FairPoint Communications 2013 Annual Report Download - page 79

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Interest Rates and Fees. Interest on borrowings under the New Credit Agreement Loans accrue at an annual rate equal to
either a British Bankers Association London Inter-Bank Offered Rate ("LIBOR") or the base rate, in each case plus an applicable
margin. LIBOR is a per annum rate for dollar deposits with an interest period of one, two, three or six months (at FairPoint
Communication's election), subject to a minimum LIBOR floor of 1.25%. The base rate is the per annum rate equal to the greatest
of (x) the federal funds effective rate plus 0.50%, (y) the rate of interest publicly quoted from time to time by The Wall Street
Journal as the United States ''Prime Rate'' and (z) LIBOR with an interest period of one month plus 1.00%. The applicable margin
for the New Term Loan is (a) 6.25% per annum with respect to term loans bearing interest based on LIBOR or (b) 5.25% per
annum with respect to term loans bearing interest based on the base rate. The applicable interest rate for the New Revolving Facility
is, initially, (a) 5.50% with respect to revolving loans bearing interest based on LIBOR or (b) 4.50% per annum with respect to
revolving loans bearing interest based on the base rate, in each case subject to adjustment based on FairPoint Communication's
consolidated total leverage ratio, as defined in the New Credit Agreement. FairPoint Communications is required to pay a quarterly
letter of credit fee on the average daily amount available to be drawn under letters of credit equal to the applicable interest 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, FairPoint Communications is 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 FairPoint Communication's consolidated total leverage ratio.
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. FairPoint Communications is 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. In addition, mandatory repayments are
required under the New Credit Agreement with (i) a percentage, initially equal to 50% and subject to reduction to 25% based on
FairPoint Communication's consolidated total leverage ratio, of FairPoint Communication's 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 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.
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 amount of capital
expenditures that FairPoint Communications and its subsidiaries may make in any fiscal year. As of December 31, 2013, FairPoint
Communications was in compliance with all covenants under the New Credit Agreement.
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, FairPoint Communications issued $300.0 million 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, commencing on August 15, 2013.
On or after February 15, 2016, FairPoint Communications 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, FairPoint Communications 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, FairPoint Communications 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