Table of Contents
									Page
ARTICLE I
DEFINITIONS
ARTICLE II
TRANSITION SERVICES
2.1					Transition Services and Fees				7
2.2					Third-Party Vendor Costs				8
2.3					Special Services and Fees				8
2.4					Schedule B Fee				9
2.5					Service Administration				9
2.6					Supplier to Pay Its Affiliates and Vendors				9
2.7					Supplier Cutover Planning Services				9
2.8					Performance by Buyers and FairPoint				9
2.9					Services Not to Be Withheld				10
ARTICLE III
SCOPE OF SERVICES; CHANGES
3.1					General Scope				10
3.2					Changes in Scope				11
ARTICLE IV
CUTOVER REPORTS
4.1				Cutover Plan					12
ARTICLE V
THIRD-PARTY INTELLECTUAL PROPERTY
5.1				Intellectual Property					14
5.2				Obtaining Waivers or Licenses					15
5.3				Alternatives					16
ARTICLE VI
PAYMENT FOR TRANSITION SERVICES

 

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								Page
6.1				Payment Upon Termination				17
6.2				Closing Date Service Payments				17
6.3				Subsequent Service Invoices and Payment.				18
6.4				Invoices				18
6.5				Late Payment				18
6.6				Surviving Obligations				19
ARTICLE VII
SERVICE LEVEL COMMITMENTS
7.1				General				19
7.2				Supplier Cooperation				19
7.3				Correction				19
ARTICLE VIII
PERSONNEL AND SYSTEMS PROVIDING TRANSITION SERVICES
8.1				Personnel				20
8.2				Intellectual Property, Equipment and Systems				20
ARTICLE IX
INTENTIONALLY OMITTED
ARTICLE X
EMPLOYMENT OF CONTRACTORS OR THIRD PARTIES
10.1				Subcontractors				20
10.2				Subcontractor Payments				21
ARTICLE XI
SINGLE POINT OF CONTACT; DISPUTE RESOLUTION
11.1				Single Point of Contact				21
11.2				Dispute Resolution				21
ARTICLE XII
POLICIES, PROCEDURES AND TRAINING

 

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12.1								Policies and Procedures		22
12.2								Training		22
12.3								No Warranty		22
ARTICLE XIII
TERM
13.1							Term			22
13.2							Full Term Cutover Notice			23
13.3							Notice of Readiness for Early Cutover in Respect of Schedule A, Schedule C and Schedule D Services.			23
13.4							Notice of Readiness for Early Cutover in Respect of Schedule A Services and Schedule D Services Only			24
13.5							Notice of Readiness for Early Cutover in Respect of Schedule C Services Only			24
13.6							Cutover Date Notice			24
ARTICLE XIV
TERMINATION
14.1							Termination of Agreement.			25
14.2							Post Expiration Continuation of Services			26
14.3							Survival			26
ARTICLE XV
LIMITATION ON LIABILITIES
15.1						Limitation on Liabilities				26
15.2						No Warranties; No Special Damages				27
15.3						Exceptions to Limitations				27
ARTICLE XVI
INDEMNIFICATION
16.1					Indemnification by Surviving Corporation					27
16.2					Indemnification by Supplier					28
16.3					Tax Indemnification					28
16.4					Indemnification Procedure- Defense of Claims.					28
16.5					Surviving Liability.					30
ARTICLE XVII
TAXES

 

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										Page
17.1								Taxes		31
ARTICLE XVIII
RECORDS; ACCESS
18.1							Records			31
18.2							Access to Books, Records, Personnel			32
ARTICLE XIX
DISPUTE RESOLUTION
19.1						General				32
19.2						Initiation				32
19.3						Arbitration Request				33
19.4						Injunctive Relief and Specific Performance.				33
ARTICLE XX
PLANT WORK RULES AND RIGHT OF ACCESS
20.1					Compliance					34
20.2					Access to Facilities					34
20.3					Computer Matters					34
ARTICLE XXI
INSURANCE
21.1				Coverage						35
21.2				Self-insurance						35
21.3				Rating						35
21.4				Subrogation						35
21.5				Indemnification						36
ARTICLE XXII
MISCELLANEOUS
22.1				Notices						36
22.2				Assignment; Exclusivity						38
22.3				Amendments						38
22.4				Headings/Captions						38
22.5				Entire Agreement						38
22.6				Waiver						39

 

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				Page
22.7		Counterparts		39
22.8		Governing Law		39
22.9		Further Assurances		40
22.10		Severability		40
22.11		No Third-Party Beneficiary		40
22.12		Independent Contractor		40
22.13		Governing Provisions		40
22.14		Force Majeure		41
22.15		Confidentiality		41

 

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TRANSITION SERVICES AGREEMENT

Transition Services Agreement, dated as of January 15, 2007, by and among Verizon Information Technologies LLC (“ Supplier ”), Northern New England Telephone Operations Inc. and Enhanced Communications of Northern New England Inc. (collectively, “ Buyers ”) and FairPoint Communications, Inc. FairPoint (“ FairPoint ” and following the Closing, the “ Surviving Corporation ”).

RECITALS

WHEREAS, Verizon Communications Inc., Northern New England Spinco Inc., and FairPoint have entered into an Agreement and Plan of Merger, dated as of the date hereof (the “ Merger Agreement ”), pursuant to which FairPoint will be the surviving entity in a merger (“ Merger ”) with Northern New England Spinco Inc.; and Verizon Communications Inc. and Northern New England Spinco Inc. have entered into a Distribution Agreement, dated as of the date hereof (the “ Distribution Agreement ”);

WHEREAS, Buyers will be, after the consummation of the Merger, subsidiaries of the Surviving Corporation;

WHEREAS, after the Merger, the Surviving Corporation and Buyers will operate certain businesses including, but not limited to, businesses which provide local exchange and long distance telecommunications services in the States of Maine, New Hampshire and Vermont which businesses were formerly operated by Affiliates of Supplier;

WHEREAS, Supplier and its Affiliates have employees with expertise and capabilities to provide the Transition Services described herein and in the attached Schedules; and

WHEREAS, Buyers, FairPoint and Supplier (each, a “ party ” and collectively, the “ parties ”) desire to enter into an agreement whereby Supplier and its Affiliates, on the terms and conditions set forth in this Agreement, will provide certain Transition Services to the Buyers exclusively for the benefit of the Spinco Business and not for the benefit of FairPoint’s or Surviving Corporation’s other Affiliates.

AGREEMENT

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties agree as follows.

 

ARTICLE I

DEFINITIONS

Capitalized terms used in this Agreement or its Schedules but not defined herein or therein shall have the meanings given them in the Merger Agreement.  Other capitalized terms, as used herein, have the meanings set forth below or elsewhere in this Agreement.

“ Agreement ” means this Transition Services Agreement, together with the Schedules attached hereto and made a part hereof.

“ Applicable Rate ” means the three-month LIBOR rate published on Telerate Page 3750 as of 11:00 a.m. London time, on the date which is two days prior to the date such rate is determined less 10 basis points, such rate to be reset every 90 days.

“ Approved Third-Party Intellectual Property ” has the meaning set forth in Section 5.1( ii ) hereto.

“ Buyers ” has the meaning set forth in the preamble hereto.

“ Change of Control ” means ( i ) any transaction or series of transactions in which any person or group (within the meaning of Rule 13d-5 under the Securities Exchange Act and Sections 13(d) and 14(d) of the Securities Exchange Act) that is a direct or indirect “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act), acquires by way of a stock issuance, stock purchase, tender offer, merger, consolidation or other business combination or otherwise, greater than 50% of the total voting power entitled to vote in the election of directors of either of the Buyers, or the Surviving Corporation, ( ii ) any merger, consolidation, reorganization or other business combination with a Person in which either of the Buyers or the Surviving Corporation does not survive, ( iii ) any merger, consolidation, reorganization or other business combination in which either of the Buyers or the Surviving Corporation survives, but the shares of common stock outstanding of either of the Buyers or Surviving Corporation or its ultimate controlling Affiliate immediately prior to such merger, consolidation, reorganization or other business combination represent 50% or less of the voting power of either of the Buyers or the Surviving Corporation after such merger, consolidation, reorganization or other business combination and ( iv ) any transaction or series of transactions in which assets comprising more than 50% of the total assets of either of the

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Buyers or Surviving Corporation and its Subsidiaries (in value) are sold to another Person.

“ Change Request ” has the meaning set forth in Section 3.2(b) hereto.

“ Conforming Change ” has the meaning set forth in Section 3.2(a) hereto.

“ Contributing Companies ” has the meaning set forth in the Distribution Agreement.

“ Cutover ” has the meaning set forth in Section 4.1(b) hereto.

“ Cutover Plan ” has the meaning set forth in Section 4.1(e) hereto.

“ Cutover Planning Committee ” has the meaning set forth in Section 4.1(a) hereto.

“ Direct Claim ” has the meaning set forth in Section 16.4(b).

“ Distribution Agreement ” has the meaning set forth in the Recitals hereto.

“ FairPoint ” has the meaning set forth in the preamble hereto.

“ FairPoint Cutover Preparation Tasks ” has the meaning set forth in Section 4.1(f).

“ Final Cutover Date ” has the meaning set forth in Section 13.6 hereto.

“ Fixed Monthly Service Fee ” has the meaning set forth in Section 2.1(a) hereto.

“ Force Majeure Event ” has the meaning set forth in Section 22.14 hereto.

“ Indemnitee ” means a Supplier Indemnitee or a FairPoint Indemnitee, as the case may be.

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“ Indemnitor ” means any person or entity required to provide indemnification under this Agreement.

“ Initial Payment” has the meaning set forth in Section 6.2 hereto.

“ Holdover Period ” has the meaning set forth in Section 14.2.

“ Intellectual Property ” has the meaning set forth in the Intellectual Property Agreement which is one of the Transaction Agreements as defined in the Merger Agreement.

“ Losses ” has the meaning set forth in the Merger Agreement.

“ Merger ” has the meaning set forth in the Recitals hereto.

“ Merger Agreement ” has the meaning set forth in the Recitals hereto.

“ Notice Effective Date” has the meaning set forth in Sections 13.3, 13.4 and 13.5 hereto.

“ Preliminary Cutover Plan ” means the written document prepared by Supplier which includes, without limitation, a plan which identifies specific business and systems deliverables to be delivered by Supplier to Buyer in stages.  The plan includes, without limitation, the extraction of data contained in certain electronic databases of the Spinco Business in two test extracts and one final extract and the transfer of such data to the Surviving Corporation or its designee in an existing format defined by Supplier.  The plan shall also include a description of the activities that must be performed by Supplier and Buyers to transfer customer service responsibility for long distance customers of the Spinco Business to Buyers. Additionally, the plan shall include a description of the activities that must be undertaken by Supplier and Buyers to transfer customer service responsibility for the dial-up, DSL and fiber to the premises (aka Fios) data and other ISP customers of Spinco Business to Buyers.  Further, the plan shall also include a description of the activities that must be undertaken by Supplier and Buyers should Schedule A Services and Schedule D Services be terminated prior to the termination of Schedule C Services and a description of the activities that must be undertaken by Supplier and Buyers if Schedule C Services were to be terminated prior to the termination of Schedule A Services and Schedule D Services and a description of the activities that

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must be undertaken by Supplier and Buyers if Schedule C Services were to be terminated prior to the termination of Schedule A Services and Schedule D Services.

“ Preliminary FairPoint Cutover Preparation Tasks ” means a written document prepared by FairPoint which identifies those activities that FairPoint must undertake and complete to be prepared for cutover.

“ Schedule A Fee” has the meaning set forth in Section 2.1(b) hereto.

“ Schedule A Services ” has the meaning set forth in Section 2.1 hereto.

“ Schedule B Fee ” has the meaning set forth in Section 2.4 hereto.

“ Schedule B Services ” has the meaning set forth in Section 2.4 hereto.

“ Schedule C Fees ” has the meaning set forth in Section 2.1(c) hereto.

“ Schedule C Services ” has the meaning set forth in Section 2.1 hereto.

“ Schedule D Fees ” has the meaning set forth in Section 2.1(d) hereto.

“ Schedule D Services ” has the meaning set forth in Section 2.1 hereto.

“ Senior Executive Officers ” means, in the case of FairPoint, Peter Nixon, and in the case of Supplier, Stephen E. Smith.

“ Service Modification ” has the meaning set forth in Section 3.2(b) hereto.

“ Settlement Requirements ” has the meaning set forth in Section 16.4(a).

“ Single Point of Contact ” has the meaning set forth in Section 11.1 hereto.

“ Special Services ” has the meaning set forth in Section 2.3 hereto.

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“ Special Services Fee ” has the meaning set forth in Section 2.3 hereto.

“ Spinco Business ” has the meaning set forth in the Distribution Agreement.

“ Supplier ” has the meaning set forth in the preamble hereto.

“ Supplier License Fees ” has the meaning set forth in Section 2.2 hereto.

“ Supplier Cutover Planning Services ” has the meaning set forth in Section 4.1(b) hereto.

“ Supplier Indemnitees ” has the meaning set forth in Section 16.1 hereto.

“ Surviving Corporation ” has the meaning set forth in the preamble hereto.

“ Team Leader ” has the meaning set forth in Section 4.1(a) hereto.

“ Termination Schedule ” has the meaning set forth in Section 4.1(a) hereto.

“ Tax ” has the meaning set forth in the Merger Agreement.

“ Third Party Claim ” has the meaning set forth in Section 16.4(a).

“ Third-Party Contractors ” has the meaning set forth in Section 10.1 hereto.

“ Third-Party Intellectual Property ” has the meaning set forth in the Merger Agreement.

“ Third-Party Vendor Costs ” has the meaning set forth in Section 2.2 hereto.

“ Third-Party Vendors ” has the meaning set forth in Section 2.2 hereto.

“ Transition Service ” has the meaning set forth in Section 2.1 hereto.

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“ Unit-Based Service Fee ” has the meaning set forth in Section 2.1(d) hereto

ARTICLE II

TRANSITION SERVICES

2.1           Transition Services and Fees .

(a)   Following the Closing, and subject to the terms and conditions hereof, Supplier shall arrange for, procure, aggregate and otherwise cause its Affiliates and their employees to provide to the Buyers for use in the Spinco Business during the term hereof the services listed on Schedule A (collectively “ Schedule A Services ” and each service a “ Schedule A Service ”), the services listed on Schedule C (collectively, the Schedule C Services ” and each service, a “ Schedule C Service ”) and the services listed on Schedule D (collectively the “ Schedule D Services ” and each service a “ Schedule D Service ”) the Schedule A Services, Schedule C Services and the Schedule D Services  (collectively, the “ Transition Services ” and each service, a “ Transition Service ”).  Each of Schedule A, Schedule C  and  Schedule D includes, for each Transition Service, ( i ) a description of the service (or group of related services) to be performed and ( ii ) significant performance requirements of Supplier or its Affiliates and Buyers and other special terms and conditions relating directly to the services to be performed.

(b)   The Schedule A Services shall be provided for the following monthly fee (each a “ Schedule A Fee ”): 

For the first eight months after the closing Date:		$14,200,000 per month
For each month beginning in the ninth month after closing		$500,000 less than for the prior month
For the thirteenth month		$14,700,000 per month
For each month following the thirteenth month until termination of the Schedule A Services		$500,000 more than the amount paid with respect to the prior month, provided that no increase shall occur after 60 calendar days after the Notice Effective Date with respect to early termination pursuant to Section 13.3, 13.4 or 13.5 hereof.

 

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For example, in the tenth month, the Schedule A Fee shall be $13,200,000 and in the fourteenth month the Schedule A Fee shall be $15,200,000.  The Schedule A Fee is exclusive of any Taxes, which shall be allocated as provided in Article XVII.

(c)           The Schedule C Services shall be provided for the fees described in Schedule C (the “ Schedule C Fees ”), stated as a monthly fixed payment (a “ Fixed Monthly Service Fee ”).  The Schedule C Fees are exclusive of any Taxes, which shall be allocated as provided in Article XVII.

(d)           The Schedule D Services shall be provided for the fees described in Schedule D (the “Schedule D Fees”), stated as a monthly fixed payment (a “ Fixed Monthly Service Fee ”) or a “Unit Based Service Fee” as applicable. The Schedule D Fees are exclusive of any Taxes, which shall be allocated as provided in Article XVII.

2.2           Third-Party Vendor Costs .  In order to provide the Transition Services, the parties acknowledge and agree that it may be necessary for Supplier to pay third-party suppliers or vendors (“ Third-Party Vendors ”) incremental or other costs and expenses or new costs or expenses incidental to Supplier’s providing transition support for the Buyers, including without limitation, product and service fees, programming fees, Taxes, maintenance fees, initiation and set-up costs and license fees and costs (including attorney’s fees) associated with any obtaining licenses, approvals, waivers or rights relating to Third-Party Intellectual Property as described in Article V.  Collectively such incremental costs and expenses payable to third parties described in the preceding sentence are “ Third-Party Vendor Costs ”.  Third-Party Vendor Costs associated with Schedule A Services shall be paid by Supplier.  Third-Party Vendor Costs associated with Schedule C and Schedule D Services are in addition to the Schedule C  and Schedule D Fees described in Section 2.1(c) and 2.1(d) and are payable by Buyers or FairPoint to Supplier pursuant to Article VI.

2.3           Special Services and Fees .  Buyers or FairPoint may request that Supplier or its Affiliates participate in meetings, telephone calls, or other consultations for Buyers or FairPoint to perform their respective requirements as described in Schedule A,

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Schedule C or Schedule D (“ Special Services ”).  Supplier shall consider all requests for Special Services in good faith, and shall provide such Special Services, where in Supplier’s judgment Supplier or its Affiliates can provide such Special Services without materially adversely disproportionately or unreasonably impacting Supplier’s or its Affiliates’ then current operations and planned future work loads and without violating any applicable law, regulation or agreement; and further provided that Supplier and its Affiliates shall have no obligation to share Verizon Proprietary Business Information or provide any training to FairPoint or its representatives or agents.   After the first 500 hours of Special Services which shall be provided by Supplier to FairPoint without cost and related to planning for the receipt of the Transition Services,  FairPoint shall pay Supplier for Special Services at the rate of $125 per hour (the “ Special Service Fee ”).  FairPoint shall also reimburse Supplier for all reasonable pre-approved out-of-pocket travel-related costs and expenses in connection with providing Special Services hereunder.

2.4           Schedule B Fee .  Prior to the Closing, Supplier and its Affiliates shall provide the services listed in Schedule B (the “ Schedule B Services ”) for the fee described on Schedule B (the “ Schedule B Fee ”), which fee is exclusive of Taxes.  FairPoint shall pay Supplier the Schedule B Fee in the amount and at the time specified in Schedule B.

2.5           Service Administration .  Supplier shall administer this Agreement with respect to the delivery of Transition Services.  As more fully described in Article XI and subject to specific arrangements set forth in Schedule A, Schedule C and Schedule D, Supplier shall coordinate all communications, questions and problem resolution with respect to all Transition Services.

2.6           Supplier to Pay Its Affiliates and Vendors .  Without limiting the obligation of the Buyers under Article VI, Supplier shall be responsible to pay its Affiliates for any Transition Services or Special Services provided and pay Third-Party Vendors for Third-Party Vendor Costs.

2.7           Supplier Cutover Planning Services .  Supplier shall provide the Supplier Cutover Planning Services described in Article IV at no additional cost.

2.8           Performance by Buyers and FairPoint .  Subject to Section 14.2, the Buyers and FairPoint shall perform in a timely fashion those tasks, and provide the personnel, facilities and accurate information, as are expressly set forth in the Schedules hereto.  In addition, the Buyers and FairPoint agree to use commercially-reasonable efforts to

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cooperate with Supplier and its Affiliates, and to perform, in a timely fashion, those additional commercially-reasonable tasks directly related to the performance of the Transition Services which Supplier may reasonably request.  FairPoint’s and Buyers’ failure to cooperate with Supplier in the manner requested shall not relieve Supplier of its obligations hereunder, except and to the extent that such failure would preclude or materially interfere with performance by Supplier of a particular component of the Transition Services.

2.9           Services Not to Be Withheld .  Subject to Supplier’s rights under Article XIV and provided none of  Buyers or FairPoint is in default of its obligation to pay fees or has refused to pay fees hereunder in bad faith, or has had a Change of Control, Supplier shall not intentionally withhold the provision of  any or all of the Schedule A Services, or substantially all of the Schedule C Services or Schedule D Services for any reason during the term of this Agreement.  If Supplier breaches or threatens to breach the provisions of this Section, Supplier agrees that FairPoint and Buyers will be irreparably harmed, and, without any additional findings of irreparable injury or harm or other considerations of public policy, FairPoint and/or Buyers shall be entitled to apply to a court of competent jurisdiction for and, provided FairPoint and/or Buyers follow the appropriate procedural requirements (including notice and an affidavit that none of Buyers or FairPoint has failed to make all undisputed payments or is in material breach), Supplier shall not oppose the granting of an injunction compelling specific performance by the Supplier of its obligations under this Agreement without the necessity of posting any bond or other security.  Supplier further agrees not to oppose any such application for injunctive relief.

ARTICLE III

SCOPE OF SERVICES; CHANGES

3.1           General Scope .  Each Transition Service described on Schedule A, Schedule C and Schedule D is limited to such functionality as was included in the same service which was provided to Verizon New England Inc. or any of the Contributing Companies, as applicable, on the date immediately prior to the Closing Date, unless the service descriptions on the Schedules hereto specifically indicate otherwise.  Unless otherwise specifically stated in the Schedules hereto, Transition Services are provided only in respect of the Spinco Business as conducted (or substantially as conducted) on the Closing Date by Buyers or their Affiliates as successors to one or more of the Contributing Companies, as defined in the Distribution Agreement, and such services are not provided in respect of, or in support of, or in combination with, any other business operation or interests of Buyers, Surviving Corporation or their Affiliates.  Except as specifically described in the Schedules hereto or this Agreement, neither Supplier nor its

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Affiliates shall have any obligation to provide any additional, modified, general or customized services.

3.2           Changes in Scope .

(a)   The parties acknowledge and agree that Supplier and its Affiliates shall provide the Transition Services utilizing systems, databases, reports, formats and processes used to support Verizon New England Inc. (and the Contributing Companies as to the respective service they received) immediately prior to the Closing Date, and except as otherwise specifically described herein or in the Schedules hereto, Supplier and its Affiliates are not obligated to make any modification or customization of any such systems, databases, reports, formats or processes.  Supplier and its Affiliates will adhere to the policies, practices and methodologies used to support Verizon New England Inc. and the Contributing Companies immediately prior to the Closing Date.  During the term of this Agreement, Supplier may at any time modify the Transition Services, as necessary or desirable, to allow for continued or conforming use of the then-existing systems and databases and to allow for continued or conforming adherence to the then-existing policies, practices and methodologies, which Supplier or its Affiliates will use to provide similar services to Verizon New England Inc. or the Contributing Companies after the Closing (each, a “ Conforming Change ”).  Provided that the Conforming Change complies with applicable law, neither Buyers nor Surviving Corporation shall be responsible for any additional costs in connection with such Conforming Change, and Supplier shall reimburse Buyers for all of Buyers’ reasonable out-of-pocket costs in connection with the implementation of such Conforming Change.  Prior to the implementation of a Conforming Change, Supplier will provide the Buyers with written notice of such change contemporaneously with the notice provided to Verizon New England Inc. or the Contributing Companies, as applicable.

(b)   In addition to Conforming Changes, during the term, the Buyers or FairPoint may request that Supplier agree to modify any of the Transition Services to comply with then-existing law or requirements of a Governmental Authority (a “ Service Modification ”).  Buyers or FairPoint shall deliver to Supplier’s Single Point of Contact (as defined in Article XI) a written description of the proposed change (each, a “ Change Request ”).

(c)   Supplier shall provide all proposed Service Modifications.  Supplier shall make commercially reasonable efforts to complete and implement Service Modifications at the time or on the schedule required by law or requirements of the Governmental Authority, taking into account Supplier’s pre-existing work load,

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service obligations and requirements of law in respect of its Affiliates.  The Supplier’s time expended to implement a Service Modification (other than a Service Modification required to be implemented by applicable law or any governmental order generally applicable to all telecommunications operators as in effect prior to the Closing Date but not any Service Modification which is part of any order of a Governmental Authority issued in connection with the Merger) shall be billed to Buyers as Special Services.  The Buyers shall reimburse Supplier for its costs and out-of pocket expenses associated with implementation and delivery of any post-Closing Service Modification (other than a Service Modification required to be implemented by applicable law or any governmental order generally applicable to all telecommunications operators as in effect prior to the Closing Date but not any Service Modification which is part of any order of a Governmental Authority issued in connection with the Merger).  FairPoint shall reimburse Supplier for its cost and out-of-pocket expenses associated with implementation and delivery of any pre-Closing Service Modification (except as provided above).

(d)   If a Conforming Change occurs or a Change Request is approved in accordance with this Article III, the definition of Transition Services and the Schedules hereto will be deemed amended to reflect the implementation of the Conforming Change or Service Modification as well as any other terms and conditions agreed upon by the parties in writing.

ARTICLE IV

CUTOVER REPORTS

4.1           Cutover Plan .

(a)   As of the date hereof, Supplier and FairPoint shall establish a planning committee (the “ Cutover Planning Committee ”) consisting of two representatives of both Supplier and FairPoint (or their Affiliates), to discuss and plan the delivery by Supplier to Buyer of specific business and system deliverables, including without limitation the extraction of data contained in certain electronic databases of the Supplier no later than 15 months after the Closing Date. Each of FairPoint, on the one hand, and the Supplier, on the other hand, shall designate a member of the Cutover Planning Committee as team leader (“ Team Leader ”) who shall have the primary responsibility and accountability for making team assignments for his/her party, coordinating communications between party teams, and assessing and reporting progress planning and implementing the Cutover Plan as described below.  Each Party will devote adequate planning resources to their portion of the Cutover Planning

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Committee to allow for timely planning consistent with timelines established in the Cutover Plan, the Deliverable Schedule and FairPoint Cutover Preparation Tasks.  The Parties expect to invite other employees or contractors to participate in specialized areas related to the Cutover Plan based on their areas of expertise and responsibility as it relates to the operation of the Spinco Business.  The activities of the Cutover Planning Committee shall be conducted consistent with all applicable requirements of law, regulation and contracts, including antitrust and telecommunications laws.

(b)   Within 30 calendar days following the date hereof, the Cutover Planning Committee shall hold its initial meeting to commence planning and preparation for the Buyers to cease using all Transition Services and thereafter to operate the Spinco Business using FairPoint’s and/or Surviving Corporation’s own systems and services or those of other third parties (the “ Cutover ”).  The services provided by the Supplier in connection with planning the Cutover are “ Supplier Cutover Planning Services ”.

(c)   Within 90 calendar days following the date hereof, Supplier shall deliver to FairPoint Supplier’s preliminary draft of a cutover plan (the “ Preliminary Cutover Plan ”) The Preliminary Cutover Plan shall include, among other provisions, a plan for activities and tasks that will be completed prior to and immediately following the Cutover Date, and those matters relating to ISP cutover described on Schedule E hereto.

(d)   The Cutover Planning Committee shall review the Preliminary Cutover Plan.  Within 30 calendar days following receipt, FairPoint may make suggestions for modification and amendment to the Preliminary Cutover Plan.  Supplier shall review all such suggestions in good faith and consider, among other factors, their commercial reasonableness, technical feasibility, the anticipated implementation period, available Supplier and Affiliate resources, and existing Supplier and Affiliate obligations and activities.  Within 30 calendar days following receipt of the FairPoint suggestions for modification, Supplier shall accept or reject any or all such suggestions in its reasonable discretion and resubmit to FairPoint the Preliminary Cutover Plan.  In addition, Supplier will provide a detailed deliverable schedule based on a target cutover date. This schedule, which shall become part of the Cutover Plan, shall include projected time lines for delivery of Supplier deliverables which are sufficient to allow Buyers’ testing where applicable, and the final deliverable dates in respect of all portions of the Spinco Business.  The final documents delivered to FairPoint by Supplier after good faith consideration of FairPoint modification suggestions shall constitute the “ Cutover Plan ” Under no circumstances may the Cutover Plan contradict the express terms of this Agreement, unless unanimously agreed to by the Cutover Planning Committee.

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(e)   Within 90 calendar days following the date hereof, FairPoint shall deliver to Supplier a preliminary description of its proposed cutover tasks (the “Preliminary FairPoint Cutover Preparation Tasks”).  The Preliminary FairPoint Cutover Preparation Tasks shall include, among other provisions, a suggested cutover date using a target cutover of approximately15 months from the date hereof, a plan for activities and tasks related to pre-cutover acceptance, testing and processing of Supplier’s data extracts, and the plan to establish FairPoint systems and processes in order to allow Buyers to function independent of Supplier and its Affiliates.[ The Preliminary FairPoint Cutover Preparation Tasks will provide for post-exit regular data feeds to the Supplier such that the Supplier may meet its Schedule A Service obligations related to DSL service with the understanding that such data feeds are provided at no cost to Supplier.]

(f)    The Cutover Planning Committee shall review the Preliminary FairPoint Cutover Preparation Tasks.  Within 30 days following receipt, Supplier shall review and may make suggestions in its reasonable discretion for modification and amendment to the Preliminary FairPoint Cutover Preparation Tasks.  Within 30 days after receipt of Supplier’s suggestions for modification and suggested cutover date, FairPoint shall accept any or all such suggestions and resubmit to Supplier the Preliminary FairPoint Cutover Preparation Tasks.  The final document delivered to Supplier after incorporation of Supplier modification suggestions shall constitute the “FairPoint Cutover Preparation Tasks”.

(g)   In addition to the scheduled reviews and meetings described in the Section 4.1, after delivery of the Cutover Plan, the Cutover Planning Committee and/or Team Leaders shall have additional meetings (telephonically or otherwise) not more frequently than weekly to consider the status of the various plans and consider any mutually-agreed additional plans or schedules.

ARTICLE V

THIRD-PARTY INTELLECTUAL PROPERTY

5.1           Intellectual Property .  Buyers understand that certain rights and licenses to use Third-Party Intellectual Property may be required to provide Transition Services.  Within 60 days after the date of this Agreement, Supplier will commence commercially-reasonable efforts to identify licensors of Third-Party Intellectual Property and determine whether consents or waivers are necessary to be obtained from such licensors in order to provide Transition Services.

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5.2           Obtaining Waivers or Licenses .

(a)   Subject to the last sentence of Section 6.1, within 90 days after the date of the Agreement, Supplier or its Affiliates shall commence commercially-reasonable efforts to obtain, at Supplier’s sole cost and expense, any necessary rights, waivers or licenses to use any and all Third-Party Intellectual Property necessary to provide Schedule A Services and Schedule B Services to the Buyers.  Subject to any contrary provision of Schedule C or Schedule D, Supplier shall make similar efforts to obtain any necessary rights, waivers or licenses to use any and all Third-Party Intellectual Property necessary to provide Schedule C Services and Schedule D Services at Buyers’ sole cost and expense.

(b)   To the extent licensors of Third-Party Intellectual Property demand payment of license or other fees for the right to use Third-Party Intellectual Property to deliver Schedule C Services or Schedule D Services, Supplier shall use commercially-reasonable efforts to communicate such demands to FairPoint.  FairPoint may direct Supplier to accept or reject such licensor demands and may authorize Supplier in making counteroffers and otherwise direct fee negotiations for a period not to exceed 30 days after receipt of licensor demands.

(c)   If no agreement with licensors of Third-Party Intellectual Property in connection with Schedule C Services is reached within 30 days after such licensor’s first demand, Supplier will resume its sole and exclusive efforts to obtain necessary licenses and rights on commercially-reasonable terms.  Supplier may enter into agreements to pay fees in its sole discretion.  All negotiated license fees in respect of Schedule C Services and Schedule D Services shall be paid by Supplier as Third-Party Vendor Costs.  FairPoint shall reimburse Supplier for all such fees paid as described in Article VI.

(d)   FairPoint agrees to reimburse Supplier for all of its costs and expenses incurred in seeking licenses, waivers or rights from all licensors of Third-Party Intellectual Property in connection with Schedule C Services and Schedule D Services including, without limitation, attorneys’ fees which are Third-Party Vendor Costs.

(e)   FairPoint agrees to cooperate as reasonably necessary to assist Supplier with obtaining such licenses.  From time to time, Supplier may provide FairPoint with a list of Third Party Intellectual Property for which it is seeking waivers or licenses as described in subsection (a) above. Within 30 days after receipt of any such list FairPoint shall advise Supplier in writing of any such Third Party Intellectual Property,

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that FairPoint has a license (or will have immediately following Closing) such that it will not be necessary for Supplier to obtain licenses or waivers in respect of the same.

(f)    Supplier’s obligation to provide each Transition Service shall be contingent upon receipt of all necessary third-party approvals, licenses and rights.  Failure to receive such approvals, licenses or rights on a timely basis, after Supplier uses its commercially-reasonable efforts, shall be cause for termination of this agreement with respect to any and all Transition Services affected by the failure to receive such approvals, licenses or rights.

5.3           Alternatives .

(a)   If after commercially-reasonable efforts to obtain a license have been undertaken as described in Section 5.2 above, any Third-Party Intellectual Property in connection with Schedule C Services or Schedule D Services is not available to Supplier for any reason, Supplier shall suggest specific product alternatives or alternative providers, if known, and if available, provide such information to FairPoint within 120 calendar days of the date Supplier is finally advised that such Third-Party Intellectual Property is not available.  Supplier shall obtain a license for the most commercially-reasonable alternative, at FairPoint’s sole cost and expense in connection with Schedule C Services or Schedule D Services.  If Supplier does not suggest an alternative in respect of Schedule C Services or Schedule D Services as applicable, then FairPoint may suggest an appropriate commercially-available alternative for Supplier’s approval, which approval shall not be unreasonably withheld.  Supplier shall obtain a license to the alternative suggested by FairPoint, at FairPoint’s sole cost and expense in connection with Schedule C Services and Schedule D Services as Third-Party Vendor Costs.   If no alternatives are available or approved, then the affected Transition Service shall not be provided.

(b)   If Third-Party Intellectual Property is only available to be licensed directly by Buyers or FairPoint, Supplier shall so notify FairPoint and FairPoint shall obtain for its own account or for Buyers’ account and at FairPoint’s cost and expense (not a Third-Party Vendor Cost) in connection with Schedule C Services and Schedule D Services and at Supplier’s cost and expense in connection with Schedule A and B Services,  such Third-Party Intellectual Property and the right for Supplier to use such Third-Party Software in the provision of Transition Services for a term not to exceed 16 months after the Closing Date.

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(c)   FairPoint Intellectual Property .  “ FairPoint Intellectual Property ” is that Intellectual Property created by FairPoint or developed by a third party on behalf of or at the direction of FairPoint, in which FairPoint has all right, title and interest and which is utilized in the performance of the Transition Services.  FairPoint grants Supplier a limited, non-exclusive, revocable, worldwide, paid up license to use FairPoint Intellectual Property solely for the purpose of providing the Transition Services.

ARTICLE VI

PAYMENT FOR TRANSITION SERVICES

6.1           Payment Upon Termination .  In the event that the Merger Agreement is terminated prior to the Closing in circumstances described in Section 9.3(b) of the Merger Agreement, Supplier will invoice FairPoint for ( i ) any Special Services Fees, including all pre-approved travel costs in connection with the performance of such Special Services, which for greater certainty, does not include any fee for the 500 hours of Special Services described in Section 2.3 above, or any Special Service Fees which have been paid  previously ( ii ) the number of dollars which is equal to the number of hours Supplier, its Affiliates or contractors have labored to provide Schedule B Services multiplied by the Special Service Fee in an amount not to exceed $34 million; (iii) the amount of Qualified Transition Expenses that exceeds $20 million; and ( iv ) (without duplication) any and all Taxes arising from or relating to such payments.  FairPoint shall pay such invoice, less any amounts disputed in writing, within 15 calendar days of receipt.  Notwithstanding anything herein to the contrary, Supplier shall be under no obligation to incur any fees other than Special Service Fees prior to the date when FairPoint’s stockholders have approved the merger contemplated by the Merger Agreement.

6.2           Closing Date Service Payments .  On the Closing Date, the Buyers shall pay Supplier in advance the sum of: (i) Fourteen Million Two Hundred Thousand Dollars ($14,200,000) for Schedule A Services, (ii) the Schedule C Fees for one month, (iii) the Schedule D Fixed Monthly Service Fees for one month (iv) Third-Party Vendor Costs, if any covering the Schedule C Services and Schedule D Services to be provided during the first month after Closing plus, (v) any Taxes arising from or relating to such payments.  The payments described in Sections (i) through (v) collectively the “Initial Payment”.

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6.3           Subsequent Service Invoices and Payment .

(a)   Prior to the beginning of the second month after Closing the Supplier will invoice in advance for each month of the term thereafter for (i) the Schedule A Fee at the rate specified in Section 2.1(b), (ii) the Schedule C Fixed Monthly Service Fee, (iii) the Schedule D Fixed Monthly Service Fee (iv) Third-Party Vendor Costs, if any, (without duplicating any Third-Party Vendor Fee previously paid in advance pursuant to Section 6.2(iii) above) covering Schedule C  Services and Schedule D Services to be provided in the immediately-following month, and (iv) any Taxes arising from or relating to such payments.  The Buyers shall pay such invoice, less any amounts disputed in writing, within 15 calendar days of receipt.

(b)   Within 30 calendar days after the end of the first month after Closing and each month of the term thereafter and within 30 calendar days after the last day of the term hereof, Supplier shall invoice the Buyers in arrears for ( i ) the Schedule D Unit-Based Service Fees and Special Service Fees covering all Transition Services provided in the immediately preceding calendar month, or a pro-rata portion of such fees for any partial month and ( ii ) any Taxes arising from or relating to such payments.  The Buyers shall pay each such invoice, less any amounts disputed in writing, within 15 calendar days of receipt.

(c)   If the Buyers or FairPoint in good faith dispute owing any amount stated on an invoice, they shall notify Supplier in wr