FairPoint Communications 2004 Annual Report Download - page 54

The leverage ratio will be tested quarterly. A determination as to whether dividend payments may be made will be based on the leverage
ratio as of the end of the quarter ending immediately prior to the date of the proposed dividend payment.
As of December 31, 2004, on a pro forma basis after giving effect to the transactions, our leverage ratio would have been 4.2:1.
If we fail to achieve any of these financial levels for any quarter but resume compliance thereafter, we may resume dividend payments
unless some other event described in the credit facility requiring suspension of dividend payments occurs.
 The credit facility is guaranteed, jointly and severally, subject to certain exceptions, by all first tier subsidiaries
of the Company. We have provided to Deutsche Bank Trust Company Americas, as collateral agent for the benefit of the lenders under the
credit facility and certain hedging creditors under permitted hedging agreements, collateral consisting of (subject to certain exceptions) 100%
of our equity interests in the subsidiary guarantors and certain other intermediate holding company subsidiaries. Newly acquired or formed
direct or indirect subsidiaries of the Company which own equity interests of any subsidiary that is an operating company will be required to
provide the collateral described above.
 The credit facility contains customary events of default, including but not limited to, failure to pay principal, interest
or other amounts when due, breach of covenants or representations, cross-defaults to certain other indebtedness in excess of specified
amounts, judgment defaults in excess of specified amounts, certain ERISA defaults, the failure of any guaranty or security document
supporting the credit facility and certain events of bankruptcy and insolvency.
91/2% Notes and Floating Rate Notes Issued in 1998
The Company issued $125.0 million aggregate principal amount of the 9 1/2%% notes and $75.0 million of the floating rate notes in
1998. In March 2003, we repurchased $9.8 million aggregate principal amount of the 9 1/2% notes. The 91/2% notes bear interest at the rate
of 91/2%% per annum and the floating rate notes bear interest at a rate per annum equal to LIBOR plus 418.75 basis points, in each case
payable semi-annually in arrears. The LIBOR rate on the floating rate notes is determined semi-annually.
The 91/2% notes and floating rate notes mature on May 1, 2008.
The 91/2% notes and floating rate notes are general unsecured obligations of the Company, subordinated in right of payment to all
existing and future senior indebtedness of the Company, including all obligations under our credit facility.
The indenture governing the 91/2% notes and floating rate notes contains certain customary covenants and events of default.
In connection with the offering, on January 5, 2005, we commenced a tender offer and consent solicitation for all of the outstanding
principal amount of the 91/2% notes and the floating rate notes. On January 20, 2005, we executed a supplemental indenture, which
became effective as of the closing of the offering, with respect to the indenture governing the 91/2% notes and the floating rate notes which
eliminated substantially all of the covenants and the events of default in such indenture. On February 9, 2005, we repurchased
$115.0 million principal amount of the 91/2%% notes and $50.8 million principal amount of the floating rate notes tendered pursuant to the
tender offers for such notes. We redeemed the remaining $0.2 million aggregate principal amount of the 9 1/2%% notes and $24.2 million
aggregate principal amount of the floating rate notes on March 10, 2005.
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