FairPoint Communications 2010 Annual Report Download - page 30

Table of Contents
 Penalty amounts resulting from any failure to meet broadband deployment requirements will be managed by us with funds deposited into an escrow
account with an escrow agent, which will reimburse us for costs incurred for additional network projects completed within 18 months of the date of
the penalty, such projects subject to the approval of the DPS.
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 We will meet the capital investment requirements of the VT 2008 Order.
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 Certain of the financial conditions of the VT 2008 Settlement and the VT 2008 Order are replaced by the terms of the Vermont Regulatory Settlement
and are satisfied or rendered moot by the debt reductions resulting from the Plan.
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 Our New Board is required to consist of a supermajority of newly appointed independent directors and at least one member of the New Board will
reside in northern New England. We are in compliance with this obligation.
 The New Board is required to appoint a “regulatory sub-committee” that will monitor compliance with the terms of the VT 2008 Order, as modified
by the Vermont Regulatory Settlement, and all other regulatory matters involving the States of Vermont, New Hampshire and Maine. We appointed a
regulatory committee on the Effective Date.
 We are required to maintain a state president who will provide a senior regulatory presence in Vermont and be able to reasonably respond to various
future Company-based dockets or regulatory issues relating to telecommunications. We fulfilled this obligation in January of 2010.
 We agreed to seek to have a Chief Information Officer in place by June 30, 2010. We fulfilled this obligation in March of 2010.
 We have agreed that the 2010 Annual Incentive Plan and the Success Bonus will be based on a combination of EBITDAR (EBITDA plus
restructuring costs) and service metrics goals and the weighting for each of these categories will be computed and clearly stated for the incentive and
bonus plans for each individual and for us in total.
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 We are required to reimburse the State of Vermont for certain costs and expenses.
 During the first two years following the Effective Date of the Plan, we are barred from paying dividends if we are in material breach of the Vermont
Regulatory Settlement until we cure such breach.
Other Regulatory Matters
Maine — Retail Regulation
Our Northern New England operations in Maine currently operate under an AFOR implemented upon consummation of the Merger. The AFOR provides for
the capping of rates for basic local exchange services and allows pricing flexibility for other services, including intrastate long-distance, optional services and
bundled packages. Under the terms of the ME 2008 Merger Order, among other things, we reduced the caps on monthly basic exchange rates effective as of
August 1, 2008 by an amount designed to decrease revenues by approximately $1.5 million per month (depending on the applicable number of access lines).
The current AFOR caps basic exchange rates in Maine at the new level for five years after August 1, 2008. The AFOR also includes an SQI requirement for
our Northern New England operations in Maine, which establishes benchmarks for certain performance categories and imposes
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