FairPoint Communications 2011 Annual Report Download - page 78

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Table of Contents
• Holders of allowed unsecured claims against FairPoint Communications, including the Pre-Petition Notes (as defined below) (the “FairPoint
Communications Unsecured Claims”) to receive the following in full and complete satisfaction of such FairPoint Communications Unsecured
Claims: (i) a pro rata share of 2,101,676 shares of New Common Stock, (ii) a pro rata share of a 45% interest in the Litigation Trust and (iii) a
pro rata share of the warrants (the “Warrants”) issued by the Company in connection with a Warrant Agreement (the “Warrant Agreement”) that
the Company entered into with The Bank of New York Mellon, as warrant agent, on the Effective Date; and
• Holders of allowed unsecured claims against the Company’s subsidiaries and holders of certain unsecured convenience claims against the
Company to receive payment in full in cash in the amount of their allowed claims.
In addition, the Plan also provided for:
• Certain of the Company’s employees and a consultant to receive (a) cash bonuses made pursuant to the FairPoint Communications, Inc. 2010
Success Bonus Plan (the “Success Bonus Plan”) and/or (b) New Common Stock awards, consisting of restricted shares of New Common Stock
and/or options to purchase shares of New Common Stock, pursuant to the terms of the FairPoint Communications, Inc. 2010 Long Term
Incentive Plan (the “Long Term Incentive Plan”); and
• Members of the Company’s board appointed on the Effective Date (the “New Board”) to receive options to purchase New Common Stock
pursuant to the terms of the Long Term Incentive Plan.
Finally, the Plan included certain discharges, releases, exculpations and injunctions that became effective on the Effective Date, including the following:
• Except as otherwise provided in the Plan, all existing claims against, and equity interests in, the Company that arose prior to the Effective Date
were released, terminated, extinguished and discharged;
• In consideration of the services of the Released Parties (as defined in the Plan), the Company and all persons who held, or may have held, claims
against, or equity interests in, the Company prior to the Effective Date released the Released Parties (as defined in the Plan) from claims, causes of
action and liabilities related to the Company;
• None of the Company, the Released Parties (as defined in the Plan) or the Litigation Trustee (as defined below) shall have or incur any liability
relating to or arising out of the Chapter 11 Cases; and
• Except as otherwise provided in the Plan, all persons are permanently enjoined from asserting claims, liabilities, causes of action, interest or
remedies that are released or discharged pursuant to the Plan.
Termination of Material Agreements
On the Effective Date, in accordance with the Plan, the Company terminated, among others, the following material agreements:
• The Pre-Petition Credit Facility (except that the Pre-Petition Credit Facility continues in effect solely for the purposes of allowing creditors under the
Pre-Petition Credit Facility to receive distributions under the Plan and to preserve certain rights of the administrative agent), and all notes, security
agreements, swap agreements and other agreements associated therewith;
• Each of the respective indentures governing (i) the 13-1/8% Senior Notes due April 1, 2018 (the “Old Notes”), which were issued pursuant to the
Indenture, dated as of March 31, 2008, by and between Spinco and U.S. Bank National Association, as amended (the “Old Indenture”), and
(ii) the 13-1/8% Senior Notes due April 2, 2018 (the “New Notes” and, together with the Old Notes, the “Pre-Petition Notes”), which were issued
pursuant to the Indenture, dated as of July 29, 2009, by and between FairPoint Communications, Inc. and U.S. Bank National Association (the
“New Indenture”) (except to the extent to allow the Company or the relevant Pre-Petition Notes indenture trustee, as applicable, to make
distributions pursuant to the Plan on account of claims related to such Pre-Petition Notes); and
• The Debtor-in-Possession Credit Agreement, dated as of October 27, 2009 (as amended, the “DIP Credit Agreement”), by and among FairPoint
Communications and FairPoint Logistics, Inc. (“FairPoint Logistics,” and together with FairPoint Communications, the “DIP Borrowers”), certain
financial institutions (the “DIP Lenders”) and Bank of America, N.A., as the administrative agent for the DIP Lenders (the “DIP Administrative
Agent”), which was terminated by its conversion into the new $75.0 million Revolving Facility (as defined herein), and all notes, security
agreements and other agreements related to the DIP Credit Agreement.
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