FairPoint Communications 2004 Annual Report Download - page 107

these loans were paid in full utilizing borrowings under the Company's amended and restated credit facility.
(f) Other
In conjunction with the senior notes payable to the RTFC and the RTB and the first mortgage notes payable to the Rural
Utilities Service, certain of the Company's subsidiaries are subject to restrictive covenants limiting the amounts of dividends
that may be paid.
The Company also has $0.4 million unsecured demand notes payable to various individuals and entities with interest
payable at 5.25% at December 31, 2004 and 2003.

The series A preferred stock was issued to the lenders in connection with the Carrier Services debt restructuring. The series A
preferred stock is nonvoting and is not convertible into common stock of the Company. The series A preferred stock provides for the
payment of dividends at a rate equal to 17.428% per annum. Dividends on the series A preferred stock are payable, at the option of the
Company, either in cash or in additional shares of series A preferred stock. The Company has the option to redeem any outstanding
series A preferred stock at any time. The redemption price for such shares is payable in cash in an amount equal to $1,000 per share
plus any accrued but unpaid dividends thereon (the Preference Amount). Under certain circumstances, the Company would be
required to pay a premium of up to 6% of the Preference Amount in connection with the redemption of the series A preferred stock. In
addition, upon the occurrence of certain events such as (i) a merger, consolidation, sale, transfer, or disposition of at least 50% of the
assets or business of the Company and its subsidiaries; (ii) a public offering of the Company's common stock which yields in the
aggregate at least $175.0 million; or (iii) the first anniversary of the maturity of the Company's senior subordinated notes (which first
anniversary will occur in May 2011), the Company would be required to redeem all outstanding shares of the series A preferred stock
at a price per share equal to the Preference Amount, unless prohibited by the Company's credit facility or by the indentures governing
its senior subordinated notes. In connection with the March refinancing, certain holders of the series A preferred stock agreed to reduce
the dividend rate payable on the shares they hold from 17.428% to 15% for the period from March 6, 2003 to March 6, 2005.
In May 2003, the FASB issued SFAS No. 150, 
 SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments
with characteristics of both liabilities and equity. SFAS No. 150 applies specifically to financial instruments that companies have
historically presented within their financial statements either as equity or between the liabilities section and the equity section, rather
than as liabilities. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial
instruments of a nonpublic entity, in which this statement shall be effective for fiscal periods beginning after December 15, 2003. For
purposes of adoption of SFAS No. 150, the Company met the definition of a nonpublic entity. The Company prospectively adopted
SFAS No. 150 effective July 1, 2003. The SFAS No. 150 adoption had no impact on net income (loss) attributed to common
shareholders for any of the periods presented.
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