FairPoint Communications 2009 Annual Report Download - page 139

Table of Contents
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The DIP Grantors entered into the DIP Security Agreement with the DIP Collateral Agent, as required under the terms of the DIP Credit
Agreement. Pursuant to the DIP Security Agreement, the DIP Grantors provided to the DIP Collateral Agent for the benefit of the secured parties
identified therein, a security interest in all assets other than the DIP Pledge Agreement Collateral, any causes of action arising under Chapter 5 of the
Bankruptcy Code and FCC licenses and authorizations by state regulatory authorities to the extent that any DIP Grantor is prohibited from granting a
lien and security interest therein pursuant to applicable law.
As of December 31, 2009, the Company had not borrowed any amounts under the DIP Credit Agreement, however letters of credit had been
issued under the DIP Credit Agreement for $1.6 million. Accordingly, as of December 31, 2009, the amount available under the DIP Credit Agreement
was $18.4 million of the $20.0 million made available pursuant to the Interim Order. On March 11, 2010 the Bankruptcy Court entered its Final DIP
Order, and the remaining portion of the $75.0 million DIP Credit Agreement became available to the Company.
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As a result of the Merger and the associated transfer of the pension and other post-employment benefits ("OPEB") assets and liabilities to
FairPoint, the Company remeasured its pension and OPEB assets and liabilities as of April 1, 2008. This measurement was based on a 6.80% discount
rate, as well as certain other valuation assumption modifications and recognition of a new collective bargaining agreement, the sum of which resulted in
material changes to the pension and OPEB balances.
Prior to the Merger, the Verizon Northern New England business participated in Verizon's benefit plans. Verizon maintained noncontributory
defined benefit pension plans for many of its employees. The postretirement health care and life insurance plans for the Verizon Northern New England
business' retirees and their dependents were both contributory and noncontributory and included a limit on the Companies' share of cost for recent and
future retirees. The Verizon Northern New England business also sponsored defined contribution savings plans to provide opportunities for eligible
employees to save for retirement on a tax-deferred basis. A measurement date of December 31 was used for the pension and postretirement health care
and life insurance plans.
The structure of Verizon's benefit plans did not provide for the separate attribution of the related pension and postretirement assets and obligations
at the Verizon Northern New England business level. Because there was not a separate plan for the Verizon Northern New England business, the
annual income and expense related to such assets and obligations were allocated to the Verizon Northern New England business and are reflected as
prepaid pension assets and employee benefit obligations in the balance sheet prior to the Merger.
After June 30, 2006, Verizon management employees, including management employees of the Verizon Northern New England business, ceased
to earn pension benefits or earn service towards the company retiree medical subsidy. In addition, new management employees hired after December 31,
2005 were not eligible for pension benefits and managers with less than 13.5 years of service as of June 30, 2006 were not eligible for company-
subsidized retiree healthcare or retiree life insurance benefits. Beginning July 1, 2006, Verizon Northern New England business management employees
received an increased company match on their savings plan contributions.
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