FairPoint Communications 2013 Annual Report Download - page 52

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4.50% per annum with respect to revolving loans bearing interest based on the base rate, in each case subject to adjustment based
on our consolidated total leverage ratio, as defined in the New Credit Agreement. We are required to pay a quarterly letter of credit
fee on the average daily amount available to be drawn under letters of credit issued under the New Revolving Facility equal to
the applicable rate for revolving loans bearing interest based on LIBOR plus a fronting fee of 0.125% per annum on the average
daily amount available to be drawn under such letters of credit. In addition, we are required to pay a quarterly commitment fee
on the average daily unused portion of the New Revolving Facility, which is 0.50% initially, subject to reduction to 0.375% based
on our consolidated total leverage ratio. In the third quarter of 2013, we entered into interest rate swap agreements with a combined
notional amount of $170.0 million with three counterparties that are effective for a two year period beginning on September 30,
2015 and maturing on September 30, 2017. Each respective swap agreement requires us to pay a fixed rate of 2.665% and provides
that we will receive a variable rate based on the three month LIBOR rate, subject to a minimum LIBOR floor of 1.25%. Amounts
payable by or due to us will be net settled with the respective counterparties on the last business day of each fiscal quarter,
commencing December 31, 2015. For further information regarding these agreements, see note (9) "Interest Rate Swap
Agreements" to our consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” included elsewhere
in this Annual Report.
Security/Guarantors. All obligations under the New Credit Agreement, together with certain designated hedging obligations
and cash management obligations, are unconditionally guaranteed on a senior secured basis by each of the Subsidiary Guarantors
and secured by a first-priority lien on substantially all personal property of FairPoint Communications and the Subsidiary
Guarantors, subject to certain exclusions set forth in the related security documents, pari passu with the lien securing the obligations
under the Notes.
Mandatory Repayments. Commencing in the second quarter of 2013, we are required to make quarterly repayments of the
New Term Loan in a principal amount equal to $1.6 million during the term of the New Credit Agreement, with such repayments
being reduced based on the application of mandatory and optional prepayments of the New Term Loan made from time to time.
In addition, mandatory repayments are due under the New Credit Agreement with (i) a percentage, initially equal to 50% and
subject to reduction to 25% in subsequent fiscal years based on our consolidated total leverage ratio, of our excess cash flow, as
defined in the New Credit Agreement, beginning with the fiscal year ending December 31, 2013, (ii) the net cash proceeds of
certain asset dispositions, insurance proceeds and condemnation awards and (iii) issuances of debt not permitted to be incurred
under the New Credit Agreement. Optional prepayments and mandatory prepayments resulting from the incurrence of debt not
permitted to be incurred under the New Credit Agreement are required to be made at (i) 103.0% of the aggregate principal amount
prepaid if such prepayment is made on or prior to February 14, 2014, (ii) 102.0% of the aggregate principal amount of the New
Term Loan so prepaid if such prepayment is made after February 14, 2014, but on or prior to February 14, 2015 and (iii) 101.0%
of the aggregate principal amount prepaid if such prepayment is made after February 14, 2015 and on or prior to February 14,
2016. No premium is required to be paid for prepayments made after February 14, 2016. We did not make any optional or mandatory
prepayments under the New Credit Agreement, excluding mandatory quarterly repayments discussed above, during the year ended
December 31, 2013. In addition, we will not be required to make an excess cash flow payment for fiscal year 2013.
Covenants. The New Credit Agreement contains customary representations and warranties and affirmative and negative
covenants for a transaction of this type, including two financial maintenance covenants: (i) a consolidated interest coverage ratio
and (ii) a consolidated total leverage ratio. The New Credit Agreement also contains a covenant limiting the maximum amount of
capital expenditures that we and our subsidiaries may make in any fiscal year.
Events of Default. The New Credit Agreement also contains customary events of default for a transaction of this type.
The Notes. On the Refinancing Closing Date, we issued $300.0 million in aggregate principal amount of the Notes pursuant
to the Indenture in a private offering exempt from registration under the Securities Act.
The terms of the Notes are governed by the Indenture. The Notes are senior secured obligations of FairPoint Communications
and are guaranteed by the Subsidiary Guarantors. The Notes and the guarantees thereof are secured by a first-priority lien on
substantially all personal property of FairPoint Communications and the Subsidiary Guarantors, subject to certain exclusions set
forth in the related security documents, pari passu with the lien securing the obligations under the New Credit Agreement. The
Notes will mature on August 15, 2019 and accrue interest at a rate of 8.75% per annum, which is payable semi-annually in arrears
on February 15 and August 15 of each year.
On or after February 15, 2016, we may redeem all or part of the Notes at the redemption prices set forth in the Indenture,
plus accrued and unpaid interest thereon, to the applicable redemption date. At any time prior to February 15, 2016, we may redeem
all or part of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus a "make-whole"
premium as of, and accrued and unpaid interest to, the applicable redemption date. In addition, at any time prior to February 15,
2016, we may, on one or more occasions, redeem up to 35% of the original aggregate principal amount of the Notes, using net
cash proceeds of certain qualified equity offerings, at a redemption price of 108.75% of the principal amount of Notes redeemed,
plus accrued and unpaid interest to the applicable redemption date.