FairPoint Communications 2010 Annual Report Download - page 10

Table of Contents
New Board and Mr. Horowitz was appointed to serve as chair of the New Board. Paul H. Sunu, our Chief Executive Officer, became a director of ours
effective as of August 24, 2010 and will continue to serve as a director on the New Board.
In accordance with the By-laws, the initial members of the New Board are expected to hold office until the first annual meeting of stockholders which will
be held following the one year anniversary of the Effective Date. Thereafter, members of the New Board are expected to have one-year terms so that their terms
will expire at each annual meeting of stockholders.
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On the Effective Date, we entered into a registration rights agreement (the “Registration Rights Agreement”) with Angelo, Gordon & Co., L.P. (“Angelo
Gordon”), on behalf of and as investment manager of the persons set forth in the Registration Rights Agreement (together with Angelo Gordon, the “Ten Percent
Holders”) that hold in the aggregate at least 10% of our New Common Stock. Under the Registration Rights Agreement, the Ten Percent Holders are entitled to
request an aggregate of two registrations of the Ten Percent Holders’ registrable securities; provided that no such rights shall be demanded prior to the
expiration of 180 days from the Effective Date. If the Ten Percent Holders in the aggregate hold less than 7.5% of the then outstanding New Common Stock,
such holders’ rights under the Registration Rights Agreement shall terminate.
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On the Effective Date, we entered into the Warrant Agreement with the Bank of New York Mellon, as Warrant Agent. Pursuant to the Warrant Agreement,
we issued or will issue the Warrants to purchase an aggregate of 3,582,402 shares of New Common Stock. The number of shares of New Common Stock
issuable upon the exercise of the Warrants is subject to adjustment upon the occurrence of certain events described in the Warrant Agreement. The initial
exercise price applicable to the Warrants is $48.81 per share of New Common Stock for which the Warrants may be exercised. The exercise price applicable to
the Warrants is subject to adjustment upon the occurrence of certain events described in the Warrant Agreement. The Warrants may be exercised at any time on
or before the seventh anniversary of the Effective Date. The Warrants, and all rights under the Warrants, are transferable as provided in the Warrant
Agreement.
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On the Effective Date, we entered into the FairPoint Litigation Trust Agreement (the “Litigation Trust Agreement”) with Mark E. Holliday, as litigation
trustee (the “Litigation Trustee”), and the official committee of unsecured creditors appointed in the Chapter 11 Cases, pursuant to which the Litigation Trust
was established for the benefit of specified holders of allowed claims and for the pursuit of certain causes of action against Verizon arising in connection with
the Agreement and Plan of Merger, dated as of January 15, 2007, by and among Verizon, Spinco and FairPoint Communications, Inc., as amended (the
“Merger Agreement”). Pursuant to the Plan, we transferred such claims and causes of actions against Verizon related to the Merger Agreement to the Litigation
Trust with title to such claims and causes of action being free and clear of all liens, charges, claims, encumbrances and interests except for the return to
FairPoint Communications of any funds deposited in the Litigation Trust bank account. In addition, pursuant to the Plan, we transferred funds to the
Litigation Trust to pay the reasonable costs and expenses associated with the administration of the Litigation Trust. Pursuant to the Litigation Trust
Agreement, the Litigation Trustee may request additional funding for the Litigation Trust from us following the Effective Date; provided, that (i) any such
additional funding will be subject to the approval of our New Board in its sole discretion, (ii) after giving effect to such additional funding, our cash on hand
may not be less than $20.0 million (after taking into account the cash distributions to be made) and (iii) no proceeds of any borrowings under the Exit
Revolving Facility may be used to fund such additional funding. The Litigation Trustee may prosecute the transferred claims and causes of action against
Verizon as described in and authorized by the Plan and the Litigation Trust Agreement, make timely and appropriate distributions to the beneficiaries of the
Litigation Trust and otherwise carry out the provisions of the Litigation Trust Agreement.
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As contemplated by the Plan, on the Effective Date, we were deemed to have adopted the Long Term Incentive Plan and the Success Bonus Plan.
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