FairPoint Communications 2011 Annual Report Download - page 21

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Table of Contents

• Certain of the financial conditions of the NH 2008 Settlement and the NH 2008 Order are replaced by the terms of the New Hampshire
Regulatory Settlement and are satisfied or rendered moot by the debt reductions resulting from the Plan.

• Our board of directors is required to consist of a supermajority of newly appointed independent directors, and at least one member of the
board of directors must reside in northern New England. We are in compliance with this obligation.
• Our board of directors is required to appoint a “regulatory sub-committee” that will monitor compliance with the terms of the NH 2008
Order, as modified by the New Hampshire 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 New Hampshire and is able to reasonably
respond to various future Company-based NHPUC dockets or regulatory issues relating to telecommunications. We fulfilled this
obligation in February 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 agreed that any management bonuses and the FairPoint Communications, Inc. 2010 Success Bonus Plan (the “Success Bonus Plan”)
would be based on a combination of EBITDAR (EBITDA plus restructuring costs) and service metrics goals and the weighting for each
of these categories would be computed and clearly stated for the incentive and bonus plans for each individual and for the Company in
total. We believe that we are in compliance with this commitment.

• We were required to reimburse the State of New Hampshire for certain costs and expenses. We fulfilled this obligation in January 2011.
• 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
New Hampshire Regulatory Settlement until we cure such breach.

On July 6, 2010, the Maine Public Utilities Commission (the “MPUC”) provided its approvals for Maine, including of the Regulatory Settlement for
Maine (the “Maine Regulatory Settlement”). The Maine Regulatory Settlement provides for, among other things, the following:

• We agreed to comply with the MPUC’s February 1, 2008 Order issued in Docket Nos. 2007-67 and 2005-155, and all stipulations
approved thereby (the “ME 2008 Merger Order”), including provisions regarding broadband build-out, capital investment, the SQI
program and other provisions of the ME 2008 Merger Order, subject to certain modifications described in the Maine Regulatory
Settlement.

• We and the MPUC agreed to submit a joint consent order to the Bankruptcy Court which provided for the implementation of the SQI
rebates for the 2008-2009 SQI year, starting with bills issued in March 2010. The Company issued the first nine months of credits
through November 2010, at which time the remaining three months were combined with the credits to be issued for the 2009-2010
penalties and were issued over the period of December 2010 to November 2011.
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