Document:

Exhibit 10.3

 

 

EXECUTION COPY

 

SECURITY AGREEMENT

 

By

 

FAIRPOINT COMMUNICATIONS, INC.,

 

and

 

ITS SUBSIDIARIES PARTY HERETO,
 as Grantors,

 

and

 

BANK OF AMERICA, N.A.,
 as Administrative Agent

 

 

Dated as of January 24, 2011

 

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I
    	
 
    
	
 
    	
 
    	
 
    
	
DEFINITIONS
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 1.01.
    	
Uniform Commercial Code Defined   Terms
    	
2
    
	
 
    	
 
    	
 
    
	
SECTION 1.02.
    	
Credit Agreement Defined Terms
    	
2
    
	
 
    	
 
    	
 
    
	
SECTION 1.03.
    	
Definition of Certain Terms Used   Herein
    	
2
    
	
 
    	
 
    	
 
    
	
SECTION 1.04.
    	
Rules of Construction
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    	
 
    
	
 
    	
 
    
	
AUTHORITY OF ADMINISTRATIVE AGENT
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 2.01.
    	
General Authority of the   Administrative Agent over the Collateral
    	
7
    
	
 
    	
 
    	
 
    
	
SECTION 2.02.
    	
Remedies Not Exclusive
    	
7
    
	
 
    	
 
    	
 
    
	
SECTION 2.03.
    	
Waiver and Estoppel
    	
8
    
	
 
    	
 
    	
 
    
	
SECTION 2.04.
    	
Limitation on Administrative   Agents’ Duty in Respect of Collateral
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    	
 
    
	
 
    	
 
    
	
SECURITY INTERESTS
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 3.01.
    	
Collateral
    	
9
    
	
 
    	
 
    	
 
    
	
SECTION 3.02.
    	
Grant of Security Interest in   Collateral
    	
11
    
	
 
    	
 
    	
 
    
	
SECTION 3.03.
    	
Ranking of Security Interests
    	
11
    
	
 
    	
 
    	
 
    
	
SECTION 3.04.
    	
Lien Filing
    	
12
    
	
 
    	
 
    	
 
    
	
SECTION 3.05.
    	
No Assumption of Liability
    	
12
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    	
 
    
	
 
    	
 
    	
 
    
	
REPRESENTATIONS AND WARRANTIES
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 4.01.
    	
Title and Authority
    	
12
    
					

 

i

 

	
SECTION 4.02.
    	
Validity of Security Interest and Filings
    	
12
    
	
 
    	
 
    	
 
    
	
SECTION 4.03.
    	
Limitations on and Absence of   Other Liens
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 4.04.
    	
Jurisdiction of Organization
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 4.05.
    	
Instruments and Tangible Chattel   Paper
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 4.06.
    	
Deposit Accounts and Investment   Property
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 4.07.
    	
Intellectual Property
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 4.08.
    	
Commercial Tort Claims
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    	
 
    
	
 
    	
 
    
	
COVENANTS
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 5.01.
    	
Protection of Security
    	
16
    
	
 
    	
 
    	
 
    
	
SECTION 5.02.
    	
Further Assurances
    	
16
    
	
 
    	
 
    	
 
    
	
SECTION 5.03.
    	
Taxes; Encumbrances
    	
16
    
	
 
    	
 
    	
 
    
	
SECTION 5.04.
    	
Assignment of Security Interest
    	
16
    
	
 
    	
 
    	
 
    
	
SECTION 5.05.
    	
Continuing Obligations of the   Grantors
    	
17
    
	
 
    	
 
    	
 
    
	
SECTION 5.06.
    	
Use and Disposition of   Collateral
    	
17
    
	
 
    	
 
    	
 
    
	
SECTION 5.07.
    	
Limitation on Modification of   Accounts
    	
17
    
	
 
    	
 
    	
 
    
	
SECTION 5.08.
    	
Insurance
    	
17
    
	
 
    	
 
    	
 
    
	
SECTION 5.09.
    	
Certain Covenants and Provisions   Regarding Patent, Trademark and Copyright Collateral
    	
17
    
	
 
    	
 
    	
 
    
	
SECTION 5.10.
    	
Other Actions
    	
19
    
	
 
    	
 
    	
 
    
	
SECTION 5.11.
    	
Legal Names; Type of   Organization (and whether a Registered Organization and/or a Transmitting   Utility); Jurisdiction of Organization; Location; Organizational   Identification Numbers; Changes Thereto; Etc.
    	
23
    

 

ii

 

	
ARTICLE VI
    	
 
    
	
 
    	
 
    	
 
    
	
REMEDIES
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 6.01.
    	
Remedies upon Default
    	
24
    
	
 
    	
 
    	
 
    
	
SECTION 6.02.
    	
Application of Proceeds
    	
25
    
	
 
    	
 
    	
 
    
	
SECTION 6.03.
    	
Grant of License to Use   Intellectual Property
    	
26
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    	
 
    
	
 
    	
 
    
	
MISCELLANEOUS
    	
 
    
	
 
    	
 
    	
 
    
	
SECTION 7.01.
    	
Notices
    	
26
    
	
 
    	
 
    	
 
    
	
SECTION 7.02.
    	
Survival of Agreement
    	
27
    
	
 
    	
 
    	
 
    
	
SECTION 7.03.
    	
Binding Effect
    	
27
    
	
 
    	
 
    	
 
    
	
SECTION 7.04.
    	
Successors and Assigns
    	
27
    
	
 
    	
 
    	
 
    
	
SECTION 7.05.
    	
GOVERNING LAW
    	
27
    
	
 
    	
 
    	
 
    
	
SECTION 7.06.
    	
Waivers; Amendment
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 7.07.
    	
Severability
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 7.08.
    	
Counterparts
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 7.09.
    	
Headings
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 7.10.
    	
Termination
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 7.11.
    	
Additional Grantors
    	
31
    
	
 
    	
 
    	
 
    
	
SECTION 7.12.
    	
Financing Statements
    	
31
    
	
 
    	
 
    	
 
    
	
SECTION 7.13.
    	
Administrative Agent Appointed   Attorney-in-Fact
    	
32
    
	
 
    	
 
    	
 
    
				

 

iii

 

	
ANNEXES
    
	
 
    	
 
    
	
Annex I
    	
Form of Issuer Acknowledgement
    
	
 
    	
 
    
	
Annex II
    	
Form of Copyright Security Agreement
    
	
 
    	
 
    
	
Annex III
    	
Form of Patent Security Agreement
    
	
 
    	
 
    
	
Annex IV
    	
Form of Trademark Security Agreement
    
	
 
    	
 
    
	
Annex V
    	
Form of Joinder Agreement
    
	
 
    	
 
    
	
SCHEDULES
    
	
 
    	
 
    
	
Schedule 1
    	
Copyrights
    
	
 
    	
 
    
	
Schedule 2
    	
Licenses
    
	
 
    	
 
    
	
Schedule 3
    	
Patents
    
	
 
    	
 
    
	
Schedule 4
    	
Trademarks
    
	
 
    	
 
    
	
Schedule 5
    	
Commercial Tort Claims
    
	
 
    	
 
    
	
Schedule 6
    	
Jurisdiction of Organization
    
	
 
    	
 
    
	
Schedule 7
    	
Deposit Accounts
    
	
 
    	
 
    
	
Schedule 8
    	
Securities and Commodities Accounts
    
	
 
    	
 
    
	
Schedule 9
    	
Filing Jurisdictions
    

 

iv

 

SECURITY AGREEMENT

 

This  SECURITY AGREEMENT (as amended, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), dated as of January 24, 2011 among FAIRPOINT COMMUNICATIONS, INC., a Delaware corporation (“FairPoint”), FAIRPOINT LOGISTICS, INC., a South Dakota corporation (“FairPoint Logistics”; and together with FairPoint, each a “Borrower” and collectively the “Borrowers”), each Subsidiary of FairPoint listed on the signature pages hereto (collectively, together with each Subsidiary that becomes a party hereto pursuant to Section 7.11 of this Agreement, the “Guarantors” and, together with the Borrowers, the “Grantors”) and BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, and together with any successors and assigns in such capacity, the “Administrative Agent”) for the benefit of the Secured Parties.

 

R E C I T A L S

 

WHEREAS, the Borrowers, the lenders from time to time party thereto (the “Lenders”) and the Administrative Agent have entered into a Credit Agreement, dated as of the date hereof (as amended, modified, restated and/or supplemented from time to time, the “Credit Agreement”), providing for the making of Loans to, and the issuance of, and participation in, Letters of Credit for the account of the Borrowers and/or one or more of their Subsidiaries, all as contemplated therein.

 

WHEREAS, each Guarantor has entered into the Continuing Guaranty, dated as of the date hereof (as amended, modified, restated and/or supplemented from time to time, the “Guaranty”) in favor of the Administrative Agent, for the benefit of the Secured Parties, pursuant to which, among other things, such Guarantor has unconditionally guaranteed the Obligations of the Borrowers.

 

WHEREAS, the Borrowers and the other Loan Parties may from time to time be a party to one or more Secured Hedge Agreements.

 

WHEREAS, the Borrowers and the other Loan Parties may from time to time be a party to one or more Secured Cash Management Agreements.

 

WHEREAS, it is a condition precedent to the effectiveness of the Credit Agreement and the making of Loans and the issuance of, and participation in, Letters of Credit thereunder that each Grantor shall have executed and delivered to the Administrative Agent this Agreement.

 

WHEREAS, each Grantor desires to execute this Agreement to satisfy the condition described in the preceding paragraph.

 

NOW THEREFORE, in consideration of the foregoing and other benefits accruing each Grantor, the receipt and sufficiency of which are hereby acknowledged, each Grantor hereby makes the following representations and warranties to the Administrative Agent for the benefit of the Secured Parties and hereby covenants and agrees with the Administrative Agent (for the benefit of the Secured Parties), as follows:

 

 

ARTICLE I

 

DEFINITIONS

 

Uniform Commercial Code Defined Terms.  Unless otherwise defined herein, terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC, including the following which are capitalized herein:

 

“Accounts”; “Bank”; “Certificates of Title”; “Chattel Paper”; “Commercial Tort Claim”; “Commodity Account”; “Commodity Contract”; “Commodity Customer”; “Commodity Intermediary”; “Deposit Accounts”; “Documents”; “Electronic Chattel Paper”; “Entitlement Holder”; “Entitlement Order”; “Equipment”; “Financial Asset”; “Fixtures”; “Goods”; “Instruments” (as defined in Article 9 rather than Article 3); “Inventory”; “Investment Property”; “Letter-of-Credit Rights”; “Letters of Credit”; “Money”; “Securities”; “Securities Account”; “Securities Intermediary”; “Security Entitlement”; “Supporting Obligations”; and “Tangible Chattel Paper”.

 

Credit Agreement Defined Terms.  Capitalized terms used but not otherwise defined herein that are defined in the Credit Agreement shall have the meanings given to them in the Credit Agreement.

 

Definition of Certain Terms Used Herein.  As used herein, the following terms shall have the following meanings:

 

“Account Debtor” shall mean any Person who is or who may become obligated to any Grantor under, with respect to or on account of an Account.

 

“Accounts Receivable” shall mean all Accounts and all right, title and interest in any returned goods, together with all rights, titles, securities and guarantees with respect thereto, including any rights to stoppage in transit, replevin, reclamation and resales, and all related security interests, liens and pledges, whether voluntary or involuntary, in each case whether now existing or owned or hereafter arising or acquired.

 

“Administrative Agent” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

 

“Bailee Letter” shall mean a bailee letter agreement, in form and substance reasonably satisfactory to the Administrative Agent.

 

“Books and Records” shall mean all instruments, files, records, ledger sheets and documents evidencing, covering or relating to any of the Collateral.

 

“Borrowers” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

 

2

 

“Charges” shall mean any and all property and other taxes, assessments and special assessments, levies, fees and all governmental charges imposed upon or assessed against, and all claims (including, without limitation, landlords’, carriers’, mechanics’, maritime, workmen’s, repairmen’s, laborers’, materialmen’s, suppliers’ and warehousemen’s Liens and other claims arising by operation of law) against, all or any portion of the Collateral.

 

“Collateral” shall have the meaning assigned to such term in Section 3.01.

 

“Collateral Estate” shall have the meaning assigned to such term in Section 2.01.

 

“Commodity Account Control Agreement” shall mean an agreement in form and substance reasonably satisfactory to the Administrative Agent establishing the Administrative Agent’s Control with respect to a Commodity Account.

 

“Control” shall mean (i) in the case of each Deposit Account, “control,” as such term is defined in Section 9-104 of the UCC, (ii) in the case of any Security Entitlement, “control,” as such term is defined in Section 8-106(d) of the UCC, and (iii) in the case of any Commodity Contract, “control,” as such term is defined in Section 9-106(b) of the UCC.

 

“Control Agreement” shall mean, collectively, the Deposit Account Control Agreements, the Securities Account Control Agreements and the Commodity Account Control Agreements.

 

“Copyright License” shall mean each agreement, now or hereafter in effect, granting any right to any third party under any Copyright now or hereafter owned by any Grantor or which such Grantor otherwise has the right to license, or granting any right to such Grantor under any Copyright now or hereafter owned by any third party, and all rights of such Grantor under any such agreement.

 

“Copyrights” shall mean, collectively, with respect to each Grantor, all copyrights (whether statutory or common law, whether registered or unregistered and whether published or unpublished) and all copyright registrations and applications made by such Grantor in the United States, in each case, whether now owned or hereafter created or acquired by or assigned to such Grantor, including, without limitation, the copyrights, registrations and applications listed in Schedule 1 to this Agreement, together with any and all (i) rights and privileges arising under applicable law with respect to such Grantor’s use of such copyrights, (ii) reissues, renewals, continuations and extensions thereof, (iii) income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof and (iv) rights to sue for past, present or future infringements thereof.

 

“Copyright Security Agreement” shall mean an agreement substantially in the form of Annex II hereto.

 

“Credit Agreement” shall have the meaning assigned to such term in the Recitals of this Agreement.

 

3

 

“Deposit Account Control Agreement” shall mean an agreement that is in form and substance reasonably satisfactory to the Administrative Agent establishing the Administrative Agent’s Control with respect to any Deposit Account.

 

“Excluded Property” shall have the meaning assigned to such term in Section 3.01.

 

“General Intangibles” shall mean, collectively, all “general intangibles,” as such term is defined in the UCC, and in any event shall include, without limitation, all choses in action and causes of action and all other intangible personal property of any Grantor of every kind and nature now owned or hereafter acquired by any Grantor, including all rights and interests in partnerships, limited partnerships, limited liability companies and other unincorporated entities, corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, Swap Contracts, Cash Management Agreements and other agreements), Intellectual Property, goodwill, registrations, franchises and tax refund claims.

 

“Grantors” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

 

“Guarantors” shall have the meaning assigned to such term in the introductory paragraph of this Agreement.

 

“Intellectual Property” shall mean all intellectual property of every kind and nature now owned in the United States by a Grantor, or hereafter acquired by any Grantor, including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how or other confidential or proprietary data or information, software and databases.

 

“Lenders” shall have the meaning assigned to such term in the Recitals of this Agreement.

 

“License” shall mean any United States Patent License, Trademark License or Copyright License or other United States license or sublicense in respect of Intellectual Property to which any Grantor is a party including, without limitation, those listed on Schedule 2 to this Agreement.

 

“Location” of any Grantor has the meaning given such term in Section 9-307 of the UCC.

 

“Patent License” shall mean any agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any invention covered by a Patent, now or hereafter owned by any Grantor or which any Grantor otherwise has the right to license, or granting to any Grantor any right to make, use or sell any invention on which a Patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement.

 

“Patents” shall mean all of the following now owned or hereafter acquired in the United States by a Grantor:  (a) all letters patent and all applications for letters patent, including

 

4

 

registrations, recordations and pending applications in the United States Patent and Trademark Office, including those listed on Schedule 3 to this Agreement, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.

 

“Patent Security Agreement” shall mean an agreement substantially in the form of Annex III hereto.

 

“Permit” shall mean any permit, approval, authorization, license, variance or permission required from a governmental authority under an applicable law.

 

“Permitted Liens” means Liens, including Permitted Priority Liens, permitted under Section 7.01 of the Credit Agreement.

 

“Permitted Priority Liens” means Liens permitted under clauses (b), (c), (d), (e), (f), (g), (i), (m), (n) and (p) of Section 7.01 of the Credit Agreement.

 

“Pledge Agreement” means the Pledge Agreement, dated as of the date hereof, made by FairPoint and certain of its Subsidiaries party thereto in favor of the Administrative Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Pledge Agreement Collateral” shall mean “Collateral” under and as defined in the Pledge Agreement.

 

“Proceeds” shall mean, collectively, all “proceeds,” as such term is defined in the UCC, and in any event shall include, without limitation, any consideration received from the sale, exchange, license, lease or other disposition of any asset or property that constitutes Collateral, any value received as a consequence of the possession of any Collateral and any payment received from any insurer or other Person or entity as a result of the destruction, loss, theft, damage or other involuntary conversion of whatever nature of any asset or property that constitutes Collateral, and shall include (a) all cash and negotiable instruments received by or held on behalf of the Administrative Agent, (b) any claim of any Grantor against any third party for (and the right to sue and recover for and the rights to damages or profits due or accrued arising out of or in connection with) (i) past, present or future infringement of any Patent now or hereafter owned by any Grantor, or licensed under a Patent License, (ii) past, present or future infringement or dilution of any Trademark now or hereafter owned by any Grantor or licensed under a Trademark License or injury to the goodwill associated with or symbolized by any Trademark now or hereafter owned by any Grantor, (iii) past, present or future breach of any License and (iv) past, present or future infringement of any Copyright now or hereafter owned by any Grantor or licensed under a Copyright License and (c) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

 

“Real Property Leaseholds” means all leases now or hereafter owned or held by a Grantor, of real property whether improved or unimproved and all rights, interests and estates,

 

5

 

real and personal, arising under or in connection with such leases and such real property, including without limitation all buildings and all personal property and fixtures included under such leases.

 

“Registered Organization” shall have the meaning given such term in Section 9-102(a)(70) of the UCC.

 

“Secured Debt Agreements” means, collectively, this Agreement, the Credit Agreement, any other Loan Document, any Secured Hedge Agreement and any Secured Cash Management Agreement.

 

“Securities Account Control Agreement” shall mean an agreement in form and substance reasonably satisfactory to the Administrative Agent establishing the Administrative Agent’s Control with respect to any Securities Account.

 

“Security Interests” shall mean the Liens and security interests granted in Sections 3.02 and 3.03 of this Agreement to secure the Obligations.

 

“Trademark License” shall mean any agreement, now or hereafter in effect, granting to any third party any right to use any Trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any Trademark now or hereafter owned by any third party, and all rights of any Grantor under any such agreement.

 

“Trademarks” shall mean all of the following now owned or hereafter acquired in the United States by a Grantor:  (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordations thereof, and all applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office or any State of the United States, and all extensions or renewals thereof, including those listed on Schedule 4 to this Agreement and, (b) all goodwill associated therewith or symbolized thereby.

 

“Trademark Security Agreement” shall mean an agreement substantially in the form of Annex IV hereto.

 

“Transmitting Utility” has the meaning given such term in Section 9-102(a)(80) of the UCC.

 

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided, however, that if by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the Administrative Agent’s and the Secured Parties’ security interests in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect on the date hereof in such other

 

6

 

jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions relating to such provisions.

 

Rules of Construction.  Unless the context otherwise requires:

 

(1)           a term has the meaning assigned to it;

 

(2)           an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

 

(3)           “or” is not exclusive;

 

(4)           words in the singular include the plural, and in the plural include the singular;

 

(5)           where the context requires, provisions relating to any Collateral, when used in relation to a Grantor, shall refer to such Grantor’s Collateral or any relevant part thereof.

 

ARTICLE II

 

AUTHORITY OF ADMINISTRATIVE AGENT

 

General Authority of the Administrative Agent over the Collateral.  The Administrative Agent hereby agrees that it holds and will hold all of its right, title and interest in, to and under this Agreement and the Collateral granted to the Administrative Agent hereunder whether now existing or hereafter arising (all such right, title and interest being hereinafter referred to as the “Collateral Estate”) under and subject to the conditions set forth in this Agreement; and the Administrative Agent further agrees that it will hold such Collateral Estate for the benefit of the Secured Parties, for the enforcement of the payment of all Obligations and as security for the performance of and compliance with the covenants and conditions of this Agreement and each of the Loan Documents.

 

Remedies Not Exclusive.  No remedy conferred upon or reserved to the Administrative Agent herein or in the other Loan Documents is intended to be exclusive of any other remedy or remedies, but every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or in any other Loan Document or now or hereafter existing at law or in equity or by statute.

 

No delay or omission by the Administrative Agent to exercise any right, remedy or power hereunder or under any other Loan Document shall impair any such right, remedy or power or shall be construed to be a waiver thereof, and every right, power and remedy given by this Agreement or any Loan Document to the Administrative Agent may be exercised from time to time and as often as may be deemed expedient by the Administrative Agent.

 

7

 

If the Administrative Agent shall have proceeded to enforce any right, remedy or power under this Agreement or under any other Loan Document and the proceeding for the enforcement thereof shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Administrative Agent, then the Grantors, the Administrative Agent and the other Secured Parties shall, subject to any determination in such proceeding, severally and respectively be restored to their former positions and rights hereunder or thereunder with respect to the Collateral Estate and in all other respects, and thereafter all rights, remedies and powers of the Administrative Agent shall continue as though no such proceeding had been taken.

 

SECTION 2.01.               Waiver and Estoppel.

 

(a)           Subject to the terms of the Loan Documents, each Grantor agrees, to the extent it may lawfully do so, that it will not at any time in any manner whatsoever claim, or take the benefit or advantage of, any appraisement, valuation, stay, extension, moratorium, turnover or redemption law, or any law permitting it to direct the order in which the Collateral shall be sold, now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance or enforcement of this Agreement or any Loan Document and hereby waives all benefit or advantage of all such laws and covenants that it will not hinder, delay or impede the execution of any power granted to the Administrative Agent in this Agreement or any Loan Document but will suffer and permit the execution of every such power as though no such law were in force.

 

(b)           Each Grantor, to the extent it may lawfully do so, on behalf of itself and all who may claim through or under it, including without limitation any and all subsequent creditors, vendees, assignees and licensors, waives and releases all rights to demand or to have any marshaling of the Collateral upon any sale, whether made under any power of sale granted herein or in any other Loan Document or pursuant to judicial proceedings or upon any foreclosure or any enforcement of this Agreement or any other Loan Document and consents and agrees that all the Collateral may at any such sale be offered and sold as an entirety.

 

(c)           Each Grantor waives, to the extent permitted by applicable law, presentment, demand, protest and any notice of any kind (except notices explicitly required hereunder or under any Loan Document) in connection with this Agreement and the other Loan Documents and any action taken by the Administrative Agent with respect to the Collateral.

 

8

 

Limitation on Administrative Agents’ Duty in Respect of Collateral.  Beyond its duties as to the custody thereof expressly provided herein or in any other Loan Document and to account to the Secured Parties and the Grantors for moneys and other property received by it hereunder or under any Loan Document and any other express duties specified in the Loan Documents, the Administrative Agent shall have no duty to the Grantors or to the Secured Parties as to any Collateral in its possession or control or in the possession or control of any of its agents or nominees, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.

 

ARTICLE III

 

SECURITY INTERESTS

 

Collateral.  For the purposes of this Agreement, the term “Collateral” shall mean each Grantor’s right, title and interest in, to and under all of the following property, wherever located, and whether now existing or hereafter arising or acquired from time to time:

 

(a)           Accounts Receivable;

 

(b)           Books and Records;

 

(c)           Money and Deposit Accounts;

 

(d)           Chattel Paper;

 

(e)           Commercial Tort Claims described on Schedule 5 to this Agreement;

 

(f)            Documents;

 

(g)           Equipment;

 

(h)           Fixtures;

 

(i)            General Intangibles;

 

(j)            Goods;

 

(k)           Instruments;

 

(l)            Inventory;

 

(m)          Investment Property;

 

(n)           Letter-of-Credit Rights;

 

(o)           Letters of Credit;

 

9

 

(p)           Supporting Obligations;

 

(q)           Intellectual Property;

 

(r)            to the extent not covered by clauses (a) through (q) of this definition, all other personal property, whether tangible or intangible; and

 

(s)           all Proceeds and products of any and all of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to such Grantor from time to time with respect to any of the foregoing;

 

provided that, notwithstanding the foregoing, “Collateral” shall not include the following items (collectively, “Excluded Property”): (i) Pledge Agreement Collateral or any Equity Interests in an Excluded Entity (as defined in the Pledge Agreement), (ii) FCC licenses and PUC authorizations to the extent (and only to the extent) that any Grantor is prohibited from granting liens and security interests therein pursuant to applicable Law, but the Collateral shall include, to the maximum extent permitted by Law, all rights incident or appurtenant to all FCC licenses and PUC authorizations and the right to receive all proceeds derived from or in connection with the sale, assignment or transfer of such FCC licenses and PUC authorizations, (iii) any contracts, leases, licenses or other agreements as to which the grant of a security interest would (A) constitute a violation of a restriction in favor of a third party on such grant, unless and until any required consents shall have been obtained, (B) constitute or result in the abandonment, invalidation, unlawfulness or unenforceability of any right, title or interest of any grantor therein or (C) give any other party to such contract, lease, license or other agreement a right to terminate its obligations thereunder; provided, however, that any such contract, lease, license or other agreement shall only be excluded, in each case under clauses (A) and (C) above, to the extent such violation or right to terminate would not be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9 409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable Law or principles of equity; and provided, further, that any such contract, lease, license or other agreement shall not be excluded, and such security interest shall attach immediately at such time as the condition causing such violation or right to terminate shall no longer exist and to the extent severable, shall attach immediately to, any portion of any such contract, lease, license or other agreement that does not result in any of the consequences specified in (A) or (C) above and (iv) and any application to register Trademarks in the United States Patent and Trademark Office based upon Grantor’s “intent to use” such Trademark (but only if the grant of security interest to such “intent to use” Trademark violates 15 U.S.C. § 1060(a)) unless and until a “Statement of Use” or “Amendment to Allege Use” is filed in the United States Patent and Trademark Office with respect thereto, at which point Collateral shall include, and the security interests granted hereunder shall attach to, such application; provided, further, however, that the Excluded Property shall not include any Proceeds, substitutions or replacements of Excluded Property (unless such Proceeds, substitutions or replacements would constitute Excluded Property).

 

10

 

SECTION 3.01.               Grant of First Lien Security Interest in Collateral.  As security for the payment and performance in full of the Obligations constituting First Lien Obligations, each Grantor hereby sells, conveys, assigns, sets over, mortgages, pledges, hypothecates and transfers to the Administrative Agent, for the ratable benefit of the Secured Parties constituting First Lien Claimholders, and hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties constituting First Lien Claimholders, a security interest in, all of such Grantor’s right, title and interest in, to and under the Collateral of such Grantor, wherever located, whether now existing or hereafter arising or acquired from time to time.

 

SECTION 3.02.               Grant of Second Lien Security Interest in Collateral.  As security for the payment and performance in full of the Obligations constituting Second Lien Obligations, each Grantor hereby sells, conveys, assigns, sets over, mortgages, pledges, hypothecates and transfers to the Administrative Agent, for the ratable benefit of the Secured Parties constituting Second Lien Claimholders, and hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties constituting Second Lien Claimholders, a security interest in, all of such Grantor’s right, title and interest in, to and under the Collateral of such Grantor, wherever located, whether now existing or hereafter arising or acquired from time to time.

 

SECTION 3.03.               Ranking of Security Interests.  Notwithstanding anything to the contrary contained in this Agreement, and subject to the terms and provisions of the Credit Agreement, each Grantor and the Administrative Agent, on behalf of the Secured Parties, acknowledges and agrees that (w) the security interest granted pursuant to this Agreement to the Administrative Agent (i) for the benefit of the Secured Parties constituting First Lien Claimholders, shall be a “first” priority senior security interest in the Collateral and (ii) for the benefit of the Secured Parties constituting Second Lien Claimholders, shall be a “second” priority interest in the Collateral fully junior, subordinated and subject to the security interest granted to the Administrative Agent for the benefit of the Secured Parties constituting First Lien Claimholders in accordance with the Credit Agreement, (x) the Administrative Agent’s security interest in the Collateral securing the Obligations constituting First Lien Obligations constitutes a security interest separate and apart (and of a different class and claim) from the Administrative Agent’s security interest in the Collateral securing the Obligations constituting Second Lien Obligations and (y) the grants of security interest hereunder constitute two separate and distinct grants of security, one in favor of the Administrative Agent for the benefit of the Secured Parties constituting First Lien Claimholders, the second in favor of the Administrative Agent for the benefit of the Secured Parties constituting Second Lien Claimholders.

 

11

 

Lien Filing.  The Administrative Agent is hereby authorized to file one or more financing statements (including fixture filings), continuation statements, filings with the United States Patent and Trademark Office, United States Copyright Office or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interests granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Administrative Agent as secured party.

 

No Assumption of Liability.  The Security Interests are granted as security only and shall not subject the Administrative Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Collateral.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

The Grantors jointly and severally represent and warrant to the Administrative Agent and the other Secured Parties that:

 

Title and Authority.  Other than with respect to Collateral constituting immaterial Intellectual Property, each Grantor has good and valid rights in the Collateral and title to the Collateral with respect to which it has purported to grant the Security Interests hereunder and has full power and authority to grant to the Administrative Agent, for the benefit of the Secured Parties, the Security Interests in such Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person other than any consent or approval which has been obtained.

 

SECTION 4.01.               Validity of Security Interest and Filings.

 

(a)           The Security Interests constitute legal and valid security interests in all the Collateral securing the payment and performance of the Obligations.  As of the date hereof, all information set forth on the Schedules annexed hereto is correct and complete.  As of the date hereof, the Collateral described on Schedules 1 through 5, 7 and 8 annexed hereto constitutes all of the property of such type of Collateral owned or held by the Grantors.  Fully completed UCC financing statements (including fixture filings as applicable) stating that the same cover “all assets of the debtor,” “all personal property and assets of the debtor” or words of similar import, or containing a description of the Collateral have been delivered to the Administrative Agent for filing in each governmental, municipal or other office specified in Schedule 9.  Except as set forth in clause (b) below with respect to Collateral consisting of United States registered Copyrights, upon (i) the filing of such UCC financing statements with the appropriate filing offices of each jurisdiction specified in Schedule 9 and (ii) the taking of possession or control by the Administrative Agent of the Collateral, the Administrative Agent for the benefit of the Secured Parties will have a perfected first priority security interest  (in the case of the Security Interest granted in Section 3.02) and second priority security interest (in the case of the Security Interest granted in Section 3.03) in respect of all Collateral, to the extent such security interest can be perfected under the UCC by such filings, possession or control.  The Security Interests are

 

12

 

and shall be prior to any other Lien on any of the Collateral, other than Permitted Priority Liens and subject to Section 10.14 of the Credit Agreement.

 

(b)           With respect to all Collateral consisting of United States registered Patents, United States registered Trademarks and United States registered Copyrights registered in the name of any Grantor as of the date hereof, fully executed Patent Security Agreements, Trademark Security Agreements and/or Copyright Security Agreements, as applicable, containing a description of all Collateral consisting of Intellectual Property with respect to United States registered Patents, United States registered Trademarks (and Trademarks for which United States registration applications are pending other than any United States registration applications comprising Excluded Property) and United States registered Copyrights have been delivered to the Administrative Agent for registration with the United States Patent and Trademark Office or for recordation with the United States Copyright Office, as applicable, pursuant to 35 U.S.C. § 261 or 17 U.S.C. § 205 and the regulations thereunder, as applicable.  Upon the recordation of such security agreements with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, and the filing of proper UCC financing statements with the appropriate filing offices of each jurisdiction specified in Schedule 9, the Administrative Agent, for the benefit of the Secured Parties, will have perfected first priority security interests (in the case of the security interest granted under Section 3.2) and second priority security interests (in the case of the security interests granted under Section 3.3) in respect of all Collateral consisting of Patents, Trademarks and Copyrights registered in the name of any Grantors as of the date hereof.

 

13

 

Limitations on and Absence of Other Liens.  The Collateral is owned by the Grantors free and clear of any Lien, except for Permitted Liens.  The Grantors have not filed or consented to the filing of (a) any financing statement or analogous document under the UCC or any other applicable laws covering any Collateral, (b) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with the United States Patent and Trademark Office or the United States Copyright Office or (c) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Permitted Liens.

 

Jurisdiction of Organization.  As of the Closing Date, Schedule 6 hereto identifies each Grantor’s corporate (or, if not a corporation, legal) name, its jurisdiction of incorporation or organization, the type of entity it was organized as and the state organization identification number of such Grantor (if the state of its incorporation or organization provides such organization number).

 

Instruments and Tangible Chattel Paper.  As of the date hereof, each Instrument and each item of Tangible Chattel Paper owned by a Grantor and required to be delivered to the Administrative Agent pursuant to Section 5.10(j) has been properly endorsed, assigned and delivered to the Administrative Agent, and, if necessary, accompanied by instruments of transfer or assignment duly executed in blank.

 

Deposit Accounts and Investment Property.  Each Grantor hereby represents and warrants that as of the date hereof (1) it has neither opened nor maintains any Deposit Accounts other than the accounts listed in Schedule 7 to this Agreement, (2) it has neither opened nor maintains any Securities Accounts or Commodity Accounts other than those listed in Schedule 8 to this Agreement and (3) it does not hold, own or have any interest in any certificated securities or uncertificated securities other than those constituting Pledge Agreement Collateral, Equity Interests in Excluded Entities, shares in CoBank, ACB required to be held in accordance with Section 2.17 of the Credit Agreement or those maintained in Securities Accounts or Commodity Accounts listed in Schedule 8 to this Agreement.

 

Intellectual Property.

 

(c)           Schedule 1 attached hereto contains a complete and accurate list, as of the date hereof, of all registered Copyrights (and Copyrights for which registration applications are pending) owned by each Grantor.

 

(d)           Schedule 2 attached hereto contains a complete and accurate list, as of the date hereof, of (i) all material Licenses under which any Grantor has licensed to a third party any of its rights or interests in any Intellectual Property and (ii) all material Licenses under which any Grantor is the licensee or sublicensee (other than Licenses in respect of general software or telephone switch software, which Licenses are not, to the Grantors’ knowledge, assignable by such Grantor).

 

14

 

(e)           Schedule 3 attached hereto contains a complete and accurate list, as of the date hereof, of all Patents owned by each Grantor.

 

(f)            Schedule 4 attached hereto contains a complete and accurate list, as of the date hereof, of all Trademarks owned by each Grantor.

 

15

 

Commercial Tort Claims.  As of the date hereof each Grantor hereby represents and warrants that it holds no Commercial Tort Claims other than those listed on Schedule 5 to this Agreement.

 

ARTICLE V

 

COVENANTS

 

Protection of Security.  Each Grantor shall, at its own cost and expense, take any and all actions reasonably necessary to defend the Security Interests of the Administrative Agent in the Collateral and the priority thereof against any Lien other than Permitted Priority Liens.

 

Further Assurances.  Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Administrative Agent may from time to time reasonably request to better assure, preserve, protect and perfect the Security Interests and the rights and remedies created hereby, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interests and the filing of any financing statements or other documents in connection herewith or therewith.

 

Taxes; Encumbrances.  At its option, the Administrative Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Collateral except to the extent the same constitute Permitted Liens, and may pay for the maintenance and preservation of the Collateral to the extent any Grantor fails to do so as required by this Agreement and each Grantor jointly and severally agrees to reimburse the Administrative Agent on demand for any payment made or any expense incurred by the Administrative Agent pursuant to the foregoing authorization, together with interest thereon at the rate then in effect in respect of the Loans, and such amounts shall constitute Obligations secured by the Collateral; provided, however, that nothing in this Section 5.03 shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Administrative Agent or any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, liens, security interests or other encumbrances and maintenance as set forth herein or in the other Secured Debt Agreements.

 

Assignment of Security Interest.  If at any time any Grantor shall take a security interest in any property of an Account Debtor or any other Person to secure payment and performance of an Account in an amount in excess of $250,000, such Grantor shall promptly assign such security interest to the Administrative Agent.  Such assignment need not be filed of public record unless necessary to continue the perfected status of the security interest against creditors of and transferees from the Account Debtor or other Person granting the security interest.

 

16

 

Continuing Obligations of the Grantors.  Each Grantor shall remain liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Administrative Agent and the other Secured Parties from and against any and all liability for such performance except to the extent resulting from the gross negligence or willful misconduct of the Administrative Agent or the other Secured Parties, as applicable.

 

Use and Disposition of Collateral.  None of the Grantors shall grant any Lien in respect of the Collateral other than Liens securing the Obligations and Permitted Liens.

 

Limitation on Modification of Accounts.  None of the Grantors will, without the Administrative Agent’s prior written consent, grant any extension of the time of payment of any of the Accounts Receivable, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any Person liable for the payment thereof or allow any credit or discount whatsoever thereon, other than extensions, credits, discounts, compromises or settlements granted or made as a result of the Chapter 11 Cases or in the ordinary course of business and consistent with its past practices and in accordance with such prudent and standard practices used in industries in which such Grantor is engaged.

 

Insurance.  The Grantors, at their own expense, shall maintain or cause to be maintained insurance covering physical loss or damage to the Collateral in accordance with Section 6.07 of the Credit Agreement.  Each Grantor irrevocably makes, constitutes and appoints the Administrative Agent (and all officers, employees or agents designated by the Administrative Agent) as such Grantor’s true and lawful agent (and attorney-in-fact) for the purpose, during the continuance of an Event of Default, of making, settling and adjusting claims in respect of Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto.

 

(a)           Certain Covenants and Provisions Regarding Patent, Trademark and Copyright Collateral.  (a)  Each Grantor agrees that it will not, nor will it permit any of its licensees to, do any act, or knowingly omit to do any act, whereby any Patent which is material to the conduct of such Grantor’s business may become invalidated or dedicated to the public.

 

(b)           Each Grantor (either itself or through its licensees or its sublicenses) will, for each Trademark material to the conduct of such Grantor’s business, (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for nonuse, (ii) maintain the quality of products and services offered under such Trademark and (iii) not knowingly use or knowingly permit the use of such Trademark in violation of any third party rights in a manner that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

(c)           Each Grantor shall notify the Administrative Agent as soon as practicable if it knows or has reason to know that any Patent, Trademark or Copyright material to the conduct of its business becomes or is reasonably likely to become abandoned, forfeited or dedicated to the

 

17

 

public, or of any adverse determination or development including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office or the United States Copyright Office regarding such Grantor’s ownership of any Patent, Trademark or Copyright material to the conduct of its business, or its right to register the same, or to keep and maintain the same.

 

(d)           Each Grantor hereby agrees that with respect to all Intellectual Property constituting Collateral owned by such Grantor on the date hereof, it will, if requested by the Administrative Agent, execute and deliver any and all agreements, instruments or documents as the Administrative Agent may reasonably request to evidence the Administrative Agent’s security interest in such Intellectual Property, which agreements, instruments or documents may be filed with the United States Patent and Trademark Office, the United States Copyright Office or any office or agency in any political subdivision of the United States.

 

(e)           In the event that any Grantor, either itself or through any agent, employee, licensee or designee, files an application for or, following the Closing Date, becomes the registered owner of, any Patent, Trademark or Copyright (or for the registration of any Trademark or Copyright) with the United States Patent and Trademark Office, the United States Copyright Office or any office or agency in any political subdivision of the United States, such Grantor shall promptly (and in any event within thirty (30) days) notify the Administrative Agent of such occurrence, and shall execute and deliver any and all agreements, instruments, documents and papers (including, without limitation, Patent Security Agreements, Trademark Security Agreements and/or Copyright Security Agreements, as applicable) as the Administrative Agent may reasonably request to evidence the Administrative Agent’s security interest in such Patent, Trademark or Copyright or application therefor, and each Grantor hereby appoints the Administrative Agent as its attorney-in-fact to execute and file such writings solely for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power, being coupled with an interest, is irrevocable until this Agreement is terminated.

 

(f)            Each Grantor will take all necessary steps that are consistent with its reasonable business judgment in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or any office or agency in any political subdivision of the United States to maintain and pursue each material application relating to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trademarks or Copyrights that is material to the conduct of any Grantor’s business, including timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent with its reasonable business judgment, to initiate opposition, interference and cancellation proceedings against third parties.

 

(g)           In the event that any Grantor has reason to believe that any Collateral consisting of a Patent, Trademark or Copyright which is material to its business has been or is about to be infringed, misappropriated or diluted by a third party, such Grantor promptly shall notify the Administrative Agent and shall, if consistent with its reasonable business judgment, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such

 

18

 

infringement, misappropriation or dilution, and take such other actions as are appropriate under the circumstances to protect such Collateral.

 

(h)           To each Grantor’s knowledge, on and as of the date hereof, such Grantor is not infringing upon any Patent, Trademark or Copyright of any other Person other than such infringement that, individually or in the aggregate, would not (or would not reasonably be expected to) result in a Material Adverse Effect and no proceedings have been instituted or are pending against such Grantor or, to such Grantor’s knowledge, threatened, and no claim against such Grantor has been received by such Grantor, alleging any such violation.

 

(i)            Upon the occurrence and during the continuance of an Event of Default, each Grantor shall upon the written request of the Administrative Agent use its commercially reasonable efforts to obtain all requisite consents or approvals by the licensor of each Copyright License, Patent License or Trademark License to effect the assignment of all of such Grantor’s right, title and interest thereunder to the Administrative Agent or its designee.

 

(j)            Upon the occurrence and during the continuance of a Default or Event of Default, each Grantor shall, upon the written request of the Administrative Agent, provide a list to the Administrative Agent of all material Licenses to which each Grantor is a party.

 

Other Actions.  In order to further ensure the attachment, perfection and priority of, and the ability of the Administrative Agent to enforce, the Administrative Agent’s security interests in the Collateral, each Grantor agrees, in each case at such Grantor’s own expense, to take the following actions with respect to the following Collateral:

 

(k)           At no time shall any Grantor maintain or establish any Deposit Account, Securities Account or Commodity Account (other than (i) a Deposit Account exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of a Grantor’s salaried employees, (ii) zero balance disbursement accounts, (iii) that certain account with Bank of America, N.A., containing the Initial Litigation Trust Funds (as defined in the Plan of Reorganization) and (iv) the FairPoint Logistics, Inc. Dual Pole Fund Deposit Account ending with the last four digits 2606, maintained by FairPoint Logistics at Fidelity Investments, so long as the amount of cash contained therein does not at any time exceed the lesser of (A) the amount required to comply with the PUC order issued prior to the date hereof in which the cash contained therein relates and (B) $2,839,435.16) not subject to a Control Agreement unless, in the case of any Deposit Account, Securities Account or Commodity Account established after the Closing Date, such Grantor shall have provided the Administrative Agent with prior written notice of its intention to establish such new Deposit Account, Securities Account or Commodity Account and within fifteen (15) days of the opening of such Deposit Account, Securities Account or Commodity Account, such Grantor shall have executed and delivered to the Administrative Agent a Control Agreement in favor of the Administrative Agent with the bank, Securities Intermediary or Commodity Intermediary with which such Deposit Account, Securities Account or Commodity Account, as applicable, is maintained, granting to the Administrative Agent Control over such account; provided, that, notwithstanding the foregoing, the Grantors may establish or maintain Deposit Accounts, Securities Accounts or Commodity Accounts that are not subject to Control Agreements so long as the aggregate value of cash, Cash Equivalents and other property contained in such accounts (taken as a whole) does not exceed $250,000 at any time; provided, further, that, in addition to the amount specified in the foregoing proviso, the Loan Parties may maintain in their disbursement accounts, in each case for periods not in excess of two Business Days, up to $2,000,000 in the aggregate for all such accounts (taken as a whole) consisting of amounts in respect of returned items and rejected wires. The Administrative Agent agrees with each Grantor that, in the case of a Deposit Account subject to the Administrative Agent’s Control, the Administrative Agent shall not give any instructions

 

19

 

directing the disposition of funds from time to time credited to any Deposit Account or withhold any withdrawal rights from such Grantor with respect to funds from time to time credited to any Deposit Account or, in the case of a Securities Account or Commodity Account subject to the Administrative Agent’s Control, the Administrative Agent shall not give any Entitlement Orders or instructions or directions to any Securities Intermediary or Commodity Intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by such Grantor, unless, in each case, an Event of Default has occurred and is continuing or, after giving effect to any withdrawal, would occur.

 

(l)            If any Grantor shall at any time hold or acquire any certificated securities constituting Investment Property that are not Pledge Agreement Collateral (other than Equity Interests in Excluded Entities or shares in CoBank, ACB required to be held pursuant to Section 2.17 of the Credit Agreement), such Grantor shall promptly (and in any event with fifteen (15) Business Days) endorse, assign and deliver the same to the Administrative Agent, accompanied by such instruments of transfer or assignment duly executed in blank, all in form and substance reasonably satisfactory to the Administrative Agent.  If any securities now or hereafter acquired by any Grantor constituting Investment Property that are not Pledge Agreement Collateral are uncertificated and are not held in accounts required to be subject to a Control Agreement, such Grantor shall promptly (and in any event within fifteen (15) Business Days) notify the Administrative Agent thereof and, if requested by the Administrative Agent, shall use commercially reasonable efforts to cause the issuer to agree to comply with instructions from the Administrative Agent as to such securities, without further consent of any Grantor pursuant to an issuer’s acknowledgement in the form attached hereto as Annex I.

 

(m)          As between the Administrative Agent and the Grantors, the Grantors shall bear the investment risk with respect to the Investment Property, and the risk of loss of, damage to or the destruction of the Investment Property, whether in the possession of, or maintained as a security entitlement or deposit by, or subject to the control of, the Administrative Agent, a Securities Intermediary, a Commodity Intermediary, any Grantor or any other Person; provided, however, that nothing contained in this Section 5.10(c) shall release or relieve any Securities Intermediary or Commodity Intermediary of its duties and obligations to the Grantors or any other Person under any Control Agreement or under applicable law.

 

(n)           Each Grantor shall promptly pay all Charges and fees arising on or after the date hereof with respect to the Investment Property pledged by it under this Agreement, except that no such Charge or fee need be paid if the amount or validity thereof is currently being contested in good faith by appropriate proceedings, reserves in conformity with GAAP with respect thereto have been provided on the books of such Grantor and such proceedings could not reasonably be expected to result in the sale, forfeiture or loss of any material portion of the Collateral or any interest therein.  In the event any Grantor shall fail to make such payment contemplated in the immediately preceding sentence, the Administrative Agent may do so for the account of such Grantor and the Grantors shall promptly reimburse and indemnify the Administrative Agent from all costs and expenses incurred by the Administrative Agent under this Section 5.10(d), together with interest thereon at the rate then in effect in respect of the Base Rate Loans, and such amounts shall constitute Obligations secured by the Collateral.

 

20

 

(o)           Electronic Chattel Paper and Transferable Records.  If any amount individually in excess of $250,000 or in the aggregate in excess of $1,000,000 payable under or in connection with any of the Collateral shall be evidenced by any Electronic Chattel Paper or any “transferable record,” as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, the Grantor acquiring such Electronic Chattel Paper or transferable record shall promptly notify the Administrative Agent thereof and shall take such action as the Administrative Agent may reasonably request to vest in the Administrative Agent control under UCC Section 9-105 of such Electronic Chattel Paper or control under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record.  The Administrative Agent agrees with such Grantor that the Administrative Agent will arrange, pursuant to procedures reasonably satisfactory to the Administrative Agent and so long as such procedures will not result in the Administrative Agent’s loss of control, for the Grantor to make alterations to the Electronic Chattel Paper or transferable record permitted under UCC Section 9-105 or, as the case may be, Section 201 of the Federal Electronic Signatures in Global and National Commerce Act of Section 16 of the Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such Electronic Chattel Paper or transferable record.

 

(p)           Letter-of-Credit Rights.  If any Grantor is at any time a beneficiary under a Letter of Credit now or hereafter issued in favor of such Grantor in an amount individually in excess of $250,000 or in the aggregate in excess of $1,000,000, such Grantor shall promptly notify the Administrative Agent and, if requested by the Administrative Agent, such Grantor shall use commercially reasonable efforts to pursuant to an agreement in form and substance satisfactory to the Administrative Agent, either (i) arrange for the issuer and any confirmer of such Letter of Credit to consent to an assignment to the Administrative Agent of the proceeds of any drawing under the Letter of Credit or (ii) arrange for the Administrative Agent to become the transferee beneficiary of such Letter of Credit.

 

(q)           Commercial Tort Claims.  If any Grantor shall at any time hold or acquire a Commercial Tort Claim having a value individually in excess of $250,000 or in the aggregate in excess of $1,000,000 such Grantor shall promptly notify the Administrative Agent thereof and, if requested by the Administrative Agent, grant to the Administrative Agent in writing signed by such Grantor a security interest therein and in the Proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Administrative Agent.

 

(r)            Motor Vehicles.  Upon the request of the Administrative Agent, each Grantor shall deliver to the Administrative Agent originals of the certificates of title or ownership for any motor vehicle valued over $250,000 (and any other Equipment that is valued over $250,000 and is covered by Certificates of Title or ownership) owned by it with each Administrative Agent listed as a lienholder therein.

 

21

 

(s)           Landlord’s Access Agreements/Bailee Letters.  With respect to each Real Property Leasehold and each warehouse or other storage facility located in the United States of America owned by any Person other than a Grantor, if Inventory, Equipment or other personal property of any Grantor with a fair market value in excess of $500,000 is regularly maintained at such location, Borrowers shall notify the Administrative Agent thereof and, if requested by the Administrative Agent, will use commercially reasonable efforts to deliver a landlord waiver and access agreement or bailee letter, as applicable, in form and substance reasonably satisfactory to the Administrative Agent.

 

(t)            Instruments and Tangible Chattel Paper.  If any amount individually in excess of $250,000 or in the aggregate in excess of $1,000,000 payable under or in connection with any of the Collateral shall be evidenced by any Instrument or Tangible Chattel Paper, the Grantor acquiring such Instrument or Tangible Chattel Paper shall forthwith endorse, assign and deliver the same to the Administrative Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Administrative Agent may from time to time specify.

 

22

 

Legal Names; Type of Organization (and whether a Registered Organization and/or a Transmitting Utility); Jurisdiction of Organization; Location; Organizational Identification Numbers; Changes Thereto; Etc.  No Grantor shall change its legal name, its type of organization, its status as a Registered Organization (in the case of a Registered Organization), its status as a Transmitting Utility or as a Person which is not a Transmitting Utility, as the case may be, its jurisdiction of organization, its Location, or its organizational identification number (if any), except that any such changes shall be permitted (so long as not in violation of the applicable requirements of the Secured Debt Agreements and so long as same do not involve (x) a Registered Organization ceasing to constitute same or (y) any Grantor changing its jurisdiction of organization or Location from the United States or a State thereof to a jurisdiction of organization or Location, as the case maybe, outside the United States or a State thereof) if (i) it shall have given to the Administrative Agent not less than ten (10) days’ prior written notice of each change to its legal name, its type of organization, whether or not it is a Registered Organization, its jurisdiction of organization, its Location, its organizational identification number (if any), and whether or not it is a Transmitting Utility, and (ii) in connection with the respective change or changes, it shall have taken all action reasonably requested by the Administrative Agent to maintain the security interests of the Administrative Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect.  In addition, to the extent that any Grantor does not have an organizational identification number on the date hereof and later obtains one, such Grantor shall promptly thereafter deliver a written notification to the Administrative Agent of such organizational identification number and shall take all actions reasonably satisfactory to the Administrative Agent to the extent necessary to maintain the security interest of the Administrative Agent in the Collateral intended to be granted hereby fully perfected and in full force and effect.

 

23

 

ARTICLE VI

 

REMEDIES

 

Remedies upon Default.  After the occurrence and during the continuance of an Event of Default, the Administrative Agent (acting in accordance with Section 8.02(c) of the Credit Agreement) shall have the right to take any of or all the following actions at the same or different times:  (a) with respect to any Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Collateral by the applicable Grantors to the Administrative Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such Collateral throughout the world on such terms and conditions and in such manner as the Administrative Agent shall determine (other than in violation of applicable law or any then existing licensing arrangements to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Collateral and without liability for trespass to enter any premises where the Collateral may be located for the purpose of taking possession of or removing the Collateral and, generally, to exercise any and all rights afforded to a secured creditor under the UCC or other applicable law.  Without limiting the generality of the foregoing, each Grantor agrees that the Administrative Agent (acting in accordance with Section 8.02(c) of the Credit Agreement) shall have the right, subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral, at public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Administrative Agent shall deem appropriate.  The Administrative Agent shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Administrative Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold.  Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

 

The Administrative Agent (acting in accordance with Section 8.02(c) of the Credit Agreement) shall give a Grantor ten (10) Business Days’ prior written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the UCC) of the Administrative Agent’s intention to make any sale or other disposition of such Grantor’s Collateral.  Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange.  Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Administrative Agent (acting in accordance with Section 8.02(c) of the Credit Agreement) may fix and state in the notice of such sale.  At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Administrative Agent may (in its sole and absolute discretion (acting in accordance with Section 8.02(c) of the Credit Agreement)) determine.  The Administrative Agent shall not be obligated to make any sale of

 

24

 

any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given.  The Administrative Agent may (acting in accordance with Section 8.02(c) of the Credit Agreement), without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned.  In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Administrative Agent (acting in accordance with Section 8.02(c) of the Credit Agreement) until the sale price is paid by the purchaser or purchasers thereof, but the Administrative Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice.  At any public (or, to the extent permitted by law, private) sale made pursuant to this Section, the Administrative Agent on behalf of the Secured Parties (or certain of them (acting in accordance with Sections 8.02(c) and 10.03 of the Credit Agreement)) may bid for or purchase, free (to the extent permitted by law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any Obligation then due and payable to such Secured Parties from any Grantor as a credit against the purchase price, and such Secured Parties may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor.  For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Administrative Agent (acting in accordance with Section 8.02(c) of the Credit Agreement) shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Administrative Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full.  As an alternative to exercising the power of sale herein conferred upon it, the Administrative Agent (acting in accordance with Section 8.02(c) of the Credit Agreement) may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver.  Any sale pursuant to the provisions of this Section shall be deemed to conform to the commercially reasonable standards as provided in Section 9-611 of the UCC.

 

This Agreement may be enforced only by the action of the Administrative Agent acting in accordance with Sections 8.02(c) and 10.03 of the Credit Agreement and no other Secured Party shall have any right individually to seek to enforce or to enforce this Agreement or to realize upon the security to be granted hereby.

 

SECTION 6.01.               Application of Proceeds.

 

(a)           All moneys collected by the Administrative Agent upon any sale or other disposition of the Collateral, together with all other moneys received by the Administrative Agent hereunder, shall be applied in accordance with Section 8.03 of the Credit Agreement.

 

25

 

(b)           All payments required to be made to the Secured Parties hereunder shall be made to the Administrative Agent for the account of the respective Secured Parties.

 

(c)           It is understood that each Grantor shall remain jointly and severally liable to the extent of any deficiency between (x) the amount of the Obligations for which it is liable directly or as a Guarantor that are satisfied with proceeds of the Collateral and (y) the aggregate outstanding amount of the Obligations.

 

Grant of License to Use Intellectual Property.  For the purpose of enabling the Administrative Agent to exercise rights and remedies under this Article at such time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Administrative Agent a nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors) to use, license or sublicense any of the Collateral, except to the extent that such license may not be granted as a result of a pre-existing exclusive license arrangement, consisting of Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.  The use of such license by the Administrative Agent shall be exercised, at the option of the Administrative Agent, after the occurrence and during the continuation of an Event of Default; provided that any license, sublicense or other transaction entered into by the Administrative Agent in accordance herewith shall be binding upon the Grantors notwithstanding any subsequent cure of an Event of Default.  Such license shall be irrevocable until this Agreement is terminated.

 

SECTION 6.02.               Subordination.  Each Grantor hereby agrees that, upon the occurrence and during the continuance of an Event of Default, unless otherwise agreed by the Administrative Agent, all Indebtedness owing by it to any Subsidiary of any Borrower shall be fully subordinated to the payment in full in cash of such Grantor’s Obligations.

 

SECTION 6.03.               Deficiency.  Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Obligations and the fees and disbursements of any attorneys employed by the Administrative Agent or any Secured Party to collect such deficiency.

 

ARTICLE VII

 

MISCELLANEOUS

 

Notices.  All notices and other communications hereunder shall be in writing (including telegraphic, telex, telecopier, facsimile or cable communication) and shall be delivered, telegraphed, telexed, telecopied, faxed, cabled, or mailed (by first class mail, postage prepaid):

 

(1)           if to any Grantor, at its address set forth opposite its signature below;

 

26

 

(2)           if to the Administrative Agent, in accordance with Section 10.02 of the Credit Agreement;

 

(3)           if to any Secured Party (other than the Administrative Agent), either (x) to the Administrative Agent, at the address of the Administrative Agent specified in the Credit Agreement, or (y) at such address as such Secured Party shall have specified in the Credit Agreement;

 

or at such other address as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.

 

Survival of Agreement.  All covenants, agreements, representations and warranties made by any Grantor herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Secured Debt Agreement shall be considered to have been relied upon by the Administrative Agent and the other Secured Parties and shall survive the making by the Lenders of the Loans and the Lenders’ issuance of and participations in Letters of Credit (as defined in the Credit Agreement), regardless of any investigation made by the Secured Parties or on their behalf, and shall continue in full force and effect until this Agreement shall terminate.

 

Binding Effect.  This Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Administrative Agent and a counterpart hereof shall have been executed on behalf of the Administrative Agent, and thereafter shall be binding upon such Grantor and the Administrative Agent and their respective successors and assigns, and shall inure to the benefit of such Grantor, the Administrative Agent and the other Secured Parties and their respective successors and assigns, except that no Grantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly permitted by each of the other Secured Debt Agreements.

 

Successors and Assigns.  Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Administrative Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

 

GOVERNING LAW.

 

(b)           THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE SECURED PARTIES AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.  Any legal action or proceeding with respect to this Agreement or any other Loan Document may be brought in the courts of the State of New York sitting in New York County or of the United States of America for the Southern District of New York, and, by execution and delivery of this

 

27

 

Agreement, each Grantor hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts.  Each party hereto further irrevocably consents to the service of process out of any of the aforementioned courts, in the manner provided in Section 10.02 of the Credit Agreement, to such party at (i) in the case of the Administrative Agent, its address specified in the Credit Agreement and (ii) in the case of a Guarantor, its address set forth opposite its signature below.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing herein shall affect the right of any of the Secured Parties to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against any Grantor in any other jurisdiction.

 

(c)           Each Grantor 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 Loan 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 such action or proceeding brought in any such court has been brought in an inconvenient forum.

 

(d)           EACH GRANTOR AND THE ADMINISTRATIVE AGENT 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.

 

28

 

Waivers; Amendment.  None of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by the Administrative Agent (with the consent of the Required Lenders or, to the extent required by Section 10.01 of the Credit Agreement, all of the Lenders) and each Grantor affected thereby.

 

Severability.  In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction).  The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.  It is understood and agreed among the parties that this Agreement shall create separate security interests in the Collateral securing the Obligations as provided in Sections 3.02 and 3.03, and that any determination by any court with jurisdiction that the security interest securing any Obligation or class of Obligations is invalid for any reason shall not in and of itself invalidate the security interest securing any other Obligations hereunder.

 

Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single contract.  Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.

 

Headings.  Article and Section headings used herein are for the purpose of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

 

SECTION 7.02.               Termination.

 

(a)           After the Termination Date (as defined below), this Agreement shall terminate (provided that all indemnities set forth herein and in the other Secured Debt Agreements shall survive any such termination) and the Administrative Agent, at the request and expense of the Grantors, will, if requested by the Grantors, execute and deliver to the Grantors a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement as provided above, and will duly assign, transfer and deliver to such Grantor (without recourse and without any representation or warranty) such of the Collateral as may be in the possession of the Administrative Agent and as has not theretofore been sold or otherwise applied or released pursuant to this Agreement, together with any moneys at the time held by the Administrative Agent hereunder.  As used in this Agreement, “Termination Date” shall mean the date upon which the Commitments have been terminated, no Note under the Credit Agreement is outstanding (and all Loans have been paid in full), all Letters of Credit (as defined in the Credit Agreement) have been cancelled (or have expired, undrawn) or collateralized to the satisfaction of the Administrative Agent and all other Obligations have been paid in full (other than arising from indemnities for which no request has been made).

 

29

 

(b)           In the event that any part of the Collateral is sold or otherwise disposed of in connection with a sale or other disposition permitted by Section 7.05 of the Credit Agreement or is otherwise released at the direction of the Required Lenders (or all the Lenders if required by Section 10.01 of the Credit Agreement), and the proceeds of such sale or other disposition or from such release are applied in accordance with the terms of the Credit Agreement to the extent required to be so applied, the Administrative Agent, at the request and expense of the respective Grantor, will release such Collateral from this Agreement, duly assign, transfer and deliver to such Grantor (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so sold, disposed of or released and as may be in possession of the Administrative Agent and has not theretofore been released pursuant to this Agreement.

 

(c)           The Administrative Agent shall have no liability whatsoever to any Secured Party as the result of any release of Collateral by it in accordance with (or which the Administrative Agent in the absence of gross negligence and willful misconduct believes to be in accordance with) this Section 7.10.

 

30

 

Additional Grantors.  It is understood and agreed that any Subsidiary of FairPoint that is required to become a party hereto pursuant to the Credit Agreement shall become a Grantor hereunder by executing and delivering a joinder agreement, in the form attached hereto as Annex V, and delivering the same to the Administrative Agent.

 

Financing Statements.  Each Grantor hereby irrevocably authorizes the Administrative Agent at any time and from time to time to file in any relevant jurisdiction any initial financing statements and amendments thereto that contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including (i) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor, (ii) any financing or continuation statements or other documents without the signature of such Grantor where permitted by law, including the filing of a financing statement describing the Collateral in such manner as the Administrative Agent may determine, in its reasonable discretion, as necessary, advisable or prudent to ensure the perfection of the Security Interests in the Collateral, including, without limitation, describing such property as “all assets” or “all personal property” and (iii) in the case of a financing statement filed as a fixture filing or covering Collateral constituting minerals or the like to be extracted or timber to be cut, a sufficient description of the real property to which such Collateral relates.

 

31

 

Administrative Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the Administrative Agent the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Administrative Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable until this Agreement is terminated and coupled with an interest.  Without limiting the generality of the foregoing, the Administrative Agent shall have the right, after the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Administrative Agent’s name or in the name of such Grantor, (a) to receive, endorse, assign or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due under and by virtue of any Collateral; (d) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (e) to send verifications of Accounts to any Account Debtor; (f) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (g) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (h) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Administrative Agent; and (i) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Administrative Agent were the absolute owner of the Collateral for all purposes; provided, that nothing herein contained shall be construed as requiring or obligating the Administrative Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Administrative Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby.  The Administrative Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their respective own gross negligence or willful misconduct.

 

SECTION 7.03.               Conflict.  Notwithstanding anything to the contrary set forth herein, this Agreement, the Liens created hereby and the rights and remedies of the Administrative Agent hereunder are subject to the terms and provisions of the Credit Agreement, including, without limitation, Sections 8.02, 8.03, 9.06, 10.03, 10.14, 10.15 and 10.16 thereof.  In the event of any inconsistency between the provisions of this Agreement and the Credit Agreement, the provisions of the Credit Agreement shall supersede and control the provisions of this Agreement.

 

[Signatures on Following Page]

 

32

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

 

Address:

 

	
c/o FAIRPOINT COMMUNICATIONS, INC.
    	
BERKSHIRE CELLULAR, INC.
    
	
521 East Morehead Street
    	
 
    
	
Charlotte, NC 28202
    	
BERKSHIRE NEW YORK ACCESS, INC.
    
	
 
    	
 
    
	
Attention: General Counsel
    	
C & E COMMUNICATIONS, LTD.
    
	
 
    	
 
    
	
Facsimile No.: (704) 344-1594
    	
C-R COMMUNICATIONS, INC.
    
	
 
    	
 
    
	
Email: slinn@fairpoint.com
    	
C-R LONG DISTANCE, INC.
    
	
 
    	
 
    
	
 
    	
COMERCO, INC.
    
	
 
    	
 
    
	
 
    	
EL PASO LONG DISTANCE COMPANY
    
	
 
    	
 
    
	
 
    	
ELLTEL LONG DISTANCE CORP.
    
	
 
    	
 
    
	
 
    	
FAIRPOINT BROADBAND, INC.
    
	
 
    	
 
    
	
 
    	
FAIRPOINT CARRIER SERVICES, INC.
    
	
 
    	
 
    
	
 
    	
FAIRPOINT COMMUNICATIONS, INC.
    
	
 
    	
 
    
	
 
    	
FAIRPOINT LOGISTICS, INC.
    
	
 
    	
 
    
	
 
    	
GERMANTOWN LONG DISTANCE COMPANY
    
	
 
    	
 
    
	
 
    	
GTC COMMUNICATIONS, INC.
    
	
 
    	
 
    
	
 
    	
MJD SERVICES CORP.
    
	
 
    	
 
    
	
 
    	
MJD VENTURES, INC.
    
	
 
    	
 
    
	
 
    	
ORWELL COMMUNICATIONS, INC.
    
	
 
    	
 
    
	
 
    	
PEOPLES MUTUAL LONG DISTANCE COMPANY
    
	
 
    	
 
    
	
 
    	
QUALITY ONE TECHNOLOGIES, INC.
    
	
 
    	
 
    
	
 
    	
RAVENSWOOD COMMUNICATIONS, INC.
    

 

[Signature Page to Security Agreement]

 

 

	
 
    	
S T ENTERPRISES, LTD.
    
	
 
    	
 
    
	
 
    	
TACONIC TECHNOLOGY CORP.
    
	
 
    	
 
    
	
 
    	
UNITE COMMUNICATIONS SYSTEMS, INC.
    
	
 
    	
 
    
	
 
    	
UTILITIES, INC.
    
	
 
    	
 
    
	
 
    	
each as a Grantor
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ajay Sabherwal
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name: Ajay Sabherwal
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title: Executive Vice President and Chief   Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
FRETEL COMMUNICATIONS, LLC
    
	
 
    	
 
    
	
 
    	
as a Grantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
MJD Ventures, Inc.,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
its Member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ Ajay Sabherwal
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name: Ajay Sabherwal
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Title: Executive Vice President and Chief   Financial Officer
    

 

[Signature Page to Security Agreement]

 

 

	
Accepted and Agreed to:
    	
 
    
	
 
    	
 
    
	
BANK OF AMERICA, N.A.,
    	
 
    
	
as Administrative Agent
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Christopher D. Post
    	
 
    
	
 
    	
Name: Christopher D. Post
    	
 
    
	
 
    	
Title:    Vice President
    	
 
    

 

[Signature Page to Security Agreement]

 

 

Annex I to the

Security Agreement

 

[Form of]

 

ISSUER’S ACKNOWLEDGMENT AGREEMENT

 

AGREEMENT (as amended, modified, restated and/or supplemented from time to time, this “Agreement”), dated as of [ , 20 ], among the undersigned grantor (the “Grantor”), BANK OF AMERICA, N.A., not in its individual capacity but solely as Administrative Agent (in such capacity, together with its successors and assigns in such capacity, the “Administrative Agent”), and [ ], as the issuer of the Investment Property (the “Issuer”).

 

Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed them in the Security Agreement (as defined below).

 

W I T N E S S E T H :

 

WHEREAS, the Grantor, certain of its affiliates and the Administrative Agent have entered into a Security Agreement, dated as of January 24, 2011 (as amended, modified, restated and/or supplemented from time to time, the “Security Agreement”), under which, among other things, in order to secure the payment of (a) the First Lien Obligations, the Grantor has pledged to the Administrative Agent, for the ratable benefit of the First Lien Claimholders, and has granted to the Administrative Agent, for the ratable benefit of the First Lien Claimholders, a security interest in, all of the right, title and interest in, to and under the Collateral of the Grantor and (b) the Second Lien Obligations, the Grantor has pledged to the Administrative Agent, for the ratable benefit of the Second Lien Claimholders, and has granted to the Administrative Agent, for the ratable benefit of the Second Lien Claimholders, a security interest in, all of the right, title and interest in, to and under the Collateral of the Grantor, including all Equity Interests and other Investment Property (in each case, other than with respect to Excluded Entities) from time to time issued by the Issuer, whether now existing or hereafter from time to time acquired by the Grantor (with all of such Investment Property being herein collectively called the “Issuer Pledged Interests”); and

 

WHEREAS, the Grantor desires the Issuer to enter into this Agreement in order to vest in the Administrative Agent control of the Issuer Pledged Interests and to provide for the rights of the parties under this Agreement;

 

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

 

1.             The Grantor hereby irrevocably authorizes and directs the Issuer, and the Issuer hereby agrees, to comply with any and all instructions and orders originated by the Administrative Agent (and its successors and assigns) regarding any and all of the Issuer Pledged Interests without the further consent by the registered owner (including the Grantor), and, following its receipt of a notice from the Administrative Agent stating that the Administrative

 

1

 

Agent is exercising exclusive control of the Issuer Pledged Interests, not to comply with any instructions or orders regarding any or all of the Issuer Pledged Interests originated by any person or entity other than the Administrative Agent (and its successors and assigns) or a court of competent jurisdiction.

 

2.             The Issuer hereby certifies that (i) no notice of any security interest, lien or other encumbrance or claim affecting the Issuer Pledged Interests (other than the security interest of the Administrative Agent) has been received by it, and (ii) the security interest of the Administrative Agent in the Issuer Pledged Interests has been registered in the books and records of the Issuer.

 

3.             The Issuer hereby represents and warrants that (i) the pledge by the Grantor of, and the granting by the Grantor of a security interest in, the Issuer Pledged Interests to the Administrative Agent, for the benefit of the Secured Parties, does not violate the charter, by-laws, partnership agreement, membership agreement or any other formation or organizational agreement governing the Issuer or the Issuer Pledged Interests, and (ii) the Issuer Pledged Interests consisting of capital stock of a corporation are fully paid and nonassessable.

 

4.             All notices, statements of accounts, reports, prospectuses, financial statements and other communications to be sent to the Grantor by the Issuer in respect of the Issuer will also be sent to the Administrative Agent at the following address:

 

[  ]

[  ]

Attention:  [  ]

Telephone No.:  [  ]

Telecopier No.:  [  ]

 

5.             Following its receipt of a notice from the Administrative Agent stating that the Administrative Agent is exercising exclusive control of the Issuer Pledged Interests and until the Administrative Agent shall have delivered written notice to the Issuer that all of the Obligations have been paid in full and this Agreement is terminated, the Issuer will send any and all redemptions, distributions, interest or other payments in respect of the Issuer Pledged Interests from the Issuer for the account of the Administrative Agent only by wire transfers to such account as the Administrative Agent shall instruct.

 

6.             Except as expressly provided otherwise in Sections 4 and 5, all notices, instructions, orders and communications hereunder shall be sent or delivered by mail, telegraph, telex, telecopy, cable or overnight courier service and all such notices and communications shall, when mailed, telexed, telecopied, cabled or sent by overnight courier, be effective when deposited in the mails or delivered to overnight courier, prepaid and properly addressed for delivery on such or the next Business Day, or sent by telex or telecopier, except that notices and communications to the Administrative Agent or the Issuer shall not be effective until received.  All notices and other communications shall be in writing and addressed as follows:

 

2

 

(a)           if to the Grantor, at:

 

 

Attention:

Telephone No.:

Fax No.:

 

(b)           if to the Administrative Agent, at the address given in Section 4 hereof;

 

(c)           if to the Issuer, at:

 

 

 

Attention:

Telephone No.:

Fax No.:

 

or at such other address as shall have been furnished in writing by any Person described above to the party required to give notice hereunder.  As used in this Section 6, “Business Day” means any day other than a Saturday, Sunday, or other day in which banks in New York are authorized to remain closed.

 

7.             This Agreement shall be binding upon the successors and assigns of the Grantor and the Issuer and shall inure to the benefit of and be enforceable by the Administrative Agent and its successors and assigns.  This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument.  In the event that any provision of this Agreement shall prove to be invalid or unenforceable, such provision shall be deemed to be severable from the other provisions of this Agreement which shall remain binding on all parties hereto.  None of the terms and conditions of this Agreement may be changed, waived, modified or varied in any manner whatsoever except in writing signed by the Administrative Agent, the Issuer and the Grantor.

 

8.             This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its principles of conflict of laws.

 

3

 

IN WITNESS WHEREOF, the Grantor, the Administrative Agent and the Issuer have caused this Agreement to be executed by their duly elected officers duly authorized as of the date first above written.

 

	
 
    	
[
    	
],
    	
 
    
	
 
    	
 
    	
as Grantor
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
BANK OF AMERICA, N.A.,
    
	
 
    	
 
    	
not in its individual capacity but solely   as Administrative Agent
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
[
    	
],
    	
 
    
	
 
    	
 
    	
as the Issuer
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Issuer’s Acknowledgement Agreement]

 

 

Annex II to the

Security Agreement

 

[Form of]

 

Copyright Security Agreement

 

Copyright Security Agreement, dated as of January 24, 2011, by [                    ] (the “Pledgor”), in favor of BANK OF AMERICA, N.A., in its capacity as administrative agent pursuant to the Credit Agreement (in such capacity, the “Administrative Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Pledgor is party to a Security Agreement of even date herewith (the “Security Agreement”) in favor of the Administrative Agent pursuant to which the Pledgor is required to execute and deliver this Copyright Security Agreement;

 

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Pledgor hereby agrees with the Administrative Agent as follows:

 

SECTION 1.           Defined Terms.  Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

 

“Copyright Collateral” shall mean all (a) Copyrights of the Pledgor listed on Schedule I attached hereto; and (b) all Proceeds of any and all of the foregoing.

 

SECTION 2.           Grant of First Lien Security Interest in Copyright Collateral.  The Pledgor hereby mortgages, pledges and grants to the Administrative Agent for the benefit of the Secured Parties constituting First Lien Claimholders a lien on, and security interest in and to, all of its right, title and interest in, to and under all the Copyright Collateral of the Pledgor as security for the payment and performance in full of the Obligations constituting First Lien Obligations.

 

SECTION 3.           Grant of Second Lien Security Interest in Copyright Collateral.  The Pledgor hereby mortgages, pledges and grants to the Administrative Agent for the benefit of the Secured Parties constituting Second Lien Claimholders a lien on, and security interest in and to, all of its right, title and interest in, to and under all the Copyright Collateral of the Pledgor as security for the payment and performance in full of the Obligations constituting Second Lien Obligations.

 

SECTION 4.           Security Agreement.  The security interests granted pursuant to this Copyright Security Agreement are granted in conjunction with the security interests granted to the Administrative Agent pursuant to the Security Agreement and Pledgor hereby acknowledges

 

1

 

and affirms that the rights and remedies of the Administrative Agent with respect to the security interests in the Copyrights made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.  In the event that any provision of this Copyright Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Administrative Agent shall otherwise reasonably determine.

 

SECTION 5.           Termination.  Upon the payment in full of the Obligations and termination of the Security Agreement, the Administrative Agent shall execute, acknowledge, and deliver to the Pledgor a written instrument in recordable form releasing the collateral pledges, grants, assignments, liens and security interests in the Copyrights under this Copyright Security Agreement.

 

SECTION 6.           Counterparts.  This Copyright Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Copyright Security Agreement by signing and delivering one or more counterparts.

 

SECTION 7.           Governing Law.  This Copyright Security Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

 

[signature page follows]

 

2

 

IN WITNESS WHEREOF, the Pledgor has caused this Copyright Security Agreement to be executed and delivered by its duly authorized offer as of the date first set forth above.

 

	
 
    	
 
    	
Very truly yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[PLEDGORS]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
Accepted and Agreed:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
BANK OF AMERICA, N.A.,
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
as Administrative Agent
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    

 

[Signature Page to Copyright Security Agreement]

 

 

SCHEDULE I

To

COPYRIGHT SECURITY AGREEMENT

COPYRIGHT REGISTRATIONS AND COPYRIGHT APPLICATIONS

 

Copyright Registrations:

 

	
OWNER
    	
 
    	
REGISTRATION NUMBER
    	
 
    	
TITLE
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

Copyright Applications:

 

	
OWNER
    	
 
    	
TITLE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

 

Annex III to the
 Security Agreement

 

[Form of]

 

Patent Security Agreement

 

Patent Security Agreement, dated as of January 24, 2011, by [                  ] (the “Pledgor”), in favor of BANK OF AMERICA, N.A., in its capacity as administrative agent pursuant to the Credit Agreement (in such capacity, the “Administrative Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Pledgor is party to a Security Agreement of even date herewith (the “Security Agreement”) in favor of the Administrative Agent pursuant to which the Pledgor is required to execute and deliver this Patent Security Agreement;

 

NOW, THEREFORE,  in consideration of the premises and to induce the Administrative Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Pledgor hereby agrees with the Administrative Agent as follows:

 

SECTION 1.           Defined Terms.  Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

 

“Patent Collateral” shall mean all (a) Patents of the Pledgor listed on Schedule I attached hereto; and (b) all Proceeds of any and all of the foregoing.

 

SECTION 2.           Grant of First Lien Security Interest in Patent Collateral.  The Pledgor hereby mortgages, pledges and grants to the Administrative Agent for the benefit of the Secured Parties constituting First Lien Claimholders a lien on, and security interest in and to, all of its right, title and interest in, to and under all the Patent Collateral of the Pledgor as security for the payment and performance in full of the Obligations constituting First Lien Obligations.

 

SECTION 3.           Grant of Second Lien Security Interest in Copyright Collateral.  The Pledgor hereby mortgages, pledges and grants to the Administrative Agent for the benefit of the Secured Parties constituting Second Lien Claimholders a lien on, and security interest in and to, all of its right, title and interest in, to and under all the Patent Collateral of the Pledgor as security for the payment and performance in full of the Obligations constituting Second Lien Obligations.

 

1

 

SECTION 4.           Security Agreement.  The security interests granted pursuant to this Patent Security Agreement are granted in conjunction with the security interests granted to the Administrative Agent pursuant to the Security Agreement and Pledgor hereby acknowledges and affirms that the rights and remedies of the Administrative Agent with respect to the security interests in the Patents made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.  In the event that any provision of this Patent Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Administrative Agent shall otherwise reasonably determine.

 

SECTION 5.           Termination.  Upon the payment in full of the Obligations and termination of the Security Agreement, the Administrative Agent shall execute, acknowledge, and deliver to the Pledgor a written instrument in recordable form releasing the collateral pledges, grants, assignments, liens and security interests in the Patents under this Patent Security Agreement.

 

SECTION 6.           Counterparts.  This Patent Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Patent Security Agreement by signing and delivering one or more counterparts.

 

SECTION 7.           Governing Law.  This Patent Security Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

 

[signature page follows]

 

2

 

IN WITNESS WHEREOF, the Pledgor has caused this Patent Security Agreement to be executed and delivered by its duly authorized offer as of the date first set forth above.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
[PLEDGORS]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

Accepted and Agreed:

 

BANK OF AMERICA, N.A.,

 

as Administrative Agent

 

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Patent Security Agreement]

 

 

SCHEDULE I
 to
 PATENT SECURITY AGREEMENT
  PATENT REGISTRATIONS AND PATENT APPLICATIONS

 

Patent Registrations:

 

	
OWNER
    	
 
    	
REGISTRATION NUMBER
    	
 
    	
NAME
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

Patent Applications:

 

	
OWNER
    	
 
    	
APPLICATION NUMBER
    	
 
    	
NAME
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

1

 

Annex IV to the
 Security Agreement

 

[Form of]

 

Trademark Security Agreement

 

Trademark Security Agreement, dated as of January 24, 2011, by [                ] (the “Pledgor”), in favor of BANK OF AMERICA, N.A., in its capacity as administrative agent pursuant to the Credit Agreement (in such capacity, the “Administrative Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Pledgor is party to a Security Agreement of even date herewith (the “Security Agreement”) in favor of the Collateral Agent pursuant to which the Pledgor is required to execute and deliver this Trademark Security Agreement;

 

NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Pledgor hereby agrees with the Administrative Agent as follows:

 

SECTION 1.           Defined Terms.  Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

 

“Trademark Collateral” shall mean all (a) Trademarks of the Pledgor listed on Schedule I attached hereto; and (b) all Proceeds of any and all of the foregoing.

 

SECTION 2.           Grant of First Lien Security Interest in Trademark Collateral.  The Pledgor hereby mortgages, pledges and grants to the Administrative Agent for the benefit of the Secured Parties constituting First Lien Claimholders a lien on, and security interest in and to, all of its right, title and interest in, to and under all the Trademark Collateral of the Pledgor as security for the payment and performance in full of the Obligations constituting First Lien Obligations.

 

SECTION 3.           Grant of Second Lien Security Interest in Copyright Collateral.  The Pledgor hereby mortgages, pledges and grants to the Administrative Agent for the benefit of the Secured Parties constituting Second Lien Claimholders a lien on, and security interest in and to, all of its right, title and interest in, to and under all the Trademark Collateral of the Pledgor as security for the payment and performance in full of the Obligations constituting Second Lien Obligations.

 

 

SECTION 4.           Security Agreement.  The security interests granted pursuant to this Trademark Security Agreement are granted in conjunction with the security interests granted to the Administrative Agent pursuant to the Security Agreement and Pledgor hereby acknowledges and affirms that the rights and remedies of the Administrative Agent with respect to the security interests in the Trademarks made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.  In the event that any provision of this Trademark Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Administrative Agent shall otherwise reasonably determine.

 

SECTION 5.           Termination.  Upon the payment in full of the Obligations and termination of the Security Agreement, the Administrative Agent shall execute, acknowledge, and deliver to the Pledgor a written instrument in recordable form releasing the collateral pledges, grants, assignments, liens and security interests in the Trademarks under this Trademark Security Agreement.

 

SECTION 6.           Counterparts.  This Trademark Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Trademark Security Agreement by signing and delivering one or more counterparts.

 

SECTION 7.           Governing Law.  This Trademark Security Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

 

[signature page follows]

 

2

 

IN WITNESS WHEREOF, the Pledgor has caused this Trademark Security Agreement to be executed and delivered by its duly authorized offer as of the date first set forth above.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
[PLEDGORS]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Accepted and Agreed:

 

BANK OF AMERICA, N.A.

 

as Administrative Agent

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Trademark Security Agreement]

 

 

SCHEDULE I
 to
 TRADEMARK SECURITY AGREEMENT
  TRADEMARK REGISTRATIONS AND TRADEMARK APPLICATIONS

 

Trademark Registrations:

 

	
OWNER
    	
 
    	
REGISTRATION NUMBER
    	
 
    	
TRADEMARK
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

Trademark Applications:

 

	
OWNER
    	
 
    	
APPLICATION NUMBER
    	
 
    	
TRADEMARK
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

ANNEX V

 

Form of Joinder to Security Agreement

 

JOINDER NO.        dated as of [                              ] (this “Joinder”), to the Security Agreement (the “Security Agreement”) dated as of January 24, 2011 (as amended, modified, restated and/or supplemented from time to time, the “Security Agreement”), among FAIRPOINT COMMUNICATIONS, INC., a Delaware corporation (“FairPoint”), FAIRPOINT LOGISTICS, INC., a South Dakota corporation (together with FairPoint, the “Borrowers”), the other Subsidiaries of FairPoint party thereto (together with the Borrowers, each a “Grantor” and collectively, the “Grantors”) and BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, together with any successors and assigns in such capacity, the “Administrative Agent”) for the benefit of the Secured Parties.

 

A.            Reference is made to (a) the Credit Agreement dated as of                   , 2011 (as amended, modified, restated and/or supplemented from time to time, the “Credit Agreement”), among the Borrowers, the Lenders party thereto and the Administrative Agent and (b) the Security Agreement.

 

B.            Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement.

 

C.            [NAME OF GRANTOR] has [formed][acquired]                             , a                        [type of entity] (the “New Grantor”).

 

D.            Pursuant to the terms and provisions of the Credit Agreement, the New Grantor is required to become a party to the Security Agreement and to pledge and grant a Lien in all of its Collateral to the Administrative Agent, for the benefit of the Secured Parties.  The New Grantor is executing this Joinder in accordance with the requirements of the Credit Agreement and Section 7.11 of the Security Agreement to become a party to the Security Agreement.

 

Accordingly, the New Grantor hereby agrees as follows:

 

SECTION 1.           The New Grantor is hereby added as a party to the Security Agreement and hereby agrees to be bound as a “Grantor” by all of the terms, covenants and provisions set forth in the Security Agreement to the same extent that it would have been bound if it had been a signatory to the Security Agreement on the date of the Security Agreement.

 

Without limiting the generality of the first paragraph of this Section 1, as security for the payment and performance in full of the Obligations constituting First Lien Obligations, each Grantor hereby sells, conveys, assigns, sets over, mortgages, pledges, hypothecates and transfers to the Administrative Agent, for the ratable benefit of the Secured Parties constituting First Lien Claimholders, and hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties constituting First Lien Claimholders, a security interest in, all of such Grantor’s right, title and interest in, to and under the 

 

 

Collateral of such Grantor, wherever located, whether now existing or hereafter arising or acquired from time to time.

 

Without limiting the generality of the first paragraph of this Section 1, as security for the payment and performance in full of the Obligations constituting Second Lien Obligations, each Grantor hereby sells, conveys, assigns, sets over, mortgages, pledges, hypothecates and transfers to the Administrative Agent, for the ratable benefit of the Secured Parties constituting Second Lien Claimholders, and hereby grants to the Administrative Agent, for the ratable benefit of the Secured Parties constituting Second Lien Claimholders, a security interest in, all of such Grantor’s right, title and interest in, to and under the Collateral of such Grantor, wherever located, whether now existing or hereafter arising or acquired from time to time.

 

SECTION 2.           Annexed hereto are supplements to each of the Schedules to the Security Agreement with respect to the New Grantor.  Such supplements shall be deemed to be part of the Security Agreement.  The New Grantor hereby represents and warrants that, as of the date hereof, all information set forth in the supplements annexed hereto is true and correct.

 

SECTION 3.           The New Grantor hereby represents and warrants to the Administrative Agent and the other Secured Parties that this Joinder has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors’ rights generally and by general principles of equity.

 

SECTION 4.           This Joinder may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.

 

SECTION 4.           Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect in accordance with the terms thereof.

 

SECTION 6.           THIS JOINDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.

 

SECTION 7.           All communications and notices to be provided to the New Grantor hereunder or under the Security Agreement shall be given to the New Grantor at the address set forth under its signature below.

 

2

 

IN WITNESS WHEREOF, the New Grantor and the Administrative Agent have duly executed this Joinder as of the day and year first above written.

 

	
 
    	
[NEW GRANTOR]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
Address of New Grantor:
    
	
 
    	
 
    
	
 
    	
[                                         ]
    

 

	
Accepted and Agreed to:
    	
 
    
	
 
    	
 
    
	
BANK OF AMERICA, N.A.,
    	
 
    
	
as Administrative Agent
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Joinder to Security Agreement]Exhibit 10.4

 

CONTINUING GUARANTY

 

CONTINUING GUARANTY (as amended, modified, restated and/or supplemented from time to time, this “Guaranty”), dated as of January 24, 2011 made by and among each of the undersigned guarantors (each, a “Guarantor” and collectively, the “Guarantors”) in favor of BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, together with any successor administrative agent, the “Administrative Agent”), for the benefit of the Secured Parties.  Except as otherwise defined herein, all capitalized terms used herein and defined in the Credit Agreement (as defined below) shall be used herein as therein defined.

 

W I T N E S S E T H :

 

WHEREAS, FairPoint Communications, Inc., a Delaware corporation (“FairPoint”), and FairPoint Logistics, Inc., a South Dakota corporation (“FairPoint Logistics”; and together with FairPoint, each a “Borrower” and collectively the “Borrowers”), the lenders from time to time party thereto (the “Lenders”) and the Administrative Agent have entered into a Credit Agreement, dated as of January 24, 2011 (as amended, modified, restated and/or supplemented from time to time, the “Credit Agreement”), providing for the making of Loans to, and the issuance of, and participation in, Letters of Credit for the account of, the Borrowers and/or one or more of their Subsidiaries, all as contemplated therein.

 

WHEREAS, each Guarantor is a direct or indirect Subsidiary of FairPoint.

 

WHEREAS, it is a condition precedent to the effectiveness of the Credit Agreement and the making of Loans to the Borrowers and the issuance of, and participation in, Letters of Credit for the account of the Borrowers and/or one or more of their Subsidiaries thereunder that each Guarantor shall have executed and delivered this Guaranty to the Administrative Agent.

 

WHEREAS, each Guarantor will obtain benefits from the incurrence of Loans by the Borrowers and the issuance of, and participation in, Letters of Credit for the account of the Borrowers and/or one or more of their Subsidiaries under the Credit Agreement and, accordingly, desires to execute this Guaranty in order to satisfy the condition described in the preceding paragraph and to induce the Lenders to make Loans to the Borrowers and issue, and/or participate in, Letters of Credit for the account of the Borrowers and/or one or more of their Subsidiaries.

 

NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each Guarantor, the receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby makes the following representations and warranties to the Administrative Agent for the benefit of the Secured Parties and hereby covenants and agrees with each other Guarantor and the Administrative Agent for the benefit of the Secured Parties as follows:

 

1.             Guaranty.  Each Guarantor, jointly and severally with the other Guarantors, hereby absolutely and unconditionally guarantees, as a guaranty of payment and performance and not as a guaranty of collection, prompt payment when due, whether at stated

 

 

maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of:

 

(a)           the First Lien Obligations, including (i) all Obligations constituting fees, indemnities, expenses, and other amounts payable to the Administrative Agent (or Administrative Agents, in accordance with Section 9.06 of the Credit Agreement), (ii) all Obligations constituting fees, indemnities and other amounts payable to the Lenders and the L/C Issuer arising under the Loan Documents, (iii) the Revolving Credit Loans, L/C Borrowings and other Obligations arising under the Loan Documents relating to the Revolving Credit Facility and all principal thereof, all interest thereon and all other sums payable thereunder, and (iv) all Obligations or liabilities of any Borrower owing to the L/C Issuer, the Cash Management Banks or any Lender under Secured Cash Management Agreements;

 

(b)           the Second Lien Obligations, including the Term Loans and other Obligations arising under the Loan Documents relating to the Term Facility and owing under Secured Hedge Agreements, and all principal thereof, all interest thereon and all other sums payable thereunder;

 

(c)           all Obligations or liabilities of any Borrower or Guarantor owing to the Administrative Agent, L/C Issuer, or any Lender under the Collateral Documents,

 

(d)           all other sums payable under the Loan Documents of any Borrower or Guarantor whether for principal, interest, expenses, fees or otherwise; and

 

(e)           any and all other indebtedness, obligations or liabilities which may at any time be owed to the Administrative Agent, L/C Issuer or any other Lender by any Borrower or Guarantor, whether incurred heretofore or hereafter or concurrently herewith, under or pursuant to any of the Loan Documents.

 

Without limiting the generality of the foregoing, each Guarantor’s liability hereunder shall extend to and include without limitation (x) the principal of, premium, if any, and interest on the Notes issued by, and the Loans made (or deemed made) to, the Borrowers under the Credit Agreement, and all reimbursement obligations and all payments and disbursements made by the L/C Issuer with respect to Letters of Credit, (y) all renewals, extensions, amendments, refinancings and other modifications thereof and (z) all out-of-pocket expenses incurred by any Secured Party (including the fees, charges and disbursements of any counsel for any Secured Party) in connection with the collection or enforcement thereof, and whether recovery upon such Obligations may be or hereafter become unenforceable or shall be an allowed or disallowed claim under any proceeding or case commenced by or against any Borrower or any other Loan Party under the Bankruptcy Code (Title 11, United States Code), any successor statute or any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally (collectively, “Debtor Relief Laws”), and including interest that accrues after the commencement by or against any Borrower or any other Loan Party of any proceeding under any Debtor Relief Laws (collectively, the “Guaranteed

 

 

2

 

Obligations”).  The books and records of the Administrative Agent or the Secured Parties showing the amount of the Guaranteed Obligations shall be admissible in evidence in any action or proceeding, and shall be binding upon the Guarantors and conclusive for the purpose of establishing the amount of the Guaranteed Obligations.  This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Guaranteed Obligations or any instrument or agreement evidencing any Guaranteed Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Guaranteed Obligations which might otherwise constitute a defense to the obligations of any Guarantor under this Guaranty, and each Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing.

 

Anything contained in this Guaranty to the contrary notwithstanding, it is the intention of each Guarantor and the Secured Parties that the obligations of each Guarantor hereunder at any time shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code (Title 11, United States Code) or any comparable provisions of any similar federal or state law.  To that end, but only in the event and to the extent that after giving effect to Section 21 of this Guaranty, such Guarantor’s obligations with respect to the Guaranteed Obligations or any payment made pursuant to such Guaranteed Obligations would, but for the operation of the first sentence of this paragraph, be subject to avoidance or recovery in any such proceeding under applicable Debtor Relief Laws after giving effect to Section 21 of this Guaranty, the amount of such Guarantor’s obligations with respect to the Guaranteed Obligations shall be limited to the largest amount which, after giving effect thereto, would not, under applicable Debtor Relief Laws, render such Guarantor’s obligations with respect to the Guaranteed Obligations unenforceable or avoidable or otherwise subject to recovery under applicable Debtor Relief Laws.  To the extent any payment actually made pursuant to the Guaranteed Obligations exceeds the limitation of the first sentence of this paragraph and is otherwise subject to avoidance and recovery in any such proceeding under applicable Debtor Relief Laws, the amount subject to avoidance shall in all events be limited to the amount by which such actual payment exceeds such limitation, and the Guaranteed Obligations as limited by the first sentence of this paragraph shall in all events remain in full force and effect and be fully enforceable against such Guarantor.  The first sentence of this paragraph is intended solely to preserve the rights of the Secured Parties hereunder against such Guarantor in such proceeding to the maximum extent permitted by applicable Debtor Relief Laws and neither such Guarantor, the Borrower, any other Guarantor nor any other Person shall have any right or claim under such sentence that would not otherwise be available under applicable Debtor Relief Laws in such proceeding.

 

2.             No Setoff or Deductions; Taxes; Payments.  Each Guarantor shall make all payments hereunder without setoff or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless such Guarantor is compelled by law to make such deduction or withholding.  If any such obligation (other than one arising with respect to Excluded Taxes) is imposed upon a Guarantor

 

3

 

with respect to any amount payable by it hereunder, such Guarantor will pay to the Administrative Agent for the benefit of the Secured Parties for application to the Guaranteed Obligations in accordance with the terms of the Loan Documents or, if the Loan Documents do not provide for the application of such amount, to be held by the Administrative Agent as collateral security for any Guaranteed Obligations thereafter existing, on the date on which such amount is due and payable hereunder, such additional amount in U.S. dollars as shall be necessary to enable the Secured Parties to receive the same net amount which the Secured Parties would have received on such due date had no such obligation been imposed upon such Guarantor.  Each Guarantor will deliver promptly to the Secured Parties certificates or other valid vouchers for all taxes or other charges deducted from or paid with respect to payments made by such Guarantor hereunder.  The obligations of the Guarantors under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.  The obligations hereunder shall not be affected by any acts of any Governmental Authority affecting any Guarantor or any other Loan Party, including but not limited to, any restrictions on the conversion of currency or repatriation or control of funds or any total or partial expropriation of any Guarantor’s or any other Loan Party’s property, or by economic, political, regulatory or other events in the countries where any Guarantor or any other Loan Party is located.

 

3.             Rights of Secured Parties.  Each Guarantor consents and agrees that, to the full extent permitted by law, the Secured Parties may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness hereof:  (a) amend, extend, renew, compromise, discharge, accelerate or otherwise change the times for payment or the terms of the Guaranteed Obligations or any part thereof; (b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any security for the payment of this Guaranty or any Guaranteed Obligations; (c) apply such security and direct the order or manner of sale thereof as the Secured Parties in its sole discretion may determine; and (d) release or substitute one or more of any endorsers or other guarantors of any of the Guaranteed Obligations.  Without limiting the generality of the foregoing, each Guarantor consents to the taking of, or failure to take, any action which might in any manner or to any extent vary the risks of the Guarantors under this Guaranty or which, but for this provision, might operate as a discharge of one or more of the Guarantors.

 

4.             Certain Waivers.  Each Guarantor waives (a) any defense arising by reason of any disability or other defense of a Borrower, any other Loan Party or any other Guarantor of the Guaranteed Obligations or any part thereof, or the cessation from any cause whatsoever (including any act or omission of any Secured Party) of the liability of the Borrowers; (b) any defense based on any claim that such Guarantor’s obligations exceed or are more burdensome than those of the Borrowers; (c) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder; (d) any right to require any Secured Party to proceed against a Borrower or any other Loan Party, proceed against or exhaust any security for any of the Guaranteed Obligations, or pursue any other remedy in the power of any Secured Party; (e) any benefit of and any right to participate in any security now or hereafter held by any Secured Party; and (f) to the full extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties.  Each Guarantor expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance,

 

4

 

protests, notices of protest, notices of dishonor and all other notices (except notices explicitly required hereunder or under any other Loan Document) or demands of any kind or nature whatsoever with respect to the Guaranteed Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Guaranteed Obligations.

 

5.             Obligations Independent.  The obligations of each Guarantor hereunder are those of primary obligor, and not merely as surety, and are independent of the Guaranteed Obligations and the obligations of any other guarantor of the Guaranteed Obligations or any part thereof, and a separate action may be brought against any Guarantor to enforce this Guaranty whether or not a Borrower or any other Person is joined as a party.  For the avoidance of doubt, all obligations of each Guarantor under this Guaranty are joint and several obligations of all the Guarantors.

 

6.             Subrogation.  No Guarantor shall exercise any right of subrogation, contribution, indemnity, reimbursement or similar rights with respect to any payments it makes under this Guaranty until all of the Guaranteed Obligations (other than arising from indemnities for which no request has been made) and any amounts payable under this Guaranty have been paid in full in immediately available funds, all Commitments are terminated and all Letters of Credit have been cancelled (or have expired, undrawn) or collateralized to the satisfaction of the Administrative Agent.  If any amounts are paid to any Guarantor in violation of the foregoing limitation, then such amounts shall be held in trust by such Guarantor for the benefit of the Secured Parties and shall forthwith be paid to the Administrative Agent for the benefit of the Secured Parties for application to the Guaranteed Obligations in accordance with the terms of the Loan Documents or, if the Loan Documents do not provide for the application of such amount, to be held by the Administrative Agent as collateral security for any Guaranteed Obligations thereafter existing, whether matured or unmatured.

 

7.             Termination; Reinstatement.  This Guaranty is a continuing and irrevocable guaranty of all Guaranteed Obligations now or hereafter existing and shall remain in full force and effect until all of the Guaranteed Obligations (other than arising from indemnities for which no request has been made) and any amounts payable under this Guaranty have been paid in full in immediately available funds, all Commitments are terminated and all Letters of Credit have been cancelled (or have expired, undrawn) or collateralized to the satisfaction of the Administrative Agent.  Notwithstanding the foregoing, this Guaranty shall continue in full force and effect or be revived, as the case may be, if any payment by or on behalf of a Borrower or a Guarantor is made, or a Secured Party exercises its right of setoff, in respect of the Guaranteed Obligations and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by a Secured Party in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and whether or not the Secured Parties are in possession of or have released this Guaranty and regardless of any prior revocation, rescission, termination or reduction.  The obligations of the Guarantors under this paragraph shall survive termination of this Guaranty.

 

5

 

8.             Release of Liability of Guarantor Upon Sale or Dissolution.  In the event that all of the capital stock or other Equity Interests of any Guarantor is sold or otherwise disposed of (including by way of the merger or consolidation of such Guarantor with or into another Person) or liquidated, in any such case in compliance with the requirements of Sections 7.04 or 7.05 (as the case may be) of the Credit Agreement (or such sale, other disposition or liquidation has been approved in writing by the Required Lenders (or all the Lenders if required by Section 10.01 of the Credit Agreement)) and the proceeds of such sale, disposition or liquidation are applied in accordance with the provisions of the Credit Agreement, to the extent applicable, such Guarantor shall, upon consummation of such sale or other disposition (except to the extent that such sale or disposition is to a Borrower or a Subsidiary thereof), be released from this Guaranty automatically and without further action and this Guaranty shall, as to such Guarantor, terminate, and have no further force or effect (it being understood and agreed that the sale of one or more Persons that own, directly or indirectly, all of the capital stock or other equity interests of any Guarantor shall be deemed to be a sale of such Guarantor for the purposes of this Section 8).

 

9.             Reserved.

 

10.          Stay of Acceleration.  In the event that acceleration of the time for payment of any of the Guaranteed Obligations is stayed, in connection with any case commenced by or against a Borrower or any other Loan Party under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be payable by the Guarantors who are not subject to such automatic stay immediately upon demand by the Administrative Agent.

 

11.          Expenses.  The Guarantors shall pay on demand all out-of-pocket expenses incurred by the Administrative Agent, any Lender and the L/C Issuer (including the fees, charges and disbursements of any counsel for any Secured Party), and shall pay on demand all fees and time charges for attorneys who may be employees of the Administrative Agent, any Lender and the L/C Issuer, in any way relating to the enforcement or protection of the rights of the Secured Parties (or any of them) under this Guaranty or in respect of the Guaranteed Obligations, including any incurred during any “workout” or restructuring in respect of the Guaranteed Obligations and any incurred in the preservation, protection or enforcement of any rights of any Secured Party in any proceeding any Debtor Relief Laws.  The obligations of the Guarantors under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

 

12.          Modifications; Miscellaneous.  Neither this Guaranty nor any provision hereof may be changed, waived, discharged or terminated except in a writing signed by each Guarantor directly affected thereby (it being understood that the addition or release of any Guarantor hereunder shall not constitute a change, waiver, discharge or termination affecting any Guarantor other than the Guarantor so added or released) and the Administrative Agent (with the consent of the Required Lenders or, to the extent required by Section 10.01 of the Credit Agreement, all of the Lenders).  No failure by any Secured Party to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy or power hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  The remedies herein

 

6

 

provided are cumulative and not exclusive of any remedies provided by law or in equity.  The unenforceability or invalidity of any provision of this Guaranty shall not affect the enforceability or validity of any other provision herein.  This Guaranty is not intended to supersede or otherwise affect any other guaranty now or hereafter given by any Guarantor for the benefit of the Secured Parties (or any of them) or any term or provision thereof.

 

13.          Condition of Borrower.  Each Guarantor acknowledges and agrees that it has the sole responsibility for, and has adequate means of, obtaining from the Loan Parties and any other guarantor of the Guaranteed Obligations such information concerning the financial condition, business and operations of the Loan Parties and any such other guarantors as such Guarantor requires, and that no Secured Party has any duty, and no Guarantor is relying on any Secured Party at any time, to disclose to such Guarantor any information relating to the business, operations or financial condition of any Loan Party or any other guarantor of the Guaranteed Obligations (such Guarantor waiving any duty on the part of the Secured Parties to disclose such information and any defense relating to the failure to provide the same).

 

14.          Setoff.  In addition to any rights now or hereafter granted under applicable law (including, without limitation, Section 151 of the New York Debtor and Creditor Law) and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized, at any time or from time to time, to set off and to appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by such Lender, the L/C Issuer or any of their respective Affiliates to or for the credit or the account of any Guarantor, against and on account of the obligations and liabilities of such Guarantor to such Lender or the L/C Issuer under this Guaranty, irrespective of whether or not such Lender or the L/C Issuer shall have made any demand hereunder and although said obligations, liabilities, deposits or claims, or any of them, shall be contingent or natured.  Each Lender and the L/C Issuer (by its acceptance of the benefits hereof) acknowledges and agrees (i) to promptly notify the relevant Guarantor after any such set-off and application; provided, that the failure to give such notice shall not affect the validity of such set-off and application; and (ii) that the provisions of this Section 14 are subject to the sharing provisions set forth in Section 2.13 of the Credit Agreement.

 

15.          Representations and Warranties.  Each Guarantor represents and warrants that (a) it is duly organized and in good standing under the laws of the jurisdiction of its organization and has full capacity and right to make and perform this Guaranty, and all necessary authority has been obtained; (b) this Guaranty constitutes its legal, valid and binding obligation enforceable in accordance with its terms; (c) the making and performance of this Guaranty does not and will not violate the provisions of any applicable law, regulation or order, and does not and will not result in the breach of, or constitute a default or require any consent under, any material agreement, instrument, or document to which it is a party or by which it or any of its property may be bound or affected; and (d) all consents, approvals, licenses and authorizations of, and filings and registrations with, any Governmental Authority required under applicable law and regulations for the making and performance of this Guaranty have been obtained or made and are in full force and effect.  In addition, each Guarantor represents and warrants that:  (x) until all of the Guaranteed Obligations (other than arising from indemnities for which no request

 

7

 

has been made) and any amounts payable under this Guaranty have been paid in full in immediately available funds, all Commitments are terminated and all Letters of Credit have been cancelled (or have expired, undrawn) or collateralized to the satisfaction of the Administrative Agent, such Guarantor will take, or will refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that no violation of any provision, covenant or agreement contained in Sections 6 and 7 of the Credit Agreement, and so that no Event of Default, is caused by the actions of such Guarantor or any of its Subsidiaries; and (y) an executed (or conformed) copy of each of the Loan Documents has been made available to a senior officer of such Guarantor and such officer is familiar with the contents thereof.

 

16.          Indemnification and Survival.  Without limitation on any other obligations of any Guarantor or remedies of any Secured Party under this Guaranty, each Guarantor shall, to the full extent permitted by law, indemnify, defend and save and hold harmless the Administrative Agent, each Lender and the L/C Issuer from and against, and shall pay on demand, any and all damages, losses, liabilities and expenses (including attorneys’ fees and expenses and the allocated cost and disbursements of legal counsel) that may be suffered or incurred by the Administrative Agent, any Lender or the L/C Issuer in connection with or as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of the Borrowers enforceable against the Borrowers in accordance with their terms.  The obligations of the Guarantors under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

 

17.          Guaranty Enforceable by Administrative Agent.  This Guaranty may be enforced only by the action of the Administrative Agent, in each case acting in accordance with Sections 8.02(c) and 10.03 of the Credit Agreement and no other Secured Party will have any right individually to seek to enforce or to enforce this Guaranty or to realize upon the security to be granted by the Loan Documents, it being understood and agreed that such rights and remedies may be exercised by the Administrative Agent acting in accordance with Section 8.02(c) of the Credit Agreement, for the benefit of the Secured Parties, upon the terms of this Guaranty and the other Loan Documents.  It is understood and agreed that the agreement in this Section 17 is solely for the benefit of the Secured Parties.

 

18.          Obligations of Guarantors Independent.  The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor, any other guarantor or any Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against each Guarantor whether or not action is brought against any other Guarantor, any Borrower or any other Person and whether or not any other Guarantor, any Borrower or any other Person may be joined in any such action or actions.

 

19.          Subordination of Indebtedness Held by Guarantors.  Any Indebtedness of any Loan Party now or hereafter held by any Guarantor is hereby subordinated to the prior payment in full in immediately available funds of all the Guaranteed Obligations, and such Indebtedness of any Loan Party to any Guarantor, if the Administrative Agent, after an Event of Default has occurred and is continuing, so requests, shall be collected, enforced and received by such Guarantor as trustee for the Secured Parties and be paid over to the Administrative Agent for the benefit of the Secured Parties for application to the Guaranteed Obligations in accordance

 

8

 

with the terms of the Loan Documents or, if the Loan Documents do not provide for the application of such amount, to be held by the Administrative Agent as collateral security for any Guaranteed Obligations thereafter existing, but without affecting or impairing in any manner the liability of such Guarantor under the other provisions of this Guaranty.  Prior to the transfer by any Guarantor of any note or negotiable instrument evidencing any Indebtedness of any Loan Party to such Guarantor, such Guarantor shall mark such note or negotiable instrument with a legend that the same is subject to this subordination.  Without limiting the generality of the foregoing, each Guarantor hereby agrees with the Secured Parties that it will not exercise any right of subrogation which it may at any time otherwise have as a result of this Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or otherwise) until all of the Guaranteed Obligations (other than arising from indemnities for which no request has been made) and any amounts payable under this Guaranty have been paid in full in immediately available funds, all Commitments are terminated and all Letters of Credit have been cancelled (or have expired, undrawn) or collateralized to the satisfaction of the Administrative Agent; provided, that if any amount shall be paid to any Guarantor on account of such subrogation rights prior to such time, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Administrative Agent for the benefit of the Secured Parties to be credited and applied to the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms of the Loan Documents or, if the Loan Documents do not provide for the application of such amount, to be held by the Administrative Agent as collateral security for any Guaranteed Obligations thereafter existing.  Upon the indefeasible payment in full in immediately available funds of all of the Guaranteed Obligations (other than arising from indemnities for which no request has been made) and any amounts payable under this Guaranty, the termination of all Commitments and  at such time as all Letters of Credit have been cancelled (or have expired, undrawn) or collateralized to the satisfaction of the Administrative Agent, each Guarantor shall be subrogated to the rights of the Secured Parties to receive payments or distributions applicable to the Guaranteed Obligations until all Indebtedness of the Borrowers held by such Guarantor shall be paid in full.

 

20.          Additional Guarantors.  It is understood and agreed that any Subsidiary of the Borrower that is required to become a party to this Guaranty after the date hereof pursuant to the Credit Agreement shall become a Guarantor hereunder by executing and delivering a joinder agreement in the form attached hereto as Annex I.

 

21.          Contribution.  At any time a payment in respect of the Guaranteed Obligations is made under this Guaranty, the right of contribution of each Guarantor against each other Guarantor shall be determined as provided in the immediately following sentence, with the right of contribution of each Guarantor to be revised and restated as of each date on which a payment (a “Relevant Payment”) is made on the Guaranteed Obligations under this Guaranty.  At any time that a Relevant Payment is made by a Guarantor that results in the aggregate payments made by such Guarantor in respect of the Guaranteed Obligations to and including the date of the Relevant Payment exceeding such Guarantor’s Contribution Percentage (as defined below) of the aggregate payments made by all Guarantors in respect of the Guaranteed Obligations to and including the date of the Relevant Payment (such excess, the “Aggregate Excess Amount”), each such Guarantor shall have a right of contribution against each other Guarantor who either has not made any payments or has made payments in respect of the

 

9

 

Guaranteed Obligations to and including the date of the Relevant Payment in an aggregate amount less than such other Guarantor’s Contribution Percentage of the aggregate payments made to and including the date of the Relevant Payment by all Guarantors in respect of the Guaranteed Obligations (the aggregate amount of such deficit, the “Aggregate Deficit Amount”) in an amount equal to (x) a fraction the numerator of which is the Aggregate Excess Amount of such Guarantor and the denominator of which is the Aggregate Excess Amount of all Guarantors multiplied by (y) the Aggregate Deficit Amount of such other Guarantor.  A Guarantor’s right of contribution pursuant to the preceding sentences shall arise at the time of each computation, subject to adjustment at the time of each computation; provided, that no Guarantor may take any action to enforce such right until all of the Guaranteed Obligations (other than arising from indemnities for which no request has been made) and any amounts payable under this Guaranty have been paid in full in immediately available funds, all Commitments are terminated and all Letters of Credit have been cancelled (or have expired, undrawn) or collateralized to the satisfaction of the Administrative Agent, it being expressly recognized and agreed by all parties hereto that any Guarantor’s right of contribution arising pursuant to this Section 21 against any other Guarantor shall be expressly junior and subordinate to such other Guarantor’s obligations and liabilities in respect of the Guaranteed Obligations and any other obligations owing under this Guaranty.  As used in this Section 21 (i) each Guarantor’s “Contribution Percentage” shall mean the percentage obtained by dividing (x) the Adjusted Net Worth (as defined below) of such Guarantor by (y) the aggregate Adjusted Net Worth of all Guarantors; (ii) the “Adjusted Net Worth” of each Guarantor shall mean the greater of (x) the Net Worth (as defined below) of such Guarantor and (y) zero; and (iii) the “Net Worth” of each Guarantor shall mean the amount by which the fair saleable value of such Guarantor’s assets on the date of any Relevant Payment exceeds its existing debts and other liabilities (including contingent liabilities, but without giving effect to any Guaranteed Obligations arising under this Guaranty) on such date.  All parties hereto recognize and agree that, except for any right of contribution arising pursuant to this Section 21, each Guarantor who makes any payment in respect of the Guaranteed Obligations shall have no right of contribution or subrogation against any other Guarantor in respect of such payment until all of the Guaranteed Obligations have been paid in full in cash, all Commitments are terminated and all Letters of Credit have been cancelled (or have expired, undrawn) or collaterized to the satisfaction of the Administrative Agent.  Each of the Guarantors recognizes and acknowledges that the rights to contribution arising hereunder shall constitute an asset in favor of the party entitled to such contribution.  In this connection, each Guarantor has the right to waive its contribution right against any Guarantor to the extent that after giving effect to such waiver such Guarantor would remain solvent, in the determination of the Required Lenders.

 

22.          Counterparts.  This Guaranty 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.

 

23.          Headings Descriptive.  The headings of the several Sections of this Guaranty are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Guaranty.

 

10

 

24.          Governing Law; Assignment; Jurisdiction; Notices.  This Guaranty shall be governed by, and construed in accordance with, the internal laws of the State of New York.  This Guaranty shall (a) bind the Guarantor and its successors and assigns, provided that no Guarantor may assign its rights or obligations under this Guaranty (and any attempted assignment without such consent shall be void), and (b) inure to the benefit of the Secured Parties and their respective successors and assigns and the Lenders may, in accordance with Section 10.06 of the Credit Agreement and without affecting the obligations of any Guarantor hereunder, assign, sell or grant participations in the Guaranteed Obligations and this Guaranty, in whole or in part.  Each Guarantor hereby irrevocably (i) submits to the non exclusive jurisdiction of courts of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Guaranty, and (ii) waives to the full extent permitted by law any defense asserting an inconvenient forum in connection therewith.  Each of the parties hereto (x) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law, and (y) consents to the service of process out of any of the aforementioned courts, in the manner provided in Section 10.02 of the Credit Agreement, to (A) in the case of the Administrative Agent, at the address provided in the Credit Agreement and (B) in the case of a Guarantor, at its address set forth opposite its signature page below.  All notices and other communications to any Guarantor under this Guaranty shall be in writing and delivered in the manner set forth in Section 10.02 of the Credit Agreement.  All notices and other communications shall be in writing and addressed to such party at (i) in the case of any Secured Party, as provided in the Credit Agreement, and (ii) in the case of any Guarantor, at its address set forth opposite its signature below.

 

25.          WAIVER OF JURY TRIAL; FINAL AGREEMENT.  TO THE EXTENT ALLOWED BY APPLICABLE LAW, EACH GUARANTOR AND THE ADMINISTRATIVE AGENT EACH IRREVOCABLY WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING ON, ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE GUARANTEED OBLIGATIONS.

 

26.          No Conflict.  Notwithstanding anything to the contrary set forth herein, this Guaranty and the rights and remedies of the Administrative Agent hereunder are subject to the terms and provisions of the Credit Agreement, including, without limitation, Sections 8.02, 8.03, 9.06, 10.03, 10.14, 10.15 and 10.16 thereof.  In the event of any inconsistency between the provisions of this Guaranty and the Credit Agreement, the provisions of the Credit Agreement shall supersede and control the provisions of this Guaranty.

 

11

 

IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and delivered as of the date first above written.

 

	
Address:
    	
 
    	
 
    
	
 
    	
 
    	
BERKSHIRE   CELLULAR, INC.
    
	
c/o   FAIRPOINT COMMUNICATIONS, INC.
    	
 
    	
BERKSHIRE   NEW YORK ACCESS, INC.
    
	
521   East Morehead Street
    	
 
    	
C   & E COMMUNICATIONS, LTD.
    
	
Charlotte,   NC 28202
    	
 
    	
C-R   COMMUNICATIONS, INC.
    
	
Attention:   General Counsel
    	
 
    	
C-R   LONG DISTANCE, INC.
    
	
Facsimile   No.: (704) 344-1594
    	
 
    	
COMERCO,   INC.
    
	
Email:   slinn@fairpoint.com
    	
 
    	
EL   PASO LONG DISTANCE COMPANY
    
	
 
    	
 
    	
ELLTEL   LONG DISTANCE CORP.
    
	
 
    	
 
    	
FAIRPOINT   BROADBAND, INC.
    
	
 
    	
 
    	
FAIRPOINT   CARRIER SERVICES, INC.
    
	
 
    	
 
    	
GERMANTOWN   LONG DISTANCE COMPANY
    
	
 
    	
 
    	
GTC   COMMUNICATIONS, INC.
    
	
 
    	
 
    	
MJD   SERVICES CORP.
    
	
 
    	
 
    	
MJD   VENTURES, INC.
    
	
 
    	
 
    	
ORWELL   COMMUNICATIONS, INC.
    
	
 
    	
 
    	
PEOPLES   MUTUAL LONG DISTANCE COMPANY
    
	
 
    	
 
    	
QUALITY   ONE TECHNOLOGIES, INC.
    
	
 
    	
 
    	
RAVENSWOOD   COMMUNICATIONS, INC.
    
	
 
    	
 
    	
S   T ENTERPRISES, LTD.
    
	
 
    	
 
    	
TACONIC   TECHNOLOGY CORP.
    
	
 
    	
 
    	
UNITE   COMMUNICATIONS SYSTEMS, INC.
    
	
 
    	
 
    	
UTILITIES,   INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
each   as a Guarantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:   Ajay Sabherwal
    
	
 
    	
 
    	
 
    	
Title:   Executive Vice President and Chief
    
	
 
    	
 
    	
 
    	
Financial   Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
FRETEL   COMMUNICATIONS, LLC
    
	
 
    	
 
    	
as   a Guarantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   
    	
MJD   Ventures, Inc.,
    
	
 
    	
 
    	
 
    	
its   Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Name:   Ajay Sabherwal
    
	
 
    	
 
    	
 
    	
Title:   Executive Vice President and Chief
    
	
 
    	
 
    	
 
    	
Financial   Officer
    

 

[Signature Page to Guaranty]

 

 

	
 
    
	
Accepted   and Agreed to:
    
	
 
    
	
BANK   OF AMERICA, N.A.,
    
	
as   Administrative Agent
    
	
By:
    	
 
    	
 
    
	
Name:
    	
 Christopher   D. Post
    	
 
    
	
Title:
    	
 Vice   President
    	
 
    

 

[Signature Page to Guaranty]

 

 

Annex I to the
 Continuing Guaranty

 

Form of Joinder to Continuing Guaranty

 

JOINDER NO.       , dated as of                   , 20     (this “Joinder”), to the Continuing Guaranty dated as of January 24, 2011 (as amended, modified, restated and/or supplemented from time to time, the “Guaranty”), made by and among FAIRPOINT LOGISTICS, INC., a South Dakota corporation (“Logistics”) and the other subsidiaries of FairPoint Communications, Inc., a Delaware corporation (together with Logistics, the “Borrowers”), party thereto in favor of BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, together with any successor administrative agent, the “Administrative Agent”) for the benefit of the Secured Parties.

 

A.            Reference is made to (a) the Credit Agreement dated as of January 24, 2011 (as amended, modified, restated and/or supplemented from time to time, the “Credit Agreement”) among the Borrowers, the Lenders party thereto and the Administrative Agent and (b) the Guaranty.

 

B.            Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Guaranty.

 

C.            [NAME OF FAIRPOINT ENTITY] has [formed][acquired]                       ,                        [type of entity](the “New Guarantor”).

 

D.            Pursuant to the terms and provisions of the Credit Agreement, the New Guarantor is required to become a party to the Guaranty and guaranty the Obligations of the Borrowers.  The New Guarantor is executing this Joinder in accordance with the requirements of the Credit Agreement and Section 20 of the Guaranty to become a party to the Guaranty.

 

Accordingly, the New Guarantor hereby agrees as follows:

 

SECTION 1.           The New Guarantor below becomes a Guarantor under the Guaranty with the same force is hereby added as a party to the Guaranty and hereby agrees to be bound as a “Guarantor” by all of the terms, covenants and provisions set forth in the Guaranty to the same extent it would have been bound if it had been a signatory to the Guaranty on the date of the Guaranty.  The New Guarantor hereby makes each of the representations and warranties applicable to a “Guarantor” contained in the Guaranty.

 

SECTION 2.           The New Guarantor hereby represents and warrants to the Administrative Agent and the other Secured Parties that this Joinder has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforceability of creditors’ rights generally and by general principles of equity.

 

1

 

SECTION 3.           This Joinder may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.

 

SECTION 4.           Except as expressly supplemented hereby, the Guaranty shall remain in full force and effect.

 

SECTION 5.           THIS JOINDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS .

 

SECTION 6.           All communications and notices to be provided to the New Guarantor hereunder or under the Guaranty shall be given to the New Guarantor at the address set forth under its signature.

 

[Signature Page Follows]

 

2

 

IN WITNESS WHEREOF, the New Guarantor and the Administrative Agent have duly executed this Joinder as of the day and year first above written.

 

	
 
    	
[NEW GUARANTOR]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
Address of New Guarantor:
    
	
 
    	
 
    
	
 
    	
[                                            ]
    

 

Accepted and Agreed to:

 

BANK OF AMERICA, N.A.,
 as Administrative Agent

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:,
    	
 
    
	
 
    	
Title:
    	
 
    

 

1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00183-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00183-of-00352.parquet"}]]