FairPoint Communications 2009 Annual Report Download - page 137

Table of Contents
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event of default under the Notes upon the expiration of a thirty day grace period. An event of default under the Notes permits the holders of the Notes to
accelerate the maturity of the Notes. In addition, the filing of the Chapter 11 Cases constituted an event of default under the New Notes.
In addition, as a result of the Restatement, the Company determined that the Company was not in compliance with the interest coverage ratio
maintenance covenant and the leverage ratio maintenance covenant under the Pre-petition Credit Facility for the measurement period ended June 30,
2009, which constituted an event of default under each of the Pre-petition Credit Facility and the Swaps, and may have constituted an event of default
under the Notes, in each case at June 30, 2009.
Debtor-in-Possession Financing
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In connection with the Chapter 11 Cases, the DIP Borrowers entered into the DIP Credit Agreement with the DIP Lenders and the Administrative
Agent. The DIP Credit Agreement provides for DIP Financing. Pursuant to the Interim Order, the DIP Borrowers were authorized to enter into and
immediately draw upon the DIP Credit Agreement on an interim basis, pending a final hearing before the Bankruptcy Court, in an aggregate amount of
$20 million. On March 11, 2010 the Bankruptcy Court entered the Final DIP Order, permitting the DIP Borrowers access to the total $75 million of the
DIP Financing, subject to the terms and conditions of the DIP Credit Agreement and related orders of the Bankruptcy Court. As of December 31, 2009,
the Company had not borrowed any amounts under the DIP Credit Agreement and letters of credit totaling $1.6 million had been issued under the DIP
Credit Agreement.
The DIP Financing will mature and will be repayable in full on the earlier to occur of (i) July 26, 2010, which date can be extended up to three
months at the request of the DIP Borrowers upon the prior written consent of the Required DIP Lenders with no fee payable by the DIP Borrowers in
connection with any such extension, (ii) the Effective Date, (iii) the voluntary reduction by the DIP Borrowers to zero of all commitments to lend under
the DIP Credit Agreement or (iv) the date on which the obligations under the DIP Financing are accelerated by the Required DIP Lenders upon the
occurrence and during the continuance of certain events of default.
Other material provisions of the DIP Credit Agreement include the following:
 Interest rates for borrowings under the DIP Credit Agreement are, at the DIP Borrowers' option, at either (i) the
Eurodollar rate plus a margin of 4.5% or (ii) the base rate plus a margin of 3.5%, payable monthly in arrears on the last business day of each month.
Interest accrues from and including the date of any borrowing up to but excluding the date of any repayment thereof and is payable (i) in respect of
each base rate loan, monthly in arrears on the last business day of each month, (ii) in respect of each Eurodollar loan, on the last day of each interest
period applicable thereto (which shall be a period of one month) and (iii) in respect of each such loan, on any prepayment or conversion (on the amount
prepaid or converted), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand. The DIP Credit Agreement provides for
the payment to the Administrative Agent, for the pro rata benefit of the DIP Lenders, of an upfront fee in the aggregate principal amount of $1.5 million,
which upfront fee was payable in two installments: (1) the first installment of $400,000 was due and payable on October 28, 2009, the date on which
the Interim Order was entered by the Bankruptcy Court, and (2) the remainder of the upfront
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