FairPoint Communications 2005 Annual Report Download - page 153

(ii) In the event the First Refusal Right with respect to SICC’s interest in RSA 6 & 7 has not been exercised or has been exercised but
the closing of the sale of SICC’s interest in RSA 6 & 7 has not yet occurred by the Closing Date, there shall be no adjustment to the Purchase Price
with respect to the RSA 6 & 7 Value and the gross proceeds of the sale of SICC’s interest in RSA 6 & 7 shall be retained by SICC for the benefit of
Buyer.
(b) Purchase Price Adjustment Regarding Working Capital.
(i) The Purchase Price shall be adjusted on a dollar for dollar basis upward or downward to the extent the Working Capital at
Closing is different than [****](2) as set forth in Schedule 1.4(b).
(ii) For the purposes of this Section 1.4, the Working Capital amount to be used for this adjustment shall be calculated as of the
Effective Time as the current assets of SICC and its Subsidiaries, including Southern Illinois RSA Partnership (“SIRP”), less the current liabilities
of SICC and its Subsidiaries, including SIRP, with all amounts determined on a consolidated basis in accordance with GAAP and consistent with
SICC’s historical accounting practices and methodologies, and disregarding any actions that may have been taken by Buyer from and after the time
the Closing actually occurred, if such time is before the Effective Time, except for the method of calculating estimates for reserves for uncollectible
subscriber accounts receivable, obsolete inventories and accruals for contingent liabilities regarding litigation which will follow the methodologies
described in notes (B), (C) and (H) to Schedule 1.4(b). In determining Working Capital: (A) current liabilities and current assets shall be adjusted to
exclude the amounts attributable to the following items, but only to the extent such amounts are deducted from the calculation of the Purchase Price in
accordance with other provisions of Section 1.4: (i) amounts related to any Indebtedness, including Indebtedness of CoBank, ACB (“CoBank”),
outstanding and accrued interest, prepayment and/or loan commitment fees thereto, (ii) amounts related to Employment Related Payments (as defined
in Section 1.4(d)) and any accrued severance or retention bonus payments pursuant to Section 6.25, and (iii) fees payable or deferred expenses
related to Daniels & Associates L.P. and other transaction expenses of the Shareholders consistent with Section 1.4(e); (B) current liabilities shall also
exclude the RSA 6 & 7 Tax Liability; (C) current liabilities and current assets shall exclude amounts related to accrued, prepaid or deferred Federal
or state income taxes; and, (D) current assets shall exclude accounts receivable for outcollect roaming revenue. For purposes of clarification, current
liabilities shall include any liability or obligation, other than items referred to above in 1.4(b)(ii)(A)(ii), relating to or arising under any employee
benefit or compensation plan, agreement, arrangement, or program accrued through, or attributable to any period prior to, the Closing Date, as well
as accrued wages and workers’ compensation, vacation, including vacation carryover, if applicable, and sick days/short term disability benefits
accrued through, or attributable to, any period prior to the Closing Date.
(2) Material omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act of 1934. Material filed separately with the Securities
and Exchange Commission.
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