (as defined in Section 9.21 of
the Plan of Reorganization), (xii) as of the relevant date of
determination, so long as no Default or Event of Default has occurred and is
continuing, costs and expenses paid by the Borrowers to a financial advisor for
the Administrative Agent and the Lenders pursuant to Section 6.20,
(xiii) negative accounting adjustments during such period resulting from
any Financial Restatement but only to the extent such Financial Restatement
affected financial information for any period ending on or prior to the Closing
Date, (xiv) any amount required to be reserved in accordance with GAAP on
account of prepetition claims that is in excess of the amount previously
reserved for such claims pursuant to Section 9.21 of the Plan of
Reorganization and (xv) severance expense incurred during such Measurement
Period in an amount not to exceed each of $12,000,000 in any fiscal year or
$30,000,000 in the aggregate through the Maturity Date, and minus (b) the
following to the extent included in calculating such Consolidated Net Income: (i) Federal,
state, local and foreign income tax credits, (ii) gains on sales of assets
(excluding sales in the ordinary course of business) and other extraordinary
gains, (iii) non-cash gains and non-cash income accrued during such
period, (iv) non-operating interest and dividend income for such period, (v) the
positive effects of non-cash adjustments from the application of fresh start
reporting (in each case of or by the Borrower and its Subsidiaries for such
Measurement Period and all as determined for 


 

















 


Consolidated
FairPoint in accordance with GAAP) and (vi) positive accounting
adjustments during such period resulting from any Financial Restatement but
only to the extent such Financial Restatement affected financial information
for any period ending on or prior to the Closing Date.


 


“Excess
Cash Flow” means, for any fiscal year of FairPoint, an amount equal to
(a) Consolidated EBITDAR for such fiscal year minus (b) the
sum (for such fiscal year) of, without duplication: (i) Consolidated
Interest Charges actually paid in cash by FairPoint and its Subsidiaries,
(ii) optional, scheduled and mandatory principal repayments of the Term
Loans pursuant to Sections 2.05(a) and (b) (other
than (b)(i)) and 2.07, and all prepayments of the Revolving
Credit Loans to the extent such prepayment is accompanied by a permanent
reduction in the Revolving Credit Commitments, (iii) all Federal, state,
local and foreign income taxes actually paid in cash by FairPoint and its
Subsidiaries, (iv) Capital Expenditures actually made by FairPoint and its
Subsidiaries in such fiscal year, and any Capital Expenditure Carryover Amounts
for such fiscal year being carried over into the next fiscal year,
(v) cash contributions to the pension trust and cash payments related to
OPEB made in such fiscal year, to the extent that the aggregate amount of such
cash contributions and payments exceeds the aggregate amount of pension and
OPEB expense, (vi) Investments made in such fiscal year pursuant to Section 7.03(j) and
(p), (vii) the cash impact of any extraordinary loss in such fiscal
year, (viii) to the extent included in the calculation of Consolidated
EBITDAR for such fiscal year, any income in such fiscal year related to current
or future projects under the American Recovery and Reinvestment Act of 2009,
(ix) Dividends paid in cash during such fiscal year pursuant to Section 7.06(d),
(x) the amount of any Cash Collateral required to be funded by FairPoint
pursuant to Section 2.03(a)(ii)(F) during such fiscal year, (xi) if
applicable, any cash payments made during such fiscal year to enter into or
settle Swap Contracts to the extent not already included in Consolidated
EBITDAR for such fiscal year, (xii) any amount paid by FairPoint during
such fiscal year on account of claims that is in excess of the amount previously
reserved by FairPoint for such claims pursuant to Section 9.21 of the Plan
of Reorganization, (xiii) to the extent such amounts were permitted to be
added back (and were added back) in the calculation of Consolidated EBITDAR for
such fiscal year, costs and expenses actually paid by the Borrowers during such
fiscal year (A) to a financial advisor for the Administrative Agent and
the Lenders pursuant to Section 6.20, (B) to Third Law
Sourcing, LLC, (C) to Altman Vilandrie & Company and (D) in
accordance with the Hauser Consulting Agreement, (xiv) the Clause (b) Capital
Expenditures Carryover Amount for such fiscal year (provided that any portion
of the Clause (b) Capital Expenditures Carryover Amount that is not
actually paid in cash in the first quarter of the immediately following fiscal
year shall be deemed to be added back to such Excess Cash Flow effective on the
tenth Business Day after the delivery of financial statements for the first
fiscal quarter of the immediately following fiscal year pursuant to Section 6.01(b) or,
if earlier, Section 6.01(c)), (xv) to the extent such amounts
were permitted to be added back (and were added back) in the calculation of
Consolidated EBITDAR for such fiscal year, the aggregate amount of severance
expense incurred during such fiscal year, and (xvi) costs 


 


2

















 


and
expenses paid by the Borrowers during such fiscal year associated with rejected
contracts, in an amount not to exceed $2,000,000 in the aggregate through the
Maturity Date, but only to the extent not included in the Reserve (as defined
in Section 9.21 of the Plan of Reorganization) to the extent such amounts
were added back in the calculation of Consolidated EBITDAR for such fiscal
year, plus (c) the sum of (for such fiscal year) of, without
duplication (i) interest and dividend income and (ii) if applicable,
any cash payments received in connection with the entering into or settlement
of Swap Contracts to the extent not already included in Consolidated EBITDAR
for such fiscal year.


 


“Capital
Expenditures Carryover Amount” means, with respect to any fiscal year of
FairPoint, an amount equal to (a) the lesser of (i) 10%, of the
Capital Expenditures limit for such fiscal year as set forth in Section 7.12
(without giving effect to any Capital Expenditure Carryover Amount) and
(ii) an amount equal to (x) the Capital Expenditures allowed for such
fiscal year as set forth in Section 7.12 minus (y) the actual
aggregate amount of Capital Expenditures made by FairPoint and its Subsidiaries
during such fiscal year; provided, that if planned Capital Expenditures
cannot be completed in a fiscal year because of a force majeure, the percentage
referred to in clause (i) for such fiscal year may be increased to a
number, and on such conditions, as the Administrative Agent shall approve in
its sole discretion upon receipt of documentation satisfactory to it plus
(b) if, in the fourth quarter of such fiscal year, FairPoint and/or its
Subsidiaries entered into binding contracts with respect to Capital
Expenditures that are within the limits set forth in Section 7.12
but are contractually committed to be spent in the first quarter of the
immediately following fiscal year (and subject to receipt of documentation
satisfactory to the Administrative Agent prior to the end of such fiscal year),
an amount equal to the lesser of (x) $5,000,000 and (y) the amount so
contractually committed (“Clause (b) Capital Expenditures Carryover
Amount”) but only to the extent such Capital Expenditures are properly
funded in the first quarter of the immediately following fiscal year.


 


“Clause
(b) Capital Expenditures Carryover Amount” has the meaning given
thereto in the definition of “Capital Expenditures Carryover Amount.”


 


“Hauser
Consulting Agreement” means  the
Consulting Agreement and General Release, dated as of August 24, 2010,
between FairPoint and David L. Hauser.


 


3

















 


Schedule II


 


Modified
Total Leverage Ratio and Interest Coverage Ratio


 


See attached.


 
















 


	
   

  	
  Confidential
  & Proprietary

  
	
   

  	
  Not
  For Distribution

  



 


Proposed Financial Covenants


 


·                  The revised
covenant levels equate to 0.50x to 1.25x change from the prior covenants
adjusted for EBITDAR definition per the current credit agreement


 


·                  Senior leverage
ratio remains as an incurrence test limiting Company to raise Permitted
Unsecured Debt when proforma senior leverage complies with covenant. Proposed
covenant to be 0.50x lower than proposed total leverage ratio


 


	
   

  	
   

  	
  Financial covenants

  	
   

  	
  Debt incurrence

  	
   

  
	
   

  	
   

  	
  Total Leverage

  	
   

  	
  Interest Coverage

  	
   

  	
  Senior Leverage

  	
   

  
	
   

  	
   

  	
  Current

  	
   

  	
  Proposed

  	
   

  	
  Current

  	
   

  	
  Proposed

  	
   

  	
  Current

  	
   

  	
  Proposed

  	
   

  
	
  1Q11

  	
   

  	
  4.00x

  	
   

  	
  4.75x

  	
   

  	
  4.00x

  	
   

  	
  3.25x

  	
   

  	
  3.50x

  	
   

  	
  4.25x

  	
   

  
	
  2Q11

  	
   

  	
  4.00x

  	
   

  	
  4.75x

  	
   

  	
  4.00x

  	
   

  	
  3.25x

  	
   

  	
  3.50x

  	
   

  	
  4.25x

  	
   

  
	
  3Q11

  	
   

  	
  3.75x

  	
   

  	
  4.75x

  	
   

  	
  4.00x

  	
   

  	
  3.25x

  	
   

  	
  3.25x

  	
   

  	
  4.25x

  	
   

  
	
  4Q11

  	
   

  	
  3.75x

  	
   

  	
  4.75x

  	
   

  	
  4.00x

  	
   

  	
  3.25x

  	
   

  	
  3.25x

  	
   

  	
  4.25x

  	
   

  
	
  1Q12

  	
   

  	
  3.25x

  	
   

  	
  4.75x

  	
   

  	
  4.25x

  	
   

  	
  3.25x

  	
   

  	
  2.75x

  	
   

  	
  4.25x

  	
   

  
	
  2Q12

  	
   

  	
  3.25x

  	
   

  	
  4.75x

  	
   

  	
  4.25x

  	
   

  	
  3.25x

  	
   

  	
  2.75x

  	
   

  	
  4.25x

  	
   

  
	
  3Q12

  	
   

  	
  3.25x

  	
   

  	
  4.75x

  	
   

  	
  4.25x

  	
   

  	
  3.25x

  	
   

  	
  2.75x

  	
   

  	
  4.25x

  	
   

  
	
  4Q12

  	
   

  	
  3.25x

  	
   

  	
  4.75x

  	
   

  	
  4.25x

  	
   

  	
  3.25x

  	
   

  	
  2.75x

  	
   

  	
  4.25x

  	
   

  
	
  1Q13

  	
   

  	
  3.00x

  	
   

  	
  4.75x

  	
   

  	
  4.50x

  	
   

  	
  3.25x

  	
   

  	
  2.50x

  	
   

  	
  4.25x

  	
   

  
	
  2Q13

  	
   

  	
  3.00x

  	
   

  	
  4.75x

  	
   

  	
  4.50x

  	
   

  	
  3.25x

  	
   

  	
  2.50x

  	
   

  	
  4.25x

  	
   

  
	
  3Q13

  	
   

  	
  3.00x

  	
   

  	
  4.50x

  	
   

  	
  4.50x

  	
   

  	
  3.50x

  	
   

  	
  2.50x

  	
   

  	
  4.00x

  	
   

  
	
  4Q13

  	
   

  	
  3.00x

  	
   

  	
  4.50x

  	
   

  	
  4.50x

  	
   

  	
  3.50x

  	
   

  	
  2.50x

  	
   

  	
  4.00x

  	
   

  
	
  1Q14

  	
   

  	
  2.75x

  	
   

  	
  4.25x

  	
   

  	
  4.50x

  	
   

  	
  3.50x

  	
   

  	
  2.25x

  	
   

  	
  3.75x

  	
   

  
	
  2Q14

  	
   

  	
  2.75x

  	
   

  	
  4.25x

  	
   

  	
  4.50x

  	
   

  	
  3.50x

  	
   

  	
  2.25x

  	
   

  	
  3.75x

  	
   

  
	
  3Q14

  	
   

  	
  2.75x

  	
   

  	
  4.00x

  	
   

  	
  4.50x

  	
   

  	
  3.50x

  	
   

  	
  2.25x

  	
   

  	
  3.50x

  	
   

  
	
  4Q14

  	
   

  	
  2.75x

  	
   

  	
  4.00x

  	
   

  	
  4.50x

  	
   

  	
  3.50x

  	
   

  	
  2.25x

  	
   

  	
  3.50x

  	
   

  
	
  1Q15

  	
   

  	
  2.75x

  	
   

  	
  3.75x

  	
   

  	
  4.50x

  	
   

  	
  3.75x

  	
   

  	
  2.25x

  	
   

  	
  3.25x

  	
   

  
	
  2Q15

  	
   

  	
  2.75x

  	
   

  	
  3.50x

  	
   

  	
  4.50x

  	
   

  	
  3.75x

  	
   

  	
  2.25x

  	
   

  	
  3.00x

  	
   

  
	
  3Q15

  	
   

  	
  2.75x

  	
   

  	
  3.50x

  	
   

  	
  4.50x

  	
   

  	
  3.75x

  	
   

  	
  2.25x

  	
   

  	
  3.00x

  	
   

  
	
  4Q15

  	
   

  	
  2.75x

  	
   

  	
  3.50x

  	
   

  	
  4.50x

  	
   

  	
  3.75x

  	
   

  	
  2.25x

  	
   

  	
  3.00x

  	
   

  



 





 
















 


Schedule
III


 


Postpetition
Obligations Secured by Permitted Liens


 


Right-of-way taxes in New Hampshire that the Company
is disputing as to validity and amount in an aggregate amount not to exceed
$1,000,000.


 

















 


EXHIBIT B


 


TRANSFEREE JOINDER


 


The undersigned (“Transferee”) hereby (i) acknowledges that
it has read and understands the Letter Agreement, dated October 13, 2010
(the “Letter Agreement”), by and among FairPoint Communications, Inc.
(“FairPoint”), [Transferor’s Name] (“Transferor”), and certain other
lenders party to the Prepetition Credit Agreement (as defined in the Letter
Agreement) and (ii) agrees to be bound by the terms and conditions thereof
to the extent and in the same manner as if the Transferee was a Consenting
Lender thereunder, and shall be deemed a “Consenting Lender” under the terms of
the Letter Agreement.


 


	
  Date
  Executed:
                    ,
  20

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Transferee’s
  name]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total
  principal amount of Class 4 Allowed Prepetition Credit Agreement Claims
  of such Transferee (whether owned directly by such Transferee or for which
  such Transferee has investment or voting discretion or control):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $                                        

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Address]

  
	
   

  	
   

  	
  Attention:

  
	
   

  	
   

  	
  Fax:

  
	
   

  	
   

  	
  Email:

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
  Revolver                                                                        

  
	
   

  	
   

  	
  LCPI                                                                              

  
	
   

  	
   

  	
  Term
  A                                                                          

  
	
   

  	
   

  	
  Term
  B                                                                           

  
					



 

















 


EXHIBIT C


 


TERMINATION EVENTS


 


“Termination Event”
shall mean the occurrence of any of the following events:


 


(a)           the Company shall not have obtained
on or prior to January 31, 2011 the approval or consent of each governmental
authority (including, without limitation, the FCC and each relevant state
public utility commission or similar regulator) that is necessary or required
in connection with the occurrence of the Plan Effective Date, the transactions
contemplated thereby and any Regulatory Settlement (as defined in the Modified
Plan (as defined in the Letter Agreement to which this Exhibit C is
attached (the “Support Letter”))) with such governmental authority
(other than, in the case of the final approval thereof, to the extent
customarily granted on or after the Plan Effective Date, the FCC), in each case
free and clear of any requirement to satisfy additional conditions or modify
the Modified Plan;


 


(b)           at
5:00 P.M. Eastern Time on January 31, 2011 if the Modified Plan has not been fully
confirmed by an order (the “Confirmation Order”) of the Bankruptcy Court
on or before such date;


 


(c)           at
5:00 P.M. Eastern Time on February 25, 2011 unless on or before such
date (x) the Confirmation Order shall not have been stayed,
reversed, vacated or otherwise modified (unless otherwise consented to in
writing by the Lender Steering Committee), and there shall be no appeal or
petition for rehearing or certiorari pending in respect of the Confirmation
Order and the time to appeal and file any such petition shall have lapsed and (y) the Plan Effective Date shall have occurred;


 


(d)           the Bankruptcy Court shall have
entered an order pursuant to Section 1104 of the Bankruptcy Code
appointing a trustee or an examiner with expanded powers to operate and manage
the Company’s business;


 


(e)           the Bankruptcy Court shall have
entered an order dismissing any of the Bankruptcy Cases or an order pursuant to
the Bankruptcy Code converting any of the Bankruptcy Cases to a case or cases
under Chapter 7 of the Bankruptcy Code;


 


(f)            the filing by the Company of any
motion or pleading with the Bankruptcy Court that is not consistent with the
Modified Plan, and such motion or pleading is not withdrawn within five (5) business
days of notice thereof by the Administrative Agent or Lender Steering Committee
to the Company (or, in the case of a motion that has already been approved by
the Bankruptcy Court at the time the Company is provided with such notice, such
motion is not stayed, reversed or vacated within five (5) business days of
such notice);


 


(g)           the Company files, proposes or
otherwise supports, or fails to actively oppose, any (x) plan of
reorganization containing terms different than those contained herein or in the
Modified Plan or (y) amendment or modification to the Modified Plan unless
such amendment or modification is otherwise consented to in writing by the
Lender Steering Committee in its sole discretion;


 

















 


(h)           an extraordinary event occurs that is
not contemplated in the Company’s forecast presented to the Lender Steering
Committee in September, 2010, and such event has a material adverse effect on
the business, assets, financial condition or prospects of the Company;


 


(i)            the material breach by the Company
of any of the undertakings, representations, warranties or covenants of the
Company set forth in the DIP Facility, as amended from time to time and as
further modified in accordance with the Support Letter, and such breach shall
continue unremedied by the Company for a period of five (5) business days
after notice thereof has been given by the Administrative Agent to the Company
(after giving effect to applicable cure periods provided for in the DIP
Facility);


 


(j)            the Bankruptcy Court grants relief
that is inconsistent with the terms hereof or the Modified Plan and such
inconsistent relief is not dismissed, vacated or modified to be consistent with
the Modified Plan within five (5) business days after notice thereof has
been given by the Administrative Agent or the Lender Steering Committee to the
Company;


 


(k)           Consolidated EBITDAR (as defined in
the DIP Facility, as amended) of the Company for the period of eleven
consecutive fiscal months ended on November 30, 2010 does not exceed
$230,000,000 (after giving effect to any one-time adjustments consented to by
the Administrative Agent in its reasonable discretion); or


 


(l)            there shall occur any of the
following events after the date hereof:  (x) the
revocation or removal of the operating license of the Company or any of its
Subsidiaries by any public utility commission or similar regulator or the FCC
in a state where the Company has material operations or conducts a material
amount of business, (y) the entry of any order or the taking of any other
action by any public utility commission or similar regulator or the FCC that
materially impairs the ability of the Company to operate its business in the
manner in which it operates on the date hereof, and in the case of each of
clauses (x) and (y), such action by any public utility commission or
similar regulator or the FCC is not stayed, reversed or vacated within fifteen
(15) days after the occurrence thereof or (z) the Company or any relevant
public utility commission or similar regulator takes any action inconsistent
with any Regulatory Settlement.