SUBSIDIARY GUARANTY
Exhibit 10.5
SUBSIDIARY GUARANTY (as amended, modified, restated and/or supplemented from time to time,
this “Guaranty”), dated as of March 31, 2008, made by and among each of the undersigned
guarantors (each, a “Guarantor” and, together with any other entity that becomes a
guarantor hereunder pursuant to Section 23 hereof, collectively, the “Guarantors”) in favor
of XXXXXX COMMERCIAL PAPER INC., as Administrative Agent (in such capacity, together with any
successor administrative agent, the “Administrative Agent”), for the benefit of the Secured
Creditors (as defined below). Except as otherwise defined herein, all capitalized terms used
herein and defined in the Credit Agreement (as defined below) shall be used herein as therein
defined.
WITNESSETH :
WHEREAS, FairPoint Communications, Inc. (“FairPoint”), Northern New England Spinco
Inc. (“Spinco”), the lenders from time to time party thereto (the “Lenders”), Bank
of America, N.A., as Syndication Agent, Xxxxxx Xxxxxxx Senior Funding, Inc. and Deutsche Bank
Securities Inc., as Co-Documentation Agents, and the Administrative Agent have entered into a
Credit Agreement, dated as of March 31, 2008 (as amended, modified, restated and/or supplemented
from time to time, the “Credit Agreement”), providing for the making of Loans to, and the
issuance of, and participation in, Letters of Credit for the account of the Borrower, all as
contemplated therein (the Lenders, each Letter of Credit Issuer, the Swingline Lender, the
Administrative Agent, the Collateral Agent, each other Agent and the Pledgee referred to in the
Pledge Agreement are herein called the “Lender Creditors”). As used herein, the term
“Borrower” shall mean (i) prior to the Merger, each of FairPoint and Spinco and (ii) from
and after the Merger, FairPoint.
WHEREAS, the Borrower may from time to time be a party to one or more Interest Rate Agreements
(each such Interest Rate Agreement with an Interest Rate Creditor (as defined below), a
“Secured Interest Rate Agreement”) with Xxxxxx Commercial Paper Inc., in its individual
capacity (“LCPI”), any Lender, a syndicate of financial institutions organized by LCPI or
such Lender or an affiliate of LCPI or such Lender (even if LCPI or any such Lender ceases to be a
Lender under the Credit Agreement for any reason), and any institution that participates therein,
and in each case their subsequent assigns (collectively, the “Interest Rate Creditors,” and
together with the Lender Creditors, collectively, the “Secured Creditors”).
WHEREAS, each Guarantor is a direct or indirect Subsidiary of the Borrower.
WHEREAS, it is a condition precedent to the making of Loans to the Borrower and the issuance
of, and participation in, Letters of Credit for the account of the Borrower under the Credit
Agreement that each Guarantor shall have executed and delivered this Guaranty to the Administrative
Agent.
WHEREAS, each Guarantor will obtain benefits from the incurrence of Loans by the Borrower and
the issuance of, and participation in, Letters of Credit for the account of the
Borrower under the Credit Agreement and the entering into by the Borrower and/or one or more
of its Subsidiaries of Secured Interest Rate Agreements and, accordingly, desires to execute this
Guaranty in order to satisfy the condition described in the preceding paragraph and to induce the
Lenders to make Loans to the Borrower and issue, and/or participate in, Letters of Credit for the
account of the Borrower and the Interest Rate Creditors to enter into Secured Interest Rate
Agreements with the Borrower and/or one or more of its Subsidiaries.
NOW, THEREFORE, in consideration of the foregoing and other benefits accruing to each
Guarantor, the receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby
makes the following representations and warranties to the Administrative Agent for the benefit of
the Secured Creditors and hereby covenants and agrees with each other Guarantor and the
Administrative Agent for the benefit of the Secured Creditors as follows:
1. GUARANTY. (a) Each Guarantor, jointly and severally, irrevocably, absolutely and
unconditionally guarantees as a primary obligor and not merely as surety:
(i) to the Lender Creditors the full and prompt payment when due (whether at the stated
maturity, by required prepayment, declaration, acceleration, demand or otherwise) of (x) the
principal of, premium, if any, and interest on the Notes issued by, and the Loans made to,
the Borrower under the Credit Agreement, and all reimbursement obligations and Unpaid
Drawings with respect to Letters of Credit and (y) all other obligations (including, without
limitation, obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due), liabilities and indebtedness owing by the Borrower to
the Lender Creditors under the Credit Agreement and each other Credit Document to which the
Borrower is a party (including, without limitation, indemnities, Fees and interest thereon
(including, without limitation, any interest accruing after the commencement of any
bankruptcy, insolvency, receivership or similar proceeding at the rate provided for in the
Credit Agreement, whether or not such interest is an allowed claim in any such proceeding)),
whether now existing or hereafter incurred under, arising out of or in connection with the
Credit Agreement and any such other Credit Document and the due performance and compliance
by the Borrower with all of the terms, conditions, covenants and agreements contained in all
such Credit Documents (all such principal, premium, interest, liabilities, indebtedness and
obligations under this clause (i), except to the extent consisting of obligations or
liabilities with respect to Secured Interest Rate Agreements, being herein collectively
called the “Credit Document Obligations”); and
(ii) to each Interest Rate Creditor the full and prompt payment when due (whether at
the stated maturity, by required prepayment, declaration, acceleration, demand or otherwise)
of all obligations (including, without limitation, obligations which, but for the automatic
stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities and
indebtedness (including, without limitation, any interest accruing after the commencement of
any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for in
the respective Secured Interest Rate Agreements, whether or not such interest is an allowed
claim in any such proceeding) owing by the
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Borrower under any Secured Interest Rate Agreement to which it is a party, whether now
in existence or hereafter arising, and the due performance and compliance by the Borrower
with all of the terms, conditions, covenants and agreements contained therein (all such
obligations, liabilities and indebtedness being herein collectively called the “Interest
Rate Obligations”, and together with the Credit Document Obligations are herein
collectively called the “Guaranteed Obligations”).
Each Guarantor understands, agrees and confirms that the Secured Creditors may enforce this
Guaranty up to the full amount of the Guaranteed Obligations against such Guarantor without
proceeding against any other Guarantor or the Borrower, or against any security for the Guaranteed
Obligations, or under any other guaranty covering all or a portion of the Guaranteed Obligations.
This Guaranty is a guaranty of prompt payment and performance and not of collection.
(b) Additionally, each Guarantor, jointly and severally, unconditionally, absolutely and
irrevocably, guarantees the payment of any and all Guaranteed Obligations whether or not due or
payable by the Borrower upon the occurrence in respect of the Borrower of any of the events
specified in Section 8.05 of the Credit Agreement, and unconditionally, absolutely and irrevocably,
jointly and severally, promises to pay such Guaranteed Obligations to the Secured Creditors on
demand.
2. LIABILITY OF GUARANTORS ABSOLUTE. The liability of each Guarantor hereunder is
primary, absolute, joint and several, and unconditional and is exclusive and independent of any
security for or other guaranty of the indebtedness of the Borrower whether executed by such
Guarantor, any other Guarantor, any other guarantor or by any other party, and the liability of
each Guarantor hereunder shall not be affected or impaired by any circumstance or occurrence
whatsoever, including, without limitation: (a) any direction as to application of payment by the
Borrower or any other party; (b) any other continuing or other guaranty, undertaking or maximum
liability of a Guarantor or of any other party as to the Guaranteed Obligations; (c) any payment on
or in reduction of any such other guaranty or undertaking; (d) any dissolution, termination or
increase, decrease or change in personnel by the Borrower; (e) the failure of any Guarantor to
receive any benefit from or as a result of its execution; delivery and performance of this
Guaranty; (f) any payment made to any Secured Creditor on the indebtedness which any Secured
Creditor repays the Borrower pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and each Guarantor waives any right to
the deferral or modification of its obligations hereunder by reason of any such proceeding; (g) any
action or inaction by the Secured Creditors as contemplated in Section 5 hereof; or (h) any
invalidity, rescission, irregularity or unenforceability of all or any part of the Guaranteed
Obligations or of any security therefor.
3. OBLIGATIONS OF GUARANTORS INDEPENDENT. The obligations of each Guarantor hereunder
are independent of the obligations of any other Guarantor, any other guarantor or the Borrower, and
a separate action or actions may be brought and prosecuted against each Guarantor whether or not
action is brought against any other Guarantor, any other
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guarantor or the Borrower and whether or not any other Guarantor, any other guarantor or the
Borrower be joined in any such action or actions.
4. WAIVERS BY GUARANTORS. (a) Each Guarantor hereby waives notice of acceptance of
this Guaranty and notice of the existence, creation or incurrence of any new or additional
liability to which it may apply, and waives promptness, diligence, presentment, demand of payment,
demand for performance, protest, notice of dishonor or nonpayment of any such liabilities, suit or
taking of other action by the Administrative Agent or any other Secured Creditor against, and any
other notice to, any party liable thereon (including such Guarantor, any other Guarantor, any other
guarantor or the Borrower) and each Guarantor further hereby waives any and all notice of the
creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice or proof of
reliance by any Secured Creditor upon this Guaranty, and the Guaranteed Obligations shall
conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended,
modified, supplemented or waived, in reliance upon this Guaranty.
(b) Each Guarantor waives any right to require the Secured Creditors to: (i) proceed against
the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any other
party; (ii) proceed against or exhaust any security held from the Borrower, any other Guarantor,
any other guarantor of the Guaranteed Obligations or any other party; or (iii) pursue any other
remedy in the Secured Creditors’ power whatsoever. Each Guarantor waives any defense based on or
arising out of any defense of the Borrower, any other Guarantor, any other guarantor of the
Guaranteed Obligations or any other party other than payment in full in cash of the Guaranteed
Obligations, including, without limitation, any defense based on or arising out of the disability
of the Borrower, any other Guarantor, any other guarantor of the Guaranteed Obligations or any
other party, or the unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the Borrower other than payment in full
in cash of the Guaranteed Obligations. The Secured Creditors may, at their election and in
accordance with the security documents governing same, foreclose on any collateral serving as
security held by the Administrative Agent, the Collateral Agent or the other Secured Creditors by
one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable (to the extent such sale is permitted by applicable law), or exercise any
other right or remedy the Secured Creditors may have against the Borrower or any other party, or
any security, without affecting or impairing in any way the liability of any Guarantor hereunder
except to the extent the Guaranteed Obligations have been paid in full in cash. Each Guarantor
waives any defense arising out of any such election by the Secured Creditors, even though such
election operates to impair or extinguish any right of reimbursement, contribution, indemnification
or subrogation or other right or remedy of such Guarantor against the Borrower, any other
Guarantor, any other guarantor of the Guaranteed Obligations or any other party or any security.
(c) Each Guarantor hereby waives the benefits of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by the Borrower or other circumstance
which operates to toll any statute of limitations as to the Borrower shall operate to toll the
statute of limitations as to each Guarantor.
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(d) Each Guarantor has knowledge and assumes all responsibility for being and keeping itself
informed of the Borrower’s and each other Guarantor’s financial condition, affairs and assets, and
of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and
the nature, scope and extent of the risks which such Guarantor assumes and incurs hereunder, and
has adequate means to obtain from the Borrower and each other Guarantor on an ongoing basis
information relating thereto and to the Borrower’s and each other Guarantor’s ability to pay and
perform its respective Guaranteed Obligations, and agrees to assume the responsibility for keeping,
and to keep, so informed for so long as this Guaranty is in effect. Each Guarantor acknowledges
and agrees that (x) the Secured Creditors shall have no obligation to investigate the financial
condition or affairs of the Borrower or any other Guarantor for the benefit of such Guarantor nor
to advise such Guarantor of any fact respecting, or any change in, the financial condition, assets
or affairs of the Borrower or any other Guarantor that might become known to any Secured Creditor
at any time, whether or not such Secured Creditor knows or believes or has reason to know or
believe that any such fact or change is unknown to such Guarantor, or might (or does) increase the
risk of such Guarantor as guarantor hereunder, or might (or would) affect the willingness of such
Guarantor to continue as a guarantor of the Guaranteed Obligations hereunder and (y) the Secured
Creditors shall have no duty to advise any Guarantor of information known to them regarding any of
the aforementioned circumstances or risks.
(e) Each Guarantor hereby acknowledges and agrees that no Secured Creditor or any other Person
shall be under any obligation (a) to marshal any assets in favor of such Guarantor or in payment of
any or all of the liabilities of the Borrower under the Credit Documents or the obligation of such
Guarantor hereunder or (b) to pursue any other remedy that such Guarantor may or may not be able to
pursue itself, any right to which such Guarantor hereby waives.
(f) Each Guarantor warrants and agrees that each of the waivers set forth in Section 3 and in
this Section 4 is made with full knowledge of its significance and consequences and that if any of
such waivers are determined to be contrary to any applicable law or public policy, such waivers
shall be effective only to the maximum extent permitted by applicable law.
5. RIGHTS OF SECURED CREDITORS. Subject to Section 4, any Secured Creditor may
(except as shall be required by applicable law and cannot be waived) at any time and from time to
time without the consent of, or notice to, any Guarantor, without incurring responsibility to such
Guarantor, without impairing or releasing the obligations or liabilities of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change, increase or extend the
time of payment of, renew, increase, accelerate or alter, any of the Guaranteed Obligations
(including, without limitation, any increase or decrease in the rate of interest thereon or the
principal amount thereof), any security therefor, or any liability incurred directly or indirectly
in respect thereof, and the guaranty herein made shall apply to the Guaranteed Obligations as so
changed, extended, increased, accelerated, renewed or altered;
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(b) take and hold security for the payment of the Guaranteed Obligations and sell, exchange,
release, surrender, impair, realize upon or otherwise deal with in any manner and in any order any
property or other collateral by whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the Borrower, any other Credit
Party, any Subsidiary thereof, any other guarantor of the Borrower or others or otherwise act or
refrain from acting;
(d) release or substitute any one or more endorsers, Guarantors, other guarantors, the
Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any security therefor or any
liability (including any of those hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any part thereof to the payment of any liability
(whether due or not) of the Borrower to creditors of the Borrower other than the Secured Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of
the Borrower to the Secured Creditors regardless of what liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or default under, any of the
Secured Interest Rate Agreements, the Credit Documents or any of the instruments or agreements
referred to therein, or otherwise amend, modify or supplement any of the Secured Interest Rate
Agreements, the Credit Documents or any of such other instruments or agreements;
(h) act or fail to act in any manner which may deprive such Guarantor of its right to
subrogation against the Borrower to recover full indemnity for any payments made pursuant to this
Guaranty; and/or
(i) take any other action or omit to take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable discharge of such Guarantor
from its liabilities under this Guaranty (including, without limitation, any action or omission
whatsoever that might otherwise vary the risk of such Guarantor or constitute a legal or equitable
defense to or discharge of the liabilities of a guarantor or surety or that might otherwise limit
recourse against such Guarantor).
No invalidity, illegality, irregularity or unenforceability of all or any part of the Guaranteed
Obligations, the Credit Documents or any other agreement or instrument relating to the Guaranteed
Obligations or of any security or guarantee therefor shall affect, impair or be a defense to this
Guaranty, and this Guaranty shall be primary, absolute and unconditional notwithstanding the
occurrence of any event or the existence of any other circumstances which
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might constitute a legal or equitable discharge of a surety or guarantor except payment in full in
cash of the Guaranteed Obligations.
6. CONTINUING GUARANTY. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively presumed to have been
created in reliance hereon. No failure or delay on the part of any Secured Creditor in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and remedies herein
expressly specified are cumulative and not exclusive of any rights or remedies which any Secured
Creditor would otherwise have. No notice to or demand on any Guarantor in any case shall entitle
such Guarantor to any other further notice or demand in similar or other circumstances or
constitute a waiver of the rights of any Secured Creditor to any other or further action in any
circumstances without notice or demand. It is not necessary for any Secured Creditor to inquire
into the capacity or powers of the Borrower or the officers, directors, partners or agents acting
or purporting to act on its or their behalf, and any indebtedness made or created in reliance upon
the professed exercise of such powers shall be guaranteed hereunder.
7. SUBORDINATION OF INDEBTEDNESS HELD BY GUARANTORS. Any indebtedness of the Borrower
now or hereafter held by any Guarantor is hereby subordinated to the indebtedness of the Borrower
to the Secured Creditors; and such indebtedness of the Borrower to any Guarantor, if the
Administrative Agent or the Collateral Agent, after an Event of Default has occurred and is
continuing, so requests, shall be collected, enforced and received by such Guarantor as trustee for
the Secured Creditors and be paid over to the Secured Creditors on account of the indebtedness of
the Borrower to the Secured Creditors, but without affecting or impairing in any manner the
liability of such Guarantor under the other provisions of this Guaranty. Prior to the transfer by
any Guarantor of any note or negotiable instrument evidencing any indebtedness of the Borrower to
such Guarantor, such Guarantor shall xxxx such note or negotiable instrument with a legend that the
same is subject to this subordination. Without limiting the generality of the foregoing, each
Guarantor hereby agrees with the Secured Creditors that it will not exercise any right of
subrogation which it may at any time otherwise have as a result of this Guaranty (whether
contractual, under Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed
Obligations have been irrevocably paid in full in cash; provided, that if any amount shall
be paid to any Guarantor on account of such subrogation rights at any time prior to the irrevocable
payment in full in cash of all the Guaranteed Obligations, such amount shall be held in trust for
the benefit of the Secured Creditors and shall forthwith be paid to the Secured Creditors to be
credited and applied to the Guaranteed Obligations, whether matured or unmatured, in accordance
with the terms of the Credit Documents or, if the Credit Documents do not provide for the
application of such amount, to be held by the Secured Creditors as collateral security for any
Guaranteed Obligations thereafter existing. Upon irrevocable payment in full in cash of all of the
Guaranteed Obligations, each Guarantor shall be subrogated to the rights of the Secured Creditors
to receive payments or distributions applicable to the Guaranteed Obligations until all
Indebtedness of the Borrower held by such Guarantor shall be paid in full.
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8. GUARANTY ENFORCEABLE BY ADMINISTRATIVE AGENT OR COLLATERAL AGENT. Notwithstanding
anything to the contrary contained elsewhere in this Guaranty or any other Credit Document or
Secured Interest Rate Agreement, the Secured Creditors agree (by their acceptance of the benefits
of this Guaranty) that this Guaranty may be enforced only by the action of the Administrative Agent
or the Collateral Agent, in each case acting upon the instructions of the Required Lenders (or,
after the date on which all Credit Document Obligations have been paid in full, the holders of a
majority of the outstanding Interest Rate Obligations) and that no other Secured Creditor shall
have any right individually to seek to enforce or to enforce this Guaranty or to realize upon the
security to be granted by the Credit Documents, it being understood and agreed that such rights and
remedies may be exercised by the Administrative Agent or the Collateral Agent or, after all the
Credit Document Obligations have been paid in full, by the holders of a majority of the outstanding
Interest Rate Obligations, as the case may be, for the benefit of the Secured Creditors upon the
terms of this Guaranty and the other Credit Documents. The Secured Creditors further agree that
this Guaranty may not be enforced against any director, officer, employee, partner, member or
stockholder of any Guarantor (except to the extent such partner, member or stockholder is also a
Guarantor hereunder). It is understood and agreed that the agreement in this Section 8 is among
and solely for the benefit of the Secured Creditors and that, if the Required Lenders (or, after
the date on which all Credit Document Obligations have been paid in full, the holders of a majority
of the outstanding Interest Rate Obligations) so agree (without requiring the consent of any
Guarantor), this Guaranty may be directly enforced by any Secured Creditor.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF GUARANTORS. In order to induce the
Lenders to make Loans to, and issue Letters of Credit for the account of, the Borrower pursuant to
the Credit Agreement, and in order to induce the Interest Rate Creditors to execute, deliver and
perform the Secured Interest Rate Agreements to which they are a party, each Guarantor represents,
warrants and covenants that:
(a) until the termination of the Total Commitment and all Secured Interest Rate Agreements and
until such time as no Note or Letter of Credit remains outstanding and all Guaranteed Obligations
have been paid in full (other than indemnities described in Section 11.01 of the Credit Agreement
and analogous provisions in the other Credit Documents which are not then due and payable), such
Guarantor will take, or will refrain from taking, as the case may be, all actions that are
necessary to be taken or not taken so that no violation of any provision, covenant or agreement
contained in Sections 6 and 7 of the Credit Agreement, and so that no Event of Default, is caused
by the actions of such Guarantor or any of its Subsidiaries; and
(b) an executed (or conformed) copy of each of the Credit Documents and each of the Secured
Interest Rate Agreements has been made available to a senior officer of such Guarantor and such
officer is familiar with the contents thereof.
10. EXPENSES. The Guarantors hereby jointly and severally agree to pay all reasonable
out-of-pocket costs and expenses of the Collateral Agent, the Administrative Agent and each other
Secured Creditor in connection with the enforcement of this Guaranty and the protection of the
Secured Creditors’ rights hereunder and of the Administrative Agent in
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connection with any amendment, waiver or consent relating hereto (including, in each case,
without limitation, the reasonable fees and disbursements of counsel).
11. BENEFIT AND BINDING EFFECT. This Guaranty shall be binding upon each Guarantor
and its successors and assigns and shall inure to the benefit of the Secured Creditors and their
successors and assigns to the extent permitted under the Credit Agreement or the respective Secured
Interest Rate Agreement.
12. AMENDMENTS; WAIVERS. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated except with the written consent of each Guarantor
directly affected thereby (it being understood that the addition or release of any Guarantor
hereunder shall not constitute a change, waiver, discharge or termination affecting any Guarantor
other than the Guarantor so added or released) and with the written consent of either (x) the
Required Lenders (or, to the extent required by Section 11.11 of the Credit Agreement, with the
written consent of each Lender) at all times prior to the time at which all Credit Document
Obligations have been paid in full or (y) the holders of a majority of the outstanding Interest
Rate Obligations at all times after the time at which all Credit Document Obligations have been
paid in full; provided, that any change, waiver, modification or variance affecting the
rights and benefits of a single Class (as defined below) of Secured Creditors (and not all Secured
Creditors in a like or similar manner) shall also require the written consent of the Requisite
Creditors (as defined below) of such Class of Secured Creditors. For the purpose of this Guaranty,
the term “Class” shall mean each class of Secured Creditors, i.e., whether (x) the
Lender Creditors as the holders of the Credit Document Obligations or (y) the Interest Rate
Creditors as the holders of the Interest Rate Obligations. For the purpose of this Guaranty, the
term “Requisite Creditors” of any Class shall mean (x) with respect to the Credit Document
Obligations, the Required Lenders (or, to the extent required by Section 11.11 of the Credit
Agreement, each Lender) and (y) with respect to the Interest Rate Obligations, the holders of a
majority of all Interest Rate Obligations outstanding from time to time under the Secured Interest
Rate Agreements.
13. SET OFF. In addition to any rights now or hereafter granted under applicable law
(including, without limitation, Section 151 of the New York Debtor and Creditor Law) and not by way
of limitation of any such rights, upon the occurrence and during the continuance of an Event of
Default (such term to mean and include any “Event of Default” as defined in the Credit Agreement
and any payment default under any Secured Interest Rate Agreement continuing after any applicable
grace period), each Secured Creditor is hereby authorized, at any time or from time to time,
without notice to any Guarantor or to any other Person, any such notice being expressly waived, to
set off and to appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by such Secured Creditor to or for the credit or the account
of such Guarantor, against and on account of the obligations and liabilities of such Guarantor to
such Secured Creditor under this Guaranty, irrespective of whether or not such Secured Creditor
shall have made any demand hereunder and although said obligations, liabilities, deposits or
claims, or any of them, shall be contingent or unmatured. Each Secured Creditor (by its acceptance
of the benefits hereof) acknowledges and agrees (i) to promptly notify the relevant Guarantor after
any such set-off and application; provided, that the failure to
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give such notice shall not affect the validity of such set-off and application; and (ii) that
the provisions of this Section 13 are subject to the sharing provisions set forth in Section 11.06
of the Credit Agreement.
14. NOTICE. Except as otherwise specified herein, all notices, requests, demands or
other communications to or upon the respective parties hereto shall be sent or delivered by mail,
telegraph, telex, telecopy, cable or courier service and all such notices and communications shall,
when mailed, telegraphed, telexed, telecopied, or cabled or sent by courier, be effective when
deposited in the mails, delivered to the telegraph company, cable company or overnight courier, as
the case may be, or sent by telex or telecopier, except that notices and communications to the
Administrative Agent or any Guarantor shall not be effective until received by the Administrative
Agent or such Guarantor, as the case may be. All notices and other communications shall be in
writing and addressed to such party at (i) in the case of any Lender Creditor, as provided in the
Credit Agreement, (ii) in the case of any Guarantor, at its address set forth opposite its
signature below and (iii) in the case of any Interest Rate Creditor, at such address as such
Interest Rate Creditor shall have specified in writing to the Guarantors; or in any case at such
other address as any of the Persons listed above may hereafter notify the others in writing.
15. REINSTATEMENT. If any claim is ever made upon any Secured Creditor for repayment
or recovery of any amount or amounts received in payment or on account of any of the Guaranteed
Obligations and any of the aforesaid payees repays all or part of said amount by reason of (i) any
judgment, decree or order of any court or administrative body having jurisdiction over such payee
or any of its property or (ii) any settlement or compromise of any such claim effected by such
payee with any such claimant (including, without limitation, the Borrower), then and in such event
each Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be
binding upon such Guarantor, notwithstanding any revocation hereof or the cancellation of any Note,
any Secured Interest Rate Agreement or any other instrument evidencing any liability of the
Borrower, and such Guarantor shall be and remain liable to the aforesaid payees hereunder for the
amount so repaid or recovered to the same extent as if such amount had never originally been
received by any such payee.
16. CONSENT TO JURISDICTION; SERVICE OF PROCESS; AND WAIVER OF TRIAL BY JURY. (a)
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE SECURED CREDITORS AND OF THE UNDERSIGNED
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. Any legal action or proceeding with respect to
this Guaranty or any other Credit Document to which any Guarantor is a party may be brought in the
courts of the State of New York or of the United States of America for the Southern District of New
York, in each case located within the City of New York, and, by execution and delivery of this
Guaranty, each Guarantor hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each Guarantor hereby
further irrevocably waives any claim that any such courts lack jurisdiction over such Guarantor,
and agrees not to plead or claim, in any legal action or proceeding with respect to this Guaranty
or any other Credit Document to which such
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Guarantor is a party brought in any of the aforesaid courts, that any such court lacks
jurisdiction over such Guarantor. Each Guarantor further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to each Guarantor at its address
set forth opposite its signature below, such service to become effective 30 days after such
mailing. Each Guarantor hereby irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any action or proceeding commenced
hereunder or under any other Credit Document to which such Guarantor is a party that such service
of process was in any way invalid or ineffective. Nothing herein shall affect the right of any of
the Secured Creditors to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against each Guarantor in any other jurisdiction.
(b) Each Guarantor hereby irrevocably waives (to the full extent permitted by applicable law)
any objection which it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Guaranty or any other Credit
Document to which such Guarantor is a party brought in the courts referred to in clause (a) above
and hereby further irrevocably waives and agrees not to plead or claim in any such court that such
action or proceeding brought in any such court has been brought in an inconvenient forum.
(c) EACH GUARANTOR AND EACH SECURED CREDITOR (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS
GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY, THE OTHER CREDIT DOCUMENTS TO WHICH SUCH
GUARANTOR IS A PARTY OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
17. TERMINATION. After the Termination Date (as defined below), but subject to
Section 15, this Guaranty shall terminate (provided that all indemnities set forth herein shall
survive any such termination) and the Administrative Agent, at the request and expense of the
respective Guarantor, will execute and deliver to such Guarantor a proper instrument or instruments
acknowledging the satisfaction and termination of this Guaranty as provided above. As used in this
Guaranty, “Termination Date” shall mean the date upon which the Total Commitment and all
Secured Interest Rate Agreements have been terminated, no Note or Letter of Credit under the Credit
Agreement is outstanding (and all Loans have been paid in full) and all other Obligations (as
defined in the Credit Agreement) have been paid in full (other than arising from indemnities for
which no request has been made).
18. RELEASE OF LIABILITY OF GUARANTOR UPON SALE OR DISSOLUTION. In the event that all
of the capital stock or other equity interests of one or more Guarantors is sold or otherwise
disposed of (including by way of the merger or consolidation of such Guarantor with or into another
Person) or liquidated, in any such case in compliance with the requirements of Section 7.02 of the
Credit Agreement (or such sale, other disposition or liquidation has been approved in writing by
the Required Lenders (or all the Lenders if required
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by Section 11.11 of the Credit Agreement)) and the proceeds of such sale, disposition or
liquidation are applied in accordance with the provisions of the Credit Agreement, to the extent
applicable, such Guarantor shall, upon consummation of such sale or other disposition (except to
the extent that such sale or disposition is to the Borrower or a Subsidiary thereof), be released
from this Guaranty automatically and without further action and this Guaranty shall, as to each
such Guarantor or Guarantors, terminate, and have no further force or effect (it being understood
and agreed that the sale of one or more Persons that own, directly or indirectly, all of the
capital stock or other equity interests of any Guarantor shall be deemed to be a sale of such
Guarantor for the purposes of this Section 18).
19. CONTRIBUTION. At any time a payment in respect of the Guaranteed Obligations is
made under this Guaranty, the right of contribution of each Guarantor against each other Guarantor
shall be determined as provided in the immediately following sentence, with the right of
contribution of each Guarantor to be revised and restated as of each date on which a payment (a
“Relevant Payment”) is made on the Guaranteed Obligations under this Guaranty. At any time
that a Relevant Payment is made by a Guarantor that results in the aggregate payments made by such
Guarantor in respect of the Guaranteed Obligations to and including the date of the Relevant
Payment exceeding such Guarantor’s Contribution Percentage (as defined below) of the aggregate
payments made by all Guarantors in respect of the Guaranteed Obligations to and including the date
of the Relevant Payment (such excess, the “Aggregate Excess Amount”), each such Guarantor
shall have a right of contribution against each other Guarantor who either has not made any
payments or has made payments in respect of the Guaranteed Obligations to and including the date of
the Relevant Payment in an aggregate amount less than such other Guarantor’s Contribution
Percentage of the aggregate payments made to and including the date of the Relevant Payment by all
Guarantors in respect of the Guaranteed Obligations (the aggregate amount of such deficit, the
“Aggregate Deficit Amount”) in an amount equal to (x) a fraction the numerator of which is
the Aggregate Excess Amount of such Guarantor and the denominator of which is the Aggregate Excess
Amount of all Guarantors multiplied by (y) the Aggregate Deficit Amount of such other Guarantor. A
Guarantor’s right of contribution pursuant to the preceding sentences shall arise at the time of
each computation, subject to adjustment at the time of each computation; provided, that no
Guarantor may take any action to enforce such right until the Guaranteed Obligations have been
irrevocably paid in full in cash and the Total Commitment and all Letters of Credit have been
terminated, it being expressly recognized and agreed by all parties hereto that any Guarantor’s
right of contribution arising pursuant to this Section 19 against any other Guarantor shall be
expressly junior and subordinate to such other Guarantor’s obligations and liabilities in respect
of the Guaranteed Obligations and any other obligations owing under this Guaranty. As used in this
Section 19: (i) each Guarantor’s “Contribution Percentage” shall mean the percentage
obtained by dividing (x) the Adjusted Net Worth (as defined below) of such Guarantor by (y) the
aggregate Adjusted Net Worth of all Guarantors; (ii) the “Adjusted Net Worth” of each
Guarantor shall mean the greater of (x) the Net Worth (as defined below) of such Guarantor and (y)
zero; and (iii) the “Net Worth” of each Guarantor shall mean the amount by which the fair
saleable value of such Guarantor’s assets on the date of any Relevant Payment exceeds its existing
debts and other liabilities (including contingent liabilities, but without giving effect to any
Guaranteed Obligations arising under this Guaranty) on such date. Notwithstanding anything to the
contrary
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contained above, any Guarantor that is released from this Guaranty pursuant to Section 18
hereof shall thereafter have no contribution obligations, or rights, pursuant to this Section 19,
and at the time of any such release, if the released Guarantor had an Aggregate Excess Amount or an
Aggregate Deficit Amount, same shall be deemed reduced to $0, and the contribution rights and
obligations of the remaining Guarantors shall be recalculated on the respective date of release (as
otherwise provided above) based on the payments made hereunder by the remaining Guarantors. All
parties hereto recognize and agree that, except for any right of contribution arising pursuant to
this Section 19, each Guarantor who makes any payment in respect of the Guaranteed Obligations
shall have no right of contribution or subrogation against any other Guarantor in respect of such
payment until all of the Guaranteed Obligations have been irrevocably paid in full in cash. Each
of the Guarantors recognizes and acknowledges that the rights to contribution arising hereunder
shall constitute an asset in favor of the party entitled to such contribution. In this connection,
each Guarantor has the right to waive its contribution right against any Guarantor to the extent
that after giving effect to such waiver such Guarantor would remain solvent, in the determination
of the Required Lenders.
20. LIMITATION ON GUARANTEED OBLIGATIONS. Each Guarantor and each Secured Creditor
(by its acceptance of the benefits of this Guaranty) hereby confirms that it is its intention that
this Guaranty not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy
Code, the Uniform Fraudulent Conveyance Act of any similar Federal or state law. To effectuate the
foregoing intention, each Guarantor and each Secured Creditor (by its acceptance of the benefits of
this Guaranty) hereby irrevocably agrees that the Guaranteed Obligations guaranteed by such
Guarantor shall be limited to such amount as will, after giving effect to such maximum amount and
all other (contingent or otherwise) liabilities of such Guarantor that are relevant under such laws
and after giving effect to any rights to contribution pursuant to any agreement providing for an
equitable contribution among such Guarantor and the other Guarantors, result in the Guaranteed
Obligations of such Guarantor in respect of such maximum amount not constituting a fraudulent
transfer or conveyance.
21. COUNTERPARTS. This Guaranty may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so executed and delivered
shall be an original, but all of which shall together constitute one and the same instrument. A
set of counterparts executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
22. PAYMENTS. All payments made by any Guarantor hereunder will be made without
setoff, counterclaim or other defense and on the same basis as payments are made by the Borrower
under Sections 3.04 and 3.05 of the Credit Agreement.
23. ADDITIONAL GUARANTORS. It is understood and agreed that any Subsidiary of the
Borrower that is required to execute a counterpart of this Guaranty after the date hereof pursuant
to the Credit Agreement shall become a Guarantor hereunder by (x) executing and delivering a
counterpart hereof (or a satisfactory joinder agreement hereto) to the Administrative Agent and (y)
taking all actions as specified in this Guaranty as would have been taken by such
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Guarantor had it been an original party to this Guaranty, in each case with all documents and
actions required to be taken above to the reasonable satisfaction of the Administrative Agent.
24. HEADINGS DESCRIPTIVE. The headings of the several Sections of this Guaranty are
inserted for convenience only and shall not in any way affect the meaning or construction of any
provision of this Guaranty.
* * *
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and delivered as of
the date first above written.
Address:
| c/o FAIRPOINT COMMUNICATIONS, INC. | FAIRPOINT BROADBAND, INC., | |||||||
| 000 Xxxx Xxxxxxxx Xxxxxx | as a Guarantor | |||||||
Xxxxxxxxx, XX 00000 |
||||||||
| By: | /s/ Xxxxxx Xxxxxxx | |||||||
| Name: | Xxxxxx Xxxxxxx | |||||||
| Title: | Treasurer | |||||||
| c/o FAIRPOINT COMMUNICATIONS, INC. | MJD VENTURES, INC., | |||||||
| 000 Xxxx Xxxxxxxx Xxxxxx | as a Guarantor | |||||||
Xxxxxxxxx, XX 00000 |
||||||||
| By: | /s/ Xxxxxx Xxxxxxx | |||||||
| Name: | Xxxxxx Xxxxxxx | |||||||
| Title: | Treasurer | |||||||
| c/o FAIRPOINT COMMUNICATIONS, INC. | MJD SERVICES CORP., | |||||||
| 000 Xxxx Xxxxxxxx Xxxxxx | as a Guarantor | |||||||
Xxxxxxxxx, XX 00000 |
||||||||
| By: | /s/ Xxxxxx Xxxxxxx | |||||||
| Name: | Xxxxxx Xxxxxxx | |||||||
| Title: | Treasurer | |||||||
| c/o FAIRPOINT COMMUNICATIONS, INC. | S T ENTERPRISES, LTD., | |||||||
| 000 Xxxx Xxxxxxxx Xxxxxx | as a Guarantor | |||||||
Xxxxxxxxx, XX 00000 |
||||||||
| By: | /s/ Xxxxxx Xxxxxxx | |||||||
| Name: | Xxxxxx Xxxxxxx | |||||||
| Title: | Treasurer | |||||||
| c/o FAIRPOINT COMMUNICATIONS, INC. | FAIRPOINT CARRIER SERVICES, INC., | |||||||
| 000 Xxxx Xxxxxxxx Xxxxxx | as a Guarantor | |||||||
Xxxxxxxxx, XX 00000 |
||||||||
| By: | /s/ Xxxxxx Xxxxxxx | |||||||
| Name: | Xxxxxx Xxxxxxx | |||||||
| Title: | Treasurer | |||||||
| c/o FAIRPOINT COMMUNICATIONS, INC. | FAIRPOINT LOGISTICS, INC., | |||||||
| 000 Xxxx Xxxxxxxx Xxxxxx | as a Guarantor | |||||||
Xxxxxxxxx, XX 00000 |
||||||||
| By: | /s/ Xxxxxx Xxxxxxx | |||||||
| Name: | Xxxxxx Xxxxxxx | |||||||
| Title: | Treasurer | |||||||
| Accepted and Agreed to: XXXXXX COMMERCIAL PAPER INC., as Administrative Agent |
||||
| By: | Xxxxxxx X. Xxxxxx | |||
| Name: | XXXXXXX X. XXXXXX | |||
| Title: | MANAGING DIRECTOR | |||
