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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 7, 1999
REGISTRATION NO. 333-[ ]
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ALEC HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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<S> <C> <C>
DELAWARE 6719 52-2126573
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
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510 L. STREET, SUITE 500, ANCHORAGE, ALASKA 99501 (907) 297-3000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
------------------------------
MICHAEL E. HOLMSTROM WITH COPIES OF ALL COMMUNICATIONS TO:
SENIOR VICE PRESIDENT AND ELLIOTT V. STEIN, ESQ.
CHIEF FINANCIAL OFFICER WACHTELL, LIPTON, ROSEN & KATZ
ALEC HOLDINGS, INC. 51 WEST 52ND STREET
500 L. STREET, SUITE 500 NEW YORK, NEW YORK 10019
ANCHORAGE, ALASKA 99501 (212) 403-1000
(907) 297-3000
(Name, Address, Including Zip Code,
and Telephone Number, Including Area
Code, of Agent for Service)
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon
consummation of the Exchange Offer referred to herein.
------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER DEBENTURE PRICE (1) FEE (2)
<S> <C> <C> <C> <C>
13% Senior Discount Debentures due 2011 $46,928,435 53.272605% $25,000,000 $6,950
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Calculated pursuant to Rule 457 under the Securities Act.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES OR ACCEPT ANY OFFER TO BUY THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION DATED JULY 7, 1999
ALEC HOLDINGS, INC.
OFFER TO EXCHANGE
ALL 13% SENIOR DISCOUNT DEBENTURES DUE 2011 ($46,928,435 PRINCIPAL AMOUNT)
FOR
13% SENIOR DISCOUNT DEBENTURES DUE 2011 ($46,928,435 PRINCIPAL AMOUNT)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED.
------------------------
TERMS OF THE EXCHANGE OFFER:
- We will issue up to $46,928,435 aggregate principal amount of exchange
debentures.
- We will exchange exchange debentures for all old debentures that are
validly tendered and not withdrawn prior to the expiration of the
exchange offer.
- You may withdraw tenders of old debentures at any time prior to the
expiration of the exchange offer.
- The exchange of old debentures for exchange debentures will not be a
taxable transaction for U.S. federal income tax purposes, but you should
see the discussion under the caption "Federal Income Tax Considerations"
on page 137 for more information.
- We will not receive any cash proceeds from the exchange offer.
- The terms of the exchange debentures are substantially identical to those
of the old debentures, except that the transfer restrictions and
registration rights relating to the old debentures do not apply to the
exchange debentures.
- We do not intend to list the exchange debentures on any national
securities exchange, and no public market for the exchange debentures is
anticipated.
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DISCUSSION OF FACTORS THAT YOU
SHOULD CONSIDER BEFORE TENDERING YOUR OLD DEBENTURES.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this prospectus is , 1999.
<PAGE>
TABLE OF CONTENTS
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<CAPTION>
PAGE
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Summary........................................ 1
Risk Factors................................... 16
The Exchange Offer............................. 27
The Acquisitions............................... 37
Use of Proceeds................................ 38
Capitalization................................. 38
Selected Historical Combined Financial
Data--PTI Alaska............................. 39
Selected Historical Financial Data--ATU........ 41
Unaudited Pro Forma Combined Financial and
Operating Data............................... 43
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 48
Industry Overview.............................. 65
Business....................................... 67
<CAPTION>
PAGE
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<S> <C>
Regulation..................................... 77
Management..................................... 83
Ownership of Capital Stock..................... 90
Insider Relationships and Related Party
Transaction.................................. 92
Description of Other Indebtedness.............. 93
Description of the Exchange Debentures......... 97
Exchange and Registration Rights Agreement..... 130
Book-Entry, Delivery and Form.................. 133
Federal Income Tax Considerations.............. 137
Plan of Distribution........................... 143
Available Information.......................... 144
Experts........................................ 145
Validity of the Exchange Debentures............ 145
Index to Financial Statements.................. F-1
</TABLE>
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FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements, including, in
particular, statements about our plans, strategies and prospects under the
captions "Summary," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" (particularly under the subheadings "Liquidity and
Capital Resources" and "Outlook") and "Business." We have based these
forward-looking statements on our current assumptions, expectations and
projections about future events. When used in this prospectus, the words
"believe," "anticipate," "intend," "estimate," "expect," "project" and similar
expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain such words. These forward-looking
statements speak only as of the date of this prospectus. Neither we nor the
initial purchasers undertake any obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise. Although management believes that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct or that savings or
other benefits anticipated in the forward-looking statements will be achieved.
Important factors, some of which may be beyond our control, that could cause
actual results to differ materially from management's expectations ("cautionary
statements") are disclosed in this prospectus, including in conjunction with the
forward-looking statements included in this prospectus and under "Risk Factors."
Prospective purchasers are cautioned not to place undue reliance on these
forward-looking statements. All subsequent written and oral forward-looking
statements attributable to us are expressly qualified in their entirety by the
cautionary statements. See "Risk Factors." These forward-looking statements are
subject to risks, uncertainties and assumptions about us, including, among other
things:
- our substantial debt and significant debt service obligations;
- our ability to integrate our recent acquisitions of PTI Alaska and ATU;
- developments in, or changes to, the laws and regulations governing our
telecommunications business;
- our ability to improve existing operations;
- the increasingly competitive nature of the telecommunications industry;
- changes in technology;
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- our ability to keep key personnel required to operate the business;
- the potential effect of year 2000 compliance issues; and
- changes in economic conditions in Alaska.
ADDITIONAL INFORMATION
This prospectus incorporates important business and financial information
about us from documents that are not included in or delivered with this
document. You can obtain documents incorporated by reference in this prospectus
(other than exhibits to those documents) by requesting them in writing or by
telephone from us at the following address:
ALEC Holdings, Inc.
510 L. Street, Suite 500
Anchorage, Alaska 99501
Attention: Michael E. Holmstrom
Telephone: (907) 297-3000
You will not be charged for any documents that you request. If you would
like to request documents, please do so by , 1999 in order to receive them
before the exchange offer expires on , 1999.
ii
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS. THIS SUMMARY IS NOT COMPLETE AND MAY NOT CONTAIN ALL OF THE
INFORMATION THAT YOU SHOULD CONSIDER BEFORE EXCHANGING YOUR OLD DEBENTURES FOR
EXCHANGE DEBENTURES, AND YOU ARE ENCOURAGED TO READ THIS PROSPECTUS IN ITS
ENTIRETY. THIS PROSPECTUS INCLUDES SPECIFIC TERMS OF THE EXCHANGE DEBENTURES WE
ARE OFFERING, AS WELL AS INFORMATION ABOUT OUR BUSINESS AND DETAILED FINANCIAL
DATA.
UNLESS OTHERWISE INDICATED, REFERENCES IN THIS PROSPECTUS TO THE "COMPANY,"
"WE," "OUR" AND "US" REFER TO ALEC HOLDINGS, INC., ITS PREDECESSORS AND ITS
WHOLLY OWNED SUBSIDIARIES AS A COMBINED ENTITY. "PTI ALASKA" REFERS TO THE
ALASKAN TELECOMMUNICATIONS PROPERTIES (OTHER THAN THE CELLULAR PROPERTIES IN
FAIRBANKS, ALASKA) THAT WE ACQUIRED FROM CENTURY TELEPHONE ENTERPRISES, INC.
("CENTURY"), INCLUDING ITS PREDECESSORS AND WHOLLY OWNED SUBSIDIARIES. "ATU"
REFERS TO ANCHORAGE TELEPHONE UTILITY. "ACS" REFERS TO ALASKA COMMUNICATIONS
SYSTEMS HOLDINGS, INC.
OUR COMPANY
We own all of the capital stock of ACS, and that capital stock accounts for
substantially all of our assets. We will conduct substantially all of our
business through ACS.
We are the leading diversified, full-service telecommunications provider in
Alaska, offering local telephone, wireless, long distance and internet services
to business and residential customers throughout the state. We have over $875
million invested in our network, a state-of-the-art telecommunications
infrastructure that includes over 485 miles of fiber optic cable and 176
switching facilities.
- LOCAL TELEPHONE. With over 300,000 access lines, we are the 16th largest
local exchange carrier, or LEC, in the U.S. and the leading LEC in
Alaska. We provide service to 75% of the Alaskan population and to all of
the state's major population centers, including Anchorage, Juneau and
Fairbanks. There are no Regional Bell Operating Companies, or RBOCs, in
Alaska.
- WIRELESS. We are the largest and only statewide provider of wireless
services in Alaska, currently serving over 66,000 subscribers. Our
service areas cover all major population centers and highway corridors.
- LONG DISTANCE AND INTERNET. We provide long distance services to
approximately 26,000 customers, primarily in Anchorage, and internet
access services to approximately 16,000 customers throughout the state.
We have achieved strong operating results through stable internal growth and
strategic acquisitions. For the year ended December 31, 1998, we would have had
pro forma combined revenues of $254 million, operating income of $40 million, a
net loss of $16 million and EBITDA (as defined) of $102 million.
We believe that the outlook for continued growth in our local telephone
business is favorable due to the fundamentals of the LEC business, including:
(1) continued demand for core telephone services and enhanced service offerings,
such as voice mail and call waiting, (2) access line growth due to higher
consumer bandwidth needs for internet, data and video usage and (3) favorable
regulatory environments. We intend to leverage our strength in our core local
telephone business to grow our wireless, long distance and internet businesses.
COMPANY BACKGROUND
We were formed in 1998 by Fox Paine & Company, LLC ("Fox Paine"), members of
the former senior management team of Pacific Telecom, Inc. and other experienced
telecommunications industry executives to acquire PTI Alaska and ATU.
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PTI ALASKA. PTI Alaska is the incumbent provider of local telephone
services to over 131,000 access lines in Juneau, Fairbanks and more than 70
rural communities in Alaska. PTI Alaska also provides cellular service to
approximately 3,000 subscribers, primarily in Juneau, and owns 10 Megahertz
("MHz") personal communications services, or PCS, licenses covering Anchorage,
Juneau and Fairbanks. In addition, PTI Alaska provides internet services to
approximately 16,000 customers statewide.
ATU. ATU is the largest LEC in Alaska, and is the incumbent provider of
local telephone services to over 168,000 access lines, primarily in Anchorage.
ATU also provides cellular service to over 63,000 subscribers primarily in
Anchorage and Fairbanks under the MACtel brand name. MACtel is the leading
cellular provider in Alaska and has achieved a penetration rate of approximately
16% in its service areas. ATU began providing long distance service on a resale
basis in the fall of 1997 and serves approximately 26,000 customers, primarily
in Anchorage.
ALASKAN TELECOMMUNICATIONS MARKET
The Alaskan telecommunications market is characterized by its large
geographical size and widely dispersed population centers. Over 60% of the
state's population resides in its three largest cities: Anchorage, Juneau and
Fairbanks. Alaska lacks a well developed ground transportation infrastructure,
and most of the state's communities are accessible only by air or water. As a
result, Alaskans are particularly dependent on telecommunications services to
access resources and information unavailable in their communities.
The demographic characteristics of Alaska provide opportunities for growth
of telecommunications services. Alaska has the highest median household income
in the U.S. In addition, Alaskans benefit from the absence of state personal
income taxes. The population in Alaska has been growing at a compound annual
rate of 1.3% over the last ten years, compared to 1.0% for the U.S. as a whole.
COMPETITIVE STRENGTHS
We believe we are well positioned to capitalize on significant opportunities
in the rural telecommunications marketplace given our competitive strengths:
LEADING COMPETITIVE POSITION. We are the leading diversified, full-service
telecommunications provider in Alaska.
- We are the incumbent LEC in our local service areas. With the exception
of Anchorage, we are the only LEC in our service areas and do not
presently experience meaningful competition from either facilities-based
providers or resellers of our local telephone services.
- We are the only statewide wireless provider, serving all major population
centers and highway corridors. We are also the preeminent wireless
provider in Alaska, serving the largest number of subscribers.
- We are a statewide internet service provider.
STRONG, PREDICTABLE CASH FLOW. Our businesses have historically exhibited
stable operating results and strong cash flow margins. Our local telephone
businesses, which represent approximately 85% of our combined revenues, are
subject to state and federal regulations that allow us to charge rates that give
us the opportunity to recover our costs and earn a reasonable rate of return on
the capital invested in our network. Historically, PTI Alaska has experienced
consistent access line growth of approximately 6% annually, and stable EBITDA
margins of approximately 46%. ATU, operating as a government-owned utility, has
achieved stable EBITDA margins of approximately 37%. We expect stable growth in
our combined telecommunications businesses, with consistent increases in EBITDA.
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SIGNIFICANT NETWORK INVESTMENT. We have over $875 million invested in our
network, a state-of-the-art telecommunications infrastructure that includes over
485 miles of fiber optic cable and 176 switching facilities. Our network
incorporates the latest generic software upgrades, facilitating efficient
deployment of network enhancements and allowing us to offer our customers a
broad range of enhanced communications services. Management believes that
substantial time and capital would be required for a competitor to build a
comparable network.
STRONG LEADERSHIP. Members of management have, on average, over 25 years of
telecommunications experience, the majority of which was spent either with
Pacific Telecom, of which PTI Alaska was a part, or ATU, and have a demonstrated
track record of acquiring, integrating and operating telecommunications
companies. Management is led by Charles E. Robinson, our Chairman, President and
Chief Executive Officer, who built the former Pacific Telecom business into a
leading telecommunications service provider to suburban and rural communities in
Alaska and the Pacific Northwest, and completed the sale of Pacific Telecom to
Century for $2.2 billion in 1997. Between 1992 and 1997, revenues and EBITDA
generated by Pacific Telecom's local telephone business grew at 17% and 22%
compound annual rates, respectively. Management has significant experience
operating local, data, wireless and cable television businesses. Members of
management, including Mr. Robinson, also operated Alascom, Inc., Alaska's
largest long distance provider, until its sale to AT&T in 1995. Management
intends to implement a strategic plan that makes use of its extensive
telecommunications experience to maximize the benefits of integrating the
operations of PTI Alaska and ATU.
Fox Paine, which beneficially owns approximately 98% of our equity, is a
private equity investment firm that manages a $500 million investment fund. Fox
Paine was founded in 1997 by Saul A. Fox and W. Dexter Paine, III, former senior
partners of Kohlberg, Kravis & Roberts and Kohlberg & Company. Fox Paine's
principals have over 26 years' combined experience in identifying exceptional
management teams and successfully executing corporate acquisitions. In their
previous positions, Fox Paine's principals directed the investment of over $700
million of equity in 17 transactions with an aggregate value of $3.4 billion.
BUSINESS STRATEGY
The principal elements of our business strategy include:
CAPITALIZE ON GROWTH OPPORTUNITIES. We intend to capitalize on growth
opportunities by expanding our offerings of enhanced services, wireless
services, long distance services, data services and internet access services and
by marketing these services under a common branding strategy. We believe that
our statewide presence and history of providing quality service will allow us to
achieve greater brand awareness and service penetration than our competitors.
- ACCESS LINE GROWTH. We intend to focus our sales and marketing efforts to
capitalize on continued growth in access line demand. We also intend to
stimulate additional demand for access lines through the provision of
advanced high-speed data services, such as digital subscriber lines and
integrated services digital networks, or ISDN, in our major markets.
- ENHANCED SERVICES. We intend to market enhanced services, such as call
waiting, caller ID and voice mail. Customer penetration of enhanced
services (the number of enhanced services divided by the number of access
lines) in our service areas is approximately 82%, while other LECs in the
U.S. have achieved penetration levels of 100% to 120%, on average.
Increasing penetration rates will improve revenue per customer that, due
to the fixed cost nature of the LEC business, are expected to result in
increasing EBITDA.
- WIRELESS SERVICES. As the only statewide cellular service provider in
Alaska, we believe our cellular operations represent a significant growth
opportunity. Our cellular operations currently penetrate only 8% of the
population, or POPs, in our Fairbanks and southeast Alaska service areas,
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compared with MACtel's 18% penetration rate in Anchorage. We also plan to
complete the digital conversion of our entire cellular network by the end
of 1999. After this conversion, we will be able to offer our customers
enhanced digital cellular services and features. We believe that the
market for wireless services will continue to grow with the growth in the
wireless industry as a whole.
- LONG DISTANCE SERVICES. As the incumbent LEC in our service areas, we are
well positioned to offer long distance services to our existing
customers. Management intends to leverage the long distance experience it
gained while operating the largest long distance provider in Alaska, to
improve the long distance operations at ATU and to expand ATU's long
distance business in PTI Alaska's service areas. In connection with the
settlement of a number of outstanding disputes we recently purchased
fiber capacity between Alaska's major population centers and between
Alaska and the contiguous 48 states of the U.S. This capacity will allow
us both to improve the quality of our service offerings and realize
future operating cost efficiencies. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Recent
Developments."
IMPROVE OPERATING EFFICIENCIES. We intend to use our operating, regulatory,
marketing and management expertise to improve operations and profitability. The
operations of PTI Alaska and ATU have several redundancies, such as material
management, purchasing, network planning/engineering and customer care centers,
that we intend to consolidate to enhance operating efficiencies. We also intend
to support the general and administrative requirements of PTI Alaska and ATU on
a common basis.
PURSUE SELECTIVE STRATEGIC ACQUISITIONS. We will pursue selective regional
acquisitions in Alaska and the western U.S. as opportunities arise. During the
last five years, RBOCs and GTE Corporation have made significant divestitures
and recently announced plans for additional divestitures of their rural
telecommunications properties to allow them to focus on urban markets.
Additionally, according to the United States Telephone Association, there are
approximately 1,300 independent telephone companies in the U.S. with fewer than
25,000 access lines. We believe that these industry dynamics will provide
opportunities for growth through acquisitions.
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SOURCES AND USES
On August 18, 1998, we announced our agreement to acquire the capital stock
of PTI Alaska from Century. Under our agreement with Century, as amended, we
acquired PTI Alaska for $411.8 million. Under our agreement with the
Municipality of Anchorage dated October 20, 1998, we acquired substantially all
of the assets and liabilities of ATU from the Municipality of Anchorage for
$263.6 million. We completed both of these acquisitions on May 14, 1999. See
"The Acquisitions."
In connection with these acquisitions, on May 14, 1999, we (1) received
equity contributions from Fox Paine Capital Fund, L.P. (the "Fund"), members of
management and other investors in the amount of $121.2 million and (2) issued
$46.9 million in principal amount of the old debentures and warrants for
aggregate gross proceeds of $25.0 million. All $146.2 million of the proceeds
from these financings, the fees and expenses of which were borne by ACS, were
contributed to ACS as common equity, as shown in the table below.
The table below outlines the sources and uses of funds at ACS for the
acquisitions and the related expenses:
<TABLE>
<CAPTION>
AMOUNT
(DOLLARS IN
MILLIONS)
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<S> <C>
SOURCES:
Revolving credit facility(a)........................................................ $ 6.7
Term loan facilities(b)............................................................. 435.0
9 3/8% Senior subordinated notes due 2009........................................... 150.0
Equity contributions................................................................ 146.2
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Total sources..................................................................... $ 737.9
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------
USES:
Purchase of PTI Alaska(c)........................................................... $ 411.8
Purchase of ATU..................................................................... 263.6
Working capital(d).................................................................. 14.1
Transaction fees and expenses....................................................... 48.4
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Total uses........................................................................ $ 737.9
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------
</TABLE>
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(a) The revolving credit facility allows for total borrowings of up to $75.0
million, of which $66.3 million remains available. See "Description of Other
Indebtedness--The Senior Credit Facility."
(b) The term loan facilities are comprised of $150.0 million of term loan A
facility, $150.0 million of term loan B facility and $135.0 million of term
loan C facility.
(c) Includes the repayment of existing indebtedness of PTI Alaska. See "The
Acquisitions."
(d) Working capital was used to fund in part the purchase of $19.5 million of
fiber capacity.
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SUMMARY OF TERMS OF THE EXCHANGE OFFER
On May 14, 1999, we completed the private offering of the old debentures. We
entered into an exchange and registration rights agreement with the initial
purchasers in the private offering in which we agreed to deliver to you this
prospectus as part of the exchange offer and agreed to complete the exchange
offer within 180 days after the date of original issuance of the old debentures.
You are entitled to exchange in the exchange offer your old debentures for
exchange debentures which are identical in all material respects to the old
debentures except:
- the exchange debentures have been registered under the Securities Act;
- the exchange debentures are not entitled to some registration rights
which are applicable to the old debentures under the exchange and
registration rights agreement; and
- contingent interest rate provisions, except for those relating to our
failure to keep effective a shelf registration statement, are no longer
applicable.
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THE EXCHANGE OFFER............ We are offering to exchange up to $46,928,435 aggregate
principal amount of old debentures for up to $46,928,435
aggregate principal amount of exchange debentures. You may
exchange old debentures only in integral multiples of
$1,000.
RESALE........................ Based on an interpretation by the staff of the Securities
and Exchange Commission set forth in no-action letters
issued to third parties, we believe that the exchange
debentures issued pursuant to the exchange offer in exchange
for old debentures may be offered for resale, resold and
otherwise transferred by you (unless you are an "affiliate"
of us within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that you
are acquiring the exchange debentures in the ordinary course
of your business and that you have not engaged in, do not
intend to engage in, and have no arrangement or
understanding with any person to participate in, a
distribution of the exchange debentures.
Each participating broker-dealer that receives exchange
debentures for its own account pursuant to the exchange
offer in exchange for old debentures that were acquired as a
result of market-making or other trading activity must
acknowledge that it will deliver a prospectus in connection
with any resale of the exchange debentures. See "Plan of
Distribution."
Any holder of old debentures who:
- is an affiliate of us;
- does not acquire exchange debentures in the ordinary
course of its business or
- tenders in the exchange offer with the intention to
participate, or for the purpose of participating, in a
distribution of exchange debentures
</TABLE>
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<TABLE>
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cannot rely on the position of the staff of the SEC stated
in Exxon Capital Holdings Corporation, Morgan Stanley & Co.
Incorporated or similar no-action letters and, in the
absence of an exemption, must comply with the registration
and prospectus delivery requirements of the Securities Act
in connection with the resale of the exchange debentures.
EXPIRATION OF THE EXCHANGE
OFFER; WITHDRAWAL OF
TENDER...................... The exchange offer will expire at 5:00 p.m., New York City
time, on , 1999, or a later date and time to which we
extend it. We do not currently intend to extend the
expiration of the exchange offer. You may withdraw your
tender of old debentures pursuant to the exchange offer at
any time before expiration of the exchange offer. Any old
debentures not accepted for exchange for any reason will be
returned without expense to you promptly after the
expiration or termination of the exchange offer.
CONDITIONS TO THE EXCHANGE
OFFER....................... The exchange offer is subject to customary conditions, which
we may waive. Please read the section under the caption "The
Exchange Offer--Conditions" of this prospectus for more
information regarding the conditions to the exchange offer.
PROCEDURES FOR TENDERING
OUTSTANDING NOTES........... If you wish to participate in the exchange offer, you must:
- complete, sign and date the accompanying letter of
transmittal, or a facsimile of the letter of transmittal,
according to the instructions contained in this prospectus
and the letter of transmittal; and
- mail or otherwise deliver the letter of transmittal, or a
facsimile of the letter of transmittal, together with your
old debentures and any other required documents, to the
exchange agent at the address set forth on the cover page
of the letter of transmittal.
If you hold old debentures through The Depository Trust
Company ("DTC") and wish to participate in the exchange
offer, you must comply with the Automated Tender Offer
Program procedures of DTC, by which you will agree to be
bound by the letter of transmittal. By signing, or agreeing
to be bound by, the letter of transmittal, you will
represent to us that, among other things:
- you acquired your old debentures in the ordinary course of
your business;
- you have no arrangement or understanding with any person
or entity to participate in a distribution of the exchange
debentures;
- if you are a broker-dealer that will receive exchange
debentures for your own account in exchange for old
debentures that were acquired as a result of market-making
activities, that you will deliver a prospectus, as
required by law, in connection with any resale of those
exchange debentures; and
</TABLE>
7
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<TABLE>
<S> <C>
- you are not an "affiliate," as defined in Rule 405 of the
Securities Act, of us or, if you are an affiliate, that
you will comply with any applicable registration and
prospectus delivery requirements of the Securities Act.
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS........... If you are a beneficial owner of old debentures which are
registered in the name of a broker, dealer, commercial bank,
trust company or other nominee, and you want to tender old
debentures in the exchange offer, you should contact the
registered holder promptly and instruct the registered
holder to tender on your behalf. If you wish to tender on
your own behalf, you must, before completing and executing
the letter of transmittal and delivering your old
debentures, either make appropriate arrangements to register
ownership of the old debentures in your name or obtain a
properly completed bond power from the registered holder.
The transfer of registered ownership may take considerable
time and may not be able to be completed before expiration
of the exchange offer.
GUARANTEED DELIVERY
PROCEDURES.................. If you wish to tender your old debentures and your old
debentures are not immediately available or you cannot
deliver your old debentures, the letter of transmittal or
any other documents required by the letter of transmittal or
comply with the applicable procedures under the DTC's
Automated Tender Offer Program, before expiration of the
exchange offer, you must tender your old debentures
according to the guaranteed delivery procedures set forth
under the caption "The Exchange Offer--Guaranteed delivery
procedures."
EFFECT ON HOLDERS OF
OUTSTANDING NOTES........... By making the exchange offer and by accepting for exchange
all validly tendered old debentures under the exchange
offer, we will have fulfilled a covenant contained in the
registration rights agreement. Accordingly, there will be no
increase in the interest rate on the old debentures under
the circumstances described in the registration rights
agreement. If you are a holder of old debentures and you do
not tender your old debentures in the exchange offer, you
will continue to hold your old debentures and will be
entitled to all the rights and subject to all the
limitations applicable to the old debentures in the
indenture, except for any rights under the registration
rights agreement that terminate upon the completion of the
exchange offer.
The trading market for old debentures could be adversely
affected if some but not all of the old debentures are
tendered and accepted in the exchange offer.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
CONSEQUENCES OF FAILURE TO
EXCHANGE.................... All untendered old debentures will remain subject to the
restrictions on transfer provided for in the old debentures
and in the indenture. In general, the old debentures may not
be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and
applicable state securities laws. Other than in connection
with the exchange offer, we do not currently anticipate that
we will register the old debentures under the Securities
Act.
FEDERAL INCOME TAX
CONSIDERATIONS.............. The exchange of old debentures for exchange debentures in
the exchange offer will not be a taxable event for U.S.
federal income tax purposes. See "Federal Income Tax
Considerations."
USE OF PROCEEDS............... We will not receive any cash proceeds from the issuance of
exchange debentures pursuant to the exchange offer.
EXCHANGE AGENT................ The Bank of New York is the exchange agent for the exchange
offer. The address and telephone number of the exchange
agent are set forth under the caption "The Exchange
Offer--Exchange agent" of this prospectus.
</TABLE>
9
<PAGE>
SUMMARY OF TERMS OF THE EXCHANGE DEBENTURES
<TABLE>
<S> <C>
ISSUER.............................. ALEC Holdings, Inc.
SECURITIES OFFERED.................. $46,928,435 aggregate principal amount of 13% Senior
Discount Debentures due 2011.
MATURITY............................ May 15, 2011.
INTEREST PAYMENT DATES.............. May 15 and November 15 of each year, commencing on
November 15, 2004.
OPTIONAL REDEMPTION................. On or after May 15, 2004, we may redeem some or all
of the exchange debentures at the redemption prices
listed under the caption "Description of the Exchange
Debentures--Optional Redemption."
Before May 15, 2002, we may redeem up to 35% of the
exchange debentures with the proceeds of sales of
equity in our Company at the redemption price listed
under the caption "Description of the Exchange
Debentures-- Optional Redemption."
CHANGE OF CONTROL................... If we experience a change of control, you will have
the right to require us to repurchase your exchange
debentures at a price equal to 101% of the principal
amount of the exchange debentures, together with
accrued and unpaid interest, if any, to the date of
repurchase. See "Description of the Exchange
Debentures--Change of Control."
RANKING............................. The exchange debentures will be unsecured and:
- rank equally with all of our other existing and
future senior debt;
- rank senior to all of our senior subordinated debt;
and
- rank senior to all of our existing and future
subordinated debt.
Assuming we had received the equity contributions and
completed the offering of the old debentures, and
that ACS had completed the acquisitions of PTI Alaska
and ATU, made the initial borrowings under its senior
credit facility and completed the offering of the ACS
senior subordinated notes, on March 31, 1999:
- ACS would have had $441.7 million of senior debt;
- we would not have had any senior debt other than
the old debentures;
- ACS' guarantor subsidiaries would have had $7.5
million of senior debt;
- ACS would not have had any senior subordinated debt
other than the ACS senior subordinated notes, and
we and ACS' guarantor subsidiaries would not have
had any senior subordinated debt, other than the
guarantees of the ACS senior subordinated notes;
and
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
- we, ACS and ACS' guarantor subsidiaries would not
have had any subordinated debt.
RESTRICTIVE COVENANTS............... We will issue the exchange debentures under an
indenture with The Bank of New York, as the trustee.
The indenture will, among other things, restrict our
ability and the ability of our subsidiaries and
future subsidiaries, to:
- incur debt;
- make investments;
- pay dividends on stock or purchase stock;
- sell assets or stock of our subsidiaries;
- engage in transactions with our affiliates;
- engage in mergers, consolidations and sales of
assets; and
- engage in business activities that are unrelated to
our current business.
The indenture will also limit the extent to which we
can permit restrictions on the ability of our
subsidiaries to pay dividends and make other
distributions.
See "Description of the Exchange
Debentures--Restrictive Covenants."
ABSENCE OF ESTABLISHED MARKET FOR
THE NOTES......................... The exchange debentures are a new issue of
securities, and there is no established trading
market for the exchange debentures. The exchange
debentures have been designated for trading in the
Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") market. However, we do
not intend to apply for the exchange debentures to be
listed on any securities exchange or to arrange for
quotation on any automated dealer quotation system.
The initial purchasers in the private placement of
the old debentures have advised us that they intend
to make a market in the exchange debentures and any
new notes issued in exchange for the exchange
debentures, but they are not obligated to do so. The
initial purchasers may discontinue any market making
in the exchange debentures or any new notes issued in
exchange for the exchange debentures at any time in
their sole discretion. We cannot assure you that a
liquid market will develop for the exchange
debentures.
</TABLE>
RISK FACTORS
You should consider carefully all of the information in this prospectus. In
particular, you should evaluate the specific factors under the caption "Risk
Factors" before deciding to exchange your old debentures for exchange
debentures.
* * * * *
We are located at 510 L. Street, Suite 500, Anchorage, Alaska 99501. Our
telephone number is (907) 297-3000.
11
<PAGE>
SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL AND OPERATING DATA
The following summary unaudited pro forma combined financial and operating
data are based on the financial statements of PTI Alaska and ATU, as adjusted to
illustrate the estimated effects of
- the acquisition of PTI Alaska;
- the acquisition of ATU;
- the purchase of fiber capacity for $19.5 million; and
- the financings necessary to complete these acquisitions,
as if these transactions had occurred on January 1, 1998 for the Operating Data
and Other Financial Data and on March 31, 1999 for the Other Data and Balance
Sheet Data.
The summary unaudited pro forma combined financial and operating data do not
purport to be indicative of what our financial position or results of operations
would actually have been had these transactions been completed on the dates
indicated or to project our results of operations for any future period. See
"Unaudited Pro Forma Combined Financial and Operating Data."
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1998 MARCH 31, 1999
----------------- ---------------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
OPERATING DATA:
Operating revenue............................................................. $ 254,101 $ 64,306
Operating expenses............................................................ 214,507 53,860
-------- ---------------
Operating income.............................................................. 39,594 10,446
Interest expense.............................................................. (56,948) (14,238)
Other income (expense)(a)..................................................... (1,514) 71
-------- ---------------
Loss before income taxes...................................................... (18,868) (3,721)
Income taxes.................................................................. -- --
-------- ---------------
Net loss...................................................................... $ (18,868) $ (3,721)
-------- ---------------
-------- ---------------
OTHER FINANCIAL DATA:
Net cash provided by operating activities(b).................................. $ (50,567) (14,995)
Net cash used by investing activities(b)...................................... (32,323) (3,907)
Net cash used by financing activities(b)...................................... (40,350) (18,903)
EBITDA (as defined)(c)........................................................ 102,246 26,533
Adjusted EBITDA(d)............................................................ 106,109 27,045
Pro forma cash interest expense(e)............................................ 53,198 13,300
Capital expenditures.......................................................... 56,443 5,583
Depreciation and amortization................................................. 61,221 15,507
Ratio of earnings to fixed charges(f)......................................... N/A N/A
Ratio of Adjusted EBITDA to pro forma cash interest expense................... 2.0x 2.0x
Ratio of total debt to Adjusted EBITDA........................................ 5.6x 23.1x
OTHER DATA (END OF PERIOD):
Access lines in service(g).................................................... 300,394 304,619
Cellular subscribers.......................................................... 66,572 67,196
Cellular penetration.......................................................... 14.5% 14.6%
BALANCE SHEET DATA (END OF PERIOD):
Total assets.................................................................. $ 796,007 $ 791,882
Long-term debt including current portion...................................... 624,245 624,245
Stockholders' equity.......................................................... 121,155 121,155
</TABLE>
- ------------------------------
(a) "Other income (expense)" includes the (1) net operating results of PTI
Alaska's and ATU's equipment sales and rental, payphone and internet
businesses and (2) equity in earnings (losses) of minority investments. For
the year ended
12
<PAGE>
December 31, 1998, these amounts represented earnings of $1,431,000 and
losses of $2,945,000, respectively. For the three months ended March 31,
1999 these amounts represented earnings of $580,000 and losses of $509,000,
respectively.
(b) Net cash data includes information from ATU financial statements prepared
according to Governmental Accounting Standards.
(c) "EBITDA" is net income before interest expense, interest income, income
taxes, depreciation and amortization, and equity in earnings (loss) of
minority investments (which was $(2,945,000) for the year ended December 31,
1998 and $(509,000) for the three months ended March 31, 1999). EBITDA
includes the net operating results of equipment sales and rental, payphone
and internet businesses and the estimated annual management fee to be paid
to Fox Paine. EBITDA is not intended to represent cash flow from operations
as defined by GAAP and should not be considered as an alternative to net
income as an indicator of our operating performance or cash flows. EBITDA is
included in this prospectus because management believes it provides
additional information with respect to our ability to satisfy its debt
service, capital expenditure and working capital requirements. While EBITDA
is frequently used as a measure of operations and the ability of a company
to meet debt service requirements, it is not necessarily comparable to other
similarly titled captions of other companies due to the differences in
methods of calculation.
(d) "Adjusted EBITDA" is EBITDA increased by (1) the net effect of the
elimination of one-time duplicative administrative charges resulting from
Century's acquisition of Pacific Telecom, and the related loss of revenues,
in the amount of $1,399,000 for the year ended December 31, 1998, (2)
unrealized access revenues in the amount of $417,000 that were not recovered
in 1998 but are being recovered in 1999 and in future years and (3) the net
effect of reduced operating expenses, primarily leased circuit expenses,
partially offset by higher maintenance expenses, that would have been
experienced had the purchase of fiber capacity occurred on January 1, 1998,
in the amount of $2,047,000 for the year ended December 31, 1998 and
$512,000 for the three months ended March 31, 1999.
(e) "Pro forma cash interest expense" is defined as interest expense exclusive
of amortization of deferred financing costs.
(f) For purposes of computing this ratio, earnings consist of earnings before
extraordinary items, income taxes and fixed charges. Fixed charges consist
of interest expense, amortization of deferred financing fees and the
component of rental expense believed by management to be representative of
the interest factor thereon. Earnings were inadequate to cover fixed charges
by $18,868,000 for the year ended December 31, 1998 and by $3,721,000 for
the three months ended March 31, 1999.
(g) "Access lines in service" includes all revenue producing lines, whether
connected to retail or wholesale customers.
13
<PAGE>
SUMMARY HISTORICAL COMBINED FINANCIAL DATA--PTI ALASKA
The following table sets forth summary historical combined financial data of
PTI Alaska. The summary historical combined financial data for each of the three
years in the period ended December 31, 1998 and as of December 31, 1997 and 1998
have been derived from the audited combined financial statements and the notes
thereto of PTI Alaska included elsewhere in this prospectus. The summary
historical combined financial data for each of the two years in the period ended
December 31, 1995 and as of December 31, 1994, 1995 and 1996 have been derived
from the unaudited combined financial statements of PTI Alaska which are not
included in this prospectus and which, in the opinion of management, include all
adjustments, consisting solely of normal, recurring adjustments, necessary to
present fairly the information they contain. The summary combined financial data
for each of the three month periods ended March 31, 1998 and 1999 and as of
March 31, 1998 and 1999 have been derived from the unaudited combined financial
statements of PTI Alaska which are included in this prospectus and which, in the
opinion of management, include all adjustments, consisting solely of normal,
recurring adjustments, necessary to present fairly the information they contain.
The financial statements of PTI Alaska include the results of the telephone
operation of the City of Fairbanks (the "City of Fairbanks Telephone Operation")
from October 6, 1997, the date of its acquisition. This acquisition was
accounted for as a purchase. PTI Alaska was acquired by Century on December 1,
1997 as part of its acquisition of Pacific Telecom. The data for the year ended
December 31, 1997 represent the results of PTI Alaska for the 11 months ended
November 30, 1997, as owned by Pacific Telecom, and the one month ended December
31, 1997, as owned by Century. The summary historical combined financial data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the audited combined
financial statements of PTI Alaska, and the related notes, included elsewhere in
this prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------- --------------------
1994 1995 1996 1997(A) 1998 1998 1999
--------- --------- --------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
OPERATING DATA:
Operating revenue.............................. $ 69,402 $ 75,071 $ 76,633 $ 88,040 $ 112,398 $ 25,798 $ 27,749
Operating expenses............................. 52,795 55,506 56,043 63,907 94,198 22,185 22,681
--------- --------- --------- ----------- --------- --------- ---------
Operating income............................... 16,607 19,565 20,590 24,133 18,200 3,613 5,068
Interest expense, net.......................... (2,459) (2,331) (1,996) (2,340) (1,405) (302) (358)
Other income (expense)(b)...................... 1,094 (1,020) (368) 152 2,070 1,129 922
--------- --------- --------- ----------- --------- --------- ---------
Income before income taxes..................... 15,242 16,214 18,226 21,945 18,865 4,440 5,632
Income taxes................................... 5,962 5,713 6,737 8,482 9,218 2,214 2,709
--------- --------- --------- ----------- --------- --------- ---------
Net income..................................... $ 9,280 $ 10,501 $ 11,489 $ 13,463 $ 9,647 $ 2,226 $ 2,923
--------- --------- --------- ----------- --------- --------- ---------
--------- --------- --------- ----------- --------- --------- ---------
OTHER FINANCIAL DATA:
Net cash provided by operating activities...... -- -- $ 34,589 $ 26,801 $ 38,291 $ 11,025 $ 14,103
Net cash provided (used) by investing
activities................................... -- -- (20,611) (16,833) (26,664) 1,947 (2,339)
Net cash used by financing activities.......... -- -- (12,947) (10,722) (6,770) (11,587) (6,753)
EBITDA (as defined)(c)......................... 30,790 32,861 35,570 42,574 50,729 11,951 13,775
EBITDA margin.................................. 44.4% 43.8% 46.4% 48.4% 45.1% 46.3% 49.6%
Capital expenditures........................... $ 21,001 $ 19,437 $ 20,465 $ 16,400 $ 26,799 $ 2,321 $ 2,200
Depreciation and amortization.................. 13,098 14,316 15,348 18,289 30,459 7,209 7,785
OTHER DATA (END OF PERIOD):
Access lines in service(d)..................... 73,563 77,660 82,969 124,869 131,858 128,023 134,276
Cellular subscribers(e)........................ 3,058 3,950 5,573 2,096 2,945 2,546 3,417
Cellular penetration........................... 2.1% 2.7% 3.8% 3.7% 5.2% 4.6% 5.2%
</TABLE>
- ------------------------------
(a) In conjunction with Century's acquisition of Pacific Telecom on December 1,
1997, the purchase method of accounting was utilized, resulting in the push
down of $208 million of goodwill to PTI Alaska.
(b) "Other income (expense)" includes the net operating results of PTI Alaska's
equipment sales and rental, payphone and internet businesses.
(c) See the definition of "EBITDA" in note (b) to "Summary Unaudited Pro Forma
Combined Financial and Operating Data."
(d) "Access lines in service" includes all revenue producing lines, whether
connected to resale or wholesale customers.
(e) On December 31, 1997, PTI Alaska sold its cellular operations in Fairbanks
to MACtel. The Fairbanks cellular property had 5,497 subscribers at the time
of the sale.
14
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA--ATU
The following table sets forth summary historical financial data of ATU. The
summary historical financial data for each of the three years in the period
ended December 31, 1998 and as of December 31, 1997 and 1998 have been derived
from the audited financial statements and the notes thereto of ATU included
elsewhere in this prospectus. The summary historical financial data for each of
the two years in the period ended December 31, 1995 and as of December 31, 1994,
1995 and 1996 have been derived from the audited financial statements of ATU
which are not included in this prospectus. The summary financial data for each
of the three month periods ended March 31, 1998 and 1999 and as of March 31,
1998 and 1999 have been derived from the unaudited financial statements of ATU
which are included in this prospectus and which, in the opinion of management,
include all adjustments, consisting solely of normal, recurring adjustments,
necessary to present fairly the information they contain. The summary historical
financial data below should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the audited
financial statements of ATU, and the related notes, included elsewhere in this
prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
OPERATING DATA:
Operating revenue.......................... $ 105,561 $ 109,831 $ 115,970 $ 125,243 $ 141,703 $ 32,853 $ 36,557
Operating expenses......................... 84,620 89,159 95,493 106,238 119,155 27,224 30,891
--------- --------- --------- --------- --------- --------- ---------
Operating income........................... 20,941 20,672 20,477 19,005 22,548 5,629 5,666
Interest expense, net...................... (7,565) (6,706) (6,840) (6,768) (6,427) (1,840) (1,585)
Other income (expense)(a).................. (328) (322) 220 (119) (2,551) (330) (593)
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes................. 13,048 13,644 13,857 12,118 13,570 3,459 3,488
Income taxes(b)............................ -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income................................. $ 13,048 $ 13,644 $ 13,857 $ 12,118 $ 13,570 $ 3,459 $ 3,488
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
OTHER FINANCIAL DATA:
Net cash provided by operating
activities(c)............................ $ 42,382 $ 43,412 $ 42,120 $ 46,641 $ 53,207 $ 8,394 $ 10,735
Net cash by investing activities(c)........ 13,577 1,057 (787) (3,665) (5,659) (8,044) (1,568)
Net cash provided (used) by financing
activities(c)............................ (57,169) (53,518) (30,095) (46,916) (33,580) 16,631 (12,150)
EBITDA (as defined)(d)..................... 39,549 39,608 41,239 45,567 52,550 12,648 13,016
EBITDA margin.............................. 37.5% 36.1% 35.6% 36.4% 37.1% 3.5% 35.6%
Capital expenditures....................... $ 33,328 $ 27,958 $ 24,958 $ 35,187 $ 29,644 $ 8,404 $ 3,383
Depreciation and amortization.............. 18,936 19,258 20,496 26,839 29,608 7,099 7,434
OTHER DATA (END OF PERIOD):
Access lines in service(e)................. 144,869 147,934 154,752 158,486 168,536 164,569 170,343
Cellular subscribers....................... 13,684 24,855 37,651 53,035 63,627 54,436 63,779
Cellular penetration....................... 4.7% 8.4% 12.6% 13.3% 15.8% 13.7% 15.8%
</TABLE>
- ------------------------------
(a) "Other income (expense)" includes the net operating results of ATU's
equipment sales and rental, payphone business, and equity in earnings (loss)
from minority investments.
(b) ATU is a public utility of the Municipality of Anchorage and is exempt from
federal and state income taxes.
(c) Net cash data includes information from ATU financial statements prepared in
accordance with Governmental Accounting Principles.
(d) See definition of "EBITDA" in note (b) to "Summary Unaudited Pro Forma
Combined Financial and Operating Data." EBITDA does not include equity in
earnings (loss) of minority investments of $(46,158), $158,000, and
$(2,945,000) for the years ended December 31, 1996, 1997 and 1998 and
$(250,000) and $(509,000) for the three months ended March 31, 1998 and
1999.
(e) "Access lines in service" includes all revenue producing lines, whether
connected to retail or wholesale customers.
15
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND THE OTHER
INFORMATION IN THIS PROSPECTUS BEFORE DECIDING TO EXCHANGE YOUR OLD DEBENTURES
FOR EXCHANGE DEBENTURES.
WE WILL HAVE A SUBSTANTIAL AMOUNT OF DEBT WE MAY NOT BE ABLE TO SERVICE.
We have a significant amount of debt. As of March 31, 1999, on a pro forma
basis after giving effect to the acquisitions, we would have had outstanding
$624.2 million aggregate principal amount of debt (excluding unused
commitments), of which $25.0 million would have been our senior debt and of
which $599.2 million would have been senior and senior subordinated debt of ACS,
and stockholders' equity of $121.2 million.
Our substantial debt could have important consequences for our operations.
For example, our substantial debt could:
- limit our flexibility in planning for, or reacting to, changes in our
businesses and the telecommunications industry;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our debt, thereby reducing the availability of
our cash flow for other purposes, including to fund future working
capital, capital expenditures and other general corporate requirements;
- limit our ability to pursue our business strategy of offering new
products and services through our existing businesses;
- make it more difficult for us to satisfy our obligations under the
exchange debentures;
- increase our vulnerability to economic downturns and adverse industry
conditions; and
- limit, among other things, our ability to borrow additional funds.
In addition, we and our subsidiaries may incur substantial additional debt
in the future. ACS' senior credit facility provides that ACS may borrow up to
$75.0 million under a revolving credit facility. The indenture does not prohibit
us or our subsidiaries from incurring additional debt, although there are
restrictions. See "Description of the Exchange Debentures--Restrictive
Covenants."
Our ability to make payments on our debt, including the exchange debentures,
depends on our future operating performance. This performance is dependent upon
the general economic and competitive conditions and financial, business and
other factors, many of which we cannot control. If we are not able to generate
sufficient cash flow from our operating activities to make payments on our debt,
we may:
- delay or reduce capital expenditures;
- sell assets or operations;
- attempt to restructure or refinance our debt; or
- seek additional equity capital.
We may be unable to take any of these actions on satisfactory terms or in a
timely manner. Moreover, any or all of these actions may not be sufficient to
allow us to service our debt or fund our other requirements.
THE EXCHANGE DEBENTURES WILL RANK EQUALLY WITH OTHER DEBT THAT ENCUMBERS OUR
ASSETS.
The right to payment on the exchange debentures will rank equally with all
of our existing and future senior debt, including our guarantee of ACS'
borrowings under the senior credit facility. Assuming we had completed our
acquisitions of PTI Alaska and ATU, the closing of ACS' senior credit
16
<PAGE>
facility, the offering of the ACS senior subordinated notes and the offering of
the old debentures on March 31, 1999:
- we would have had $25.0 million of senior debt outstanding, in addition
to our guarantee of ACS' borrowings under the senior credit facility, and
our guarantee of the ACS senior subordinated notes would have been
subordinate to all of our outstanding senior debt;
- ACS would have had $441.7 million of senior debt outstanding under its
senior credit facility and $150.0 million from the issuance of the ACS
senior subordinated notes; and
- ACS' subsidiaries would have had $7.5 million of senior debt outstanding,
in addition to their guarantees of ACS' borrowings under the senior
credit facility.
In the event of a bankruptcy or similar proceeding with respect to us, our
assets will be available to pay obligations on the exchange debentures only
after all outstanding senior debt has been paid in full. There may not be
sufficient assets remaining to make payment of amounts due on any or all of the
exchange debentures then outstanding.
OUR HOLDING COMPANY STRUCTURE EFFECTIVELY SUBORDINATES THE EXCHANGE DEBENTURES
TO ALL OF THE DEBT OF OUR SUBSIDIARIES.
Because we are a holding company, the exchange debentures will be
effectively subordinated to all existing and future liabilities of our
subsidiaries, including ACS' outstanding debt under the senior credit facility
and the ASC senior subordinated notes totalling $591.7 million. ACS has $66.3
million in additional borrowing availability under the senior credit facility.
Effective subordination means that any right we have to participate in any
distribution of the assets of any of our subsidiaries upon the liquidation,
reorganization or insolvency of that subsidiary (and your right to participate
in any distribution as holders of exchange debentures) will be subject to the
prior claims of that subsidiary's creditors. Moreover, the obligations of our
subsidiaries under the senior credit facility are secured by substantially all
of their assets. See "Description of Other Indebtedness."
LENDERS UNDER ACS' SENIOR CREDIT FACILITY COULD FORECLOSE UPON THE CAPITAL STOCK
OF ACS AND PREVENT YOU FROM RECEIVING PAYMENTS UNDER THE EXCHANGE DEBENTURES.
In connection with ACS' senior credit facility, we granted the senior
lenders a first priority lien on all of the capital stock of ACS we own. If ACS
defaults under the senior credit facility or if we default on our guarantee of
the senior credit facility, the lenders under the senior credit facility could
foreclose upon the ACS capital stock we own. If the lenders did so, we would be
prevented from receiving dividends from ACS, our primary source of funds for
satisfaction of our obligations. If that were to occur, unless we could
refinance our obligations, there might be insufficient assets remaining to make
payment of amounts due on any or all of the exchange debentures then
outstanding, and a default under the indenture governing the exchange debentures
could occur.
WE ARE DEPENDENT ON OUR SUBSIDIARIES FOR FUNDS NECESSARY TO MAKE PAYMENTS ON THE
EXCHANGE DEBENTURES.
Our only material asset is ACS' capital stock. We do not expect to undertake
any business activities, other than in connection with:
- our ownership of ACS' capital stock;
- the performance of our obligations as a guarantor of ACS' senior credit
facility and of the ACS senior subordinated notes; and
- the issuance of the exchange debentures and warrants to purchase our
capital stock.
All of our operations will be conducted through our subsidiaries. As a
result, we will be dependent upon dividends from ACS and its subsidiaries for
the funds necessary to satisfy our obligations, including payment of principal
of the exchange debentures upon their scheduled maturity or if their maturity is
accelerated, unless they could be refinanced, and, after May 15, 2004, payment
of interest
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on the exchange debentures. We will also be dependent upon dividends from ACS
and its subsidiaries for the funds needed to purchase any exchange debentures
tendered upon an offer to purchase following a "change of control," as defined
in the indenture governing the exchange debentures, or sales of assets.
The indenture governing the exchange debentures will limit restrictions on
the ability of our subsidiaries to pay dividends or make other distributions,
but these limitations are subject to a number of significant qualifications and
exceptions. In addition,
- ACS' senior credit facility and the indenture governing the ACS senior
subordinated notes will restrict the ability of our subsidiaries to pay
dividends or make other distributions; and
- the ability of our subsidiaries to pay dividends or make other
distributions may be restricted by applicable laws and regulations, as
well as by agreements our subsidiaries enter with other parties.
If we do not receive dividends from ACS and its subsidiaries that are
sufficient for us to satisfy our obligations under the exchange debentures,
then, unless we can refinance those obligations, a default under the indenture
governing the exchange debentures could occur and payment of all amounts
outstanding under the exchange debentures would be accelerated.
WE MAY NOT BE ABLE TO SATISFY OUR OBLIGATIONS TO HOLDERS OF THE EXCHANGE
DEBENTURES UPON A CHANGE OF CONTROL.
Upon the occurrence of a "change of control," as defined in the indenture
governing the exchange debentures, each holder of the exchange debentures will
have the right to require us to repurchase the holder's exchange debentures at a
price equal to 101% of the principal amount of the exchange debentures, together
with accrued and unpaid interest, if any, to the date of repurchase; but,
- ACS' senior credit facility will effectively prevent the repurchase of
the exchange debentures by us in the event of a change of control, unless
all amounts outstanding under our senior credit facility are repaid in
full;
- our failure to repurchase the exchange debentures would be a default
under the indenture governing the exchange debentures, which would be a
default under our senior credit facility; and
- our failure to repay all amounts outstanding under our senior credit
facility upon a default would be a default under the indenture governing
the exchange debentures.
In the event of a change of control, we and ACS may not have sufficient
assets to satisfy all obligations under ACS' senior credit facility, the
indenture governing the ACS senior subordinated notes and the indenture
governing the exchange debentures.
OUR DEBT INSTRUMENTS CONTAIN RESTRICTIVE COVENANTS THAT MAY LIMIT OUR
FLEXIBILITY.
The indentures governing the exchange debentures and the ACS senior
subordinated notes and the credit agreement relating to ACS' senior credit
facility will, among other things, restrict our ability and the ability of our
subsidiaries and future subsidiaries to:
- incur debt;
- pay dividends on stock or purchase stock;
- make investments;
- use the proceeds of the sale of assets or stock of our subsidiaries;
- engage in transactions with our affiliates;
- engage in mergers, consolidations and sales of assets;
- engage in business activities unrelated to our current business; and
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- permit restrictions on the ability of our subsidiaries to pay dividends
and make other distributions.
In addition, ACS' senior credit facility will require it to maintain minimum
interest coverage ratios and maximum leverage ratios.
The restrictions in the ACS' senior credit facility and the indentures
governing the exchange debentures and the ACS senior subordinated notes may
limit our financial and operating flexibility. In addition, if we do not comply
with these restrictions, or if ACS fails to satisfy the financial ratios and
tests under ACS' senior credit facility, the holders of the exchange debentures
and the ACS senior subordinated notes may accelerate payments due them, and the
lenders could accelerate payment of all amounts outstanding under ACS' senior
credit facility.
WE CANNOT ASSURE YOU THAT WE WILL BE ABLE TO SUCCESSFULLY INTEGRATE OUR RECENT
ACQUISITIONS OR ANY ACQUISITIONS WE MAY MAKE IN THE FUTURE.
Our ability to operate successfully is dependent on our ability to integrate
the acquisitions of PTI Alaska and ATU. Because we acquired both PTI Alaska and
ATU at the same time, there may be unanticipated difficulties or complexities
that would interfere with our ability to integrate these businesses. Our success
will depend on our ability to, among other things:
- transfer general and administrative support services and information
technology platforms that are currently provided to PTI Alaska by Century
to ATU's systems;
- modify ATU's current information technology platforms to support the
operations of both PTI Alaska and ATU; and
- coordinate and integrate operational, financial and management processes,
systems and controls.
In addition, any future acquisitions may involve some or all of the
following risks:
- diversion of management attention from operating matters;
- inability to retain key personnel of the acquired business or maintain
relationships with its customers;
- inability to successfully integrate acquired businesses with our existing
businesses, including information technology systems; and
- difficulty in maintaining uniform standards, controls, procedures and
policies.
OUR BUSINESS IS SUBJECT TO EXTENSIVE GOVERNMENTAL LEGISLATION AND REGULATION.
APPLICABLE LEGISLATION AND REGULATIONS AND CHANGES TO THEM COULD ADVERSELY
AFFECT OUR BUSINESS.
We operate in a heavily regulated industry, and most of our revenues come
from the provision of services regulated by the Federal Communications
Commission and the Regulatory Commission of Alaska (the "RCA"). The RCA
succeeded the Alaska Public Utilities Commission (the "APUC"), which was
abolished on June 30, 1999, with the RCA assuming jurisdiction over the
operations of utilities in Alaska. It is not possible to predict what, if any,
changes the RCA will make in the regulatory rules, orders and procedures that
impact our local or long distance operations. Laws and regulations applicable to
us and our competitors may be, and have been, challenged in the courts, and
could be changed by legislative initiative or regulatory agencies at any time.
We cannot predict the impact of future developments or changes to the regulatory
environment or the impact these developments or changes would have on us if they
occurred. See "Regulation."
SUBSTANTIAL PROTECTIONS FROM COMPETITION GRANTED TO PTI ALASKA UNDER THE
TELECOMMUNICATIONS ACT OF 1996 HAVE BEEN REVOKED.
To encourage competition, the Telecommunications Act of 1996 (the "Telecom
Act") generally requires incumbent LECs to allow competitors to interconnect
with their local networks. Historically, each of PTI Alaska's rural local
operating companies qualified for protections under the Telecom Act that
exempted it from or permitted suspension or modification of these obligations.
For the first three
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months of 1999, these companies accounted for 42.3% of our revenues and 52.3% of
our operating income. In the fall of 1997, the APUC conducted a proceeding to
determine whether these rural exemptions should be lifted. Although the APUC
decided that the rural exemptions should be maintained, the decision was
appealed and the Alaska Superior Court remanded the case back to the APUC for
further proceedings. On June 30, 1999 (its last day of existence), the APUC
voted to revoke the rural exemptions held by each of PTI Alaska's rural local
exchange operating companies and directed the commencement of negotiations under
Section 252 of the Telecom Act between those companies and GCI, Inc., a
competitor which had been seeking interconnection with PTI Alaska's rural local
exchange companies. Section 252 provides for a maximum negotiation and
arbitration period of nine months for approval of an interconnection agreement.
In its opinion, the APUC did not address the rights of PTI Alaska's local
exchange operating companies regarding suspension and modification of
interconnection duties under a separate provision of the Telecom Act. PTI
Alaska's local exchange companies could pursue reconsideration of the APUC
ruling by the new RCA, judicial challenge to the APUC ruling, or a new
proceeding to establish the need for suspension and/or modification of
interconnection duties under the Telecom Act. We have not yet determined which,
if any, of these remedies we will pursue. Moreover, we cannot assure you that
any of these potential remedies, if pursued, could be successfully invoked.
Additionally, during the last session, a bill was proposed in the Alaska
State Senate that proposed to open to competition many local telephone markets
within Alaska having 5,000 or more access lines, effectively depriving incumbent
LECs in those markets of their rural exemptions. We cannot predict at this time
whether or to what extent proposals included in the bill will be offered again
and enacted into law. To the extent the markets of PTI Alaska's rural local
exchange companies are opened to competition by the APUC's termination of their
rural exemptions, we do not believe that the marginal effect of passage of the
proposed bill on our business would be material.
If the rural exemptions remain revoked in whole or in part, all or some of
PTI Alaska's local operating companies that are affected may be required to
negotiate with their competitors the terms under which the competitors would be
allowed to interconnect with our local networks. We cannot assure you that the
terms or rates for this interconnection would be sufficient to cover our costs
or otherwise mitigate the financial impacts of competition or that we would be
able to compete effectively with these competitors. See "Regulation."
THE RATES WE CHARGE OUR LOCAL TELEPHONE CUSTOMERS ARE SUBJECT TO REVIEW AND
DOWNWARD ADJUSTMENT BY THE RCA.
The rates we charge our local telephone customers are based, in part, on a
rate of return on capital invested in our networks for our local telephone
operating companies that is authorized by the RCA. These authorized rates are
subject to review and change by the RCA at any time. The APUC has in the past
indicated that one of our local telephone operating companies had earnings in
excess of its historical authorized rate of return, but neither the RCA nor the
APUC has initiated a proceeding to review or change the authorized rate of
return. As a condition to granting its approval of our recent acquisitions of
PTI Alaska and ATU, the APUC has required that we file, by June 30, 2001,
revenue requirement, cost-of-service and rate design studies which will show our
earnings levels for the year ended December 31, 2000. Based on historical
practice, the APUC did not generally initiate rate proceedings unless a company,
as a whole, was earning in excess of the average of its authorized rates of
return. We cannot assure you, however, that the RCA will not change this
practice, that our earnings levels, as disclosed in our studies, will not exceed
our authorized rates of return, or that the RCA will not initiate a rate
proceeding which could cause the RCA to order us to reduce our rates.
REVENUES FROM ACCESS CHARGES MAY BE REDUCED OR LOST.
PTI Alaska receives a significant portion of its revenues (45.3% in 1998)
from access charges paid by interstate and intrastate interexchange carriers for
originating and terminating calls in its service
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areas. The amount of revenue that PTI Alaska receives from access charges is
calculated in accordance with guidelines set by the FCC and the RCA. These
guidelines are subject to change by the FCC and the RCA for LECs serving rural
areas. Any change in the guidelines may be adverse to us. The FCC has initiated
a proceeding to review its rates and policies governing access charges and the
rate of return applicable to incumbent LECs serving rural areas. The APUC
initiated various proceedings for the reform of intrastate access charges. We
cannot predict when any reforms will be implemented by the RCA or if the final
reforms will have an adverse effect on our business.
UNIVERSAL SERVICE SUPPORT CURRENTLY RECEIVED BY SOME OF OUR SUBSIDIARIES MAY BE
REDUCED OR DISCONTINUED IN THE FUTURE.
PTI Alaska receives a portion of its revenues (11.9% in 1998) from the
federal Universal Service Fund, or USF, which was established to compensate for
the high cost of providing universal telecommunications services in rural
markets. If the subsidies received from the USF were materially reduced or
discontinued, some of PTI Alaska's local operating companies might not be able
to operate profitably.
Various reform proceedings are underway at the FCC to change the method of
calculating the amount of subsidies paid under the universal service support
system. Future reforms are expected to replace the current historical cost
system with a system based upon forward-looking costs. We cannot be certain that
this method or any other method we are required to use to determine the
allocation of costs in the future will accurately reflect all of the costs PTI
Alaska incurs or that PTI Alaska will continue to receive the subsidies it
currently receives, and, therefore, we cannot assure you that we will be able to
recover these costs.
Reform proceedings are also underway within the state jurisdiction to review
carriers' support from the Alaska Universal Service Fund (the "AUSF"). These
proceedings could change the method of calculating the support paid to some of
PTI Alaska's local operating companies. For example, the APUC Staff proposed to
reduce or eliminate carriers' receipt of support for switching costs. By the
Staff's calculations, some of PTI Alaska's local operating companies receive
$1.5 million of switching support from the AUSF. Depending on the RCA's actions,
the guidelines under which some of PTI Alaska's local operating companies
receive support from the AUSF may change, impacting PTI Alaska's ability to
recover its costs.
In addition, the APUC proposed funding public interest pay telephones from
the state universal service fund. Carriers would be required to place pay
telephones in locations required in the public interest, supported by the AUSF.
We cannot assure you that the method that the RCA may adopt for compensating
carriers for their public interest pay telephone costs will ensure full cost
recovery. Finally, the APUC's establishment of the AUSF has been challenged in
state court. This lawsuit could cause the RCA to change the manner in which it
funds support for universal service, or could render establishment of this, or
any, state universal service support system null and void under existing legal
authority.
THE TELECOMMUNICATIONS INDUSTRY IS EXTREMELY COMPETITIVE, AND MANY OF OUR
COMPETITORS HAVE SIGNIFICANT ADVANTAGES OVER US THAT MAY ADVERSELY AFFECT OUR
ABILITY TO COMPETE WITH THEM.
The telecommunications industry is extremely competitive. We face many of
the same types of competitive challenges in our local telephone, wireless, long
distance and internet access businesses. In each case, the companies against
which we compete have or may in the future have advantages over us, including:
- greater financial and technical resources;
- stronger brand name recognition; and
- fewer regulatory burdens.
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Aggressive competition could result in, among other things:
- reductions in our customer base;
- the lowering of rates and other prices in order to compete; and
- increased marketing expenditures and use of discounting and promotional
campaigns that adversely affect our margins.
Moreover, we may experience high customer turnover, particularly in our
wireless, long distance and internet businesses, as customers change providers
in response to offerings of lower rates and promotional incentives by our
competitors.
The timing and effectiveness of competitive entry and the resulting
reductions in our customer base and rates and increases in our costs in response
to competitive threats cannot be predicted, but this competition could have a
material adverse effect on our financial condition and results of operations.
LOCAL TELEPHONE SERVICES. We currently face competition from a variety of
companies in Anchorage. To date most competitors in Anchorage have focused on
offering favorably priced bundled services, including both local and long
distance, primarily to residential customers. This competition has resulted in a
loss of market share and retail access lines as these competitors either resell
ATU's services or lease unbundled network elements from ATU in offering their
bundled services. We could in the future face more competition in Anchorage as
well as experience competition in PTI Alaska's markets. We believe that the
Telecom Act and various other legislative initiatives and recent actions by the
FCC and state regulatory authorities may result in increased competition for
each of the services we offer.
Consistent with this regulatory environment, on June 30, 1999, the APUC
ordered the rural exemptions of PTI Alaska's rural local exchange companies
terminated. While the near-term effect of these termination orders is unclear,
they are intended to increase local exchange competition in PTI Alaska's rural
markets and will likely have that effect over the longer-term.
In addition, even if we continue to benefit from the existence of the rural
exemptions, other local service providers that build their own networks could
enter PTI Alaska's service areas at any time. Companies can also bypass our
local telephone networks by using the facilities of interexchange carriers,
cable television companies, electric utilities and wireless service providers.
We have also offered to resell our services to competitors at a wholesale
discount rate, although no competitor has pursued this offer to date.
Although we are entitled to set rates for our services at a level that
affords us an opportunity to earn a reasonable rate of return on the invested
capital in our network, the need to respond to price competition could lead us
to charge lower rates.
WIRELESS. We currently compete with one other cellular provider in each of
our wireless service areas. In addition, there are six PCS licensees in each of
our wireless service areas. One of these PCS licensees has constructed a network
and is currently providing digital PCS service in Anchorage, and another
licensee has recently announced the commencement of trials of its technology.
Any of these other potential competitors could initiate service in the future.
LONG DISTANCE AND INTERNET. Both the long distance and internet markets are
characterized by aggressive price competition. The long distance market in our
service areas is dominated by two large competitors, and acquisition of market
share will be difficult. Although there are a large number of competitive
internet access providers, there are few barriers to entry, which can make
market share growth costly.
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OUR LONG DISTANCE STRATEGY INVOLVES MANY RISKS AND UNCERTAINTIES.
As a new entrant in the long distance business, we have invested and will
continue to invest significant resources to promote our product offerings in
order to generate brand recognition and establish ourselves as a preferred
provider of long distance services. Many of these costs, such as the costs of
fiber capacity, will be incurred in advance of the receipt of related revenues.
We cannot assure you that our long distance strategy will be successful or that
we will be able to recover these costs. In 1998 ATU incurred an operating loss
of $3.7 million from long distance services.
We currently offer long distance services through a reseller strategy. As a
reseller, we rely on other long distance carriers to provide transmission and
termination services for our long distance services. Because we do not own our
own facilities, we are subject to changes in the policies and available capacity
of the carriers from which we lease our transmission capacity. Furthermore, in
negotiating resale agreements with carriers to provide us with these services,
we must estimate future supply and demand for transmission capacity, as well as
the calling patterns and traffic levels for our future customers. If we:
- overestimate our needs for transmission services, we may be obligated to
incur excessive fixed costs; or
- underestimate our needs for transmission services, we may be obligated to
pay higher prices for needed capacity or may find that this capacity is
unavailable and, therefore, be unable to provide adequate service to our
customers.
In response to these concerns and as part of the settlement of a number of
outstanding disputes, including opposition to our recent acquisitions of PTI
Alaska and ATU, we recently agreed to purchase capacity between Alaska's major
population centers and between Alaska and the contiguous 48 states of the U.S.
As a result, we will commit significant additional resources to our long
distance business in the future. We cannot assure you that we will generate
sufficient revenues in our long distance business to recover the costs of these
investments. See "Business--Products Services and Revenue Sources-- Long
Distance Services." Although this acquisition mitigates somewhat the risks
related to being a reseller, we now have significant additional resources
committed to our long distance businesses, the costs of which we may not be able
to recover.
Finally, because we have affiliated local telephone service companies, our
long distance operations are subject to a number of regulations and restrictions
adopted by the APUC. These requirements require us to keep our long distance
business separate from our local telephone business and impose restrictions on
our ability to jointly market and, in some areas, bundle our long distance and
local services. This may increase the costs we would otherwise incur in
competing successfully in the long distance business.
IF WE DO NOT ADAPT TO TECHNOLOGICAL CHANGES IN THE TELECOMMUNICATIONS INDUSTRY,
WE COULD LOSE OUR CUSTOMERS OR MARKET SHARE.
The telecommunications industry will continue to experience rapid changes in
technology. Our success may depend on our ability to adapt to changes in the
industry. Our failure to adopt a new technology, or our choice of one
technological innovation over another, may have an adverse impact on our ability
to compete or meet the demands of our customers. Technological change could,
among other things, reduce the capital required by a competitor to provide local
service in our service areas.
THE SUCCESSFUL OPERATION AND GROWTH OF OUR BUSINESSES ARE DEPENDENT ON ECONOMIC
CONDITIONS IN ALASKA.
We offer telecommunications services solely in Alaska. Because of this
geographical concentration, the successful operation and growth of our
businesses is dependent on economic conditions in Alaska. The Alaskan economy,
in turn, is dependent upon:
- the strength of the natural resources industries, particularly oil
production;
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- the strength of the Alaskan tourism industry;
- the level of government and military spending; and
- continued growth in services industries.
The customer base for telecommunications services in Alaska is small and
geographically concentrated. The population of Alaska is approximately 614,000
people, over 60% of whom live in Anchorage, Juneau and Fairbanks.
IF WE FAIL TO RESOLVE POTENTIAL YEAR 2000 PROBLEMS IN A TIMELY MANNER, WE COULD
EXPERIENCE SIGNIFICANT BUSINESS DISRUPTIONS.
We have conducted a review of the computer systems and related software and
equipment that we acquired upon completion of our acquisitions of PTI Alaska and
ATU. We have identified a number of systems that are not year 2000 compliant and
have implemented a plan that we believe will ensure that these systems, software
and equipment store and process information properly in the year 2000 and later
years. We expect that the action items required by this plan will be largely
completed by October, 1999. We have also made efforts to verify the year 2000
readiness of our important vendors and suppliers. Although we believe the
processes we have initiated are adequate to remedy year 2000 deficiencies, we
cannot assure you that these remedies will be timely or effectively implemented.
We also can make no assurances that we are immune to any adverse impacts from
year 2000 deficiencies suffered by third parties that may in some way affect our
business in a materially adverse manner. We believe that, in the event that we
or our important vendors or suppliers experience year 2000 problems, the
problems could create a material disruption to our business processes and
relationships with our customers, or could require the expenditure of material
financial and other resources, and could, therefore, have an adverse impact on
our business. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
WE DEPEND ON OUR ABILITY TO RECRUIT AND RETAIN KEY PERSONNEL.
Our success depends on our ability to retain our senior management team,
including, in particular, Charles E. Robinson, our Chairman, President and Chief
Executive Officer. Our business will be managed by a small group of key
executive officers. The loss of any of these officers could have an adverse
impact on our business.
Our success also depends on our continued ability to recruit and retain
highly skilled, knowledgeable and sophisticated technical, managerial and
professional personnel. Competition for highly qualified personnel in the
telecommunications industry is intense, and the number of these individuals
living in, or willing to move to, Alaska is limited. Accordingly, we can not
assure you that we will be able to recruit or retain the necessary personnel in
the future.
THE INTERESTS OF OUR CONTROLLING STOCKHOLDER MAY CONFLICT WITH THE INTERESTS OF
HOLDERS OF THE EXCHANGE DEBENTURES.
Fox Paine beneficially owns approximately 98% of the outstanding shares of
our voting capital stock. As a result, Fox Paine has the power to:
- elect our directors and the directors of ACS; and
- approve any action requiring the approval of our stockholders or the
stockholders of ACS.
The directors elected by Fox Paine have the authority to make decisions
affecting our capital structure and the capital structure of ACS, including the
issuance of additional debt or equity. Fox Paine also has the ability to make
decisions regarding any merger, consolidation or sale of assets involving us or
ACS.
Fox Paine may in the future make significant investments in other
telecommunications companies. Some of these companies may be our competitors.
Fox Paine and its affiliates are not obligated to advise us of any investment or
business opportunities of which they are aware.
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FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID
THE EXCHANGE DEBENTURES.
Our issuance of the exchange debentures may be subject to review under U.S.
federal bankruptcy law and comparable provisions of state fraudulent conveyance
laws if a bankruptcy or reorganization case or lawsuit is commenced by or on
behalf of our unpaid creditors. Under these laws, if a court were to find in a
bankruptcy or reorganization case or lawsuit that, at the time we issued the
exchange debentures:
- we issued the exchange debentures to delay, hinder or defraud present or
future creditors; or
- we received less than reasonably equivalent value or fair consideration
for issuing the exchange debentures and at the time we issued the
exchange debentures:
- we were insolvent or rendered insolvent by reason of issuing the exchange
debentures;
- we were engaged, or about to engage, in a business or transaction for
which our remaining unencumbered assets constituted unreasonably small
capital to carry on our business; or
- we intended to incur, or believed that we would incur, debts beyond our
ability to pay as they mature,
then the court could void the obligations under the exchange debentures or
subordinate the exchange debentures to our other debt or take other action
detrimental to holders of the exchange debentures.
The measures of insolvency for purposes of fraudulent transfer laws vary
depending upon the law of the jurisdiction that is being applied in any
proceeding to determine whether a fraudulent transfer has occurred. Generally,
however, a person would be considered insolvent if, at the time it incurred the
debt:
- the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they become due.
There can be no assurance regarding the standard that a court would use to
determine whether or not we were solvent at the relevant time, or, regardless of
the standard that the court uses, that the issuance of the exchange debentures
would not be voided or the exchange debentures would not be subordinated to our
other debt.
THERE IS NO ESTABLISHED TRADING MARKET FOR THE EXCHANGE DEBENTURES.
The exchange debentures are a new issue of securities. If issued under an
effective registration statement, the exchange debentures generally may be
resold or otherwise transferred with no need for further registration; but,
- the exchange debentures will constitute a new issue of securities with no
established trading market; and
- the offer to exchange the exchange debentures for the old debentures will
not depend upon the amount of old debentures tendered for exchange.
We cannot assure you that a liquid market will develop for the exchange
debentures, that you will be able to sell your exchange debentures at a
particular time or that the prices that you receive when you sell will be
favorable. Future trading prices of the exchange debentures will depend on many
factors, including:
- our operating performance and financial condition;
- prevailing interest rates; and
- the market for similar securities.
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The exchange debentures have been designated for trading in the PORTAL
market. However, we do not intend to apply for the exchange debentures to be
listed on any securities exchange or to arrange for quotation on any automated
dealer quotation system.
The initial purchasers have advised us that they intend to make a market in
the exchange debentures, but they are not obligated to do so. The initial
purchasers may discontinue any market making in the exchange debentures at any
time, in their sole discretion.
YOU MAY BE DEEMED TO HAVE RECEIVED RESTRICTED SECURITIES IN EXCHANGE FOR YOUR
OLD DEBENTURES.
If you exchange your old debentures in the exchange offer, you will be
deemed to have represented, by your acceptance of the exchange offer, that you
acquired the exchange debentures in the ordinary course of business and that you
are not engaged in, and do not intend to engage in, a distribution of the
exchange debentures. If the SEC later determines otherwise, however, you may be
deemed to have received restricted securities. If so, you will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
THERE MAY BE ADVERSE CONSEQUENCES IF YOU DO NOT EXCHANGE YOUR OLD DEBENTURES.
It may be difficult for you to sell old debentures that are not exchanged in
the exchange offer. If you do not tender your old debentures or if we do not
accept some of your old debentures, those old notes will continue to be subject
to transfer and exchange restrictions.
These restrictions on transfer of your old debentures arise because we
issued the old debentures pursuant to an exemption from the registration
requirements of the Securities Act and applicable state securities laws. In
general, you may only offer or sell the old debentures if they are registered
under the Securities Act and applicable state securities laws, or offered and
sold pursuant to an exemption from the Securities Act and applicable state
securities laws. If you intend to make use of an exemption, you must, if
requested by us, deliver to us an opinion of independent counsel, reasonably
satisfactory in form and substance to us, that the exemption is available. We do
not intend to register the old debentures under the Securities Act.
Based on interpretations of the SEC staff, exchange debentures issued
pursuant to the exchange offer may be offered for resale, resold or otherwise
transferred by their holders (other than any holder that is our "affiliate"
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that the holders acquired the exchange debentures in the ordinary
course of the holders' business and the holders have no arrangement or
understanding with respect to the distribution of the exchange debentures to be
acquired in the exchange offer. Any holder who tenders in the exchange offer for
the purpose of participating in a distribution of the exchange debentures:
- cannot rely on the applicable interpretations of the SEC; and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.
To the extent the old debentures are tendered and accepted in the exchange
offer, the trading market, if any, for the old debentures would be adversely
affected due to a reduction in market liquidity.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
We have entered into an exchange and registration rights agreement with the
initial purchasers of the old debentures in which we agreed to file a
registration statement relating to an offer to exchange the old debentures for
exchange debentures. We also agreed to use our reasonable best efforts to cause
the exchange offer to be consummated within 180 days following the original
issue of the old debentures. The exchange debentures will have terms
substantially identical to the old debentures except that the exchange
debentures will not contain terms with respect to transfer restrictions,
registration rights and additional interest for our failure to observe as
obligations in the registration rights agreement. The old debentures were issued
on May 14, 1999.
Under the circumstances set forth below, we will use our reasonable best
efforts to cause the SEC to declare effective a shelf registration statement
with respect to the resale of the old debentures and keep the statement
effective for up to two years after the original issue of the old debentures.
These circumstances include:
- if any changes in law, SEC rules or regulations or applicable
interpretations by the staff of the SEC do not permit us to effect the
exchange offer as contemplated by the registration rights agreement;
- if any old debentures validly tendered in the exchange offer are not
exchanged for exchange debentures within 180 days after the original
issue of the old debentures;
- if any initial purchaser of the old debentures requests within 20 days of
completion of the exchange offer, but only with respect to any old
debentures not eligible to be exchanged for exchange debentures in the
exchange offer;
- if any holder of the old debentures is not permitted by any law or
applicable interpretations by the staff of the SEC to participate in the
exchange offer;
- if any holder of old debentures that participates in the exchange offer
and does not receive fully tradeable exchange notes requests within 20
days of completion of the exchange offer; or
- if we elect to file a shelf registration statement with respect to the
resale of the old debentures.
If we fail to comply with our obligations under the registration rights
agreement, we may be required to pay additional interest to holders of the old
debentures. Please read the section captioned "Exchange and Registration Rights
Agreement" for more details regarding the registration rights agreement.
RESALE OF EXCHANGE DEBENTURES
Based on interpretations of the SEC staff set forth in no-action letters
issued to unrelated third parties, we believe that exchange debentures issued
under the exchange offer in exchange for old debentures may be offered for
resale, resold and otherwise transferred by any exchange debenture holder
without compliance with the registration and prospectus delivery provisions of
the Securities Act, if:
- the holder is not our "affiliate" within the meaning of Rule 405 under
the Securities Act;
- the exchange debentures are acquired in the ordinary course of the
holder's business; and
- the holder does not intend to participate in a distribution of the
exchange debentures.
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Any holder who tenders in the exchange offer with the intention of
participating in any manner in a distribution of the exchange debentures:
- cannot rely on the position of the staff of the SEC set forth in "Exxon
Capital Holdings Corporation" or similar interpretive letters; and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.
This prospectus may he used for an offer to resell, resale or other
retransfer of exchange debentures. With regard to broker-dealers, only
broker-dealers that acquired the old debentures as a result of market-making
activities or other trading activities may participate in the exchange offer.
Each broker-dealer that receives exchange debentures for its own account in
exchange for old debentures, where the old debentures were acquired by the
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of the exchange debentures. Please read the section captioned
"Plan of Distribution" for more details regarding the transfer of exchange
debentures.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept for exchange any old debentures
properly tendered and not withdrawn before expiration of the exchange offer. We
will issue $1,000 principal amount of exchange debentures in exchange for each
$1,000 principal amount of old debentures surrendered under the exchange offer.
Old debentures may be tendered only in integral multiples of $1,000.
The form and terms of the exchange debentures will be substantially
identical to the form and terms of the old debentures except the exchange
debentures:
- will be registered under the Securities Act;
- will not bear legends restricting their transfer; and
- will not provide for any additional interest upon our failure to fulfill
our obligations under the registration rights agreement to file, and
cause to be effective, a registration statement.
The exchange debentures will evidence the same debt as the old debentures.
The exchange debentures will be issued under and entitled to the benefits of the
same indenture that authorized the issuance of the old debentures. Consequently,
both series will be treated as a single class of debt securities under that
indenture. For a description of the indenture, see "Description of Exchange
Debentures" below.
The exchange offer is not conditioned upon any minimum aggregate principal
amount of old debentures being tendered for exchange.
As of the date of this prospectus, $46.9 million aggregate principal amount
of the old debentures are outstanding. This prospectus and the letter of
transmittal are being sent to all registered holders of old debentures. There
will be no fixed record date for determining registered holders of old
debentures entitled to participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the provisions of
the registration rights agreement, the applicable requirements of the Securities
Act and the Securities Exchange Act of 1934 and the rules and regulations of the
SEC. Old debentures that are not tendered for exchange in the exchange offer
will remain outstanding and continue to accrue interest and will be entitled to
the rights and benefits their holders have under the indenture relating to the
old debentures.
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We will be deemed to have accepted for exchange properly tendered old
debentures when we have given oral or written notice of the acceptance to the
exchange agent. The exchange agent will act as agent for the tendering holders
for the purposes of receiving the exchange debentures from us and delivering the
exchange debentures to their holders. Subject to the terms of the registration
rights agreement, we expressly reserve the right to amend or terminate the
exchange offer, and not to accept for exchange any old debentures not previously
accepted for exchange, upon the occurrence of any of the conditions specified
below under the caption "--Conditions."
Holders who tender old debentures in the exchange offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
letter of transmittal, transfer taxes with respect to the exchange of old
debentures. We will pay all charges and expenses, other than applicable taxes
described below, in connection with the exchange offer. It is important that you
read the section labeled "--Fees and Expenses" below for more details regarding
fees and expenses incurred in the exchange offer.
EXPIRATION OF THE EXCHANGE OFFER; EXTENSIONS; AMENDMENTS
The exchange offer will expire at 5:00 p.m., New York City time on [ ],
1999, unless, in our sole discretion, we extend it.
In order to extend the exchange offer, we will notify the exchange agent
orally (confirmed in writing) or in writing of any extension. We will notify the
registered holders of old debentures of the extension no later than 9:00 a.m.,
New York City time, on the business day after the previously scheduled
expiration of the exchange offer.
We reserve the right, in our sole discretion:
- to delay accepting for exchange any old debentures;
- to extend the exchange offer or to terminate the exchange offer and to
refuse to accept old debentures not previously accepted if any of the
conditions set forth below under "--Conditions" have not been satisfied,
by giving oral (confirmed in writing) or written notice of the delay,
extension or termination to the exchange agent; or
- subject to the terms of the registration rights agreement, to amend the
terms of the exchange offer in any manner.
Any delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice to the registered
holders of old debentures. If we amend the exchange offer in a manner that we
determine to constitute a material change, we will promptly disclose that
amendment in a manner reasonably calculated to inform the holders of old
debentures of the amendment.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, we will have no obligation to publish, advertise, or
otherwise communicate any public announcement, other than by making a timely
release to a financial news service.
CONDITIONS
Despite any other term of the exchange offer, we will not be required to
accept for exchange, or exchange any exchange debentures for, any old
debentures, and we may terminate the exchange offer
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<PAGE>
as provided in this prospectus before accepting any old debentures for exchange
if in our reasonable judgment:
- the exchange debentures to be received will not be tradeable by the
holder, without restriction under the Securities Act, the Exchange Act
and without material restrictions under the blue sky or securities laws
of substantially all of the states of the United States;
- the exchange offer, or the making of any exchange by a holder of old
debentures, would violate applicable law or any applicable interpretation
of the staff of the SEC; or
- any action or proceeding has been instituted or threatened in any court
or by or before any governmental agency with respect to the exchange
offer that, in our judgment, would reasonably be expected to impair our
ability to proceed with the exchange offer.
In addition, we will not be obligated to accept for exchange the old
debentures of any holder that has not made to us:
- the representations described under "--Purpose and effect of the exchange
offer," "--Procedures for tendering" and "Plan of Distribution"; and
- any other representations that may be reasonably necessary under
applicable SEC rules, regulations or interpretations to make available to
us an appropriate form for registration of the exchange debentures under
the Securities Act.
We expressly reserve the right, at any time or at various times, to extend
the period of time during which the exchange offer is open. Consequently, we may
delay acceptance of any old debentures by giving oral or written notice of an
extension to their holders. During an extension, all old debentures previously
tendered will remain subject to the exchange offer, and we may accept them for
exchange. We will return any old debentures that we do not accept for exchange
for any reason without expense to their tendering holder as promptly as
practicable after the expiration or termination of the exchange offer.
We expressly reserve the right to amend or terminate the exchange offer, and
to reject for exchange any old debentures not previously accepted for exchange,
upon the occurrence of any of the conditions of the exchange offer specified
above. We will give oral or written notice of any extension, amendment,
non-acceptance or termination to the holders of the old debentures as promptly
as practicable. In the case of any extension, the notice of extension will be
issued no later than 9:00 a.m., New York City time, on the business day after
the previously scheduled expiration of the exchange offer.
These conditions are solely for our benefit and we may assert them
regardless of the circumstances that may give rise to them or waive them in
whole or in part at any time or at various times in our sole discretion. If we
fail at any time to exercise any of the foregoing rights, this failure will not
constitute a waiver of that right. Each of these rights will be deemed an
ongoing right that we may assert at any time or at various times.
In addition, we will not accept for exchange any old debentures tendered,
and will not issue exchange debentures in exchange for any old debentures, if at
that time a stop order is threatened or in effect with respect to the
registration statement of which this prospectus constitutes a part or the
qualification of the indenture under the Trust Indenture Act of 1939.
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<PAGE>
PROCEDURES FOR TENDERING
Only a holder of record of old debentures may tender old debentures in the
exchange offer. To tender in the exchange offer, a holder must:
- complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal; have the signature on the letter of transmittal
guaranteed if the letter of transmittal so requires; and deliver the
letter of transmittal or facsimile to the exchange agent prior to the
expiration date; or
- comply with DTC's Automated Tender Offer Program procedures described
below.
In addition, either:
- the exchange agent must receive old debentures along with the letter of
transmittal; or
- the exchange agent must receive, before expiration of the exchange offer,
a timely confirmation of book-entry transfer of old debentures into the
exchange agent's account at DTC according to the procedure for book-entry
transfer described below or a properly transmitted agent's message; or
- the holder must comply with the guaranteed delivery procedures described
below.
To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at the
address set forth below under "--Exchange agent" before expiration of the
exchange offer.
The tender by a holder that is not withdrawn before expiration of the
exchange offer will constitute an agreement between that holder and us in
accordance with the terms and subject to the conditions set forth in this
prospectus and in the letter of transmittal.
THE METHOD OF DELIVERY OF OLD DEBENTURES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE HOLDER'S ELECTION AND
RISK. RATHER THAN MAIL THESE ITEMS, WE RECOMMEND THAT HOLDERS USE AN OVERNIGHT
OR HAND DELIVERY SERVICE. IN ALL CASES, HOLDERS SHOULD ALLOW SUFFICIENT TIME TO
ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE EXPIRATION OF THE EXCHANGE OFFER.
HOLDERS SHOULD NOT SEND THE LETTER OF TRANSMITTAL OR OLD DEBENTURES TO US.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR OTHER NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR THEM.
Any beneficial owner whose old debentures are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct it to
tender on the owner's behalf. If the beneficial owner wishes to tender on its
own behalf, it must, prior to completing and executing the letter of transmittal
and delivering its old debentures, either:
- make appropriate arrangements to register ownership of the old debentures
in the owner's name; or
- obtain a properly completed bond power from the registered holder of old
debentures.
The transfer of registered ownership may take considerable time and may not
be completed prior to the expiration date.
Signatures on a letter of transmittal or a notice of withdrawal described
below must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the
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United States or another "eligible institution" within the meaning of Rule
17Ad-15 under the Exchange Act, unless the old debentures are tendered:
- by a registered holder who has not completed the box entitled "Special
Registration Instructions" or "Special Delivery Instructions" on the
letter of transmittal; or
- for the account of an eligible institution.
If the letter of transmittal is signed by a person other than the registered
holder of any old debentures, the old debentures must be endorsed or accompanied
by a properly completed bond power. The bond power must be signed by the
registered holder as the registered holder's name appears on the old debentures
and an eligible institution must guarantee the signature on the bond power.
If the letter of transmittal or any old debentures or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
these persons should so indicate when signing. Unless we waive this requirement,
they should also submit evidence satisfactory to us of their authority to
deliver the letter of transmittal.
The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may use DTC's Automated Tender Offer
Program to tender. Participants in the program may, instead of physically
completing and signing the letter of transmittal and delivering it to the
exchange agent, transmit their acceptance of the exchange offer electronically.
They may do so by causing DTC to transfer the old debentures to the exchange
agent in accordance with its procedures for transfer. DTC will then send an
agent's message to the exchange agent. The term "agent's message" means a
message transmitted by DTC, received by the exchange agent and forming part of
the book-entry confirmation, to the effect that:
- DTC has received an express acknowledgment from a participant in its
Automated Tender Offer Program that is tendering old debentures that are
the subject of the book-entry confirmation;
- the participant has received and agrees to be bound by the terms of the
letter of transmittal or, in the case of an agent's message relating to
guaranteed delivery, that the participant has received and agrees to be
bound by the applicable notice of guaranteed delivery; and
- the agreement may be enforced against the participant.
We will determine in our sole discretion all questions as to the validity,
form, eligibility (including time of receipt), acceptance of tendered old
debentures and withdrawal of tendered old debentures. Our determination will be
final and binding. We reserve the absolute right to reject any old debentures
not properly tendered or any old debentures the acceptance of which would, in
the opinion of our counsel, be unlawful. We also reserve the right to waive any
defects, irregularities or conditions of tender as to particular old debentures.
Our interpretation of the terms and conditions of the exchange offer (including
the instructions in the letter of transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of old debentures must be cured within the time that we determine. Although we
intend to notify holders of defects or irregularities with respect to tenders of
old debentures, neither we, the exchange agent nor any other person will incur
any liability for failure to give notification. Tenders of old debentures will
not be deemed made until those defects or irregularities have been cured or
waived. Any old debentures received by the exchange agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the exchange agent without cost to the tendering
holder, unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date.
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In all cases, we will issue exchange debentures for old debentures that we
have accepted for exchange under the exchange offer only after the exchange
agent timely receives:
- old debentures or a timely book-entry confirmation that old debentures
have been transferred into the exchange agent's account at DTC; and
- a properly completed and duly executed letter of transmittal and all
other required documents or a properly transmitted agent's message.
By signing the letter of transmittal, each tendering holder of old
debentures will represent to us that, among other things:
- any exchange debentures that the holder receives will be acquired in the
ordinary course of its business;
- the holder has no arrangement or understanding with any person or entity
to participate in the distribution of the exchange debentures;
- if the holder is not a broker-dealer, that it is not engaged in and does
not intend to engage in the distribution of the exchange debentures;
- if the holder is a broker-dealer that will receive exchange debentures
for its own account in exchange for old debentures were acquired as a
result of market-making activities or other trading activities, that it
will deliver a prospectus, as required by law, in connection with any
resale of those exchange debentures (see "Plan of Distribution"); and
- the holder is not an "affiliate," as defined in Rule 405 of the
Securities Act, of us or, if the holder is an affiliate, it will comply
with any applicable registration and prospectus delivery
requirements of the Securities Act.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the old debentures at DTC for purposes of the exchange offer promptly after
the date of this prospectus; and any financial institution participating in
DTC's system may make book-entry delivery of old debentures by causing DTC to
transfer old debentures into the exchange agent's account at DTC in accordance
with DTC's procedures for transfer. Holders of old debentures who are unable to
deliver confirmation of the book-entry tender of their old debentures into the
exchange agent's account at DTC or all other documents required by the letter of
transmittal to the exchange agent on or prior to the expiration date must tender
their old debentures according to the guaranteed delivery procedures described
below.
GUARANTEED DELIVERY PROCEDURES
Holders wishing to tender their old debentures but whose old debentures are
not immediately available or who cannot deliver their old debentures, the letter
of transmittal or any other required documents to the exchange agent or comply
with the applicable procedures under DTC's Automated Tender Offer Program before
expiration of the exchange offer may tender if:
- the tender is made through an eligible institution;
- before expiration of the exchange offer, the exchange agent receives from
the eligible institution either a properly completed and duly executed
notice of guaranteed delivery (by facsimile transmission, mail or hand
delivery) or a properly transmitted agent's message and notice of
guaranteed delivery:
- setting forth the name and address of the holder and the registered
number(s) and the principal amount of old debentures tendered;
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- stating that the tender is being made by guaranteed delivery; and
- guaranteeing that, within three New York Stock Exchange trading days
after expiration of the exchange offer, the letter of transmittal (or
facsimile thereof) together with the old debentures or a book-entry
confirmation, and any other documents required by the letter of
transmittal will be deposited by the eligible institution with the
exchange agent; and
- the exchange agent receives the properly completed and executed letter of
transmittal (or facsimile thereof), as well as all tendered old
debentures in proper form for transfer or a book-entry confirmation, and
all other documents required by the letter of transmittal, within three
New York Stock Exchange trading days after expiration of the exchange
offer.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their old debentures according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, holders of old debentures
may withdraw their tenders at any time before expiration of the exchange offer.
For a withdrawal to be effective:
- the exchange agent must receive a written notice (which may be by
telegram, telex, facsimile transmission or letter) of withdrawal at one
of the addresses set forth below under "--Exchange agent"; or
- holders must comply with the appropriate procedures of DTC's Automated
Tender Offer Program system.
Any notice of withdrawal must:
- specify the name of the person who tendered the old debentures to be
withdrawn;
- identify the old debentures to be withdrawn (including the principal
amount of the old debentures to be withdrawn); and
- where certificates for old debentures have been transmitted, specify the
name in which the old debentures were registered, if different from that
of the withdrawing holder.
If certificates for old debentures have been delivered or otherwise
identified to the exchange agent, then, prior to the release of those
certificates, the withdrawing holder must also submit:
- the serial numbers of the particular certificates to be withdrawn; and
- a signed notice of withdrawal with signatures guaranteed by an eligible
institution, unless the withdrawing holder is an eligible institution.
If old debentures have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawn old
debentures and otherwise comply with the procedures of the facility. We will
determine all questions as to the validity, form and eligibility (including time
of receipt) of notices of withdrawal, and our determination shall be final and
binding on all parties. We will deem any old debentures so withdrawn not to have
been validly tendered for exchange for purposes of the exchange offer. Any old
debentures that have been tendered for exchange but that are not exchanged for
any reason will be returned to their holder without cost to the holder (or, in
the case of old debentures tendered by book-entry transfer into the exchange
agent's account at DTC according to the procedures described above, those old
debentures will be credited to an account maintained with DTC for old
debentures) as soon as practicable after withdrawal, rejection of tender or
termination of the
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exchange offer. Properly withdrawn old debentures may be retendered by following
one of the procedures described under "--Procedures for tendering" above at any
time on or before expiration of the exchange offer.
EXCHANGE AGENT
The Bank of New York has been appointed as exchange agent for the exchange
offer. You should direct questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal and
requests for the notice of guaranteed delivery to the exchange agent addressed
as follows:
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Delivery:
The Bank of New York The Bank of New York
101 Barclay Street, 101 Barclay Street, Ground Level
Floor 7 East Corporate Trust Services Window
New York, New York 10286 New York, New York 10286
Attention: Reorganization Section Attention: Reorganization Section
</TABLE>
By Facsimile Transmission (for Eligible Institutions Only):
The Bank of New York
(212) 815-6339
To Confirm by Telephone or for Information Call: (212) 815-2824
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY OF THE LETTER OF TRANSMITTAL.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, we may make additional solicitations by
telegraph, telephone or in person by our officers and regular employees and
those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses.
We will pay the cash expenses to be incurred in connection with the exchange
offer. The expenses are estimated in the aggregate to be approximately $80,000.
They include:
- SEC registration fees;
- fees and expenses of the exchange agent and trustee;
- accounting and legal fees; and
- printing and mailing costs.
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TRANSFER TAXES
We will pay all transfer taxes, if any, applicable to the exchange of old
debentures under the exchange offer. The tendering holder, however, will be
required to pay any transfer taxes (whether imposed on the registered holder or
any other person) if:
- certificates representing old debentures for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of old
debentures tendered;
- tendered old debentures are registered in the name of any person other
than the person signing the letter of transmittal; or
- a transfer tax is imposed for any reason other than the exchange of old
debentures under the exchange offer.
If satisfactory evidence of payment of transfer taxes is not submitted with
the letter of transmittal, the amount of any transfer taxes will be billed to
the tendering holder.
ACCOUNTING TREATMENT
We will record the exchange debentures in our accounting records at the same
carrying value as the old debentures, which is the aggregate principal amount,
as reflected in our accounting records on the date of exchange. Accordingly, we
will not recognize any gain or loss for accounting purposes in connection with
the exchange offer. We will record the expenses of the exchange offer as
incurred.
OTHER
Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. You are urged to consult your financial and tax
advisors in making your own decision on what action to take.
We may in the future seek to acquire untendered old debentures in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. However, we have no present plans to acquire any old debentures
that are not tendered in the exchange offer or to file a registration statement
to permit resales of any untendered old debentures.
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THE ACQUISITIONS
THE ACQUISITION AGREEMENTS
On August 14, 1998, we entered into a purchase agreement with CenturyTel of
the Northwest, Inc. and CenturyTel Wireless, Inc., which are wholly owned
subsidiaries of Century relating to the acquisition of PTI Alaska. Pursuant to
the PTI Alaska purchase agreement, we acquired all of the capital stock of PTI
Alaska for $411.8 million on May 14, 1999.
On October 20, 1998, we entered into an asset purchase agreement with the
Municipality of Anchorage relating to the acquisition of ATU. Pursuant to the
ATU purchase agreement, we acquired substantially all of the assets and
liabilities of ATU for $263.6 million on May 14, 1999.
The PTI Alaska purchase agreement contains customary representations,
warranties and covenants, as well as limited indemnification provisions under
which the PTI Alaska sellers agreed to indemnify us for specified losses and we
agreed to indemnify the PTI Alaska sellers for specified losses. The ATU
purchase agreement contains customary representations, warranties and covenants.
The PTI Alaska purchase agreement and the ATU purchase agreement have each been
filed as exhibits to the registration statement of which this prospectus is a
part and are incorporated by reference herein.
RELATED AGREEMENTS
LICENSE AGREEMENT. Pursuant to a license agreement entered into on May 14,
1999 among the PTI Alaska Sellers and us, the PTI Alaska sellers granted to us
an exclusive, royalty-free license to use several trade names, trademarks and
service marks owned by Century, including Pacific Telecom, PTI, PTINet-SM-, PTI
Communications-SM- and Cellulink-SM-, throughout Alaska in connection with our
provisioning of telecommunications services. The license agreement also contains
customary provisions relating to maintaining the quality of the names and marks,
protection against infringement and limited cross-indemnification provisions.
The license agreement is perpetual unless terminated by the PTI Alaska sellers
upon 30 days' written notice to us upon a material breach of the license
agreement by us, which breach has not been cured or discontinued within 90 days
of notification by the PTI Alaska sellers. The license agreement may also be
terminated under other limited circumstances.
TRANSITION SERVICES AGREEMENT. Pursuant to a transition services agreement
dated August 14, 1998, by and among PTI Alaska, on the one hand, and Century and
its affiliates (the "suppliers"), on the other hand, (1) the suppliers and PTI
Alaska formalized intercompany arrangements under which the suppliers have been
providing PTI Alaska, among other services, accounting, financial, information
and data, technical, construction and engineering, customer and purchasing and
contract administration services (the "transition services") prior to the PTI
Closing Date and (2) the suppliers agreed to continue to provide the transition
services until August 31, 1999.
The suppliers have agreed to provide the transition services in a manner
consistent with past practice in all material respects at their actual cost plus
operating costs and other costs relating to the provision of cellular services.
In addition, we have agreed to pay the suppliers a one-time payment of $1.0
million in consideration for the continued provision of the transition services.
We can terminate the provision of any transition service, or the entire
transition services agreement, on 60 days' written notice to the suppliers.
37
<PAGE>
USE OF PROCEEDS
We contributed all of the proceeds from our offering of old debentures and
the equity contributions from the Fund, members of management and other
investors of $146.2 million to ACS as common equity.
ACS used the proceeds from its offering of the ACS senior subordinated
notes, the equity contributions from Holdings and borrowings under the senior
credit facility of $[688] million (after deduction of discounts to the initial
purchasers in the private placement of the senior subordinated notes and other
fees and expenses of the acquisitions and related transactions) to:
- finance the aggregate consideration paid to Century in connection with
the PTI Alaska acquisition, including repayment of PTI Alaska's
outstanding indebtedness of $43 million;
- finance the aggregate consideration paid to the Municipality of Anchorage
in connection with the ATU acquisition; and
- finance general corporate needs, including the purchase of fiber capacity
for $19.5 million.
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 1999, as
adjusted to give pro forma effect to the acquisitions of PTI Alaska and ATU, our
offering of old debentures, the initial borrowings by ACS under the senior
credit facility and the offering of the ACS senior subordinated notes by ASC as
of that date. This table should be read in conjunction with "Use of Proceeds,"
"Unaudited Pro Forma Combined Financial and Operating Data" and the historical
financial statements of PTI Alaska and ATU, and the related notes, included in
this prospectus.
<TABLE>
<CAPTION>
PRO FORMA
MARCH 31, 1999
---------------
<S> <C>
(DOLLARS IN
MILLIONS)
Total debt (including current portion):
Capital lease obligations................................................... $ 7.5
Revolving credit facility (of ACS)(a)....................................... 6.7
Term loan facilities (of ACS)(b)............................................ 435.0
9 3/8% Senior subordinated notes due 2009 (of ACS).......................... 150.0
13% Senior discount debentures due 2011..................................... 25.0
------
Total debt................................................................ 624.2
Total stockholders' equity(c)................................................. 121.2
------
Total capitalization...................................................... $ 745.4
------
------
</TABLE>
- ------------------------------
(a) Total borrowings of up to $75.0 million are available to ACS under the
revolving credit facility, of which $66.3 million remains available. See
"Description of Other Indebtedness--The Senior Credit Facility."
(b) The term loan facilities are comprised of $150.0 million of term loan A
facility, $150.0 million of term loan B facility and $135.0 million of term
loan C facility.
(c) Stockholders' equity consists of the proceeds of $121.2 million of common
equity contributed by the Fund, members of management and other investors to
us, all of which we contributed to ACS.
38
<PAGE>
SELECTED HISTORICAL COMBINED FINANCIAL DATA--PTI ALASKA
The following tables set forth selected historical combined financial data
of PTI Alaska. The selected historical combined financial data for each of the
three years in the period ended December 31, 1998 and as of December 31, 1997
and 1998 have been derived from the audited combined financial statements and
the related notes of PTI Alaska included in this prospectus. The selected
historical combined financial data for each of the two years in the period ended
December 31, 1995 and as of December 31, 1994, 1995 and 1996, have been derived
from the unaudited combined financial statements of PTI Alaska, which are not
included in this prospectus and which, in the opinion of management, include all
adjustments, consisting solely of normal, recurring adjustments, necessary to
present fairly the information they contain. The summary combined financial data
for each of the three month periods ended March 31, 1998 and 1999 and as of
March 31, 1998 and 1999 have been derived from the unaudited combined financial
statements of PTI Alaska which are included in this prospectus and which, in the
opinion of management, include all adjustments, consisting solely of normal,
recurring adjustments, necessary to present fairly the information they contain.
The financial statements of PTI Alaska include the results of the City of
Fairbanks Telephone Operation from October 6, 1997, the date of its acquisition.
This acquisition was accounted for as a purchase. PTI Alaska was acquired by
Century on December 1, 1997. The financial statements for the 11-month period
ended November 30, 1997 and prior periods have been presented on Pacific
Telecom's basis of accounting, while the financial statements as of December 31,
1997, the one-month period ended December 31, 1997 and subsequent periods have
been presented on Century's basis of accounting. The selected historical
combined financial data below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the audited combined financial statements of PTI Alaska, and the related notes,
included in this prospectus.
39
<PAGE>
<TABLE>
<CAPTION>
PTI ALASKA
----------------------------------------------------------------------------------------------
CENTURY
PACIFIC TELECOM ----------------------------------------------
---------------------------------------------- DEC. 1,
1997 THREE MONTHS
YEAR ENDED DECEMBER 31, JAN. 1, 1997 TO YEAR ENDED ENDED MARCH 31,
------------------------------- TO DEC. 31, DEC. 31, --------------------
1994 1995 1996 NOV. 30, 1997 1997 1998 1998 1999
--------- --------- --------- ------------- ----------- ----------- --------- ---------
(DOLLARS IN THOUSANDS) (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Operating revenue
Local telephone................ $ 66,636 $ 70,540 $ 71,810 $ 73,472 $ 9,267 $ 109,822 $ 25,390 $ 27,203
Cellular....................... 2,766 4,531 4,823 5,120 181 2,576 408 546
--------- --------- --------- ------------- ----------- ----------- --------- ---------
Total operating revenue.... 69,402 75,071 76,633 78,592 9,448 112,398 25,798 27,749
Operating expenses
Local telephone................ 37,664 38,043 37,314 36,572 5,817 61,611 14,646 14,500
Cellular....................... 2,042 3,147 3,381 3,082 147 2,128 330 396
Depreciation and
amortization................. 13,089 14,316 15,348 15,823 2,466 30,459 7,209 7,785
--------- --------- --------- ------------- ----------- ----------- --------- ---------
Total operating expenses... 52,795 55,506 56,043 55,477 8,430 94,198 22,185 22,681
--------- --------- --------- ------------- ----------- ----------- --------- ---------
Operating income................. 16,607 19,565 20,590 23,115 1,018 18,200 3,613 5,068
Interest expense, net............ (2,459) (2,331) (1,996) (2,169) (171) (1,405) (302) (358)
Other income (expense)(a)........ 1,094 (1,020) (368) (272) 424 2,070 1,129 922
--------- --------- --------- ------------- ----------- ----------- --------- ---------
Income before income taxes....... 15,242 16,214 18,226 20,674 1,271 18,865 4,440 5,632
Income taxes..................... 5,962 5,713 6,737 7,746 736 9,218 2,214 2,709
--------- --------- --------- ------------- ----------- ----------- --------- ---------
Net income....................... $ 9,280 $ 10,501 $ 11,489 $ 12,928 $ 535 $ 9,647 $ 2,226 $ 2,923
--------- --------- --------- ------------- ----------- ----------- --------- ---------
--------- --------- --------- ------------- ----------- ----------- --------- ---------
OTHER FINANCIAL DATA:
Net cash provided by operating
activities..................... -- -- $ 34,589 $ 21,213 $ 5,588 $ 38,291 $ 11,025 $ 14,103
Net cash provided (used) by
investing activities........... -- -- (20,611) (13,554) (3,279) (26,664) 1,947 (2,339)
Net cash used by financing
activities..................... -- -- (12,947) (8,209) (2,563) (6,770) (11,587) (6,753)
EBITDA (as defined)(b)........... 30,790 32,861 35,570 38,666 3,908 50,729 11,951 13,775
EBITDA margin.................... 44.4% 43.8% 46.4% 49.2% 41.4% 45.1% 46.3% 49.6%
Capital expenditures............. $ 21,001 $ 19,437 $ 20,465 $ 14,575 $ 1,825 $ 26,799 $ 2,321 $ 2,200
Ratio of earnings to fixed
charges(c)..................... 4.5x 4.3x 4.8x 5.5x 3.2x 4.5x 2.5x 5.0x
OTHER DATA (END OF PERIOD):
Access lines in service.......... 73,563 77,660 82,969 -- 124,869 131,858 128,023 134,276
Cellular subscribers(d).......... 3,058 3,950 5,573 -- 2,096 2,945 2,546 3,417
Cellular penetration............. 2.1% 2.7% 3.8% -- 3.7% 5.2% 4.6% 5.2%
BALANCE SHEET DATA (END OF
PERIOD)
Total assets..................... $ 157,536 $ 161,323 $ 162,834 -- $ 459,175 $ 472,660 $ 466,301 $ 473,669
Long-term debt including current
portion........................ $ 43,089 43,616 44,294 -- 42,950 43,408 42,683 43,094
Stockholders' equity............. 82,317 90,841 92,137 -- 391,314 400,962 395,359 403,885
</TABLE>
- ------------------------------
(a) "Other income (expense)" includes the net operating results of PTI Alaska's
equipment sales and rental, payphone and internet businesses.
(b) "EBITDA" is net income before interest expense, interest income, income
taxes, depreciation and amortization. EBITDA includes the net operating
results of equipment sales and rental, payphone and internet businesses.
EBITDA is not intended to represent cash flow from operations as defined by
GAAP and should not be considered as an alternative to net income as an
indicator of our operating performance or cash flows. EBITDA is included in
this prospectus because management believes it provides additional
information with respect to our ability to satisfy our debt service, capital
expenditure and working capital requirements. While EBITDA is frequently
used as a measure of operations and the ability of a company to meet debt
service requirements, it is not necessarily comparable to other similarly
titled captions of other companies due to the differences in methods of
calculation.
(c) For purposes of calculating the ratio of earnings to fixed charges,
"earnings" represent income before provision for income taxes plus fixed
charges. "Fixed charges" consist of interest expensed and capitalized,
amortization of debt issuance costs, and the portion of rental expense which
management believes is representative of the interest component of lease
expense.
(d) On December 31, 1997, PTI Alaska sold its cellular operations in Fairbanks
to ATU. The Fairbanks cellular property had 5,497 subscribers at the time of
the sale.
40
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA--ATU
The following table sets forth selected historical financial data of ATU.
The selected historical financial data for each of the three years in the period
ended December 31, 1998 and as of December 31, 1997 and 1998 have been derived
from the audited financial statements and the related notes of ATU included in
this prospectus. The selected historical financial data for each of the two
years in the period ended December 31, 1995 and as of December 1994, 1995 and
1996 have been derived from the audited financial statements of ATU which are
not included in this prospectus. The summary financial data for each of the
three month periods ended March 31, 1998 and 1999 and as of March 31, 1998 and
1999 have been derived from the unaudited financial statements of ATU which are
included in this prospectus and which, in the opinion of management, include all
adjustments, consisting solely of normal, recurring adjustments, necessary to
present fairly the information they contain. The selected historical financial
data below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the audited
financial statements of ATU, and the related notes, included in this prospectus.
<TABLE>
<CAPTION>
ATU
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
<CAPTION>
1994 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Operating revenue
Local telephone.................................... $ 97,021 $ 97,161 $ 99,071 $ 101,857 $ 105,663 $ 25,830 $ 27,164
Cellular........................................... 8,540 12,670 16,897 21,845 29,225 5,879 6,710
Long distance...................................... -- -- 2 1,541 6,815 1,144 2,683
--------- --------- --------- --------- --------- --------- ---------
Total operating revenues....................... 105,561 109,831 115,970 125,243 141,703 32,853 36,557
Operating expenses
Local telephone.................................... 59,211 60,174 62,075 60,300 59,191 14,179 15,474
Cellular........................................... 6,473 9,727 12,379 14,455 19,961 4,048 4,740
Long distance...................................... -- -- 543 4,644 10,395 1,898 3,243
Depreciation and amortization...................... 18,936 19,258 20,496 26,839 29,608 7,099 7,434
--------- --------- --------- --------- --------- --------- ---------
Total operating expenses....................... 84,620 89,159 95,493 106,238 119,155 27,224 30,891
--------- --------- --------- --------- --------- --------- ---------
Operating income..................................... 20,941 20,672 20,477 19,005 22,548 5,629 5,666
Interest expense, net................................ (7,565) (6,706) (6,840) (6,768) (6,427) (1,840) (1,585)
Other income (expense)(a)............................ (328) (322) 220 (119) (2,551) (330) (593)
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes........................... 13,048 13,644 13,857 12,118 13,570 3,459 3,488
Income taxes(b)...................................... -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income........................................... $ 13,048 $ 13,644 $ 13,857 $ 12,118 $ 13,570 $ 3,459 $ 3,488
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
OTHER FINANCIAL DATA:
Net cash provided by operating activities(c)......... $ 42,382 $ 43,412 $ 42,120 $ 46,641 $ 53,207 $ 8,394 $ 10,735
Net cash provided (used) by investing
activities(c)...................................... 13,577 1,057 (787) (3,665) (5,659) (8,044) (1,568)
Net cash provided (used) by financing
activities(c)...................................... (57,169) (53,518) (30,095) (46,916) (33,580) 16,631 (12,150)
EBITDA (as defined)(d)............................... 39,549 39,608 41,239 45,567 52,550 12,648 13,016
EBITDA margin........................................ 37.5% 36.1% 35.6% 36.4% 37.1% 38.5% 35.6%
Capital expenditures................................. $ 33,328 $ 27,958 $ 24,958 $ 35,187 $ 29,644 $ 8,404 $ 3,383
Ratio of earnings to fixed charges(e)................ 1.5x 1.4x 1.4x 1.4x 1.5x 1.7x 1.4x
OTHER DATA (end of period):
Access lines in service(f)........................... 144,869 147,934 154,752 158,486 168,536 164,569 170,343
Cellular subscribers................................. 13,684 24,855 37,651 53,035 63,627 54,436 63,779
Cellular penetration................................. 4.7% 8.4% 12.6% 13.3% 15.8% 13.7% 15.8%
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
ATU
---------------------------------------------------------------------------
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (END OF PERIOD):
Total assets......................................... $ 288,857 $ 289,903 $ 308,810 $ 323,124 $ 350,245 $ 351,190 $ 346,696
Long-term debt including current portion............. 145,775 123,009 146,412 151,945 172,521 180,161 167,618
Fund equity.......................................... 118,695 126,839 132,596 136,414 141,884 139,873 145,372
</TABLE>
- ------------------------------
(a) "Other income (expense)" includes the net operating results of ATU's
equipment sales and rental, and payphone business and equity in earnings
(losses) from minority investments.
(b) During the periods presented, ATU was a public utility of the Municipality
of Anchorage and was exempt from federal and state income taxes.
(c) Net cash data includes information from ATU financial statements prepared in
accordance with Governmental Accounting Principles.
(d) "EBITDA" is net income before interest expense, interest income, income
taxes, depreciation and amortization, and equity in earnings (loss) of
minority investments of $(46,158), $158,000 and $(2,945,000) for the years
ended December 31, 1996, 1997 and 1998 and $(250,000) and $(509,000) for the
three months ended March 31, 1998 and 1999. EBITDA includes the net
operating results of equipment sales and rental, payphone and internet
businesses. EBITDA is not intended to represent cash flow from operations as
defined by GAAP and should not be considered as an alternative to net income
as an indicator of our operating performance or cash flows. EBITDA is
included in this prospectus because management believes it provides
additional information with respect to our ability to satisfy our debt
service, capital expenditure and working capital requirements. While EBITDA
is frequently used as a measure of operations and the ability of a company
to meet debt service requirements, it is not necessarily comparable to other
similarly titled captions of other companies due to the differences in
methods of calculation.
(e) For purposes of calculating the ratio of earnings to fixed charges,
"earnings" represent income before provision for income taxes plus fixed
charges. "Fixed charges" consist of interest expensed and capitalized,
amortization of debt issuance costs and the portion of rental expense which
management believes is representative of the interest component of lease
expense.
(f) "Access lines in service" includes all revenue producing lines, whether
connected to retail or wholesale customers.
42
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL AND OPERATING DATA
The following unaudited pro forma combined financial and operating data are
based on the financial statements of PTI Alaska and ATU, as adjusted for the
estimated effects of:
- the acquisition of PTI Alaska;
- the acquisition of ATU;
- the purchase of fiber capacity for $19.5 million; and
- the financings necessary to complete these transactions,
as if they had occurred on January 1, 1998 for the Statement of Operations and
on March 31, 1999 for the Balance Sheet. The unaudited pro forma combined
financial and operating data are not necessarily indicative of what our
financial position or results of operations would actually have been had these
transactions been completed on the dates indicated and do not project our
results of operations for any future date.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
------------------------------------------------
THREE MONTHS ENDED
ACQUISITION PRO FORMA MARCH 31,
--------------------
1999
1998 ---------
---------
PRO FORMA
PTI ALASKA ATU ADJUSTMENTS COMBINED COMBINED
----------- --------- ----------- ----------- --------------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Operating revenue
Local telephone........................... $ 109,822 $ 105,663 $ -- $ 215,485 $ 51,220 $ 54,367
Cellular.................................. 2,576 29,225 -- 31,801 6,287 7,256
Long distance............................. -- 6,815 -- 6,815 1,144 2,683
----------- --------- ----------- ----------- --------- ---------
Total operating revenue............... 112,398 141,703 -- 254,101 58,651 64,306
Operating expenses
Local telephone........................... 61,611 59,191 -- 120,802 28,825 29,974
Cellular.................................. 2,128 19,961 -- 22,089 4,378 5,136
Long distance............................. -- 10,395 -- 10,395 1,898 3,243
Depreciation and amortization............. 30,459 29,608 1,154(a) 61,221 14,597 15,507
----------- --------- ----------- ----------- --------- ---------
Total operating expenses.............. 94,198 119,155 1,154 214,507 49,698 53,860
----------- --------- ----------- ----------- --------- ---------
Operating income............................ 18,200 22,548 (1,154) 39,594 8,953 10,446
Interest expense, net....................... (1,405) (6,427) (49,116)(b) (56,948) (14,237) (14,238)
Equity in earnings (loss) of subsidiaries... -- (2,945) -- (2,945) (250) (509)
Other income (expense)...................... 2,070 394 (1,033)(c) 1,431 791 580
----------- --------- ----------- ----------- --------- ---------
Income (loss) before income taxes......... 18,865 13,570 (51,303) (18,868) (4,743) (3,721)
Income tax expense (benefit)................ 9,218 -- (9,218)(d) -- -- --
----------- --------- ----------- ----------- --------- ---------
Net income (loss)........................... $ 9,647 $ 13,570 $ (42,085) $ (18,868) $ (4,743) $ (3,721)
----------- --------- ----------- ----------- --------- ---------
----------- --------- ----------- ----------- --------- ---------
OTHER DATA:
EBITDA (as defined)(e)...................... -- -- -- $ 102,246 $ 24,341 $ 26,533
Adjusted EBITDA............................. -- -- -- 106,109 24,853 27,045
Pro forma cash interest expense............. -- -- -- 53,198 13,300 13,300
Capital expenditures........................ -- -- -- 56,443 10,725 5,583
</TABLE>
43
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(a) Represents the increase in amortization expense as a result of the increase
in goodwill due to the application of purchase accounting as described in
note (a) to the Unaudited Pro Forma Combined Balance Sheet and the
$19,500,000 purchase of fiber capacity. Goodwill is amortized over 40 years,
and fiber capacity is amortized over 20 years.
(b) Represents the net adjustment to interest expense as a result of the
borrowings under the revolving credit facility, the term loan facilities,
the ACS senior subordinated notes and the exchange debentures, calculated as
follows (dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
-----------------
<S> <C>
Revolving credit facility (of ACS)(1)................................................ $ 523
Term Loan A Facility (of ACS)(2)..................................................... 11,625
Term Loan B Facility (of ACS)(3)..................................................... 12,000
Term Loan C Facility (of ACS)(4)..................................................... 11,138
9 3/8% Senior subordinated notes due 2009 (of ACS)(5)................................ 14,063
13% Senior discount debentures due 2011(6)........................................... 3,250
Interest on long term obligations assumed(7)......................................... 600
-------
Pro forma cash interest expense(8)................................................... 53,198
Amortization of deferred financing costs(9).......................................... 3,750
-------
Pro forma interest expense........................................................... 56,948
Historical interest expense, net..................................................... (7,832)
-------
Total.......................................................................... $ 49,116
-------
-------
</TABLE>
----------------------------
(1) Represents interest on the $6.7 million that was drawn under the
revolving credit facility of ACS on the closing date using an assumed
interest rate of 7.75%.
(2) Represents interest on the $150.0 million Term Loan A Facility of ACS
using an assumed interest rate of 7.75%.
(3) Represents interest on the $150.0 million Term Loan B Facility of ACS
using an assumed interest rate of 8.00%.
(4) Represents interest on the $135.0 million Term Loan C Facility of ACS
using an assumed interest rate of 8.25%.
(5) Represents interest on the $150.0 million senior subordinated notes of
ACS using an interest rate of 9.375%.
(6) Represents interest on the $25.0 million exchange debentures using an
interest rate of 13.0%.
(7) Represents interest on $7.5 million of long-term obligations assumed by
us at an interest rate of 8.00%.
(8) A 1/8% change in interest rates for the variable rate debt above would
change interest expense by $552,000.
(9) Deferred financing costs are amortized over the term of the related debt
(an average life of eight years for all borrowings).
(c) Represents the estimated annual management fee to be paid to Fox Paine.
(d) Represents the elimination of historical tax expense, as on a pro forma
basis we would have been in a net loss position. No tax benefit for the net
loss is reflected in the Unaudited Pro Forma Combined Statement of
Operations, as we are uncertain when profitable operations will be achieved.
(e) "EBITDA" is net income before interest expense, interest income, income
taxes, depreciation and amortization. EBITDA includes the net operating
results of equipment sales and rental, payphone and internet businesses and
the estimated annual management fee to be paid to Fox Paine. EBITDA is not
intended to represent cash flow from operations as defined by GAAP and
should not be considered as an alternative to net income as an indicator of
our operating performance or cash flows. EBITDA is included in this
prospectus because management believes it provides additional information
with respect to our ability to satisfy our debt service, capital expenditure
and working capital requirements. While EBITDA is frequently used as a
measure of operations and the ability of a company to meet debt service
requirements, it is not necessarily comparable to other similarly titled
captions of other companies due to the differences in methods of
calculation.
44
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
AT MARCH 31, 1999
----------------------------------------------------
ACQUISITION PRO FORMA
PTI ALASKA ATU ADJUSTMENTS(A) COMBINED
----------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
ASSETS
Cash and cash equivalents.............................. $ 10,739 $ 23,034 $ (33,773)(b) $ --
Accounts receivable.................................... 54,645 24,026 (36,489)(e) 42,182
Inventory and other current assets..................... 2,660 3,138 -- 5,798
----------- ---------- -------------- -----------
Total current assets............................... 68,044 50,198 (70,262) 47,980
Gross telephone plant.................................. 413,478 449,354 19,500(d) 882,332
Less: accumulated depreciation......................... 255,612 194,170 -- 449,782
----------- ---------- -------------- -----------
Net telephone plant................................ 157,866 255,184 19,500(d) 432,550
Restricted funds and investments....................... -- 17,309 (17,309)(c) --
Financing costs........................................ -- -- 30,000(e) 30,000
Goodwill............................................... 241,030 16,203 9,588(f) 266,821
Long-term investments.................................. 976 5,107 -- 6,083
Other.................................................. 5,753 2,695 -- 8,448
----------- ---------- -------------- -----------
Total other assets................................. 247,759 41,314 22,279 311,352
----------- ---------- -------------- -----------
Total assets........................................... $ 473,669 $ 346,696 $ (28,483) $ 791,882
----------- ---------- -------------- -----------
----------- ---------- -------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable....................................... $ 2,589 $ 22,967 -- $ 25,556
Accrued salaries and benefits.......................... 2,321 5,170 -- 7,491
Advance billings and customer deposits................. 2,026 3,790 -- 5,816
Other.................................................. 3,778 1,779 -- 5,557
----------- ---------- -------------- -----------
Total current liabilities.......................... 10,714 33,706 -- 44,420
Long-term obligations and current maturities........... 43,094 167,618 413,533(g) 624,245
Deferred income taxes.................................. 13,914 -- (13,914)(h) --
Deferred investment tax credits........................ 780 -- -- 780
Other.................................................. 1,282 -- -- 1,282
----------- ---------- -------------- -----------
Total deferred credits and other liabilities....... 15,976 -- (13,914) 2,062
----------- ---------- -------------- -----------
Stockholders' equity................................... 403,885 145,372 (428,102)(i) 121,155
----------- ---------- -------------- -----------
Total liabilities and stockholders' equity......... $ 473,669 $ 346,696 ($ 28,483) $ 791,882
----------- ---------- -------------- -----------
----------- ---------- -------------- -----------
</TABLE>
45
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(a) The following represents the sources of funds and the preliminary allocation
of the purchase price for the acquisitions to the assets acquired and
liabilities assumed based upon their respective estimated fair values. The
actual purchase adjustments to reflect the fair values of the assets
acquired and liabilities assumed will be based upon appraisal studies and
management's evaluation of the assets and liabilities. Accordingly, the
adjustments that have been included in the pro forma data will change based
upon the final allocation.
The sources and uses of the funds are as follows:
<TABLE>
<CAPTION>
AMOUNT
--------------------
<S> <C>
(DOLLARS IN
THOUSANDS)
Sources of funds:
Revolving credit facility (of ACS).................................... $ 6,745
Term loan facilities (of ACS)......................................... 435,000
9 3/8% Senior subordinated notes due 2009 (of ACS).................... 150,000
13% Senior discount debentures due 2011............................... 25,000
Issuance of common stock.............................................. 121,155
--------
Total sources..................................................... $ 737,900
--------
--------
Uses of funds:
Accounts receivable................................................... $ 42,182
Inventories and other current assets.................................. 5,798
Property, plant and equipment......................................... 432,550
Other assets.......................................................... 14,531
Capitalized financing costs........................................... 30,000
Goodwill.............................................................. 266,821
Liabilities assumed................................................... (53,982)
--------
Total uses........................................................ $ 737,900
--------
--------
</TABLE>
(b) Represents cash used to fund a portion of the purchase price for the
acquisitions.
(c) Represents assets at March 31, 1999 that were not acquired in the
acquisitions.
(d) Represents the purchase of fiber capacity for $19,500,000.
(e) Represents the portion of the fees and expenses attributable to the
revolving credit facility, the term loan facilities, the senior subordinated
notes of ACS, the old debentures and the exchange debentures, which have
been recorded as deferred financing costs and will be amortized over the
average life of the debt issued.
(f) Represents the adjustment to goodwill to reflect the preliminary allocation
of the purchase price by eliminating existing goodwill of $258,947,000 and
reflecting the goodwill set forth in note (a) of $266,821,000. Goodwill is
amortized over 40 years.
(g) Represents the payment of existing debt, the initial borrowings under the
ACS revolving credit facility and ACS the term loan facilities, the offering
of the senior subordinated notes of ACS and the offering of the exchange
debentures as follows:
<TABLE>
<CAPTION>
AMOUNT
--------------------
<S> <C>
(DOLLARS IN
THOUSANDS)
Revolving credit facility (of ACS)...................................... $ 6,745
Term loan facilities (of ACS)........................................... 435,000
Capital lease obligations............................................... 7,500
9 3/8% Senior subordinated notes due 2009 (of ACS)...................... 150,000
</TABLE>
46
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET (CONTINUED)
<TABLE>
<S> <C>
13% Senior discount debentures due 2011................... 25,000
--------
Total debt.......................................... 624,245
Repayment of existing long-term obligations............... 210,712
--------
Increase in long-term obligations......................... $ 413,533
--------
--------
</TABLE>
(h) Represents the adjustment to reduce deferred income taxes to zero at the
date of acquisition as the beginning book basis of the assets and
liabilities equalled their tax basis for all items except some portion of
goodwill.
(i) Represents the adjustment to stockholders' equity to eliminate the existing
equity of PTI Alaska and ATU and reflect the $121,155,000 of proceeds from
our issuance of common stock.
47
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
We were formed in 1998 to acquire telecommunications properties in Alaska.
Prior to the consummation of the acquisitions of PTI Alaska and ATU, we had no
operations. Accordingly, the following is a discussion and analysis of the
historical financial condition and results of operations of PTI Alaska and ATU,
respectively. See "Capitalization," "Unaudited Pro Forma Combined Financial and
Operating Data" and "Use of Proceeds." The following discussion should be read
in conjunction with the combined financial statements of PTI Alaska and the
consolidated financial statements of ATU, and the related notes, included in
this prospectus.
REVENUES. PTI Alaska generates revenue through: (1) the provision of local
telephone services, including (a) basic local service to customers within its
service areas, (b) network access services to IXCs for origination and
termination of interstate and intrastate long distance phone calls, (c) enhanced
services, (d) ancillary services, such as billing and collection, and (e) USF;
and (2) the provision of wireless services. PTI Alaska generates additional
revenue through the provision of internet access and miscellaneous equipment
sales, which are recorded net of expenses as "Other income (expense)."
ATU generates revenue through: (1) the provision of local telephone
services, including (a) basic local service to customers within its service
areas, (b) network access services to interexchange carriers, or IXCs, for
origination and termination of interstate and intrastate long distance phone
calls, (c) enhanced services and (d) ancillary services, such as billing and
collection; (2) the provision of wireless services; and (3) the provision of
long distance services. In addition, ATU recognizes its proportionate share of
the net income or loss of its minority-owned investments.
The historically stable revenue and cash flow of LEC operations are the
result of the need for basic telecommunications services, the highly regulated
nature of the telecommunications industry and, in the case of rural LECs, the
underlying cost recovery settlement and support mechanisms applicable to LEC
operations. Basic local service is generally provided at a flat monthly rate and
allows the user to place unlimited calls within a defined local calling area.
Access revenues are generated by providing IXCs access to the LEC's local
network and its customers. USF revenues are a subsidy paid to rural LECs, such
as PTI Alaska, to support the high cost of providing universal service in rural
markets. Other service revenue is generated from ancillary services, enhanced
services, such as voice mail, or internet access.
Changes in revenue are largely attributable to changes in the number of
access lines, local service rates and minutes of use. Other factors can also
impact revenue, such as: (1) intrastate and interstate revenue settlement
methodologies, (2) whether an access line is used by a business or residential
subscriber, (3) calling patterns (intrastate and interstate), (4) customers'
selection of various local rate plan options, (5) selection of enhanced calling
services or other packaged products (such as cellular and internet) and (6)
other subscriber usage characteristics.
LECs have two basic tiers of customers: (1) end users located in the LEC's
local exchanges that pay for local telephone service and (2) the IXCs that pay
the LEC for access to customers located within that LEC's local service area.
LECs provide access service to numerous IXCs and also bill and collect long
distance charges from IXC customers on behalf of the IXCs. The amount of access
charge revenue associated with a particular IXC varies depending upon long
distance calling patterns and the relative market share of each long distance
carrier.
Our local service rates for end users are authorized by the APUC. Authorized
rates of return are set by the FCC and the APUC for interstate and intrastate
access charges, respectively, and may change from time to time.
48
<PAGE>
OPERATING EXPENSES. PTI Alaska's operating expenses are categorized as:
cost of sales and operating expenses--telephone; cost of sales and operating
expenses--wireless; and depreciation and amortization. Cost of sales and
operating expenses--telephone are those operating expenses incurred by PTI
Alaska in connection with its local telephone business, including the operation
of its central offices and outside plant facilities and related operations,
customer service, marketing and other general and administrative expenses and
allocated corporate expenses. Cost of sales and operating expenses--wireless are
those operating expenses incurred by PTI Alaska in connection with the operation
of its wireless facilities and transmission of wireless services, customer
service, marketing and other general and administrative expenses and allocated
corporate expenses.
ATU's operating expenses are categorized as: cost of sales and operating
expenses--local telephone; cost of sales and operating expenses--cellular; cost
of sales and operating expenses--long distance; and depreciation and
amortization. Cost of sales and operating expenses--local telephone are those
operating expenses incurred by ATU in connection with its local telephone
business, including the operation of its central offices and outside plant
facilities and related operations, customer service, marketing and other general
and administrative expenses and corporate expenses. Cost of sales and operating
expenses--cellular are those operating expenses incurred by ATU in connection
with the operation of its wireless facilities and transmission of wireless
services, customer service, marketing and other general and administrative
expenses and corporate expenses. Cost of sales and operating expenses--long
distance includes operating expenses incurred by ATU in connection with the
provisioning of long distance services.
PTI ALASKA
On August 14, 1998, we entered into an agreement to acquire PTI Alaska. We
completed the acquisition of PTI Alaska on May 14, 1999. PTI Alaska is the
incumbent provider of local telephone services to over 131,000 access lines in
Juneau, Fairbanks and more than 70 rural communities in Alaska. PTI Alaska also
provides cellular services and internet access services. Since August 1998,
members of management have been providing advisory and management consulting
services to PTI Alaska relating to its day-to-day business operations under a
consulting agreement between Century and LEC Consulting Corporation, a company
formed by members of management.
Century acquired PTI Alaska on December 1, 1997 as part of its acquisition
of Pacific Telecom, Inc. from PacifiCorp Holdings, Inc. On October 6, 1997,
prior to its acquisition by Century, PTI Alaska acquired the assets of the City
of Fairbanks Telephone Operation. On December 31, 1997, PTI Alaska sold its
Alaska rural statistical area ("RSA") #1 B-side cellular property in Fairbanks
to MACtel. The operating results of this divested property are included in the
historical operating results of PTI Alaska.
The following table summarizes each component of PTI Alaska's revenue
sources for the years ended December 31, 1996, 1997 and 1998 and the three month
periods ended March 31, 1998 and 1999 (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998 1998 1999
--------- --------- ---------- --------- ---------
Local service............................................. $ 21,740 $ 26,937 $ 37,255 $ 8,961 $ 9,576
Network access............................................ 45,056 50,298 64,321 14,292 15,305
Other..................................................... 5,014 5,504 8,246 2,137 2,322
--------- --------- ---------- --------- ---------
Local telephone........................................... 71,810 82,739 109,822 25,390 27,203
Cellular.................................................. 4,823 5,301 2,576 408 546
--------- --------- ---------- --------- ---------
Total..................................................... $ 76,633 $ 88,040 $ 112,398 $ 25,798 $ 27,749
--------- --------- ---------- --------- ---------
--------- --------- ---------- --------- ---------
</TABLE>
49
<PAGE>
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998.
OPERATING REVENUES
Combined operating revenues increased 7.6% for the three months ended March
31, 1999 as compared to the three months ended March 31, 1998. Local service,
network access and cellular revenues all increased as compared to the prior
three month period.
LOCAL TELEPHONE
Local telephone revenues increased 7.1% for the three months ended March 31,
1999 as compared to the three months ended March 31, 1998. The increase in local
service revenues paralleled a 4.9% growth in access lines from the previous
period. Access revenues increased $1.0 million, or 7.1%, as compared to the
prior three month period.
CELLULAR
Cellular revenues increased 33.8% for the three months ended March 31, 1999
as compared to the three months ended March 31, 1998, as cellular customers
increased 34.3% during that period.
OPERATING EXPENSES
LOCAL TELEPHONE
Cost of sales and operating expenses--telephone decreased marginally for the
three months ended March 31, 1999 as compared to the three months ended March
31, 1998.
CELLULAR
Cost of sales and operating expenses--cellular increased 20.0% for the three
months ended March 31, 1999 as compared to the three months ended March 31,
1998. This increase is due to the additional cost required to support additional
cellular customers.
DEPRECIATION AND AMORTIZATION
The 8.0% increase in depreciation and amortization for the three months
ended March 31, 1999 as compared to the three months ended March 31, 1998 was
due to higher plant in service balances and amortization of goodwill associated
with purchase accounting.
INTEREST EXPENSE, NET
Interest expense, net increased to $358,000 the three months ended March 31,
1999 from $302,000 for the three months ended March 31, 1998.
OTHER INCOME (EXPENSE)
Other income (expense) is related to the net operating results of
nonregulated equipment sales and rental activity, primarily relating to local
telephone operations. For the three months ended March 31, 1999, other income
(expense) decreased 18.3% as compared to the three months ended March 31, 1998.
The decrease was primarily due to recognition of expenses attributable to
projects recognized in the prior year.
50
<PAGE>
INCOME TAXES
The provision for income taxes was $2.7 million for the three months ended
March 31, 1999 as compared to $2.2 million for the three months ended March 31,
1998 due to higher taxable income in the more recent three month period.
NET INCOME AND EBITDA
Increases in Net Income and EBITDA are a result of the factors described
above. EBITDA includes the net operating results of equipment sales and rental,
payphone and internet businesses which are included below operating income in
the line "Other income (expense)."
FISCAL YEAR ENDED DECEMBER 31, 1998 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1997
The financial statements of PTI Alaska reflect the combined results of PTI
Alaska, including Telephone Utilities of Alaska, Inc. ("TUA"), which operates in
Juneau; Telephone Utilities of the Northland, Inc. ("TUNI"), which operates in
numerous rural communities; and the Alaska RSA #3 cellular property for the
years ended December 31, 1997 and 1998. Additionally, the results of the City of
Fairbanks Telephone Operation are reflected from the date of acquisition,
October 6, 1997. The Alaska RSA #1 B-side cellular property was divested on
December 31, 1997 to satisfy FCC cross-ownership restrictions. The operating
results of this property are included in the financial statements for the years
ended December 31, 1997 and 1996, respectively, as follows:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
Revenues............................................................. $ 2,681 $ 3,100
Operating expenses................................................... 1,889 1,643
Depreciation......................................................... 457 424
--------- ---------
Operating income..................................................... $ 335 $ 1,033
--------- ---------
--------- ---------
</TABLE>
OPERATING REVENUES
Combined operating revenues increased 27.7% to $112.4 million for the year
ended December 31, 1998 as compared to $88.0 million for the year ended December
31, 1997. Local telephone operating revenues increased 32.7% to $109.8 million
for the year ended December 31, 1998 as compared to $82.7 million for the year
ended December 31, 1997. Cellular revenues decreased 51.4% to $2.6 million for
the year ended December 31, 1998 as compared to $5.3 million for the year ended
December 31, 1997. Ownership of the City of Fairbanks Telephone Operation for a
full year in 1998 versus a partial year in 1997 accounted for $21.0 million of
the total $24.4 million increase in combined operating revenues.
LOCAL TELEPHONE
Local telephone revenues increased 32.7% to $109.8 million for the year
ended December 31, 1998 as compared to $82.7 million for the year ended December
31, 1997. Of this increase, $21.0 million was due to the full year of ownership
of the City of Fairbanks Telephone Operation in 1998 versus a partial year in
1997, $4.2 million was due to higher access revenues at TUA and TUNI, $1.5
million was due to higher local service revenues at TUA and TUNI, and $0.4
million was due to higher other revenues. The increase in local service revenues
was due to a 5.6% growth in access lines from December 31, 1997 to December 31,
1998. Growth in access revenues was primarily the result of a higher revenue
requirement due to higher expenses for the year ended December 31, 1998 as
compared to the year ended December 31, 1997.
51
<PAGE>
CELLULAR
Cellular revenues decreased 51.4% to $2.6 million for the year ended
December 31, 1998 as compared to $5.3 million for the year ended December 31,
1997. Improved results of the Alaska RSA #3 property increased revenues $0.4
million for the year ended December 31, 1998 as compared to the year ended
December 31, 1997. The divestiture of the Alaska RSA #1 B-side cellular property
decreased cellular revenue by $3.1 million for the year ended December 31, 1998
as compared to the year ended December 31, 1997.
OPERATING EXPENSES
LOCAL TELEPHONE
Cost of sales and operating expenses--telephone increased 45.4% to $61.6
million for the year ended December 31, 1998 as compared to $42.4 million for
the year ended December 31, 1997. Ownership of the City of Fairbanks Telephone
Operation for the full year 1998 versus a partial year in 1997 accounted for
$15.0 million of the total increase in cost of sales and operating expenses--
telephone. The remaining increase was due to $4.2 million of higher expenses at
TUA and TUNI local telephone operations, attributable to increased costs
necessary to support growth in access lines and higher corporate allocated
costs.
CELLULAR
Cost of sales and operating expenses--cellular decreased by 34.1% to $2.1
million for the year ended December 31, 1998 as compared to $3.2 million for the
year ended December 31, 1997. In addition, $0.5 million of higher cost of sales
and operating expense--cellular was due to increased costs necessary to support
the increased number of customers for the Alaska RSA #3 cellular property. The
divestiture of the Alaska RSA #1 B-side cellular property decreased expenses by
$1.6 million.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased $12.2 million to $30.5 million for
the year ended December 31, 1998 as compared to $18.3 million for the year ended
December 31, 1997. The increase in depreciation and amortization expense was due
to higher plant in service balances, amortization of goodwill associated with
purchase accounting, higher authorized depreciation rates effective January 1,
1998, as approved by the APUC, and a full year of ownership of the City of
Fairbanks Telephone Operation.
INTEREST EXPENSE, NET
Interest expense, net decreased 40.0% to $1.4 million for the year ended
December 31, 1998 as compared to $2.3 million for the year ended December 31,
1997. The decrease was due to $4.9 million in higher cash and cash equivalents
and $11.5 million higher affiliated receivable balances at December 31, 1998 as
compared to December 31, 1997.
OTHER INCOME (EXPENSE)
Other income (expense) is related to the net operating results of
nonregulated equipment sales and rental activity, primarily relating to local
telephone operations. For the year ended December 31, 1998 Other income
(expense) was $2.0 million as compared to $0.2 million for the year ended
December 31, 1997. The improved results were due to $0.8 million of higher
equipment rental and sales results, $0.3 million of stronger payphone results,
$0.2 million of higher internet operating income, and other miscellaneous items.
52
<PAGE>
INCOME TAXES
Income taxes increased 8.7% to $9.2 million for the year ended December 31,
1998 as compared to $8.5 million for the year ended December 31, 1997. Higher
income taxes were due to higher taxable income in 1998 as compared to 1997.
NET INCOME
As a result of the factors described above, net income decreased $3.8
million to $9.6 million for the year ended December 31, 1998 as compared to
$13.4 million for the year ended December 31, 1997.
EBITDA
As a result of the factors described above, EBITDA increased by $8.1 million
to $50.7 million for the year ended December 31, 1998 as compared to $42.6
million for the year ended December 31, 1997. EBITDA includes the net operating
results of equipment sales and rental, payphone and internet businesses.
FISCAL YEAR ENDED DECEMBER 31, 1997 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1996
OPERATING REVENUES
Combined operating revenues increased 14.9% to $88.0 million for the year
ended December 31, 1997 as compared to $76.6 million for the year ended December
31, 1996. Local telephone operating revenues increased 15.2% to $82.7 million
for the year ended December 31, 1997 as compared to $71.8 million for the year
ended December 31, 1996. Cellular revenues increased 9.9% to $5.3 million for
the year ended December 31, 1997 as compared to $4.8 million for the year ended
December 31, 1996. Ownership of the City of Fairbanks Telephone Operation from
October 6, 1997 through December 31, 1997 accounted for $7.8 million of the
total $11.4 million increase in combined operating revenues.
LOCAL TELEPHONE
Local telephone revenues increased 15.2% to $82.7 million for the year ended
December 31, 1997 as compared to $71.8 million for the year ended December 31,
1996. Of this increase, $7.8 million was due to partial year ownership of the
City of Fairbanks Telephone Operation in 1997, $1.2 million was due to higher
access revenues at TUA and TUNI, and $2.0 million was due to higher local
service and other revenues at TUA and TUNI. The increase in local service
revenues was due to a 6.0% growth in access lines and higher enhanced services
revenue (in each case without giving effect to the City of Fairbanks Telephone
Operation acquisition). Growth in access revenues was primarily the result of a
higher revenue requirement due to higher expenses for the year ended December
31, 1997 as compared to the prior year.
CELLULAR
Cellular revenues increased 9.9% to $5.3 million for the year ended December
31, 1997 as compared to $4.8 million for the year ended December 31, 1996.
Improved results were primarily due to an increase in subscribers from December
31, 1996 to December 31, 1997.
53
<PAGE>
OPERATING EXPENSES
LOCAL TELEPHONE
Cost of sales and operating expenses--telephone increased 13.6% to $42.4
million for the year ended December 31, 1997 as compared to $37.3 million for
the year ended December 31, 1996. Ownership of the City of Fairbanks Telephone
Operation for part of the year in 1997 accounted for $4.4 million of the total
increase. The remaining increase is due to $0.7 million higher expenses for TUA
and TUNI local telephone operations, attributable to increased costs necessary
to support growth in access lines.
CELLULAR
Cost of sales and operating expenses--cellular decreased 4.5% to $3.2
million for the year ended December 31, 1997 as compared to $3.4 million for the
year ended December 31, 1996.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization increased 19.2% to $18.3 million for the year
ended December 31, 1997 as compared to $15.3 million for the year ended December
31, 1996. Ownership of the City of Fairbanks Telephone Operation for part of the
year in 1997 resulted in $2.1 million of the total increase. The remaining
portion of the total increase was due to higher plant in service balances in
1997 as compared to 1996.
INTEREST EXPENSE, NET
Interest expense, net increased 17.2% to $2.3 million for the year ended
December 31, 1997 as compared to $2.0 million for the year ended December 31,
1996.
OTHER INCOME (EXPENSE)
Other income (expense) is related to the operating income for nonregulated
equipment sales and rental activity, primarily relating to local telephone
operations. For the year ended December 31, 1996, this activity resulted in
other income (expense) of $(0.4) million as compared to $0.2 million for the
year ended December 31, 1997. This increase was due principally to increased
internet revenues and increased payphone, equipment sales and rental activity.
INCOME TAXES
Income taxes increased 25.9% to $8.5 million for the year ended December 31,
1997 as compared to $6.7 million for the year ended December 31, 1996. The
higher income taxes were due to higher taxable income in 1997 as compared to
1996.
NET INCOME
As a result of the factors described above, net income increased $1.9
million to $13.4 million for the year ended December 31, 1997 as compared to
$11.5 million for the year ended December 31, 1996.
EBITDA
As a result of the factors described above, EBITDA increased $7.0 million to
$42.6 million for the year ended December 31, 1998 as compared to $35.6 million
for the year ended December 31, 1996. EBITDA includes the net operating results
of equipment sales and rental, payphone and internet businesses.
54
<PAGE>
ATU
On October 20, 1998, we entered into an agreement to acquire substantially
all of the assets and liabilities of ATU from the Municipality of Anchorage. ATU
is the incumbent provider of local telephone services to over 168,000 access
lines in the Municipality of Anchorage and surrounding communities. ATU also
provides cellular and long distance services. In addition, ATU holds minority
interests in companies that deliver wireless cable television, internet access
and wholesale long distance. Prior to May 1999, ATU also held a minority
interest in a provider of home security services.
The following table summarizes each component of ATU's revenue sources for
the years ended December 31, 1996, 1997 and 1998 and the three months ended
March 31, 1998 and 1999 (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998 1998 1999
---------- ---------- ---------- --------- ---------
Local service.......................................... $ 49,458 $ 52,007 $ 50,863 $ 12,913 $ 12,244
Network access......................................... 34,800 34,369 34,740 8,035 10,686
Other.................................................. 14,813 15,481 20,060 4,882 4,234
---------- ---------- ---------- --------- ---------
Local telephone.................................. 99,071 101,857 105,663 25,830 27,164
Cellular............................................... 16,897 21,845 29,225 5,879 6,710
Long distance.......................................... 2 1,541 6,815 1,144 2,683
---------- ---------- ---------- --------- ---------
Total.................................................. $ 115,970 $ 125,243 $ 141,703 $ 32,853 $ 36,557
---------- ---------- ---------- --------- ---------
---------- ---------- ---------- --------- ---------
</TABLE>
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1998
OPERATING REVENUES
Operating revenues increased 11.3% million for the three months ended March
31, 1999 as compared to the three months ended March 31, 1998. ATU reported
revenue growth in all three service categories: local telephone, cellular and
long distance.
LOCAL TELEPHONE
Local telephone revenues, which consist of local service, network access
charges and other revenues, increased 5.2% for the three months ended March 31,
1999 as compared to the three months ended March 31, 1998. Comparing the same
periods, local service revenues decreased 5.2% as a result of a 3.6% decrease in
retail access lines. Local service revenues include revenues for ATU's retail
local telephone service to business and residential customers and wholesale
customers that resell ATU's local telephone service. The decrease in retail
access lines was primarily due to the introduction of competition in ATU's
service area.
Network access revenues increased 33.0% for the three months ended March 31,
1999 as compared to the three months ended March 31, 1998, due primarily to
prior period revenues which had been reserved in connection with various
regulatory matters that have been resolved.
Other revenues decreased $0.6 million, or 13.3% for the three months ended
March 31, 1999 as compared to the three months ended March 31, 1998. One
significant component of other revenues is rental of unbundled network elements
to other service providers. A significant increase in this rental activity was
offset by two factors. Other revenues for the prior three month period ending
March 31, 1998 included one-time revenue from services provided to
facility-based competitors of approximately $0.6 million. In addition, there was
a significant decrease in revenues generated from billing and collection
services provided to other service providers during the 1st quarter of 1999.
55
<PAGE>
CELLULAR
Cellular revenues increased 14.1% for the three months ended March 31, 1999
as compared to the three months March 31, 1998. The number of subscribers
increased from 54,436 at March 31, 1998 to 63,779 at March 31, 1999.
LONG DISTANCE
Long distance revenues increased 134.5% for the three months ended March 31,
1999 as compared to the three months ended March 31, 1998 principally due to a
161.1% growth in minutes of use.
OPERATING EXPENSES
LOCAL TELEPHONE
Cost of sales and operating expenses--telephone increased 9.1% for the three
months ended March 31, 1999 as compared to the three months ended March 31, 1998
due to a number of factors including increased labor and consulting related to
new information systems, increased customer service expense and an increase in
sales and marketing expense as a response to the opening of the local market to
competition.
CELLULAR
Cost of sales and operating expenses--cellular increased 17.1% for the three
months ended March 31, 1999 as compared to the three months ended March 31, 1998
primarily due to the increase costs of supporting a larger customer base.
LONG DISTANCE
Cost of sales and operating expenses--long distance increased 70.9% for the
three months ended March 31, 1999 as compared to the three months ended March
31, 1998. Expenses rose at a lower rate than revenues due to economies of scale.
Since ATU is not a facilities-based carrier, a primary component of long
distance cost of sales is the semi-fixed expense of leased lines. The number of
leased lines is fixed over a range of capacity. In addition, selling, general
and administrative expense, as a percentage of revenues, was significantly lower
for the three months ended March 31, 1999 as compared to the three months ended
March 31, 1998.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased 4.7% for the three months
ended March 31, 1999 as compared to the three months ended March 31, 1998
primarily due to increases in plant in service balances and goodwill
amortization.
INTEREST EXPENSE, NET
Interest expense, net decreased 13.9% for the three months ended March 31,
1999 as compared to the three months ended March 31, 1998 due to the decrease in
outstanding long-term debt.
OTHER INCOME (EXPENSE)
Other income (expense) consists of equity in earnings (loss) of minority
interests and the net operating results of ATU's nonregulated equipment sales
and lease activities. Other income (expense) changed only marginally between the
two three month periods.
56
<PAGE>
NET INCOME AND EBITDA
The 0.8% increase in net income and the 2.9% increase in EBITDA result from
the factors described above. Because ATU is a public utility of the Municipality
of Anchorage, it is exempt from U.S. federal and state income taxes. Because
earnings and losses from equity investments do not directly affect the operating
cash requirements of ATU, these amounts have been excluded from the EBITDA
calculation. EBITDA includes the net operating results of equipment sales and
rental, payphone and internet businesses which are included below operating
income in the line "Other income (expense)."
FISCAL YEAR ENDED DECEMBER 31, 1998 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1997
OPERATING REVENUES
Operating revenues increased 13.1% to $141.7 million for the year ended
December 31, 1998 as compared to $125.2 million for the year ended December 31,
1997. ATU reported revenue growth in all three service categories: local
telephone, cellular and long distance.
LOCAL TELEPHONE
Local telephone revenues, which consist of local service, network access
charges and other revenues, increased 3.7% to $105.7 million for the year ended
December 31, 1998 as compared to $101.9 million for the year ended December 31,
1997. Local service revenues decreased 2.2% to $50.9 million for the year ended
December 31, 1998 as compared to $52.0 million for the year ended December 31,
1997 as a result of a decrease in retail access lines. Local service revenues
include revenues for ATU's retail local telephone service to business and
residential customers and wholesale customers that resell ATU's local telephone
service. Although the total number of access lines increased from 158,486 at
December 31, 1997 to 168,536 at December 31, 1998, retail access lines decreased
14,492 from 150,720 at December 31, 1997 to 136,228 at December 31, 1998,
principally as a result of the introduction of competition in ATU's service
area. The number of access lines made available to competitors increased from
7,766 at December 31, 1997 to 32,308 at December 31, 1998. This decrease in
retail access lines resulted in a decrease in local service revenues.
Network access revenues increased 1.1% to $34.7 million for the year ended
December 31, 1998 as compared to $34.4 million for the year ended December 31,
1997. Market share losses relating to increased sales by competitors reduced
network access revenues by $1.9 million in 1998. We expect this competition to
continue. This decrease was partially offset by $2.4 million in higher
intrastate network access revenues from the settlement of a prior year access
charge dispute.
Other revenues increased 29.6% to $20.1 million for the year ended December
31, 1998 as compared to $15.5 million for the year ended December 31, 1997. This
increase was attributable to $3.8 million of higher revenues from Unbundled
network element, or UNE, interconnection and $0.7 million of directory revenue.
Revenues from monthly charges paid by competing carriers for UNE interconnection
are accounted for as other revenue.
CELLULAR
Cellular revenues increased 33.8% to $29.2 million for the year ended
December 31, 1998 as compared to $21.8 million for the year ended December 31,
1997. The increase was due to an increase in the number of cellular subscribers
in Anchorage and Alaska RSA #2, as well as the acquisition of the Alaska RSA #1
B-side cellular property on January 1, 1998. The number of subscribers increased
from 47,538 (excluding the Alaska RSA #1 B-side property) at December 31, 1997
to 63,627 at December 31, 1998. The Fairbanks property increased from 5,497
subscribers at January 1, 1998 to
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9,064 at December 31, 1998. Average revenue per customer per month remained
stable at $42 per customer per month.
LONG DISTANCE
Long distance revenues increased 342.2% to $6.8 million for the year ended
December 31, 1998 as compared to $1.5 million for the year ended December 31,
1997 principally due to customer growth. The number of customers increased to
25,670 customers at December 31, 1998 from approximately 10,600 customers at
December 31, 1997.
OPERATING EXPENSES
LOCAL TELEPHONE
Cost of sales and operating expenses--telephone decreased 1.8% to $59.2
million for the year ended December 31, 1998 as compared to $60.3 million for
the year ended December 31, 1997. Product sales and advertising expenses
increased $2.4 million in 1998 due to increased advertising campaigns resulting
from heightened competition in the local telephone market in 1998. These higher
expenses were offset by $3.5 million of lower expenses, primarily due to lower
labor expenses associated with reduced full-time local telephone employee levels
in 1998 as compared to 1997.
CELLULAR
Cost of sales and operating expenses--cellular increased 38.1% to $20.0
million for the year ended December 31, 1998 as compared to $14.5 million for
the year ended December 31, 1997. An increase in customers from 47,538 at
December 31, 1997 to 63,627 at December 31, 1998 resulted in increases in sales
and marketing, general and administrative and other operating expenses. Of the
$5.5 million increase in cost of sales and operating expenses--cellular, $2.1
million was due to the operation of the newly acquired Alaska RSA #1 B-side
cellular property for a full year in 1998.
LONG DISTANCE
Cost of sales and operating expenses--long distance increased 123.8% to
$10.4 million for the year ended December 31, 1998 as compared to $4.6 million
for the year ended December 31, 1997. Higher expenses were due to increased
dedicated facilities leases, access payments, advertising and administrative
expenses to support greater long distance traffic volumes. Traffic volumes
increased due to increases in the total number of long distance customers. As a
result, ATU's long distance operations incurred losses of $3.7 million in 1998
and $3.2 million in 1997.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased 10.3% to $29.6 million for
the year ended December 31, 1998 as compared to $26.8 million for the year ended
December 31, 1997. Increases in plant in service balances and goodwill
amortization accounted for the increase. Higher depreciation and amortization
expense of $1.5 million in the local telephone operations and $1.3 million in
the cellular and long distance operations was incurred in 1998.
INTEREST EXPENSE, NET
Interest expense, net decreased 5.0% to $6.4 million for the year ended
December 31, 1998 as compared to $6.8 million for the year ended December 31,
1997. Interest expense increased by $1.1 million as a result of higher
outstanding long-term obligations associated with a bond issuance in 1998.
Increases in interest income from higher cash balances served to offset higher
interest expense.
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Reversal of previously accrued interest expense for revenue that had been
reserved in prior periods but recognized in 1998 reduced interest expense for
the year ended December 31, 1998 by $0.4 million.
OTHER INCOME (EXPENSE)
Other income (expense) consists of equity in earnings (loss) of minority
interests and the net operating results of ATU's nonregulated equipment sales
and lease activities. Other income (expense) deteriorated by $2.5 million from
an expense of $0.1 million for the year ended December 31, 1997 to an expense of
$2.6 million for the year ended December 31, 1998. ATU recognized losses in its
minority investments of $2.9 million for the year ended December 31, 1998
compared to earnings of $0.2 million for the year ended December 31, 1997. For
the year ended December 31, 1998, ATU incurred $1.1 million in proportional
losses from its minority investments, and wrote down $1.5 million and $0.4
million of its investments in Alaskan Choice Television, LLC, and Internet
Alaska, respectively.
NET INCOME
As a result of the factors described above, net income increased $1.5
million to $13.6 million for the year ended December 31, 1998 as compared to
$12.1 million for the year ended December 31, 1997. Because ATU is a public
utility of the Municipality of Anchorage, it is exempt from U.S. federal and
state income taxes.
EBITDA
As a result of the factors described above, EBITDA increased $7.0 million to
$52.6 million for the year ended December 31, 1998 as compared to $45.6 million
for the year ended December 31, 1997. Because earnings and losses from equity
investments do not directly affect the operating cash requirements of ATU, these
amounts have been excluded from the EBITDA calculation. EBITDA includes the net
operating results of equipment sales and rental, payphone and internet
businesses.
FISCAL YEAR ENDED DECEMBER 31, 1997 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1996
OPERATING REVENUES
Operating revenues increased 8.0% to $125.2 million for the year ended
December 31, 1997 as compared to $116.0 million for the year ended December 31,
1996. ATU reported revenue growth in all three service categories: local
telephone, cellular and long distance.
LOCAL TELEPHONE
Local telephone revenues increased 2.8% to $101.9 for the year ended
December 31, 1997 as compared to $99.1 million for the year ended December 31,
1996. Local service revenues increased 5.2% to $52.0 million for the year ended
December 31, 1997 as compared to $49.5 million for the year ended December 31,
1996. The increase in local service revenues was primarily due to a 2.4%
increase in access lines and increases in penetration of enhanced services, such
as caller ID and call forwarding. Access revenues declined $0.4 million for the
year ended December 31, 1997 due to lower intrastate access revenues. Other
revenues increased 4.5% to $15.5 million for the year ended December 31, 1997 as
compared to $14.8 million for the year ended December 31, 1996, principally as a
result of the commencement of UNE interconnection, resulting in the sale by ATU
of unbundled network elements to a competitor, and directory advertising
revenues.
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CELLULAR
Cellular revenues increased 29.3% to $21.8 million for the year ended
December 31, 1997 as compared to $16.9 million for the year ended December 31,
1996. The increase was principally attributable to a 26.3% increase in the
number of subscribers, from 37,651 at December 31, 1996 to 47,538 at December
31, 1997 (excluding the Alaska RSA #1 B-Side cellular property which was
acquired on January 1, 1998).
LONG DISTANCE
Long distance revenues increased to $1.5 million for the year ended December
31, 1997 as compared to $2,000 for the year ended December 31, 1996. The
increase was attributable to the commencement of the long distance business in
the fall of 1996.
OPERATING EXPENSES
LOCAL TELEPHONE
Cost of sales and operating expenses--telephone decreased 2.9% to $60.3
million for the year ended December 31, 1997 as compared to $62.1 million for
the year ended December 31, 1996. The decrease is primarily attributable to
lower labor expense from a reduction in the number of employees and lower
expenses from regulatory consulting services.
CELLULAR
Cost of sales and operating expenses--cellular increased 16.8% to $14.5
million for the year ended December 31, 1997 as compared to $12.4 million for
the year ended December 31, 1996. The increase is attributable to increases in
the number of employees to support growth in the customer base and increased
advertising expenses.
LONG DISTANCE
Cost of sales and operating expenses--long distance increased $4.1 million
to $4.6 million for the year ended December 31, 1997 as compared to $0.5 million
for the year ended December 31, 1996. The increase was due to start-up expenses
associated with commencing long distance operations, including higher switching,
facilities lease and access expenses to support the larger base of customers.
DEPRECIATION AND AMORTIZATION
Depreciation expense increased 30.9% to $26.8 million for the year ended
December 31, 1997 as compared to $20.5 million for the year ended December 31,
1996. The higher depreciation expense was attributable to higher telephone plant
in service, as well as higher depreciation rates authorized by the APUC that
became effective January 1, 1997.
INTEREST EXPENSE, NET
Interest expense, net remained relatively unchanged. Higher interest expense
from higher outstanding long-term debt balances was offset by higher interest
income associated with higher cash balances.
OTHER INCOME (EXPENSE)
Other income (expense) consists of minority investment earnings of $0.2
million for the year ended December 31, 1997, and net nonregulated expense of
$0.3 million for the year ended December 31, 1997 as compared to net
nonregulated income of $0.3 million for the year ended December 31, 1996.
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NET INCOME
As a result of the factors described above, net income decreased $1.8
million to $12.1 million for the year ended December 31, 1997 as compared to
$13.9 million for the year ended December 31, 1996. Because ATU is a public
utility of the Municipality of Anchorage, it is exempt from federal and state
income taxes.
EBITDA
As a result of the factors described above, EBITDA increased $4.4 million to
$45.6 million for the year ended December 31, 1997 as compared to $41.2 million
for the year ended December 31, 1996. Because earnings and losses from equity
investments do not directly affect the operating cash requirements of ATU, these
amounts have been excluded from the EBITDA calculation. EBITDA includes the net
operating results of equipment sales and rental, payphone and internet
businesses.
YEAR 2000
Some of our older computer programs identify years with two digits instead
of four. This may cause problems because these programs may recognize the year
2000 as the year 1900. These problems could result in a system failure or
miscalculations disrupting operations, including a temporary inability to
process transactions, send invoices or engage in similar, normal business
activities. In addition, we face the risk that suppliers of products, services
and systems purchased by us do not have business systems or products that comply
with the year 2000 requirements.
While we believe that the conversions or installations of replacement
systems will proceed smoothly, we cannot assure you that there will not be
interruptions or failures in our systems or in the systems of our suppliers. The
telecommunications industry is highly susceptible to the year 2000 issue. Should
the year 2000 issue cause problems across our infrastructure, service could be
interrupted. These events, if they occur, could materially adversely affect our
financial condition and results of operations.
In order to understand our vulnerability to the year 2000 issue, we
conducted a complete systems assessment of our year 2000 compliance during the
process of evaluating the acquisitions of PTI Alaska and ATU. Many of our
systems have been represented by the respective vendors of these systems to be
year 2000 compliant and both PTI Alaska and ATU have initiatives in progress
that we believe will address all outstanding year 2000 issues.
As of January 1, 1999, ATU completed its installation of SAP, an integrated
financial and accounting system. On March 12, 1999, ATU completed its
installation of Saville, a state-of-the-art customer care and billing system.
MACtel and ATU Long Distance will continue to operate their existing financial
management and billing systems. For carrier access billing, following the
closing of the acquisitions, ATU will transition to PTI Alaska's existing
systems. Each of the foregoing systems has been represented by the vendor to be
year 2000 compliant.
We are in the process of converting PTI Alaska's customer care and billing
systems to ATU's Saville platform. This process is expected to be complete in
July 1999. PTI Alaska recently completed its installation of Platinum, an
integrated financial and accounting application. Facilities management and
repair support systems for PTI Alaska are scheduled to be transitioned in July
1999 to ATU platforms, which have been represented by the vendors as year 2000
compliant.
Since January 1, 1997, ATU has spent approximately $22.8 million to upgrade
and maintain its information technology systems. While each of these upgrades
related to systems that, based on representations by the vendors, we believe are
year 2000 compliant, the expenditures for upgrading these systems also included
costs of replacing otherwise obsolete systems. We expect to spend an
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additional $4.3 million to make our information technology systems year 2000
compliant by the end of October 1999.
PTI Alaska's cellular systems are supported by Novatel and Northern Telecom
switching and cell site equipment. The Novatel switches, which serve southeast
Alaska, are not currently year 2000 compliant, but these systems are in the
process of being replaced by year 2000 compliant systems, with completion
expected by October 1999 at a cost of approximately $4.0 million.
Given the progress made to date, we do not anticipate delays in finalizing
and implementing year 2000 readiness solutions by the end of October 1999. We
cannot accurately estimate the uncertainty of completing our year 2000 readiness
plan, particularly as it relates to any failure by third parties that have
material relationships with us and fail to achieve their own year 2000
readiness. We have in the past and will continue to obtain assurances from third
parties that their systems are or will be year 2000 compliant no later than the
end of October 1999. Any failures by these third parties to appropriately
address their own year 2000 readiness challenges could materially adversely
affect our financial condition and results of operations.
We believe that the following several situations make up our most reasonably
likely worst case scenario:
FAILURE OF ELECTRICAL POWER SUPPLIES. Although most of our major switching
and information systems have emergency standby power supplies, in the event of
long-term power disruption we may be required to shut down our switching and
computer equipment. We believe the larger electrical utilities that provide
service to us are pursuing year 2000 readiness strategies. However, electric
utilities serving smaller rural communities may be particularly exposed to year
2000 readiness issues.
DISRUPTION OF SWITCHING AND INFORMATION TECHNOLOGY INFRASTRUCTURE. The most
significant risks related to our switching and information technology systems
are (1) the inability of our customers to make and receive calls, (2) the
inability of our cell sites, switching centers and other interfaces to process
and record call details of local telephone, long distance and cellular traffic
accurately and (3) the inability of our billing systems to report and bill
customers for phone usage accurately. We believe that we have adequately
addressed each of these risks in our year 2000 readiness plan.
INABILITY OF LARGE CUSTOMERS TO PAY INVOICES. Our largest customers are
IXCs that are both customers and competitors in some of our markets. If IXCs
experience year 2000 readiness problems, we may experience delays in collection
of outstanding receivables and a decrease in the cash available to fulfill our
obligations.
We are developing contingency plans for potential year 2000 disruptions. We
are closely monitoring our year 2000 readiness plan and have developed
preliminary contingency plans for the most critical aspects of our year 2000
readiness plan. Details of these plans will be further developed and will depend
on our final assessment of the relevant situation and potential alternative
strategies.
LIQUIDITY AND CAPITAL RESOURCES
Our initial debt borrowings (including those of ACS) and equity
contributions were sufficient to fund the consummation of the acquisitions of
PTI Alaska and ATU. As a result of the financing for these acquisitions, we have
a substantial amount of long-term debt. Interest payments on the old debentures
(and on the exchange debentures commencing on November 15, 2004), the ACS
Holding senior subordinated notes and borrowings by ACS under the senior credit
facility, as well as amortization of borrowings under the senior credit
facility, represent significant obligations of ours. Interest on the old
debentures and on the ACS senior subordinated notes (and on the exchange
debentures commencing on November 15, 2004) is payable semiannually. Interest on
borrowings under the senior credit facility is payable quarterly, and the senior
credit facility requires annual amortization
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payments commencing on May 14, 2002. We also have a $75.0 million revolving
credit facility, approximately $66.3 million of which is undrawn and available.
Management believes additional debt availability and internally generated
cash flow from operations will be adequate to meet our anticipated capital and
liquidity requirements. Other than debt service, our future liquidity demands
relate to capital expenditures and working capital.
The local telephone business is a regulated business that requires the
timely maintenance of plant and infrastructure. Our local network is of high
quality and is technically advanced and will have relatively predictable annual
capital needs. Our historical capital expenditures have been significant. The
construction and geographic expansion of our cellular network required a
substantial amount of capital. We are in the process of completing a digital
upgrade of our cellular network and expect to finish this upgrade during the
last six months of 1999, spending approximately $7.0 million. The implementation
of our long distance strategy is capital intensive. We recently purchased fiber
capacity for $19.5 million. This purchase will enable us to use our own leased
facilities in developing our business. If we successfully implement our long
distance strategy and grow our long distance business, we will be required to
make substantial purchases of additional fiber capacity. In addition to the
purchase of fiber capacity, we anticipate total capital expenditures in 1999 of
approximately $58.0 million, of which approximately $48.0 million will be for
our LEC business and approximately $10.0 million will be for our cellular
business. We do not expect our capital expenditure requirements to increase
materially in the foreseeable future for our LEC or cellular businesses.
Our capital requirements may change, however, due to, among other things:
(1) the availability of additional fiber capacity; (2) our decision to pursue
specific acquisition opportunities; (3) changes in technology; or (4) the
effects of competition. Any of these changes could require additional financing
that might not be available or, if available, might not be on terms favorable to
us. Our ability to satisfy our capital requirements will be dependent upon our
future financial performance, which is, in turn, subject to future economic
conditions and to financial, business and other factors, many of which are
beyond our control. See "Risk Factors."
EFFECT OF NEW ACCOUNTING STANDARDS
SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES,
was issued in June 1998. SFAS No. 133 establishes standards for the recognition
and measurement of derivatives and hedging activities. This statement is
effective for fiscal years beginning after June 15, 1999. We are currently
analyzing the impact SFAS No. 133 will have on our financial statements.
Statement of Position ("SOP") 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER
SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE, was issued in March 1998. SOP
98-1, among other things, requires that the costs of the software, whether
purchased or developed internally, be capitalized and amortized over the
estimated useful life of the software. Adoption of SOP 98-1 is required as of
January 1, 1999. We do not expect SOP 98-1 to have a material impact on our
financial statements.
RECENT DEVELOPMENTS
On April 5, 1999, we and GCI, Inc. entered into a settlement agreement under
which we agreed to enter into a number of new business arrangements and to
settle a number of outstanding disputes. As part of this agreement, we acquired
$19.5 million of fiber optic capacity on GCI's systems. We expect that, despite
the large initial cost of acquiring this capacity, the transition to leased
facilities-based services will reduce the cost of providing long distance and
internet access services. In addition, as part of this agreement, GCI withdrew
its opposition to our acquisitions of PTI Alaska and ATU and agreed to settle
several outstanding claims against ATU, the effect of which is not expected to
be material.
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OUTLOOK
We expect the current demand for telecommunications services in Alaska to
continue to grow, particularly as data-related usage leads to increased access
line demand and industry-wide demand for wireless services increases. We believe
that we will be able to capitalize on this demand through our diverse service
offerings and a focused sales and marketing approach.
There are currently a number of regulatory proceedings underway at the
federal and state levels that could have a significant impact on our operations.
The APUC held hearings the week of June 21, 1999 and on June 30, 1999 issued
orders revoking the rural exemptions applicable to PTI Alaska's rural local
exchange operating companies. We may seek reconsideration or appeal of these
orders or suspension or modification of our interconnection duties under the
Telecom Act. In addition to seeking these remedies, we can request that the RCA
take further steps to reform rural markets by initiating regulatory changes to
permit increased operating and marketing flexibility in our operations, in order
to mitigate the impact that competition might have on our operations. If any
reconsideration or appeal of the APUC's orders or suspension or modification of
interconnection duties is not sought, or if these market structure reforms are
not implemented or if they are implemented in a manner that is unfavorable to
us, then we may be unable to provide local telephone service on a profitable
basis to all our service areas. See "Regulation."
We believe there are numerous potential facilities-based competitors for
each of our services in our service areas. During the last session, a bill was
proposed in the Alaska State Senate to open to competition many local telephone
markets in which we operate. Specifically, the bill proposed to allow
competitors to provide local telephone service in local telephone markets
throughout Alaska that have at least 5,000 access lines, effectively depriving
incumbent LECs in those markets of their rural exemptions. Competition resulting
from this bill, if it had been enacted into law, could have materially adversely
affected our profitability. We cannot predict at this time whether or to what
extent proposals included in the bill will be offered again and enacted into
law. However, with the exception of Anchorage, we do not expect facilities-based
competition for our services to begin in the near future, either because of
regulatory restrictions pertaining to negotiation or arbitration or because of
the significant capital investment that would be required to initiate
facilities-based competition. We believe that our existing competitors in
Anchorage will continue to market their services aggressively and that we may be
forced to react to special promotions or discounts in order to retain our
customer base. If that is required, it may materially adversely affect our
profitability.
The telecommunications industry is subject to continuous technological
change. We expect that new technological developments in the future will
generally serve to enhance our ability to provide service to our customers.
However, these developments may also increase competition or require us to make
significant capital investments to maintain our leadership position in Alaska.
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INDUSTRY OVERVIEW
OVERVIEW
In recent years, the telecommunications industry has undergone rapid change
due to deregulation, construction of additional infrastructure and introduction
of new technologies, all of which have resulted in increased competition and
demand for telecommunications services. The Alaskan telecommunications industry
is influenced by many of these factors, though Alaska's unique characteristics
further enhance the need for telecommunications services. Alaska has widely
dispersed population centers across a large geographic area and under-developed
ground transportation infrastructure. As a result, Alaskan residents are
particularly dependent on telecommunications to access resources and
information.
Alaskan telecommunications operators use a variety of technologies,
including traditional copper wire, fiber optic cable, digital microwave and
satellite-based communications (particularly in remote communities) to provide
telecommunications services, including local telephone, wireless, long distance
services and internet access. Management estimates the telecommunications market
in Alaska generated revenues of approximately $810 million in 1997, of which
approximately $300 million was attributable to local telephone, $60 million to
wireless, $430 million to long distance and $20 million to internet.
LOCAL TELEPHONE OVERVIEW
The U.S. LEC industry is subject to significant regulation from both the FCC
and state authorities. The U.S. local telephone industry is composed of a few
large, well-known companies, including the RBOCs and GTE Corporation, and
numerous small, independent telephone companies. Large incumbent LECs generate
the vast majority of the estimated $100 billion in annual local exchange
revenues and own a majority of the access lines. A majority of the small,
independent telephone companies operate in sparsely populated rural areas with
limited competition due to the unfavorable economics of constructing and
operating a competing network in those areas.
Local telephone services traditionally offered by local telephone companies
include (1) basic local service to customers within a LEC's service area, (2)
network access services to interexchange carriers for origination and
termination of interstate and intrastate long distance phone calls, (3) enhanced
services, such as call waiting, call forwarding, caller ID and voice mail and
(4) other services, such as billing and collection, directory publishing,
directory assistance and Centrex, a switch-based service offering for business
customers. Rural LECs typically receive the majority of their revenues from
access charges, as opposed to the RBOCs, which receive a greater share of
revenues from basic local services.
The characteristics of a rural LEC's service areas result in higher costs
for the LEC because of the additional costs of providing the infrastructure to
rural customers and the lack of economies of scale available in more densely
populated areas. To ensure that affordable universal telephone service is
available in remote areas, rural LECs typically benefit from various support
mechanisms. The largest support mechanism for rural LECs is the USF. See
"Regulation."
ALASKAN OVERVIEW
The population of Alaska was approximately 614,020 at June 30, 1998, having
grown at a compound annual rate of approximately 1.3% over the past ten years.
While the majority of the population is concentrated in the city of Anchorage
and surrounding areas, population growth in recent years has been broadly
distributed throughout the state. The U.S. Census Bureau projects that through
2005 the population of Alaska will grow at a compound annual rate of 1.9%, as
compared to a 0.8% compound annual rate projected for the U.S. as a whole.
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Alaska has the highest median household income in the U.S. According to the
U.S. Census Bureau, Alaska's average median household income during the period
from 1995 to 1997 was $50,829, approximately 40% greater than the overall U.S.
median household income. In addition, Alaskans benefit from the absence of state
personal income taxes.
Alaska's economic activity centers around three urban areas: Anchorage,
Juneau, and Fairbanks. Historically, the state's economy has depended
significantly on natural resource industries in general and the petroleum
industry in particular. In 1996, the most recent year for which the gross state
product was calculated, the petroleum industry represented approximately 36.3%
of the $25.9 billion gross state product. In 1998 most of the employment growth
in Alaska was attributable to the services sector, and in particular, health
care, hotels and social services.
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BUSINESS
OUR COMPANY
We are the leading diversified, full-service telecommunications provider in
Alaska offering local telephone, wireless, long distance and internet services
to business and residential customers throughout the state. We have over $875
million invested in our network, a state-of-the-art telecommunications
infrastructure that includes over 485 miles of fiber optic cable and 176
switching facilities.
LOCAL TELEPHONE. With over 300,000 access lines, we are the 16th largest
LEC in the U.S. and the leading LEC in Alaska. We provide service to 75% of the
Alaskan population and to all of the state's major population centers, including
Anchorage, Juneau and Fairbanks. There are no RBOCs in Alaska.
WIRELESS. We are the largest and only statewide provider of wireless
services in Alaska, currently serving over 66,000 subscribers. Our service areas
cover all major population centers and highway corridors.
LONG DISTANCE AND INTERNET. We provide long distance services to
approximately 26,000 customers, primarily in Anchorage, and internet access
services to approximately 16,000 customers throughout the state.
We have achieved strong operating results through stable internal growth and
strategic acquisitions. For the year ended December 31, 1998, we would have had
consolidated pro forma revenues of $254 million, operating income of $40
million, a net loss of $16 million and EBITDA of $102 million.
We believe that the outlook for continued growth in our local telephone
business is favorable due to the fundamentals of the LEC business, including:
- continued demand for core telephone services and enhanced service
offerings, such as voice mail and call waiting,
- access line growth due to higher consumer bandwidth needs for internet,
data and video usage and
- improving regulatory environments.
We also intend to leverage our strength in our core local telephone business to
grow our wireless, long distance and internet businesses.
COMPANY BACKGROUND
We were formed in 1998 by Fox Paine and management to acquire PTI Alaska and
ATU.
PTI ALASKA. PTI Alaska is the incumbent provider of local telephone
services to over 131,000 access lines in Juneau, Fairbanks and more than 70
rural communities in Alaska. PTI Alaska also provides cellular service to
approximately 3,000 subscribers, primarily in Juneau, and owns 10 MHz PCS
licenses covering Anchorage, Juneau and Fairbanks. In addition, PTI Alaska
provides internet services to approximately 16,000 customers statewide.
ATU. ATU is the largest LEC in Alaska and is the incumbent provider of
local telephone services to over 168,000 access lines, primarily in Anchorage.
ATU also provides cellular service to over 63,000 subscribers primarily in
Anchorage and Fairbanks under the MACtel brand name. MACtel is the leading
cellular provider in Alaska and has achieved a penetration rate of approximately
16% in its service areas. ATU began providing long distance service through ATU
Long Distance on a resale basis in the fall of 1997 and serves approximately
26,000 customers, primarily in Anchorage.
PRODUCTS, SERVICES AND REVENUE SOURCES
We offer a broad portfolio of telecommunications services to residential and
business customers in our markets. Our service offerings are locally managed to
better serve the needs of each community. We believe that, as the communications
marketplace continues to converge, the ability to offer an
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integrated package of communications products will provide a distinct
competitive advantage, as well as increase customer loyalty, thereby decreasing
customer turnover. We intend to complement our local telephone services by
actively marketing our wireless, long distance and internet service offerings.
The following table sets forth the components of our revenues on a pro forma
basis for the year ended December 31, 1998:
<TABLE>
<CAPTION>
REVENUE SOURCE PERCENT
- ------------------------------------------------------------------------------------ AMOUNT -----------
-------------------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Local telephone services
Basic local service............................................................... $ 78.6 30.9%
Enhanced services................................................................. 9.5 3.8
Network access...................................................................... 85.6 33.7
Cellular............................................................................ 31.8 12.5
Long distance....................................................................... 6.8 2.7
USF................................................................................. 13.5 5.3
Other............................................................................... 28.3 11.1
------ ---
Total........................................................................... $ 254.1 100%
------ ---
------ ---
</TABLE>
LOCAL TELEPHONE SERVICES
BASIC LOCAL SERVICE. Basic local service enables customers to originate and
receive telephone calls within a defined "exchange" area. We provide basic local
services to residential and business customers, generally for a fixed monthly
charge. The maximum amount that we can charge a customer for basic local
services is determined by rate proceedings involving the appropriate state
regulatory authorities. We charge business customers higher rates to recover a
portion of the costs of providing local service to residential customers. On
average, U.S. business rates for basic local services have been over two times
the rates of residential customers. Basic local service also includes
non-recurring charges to customers for the installation of new products and
services.
At December 31, 1998, approximately 60% of our retail access lines served
residential customers, while 40% served business customers. Currently, our
monthly charges for basic local service for residential customers range from
$9.42 to $16.30 in PTI Alaska's service areas and are $9.70 in ATU's service
area, as compared to the national average of $15.99. Monthly charges for
business customers range from $17.65 to $26.05 in PTI Alaska's service areas and
are $25.75 in ATU's service areas, as compared to the national average of
$34.55.
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The table below sets forth the growth in access lines at PTI Alaska and ATU
from December 31, 1994 to December 31, 1998:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------------------
1994 1995 1996 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Access lines
PTI Alaska......................................... 73,563 77,660 82,969 124,869(a) 131,858
ATU(b)............................................. 144,869 147,934 154,752 158,486 168,536
% Growth
PTI Alaska......................................... -- 5.6% 6.8% 50.5%(a) 5.6%
ATU................................................ -- 2.1% 4.6% 2.4% 6.3%
</TABLE>
- ------------------------------
(a) Approximately 37,000 access lines were acquired by PTI Alaska as part of its
acquisition of the City of Fairbanks Telephone Operation in October 1997.
(b) Represents all revenue producing access lines, whether connected to retail
or wholesale customers.
Future growth in access lines is expected to be derived from (1) increases
in line demand from data-related usage by existing business customers, (2)
increased additional line demand from internet usage by residential customers
and (3) population growth in our service areas.
ENHANCED SERVICES. Enhanced services consist of services such as call
waiting, call forwarding, call return, continuous redial, caller ID and voice
mail. These services are generally billed on a monthly basis together with the
customers' bill for basic local services. Customer penetration of enhanced
services (the number of enhanced services divided by the number of access lines)
in our service areas is currently 82%, while other rural LECs in the U.S. have
achieved penetration levels of 100% to 120%, on average.
NETWORK ACCESS
Network access services include long distance, or toll, calls that typically
involve more than one company in the provision of telephone service. We bill
access charges to each IXC for the use of our facilities to access the customer,
as described below. Since toll calls are generally billed to the customer
originating the call, a mechanism is required to compensate each company
providing services relating to the call. Rural LECs typically are allowed to
charge higher access rates to IXCs than urban LECs as an implicit means of
recovering a portion of the costs of providing telephone service to rural
service areas.
INTRASTATE ACCESS CHARGES. We generate intrastate access revenue when an
intrastate long distance call (which involves an IXC) is originated by a
customer within the same state but in another local calling area. The IXC pays
us an intrastate access payment for either terminating or originating the call.
We record the details of the call through our carrier access billing system and
receive the access payment from the IXC. When one of our customers originates
the call, we typically provide billing and collection for the IXC through a
billing and collection agreement. The access charge for our intrastate service
is regulated and approved by the RCA.
INTERSTATE ACCESS CHARGES. We generate interstate access revenue when an
interstate long distance call is originated by a customer calling from a local
calling area in one state to a local calling area in another state. We bill
interstate access charges in the same manner as we bill intrastate access
charges; however, the interstate access charge is regulated and approved by the
FCC rather than by the RCA.
WIRELESS SERVICES
Our cellular businesses currently are managed separately from our LEC
business and are subject to a different regulatory framework and cost structure.
Management intends to integrate PTI Alaska's cellular operations with those of
MACtel. The primary sources of wireless revenue include subscriber access
charges, airtime usage, toll charges, connection fees, roaming revenues, as well
as enhanced features, such as voice mail. A subscriber may purchase services
separately or may purchase rate plans that package these services in different
ways to fit different calling patterns. We currently provide
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digital service in Anchorage and Fairbanks and expect to be fully digital in our
other service areas [by the end of 1999]. Upon conversion to digital service, we
will be able to offer advanced digital services and features, such as text
messaging.
As illustrated in the table below, both PTI Alaska and MACtel have
experienced growth in the number of cellular subscribers served and the total
population over the past five years:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------------------
1994 1995 1996 1997 1998(A)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Total POPs
PTI Alaska............................................... 53,484 54,286 55,101 55,927 56,766
MACtel................................................... 289,813 294,160 298,573 397,434 403,396
Ending subscribers
PTI Alaska............................................... 1,194 1,300 1,678 2,096 2,945
MACtel................................................... 13,684 24,855 37,651 53,035 63,627
Ending penetration
PTI Alaska............................................... 2.2% 2.4% 3.1% 3.7% 5.2%
MACtel................................................... 4.7% 8.4% 12.6% 13.3% 15.8%
</TABLE>
- ------------------------------
(a) MACtel acquired the Alaska RSA #1 B-Side cellular property from PTI Alaska
on January 5, 1998, which had 94,383 POPs and 5,497 subscribers on the date
of acquisition. The chart includes the RSA #1 B-Side cellular property for
MACtel as of December 31, 1997. The RSA #1 B-Side cellular property has been
excluded from the data for PTI Alaska presented in the table.
Although MACtel has achieved cellular penetration rates of 18% and 19% in
Anchorage and Kenai, respectively, penetration rates in our other service areas
are significantly lower. Management believes there are opportunities to improve
the penetration rates of our cellular operations in Fairbanks and Juneau.
Management also believes that the market for wireless services will continue to
grow with the growth in the wireless industry as a whole.
We also own 10 MHz E Block PCS licenses covering Anchorage, Juneau and
Fairbanks, which were purchased by PTI Alaska in 1997. We have not built out
these licenses and do not plan to do so in the near future. Management is
analyzing technical alternatives for using this spectrum to enhance our service
offerings in our overall business.
LONG DISTANCE SERVICES
We began offering long distance services on a resale basis in October 1997,
primarily in Anchorage. We currently have approximately 26,000 long distance
customers and less than a 2.5% market share, based on revenues. We intend to
expand our long distance operations into PTI Alaska's service areas during 1999.
Before August 1998, PTI Alaska was precluded from entering the long distance
business by a non-competition agreement with AT&T Alascom, Inc. which was signed
when Pacific Telecom sold Alascom, Inc. to AT&T in 1995. To date, our long
distance operations have generated operating losses.
We recently purchased fiber capacity between the major population centers in
Alaska and between Alaska and the contiguous 48 states of the U.S. from GCI. We
agreed to pay $19.5 million for one DS-3 from Fairbanks to Anchorage, one-half
DS-3 from Anchorage to Juneau, and one DS-3 from Anchorage to Seattle. One DS-3
is equivalent to 28 multiplexed T-1 channels. We will require significant
additional fiber capacity to grow our long distance business. We have various
alternatives for the purchase of this additional capacity, including a limited
purchase option with GCI. Under our agreement with GCI, the price for additional
capacity, if available, will be the lowest price at which GCI sells capacity to
another purchaser. In addition, GCI has agreed to match the lowest price we
receive for comparable capacity from other suppliers. [We intend to pursue
purchases of additional capacity from another supplier that has indicated it
will complete the construction of a fiber optic cable over similar routes in the
third quarter of 1999.] Although the capacity to be purchased from GCI
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covers our primary long distance routes, we expect to lease capacity over routes
serving other areas of the state. See "Management's Discussion and Analysis of
Results of Operations--Recent Developments."
We are subject to numerous conditions imposed by the RCA and, to a lesser
degree, by the FCC on the manner in which we conduct our long distance
operations. The restrictions are intended to prohibit cross-subsidization from
the regulated LEC to the unregulated long distance affiliate and discrimination
against other long distance providers in favor of a LEC's long distance
affiliate. Specifically, our long distance affiliates are
- required to hold all books and records, management, employees and
administrative services separate, except that services may be provided
among affiliates through arms-length affiliated interest agreements;
- prohibited from jointly marketing or bundling local and long distance
services until competition develops in the local market and
- prevented from joint ownership of telephone transmission or switching
facilities with the LEC and from using the LEC's assets as collateral for
its own indebtedness.
As a result of the introduction of competition in ATU's local service areas, the
APUC lifted the restriction on bundling on local and long distance services in
ATV's service areas in 1998.
USF REVENUE
USF revenue supplements the amount of local service revenue we receive to
ensure that basic local service rates for customers in high cost rural areas are
not significantly higher than rates charged in lower cost urban and suburban
areas. The federal USF is funded by monthly customer fees charged to IXCs, LECs
and other telecommunications providers and distributed to us on a monthly basis
based upon our costs for providing local service. See "Regulation."
OTHER
We seek to capitalize on our local presence and network infrastructure by
offering additional services to customers, such as directory services and
billing and collection services for IXCs.
INTERNET ACCESS
We provide internet access services to approximately 16,000 customers under
the PTINet( SM) brand name. For the year ended December 31, 1998, PTI Alaska
generated $5.1 million in internet access revenues. In order to offer internet
access, we provide local dial-up telephone numbers for our customers. These
local dial-up numbers allow customers access, through a modem connection on
their computer, to a series of computer servers we own and maintain. These
servers allow customers to access their e-mail accounts and to be routed to
local access points that connect customers to the internet. We charge customers
either a flat rate for unlimited internet usage or a usage-sensitive rate,
which, in either case, is billed in conjunction with the local telephone bill.
Internet revenues are recorded, net of expenses, in our income statement under
"Other income (expense)."
NETWORK FACILITIES
LOCAL TELEPHONE SERVICES
As of December 31, 1998, we owned 74 exchanges serving over 300,000 access
lines. All of our exchanges are served by digital switches, provided
predominately by Northern Telecom. Our switches are linked through a combination
of extensive aerial, underground and buried cable, including 485 miles of fiber
optic cable, as well as digital microwave and satellite links. We have 100%
single-party services (one customer per access line), and believe all switches
have the latest generic software upgrades available, allowing for the full range
of enhanced customer features.
We have integrated numerous network elements to offer a variety of services
and applications that meet the increasingly sophisticated needs of customers.
These elements include Signal System 7, or
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SS7, signaling networks, voice messaging platforms, digital switching and, in
some communities, ISDN access. As the telecommunications industry experiences
significant changes in technology, customer demand and competitive pressures, we
intend to introduce additional enhancements, such as information delivery that
improves the delivery speeds of data, video and voice traffic, known as ATM, and
the efficient switching of variable-length data packets, known as Frame Relay.
Network operations and monitoring will be provided for PTI Alaska and ATU by
ATU's network operating control center ("NOCC") located in Anchorage. The NOCC
has technicians staffed or on-call seven days a week, 24 hours a day. Automated
alarm systems are in place should problems arise with the network after normal
business hours. In addition, we have the right to use Century's NOCC until
August 31, 1999 under a transition services agreement. We also have customer
care facilities in Anchorage and Fairbanks with extensive business hours to
efficiently handle customer inquiries and orders for service.
WIRELESS SERVICES
Our cellular operations consist of eight switching centers and 77 cell sites
covering all major population centers and highway corridors in Alaska. We plan
to complete the conversion of all of our switching and cell site equipment to
digital service by the end of 1999. Our switching and cell site infrastructure
is linked by digital microwave and fiber. MACtel also has a NOCC and customer
care center, located in Anchorage.
COMPETITION
LOCAL TELEPHONE SERVICES
Incumbent LECs may be subject to any of three types of competition:
- facilities-based competition from providers with their own local service
network;
- resale competition from providers who purchase local service from the
incumbent LEC at wholesale rates and resell these services to their
customers ("resale interconnection"); and
- competition from providers who lease unbundled network elements from the
incumbent LEC ("UNE interconnection").
The geographic characteristics of rural areas make the entrance of most
facilities-based competitors uneconomical because of the significant capital
investment required and the limited market size. Thus, competition is likely to
come from resale interconnection or UNE interconnection.
In September 1997, GCI and AT&T Alascom, two long distance carriers in
Alaska, began providing competitive local telephone services in Anchorage. GCI
competes principally through UNE interconnection with ATU's facilities, while
AT&T Alascom competes exclusively by reselling ATU's services. Competition is
based upon price and pricing plans, types of services offered, customer service,
billing services, quality and reliability. GCI has focused principally on
advertising discount plans for bundled services. AT&T Alascom's strategy has
been to sell ATU's service as part of a package of local and long distance
services. As a result, ATU lost approximately 19% of its retail access lines in
Anchorage to these competitors during the first ten months of competition,
approximately 61% of which resulted from UNE interconnection by GCI. The
majority of this loss was among price-sensitive residential customers who have
lower average monthly bills than ATU's business customers. Since June 1998, the
rate of this loss has slowed. We expect GCI and AT&T Alascom to continue to
compete for local telephone business.
As "rural telephone companies" under the Telecom Act, PTI Alaska's local
telephone operating subsidiaries had been granted rural exemptions from the
obligation to lease their facilities to competitive LECs seeking to interconnect
with our network. Thus, we do not currently face competition for local telephone
services in PTI Alaska's service areas, although PTI Alaska voluntarily offered
competitors the opportunity to begin resale service at wholesale rates in 1997.
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Despite these rural exemptions, in the fall of 1997, PTI Alaska received a
request from GCI for UNE interconnection. Following failed negotiations between
PTI Alaska and GCI, the APUC conducted a hearing in which it affirmed PTI's
rural exemptions. This ruling was appealed and was remanded to the APUC for
further proceedings. The APUC terminated the rural exemptions on June 30, 1999
and ordered the start of a nine-month cycle of negotiation or arbitration as
provided for in the Telecom Act. Management expects that we may eventually be
required to allow UNE interconnection in some of PTI Alaska's service areas but
believes that our services offerings and customer relationships and management's
expertise in the local telephone business will provide us a competitive
advantage over new LECs. In addition, management believes that the lifting of
the rural exemptions provides the RCA the opportunity to implement market
structure reforms that would mitigate the financial impact caused by
competition, although we cannot assure you that the RCA will take any actions
that would so benefit us.
We expect increasing competition from providers of various services that
provide users the means to bypass its network. Long distance companies may
construct, modify or lease facilities to transmit traffic directly from a user
to a long distance company. Cable television companies, in particular, may be
able to modify their networks to partially or completely bypass our local
network.
In addition, while cellular telephone services have historically
complemented traditional LEC services, we anticipate that existing and emerging
wireless technologies may increasingly compete with LEC services. Technological
developments in cellular telephone features, personal communications services,
digital microwave and other wireless technologies are expected to further permit
the development of alternatives to traditional landline services.
WIRELESS SERVICES
The wireless telecommunications industry is experiencing significant
technological change, as evidenced by the increasing pace of improvements in the
capacity and quality of digital technology, shorter cycles for new products and
enhancements and changes in consumer preferences and expectations. We believe
that the demand for wireless telecommunications services is likely to increase
significantly as equipment costs and service rates continue to decline and
equipment becomes more convenient and functional. We currently compete with one
other cellular provider in each of its wireless service areas, including AT&T
Wireless Services, Century and Mercury Communications. Competition is based on
price, quality and network coverage. In addition, there are six PCS licensees in
each of our wireless service areas. We hold licenses covering Anchorage,
Fairbanks and Juneau. One of the PCS licensees began providing digital PCS
service in Anchorage in October 1998. Another PCS licensee has recently
indicated it will commence trials of its technology. We believe that the unique
and vast terrain and the high cost of PCS system build-out makes entrance into
markets outside Anchorage unlikely.
LONG DISTANCE SERVICES
The long distance telecommunications market is highly competitive.
Competition in the long distance business is based on price, customer service,
billing services and quality. We currently offer long distance in ATU's service
areas, and intend, subject to regulatory restrictions, to expand ATU's long
distance operations into PTI Alaska's service areas. AT&T Alascom and GCI are
currently the two major long distance providers in Alaska, including in our
service areas.
Our long distance operations are subject to regulatory restrictions. See
"--Products, Services and Revenue Sources--Long Distance Services."
INTERNET SERVICES
The market for internet access services is highly competitive. There are few
significant barriers to entry, and we expect that competition will intensify in
the future. We currently compete with a number
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of established on line services companies, IXCs and cable companies. We believe
that our ability to compete successfully will depend upon a number of factors,
including the reliability and security of our network infrastructure, the ease
of access to the internet and the pricing policies of our competitors.
CUSTOMERS
We have two basic types of customers for our local services:
- business and residential customers located in their local service areas
that pay for local phone service and
- IXCs that pay us for access to long distance calling customers located
within our local service areas.
In general, the majority of our local customers are residential, rather than
business, customers, as is typical for rural telephone companies. In addition,
no single local customer of ours represented more than 5% of our total 1998 pro
forma revenue, excluding access customers.
SALES AND MARKETING
PTI Alaska and ATU have historically conducted their sales and marketing
operations for each of their respective products on a stand-alone basis. At PTI
Alaska, local telephone products and services are provided under the PTI
Communications(SM) brand name, wireless services are marketed under the
Cellulink(SM) brand name and PTI Alaska's internet access services are sold
under the PTINet brand name. Similarly, at ATU local telephone products and
services are marketed under the ATU brand name, cellular services are marketed
under the MACtel brand name and long distance services are marketed under the
ATU LD brand name. Each of these product lines has separate sales forces and
marketing departments.
Our sales and marketing strategy, subject to regulatory restrictions, is to:
- market aggressively current and future service offerings, including
packaged service offerings,
- centralize sales and marketing functions and
- enhance direct sales efforts.
We also believe that we can leverage our position as an integrated provider of
multiple telecommunications services with attractive positions in local access
and cellular services. By pursuing a marketing strategy that takes advantage of
these characteristics, we believe we can increase penetration of new product
offerings, maintain customer retention rates, increase our share of our
customers' overall telecommunications expenditures and achieve continued revenue
and operating cash flow growth.
While PTI Alaska and ATU have, to a limited extent, packaged local telephone
services into attractively-priced service offerings and packaged these local
telephone services with wireless, long distance and internet services, neither
PTI Alaska nor ATU has focused on these types of offerings. Packaged offerings
allow customers to enjoy pricing for a number of services at a substantial
discount to A LA CARTE pricing of individual services. Subject to regulatory
limitations, we intend to expand this strategy, which we expect will increase
the average revenue per customer and result in a more loyal and satisfied
customer base.
We intend to establish a sales and marketing division where marketing
strategies will be centralized and sales functions will be based locally. To
enhance our direct selling efforts, we intend to establish additional customer
and retail service centers in its larger service areas, such as Juneau and
Kenai/ Soldotna, and to enhance call center operations through a combination of
technology investments and training and incentive compensation programs for call
center employees. In addition, we intend to
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begin marketing PTI Alaska's cellular operations under the MACtel brand name. We
will continue to review our branding strategy and believe that further
rationalization of our brand names may be appropriate.
SUPPLIERS
We believe we have strong, long-term relationships with our numerous
communications vendors. Our primary switching vendor is Northern Telecom, a
leading provider of advanced switching systems to rural service providers. While
we recognize that the separation of PTI Alaska from the rest of Century's
properties might result in higher unit costs for PTI Alaska, we expect that the
combination of PTI Alaska and ATU and the presence of vendor competition will
deter any significant unit increases and may result in unit cost reductions in
the longer term. We also enjoy positive relationships with a variety of vendors
for outside plant facilities and other elements of our network.
EMPLOYEES
We consider employee relations to be good. As of June 18, 1999, we employed
a total of 1,107 full-time employees, 750 of whom were represented by unions. In
addition, we employ approximately 32 part-time employees in various support
positions throughout the organization.
PTI Alaska has a collective bargaining agreement with the International
Brotherhood of Electrical Workers that expires in 2004. This agreement provides
for wage increases up to 4% based upon the annual increases in the U.S.
Department of Labor CPI-U, the Consumer Price Index for Anchorage. ATU also has
a contract with the IBEW that is scheduled to expire in August 1999. Management
and the IBEW are negotiating the terms under which ATU's represented employees
would be transitioned to PTI Alaska's collective bargaining agreement. We
believe this transition will be completed prior to expiration of ATU's existing
agreement and are confident that a mutually acceptable transition can be
negotiated with the IBEW. There have been no work stoppages or strikes by either
PTI Alaska's or ATU's employees, and management has worked closely with IBEW
leadership for many years.
MINORITY INTERESTS
We own minority interests in the entities described below:
- a 47% equity interest in Alaska Network Systems, Inc., which provides
wholesale intrastate and interstate long distance services;
- a 30% share of Internet Alaska, Inc., which serves approximately 30,000
customers, primarily in Anchorage and Fairbanks; and
- a 33% interest in Alaskan Choice Television, L.L.C. ("ACTV"), a wireless
cable television provider whose business plan requires significant
additional capital. While we are not obligated to make an additional
investment in ACTV, we are currently considering a number of alternatives
which address our proportionate interest in ACTV.
For the year ended December 31, 1998, ATU incurred $1.1 million in
proportional losses from its minority investments and wrote down $1.5 million
and $0.4 million of its investments in Alaskan Choice Television, LLC, and
Internet Alaska. See Note 7 to the consolidated financial statements of ATU
included herein.
ENVIRONMENTAL REGULATIONS
Our operations are subject to federal, state and local laws and regulations
governing the use, storage, disposal of, and exposure to, hazardous materials,
the release of pollutants into the environment and the remediation of
contamination. As an owner or operator of property and a
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generator of hazardous wastes, we could be subject to environmental laws that
impose liability for the entire cost of cleanup at contaminated sites,
regardless of fault or the lawfulness of the activity that resulted in
contamination. We believe, however, that our operations are in substantial
compliance with applicable environmental laws and regulations.
Many of our properties formerly contained, or currently contain, underground
and aboveground storage tanks used for the storage of fuel or wastes. Some of
these tanks have leaked. We believe that known contamination caused by these
leaks has been, or is being, investigated or remediated. We cannot be sure,
however, that we have discovered all contamination or that the regulatory
authorities will not request additional remediation at sites that have
previously undergone remediation.
Our cellular operations are also subject to regulations and guidelines that
impose a variety of operational requirements relating to radio frequency
emissions. The potential connection between radio frequency emissions and
negative health effects, including some forms of cancer, has been the subject of
substantial study by the scientific community in recent years. To date, the
results of these studies have been inconclusive. Although we have not been named
in any lawsuits alleging damages from radio frequency emissions, it is possible
we could be sued in the future, particularly if scientific studies conclusively
determine that radio frequency emissions are harmful.
PROPERTIES
LOCAL TELEPHONE. Our primary properties consist of 168 switching facilities
serving 74 exchanges. We own most of our administrative and maintenance
facilities, central office and remote switching platforms and transport and
distribution network facilities. We lease our corporate headquarters located in
Anchorage.
Our transport and distribution network facilities include a fiber optic
backbone and copper wire distribution facilities that connect customers to
remote switch locations or to the central office and to points of presence or
interconnection with IXCs. These facilities are located on land pursuant to
permits, easements or other agreements.
WIRELESS. We have 77 cell sites that cover all major population centers and
highway corridors throughout Alaska. Most of these sites are leased.
LEGAL PROCEEDINGS
We currently, and from time to time, are involved in litigation and
regulatory proceedings incidental to the conduct of our business. Neither PTI
Alaska nor ATU is a party to any lawsuit or proceeding that, in the opinion of
management, is likely to have a material adverse effect on us.
In March 1999, the Alaska Superior Court ordered the APUC to conduct further
proceedings to consider whether it is appropriate to lift PTI Alaska's rural
exemptions, based on a finding that the burden of proof had been assigned to GCI
in error. The remand is now pending at the APUC. See "Regulation."
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REGULATION
OVERVIEW
Our operations are subject to the separate but concurrent jurisdictional
control of both the federal government and the State of Alaska. PTI Alaska's
local telephone operating subsidiaries, TUNI, TUA and PTIC (formerly the City of
Fairbanks Telephone Operation), and ATU are each "telecommunications carriers"
and "local exchange companies" under the Communications Act of 1934, as amended
by the Telecom Act (the "Communications Act"). As a result, the FCC exercises
jurisdiction over all of our interstate and wireless communications activities.
PTI Alaska's local telephone operating companies and ATU are also "public
utilities" within the meaning of the Alaska Statutes and are, therefore,
governed by the applicable rules and regulations of the RCA.
FEDERAL REGULATION
Under the federal regulatory scheme, incumbent LECs are required to comply
with the Communications Act and the applicable rules and regulations. In
substantially overhauling the Communications Act, the Telecom Act was intended
to, among other things, eliminate unproductive regulatory burdens and promote
competition. Despite this, telecommunications carriers are still subject to
extensive ongoing regulatory requirements. For instance, FCC-regulated entities
are required to obtain operating authorizations prior to providing
international, interstate and wireless communications services. The FCC also
regulates transfers of control and assignments of these operating
authorizations. The FCC requires carriers providing access services to file
tariffs with the FCC reflecting the rates, terms and conditions of those
services. These tariffs are subject to review and potential objection by the FCC
or third parties.
STATE REGULATION
Telecommunications companies subject to the RCA's jurisdiction are required
to obtain certificates of public convenience and necessity prior to operating as
a public utility in Alaska. The RCA is responsible for approving new issuances
and any transfers of these operating certificates. In addition, the RCA is
responsible for implementing a portion of the competitive requirements of the
Telecom Act, as well as for regulating intrastate access and local service rates
and services of local telephone companies. After passage of the Telecom Act, the
APUC adopted a plan to address competition issues across Alaska. The APUC
established multiple dockets to investigate different competition-related
issues, including revising local and long distance market structures, reforming
its intrastate access charge system and establishing a state universal service
fund.
COST RECOVERY AND REVENUE RECOGNITION
As a regulated common carrier, we are afforded the opportunity to set
maximum rates at a level that allows us the opportunity to recover the
reasonable costs we incur in the provision of regulated telecommunications
services and to earn a reasonable rate of return on the investment required to
provide these services.
These costs are recovered through:
- monthly charges to end users for basic local telephone services and
enhanced service offerings,
- access charges to IXCs for originating and terminating interstate and
intrastate interexchange calls,
- interconnection charges or other rates to competing carriers
interconnecting with our networks or reselling our services, and
- high-cost support mechanisms, such as the USF, and the state high-cost
fund.
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Rates for regulated services, and the amount of high-cost support, are set by
the FCC with respect to interstate services and by the APUC with respect to
intrastate services.
In conjunction with the recovery of costs and establishment of rates, a LEC
must first determine its aggregate costs and then allocate those costs between
regulated and nonregulated services.
After identifying the regulated costs of providing local telephone service,
a LEC must allocate those costs among its various local exchange and interstate
and intrastate interexchange services and between state and federal
jurisdictions. This process is complicated by the difficulty of allocating
specific pieces of plant and equipment to a particular service because a LEC's
plant and equipment are utilized for different services, such as local telephone
and interstate and intrastate access. This process is referred to as
"separations" and is governed primarily by the FCC's rules and regulations. The
underlying legal purpose of separations rules is to define how a carrier's
expenses are allocated and recovered from federal and state jurisdictions. The
FCC is considering whether to modify or eliminate the current separations
process. This decision could indirectly increase or reduce earnings of carriers
subject to separations rules.
INTERSTATE END-USER RATES
Deployment of the local telephone network from the switching facility to the
customer (the "local loop") is one of the most significant costs incurred by a
LEC in providing telephone service. The FCC has established a rate structure
that provides for the recovery of a portion of the cost of the local loop
allocated to that interstate jurisdiction directly from the end user customer
through the assessment of a subscriber line charge. The remaining portion of the
local loop costs are recovered from interstate access charges to an IXC.
As a result of the market and geographic conditions in rural areas, the
costs of providing local loop and switching services are often higher than in
urban areas. In the absence of an accommodation in the FCC rules to address this
fact, a substantial portion of the costs of smaller LECs would remain
unrecovered, leaving them little alternative other than to charge high rates for
intrastate services. Accordingly, the FCC provides for additional interstate
recovery by eligible telecommunications carriers through the USF. The USF is
available to carriers whose local loop costs are significantly above the
national average as calculated pursuant to FCC rules.
INTERSTATE ACCESS RATES
Interstate access rates are developed on the basis of a LEC's measurement of
its interstate costs for the provision of access service to IXCs divided by its
projected demand for each service. The resulting rates are published in a
company's interstate access tariff and filed with the FCC, at which time they
are subject to challenge by third parties and to review by the FCC.
The FCC recognized that this rate making and tariff filing process may be
administratively burdensome for small LECs. Accordingly, the FCC established the
National Exchange Carriers Association ("NECA") in 1983 to, among other things,
develop common interstate access service rates, terms and conditions. NECA
develops interstate access rates on the basis of data that are provided
individually by participating LECs and blended to yield average rates. These
rates are intended to generate revenue equal to the aggregate costs plus a
return on the investment of all of the participants. Currently, the authorized
rate of return used in setting interstate access rates is 11.25%.
Individual participating LECs are likely to have costs of providing service
that are either higher or lower than the revenues generated by applying the
overall NECA tariff rate. To rectify this result, the revenues generated by
applying the NECA rates are pooled from all of the participating companies and
redistributed on the basis of each individual company's costs. The result of
this process not only eliminates the burden of individual tariff filing, but
also produces a system in which small companies
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can share and spread risk. For example, if a smaller LEC filed its own tariff
and subsequently suffered the loss of major customers that utilize interstate
access service, the LEC could suffer significant under-recovery of its costs. In
the NECA pool environment, the impact of this loss is reduced because it is
spread over all of the pool participants.
NECA operates separate pools for traffic sensitive (primarily switching) and
non-traffic sensitive (primarily loop) costs. Companies are also free to develop
and administer their own interstate access charges.
The FCC has initiated a proceeding to review its rates and policies
governing interstate exchange access and the rate of return applicable to
incumbent LECs. Because most rural LECs are subject to rate-of-return
regulation, the outcome of this proceeding will directly affect the earning
prospects for rural and small LECs. The outcome of this proceeding, and its
ultimate impact on us, cannot be predicted at this time.
INTRASTATE END USER RATES. The levels of rates charged to end users for the
provision of basic local service are generally subject to rate-of-return
regulation administered by the RCA. Local rates are typically set at a level
that will allow recovery of embedded costs for local service divided by the
number of services and customers. Recognized costs include an allowance for a
rate of return on investment in plant used to provide local service. Rate cases
are typically infrequent, carrier-initiated and require the carrier to meet
substantial burdens of proof. The last APUC-authorized rates of return were
12.55% and 11.70% for TUA and TUNI, respectively. The TUA and TUNI rates were
ordered in 1989. PTIC was previously not regulated by the APUC and instead was
regulated by the City of Fairbanks Public Utilities Board. As a condition of the
acquisition of the City of Fairbanks Telephone Operation by PTI Alaska, the APUC
required that a general rate proceeding be initiated for PTIC by June of 1999.
This proceeding has been delayed and combined with a company-wide earnings
review to be filed with the APUC by June 30, 2001. ATU's last authorized rate of
return was 9.79% (retail local exchange) and 10.85% (intrastate access), ordered
in 1991.
The APUC adopted regulations to govern competition in the local exchange
marketplace. The transitional regulations provide for, among other things:
- initial classification of all incumbent LECs (including PTI Alaska and
ATU) as dominant carriers,
- symmetrical requirements that all carriers (dominant and nondominant)
offer all retail services for resale at wholesale rates, and
- substantial dominant carrier pricing flexibility in competitive areas,
under which carriers may reduce retail rates, offer new or repackaged
services and implement special contracts for retail service upon 30 days'
notice to the APUC (only rate increases affecting existing services are
subject to full cost support showings for LECs in areas with local
competition).
INTRASTATE ACCESS RATES. In the past, the APUC has required all local
companies in Alaska to pool their access costs and has set an annual statewide
average price for access service. Each LEC charges IXCs fees for originating or
terminating long distance calls on its network based on the statewide average
cost of access rather than on its costs of access. Access revenues are collected
in a pool administered by the Alaska Exchange Carriers Association ("AECA") and
then redistributed to the LECs based on their actual costs.
With the passage of the Telecom Act and increased competition in the local
exchange market, the APUC began a process of reforming intrastate access
charges.
Under recent revisions to the Alaska access system, LECs not yet subject to
local competition continue to participate in the AECA pool. Participants in this
pool recover their costs based on the embedded cost of services most recently
authorized by the APUC. These revisions also allow LECs to
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exit the pool in the event of competitive entry. These LECs have the right to
propose that their access charges be based on market rates.
An additional consequence of this access reform is the continued removal of
subsidies implicit in access pricing. For instance, the APUC recently abolished
the "weighting system" for the non-traffic-sensitive rate element that had
loaded extra costs on access charges for lower cost urban exchanges to support
rural exchanges. At the same time, the APUC proposed to support a portion of
high switching costs separately through a state universal service fund.
The AUSF serves as a complement to the USF. Currently, the AUSF only
subsidizes a portion of higher cost carriers' switching costs, and the costs of
lifeline service--supporting rates of low income customers. The APUC indicated
that it may have considered expanding the AUSF's coverage in the future, such as
to support the costs of public interest pay telephones. The RCA is examining
whether existing support paid to carriers for switching costs is reasonable or
should be changed, eliminated or reduced. Further litigation has been initiated
in state court to determine the lawfulness of the AUSF as currently established.
THE TELECOM ACT
Among other things, the Telecom Act was enacted to enhance competition
without jeopardizing the availability of nationwide universal service at
affordable rates. These two objectives have resulted in a complex set of rules
intended to promote competitive entry in the provision of local telephone
services, except where entry would make the provision of universal service
prohibitively expensive.
PROMOTION OF LOCAL SERVICE COMPETITION AND THE RURAL EXEMPTIONS
The Telecom Act made competitive entry into the local telephone business
more attractive to other carriers by removing barriers to competition. In order
to promote competition, the Telecom Act established new interconnection rules
generally requiring LECs to allow competing carriers to interconnect with their
local networks. Congress recognized, however, that when the desire to promote
competition conflicted with the ability of existing carriers to provide
universal service to higher cost customers, LECs classified as "Rural Telephone
Companies" should be exempted from interconnection requirements until the
appropriate conditions for competitive entry exist.
Under the Telecom Act, all LECs, including both incumbent LECs and new
competitive carriers, are required to:
- offer reasonable and nondiscriminatory resale of their telecommunications
services;
- ensure that customers can keep their telephone numbers when changing
carriers;
- ensure that competitors' customers can use the same number of digits when
dialing and receive nondiscriminatory access to telephone numbers,
operator service, directory assistance and directory listing;
- ensure access to telephone poles, ducts, conduits and rights of way; and
- compensate competitors for the costs of terminating traffic.
The Telecom Act also requires incumbent LECs to:
- interconnect their facilities and equipment with any requesting
telecommunications carrier at any technically feasible point;
- unbundle and provide nondiscriminatory access to UNEs, such as local
loops, switches and transport facilities, at nondiscriminatory rates and
on nondiscriminatory terms and conditions;
- offer resale interconnection at wholesale rates;
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- provide reasonable notice of changes in the information necessary for
transmission and routing of services over the incumbent LEC's facilities
or in the information necessary for interoperability; and
- provide for the physical collocation of equipment necessary for
interconnection or access to UNEs at the premises of the incumbent LEC,
at rates, terms and conditions that are just, reasonable and
nondiscriminatory.
In order to implement interconnection requirements, LECs generally enter
into negotiated interconnection arrangements with competing carriers. LECs may
also offer interconnection tariffs, available to all competitors.
Competitors are required to compensate a LEC for the cost of providing
interconnection services. In the case of resale interconnection, the rules
provide that the rates charged should be on a wholesale basis and reflect the
current retail rates of the LEC, excluding the portion of costs avoided by the
LEC. In the case of UNE interconnection, rates are based on costing
methodologies that employ a forward-looking pricing methodology known as Total
Element Long Run Incremental Cost. The Telecom Act specifies that resale and UNE
rates are to be negotiated among the parties, or, if the parties fail to reach
an agreement, arbitrated by the relevant state regulatory authority. Once the
parties have come to agreement, the proposed rates are subject to final approval
by the state regulatory commission.
In January of 1997, ATU entered into an interconnection agreement with GCI,
which provides for resale and UNE interconnection, and with AT&T Alascom, which
provides for resale interconnection.
PTI Alaska's local operating utilities, TUA, TUNI and PTIC, are defined as
"rural telephone companies" under the Telecom Act. As rural telephone companies,
they were granted rural exemptions from the requirements relating to both resale
interconnection and UNE interconnection. The rural exemptions were to continue
until the APUC determined that interconnection was technically feasible, not
unduly economically burdensome and consistent with the Telecom Act's universal
service provisions, or until Alaska's state legislature acted to remove the
rural exemptions directly.
On June 30, 1999, the APUC ordered the rural exemptions of TUNI, TUA and
PTIC terminated in order to increase competition in their rural exchange
markets. As a result, these companies are no longer exempt from the Telecom
Act's interconnection requirements. While the short-term effect of the orders
will likely be delayed for up to nine months under the Telecom Act while
interconnection agreements are negotiated, the eventual effect of the orders,
taken alone as written by the APUC without reference to potential modification
and suspension of those companies' interconnection duties, would likely be
materially adverse to their operations. We have not yet determined whether we
will seek reconsideration or appeal of the APUC's orders. We have also not yet
determined whether or to what extent we will seek suspension and modification of
their interconnection duties or market structure reforms that would permit these
companies increased operating and marketing flexibility that we believe over the
longer term could largely offset the adverse effect caused by the loss of the
rural exemptions.
In April 1999, a bill was proposed in the Alaska State Senate to open to
competition many local telephone markets in which we operate. Specifically, the
bill proposed to allow competitors to provide local telephone service in local
telephone markets throughout Alaska that have at least 5,000 access lines,
effectively depriving incumbent LECs in those markets of their rural exemptions.
Competition resulting from this bill, if it had been enacted into law, could
have materially adversely affected our profitability. We cannot predict at this
time whether or to what extent proposals included in the bill will be offered
again and enacted into law. To the extent the markets of PTI Alaska's rural
local exchange companies are opened to competition by the APUC's termination of
their rural exemptions, we do not believe that the marginal effect of passage of
the proposed bill on our business would be material.
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For the first three months of 1999, PTI Alaska's local exchange companies
benefiting from rural exemptions accounted for 42.3% of our revenues and 52.3%
of our operating income. Loss of the rural exemptions, absent compensating
measures, such as rate increases, or market structure reforms, such as the
replacement of implicit subsidies by explicit support mechanisms, or rate
deaveraging, could adversely affect our ability to meet our financial
obligations.
PROMOTION OF UNIVERSAL SERVICE
While the Telecom Act promoted Congress' policy of ensuring that affordable
service is provided to consumers universally in rural, high-cost areas of the
country, the Telecom Act altered the framework for providing universal service
by:
- requiring the FCC to make implicit subsidies explicit;
- expanding the types of communications carriers required to pay universal
service support; and
- allowing competitive LECs to be eligible for funding.
These and other provisions were intended to make provision of universal service
support compatible with a competitive market.
Pursuant to the Telecom Act, USF funds are only available to carriers that
are designated as eligible telecommunications carriers ("ETCs") by a state
public utilities commission (a "PUC"). In areas served by rural LECs, the
Telecom Act provides that a state PUC may designate more than one ETC (in
addition to the incumbent LEC) only after determining that the designation of an
additional ETC will serve the public interest. As a result, an incumbent rural
LEC has an opportunity to maintain its status as the sole recipient of USF
payments in its service area, even if it is subsequently subjected to
competition. TUA, TUNI and PTIC are currently the sole designated ETCs in their
respective service areas. The addition of a second ETC in PTI Alaska's service
areas could have the effect of reducing the amount of funds available from the
USF and could materially adversely affect our ability to achieve a reasonable
rate of return on the capital invested in our network.
In May 1997, the FCC implemented new rules for interstate universal service
support. The new rules provide for separate USF programs for rural and non-rural
telephone companies. The new rules for non-rural companies base support upon
"forward-looking costs" derived from cost proxy models. The FCC set the
implementation date for the new system at January 1, 1999 (which has now been
postponed to January 1, 2000 for non-rural telephone companies). The FCC has
established a Rural Task Force, which will investigate how to adapt the proxy
cost models approved for larger carriers for rural telephone companies. The FCC
has indicated that it will not implement a new system for application to rural
telephone companies for an additional three years after the first step
implementation, or at least until January 1, 2001. In the interim, support
mechanisms for rural carriers remain unchanged. The FCC revised its rules for
non-rural carriers in May 1999 and sought comment on aspects of its revised
plan.
It is uncertain whether the forward-looking cost model will fully compensate
LECs for the cost of providing local service in high-cost areas. An appeal of
the FCC's universal service rules is pending before the U.S. Court of Appeals
for the Fifth Circuit, for which oral arguments were heard on December 1, 1998.
The court could issue its decision in the third or fourth quarter of this year.
It is not possible to predict at this time whether the FCC or the courts will
order modification to the fund or the ultimate impact from any modification on
us.
The court may issue its decision in the third or fourth quarter of 1999,
though it is unclear what impact, if any, the FCC's revised rules will have on
its decision.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
Set forth below are the names, ages and positions of the individuals who
currently serve as our executive officers and directors. Subject to our
obligations under the employment agreements described under the caption "--New
Employment Arrangements," our directors and officers are elected at the annual
meeting of our shareholders and will serve until they resign or are removed or
until their successors are elected and qualified.
<TABLE>
<CAPTION>
NAME POSITION AGE
- ----------------------------------- ---------------------------------------------------------------------- ---------
<S> <C> <C>
Charles E. Robinson Chairman, President and Chief Executive Officer 65
Wesley E. Carson Executive Vice President and Assistant Secretary 48
Michael E. Holmstrom Senior Vice President and Chief Financial Officer 56
Benjamin L. Jarvis Senior Vice President of LEC Operations 61
F. Scott Davis President and CEO of MACtel 61
Michael E. Bowman Vice President of Division Operations 43
Mark A. Foster President of ATU LD 38
John Ayers Senior Vice President of Marketing and Sales 56
Donn T. Wonnell Executive Vice President, General Counsel and Secretary 52
Kenneth Laing Vice President of Division Operations 56
Michael L. Schuh Vice President of Information Technology and Chief Information Officer 40
Dean A. Ryland Vice President, Finance and Accounting, Controller and Assistant 48
Treasurer
W. Dexter Paine, III Director 38
Saul A. Fox Director 45
J. Russell Triedman Director 29
</TABLE>
See "Ownership of Capital Stock--Stockholders' Agreement" for information
regarding election and terms of our directors and other related arrangements.
CHARLES E. ROBINSON
Mr. Robinson is our Chairman, President and Chief Executive Officer. Mr.
Robinson has over four decades of experience in the telecommunications industry.
Mr. Robinson was instrumental in creating Alaska's long distance communications
systems, including the White Alice Communications System, beginning in the late
1950's. Between 1979 to 1982, Mr. Robinson served as President of Alascom, the
state's primary long distance carrier at the time. Under his guidance, Alascom
developed the first statewide long distance service network in Alaska,
connecting with more than 27 independent local companies. Mr. Robinson served as
President and Chief Operating Officer of Pacific Telecom from 1981 until its
sale to Century in 1997 and was appointed Chairman and Chief Executive Officer
in 1989. Mr. Robinson has been a member of the National Security
Telecommunications Advisory Committee for the last 18 years, having been
appointed by President Reagan. Mr. Robinson also served on the Board of
Directors of the United States Telephone Association from 1993 to 1995.
WESLEY E. CARSON
Mr. Carson is our Executive Vice President and Assistant Secretary. Mr.
Carson has over 19 years of telecommunications experience. Mr. Carson began his
career in telecommunications in 1980 with TRT Telecommunications Corporation, an
international data and voice carrier located in Washington, D.C. that was
acquired by Pacific Telecom in 1988. From 1989 to 1997, Mr. Carson served as the
Vice President of Human Resources for Pacific Telecom responsible for the
planning, development, implementation and administration of human resources
policies and procedures and employee relations.
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Mr. Carson has been involved with labor issues for nearly 20 years and an active
participant in Alaska labor relations since 1989. Mr. Carson holds a B.A. in
International Relations from Brigham Young University, a Master of Public
Administration degree from the University of Illinois-Springfield and a J.D.
from Georgetown University.
MICHAEL E. HOLMSTROM
Mr. Holmstrom is our Senior Vice President and Chief Financial Officer and
will be responsible for our financial, accounting, tax and business development
functions. Mr. Holmstrom's career in telecommunications spans 35 years. Since
1990 he has consulted, served as Chief Operating Officer for Spectrum Network
Systems, Ltd. in Sydney, Australia, and as Chief Financial Officer for Atlantic
Tele-Network in the U.S. Virgin Islands. From 1983 through 1989 he was Vice
President of Unregulated Operations, Chief Financial Officer and then President
of CP National Corporation, a telecommunications provider that merged with
Alltel Corporation in December 1988. Mr. Holmstrom was Vice President of Finance
at Alascom from 1976 through 1980, and Vice President of Financial and Business
Planning at Pacific Telecom, Alascom's parent corporation, from 1980 to 1981.
Mr. Holmstrom has a B.S. in Business Administration from Gannon University. He
was Executive-in-Residence professor of business strategy at Texas A&M
University for the academic year 1981 to 1982.
BENJAMIN L. JARVIS
Mr. Jarvis is our Senior Vice President of LEC Operations. Mr. Jarvis has
over 35 years of experience in the telecommunications industry. Mr. Jarvis
served Pacific Telecom in operations management from 1966 to 1982. From 1982 to
1998, Mr. Jarvis held various leadership positions with Harris Corporation, Bay
Area Teleport and Harbor Bay Telecommunications, American Satellite Inc., U.S.
Intelco Networks Inc. and two competitive local exchange companies operating in
emerging markets.
F. SCOTT DAVIS
Mr. Davis is responsible for our statewide cellular operations as President
and Chief Executive Officer of MACtel, which position he has held since 1995.
Mr. Davis has been with MACtel since 1990, previously serving as Sales and
Marketing Manager, and then General Manager. Mr. Davis has more than 30 years of
experience in the wireless industry beginning in 1966 at Airsignal
International, Inc., where he advanced to the position of Executive Vice
President before he left in 1982. From 1982 to 1987 he served as Senior Vice
President and General Manager for McCaw Communications Companies, Inc., with
responsibility for Alaska and Hawaii. Mr. Davis worked in Alaska as a
communications broker and consultant from 1987 to 1990. Mr. Davis holds a B.B.A.
degree from Washburn University.
MICHAEL E. BOWMAN
Mr. Bowman is Vice President of Division Operations with responsibility for
ATU's operations and managing statewide central office engineering and network
administration. Prior to joining us, Mr. Bowman had been with ATU since 1975,
rising to become Chief Operations Officer. Mr. Bowman has also held positions of
significant leadership within the International Brotherhood of Electrical
Workers.
MARK A. FOSTER
Mr. Foster is President of ATU LD. Mr. Foster has over 15 years experience
in the utility industry, including a term as a Commissioner on the Alaska Public
Utility Commission. Mr. Foster served as President of the Western Conference of
Public Service Commissioners in 1993. Prior to joining ATU
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LD in 1997, Mr. Foster was a consultant specializing in strategic planning for
utilities transitioning into increasingly competitive markets.
JOHN AYERS
Mr. Ayers is Senior Vice President of Marketing and Sales. Mr. Ayers has
more than 20 years of experience in the telecommunications industry. As
President and co-founder of e.Net, Ltd. in 1996, Mr. Ayers served as a
consultant to a variety of established and start-up businesses. From February
1987 through August 1995, Mr. Ayers held various leadership positions with
Pacific Telecom, Inc and its subsidiaries, including Executive Vice President of
Pacific Telecom Services Company, with responsibility for strategic planning,
marketing and business development, and Executive Vice President and General
Manager of Alascom, Inc., Alaska's largest inter-exchange carrier. Mr. Ayers
holds a bachelor's degree in management from Golden Gate University.
DONN T. WONNELL
Mr. Wonnell is Executive Vice President, General Counsel and Secretary. Mr.
Wonnell has worked in the telecommunications industry for more than 20 years.
Mr. Wonnell served as Vice President for legal, regulatory, and legislative
affairs of Pacific Telecom until the merger of Pacific Telecom into Century at
the end of 1997. Prior to joining PTI, Mr. Wonnell served as President of the
Telecommunications and Energy Division of California Pacific Utilities in San
Francisco, and, earlier, as Vice President and General Counsel of RCA Alaska
Communications in Anchorage. Mr. Wonnell holds a B.A. from the College of
William & Mary and a J.D. from the University of Pennsylvania School of Law. Mr.
Wonnell has been admitted to practice before the bars of Alaska, California,
Pennsylvania, and the District of Columbia.
KENNETH LAING
Mr. Laing is Vice President of Division Operations with statewide
responsibility for customer service and outside plant engineering, as well as
direction of operations for the PTI Communications properties. Mr. Laing's
telecommunications experience includes more than 30 years serving in various
Senior management capacities in local exchange telephone and long distance
companies. Mr. Laing began his telecommunications career in 1968 as a technician
for RCA, building the Alaskan telecommunications network that preceded Alascom.
Mr. Laing subsequently served in various leadership positions within Alascom,
including Vice President of Administration and Vice President of Local Exchange
Operations for Pacific Telecom's Montana and Washington divisions. Mr. Laing was
an executive of LEC Consulting Corporation before our acquisition of PTI Alaska
and ATU. Mr. Laing, a veteran of the U.S. Air Force, attended the University of
Washington and Northeastern University.
MICHAEL L. SCHUH
Mr. Schuh is our Vice President of Information Technology and Chief
Information Officer. Mr. Schuh has more than 22 years of information technology
experience, with 17 of those years devoted to telecommunications. Mr. Schuh
worked for Pacific Telecom from 1986 to 1998, initially as an Information
Services Manager and later as Senior Manager, LEC Operations, Customer Services
and System Support. Prior to joining Pacific Telecom, Mr. Schuh held various
positions in the computer operations department of the Municipality of Anchorage
and Alascom from 1979 through 1986.
DEAN A. RYLAND
Mr. Ryland is our Vice President, Finance and Accounting, Controller and
Assistant Treasurer. From 1997 to 1998, Mr. Ryland served as a senior accounting
manager with Century. Prior to this time he worked at Pacific Telecom for over
20 years, holding various positions including Vice President, Finance and
Administration Multivisions Ltd., and Pacific Telecom Accounting Manager. Mr.
Ryland
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earned a B.A. from the University of Santa Clara. Mr. Ryland began his
professional accounting career as an auditor for PriceWaterhouse based in
Anchorage and left when offered an opportunity to join Alascom in 1976.
W. DEXTER PAINE, III
Mr. Paine is a director. Mr. Paine has been President and Co-founder of Fox
Paine since its inception in 1997. From 1994 until founding Fox Paine, Mr. Paine
served as a senior partner of Kohlberg & Company, where he was responsible for
establishing and leading the firm's west coast office. Prior to joining Kohlberg
& Company, Mr. Paine served as a general partner at Robertson Stephens &
Company. In his more than 11 years in leveraged investing, Mr. Paine has focused
on the supermarket, healthcare, telecommunications and automotive industries.
Mr. Paine has a B.A. in economics from Williams College.
SAUL A. FOX
Mr. Fox is a director. Mr. Fox has been Chief Executive Officer and
Co-founder of Fox Paine since its inception in 1997. From 1984 until founding
Fox Paine, Mr. Fox was at Kohlberg Kravis & Roberts & Co., where he became one
of KKR's most senior general partners prior to his retirement from KKR in 1996.
In his more than 13 years at KKR, Mr. Fox was involved in numerous leveraged
transactions in a wide variety of industries. Prior to joining KKR, Mr. Fox was
an attorney at Latham & Watkins, a leading national law firm headquartered in
Los Angeles, California. Mr. Fox has a B.S. in communications and computer
science from Temple University and a J.D. from the University of Pennsylvania
Law School.
J. RUSSELL TRIEDMAN
Mr. Triedman is a director. Mr. Triedman has been a Vice President of Fox
Paine since 1998. Upon completion of law school in 1996, Mr. Triedman worked at
Cravath, Swaine & Moore. While at Cravath, Mr. Triedman worked in mergers and
acquisitions and high yield finance. Prior to attending law school, Mr. Triedman
worked as a financial analyst at Brown Brothers Harriman & Co. in the private
equity group, where he facilitated three private equity investments totaling $95
million. Mr. Triedman is a graduate of Brown University with a B.S. in Applied
Mathematics and Economics and holds a J.D. from the University of Chicago Law
School.
COMPENSATION OF DIRECTORS
We currently do not compensate our directors other than for expense
reimbursement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
We do not currently have a compensation committee. All arrangements
regarding executive compensation before completion of the acquisitions of PTI
Alaska and ATU were conducted between members of Fox Paine and our executive
officers.
NEW EMPLOYMENT ARRANGEMENTS
Before completion of the acquisitions of PTI Alaska and ATU, we entered into
new employment arrangements with some of our employees relating to their
employment with us and ACS, their ownership of our common stock and the granting
of options to purchase shares of our common stock following the completion of
these acquisitions, as more fully described below.
EMPLOYMENT AGREEMENT WITH CHARLES E. ROBINSON. Under the employment
agreement between us, ACS and Charles E. Robinson, dated as of March 12, 1999,
Mr. Robinson serves as the Chairman of the Board, Chief Executive Officer and
President of us and ACS for a three-year period commencing
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on the Closing Date, which term will be extended automatically for successive
additional one-year periods unless either our board of directors gives Mr.
Robinson, or Mr. Robinson gives our board of directors, no less than 90 days
written notice of the intention not to extend the term. Mr. Robinson will
receive during the initial term of his employment agreement an annual base
salary of $500,000 that may be increased at the beginning of each year following
the first year of employment. Mr. Robinson will be eligible for an annual bonus
for each calendar year based on our attainment of mutually determined business
targets. Mr. Robinson will receive an annual bonus equal to 100% of his annual
base salary, as then in effect, if we attain these mutually determined business
targets, with appropriate adjustments to the extent we exceed or fail to reach
these targets. In no event will Mr. Robinson's annual bonus be less than
$200,000. Mr. Robinson's employment agreement also provides for other customary
benefits including fringe benefit plans, paid vacation, life and disability
insurance plans and expense reimbursement.
Under the Robinson employment agreement, if Mr. Robinson's employment were
to be terminated by Mr. Robinson for Good Reason (as defined below) or following
a Change in Control (as defined below) or by us without Cause (as defined
below), we would be obligated to pay Mr. Robinson a lump sum cash payment in an
amount equal to the sum of:
- Mr. Robinson's annual base salary, as then in effect plus
- Mr. Robinson's most recent annual bonus, as well as reimbursement for the
cost of continuing health insurance coverage under COBRA for twelve
months.
In addition, notwithstanding any provisions to the contrary in any option plan
or agreement under which Mr. Robinson has received options, upon the termination
of Mr. Robinson's employment, the number of then-unvested options will vest as
are necessary to vest at least one-third of all options received by Mr.
Robinson. In addition, in the event we decide at any time not to extend the term
of his employment agreement, we will pay Mr. Robinson the sum of:
- Mr. Robinson's annual base salary, as then in effect, plus
- Mr. Robinson's most recent annual bonus plus
- reimbursement for the cost of continuing health insurance coverage under
COBRA for twelve months.
As used in the Robinson employment agreement:
- "Good Reason" means:
- the assignment of Mr. Robinson by us to any duties materially
inconsistent with, or a material diminution of, his position, including
duties, title, offices, or responsibilities; or
- the transfer, without Mr. Robinson's concurrence, of Mr. Robinson's
principal place of employment to a geographic location more than 100
miles from both his current personal residence and from the location of
his current principal place of employment;
- "Cause" means:
- the willful failure to comply with lawful directions of our board of
directors after written notice;
- fraud, misappropriation or embezzlement; or
- a material breach of the Robinson employment agreement (other than due to
physical or mental illness) that is not cured within 30 days after
receipt of written notice from our board of directors of a specific
failure to perform his duties; and
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- "Change in Control" means:
- the acquisition by any person or group (as that term is used in
Regulation 13D under the Exchange Act), other than Fox Paine or any of
its affiliates, of beneficial ownership of a majority of ours or ACS'
outstanding voting securities; or
- any sale, lease, exchange or other transfer in one transaction or a
series of transactions, other than a transfer to an entity which is
majority controlled by Fox Paine or any affiliate thereof or an entity
with substantially the same equity holders as immediately prior to the
transfer, of all or substantially all of the assets of us or ACS or its
operating subsidiaries (taken together), or any plan for the liquidation
or dissolution.
The Robinson employment agreement also provides that during his employment
and during the 12-month period following any termination of his employment, Mr.
Robinson shall not directly or indirectly own, invest (equity or debt) in,
manage, control, participate in, consult with, advise, render services to, or in
any manner engage in, or be connected as an employee, officer, partner,
director, consultant or otherwise with:
- any enterprise engaged in the provision of local exchange or wireless
telecommunications services in any state in which:
- we, our affiliates or subsidiaries or
- any entity that is a party to an acquisition agreement with us, our
affiliates or subsidiaries
is engaged in the provision of local exchange or wireless
telecommunications services, or
- any enterprise that is the subject of a potential transaction made known
to us, our affiliates or subsidiaries, or Mr. Robinson during or at any
time prior to the termination of the Robinson employment agreement, that
is engaged in the provision of local exchange or wireless
telecommunications services;
PROVIDED that Mr. Robinson may be a passive owner of not more than one percent
of any publicly traded class of capital stock of any entity engaged in the
provision of local exchange or wireless telecommunications services. The
Robinson employment agreement also provides for other restrictions during Mr.
Robinson's employment and during the 12-month period following any termination
of his employment in connection with:
- inducing or attempting to induce any employee of us or our affiliates or
subsidiaries to terminate, or otherwise interfering with, the
relationship between us or our affiliates or subsidiaries and any of our
employees, and
- soliciting or attempting to solicit business from any customer or
supplier of us or our affiliates or subsidiaries.
EMPLOYMENT AGREEMENT WITH WESLEY E. CARSON. Under the employment agreement,
dated March 12, 1999, by and between us, ACS and Wesley Carson, Mr. Carson
serves as Executive Vice President of us and ACS for a two-year initial term at
an annual base salary of $200,000. Mr. Carson's employment agreement contains
provisions for additional terms, salary increases during any additional term,
annual bonus, severance, other benefits, definitions of "Good Reason," "Cause"
and "Change in Control" and provisions for non-competition and non-solicitation
similar to those in Mr. Robinson's employment agreement, except that:
- Mr. Carson does not have a guaranteed minimum annual bonus and Mr. Carson
will receive no annual bonus if termination occurs prior to December 31,
1999; and
- Mr. Carson's employment agreement does not provide any additional rights
with respect to vesting of then-unvested options upon termination.
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EMPLOYMENT AGREEMENT WITH MICHAEL E. HOLMSTROM. Under the employment
agreement, dated April 19, 1999, by and among us and ACS and Michael E.
Holmstrom, Mr. Holmstrom serves as Executive Vice President of us and ACS for a
two-year initial term at an annual base salary of $200,000. Mr. Holmstrom's
employment agreement contains provisions for additional terms, salary increases
during any additional term, annual bonus, severance, other benefits, definitions
of "Good Reason," "Cause" and "Change in Control" and provisions for
non-competition and non-solicitation similar to those in Mr. Robinson's
employment agreement, except that:
- Mr. Holmstrom does not have a guaranteed minimum annual bonus and Mr.
Holmstrom will receive no annual bonus if termination occurs prior to
December 31, 1999; and
- Mr. Holmstrom's employment agreement does not provide any additional
rights with respect to vesting of then-unvested options upon termination.
Mr. Holmstrom's employment agreement also obliges us to pay relocation-related
costs of Mr. Holmstrom.
ALEC HOLDINGS, INC. 1999 STOCK INCENTIVE PLAN
In connection with the completion of the acquisitions of PTI Alaska and ATU,
we adopted the ALEC Holdings, Inc. 1999 Stock Incentive Plan under which we may
grant incentive awards in the form of options to purchase shares of our common
stock, restricted shares of our common stock and stock appreciation rights to
non-employee directors, officers, employees and consultants ("participants") of
us and our affiliates. The total number of shares of our common stock initially
reserved and available for grant under the stock incentive plan is 3,410,486
shares. A committee of our board of directors, or our board of directors itself
in the absence of a committee, is authorized to make grants and various other
decisions under the stock incentive plan. Unless otherwise determined by the
committee, any participant granted an award under the stock incentive plan must
become a party to, and agree to be bound by, the stockholders' agreement (as
described below).
Stock options may include incentive stock options, nonqualified stock
options or both, in each case, with or without stock appreciation rights. Stock
options are generally nontransferable and, unless otherwise determined by the
committee, have a term of ten years. Upon a participant's death or when the
participant's employment with us or the applicable affiliate of us is terminated
for any reason, the participant's then-unvested stock options are forfeited and
the participant or his or her legal representative may, within three months (if
termination of employment is for any reason other than death) or one year (in
the case of the participant's death), exercise any previously vested stock
options. Stock appreciation rights may be granted in conjunction with all or
part of any stock option award and are generally exercisable only in connection
with the exercise of the related stock option. Upon termination or exercise of
the related stock option, stock appreciation rights terminate and are no longer
exercisable. Stock appreciation rights are transferable only with the related
stock options. Unless otherwise provided in the related award agreement or, if
applicable, the stockholders' agreement, immediately prior to the change of
control transactions described in the stock incentive plan, all outstanding
stock options and stock appreciation rights will become fully exercisable and
vested, and any restrictions and deferral limitations applicable to any
restricted stock awards will lapse. The committee may also grant to any
participant, on terms and conditions determined by the committee, the right to
receive cash payments to be paid at that time as an award results in
compensation income to the participant in order to assist the participant in
paying the resulting taxes.
The stock incentive plan will terminate on May 14, 2009. However, awards
outstanding at that time will not be affected or impaired by the stock incentive
plan's termination. Our board of directors and the committee have authority to
amend the stock incentive plan and awards granted thereunder.
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OWNERSHIP OF CAPITAL STOCK
The following table sets forth information regarding the beneficial
ownership of our common stock, par value $0.01 per share, by:
- each person known by us to own beneficially more than 5% of our common
stock;
- each director and each named executive officer of us; and
- all of our executive officers and directors, as a group.
Except as otherwise indicated in the footnotes below, each beneficial owner has
the sole power to vote and to dispose of all shares held by that holder.
<TABLE>
<CAPTION>
SHARES OF
HOLDINGS COMMON
STOCK
BENEFICIALLY PERCENT OF SHARES
NAME AND ADDRESS OWNED(+) OUTSTANDING(++)
- --------------------------------------------------------------------------- -------------------- -----------------
<S> <C> <C>
Fox Paine Capital, LLC(a).................................................. 19,555,751 90.0%
Fox Paine Capital Fund(a).................................................. 16,251,658 74.8%
FPC Investors, L.P.(a)..................................................... 241,144 1.1%
W. Dexter Paine, III(a).................................................... 19,555,751 90.0%
Saul A. Fox(a)............................................................. 19,555,751 90.0%
J. Russell Triedman(a)..................................................... 19,555,751 90.0%
Charles E. Robinson(b)..................................................... 241,788 1.1%
Wesley E. Carson(c)........................................................ 129,341 *
Michael E. Holmstrom(d).................................................... 16,249 *
Donn T. Wonnell(e)......................................................... 16,249 *
All directors and executive officers as a group (6 persons)(f)............. 19,959,378 91.9%
</TABLE>
- ------------------------------
(*) Indicates less than 1% of outstanding shares.
(+) The amounts and percentage of our common stock beneficially owned are
reported on the basis of regulations of the SEC governing the determination
of beneficial ownership of securities. Under the rules of the SEC, a person
is deemed to be a "beneficial owner" of a security if that person has or
shares "voting power," which includes the power to vote or to direct the
voting of the security, or "investment power," which includes the power to
dispose of or to direct the disposition of the security. A person is also
deemed to be a beneficial owner of any securities of which that person has a
right to acquire beneficial ownership within 60 days. Under these rules,
more than one person may be deemed a beneficial owner of the same securities
and a person may be deemed to be a beneficial owner of securities as to
which that person has no economic interest. The percentage of our common
stock outstanding is based on the 21,724,027 shares of our common stock
outstanding as of the date of this prospectus, without taking into account
any options or convertible interests.
(++) Computed with respect to the currently outstanding shares of our common
stock, as the case may be held by the holder, without taking into account
any options or warrants.
(a) Fox Paine Capital, LLC is General Partner or Manager of (1) the Fund, (2)
FPC Investors, L.P., (3) ALEC Coinvestment Fund I, LLC, (4) ALEC
Coinvestment Fund II, LLC, (5) ALEC Coinvestment Fund III, LLC, (6) ALEC
Coinvestment Fund IV, LLC (7) ALEC Coinvestment Fund V, LLC and (8) ALEC
Coinvestment Fund VI, LLC and possesses voting and investment power over all
shares held by each of these entities. Fox Paine Capital is not the record
owner of any shares of our common stock. Messrs. Fox and Paine are the
Members of Fox Paine Capital and share voting power of Fox Paine Capital.
Mr. Triedman is a Vice President of Fox Paine. Each of Messrs. Paine and Fox
are limited partners of FPC Investors. None of the shares shown as
beneficially owned by any of Messrs. Fox, Paine or Triedman are owned of
record by these individuals. The address of Fox Paine Capital, the Fund, FPC
Investors, and Messrs. Paine, Fox and Triedman is c/o Fox Paine & Company,
LLC, 950 Tower Lane, Suite 1950, Foster City, CA 94404.
(b) Mr. Robinson is record owner of 241,788 shares of our common stock. The
address of Mr. Robinson is c/o ALEC Holdings, Inc., 510 L. Street, Suite
500, Anchorage, Alaska 99501. Of these shares, 172,729 represent stock
grants. See "Insider Relationships and Related Party Transactions."
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(c) Mr. Carson is record owner of 129,341 shares of our common stock. The
address of Mr. Carson is c/o ALEC Holdings, Inc., 510 L. Street, Suite 500,
Anchorage, Alaska 99501. Of these shares, 85,469 represent stock grants. See
"Insider Relationships and Related Party Transactions."
(d) Mr. Holmstrom is record owner of 16,249 shares of our common stock. See
"Insider Relationships and Related Party Transactions." The address of Mr.
Holmstrom is c/o ALEC Holdings, Inc., 510 L. Street, Suite 500, Anchorage,
Alaska 99501.
(e) Mr. Wonnell is the record owner of 16,249 shares of our common stock. See
"Insider Relationships and Related Party Transactions." The address of Mr.
Wonnell is c/o ALEC Holdings, Inc., 510 L. Street, Anchorage, Alaska 99501.
(f) See "Management--ALEC Holdings, Inc. 1999 Stock Incentive Plan" for a
discussion of options to purchase or other equity rights that may be granted
to our directors and officers.
STOCKHOLDERS' AGREEMENT
On May 14, 1999, we entered into a stockholders' agreement with the Fund,
affiliates of the Fund (the "Fund Investors"), co-investors and some of our
employees listed as parties thereto (the "Non-Fund Investors"). The following is
a summary of the principal terms of the stockholders' agreement and is subject
to and qualified in its entirety by reference to the stockholders' agreement,
which has been filed as an exhibit to the registration statement of which this
prospectus is a part and is incorporated by reference herein.
The stockholders' agreement provides, among other things for:
- the right of the Non-Fund Investors to participate in, and the right of
the Fund to require the Non-Fund Investors to participate in, sales of
our common stock by the Fund;
- prior to an initial public offering of our stock, our rights to purchase,
and the rights of the Non-Fund Investors to require us to purchase,
except in the case of termination of employment of the Non-Fund
Investors, all, but not less than all, of the shares of our common stock
owned by a Non-Fund Investor upon the termination of employment or death
of the Non-Fund Investor, at prices determined in accordance with the
stockholders' agreement; and
- additional restrictions on the rights of the Non-Fund Investors to
transfer shares of our common stock.
The stockholders' agreement also contains provisions granting the Fund and
the Non-Fund Investors rights in connection with registrations of our common
stock and provides for indemnification and other rights, restrictions and
obligations in connection with those registrations.
The stockholders' agreement will terminate:
- with respect to the rights and obligations of and restrictions on the
Fund Investors and the Non-Fund Investors in connection with restrictions
on the transfer of shares of our common stock, when the Fund and its
affiliates no longer hold at least 20% of the outstanding shares of our
common stock, on a fully diluted basis; PROVIDED that the stockholders'
agreement will terminate in that respect in any event if we enter into
transactions resulting in the Fund, its affiliates, the Non-Fund
Investors, and each of their respective permitted transferees, owning
less than a majority of the outstanding voting power of the entity
surviving those transactions; and
- with respect to the registration of our common stock in offerings on the
earlier of (a) the date on which there are no longer any registrable
securities outstanding (as determined under the stockholders' agreement)
and (b) the 20(th) anniversary of the stockholders' agreement.
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INSIDER RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In connection with the completion of the acquisitions of PTI Alaska and ATU,
members of management were given grants of our common stock. See "Ownership of
Capital Stock." In connection with the stock grants, we loaned one member of
management and one former member of management approximately 40% of the fair
market value of the grants on May 14, 1999 to be used by those two individuals
to pay taxes on the income deemed received in connection with the grants.
In connection with the execution of the PTI Alaska purchase agreement,
Century entered into a consulting agreement, dated August 14, 1998, with LEC
Consulting Corporation, a corporation owned and operated by members of
management. Pursuant to the consulting agreement, LEC Consulting provided
management and advisory services to PTI Alaska with respect to its day-to-day
business operations. Under the terms of the consulting agreement, Century paid
LEC Consulting $175,000 per month for these services. In addition to the
services required under the consulting agreement, LEC Consulting employees were
responsible for managing the transition process for us and for creating the
infrastructure necessary to begin operations as of May 14, 1999. In addition,
Fox Paine loaned to LEC Consulting approximately $3.4 million beginning in
August 1998 for funding of start-up expenses, which amount was repaid out of
funds provided by us on May 14, 1999 as part of the fees and expenses related to
the acquisitions. LEC Consulting was merged into ACS on May 10, 1999.
Pursuant to a consulting agreement between Century and Mr. Robinson, Mr.
Robinson will continue to provide consulting services to Century with respect to
its operations in the lower 48 contiguous states. These services will not
interfere with Mr. Robinson's fulfillment of his duties and responsibilities to
us. However, we have agreed that Mr. Robinson will not participate in making any
decisions relating to acquisitions by us in the lower 48 contiguous states
during the term of his consulting agreement and for two years thereafter. This
consulting agreement is expected to expire on or before November 2000.
Fox Paine received advisory fees upon consummation of each of the
acquisitions. In addition, Fox Paine will receive an annual management fee.
In connection with the consummation of the acquisitions of PTI Alaska and
ATU and the private offering of the old debentures, we issued warrants to
purchase shares of our common stock, representing 3.40% of our fully diluted
ownership, to the initial purchasers in the private offering of the old
debentures. The warrants are exercisable for $0.01 per share and expire on May
14, 2011. The proceeds received from the issuance of the old debentures and the
warrants, together with the proceeds to us of the equity contributions, were
contributed to ACS as common equity. See "The Acquisitions."
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DESCRIPTION OF OTHER INDEBTEDNESS
THE SENIOR CREDIT FACILITY
ACS, together with us, entered into a credit agreement with The Chase
Manhattan Bank, as administrative agent and collateral agent, Credit Suisse
First Boston Corporation, as documentation agent, and Canadian Imperial Bank of
Commerce, as syndication agent, and the lenders named therein that provides the
ACS' senior credit facility consisting of term loans of up to $460.0 million and
a revolving credit facility of $75.0 million. Chase Securities Inc. acts as
advisor and arranger in connection with the senior credit facility. The
following is a summary description of the principal terms of the senior credit
facility and is subject to and qualified in its entirety by reference to the
credit agreement, which has been filed as an exhibit to the registration
statement of which this prospectus is a part and is incorporated by reference
herein.
STRUCTURE. Loans under the credit agreement consist of:
- a term loan A facility in the amount of $150.0 million;
- a term loan B facility in the amount of $150.0 million;
- a term loan C facility in the amount of $160.0 million; and
- a revolving credit facility in the amount of $75.0 million which is
available, in part, for up to $25.0 million in letters of credit and up
to $10.0 million in the form of swingline loans.
The term loan facilities and the revolving credit facility constitute the senior
credit facility. ACS used the term loan facilities and a portion of the
revolving credit facility to provide a portion of the funds necessary to
complete the acquisitions of PTI Alaska and ATU and to repay existing
indebtedness of PTI Alaska. ACS will use the remainder of the revolving credit
facility for general corporate purposes.
SECURITY; GUARANTEES. ACS' obligations under the senior credit facility are
unconditionally and irrevocably guaranteed, jointly and severally, by us and by
each of ACS' existing and subsequently acquired or organized domestic (or, in
limited circumstances, foreign) subsidiaries. In addition, the senior credit
facility and the guarantees thereunder are secured by substantially all of ACS'
assets and all of the assets of ACS' subsidiaries (collectively, the
"Collateral"), including:
- a first priority pledge (1) by us of all of ACS' capital stock and (2)
(a) to the extent not prohibited by law or any existing contract, by ACS
of the capital stock of companies in which ACS holds a minority stake and
(b) of all the capital stock ACS, or any of its domestic subsidiaries
(or, under limited circumstances, any of ACS' foreign subsidiaries), held
in any existing and subsequently acquired or organized subsidiary (which
pledge, in the case of any foreign subsidiary will, except under limited
circumstances, be limited to 65% of the capital stock of the foreign
subsidiary) and
- a perfected first priority security interest in, and mortgage on,
substantially all of ACS' tangible and intangible assets and
substantially all of the tangible and intangible assets of the guarantors
(including but not limited to accounts receivable, documents, inventory,
equipment, intellectual property, investment property, general
intangibles, real property, cash and cash accounts and proceeds of the
foregoing), in each case subject to limited exceptions. The credit
agreement provides for the release of guarantees under limited
circumstances.
AVAILABILITY. The availability of the senior credit facility is subject to
various conditions precedent typical of bank loans including, among other
things, the absence of any material adverse change in ACS' business. The full
amount of the term loan facilities was required to be drawn in a single drawing
on May 14, 1999. Amounts repaid or prepaid under the term loan facilities may
not be reborrowed. Amounts repaid under the revolving credit facility are
available for reborrowing on a revolving basis,
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subject to the terms of the revolving credit facility. As a result of issuance
of $150.0 million in ACS senior subordinated notes, the term loan C facility was
reduced to $135.0 million on May 14, 1999.
AMORTIZATION, INTEREST.
- The term loan A facility is repayable in annual principal payments of one
percent of principal over five years, commencing on May 14, 2002, with
the balance of the term loan A facility payable at maturity. The final
maturity of the term loan A facility is November 14, 2006. The term loan
A facility bears interest at a rate PER ANNUM equal (at ACS' option) to:
(1) an adjusted London interbank offered rate ("Adjusted LIBOR") plus
2.75% or (2) a rate equal to the greater of the administrative agent's
prime rate, a certificate of deposit rate plus 1% and the federal funds
effective rate plus 1/2 of 1% (the "Alternate Base Rate") plus 1.75%, in
each case subject to reduction based on ACS' financial performance.
- The term loan B facility is repayable in annual principal payments of one
percent of principal over six years, commencing on May 14, 2002, with the
balance of term loan B facility payable at maturity. The final maturity
of the term loan B facility is November 14, 2007. The term loan B
facility bears interest at a rate PER ANNUM equal (at ACS' option) to:
(1) Adjusted LIBOR plus 3.00% or (2) the Alternate Base Rate plus 2.00%.
- The term loan C facility is repayable in annual principal payments of one
percent of principal over six years, commencing on May 14, 2002, with the
balance of term loan C facility payable at maturity. The final maturity
of the term loan C facility is May 14, 2008. The term loan C facility
bears interest at a rate PER ANNUM equal (at ACS' option) to: (1)
Adjusted LIBOR plus 3.25% or (2) the Alternate Base Rate plus 2.25%.
- The revolving credit facility is a seven-year facility and outstanding
balances thereunder will bear interest at a rate PER ANNUM equal (at ACS'
option) to: (1) Adjusted LIBOR plus 2.75% or (2) the Alternate Base Rate
plus 1.75%, in each case subject to reduction based on ACS' financial
performance. Amounts under the senior credit facility not paid when due
bear interest at a default rate equal to 2.0% above the otherwise
applicable rate.
PREPAYMENTS. The senior credit facility permits ACS to prepay loans and to
permanently reduce revolving credit commitments, in whole or in part, at any
time. In addition, ACS is required to make mandatory prepayments of the term
loan facilities, subject to limited exceptions, in amounts equal to the excess,
if any, of:
- 50% of excess cash flow for each fiscal year, as specified in the credit
agreement, over
- the aggregate principal amount of the term loan facilities prepaid during
the fiscal year.
ACS is also required to make mandatory prepayments of term loan facilities,
subject to limited exceptions, with the net cash proceeds of dispositions of
assets or issuances of debt of us or any of our subsidiaries. Mandatory and
optional prepayments will be allocated PRO RATA among the term loan A facility,
the term loan B facility and the term loan C facility, as applicable, and within
each term loan facility, applied PRO RATA to the remaining amortization payments
under that facility, except that the lenders participating in the term loan B
facility and the term loan C facility, as applicable, have the right to refuse
mandatory prepayments, in which case those prepayments will be applied to the
term loan A facility, or, if no portion of the term loan A facility remains
outstanding, ACS may retain the prepayments. Any prepayment of Adjusted LIBOR
loans other than at the end of an interest period will be subject to
reimbursement of breakage costs as described in the credit agreement.
FEES. ACS is required to pay the lenders, on a quarterly basis, a
commitment fee equal to 1/2 of 1% PER ANNUM on the undrawn portion of the unused
commitments, subject to reductions based upon ACS' financial performance. ACS is
also required to pay:
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- on a quarterly basis, a commission on the face amount of all outstanding
letters of credit equal to the applicable margin then in effect for
Adjusted LIBOR loans under the revolving credit facility;
- on a quarterly basis, a fronting fee in the amount of 0.25% PER ANNUM on
each letter of credit to the issuing bank;
- standard fees of the issuing bank with respect to issuance, amendment,
renewal or extension of any letters of credit; and
- fees payable to the administrative agent.
COVENANTS, EVENTS OF DEFAULT. The credit agreement contains customary
covenants that, among other things, restrict our ability, the ability of ACS and
the ability of ACS' subsidiaries to dispose of assets, incur additional
indebtedness, incur guarantee obligations, prepay other indebtedness or amend
other debt instruments, pay dividends, create liens on assets, enter into sale
and leaseback transactions, make investments, loans or advances, make
acquisitions, engage in mergers or consolidations, change ACS' business, make
capital expenditures or engage in transactions with affiliates. In addition,
under the senior credit facility, ACS is required to comply with specified
financial ratios, including minimum interest coverage ratios and maximum
leverage ratios.
The credit agreement also contains provisions that prohibit any modification
of the indenture relating to the senior subordinated notes of ACS as well as
customary representations and warranties, affirmative covenants and events of
default, including cross default, material judgments and change in control.
THE ACS SENIOR SUBORDINATED NOTES
On May 14, 1999, ACS issued $150.0 million in aggregate principal amount of
senior subordinated notes due 2009, for gross proceeds of $25.0 million, in a
private transaction not subject to the registration requirements of the
Securities Act. Cash interest is payable on the outstanding principal amount of
the ACS senior subordinated notes at the rate of 9 3/8% PER ANNUM payable
semiannually on May 15th and November 15th of each year, commencing November 15,
1999, subject to restrictions on dividends to ACS contained in the ACS senior
credit facility.
The ACS senior subordinated notes rank junior in right of payment to all
current and future senior indebtedness of ACS, rank PARI PASSU in right of
payment to all current and future senior subordinated indebtedness of ACS and
rank senior in right of payment to all current and future subordinated
indebtedness of ACS. As obligations of a holding company, the ACS senior
subordinated notes are effectively subordinated to all obligations of the
subsidiaries of ACS. See "Risk Factors."
The ACS senior subordinated notes are not redeemable until May 15, 2004.
Thereafter, the ACS senior subordinated notes will be redeemable at the option
of ACS with a premium that declines each year until 2007, when the ACS senior
subordinated notes will be redeemable in whole or in part at 100% of their
principal amount plus accrued and unpaid interest. Upon a Change of Control (as
defined in the indenture governing the ACS senior subordinated notes), each
holder will be able to require ACS to offer to redeem the holder's ACS senior
subordinated notes at a price equal to 101% of principal amount, subject to
restrictions contained in the ACS senior credit facility. If ACS consummates one
or more offerings of ACS capital stock on or before May 15, 2002, ACS, at its
option, will be able to use all or a portion of the sale proceeds to redeem up
to 35% of the aggregate principal amount of the ACS senior subordinated notes
originally issued, at a price equal to their principal amount plus a premium
equal to one year's interest at the stated interest rate.
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The indenture relating to the ACS senior subordinated notes contains various
restrictive covenants that, among other things, limit:
- the incurrence of indebtedness by ACS and its subsidiaries;
- the payment of Restricted Payments (as defined in the indenture relating
to the ACS senior subordinated notes);
- the payment of dividends on stock and purchases of stock;
- the sale of assets or stock of ACS' subsidiaries;
- transactions with affiliates;
- mergers, consolidations and sales of assets; and
- the business activities in which ACS and its subsidiaries may engage.
Each of these limitations, however, is subject to qualifications set forth fully
in the indenture governing the ACS senior subordinated notes, which has been
filed as an exhibit to the registration statement of which this prospectus is a
part and is incorporated by reference herein.
The indenture relating to the ACS senior subordinated notes also contains
events of default customary for obligations of this type, including a default in
the payment of interest on the ACS senior subordinated notes when due and
payable, the acceleration of debt of ACS or any of its subsidiaries in an amount
in excess of $5.0 million and the rendering of any judgment for the payment of
money in excess of $5.0 million against ACS, subject, in each case, to
applicable grace periods. As a result, events may occur that cause a default
under the indenture governing the ACS senior subordinated notes at a time when
there is no default under the indenture governing the exchange debentures.
Payment of all amounts outstanding under the ACS senior subordinated notes could
be accelerated in the event of a default under the indenture governing the ACS
senior subordinated notes.
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DESCRIPTION OF THE EXCHANGE DEBENTURES
DEFINITIONS OF TERMS USED IN THIS DESCRIPTION OF THE EXCHANGE DEBENTURES MAY
BE FOUND UNDER THE CAPTION "--DEFINITIONS." FOR PURPOSES OF THIS SECTION,
REFERENCES TO "HOLDINGS" OR THE "COMPANY" REFER ONLY TO ALEC HOLDINGS, INC. AND
"ACS" REFERS ONLY TO ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC. AND NOT ANY OF
THEIR SUBSIDIARIES.
GENERAL
Holdings will issue the exchange debentures under the same indenture, dated
as of May 14, 1999 (the "Indenture"), between Holdings and The Bank of New York,
as Trustee (the "Trustee"), under which the old debentures were issued, a copy
of which is available upon request to Holdings. The Indenture contains
provisions that define your rights under the exchange debentures. In addition,
the Indenture governs the obligations of Holdings under the exchange debentures.
The terms of the exchange debentures include those stated in the Indenture and
those made part of the Indenture by reference to the TIA.
The following description is meant to be only a summary of the Indenture. It
does not restate the terms of the Indenture in their entirety. We urge you to
read carefully the Indenture as it, and not this description, governs your
rights as Holders.
OVERVIEW OF THE EXCHANGE DEBENTURES
The exchange debentures:
- will be general unsecured obligations of Holdings;
- will be senior in right of payment to all existing and future
Subordinated Obligations of Holdings; and
- will be effectively subordinated to all Secured Indebtedness of Holdings
and its Subsidiaries to the extent of the value of the assets securing
that Indebtedness.
PRINCIPAL, MATURITY AND INTEREST
We will initially issue exchange debentures in an aggregate principal amount
of $46,928,435 with gross proceeds of $25 million. The exchange debentures will
mature on May 15, 2011. We will issue the exchange debentures in fully
registered form, without coupons, in denominations of $1,000 and any integral
multiple of $1,000.
The Exchange Debentures will not accrue interest prior to November 15, 2004.
Each exchange debenture we issue will bear interest at a rate of 13% beginning
on November 15, 2004, or from the most recent date to which interest has been
paid or provided for. We will pay interest semiannually to Holders of record at
the close of business on the May 1 or November 1 immediately preceding the
interest payment date on May 15 and November 15 of each year. We will pay
interest on overdue principal at 1% PER ANNUM in excess of such rate, and we
will pay interest on overdue installments of interest at such higher rate to the
extent lawful.
PAYING AGENT AND REGISTRAR
We will pay the principal of, premium, if any, and interest on the exchange
debentures at any office of ours or any agency designated by us which is located
in the Borough of Manhattan, the City of New York. We have initially designated
the corporate trust office of the Trustee to act as the agent of Holdings in
such matters (the "Paying Agent"). The location of the corporate trust office is
101 Barclay Street, Floor 21W, New York, New York 10286. We reserve the right,
however, to pay interest to Holders by check mailed directly to Holders at their
registered addresses.
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Holders may exchange or transfer their exchange debentures at the location
given in the preceding paragraph. No service charge will be made for any
registration of transfer or exchange of exchange debentures. We may, however,
require Holders to pay any transfer tax or other similar governmental charge
payable in connection with such transfer or exchange.
OPTIONAL REDEMPTION
Except as set forth in the following paragraph, we may not redeem the
exchange debentures at our option prior to May 15, 2004. After this date, we may
redeem the exchange debentures in whole or in part, on not less than 30 nor more
than 60 days' prior notice, at the following redemption prices (expressed as
percentages of principal amount), plus accrued and unpaid interest thereon, and
Additional Amounts in respect thereof, if any, to the redemption date (subject
to the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date), if redeemed during the
twelve-month period commencing on May 15 of the years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ------------------------------------------------------------------------------------- -----------
<S> <C>
2004................................................................................. 106.500%
2005................................................................................. 105.200%
2006................................................................................. 103.900%
2007................................................................................. 102.600%
2008................................................................................. 101.300%
2009 and thereafter.................................................................. 100.000%
</TABLE>
Prior to May 15, 2002, we may, at our option, on one or more occasions, also
redeem up to a maximum of 35% of the original aggregate principal amount of the
exchange debentures with the Net Cash Proceeds of one or more Equity Offerings
by Holdings, at a redemption price equal to 113% of the principal amount
thereof, plus accrued and unpaid interest on, and any Additional Amounts in
respect of, the exchange debentures, to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date); PROVIDED, HOWEVER, that after giving
effect to any such redemption:
(1) at least 65% of the original aggregate principal amount of the exchange
debentures remains outstanding; and
(2) any such redemption by Holdings must be made within 90 days of such
related Equity Offering by Holdings, and must be made upon not less than
30 nor more than 60 days' notice mailed to each Holder of exchange
debentures being redeemed and otherwise in accordance with the procedures
set forth in the Indenture.
SELECTION
If we partially redeem exchange debentures, the Trustee will select the
exchange debentures to be redeemed on a PRO RATA basis, by lot or by such other
method as the Trustee shall deem to be fair and appropriate (and in such manner
as complies with applicable legal requirements); PROVIDED that no exchange
debenture of $1,000 in original principal amount or less will be redeemed in
part. If we redeem any exchange debenture in part only, the notice of redemption
relating to such exchange debenture shall state the portion of the principal
amount of such exchange debenture to be redeemed. A new exchange debenture in
principal amount equal to the unredeemed portion of such exchange debenture will
be issued in the name of the Holder upon cancellation of the original exchange
debenture. On and after the redemption date, interest will cease to accrue on
exchange debentures or portions of exchange debentures called for redemption so
long as we have deposited with the Paying Agent funds sufficient to pay the
principal of, plus accrued and unpaid interest on, and Additional Amounts in
respect of, the exchange debentures to be redeemed.
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CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each Holder will have the right to require Holdings to repurchase all
or any part of such Holder's exchange debentures at a purchase price in cash
equal to 101% of Accreted Value (or if after May 14, 2004, of the principal
amount thereof plus accrued and unpaid interest thereon) and Additional Amounts
in respect thereof, if any, to the date of repurchase (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date); PROVIDED, HOWEVER, that notwithstanding the
occurrence of a Change of Control, Holdings shall not be obligated to repurchase
the exchange debentures pursuant to this section in the event that it has
exercised its right to redeem all the exchange debentures under the terms
described under the caption "--Optional Redemption":
(1) prior to the first public offering of Company Common Stock, the
Permitted Holders, taken together, cease to be the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of
the Voting Stock of ACS or Holdings, whether as a result of issuance of
securities of ACS or Holdings, any merger, consolidation, liquidation or
dissolution of ACS or Holdings, any direct or indirect transfer of
securities by any Permitted Holder or otherwise (for purposes of this
clause (1) and clause (2) below, the Permitted Holders shall be deemed to
beneficially own any Voting Stock of an entity (the "specified entity")
held by any other entity (the "parent entity") so long as the Permitted
Holders beneficially own, directly or indirectly, in the aggregate a
majority of the voting power of the Voting Stock of the parent entity);
(2) (a) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (1) above, except that
for purposes of this clause (2) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right
to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 35% of the
total voting power of the Voting Stock of ACS or Holdings and (b) the
Permitted Holders beneficially own (as defined in clause (1) above),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of ACS or Holdings than such other
person and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors of ACS or Holdings, as the case may be (for the purposes of
this clause (2), such other person shall be deemed to beneficially own
any Voting Stock of a specified entity held by a parent entity, if such
other person is the beneficial owner (as defined in this clause (2)),
directly or indirectly, of more than 35% of the voting power of the
Voting Stock of such parent entity and the Permitted Holders beneficially
own (as defined in clause (1) above), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting Stock of
such parent entity and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of
the board of directors of such parent entity);
(3) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Holdings
or ACS, as the case may be (together with any new directors whose (a)
election by such Board of Directors of ACS or Holdings, as the case may
be, or whose nomination for election by the shareholders of ACS or
Holdings, as the case may be, was approved by a majority vote of the
directors of ACS or Holdings, as the case may be, then still in office
who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved or (b) who
are designees of the Permitted Holders or were nominated by the Permitted
Holders) cease for any reason to
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constitute a majority of the Board of Directors of Holdings or ACS, as
the case may be, then in office;
(4) the adoption of a plan relating to the liquidation or dissolution of ACS
or Holdings;
(5) the merger or consolidation of ACS or Holdings with or into another
Person or the merger of another Person with or into ACS or Holdings, or
the sale of all or substantially all the assets of ACS or Holdings to
another Person (other than a Person that is controlled by the Permitted
Holders), and, in the case of any such merger or consolidation, the
securities of ACS or Holdings that are outstanding immediately prior to
such transaction and that represent 100% of the aggregate voting power of
the Voting Stock of ACS or Holdings are changed into or exchanged for
cash, securities or property, unless pursuant to such transaction such
securities are changed into or exchanged for, in addition to any other
consideration, securities of the surviving Person or transferee that
represent immediately after such transaction, at least a majority of the
aggregate voting power of the Voting Stock of the surviving Person or
transferee; or
(6) ACS ceases to be a Wholly Owned Subsidiary of Holdings.
In the event that at the time of such Change of Control the terms of the
Bank Indebtedness restrict or prohibit the repurchase of exchange debentures
pursuant to this covenant, then prior to the mailing of the notice to Holders
provided for in the immediately succeeding paragraph but in any event within 30
days following any Change of Control, Holdings shall:
(1) repay in full all Bank Indebtedness or, if doing so will allow the
repurchase of exchange debentures, offer to repay in full all Bank
Indebtedness and repay the Bank Indebtedness of each lender who has
accepted such offer; or
(2) obtain the requisite consent under the agreements governing the Bank
Indebtedness to permit the repurchase of the exchange debentures as
provided for in the immediately succeeding paragraph.
Within 30 days following any Change of Control, Holdings shall mail a notice
to each Holder with a copy to the Trustee (the "Change of Control Offer")
stating:
(1) that a Change of Control has occurred and that such Holder has the right
to require Holdings to purchase such Holder's exchange debentures at a
purchase price in cash equal to 101% of the Accreted Value (or, after May
14, 2004, the principal amount thereof, plus accrued and unpaid interest)
and Additional Amounts in respect thereof, if any, to the date of
purchase (subject to the right of Holders of record on the relevant
record date to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts and financial information regarding
such Change of Control;
(3) the purchase date (which shall be no earlier than 30 days nor later than
60 days from the date such notice is mailed); and
(4) the instructions determined by Holdings, consistent with this covenant,
that a Holder must follow in order to have its exchange debentures
purchased.
Holdings will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by Holdings and
purchases all exchange debentures validly tendered and not withdrawn under such
Change of Control Offer.
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Holdings will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the purchase of exchange debentures pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, Holdings will comply with
the applicable securities laws and regulations and will not be deemed to have
breached its obligations under this covenant by virtue thereof.
RESTRICTIVE COVENANTS
The Indenture will contain covenants including, among others, the following:
LIMITATION ON INDEBTEDNESS. (1) Holdings will not, and will not permit any
Restricted Subsidiary to, Incur any Indebtedness; PROVIDED, HOWEVER, that
Holdings or any Restricted Subsidiary may Incur Indebtedness if on the date of
such Incurrence and after giving effect thereto the Debt to EBITDA Ratio would
be less than 7.25:1.
(2) Notwithstanding the foregoing paragraph (1), Holdings and its Restricted
Subsidiaries may Incur the following Indebtedness:
(a) Bank Indebtedness in an aggregate principal amount not to exceed $585
million less the aggregate amount of all prepayments of principal applied
to permanently reduce any such Indebtedness;
(b) Indebtedness of ACS owed to and held by any Wholly Owned Subsidiary or
Indebtedness of a Restricted Subsidiary owed to and held by ACS or any
Wholly Owned Subsidiary; PROVIDED, HOWEVER, that any subsequent issuance
or transfer of any Capital Stock or any other event that results in any
such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or
any subsequent transfer of any such Indebtedness (except to ACS or a
Wholly Owned Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the issuer thereof;
(c) Indebtedness (i) represented by the exchange debentures, (ii)
represented by the Notes and the Guarantees, (iii) outstanding on the
Closing Date (other than the Indebtedness described in clauses (a) and
(b) above), (iv) consisting of Refinancing Indebtedness Incurred in
respect of any Indebtedness described in this clause (c) (including
Indebtedness Refinancing Indebtedness) or the foregoing paragraph (1) or
(v) consisting of guarantees of any Indebtedness permitted under clauses
(a) and (b) of this paragraph (2);
(d) (i) Indebtedness of a Restricted Subsidiary Incurred and outstanding on
or prior to the date on which such Restricted Subsidiary was acquired by
Holdings (other than Indebtedness Incurred as consideration in, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Subsidiary of, or was otherwise
acquired by, Holdings); PROVIDED, HOWEVER, that on the date that such
Restricted Subsidiary is acquired by Holdings, Holdings would have been
able to Incur $1.00 of additional Indebtedness pursuant to the foregoing
paragraph (1) after giving effect to the Incurrence of such Indebtedness
pursuant to this clause (d) and (ii) Refinancing Indebtedness Incurred by
ACS or a Restricted Subsidiary in respect of Indebtedness Incurred
pursuant to this clause (d);
(e) Indebtedness in respect of performance bonds, bankers' acceptances,
letters of credit and surety or appeal bonds provided by Holdings and the
Restricted Subsidiaries in the ordinary course of their business;
(f) Purchase Money Indebtedness and Capitalized Lease Obligations in an
aggregate principal amount not in excess of $20 million at any time
outstanding;
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(g) Hedging Obligations of Holdings directly related to Indebtedness
permitted to be Incurred by Holdings pursuant to the Indenture for the
purpose of fixing or hedging interest rate risk or currency fluctuations;
(h) (i) Indebtedness of another Person Incurred and outstanding on or prior
to the date on which such Person consolidates with or merges with or into
Holdings or ACS (other than Indebtedness Incurred as consideration in, or
to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to
which such Person consolidates with or merges with or into Holdings or
ACS); PROVIDED, HOWEVER, that on the date that such transaction is
consummated, Holdings would have been able to Incur $1.00 of additional
Indebtedness pursuant to the foregoing paragraph (1) after giving effect
to the Incurrence of such Indebtedness pursuant to this clause (h) and
(ii) Refinancing Indebtedness Incurred by Holdings or ACS or the
Successor Company in respect of Indebtedness Incurred pursuant to
subclause (i) of this clause (h); or
(i) Indebtedness (other than Indebtedness permitted to be Incurred pursuant
to the foregoing paragraph (1) or any other clause of this paragraph (2))
in an aggregate principal amount on the date of Incurrence that, when
added to all other Indebtedness Incurred pursuant to this clause (i) and
then outstanding, shall not exceed $5 million.
(3) Notwithstanding the foregoing, Holdings may not Incur any Indebtedness
pursuant to paragraph (2) above if the proceeds thereof are used, directly or
indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any
Subordinated Obligations, unless such Indebtedness will be subordinated to the
exchange debentures to at least the same extent as such Subordinated
Obligations. In addition, Holdings may not Incur any Secured Indebtedness that
is not Pari Passu Indebtedness unless contemporaneously therewith effective
provision is made to secure the exchange debentures equally and ratably with (or
on a senior basis to, in the case of Indebtedness subordinated in right of
payment to the exchange debentures) such Secured Indebtedness for so long as
such Secured Indebtedness is secured by a Lien.
(4) Notwithstanding any other provision of this covenant, the maximum amount
of Indebtedness that Holdings or any Restricted Subsidiary may Incur pursuant to
this covenant shall not be deemed to be exceeded solely as a result of
fluctuations in the exchange rates of currencies. For purposes of determining
the outstanding principal amount of any particular Indebtedness Incurred
pursuant to this covenant:
(a) Indebtedness Incurred pursuant to the Credit Agreement prior to or on
the Closing Date shall be treated as Incurred pursuant to clause (2)(a)
above;
(b) Indebtedness permitted by this covenant need not be permitted solely by
reference to one provision permitting such Indebtedness but may be
permitted in part by one such provision and in part by one or more other
provisions of this covenant permitting such Indebtedness; and
(c) in the event that Indebtedness meets the criteria of more than one of
the types of Indebtedness described in this covenant, Holdings, in its
sole discretion, shall classify such Indebtedness and only be required to
include the amount of such Indebtedness in one of such clauses.
LIMITATION ON RESTRICTED PAYMENTS. (1) Holdings will not, and will not
permit any Restricted Subsidiary, directly or indirectly, to:
(a) declare or pay any dividend or make any distribution on or in respect of
its Capital Stock (including any payment in connection with any merger or
consolidation involving Holdings) or similar payment to the holders of
its Capital Stock except dividends or distributions payable
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solely in its Capital Stock (other than Disqualified Stock) and except
dividends or distributions payable to Holdings or another Restricted
Subsidiary (and, if such Restricted Subsidiary has shareholders other
than Holdings or other Restricted Subsidiaries, to its other shareholders
on a pro rata basis);
(b) purchase, redeem, retire or otherwise acquire for value any Capital
Stock of Holdings or any Restricted Subsidiary held by Persons other than
Holdings or another Restricted Subsidiary;
(c) purchase, repurchase, redeem, defease or otherwise acquire or retire for
value, prior to scheduled maturity, scheduled repayment or scheduled
sinking fund payment any Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case, due within one
year of the date of acquisition); or
(d) make any Investment (other than a Permitted Investment) in any Person
(any such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or Investment being herein referred to as a
"Restricted Payment") if at the time Holdings or such Restricted Subsidiary
makes such Restricted Payment:
(i) a Default will have occurred and be continuing (or would result
therefrom);
(ii) Holdings could not Incur at least $1.00 of additional Indebtedness
under paragraph (1) of the covenant described under the caption
"--Limitation on Indebtedness"; or
(iii) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the Board of Directors, whose determination will
be conclusive and evidenced by a resolution of the Board of Directors)
declared or made subsequent to the Closing Date would exceed the sum of,
without duplication:
(A) (i) 100% of EBITDA accrued during the period (treated as one
accounting period) from the beginning of the fiscal quarter
immediately following the fiscal quarter during which the Closing
Date occurs to the end of the most recent fiscal quarter for
which financial statements are publicly available (or, in case
such EBITDA will be a deficit, minus 100% of such deficit), minus
(ii) 140% of Consolidated Interest Expense accrued during the
period (treated as one accounting period) from the beginning of
the fiscal quarter immediately following the fiscal quarter
during which the Closing Date occurs to the end of the most
recent fiscal quarter for which financial statements are publicly
available; plus
(B) the aggregate Net Cash Proceeds received by Holdings from the
issue or sale of its Capital Stock (other than Disqualified
Stock) subsequent to the Closing Date (other than (x) an
issuance or sale to a Subsidiary of Holdings, (y) an issuance or
sale to an employee stock ownership plan or other trust
established by Holdings or any of its Subsidiaries or (z) to the
extent used in accordance with clause (2)(e)(ii) or
(2)(f)(iii)(B)) below; plus
(C) the aggregate Net Cash Proceeds received by Holdings from the
sale or other disposition (other than to Holdings or a
Restricted Subsidiary) of any Investments previously made by
Holdings or a Restricted Subsidiary and treated as a Restricted
Payment; PROVIDED that the amount added pursuant to this clause
(C) shall not exceed the amount treated as a Restricted Payment
and not previously added pursuant to this paragraph (iii); plus
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(D) the amount by which Indebtedness of Holdings or its Restricted
Subsidiaries is reduced on Holdings' balance sheet upon the
conversion or exchange (other than by a Subsidiary of Holdings)
subsequent to the Closing Date of any Indebtedness of Holdings or
its Restricted Subsidiaries issued after the Closing Date that is
convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of Holdings (less the amount of any cash or
the fair market value of other property distributed by Holdings
or any Restricted Subsidiary upon such conversion or exchange);
plus
(E) the amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from (i) payments of
dividends, repayments of the principal of loans or advances or
other transfers of assets to Holdings or any Restricted
Subsidiary from Unrestricted Subsidiaries or (ii) the
redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued, in each case, as provided in the
definition of "Investment") not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously
made by Holdings or any Restricted Subsidiary in such
Unrestricted Subsidiary, which amount was included in the
calculation of the amount of Restricted Payments; plus
(F) $5 million.
(2) The provisions of the foregoing paragraph (1) will not prohibit:
(a) any purchase, repurchase, retirement, defeasance or other acquisition or
retirement for value of Capital Stock or Subordinated Obligations of
Holdings made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of Holdings (other than
Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary of Holdings or an employee stock ownership plan or other trust
established by Holdings or any of its Subsidiaries); PROVIDED, HOWEVER,
that:
(i) such Restricted Payment will be excluded in the calculation of the
amount of Restricted Payments; and
(ii) the Net Cash Proceeds from such sale applied in the manner set
forth in this clause (a) will be excluded from the calculation of
amounts under clause (B) of paragraph (iii) above;
(b) any purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Obligations of Holdings made by
exchange for, or out of the proceeds of the substantially concurrent sale
of, Indebtedness of Holdings that is permitted to be Incurred pursuant to
paragraph (2) of the covenant described under the caption "--Limitation
on Indebtedness"; PROVIDED, HOWEVER, that such purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value will
be excluded in the calculation of the amount of Restricted Payments;
(c) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by the covenant described under
the caption "--Limitation on Sales of Assets and Subsidiary Stock";
PROVIDED, HOWEVER, that such purchase or redemption will be excluded in
the calculation of the amount of Restricted Payments;
(d) dividends paid within 60 days after the date of declaration thereof if
at such date of declaration such dividend would have complied with this
covenant; PROVIDED, HOWEVER, that such dividend will be included in the
calculation of the amount of Restricted Payments;
(e) the repurchase or other acquisition of shares of, or options to purchase
shares of, common stock of Holdings or any of its Subsidiaries from
employees, former employees, consultants,
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former consultants, directors or former directors of Holdings or any of
its Subsidiaries (or permitted transferees of such employees, former
employees, consultants, former consultants, directors or former
directors), pursuant to the terms of agreements (including employment
agreements) or plans (or amendments thereto) approved by the Board of
Directors under which such individuals purchase or sell, or are granted
the option to purchase or sell, shares of such common stock; PROVIDED,
HOWEVER, that the aggregate amount of such repurchases, together with any
amounts or other distributions to Holdings under the following paragraph
(f)(iii), shall not exceed in any calendar year the sum of (i) $5 million
plus (ii) the Net Cash Proceeds received since the date of the Indenture
by Holdings or received by Holdings and contributed to Holdings from the
sale of Capital Stock to employees, consultants and directors of Holdings
or Holdings; PROVIDED, FURTHER, HOWEVER, that such repurchases and other
acquisitions of shares, or options to purchase shares of common stock
shall be included in the calculation of the amount of Restricted
Payments; and
Notwithstanding the foregoing, no cash dividends in excess of $10.0 million may
be paid by Holdings unless Holdings shall have set aside in an escrow account an
amount not less than the amount of accretion accrued from the original issue
date of the Exchange Debentures.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED
SUBSIDIARIES. Holdings will not, and will not permit any Restricted Subsidiary
to, create or otherwise cause or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock or
pay any Indebtedness or other obligations owed to Holdings or any of its
Restricted Subsidiaries;
(2) make any loans or advances to Holdings or any of its Restricted
Subsidiaries; or
(3) transfer any of its property or assets to Holdings or any of its
Restricted Subsidiaries,
except:
(a) any encumbrance or restriction pursuant to applicable law or an
agreement in effect at or entered into on the Closing Date;
(b) any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement relating to any Indebtedness Incurred by such
Restricted Subsidiary prior to the date on which such Restricted
Subsidiary was acquired by Holdings (other than Indebtedness Incurred as
consideration in, in contemplation of, or to provide all or any portion
of the funds or credit support utilized to consummate the transaction or
series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was otherwise acquired by
Holdings) and outstanding on such date;
(c) any encumbrance or restriction (x) pursuant to an agreement effecting a
Refinancing of Indebtedness Incurred pursuant to an agreement referred to
in clause (a) or (b) above or this clause (c) or (y) contained in any
amendment to an agreement referred to in clause (a) or (b) above or this
clause (c) or (z) pursuant to any other agreement regarding Indebtedness
otherwise permitted by the covenant "Limitation on Indebtedness";
PROVIDED, HOWEVER, that the encumbrances and restrictions contained in
any such Refinancing agreement or amendment are no less favorable to the
Noteholders than the encumbrances and restrictions contained in such
predecessor agreements or, with respect to agreements entered into at or
after the Closing Date, the most restrictive agreement in existence at or
prior to the Closing Date;
(d) in the case of clause (3), any encumbrance or restriction:
(i) that restricts in a customary manner the subletting, assignment or
transfer of any property or asset that is subject to a lease,
license or similar contract; or
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(ii) contained in security agreements securing Indebtedness of a
Restricted Subsidiary to the extent such encumbrance or restriction
restricts the transfer of the property subject to such security
agreements;
(e) with respect to a Restricted Subsidiary, any restriction imposed
pursuant to an agreement entered into for the sale or disposition of all
or substantially all the Capital Stock or assets of such Restricted
Subsidiary pending the closing of such sale or disposition;
(f) any encumbrance or restriction relating to Purchase Money Indebtedness
or Capitalized Lease Obligations for property acquired in the ordinary
course of business that imposes restrictions on the ability of Holdings
or a Restricted Subsidiary to sell, lease or transfer the acquired
property to Holdings or its Restricted Subsidiaries;
(g) restrictions on cash or other deposits imposed by customers under
contracts entered into in the ordinary course of business;
(h) any encumbrance or restriction contained in joint venture agreements and
other similar agreements entered into in the ordinary course of business
and customary for such types of agreements; and
(i) any encumbrance or restriction pursuant to an agreement for Indebtedness
under Section 2(e) and 2(g) of the covenant "Limitation on Indebtedness."
LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK. (1) Holdings will not,
and will not permit any Restricted Subsidiary to, make any Asset Disposition
unless:
(a) Holdings or such Restricted Subsidiary receives consideration (including
by way of relief from, or by any other Person assuming sole
responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Disposition at least equal to the fair market value, as
determined in good faith by the Board of Directors, of the shares and
assets subject to such Asset Disposition;
(b) at least 75% of the consideration thereof received by Holdings or such
Restricted Subsidiary is in the form of cash; PROVIDED that the following
shall be deemed to be cash for purposes of this clause (b): (i) the
amount of any liabilities (as shown on Holdings', or such Restricted
Subsidiary's, most recent balance sheet or in the notes thereto) of
Holdings or any Restricted Subsidiary (other than liabilities that are by
their terms subordinated to the Exchange Debentures) that are assumed by
the transferee of any such assets, (ii) the amount of any securities
received by Holdings or such Restricted Subsidiary from such transferee
that are converted by Holdings or such Restricted Subsidiary into cash
(to the extent of the cash received) within 90 days following the closing
of such Asset Disposition, (iii) the fair market value of any
Telecommunications Assets received by Holdings in such Asset Disposition
and (iv) the fair market value of any Permitted Joint Venture Interests
received by Holdings or any Restricted Subsidiary in such Asset
Disposition; PROVIDED that the aggregate fair market value of all
Permitted Joint Venture Interests received pursuant to this clause (iv),
valued, in each case, at the time of receipt, shall not exceed 10% of
Consolidated Net Tangible Assets,
(for purposes of this paragraph (b), all determinations of fair market
value shall be made in good faith by the Board of Directors and evidenced
by an Officers' Certificate delivered to the Trustee); and
(c) from and after the date on which neither the Bank Indebtedness nor the
Notes (including any Refinancings thereof) are outstanding, an amount
equal to 100% of the Net Available Cash
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from such Asset Disposition is applied by Holdings (or such Restricted
Subsidiary, as the case may be):
(i) FIRST, to the extent Holdings elects (or is required by the terms of
any Indebtedness), to prepay, repay, redeem, purchase or otherwise
acquire Indebtedness (other than any Disqualified Stock) of a Wholly
Owned Subsidiary (in each case, other than Indebtedness owed to
Holdings or an Affiliate of Holdings and other than Preferred Stock)
within 180 days of the later of the date of such Asset Disposition
or the receipt of such Net Available Cash;
(ii) SECOND, to the extent of the balance of Net Available Cash after
application in accordance with clause (i) above, to the extent
Holdings or such Restricted Subsidiary elects to, or enters into a
binding agreement to, reinvest in Additional Assets (including by
means of an Investment in Additional Assets by a Restricted
Subsidiary with cash in an amount equal to the amount of Net
Available Cash received by, or to be received by, Holdings or
another Restricted Subsidiary) within 180 days of the later of such
Asset Disposition or the receipt of such Net Available Cash; and
(iii) THIRD, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (i) and (ii) above, to
make an Offer to purchase exchange debentures pursuant to and
subject to the conditions set forth in paragraph (2) below;
PROVIDED, HOWEVER, that, if Holdings elects (or is required by the
terms of any other Senior Subordinated Indebtedness), such Offer
may be made ratably to purchase the exchange debentures and other
Pari Passu Indebtedness of Holdings;
PROVIDED, HOWEVER, that, in connection with any prepayment, repayment or
purchase of Indebtedness pursuant to clause (i) or (iii) above, Holdings
or such Restricted Subsidiary will retire such Indebtedness and will
cause the related loan commitment (if any) to be permanently reduced in
an amount equal to the principal amount so prepaid, repaid or purchased.
Upon completion of any Offer, the amount of Net Available Cash shall be
reset at zero and Holdings shall be entitled to use any remaining proceeds for
any corporate purposes to the extent permitted under the Indenture.
Notwithstanding the foregoing provisions of this covenant, Holdings and the
Restricted Subsidiaries will not be required to apply any Net Available Cash in
accordance with this covenant except to the extent that the aggregate Net
Available Cash from all Asset Dispositions that is not applied in accordance
with this covenant exceeds $10 million.
(2) In the event of an Asset Disposition that requires the purchase of
exchange debentures pursuant to clause (c)(iii) above, Holdings will be required
to offer to purchase exchange debentures tendered pursuant to an offer by
Holdings for the exchange debentures (an "Offer") at a purchase price of 100% of
their Accreted Value, (or, if after May 14, 2004, principal amount plus accrued
and unpaid interest thereon), and Additional Amounts in respect thereof, if any,
to the date of purchase in accordance with the procedures (including prorating
in the event of oversubscription) set forth in the Indenture and to purchase
other Pari Passu Indebtedness on the terms and to the extent contemplated
thereby. Holdings will not be required to make an Offer for exchange debentures
(and other Pari Passu Indebtedness) pursuant to this covenant if the Net
Available Cash available therefor (after application of the proceeds as provided
in clauses (c)(i) and (c)(ii) above) is less than $10 million for any particular
Asset Disposition (which lesser amount will be carried forward for purposes of
determining whether an Offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition).
(3) Holdings will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of
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exchange debentures pursuant to this covenant. To the extent that the provisions
of any securities laws or regulations conflict with provisions of this covenant,
Holdings will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under this covenant by
virtue thereof.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. (1) Holdings will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, enter into or
conduct any transaction or series of related transactions (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of Holdings (an "Affiliate Transaction") unless such
Affiliate Transaction is on terms:
(a) that are no less favorable to Holdings or such Restricted Subsidiary, as
the case may be, than those that could be obtained at the time of such
transaction in arms'-length dealings with a Person who is not such an
Affiliate;
(b) that, in the event such Affiliate Transaction involves an aggregate
amount in excess of $5 million:
(i) are set forth in writing; and
(ii) have been approved by a majority of the members of the Board of
Directors having no personal stake, other than as a holder of
Capital Stock of Holdings, Holdings or such Restricted Subsidiary,
in such Affiliate Transaction; and
(c) that, in the event such Affiliate Transaction involves an amount in
excess of $15 million, have been determined by a nationally recognized
appraisal or investment banking firm to be fair, from a financial
standpoint, to Holdings and its Restricted Subsidiaries.
(2) The provisions of paragraph (1) above will not prohibit:
(a) any Restricted Payment permitted to be paid pursuant to the covenant
described under the caption "--Limitation on Restricted Payments";
(b) any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the
Board of Directors;
(c) the grant of stock options or similar rights to employees and directors
of Holdings pursuant to plans approved by the Board of Directors;
(d) loans or advances to employees in the ordinary course of business in
accordance with past practices of Holdings, but in any event not to
exceed $10 million in the aggregate outstanding at any one time;
(e) the payment of reasonable fees to directors of Holdings and its
Subsidiaries who are not employees of Holdings or its Subsidiaries;
(f) any transaction between Holdings and a Restricted Subsidiary or between
Restricted Subsidiaries;
(g) customary indemnification and insurance arrangements in favor of
officers, directors, employees and consultants of Holdings or any of the
Restricted Subsidiaries;
(h) payments by Holdings or any of its Restricted Subsidiaries to Fox Paine
and its Affiliates for any financial advisory, financing, underwriting or
other placement services or in respect of other investment banking
activities, including, without limitation, in connection with
acquisitions or divestitures which payments are approved by a majority of
the members of the Board of Directors referred to in clause (b)(ii) above
in good faith;
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(i) the existence of, or the performance by Holdings or any of its
Restricted Subsidiaries of the obligations under the terms of, any
stockholders agreements (including any registration rights agreement or
purchase agreement related thereto) to which it is a party as of the
Closing Date, as such agreements, may be amended from time to time
pursuant to the terms thereof; PROVIDED, HOWEVER, that the terms of any
such amendment are no less favorable to the Holders than the terms of any
such agreements in effect as of the Closing Date; and
(j) the issuance of Capital Stock (other than Disqualified Stock) of
Holdings for cash to any Permitted Holder.
LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES. Holdings will not sell or otherwise dispose of any shares of
Capital Stock of a Restricted Subsidiary, and will not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any
shares of its Capital Stock except:
(1) to Holdings or a Wholly Owned Subsidiary;
(2) if, immediately after giving effect to such issuance, sale or other
disposition, neither Holdings nor any of its Subsidiaries own any Capital
Stock of such Restricted Subsidiary; or
(3) if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary
and any Investment in such Person remaining after giving effect thereto
would have been permitted to be made under the covenant described under
the caption "--Limitation on Restricted Payments" if made on the date of
such issuance, sale or other disposition.
The proceeds of any sale of such Capital Stock permitted hereby will be
treated as Net Available Cash from an Asset Disposition and must be applied in
accordance with the terms of the covenant described under the caption
"--Limitation on Sales of Assets and Subsidiary Stock."
SEC REPORTS. Notwithstanding that Holdings may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, Holdings will
file with the SEC and provide the Trustee and Exchange Debentures and
prospective Exchange Debentures (upon request) within 15 days after it files
them with the SEC, copies of its annual report and the information, documents
and other reports that are specified in Sections 13 and 15(d) of the Exchange
Act. In addition, following an Equity Offering, Holdings shall furnish to the
Trustee and Exchange Debentures, promptly upon their becoming available, copies
of the annual report to shareholders and any other information provided by
Holdings or Holdings to its public shareholders generally. Holdings also will
comply with the other provisions of Section 314(a) of the TIA.
LIMITATION ON LINES OF BUSINESS. Holdings will not, and will not permit any
Restricted Subsidiary to, engage in any business, other than a Related Business.
MERGER AND CONSOLIDATION
Holdings will not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "Successor Company")
will be a corporation organized and existing under the laws of the United
States of America, any state thereof or the District of Columbia, and the
Successor Company (if not Holdings) will expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of Holdings under the
exchange debentures and the Indenture;
(2) immediately after giving effect to such transaction (and treating any
Indebtedness which becomes an obligation of the Successor Company or any
Restricted Subsidiary as a result of
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such transaction as having been Incurred by the Successor Company or such
Restricted Subsidiary at the time of such transaction), no Default shall
have occurred and be continuing;
(3) immediately after giving effect to such transaction, the Successor
Company would be able to Incur an additional $1.00 of Indebtedness under
paragraph (1) of the covenant described under the caption "--Restrictive
Covenants--Limitation on Indebtedness";
(4) Holdings shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger
or transfer and such supplemental indenture (if any) comply with the
Indenture; and
(5) Holdings shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders will not recognize income, gain or loss for
Federal income tax purposes as a result of such transaction and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such transaction had not
occurred.
Notwithstanding the foregoing clause (2) or (3), Holdings may merge with an
Affiliate incorporated or formed solely for the purpose of reincorporating
Holdings in another jurisdiction.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, Holdings under the Indenture, but Holdings,
in the case of a conveyance, transfer or lease of all or substantially all its
assets, will not be released from the obligation to pay the principal of and
interest on the exchange debentures.
DEFAULTS
Each of the following is an "Event of Default":
(1) a default in any payment of interest on any exchange debenture when due
and payable, continued for 30 days;
(2) a default in the payment of principal of any exchange debenture when due
and payable at its Stated Maturity, upon required redemption or
repurchase, upon declaration or otherwise;
(3) the failure by Holdings to comply with its obligations under the
covenant described under the caption "--Merger and Consolidation";
(4) the failure by Holdings to comply for 30 days after notice with any of
its obligations under the covenants described under the captions
"--Change of Control" or "--Restrictive Covenants" (in each case, other
than a failure to purchase exchange debentures);
(5) the failure by Holdings to comply for 60 days after notice with its
other agreements contained in the exchange debentures or the Indenture;
(6) the failure by Holdings or any Subsidiary of Holdings to pay any
Indebtedness (other than Indebtedness owing to Holdings or a Subsidiary
of Holdings) within any applicable grace period after final maturity or
the acceleration of any such Indebtedness by the holders thereof because
of a default if the total amount of such Indebtedness unpaid or
accelerated exceeds $5.0 million or its foreign currency equivalent (the
"cross acceleration provision") and such failure continues for 10 days
after receipt of the notice specified in the Indenture;
(7) certain events of bankruptcy, insolvency or reorganization of Holdings
or a Significant Subsidiary (the "bankruptcy provisions"); or
(8) the rendering of any judgment or decree for the payment of money in
excess of $5.0 million or its foreign currency equivalent against
Holdings or a Subsidiary of Holdings, to the extent such judgment or
decree is not covered by insurance or is in excess of insurance coverage,
if
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such judgment or decree remains outstanding for a period of 60 days
following such judgment and is not discharged, waived or stayed (the
"judgment default provision").
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
However, a default under clause (4), (5) or (6) above will not constitute an
Event of Default until the Trustee or the Holders of at least 25% in principal
amount of the outstanding exchange debentures notify Holdings of the default and
Holdings does not cure such default within the time specified in clauses (4),
(5) or (6) above after receipt of such notice.
If an Event of Default (other than an Event of Default under the bankruptcy
provisions) occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the outstanding exchange debentures by notice to Holdings
may declare the principal of (if, prior to May 14, 2004, the Accreted Value) and
accrued but unpaid interest on all the exchange debentures to be due and
payable. Upon such a declaration, such principal and interest will be due and
payable immediately. If an Event of Default under the bankruptcy provisions
occurs, the principal of and accrued and unpaid interest on all the exchange
debentures (if, prior to May 14, 2004, the Accreted Value of all the Exchange
Debentures) will become immediately due and payable without any declaration or
other act on the part of the Trustee or any Holders. Under certain
circumstances, the Holders of a majority in principal amount of the outstanding
exchange debentures may rescind any such acceleration with respect to the
exchange debentures and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the exchange debentures unless:
(1) such Holder has previously given the Trustee notice that an Event of
Default is continuing;
(2) Holders of at least 25% in principal amount of the outstanding exchange
debentures have requested the Trustee in writing to pursue the remedy;
(3) such Holders have offered the Trustee reasonable security or indemnity
against any loss, liability or expense;
(4) the Trustee has not complied with such request within 60 days after the
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the outstanding Notes
have not given the Trustee a direction inconsistent with such request
within such 60-day period.
Subject to certain restrictions, the Holders of a majority in principal
amount of the outstanding exchange debentures will be given the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee. The
Trustee, however, may refuse to follow any direction that conflicts with law or
the Indenture or that the Trustee determines is unduly prejudicial to the rights
of any other Holder or that would involve the Trustee in personal liability.
Prior to taking any action under the Indenture, the Trustee will be entitled to
indemnification satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
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If a Default occurs and is continuing and is known to the Trustee, the
Trustee must mail to each Holder notice of the Default within 90 days after it
is known to a Trust Officer or written notice of it is received by the Trustee.
Except in the case of a Default in the payment of principal of, premium (if any)
or interest on any exchange debenture (including payments pursuant to the
redemption provisions of such exchange debenture), the Trustee may withhold
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding notice is in the interests of the Holders. In
addition, Holdings will be required to deliver to the Trustee, within 120 days
after the end of each fiscal year, a certificate indicating whether the signers
thereof know of any Default that occurred during the previous year. Holdings
will also be required to deliver to the Trustee, within 30 days after the
occurrence thereof, written notice of any event that would constitute certain
Events of Default, its status and what action Holdings is taking or proposes to
take in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture or the exchange debentures may
be amended with the written consent of the Holders of a majority in principal
amount of the exchange debentures then outstanding and any past default or
compliance with any provisions may be waived with the consent of the Holders of
a majority in principal amount of the exchange debentures then outstanding.
However, without the consent of each Holder of an outstanding exchange debenture
affected, no amendment may, among other things:
(1) reduce the amount of exchange debentures whose Holders must consent to
an amendment;
(2) reduce the rate of or extend the time for payment of interest or any
Additional Amounts on any exchange debenture;
(3) reduce the principal of or extend the Stated Maturity of any exchange
debenture;
(4) reduce the premium payable upon the redemption of any exchange debenture
or change the time at which any exchange debenture may be redeemed as
described under the caption "--Optional Redemption;"
(5) make any exchange debenture payable in money other than that stated in
the exchange debenture;
(6) make any change to the subordination provisions of the Indenture that
adversely affects the rights of any Holder;
(7) impair the right of any Holder to receive payment of principal of, and
interest or any Additional Amounts on, such Holder's exchange debentures
on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder's exchange
debentures; or
(8) make any change in the amendment provisions which require each Holder's
consent or in the waiver provisions.
Without the consent of any Holder, Holdings and Trustee may amend the
Indenture to:
- cure any ambiguity, omission, defect or inconsistency;
- provide for the assumption by a successor corporation of the obligations
of Holdings under the Indenture;
- provide for uncertificated exchange debentures in addition to or in place
of certificated exchange debentures (PROVIDED that the uncertificated
exchange debentures are issued in registered form for purposes of Section
163(f) of the Code, or in a manner such that the uncertificated Notes are
described in Section 163(f)(2)(B) of the Code);
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- secure the exchange debentures;
- add to the covenants of Holdings for the benefit of the Holders or to
surrender any right or power conferred upon Holdings;
- make any change that does not adversely affect the rights of any Holder,
subject to the provisions of the Indenture; or
- comply with any requirement of the SEC in connection with the
qualification of the Indenture under the TIA.
The consent of the Debentureholders will not be necessary to approve the
particular form of any proposed amendment. It will be sufficient if such consent
approves the substance of the proposed amendment.
After an amendment becomes effective, Holdings will be required to mail to
Holders a notice briefly describing such amendment. However, the failure to give
such notice to all Holders, or any defect therein, will not impair or affect the
validity of the amendment.
TRANSFER AND EXCHANGE
A Holder will be able to transfer or exchange exchange debentures. Upon any
transfer or exchange, the registrar and the Trustee may require a
Debentureholder, among other things, to furnish appropriate endorsements and
transfer documents and Holdings may require a Debentureholder to pay any taxes
required by law or permitted by the Indenture. Holdings will not be required to
transfer or exchange any exchange debenture selected for redemption or to
transfer or exchange any exchange debenture for a period of 15 days prior to a
selection of exchange debentures to be redeemed. The exchange debentures will be
issued in registered form and the Holder will be treated as the owner of such
exchange debenture for all purposes.
DEFEASANCE
Holdings may at any time terminate all its obligations under the exchange
debentures and the Indenture ("legal defeasance"), except for certain
obligations, including those respecting the defeasance trust and obligations to
register the transfer or exchange of the exchange debentures, to replace
mutilated, destroyed, lost or stolen exchange debentures and to maintain a
registrar and paying agent in respect of the exchange debentures. In addition,
Holdings may at any time terminate:
(1) its obligations under the covenants described under "--Restrictive
Covenants" or
(2) the operation of the cross acceleration provision, the bankruptcy
provisions with respect to Significant Subsidiaries and the judgment
default provision described under "--Defaults" and the limitations
contained in clauses (3) and (4) under the first paragraph under
"--Merger and Consolidation" ("covenant defeasance").
In the event that Holdings exercises its legal defeasance option or its covenant
defeasance option, each Guarantor will be released from all of its obligations
with respect to its Guarantee.
Holdings may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option. If Holdings exercises its legal
defeasance option, payment of the exchange debentures may not be accelerated
because of an Event of Default with respect thereto. If Holdings exercises its
covenant defeasance option, payment of the exchange debentures may not be
accelerated because of an Event of Default specified in clause (4), (6), (7)
(with respect only to Significant Subsidiaries) or (8) under "--Defaults" or
because of the failure of Holdings to comply with clause (3) or (4) under the
first paragraph under "--Merger and Consolidation."
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In order to exercise either defeasance option, Holdings must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium (if any) and
interest on the exchange debentures to redemption or maturity, as the case may
be, and must comply with certain other conditions, including delivery to the
Trustee of an Opinion of Counsel to the effect that Holders will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and defeasance and will be subject to federal income tax on the same amounts and
in the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred (and, in the case of legal defeasance
only, such Opinion of Counsel must be based on a ruling of the Internal Revenue
Service or other change in applicable federal income tax law).
CONCERNING THE TRUSTEE
The Bank of New York is to be the Trustee under the Indenture and has been
appointed by Holdings as Registrar and Paying Agent with regard to the exchange
debentures.
GOVERNING LAW
The Indenture and the exchange debentures will be governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
applicable principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby.
DEFINITIONS
"Accreted Value" means, for each $1,000 face amount of exchange notes, as of
any date of determination prior to May 14, 2004 the sum of (i) the initial
offering price of each exchange note and (ii) that portion of the excess of the
principal amount of each exchange note over such initial offering price which
shall have been accreted thereon through such date, such amount to be so
accreted on a daily basis and compounded semi-annually on each May 15 and
November 15 at the rate of 13% per annum from the date of issuance of the
exchange notes through the date of determination. The Accreted Value will cease
to accrete on and after May 14, 2004.
"ACS" means Alaska Communications Systems Holdings, Inc., a Delaware
corporation and a Wholly Owned Subsidiary, formerly known as ALEC Acquisition
Corporation.
"ACS Indenture" means the indenture for ACS' 9 3/8% Senior Subordinated
Notes due 2009.
"Additional Amounts" means any liquidated damages payable pursuant to any
exchange agreement, registration rights agreement or similar agreement entered
into in connection with the Indenture.
"Additional Assets" means:
(1) any property or assets (other than Indebtedness and Capital Stock) to be
used by Holdings or a Restricted Subsidiary in a Related Business;
(2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a
result of the acquisition of such Capital Stock by Holdings or another
Restricted Subsidiary; or
(3) Capital Stock constituting a minority interest in any Person that at
such time is a Restricted Subsidiary;
PROVIDED, HOWEVER, that any such Restricted Subsidiary described in clauses (2)
or (3) above is primarily engaged in a Related Business.
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"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the provisions described under the captions "--Restrictive
Covenants--Limitation on Transactions with Affiliates" and "--Restrictive
Covenants--Limitation on Sales of Assets and Subsidiary Stock" only, "Affiliate"
shall also mean any beneficial owner of shares representing 5% or more of the
total voting power of the Voting Stock (on a fully diluted basis) of ACS or
Holdings or of rights or warrants to purchase such Voting Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Alaska Entities" means Telephone Utilities of Alaska, Inc., Telephone
Utilities of the Northland, Inc., PTI Communications of Alaska, Inc., Pacific
Telecom of Alaska PCS, Inc. and Pacific Telecom Cellular of Alaska, Inc.
"ALEC Acquisition Sub" means ALEC Acquisition Sub Corp., a Delaware
corporation and a Wholly Owned Subsidiary.
"Asset Disposition" means any sale, lease, transfer or other disposition (or
series of related sales, leases, transfers or dispositions) by Holdings or any
Restricted Subsidiary, including any disposition by means of a merger,
consolidation, or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of:
(1) any shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be
held by a Person other than ACS or a Restricted Subsidiary);
(2) all or substantially all the assets of any division or line of business
of Holdings or any Restricted Subsidiary; or
(3) any other assets of Holdings or any Restricted Subsidiary outside of the
ordinary course of business of Holdings or such Restricted Subsidiary;
(other than, in the case of (1), (2) and (3) above:
(a) a disposition by a Restricted Subsidiary to Holdings or by Holdings
or a Restricted Subsidiary to a Wholly Owned Subsidiary;
(b) for purposes of the provisions described under the caption
"--Restrictive Covenants-- Limitation on Sales of Assets and
Subsidiary Stock" only, a disposition subject to the covenant
described under the caption "--Restrictive Covenants--Limitation on
Restricted Payments";
(c) a disposition of assets with a fair market value of less than
$100,000;
(d) a disposition of Temporary Cash Investments or goods held for sale in
the ordinary course of business or obsolete equipment or other
obsolete assets in the course of business consistent with past
practices of Holdings;
(e) the disposition of all or substantially all of the assets of Holdings
in a manner permitted under the covenant described under the caption
"--Merger and Consolidation" or any disposition that constitutes a
Change of Control under the Indenture; and
(f) the lease, assignment or sub-lease of any real or personal property
in the ordinary course of business).
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"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the exchange debentures, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which such
lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing:
(1) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment
of such Indebtedness or redemption or similar payment with respect to
such Preferred Stock multiplied by the amount of such payment by
(2) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in respect of
the Credit Agreement, the notes issued pursuant thereto, the guarantees thereof,
the collateral documents relating thereto and any Refinancing Indebtedness with
respect thereto, as amended from time to time, including principal, premium (if
any), interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to ACS whether or not a
claim for post-filing interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of Holdings or any
committee thereof duly authorized to act on behalf of the Board of Directors of
Holdings.
"Business Day" means each day that is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) equity of such Person, including any Preferred Stock,
but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be prepaid by the lessee without payment of a
penalty.
"Closing Date" means the date of the Indenture.
"CNI" means CenturyTel of the Northwest, Inc., formerly known as Pacific
Telecom, Inc., a Washington corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means ALEC Holdings, Inc., a Delaware corporation.
"Consolidated Current Liabilities" as of the date of determination means the
aggregate amount of liabilities of Holdings and its Consolidated Restricted
Subsidiaries which may properly be classified as current liabilities (including
taxes accrued as estimated), on a Consolidated basis, after eliminating:
(1) all intercompany items between Holdings and any Restricted Subsidiary;
and
(2) all current maturities of long-term Indebtedness, all as determined in
accordance with GAAP consistently applied.
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"Consolidated Interest Expense" means, for any period, the total interest
expense of Holdings and its Consolidated Restricted Subsidiaries, plus, to the
extent Incurred by Holdings and its Consolidated Restricted Subsidiaries in such
period but not included in such interest expense:
(1) interest expense attributable to Capitalized Lease Obligations and the
interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction;
(2) amortization of debt discount and debt issuance costs;
(3) capitalized interest;
(4) non-cash interest expense;
(5) commissions, discounts and other fees and charges attributable to
letters of credit and bankers' acceptance financing;
(6) interest accruing on any Indebtedness of any other Person to the extent
such Indebtedness is guaranteed by Holdings or any Restricted Subsidiary;
(7) amortization of net costs associated with Hedging Obligations (including
amortization of fees);
(8) dividends in respect of all Disqualified Stock of Holdings and all
Preferred Stock of any of the Subsidiaries of Holdings, to the extent
held by Persons other than Holdings or a Wholly Owned Subsidiary;
(9) interest Incurred in connection with investments in discontinued
operations; and
(10) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to
pay interest or fees to any Person (other than Holdings) in connection
with Indebtedness Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net income of Holdings
and its Consolidated Subsidiaries for such period; PROVIDED, HOWEVER, that there
shall not be included in such Consolidated Net Income:
(1) any net income of any Person (other than Holdings) if such Person is not
a Restricted Subsidiary, except that:
(a) subject to the limitations contained in clause (4) below, Holdings'
equity in the net income of any such Person for such period shall be
included in such Consolidated Net Income up to the aggregate amount
of cash or other assets actually distributed by such Person during
such period to Holdings or a Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other
distribution made to a Restricted Subsidiary, to the limitations
contained in clause (3) below); and
(b) Holdings' equity in a net loss of any such Person for such period
shall be included in determining such Consolidated Net Income;
(2) any net income (or loss) of any Person acquired by Holdings or a
Subsidiary of Holdings in a pooling of interests transaction for any
period prior to the date of such acquisition;
(3) any net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of its net income is not, at the date of
determination, permitted without any prior governmental approval (which
has not been obtained) or, directly or indirectly, by the operation of
the terms of its charter, or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, unless such restrictions with
respect to the payment of dividends or similar distributions have been
legally waived, except
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that the net loss of any such Restricted Subsidiary for such period shall
be included in determining such Consolidated Net Income;
(4) any gain (but not loss) realized upon the sale or other disposition of
any asset of Holdings or its Consolidated Subsidiaries (including
pursuant to any Sale/Leaseback Transaction) that is not sold or otherwise
disposed of in the ordinary course of business and any gain (but not
loss) realized upon the sale or other disposition of any Capital Stock of
any Person;
(5) any extraordinary or otherwise nonrecurring gain or loss; and
(6) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purpose of the covenant described
under the caption "--Restrictive Covenants--Limitation on Restricted Payments"
only, there shall be excluded from Consolidated Net Income any dividends,
repayments of loans or advances or other transfers of assets from Unrestricted
Subsidiaries to Holdings or a Restricted Subsidiary to the extent such
dividends, repayments or transfers increase the amount of Restricted Payments
permitted under such covenant pursuant to clause (1)(d)(iii)(E) thereof.
"Consolidated Net Tangible Assets" as of any date of determination, means
the total amount of assets (less accumulated depreciation and amortization,
allowances for doubtful receivables, other applicable reserves and other
properly deductible items) which would appear on a consolidated balance sheet of
Holdings and its Consolidated Restricted Subsidiaries, determined on a
Consolidated basis in accordance with GAAP, and after giving effect to purchase
accounting and after deducting therefrom Consolidated Current Liabilities and,
to the extent otherwise included, the amounts of:
(1) minority interests in Consolidated Subsidiaries held by Persons other
than Holdings or a Restricted Subsidiary;
(2) excess of cost over fair value of assets of businesses acquired, as
determined in good faith by the Board of Directors;
(3) any revaluation or other write-up in book value of assets subsequent to
the date of the Indenture as a result of a change in the method of
valuation in accordance with GAAP consistently applied;
(4) unamortized debt discount and expenses and other unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade names,
copyrights, licenses, organization or developmental expenses and other
intangible items;
(5) treasury stock;
(6) cash set apart and held in a sinking or other analogous fund established
for the purpose of redemption or other retirement of Capital Stock to the
extent such obligation is not reflected in Consolidated Current
Liabilities; and
(7) Investments in and assets of Unrestricted Subsidiaries.
"Consolidation" means the consolidation of the amounts of each of the
Restricted Subsidiaries with those of Holdings in accordance with GAAP
consistently applied; PROVIDED, HOWEVER, that "Consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of Holdings or any Restricted Subsidiary in an Unrestricted Subsidiary will be
accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Credit Agreement" means the credit agreement dated as of May 14, 1999 among
Holdings, ACS, the financial institutions named therein, The Chase Manhattan
Bank, as Administrative Agent, Canadian Imperial Bank of Commerce, as
Syndication Agent and Credit Suisse First Boston, as Documentation Agent, as
amended, waived or otherwise modified from time to time (except to the
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extent that any such amendment, waiver or other modification thereto would be
prohibited by the terms of the Indenture, unless otherwise agreed to by the
Holders of at least a majority in aggregate principal amount of exchange
debentures at the time outstanding), including any such amendments or
modifications (or any other credit agreement or credit agreements) that replace,
refund or refinance any or a portion of the commitments or loans thereunder, up
to a maximum principal amount not to exceed $585 million.
"Currency Agreement" means, with respect to any Person, any foreign exchange
contract, currency swap agreements or other similar agreement or arrangement to
which such Person is a party or of which it is a beneficiary.
"CWI" means CenturyTel Wireless, Inc., formerly known as Century Cellunet,
Inc., a Louisiana corporation.
"Debt to EBITDA Ratio" as of any date of determination means the ratio of:
(1) Total Consolidated Indebtedness as of the date of determination to
(2) EBITDA for the period of the most recent four consecutive fiscal
quarters ending at the end of the most recent fiscal quarter for which
financial statements are publicly available; PROVIDED, HOWEVER, that:
(a) if Holdings or any Restricted Subsidiary has repaid, repurchased,
defeased or otherwise discharged any Indebtedness since the beginning
of such period or if any Indebtedness is to be repaid, repurchased,
defeased or otherwise discharged (in each case, other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced)
on the date of the transaction giving rise to the need to calculate
the Debt to EBITDA Ratio, EBITDA for such period shall be calculated
on a pro forma basis as if such discharge had occurred on the first
day of such period and as if Holdings or such Restricted Subsidiary
has not earned the interest income actually earned during such period
in respect of cash or Temporary Cash Investments used to repay,
repurchase, defease or otherwise discharge such Indebtedness;
(b) if since the beginning of such period Holdings or any Restricted
Subsidiary shall have made any Asset Disposition, the EBITDA for such
period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets that are the subject of
such Asset Disposition for such period or increased by an amount
equal to the EBITDA (if negative) directly attributable thereto for
such period;
(c) if since the beginning of such period, Holdings or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in
any Person that is merged with or into Holdings or any Restricted
Subsidiary (or any Person that becomes a Restricted Subsidiary) or an
acquisition of assets, including any acquisition of assets occurring
in connection with a transaction causing a calculation to be made
hereunder, which constitutes all or substantially all of an operating
unit of a business, EBITDA for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any
Indebtedness) as if such Investment or acquisition occurred on the
first day of such period; any such pro forma calculation may include
adjustments appropriate to reflect, without duplication (x) any such
acquisition to the extent such adjustments may be reflected in the
preparation of pro forma financial information in accordance with the
requirements of GAAP and Article XI of Regulation S-X under the
Exchange Act; (y) the annualized amount of operating expense
reductions reasonably expected to be realized in the six months
following any such acquisition made during any of the four fiscal
quarters constituting the four-quarter reference period prior to the
date of determination; and (z) the annualized amount of operating
expense reductions reasonably
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expected to be realized in the six months following any such
acquisition made by Holdings during either of the two fiscal quarters
immediately preceding the four-quarter reference period prior to the
date of determination; PROVIDED that in either case such adjustments
are set forth in an Officers' Certificate signed by Holdings' chief
executive officer and chief financial officer which states (i) the
amount of such adjustment or adjustments, (ii) that such adjustment
or adjustments are based on the reasonable good faith beliefs of the
officers executing such Officers' Certificate at the time of such
execution and (iii) that any related Incurrence of Indebtedness is
permitted pursuant to the Indenture; and
(d) if since the beginning of such period, any Person (that subsequently
became a Restricted Subsidiary or was merged with or into Holdings or
any Restricted Subsidiary since the beginning of such period) shall
have made any Asset Disposition or any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (b)
or (c) above if made by Holdings or a Restricted Subsidiary during
such period, EBITDA for such period shall be calculated after giving
pro forma effect thereto as if such Asset Disposition, Investment or
acquisition of assets occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to
an acquisition of assets and the amount of income or earnings relating thereto,
the pro forma calculations shall be determined in good faith by a responsible
financial or accounting Officer of Holdings. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be calculated as if the rate in effect on the
date of determination had been the applicable rate for the entire period (taking
into account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term as at the date of determination in
excess of 12 months).
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
that by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable or exercisable) or upon the happening of any
event:
(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or Disqualified Stock;
or
(3) is redeemable at the option of the holder thereof, in whole or in part;
in each case on or prior to the first anniversary of the Stated Maturity of the
exchange debentures; PROVIDED, HOWEVER, that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving holders thereof
the right to require such Person to repurchase or redeem such Capital Stock upon
the occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the exchange debentures shall not
constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are not more favorable to the
holders of such Capital Stock than the provisions of the covenants described
under the captions "--Change of Control" and "--Restrictive
Covenants--Limitation on Sale of Assets and Subsidiary Stock."
"Domestic Subsidiary" means any Restricted Subsidiary of Holdings other than
a Foreign Subsidiary.
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"EBITDA" for any period means the Consolidated Net Income for such period,
plus the following to the extent deducted in calculating such Consolidated Net
Income:
(1) income tax expense of Holdings and its Consolidated Restricted
Subsidiaries;
(2) Consolidated Interest Expense;
(3) depreciation expense of Holdings and its Consolidated Restricted
Subsidiaries;
(4) amortization expense of Holdings and its Consolidated Restricted
Subsidiaries (excluding amortization expense attributable to a prepaid
cash item that was paid in a prior period); and
(5) all other non-cash charges of Holdings and its Consolidated Restricted
Subsidiaries (excluding any such non-cash charge to the extent it
represents an accrual of or reserve for cash expenditures in any future
period, but that will not be expensed in such future periods),
in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the income
or profits of, and the depreciation and amortization and non-cash charges of, a
Restricted Subsidiary of Holdings shall be added to Consolidated Net Income to
compute EBITDA only to the extent (and in the same proportion) that the net
income of such Restricted Subsidiary was included in calculating Consolidated
Net Income and only if a corresponding amount would be permitted at the date of
determination to be dividended to Holdings by such Restricted Subsidiary without
prior approval (that has not been obtained), pursuant to the terms of its
charter and all agreements, instruments, judgments, decrees, orders, statutes,
rules and governmental regulations applicable to such Restricted Subsidiary or
its stockholders.
"Equity Offering" means any public or private sale of Capital Stock (other
than Disqualified Stock) of Holdings, other than offerings of Holdings of the
type that can be registered on Form S-8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Foreign Subsidiary" means any Restricted Subsidiary of Holdings that is not
organized under the laws of the United States of America or any state thereof or
the District of Columbia.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including those set forth in:
(1) the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants;
(2) statements and pronouncements of the Financial Accounting Standards
Board;
(3) such other statements by such other entities as approved by a
significant segment of the accounting profession; and
(4) the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the
Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the
SEC.
All ratios and computations based on GAAP contained in the Indenture shall be
computed in conformity with GAAP.
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"guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and any obligation, direct or indirect, contingent or otherwise, of
any Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by agreement
to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise);
or
(2) entered into for purposes of assuring in any other manner the obligee of
such Indebtedness or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in
part);
PROVIDED, HOWEVER, that the term "guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "guarantee"
used as a verb has a corresponding meaning. The term "guarantor" shall mean any
Person guaranteeing any obligation.
"Guarantee" means each guarantee of the obligations with respect to the
Notes issued by a Guarantor pursuant to the terms of the ACS Indenture.
"Guarantor" means any Domestic Subsidiary of ACS.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Debentureholder" means the Person in whose name an exchange
debenture is registered on the registrar's books.
"Holdings" means ALEC Holdings, Inc., a Delaware corporation.
"Incur" means issue, assume, guarantee, incur or otherwise become liable
for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a Person
existing at the time such Person is merged or consolidated with Holdings or
becomes a Subsidiary of Holdings (whether by merger, consolidation, acquisition
or otherwise) shall be deemed to be Incurred by such Person at the time of such
merger or consolidation or at the time it becomes a Subsidiary of Holdings. The
term "Incurrence" when used as a noun shall have a correlative meaning. The
accretion of principal of a non-interest bearing or other discount security
shall not be deemed the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal of and premium (if any) in respect of indebtedness of such
Person for borrowed money;
(2) the principal of and premium (if any) in respect of obligations of such
Person evidenced by bonds, debentures, notes or other similar
instruments;
(3) all obligations of such Person in respect of letters of credit or other
similar instruments (including reimbursement obligations with respect
thereto);
(4) all obligations of such Person to pay the deferred and unpaid purchase
price of property or services (except Trade Payables and contingent
obligations to pay earn-outs), which purchase price is due more than six
months after the date of placing such property in service or taking
delivery and title thereto or the completion of such services;
(5) all Capitalized Lease Obligations and all Attributable Debt of such
Person;
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(6) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, any Preferred Stock (but
excluding, in each case, any accrued dividends);
(7) all Indebtedness of other Persons secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person;
PROVIDED, HOWEVER, that the amount of Indebtedness of such Person shall
be the lesser of:
(A) the fair market value of such asset at such date of determination and
(B) the amount of such Indebtedness of such other Persons;
(8) to the extent not otherwise included in this definition, Hedging
Obligations of such Person; and
(9) all obligations of the type referred to in clauses (1) through (8) above
of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
guarantee.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"Interest Rate Agreement" means, with respect to any Person, any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any, direct or indirect, advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extension of credit (including by way of guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary" and the covenant described under the caption
"--Restrictive Covenants-- Limitation on Restricted Payments":
(1) "Investment" shall include the portion (proportionate to Holdings'
equity interest in such Subsidiary) of the fair market value of the net
assets of any Subsidiary of Holdings at the time that such Subsidiary is
designated an Unrestricted Subsidiary; PROVIDED, HOWEVER, that, upon a
redesignation of such Subsidiary as a Restricted Subsidiary, Holdings
shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary in an amount (if positive) equal to:
(a) Holdings' Investment in such Subsidiary at the time of such
redesignation less
(b) the portion (proportionate to Holdings' equity interest in such
Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall be
valued at its fair market value at the time of such transfer, in each
case, as determined in good faith by the Board of Directors.
"Legal Holiday" means a Saturday, Sunday or other day on which banking
institutions in the State of New York are authorized or required by law to
close.
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"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Management Group" means the group consisting of current and former
directors and executive officers of ACS.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise and proceeds from the
sale or other disposition of any securities received as consideration, but only
as and when received, but excluding any other consideration received in the form
of assumption by the acquiring Person of Indebtedness or other obligations
relating to the properties or assets that are the subject of such Asset
Disposition or received in any other non-cash form) therefrom, in each case net
of:
(1) all legal fees and expenses, title and recording tax expenses,
commissions and other fees and expenses incurred, and all federal, state,
provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset Disposition;
(2) all payments, including any prepayment premiums or penalties, made on
any Indebtedness that is secured by any assets subject to such Asset
Disposition, in accordance with the terms of any Lien upon or other
security agreement of any kind with respect to such assets, or which must
by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law be repaid out of the proceeds from such
Asset Disposition;
(3) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition; and
(4) appropriate amounts to be provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the
property or other assets disposed of in such Asset Disposition and
retained by Holdings or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees and expenses actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Notes" means the 9 3/8% Senior Subordinated Notes due 2009 of ACS.
"Officer" means the Chairman of the Board, the Chief Executive Officer, the
Chief Financial Officer, the President, any Vice President, the Treasurer or the
Secretary of Holdings.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to
Holdings or the Trustee.
"Pari Passu Indebtedness" of Holdings means the exchange debentures,
Holdings' guarantee of the Bank Indebtedness, and any other Indebtedness of
Holdings that specifically provides that such Indebtedness is to rank PARI PASSU
with Holdings' Debentures, in right of payment and is not subordinated by its
terms in right of payment to any Indebtedness or other obligation of Holdings
which is not Pari Passu Indebtedness.
"Permitted Holders" means Fox Paine Capital Fund, L.P., and its Affiliates,
FPC Investors, L.P., ALEC Coinvestment Fund I, LLC, ALEC Coinvestment Fund II,
LLC, ALEC Coinvestment Fund III, LLC, ALEC Coinvestment Fund IV, LLC, ALEC
Coinvestment Fund V, LLC, the Management Group and any Person acting in the
capacity of an underwriter in connection with a public or private offering of
Holdings' or Holdings' Capital Stock.
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"Permitted Investment" means an Investment by Holdings or any Restricted
Subsidiary in:
(1) Holdings, a Restricted Subsidiary or a Person that will, upon the making
of such Investment, become a Restricted Subsidiary; PROVIDED, HOWEVER,
that the primary business of such Restricted Subsidiary is a Related
Business;
(2) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, ACS or a Restricted Subsidiary;
PROVIDED, HOWEVER, that such Person's primary business is a Related
Business;
(3) Temporary Cash Investments;
(4) receivables owing to Holdings or any Restricted Subsidiary if created or
acquired in the ordinary course of business and payable or dischargeable
in accordance with customary trade terms; PROVIDED, HOWEVER, that such
trade terms may include such concessionary trade terms as Holdings or any
such Restricted Subsidiary deems reasonable under the circumstances;
(5) payroll, travel and similar advances to cover matters that are expected
at the time of such advances ultimately to be treated as expenses for
accounting purposes and that are made in the ordinary course of business;
(6) any loans or advances to employees made in the ordinary course of
business consistent with past practices of Holdings or such Restricted
Subsidiary and not exceeding, when aggregated with amounts loaned or
advanced under clause (2)(f)(iv) of "--Restrictive Covenants-- Limitation
on Restricted Payments," $5 million in the aggregate outstanding at any
one time;
(7) stock, obligations or securities received in settlement of (or
foreclosure with respect to) debts created in the ordinary course of
business and owing to Holdings or any Restricted Subsidiary or in
satisfaction of judgments;
(8) any Person to the extent such Investment represents the non-cash or
deemed cash portion of the consideration received for an Asset
Disposition that was made pursuant to and in compliance with the covenant
described under the caption "--Restrictive Covenants-- Limitation on
Sales of Assets and Subsidiary Stock";
(9) any Investment existing on the Closing Date;
(10) Hedging Obligations permitted under paragraph (2)(g) of the covenant
described under the caption "--Restrictive Covenants--Limitation on
Indebtedness";
(11) guarantees of Indebtedness permitted under the covenant described under
the caption "--Restrictive Covenants--Limitation on Indebtedness";
(12) Investments which are made exclusively with Capital Stock of Holdings
(other than Disqualified Stock); and
(13) additional Investments having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (13)
that are at the time outstanding, not to exceed $5 million at the time of
such Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes
in value).
"Permitted Joint Venture Interests" means equity interests representing at
least 35% of the Voting Stock of a Person engaged in a business in which
Holdings was engaged at the Closing Date or a Related Business.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
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"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) that is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
"principal" of an exchange debenture means, prior to May 14, 2004 the
Accreted Value and, from and after May 14, 2004, the principal of the exchange
debenture plus the premium, if any, payable on the exchange debenture that is
due or overdue or is to become due at the relevant time.
"Purchase Money Indebtedness" means Indebtedness:
(1) consisting of the deferred purchase price of an asset, conditional sale
obligations, obligations under any title retention agreement and other
purchase money obligations, in each case where the maturity of such
Indebtedness does not exceed the anticipated useful life of the asset
being financed; and
(2) incurred to finance the acquisition by Holdings or a Restricted
Subsidiary of such asset, including additions and improvements; PROVIDED,
HOWEVER, that such Indebtedness is incurred within 180 days before or
after the acquisition by Holdings or such Restricted Subsidiary of such
asset.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, replace, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, repay, redeem, retire, renew, repay or extend (including
pursuant to any defeasance or discharge mechanism) any Indebtedness of Holdings
or any Restricted Subsidiary existing on the Closing Date or Incurred in
compliance with the Indenture (including Indebtedness of ACS that Refinances
Refinancing Indebtedness); PROVIDED, HOWEVER, that:
(1) other than with respect to Bank Indebtedness or the Notes, the
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced;
(2) other than with respect to Bank Indebtedness or the Notes, the
Refinancing Indebtedness has an Average Life at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the Average
Life of the Indebtedness being refinanced;
(3) such Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate issue
price) that is equal to or less than the aggregate principal amount (or
if issued with original issue discount, the aggregate accreted value)
then outstanding of the Indebtedness being Refinanced; and
(4) if the Indebtedness being Refinanced is subordinated in right of payment
to the exchange debentures, such Refinancing Indebtedness is subordinated
in right of payment to the exchange debentures at least to the same
extent as the Indebtedness being Refinanced;
PROVIDED, FURTHER, HOWEVER, that Refinancing Indebtedness shall not include:
(a) Indebtedness of a Restricted Subsidiary that Refinances Indebtedness
of Holdings; or
(b) Indebtedness of Holdings or a Restricted Subsidiary that Refinances
Indebtedness of an Unrestricted Subsidiary.
"Related Business" means any business related, ancillary or complementary to
the businesses of Holdings and the Restricted Subsidiaries on the Closing Date.
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"Representative" means the trustee, agent or representative (if any) for an
issue of Senior Indebtedness.
"Restricted Subsidiary" means any Subsidiary of Holdings other than an
Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired by Holdings or a Restricted Subsidiary whereby
Holdings or a Restricted Subsidiary transfers such property to a Person and
Holdings or such Restricted Subsidiary leases it from such Person, other than
leases between Holdings and a Wholly Owned Subsidiary or between Wholly Owned
Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of Holdings secured by a Lien.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of Holdings within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the final payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of Holdings (whether
outstanding on the Closing Date or thereafter Incurred) that is subordinate or
junior in right of payment to the exchange debentures pursuant to a written
agreement.
"Subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other
entity:
(1) of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or, in
the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held; or
(2) that is, as of such date, otherwise controlled by the parent or one or
more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
"Telecommunications Assets" means (1) assets used or useful in the operating
businesses of ACS at the Closing Date or in a Related Business or (2) equity
interests representing a majority of the Voting Stock of Persons engaged in such
businesses.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States of America or
any agency thereof or obligations guaranteed by the United States of
America or any agency thereof;
(2) investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company that is organized under the
laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital,
surplus and undivided profits aggregating in excess of $250.0 million (or
the foreign currency equivalent thereof) and whose long-term debt is
rated "A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule
436 under the Securities Act);
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(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with a bank meeting the qualifications described in clause (2)
above;
(4) investments in commercial paper, maturing not more than 90 days after
the date of acquisition, issued by a corporation (other than an Affiliate
of Holdings) organized and in existence under the laws of the United
States of America or any foreign country recognized by the United States
of America with a rating at the time as of which any investment therein
is made of "P-1" (or higher) according to Moody's Investors Service, Inc.
or "A-1" (or higher) according to Standard and Poor's Ratings Service, a
division of The McGraw-Hill Companies, Inc. ("S&P"); and
(5) investments in securities with maturities of six months or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth
or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or
"A" by Moody's Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. SectionSection
77aaa-77bbbb) as in effect on the Closing Date.
"Total Consolidated Indebtedness" means, as of any date of determination, an
amount equal to the aggregate amount of all Indebtedness of Holdings and its
Restricted Subsidiaries, determined on a Consolidated basis, outstanding as of
such date of determination, after giving effect to any Incurrence of
Indebtedness and the application of the proceeds therefrom giving rise to such
determination.
"Trade Payables" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed or
guaranteed by such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
"Trustee" means the party named as such in the Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of Holdings that at the time of determination shall be
designated an Unrestricted Subsidiary by the Board of Directors in the
manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of Holdings (including any
newly acquired or newly formed Subsidiary of Holdings) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital
Stock or Indebtedness of, or owns or holds any Lien on any property of, ACS or
any other Subsidiary of Holdings that is not a Subsidiary of the Subsidiary to
be so designated; PROVIDED, HOWEVER, that either:
(1) the Subsidiary to be so designated has total Consolidated assets of
$1,000 or less; or
(2) if such Subsidiary has Consolidated assets greater than $1,000, then
such designation would be permitted under the caption "--Restrictive
Covenants--Limitation on Restricted Payments."
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; PROVIDED, HOWEVER, that immediately after giving effect
to such designation:
(1) Holdings could Incur $1.00 of additional Indebtedness under paragraph
(1) of the covenant described under the caption "--Restrictive
Covenants--Limitation on Indebtedness" and
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(2) no Default shall have occurred and be continuing.
Any such designation of a Subsidiary as a Restricted Subsidiary or Unrestricted
Subsidiary by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
that are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of Holdings all the
Capital Stock of which (other than directors' qualifying shares) is owned by
Holdings or another Wholly Owned Subsidiary.
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EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
We and the initial purchasers in the private offering of the old debentures
entered into an exchange and registration rights agreement on May 14, 1999.
Pursuant to the registration rights agreement, we agreed to:
- file with the SEC on or before July 28, 1999 (75 days after issuance of
the old debentures) a registration statement on Form S-1 or Form S-4, if
the use of that form is then available (the "exchange offer registration
statement"), relating to a registered exchange offer for the exchange
debentures under the Securities Act and
- use our reasonable best efforts to cause the exchange offer registration
statement to be declared effective under the Securities Act on or before
October 11, 1999 (150 days after issuance of the old debentures).
As soon as practicable after the effectiveness of the exchange offer
registration statement, we will offer to the holders of Transfer Restricted
Securities (as defined below) who are not prohibited by any law or policy of the
SEC from participating in the exchange offer the opportunity to exchange their
Transfer Restricted Securities for exchange debentures. We will keep the
exchange offer open for not less than 30 days (or longer, if required by
applicable law) after the date on which notice of the exchange offer is mailed
to the holders of the old debentures.
If:
- because of any change in law or applicable interpretations thereof by the
staff of the SEC, we are not permitted to effect the exchange offer as
contemplated by the registration rights agreement;
- any old debentures validly tendered pursuant to the exchange offer are
not exchanged for exchange debentures on or before November 10, 1999 (180
days after issuance of the old debentures);
- any initial purchaser so requests within 20 business days of completion
of the exchange offer with respect to old debentures held by it that are
not eligible to be exchanged for exchange debentures in the exchange
offer;
- any applicable law or interpretations do not permit any holder of old
debentures to participate in the exchange offer;
- any holder of old debentures that participates in the exchange offer that
does not receive freely transferable exchange debentures in exchange for
tendered old debentures so requests within 20 business days of completion
of the exchange offer; or
- we so elect,
then we will file with the SEC a shelf registration statement to cover resales
of Transfer Restricted Securities by holders who provide requested information
in connection with the shelf registration statement.
For purposes of this section, "Transfer Restricted Securities" means each
old debenture until:
- the date on which the old debenture has been exchanged for a freely
transferable exchange debenture in the exchange offer;
- the date on which the old debenture has been effectively registered under
the Securities Act and disposed of in accordance with the shelf
registration statement; or
- the date on which the old debenture is distributed to the public pursuant
to Rule 144 under the Securities Act or is salable pursuant to Rule
144(k) under the Securities Act.
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We will use our reasonable best efforts to have the exchange offer
registration statement or, if applicable, the shelf registration statement
(each, a "registration statement") declared effective by the SEC as promptly as
practicable after its filing with the SEC. Unless the exchange offer would not
be permitted by a policy of the SEC, we will commence the exchange offer and
will use our reasonable best efforts to consummate the exchange offer as
promptly as practicable, but in any event on or before November 10, 1999. If
applicable, we will use our reasonable best efforts to keep the shelf
registration statement effective until May 14, 2001 or the shorter period when
all old debentures covered by the shelf registration statement have been sold in
the manner set forth above and as contemplated in the shelf registration
statement or when the old debentures become eligible for resale pursuant to Rule
144 under the Securities Act without volume restrictions, if any.
If:
- the applicable registration statement is not filed with the SEC on or
before July 28, 1999;
- the exchange offer registration statement or the shelf registration
statement, as the case may be, is not declared effective on or before
October 11, 1999 (or, in the case of a shelf registration statement
required to be filed in response to a change in law or applicable
interpretations of the staff of the SEC, if later, within 60 days after
publication of the change in the law or interpretation);
- the exchange offer is not consummated on or before November 10, 1999; or
- the shelf registration statement is filed and declared effective on or
before October 11, 1999 (or, in the case of a shelf registration
statement required to be filed in response to a change in law or
applicable interpretations of the staff of the SEC, if later, within 60
days after publication of the change in the law or interpretation); but
shall thereafter cease to be effective (at any time that we are obligated
to maintain its effectiveness) without being succeeded within 45 days by
an additional registration statement filed and declared effective
(each of the four events referred to above, a "Registration Default"), we will
be obligated to pay liquidated damages to each holder of Transfer Restricted
Securities, during the period of one or more Registration Defaults, in an amount
equal to $0.192 per week per $1,000 principal amount of the old debentures
constituting Transfer Restricted Securities held by the holder until the
applicable registration statement is filed, the exchange offer registration
statement is declared effective and the exchange offer is consummated or the
shelf registration statement is declared effective or again becomes effective,
as the case may be. All accrued liquidated damages shall be paid to holders in
the same manner as interest payments on the old debentures on semi-annual
payment dates that correspond to interest payment dates for the old debentures.
Following the cure of all Registration Defaults, the accrual of liquidated
damages will cease.
The registration rights agreement also provides that we:
- will make available for a period of 90 days after the completion of the
exchange offer a prospectus meeting the requirements of the Securities
Act to any broker-dealer for use in connection with any resale of any
exchange debentures and
- will pay all expenses incident to the exchange offer (including the
expense of one counsel to the holders of the old debentures) and will
jointly and severally indemnify holders of the old debentures (including
any broker-dealer) against related liabilities, including liabilities
under the Securities Act. A broker-dealer that delivers a prospectus to
purchasers in connection with resales of the exchange debentures will be
subject to the civil liability provisions under the Securities Act and
will be bound by the provisions of the registration rights agreement
(including those relating to indemnification rights and obligations).
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Each holder of old debentures who wants to exchange old debentures for
exchange debentures in the exchange offer will be required to make several
representations. See "The Exchange Offer-- Procedures for tendering."
Holders of the old debentures will be required to make the representations
to us described under the caption "The Exchange Offer--Procedures for tendering"
in order to participate in the exchange offer and will be required to deliver
information to be used in connection with the shelf registration statement in
order to have their old debentures included in the shelf registration statement
and benefit from the provisions regarding liquidated damages set forth in the
preceding paragraphs. A holder who sells old debentures pursuant to the shelf
registration statement generally will be:
- required to be named as a selling securityholder in the related
prospectus and to deliver a prospectus to purchasers;
- subject to the civil liability provisions under the Securities Act in
connection with those sales; and
- bound by the provisions of the registration rights agreement that are
applicable to that holder (including those relating to indemnification
obligations).
As long as the old debentures are outstanding, we will continue to provide
to holders of the old debentures and to prospective purchasers of the old
debentures the information required by Rule 144A(d)(4) under the Securities Act.
This description of the registration rights agreement is a summary only and
is qualified in its entirety by reference to all provisions of the registration
rights agreement, which has been filed as an exhibit to the registration
statement of which this prospectus is a part and is incorporated by reference
herein.
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BOOK-ENTRY, DELIVERY AND FORM
The exchange debentures will initially be represented by one or more
permanent global notes in definitive, fully registered book-entry form, without
interest coupons that will be deposited with, or on behalf of, DTC and
registered in the name of Cede and Co., as nominee of DTC, on behalf of the
acquirors of exchange debentures for credit to the accounts of the acquirors (or
to other accounts as they may direct) at DTC, or Morgan Guaranty Trust Company
of New York, Brussels office, as operator of the Euroclear System, or Cedel
Bank, societe anonyme. See "The Exchange Offer-- Book-entry transfer."
The global notes may be transferred in whole and not in part, solely to
another nominee of DTC or to a successor of DTC or its nominee. Beneficial
interests in the global notes may not be exchanged for exchange notes in
physical, certificated form ("certificated exchange notes") except in the
limited circumstances described below.
All interests in the global notes, including those held through Euroclear or
Cedel, may be subject to the procedures and requirements of DTC. Those interests
held through Euroclear or Cedel may also be subject to the procedures and
requirements of those systems.
BOOK-ENTRY PROCEDURES FOR THE GLOBAL NOTES
The descriptions of the operations and procedures of DTC, Euroclear and
Cedel set forth below are provided as a matter of convenience. These operations
and procedures are solely within the control of the settlement systems and are
subject to change by them from time to time. We take no responsibility for these
operations or procedures, and you are urged to contact the relevant system or
its participants directly to discuss these matters.
DTC has advised us that it is:
(i) a limited purpose trust company organized under the laws of the State of
New York,
(ii) a "banking organization" within the meaning of the New York Banking
Law,
(iii) a member of the Federal Reserve System,
(iv) a "clearing corporation" within the meaning of the Uniform Commercial
Code, as amended, and
(v) a "clearing agency" registered pursuant to Section 17A of the Exchange
Act.
DTC was created to hold securities for its participants (collectively, "the
participants") and facilitates the clearance and settlement of securities
transactions between participants through electronic book-entry changes to the
accounts of its participants, eliminating the need for physical transfer and
delivery of certificates. DTC's participants include securities brokers and
dealers (including the initial purchasers in the private offering of the old
debentures), banks and trust companies, clearing corporations and similar
organizations. Indirect access to DTC's system is also available to other
entities, such as banks, brokers, dealers and trust companies (collectively, the
"indirect participants") that clear through or maintain a custodial relationship
with a participant, either directly or indirectly. Investors who are not
participants may beneficially own securities held by or on behalf of DTC only
through participants or indirect participants.
We expect that pursuant to procedures established by DTC ownership of the
exchange debentures will be shown on, and the transfer of ownership thereof will
be effected only through, records maintained by DTC, with respect to the
interests of participants, and the records of participants and the indirect
participants, with respect to the interests of persons other than participants.
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The laws of some jurisdictions may require that purchasers of securities
take physical delivery of purchased securities in definitive form. Accordingly,
the ability to transfer interests in the exchange notes represented by a global
note to those persons may be limited. In addition, because DTC can act only on
behalf of its participants, who in turn act on behalf of persons who hold
interests through participants, the ability of a person having an interest in
exchange debentures represented by a global note to pledge or transfer that
interest to persons or entities that do not participate in DTC's system, or to
otherwise take actions in respect of that interest, may be affected by the lack
of a physical definitive security in respect of that interest.
So long as DTC or its nominee is the registered owner of a global note, DTC
or its nominee will be considered the sole owner or holder of the exchange
debentures represented by the global note for all purposes under the indenture.
Except as provided below, owners of beneficial interests in a global note will
not be entitled to have exchange debentures represented by that global note
registered in their names, will not receive or be entitled to receive physical
delivery of certificated exchange notes and will not be considered the owners or
holders thereof under the indenture for any purpose, including with respect to
the giving of any direction, instruction or approval to the trustee.
Accordingly, each holder owning a beneficial interest in a global note must rely
on the procedures of DTC and, if the holder is not a participant or an indirect
participant, on the procedures of the participant through which the holder owns
its interest, to exercise any rights of a holder of exchange debentures under
the indenture or the global note. We understand that, under existing industry
practice, in the event that we request any action of holders of exchange
debentures, or a holder that is an owner of a beneficial interest in a global
note desires to take any action that DTC, as the holder of that global note, is
entitled to take, DTC would authorize the participants to take that action and
the participants would authorize holders owning through the participants to take
that action or would otherwise act upon the instruction of the holders. Neither
we nor the trustee will have any responsibility or liability for any aspect of
the records relating to or payments made on account of exchange debentures by
DTC, or for maintaining, supervising or reviewing any records of DTC relating to
exchange debentures.
Payments with respect to the principal of, and premium, if any, Liquidated
Damages, if any, and interest on, any exchange debentures represented by a
global note registered in the name of DTC or its nominee on the applicable
record date will be payable by the trustee to or at the direction of DTC or its
nominee in its capacity as the registered holder of the global note representing
the exchange debentures under the indenture. Under the terms of the indenture,
we and the trustee may treat the persons in whose names the exchange debentures,
including the global notes, are registered as the owners for the purpose of
receiving payment thereon and for any and all other purposes whatsoever.
Accordingly, neither we nor the trustee has or will have any responsibility or
liability for the payment of these amounts to owners of beneficial interests in
a global note (including principal, premium, if any, Liquidated Damages, if any,
and interest). Payments by the participants and the indirect participants to the
owners of beneficial interests in a global note will be governed by standing
instructions and customary industry practice and will be the responsibility of
the participants or the indirect participants and DTC.
DTC management is aware that some computer applications, systems, and the
like for processing data that are dependent upon calendar dates, including dates
before, on, and after January 1, 2000, may encounter year 2000 problems. DTC has
informed its participants and other members of the financial community that it
has developed and is implementing a program so that its systems, as they relate
to the timely payment of distributions (including principal and income payments)
to securityholders, book-entry deliveries, and settlement of trades within DTC,
continue to function appropriately. This program includes a technical assessment
and a remediation plan, each of which is complete. Additionally, DTC's plan
includes a testing phase, which is expected to be completed within appropriate
time frames.
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However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed the industry that it is contacting (and will
continue to contact) third party vendors from whom DTC acquires services to:
- impress upon them the importance of their services being year 2000
compliant; and
- determine the extent of their efforts for year 2000 remediation (and, as
appropriate, testing) of their services.
In addition, DTC is in the process of developing the contingency plans that
it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Cedel will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
exchange notes, cross-market transfers between the participants in DTC, on the
one hand, and Euroclear or Cedel participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Cedel, as the case may be, by its respective depositary. However, these
cross-market transactions will require delivery of instructions to Euroclear or
Cedel by the counterparty in the appropriate system in accordance with the rules
and procedures and within the established deadlines (Brussels time) of the
appropriate system. Euroclear or Cedel will, if the transaction meets its
settlement requirements, deliver instructions to its respective depositary to
take action to effect final settlement on its behalf by delivering or receiving
interests in the relevant global notes in DTC and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Euroclear participants and Cedel participants may not deliver instructions
directly to the depositories for Euroclear or Cedel.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a global note from a participant in
DTC will be credited, and that crediting will be reported to the relevant
Euroclear or Cedel participant, during the securities settlement processing day
(which must be a business day for Euroclear and Cedel) immediately following the
settlement date of DTC. Cash received in Euroclear or Cedel as a result of sales
of interest in a global note by or through a Euroclear or Cedel Participant to a
participant in DTC will be received with value on the settlement date of DTC,
but will be available in the relevant Euroclear or Cedel cash account only as of
the business day for Euroclear or Cedel following DTC's settlement date.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to
facilitate transfers of interests in the global notes among participants in DTC,
Euroclear and Cedel, they are under no obligation to perform or to continue to
perform these procedures, and these procedures may be discontinued at any time.
Neither we nor the trustee will have any responsibility for the performance by
DTC, Euroclear or Cedel or their participants or indirect participants of their
obligations under the rules and procedures governing their operations.
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CERTIFICATED EXCHANGE NOTES
If:
(i) we notify the Trustee in writing that DTC is no longer willing or able
to act as a depositary or DTC ceases to be registered as a clearing
agency under the Exchange Act and a successor depositary is not
appointed within 90 days of that notice or cessation;
(ii) we, at our option, notify the trustee in writing that we elect to cause
the issuance of exchange debentures in definitive form under the
indenture; or
(iii) upon the occurrence of other events as provided in the indenture,
then, upon surrender by DTC of the global notes, certificated exchange notes
will be issued to each person that DTC identifies as the beneficial owner of the
exchange debentures represented by the global notes. Upon that issuance, the
trustee is required to register the certificated exchange notes in the name of
that person (or the nominee of any thereof) and cause the same to be delivered
to that person.
Neither we nor the trustee shall be liable for any delay by DTC or any
participant or indirect participant in identifying the beneficial owners of the
related exchange debentures, and each beneficial owner of exchange debentures
may conclusively rely on, and shall be protected in relying on, instructions
from DTC for all purposes (including with respect to the registration and
delivery, and the respective principal amounts, of the exchange debentures to be
issued).
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FEDERAL INCOME TAX CONSIDERATIONS
SCOPE OF DISCUSSION
This general discussion of certain U.S. federal income and estate tax
consequences applies to you if you acquired old debentures at original issue for
cash, exchange your old debentures for exchange debentures pursuant to the terms
set forth in this prospectus and hold the exchange debentures as a "capital
asset," generally, for investment, under Section 1221 of the Internal Revenue
Code of 1986, as amended (the "Code"). This summary, however, does not consider
state, local or foreign tax laws. In addition, it does not include all of the
rules which may affect the U.S. tax treatment of your investment in the exchange
debentures. For example, special rules not discussed here may apply to you if
you are:
- a broker-dealer, a dealer in securities, a trader in securities who
elects to apply a mark-to-market method of accounting or a financial
institution;
- an S corporation;
- an insurance company;
- a tax-exempt organization;
- subject to the alternative minimum tax provisions of the Code;
- holding the exchange debentures as part of a hedge, straddle, conversion
transaction or other risk reduction or constructive sale transaction;
- a nonresident alien or foreign corporation subject to net-basis U.S.
federal income tax on income or gain derived from an exchange debenture
because such income or gain is effectively connected with the conduct of
a U.S. trade or business; or
- an expatriate of the U.S.
This discussion only represents our best attempt to describe certain federal
income tax consequences that may apply to you based on current U.S. federal tax
law. This discussion may in the end inaccurately describe the federal income tax
consequences which are applicable to you because the law may change, possibly
retroactively, and because the Internal Revenue Service or any court may
disagree with this discussion.
THIS SUMMARY MAY NOT COVER YOUR PARTICULAR CIRCUMSTANCES BECAUSE IT DOES NOT
CONSIDER FOREIGN, STATE OR LOCAL TAX RULES, DISREGARDS CERTAIN SPECIAL FEDERAL
TAX RULES, AND DOES NOT DESCRIBE FUTURE CHANGES IN FEDERAL TAX RULES. PLEASE
CONSULT YOUR TAX ADVISOR RATHER THAN RELYING ON THIS GENERAL DESCRIPTION.
THE EXCHANGE OFFER
The issuance of the exchange debentures to holders of the old debentures
pursuant to the terms set forth in this prospectus will not constitute an
exchange for federal income tax purposes. Consequently, no gain or loss will be
recognized by holders of the old debentures upon receipt of the exchange
debentures, and ownership of the exchange debentures will be considered a
continuation of ownership of the old debentures. For purposes of determining
gain or loss upon the subsequent sale or exchange of the exchange debentures, a
holder's basis in the exchange debentures should be the same as the holder's
basis in the old debentures exchanged. A holder's holding period for the
exchange debentures should include the holder's holding period for the old
debentures exchanged. The issue price and other tax characteristics of the
exchange debentures should be identical to the issue price and other tax
characteristics of the old debentures exchanged.
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U.S. HOLDERS
If you are a "U.S. Holder," as defined below, this section applies to you.
Otherwise, the next section, "Non-U.S. Holders," applies to you.
DEFINITION OF U.S. HOLDER. You are a "U.S. Holder" if you hold the exchange
debentures and you are:
- a citizen or resident of the U.S., including an alien individual who is a
lawful permanent resident of the U.S. or meets the "substantial presence"
test under Section 7701 (b) of the Code;
- a corporation or partnership created or organized in the U.S. or under
the laws of the U.S. or of any political subdivision of the U.S. (except
that under the regulations to be published, certain partnerships created
or organized under the foreign laws may be classified as a domestic
partnership if such classification is more appropriate);
- an estate, the income of which is subject to U.S. federal income tax
regardless of its source; or
- a trust, if a U.S. court can exercise primary supervision over the
administration of the trust and one or more U.S. persons can control all
substantial decisions of the trust, or if the trust was in existence on
August 20, 1996 and has elected to continue to be treated as a U.S.
person.
TAXATION OF ORIGINAL ISSUE DISCOUNT. You must include original issue
discount ("OID") on the exchange debentures as ordinary income as it accrues
over the term of the exchange debentures under a constant yield methods' as
described below, whether you use the accrual method or the cash method.
The exchange debentures will be treated as issued with OID equal to the
excess of the "stated redemption price at maturity" of an exchange debenture
over its "issue price." The issue price of an exchange debenture should be
identical to the issue price of an old debenture. The issue price of an old
debenture is the first price at which a substantial portion of the old
debentures were sold for money (excluding sales to bond houses, brokers or
similar persons or organizations acting in the capacity of underwriters,
placement agents or wholesalers). The stated redemption price at maturity of an
exchange debenture is the total of all payments on the exchange debenture,
including payments of stated interest.
The amount of OID includible in your income is the sum of the "daily
portions" of OID with respect to the exchange debenture for each day during the
taxable year or portion thereof in which you hold such exchange debenture
("accrued OID"). The daily portion is determined by allocating to each day in
any "accrual period" a pro-rata portion of the OID that accrued in such period.
The "accrual period" of an exchange debenture may be of any length and may vary
in length over the term of an exchange debenture, provided that each accrual
period is no longer than one year and each scheduled payment of principal or
interest occurs either on the first or last day of an accrual period. The amount
of OID that accrues with respect to any accrual period is the product of the
exchange debenture's adjusted issue price at the beginning of such accrual
period and its yield to maturity, determined on the basis of compounding at the
close of each accrual period and properly adjusted for the length of such
period. The "adjusted issue price" of an exchange debenture at the start of any
accrual period is equal to its issue price increased by the accrued OID for each
prior accrual period and reduced by any prior payments made on such exchange
debenture. Payments of stated interest on an exchange debenture need not be
included in income as they are received or accrued, because they are reflected
in the calculation of OID.
HIGH YIELD DISCOUNT OBLIGATIONS. Sections 163(e) and 163(i) of the Code
provide rules that affect the tax treatment of certain high-yield discount
obligations ("HYDOs"). The exchange debentures constitute HYDOs because their
yield-to-maturity exceeds by five percentage points or more the applicable
federal rate ("AFR") for instruments with a similar maturity in effect for the
calendar month
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in which the old debentures were issued. Because the exchange debentures are
HYDOs, we may not deduct any OID that accrues with respect to the exchange
debentures until we pay such amount in cash.
In addition, because the exchange debentures' yield-to-maturity exceeds the
relevant AFR by more than six percentage points,
- a portion of such interest corresponding to the yield in excess of six
percentage points above the AFR will not be deductible by us at any time
and
- a corporate holder may be entitled to treat the portion of the interest
that is not deductible by us as a dividend, which may then qualify for
the dividends-received deduction provided by Section 243 of the Code
(subject to applicable conditions and limitations).
Corporate holders of exchange debentures should consult with their tax advisors
as to the applicability of the dividends-received deduction.
SALE OR OTHER TAXABLE DISPOSITION OF THE EXCHANGE DEBENTURES. You must
recognize taxable gain or loss on the sale, exchange, redemption, retirement or
other taxable disposition of an exchange debenture. The amount of your gain or
loss equals the difference between the amount you receive for the exchange
debenture (in cash or other property, valued at fair market value), minus the
amount attributable to accrued interest on the exchange debenture, minus your
adjusted tax basis in the exchange debenture. Your initial tax basis should
equal the price you paid for the old debenture. Your adjusted tax basis in an
exchange debenture will equal the initial tax basis, increased by OID previously
included in your gross income to the date of disposition with respect to the
exchange debenture and the old debenture exchanged therefor and reduced by any
payments on the exchange debenture or the old debenture exchanged therefor.
Your gain or loss will generally be a long-term capital gain or loss if your
holding period for the exchange debenture is more than one year. Otherwise, it
will be a short-term capital gain or loss. Payments attributable to accrued
interest which you have not yet included in income will be taxed as ordinary
interest income.
OPTIONAL REDEMPTION: REPURCHASE AT THE OPTION OF HOLDERS.
On or after May 15, 2004, we have the right to redeem the exchange
debentures prior to their stated maturity date. In addition, we may, under
certain circumstances, have the right to redeem up to 35% of the exchange
debentures before May 15, 2002. If we experience a change of control, you will
have the right to require us to repurchase your exchange debentures prior to
their stated maturity date. See "Description of the Exchange
Debentures--Optional Redemption" and "Description of the Exchange
Debentures--Change of Control."
The presence of such options may affect the calculation of OID, among other
things. The OID rules provide that, solely for purposes of the accrual of OID,
an issuer of a debt instrument having an option to redeem the debt instrument
prior to its stated maturity date will be presumed to exercise such option in
the manner that minimizes the yield on the debt instrument. Conversely, a holder
having an option to elect repayment of the debt instrument prior to its stated
maturity date will be presumed to exercise such option in a manner that
maximizes the yield on the debt instrument. If the exercise of such option or
options to redeem the debt instrument prior to its stated maturity date or to
elect repayment of the debt instrument prior to its stated maturity date
actually occurs or does not occur, contrary to the presumption made under the
OID rules (a "change of circumstances"), then, solely for purposes of the
accrual of OID, the debt instrument is treated as reissued on the date of the
change in circumstances for an amount equal to its adjusted issue price on that
date.
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BACKUP WITHHOLDING. You may be subject to a 31% backup withholding tax when
you receive interest payments on an exchange debenture or proceeds upon the sale
or other disposition of an exchange debenture. Certain holders (including, among
others, corporations and certain tax-exempt organizations) are generally not
subject to backup withholding. In addition, the 31% backup withholding tax will
not apply, to you if you provide your taxpayer identification number ("TIN") in
the prescribed manner unless:
- the IRS notifies us or our agent that the TIN you provided is incorrect;
- you fail to report interest and dividend payments that you receive on
your tax return and the IRS notifies us or our agent that withholding is
required; or
- you fail to certify under penalties of perjury that you are not subject
to back up withholding.
If the 31% backup withholding tax does apply to you, you may use the amounts
withheld as a refund or credit against your U.S. federal income tax liability as
long as you provide certain information to the IRS.
NON-U.S. HOLDERS
DEFINITION OF NON-UNITED STATES HOLDER. A "Non-U.S. Holder" is any person
who holds exchange debentures other than a U.S. Holder. Please note that if you
are subject to U.S. federal income tax on a net basis on income or gain with
respect to an exchange debenture because such income or gain is effectively
connected with the conduct of a U.S. trade or business, this disclosure does not
cover the U.S. federal tax rules that apply to you.
INTEREST.
PORTFOLIO INTEREST EXEMPTION. You will generally not have to pay U.S.
federal income tax on interest (including OID) paid on the exchange debentures
because of the "portfolio interest exemption" if either:
- you represent that you are not a U.S. person for U.S. federal income tax
purposes and you provide your name and address to us or our paying agent
on a properly executed IRS Form W-8 (or a suitable substitute form)
signed under penalties of perjury; or
- a securities clearing organization, bank, or other financial institution
that holds customers' securities in the ordinary course of its business
holds the exchange debenture on your behalf, certifies to us or our agent
under penalties of perjury that it has received IRS Form W-8 (or a
suitable substitute form) from you or from another qualifying financial
institution intermediary, and provides a copy to us or our agent.
You will not, however, qualify for the portfolio interest exemption described
above if:
- you own, actually or constructively, 10% or more of the total combined
voting power of all classes of our capital stock;
- you are a controlled foreign corporation with respect to which we are a
"related person" within the meaning of Section 864(d)(4) of the Code;
- you are a bank receiving interest described in Section 881(c)(3)(A) of
the Code;
WITHHOLDING TAX IF THE INTEREST IS NOT PORTFOLIO INTEREST. If you do not
claim, or do not qualify for, the benefit of the portfolio interest exemption,
you may be subject to a 30% withholding tax on interest payments made on the
exchange debentures. However, you may be able to claim the benefit of a reduced
withholding tax rate under an applicable income tax treaty. The required
information for claiming treaty benefits is generally submitted, under current
regulations, on Form 1001. Successor
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forms will require additional information, as discussed below under the heading
"Non-U.S. Holders-- New Withholding Regulations."
REPORTING. We may report annually to the IRS and to you the amount of
interest paid to, and the tax withheld, if any, with respect to you.
SALE OR OTHER DISPOSITION OF EXCHANGE DEBENTURES. You will generally not be
subject to U.S. federal income tax or withholding tax on gain recognized on a
sale, exchange, redemption, retirement, or other disposition of an exchange
debenture. You may, however, be subject to tax on such gain if you are an
individual who was present in the U.S. for 183 days or more in the taxable year
of the disposition, in which case you may have to pay a U.S. federal income tax
of 30% (or a reduced treaty rate) on such gain.
U.S. FEDERAL ESTATE TAXES. If you qualify for the portfolio interest
exemption under the rules described above when you die, the exchange debentures
will not be included in your estate for U.S. federal estate tax purposes.
BACKUP WITHHOLDING AND INFORMATION REPORTING.
PAYMENTS FROM U.S. OFFICE. If you receive payments of interest or principal
directly from us or through a U.S. office of a custodian, nominee, agent or
broker, there is a possibility that you will be subject to both backup
withholding at a rate of 31% and information reporting.
With respect to interest payments made on the Note, however, backup
withholding and information reporting will not apply if you certify, generally
on a Form W-8 or a substitute form, that you are not a U.S. person in the manner
described above under the heading "Non-U.S. Holders-- Interest."
Moreover, with respect to proceeds received on the sale, exchange,
redemption, or other disposition of an exchange debenture, backup withholding or
information reporting generally will not apply if you properly provide,
generally on Form W-8 or a substitute form, a statement that you are an "exempt
foreign person" for purposes of the broker reporting rules, and other required
information. If you are not subject to U.S. federal income or withholding tax on
the sale or other disposition of an exchange debenture, as described above under
the heading "Non-U.S. Holders--Sale or Other Disposition of Exchange
Debentures," you will generally qualify as an "exempt foreign person" for
purposes of the broker reporting rules.
PAYMENTS FROM FOREIGN OFFICE. If payments of principal and interest are
made to you outside the U.S. by or through a foreign office of your foreign
custodian, nominee or other agent, or if you receive the proceeds of the sale of
an exchange debenture through a foreign office of a "broker," as defined in the
pertinent U.S. Treasury Regulations, you will generally not be subject to backup
withholding or information reporting. You will, however, be subject to backup
withholding and information reporting if the foreign custodian, nominee, agent
or broker has actual knowledge or, after December 31, 2000, reason to know, that
the payee is a U.S. person. You will also be subject to information reporting,
but not backup withholding, if the payment is made by a foreign office of a
custodian, nominee, agent or broker that is a U.S. person or a controlled
foreign corporation for U.S. federal income tax purposes, or that derives 50% or
more of its gross income from the conduct of a U.S. trade or business for a
specified three year period, unless the broker has in its records documentary
evidence that you are a Non-U.S. Holder and certain other conditions are met.
REFUNDS. Any amounts withheld under the backup withholding rules may be
refunded or credited against the Non-U.S. Holder's U.S. federal income tax
liability, provided that the required information is furnished to the IRS.
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NEW WITHHOLDING REGULATIONS. New regulations relating to withholding tax on
income paid to foreign persons (the "New Withholding Regulations") will
generally be effective for payments made after December 31, 2000, subject to
certain transition rules. The New Withholding Regulations modify and, in
general, unify the way in which you establish your status as a non-U.S.
"beneficial owner" eligible for withholding exemptions including the portfolio
interest exemption, a reduced treaty rate or an exemption from backup
withholding. For example, the New Withholding Regulations will require new
forms, which you will generally have to provide earlier than you would have had
to provide replacements for expiring existing forms.
The New Withholding Regulations clarify withholding agents' reliance
standards. They also require additional certifications for claiming treaty
benefits. The New Withholding Regulations also provide somewhat different
procedures for foreign intermediaries and flow-through entities (such as foreign
partnerships) to claim the benefit of applicable exemptions on behalf of
non-U.S. beneficial owners for which or for whom they receive payments.
When you purchased the old debentures, you were required to submit
certification that complies with the currently effective temporary Treasury
Regulations in order to obtain an available exemption from or reduction in
withholding tax. The New Withholding Regulations provide that certifications
satisfying the requirements of the New Withholding Regulations will be deemed to
satisfy the requirement of the temporary Treasury Regulations now in effect. If
you are a Non-U.S. Holder claiming benefit under an income tax treaty (and not
relying on the portfolio interest exemption), you should be aware that you may
be required to obtain a taxpayer identification number and to certify your
eligibility under the applicable treaty's limitations on benefits article in
order to comply with the New Withholding Regulations' certification
requirements.
THE NEW WITHHOLDING REGULATIONS ARE COMPLEX AND THIS SUMMARY DOES NOT
COMPLETELY DESCRIBE THEM. PLEASE CONSULT YOUR TAX ADVISOR TO DETERMINE HOW THE
NEW WITHHOLDING REGULATIONS WILL AFFECT YOUR PARTICULAR CIRCUMSTANCES.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange debentures for its own account in
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of the exchange debentures. This prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of exchange debentures received in exchange for old
debentures where the old debentures were acquired as a result of market-making
activities or other trading activities. We have agreed that, for at least 90
days after the exchange offer is completed, we will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any resale of exchange debentures.
We will not receive any proceeds from any sales of the exchange debentures
by broker-dealers. Exchange debentures received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the exchange debentures or a combination of
methods of resale, at market prices prevailing at the time of resale, at prices
related to those prevailing market prices or at negotiated prices. Any resale
may be made directly to the purchaser or to or through brokers or dealers who
may receive compensation in the form of commissions or concessions from the
broker-dealer and/or the purchasers of the exchange debentures. Any
broker-dealer that resells the exchange debentures that were received by it for
its own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of the exchange debentures may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
resale of exchange debentures and any commissions or concessions received by any
of those persons may be deemed to be underwriting compensation under the
Securities Act. The letter of transmittal states that, by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
We have agreed to pay the expenses incident to the exchange offer, other
than commission or concessions of any brokers or dealers and the fees of any
counsel or other advisors or experts retained by the holders of old debentures,
and will indemnify the holders of the exchange debentures (including any
broker-dealers) against related liabilities, including liabilities under the
Securities Act.
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AVAILABLE INFORMATION
We have filed with the SEC a registration statement on Form S-4 under the
Securities Act for the registration of the exchange debentures offered in this
prospectus. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the registration
statement, some of which is contained in exhibits and schedules to the
registration statement as permitted by the rules and regulations of the SEC. For
further information with respect to us or the exchange debentures offered in
this prospectus, you should refer to the registration statement, including the
related exhibits and financial statement. With respect to each document filed
with the SEC as an exhibit to the registration statement, you should refer to
the exhibit for a more complete description of the matter involved, and each
discussion in this prospectus of any document filed as an exhibit to the
registration statement qualified in its entirety by reference to the relevant
exhibit.
In connection with the exchange offer, we will become subject to the
information requirements of the Exchange Act, and, in accordance therewith, will
file reports and other information with the SEC. The registration statement and
the reports and other information we file can be inspected and copied at the
Public Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549 and the regional offices of the SEC located at 7 World Trade Center, New
York, New York 10048 and 500 West Madison Street, 14th Floor, Chicago, Illinois
60661. Copies of these materials may be obtained from the Public Reference
Section of the SEC, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 and at its public reference facilities in New York, New York and Chicago,
Illinois at prescribed rates. Information on the operation of the Public
Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. We will
make our filings with the SEC electronically. The SEC maintains an internet site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically, which information can be
accessed at "http://www.sec.gov".
We will send to each holder of exchange debentures copies of annual reports
and quarterly reports containing the information required to be filed under the
Exchange Act. So long as we are subject to the periodic reporting requirements
of the Exchange Act, we are required to furnish the information required to be
filed with the SEC to the trustee and the holders of the old debentures and the
exchange debentures. We have agreed that, even if we are not required under the
Exchange Act to furnish this information to the SEC, we will nonetheless
continue to furnish information that would be required to be furnished by us by
Section 13 of the Exchange Act to the Trustee and the holders of the old
debentures or exchange debentures as if we were subject to these periodic
reporting requirements.
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EXPERTS
The balance sheet of ALEC Holdings, Inc. as of March 31, 1999 included in
this prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report herein and are included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
The consolidated financial statements of Alaska Communications Systems
Holdings, Inc. as of December 31, 1998 and for the period from July 16, 1998
(date of inception) through December 31, 1998 included in this prospectus have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report herein and are included in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The combined financial statements of CenturyTel's Alaska Properties (also
known as PTI Alaska) as of December 31, 1998 and for the year then ended have
been included herein and in the registration statement in reliance upon the
report of KPMG LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
The combined financial statements of CenturyTel's Alaska Properties (also
known as PTI Alaska) as December 31, 1997 and for the year ended December 31,
1996, eleven months ended November 30, 1997, and one month ended December 31,
1997 included in this prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report herein and are included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The combined financial statements of Telephone Fund of Fairbanks Municipal
Utilities Services as of October 6, 1997 and for the year ended December 31,
1996 and the period ended October 6, 1997 included in this prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report herein and are included in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The financial statements of the Municipality of Anchorage Telephone Utility
Fund as of December 31, 1998, and for each of the years in the three-year period
ended December 31, 1998, have been included herein and in the registration
statement in reliance upon the report of KPMG LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing.
VALIDITY OF THE EXCHANGE DEBENTURES
The validity of the exchange debentures will be passed upon for us by
Wachtell, Lipton, Rosen & Katz, New York, New York.
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Until , all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
ALEC Holdings, Inc.
Independent Auditors' Report....................................................... F-2
Balance Sheet--March 31, 1999...................................................... F-3
Notes to Balance Sheet--Period from October 13, 1998 (Date of Inception) through
March 31, 1999................................................................... F-4
Alaska Communications Systems Holdings, Inc.
Independent Auditors' Report....................................................... F-5
Consolidated Balance Sheets--December 31, 1998 and March 31, 1999.................. F-6
Consolidated Statement of Cash Flows--Period from July 16, 1998 (Date of Inception)
through December 31, 1998 and Three Months Ended March 31, 1999.................. F-7
Notes to Consolidated Financial Statements--Period from July 16, 1998 (Date of
Inception) through December 31, 1998 (Notes for Three Months Ended March 31, 1998
and 1999 Are Unaudited).......................................................... F-8
CenturyTel Alaska Properties
Independent Auditors' Reports...................................................... F-11
Combined Balance Sheets--December 31, 1997, December 31, 1998 and March 31, 1999... F-13
Combined Statements of Income and Retained Earnings--Year Ended December 31, 1996,
Eleven Months Ended November 30, 1997, One Month Ended December 31, 1997, Year
Ended December 31, 1998 and Three Months Ended March 31, 1998 and 1999........... F-14
Combined Statements of Cash Flows--Year Ended December 31, 1996, Eleven Months
Ended November 30, 1997, One Month Ended December 31, 1997, Year Ended December
31, 1998 and Three Months Ended March 31, 1998 and 1999.......................... F-15
Notes to Combined Financial Statements--Year Ended December 31, 1996, Eleven Months
Ended November 30, 1997, One Month Ended December 31, 1997, Year Ended
December 31, 1998 (Notes for Three Months Ended March 31, 1998 and 1999 Are
Unaudited)....................................................................... F-16
Telephone Fund of Fairbanks Municipal Utilities Services
Independent Auditors' Report....................................................... F-29
Combined Balance Sheet--October 6, 1997............................................ F-30
Combined Statements of Income and Fund Equity--Year Ended December 31, 1996 and
Period Ended October 6, 1997..................................................... F-31
Combined Statements of Cash Flows--Year Ended December 31, 1996 and Period Ended
October 6, 1997.................................................................. F-32
Notes to Combined Financial Statements--Year Ended December 31, 1996 and Period
Ended October 6, 1997............................................................ F-33
Municipality of Anchorage Telephone Utility Fund
Independent Auditors' Report (Notes for Three Months Ended March 31, 1998 and 1999
Are Unaudited)................................................................... F-36
Balance Sheets--December 31, 1997, December 31, 1998 and March 31, 1999............ F-37
Statements of Revenues, Expenses, and Changes in Retained Earnings--Years Ended
December 31, 1996, 1997 and 1998 and Three Months Ended March 31, 1998 and March
31, 1999......................................................................... F-38
Statements of Cash Flows--Years Ended December 31, 1996, 1997 and 1998 and Three
Months Ended March 31, 1998 and March 31, 1999................................... F-39
Notes to Financial Statements--Years Ended December 31, 1996, 1997 and 1998........ F-40
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
ALEC Holdings, Inc.
Anchorage, Alaska
We have audited the balance sheet of ALEC Holdings, Inc. (the "Company") as
of March 31, 1999. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of ALEC Holdings, Inc. as of
March 31, 1999, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Portland, Oregon
June 28, 1999
F-2
<PAGE>
ALEC HOLDINGS, INC.
BALANCE SHEET
MARCH 31, 1999
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS:
<S> <C>
Cash............................................................................ $ 1
---------
---------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; authorized, 1,000 shares; outstanding, 100
shares........................................................................ $ 1
---------
---------
</TABLE>
See notes to Balance Sheet.
F-3
<PAGE>
ALEC HOLDINGS, INC.
NOTES TO BALANCE SHEET
MARCH 31,1999
1. THE COMPANY
Alec Holdings, Inc. (the "Company") was incorporated in the State of
Delaware in October 1998 to operate as a holding company to purchase
telecommunications properties.
2. SUBSEQUENT ACQUISITIONS
At March 31, 1999, Alaska Communications Systems Holdings, Inc. ("ACS"),
which became a wholly owned subsidiary of the Company in May 1999, had announced
two purchase agreements that would allow ACS to enter the telecommunications
industry. The first agreement involved the acquisition of Century Tel's Alaska
holdings including Telephone Utilities of Alaska, Inc., Telephone Utilities of
the Northland, Inc., PTI Communications of Alaska, Inc., Pacific Telecom of
Alaska PCS, Inc. and Pacific Telecom Cellular of Alaska, Inc. The second
agreement was with the Municipality of Anchorage to acquire all of its
telecommunication investments.
On May 14, 1999, ACS Company purchased all the outstanding shares of PTI
Alaska from CenturyTel of the Northwest, Inc. and CenturyTel Wireless, Inc.,
which are wholly owned subsidiaries of Century. PTI Alaska is the incumbent
provider of local telephone services to over 131,000 access lines in Juneau,
Fairbanks and more than 70 rural communities in Alaska. PTI Alaska also provides
cellular services to approximately 3,000 subscribers and internet services to
approximately 16,000 customers. The aggregate cash purchase paid by the Company
was approximately $411.8 million.
On May 14, 1999, ACS also purchased certain of the assets and certain of the
liabilities of the Anchorage Telephone Utility ("ATU") from the Municipality of
Anchorage. ATU is the largest Local Exchange Carrier in Alaska providing local
services to over 168,000 access lines, primarily in Anchorage. ATU also provides
cellular service to over 63,000 subscribers under the MACtel brand name and long
distance service on a resale basis to approximately 26,000 customers. The
aggregate cash purchase price paid by the Company was approximately $263.6
million.
ACS recorded transaction fees and expenses of approximately $48 million from
these purchases. In addition, ACS will amortize approximately $267 of
acquisition goodwill over 40 years.
F-4
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Alaska Communications Systems Holdings, Inc.
Anchorage, Alaska
We have audited the consolidated balance sheet of Alaska Communications
Systems Holdings, Inc. and Subsidiaries (the "Company") as of December 31, 1998,
and the related consolidated statement of cash flows for the period from July
16, 1998 (date of inception) through December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Alaska
Communications Systems Holdings, Inc. and Subsidiaries as of December 31, 1998,
and their cash flows for the period from July 16, 1998 (date of inception)
through December 31, 1998 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Portland, Oregon
March 24, 1999
F-5
<PAGE>
ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
------------ ------------
<S> <C> <C>
(unaudited)
ASSETS
CURRENT ASSETS:
Cash............................................................................... $ 281,236 $ 180,422
Receivable from employees and related party (Note 2)............................... 41,771 44,770
------------ ------------
Total current assets........................................................... 323,007 225,192
PROPERTY, PLANT, AND EQUIPMENT, Net (Notes 1 and 3).................................. 36,536 565,482
DEFERRED ACQUISITION AND FINANCING COSTS (Note 1).................................... 248,637 1,709,089
DEPOSITS............................................................................. 11,820 15,720
------------ ------------
$ 620,000 $ 2,515,483
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accrued Liabilities................................................................ $ -- $ 495,483
Advances payable to stockholder (Note 2)........................................... 620,000 2,020,000
------------ ------------
Total current liabilities...................................................... 620,000 2,515,483
COMMITMENTS AND CONTINGENCIES (Notes 4 and 5)........................................ -- --
STOCKHOLDER'S EQUITY:
Common stock, $.01 par value; authorized, 1,000 shares; outstanding,
1 share.......................................................................... -- --
------------ ------------
$ 620,000 $ 2,515,483
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
JULY 16,
1998
(DATE OF
INCEPTION)
THROUGH THREE MONTHS
DECEMBER 31, ENDED
1998 MARCH 31, 1999
------------ --------------
<S> <C> <C>
(unaudited)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property, plant, and equipment...................................... $ (36,536) $ (528,946)
Deferred acquisition costs....................................................... (248,637) (1,460,452)
Deposits......................................................................... (11,820) (3,900)
Accounts receivable from employees and related party............................. (41,771) (2,999)
Accrued liabilities.............................................................. 495,483
------------ --------------
Net cash used in investing activities........................................ (338,764) (1,500,814)
------------ --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from advances from stockholder.......................................... 620,000 1,400,000
------------ --------------
NET (DECREASE) INCREASE IN CASH.................................................... 281,236 (100,814)
CASH, BEGINNING OF PERIOD.......................................................... -- 281,236
------------ --------------
CASH, END OF PERIOD................................................................ $ 281,236 $ 180,422
------------ --------------
------------ --------------
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIOD FROM JULY 16, 1998 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements for Alaska Communications Systems
Holdings, Inc. and Subsidiaries (the "Company") represent the operating results
of the following three legal entities:
Alaska Communications Systems Holdings, Inc. (formerly ALEC Acquisition
Corporation)
ALEC Acquisition Sub Corp., Inc.
Alaska Communications Systems, Inc.
The Company was organized in 1998 as the principal entity to acquire and
manage telecommunication operations in Alaska. The principal activities in 1998
were the preparation of systems and obtaining financing for pending acquisitions
(see Note 5). In May 1999, the Company was acquired and became a wholly owned
subsidiary of ALEC Holdings, Inc.
A summary of significant accounting policies followed by the Company is set
forth below:
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of commitments and contingencies at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.
PROPERTY, PLANT, AND EQUIPMENT is stated at cost. At December 31, 1998, the
Company was in the early stages of opening its Corporate Headquarters in
Anchorage. No depreciation was claimed in 1998 since the assets in service were
acquired at year end.
DEFERRED ACQUISITION AND FINANCING COSTS are stated at cost and are direct
costs incurred in connection with the Company's acquisitions and related
financings.
REVENUES--No revenues or expenses have been generated since the Company was
not in operation as of December 31, 1998.
2. TRANSACTIONS WITH RELATED PARTIES
Fox Paine Capital Fund, the majority stockholder of the Company's parent,
ALEC Holdings, Inc., has advanced cash to allow the Company to operate until
permanent funding is put in place at the closing of the acquisitions (see Note
5). Outstanding advances were $620,000 as of December 31, 1998. Fox Paine
Capital Fund will continue to fund the Company until permanent funding is
obtained at the closing of the acquisitions.
The Company advanced cash to a related party to perform certain consulting
services in connection with the Company's pending acquisitions. Cash used is
capitalized as deferred acquisition costs. Any unused cash that was advanced to
this related party is to be repaid to the Company. As of December 31, 1998, the
total amount of unused cash was $41,771.
F-8
<PAGE>
ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIOD FROM JULY 16, 1998 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1998
3. PROPERTY, PLANT, AND EQUIPMENT
The balances by category of property, plant, and equipment, at December 31,
1998 are:
<TABLE>
<S> <C>
Office furniture, equipment, and other............................. $ 3,049
Construction work in progress...................................... 33,487
---------
Total property, plant, and equipment............................. 36,536
Less: Accumulated depreciation..................................... --
---------
Property, plant, and equipment, net.............................. $ 36,536
---------
---------
</TABLE>
4. LEASES
The Company has entered into an operating lease for office space in
Anchorage, Alaska for its corporate headquarters. The lease is for 60 months
and, under this lease agreement, future minimum annual rental payments are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ----------------------------------------------------------------------------------
<S> <C>
1999.............................................................................. $ 278,772
2000.............................................................................. 139,060
2001.............................................................................. 141,841
2002.............................................................................. 144,678
2003.............................................................................. 147,571
----------
Total......................................................................... $ 851,922
----------
----------
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
The Company has announced two purchase agreements that will allow the
Company to enter the telecommunications industry. The first agreement involves
the acquisition of CenturyTel's Alaska holdings including Telephone Utilities of
Alaska, Inc., Telephone Utilities of the Northland, Inc., PTI Communications of
Alaska, Inc., Pacific Telecom of Alaska PCS, Inc., and Pacific Telecom Cellular
of Alaska, Inc. and the second is with the Municipality of Anchorage to acquire
all of its telecommunication investments. Upon completion of these two
contracts, the Company will have in excess of 300,000 local telephone, 70,000
cellular, 20,000 long distance, and 16,000 internet access lines. The combined
purchase price is approximately $700 million. The Company is being funded by a
$145 million equity contribution from its parent, ALEC Holdings, Inc., and the
remainder with bank financed debt.
It is currently anticipated that by mid-1999 all regulatory approvals will
have been granted and the acquisitions will be completed. At that time, the
Company's primary business will be to provide traditional local telephone, long
distance, cellular, and internet service throughout the state of Alaska. Until
the completion of the acquisitions, the Company is incurring costs to facilitate
certain transition and financing activities.
F-9
<PAGE>
ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PERIOD FROM JULY 16, 1998 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1998
6. BASIS OF PRESENTATION FOR UNAUDITED QUARTERLY INFORMATION
The accompanying unaudited financial information at March 31, 1999 and for
the three months ended March 31, 1998 and 1999 have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the full
fiscal year or for any future period.
F-10
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Century Telephone Enterprises, Inc.:
We have audited the accompanying combined balance sheet of CenturyTel's
Alaska Properties as of December 31, 1998, and the related combined statement of
income and retained earnings, and cash flows for the year then ended. These
combined financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these combined
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of CenturyTel's Alaska
Properties as of December 31, 1998, and the results of their operations and
their cash flows for the year ended December 31,1998, in conformity with
generally accepted accounting principles.
KPMG LLP
Shreveport, Louisiana
February 26, 1999
F-11
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Century Telephone Enterprises, Inc.
Monroe, Louisiana
We have audited the combined balance sheet of CenturyTel Alaska Properties
as of December 31, 1997, and the related combined statements of income and
retained earnings and of cash flows for the year ended December 31, 1996, eleven
months ended November 30, 1997, and one month ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of CenturyTel Alaska
Properties as of December 31, 1997, and the results of their operations and
their cash flows for the year ended December 31, 1996, eleven months ended
November 30, 1997, and one month ended December 31, 1997, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Portland, Oregon
March 25, 1999
F-12
<PAGE>
CENTURYTEL ALASKA PROPERTIES
COMBINED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1997 1998 1999
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
<CAPTION>
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents..................................................... $ 871 $ 5,728 $ 10,739
Accounts receivable:
Customers, less allowance for doubtful accounts of $376, $164 and $162 at
December 31, 1997 and 1998, and March 31, 1999, respectively.............. 5,071 $ 8,446 $ 8,362
Affiliates (Note 8)......................................................... 20,404 31,922 38,361
Connecting companies........................................................ 4,146 10,984 6,596
Receivable from sale of cellular license.................................... 5,022 -- --
Miscellaneous accounts receivable and other................................. 2,760 1,213 1,326
Material and supplies (at cost)............................................... 2,653 2,072 2,058
Prepayments................................................................... 1,513 610 602
--------- --------- -----------
Total current assets........................................................ 42,440 60,975 68,044
--------- --------- -----------
PROPERTY, PLANT AND EQUIPMENT, Net (Note 4)..................................... 158,590 161,710 157,866
--------- --------- -----------
OTHER ASSETS:
Excess cost of net assets acquired, less accumulated amortization of $5,056,
$6,853 and $8,455 at December 31, 1997 and 1998, and March 31, 1999,
respectively (Note 1)....................................................... 248,948 242,632 241,030
Investments, at cost.......................................................... 997 976 976
Other, net.................................................................... 8,200 6,367 5,753
--------- --------- -----------
Total other assets.......................................................... 258,145 249,975 247,759
--------- --------- -----------
TOTAL ASSETS.................................................................... $ 459,175 $ 472,660 $ 473,669
--------- --------- -----------
--------- --------- -----------
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY
<S> <C> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 5)................................. $ 1,316 $ 1,427 $ 1,451
Accounts payable.............................................................. 3,275 5,322 2,589
Accrued expenses and other accrued liabilities:
Salaries and benefits....................................................... 2,434 1,949 2,321
Taxes....................................................................... 1,123 1,008 1,937
Other....................................................................... 684 1,849 1,841
Advance billings and customer deposits (Note 1)............................... 1,643 2,019 2,026
--------- --------- -----------
Total current liabilities................................................. 10,475 13,574 12,165
--------- --------- -----------
LONG-TERM DEBT (Note 5)......................................................... 41,634 41,981 41,643
--------- --------- -----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes (Note 6)................................................ 11,297 13,523 13,914
Deferred investment tax credits............................................... 1,421 909 780
Other......................................................................... 3,034 1,711 1,282
--------- --------- -----------
Total deferred credits and other liabilities................................ 15,752 16,143 15,976
--------- --------- -----------
SHAREHOLDER'S EQUITY:
Common stock (103, 104 and 104 shares authorized and 23, 24, and 24 issued and
outstanding, respectively).................................................. 23 24 24
Paid-in capital............................................................... 393,026 393,026 393,026
Retained earnings............................................................. (1,735) 7,912 10,835
--------- --------- -----------
Total shareholder's equity................................................ 391,314 400,962 403,885
--------- --------- -----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY...................................... $ 459,175 $ 472,660 $ 473,669
--------- --------- -----------
--------- --------- -----------
</TABLE>
See accompanying notes to combined financial statements.
F-13
<PAGE>
CENTURYTEL ALASKA PROPERTIES
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ELEVEN ONE MONTH ENDED MARCH 31,
YEAR ENDED MONTHS ENDED ENDED YEAR ENDED ------------------------
DECEMBER 31, NOVEMBER 30, DECEMBER 31, DECEMBER 31, 1998 1999
1996 1997 1997 1998 ----------- -----------
------------- ------------- ------------- ------------- (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Telephone.................. $ 71,810 $ 73,472 $ 9,267 $ 109,822 $ 25,390 $ 27,203
Cellular................... 4,823 5,120 181 2,576 408 546
------------- ------------- ------------- ------------- ----------- -----------
Total operating
revenues............. 76,633 78,592 9,448 112,398 25,798 27,749
------------- ------------- ------------- ------------- ----------- -----------
OPERATING EXPENSES:
Cost of sales and operating
expenses--telephone...... 37,314 36,572 5,817 61,611 14,646 14,500
Cost of sales and operating
expenses--cellular....... 3,381 3,082 147 2,128 330 396
Depreciation and
amortization............. 15,348 15,823 2,466 30,459 7,209 7,785
------------- ------------- ------------- ------------- ----------- -----------
Total operating
expenses............. 56,043 55,477 8,430 94,198 22,185 22,681
------------- ------------- ------------- ------------- ----------- -----------
OPERATING INCOME............. 20,590 23,115 1,018 18,200 3,613 5,068
------------- ------------- ------------- ------------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense........... (3,176) (3,027) (253) (3,588) (797) (965)
Interest income (Note 8)... 1,180 858 82 2,183 495 607
Other income (expense),
net...................... (33) (298) 53 356 357 80
Nonregulated income
(expense), net........... (335) 26 371 1,714 772 842
------------- ------------- ------------- ------------- ----------- -----------
Total other income
(expense)............ (2,364) (2,441) 253 665 827 564
------------- ------------- ------------- ------------- ----------- -----------
INCOME BEFORE INCOME TAX
EXPENSE.................... 18,226 20,674 1,271 18,865 4,440 5,632
INCOME TAX EXPENSE (Note
6)......................... 6,737 7,746 736 9,218 2,214 2,709
------------- ------------- ------------- ------------- ----------- -----------
NET INCOME................... 11,489 12,928 535 9,647 2,226 2,923
------------- ------------- ------------- ------------- ----------- -----------
RETAINED EARNINGS AT
BEGINNING OF PERIOD........ 63,216 61,079 -- (1,735) (1,735) 7,912
Less dividends to
shareholder................ 13,626 7,080 2,270 -- -- --
------------- ------------- ------------- ------------- ----------- -----------
RETAINED EARNINGS AT END OF
PERIOD..................... $ 61,079 $ 66,927 $ (1,735) $ 7,912 $ 491 $ 10,835
------------- ------------- ------------- ------------- ----------- -----------
------------- ------------- ------------- ------------- ----------- -----------
</TABLE>
See accompanying notes to combined financial statements.
F-14
<PAGE>
CENTURYTEL ALASKA PROPERTIES
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ELEVEN ONE MONTH ENDED MARCH 31,
YEAR ENDED MONTHS ENDED ENDED YEAR ENDED ------------------------
DECEMBER 31, NOVEMBER 30, DECEMBER 31, DECEMBER 31, 1998 1999
1996 1997 1997 1998 ----------- -----------
------------- ------------- ------------- ------------- (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.......................... $ 11,489 $ 12,928 $ 535 $ 9,647 $ 2,226 $ 2,923
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization..... 15,348 15,823 2,466 30,459 7,209 7,785
Deferred income taxes and
unamortized investment tax
credits, net.................... 1,538 1,160 65 24 148 66
Change in current assets and
liabilities:
Accounts receivable............. 14,476 (1,383) 3,873 (3,644) (2,105) 4,359
Accounts payable................ (6,828) (2,986) (1,527) 1,479 (282) (2,733)
Other current assets and
liabilities, net.............. (1,434) (4,329) 176 2,427 1,588 1,322
Other, net...................... -- -- -- (2,101) 2,241 381
------------- ------------- ------------- ------------- ----------- -----------
Net cash provided by operating
activities.................. 34,589 21,213 5,588 38,291 11,025 14,103
------------- ------------- ------------- ------------- ----------- -----------
INVESTING ACTIVITIES:
Payments for property, plant, and
equipment......................... (20,465) (14,575) (1,825) (26,799) (2,321) (2,200)
Other, net.......................... (146) 1,021 (1,454) 135 4,268 (139)
------------- ------------- ------------- ------------- ----------- -----------
Net cash provided (used) by
investing activities........ (20,611) (13,554) (3,279) (26,664) 1,947 (2,339)
FINANCING ACTIVITIES:
Proceeds from issuance of long-term
debt.............................. 1,739 -- -- -- -- --
Dividends paid...................... (13,626) (7,080) (2,270) -- -- --
Payments of long-term debt.......... (1,060) (1,129) (293) (1,322) (2,047) (314)
Change in affiliate balance......... -- -- -- (5,448) (9,540) (6,439)
------------- ------------- ------------- ------------- ----------- -----------
Net cash used by financing
activities.................. (12,947) (8,209) (2,563) (6,770) (11,587) (6,753)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS......................... 1,031 (550) (254) 4,857 1,385 5,011
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR............................. 644 1,675 1,125 871 871 5,728
------------- ------------- ------------- ------------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF
YEAR................................ $ 1,675 $ 1,125 $ 871 $ 5,728 $ 2,256 $ 10,739
------------- ------------- ------------- ------------- ----------- -----------
------------- ------------- ------------- ------------- ----------- -----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Net assets of acquisitions
contributed as paid-in capital,
including push-down of goodwill of
$32,159........................... $ -- $ 89,132 $ -- $ -- $ -- $ --
Push-down of excess costs of Alaskan
entities from CenturyTel
acquisition....................... -- -- 208,389 -- -- --
Paydown of minority interest
liability through transfer of
property, plant, and equipment.... -- -- 1,525 -- -- --
Income tax paid..................... 5,344 4,653 3,207 600 1,428 2,076
Interest paid....................... 3,510 2,706 261 3,434 577 954
</TABLE>
See accompanying notes to combined financial statements.
F-15
<PAGE>
CENTURYTEL ALASKA PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996, ELEVEN MONTHS ENDED NOVEMBER 30, 1997,
ONE MONTH ENDED DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998
(INFORMATION AS OF MARCH 31, 1998 AND 1999 AND FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)
1. GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL--The combined financial statements for CenturyTel Alaska Properties
(the "Company") represent the operating results of the following legal entities
("Alaskan Entities"):
Telephone Utilities of Alaska, Inc. ("TUA")
Telephone Utilities of the Northland, Inc. ("TUN")
PTI Communications of Alaska, Inc. ("PTICA")
Pacific Telecom of Alaska PCS, Inc. ("PTAPCS")
Pacific Telecom Cellular of Alaska, Inc. ("PTCA"), excluding the assets,
liabilities and equity of Alaska RSA #1
TUA, TUN, PTICA, and PTAPCS were wholly owned subsidiaries of Pacific
Telecom, Inc. ("PTI") and PTCA was a wholly owned subsidiary of Pacific Telecom
Cellular, Inc., which was a wholly owned subsidiary of PTI. Until December 1,
1997, PacifiCorp Holdings owned 100% of the voting securities of PTI. The
Company was acquired on December 1, 1997 as a result of Century Telephone
Enterprises, Inc.'s ("CenturyTel") acquisition of Pacific Telecom, Inc. (the
"Acquisition") (Note 13). The financial statements beginning December 1, 1997
reflect the excess cost of net assets acquired and the subsequent amortization
expense which was allocated to the Alaska properties in accordance with purchase
accounting.
TUA, TUN, PTICA, and PTAPCS became wholly owned subsidiaries of CenturyTel
of the Northwest, Inc. ("CNI") which is a wholly owned subsidiary of CenturyTel.
PTCA is a wholly owned subsidiary of CenturyTel Wireless, Inc. ("CT Wireless")
which is a wholly owned subsidiary of CenturyTel.
The Company's primary business is to provide traditional and cellular
telephone service to its customers which are located in the state of Alaska. The
Company was dependent on PTI and certain subsidiaries prior to the Acquisition
and is dependent upon CenturyTel and certain CenturyTel subsidiaries to provide
construction and maintenance services, materials and supplies and managerial,
technical and accounting services. Intercompany billings include a return on
investment to the related company.
The Company's telephone operations are regulated in nature and its telephone
accounting records are maintained in accordance with the rules and regulations
of the Alaska Public Utilities Commission ("APUC") which substantially adhere to
the rules and regulations of the Federal Communications Commission. The
Company's regulated operations are subject to the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 71, ACCOUNTING FOR THE EFFECTS OF
CERTAIN TYPES OF REGULATION.
ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported
F-16
<PAGE>
CENTURYTEL ALASKA PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996, ELEVEN MONTHS ENDED NOVEMBER 30, 1997,
ONE MONTH ENDED DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998
(INFORMATION AS OF MARCH 31, 1998 AND 1999 AND FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)
1. GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results may differ
from those estimates.
REVENUE RECOGNITION--Revenues are recognized when earned. The Company
participates in toll revenue pools with other telephone companies. Such pools
are funded by toll revenue and/or access charges regulated by the APUC within
the intrastate jurisdiction and the Federal Communications Commission within the
interstate jurisdiction. Much of the toll service revenue earned through various
pooling processes is initially recorded based on estimates. These estimates are
subject to subsequent adjustment in future accounting periods as refined
operational information becomes available.
PROPERTY, PLANT, AND EQUIPMENT--Telephone plant is stated substantially at
original cost of construction. Telephone plant retired in the ordinary course of
business, together with cost of removal, less salvage, is charged to accumulated
depreciation with no gain or loss recognized. Renewals and betterments of
telephone plant are capitalized while repairs, as well as renewals of minor
items, are charged to operating expense.
The Company provides depreciation for telephone plant on the straight-line
method, using rates approved by the regulatory authorities. Depreciation expense
for telephone plant amounted to $13,774, $14,406, $1,737, and $23,550 for the
year ended December 31, 1996, eleven months ended November 30, 1997, one month
ended December 31, 1997, and year ended December 31, 1998, respectively.
Included in 1998 expense is additional depreciation of approximately $1,506
which was approved by the regulatory authorities. The composite depreciation
rate was 5.7% for the year ended December 31, 1996, 5.8% for the eleven months
ended November 30, 1997 and the one month ended December 31, 1997, and 6.1% for
the year ended December 31, 1998.
Non-telephone plant is stated at cost and, when sold or retired, a gain or
loss is recognized. Depreciation of such property is provided on the
straight-line method over its estimated service lives ranging from 7 to 15
years. Depreciation for non-telephone plant amounted to $1,198, $922, $190, and
$583 for the year ended December 31, 1996, eleven months ended November 30,
1997, one month ended December 31, 1997, and the year ended December 31, 1998,
respectively.
LONG-LIVED ASSETS AND EXCESS COST OF NET ASSETS ACQUIRED (GOODWILL)--The
carrying value of long-lived assets, including allocated goodwill, is reviewed
for impairment at least annually, or whenever events or changes in circumstances
indicate that such carrying value may not be recoverable, by assessing the
recoverability of such carrying value through estimated undiscounted future net
cash flows expected to be generated by the assets. The excess cost of net assets
acquired is being amortized over 40 years. Amortization expense was $333 for the
year ended December 31, 1996, $455 during the eleven months ended November 30,
1997, $537 during the one month ended December 31, 1997, and $6,326 for the year
ended December 31, 1998.
F-17
<PAGE>
CENTURYTEL ALASKA PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996, ELEVEN MONTHS ENDED NOVEMBER 30, 1997,
ONE MONTH ENDED DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998
(INFORMATION AS OF MARCH 31, 1998 AND 1999 AND FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)
1. GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES--Prior to the Acquisition, the Company was included in the
consolidated federal income tax return of PacifiCorp Holdings and CenturyTel in
subsequent periods. For financial accounting purposes, federal income taxes are
computed and recorded as if the Company filed a separate federal income tax
return, except that, (i) in the event the Company generates a net tax loss which
is utilized in the respective consolidated return, the Company will be given the
benefit of such loss, and (ii) income taxes are calculated based upon the
statutory tax rate in effect for PacifiCorp prior to the Acquisition and
CenturyTel and its subsidiaries for subsequent periods on a consolidated basis.
The Company periodically settles amounts owed to CenturyTel for federal income
taxes. The Company is included in a consolidated Alaska state income tax return.
The Company uses the asset and liability method of accounting for income
taxes under which deferred tax assets and liabilities are established for the
future tax consequences attributable to differences between the financial
statement carrying amounts of assets and liabilities and their respective tax
bases. Investment tax credits related to plant have been deferred and are being
amortized as a reduction of federal income tax expense over the estimated useful
lives of the assets giving rise to the credits.
Pursuant to SFAS 71, the regulatory liability, net of the related tax
impact, is being amortized as a reduction of federal income tax expense over the
estimated remaining lives of the assets which generated the deferred taxes.
CASH EQUIVALENTS--For purposes of the statement of cash flows, the Company
considers all demand deposits, central depository bank account ("CDA") deposits,
and all short-term investments with a maturity at date of purchase of three
months or less to be cash equivalents.
INVESTMENTS--The Rural Telephone Bank ("RTB") requires borrowers of RTB
funds to purchase RTB stock as a percentage of loan funds provided. These
investments have been accounted for using the cost method.
ADVANCE BILLINGS--Advance billings creditable to revenue accounts in future
months are recorded in advance billings until the service is rendered.
EARNINGS PER SHARE--The common stock of the Company is not traded in a
public market; therefore, earnings per share amounts are not presented in
accordance with SFAS 128, EARNINGS PER SHARE.
2. PCS LICENSE ACQUISITION COSTS
In early 1997, the Company was awarded three 10 MHz licenses to provide
personal communications services ("PCS") in Alaska. The Company paid $3,023 for
such licenses, which will be amortized over the useful economic lives once
construction is complete. At this time, construction has not yet begun. These
licenses are included in Other Assets on the balance sheet.
F-18
<PAGE>
CENTURYTEL ALASKA PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996, ELEVEN MONTHS ENDED NOVEMBER 30, 1997,
ONE MONTH ENDED DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998
(INFORMATION AS OF MARCH 31, 1998 AND 1999 AND FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)
3. FAIR VALUE OF FINANCIAL INSTRUMENTS
CASH AND CASH EQUIVALENTS, ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE, ACCRUED
EXPENSES, AND CUSTOMER DEPOSITS--The carrying amount approximates the fair value
due to the short maturity of these instruments.
OTHER INVESTMENTS--The Company's other investments are represented by its
investment in RTB stock. The carrying amount of such investment approximates the
fair market value of these instruments.
LONG-TERM DEBT--The carrying value of the Company's long-term debt had a
fair value of $42,669 at December 31, 1997 and $45,853 at December 31, 1998. The
fair value was estimated by discounting the scheduled payment streams to present
value based upon rates currently offered to the Company for debt of similar
remaining maturities. Prepayment penalties and other costs of debt retirement
are not reflected in the estimates.
4. PROPERTY, PLANT, AND EQUIPMENT, NET
The following table summarizes the major classes of property, plant, and
equipment as of December 31, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
General support....................................................... $ 33,508 $ 31,811
Central office........................................................ 113,040 120,613
IOT................................................................... 21,283 5,652
Cable and wire........................................................ 221,428 232,819
Construction in progress.............................................. 5,633 9,345
Nonregulated and other................................................ 677 8,452
---------- ----------
Telephone property, plant, and equipment............................ 395,569 408,692
Less accumulated depreciation......................................... (238,228) (248,915)
---------- ----------
Net telephone property, plant, and equipment........................ 157,341 159,777
---------- ----------
Wireless property, plant, and equipment............................... 1,340 2,617
Less accumulated depreciation......................................... (91) (684)
---------- ----------
Net wireless property, plant, and equipment......................... 1,249 1,933
---------- ----------
Property, plant, and equipment, net................................. $ 158,590 $ 161,710
---------- ----------
---------- ----------
</TABLE>
The Company retired approximately $1,762 of telephone property, plant, and
equipment and a like amount of accumulated depreciation in 1998.
F-19
<PAGE>
CENTURYTEL ALASKA PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996, ELEVEN MONTHS ENDED NOVEMBER 30, 1997,
ONE MONTH ENDED DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998
(INFORMATION AS OF MARCH 31, 1998 AND 1999 AND FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)
5. LONG-TERM DEBT
Long-term debt as of December 31, 1997 and 1998 is summarized below:
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
First mortgage notes:
5.0%-6.5%, due in installments to 2027................................ $ 29,226 $ 28,546
7.2%-9.4%, due in installments to 2020................................ 10,820 10,588
10.1%-11.8%, due in installments to 2017.............................. 2,904 2,672
Unsecured note at 3%, due in installments to 2007....................... -- 1,602
--------- ---------
Subtotal............................................................ 42,950 43,408
Less current maturities................................................. (1,316) (1,427)
--------- ---------
Total long-term debt, excluding current maturities.................. $ 41,634 $ 41,981
--------- ---------
--------- ---------
</TABLE>
The approximate annual debt maturities for the five years subsequent to
December 31, 1998 are as follows: 1999, $1,427; 2000, $1,527; 2001, $1,637;
2002, $1,755; and 2003, $1,551.
At December 31, 1998, under the most restrictive covenant of the Company's
long-term debt agreement, all of the Company's retained earnings were available
for the payment of cash dividends.
Substantially all of the Company's telephone property, plant, and equipment
is pledged to secure the first mortgage notes.
6. INCOME TAXES
Income tax expense consists of the following components:
<TABLE>
<CAPTION>
ELEVEN MONTHS ONE MONTH
YEAR ENDED ENDED ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 30, DECEMBER 31, DECEMBER 31,
1996 1997 1997 1998
----------------- --------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Federal:
Current....................... $ 4,733 $ 5,689 $ 575 $ 7,093
Deferred...................... 265 109 (12) (177)
State:
Current....................... 1,388 1,708 170 2,101
Deferred...................... 351 240 3 201
------ ------ ----- ------
Income tax expense.......... $ 6,737 $ 7,746 $ 736 $ 9,218
------ ------ ----- ------
------ ------ ----- ------
</TABLE>
F-20
<PAGE>
CENTURYTEL ALASKA PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996, ELEVEN MONTHS ENDED NOVEMBER 30, 1997,
ONE MONTH ENDED DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998
(INFORMATION AS OF MARCH 31, 1998 AND 1999 AND FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)
6. INCOME TAXES (CONTINUED)
The following is a reconciliation from the statutory federal income tax rate
to the Company's effective income tax rate:
<TABLE>
<CAPTION>
ELEVEN MONTHS ONE MONTH
YEAR ENDED ENDED ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 30, DECEMBER 31, DECEMBER 31,
1996 1997 1997 1998
------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Statutory federal income tax rate..................... 35.00% 35.00% 35.00% 35.00%
State income taxes, net of federal income tax
benefit............................................. 6.00% 6.00% 8.44% 7.90%
Amortization of nondeductible excess cost of net
assets acquired..................................... -- -- 14.20% 10.10%
Amortization of excess deferred income taxes.......... (1.67)% (1.32 )% (2.18 )% (1.60 )%
Amortization of deferred investment tax credits....... (3.15 )% (2.27 )% (3.76 )% (2.70 )%
Other, net............................................ 0.78% 0.06% 6.20% 0.20%
----- ----- ----- -----
Effective income tax rate........................... 36.96% 37.47% 57.90% 48.90%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
The tax effects of temporary differences that gave rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1997 and 1998 were as follows:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Deferred tax assets:
Regulatory liability.................................................................... $ 18 $ 388
Deferred investment tax credits......................................................... 991 374
Other................................................................................... 829 567
---------- ----------
Total gross deferred tax assets......................................................... 1,838 1,329
Less: Valuation allowances............................................................ -- --
---------- ----------
Net Deferred tax assets............................................................... 1,838 1,329
Deferred tax liabilities:
Property, plant, and equipment, primarily due to depreciation differences............... (13,088) (14,112)
Excess costs of net assets acquired..................................................... (47) (740)
---------- ----------
Total gross deferred tax liabilities.................................................... (13,135) (14,852)
---------- ----------
Net deferred tax liability.............................................................. $ (11,297) $ (13,523)
---------- ----------
---------- ----------
</TABLE>
F-21
<PAGE>
CENTURYTEL ALASKA PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996, ELEVEN MONTHS ENDED NOVEMBER 30, 1997,
ONE MONTH ENDED DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998
(INFORMATION AS OF MARCH 31, 1998 AND 1999 AND FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)
7. EMPLOYEE BENEFIT PLANS
Substantially all employees of the Company, except those which are members
of the International Brotherhood of Electrical Workers ("IBEW"), are covered by
a pension plan (the "Plan") which is sponsored by PTI before the Acquisition and
CNI subsequently which includes other affiliated companies. The Plan provides
benefits based upon employees' total years of service and the highest five years
compensation during their last 10 years of service. The Company's portion of
pension income was $57 during the year ended December 31, 1996, $219 during the
eleven months ended November 30, 1997, $23 during the one month ended December
31, 1997, and $384 for the year ended December 31, 1998. Because actuarial
information regarding the status of the Plan is computed for the Plan in total,
the Company does not separately determine its portion of the actuarial present
value of the accumulated plan benefits, projected benefit obligation, or net
assets available for benefits.
In accordance with the purchase agreement with Alaska Communications Systems
Holdings, Inc., formerly known as ALEC Acquisition Corporation ("ALEC") (see
Note 13), the Plan assets and obligations will be valued at the closing date.
Based on this valuation, assets equaling the actuarial present value of the
accrued benefits of the Company's employees, plus an additional $250, will be
transferred to a replacement plan.
The Company participates in a postretirement health care and insurance plan
(the "PRB Plan") which is sponsored by PTI prior to acquisition and by CNI
subsequently which includes other affiliated companies.
The Company recognizes the cost of other postretirement benefits over the
active service period of its employees. PTI's policy was to fund annually an
amount of the postretirement benefit liability that will systematically reduce
that liability using available funds and allow deductibility for federal income
tax purposes. Due to income tax regulations that restrict the deductibility of
certain contributions for postretirement benefits, PTI elected to make non-tax
contributions to meet funding requirements imposed by state regulatory
commissions. PTI recognized the transition obligation, which represents the
previously unrecognized prior service cost, over a period of 20 years. Because
actuarial information regarding the status of the PRB Plan is computed for the
PRB Plan in total, PTI did not separately determine its portion of the actuarial
present value of the accumulated plan benefit, projected benefit obligations or
net assets available for benefits. At December 31, 1997, the date of the latest
actuarial evaluation for the PRB Plan, plan assets were less than the projected
benefit obligation by approximately $46,246 and the unamortized portion of the
transition obligation was $26,099. The Company's portion of the net periodic
postretirement benefit cost was $846 during the year ended
F-22
<PAGE>
CENTURYTEL ALASKA PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996, ELEVEN MONTHS ENDED NOVEMBER 30, 1997,
ONE MONTH ENDED DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998
(INFORMATION AS OF MARCH 31, 1998 AND 1999 AND FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)
7. EMPLOYEE BENEFIT PLANS (CONTINUED)
December 31, 1996, $485 during the eleven months ended November 30, 1997, $41
during the one month ended December 31, 1997, and $471 during the year ended
December 31, 1998, as follows
<TABLE>
<S> <C>
Service cost......................................................... $ 183
Interest cost........................................................ 392
Amortization of transition obligation................................ 116
Amortization of unrecognized prior service cost...................... (4)
Expected return on assets............................................ (216)
---------
Net periodic postretirement benefit cost....................... $ 471
---------
---------
</TABLE>
At the time of adoption of SFAS 106, EMPLOYERS' ACCOUNTING FOR
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS, the Company elected to amortize the
transition obligation, at the date of implementation, over 20 years.
In accordance with the purchase agreement with ALEC (see Note 13), the
purchaser assumes the liability for postretirement benefits related to employees
that retire subsequent to the closing date.
8. CERTAIN TRANSACTIONS
The Company purchases certain plant materials and other services (including
certain operating expenses) from PTI, CenturyTel, and other affiliated
companies. Materials and services purchased by the Company from PTI prior to
acquisition and CenturyTel and its subsidiaries subsequently totaled
approximately $9,227 for the year ended December 31, 1996, $8,581 for the eleven
months ended November 30, 1997, $1,626 for the one month ended December 31,
1997, and $29,306 (which included $15,648 of operating expenses) during the year
ended December 31, 1998.
Prior to the Acquisition, short-term advances were made to PTI under an
agreement providing interest at the prime commercial rate for funds held more
than 90 days. Interest income on these advances was $1,052 during the year ended
December 31, 1996, $797 during the eleven months ended November 30, 1997, and
$81 during the one month ended December 31, 1997.
Subsequent to the Acquisition, the Company participates in a Central
Depository Account ("CDA") with CenturyTel and other affiliates. The Company is
assessed or receives interest on the net amount of its CDA balance and the net
accounts receivable or payable to CenturyTel and its affiliates. Related
interest income amounted to $2,156 for the year ended December 31, 1998. The
rate used to calculate the related interest income was the three month U.S.
T-Bill rate. Related interest expense amounted to $637 for the year ended
December 31, 1998. The rate used to calculate the related interest expense was
the weighted average rate of CenturyTel's debt.
F-23
<PAGE>
CENTURYTEL ALASKA PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996, ELEVEN MONTHS ENDED NOVEMBER 30, 1997,
ONE MONTH ENDED DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998
(INFORMATION AS OF MARCH 31, 1998 AND 1999 AND FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)
9. BUSINESS AND CREDIT CONCENTRATIONS
The Company provides telephone services to customers (business and
residential) located in the state of Alaska. Receivables from connecting
companies represent the amounts due from various long distance carriers such as
AT&T and the Bell operating companies.
The ultimate realization of the Company's balance in the CDA discussed above
is dependent upon the financial resources of CenturyTel.
10. COMMITMENTS AND CONTINGENCIES
Expenditures for property, plant, and equipment are anticipated to be
approximately $19,469 for telephone operations and $615 for wireless operations
during 1999.
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of the matters will not have a material adverse effect on the
Company's financial position or results of operations.
The Company's operations are subject to federal, state and local laws and
regulations governing the use, storage, disposal of, and exposure to, hazardous
materials, the release of pollutants into the environment and the remediation of
contamination. As an owner or operator of property and a generator of hazardous
wastes, the Company could be subject to certain environmental laws that impose
liability for the entire cost of cleanup at contaminated sites, regardless of
fault or the lawfulness of the activity that resulted in contamination. The
Company believes, however, that its operations are in substantial compliance
with applicable environmental laws and regulations.
Many of the Company's properties formerly contained, or currently contain,
underground and aboveground storage tanks used for the storage of fuel or
wastes. Some of these tanks have leaked. The Company believes that known
contamination caused by these leaks has been, or is being, investigated or
remediated. The Company cannot be sure, however, that it has discovered all
contamination or that the regulatory authorities will not request additional
remediation at sites that have previously undergone remediation.
F-24
<PAGE>
CENTURYTEL ALASKA PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996, ELEVEN MONTHS ENDED NOVEMBER 30, 1997,
ONE MONTH ENDED DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998
(INFORMATION AS OF MARCH 31, 1998 AND 1999 AND FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)
11. BUSINESS SEGMENTS
The Company is engaged in providing local exchange telephone services and
cellular telephone services in Alaska. The following tables illustrate selected
financial data for each segment:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996 TELEPHONE WIRELESS TOTAL
- ----------------------------------------------------------- ---------- ----------- ----------
<S> <C> <C> <C>
Operating revenues......................................... $ 71,810 $ 4,823 $ 76,633
Depreciation and amortization.............................. 14,383 965 15,348
Operating income........................................... 20,113 477 20,590
Capital expenditures....................................... 19,694 771 20,465
</TABLE>
<TABLE>
<CAPTION>
ELEVEN MONTHS ENDED NOVEMBER 30, 1997 TELEPHONE WIRELESS TOTAL
- ----------------------------------------------------------- ---------- ----------- ----------
<S> <C> <C> <C>
Operating revenues......................................... $ 73,472 $ 5,120 $ 78,592
Depreciation and amortization.............................. 15,090 733 15,823
Operating income........................................... 21,810 1,305 23,115
Capital expenditures....................................... 14,225 350 14,575
</TABLE>
<TABLE>
<CAPTION>
ONE MONTH ENDED DECEMBER 31, 1997 TELEPHONE WIRELESS TOTAL
- ----------------------------------------------------------- ---------- ----------- ----------
<S> <C> <C> <C>
Operating revenues......................................... $ 9,267 $ 181 $ 9,448
Depreciation and amortization.............................. 2,375 91 2,466
Operating income (loss).................................... 1,075 (57) 1,018
Capital expenditures....................................... 1,732 93 1,825
Total assets............................................... 450,155 9,020 459,175
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998 TELEPHONE WIRELESS TOTAL
- ----------------------------------------------------------- ---------- ----------- ----------
<S> <C> <C> <C>
Operating revenues......................................... $ 109,822 $ 2,576 $ 112,398
Depreciation and amortization.............................. 29,734 725 30,459
Operating income (loss).................................... 18,476 (276) 18,200
Capital expenditures....................................... 26,664 135 26,799
Total assets............................................... 470,649 2,011 472,660
</TABLE>
F-25
<PAGE>
CENTURYTEL ALASKA PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996, ELEVEN MONTHS ENDED NOVEMBER 30, 1997,
ONE MONTH ENDED DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998
(INFORMATION AS OF MARCH 31, 1998 AND 1999 AND FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)
11. BUSINESS SEGMENTS (CONTINUED)
The following is a reconciliation of operating income to income before
income tax expense:
<TABLE>
<CAPTION>
ELEVEN MONTHS ONE MONTH
YEAR ENDED ENDED ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 30, DECEMBER 31, DECEMBER 31,
1996 1997 1997 1998
------------ -------------------- ----------------- ------------
<S> <C> <C> <C> <C>
Operating income........................... $ 20,590 $ 23,115 $ 1,018 $ 18,200
Interest expense........................... (3,176) (3,027) (253) (3,588)
Nonregulated income (expense).............. (335) 26 371 1,714
Interest income............................ 1,180 858 82 2,183
Other income (expense), net................ (33) (298) 53 356
------------ ------- ------ ------------
Income before income tax expense........... $ 18,226 $ 20,674 $ 1,271 $ 18,865
------------ ------- ------ ------------
------------ ------- ------ ------------
</TABLE>
12. ACCOUNTING FOR THE EFFECTS OF REGULATION
The Company currently accounts for its regulated telephone operations in
accordance with the provisions of SFAS 71. While the ongoing applicability of
SFAS 71 to the Company's telephone operations is being monitored due to the
changing regulatory, competitive, and legislative environments, the Company
believes that SFAS 71 still applies. However, it is possible that changes in
regulation or legislation or anticipated changes in competition or in the demand
for regulated services or products could result in the Company's telephone
operations not being subject to SFAS 71 in the near future. In that event,
implementation of SFAS 101, REGULATED ENTERPRISES--ACCOUNTING FOR THE
DISCONTINUANCE OF APPLICATION OF FASB STATEMENT NO. 71, would require the
write-off of previously established regulatory assets and liabilities, along
with an adjustment of certain accumulated depreciation accounts to reflect the
difference between recorded depreciation and the amount of depreciation that
would have been recorded had the Company's telephone operations not been subject
to rate regulation. Such discontinuance of the application of SFAS 71 would
result in a material, noncash charge against earnings which would be reported as
an extraordinary item. While the effect of implementing SFAS 101 cannot be
precisely estimated at this time, management believes that the noncash,
after-tax, extraordinary charge would be between $25,000 and $28,000.
13. ACQUISITIONS AND DISPOSITIONS
On September 8, 1997, the Company acquired the outstanding stock of
Polarnet, Inc., an Internet service provider. The purchase price was
approximately $1,100 and was accounted for by the purchase method. The excess of
the purchase price over the estimated fair value of net assets acquired amounted
to approximately $968, which is included in goodwill. The results of operations
of Polarnet, Inc. from September 8, 1997 are included in the statement of
income.
On October 6, 1997, PTI acquired the net assets of the local exchange
utilities ("PTI-Fairbanks") from the City of Fairbanks. The purchase price was
approximately $87 million and was accounted for
F-26
<PAGE>
CENTURYTEL ALASKA PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996, ELEVEN MONTHS ENDED NOVEMBER 30, 1997,
ONE MONTH ENDED DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998
(INFORMATION AS OF MARCH 31, 1998 AND 1999 AND FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)
13. ACQUISITIONS AND DISPOSITIONS (CONTINUED)
by the purchase method. The excess of the purchase price over the estimated fair
value of net assets acquired amounted to approximately $31 million, which is
included in goodwill. The results of operations of PTI-Fairbanks from October 6,
1997 are included in the statements of income. Assets and liabilities acquired
were as follows:
<TABLE>
<S> <C>
Fair value of assets acquired...................................... $ 86,750
Cash paid for net assets........................................... (85,000)
---------
Liabilities assumed.............................................. $ 1,750
---------
---------
</TABLE>
On December 1, 1997, PTI was sold to CenturyTel for approximately $2.2
billion (including assumed debt). As a result of this transaction, the Company
recorded all previously retained earnings as paid-in capital and pushed down
excess costs of approximately $208 million to the Alaskan entities to reflect
the change from PTI's to CenturyTel's basis of accounting.
In August 1998 CNI and CT Wireless entered into a definitive agreement to
sell the stock of the Company to ALEC for approximately $409 million, subject to
certain adjustments. The transaction is anticipated to close in 1999 subject to
regulatory approvals and various closing conditions.
14. YEAR 2000 (UNAUDITED)
The Company has initiated a plan ("Year 2000 Plan") to identify, assess, and
remediate "Year 2000" issues within each of its significant computer programs
and certain equipment which contain micro-processors. The Year 2000 Plan is
addressing the issue of computer programs and embedded computer chips being
unable to distinguish between the year 1900 and the year 2000, if a program or
chip uses only two digits rather than four to define the applicable year. The
Company has divided the Year 2000 Plan into four major phases--assessment,
planning, implementation, and testing. After completing the assessment and
planning phases earlier this year, the Company is currently in the
implementation and testing phases. Systems which have been determined not to be
Year 2000 compliant are being either replaced or reprogrammed, and thereafter
tested for Year 2000 compliance. The Year 2000 Plan anticipates that by October
1999 the implementation and testing phases will be completed.
The Company is identifying and contacting critical suppliers and customers
whose computerized systems interface with the Company's systems, regarding their
plans and progress in addressing their Year 2000 issues. The Company has
received varying information from such third parties on the state of compliance
or expected compliance. Contingency plans are being developed in the event that
any critical supplier or customer is not compliant.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
operations, liquidity, and financial condition. Due to the general uncertainty
inherent in
F-27
<PAGE>
CENTURYTEL ALASKA PROPERTIES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1996, ELEVEN MONTHS ENDED NOVEMBER 30, 1997,
ONE MONTH ENDED DECEMBER 31, 1997 AND YEAR ENDED DECEMBER 31, 1998
(INFORMATION AS OF MARCH 31, 1998 AND 1999 AND FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1998 AND 1999 IS UNAUDITED)
(IN THOUSANDS)
14. YEAR 2000 (UNAUDITED) (Continued)
the Year 2000 problem, resulting in part from the uncertainty of the Year 2000
readiness of third-party suppliers and customers, the Company is unable to
determine at this time whether consequences of Year 2000 failures will have a
material impact on the Company's operations, liquidity, or financial condition.
15. BASIS OF PRESENTATION FOR UNAUDITED QUARTERLY INFORMATION
The accompanying unaudited financial information at March 31, 1999 and for
the three months ended March 31, 1998 and 1999 have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the full
fiscal year or for any future period.
F-28
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Century Telephone Enterprises, Inc.
Monroe, Louisiana
We have audited the combined balance sheet of Telephone Fund of Fairbanks
Municipal Utilities Services (the "Company") as of October 6, 1997, and the
related combined statements of income and fund equity and of cash flows for the
period ended October 6, 1997 and the year ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Telephone Fund of
Fairbanks Municipal Utilities Services as of October 6, 1997, and the results of
their operations and their cash flows for the period ended October 6, 1997 and
the year ended December 31, 1996 in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Portland, Oregon
March 25, 1999
F-29
<PAGE>
TELEPHONE FUND OF FAIRBANKS
MUNICIPAL UTILITIES SERVICES
COMBINED BALANCE SHEET
OCTOBER 6, 1997
(IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Accounts receivable:
Customers, less allowance for doubtful accounts of $156........................ $ 903
Connecting companies and other................................................. 1,949
Material and supplies (at cost).................................................. 2,608
Prepayments...................................................................... 23
---------
Total current assets......................................................... 5,483
PROPERTY, PLANT, AND EQUIPMENT, Net................................................ 50,279
---------
$ 55,762
---------
---------
LIABILITIES AND FUND EQUITY
CURRENT LIABILITIES:
Accounts payable................................................................. $ 290
Accrued expenses and other accrued liabilities................................... 2,869
Advance billings and customer deposits (Note 1).................................. 1,140
Capital leases................................................................... 262
---------
Total current liabilities.................................................... 4,561
DEFERRED CREDIT (Note 1)........................................................... 1,180
FUND EQUITY........................................................................ 50,021
---------
$ 55,762
---------
---------
</TABLE>
See accompanying notes to combined financial statements.
F-30
<PAGE>
TELEPHONE FUND OF FAIRBANKS
MUNICIPAL UTILITIES SERVICES
COMBINED STATEMENTS OF INCOME AND FUND EQUITY
PERIOD ENDED OCTOBER 6, 1997 AND YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, OCTOBER 6,
1996 1997
------------ ------------
<S> <C> <C>
OPERATING REVENUES--Telephone........................................................ $ 25,084 $ 19,768
------------ ------------
OPERATING EXPENSES:
Cost of sales and operating expenses--telephone.................................... 14,523 11,136
Depreciation and amortization...................................................... 5,172 4,249
------------ ------------
Total operating expenses....................................................... 19,695 15,385
------------ ------------
OPERATING INCOME..................................................................... 5,389 4,383
------------ ------------
OTHER INCOME (EXPENSE):
Interest expense................................................................... (1,552) (1,520)
Interest income.................................................................... 462 416
Other income, net.................................................................. 121 104
Nonregulated income, net........................................................... 797 203
------------ ------------
Total other expense............................................................ (172) (797)
------------ ------------
NET INCOME........................................................................... 5,217 3,586
FUND EQUITY, BEGINNING OF YEAR....................................................... 48,298 49,690
DIVIDENDS............................................................................ (3,825) (3,255)
------------ ------------
FUND EQUITY, END OF YEAR............................................................. $ 49,690 $ 50,021
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to combined financial statements.
F-31
<PAGE>
TELEPHONE FUND OF FAIRBANKS
MUNICIPAL UTILITIES SERVICES
COMBINED STATEMENTS OF CASH FLOWS
PERIOD ENDED OCTOBER 6, 1997 AND YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, OCTOBER 6,
1996 1997
------------ -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income......................................................................... $ 5,216 $ 3,586
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization.................................................... 5,172 4,249
Change in current assets and liabilities:
Accounts receivable............................................................ 167 996
Accounts payable............................................................... (563) (2,133)
Other current assets and liabilities, net...................................... 132 529
------------ -------------
Net cash provided by operating activities.................................... 10,124 7,227
------------ -------------
INVESTING ACTIVITIES:
Payments for property, plant, and equipment........................................ (6,023) (3,452)
------------ -------------
FINANCING ACTIVITIES:
Dividends paid to MUS.............................................................. (3,825) (3,255)
Payments of lease obligation....................................................... (276) (520)
------------ -------------
Net cash used in financing activities........................................ (4,101) (3,775)
------------ -------------
INCREASE (DECREASE) IN CASH.......................................................... -- --
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR......................................... -- --
------------ -------------
CASH AND CASH EQUIVALENTS, END OF YEAR............................................... $ -- $ --
------------ -------------
------------ -------------
</TABLE>
See notes to combined financial statements.
F-32
<PAGE>
TELEPHONE FUND OF FAIRBANKS MUNICIPAL UTILITIES SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS
PERIOD ENDED OCTOBER 6, 1997 AND YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Telephone Utility of Fairbanks Municipal Utilities Services' (the
"Company") primary business is to provide telephone service to its customers who
are located in the City of Fairbanks and surrounding local areas. The Company's
telephone operations are regulated in nature and its telephone accounting
records are maintained in accordance with the rules and regulations of the
Alaska Public Utilities Commission ("APUC") which substantially adhere to the
rules and regulations of the Federal Communications Commission. The Company's
regulated operations are subject to the provisions of Statement of Financial
Accounting Standards No. 71 ("SFAS 71"), ACCOUNTING FOR THE EFFECTS OF CERTAIN
TYPES OF REGULATION. In an asset purchase agreement effective October 6, 1997,
the Company was sold by the Municipal Utilities System ("MUS"), an enterprise
fund of the City of Fairbanks, to PTI Communications of Alaska, Inc. and began
doing business as PTI-Fairbanks. The financial statements do not reflect any
purchase adjustments from this transaction. The financial statements also
exclude the cellular fund which operates the RSA #1 A-Side cellular property
site license.
The accompanying financial statements represent the financial position of
the Company as of October 6, 1997 and the results of its operations and cash
flows for the period ended October 6, 1997 and the year ended December 31, 1996.
A summary of significant accounting policies followed by the Company is set
forth below:
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires Management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of commitments and contingencies at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
PROPERTY, PLANT, AND EQUIPMENT--The Company states its property, plant and
equipment at cost. Additions to plant include direct costs and related indirect
charges. Depreciation is provided using the straight-line method based primarily
on the estimated service lives of the various classes of depreciable assets. The
composite depreciation rate for depreciable telecommunications plant was 5.7%
for the period ended October 6, 1997 and 4.9% for the year ended 1996.
INCOME TAXES--As MUS is a public entity, it is exempt from paying any
federal, state or local taxes. In place of property taxes, MUS makes a payment
in lieu of taxes (see Note 2).
REVENUE RECOGNITION--The Company participates in access revenue pools for
certain interstate and intrastate revenues, which are initially recorded based
on estimates. Certain network access revenues are estimated under cost
separations procedures that base revenues on current operating costs and
investments in facilities to provide such services. These estimates are subject
to subsequent adjustment in future accounting periods as refined operational
information becomes available.
ADVANCE BILLINGS--Advance billings creditable to revenue accounts in future
months are recorded in advance billings until the service is rendered.
DEFERRED CREDIT--In prior years contributions were made by outside third
parties to fund construction of certain property, plant, and equipment of the
Company. These contributions have been recorded as a deferred credit and are
being amortized over the lives of the funded assets.
F-33
<PAGE>
TELEPHONE FUND OF FAIRBANKS MUNICIPAL UTILITIES SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
PERIOD ENDED OCTOBER 6, 1997 AND YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
2. TRANSACTIONS WITH RELATED PARTIES
The Company purchases certain administrative, engineering, personnel, and
legal services from the City of Fairbanks. These services, which are charged at
cost to various capital and expense accounts, were $596 for the period ended
October 6, 1997 and $853 for the year ended December 31, 1996.
The Company makes payments in lieu of taxes at 4% of gross revenue, with
payments capped at $2,243, plus a 3% supplemental, with payments capped at
$1,300 for all utilities. Payments in lieu of taxes to the City of Fairbanks
General Fund by the Company amounted to $1,536 for the period ended October 6,
1997 and $1,715 for the year ended December 31, 1996.
MUS also allocates interest expense on revenue bonds as well as interest
income earned on short-term investments to each of its utilities as part of its
centralized cash management program. The amount of interest expense and income
allocated to the Company was $1,520 and $416 during the period ended October 6,
1997 and $1,552 and $462 during the year ended December 31, 1996.
3. PROPERTY, PLANT, AND EQUIPMENT, NET
The balances by category of property, plant, and equipment, net at October
6, 1997 are:
<TABLE>
<S> <C>
Central office equipment........................................... $ 25,533
Poles, cable, and conduit.......................................... 60,195
Buildings.......................................................... 6,675
Office furniture, equipment, and other............................. 25,884
Construction work in progress...................................... 4,897
---------
Total property, plant, and equipment, gross.................... 123,184
Accumulated depreciation........................................... (72,905)
---------
Property, plant, and equipment, net............................ $ 50,279
---------
---------
</TABLE>
4. EMPLOYEE BENEFIT PLANS
All permanent employees of the Company are eligible to participate as
members of the State of Alaska Public Employees Retirement System ("PERS"), a
defined benefit agent multiple-employer public employee retirement system that
acts as a common investment and administrative agent for the State of Alaska and
any political subdivision or public organization that elects to join the system.
Eligible employees contribute 6.75% of their gross salary to PERS. The Company
is required to contribute the remaining amounts necessary to fund PERS, using
the actuarial basis specified by the PERS Board. Because actuarial information
regarding the status of the PERS plan is computed for the Plan in total, the
Company does not separately determine its portion of the actuarial present value
for the accumulated plan benefits, projected benefit obligation, or net assets
available for benefits. At June 30, 1997, the date of the latest actuarial
evaluation for the Plan, Plan assets of $70,726 exceeded the projected benefit
obligation by approximately $33,837.
Certain employees of the Company are members of the International
Brotherhood of Electrical Workers ("IBEW") and are eligible to participate in
two different union-sponsored multiple employer defined benefit plans, a pension
plan and a thrift plan. Under the pension plan, the Company
F-34
<PAGE>
TELEPHONE FUND OF FAIRBANKS MUNICIPAL UTILITIES SERVICES
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
PERIOD ENDED OCTOBER 6, 1997 AND YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
4. EMPLOYEE BENEFIT PLANS (CONTINUED)
contributed between $4 and $5.09 per compensable hour to the Alaska Electrical
Pension Fund and the total contribution was $782 for the period ended October 6,
1997 and $864 for the year ended December 31, 1996. Under the thrift plan, the
Company pays a minimum of 4% of the participant's gross wages into the plan plus
after one year it matches the employee's contributions, to a maximum of 3%. The
Company's contributions to the thrift plan was $332 for the period ended October
6, 1997 and $298 for the year ended December 31, 1996.
5. EMPLOYEES' DEFERRED COMPENSATION
The Company offers its employees three deferred compensation plans which are
part of the MUS multiemployer plan. The plans are available to all Company
employees and permit them to defer a portion of their salary until future years.
Participants' rights under the plans are equal to those of general creditors of
MUS in an amount equal to the fair market value of the deferred account for each
participant. The fair market value of both the assets and liabilities for the
Plan in total at October 6, 1997 was $13,247.
6. COMMITMENTS AND CONTINGENCIES
Expenditures under the Company's 1998 construction and capital expenditure
program are expected to approximate $7,193.
* * * * * *
F-35
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Honorable Mayor and Members of the Assembly
Municipality of Anchorage:
We have audited the accompanying balance sheets of the Municipality of
Anchorage Telephone Utility Fund (Utility) as of December 31, 1998 and 1997, and
the related statements of revenues, expenses, and changes in retained earnings,
and cash flows for each of the years in the three-year period ended December 31,
1998. These financial statements are the responsibility of the Utility's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The financial statements present only the Municipality of Anchorage
Telephone Utility Fund and are not intended to present fairly the financial
position and results of operations of the Municipality of Anchorage in
conformity with generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Municipality of
Anchorage Telephone Utility Fund as of December 31, 1998 and 1997, and the
results of its operations and its cash flows for each of the years in the
three-year period ended December 31, 1998 in conformity with generally accepted
accounting principles.
The year 2000 supplementary information on pages [F-53 and F-54] is not a
required part of the financial statements, but is supplementary information
required by the Governmental Accounting Standards Board, and we did not audit
and do not express an opinion on such information. Further, we were unable to
apply to the information certain procedures prescribed by professional standards
because of the nature of the matter underlying the disclosure requirements and
because sufficiently specific criteria regarding the matters to be disclosed
have not been established. In addition, we do not provide assurance that the
Municipality of Anchorage Telephone Utility Fund is or will become year 2000
compliant, that its year 2000 remediation efforts will be successful in whole or
in part, or that parties with which the Municipality of Anchorage Telephone
Utility Fund does business are or will become year 2000 compliant.
KPMG LLP
Anchorage, Alaska
February 19, 1999
F-36
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- MARCH 31,
1997 1998 1999
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash...................................................................... $ 10,474 $ 25,755 $ 23,034
Accounts receivable, net of uncollectibles of $1,586, $1,343 and $1,735 in
1998, 1997 and March 31, 1999........................................... 21,216 23,733 24,026
Inventories............................................................... 4,415 3,074 3,138
---------- ---------- -----------
Total current assets.................................................. 36,105 52,562 50,198
RESTRICTED INVESTMENTS...................................................... 14,962 15,592 17,309
NET TELEPHONE PLANT......................................................... 250,669 257,703 255,184
OTHER ASSETS
Cellular licenses......................................................... 9,670 16,315 16,203
Minority investments...................................................... 7,983 5,535 5,107
Other..................................................................... 3,735 2,538 2,695
---------- ---------- -----------
Total other assets.................................................... 21,388 24,388 24,005
---------- ---------- -----------
TOTAL ASSETS................................................................ $ 323,124 $ 350,245 $ 346,696
---------- ---------- -----------
---------- ---------- -----------
FUND EQUITY AND LIABILITIES
CURRENT LIABILITIES
Accounts payable.......................................................... $ 23,211 $ 24,366 $ 22,967
Accrued interest.......................................................... 1,730 2,227 1,779
Compensated absences payable.............................................. 3,297 2,786 2,857
Accrued employee benefits................................................. 2,141 1,938 2,313
Advance billings and customer deposits.................................... 4,386 4,523 3,790
Current installments of long-term obligations............................. 16,719 17,614 17,249
---------- ---------- -----------
Total current liabilities............................................. 51,484 53,454 50,955
LONG-TERM OBLIGATIONS....................................................... 135,226 154,907 150,369
FUND EQUITY
Retained Earnings......................................................... 136,414 141,884 145,372
---------- ---------- -----------
TOTAL FUND EQUITY AND LIABILITIES........................................... $ 323,124 $ 350,245 $ 346,696
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
See accompanying notes to financial statements.
F-37
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
YEARS ENDED DECEMBER 31, 31,
---------------------------------- ------------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
OPERATING REVENUES
Local telephone.................................. $ 99,071 $ 101,857 $ 105,663 $ 25,830 $ 27,164
Cellular......................................... 16,897 21,845 29,225 5,879 6,710
Long distance.................................... 2 1,541 6,815 1,144 2,683
---------- ---------- ---------- ----------- -----------
Total operating revenue........................ 115,970 125,243 141,703 32,853 36,557
---------- ---------- ---------- ----------- -----------
OPERATING EXPENSES
Cost of sales and operating expenses--local...... 62,075 60,300 59,191 14,179 15,474
Cost of sales and operating expenses--
cellular....................................... 12,379 14,455 19,961 4,048 4,740
Cost of sales and operating expenses--long
distance....................................... 543 4,644 10,395 1,898 3,243
Depreciation and amortization.................... 20,496 26,839 29,608 7,099 7,434
---------- ---------- ---------- ----------- -----------
Total operating expenses....................... 95,493 106,238 119,155 27,224 30,891
OPERATING INCOME................................... 20,477 19,005 22,548 5,629 5,666
---------- ---------- ---------- ----------- -----------
Interest expense................................... (9,187) (9,308) (9,394) (2,448) (1,996)
Equity in earnings (loss) of minority
investments...................................... (45) 158 (2,945) (250) (509)
Interest income.................................... 2,347 2,540 2,967 608 411
Net nonregulated income (loss) and other........... 265 (277) 394 (80) (84)
---------- ---------- ---------- ----------- -----------
Net other expense.............................. (6,620) (6,887) (8,978) (2,170) (2,178)
---------- ---------- ---------- ----------- -----------
NET INCOME....................................... 13,857 12,118 13,570 3,459 3,488
RETAINED EARNINGS, JANUARY 1....................... 126,839 132,596 136,414 136,414 141,884
Utility Revenue Distribution to Municipality of
Anchorage........................................ (8,100) (8,300) (8,100) 0 0
---------- ---------- ---------- ----------- -----------
RETAINED EARNINGS, PERIOD END...................... $ 132,596 $ 136,414 $ 141,884 $ 139,873 $ 145,372
---------- ---------- ---------- ----------- -----------
---------- ---------- ---------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
F-38
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED MARCH 31,
DECEMBER 31,
------------------------------- ----------------------------
1996 1997 1998 1998 1999
--------- --------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Income from operations........................................... $ 20,477 $ 19,005 $ 22,548 $ 5,629 $ 5,666
Adjustments to reconcile income from operations to net cash
provided by operating activities
Depreciation and amortization.................................. 20,496 26,839 29,608 7,099 7,434
Provision for uncollectible accounts........................... 1,112 1,113 1,643 441 944
Loss on disposition of fixed assets............................ 288 100 174 56 --
Nonregulated income and other.................................. 439 43 95 (464) (165)
Changes in assets and liabilities which increase (decrease)
cash
Accounts receivable.......................................... (996) (4,040) (4,160) (1,184) (1,237)
Inventory of materials, supplies, and goods for resale....... 159 (504) 1,341 63 (64)
Other assets................................................. (364) 120 1,244 751 (157)
Accounts payable............................................. (25) 4,172 1,155 (4,290) (1,399)
Accrued employee benefits and compensated absences payable... 1,198 194 (713) 408 446
Customer deposits............................................ (620) (262) (292) (115) (733)
Advance billings............................................. 306 558 428 -- --
Other liabilities............................................ (350) (697) 136 -- --
--------- --------- --------- ------------- -------------
Net cash provided by operating activities.......................... 42,120 46,641 53,207 8,394 10,735
--------- --------- --------- ------------- -------------
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Utility revenue distribution--Municipality of Anchorage.......... (8,100) (8,300) (8,100) -- --
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Acquisition of telephone plant................................... (24,958) (35,187) (29,644) 8,404 3,383
Short-term advance from Municipality of Anchorage General Fund... (12,000) -- -- -- --
Principal payments on long-term obligations...................... (22,002) (19,617) (17,340) (2,497) (6,475)
Bond issuance.................................................... 43,659 24,790 29,592 29,592 --
Interest payments on long-term obligations....................... (6,513) (7,952) (8,011) (2,060) (2,292)
Cost of removal of telephone plant............................... (181) (650) (77) -- --
--------- --------- --------- ------------- -------------
Net cash used by capital and related financing activities.......... (21,995) (38,616) (25,480) 16,631 (12,150)
--------- --------- --------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Interest......................................................... 2,347 2,325 2,968 744 411
Minority investments............................................. (2,398) (5,227) (7,283) (7,283) --
Proceeds from sale of restricted investments..................... 12,865 12,109 13,912 13,912 15,655
Purchase of restricted investments............................... (13,601) (12,872) (15,256) (15,417) (17,634)
--------- --------- --------- ------------- -------------
Net cash used by investing activities.............................. (787) (3,665) (5,659) (8,044) (1,568)
--------- --------- --------- ------------- -------------
NET CHANGE IN CASH................................................. 11,238 (3,940) 13,968 16,981 (2,983)
CASH, JANUARY 1.................................................... 5,243 16,481 12,541 12,541 26,509
--------- --------- --------- ------------- -------------
CASH, PERIOD END................................................... $ 16,481 $ 12,541 $ 26,509 $ 29,522 $ 23,526
--------- --------- --------- ------------- -------------
NON-CASH CAPITAL, FINANCING, AND INVESTING ACTIVITIES
Retirement of telephone plant.................................... $ 7,124 $ 9,077 $ 3,401 -- --
Write down of long-term investments.............................. -- -- 1,888 -- --
Financed equipment purchased..................................... -- -- 6,655 -- 1,420
--------- --------- --------- ------------- -------------
Total Non-cash Capital, Financing, and Investing Activities...... $ 7,124 $ 9,077 $ 11,944 -- 1,420
--------- --------- --------- ------------- -------------
--------- --------- --------- ------------- -------------
</TABLE>
See accompanying notes to financial statements.
F-39
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
The accompanying financial statements include the activities of the
Telephone Utility Fund (Utility), a public utility of the Municipality of
Anchorage (Municipality), ATU Communications, Inc. (ACI), a holding company,
MACtel, Inc. (MACtel) and ATU Long Distance, Inc. (ATU LD), wholly owned
subsidiaries of ACI. All significant intercompany transactions have been
eliminated.
The regulated arm of the Utility provides local telecommunications service
and access to long distance telecommunications service to the Anchorage Bowl
area and to Girdwood and other small communities in the area south of the
Anchorage Bowl both inside and outside the boundaries of the Municipality. The
nonregulated arm of the Utility sells, rents, and leases customer premise
equipment to customers throughout the State of Alaska. MACtel is a
wholesale/retail cellular service provider that operates in Anchorage, the Kenai
Peninsula, and the North Star and North Slope Boroughs. ATU LD provides long
distance service to customers in Anchorage, Fairbanks, Juneau, the Kenai
Peninsula and the Matanuska Valley. Approximately 70% of the Utility's employees
are covered under a labor contract with the International Brotherhood of
Electrical Workers (IBEW) which expires on August 31, 1999.
On January 5, 1998, MACtel acquired certain assets of Pacific Telecom
Cellular of Alaska RSA #1, Inc. and stock of Prudhoe Communications, Inc.,
collectively d/b/a Cellulink, a cellular service company in Fairbanks, Alaska
for $8,900.
The purchase price was allocated as follows:
<TABLE>
<S> <C>
Property and equipment.............................................. $ 1,817
Cellular licenses................................................... 7,083
---------
$ 8,900
---------
---------
</TABLE>
Results of operations for the acquired companies have been included in 1998
operations since the date of acquisition. Pro forma information for prior
periods is not presented because it is not material.
SALE OF UTILITY
During 1998, the Municipal Assembly accepted a bid in the amount of $295,000
from Alaska Communications Systems, Inc. to acquire substantially all of the
assets and assume substantially all of the liabilities of the Utility. The sale
will become effective after review and approval by the Alaska Public Utilities
Commission (APUC), the Federal Communications Commission (FCC), and non-action
by the United States Department of Justice under the Hart-Scott-Rodino Act. The
sales price will be adjusted based upon levels of cash and net plant on the
closing date.
F-40
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REGULATION
The Utility is subject to rate regulation by the FCC for interstate
telecommunication service, and the APUC for intrastate and local exchange
telecommunication service. The Utility, as required by the FCC, accounts for
such activity separately.
The services of ATU LD are subject to rate regulation as a non-dominant
interexchange carrier by the FCC for interstate telecommunication services and
the APUC for intrastate telecommunication services. The operations of MACtel are
not subject to rate regulation.
BASIS OF ACCOUNTING
The accounting records of the Utility conform to Part 32 Uniform System of
Accounts as prescribed by the FCC and the APUC.
The accompanying financial statements are prepared on the accrual basis of
accounting. The accounting policies of the Utility are in conformity with the
requirements of the FCC and the APUC. The Utility prepares its financial
statements in accordance with Statement of Financial Accounting Standards (SFAS)
No. 71, "Accounting for the Effects of Certain Types of Regulation." Accounting
under SFAS No. 71 is appropriate as long as rates are established by or subject
to approval by independent third-party regulators; rates are designed to recover
the specific enterprise's cost-of-service; and in view of demand for service, it
is reasonable to assume that rates are set at levels that will recover costs and
can be collected from customers.
Under Governmental Accounting Standards Board (GASB) Statement No. 20,
ACCOUNTING AND FINANCIAL REPORTING FOR PROPRIETARY FUNDS AND OTHER GOVERNMENTAL
ENTITIES THAT USE PROPRIETARY FUND ACCOUNTING, the Utility applies all
applicable GASB pronouncements and all Financial Accounting Standards Board
(FASB) Statements and Interpretations, Accounting Principles, Board Opinions and
Accounting Research Bulletins, unless they conflict with or contradict GASB
pronouncements.
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the date
of the balance sheet and revenues and expenses for the period. Actual results
could differ from those estimates. The more significant accounting and reporting
policies and estimates applied in the preparation of the accompanying financial
statements are discussed below.
CASH POOLS AND RESTRICTED INVESTMENTS
The Municipality uses a central treasury to account for all cash and
investments to maximize interest income. Interest income from cash pool
investments is allocated to the Utility based on its monthly closing cash pool
equity balance. Restricted investments are recorded at fair value. All amounts
in the cash pools and in restricted investments are interest bearing and consist
primarily of repurchase agreements, banker's acceptances or U.S. Government
securities. The Utility adopted GASB Statement No. 31, ACCOUNTING AND FINANCIAL
REPORTING FOR CERTAIN INVESTMENTS AND FOR EXTERNAL
F-41
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENT POOLS, during 1998. The impact of adopting this statement was not
material to the financial statements.
Under GASB Statement No. 3, DEPOSITS WITH FINANCIAL INSTITUTIONS,
INVESTMENTS (INCLUDING REPURCHASE AGREEMENTS), AND REVERSE REPURCHASE
AGREEMENTS, the Utility's cash and investments are classified in credit risk
category 1 because they are insured or registered or are securities held by the
Utility or its agent in the Utility's name.
STATEMENT OF CASH FLOWS
The Utility has adopted GASB Statement No. 9, REPORTING CASH FLOWS OF
PROPRIETARY AND NONEXPENDABLE TRUST FUNDS AND GOVERNMENTAL ENTITIES THAT USE
PROPRIETARY FUND ACCOUNTING. For purposes of the statement of cash flows, the
Utility has defined cash as the demand deposits and investments maintained in
the general and construction cash pools, including restricted and unrestricted
balances, as well as cash balances maintained separately from the cash pools.
Maturity periods of investments have been disregarded, since the Utility uses
the general and construction cash pools as demand deposit accounts.
Cash consists of the following at December 31:
<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Equity in general cash pool...................................................... $ 14,427 $ 9,401 $ 19,254
Cash............................................................................. 963 1,073 6,501
--------- --------- ---------
Total cash................................................................. 15,390 10,474 25,755
Amounts included with restricted investments:
Equity in construction cash pool................................................. -- 927 --
Equity in general cash pool reserved for customer deposits....................... 1,091 830 537
Cash included in revenue bond reserve investments................................ -- 310 217
--------- --------- ---------
$ 16,481 $ 12,541 $ 26,509
--------- --------- ---------
--------- --------- ---------
</TABLE>
INVENTORIES
The Utility's inventories, consisting primarily of parts and supplies, are
valued at the lower of weighted average cost or market.
TELEPHONE PLANT
Telephone plant is stated at cost. The additions to telephone plant in
service are recorded at the original cost of contracted services, direct
materials and labor, and indirect overhead charges. When property is retired,
the cost of the property unit, plus removal costs, less salvage, is charged to
accumulated depreciation. Gain or loss on the retirement of regulated telephone
plant is not recognized except for extraordinary retirements.
F-42
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Utility's depreciation is computed using the straight-line method over
the estimated lives of the assets. Current rates on regulated plant were
implemented January 1, 1997 and were based on APUC Docket U-96-78. MACtel and
ATU LD property and equipment are depreciated using the straight-line and
declining balance methods over the estimated useful asset lives.
The estimated life in years of major plant and equipment categories follows:
<TABLE>
<CAPTION>
ESTIMATED
PLANT AND EQUIPMENT LIFE
- ----------------------------------------------------------------------------------- -----------
<S> <C>
Buildings.......................................................................... 56
Central office equipment........................................................... 9-10
Cable, wire and conduit............................................................ 12-46
Furniture, computers and support equipment......................................... 7-22
Vehicles........................................................................... 11-19
Leasehold improvements............................................................. 2-3
Nonregulated....................................................................... 3-10
</TABLE>
MINORITY INVESTMENTS
Minority investments consist of investments in companies which are accounted
for using the equity method.
CELLULAR LICENSES
Cellular licenses are stated at net book value. Amortization is computed on
the straight-line method over an estimated useful life of 40 years.
DISCOUNT ON REVENUE BONDS PAYABLE
The discount on revenue bonds payable is amortized over the life of the
related bond issue using the effective interest method.
REVENUE RECOGNITION
Recurring revenues are billed one month in advance and are deferred until
the month earned. Nonrecurring revenues are billed in arrears and are recognized
when earned.
During 1998 the Utility participated in both interstate and intrastate
common line pooled settlements. During 1998 the Utility did not participate in
any traffic-sensitive pools. Pooled revenues are based on settlements with the
applicable pool's administrator. Intrastate pooled revenues are settled on a
monthly basis with the Alaska Exchange Carrier Association (AECA) and are final
at the time of settlement. Participation in the AECA pool was discontinued
effective January 1, 1999. Interstate pooled revenues are settled on a monthly
basis with the National Exchange Carrier Association (NECA). The NECA
settlements may be adjusted for a period of up to twenty-four months. Interstate
F-43
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
traffic sensitive revenue is based on rates and charges defined in the Utility's
interstate tariff approved by the FCC. Interstate traffic sensitive revenue is
recognized when earned for both recurring and nonrecurring charges.
To the extent that disputes arise over revenue settlement procedures, the
Utility's policy is to defer revenue collected until settlement methodologies
are resolved and finalized.
MUNICIPAL UTILITY SERVICE ASSESSMENT
The Municipal Utility Service Assessment (MUSA) is assessed by the
Municipality and is calculated based on the net book value of telephone plant in
the prior year. Net book value for each tax district is multiplied by the
current mill rate to determine the assessment. The Utility also pays a gross
receipt tax, which is 1.25% of gross operating revenues, excluding nonregulated
revenues.
ADVERTISING
Advertising costs are expensed in the period in which they are incurred.
INCOME TAXES
The Internal Revenue Code provides that gross income for tax purposes does
not include income accruing to a state or territory, or any political
subdivision thereof, which is derived from the exercise of any essential
governmental function or from any public utility. The Utility is a public
utility of the Municipality and is therefore exempt from federal and state
income taxes. ACI and its subsidiaries are exempt from federal and state income
taxes because ACI is a holding company owned 100% by the Utility.
GASB NO. 27
The Utility adopted GASB Statement No. 27, ACCOUNTING FOR PENSIONS BY STATE
AND LOCAL GOVERNMENTAL EMPLOYERS, during 1998. GASB No. 27 establishes standards
for the measurement, recognition and display of pension expense and related
liabilities, assets, note disclosure and applicable required supplementary
information in the financial reports of state and local governmental employers.
The impact of adopting GASB No. 27 was not material to the financial statements.
IMPAIRMENT OF LONG-LIVED ASSETS
The Utility has adopted FASB Statement No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF.
Under the provisions of this statement, the Utility has evaluated its long-lived
assets for financial impairments and will continue to evaluate them if events or
changes in circumstance indicate the carrying amount of such assets may not be
fully recoverable.
F-44
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATIONS
Certain reclassifications have been made to the December 31, 1997 and 1996
financial statements to conform to the current year's presentation.
(2) TELEPHONE PLANT
A summary of telephone plant and equipment at December 31, follows:
<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Plant in Service
Cable, wire and conduit........................................... $ 166,055 $ 169,705
Central office equipment.......................................... 124,199 126,364
Buildings......................................................... 43,908 44,207
Furniture, computers and support equipment........................ 21,580 21,380
Nonregulated equipment............................................ 30,413 36,269
Vehicles.......................................................... 7,523 7,499
Land.............................................................. 5,101 5,168
Leasehold improvements............................................ 468 741
----------- -----------
399,247 411,333
Less accumulated depreciation..................................... (162,990) (187,179)
----------- -----------
Net plant in service............................................ 236,257 224,154
Construction work in progress..................................... 14,412 33,549
----------- -----------
Net telephone plant............................................. $ 250,669 $ 257,703
----------- -----------
----------- -----------
</TABLE>
F-45
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(3) LONG-TERM OBLIGATIONS
Long-term obligations consist of the following at December 31:
Bonds payable:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
1993 Series, effective interest rate of 5.49%, due in 2013.............................. $ 17,390 $ 16,670
1994 Series, effective interest rate of 4.38%, due in 2010.............................. 66,210 54,265
1996 Series, effective interest rate of 5.71%, due in 2016.............................. 42,745 41,430
1997 Series, effective interest rate of 5.18%, due in 2017.............................. 25,000 24,275
1998 Series, effective interest rate of 4.44%, due in 2010.............................. -- 30,000
---------- ----------
151,345 166,640
Less: Unamortized loss on refunding..................................................... (2,295) (1,643)
Less: Current portion................................................................... (14,705) (16,370)
Less: Unamortized discount.............................................................. (257) (226)
Plus: Unamortized premium............................................................... 238 678
---------- ----------
Net long-term revenue bonds payable....................................................... 134,326 149,079
---------- ----------
Equipment financing obligations, interest rates range from approximately 4-5%, final
payment due in 2004..................................................................... -- 6,034
Less: Current portion................................................................... -- (1,071)
---------- ----------
Net equipment financing obligations....................................................... -- 4,963
---------- ----------
Note payable:
Note payable, effective interest rate of 5.98%, due in 1999............................. 2,187 173
Less: Current portion................................................................... (2,014) (173)
---------- ----------
Net note payable.......................................................................... 173 --
---------- ----------
Arbitrage payable......................................................................... 727 865
---------- ----------
Total long-term obligations............................................................... $ 135,226 $ 154,907
---------- ----------
---------- ----------
</TABLE>
F-46
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(3) LONG-TERM OBLIGATIONS (CONTINUED)
Debt service requirements are the following for the years ended December 31:
<TABLE>
<CAPTION>
PRINCIPAL INTEREST TOTAL
---------- --------- ----------
<S> <C> <C> <C>
1999....................................................... $ 17,614 $ 8,272 $ 25,886
2000....................................................... 17,686 7,592 25,278
2001....................................................... 18,381 6,853 25,234
2002....................................................... 19,176 6,063 25,239
2003....................................................... 9,989 5,152 15,141
2004-2008.................................................. 41,461 18,580 60,041
2009-2013.................................................. 30,825 9,164 39,989
2014-2017.................................................. 17,715 1,720 19,435
---------- --------- ----------
$ 172,847 $ 63,396 $ 236,243
---------- --------- ----------
---------- --------- ----------
</TABLE>
The 1993 revenue bond covenants require the establishment of reserves over a
five-year period equal to the maximum annual debt service on all outstanding
bonds. The 1994 refunding bond covenants require establishment of a reserve in
the amount of $9,750. The 1996 revenue bond covenants require an amount equal to
the lesser of $4,400 or the maximum annual debt service to be funded in equal
installments over four years. The 1997 revenue bond covenants require an amount
equal to the lessor of $2,500 or the maximum annual debt service to be funded in
equal installments over four years. The 1998 revenue bond covenants require an
amount equal to the lessor of $3,000 or the maximum annual debt service to be
funded in equal installments over four years. The revenue bond covenants further
stipulate that revenues less expenses will be equal to at least 1.4 times the
debt service requirements for that year. Expenses are defined as costs for
operation and maintenance of the system, excluding depreciation and MUSA for
each year. For the years ended December 31, 1998, 1997 and 1996, the Utility
complied with the revenue bond covenants.
(4) REFUNDING OF LONG-TERM OBLIGATIONS
In 1994, the Utility issued refunding bond issues for the purpose of
redeeming certain bond issues when they become due or callable. The net proceeds
of the refunding bond issue were used to purchase US Government securities which
were deposited in an irrevocable trust with an escrow agent to provide all
future debt service payments on the refunded bonds. Since payment of these
advance refunded issues has been provided, as described above, neither the
liability nor the assets irrevocably pledged, including related interest income
and expense, are reflected in the accompanying financial statements.
Defeased bonds as of December 31, 1998 total $11,390 for the 1990 issue.
F-47
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(5) RETIREMENT PLANS
Substantially all employees are covered by one of the following plans.
INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS (IBEW) PLAN
The IBEW Plan is a union sponsored defined benefit pension plan for members
of the IBEW #1547 Union. The Utility contributed $3.67 per compensable employee
hour to the Alaska Electrical Trust Fund in 1998, 1997 and 1996. Utility
contributions to this plan were $3,130, $3,379 and $3,608 for the years ended
December 31, 1998, 1997 and 1996, respectively. The hourly rate paid by the
Utility is determined by the collective bargaining process. The Utility's
obligation for IBEW employee retirement is limited to the amount paid to the
Alaska Electrical Trust Fund.
STATE OF ALASKA PUBLIC EMPLOYEES' RETIREMENT SYSTEM PLAN
As discussed in note 1, the Utility adopted the provisions of GASB Statement
No. 27, ACCOUNTING FOR PENSIONS BY STATE AND LOCAL GOVERNMENTAL EMPLOYERS (GASB
27), in 1998.
STATE OF ALASKA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
A. PLAN DESCRIPTION
The Utility contributes to the State of Alaska Public Employees' Retirement
System (PERS), a defined benefit, agent multiple-employer public employee
retirement system which was established and is administered by the State of
Alaska (State) to provide pension, postemployment healthcare, death and
disability benefits to eligible employees.
All full-time Utility employees not covered by the IBEW Plan are eligible to
participate in PERS. Benefit and contribution provisions are established by
State law and may be amended only by the State Legislature.
Each fiscal year, PERS issues a publicly available financial report that
includes financial statements and required supplementary information. That
report may be obtained by writing to the State of Alaska, Department of
Administration, Division of Retirement and Benefits, P.O. Box 110203, Juneau,
Alaska, 99811-0203 or by calling (907) 465-4460.
B. FUNDING POLICY AND ANNUAL PENSION COST
Employee contribution rates are 6.75% as required by State statute. The
funding policy for PERS provides for periodic employer contributions at
actuarially determined rates that, expressed as a percentage of annual covered
payroll, are sufficient to accumulate sufficient assets to pay benefits when
due.
F-48
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(5) RETIREMENT PLANS (CONTINUED)
The Utility's annual pension cost for the current year and the related
information is as follows:
<TABLE>
<CAPTION>
POSTEMPLOYMENT
PENSION HEALTHCARE
--------------------------- -----------------
<S> <C> <C>
Contribution rates:
Employee...................................... 4.86% 1.89%
Employer...................................... 6.36% 2.47%
Annual pension cost............................. $750 $ 291
Contributions made.............................. $750 $ 291
Actuarial valuation date........................ June 30, 1996 Same
Actuarial cost method........................... Projected unit credit Same
Amortization method............................. Level dollar, open Same
Amortization period............................. Rolling 25 years Same
Asset valuation method.......................... 5-year smoothed market Same
Actuarial assumptions:
Inflation rate................................ 4% Same
Investment return............................. 8.25% Same
Projected salary increase..................... 5.5% N/A
Health cost trend............................... N/A 5.5%
</TABLE>
The components of annual pension cost for the year ended December 31, 1998
are as follows:
<TABLE>
<S> <C>
Annual required contribution (ARC).................................. $ 1,041
Interest on the net pension obligation (NPO)........................ --
Adjustment to the ARC............................................... --
---------
Annual pension cost (APC)........................................... 1,041
Contributions made.................................................. 1,041
Increase in NPO..................................................... --
NPO, beginning of year.............................................. --
---------
NPO, end of year.................................................... $ --
---------
---------
</TABLE>
F-49
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(5) RETIREMENT PLANS (CONTINUED)
Three year trend information follows:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
ENDED OF APC
DECEMBER 31 APC CONTRIBUTED NPO
--------------- --------- --------------- ---------
<S> <C> <C> <C> <C>
Pension......................................... 1996 $ 1,032 100% $
1997 827 100% --
1998 750 100% --
Postemployment healthcare....................... 1996 $ 382 100% $ --
1997 306 100% --
1998 291 100% --
</TABLE>
In the current year (the transition year), the Utility determined, in
accordance with provisions of GASB No. 27, that no pension liability (asset)
existed to PERS and there was no previously reported liability (asset) to PERS.
Information regarding funding progress follows:
<TABLE>
<CAPTION>
UNFUNDED
ACTUARIAL
ACTUARIAL ACTUARIAL ACTUARIAL ACCRUED UAAL AS A
VALUATION VALUE ACCRUED LIABILITY PERCENTAGE
YEAR ENDED OF PLAN LIABILITY (ASSET) FUNDED COVERED OF COVERED
JUNE 30 ASSETS (AAL) (UAAL) RATIO PAYROLL PAYROLL
------------- --------- --------- ----------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Pension benefits 1995 $ 5,417 $ 4,457 $ (960) 122% $ 11,288 (9)%
1996 6,656 5,702 (954) 117% 11,436 (8)%
1997 10,180 7,419 (2,761) 137% 12,290 (22)%
Postemployment healthcare
benefits 1995 $ 2,036 $ 1,675 $ (361) 122% $ 11,288 (3)%
1996 2,565 2,198 (367) 117% 11,436 (3)%
1997 3,794 2,765 (1,029) 137% 12,290 (8)%
Total 1995 $ 7,453 $ 6,132 $ (1,321) 122% $ 11,288 (12)%
1996 9,221 7,900 (1,321) 117% 11,436 (11)%
1997 13,974 10,184 (3,790) 137% 12,290 (31)%
</TABLE>
(6) OTHER EMPLOYEE BENEFITS
The Municipality offers its employees, including employees of the Utility, a
deferred compensation plan (Plan) created in accordance with Internal Revenue
Code Section 457. The Plan, available to all Municipal employees, permits them
to defer a portion of their salary until future years. The deferred compensation
is not available to employees until termination, retirement, death or
unforeseeable emergency. It is the opinion of the Municipality's legal counsel
that the Municipality has no liability for losses under the Plan but does have
the duty of due care that would be required of an ordinary
F-50
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(6) OTHER EMPLOYEE BENEFITS (CONTINUED)
prudent investor. The Municipality believes that it is unlikely that it will use
the assets to satisfy the claims of general creditors in the future.
In accordance with labor agreements, IBEW employees' medical/dental coverage
is provided through the Alaska Electrical Health and Welfare Trust Fund. Utility
contributions to this fund were $2,859, $3,143 and $2,888 for the years ended
December 31, 1998, 1997 and 1996, respectively.
(7) MINORITY INVESTMENTS
Minority investments held consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1998 OWNERSHIP %
--------- --------- -----------------
<S> <C> <C> <C>
Alaskan Choice Television, LLC.............................. $ 4,627 $ 2,651 33%
Alaska Network Systems, Inc................................. 2,353 2,015 47%
Internet Alaska, Inc........................................ 803 500 30%
Security One, LLC........................................... 200 369 20%
--------- ---------
$ 7,983 $ 5,535
--------- ---------
--------- ---------
</TABLE>
The Utility is one of three members of a limited liability company, Alaskan
Choice Television, LLC (ACTV). ACTV has accumulated substantial losses since
inception and is not generating sufficient cash flow to sustain operations.
These factors, among others, indicate that ACTV may be unable to continue as a
going concern for a reasonable period of time. ACTV's continuation as a going
concern is dependent upon its ability to attain additional equity and debt
financing and achieve positive cash flow and profitability. ACTV is in
negotiation with a potential investor who will provide working capital. The
other two members of the limited liability company have agreed to sell their
interests to this investor. ACTV expects to complete this transaction in the
second quarter of 1999. Additionally, ACTV is in discussion with several
financial institutions to provide the necessary debt financing. Pursuant to
Statement of Financial Accounting Standards Board Statement No. 121, "Accounting
for the Impairment of Long-Lived Assets", the Utility assessed the
recoverability of its investment in ACTV during 1998 and adjusted the carrying
value of the investment to its estimated fair value resulting in a noncash
impairment loss of approximately $1,500.
(8) RELATED PARTY TRANSACTIONS
INTRAGOVERNMENTAL CHARGES
Certain general and administrative functions of the Municipality, including
data processing, workers' compensation insurance and medical/dental/life
insurance, are centralized and the related cost is allocated to the various
funds of the Municipality, including the Utility. Such costs allocated to the
Utility totaled $3,187, $3,672, and $3,204 for the years ended December 31,
1998, 1997, and 1996, respectively.
F-51
<PAGE>
j
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(9) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument represents the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced sale or liquidation. Significant differences can arise
between the fair value and carrying amount of financial instruments that are
recognized at historical cost amounts.
The following methods and assumptions were used by the Utility in estimating
fair value disclosures for financial instruments:
Cash, restricted investments, accounts receivable, accounts payable and
accrued liabilities, accrued interest, customer deposits and accrued
employee benefits--The carrying amounts at December 31, 1998 and 1997
approximate the fair values due to the short maturity of these instruments.
Long-term debt--The fair value of the Utility's long-term debt is
estimated by discounting the future cash flows of the various instruments at
rates currently available to the Utility for similar debt instruments of
comparable maturities.
The carrying amount of long-term debt and its estimated fair value at
December 31 are as follows:
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Carrying amount....................................................... $ 153,532 $ 172,847
Fair value............................................................ 161,000 181,000
</TABLE>
(10) BUSINESS SEGMENTS
The Utility has adopted FASB Statement No. 131, DISCLOSURES ABOUT SEGMENTS
OF AN ENTERPRISE AND RELATED INFORMATION. The Utility has three reportable
segments: local telephone, long distance and cellular. The accounting policies
of the segments are the same as those described in the summary of significant
accounting policies. Each reportable segment is a strategic business offering
different services and is managed separately.
F-52
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(10) BUSINESS SEGMENTS (CONTINUED)
The following table illustrates selected financial data for each segment for
the years ended December 31.
<TABLE>
<CAPTION>
LOCAL LONG
1996 TELEPHONE DISTANCE CELLULAR TOTAL
- ----------------------------------------------------------------------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Operating income (loss)................................................ $ 18,536 $ (542) $ 2,483 $ 20,477
Depreciation and amortization.......................................... 18,460 -- 2,036 20,496
Capital expenditures................................................... 22,280 -- 4,992 27,272
Total assets........................................................... 278,354 81 30,375 308,810
1997
- -----------------------------------------------------------------------
Operating income (loss)................................................ $ 17,846 $ (3,218) $ 4,377 $ 19,005
Depreciation and amortization.......................................... 23,712 114 3,013 26,839
Capital expenditures................................................... 28,922 664 6,201 35,787
Total assets........................................................... 287,419 1,757 33,948 323,124
1998
- -----------------------------------------------------------------------
Operating income (loss)................................................ $ 21,145 $ (3,744) $ 5,147 $ 22,548
Depreciation and amortization.......................................... 25,327 164 4,117 29,608
Capital expenditures................................................... 26,751 275 9,431 36,457
Total assets........................................................... 295,810 2,532 51,903 350,245
</TABLE>
(11) COMMITMENTS AND CONTINGENCIES
CONSTRUCTION COMMITMENTS
The Municipal Assembly has approved the Utility's 1999 capital budget of
$29,200.
CONTINGENCIES
The Utility is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of the matters will not have a material adverse effect on the
Utility's financial position or results of operations.
(12) REQUIRED SUPPLEMENTARY INFORMATION--YEAR 2000 (UNAUDITED)
Some of the Utility's older computer programs identify years with two digits
instead of four. This may cause problems because these programs may recognize
the year 2000 as the year 1900. These problems could result in a system failure
or miscalculations disrupting operations, including a temporary inability to
process transactions, send invoices or engage in similar, normal business
activities. In addition, the Utility faces the risk that suppliers of products,
services and systems do not comply with the year 2000 requirements.
While management believes that the conversions or installations of
replacement systems will proceed smoothly, unforeseen interruption or failures
in our systems or in the systems of our vendors
F-53
<PAGE>
MUNICIPALITY OF ANCHORAGE
TELEPHONE UTILITY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
(12) REQUIRED SUPPLEMENTARY INFORMATION--YEAR 2000 (UNAUDITED) (CONTINUED)
may occur. The telecommunications industry is susceptible to the year 2000
issue. Should the year 2000 issue cause problems across our infrastructure,
service could be interrupted.
In order to understand the Utility's vulnerability to the year 2000 issue,
management conducted a complete systems assessment of year 2000 compliance. Many
systems have been represented by the respective vendors of these systems to be
year 2000 compliant and the Utility has initiatives in progress that we believe
will address all outstanding year 2000 issues.
As of January 1, 1999, the Utility completed its installation of SAP, an
integrated financial and accounting system. In March, 1999, the Utility
completed its installation of Saville, a state-of-the-art customer care and
billing system. MACtel and ATULD will continue to operate their existing
financial management and billing systems. Each of the foregoing systems has been
represented by the vendor to be year 2000 compliant.
Since January 1, 1997, the Utility has spent approximately $23 million to
upgrade and maintain its information technology systems. While each of these
upgrades related to systems that, based on representations by the vendors,
management believes are year 2000 compliant, the expenditures for upgrading
these systems also included costs of replacing otherwise obsolete systems. The
Utility expects to spend an additional $4 million to make the information
technology systems year 2000 compliant by the end of the third quarter of 1999.
Given the progress made to date, we do not anticipate delays in finalizing
and implementing year 2000 readiness solutions. The Utility cannot accurately
estimate the uncertainty of completing the year 2000 readiness plan,
particularly as it relates to any failure by third parties that have material
relationships with us and fail to achieve their own year 2000 readiness. Any
failures by these third parties to approximately address their own year 2000
readiness challenges could after our financial condition however, management
believes that its contingency planning will minimize such impacts.
(13) BASIS OF PRESENTATION FOR UNAUDITED QUARTERLY INFORMATION
The accompanying unaudited financial information at March 31, 1999 and for
the three months ended March 31, 1998 and 1999 have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the full
fiscal year or for any future period.
F-54
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("DGCL") provides that a
corporation has the power to indemnify its officers, directors, employees and
agents (or persons serving in such positions in another entity at the request of
the corporation) against expenses, including attorneys' fees, judgments, fines
or settlement amounts actually and reasonably incurred by them in connection
with the defense of any action by reason of being or having been directors or
officers, if such person shall have acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation (and, with respect to any criminal action, had no reasonable cause
to believe the person's conduct was unlawful), except that if such action shall
be by or in the right of the corporation, no such indemnification shall be
provided as to any claim, issue or matter as to which such person shall have
been judged to have been liable to the corporation unless and to the extent that
the Court of Chancery of the State of Delaware, or another court in which the
suit was brought, shall determine upon application that, in view of all of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity. The Registrant's Certificate of Incorporation provides that the
Registrant will indemnify its officers and directors to the fullest extent
permitted by Delaware law.
As permitted by Section 102 of the DGCL, the Registrant's Certificate of
Incorporation provides that no director shall be liable to the Registrant or its
stockholders for monetary damages for any breach of fiduciary duty as a director
other than (i) for breaches of the director's duty of loyalty to the Registrant
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) for the
unlawful payment of dividends or unlawful stock purchases or redemptions under
Section 174 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<C> <S>
(a) Exhibits:
2.1 Purchase Agreement, dated as of August 14, 1998, as amended, by and among ALEC
Acquisition Sub Corp., CenturyTel of the Northwest, Inc. and CenturtyTel Wireless,
Inc.
2.2 Asset Purchase Agreement, dated as of October 20, 1998, by and between Alaska
Communications Systems, Inc. and the Municipality of Anchorage.
3.1 Certificate of Incorporation of the Registrant.
3.2 By-Laws of the Registrant.
3.3 Certificate of Incorporation of Alaska Communications Systems Holdings, Inc.
3.4 By-Laws of Alaska Communications Systems Holdings, Inc.
3.5 Certificate of Incorporation of ALEC Acquisition Sub Corp.
3.6 By-Laws of ALEC Acquisition Sub Corp.
3.7 Certificate of Incorporation of Alaska Communication Systems, Inc.
3.8 By-Laws of Alaska Communications Systems, Inc.
3.9 Certificate of Incorporation of Telephone Utilities of the Northland, Inc.
3.10 By-Laws of Telephone Utilities of the Northland, Inc.
3.11 Certificate of Incorporation of Telephone Utilities of Alaska, Inc.
3.12 By-Laws of Telephone Utilities of Alaska, Inc.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
3.13 Certificate of Incorporation of Pacific Telecom Cellular of Alaska, Inc.
3.14 By-Laws of Pacific Telecom Cellular of Alaska, Inc.
3.15 Certificate of Incorporation of Pacific Telecom of Alaska PCS, Inc.
3.16 By-Laws of Pacific Telecom of Alaska PCS, Inc.
3.17 Certificate of Incorporation of PTI Communications of Alaska, Inc.
3.18 By-Laws of PTI Communications of Alaska, Inc.
3.19 Certificate of Incorporation of MACtel, Inc.
3.20 By-Laws of MACtel, Inc.
3.21 Certificate of Incorporation of MACtel License Sub, Inc.
3.22 By-Laws of MACtel License Sub, Inc.
3.23 Certificate of Incorporation of MACtel Fairbanks, Inc.
3.24 By-Laws of MACtel Fairbanks, Inc.
3.25 Certificate of Incorporation of MACtel Fairbanks License Sub, Inc.
3.26 By-Laws of MACtel Fairbanks License Sub, Inc.
3.27 Certificate of Incorporation of Prudhoe Communications, Inc.
3.28 By-Laws of Prudhoe Communications, Inc.
3.29 Certificate of Incorporation of ATU Communications, Inc.
3.30 By-Laws of ATU Communications, Inc.
3.31 Certificate of Incorporation of ATU Long Distance, Inc.
3.32 By-Laws of ATU Long Distance, Inc.
3.33 Certificate of Incorporation of Peninsula Cellular Services, Inc.
3.34 By-Laws of Peninsula Cellular Services, Inc.
3.35 Certificate of Incorporation of PTINet, Inc.
3.36 By-Laws of PTINet, Inc.
4.1 Indenture, dated as of May 14, 1999, by and among Alaska Communications Systems
Holdings, Inc., the Guarantors (as defined therein) and IBJ Whitehall Bank & Trust
Company.
4.2 Purchase Agreement, dated as of May 11, 1999, by and among Alaska Communications
Systems Holdings, Inc., the Guarantors, Chase Securities Inc., CIBC World Markets
Corp. and Credit Suisse First Boston Corporation.
4.3 Indenture, dated as of May 14, 1999, by and between the Registrant and The Bank of
New York.
4.4 Purchase Agreement, dated as of May 11, 1999, by and among the Registrant, DLJ
Investment Partners, L.P., DLJ Investment Funding, Inc. and DLJ ESC II, L.P.
5.1 Opinion of Wachtell, Lipton, Rosen & Katz (including consent).
10.1 Exchange and Registration Rights Agreement, dated as of May 14, 1999, by and among
Alaska Communications Systems Holdings, Inc., the Guarantors, Chase Securities Inc.,
CIBC World Markets Corp. and Credit Suisse First Boston Corporation.
10.2 Exchange and Registration Rights Agreement, dated as of May 14, 1999, by and among
the Registrant, DLJ Investment Partners, L.P., DLJ Investment Funding, Inc. and DLJ
ESC II L.P.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.3 Credit Agreement, dated as of May 14, 1999, by and among Alaska Communications
Systems Holdings, Inc., the Registrant, the financial institutions Lenders party
thereto, The Chase Manhattan Bank, Credit Suisse First Boston and Canadian Imperial
Bank of Commerce.
10.4 Stockholders' Agreement, dated as of May 14, 1999, by and among the Registrant and
the Investors listed on the signature pages thereto.
10.5 Employment Agreement, dated as of March 12, 1999, by and among Alaska Communications
Systems Holdings, Inc., the Registrant and Charles E. Robinson.
10.6 Employment Agreement, dated as of March 12, 1999, by and among Alaska Communications
Systems Holdings, Inc., the Registrant and Wesley E. Carson.
10.7 Employment Agreement, dated as of April 19, 1999, by and among Alaska Communications
Systems Holdings, Inc., the Registrant and Michael E. Holmstrom.
10.8 ALEC Holdings, Inc. 1999 Stock Incentive Plan.
12.1 Statements re computation of ratios.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Deloitte & Touche LLP relating to the audited financial statements of
ALEC Holdings, Inc. as of March 31, 1999.
23.2 Consent of Deloitte & Touche LLP relating to the audited financial statements of
Alaska Communications Systems Holdings, Inc. as of December 31, 1998 and for the
period from June 16, 1998 (date of inception) through December 31, 1998 (included in
Exhibit No. 23.1).
23.3 Consent of KPMG LLP relating to the audited combined financial statements of
CenturyTel's Alaska Properties as of December 31, 1998 and for the year then ended.
23.4 Consent of Deloitte & Touche LLP relating to the audited financial statements of
Telephone Fund of Fairbanks Municipal Utilities Services as of October 6, 1997 and
for the period ended October 6, 1997 and the year ended December 31, 1996 (included
in Exhibit No. 23.1).
23.5 Consent of KPMG LLP relating to the audited financial statements of Municipality of
Anchorage Telephone Utility Fund as of December 31, 1997 and 1998 and for each of
the years in the three-year period ended December 31, 1998.
23.6 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit No. 5.1).
24.1 Powers of Attorney (included in signature pages to Registration Statement).
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 of The Bank of New
York under the Trust Indenture Act of 1939.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal for the 13% Senior Discount Debentures due 2011.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Guidelines for Certification of Taxpayer Identification Number on Substitute Form
W-9.
99.4 Form of Institutions Letter.
99.5 Form of Client Letter.
(b) Financial Statement Schedule.
</TABLE>
II-3
<PAGE>
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change in such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in the documents filed
subsequent to the effective date of the Registration Statement through the date
of responding to the request.
(d) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Municipality of Anchorage, State
of Alaska, on July 7, 1999.
ALEC HOLDINGS, INC.
By: /s/ MICHAEL E. HOLMSTROM
-----------------------------------------
Michael E. Holmstrom
Senior Vice President and
Chief Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Charles E. Robinson, Wesley E. Carson and Michael
E. Holmstrom, and each of them, his attorney-in-fact with power of substitution
for him in any and all capacities, to sign any amendments, supplements,
subsequent registration statements relating to the offering to which this
Registration Statement relates, or other instruments he deems necessary or
appropriate, and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorney-in-fact or his substitute may do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ CHARLES E. ROBINSON Chairman of the Board,
- ------------------------------ President and Chief July 7, 1999
Charles E. Robinson Executive Officer
/s/ MICHAEL E. HOLMSTROM Senior Vice President and
- ------------------------------ Chief Financial Officer July 7, 1999
Michael E. Holmstrom
/s/ WESLEY E. CARSON Executive Vice President
- ------------------------------ and Assistant Secretary July 7, 1999
Wesley E. Carson
/s/ DONN T. WONNELL Executive Vice President,
- ------------------------------ General Counsel and July 7, 1999
Donn T. Wonnell Secretary
/s/ DEAN A. RYLAND Vice President, Controller
- ------------------------------ and Assistant Treasurer July 7, 1999
Dean A. Ryland
/s/ SAUL A. FOX Director
- ------------------------------ July 7, 1999
Saul A. Fox
/s/ W. DEXTER PAINE, III Director
- ------------------------------ July 7, 1999
W. Dexter Paine, III
/s/ J. RUSSELL TRIEDMAN Director
- ------------------------------ July 7, 1999
J. Russell Triedman
II-5
<PAGE>
Exhibit 2.1
EXECUTION COPY
STRICTLY CONFIDENTIAL
PURCHASE AGREEMENT
BY AND AMONG
ALEC ACQUISITION CORPORATION,
CENTURYTEL OF THE NORTHWEST, INC.
AND
CENTURYTEL WIRELESS, INC.
DATED AUGUST 14, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1 DEFINITIONS................................................ 2
1.1 Defined Terms.............................................. 2
1.2 Singular and Plural........................................ 7
1.3 Capitalized Terms.......................................... 7
SECTION 2 SALE OF PROPERTIES......................................... 7
2.1 Purchase and Sale.......................................... 7
2.2 Purchase Price; Adjustments................................ 7
2.3 Signing and Closing........................................ 12
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLERS.................. 12
3.1 Organization and Qualification of Sellers.................. 12
3.2 Authorization of Agreement................................. 12
3.3 Alaska Entities............................................ 13
3.4 Organization and Qualification of the Alaska Entities...... 13
3.5 Capital Stock and Equity Interests......................... 13
3.6 Organizational Documents................................... 14
3.7 Financial Statements....................................... 14
3.8 Absence of Material Changes................................ 15
3.9 Indebtedness............................................... 18
3.10 Litigation and Claims...................................... 19
3.11 Title to Property and Leases............................... 19
3.12 Sufficiency and Condition of Assets........................ 21
3.13 Insurance.................................................. 22
3.14 Contracts.................................................. 22
3.15 No Violation............................................... 23
3.16 Undisclosed Liabilities.................................... 24
3.17 Compliance with Laws, Permits.............................. 24
3.18 ERISA...................................................... 25
3.19 Environmental Matters...................................... 30
3.20 Employees.................................................. 33
3.21 Tax Matters................................................ 34
3.22 No Finder.................................................. 36
3.23 Labor Relations............................................ 36
3.24 Rights to Trade Name....................................... 37
3.25 Books and Records.......................................... 38
3.26 Intellectual Properties.................................... 38
3.27 Affiliate Transactions..................................... 40
3.28 Telephone Operations....................................... 40
3.29 Alaska Division Headquarters Relocation Costs.............. 41
<PAGE>
Page
----
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER.................... 41
4.1 Organization of Buyer...................................... 41
4.2 Authorization of Agreement................................. 41
4.3 No Violation............................................... 42
4.4 Financing Commitments...................................... 42
4.5 Due Diligence.............................................. 43
4.6 Incorporation.............................................. 43
4.7 Buyer's Management......................................... 43
SECTION 5 CONDUCT PENDING CLOSING.................................... 44
5.1 HSR, FCC and APUC Approvals................................ 44
5.2 Other Consents............................................. 45
5.3 Conduct of Business Prior to the Closing Date.............. 45
5.4 Notification of Certain Matters............................ 49
5.5 Notice of Litigation....................................... 50
5.6 Access to Information...................................... 51
5.7 Maintenance of Financing Commitments....................... 51
5.8 Consulting Agreement....................................... 52
SECTION 6 ADDITIONAL AGREEMENTS...................................... 52
6.1 Public Announcements....................................... 52
6.2 Indemnification by Sellers................................. 53
6.3 Indemnification by Buyer................................... 61
6.4 Sellers Covenant Not to Compete............................ 65
6.5 Employment Matters......................................... 66
6.6 Multiemployer Plans........................................ 68
6.7 License of Tradenames...................................... 69
6.8 Transition Services........................................ 69
6.9 Nonsolicitation and No Hire................................ 70
6.10 Support Software........................................... 70
6.11 Remediation................................................ 70
6.12 Advances to Alaska Entities................................ 71
6.13 Severance Pay for Alaska Entities Employees................ 71
6.14 Ancillary Agreements....................................... 71
6.15 Intercompany Accounts...................................... 72
SECTION 7 COVENANTS WITH RESPECT TO TAXES............................ 73
7.1 Tax Sharing Agreements..................................... 73
7.2 Returns for Periods Through the Closing Date............... 73
7.3 Audits..................................................... 74
7.4 Section 338(h)(10) Election................................ 75
7.5 Taxes Other Than Income Taxes.............................. 75
7.6 Allocation Among Periods................................... 76
7.7 Cooperation on Tax Matters................................. 77
7.8 Contests................................................... 78
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7.9 Resolution of Disagreements Between Parent, CWI or CNI
and Buyer.................................................. 79
7.10 Allocation of Purchase Price............................... 79
SECTION 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER............... 80
8.1 Representations and Warranties............................. 80
8.2 Covenants.................................................. 81
8.3 Material Adverse Effect.................................... 81
8.4 Certificates............................................... 82
8.5 Certified Copy of Charter, Resolutions, etc. .............. 82
8.6 Opinion of Counsel for Sellers............................. 82
8.7 Consents and Approvals..................................... 83
8.8 Prohibitions............................................... 83
8.9 Resignations............................................... 83
8.10 Stock Certificates; Closing Documents...................... 84
8.11 Ancillary Agreements....................................... 84
8.12 Outstanding Indebtedness................................... 84
8.13 FIRPTA Affidavit........................................... 84
8.14 Intercompany Accounts...................................... 84
SECTION 9 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS............. 85
9.1 Representations and Warranties............................. 85
9.2 Covenants.................................................. 85
9.3 Certificate................................................ 85
9.4 Certified Copy of Resolutions.............................. 86
9.5 Opinion of Counsel for Buyer............................... 86
9.6 Consents and Approvals..................................... 86
9.7 Prohibitions............................................... 87
9.8 Closing Documents.......................................... 87
SECTION 10 CLOSING DOCUMENTS.......................................... 87
10.1 By Sellers................................................. 87
10.2 By Buyer................................................... 88
SECTION 11 TERMINATION................................................ 88
11.1 Right of Termination....................................... 88
11.2 Effect of Termination...................................... 90
SECTION 12 MISCELLANEOUS.............................................. 90
12.1 Fees and Expenses.......................................... 90
12.2 Rights of Third Parties.................................... 90
12.3 Confidential Information................................... 91
12.4 Waiver..................................................... 92
12.5 Specific Performance....................................... 92
12.6 Entirety of Agreement...................................... 92
12.7 Prohibited Negotiations.................................... 93
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12.8 Survival................................................... 93
12.9 Arbitration................................................ 94
12.10 Attorney Fees.............................................. 94
12.11 Notices.................................................... 94
12.12 Amendment.................................................. 96
12.13 Further Assurances......................................... 96
12.14 Governing Law.............................................. 97
12.15 Counterparts............................................... 97
12.16 Binding Effect; Assignment................................. 97
12.17 Meanings of Pronouns, Singular and Plural Words............ 98
12.18 Headings................................................... 98
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PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is made and entered into as of
the 14th day of August, 1998, by and among ALEC Acquisition Corporation, a
Delaware corporation ("Buyer"), and CenturyTel of the Northwest, Inc., f/k/a
Pacific Telecom, Inc., a Washington corporation ("CNI") and CenturyTel Wireless,
Inc., f/k/a Century Cellunet, Inc., a Louisiana corporation ("CWI"), with CNI's
and CWI's offices at 100 Century Park Drive, Monroe, Louisiana, 71203. CNI and
CWI are sometimes hereinafter referred to individually as "Seller" or
collectively as "Sellers".
WITNESSETH:
WHEREAS, Century Telephone Enterprises, Inc., a Louisiana corporation
("Parent"), owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of CNI and CWI, and CNI and CWI own all of the issued
and outstanding shares of capital stock of Telephone Utilities of Alaska Inc.,
Telephone Utilities of the Northland, Inc., PTI Communications of Alaska, Inc.,
Pacific Telecom Cellular of Alaska, Inc. and Pacific Telecom of Alaska PCS, Inc.
(collectively the "Alaska Entities");
WHEREAS, Sellers desire to sell and Buyer desires to purchase all of the
issued and outstanding shares of capital stock of the Alaska Entities (the
"Purchase Transactions");
WHEREAS, the Boards of Directors of CNI, CWI and Buyer have determined
that this Agreement is in the best interest of their respective corporations and
shareholders.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein the parties hereto agree
as follows:
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SECTION 1
DEFINITIONS
1.1 Defined Terms. For all purposes of this Agreement, except as otherwise
expressly provided herein, terms defined above in the preamble and recitals
shall have the meanings set forth therein and the following terms shall have the
meanings set forth below:
"Affiliate" means (unless otherwise provided herein), with respect
to any Person, any other Person that, directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common
control with, such Person.
"Affiliated Group" means any affiliated group within the meaning of
Section 1504(a) of the Code or any similar group defined under a similar
provision of state, local or foreign law.
"Alaska Entity" or "Alaska Entities" means, individually, any one
of, or collectively, all of, the following corporations listed below:
Telephone Utilities of Alaska, Inc.
Telephone Utilities of the Northland, Inc.
PTI Communications of Alaska, Inc. ("PTIC")
Pacific Telecom Cellular of Alaska, Inc. ("PTC") and its
wholly-owned subsidiary:
Pacific Telecom Cellular of Alaska RSA #1, Inc.
Pacific Telecom of Alaska PCS, Inc.
"Alaska Entity Employee" means any employee actively employed by the
Alaska Entities as of the Closing Date and shall not include any employee
of an Alaska Entity who is retired or who is on long-term disability leave
on the Closing Date.
"Alaska PCS Licenses" means, individually, any one of, or
collectively, all of, the following PCS Licenses:
BTA NAME
--- ----
B014 Anchorage, Alaska
B136 Fairbanks, Alaska
B221 Juneau-Ketchikan, Alaska
"Alaska Stock" means all of the issued and outstanding capital stock
of the Alaska Entities.
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"Alaska Telco Entity" or "Alaska Telco Entities" means,
individually, any one of, or collectively, all of, the following
corporations:
Telephone Utilities of Alaska, Inc.
Telephone Utilities of the Northland, Inc.
PTI Communications of Alaska, Inc.
"Applicable Law" means any federal, state, or local (domestic or
foreign) statute, law, rule, regulation or ordinance or any judgment,
order, writ, injunction or decree of any Governmental Entity to which a
specified Person or property is subject.
"APUC" means the Alaska Public Utilities Commission.
"APUC Licenses" means all licenses, permits, franchises,
certificates, consents, approvals and other authorizations issued by the
APUC, and all applications therefor, together with any renewals,
extensions or modifications thereof and additions thereto.
"Basic Trading Area" or "BTA" shall mean a service area designated
as such in the Broadband PCS Reconsideration Order issued by the FCC.
"Budget" shall mean the approved 1998 capital expenditures and
operating budget of the Alaska Entities attached hereto as Schedule 1.1.
"Business" shall mean the operations and businesses of the Alaska
Entities conducted in the State of Alaska, including, without limitation,
the provision of local exchange telephone services, Cellular Service, PCS
(including any services or operations related to the Alaska PCS Licenses),
or any other services in Alaska, as conducted since December 1, 1997,
taken as a whole.
"Cellular Service" means the provision of cellular radio telephone
service pursuant to authority granted by the FCC under the Communications
Act and the regulations promulgated thereunder.
"Closing" means the closing of the transactions contemplated by this
Agreement, to be scheduled and held in accordance with Section 2.3.
"Closing Date" means the date on which the Closing occurs, as
determined in accordance with Section 2.3.
"Closing Instruments" means, with respect to any Party hereto, all
of the agreements, certificates, resignations, acknowledgments, releases,
documents and other instruments to be delivered by such Party at or prior
to the Closing, pursuant to Sections 8, 9 or 10.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Combined Intercompany Receivable" means the net amount owed by the
Sellers and their Affiliates to the Alaska Entities, on a combined basis,
netting all amounts that are Intercompany Accounts, as of August 31, 1998.
"Communications Act" shall mean the Communications Act of 1934, as
amended, including the Telecommunications Act of 1996.
"Contract(s)" means, with respect to any specified Person, any
written or oral, contract, agreement, lease, or commitment to which such
Person or its properties are legally bound, or under which such Person is
legally obligated, whether on an absolute or contingent basis.
"DOJ" means the U.S. Department of Justice.
"Employee Benefit Plan" means each plan or agreement that any Alaska
Entity maintains, administers, participates in, contributes to, or has any
absolute or continent liability with respect to, or under which any
employees of an Alaska Entity participate or benefit, that is (i) an
"employee welfare benefit plan," as defined in Section 3(l) of ERISA
("Employee Welfare Benefit Plan"), (ii) an "employee pension benefit
plan," as defined in Section 3(2) of ERISA, but excluding, any
"multiemployer plans" ("Employee Pension Benefit Plan"), (iii) a
"multiemployer plan," as defined in Section 4001(a)(3) and 3(37) of ERISA
("Multiemployer Plan"), (iv) a voluntary employees' beneficiary
association and related trusts ("VEBA") or (v) a retirement or deferred
compensation plan, incentive compensation plan, profit sharing plan, stock
purchase plan, stock option plan, stock appreciation plan, restricted
stock, unemployment compensation plan, chance in control plan, vacation
pay, sick pay, death benefit, severance pay, bonus or benefit arrangement,
medical, medical reimbursement, post retirement health, dental,
disability, insurance or hospitalization program or benefit or any other
fringe benefit arrangement for any director, officer, employee, consultant
or agent, whether active or retired, and whether pursuant to contract,
plan or any other legally binding arrangement, custom or understanding,
that does not constitute an Employee Welfare Benefit Plan, Employee
Pension Benefit Plan, Multiemployer Plan or VEBA.
"Encumbrances" means any and all liens, charges, pledges, options,
mortgages, rights of refusal, deeds of trust, security interests, claims,
transfer restrictions, easements, title defects, and other restrictions or
encumbrances of every type and description, whether choate or inchoate and
whether imposed by law, contract or otherwise of any kind whatsoever.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"FCC" means the Federal Communications Commission.
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"FCC Licenses" means all licenses, permits, franchises,
certificates, consents, approvals and other authorizations issued by the
FCC (including the Alaska PCS Licenses), and all applications therefor,
together with any renewals, extensions or modifications thereof and
additions thereto.
"FTC" means the Federal Trade Commission.
"GAAP" means United States generally accepted accounting principles
applied on a basis consistent with prior accounting periods.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any public, governmental,
legislative or regulatory body, agency, department, commission, board,
bureau, or other authority or instrumentality (domestic or foreign),
including but not limited to the DOJ, FCC, FTC, IRS or the APUC.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indebtedness" means all debt obligations (whether for principal,
interest, premium, fees or otherwise and whether classified as current or
long-term) for or arising under (i) borrowed money (including all notes
payable and all obligations evidenced by bonds, debentures, notes or other
similar instruments) or purchase money indebtedness; (ii) all
reimbursement obligations under letters of credit, bankers' acceptances
and similar instruments (whether or not matured) (iii) all obligations
under conditional sale or other title retention agreements relating to
property purchased, (iv) any sale-leaseback obligations or lease
obligations that would be required to be capitalized in accordance with
GAAP or (v) any guarantee or assumption of any of the foregoing, in
clauses (i) through (iv) or guaranty to maintain minimum equity or capital
in any Person or any similar obligation.
"IRS" means the Internal Revenue Service.
"Knowledge" means, with respect to any Seller, actual knowledge of
W. Bruce Hanks, R. Stewart Ewing, Jr., David D. Cole, Kenneth R. Cole,
Nick Bowman, Calvin Simshaw, Murray Greer, Mary Cunningham, Chris Watkins
and Gary Perleberg.
"Losses" shall have the meaning given it in Section 6.2.
"Material" means material to the Alaska Entities, taken as a whole.
"Material Adverse Effect" means any effect that is materially
adverse to the business, assets, properties, financial condition or
results of operations of the Alaska Entities, taken as a whole.
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"Material Contract" means any Contract of the type described in the
first sentence of Section 3.14 or any other Contract the termination of
which would be reasonably likely to have a Material Adverse Effect.
"Material Indebtedness" means Indebtedness in excess of $500,000 and
including all indebtedness incurred or assumed pursuant to the
Consolidating Telephone Loan Contract, dated as of June 1, 1987, between
Telephone Utilities of the Northland, Inc., United States of America and
Rural Telephone Bank, as amended, modified or supplemented to date.
"Net Working Capital" means current assets minus current
liabilities, in each case, determined in accordance with GAAP on a
combined basis, but shall exclude all intercompany payables, intercompany
receivables and other intercompany accounts (collectively, the
"Intercompany Accounts") between any Alaska Entity, on the one hand, and
Sellers or any Affiliate of Sellers (other than the Alaska Entities), on
the other hand. For the purposes of this definition, current income Taxes
payable are not to be included as Intercompany Account.
"Party" or "Parties" means, individually, CNI, CWI or Buyer and,
collectively, CNI, CWI and Buyer.
"PCS" or "Broadband PCS" means the provision of personal
communications services in the 2GHz band, pursuant to authority granted by
the FCC under the Communications Act and the regulations promulgated
thereunder.
"PCS License" or "Broadband PCS License" shall mean an E Block
Broadband 10 MHz PCS Permit granted by the FCC to construct and/or operate
a telecommunications system to provide PCS in a particular Basic Trading
Area.
"Permits" mean permits, licenses, franchises, certificates,
consents, approvals, and other authorizations issued or granted by
Governmental Entities, including all FCC Licenses, all APUC Licenses and
all such other authorizations issued or granted by the FCC or the APUC.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
enterprise, unincorporated organization, Governmental Entity, or other
entity.
"Proceedings" means any and all actions, suits, hearings,
investigations or other proceedings by or before any arbitrator, court or
Governmental Entity.
"Purchase Price" shall have the meaning given to it in Section
2.2(a) hereof.
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"Subsidiary" means, with respect to any entity, any corporation at
least 50% of whose outstanding voting securities are owned, directly or
indirectly, by such entity or any partnership, joint venture or other
entity at least 50% of whose total equity interest is directly or
indirectly owned by such entity.
"Tax(es)" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes
under Code Sec. 59A), customs, duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, hearing impaired, 911 surcharge,
estimated, or other tax or levy, including any interest, penalty, or
addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
1.2 Singular and Plural. Defined terms in this Agreement shall also mean
in the singular number the plural, and in the plural number the singular.
1.3 Capitalized Terms. In addition to such terms as are defined in the
preamble and recitals to this Agreement and in Section 1.1, any other
capitalized term appearing herein shall have the meaning ascribed to it in the
Section in which it is defined.
SECTION 2
SALE OF PROPERTIES
2.1 Purchase and Sale. Subject to the terms and conditions hereof, and in
reliance upon the representations, warranties, covenants and agreements herein,
at the Closing, Sellers agree to sell and deliver to Buyer and Buyer agrees to
purchase, accept and pay for, all of Sellers' right, title and interest in and
to the Alaska Stock, free and clear of all Encumbrances.
2.2 Purchase Price; Adjustments.
(a) As consideration for the Alaska Stock, Buyer will pay to Sellers
the sum of $415,000,000 (the "Purchase Price"), adjusted pursuant to
Section 2.2(b) below.
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(b) The Purchase Price shall be adjusted (i) upwards or downwards,
on a dollar-for-dollar basis by the amount that Net Working Capital of the
Alaska Entities as of August 31, 1998 is either a positive or negative
number, respectively; (ii) downwards, on a dollar-for-dollar basis by an
amount equal to the amount of all long-term liabilities as of August 31,
1998 (excluding the current portion of long-term Indebtedness) of the
Alaska Entities; (iii) upwards or downwards, on a dollar-for-dollar basis,
by the amount that actual capital expenditures of the Alaska Entities have
been greater or less than $18,199,000, in the aggregate, from January 1,
1998 until August 31, 1998; (iv) downwards, on a dollar-for-dollar basis,
by the aggregate amount of dividends paid by the Alaska Entities to
Sellers pursuant to Section 2.2(c); (v) upwards, on a dollar-for-dollar
basis by the amount of Advances (as defined below) that Sellers make to
the Alaska Entities from August 31, 1998 until the Closing that have not
been repaid prior to the Closing; (vi) upwards, on a dollar for dollar
basis, by an amount equal to $33,333.00 per day for each day from August
31, 1998 through the day prior to the Closing Date; and (vii) upwards, on
a dollar-for-dollar basis, by the Estimated Income Tax Amount (as defined
in Section 7.2) (the aggregate net amount of the adjustments pursuant to
subsections (i)-(iii) above being referred to as the "Adjustment Amount"
and the aggregate net amount of the adjustments pursuant to (iv)-(vii)
being the "Additional Amount").
(c) In the event the Net Working Capital of the Alaska Entities at
August 31, 1998 exceeds $2,000,000, Sellers and Buyer will cooperate to
allow the Alaska Entities to pay cash dividends to Sellers between
September 1, 1998 and the Closing Date
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(without any negative tax impact on the Alaska Entities or Buyer) equal to
the amount by which Net Working Capital as of August 31, 1998 exceeds
$2,000,000.
(d) On the Closing Date, Buyer shall pay to Sellers, by wire
transfer(s) of immediately available funds to the account(s) specified by
Sellers:
(i) in the event that, on or prior to the Closing Date, the
Adjustment Amount has been finally and conclusively determined
pursuant to this Section 2.2, the Purchase Price, as adjusted by the
Adjustment Amount and the Additional Amount, or
(ii) in the event that, as of the Closing Date, the Adjustment
Amount has not been finally and conclusively determined pursuant to
this Section 2.2, the Purchase Price as adjusted by the Additional
Amount and as adjusted by the Estimated Adjustment Amount (as
defined below); provided that, within five (5) business days of any
final, binding, and conclusive determination of the Adjustment
Amount (whether through non-objection, agreement, or otherwise),
Buyer and Sellers shall recalculate the Purchase Price adjusted by
the Adjustment Amount and the Additional Amount. If the Adjustment
Amount is less than the Estimated Adjustment Amount, Sellers shall
promptly pay to Buyer such difference (without interest). If, on the
other hand, the Adjustment Amount is more than the Estimated
Adjustment Amount, then Buyer shall promptly pay the amount of such
excess (without interest) to Sellers.
(e) As soon as practicable, but in no event later than November 30,
1998, Sellers shall prepare a combined balance sheet of the Alaska
Entities as of August 31, 1998 (including the notes thereto, the "Signing
Date
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Balance Sheet"). The Signing Date Balance Sheet shall be prepared in
accordance with GAAP and shall be accompanied by a special report of KPMG
Peat Marwick ("KPMG"), Seller's independent public accountants, resulting
from agreed-upon procedures performed pertinent to the individual
components of Net Working Capital (the "Special Report"). Buyer and
Sellers agree to work together in specifying the agreed-upon procedures to
be performed by KPMG no later than September 15, 1998. Sellers shall also
prepare a certificate (the "Calculation Certificate") setting forth the
amount (and the underlying calculation thereof) estimated to be the
Adjustment Amount (the "Estimated Adjustment Amount"). Sellers shall
deliver copies of the Signing Date Balance Sheet, Special Report and the
Calculation Certificate to Buyer promptly after they have been prepared.
Upon receipt of the Signing Date Balance Sheet, Special Report and
Calculation Certificate, Buyer shall have thirty (30) days to notify
Sellers in writing of any objections that they may have to such
Calculation Certificate. If no written objection is delivered by Buyer to
Sellers within such thirty (30) day period, the Calculation Certificate
shall conclusively be deemed to have been agreed upon by the Parties and
shall be final, binding and conclusive with respect to all Parties hereto,
and shall not be subject to review, absent manifest error. If, on the
other hand, Buyer gives timely notice of their objections to the
Calculation Certificate, Sellers and Buyer shall attempt to resolve any
disputed matters by negotiating in good faith and attempting to agree in
writing as to the Adjustment Amount. If Sellers and Buyer are unable to
agree within fifteen (15) days from the date of delivery of Buyer's
written objection, then Buyer and Sellers shall submit any disputed
matters to a nationally recognized accounting firm mutually acceptable to
both Buyer and Sellers (which shall not be any certified public accounting
firm retained within the past two (2) years by either Buyer (or its
majority shareholder), or Sellers to audit their respective financial
statements). If Buyer and Sellers are unable to agree on a nationally
recognized accounting firm within ten (10) days following the expiration
of such fifteen (15) day period, then Sellers on the one hand and Buyer on
the other shall each select a nationally recognized accounting firm (which
shall not be any certified public accounting firm retained
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within the past two (2) years by either Buyer (or its majority
shareholder) or Sellers to audit their respective financial statements),
and the two firms selected shall together select a third nationally
recognized accounting firm (which shall not be any certified public
accounting firm retained within the past two (2) years by either Buyer or
Sellers to audit their respective financial statements), to resolve the
dispute. If the two accounting firms selected by the Parties are unable to
agree within thirty (30) days on a third accounting firm to resolve the
dispute, then either Buyer or Sellers may commence court proceedings to
name a nationally recognized accounting firm (which shall not be any
certified public accounting firm retained within the past two (2) years by
either Buyer or Sellers to audit their respective financial statements),
to resolve the dispute. The accounting firm selected hereunder to resolve
the dispute shall make a final determination as soon as reasonably
practicable of the actual amount of the disputed matters, which will be
provided in writing to each Party, and its resolution shall be final,
conclusive and binding, on all Parties to this Agreement and shall not be
subject to judicial review. Each of the Parties agrees to execute, if
necessary, a reasonable engagement letter with the accounting firm
selected to resolve the dispute. All fees, costs, and expenses of the
accounting firms selected pursuant to
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this Section shall be borne equally by Buyer, on the one hand, and
Sellers, on the other hand.
2.3 Signing and Closing. The signing of this Agreement will take place at
the offices of Boles, Boles & Ryan in Monroe, Louisiana. The Closing of the
transactions contemplated herein will take place at the offices of Wachtell,
Lipton, Rosen & Katz in New York, New York beginning at 10:00 a.m. local time on
the first business day of the month following the month in which the
satisfaction or waiver of all conditions to the obligations of the Parties set
forth in Sections 8.7 and 9.6 occurs, or, if not then satisfied, as soon
thereafter as all other conditions in Sections 8 and 9 have been satisfied or
waived. The date on which the Closing occurs shall be known as the "Closing
Date".
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
For the purpose of inducing Buyer to enter into this Agreement, Sellers
hereby make the following representations and warranties to Buyer.
3.1 Organization and Qualification of Sellers. CNI is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Washington. CWI is a corporation duly incorporated, validly existing, and in
good standing under the laws of the State of Louisiana. Each Seller possesses
full corporate power and authority to carry on the business in which it is
presently engaged, to own, lease and operate its properties and to enter into
and perform its obligations under this Agreement.
3.2 Authorization of Agreement. The respective Boards of Directors of
Parent and each Seller have duly approved and authorized the execution and
delivery of this Agreement and the consummation of the Purchase Transactions,
and no other corporate proceedings on the
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part of Parent or any Seller are necessary to approve or authorize the execution
and delivery of this Agreement by Sellers or the consummation by Sellers of the
Purchase Transactions. Assuming due execution, delivery and performance of this
Agreement by Buyer, this Agreement constitutes a valid and legally binding
obligation of each Seller, enforceable in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application relating to or affecting creditors' rights
and the application of equitable principles in any action, legal or equitable.
3.3 Alaska Entities. Schedule 3.3 sets forth a listing of each of the
Alaska Entities, their respective jurisdictions of incorporation and each
Seller's equity interest therein.
3.4 Organization and Qualification of the Alaska Entities. Except as
disclosed on Schedule 3.4, each of the Alaska Entities is duly incorporated and
validly existing and in good standing (to the extent such jurisdictions provide
evidence of good standing) under the laws of the jurisdiction of its
incorporation. Each Alaska Entity possesses full corporate power and authority
to carry on the business in which it is presently engaged and to own, lease and
operate its properties. Except as disclosed on Schedule 3.4 no Alaska Entity has
failed to qualify as a foreign corporation in any state or jurisdiction where
the nature of its activities or the character or location of its properties
requires such qualification.
3.5 Capital Stock and Equity Interests. The Alaska Entities each have an
authorized capitalization and the number of issued and outstanding shares as set
forth on Schedule 3.5 hereto. All of the issued and outstanding shares of Alaska
Stock are owned, directly or indirectly, by either CNI or CWI, as listed on
Schedule 3.5, have been duly authorized and are duly and validly issued and
outstanding, fully paid and nonassessable, and are owned of record and
beneficially by either CNI or CWI, except as indicated on Schedule
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3.5, free and clear of any and all Encumbrances. There are no outstanding
options, warrants or other rights of any nature providing for the purchase,
issuance or sale of any stock of any of the Alaska Entities, and there are no
outstanding securities or debt obligations of any of the Alaska Entities or
any of the Sellers convertible into or exchangeable for shares of capital
stock or equity interests of any of Alaska Entities. Upon the consummation of
the transactions contemplated hereby, Buyer will acquire direct lawful title
to all of the stock of the Alaska Entities, free and clear of all
Encumbrances of any kind whatsoever.
3.6 Organizational Documents. Sellers have delivered to Buyer true,
correct and complete copies of: (i) the articles or certificates of
incorporation of each Seller and each Alaska Entity, together with all
amendments thereto, as certified by the Secretary of State of their respective
corporate domiciles and (ii) the bylaws of each Seller and each Alaska Entity as
currently in effect, as certified by the respective Secretary of each such
entity.
3.7 Financial Statements. Except as disclosed on Schedule 3.7, Sellers
have delivered to Buyer true, correct and complete copies of the unaudited
(except as specified below) balance sheets and statements of income of each of
the Alaska Entities for the year ending December 31, 1997 (the "1997 Financial
Statements") and have also delivered to Buyer true, correct and complete copies
of unaudited balance sheets and income statements for the Alaska Entities, as
of, and for the interim period ending, on June 30, 1998 (the "Interim Financial
Statements" and, together with the 1997 Financial Statements, the "Financial
Statements"). The 1997 Financial Statements for Telephone Utilities of the
Northland, Inc. have been audited by Deloitte & Touche LLP, certified public
accountants, and a copy of its statement of cash flows, statement of changes in
shareholders' equity and unqualified opinion with respect thereto has been
delivered to Buyer. The Financial Statements were prepared in
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accordance with GAAP (except for any changes in accounting methods referred to
in the notes thereto and subject in the case of unaudited interim financial
statements to normal year end adjustments (the effect of which will not,
individually or in the aggregate, be material) and, in the case of all unaudited
Financial Statements, the absence of footnotes) and fairly present (i) the
financial condition of the Alaska Entities as of the respective dates thereof,
and (ii) the results of operations of the Alaska Entities for the periods
therein set forth. All such unaudited Financial Statements included in the
Financial Statements reflect all adjustments that are necessary for a fair
statement of the financial condition and results of operations for the periods
presented therein, except as disclosed on Schedule 3.7.
3.8 Absence of Material Changes. Except as disclosed on Schedule 3.8,
since December 31, 1997, neither the Business nor any Alaska Entity has:
(a) undergone any change in its business, assets, properties,
financial condition, or results of operations other than changes in the
ordinary course of business, none of which, individually or in the
aggregate, has had or, to the knowledge of Sellers, would reasonably be
expected to have a Material Adverse Effect, and there has not been any
condition, event or occurrence which, individually or in the aggregate,
has had or would be reasonably likely to have a Material Adverse Effect;
(b) suffered any damage, destruction or loss, whether or not covered
by insurance, that was, individually or in the aggregate, Material;
(c) issued, sold, redeemed or repurchased any capital stock or other
equity interests or securities convertible or exchangeable into, or
granted any options, warrants or other rights to acquire, any such
securities, or directly or indirectly redeemed, purchased or otherwise
acquired any shares of its capital stock or equity interests;
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mortgaged, pledged or subjected to any Encumbrance any of its properties
or assets valued, individually or in the aggregate, in excess of $250,000;
(d) except in accordance with the Budget, incurred any Material
Indebtedness or amended, varied or altered the payment obligations with
respect to, or requested any waivers with respect to, the terms of any
existing Material Indebtedness, or entered into, amended, modified or
renewed or terminated any lease of material real estate or lease of
material personal property;
(e) entered into any transactions that create an impediment to
satisfaction of the conditions and covenants contained in this Agreement
or to timely consummation of the Closing;
(f) acquired or disposed of any assets or properties not
contemplated in the Budget having a value in excess of $250,000 in the
case of any single item or $1,000,000 in the aggregate, or relocated or
otherwise transferred any assets to other areas of Seller's operations;
(g) merged or consolidated with any other corporation or entered
into any joint venture, partnership or other similar arrangement or formed
any other new material arrangement for the conduct of its business or made
any material investment in the securities or businesses of any Person, or
amended its certificate or articles of incorporation or bylaws;
(h) received notice of any dispute, claim, event or condition of any
character (including but not limited to any notices from any Governmental
Entity) that would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect (except for changes in
accounting principles or interpretations adopted by the
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Financial Accounting Standards Board, changes in general economic
conditions, including any change in the level of interest rates, or
industry-wide changes in the regulatory environment, including but not
limited to the loss of, or changes resulting from the loss of, the Rural
Exemption (as defined in Section 251(f)(1) of the Communications Act));
(i) terminated, modified, extended or amended any Material Contract
or, except as contemplated in the Budget, entered into any Material
Contract;
(j) made any change in its accounting methods or practices other
than changes in estimates related to the determination of expense accruals
for health, pension and other post-retirement benefits which are disclosed
in the Financial Statements;
(k) hired any new employees, agents or representatives (except new
employees, agents or representatives hired in the ordinary course of
business consistent with past practice whose annual compensation is not
expected to exceed $50,000) or entered into any new employment, severance,
consulting or other compensation agreement with any director, officer,
employee, agent or representative or other Person, except as contemplated
herein;
(l) increased the compensation (including bonuses, commissions,
fringe benefits, severance or retirement benefits) payable or to become
payable to any officer, director, employee, agent or representative,
except increases required by written Contracts or Employee Benefit Plans
then in effect and disclosed on Schedule 3.18 or increases and bonuses to
employees who are not officers or directors in the ordinary course of
business consistent with past practices or required by mandated ERISA
changes, or adopted, committed itself to adopt, or amended or modified in
any material
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respect or terminated any Employee Benefit Plan except as expressly
permitted under this Agreement or as required by Applicable Law, or taken
any action that could result in a withdrawal or partial withdrawal from a
Multiemployer Plan;
(m) amended, renegotiated or entered into any collective bargaining
or similar agreement;
(n) received any notice indicating that there exists any material
labor unrest among its employees or that any group, labor union or similar
organization has tried to organize any of its employees;
(o) declared or paid any dividend or distribution with respect to
its stock, other than dividends permitted pursuant to Section 6.15;
(p) amended the Budget or otherwise taken any action to reduce the
amount of capital spending identified in the Budget, or otherwise operated
other than in compliance with the Budget in all significant respects;
(q) settled or compromised any pending or threatened material
Proceeding, or canceled, compromised, settled or given up, waived or
released any material claims or rights;
(r) authorized, announced or implemented any new pricing, discount
or marketing programs or introduced any new services, except as
specifically contemplated by the Budget; or
(s) entered into any Contract or made any commitment to do or to
take any of the actions referred to in subsections (a) through (r) of this
Section 3.8.
3.9 Indebtedness. Except as disclosed on Schedule 3.9, all Material
Indebtedness of each Alaska Entity is prepayable at any time at the option of
such entity, without premium or
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penalty, and none of such Material Indebtedness is subject to acceleration or a
penalty upon change of control of any Alaska Entity (a "Change of Control").
Schedule 3.9 sets forth the prepayment terms with respect to all outstanding
Material Indebtedness. No Alaska Entity is in default under any Contract
evidencing any Material Indebtedness or in the performance, observance or
fulfillment of any covenant or condition relating thereto, and to the knowledge
of Sellers no event has occurred and is continuing which with the giving of
notice or lapse of time, or both, would constitute a default, or result in the
acceleration of or entitle any party to accelerate any obligation or right under
any such Material Indebtedness.
3.10 Litigation and Claims. Schedule 3.10 sets forth a list of each
Material Proceeding in which any Alaska Entity is a party or which otherwise
relates to the Alaska Entities. Except as specifically disclosed on Schedule
3.10, there are no decrees, judgments, fines, forfeiture, awards, orders or
injunctions to which any Alaska Entity is subject, or which otherwise relates to
the Alaska Entities, and there is no Proceeding pending, or to the Knowledge of
Sellers, threatened against or relating to any Seller or any Alaska Entity or
which otherwise relates to the Alaska Entities, that if determined adversely to
such Seller or Alaska Entity, would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
3.11 Title to Property and Leases. Set forth on Schedule 3.11 is a list of
all real property and buildings owned or leased by any Alaska Entity or used in
the Business with a value in excess of $250,000, with respect to owned
properties, and monthly payments in excess of $10,000 with respect to leased
properties. Except as set forth on Schedule 3.11, each Alaska Entity owns or
leases all of the real and tangible personal property reflected on its December
31, 1997 balance sheet included in the Financial Statements except (i) property
disposed of
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since said date for fair and adequate consideration in the ordinary course of
business or dispositions which are not, in the aggregate, Material and (ii)
leases which have expired since said date and which are not, in the aggregate,
Material. Except as disclosed on Schedule 3.11, title to all real and tangible
personal property owned by each Alaska Entity is, in each case, held in the name
of such Alaska Entity, and is good and lawful, marketable and free and clear of
any Encumbrances, except for (i) Encumbrances arising under indentures, security
interests, mortgages and/or deeds of trust securing indebtedness disclosed in
the Financial Statements, (ii) Encumbrances for Taxes or assessments not yet due
and payable or being contested in good faith, (iii) imperfections of title and
Encumbrances, if any, that do not materially detract from the use, utility or
value, or Materially interfere with the use or marketability of the property
affected thereby, (iv) all rights reserved to or vested in any Governmental
Entity to control or regulate any such entity's property or assets in any manner
and (v) Encumbrances which are otherwise not in the aggregate Material. All real
estate leases to which any Alaska Entity is a Party (collectively, the "Leases")
are legal, valid and enforceable in accordance with their respective tenants,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or other laws of general application relating to or affecting
enforcement of creditors' rights and the application of equitable principles in
any action, legal or equitable; no Alaska Entity is in default under any of such
lease, and, to the Knowledge of Sellers, no event has occurred which, with
notice or lapse of time, or both, would constitute a default by any party under
any such Lease. Each Alaska Entity owns or leases all the real and tangible
personal property and assets necessary for the continued conduct of its present
business in the ordinary course and in the manner it has been operated since
January 1, 1998, except where the failure to own or lease such property or
assets could not reasonably be expected to,
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individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Alaska Entities purchase the predominance of their
information services from Affiliates. The software associated therewith is not
owned by or licensed to the Alaska Entities. The Alaska Entities utilize such
software through license agreements between Affiliates and third parties and
those agreements will not continue to be utilized beyond the Closing Date by any
Alaska Entity unless such utilization is pursuant to the Transition Services
Agreement.
3.12 Sufficiency and Condition of Assets.
(a) Except as disclosed in Schedule 3.12(a) or with respect to the
services provided in the Transition Services Agreement, as of the Closing
Date, Sellers will transfer to Buyer valid rights to use all of the
assets, rights and/or interests which are used in, and are sufficient for,
the operation of the Business as conducted by Sellers since December 1,
1997.
(b) Except as disclosed on Schedule 3.12(b), all buildings,
equipment and other tangible assets owned by each Alaska Entity are in
good operating condition, reasonable wear and tear excepted, and do not
require any maintenance or repairs except for routine maintenance and
repairs that arise in the ordinary course of business, maintenance and
repairs that are contemplated in the Budget or maintenance and repairs
that in the aggregate are not Material in nature or cost.
(c) Prior to the date hereof, (i) PolarNet, Inc., an Alaska
corporation was merged with and into PTIC with PTIC as the surviving
corporation, and (ii) MVI Corp., an Oregon corporation ("MVI") has
transferred good title to each of the Alaska PCS Licenses, free and clear
of all Encumbrances, to Pacific Telecom of Alaska PCS, Inc., a
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newly-formed wholly owned subsidiary of CNI, whose sole assets are and, as
of the Closing, shall be the Alaska PCS Licenses.
3.13 Insurance. Schedule 3.13 sets forth a list of all insurance policies
covering the businesses, properties and assets of the Alaska Entities. All such
policies are in full force and effect. All property of any Alaska Entity of an
insurable nature and of a character usually insured by companies carrying on
similar businesses has been insured in such amounts and against such Losses (as
defined herein) as is customary for such companies. Since December 1, 1997, none
of the Sellers has received notice of (a) any failure to pay premiums under any
policy, (b) any cancellation of any Material policy, (c) any insurer denying any
Material claim or (d) any insurer defending any Material claim with a
reservation of rights, which, in any such case, relates to the Alaska Entities
or the Business. Except as disclosed in Schedule 3.13, no liability policy to
which the Alaska Entities is a party or under which the Business is covered has
a deductible in excess of $100,000.00.
3.14 Contracts. Schedule 3.14 identifies all Contracts to which an Alaska
Entity is a party that are not terminable within one year from the date hereof
or which obligate any Alaska Entity to make annual payments in excess of
$250,000. Each Material Contract to which any Alaska Entity is a party is valid,
binding and enforceable in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting creditor's rights and the application of
equitable principles in any action, legal or equitable and, except as set forth
on Schedule 3.14, the Alaska Entities are not in default under any such Material
Contract, and to Seller's Knowledge, no event has occurred which, with notice or
lapse of time, or both, would constitute such a default, or result in the
acceleration of or entitle any party to accelerate any
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obligation or right under any such Contract, except such defaults that would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule 3.14 no Material Contract
contains any provision providing that it may be canceled, terminated or
accelerated upon a Change of Control, provides for any changes in the rates or
other terms upon a Change of Control, or requires the consent to such a Change
in Control. Each Alaska Entity has in effect all Material Contracts that are
necessary for the conduct of its business as presently conducted in the ordinary
course. Except as set forth on Schedule 3.14, no Seller or any Affiliate of any
Seller (other than the Alaska Entities) is a party to any agreement for the
benefit of any Alaska Entity or the Business. Except as set forth on Schedule
3.14, there are no Contracts which restrict or inhibit the ability of the Alaska
Entities or any stockholder or Affiliate thereof from doing business in any
manner or in any geographic location. To the extent this Section 3.14 relates to
oral Contracts entered into prior to December 1, 1997, the representations and
warranties contained herein with respect to such oral contracts shall be deemed
to be qualified by the phrase "to the Knowledge of Sellers."
3.15 No Violation. Except as disclosed on Schedule 3.15, with respect to
each Seller and each Alaska Entity, the execution, delivery, and performance of
this Agreement and the consummation of the Purchase Transactions will not: (1)
violate or conflict with or result in a breach of the articles or certificate of
incorporation or bylaws of any Seller or any Alaska Entity, (ii) except as
disclosed in Schedule 3.15, violate or conflict with, or result in the
imposition or creation of any Encumbrance upon or in any of the Alaska Stock or
properties or assets owned or leased by any of the Alaska Entities pursuant to
any Applicable Law or any other material restriction of any kind or character to
which any Seller or any Alaska Entity is or may be subject or by which any of
them or any of their assets or properties is or may be bound
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or (iii) conflict with, violate or constitute a default under any provision of,
or be an event that is (or with the giving of notice or passage of time or both
will result in) a violation of or default under, or result in the acceleration
of or entitle any party to accelerate (whether after the giving of notice or
passage of time or both) any obligation or right under, or require a consent or
create a penalty or increase any Seller's or Alaska Entities' payment or
performance obligations under, any Encumbrance, order, arbitration award,
judgment or decree, or any Material Contract or Permit, to which any Seller or
any Alaska Entity is a party or by which any of them or any of their property is
bound.
3.16 Undisclosed Liabilities. Except as set forth in Schedule 3.16 or in
any of the other Schedules to this Agreement, no Alaska Entity has any liability
or obligation of any nature, whether accrued, absolute, contingent, known,
unknown or otherwise, and whether due or to become due, which was not reflected
in the Financial Statements, except for liabilities and obligations incurred by
such Alaska Entity in the ordinary course of business since December 31, 1997,
which, in the aggregate, would not reasonably be expected to have a Material
Adverse Effect.
3.17 Compliance with Laws, Permits. Set forth on Schedule 3.17 is a list
of all Material Permits (and the beneficiaries and holders thereof) under which
the Alaska Entities or the Business provide or are authorized to provide local
exchange telephone services, cellular telephone services, cable television
services, personal communication services, or any other services provided by the
Alaska Entities or, in connection with the Business, the Sellers. Except as
disclosed on Schedule 3.17 each of the Alaska Entities and the Sellers has
complied with all Applicable Laws except where the failure to so comply would
not reasonably be expected to have a Material Adverse Effect. Each Alaska Entity
has obtained all Material
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Permits required in order to conduct the Business as presently conducted. The
present use by each Alaska Entity of its properties and the conduct of the
Business does not violate any Applicable Law or Permit, except where such
violations, in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. All Permits which are Material are in full force and
effect, have been legally and validly issued, and will continue in full force
and effect after the Closing Date without the consent, approval or act of, or
the making of any filing with, any Governmental Entity, subject to the receipt
of the approvals and the completion of the filings described in Section 5.1
hereof. No Alaska Entity is in default under the terms of any Permit which is
Material and no such entity has received written notice of any default
thereunder. Except as disclosed on Schedule 3.17, no Government Entity has
notified any Alaska Entity of its intent to modify, revoke, terminate or fail to
renew any Permit which is Material.
3.18 ERISA.
(a) Set forth on Schedule 3.18 hereto is a list identifying each
"Employee Benefit Plan". Except for any plan that is a Multiemployer Plan,
the Sellers have made available to Buyer accurate and complete copies of
all Employee Benefit Plans maintained, adopted or participated in by any
Alaska Entity (and, if applicable, the related trust agreements) and all
amendments thereto, together with the three most recent annual reports
(Form 5500 including, if applicable, Schedule B thereto) prepared in
connection with any such Employee Benefit Plan. For purposes of this
Section 3.18 only, an "Affiliate" of any person means any other person
which, together with such person, would be treated as a single employer
under Section 414 of the Code.
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(b) Except as disclosed on Schedule 3.18, (i) no Employee Benefit
Plan constitutes a Multiemployer Plan, and (ii) no Employee Benefit Plan
is subject to Title IV of ERISA or to the minimum funding standards of
ERISA and the Code. There are no accumulated funding deficiencies as
defined in Section 412 of the Code (whether or not waived) with respect to
any Employee Benefit Plan. No Alaska Entity has incurred any Material
liability under Title IV of ERISA arising in connection with the
termination of, or complete or partial withdrawal from, any Employee
Benefit Plan covered or previously covered by Title IV of ERISA. Each
Alaska Entity has paid and discharged promptly when due all liabilities
and obligations with respect to any Employee Benefit Plan arising under
ERISA or the Code of a character which if unpaid or unperformed might
result in the imposition of an Encumbrance against any of the assets of
any Alaska Entity or assets currently held by Sellers, but which would,
upon consummation of the transactions contemplated hereby, be assets of
any Alaska Entity. Nothing done or omitted to be done and no transaction
or holding of any asset under or in connection with any Employee Benefit
Plan has made or will make any Alaska Entity, subject to any liability
under Section 502(i) or (1) of Title I of ERISA or liable for any tax
pursuant to Section 4975 of the Code that could have a Material Adverse
Effect.
(c) Each Employee Benefit Plan which is designated on Schedule 3.18
as being intended to be qualified under Section 401(a) of the Code is so
qualified, and each trust forming a part thereof is exempt from Tax
pursuant to Section 501(a) of the Code. CNI has made available to Buyer
accurate and complete copies of the most recent IRS determination letters
with respect to any such Employee Benefit Plans and the related
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trust that have not been revoked. Each Employee Benefit Plan is being
maintained, in all Material respects, in compliance with its terms and
with the requirements prescribed by all Applicable Law, except where the
failure to so maintain such Employee Benefit Plan would not have a
Material Adverse Effect.
(d) Except as set forth on Schedule 3.18, since January 1, 1991, no
Alaska Entity has maintained or contributed to a Multiemployer Plan.
Except as set forth on Schedule 3.18, with respect to each Multiemployer
Plan in which any Alaska Entity participates or has participated, (i)
since January 1, 1991, no Alaska Entity has withdrawn, partially
withdrawn, or received any notice of any claim or demand for withdrawal
liability or partial withdrawal liability and (ii) the transaction
contemplated by this Agreement does not constitute a withdrawal or partial
withdrawal under any Multiemployer Plan maintained or previously
maintained or contributed to by any Alaska Entity. Until the Closing,
Sellers will advise Buyer in the event that any Alaska Entity has received
any notice (i) that any Multiemployer Plan is in reorganization, (ii) that
increased contributions may be required to avoid a reduction in
Multiemployer Plan benefits or the imposition of any excise tax, (iii)
that any Multiemployer Plan is or may become insolvent, (iv) that any
Multiemployer Plan is a party to any pending merger or asset transfer, or
(v) that any Pension Benefit Guaranty Corporation ("PBGC") proceedings
against or affecting any Multiemployer Plan have been initiated.
(e) All contributions (including all employer contributions and
employee salary reduction contributions) that are due have been paid to
each Employee Benefit Plan, and all contributions for any period ending on
or before (i) August 31, 1998 and (ii) the Closing Date, that are not yet
due will be paid to each Employee Benefit Plan or
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accrued in accordance with past custom and practice, and to the extent
they relate to the Alaska Entity Employees will be fully reflected on the
financial statements of the Alaska Entities as of (i) August 31, 1998 and
(ii) the Closing Date, respectively. All premiums, including without
limitation, premiums payable to the PBGC, or other payments for all
periods ending on or before the Closing Date which have become due have
been paid or will be paid prior to the Closing Date with respect to each
such Employee Benefit Plan which is an Employee Welfare Benefit Plan and,
to the extent they relate to the Alaska Entity Employees, any unpaid
premiums will be fully accrued on the financial statements of the Alaska
Entities as of (i) August 31, 1998 and (ii) the Closing Date, as
appropriate.
(f) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, Summary Plan Descriptions, and
reports required by Labor Department Regulation Section 2520.104-23) have
been filed or distributed appropriately with respect to each Employee
Benefit Plan (other than any Multiemployer Plan) except where failure to
do so would not have a Material Adverse Effect. The requirements of Part 6
of Subtitle B of Title I of ERISA and of Section 4980B of the Code have
been met in all material respects with respect to each such Employee
Benefit Plan (other than any Multiemployer Plan) which is an Employee
Welfare Benefit Plan. No claim, lawsuit, arbitration or Proceeding is
pending or to Sellers' Knowledge has been threatened, asserted or
instituted against CNI, CWI or any Alaska Entity, or any Employee Benefit
Plan (other than any Multiemployer Plan) in connection with or arising out
of, directly or indirectly, Part 6 of Subtitle B of Title I of
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ERISA as it applies to the Alaska Entities, and, to Sellers' Knowledge,
there are no facts that exist which could give rise to any such claims or
other Proceedings.
(g) Except as set forth on Schedule 3.18, no Alaska Entity maintains
or contributes to or is required to contribute to any material Employee
Welfare Benefit Plan or other program or arrangement providing medical,
health, or life insurance or other welfare-type benefits for current or
future retired or terminated employees, their spouses, or their dependents
(other than in accordance with Section 4980B of the Code or Sections
601-607 of ERISA).
(h) Except as set forth on Schedule 3.18, consummation of the
transactions contemplated herein (either alone or in conjunction with any
other event) will not entitle any officer or employee of any Alaska Entity
to severance pay and will not increase, or accelerate the time of payment
or vesting, of, any compensation due to any officer, director or employee
of any Alaska Entity under any Employee Benefit Plan.
(i) Except as indicated on Schedule 3.18, the fair market value of
the assets of each Employee Benefit Plan which is subject to Title IV of
ERISA or the minimum funding requirements of Section 412 of the Code
exceeds the amount of benefit liabilities for such plan, computed on a
termination basis utilizing PBGC factors. Except as indicated on Schedule
3.18, to Seller's Knowledge, the fair market value of the assets of each
Multiemployer Plan which is subject to Title IV of ERISA or the minimum
funding requirements of Section 412 of the Code exceeds the amount of
benefit liabilities for such plan, computed on a termination basis
utilizing PBGC factors.
(j) No Employee Benefit Plan which is subject to Title IV of ERISA
has been completely or partially terminated in the preceding six years.
The PBGC has not
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instituted proceedings to terminate any Employee Benefit Plan. There has
been no reportable event (as such term is defined in Section 4043(c) of
ERISA) with respect to an Employee Benefit Plan for which notice to the
PBGC has not, by rule or regulation, been waived or which, individually or
in the aggregate with other reportable events, would have a Material
Adverse Effect.
(k) There are no pending claims (other than claims for benefits in
the ordinary course), lawsuits or arbitrations which have been asserted or
instituted, or to Seller's Knowledge, which have been threatened against
the Employee Benefit Plans, any fiduciaries thereof with respect to their
duties to the Employee Benefit Plans or the assets of any of the trusts
under any of the Employee Benefit Plans which could reasonably be expected
to result in any material liability of any Alaska Entity to the PBGC, the
Department of Treasury, the Department of Labor, any Multiemployer Plan,
any Employee Benefit Plan or any participant in an Employee Benefit Plan.
(l) The Alaska Entities are in compliance with the Family and
Medical Leave Act of 1993, except with respect to any noncompliance that
would not reasonably be expected to have a Material Adverse Effect. The
Alaska Entities and each member of their business enterprises have
complied with the Worker Adjustment and Retraining Notification Act,
except with respect to any noncompliance that would not have a Material
Adverse Effect.
3.19 Environmental Matters. Except as set forth on Schedule 3.19:
(a) Each Alaska Entity possesses all Permits which are Material that
are required under Applicable Laws relating to pollution or the protection
of the environment, including, without limitation, all laws and
regulations governing the
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generation, use, collection, treatment, storage, transportation, recovery,
removal, discharge or disposal of all hazardous substances or hazardous
wastes (collectively, "Environmental Laws"). Each Alaska Entity is in
Material compliance with all Environmental Laws. For purposes of this
Section 3.19, "hazardous substances" and "hazardous wastes" are materials
defined as "hazardous substances", "hazardous wastes", "hazardous
constituents", "pollutants" or "contaminants" in (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
by the Superfund Amendments and Reauthorization Act of 1986, and any
amendments thereto and regulations thereunder, (ii) the Resource
Conservation and Recovery Act of 1976, as amended by the Hazardous and
Solid Waste Amendments of 1984, and any amendments thereto and regulations
thereunder or (iii) any other Environmental Law regulating gasoline,
diesel fuel and other petroleum hydrocarbons, including without limitation
asbestos and polychlorinated biphenols ("PCBs").
(b) No Alaska Entity has been subject to any enforcement actions or
lawsuits pursuant to, nor has it received any notice from any Governmental
Entity of any Material violations of, any Environmental Law, and, to the
Knowledge of Sellers, there are no facts or circumstances that it
currently anticipates could reasonably be expected to form the basis of a
claim or citation against any Alaska Entity for a violation of any such
Environmental Laws, except for violations that, in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
(c) There are no hazardous substances or hazardous wastes (or any
asbestos, fuel oil or other petroleum compounds or PCBs) used, disposed
of, discharged or stored by any Alaska Entity, except in the ordinary
course of their business and in Material
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compliance with all Environmental Laws. At no time has any Alaska Entity
caused or, to the Knowledge of Sellers, permitted, hazardous wastes,
hazardous substances or any other such materials to be treated, stored,
disposed of, released, discharged or deposited on, under, at or from
premises owned or operated by any Alaska Entity, which materials if known
to be present, would reasonably be anticipated now to require the
expenditures of a Material amount for clean-up, removal, response,
remediation or other obligations ("Response") under any Environmental Law.
(d) To the Knowledge of Sellers, there are no disposal sites for
hazardous substances, hazardous wastes or any other wastes located on or
under the real estate now owned or operated by any Alaska Entity. Each
Person retained by or on behalf of any Alaska Entity to handle, transport
or dispose of hazardous substances, hazardous wastes or other wastes since
June 11, 1993 was, to the Knowledge of Sellers then duly licensed under
all Applicable Laws to handle, transport or dispose of such substances or
wastes, and, in each instance in which the hazardous substances or
hazardous wastes of the Alaska Entities were disposed of, the disposal
site was, to the Knowledge of Sellers, then duly licensed under all
Applicable Laws to receive such substances or wastes. To the Knowledge of
Sellers, none of the disposal sites that in the past have been the
recipient of hazardous substances or hazardous wastes generated by any
Alaska Entity are or have been listed on the US EPA National Priority List
or are Superfund or other sites subject to Response under any
Environmental Law.
(e) CNI has provided Buyer with access to true and complete copies
of any reports, studies, analyses or tests currently in its or its
Affiliates' possession pertaining to hazardous substances or hazardous
wastes or concerning compliance with
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environmental laws in, on or under the real estate owned or operated by
any Alaska Entity.
3.20 Employees.
(a) CNI has provided to Buyer a list by job location or employing
entity of each employee of any Alaska Entity together with each such
person's date of hire, employment status (e.g., active, long-term
disability, retired, etc.), position or function, and annual base salary
or wages, including any incentive or bonus arrangement with respect to
such person.
(b) Sellers have provided to Buyer a list of all Contracts between
any Alaska Entity, or, with respect to any Alaska Entity Employees, any
Seller, on the one hand, and any union or collective bargaining unit, on
the other hand.
(c) Sellers have provided to Buyer a list and copies by bargaining
unit of each employee of any Alaska Entity who is a member of any
collective bargaining unit of any Alaska Entity, together with each such
person's classification or position, job location, and bargaining unit
seniority date.
(d) The estimated liability for all welfare benefit claims,
including, without limitation, life insurance, accidental death and
dismemberment, medical, dental, vision, health and disability claims and
expenses incurred by any employee of the Alaska Entities and his or her
eligible dependents on or prior to August 31, 1998 will be recorded on the
Signing Date Balance Sheet. For purposes hereof, a claim or expense shall
be considered to be incurred when the service giving rise to the claim or
expense is provided.
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3.21 Tax Matters. Except as disclosed on Schedule 3.21:
(a) Each of the Alaska Entities has filed or caused to be filed all
Tax Returns that it was required to file or which were required to be
filed with respect to it. All Taxes owed by any of the Alaska Entities and
the Affiliated Group shown on such Tax Returns have been paid. None of
Parent and its Affiliated Group or the Alaska Entities currently is the
beneficiary of any extension of time within which to file any Tax Return.
(b) Each Alaska Entity has withheld and paid all Material Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or
other third party.
(c) There is no dispute or claim concerning any Tax Liability of the
Alaska Entities claimed or raised by an authority in writing.
(d) Each of the Alaska Entities have (and as of the Closing Date
will have) made all deposits required with respect to Taxes.
(e) No waiver of any statute of limitations as to any Tax assessment
or deficiency which affects any Alaska Entity has been given by CNI, CWI,
Parent's Affiliated Group or any of the Alaska Entities.
(f) None of CNI, CWI or its Subsidiaries, the Alaska Entities or
Parent's Affiliated Group has filed a consent under Section 341(f) of the
Code.
(g) None of the Alaska Entities is obligated to make any payments
that will not be deductible under Section 280G of the Code.
(h) None of the Alaska Entities is a party to any Tax allocation or
sharing contract.
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(i) Neither the Alaska Entities nor any of their Subsidiaries has
been a member of an affiliated group filing a consolidated federal Tax
Return (other than Parent's Affiliated Group or PacifiCorp's Affiliated
Group or as set forth on Schedule 3.21) or has any liability for the Taxes
of any person (other than any of Sellers or Parent's Affiliated Group or
Pacificorp's Affiliated Group) under Treasury Regulation ss. 1.1502-6 (or
any similar provision of state, local, or foreign law).
(j) As of August 31, 1998, there will be no deferred Tax liabilities
based upon any intercompany transactions between or among the Alaska
Entities.
(k) The unpaid Taxes of the Alaska Entities (i) did not, as of
December 31, 1997, or June 30, 1998, exceed by any Material amount the
reserve for Tax liability (other than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set
forth on the combined balance sheets of the Alaska Entities (other than in
any notes thereto) as of December 31, 1997 or June 30, 1998, respectively,
and (ii) will not exceed that reserve as adjusted for the passage of time
through August 31, 1998 and as reflected on the Signing Date Balance Sheet
in accordance with the past custom and practice of the Alaska Entities in
filing their Tax Returns.
(l) For both accounting and rate making purposes in its regulated
books of account, each Alaska Telco Entity has been using, and will
continue to use up to the Closing Date, a normalization method of
accounting as described in Section 167(l) (as in effect at the time the
related assets were placed in service) and 168(i) of the Code for the
federal Tax effect of the use of accelerated depreciation.
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(m) For both accounting and rate-making purposes in its regulated
books of account, each Alaska Telco Entity has been using, and will
continue to use through the Closing Date, a method of accounting for
investment credits which conforms with the requirements of Section 46(f)
of the Code, as in effect at the time the related assets were placed in
service.
(n) The regulated books of account of each Alaska Entity will
reflect the Tax payments made by each Alaska Telco Entity through the
Closing Date.
(o) None of the Alaska Entities are subject to any foreign Tax.
(p) Sellers are, and on the Closing Date will be, eligible to make
an election under Section 338(h)(10) with respect to the sale of the
Alaska Stock pursuant to this Agreement.
3.22 No Finder. Except as disclosed on Schedule 3.22, no Alaska Entity has
paid or become obligated, nor will any Alaska Entity upon consummation of the
transactions contemplated herein become obligated, to pay any fee or any
commission to any broker, finder or intermediary for or on account of the
transactions contemplated herein.
3.23 Labor Relations. Except as disclosed on Schedule 3.23, none of the
following is presently pending, or to the Knowledge of Sellers, is contemplated
or threatened, against any Alaska Entity (except for those items, which, in the
aggregate, would not reasonably be expected to leave a Material Adverse Effect):
(a) Unfair labor practice charges, complaints or Proceedings, or
representation elections, petitions or demands;
(b) Grievances or arbitration demands arising pursuant to any
collective bargaining agreement or other Contract;
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(c) Claims, charges, complaints or other Proceedings alleging
wrongful discharge, breach of any employment Contract or right, or breach
of public policy, unlawful retaliation, or employment discrimination of
any nature including but not limited to sex (including pregnancy, equal
pay and sexual harassment), race, color, national origin or ancestry, age,
religion, disability or handicap, AIDS or HIV-positive status, sickle cell
trait, veterans' status, or the perception of any such characteristic, or
any other characteristic or condition protected under any Applicable Law
or enactment;
(d) Work stoppages, strikes or other concerted action by Alaska
Entity Employees;
(e) Payments for or provisions for payments to any former employee
or person who retired from any Alaska Entity of any post-retirement health
insurance or other healthcare benefit (other than a benefit pursuant to an
Employee Benefit Plan disclosed in Schedule 3.18), or payments for or
provisions for payments to any such former employee or person of any
retiree health insurance or other health-care benefit;
(f) Employment-related claims or investigations including but not
limited to those arising under the Occupational Safety and Health Act; the
Family and Medical Leave Act; the Fair Labor Standards Act; the Worker
Adjustment and Retraining Notification Act; the Rehabilitation Act of
1973; or any corresponding or related Applicable Law or enactment; or
(g) Worker's compensation disability claims.
3.24 Rights to Trade Name. To the Knowledge of Sellers, each of the Alaska
Entities currently possesses (either through direct ownership or pursuant to the
License Agreement) all rights to the use of the name "PTI", "Cellulink",
"Pacific Telecom", "PTI Net"
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and "PTI Communications", and any trade marks, service marks or other depiction
relating thereto in Alaska.
3.25 Books and Records.
(a) The minute books of the Alaska Entities contain, in all Material
respects, accurate records of all meetings of and corporate actions or
written consents by the shareholders and directors of such entities.
(b) Except as disclosed on Schedule 3.25, all of the other books and
records of the Alaska Entities and all files, data and other materials
relating to the businesses of the Alaska Entities have been prepared and
maintained in accordance with good business practices and comply with all
Applicable Laws, except where the failure to so comply would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Alaska Entities do not have any of their
records, systems, controls, data or information recorded, stored,
maintained, operated or otherwise wholly or partly dependent upon or held
by any means (including any electronic, mechanical or photographic
process, whether computerized or not) that are not under their control,
either through direct ownership or rights of use, except that Affiliates
of the Alaska Entities provide services and retain records, systems,
controls, data and other information and services.
3.26 Intellectual Properties.
(a) The use by the Alaska Entities of the respective patents,
trademarks, service marks, trade names, copyrights, design rights,
computer programs or data bases, or applications or registrations therefor
used in the conduct of the Business (collectively "Intellectual
Property"), does not infringe on the rights of any Person, except for any
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such infringements that would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Alaska Entities purchase
the predominance of their information services from Affiliates. The
software associated therewith is not owned by or licensed to the Alaska
Entities. The Alaska Entities utilize such software through license
agreements between Affiliates and third parties and those agreements will
not continue to be utilized beyond the Closing Date by any Alaska Entity
unless such utilization is pursuant to the Transition Services Agreement
or Section 6.10. No Proceedings by or against any Alaska Entity or with
respect to the Business are pending, or to the Knowledge of Sellers,
threatened, that challenge the right of any Alaska Entity to use its
Intellectual Property or challenge the right of any other Person to use
the Intellectual Property of the Business, and no order, decree, judgment,
stipulation, injunction, restriction or agreement restricts the scope of
the use of the Intellectual Property in the conduct of the Business,
except for any such Proceeding that would not reasonably be expected to
have a Material Adverse Effect.
(b) To the Knowledge of Sellers, neither the Sellers (in connection
with the Business), the Business nor any Alaska Entity has infringed or
violated any Intellectual Property of any Person, nor used without
permission any confidential information, trade secrets, patentable or
unpatentable inventions, technology, new ideas or know-how (collectively,
"Proprietary Information") of any Person, including without limitation,
any former employer of an employee of any Alaska Entity or any Seller.
(c) To the Knowledge of Sellers, no other Person is currently using
any Intellectual Property or Proprietary Information of any Alaska Entity
or otherwise used in the Business in an unauthorized manner.
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3.27 Affiliate Transactions. Except as contemplated by this Agreement, the
only agreements or arrangements between Sellers and their Affiliates (other than
the Alaska Entities), on the one hand, and the Alaska Entities, on the other
hand, that will remain in place from and after the Closing are those items
contemplated pursuant to the Transition Services Agreement.
3.28 Telephone Operations. Since December 1, 1997, except as set forth on
Schedule 3.28:
(a) no Alaska Telco Entity has elected to file interexchange tariffs
under the FCC's price cap order;
(b) no Alaska Telco Entity has any inventory, plant or equipment
reflected on the Financial Statements that has been disallowed from the
rate base or excluded from the revenue calculations for any pool (unless
such assets are allocated to unregulated businesses) on the basis of used
and useful, excess capacity or prudency findings in any order issued by
APUC or the FCC or in any determination by an administrator of an
interstate or intrastate pool, nor has any Alaska Entity received
notification that the APUC or the FCC or any pool administrator proposes
to exclude any such assets from the rate base or revenue calculations for
the pools;
(c) no Alaska Telco Entity has received any interconnection or
resale request pursuant to Section 251 (c) of the Communications Act of
1934, as amended;
(d) no Alaska Telco Entity is subject to any pending or, to the
Knowledge of Sellers, threatened earnings reduction Proceeding; and
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(e) no Alaska Telco Entity has agreed to, and no Alaska Telco Entity
currently intends to agree to, any reduction in its authorized revenues,
except on a revenue neutral basis.
3.29 Alaska Division Headquarters Relocation Costs. All costs and expenses
reasonably expected to be incurred by the Alaska Entities in connection with the
transfer of the "Alaska Division" headquarters and the relocation of employees
from Anchorage to Fairbanks, Alaska have been either paid, fully accrued on the
balance sheet included in the Interim Financial Statements or will be fully
accrued on the Signing Date Balance Sheet.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
For the purpose of inducing Sellers to enter into this Agreement, Buyer
hereby makes the following representations and warranties to Sellers.
4.1 Organization of Buyer. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
with full corporate power and authority to carry on the business in which it is
presently engaged, to own, lease and operate its properties, and to enter into
and perform its obligations under this Agreement.
4.2 Authorization of Agreement. The Board of Directors of Buyer has duly
approved and authorized the execution and delivery of this Agreement and the
consummation of the Purchase Transactions, and no other corporate proceedings on
the part of Buyer are necessary to approve or authorize the execution and
delivery of this Agreement by Buyer or the consummation by Buyer of the Purchase
Transactions. Assuming due execution, delivery and performance of this Agreement
by the Sellers, this Agreement constitutes a valid and legally binding
obligation of Buyer, enforceable in accordance with its terms, except as may be
limited
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by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of general application relating to or affecting creditors' rights and the
application of equitable principles in any action, legal or equitable.
4.3 No Violation. Except as disclosed on Schedule 4.3, the execution,
delivery, and performance of this Agreement and the consummation of the Purchase
Transactions will not: (i) violate or result in a breach of or default or
acceleration under the Certificate of Incorporation or bylaws of Buyer; (ii)
result in the imposition or creation of any Encumbrance upon or in any of
Buyer's assets or properties pursuant to any Applicable Law or any other
material restriction of any kind or character to which Buyer is or may be
subject or by which any of them or any of Buyer's assets or properties is or may
be bound (other than in connection with the Financing Commitments); or (iii)
conflict with, violate or constitute a default under any provision of, or be an
event that is (or with the giving of notice or passage of time or both will
result in) a violation of or default under, or result in the acceleration of or
entitle any party to accelerate (whether after the giving of notice or passage
of time or both) any obligation or right under, or require a consent or create a
penalty or increase any payment or performance obligations of Buyer under, any
Encumbrance, order, arbitration award, judgment or decree, or any Contract or
Permit, to which Buyer is a party or by which Buyer or any of its property is
bound.
4.4 Financing Commitments. Buyer has obtained financing commitments for
$65 million of equity, as provided in the letters, dated the date hereof, true
and complete copies which are attached hereto as Exhibit 4.4(a) (the "Equity
Commitments") and for $410 million of debt, as provided in the letters, dated
the date hereof, true and complete copies of which are attached hereto as
Exhibit 4.4(b) (the "Debt Commitments" and, together with the Equity
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Commitments, the "Financing Commitments"), which are sufficient to enable Buyer
to financially consummate the Purchase Transactions contemplated hereby.
4.5 Due Diligence. Buyer is a sophisticated Person that was advised by
knowledgeable counsel and other representatives in connection with this
Agreement, and Buyer and its representatives have been permitted access to the
management, facilities and books and records of the Alaska Entities for the
purpose of conducting a due diligence review and has had the opportunity to
discuss with such management any such matters relating to the Alaska Entities
and the Purchase Transactions as Buyer has elected in its sole discretion.
4.6 Incorporation. Buyer is a newly formed corporation which, as of the
date hereof, has no operations and has not conducted any business other than in
connection with the Purchase Transactions contemplated by this Agreement, Buyer,
as of the date hereof, has no assets other than the Financing Commitments.
4.7 Buyer's Management. The anticipated management of Buyer has
substantial experience and skill in the telecommunications industry and
specifically with the Alaska Entities. Buyer's anticipated management recognizes
that the Alaska Entities purchase the predominance of their information services
from Affiliates. The software associated therewith is not owned by or licensed
to the Alaska Entities. Additionally, the Buyers understand the Alaska Entities
utilize certain software through license agreements between Affiliates and third
parties and those agreements will not continue to be utilized beyond the Closing
Date by any Alaska Entity unless such utilization is pursuant to the Transition
Services Agreement.
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SECTION 5
CONDUCT PENDING CLOSING
5.1 HSR, FCC and APUC Approvals.
(a) The Parties shall, as promptly as practicable after the date
hereof but in any event no later than 10 business days after the date
hereof, file all notification reports required under the HSR Act, and
file, as promptly as practicable after any request therefor, any
additional information required under the HSR Act.
(b) The Parties shall cooperate and use their respective reasonable
best efforts (i) to obtain all of such consents, approvals or statements
of non-objection of the FCC and the APUC as shall be necessary for the
consummation of the transactions contemplated by this Agreement, (ii) to
defend such consents, approvals or statements of non-objection in any
administrative or judicial review proceeding, (iii) to secure such
consents, approvals or statements of non-objection free of any condition
on any Alaska Entity, and (iv) if such consents, approvals or statements
of non-objection impose any condition on any Alaska Entity, to use their
best efforts to comply with or, if appropriate, to attempt to remove such
condition; provided that nothing herein shall require Buyer to agree to,
or operate subject to, any condition which would reasonably be expected to
have a material adverse effect on Buyer and its subsidiaries, taken as a
whole after giving effect to the Closing. In furtherance thereof, the
Parties shall submit to the FCC and the APUC, as promptly as practicable
after the date hereof but in no event later than 10 business days after
the date hereof, all correspondence, notifications, petitions,
applications and other filings necessary to obtain such consents,
approvals or statements of non-objection.
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5.2 Other Consents. The Parties agree to cooperate and use their
respective reasonable best efforts in obtaining the consents of any third
parties (in addition to the FCC, APUC, DOJ or FTC, whose consents or approvals
are covered in Section 5.1) required in connection with the transactions
contemplated hereunder.
5.3 Conduct of Business Prior to the Closing Date. Except as disclosed on
Schedule 5.3, as otherwise permitted or required by this Agreement, or consented
to in writing by Buyer, from the date hereof until the Closing Date, each Alaska
Entity will, and Sellers will, as appropriate, cause each Alaska Entity to:
(a) carry on its business in the ordinary course in all material
respects in the same manner as heretofore conducted and maintain its
existence and powers and all of its Material Permits and Material
Contracts and books of account and records necessary to the conduct of its
business (it being understood that each Alaska Entity will be deemed to
have maintained any Material Permit or Material Contract if, in connection
with the lapse of the normal term of any such Permit or Contract, such
entity promptly secures a replacement Permit or Contract providing
benefits to such entity substantially similar to the lapsed Permit or
Contract);
(b) not issue, sell, redeem or repurchase any additional capital
stock or other equity interests or securities convertible into, or grant
any options, warrants or other rights to acquire, any such securities, or
directly or indirectly redeem, purchase or otherwise acquire any shares of
its capital stock or equity interests;
(c) not hire any new employees, agents or representatives (except
new employees, agents or representatives hired in the ordinary course of
business consistent with past practice whose annual compensation is not
expected to exceed $50,000) or
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enter into any new employment, severance, consulting or other compensation
agreement with any director, officer, employee, agent or representative or
other Person, except as contemplated herein;
(d) not make any increase in the compensation (including bonuses,
commissions, fringe benefits, severance or retirement benefits) payable or
to become payable to any officer, director, employee, agent or
representative, except increases required by written Contracts or Employee
Benefit Plans currently in effect and disclosed on Schedule 3.18 and
increases and bonuses to employees who are not officers or directors in
the ordinary course of business consistent with past practices or required
by mandated ERISA chances, or adopt, commit itself to adopt, or amend or
modify in any material respect or terminate any Employee Benefit Plan
except as expressly permitted under this Agreement or as required by
Applicable Law, or take any action that could result in a withdrawal or
partial withdrawal from a Multiemployer Plan;
(e) except in accordance with the Budget or pursuant to Advances
contemplated by Section 6.12 incur any Indebtedness or enter into any
financing transaction, or vary, or request any waivers with respect to,
the terms of any existing Material Indebtedness, enter into, amend, modify
or renew or terminate any lease of real estate or material lease of
personal property, or create or allow the imposition of any Material
Encumbrance, except pursuant to after-acquired title clauses in any
security instruments in effect on the date hereof and listed on Schedule
3.9 hereto;
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(f) not make any expenditure in excess of $250,000 except pursuant
to a Contract or in accordance with the Budget, or enter into any Contract
to make such an expenditure;
(g) amend the Budget or otherwise take any action to reduce the
amount of capital spending identified in the Budget, or otherwise operate
other than in compliance with the Budget in all significant respects;
(h) not sell, transfer, lease or otherwise dispose of any asset
having a value in excess of $250,000 individually or $1,000,000 in the
aggregate, or relocate or otherwise transfer any assets to other areas of
Seller's operations;
(i) not declare, make or pay dividends or distributions to
shareholders unless approved by Buyer as contemplated in and subject to
Sections 2.2(c) and 6.15;
(j) not amend its certificate or articles of incorporation or
bylaws;
(k) not settle or compromise any pending or threatened Proceeding,
or cancel, compromise, settle or give up, waive or release any claims or
rights;
(l) advise and consult with Buyer with respect to (i) any matter
which would reasonably be expected to have a Material Adverse Effect on
the Business, or (ii) any proposed amendment to, or deviation from, the
Budget;
(m) consult with Buyer concerning labor relations issues prior to
establishing the bargaining, agenda for any Alaska Entity and advise Buyer
on the status of any collective bargaining with certified representatives
of Alaska Entities Employees;
(n) use commercially reasonable efforts to preserve intact the
current organization of its business, keep available the services of its
current officers and
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employees and maintain good relations with its suppliers, customers,
creditors and employees;
(o) maintain in effect insurance comparable in amount and scope of
coverage to such insurance now carried by an Alaska Entity;
(p) deliver to Buyer true, correct and complete copies of its
monthly Financial Statements no later than 20 business days following the
end of the previous month;
(q) not take any action or omit to take any action that would result
in the breach of any representation or warranty made pursuant to Section 3
hereof or cause any condition set forth in Section 8 or 9 not to be
satisfied;
(r) use commercially reasonable efforts to maintain the Rural
Exemption, and to keep Buyer fully informed and communicate with the
Consultant with respect to any chances in the status of such matter;
(s) not enter into any joint venture, partnership or other similar
arrangement or form any other new material arrangement for the conduct of
its business or make any material investment in or purchase any material
assets or securities or businesses of any Person;
(t) not enter into any noncompetition agreement or any other
agreement which would restrict or inhibit the ability of the Alaska
Entities to do business, except as contemplated hereby;
(u) not authorize, announce or implement any new material pricing,
discount or marketing programs or introduce any new services, except as
specifically contemplated by the Budget;
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(v) not take any action, and shall not permit the Alaska Entities to
take any action, which is inconsistent with, or not contemplated by, the
Consulting Agreement (as defined in Section 5.8);
(w) not permit a chance in its methods of maintaining its books,
accounts or business records or, except as required by GAAP (in which
event prior notice shall be given to Buyer), change any of its accounting
principles or the methods by which such principles are applied for tax or
financial reporting purposes;
(x) not make any election with respect to Taxes, consent to any
waiver or extension of time to assess or collect any Taxes or file any Tax
Return other than a Tax Return filed in the ordinary course of business
and prepared in a manner consistent with past practice;
(y) not directly or indirectly allocate or charge costs or expenses
related to services provided by Affiliates of the Alaska Entities except
pursuant to the Transition Services Agreement; and
(z) not agree to take any action prohibited by this Section 5.3.
5.4 Notification of Certain Matters.
(a) Sellers shall give prompt written notice to Buyer (i) if they
become aware that any representation or warranty contained in Sections 3
or 4 was untrue or inaccurate in any material respect as of the date made
or deemed made; (ii) if they become aware that any event has or has not
occurred which causes or would be reasonably likely to cause any condition
set forth in Sections 8 or 9 not to be satisfied; and (iii) of any failure
or anticipated failure of any Seller or Alaska Entity to comply in any
material respect with any covenant or agreement to be complied with at or
prior to Closing.
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(b) Buyer shall give prompt written notice to Sellers (i) if it
becomes aware that any representation or warranty contained in Sections 3
or 4 was untrue or inaccurate in any material respect as of the date made
or deemed made, (ii) if it becomes aware that any event has or has not
occurred which causes or would be reasonably likely to cause any condition
set forth in Sections 8 or 9 not to be satisfied; (iii) of any failure or
anticipated failure of Buyer to comply in any material respect with any
covenant or agreement to be complied with at or prior to Closing; and (iv)
upon receipt from The Chase Manhattan Bank ("Chase") of a notice pursuant
the last sentence of the seventh paragraph of the Commitment Letter
contained in Exhibit 4.4(b), which notice, in the case of subclause (iv)
shall include a copy of any such notice received from Chase.
(c) The delivery of any notice pursuant to this Section shall not be
deemed to (i) modify the representations or warranties hereunder of the
party delivering such notice; (ii) modify any condition to Closing set
forth in Section 8 or Section 9; or (iii) limit or otherwise affect the
remedies available hereunder to the party receiving such notice; provided
however that notification that a Material Adverse Effect has occurred
shall only give rise to Buyer's right to accept such Material Adverse
Effect and proceed to the Closing of the Purchase Transactions or
terminate this Agreement pursuant to Section 11 and with the effects
described in Section 11.2.
5.5 Notice of Litigation. Until the Closing, (i) Buyer, upon learning of
the same, shall promptly notify Sellers of any Proceeding which is commenced or
threatened against Buyer and which seeks to enjoin or impede the consummation of
the transactions contemplated by this Agreement; and (ii) Sellers upon learning
of the same, shall promptly notify Buyer of any Proceeding which is commenced or
threatened against any Seller or Alaska Entity and
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which seeks to enjoin or impede the consummation of the transactions
contemplated by this Agreement, or which would otherwise reasonably be expected
to have a Material Adverse Effect.
5.6 Access to Information. From the date hereof through the Closing Date,
the Sellers shall afford to the officers, employees and authorized
representatives of Buyer (including its independent public accountants,
consultants and attorneys and the Consultant), complete access during normal
business hours to (i) the offices, operations, properties and business and
financial records (including computer files, retrieval programs and similar
documentation, and including all Contracts and Permits and all FCC and APUC
records) of the Alaska Entities, and of the Sellers, to the extent relating
thereto, (ii) the Alaska Entities Employees and (iii) the outside accountants of
the Sellers and the Alaska Entities and their workpapers relating to the Alaska
Entities, in each case to the extent Buyer shall deem necessary or desirable,
and shall furnish to Buyer or its authorized representatives such additional
information concerning the respective operations, properties and business of the
Alaska Entities, as Buyer shall reasonably request. No investigation made by
Buyer or its authorized representatives hereunder shall affect the
representations and warranties of Sellers hereunder, provided however that
nothing contained in this Section 5.6 shall limit Buyer's notification
obligations contained in Section 5.4(b).
5.7 Maintenance of Financing Commitments. Buyer shall maintain in effect
until the Closing Date the Financing Commitments in form and substance
reasonably satisfactory to Sellers and Sellers have advised Buyer that the
Financing Commitments attached as Exhibits 4.4(a) and (b) hereto are in form and
substance reasonably satisfactory to Sellers.
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5.8 Consulting Agreement. Sellers shall enter into and comply with the
terms of the consulting agreement with LEC Consulting Corporation, a Delaware
corporation (the "Consultant"), in the form attached hereto as Exhibit 5.8 (the
"Consulting Agreement"), as of the date hereof, pursuant to which the Consultant
shall be retained to manage and operate the Business prior to Closing in
accordance with the terms thereof. Any actions taken by Sellers or the Alaska
Entities with the explicit approval or consent of, or at the direction of, the
Consultant, shall be deemed to have been approved by Buyer for purposes of
Section 5.3 and shall be deemed not to be breaches of such covenant for purposes
of Section 6.2 or 8.2.
SECTION 6
ADDITIONAL AGREEMENTS
6.1 Public Announcements. The Parties hereto covenant and agree that,
except as provided below, none of them will make, issue or release a public
announcement, press release, public statement or public acknowledgment of the
existence of, or reveal publicly the terms, conditions and status of, the
transactions provided for herein without the prior consent of Sellers, in the
case of an announcement by Buyer, or the prior consent of Buyer in the case of
an announcement by Sellers, as to the content and time of release of and the
media in which such statement or announcement is to be made; provided, that each
of the parties hereto expressly consents to the press releases being issued on
the date hereof by the other party; and provided, further, that in the case of
announcements which outside counsel for any Party believes such Party or its
parent corporation is required by law or under applicable stock exchange (or
similar securities trading) rules to make, issue or release, the making, issuing
or releasing of any such announcement by such Party or its parent corporation
shall not constitute a breach of this Agreement if such Party shall have given,
to the extent reasonably possible, not
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less than twenty-four (24) hours prior notice to the other Parties and shall
have attempted, to the extent reasonably possible, to clear the content and time
of such announcement, statement, acknowledgment or revelation with the other
Party. Each Party hereto agrees that it will not unreasonably withhold any such
consent or clearance. After the Closing Date, except as required by law, Buyer
shall not make any public references to any Seller or any of its Affiliates in
conjunction with references to this Agreement, its contents, the Purchase
Transactions or Sellers' past operation of the Business or ownership of the
Alaska Entities, except to identify any Seller as the past operator of the
Business and the past owner of the Alaska Entities.
6.2 Indemnification by Sellers.
(a) If the Closing occurs, subject to the terms and conditions of
this Section 6.2, including without limitation the limits on indemnity set
forth in Section 6.2(d) hereof, Sellers, jointly and severally, shall on
an after-tax basis indemnify and hold harmless Buyer and its Affiliates
(including the Alaska Entities after the Closing) and their respective
controlling persons, officers, directors and representatives
(individually, "Buyer Indemnitee" and collectively, "Buyer Indemnities")
from, and will pay to any Buyer Indemnitee the amount (net of any proceeds
received by the Buyer Indemnities from any form of insurance, indemnity or
other source of reimbursement, or other offsets or benefits, including tax
benefits, obtained) of, any loss, liability, claim, judgment, damage, cost
or expense (including, without limitation, interest, penalties, and the
reasonable fees, disbursements and expenses of attorneys, accountants and
other professional advisors) or diminution in value, whether or not
involving a third-party claim (collectively, "Losses"), arising, directly
or indirectly from or in connection with:
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(i) any breach or violation of any representation or warranty
of any Seller contained in this Agreement as of the date such
representation or warranty is made or deemed made under Section 8.1
(other than those contained in Section 3.19 hereof, which are solely
covered by Section 6.2(b) below) or a material breach of any
agreement or covenant or any material failure of any Seller to
perform any of its obligations under this Agreement; and
(ii) any Losses resulting from any liability of any of the
Alaska Entities (A) for any Taxes of Sellers, the Alaska Entities
and their Affiliates with respect to any Tax period or portion
thereof ending on or before August 31, 1998 (or for any Tax period
beginning before and ending after August 31, 1998 to the extent
allocable (determined in a manner consistent with Section 7) to the
portion of such period beginning before and ending on August 31,
1998) to the extent such Taxes are not reflected in the Net Working
Capital of the Alaska Entities as of August 31, 1998, (B) any Taxes
payable as a result of the Section 338(h)(10) Election (as
hereinafter defined)), (C) for the unpaid Taxes of any Person (other
than any of the Alaska Entities) under Reg.ss. 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee
or successor, by contract, or otherwise and (D) for any Taxes
attributable to any deferred income attributable to any deferred
income by Reg. ss.ss. 1.1502-13 and 1.1502-14 or to any excess loss
account taken into income under Reg.ss. 1.1502-19, in either case as
a result of the consummation of the transactions contemplated
hereby.
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(b) (i) After the date hereof, Sellers, jointly and severally,
shall:
(A) hold Buyer and each Alaska Entity harmless from any
Losses, incurred by such entity to remove or decommission all
underground storage tanks identified on Schedule 3.19 or otherwise
located on any property owned, leased or otherwise operated by any
Alaska Entity (plus all associated expenses to remediate such sites
in compliance with applicable Environmental Laws); and
(B) on an after-tax basis, indemnify and hold harmless each
Buyer Indemnitee for, and reimburse each Buyer Indemnitee against,
any and all Losses (net of any proceeds received by the Buyer
Indemnities from any form of insurance, indemnity by prior owner or
other source of reimbursement, or other offsets or benefits
including tax benefits obtained) arising directly or indirectly from
or in connection with any breach or violation of any representation
or warranty of any Seller contained in Section 3.19 of this
Agreement.
(ii) Except to the extent of the environmental indemnity in Section
6.2(b), Buyer covenants not to and to cause any Buyer Indemnitee not to
sue, directly or indirectly, any Seller (or any Affiliate thereof) for
damages, injunctive relief or any other relief or remedy in any way
related to any hazardous substance or hazardous waste on under, in or from
the real property owned or operated by any Alaska Entity (the "Real
Property") or any non-owned and operated disposal sites and Buyer releases
and agrees to cause each Buyer
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Indemnitee to release Sellers from any and all claims or liabilities
arising out of such hazardous substances or hazardous wastes.
(iii) Buyer shall have no right to claim indemnity for or
relating to Losses pursuant to this Section 6.2(b) to the extent
that such Losses could have been avoided or reduced through the
exercise of due care or reasonable mitigation measures. Buyer shall
also have no right to indemnification for or related to any Losses
for which payment is obtained from insurance or from other
third-party sources. Prior to asserting a claim for indemnification
or reimbursement against Sellers, Buyer shall use all reasonable
efforts to initiate all claims for recovery of any claimed amounts
from all other sources from which recovery may reasonably be sought
and expected, including Governmental Entities, third parties or
insurers. Any indemnity payment due under this Section 6.2(b) shall
be subject to the limitations set forth in Section 6.2(d); provided,
however, that no indemnity payment due under Section 6.2(b)(i)(A)
shall be subject to such limitations except the $60,000,000 cap on
the maximum amount of indemnification payable by Sellers pursuant to
this Agreement. Sellers' environmental indemnity obligation shall be
extinguished and be of no further force and effect as of November 1,
2002, except with respect to claims against Sellers for which Buyer
has provided notice to Sellers in accordance with Section 6.2(c)(i),
prior to such date.
(c) The following procedures will govern indemnification of all
claims against Sellers under this Agreement.
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(i) A Buyer Indemnitee seeking indemnification hereunder shall
give written notice to Sellers of any matter with respect to which
the Buyer Indemnitee seeks to be indemnified (the "Buyer Indemnity
Claim") prior to the expiration of the applicable survival period
specified in Section 12.8. Such notice shall state the nature of the
Buyer Indemnity Claim and, if known, the amount of the Loss. If the
Buyer Indemnity Claim arises from a claim of a third party, the
Buyer Indemnitee shall give such notice within a reasonable period
of time after the Buyer Indemnitee has actual notice of such claim,
and in the event that a suit or other Proceeding is commenced,
within 20 days after receipt of written notice by the Buyer
Indemnitee thereof. Notwithstanding anything herein to the contrary,
the failure of a Buyer Indemnitee to give timely notice of a Buyer
Indemnity Claim shall not bar such Buyer Indemnity Claim except and
to the extent that the failure to give timely notice has materially
impaired the ability of Sellers to defend the Buyer Indemnity Claim
or the time period for claiming indemnification has expired.
(ii) Promptly after receipt by a Buyer Indemnitee of notice of
the commencement of any Proceeding, the Buyer Indemnitee shall, if a
claim in respect thereof is to be made against Sellers under this
Section 6.2, give written notice to Sellers of the commencement
thereof. Sellers, or any of them, shall be entitled to participate
in such Proceeding and, to the extent that any Sellers may wish, to
assume the defense thereof. If any Seller elects to assume the
defense of such Proceeding, the Buyer Indemnitee shall cooperate in
the defense of such Proceeding. Sellers shall pay such Buyer
Indemnitee's reasonable out-of-pocket
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expenses incurred in connection with such cooperation. Sellers shall
keep the Buyer Indemnitee reasonably informed as to the status of
the defense of such Proceeding. If Sellers elect not to assume (or
fail to assume) the defense of such Proceeding, the Buyer Indemnitee
may assume the defense of such Proceeding with counsel of its choice
(and reasonably acceptable to Sellers) at the expense of Sellers.
The Buyer Indemnitee shall conduct any such defense, and shall not
settle any such Proceeding without the consent of Sellers, which
shall not be unreasonably withheld. A Buyer Indemnitee shall have
the right to employ separate counsel if, in such Buyer Indemnitee's
reasonable judgment at any time, either a conflict of interest
between such Buyer Indemnitee and any Seller exists in respect of
such claim, or there may be defenses available to such Buyer
Indemnitee which are different from or in addition to those
available to any Seller and the representation of both parties by
the same counsel would be inappropriate, and in that event (i) the
reasonable fees and expenses of such separate counsel shall be paid
by the Sellers and (ii) each of such Buyer Indemnitee and the
Sellers shall have the right to conduct its own defense in respect
of such claim. If Sellers elect to assume the defense of a
Proceeding asserted against the Buyer Indemnitee or against the
Buyer Indemnitee and any Seller, (A) no compromise or settlement
thereof may be effected by Sellers without the Buyer Indemnitee's
written consent (which shall not be unreasonably withheld) unless
the sole relief provided is monetary damages that are paid in full
by Sellers and the settlement includes an unconditional release of
all claims against the Buyer Indemnitee and (B) the Buyer Indemnitee
shall have
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no liability with respect to any compromise or settlement thereof
effected without its written consent (which shall not be
unreasonably withheld).
(d) (i) For purposes of this Section 6.2, the representations and
warranties of the Sellers contained herein shall be deemed to have been
made without the modifying language "material," "Material" "Material
Adverse Effect," or "to the Knowledge of Sellers" (or modifying language
of similar import). Accordingly, (A) all determinations under Section 6.2
as to whether a representation or warranty has been breached or violated
shall be made as if such representation or warranty, as the case may be,
contained no such modifying language, and (B) the amount of the Loss with
respect to any claim arising from a breach or violation of any
representation or warranty of Sellers contained in this Agreement shall be
determined without respect to any limitation of materiality or knowledge
contained in such representation or warranty.
(ii) Notwithstanding any other provision in this Agreement, no
indemnification shall be required to be made by Sellers pursuant to
this Section 6.2 with respect to any individual claim for Losses for
which the amount claimed is $10,000 or less. An individual claim for
Losses greater than $10,000 shall be indemnified to the extent that
the aggregate amount of all Losses exceeds $2,000,000. A claim for
Losses that is less than $10,000 will not be considered in
determining whether the aggregate amount of all Losses exceeds
$2,000,000. In addition, the aggregate amount of indemnification
payable by Sellers pursuant to this Agreement shall in no event
exceed $60,000,000 except with respect to breaches of Section 3.5 as
it relates to title to the stock of any of the Alaska Entities.
Notwithstanding anything in this paragraph to the contrary,
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breaches of Section 3.21 shall not be subject to, or included for
purposes of determining the amounts under, any of thresholds
contained in this paragraph and the Buyer Indemnified Parties shall
be indemnified to the full extent of any Losses thereunder, provided
however that it shall be subject to the $60,000,000 cap. Seller's
obligation to indemnify Buyer hereunder shall be extinguished and be
of no further force and effect upon expiration of the applicable
survival period specified in Section 12.8, except with respect to
claims against Sellers for which Buyer has provided notice to
Sellers prior to such expiration in accordance with Section
6.2(c)(i). Following the Closing, the sole remedy of Buyer for any
breach of a representation, warranty or covenant (other than
representations, warranties or covenants that specifically provide
for equitable relief and subject to Section 12.5) made by Sellers
pursuant to this Agreement (except for a claim based on common-law
fraud) is to assert an indemnification claim pursuant to this
Section 6.2 or any other provision of this Agreement providing for
indemnity.
(iii) To the extent included in revenues before August 31,
1998 and not booked as a payable at August 31, 1998, any amounts
required to be refunded to NECA for the carrier common line pool for
1997 and the 8 months ended August 31, 1998 shall be reimbursed by
the Sellers to the Alaska Entities without reference to the limits
set forth in (ii) above.
(e) For purposes of this Section 6.2, tax benefits shall include the
present value of the benefit of the carry-forward losses that can
reasonably be expected to be used before the expiration of the
carry-forward period.
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6.3 Indemnification by Buyer.
(a) If the Closing occurs, subject to the terms and conditions of
this Section 6.3, including, without limitation, the limits on indemnity
set forth in Section 6.3(c)(ii) hereof, Buyer shall, on an after-tax basis
indemnify and hold harmless each Seller and their Affiliates and their
respective controlling persons, officers, directors and representatives
(individually, "Seller Indemnitee" and collectively, "Seller Indemnities")
from and will pay to any Seller Indemnitee the amount (net of proceeds
received by the Seller Indemnitee from any form of insurance, indemnity or
other source of reimbursement, or other offsets or benefits, including tax
benefits, obtained) of any Losses arising directly or indirectly from or
in connection with:
(i) any breach or violation of any representation or warranty
of Buyer contained in this Agreement or a material breach of any
agreement or covenant or any material failure of Buyer to perform
any of its obligations under this Agreement;
(ii) the presence of hazardous substances or hazardous wastes
on, under, above or from the Real Property after the Closing Date,
to the extent that such Losses are related to Buyer's use, operation
or occupancy of the Real Property and to the extent that such
Losses' were caused, contributed to or exacerbated by Buyer's
activities, operations or omissions; or
(iii) any claim made for severance pay or other remuneration
related to termination of employment occurring on or after the
Closing Date.
(b) The following procedures will govern indemnification of all
claims against Buyer under this Agreement:
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(i) A Seller Indemnitee seeking indemnification hereunder
shall give written notice to Buyer of any matter with respect to
which the Seller Indemnitee seeks to be indemnified (the "Seller
Indemnity Claim") prior to the expiration of the applicable survival
period specified in Section 12.8. Such notice shall state the nature
of the Seller Indemnity Claim and, if known, the amount of the Loss.
If the Seller Indemnity Claim arises from a claim of a third party,
the Seller Indemnitee shall give such notice within a reasonable
period of time after the Seller Indemnitee has actual notice of such
claim, and in the event that a suit or other proceeding is
commenced, within 20 days after receipt of written notice by the
Seller Indemnitee thereof. Notwithstanding anything herein to the
contrary, the failure of a Seller Indemnitee to give timely notice
of a Seller Indemnity Claim shall not bar such Seller Indemnity
Claim except and to the extent that the failure to give timely
notice has materially impaired the ability of Buyer to defend the
Seller Indemnity Claim or the time period for claiming
indemnification has expired.
(ii) Promptly after receipt by a Seller Indemnitee of notice
of the commencement of any Proceeding, the Seller Indemnitee shall,
if a claim in respect thereof is to be made against Buyer under this
Section 6.3, give written notice to Buyer of the commencement
thereof. Buyer shall be entitled to participate in such Proceeding
and, to the extent that Buyer may wish, to assume the defense
thereof. If Buyer elects to assume the defense of such Proceeding,
the Seller Indemnitee shall cooperate in the defense of such
Proceeding. Buyer shall pay such Seller Indemnitee's reasonable
out-of-pocket expenses incurred in
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connection with such cooperation. Buyer shall keep the Seller
Indemnitee reasonably informed as to the status of the defense of
such Proceeding. If Buyer elects not to assume (or fails to assume)
the defense of such Proceeding, the Seller Indemnitee may assume
defense of such Proceeding with counsel of its choice (and
reasonably acceptable to Buyer) at the expense of Buyer. The Seller
Indemnitee shall conduct any such defense, and shall not settle any
such Proceeding without the consent of Buyer, which shall not be
unreasonably withheld. A Seller Indemnitee shall have the right to
employ separate counsel if, in such Seller Indemnitee's reasonable
judgment at any time, either a conflict of interest between such
Seller Indemnitee and Buyer exists in respect of such claim, or
there may be defenses available to such Seller Indemnitee which are
different from or in addition to those available to Buyer and the
representation of both parties by the same counsel would be
inappropriate, and in that event (i) the reasonable fees and
expenses of such separate counsel shall be paid by Buyer and (ii)
each of such Seller Indemnitee and Buyer shall have the right to
conduct its own defense in respect of such claim. If Buyer elects to
assume the defense of an Proceeding asserted against the Seller
Indemnitee or against the Seller Indemnitee and Buyer, (A) no
compromise or settlement thereof may be effected by Buyer without
the Seller Indemnitee's written consent (which shall not be
unreasonably withheld) unless the sole relief provided is monetary
damages that are paid in full by Buyer and the settlement includes
an unconditional release of all claims against the Seller Indemnitee
and (B) the Seller Indemnitee shall have
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no liability with respect to any compromise or settlement thereof
effected without its written consent (which shall not be
unreasonably withheld).
(c) (i) For purposes of this Section 6.3, the representations and
warranties of the Buyer contained herein shall be deemed to have been made
without the modifying language "material" or "material adverse effect" (or
modifying language of similar import). Accordingly, (A) all determinations
under Section 6.3 as to whether a representation or warranty has been
breached or violated shall be made as if such representation or warranty,
as the case may be, contained no such modifying language, and (B) the
amount of the Loss with respect to any claim arising from a breach or
violation of any representation or warranty of Buyer contained in this
Agreement shall be determined without respect to any limitation of
materiality contained in such representation or warranty.
(ii) Notwithstanding any other provision in this Agreement, no
indemnification shall be required to be made by Buyer pursuant to
this Section 6.3 with respect to any individual claim for Losses for
which the amount claimed is $10,000 or less. An individual claim for
Losses greater than $10,000 shall be indemnified to the extent that
the aggregate amount of all Losses exceeds $2,000,000. A claim for
Losses that is less than $10,000 will not be considered in
determining whether the aggregate amount of all Losses exceeds
$2,000,000. In addition, the aggregate amount of indemnification
payable by Buyer pursuant to this Agreement shall in no event exceed
$60,000,000. Buyer's obligation to indemnify the Seller Indemnitee
hereunder shall be extinguished and be of no further force and
effect upon expiration of the
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applicable survival period specified in Section 12.8, except with
respect to claims against Buyer for which a Seller Indemnitee has
provided notice to Buyer prior to such expiration in accordance with
Section 6.3(b)(i). Following the Closing, the sole remedy of a
Seller Indemnitee for any breach of a representation, warranty or
covenant (other than representations, warranties or covenants that
specifically provide for equitable relief and subject to Section
12.5) made by Buyer pursuant to this Agreement is to assert an
indemnification claim pursuant to this Section 6.3 or any other
provision of this Agreement providing for indemnification.
(d) For purposes of this Section 6.3, tax benefits shall include the
present value of the benefit of the carry-forward losses that can
reasonably be expected to be used before the expiration of the
carry-forward period.
6.4 Sellers Covenant Not to Compete. Sellers agree that, from the date
hereof until one year after the Closing Date, they will not, and will cause
their Affiliates (other than the Alaska Entities prior to Closing) not to, own,
manage, operate, promote or have any interest in (other than passive ownership
of less than 10% of the equity interests of any publicly-held entity in which
they do not have any board representation and do not have any positive or
negative governance rights other than pro rata voting rights) or provide
consulting or advisory services to any other corporation, entity or other Person
engaged in the provision of any telecommunications services within the State of
Alaska (provided Sellers and their Affiliates may provide such services to a
Person not more than 10% of whose revenues are generated in the State of Alaska
to the extent such consulting or advisory services are not provided primarily
with or for the benefit of such Alaska related telecommunications services).
Sellers agree that
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such restrictive covenant is reasonable in scope both in duration and geographic
coverage. This covenant may be specifically enforced by Buyer.
6.5 Employment Matters.
(a) Alaska Entity Employees. Following the Closing Date, the Alaska
Entity Employees shall be employed by Buyer. Buyer shall be responsible
for any reemployment rights of any employees of Alaska Entities.
(b) Welfare Benefit Plans. Sellers and their Affiliates shall
continue to provide coverage under Sellers' welfare benefit plans,
including, without limitation, life insurance, accidental death and
dismemberment, medical, dental, vision, health and disability ("Welfare
Benefit Plans") for each eligible Alaska Entity Employee and his or her
eligible dependents from August 31, 1998 to the Closing Date. Sellers
shall retain the responsibility for all post-retirement benefit
obligations and liabilities with respect to any employee of any Alaska
Entity who retired prior to the Closing Date and Buyer shall not assume
any liability with respect to such claims. Following the Closing Date, all
Welfare Benefit Plan claims incurred by the Alaska Entity Employees and
their eligible dependents after the Closing Date shall be Buyer's
responsibility and shall be determined under Buyer's benefit plans. For
purposes hereof, a claim or expense shall be considered to be "incurred"
when the service giving rise to such claim or expense is provided.
(c) Qualified Plan Transfer. Buyer shall provide for a defined
contribution tax-qualified employee pension benefit plan and trust as a
replacement plan and trust to accept from the Century Telephone
Enterprises, Inc. Dollars & Sense Plan and Trust
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("Dollars & Sense") a plan-to-plan transfer of assets, in cash,
attributable to accounts of Alaska Entity Employees. The following shall
apply to Alaska Entity Employees:
(i) the plan-to-plan transfer may include one or more notes
evidencing loans to the Alaska Entity Employee from Dollars & Sense;
(ii) the loan shall be maintained under such replacement plan
substantially in accordance with the current terms of such loan;
(iii) prior to such plan-to-plan transfer, Sellers shall
provide Buyer with a copy of the latest favorable determination
letter (which has not been revoked) recognizing the qualified status
of Dollars & Sense under Section 401(a) of the Code;
(iv) the plan-to-plan transfer shall occur as soon as
reasonably practicable following the Closing Date; and
(v) the plan-to-plan transfer will be equal to the account
balances of the Alaska Entity Employees and any Buyer Employees (as
defined herein), determined as of the close of business of the day
immediately preceding the date of such transfer.
Pacific Telecom Retirement Plan. Buyer shall provide for a defined
benefit tax qualified employee pension benefit plan and trust as a
replacement plan and trust to which shall be transferred or spun off,
within a reasonable period of time after the Closing and after receipt by
Buyer of a favorable determination letter that the Pacific Telecom
Retirement Plan and the related trust are qualified under Section 401(a)
of the Code, cash or cash equivalents, or to the extent requested by
Buyer, assets, equal to an amount sufficient to fund, as of the Closing
Date, benefits accrued by the Alaska Entity
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Employees and Buyer Employees under the Pacific Telecom Retirement Plan,
based on the actuarial assumptions attached hereto as Exhibit 6.5(d), plus
$250,000. For purposes of this Section 6.5, "Buyer Employees" shall
include only those persons, who are employed by Buyer within 90 days of
the Closing and who have a vested benefit under either Dollars & Sense or
the Pacific Telecom Retirement Plan, as applicable.
Controlled Group Liability. Neither Buyer nor any of the Alaska
Entities shall be responsible for, and Sellers and their Affiliates shall
pay for and, to the extent necessary, reimburse, Buyer and the Alaska
Entities for any and all Losses arising out of or relating to any
Controlled Group Liability (as hereinafter defined). For purposes hereof,
"Controlled Group Liability" means any liability (a) under Title IV of
ERISA, (b) under Section 302 of ERISA, and (c) under Sections 412 and 4971
of the Code, other than such liabilities that arise out of, or relate to,
the employee benefit plans maintained exclusively for the benefit of the
Alaska Entities Employee(s).
6.6 Multiemployer Plans. After the date hereof and prior to Closing,
Sellers agree to use their best efforts to ensure that no Alaska Entity
withdraws or partially withdraws from any Multiemployer Plan. The Parties agree
that the transactions contemplated by this Agreement do not constitute a
withdrawal or partial withdrawal under any Multiemployer Plan maintained or
previously maintained by any Alaska Entity, and the Parties agree to take no
position inconsistent therewith. If it is determined that following the Closing,
Sellers or Buyer would incur a "withdrawal liability" (within the meaning of
Title IV of ERISA) as a result of a complete or partial withdrawal from any of
the Multiemployer Plans listed on Schedule 3.18 on the day after the Closing,
then (i) to the extent that such complete or partial withdrawal arises from or
relates to the consummation of the Purchase Transactions, Sellers shall be
responsible
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for such withdrawal liability and shall hold harmless and indemnify
Buyer for any withdrawal liability assessed against or imposed upon Buyer or its
Affiliates and (ii) in all other cases, Buyer shall be responsible for such
withdrawal liability and shall hold harmless and indemnify Sellers for any
withdrawal liability assessed against or imposed upon Sellers or their
Affiliates.
6.7 License of Tradenames. At the time of the Closing, Sellers shall grant
to Buyer perpetual exclusive royalty-free licenses in Alaska of the trademarks,
tradenames and service marks of Pacific Telecom, Inc. and PTI Communications,
Inc., including, without limitation, "Cellulink", "Digicall", "Digitrex",
"Pacific Telecom", "PTI", "PTI Communications", "The Directory", and "PTI Net",
pursuant to a license agreement in the form attached hereto as Exhibit 6.7 (the
"License Agreement"); provided, however, the license hereunder shall only be
effective as to the use of such trademarks, tradenames and service marks in the
State of Alaska, and Buyer and its Affiliates shall not be entitled to, and are
specifically prohibited from, the use of any such trademarks, tradenames and
service marks in any and all locations other than the State of Alaska, and the
breach or threatened breach of the License Agreement shall give rise to
immediate injunctive relief without necessity of posting bond, as provided
therein.
6.8 Transition Services. Sellers and Buyer will enter into an agreement as
of the date hereof, in the form attached hereto as Exhibit 6.8 (the "Transition
Services Agreement") for the continued provision of certain services to the
Alaska Entities by any Seller or Affiliate thereof from the date hereof until
180 days following the Closing Date (or until Buyer sooner terminates with
respect to certain or all services as provided for in the Transition Services
Agreement).
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6.9 Nonsolicitation and No Hire. Each Party agrees not to, and shall cause
its Affiliates not to, recruit, solicit, or otherwise induce or intentionally
influence any individual who was an employee of the other Party (with respect to
the Sellers, the Alaska Entities shall be included as an "other party" for
purposes of this Section 6.9) or its Affiliates as of June 30, 1998 or
thereafter (an "Employee") to discontinue employment with such entity, or
actually employ (or retain as consultant) any such Employee for a period of two
(2) years from the date hereof, without the written consent of the other Party.
Each Party acknowledges that the violations of this Section 6.10 could cause
irreparable harm to the other Party and any breach or threatened breach of this
Section shall give rise to injunctive relief without the necessity of posting
bond. This Section shall survive termination pursuant to Section 11.2.
6.10 Support Software. At the Closing, Sellers hereby grant to Buyer an
option to purchase any software associated with the billing, accounting,
customer service, and network information of the Alaska Entities, to the extent
Sellers (i) have no further need for such software and (ii) are legally capable
of such transfer. It shall be Buyer's responsibility to obtain any consents for
such transfer at Buyer's cost. The purchase price shall be negotiated in good
faith and shall approximate a reasonable market price. Such option shall expire
90 days subsequent to Closing.
6.11 Remediation. Prior to the Closing, Sellers shall use all commercially
reasonable efforts to remove and remediate in compliance with Environmental Laws
all underground storage tanks located on property owned, leased or operated by
all Alaska Entities at Sellers' sole cost and expense, provided however, that in
the event all such tanks are not removed or remediated prior to the Closing,
Sellers shall continue to use all commercially reasonable efforts, at Sellers'
sole cost and expense, in compliance with Environmental Laws
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until such removal and remediation process is concluded. Subsequent to the
Closing, the removal and remediation process shall be conducted in such a manner
as to not unreasonably interfere with the operations of the Alaska Entities.
6.12 Advances to Alaska Entities. As contemplated by Section 2.2(b),
Sellers agree to make available to the Alaska Entities cash advances (the
"Advances") upon request by the Alaska Entities from time to time during the
period from August 31, 1998 to the Closing Date. The Advances shall bear
interest at a rate equal to the 30 day London Interbank Offered Rate ("LI]BOR")
plus 100 basis points, adjusted monthly. All Advances shall be repaid in full on
the Closing Date by payment of the Additional Amount calculated pursuant to
Section 2.2.
6.13 Severance Pay for Alaska Entities Employees. From the day after the
Closing Date until December 1, 1999, Buyer will provide non-represented Alaska
Entity Employees who are terminated following the Closing Date because of a
reduction in work force (layoff), job elimination, dismissed because the
employee is not properly qualified or other termination by the employer without
good cause related to the employee's conduct, with severance pay which is not
less than the termination allowance set forth in the Century Termination
Allowance Policy dated October 1, 1996, except that the minimum amount of
severance shall be four (4) weeks severance pay.
An Alaska Entity Employee's years of service for purposes of this Section
6.13 shall include the employee's pre-losing service with PacifiCorp, PacifiCorp
Holdings, Inc., any Seller, any Alaska Entity, or any Affiliate of any of the
foregoing.
6.14 Ancillary Agreements. Sellers shall not, and shall not permit the
Alaska Entities to, make any change, addition, amendment or other modification
to the forms attached hereto or terms thereof, or waive any provision of, or
terminate any of, the Consulting
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Agreement, the Transition Services Agreement or the License Agreement
(collectively, the "Ancillary Agreements"), without the prior written consent of
Buyer.
6.15 Intercompany Accounts. (a) From and after August 31, 1998, neither
the Alaska Entities, on the one hand, nor the Sellers or any Affiliates of
Sellers (other than the Alaska Entities), on the other hand, shall increase any
Intercompany Account, except with respect to Advances or payables incurred under
the Transition Services Agreement.
(b) Notwithstanding the foregoing, at any time prior to the Closing
Date, and upon prior written notice to Buyer, Sellers may cause the Alaska
Entities to declare and pay a dividend of intercompany receivables equal
to the net Combined Intercompany Receivable to the extent that it is
positive, as of August 31, 1998, provided that all Taxes and other costs
related to the declaration or payment of such dividend shall be borne by
Sellers. Buyer agrees to use all commercially reasonable efforts to
cooperate with Sellers with respect to the foregoing. To the extent the
Alaska Entities cannot declare and pay the dividends contemplated by this
Section 6.15(b) because of loan restrictions or other legal issues, Buyer
will pay an amount equal to the net amount of the Combined Intercompany
Receivable if positive to Sellers at Closing and Sellers will pay the net
Combined Intercompany Receivables to the Alaska Entities at such time and
in such amount. In addition, after the dividend or payment contemplated by
the foregoing provisions of this Section 6.15(b), all remaining
Intercompany Accounts, which, by virtue of the foregoing provisions will
have a net amount due equal to zero, will be transferred to Buyer at the
Closing without additional payment and there will be no other Intercompany
Accounts outstanding.
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SECTION 7
COVENANTS WITH RESPECT TO TAXES
7.1 Tax Sharing Agreements. Any Tax allocation, indemnity or sharing
policy between Parent, CWI, CNI, or their Affiliated Group, on the one hand, and
any of the Alaska Entities, on the other hand, shall be terminated as of the
Closing Date and will have no further effect for any taxable year (whether the
current year, a future year, or a past year).
7.2 Returns for Periods Through the Closing Date. Sellers will include, or
cause to be included, the income of the Alaska Entities (including any deferred
income triggered into income by Reg. ss.ss. 1.1502-13 and 1.1502-14 and any
excess loss accounts taken into income under Reg. ss. 1.1502-19) for all periods
through the Closing Date on the consolidated federal and consolidated, unitary
or combined state and local income Tax Returns of Parent and its Affiliated
Group and, on behalf of the Alaska Entities, will pay or cause to be paid any
federal and state income Taxes attributable to such income. Estimates of such
Taxes for the period between September 1, 1998 and the Closing Date (the
"Estimated Income Tax Amount") shall be accrued monthly on the books of the
Alaska Entities and any amount not previously paid to Sellers shall be included
in the Additional Amount set forth in Section 2.2(b). Subsequent to Closing,
Buyer shall pay to Sellers at least two (2) business days prior to the date on
which Taxes are to be paid by Sellers with respect to such Tax Returns an amount
equal to the amount by which the portion of such Taxes currently payable which
relate to the portion of such taxable period beginning after August 31, 1998
through the Closing Date (but excluding Taxes attributable to any deferred
income triggered into income by Reg. ss.ss. 1.1502-13 and 1.1502-14 and any
excess loss accounts taken into income under Reg. ss. 1.1502-19) exceeded the
Estimated Income Tax Amount, and Sellers shall pay to Buyer within two (2) days
of the filing
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of such Tax Returns, an amount equal to the amount by which the Estimated Income
Tax Amount exceeded the actual amount of the portion of such Taxes currently
payable on such Tax Return which relate to the period beginning after August 31,
1998 through the Closing Date. In the event that the amount paid by Buyer
pursuant to the immediately preceding sentence exceeds, or is exceeded by, the
amount properly allocable to Buyer under such sentence, Sellers shall pay to
Buyer the amount of any excess, and Buyer shall pay to Sellers the amount of any
shortfall. Buyer will cause the Alaska Entities to furnish Tax information for
periods ending on or prior to the Closing Date to Parent for inclusion in the
consolidated federal and state consolidated, unitary or combined income Tax
Returns for Parent and its Affiliated Group in accordance with the past custom
and practice of the Alaska Entities. Sellers will not take, or cause or permit
to be taken, any position on such returns that relate to the Alaska Entities
that would adversely affect the Alaska Entities after the Closing Date, unless
such position would be reasonable in the case of a person that owned the Alaska
Entities both before and after the Closing Date. The income of the Alaska
Entities will be apportioned to the period up to and including the Closing Date
and to the period after the Closing Date by closing the books of the Alaska
Entities as of the end of the Closing Date.
7.3 Audits. Sellers will allow, or cause to be allowed, Buyer (without
counsel present) to participate at Buyer's own expense in any audits of the
consolidated federal and consolidated, unitary or combined income Tax Returns of
Parent and its Affiliated Group to the extent that such audits relate to the
Alaska Entities. Sellers will not settle, or cause or permit to be settled any
such audit in a manner which would adversely affect the Alaska Entities after
the Closing Date unless (i) such settlement would be reasonable in the case of a
person that owned
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the Alaska Entities both before and after the Closing Date, or (ii) Sellers
obtain the prior written consent of Buyer, which consent shall not unreasonably
be withheld.
7.4 Section 338(h)(10) Election. At Buyer's option, Sellers will join, and
will cause their Affiliated Group to join, with Buyer in making an election
under ss.338(h)(10) of the Code (and any corresponding or similar elections
under state, local, or foreign Tax law) (collectively a "ss.338(h)(10)
Election") with respect to the purchase and sale of the Alaska Stock hereunder;
provided that all Taxes solely payable as a result of such ss.338(h)(10)
Election shall be the sole responsibility of Parent, CWI and CNI and their
Affiliate Group.
7.5 Taxes Other Than Income Taxes.
(a) Periods Ending on or Prior to the Closing Date. Sellers shall
prepare or cause to be prepared and timely file or cause to be timely
filed, all Tax Returns (other than Tax Returns covered under Section 7.2)
for the Alaska Entities for all periods ending on or prior to the Closing
Date. The Alaska Entities shall pay all such Taxes. Sellers shall make
available copies of such Tax Returns to Buyer at Buyer's request. Sellers
shall pay to the Alaska Entities at least two (2) business days prior to
the date on which Taxes are paid by the Alaska Entities an amount equal to
the portion of such Taxes which relates to the portion of such taxable
period ending on August 31, 1998, to the extent such Taxes are not
reflected in the Net Working Capital of the Alaska Entities as of August
31, 1998. To the extent the amount of such Taxes reflected in Net Working
Capital of the Alaska Entities as of August 31, 1998 exceeds the amount of
such Taxes applicable to the period ending on August 31, 1998, the Alaska
Entities will pay such excess to Sellers.
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(b) Periods Ending Subsequent to the Closing Date. Buyers shall
prepare or cause to be prepared and timely file or cause to be timely
filed, all Tax Returns (other than Tax Returns covered under Section 7.2)
for the Alaska Entities for all periods subsequent to the Closing Date.
The Alaska Entities shall pay all such Taxes. Buyer shall make available
copies of such Tax Returns to Sellers at Sellers' request. Upon five (5)
days written notice, Sellers shall pay to the Alaska Entities at least two
(2) business days prior to the date on which Taxes are paid by the Alaska
Entities, an amount equal to the portion of such Taxes which relates to
the portion of such taxable period ending on August 31, 1998, to the
extent such Taxes are not reflected in the Net Working Capital of the
Alaska Entities as of August 31, 1998. To the extent the amount of such
Taxes reflected in Net Working Capital of the Alaska Entities as of August
31, 1998 exceeds the amount of such Taxes applicable to the period ending
on August 31, 1998, the Alaska Entities will pay such excess to Sellers.
7.6 Allocation Among Periods. For purposes of this Section 7, in the case
of any Taxes that are imposed on a periodic basis and are payable for a taxable
period that includes (but does not end on) August 31, 1998, the portion of such
Tax which relates to the portion of such taxable period ending on August 31,
1998 shall (i) in the case of any Taxes not based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire taxable period
multiplied by a fraction the numerator of which is the number of days in the
taxable period ending on August 31, 1998 and the denominator of which is the
number of days in the entire taxable period, and (ii) in the case of any Tax
based upon or related to income or receipts be deemed to be the amount which
would be payable if the relevant taxable period ended on
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August 31, 1998. All determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior practice of the
Alaska Entities.
7.7 Cooperation on Tax Matters.
(a) Buyer, the Alaska Entities, Sellers and their respective
Affiliates shall cooperate fully, and to the extent reasonably requested
by the other party, in connection with the filing of Tax Returns pursuant
to this Section 7 and in connection with any audit, litigation or other
Proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision, of records
and information which are reasonably relevant to any such audit,
litigation or other Proceeding and making employees available on a
mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Alaska Entities, and
Sellers agree (i) to retain or cause to be retained all books and records
with respect to Tax matters pertinent to the Alaska Entities relating to
any taxable period beginning before the Closing Date until the expiration
of the statute of limitations (and, to the extent notified by Buyer or
CNI, any extensions thereof) of the respective taxable periods, and to
abide by all record retention agreements entered into with any taxing
authority, and (ii) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and records
and, if the other party so requests, Buyer, the Alaska Entities, Sellers
or an Affiliate of CNI, as the case may be, shall reasonably allow the
other party to take possession of such books and records in such
circumstances at such other party's expense.
(b) Buyer and Sellers further agree, upon request, to use, or cause
to be used, best efforts to obtain any certificate or other document from
any Governmental Entity or
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any other person as may be necessary to mitigate, reduce or eliminate any
Tax that could be imposed (including, but not limited, with respect to the
transactions contemplated hereby).
(c) Buyer and Sellers further agree, upon request, to provide, or
cause to be provided, to the other party all information that either party
may be required to report pursuant to Section 6043 of the Code and all
Treasury Department Regulations promulgated thereunder.
7.8 Contests. Whenever any taxing authority asserts a claim, makes an
assessment, or otherwise disputes the amount of Taxes for which any Seller is or
may be liable under this Agreement, Buyer shall, if informed of such an
assertion, promptly inform CNI. CNI shall have the right to control any
resulting Proceedings to represent the Alaska Entities' interests therein, and
to determine whether and when to settle any such claim, assessment or dispute,
except to the extent such Proceedings or determinations affect the amount of
Taxes for which Buyer is liable under this Agreement. Whenever any taxing
authority asserts a claim, makes an assessment or otherwise disputes the amount
of Taxes for which Buyer is liable under this Agreement, Sellers shall, if
informed of such an assertion, promptly inform Buyer. Buyer shall have the right
to control any resulting Proceedings and to determine whether and when to settle
any such claim, assessment or dispute, except to the extent such Proceedings or
determinations affect the amount of Taxes for which Sellers are liable under
this Agreement; provided, however, that Buyer agrees, unless otherwise required
by law, not to take any position that is inconsistent with a position taken by
CNI and its Affiliated Group with respect to Taxes on or prior to the Closing
Date, which position is reasonably likely to materially and adversely affect the
Tax liability of CNI or its Affiliated Group.
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7.9 Resolution of Disagreements Between Parent, CWI or CNI and Buyer. If
Sellers and Buyer disagree as to the amount of Taxes for which each is liable
under this Agreement or as to the allocation pursuant to Section 7.10, Sellers
and Buyer shall promptly consult each other in an effort to resolve such
dispute. If any such point of disagreement cannot be resolved within sixty (60)
days of the date of consultation, Sellers and Buyer shall within ten (10) days
after such sixty (60)-day period jointly select a nationally recognized
independent public accounting firm which has not, except pursuant to this
Section 7.9, performed any services since January 1, 1996 for any of Parent,
Sellers or Buyer or their respective Affiliated Groups or Subsidiaries, to act
as an arbitrator to resolve, within sixty (60) days after their selection, all
points of disagreement concerning Tax matters with respect to this Agreement and
presented to such accounting firm at the time of its selection. If no nationally
recognized independent public accounting firm meets the aforementioned standard,
Sellers and Buyer nonetheless shall attempt to agree on an accounting firm that
is satisfactory to both Parties. If the Parties cannot agree on the selection of
an accounting firm within such ten-day period, within two (2) business days
after such ten-day period, the Parties shall select an eligible nationally
recognized accounting firm by lot.
7.10 Allocation of Purchase Price. The Parties agree that the Purchase
Price (as finally adjusted pursuant to Section 2.2) and the liabilities of the
Alaska Entities (plus other relevant items), reduced by (i) $3,000,000 of the
Purchase Price that is properly allocable to the Alaska PCS Licenses and (ii)
$5,000,000 of the Purchase Price that is properly allocable to Sellers' covenant
in Section 6.4, will be allocated to the assets of the Alaska Entities for all
purposes (including Tax and financial accounting purposes) in a manner
consistent with the requirements of Regulations ss.ss. 1.338(h)(10)-1 and
1.338(h)-2T and mutually agreed upon by
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Sellers and Buyer. Buyer, the Alaska Entities, and Sellers will file, or cause
to be filed, all Tax Returns (including amended returns and claims for refund)
and information reports in a manner consistent with such allocation.
SECTION 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the Closing under this Agreement
are subject to the fulfillment prior to or on the Closing Date of the following
conditions precedent, except such of the following conditions precedent as shall
have been expressly waived in writing by Buyer.
8.1 Representations and Warranties. (a) The representations and warranties
of Sellers contained in this Agreement that contain the modifying language
"material," "Material," or "Material Adverse Effect" are true and correct in all
respects, and any such representations and warranties that are not so qualified
are true and correct in all material respects, in each case, on and as of the
date hereof and, with respect to the representations and warranties contained in
Section 3.16 and any other representations which speak as of August 31, 1998, on
and as of August 31, 1998, and, for purposes of Section 6.2 shall be deemed made
as of such date or dates, as the case may be.
(b) To the extent actions are taken by Sellers or the Alaska
Entities without the consent of the Consultant, or not taken after such
actions are requested to be taken by the Consultant (those so taken
without consent or not taken following such request being, "Seller
Actions"), any representations and warranties which have been affected by
such Seller Actions shall also be true and correct as of the Closing Date
with the same effect as though such representations and warranties had
been made as of such
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date, with respect only to such Seller Actions and the effects thereof,
and, for purposes of Section 6.2 shall be deemed made as of such date.
(c) The representations and warranties contained in Sections 3.1
through 3.6, 3.15, 3.21(p), 3.22, 3.25(a), 3.26(c) and 3.27, that contain
the modifying language "material," "Material," or "Material Adverse
Effect" shall also be true and correct in all respects, and any of such
representations and warranties that are not so qualified shall be true and
correct in all material respects, in each case, as of the Closing Date
with the same effect as though such representations and warranties had
been made as of such date and, for purposes of Section 6.2 shall be deemed
made as of such date.
8.2 Covenants. Sellers shall have performed, satisfied and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed, satisfied or complied with by them on or before the Closing
Date; provided that, for purposes of this Section 8.2, any action, or failure to
act, taken at the written request of, or pursuant to explicit approval or
consent of the Consultant or at the explicit direction of the Consultant shall
be deemed not to be a material breach of covenant or agreement or the material
failure to perform, satisfy or comply with any obligation contained herein.
8.3 Material Adverse Effect. From the date hereof until the Closing Date,
there shall have been no change that would have a Material Adverse Effect;
provided, however, that Material Adverse Effects shall not include changes as a
result of actions taken by or with the consent of the Consultant, changes in
accounting principles or interpretations adopted by the Financial Accounting
Standards Board, changes in general economic conditions, including any change in
the level of interest rates, or industry-wide changes in the regulatory
environment (including but not limited to the loss of, or changes resulting from
the loss of, the Rural
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Exemption (as defined in Section 251(f)(1) of the Communications Act)); provided
further, that, notwithstanding the foregoing, a Material Adverse Effect shall be
deemed to have occurred in the event that Buyer shall not have obtained,
pursuant to the Debt Commitments and in accordance with the terms set forth
therein, the funds that, when aggregated with the funds to be provided pursuant
to the Equity Commitment, are necessary to consummate the Purchase Transactions
contemplated hereby.
8.4 Certificates. Buyer shall have received certificates, dated the
Closing Date, signed by a duly authorized officer of each Seller, in such
officer's representative capacity, without personal liability, certifying to the
fulfillment of the conditions set forth in Sections 8.1, 8.2 and 8.3.
8.5 Certified Copy of Charter, Resolutions, etc. Sellers shall have
delivered to Buyer (i) copies, certified by the duly qualified and acting
Secretary or Assistant Secretary of each Seller of resolutions adopted by Boards
of Directors of such Sellers approving this Agreement and the consummation of
the transactions contemplated by this Agreement, (ii) certificates of incumbency
dated the Closing Date of all officers of Sellers who have been or will be
authorized to execute or attest to this Agreement, or any statement, certificate
or other instrument on behalf of Sellers each showing specimen signatures of
each such officer and executed by the President or a Vice President and the
Secretary or Assistant Secretary of each Seller and (iii) copies of the
documents required by Section 3.6, dated as of the Closing Date.
8.6 Opinion of Counsel for Sellers. Buyer shall have received an opinion
of Boles, Boles & Ryan, counsel for Sellers, dated the Closing Date, in form and
substance reasonably satisfactory to Buyer. In expressing any opinions as to
matters of fact relevant to conclusions of law, such counsel may rely upon
certificates of Sellers, the officers and agents of Sellers, and
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of public officials. In expressing any opinions as to matters involving the law
of other jurisdictions such counsel may rely on the opinion of other counsel.
8.7 Consents and Approvals. (i) All waiting periods applicable under the
HSR Act shall have expired or been terminated, (ii) all consents and approvals
required by the FCC and the APUC, in each case, in a form reasonably
satisfactory to Buyer, shall have been obtained, and (iii) all other
registrations, Permits, filings, applications, notices, consents, approvals,
orders, qualifications and waivers required to be obtained or made as of the
Closing Date shall have been filed, made or obtained, except, in the case of
this clause (iii), for such registrations, filings, notices, consents,
approvals, orders, qualifications and waivers which would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect
following the Closing.
8.8 Prohibitions. There shall have been no statute, rule, injunction,
restraining order, decree or other order of any nature promulgated, enacted,
entered or enforced by any Governmental Entity which shall remain in effect
which restrains, prohibits or delays the performance of this Agreement or
imposes significant penalties or damages on Buyer or the Alaska Entities with
respect to (or any other materially adverse relief or remedy in connection
with), the consummation of the Purchase Transactions or the performance of the
material obligations of the Buyer or the Alaska Entities hereunder, and there
shall be no Proceeding pending or threatened seeking such relief.
8.9 Resignations. Buyer shall have received from each director and officer
of each Alaska Entity from whom such a resignation is requested a resignation
from all directorships and offices held by such directors and officers in such
entities.
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8.10 Stock Certificates; Closing Documents. Sellers shall have delivered
to Buyer certificates representing the Alaska Stock, duly endorsed in blank or
accompanied by stock powers or other instruments of transfer duly executed in
blank, and bearing or accompanied by all requisite stock transfer stamps. All
Encumbrances on the Alaska Stock shall have been eliminated or discharged and
all Encumbrances on assets of the Alaska Entities, other than those set forth on
Schedule 8.10, shall have been eliminated or discharged, and Buyer shall have
received evidence thereof which is satisfactory to it. Sellers shall have
delivered to Buyer all documents or instruments required to be delivered
pursuant to Section 10.1.
8.11 Ancillary Agreements. Each of the Ancillary Agreements shall have
been executed and delivered by the appropriate Parties and shall be in full
force and effect as of the Closing Date.
8.12 Outstanding Indebtedness. Sellers shall have taken all necessary
actions, in a manner that does not require Sellers to prepay any outstanding
Indebtedness if the Purchase Transactions are not consummated, such that, as of
the Closing Date, all outstanding Indebtedness shall be prepayable and
accelerated as of the Closing Date with Buyer responsible for all costs,
expenses and fees related thereto. To the extent reasonably possible, Buyer
agrees to prepay all such outstanding Indebtedness, at the direction of Sellers,
on the Closing Date.
8.13 FIRPTA Affidavit. Sellers shall have delivered to Buyer an affidavit
(a so-called "FIRPTA affidavit") in form and substance reasonably satisfactory
to Buyer duly executed and acknowledged, certifying facts that would exempt the
transactions contemplated hereby from the provisions of the Foreign Investment
in Real Property Tax Act.
8.14 Intercompany Accounts. In accordance with Section 6.15, Sellers shall
cause all Intercompany Accounts maintained between any Alaska Entity and Sellers
or any Affiliate
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of Sellers to be satisfied and canceled and shall release and waive, in form and
substance reasonably satisfactory to Buyer, all claims of Sellers or any
Affiliate of Sellers, against any Alaska Entity. A positive net Combined
Intercompany Receivable balance shall be satisfied in accordance with Section
6.15(b). A negative net Combined Intercompany Receivable shall be satisfied
through conversion of the balance into an equity contribution from the Sellers
to the Alaska Entities.
SECTION 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
The obligations of Sellers under this Agreement are subject to the
fulfillment prior to or on the Closing Date of the following conditions
precedent, except such of the following conditions precedent as shall have been
expressly waived in writing by Sellers.
9.1 Representations and Warranties. The representations and warranties of
Buyer contained in this Agreement that contain the modifying language
"material," or "material adverse effect" are true and correct in all respects,
and any such representations and warranties that are not so qualified are true
and correct in all material respects, in each case, on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of such date.
9.2 Covenants. Buyer shall have performed, satisfied and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed, satisfied or complied with by it on or before the Closing Date.
9.3 Certificate. Sellers shall have received a certificate, dated the
Closing Date, signed by a duly authorized officer of Buyer, in such officer's
representative capacity, without
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personal liability, certifying to the fulfillment of the conditions set forth in
Sections 9.1 and 9.2 hereof.
9.4 Certified Copy of Resolutions. Buyer shall have delivered to Sellers
(i) copies, certified by the duly qualified and acting Secretary or Assistant
Secretary of Buyer, of resolutions adopted by Buyer's Board of Directors
approving this Agreement and the consummation of the transactions contemplated
by this Agreement, and (ii) certificates of incumbency dated the Closing Date of
all officers of Buyer who have been or will be authorized to execute or attest
to this Agreement, or any statement, certificate or other instrument on behalf
of Buyer, each showing specimen signatures of each such officer and executed by
the President or a Vice President and the Secretary or Assistant Secretary of
Buyer.
9.5 Opinion of Counsel for Buyer. Sellers shall have received an opinion
of Wachtell, Lipton, Rosen & Katz, counsel for Buyer, dated the Closing Date, in
form and substance reasonably satisfactory to Sellers. In expressing any opinion
as to matters of fact relevant to conclusions of law, such counsel may rely upon
certificates of Buyer, the officers and agents of Buyer, and of public
officials. In expressing its opinion as to matters involving the law of other
jurisdictions such counsel may rely on the opinion of other counsel.
9.6 Consents and Approvals. (i) All waiting periods applicable under the
HSR Act shall have expired or been terminated, (ii) all consents and approvals
required by the FCC and the APUC, in each case, in a form reasonably
satisfactory to Sellers shall have been obtained, and (iii) all other
registrations, permits, filings, applications, notices, consents, approvals,
orders, qualifications and waivers required to be obtained or made as of the
Closing Date shall have been filed, made or obtained, except, in the case of
this clause (iii), for such registrations, filings, notices, consents,
approvals, orders, qualifications and waivers which would not,
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individually or in the aggregate, reasonably be expected to have a material
adverse effect on Buyer's ability to consummate the transactions contemplated
by, or fulfill its obligations under, this Agreement.
9.7 Prohibitions. There shall have been no statute, rule, injunction,
restraining order, decree or other order of any nature promulgated, enacted,
entered or enforced by any Governmental Entity which shall remain in effect
which restrains, prohibits or delays the performance of this Agreements or
imposes significant penalties or damages on any Seller.
9.8 Closing Documents. Buyers shall have delivered to Sellers all other
documents or instruments required to be delivered pursuant to Section 10.2.
SECTION 10
CLOSING DOCUMENTS
10.1 By Sellers. In addition to any other documents or instruments to be
delivered by Sellers to Buyer, Sellers shall, on the Closing Date:
(a) deliver to Buyer certificates representing all of the
outstanding capital stock of the Alaska Entities, duly endorsed for
transfer, either in blank on the certificates or on separate stock powers
(assignments) accompanying the certificates, free of Encumbrances;
(b) deliver all minute books and stock registers and other records
of the Alaska Entities;
(c) deliver the certificates required by Section 8.4 and 8.5;
(d) deliver the legal opinion required by Section 8.6;
(e) deliver documents evidencing the continued existence or good
standing of the Alaska Entities;
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(f) deliver any resignations required by Section 8.9;
(g) deliver proof of acceleration of the Indebtedness required by
Section 8.12;
(h) deliver the FIRPTA Affidavit required by Section 8.14; and
(i) provide such other proof or indication of satisfaction of the
conditions set Forth in Section 8 as Buyer may reasonably request.
10.2 By Buyer. In addition to any other documents or instruments to be
delivered by Buyer to Sellers, Buyer shall, on the Closing Date:
(a) deliver the Purchase Price, as adjusted, by amounts equal to the
Adjustment Amount (or the Estimated Adjustment Amount as provided in
Section 2.2(c)) and the Additional Amount, in immediately available funds;
(b) deliver any amounts payable under the Transition Services
Agreement in immediately available funds;
(c) deliver the certificates required by Sections 9.3 and 9.4;
(d) deliver the legal opinion required by Section 9.5; and
(e) provide any such other proof or indication of satisfaction of
the conditions set forth in Section 9 as Sellers may reasonably request.
SECTION 11
TERMINATION
11.1 Right of Termination.
(a) This Agreement may be terminated:
(i) at any time prior to the Closing by the mutual written
consent of Sellers and Buyer;
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(ii) by Sellers or Buyer by written notice to the other if the
Closing shall not have occurred on or before the date that is one
year from the date hereof; provided, however, that the right to
terminate this Agreement under this Section 11.1(a)(ii) shall not be
available to Sellers or Buyer if Sellers' or Buyer's, respectively,
failure to fulfill or perform any obligation under this Agreement
has been a substantial cause of, or has substantially resulted in,
the failure of the Closing to occur on or before such date;
(iii) by Sellers or Buyer in the event there is a final and
nonappealable order of a Governmental Entity prohibiting the
Purchase Transactions contemplated hereby;
(iv) by Buyer or Sellers in the event that any condition to
the obligations of such Party contained in Section 8 and 9,
respectively, becomes incapable of being satisfied prior to the
first anniversary of the date hereof;
(v) by Buyer if there has been a material breach by any Seller
of a covenant and such breach has not been cured within 30 days
after receipt of written notice thereof from Buyer;
(vi) by Sellers if there has been a material breach by Buyer
of a covenant and such breach has not been cured within thirty (30)
days after receipt of written notice thereof from Sellers;
(vii) by Sellers upon 10 business days' written notice if
Buyer falls to maintain the Financing Commitments; or
(viii) by Buyer if a Material Adverse Effect was in effect
prior to the date hereof.
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11.2 Effect of Termination. In the event of termination of this Agreement
pursuant to Section 11.1, except as provided in this Section 11.2, Section 6.9,
Section 12.1, and Section 12.3 hereof, this Agreement shall forthwith become
void and have no effect, and there shall be no liability on the part of Buyer or
Sellers, or their respective officers, directors or agents, except that nothing
contained in this provision shall relieve any Party from liability for any
willful and knowing breach of any covenant or any willful and knowing breach of
any representation or warranty. The Parties acknowledge that the sole remedy for
any breach prior to the Closing Date (other than a willful and knowing breach)
is to assert the failure of a condition under Section 8 or Section 9 or to
assert its rights under Sections 11.1(a)(v), (vi), (vii) or (viii).
SECTION 12
MISCELLANEOUS
12.1 Fees and Expenses. Except as disclosed on Schedule 12.1, the Parties
represent to each other that no broker or other person is entitled to any fee or
commission in connection with the negotiation or consummation of the
transactions contemplated hereby, except for the fees of attorneys and
accountants for the respective Parties. Sellers and Buyer shall each pay their
own expenses incident to this Agreement and the performance of their respective
obligations hereunder, including the fees of their respective accountants,
counsel and investment bankers, provided, however, that any filing fees for (i)
the HSR Act application shall be paid by Buyer and (ii) the APUC and the FCC
shall be paid equally by Sellers on the one hand and Buyer on the other hand.
12.2 Rights of Third Parties. Nothing in this Agreement, other than the
indemnification provisions contained in Sections 6.2 and 6.3 whether express or
implied, is
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intended to confer any rights or remedies under or by reason of this Agreement
on any Person other than the Parties hereto, their respective successors and
permitted assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third person to any Party to this
Agreement, nor shall any provision give any third person any right of
subrogation or action over or against any Party to this Agreement.
12.3 Confidential Information.
(a) Buyer will hold in strict confidence and will cause its
attorneys, accountants, employees, advisers and other agents acting for or
on its behalf to hold in strict confidence, all documents, information
concerning the Sellers and, prior to the Closing Date, information
concerning the Alaska Entities, obtained pursuant to this Agreement or in
connection with the transactions provided for herein (except to the extent
that such documents or information (i) are required to be disclosed by
Applicable law or any Governmental Entity; (ii) are already generally
available to the public other than as a result of a disclosure by Buyer or
its representatives or (iii) become lawfully available to Buyer on a
nonconfidential basis from any third party (excluding Affiliates of Buyer)
who is not under an obligation of confidence) and, if the transactions
provided for herein are not consummated, such confidence shall be
maintained and all such documents shall be returned to Sellers together
with any copies thereof.
(b) Each of the Sellers will hold in strict confidence and will
cause its attorneys, accountants, employees, advisers and other agents
acting for or on its behalf to hold in strict confidence, all documents
and information concerning the Alaska Entities (except to the extent that
such documents or information (i) are required to be disclosed by
Applicable law or any Governmental Entity or (ii) are already generally
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available to the public prior to the date hereof or (iii) following the
date hereof, are generally available other than as a result of a
disclosure by any Seller or its representatives). As soon as practicable
following the Closing Date, Sellers will deliver to Buyer all materials,
documents or information related to the Alaska Entities and not required
to be retained by Sellers pursuant to Applicable Law.
12.4 Waiver. Sellers on the one hand and Buyer on the other may, by
written instrument, (i) extend the time for the performance of any of the
obligations or other acts of the other, (ii) waive any inaccuracies of the other
in its representations and warranties, (iii) waive compliance with any of the
covenants or closing conditions of the other contained in this Agreement and
(iv) waive the other's performance of any of the obligations set out in this
Agreement, provided, however, that no Party may grant any waiver, the effect of
which would be unlawful. No waiver by a Party to this Agreement of a breach of
any term or condition hereof shall be construed to operate as a waiver of a
subsequent breach of any such term or condition or of any other term or
condition hereof.
12.5 Specific Performance. The Parties acknowledge that their obligations
hereunder are unique, and that it would be extremely impracticable to measure
the resulting damages if any Party should default in its obligations under this
Agreement. Accordingly, in the event of the failure by a Party to consummate the
transactions contemplated hereby, or perform its obligations hereunder, which
failure constitutes a breach hereof by such Party, the nondefaulting Party may,
in addition to any other available rights or remedies, sue in equity for
specific performance.
12.6 Entirety of Agreement. This Agreement, including the exhibits and
schedules hereto, states the entire agreement of the Parties and merges all
prior negotiations, agreements
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and understandings, if any. The Parties agree that in dealing with third parties
no contrary representations will be made.
12.7 Prohibited Negotiations. Prior to the Closing Date or the termination
of this Agreement, Sellers will not, and will cause their respective Affiliates,
directors, officers, employees and representatives not to, solicit, encourage or
respond to inquiries or proposals with respect to, or furnish any information
relating to or participate in any negotiations or discussions concerning, any
acquisition or purchase of all or substantially all of the stock, the assets of,
or of a substantial equity interest in, or any business combination with, any of
the Alaska Entities, other than as contemplated by this Agreement, and Sellers
shall notify Buyer immediately if any such inquiries or proposals are received
by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated with any Seller or Alaska Entity.
12.8 Survival. The representations and warranties made by or on behalf of
(i) Sellers and (ii) Buyer in this Agreement shall survive for a period of two
(2) years from the Closing Date, except for (a) the representations and
warranties contained in Sections 3.1, 3.2 and 3.5 (but only as the
representations and warranties in Section 3.5 relate to title to the stock of
any Alaska Entity) which will survive without limit; (b) the representations and
warranties contained in Section 3.19, which will survive until November 1, 2002;
and (c) the representations and warranties contained in Section 3.21, which will
survive for six (6) months beyond the applicable statute of limitations. The
covenants and agreements set forth herein shall survive the Closing in
accordance with their terms. The Parties hereto, in executing and carrying out
the provisions of this Agreement, are relying solely on the representations,
warranties, covenants and agreements contained or referred to herein and not
upon any
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representation, warranty, covenant, agreement, promise or information, written
or oral, made by any Person or entity other than as specifically set forth
herein.
12.9 Arbitration. Except as set forth in Section 2.2(e), or in any
Sections permitting specific performance or injunctive relief, any claim,
controversy or other dispute arising out of this Agreement shall be resolved by
arbitration. A single arbitrator having at least five years experience in the
telephone industry shall conduct the arbitration under the then current rules of
The American Arbitration Association. Such arbitrator shall be mutually agreed
upon by the Parties. If the Parties are unable to agree upon an arbitrator each
Party shall select a natural person who meets the qualifications for the
arbitrator. Together these two individuals shall select a third natural person
who meets the arbitrator criteria, and such third person shall serve as the
arbitrator. The Federal Arbitration Act, 9 U.S.C. ss.ss. 1-15, not state law,
shall govern the arbitrability of all claims. The arbitrator shall have
authority to award compensatory damages only. Notwithstanding the preceding
sentence, the non-prevailing Party shall bear responsibility for the prevailing
Party's costs and attorneys' fees. The arbitrator's award shall be final and
binding and may be entered in any court having jurisdiction thereof. The
arbitration shall be conducted in Dallas, Texas.
12.10 Attorney Fees. If any arbitration, legal action or other Proceeding
is brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing Party shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it may be
entitled.
12.11 Notices. Any notices or other communications required or permitted
under this Agreement shall be sufficiently given if sent by commercial overnight
delivery, facsimile
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(followed by otherwise sufficient delivery within a reasonable time), registered
or certified mail, postage prepaid, addressed as follows:
SELLERS:
Century Telephone Enterprises, Inc.
100 Century Park Drive
Monroe, Louisiana 71203
Attn: W. Bruce Hanks
Facsimile No.: (318) 362-1684
Copy to:
Harvey P. Perry, Esq.
General Counsel
Century Telephone Enterprises, Inc.
100 Century Park Drive
Monroe, LA 71203
Facsimile No.: (318) 388-9488
and
William R. Boles, Jr., Esq. and
G. Robert Collier, Jr., Esq.
Boles, Boles & Ryan
1805 Tower Drive
Monroe, LA 71201
Facsimile No. (318) 329-9150
BUYER:
W. Dexter Paine III
ALEC Acquisition Corporation
c/o Fox Paine & Company LLC
950 Tower Lane
Suite 1950
Foster City, CA 94404
Facsimile No.: (650) 525-1396
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<PAGE>
Copies to:
Mitchell S. Presser
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Facsimile No. (212) 403-2000
Deborah J. Harwood
LEC Consulting Corporation
100 West 11th Street, Suite A
Vancouver, Washington 98660
Facsimile No. (360) 993-5156
or to such other address as shall be furnished in writing by any party and any
such notice or communications shall be deemed to have been given as of the date
actually received.
12.12 Amendment. This Agreement may be modified or amended only by an
instrument in writing, duly executed by the Parties hereto.
12.13 Further Assurances.
(a) After the Closing Date, the Parties, without further
consideration, agree to execute such additional documents as may be
reasonably requested by the other Party to carry out the purposes and
intent of this Agreement and to fulfill their respective obligations
hereunder. In case at any time after the Closing Date any further action
is necessary or desirable to carry out the purposes of this Agreement, the
proper officers and directors of each Party to this Agreement shall take
all such necessary or desirable action.
(b) Prior to and after the Closing Date, to the extent reasonably
requested by Buyer, Sellers agree to provide the Alaska Entities with
copies of and access to all records, data or other information held by
Sellers or its Affiliates (other than the Alaska Entities) relating to the
Alaska Entities, and to cooperate with and to assist Buyer in the
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preparation of audited financial statements of the Alaska Entities, to the
extent such financial statements relate to periods prior to the Closing.
(c) Without limiting Sellers' obligations otherwise under this
Agreement, Sellers agree that to the extent there are any assets,
services, facilities, rights, interests or agreements needed for the
operation of the Business, and not transferred to Buyer as of the Closing
Date or provided pursuant to the Transition Services Agreement, Sellers
will work with Buyer to find a solution for the Buyer to obtain such
needed assets, services and facilities.
12.14 Governing Law. This Agreement shall be construed and interpreted and
the rights of the Parties covered by and enforced in accordance with the laws of
the State of Washington; provided, however, that any dispute regarding the
reasonableness of the covenants and agreements set forth in Sections 6.4 and
6.11 hereof, or the territorial scope or duration thereof, shall be governed by
the laws applicable to such dispute.
12.15 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be one and the same Agreement and shall become
effective when one or more counterparts have been signed by each Party and
delivered to the other Party.
12.16 Binding Effect; Assignment. This Agreement shall be binding on, and
shall inure to the benefit of, the Parties hereto and their respective legal
representatives, successors and assigns; provided, however, that Buyer may not
assign its rights hereunder (other than to any Subsidiary or Affiliate of Buyer
to which assignment is expressly allowed) without the prior written consent of
Sellers and Sellers may not assign their rights hereunder without the prior
written consent of Buyer.
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12.17 Meanings of Pronouns, Singular and Plural Words. All pronouns used
in this Agreement shall be deemed to refer to the masculine, feminine, neuter,
singular and plural, as the identity of the person to which or to whom reference
is made may require. Unless the context in which it is used shall clearly
indicate to the contrary, words used in the singular shall include the plural,
and words used in the plural shall include the singular.
12.18 Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
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IN WITNESS WHEREOF, CENTURYTEL OF THE NORTHWEST, INC. has executed this
Agreement this 14th day of August, 1998.
CENTURYTEL OF THE NORTHWEST, INC.:
BY: /s/ W. Bruce Hanks
--------------------------------
ITS:
-------------------------------
IN WITNESS WHEREOF, CENTURYTEL WIRELESS, INC. has executed this Agreement
this 14th day of August, 1998.
CENTURYTEL WIRELESS, INC.:
BY: /s/ W. Bruce Hanks
--------------------------------
ITS:
-------------------------------
IN WITNESS WHEREOF, BUYER has executed this Agreement this 14th day of
August, 1998
ALEC ACQUISITION CORPORATION:
BY: /s/ W. Dexter Paine
--------------------------------
ITS: President
-------------------------------
SIGNATURE PAGE TO THAT CERTAIN PURCHASE AGREEMENT BY AND BETWEEN ALEC
ACQUISITION CORPORATION, CENTURYTEL OF THE NORTHWEST, INC., F/K/A PACIFIC
TELECOM, INC., AND CENTURYTEL WIRELESS, INC. F/K/A CENTURY CELLUNET, INC., DATED
AUGUST 14th 1998.
<PAGE>
Exhibit 2.2
================================================================================
ASSET PURCHASE AGREEMENT
By and Between
ALASKA COMMUNICATIONS SYSTEMS, INC.
and
THE MUNICIPALITY OF ANCHORAGE
Dated as of October 20, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
RECITALS
1. Assets to be Acquired ........................................... 1
1.1 Included Assets ........................................... 1
1.2 Excluded Assets ........................................... 2
2. Purchase Price: Assumption of Liabilities ...................... 2
2.1 Purchase Price ............................................ 2
2.2 Payment of Purchase Price ................................. 2
2.3 Assumption of Liabilities ................................. 3
2.4 Liabilities Not Assumed ................................... 5
2.5 Cash and Net Plant Adjustment ............................. 7
2.6 The Report ................................................ 8
3. Transfer and Assignment of Assets; Liabilities .................. 9
3.1 Instruments of Conveyance and Transfer .................... 9
3.2 Assignment of Certain Contracts and Rights ................ 10
3.3 Further Assurances ........................................ 10
4. Closing ......................................................... 11
4.1 Closing Date and Time ..................................... 11
5. Representations and Warranties of the Seller .................... 12
5.1 Standing and Power ........................................ 12
5.2 Authority ................................................. 12
5.3 Financial Information ..................................... 13
5.4 Absence of Certain Changes or Events ...................... 14
5.5 Title to Properties; Absence of Liens ..................... 17
5.6 List of Properties, Contracts and Other Data .............. 18
5.7 Litigation ................................................ 20
5.8 Employee Benefit Plans .................................... 20
5.9 Government Approvals ...................................... 21
5.10 Insurance ................................................. 22
5.11 Condition of Assets ....................................... 22
5.12 Accounts Receivable and Accounts Payable .................. 23
5.13 No Defaults ............................................... 23
5.14 Compliance with Applicable Law ............................ 23
5.15 Absence of Undisclosed Liabilities ........................ 24
5.16 Taxes ..................................................... 24
5.17 Brokers ................................................... 25
5.18 Hazardous Substances ...................................... 25
5.19 Underground Storage ....................................... 26
<PAGE>
5.20 Exclusivity of Representations and Warranties ............. 26
6. Representations and Warranties of the Buyer ..................... 27
6.1 Organization and Standing ................................. 27
6.2 Authority ................................................. 27
6.3 Financing ................................................. 28
6.4 Brokers ................................................... 28
7. Covenants of the Seller ......................................... 28
7.1 Access to Properties, Books and Records ................... 28
7.2 Conduct of Business ....................................... 29
7.3 Defeasance ................................................ 32
7.4 Consulting Agreement ...................................... 32
7.5 North Wire Center ......................................... 33
8. Covenants of the Buyer .......................................... 33
8.1 Interconnection Agreements and Employees .................. 33
8.2 As Is ..................................................... 33
8.3 Cellular Licenses ......................................... 33
9. Covenants of the Seller and the Buyer ........................... 34
9.1 Regulatory Approvals ...................................... 34
9.2 Inspection and Preservation of Records; Further
Assistance ................................................ 35
9.3 Public Announcements ...................................... 37
9.4 Intervention in Commission Hearings ....................... 37
9.5 Taxes ..................................................... 37
9.6 Allocation of Purchase Price .............................. 37
10. Conditions to Obligations of the Seller ......................... 38
10.1 Compliance with Agreement ................................. 38
10.2 Representations and Warranties ............................ 38
10.3 Certificate of the Buyer .................................. 38
10.4 Consents and Approvals .................................... 38
10.5 All Proceedings to be Satisfactory ........................ 39
10.6 Opinions of Counsel ....................................... 39
10.7 Defeasance ................................................ 39
10.8 Acceptance by the Municipal Assembly ...................... 40
10.9 Adverse Proceedings ....................................... 40
11. Conditions to Obligations of the Buyer .......................... 40
11.1 Compliance with Agreement ................................. 40
11.2 Representations and Warranties ............................ 40
11.3 Certificate of the Seller ................................. 41
11.4 Consents and Approvals .................................... 41
11.5 All Proceedings to be Satisfactory ........................ 41
11.6 Opinions of Counsel ....................................... 41
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11.7 Defeasance; Removal of Liens .............................. 42
11.8 Acceptance by the Municipal Assembly ...................... 42
11.9 Adverse Proceedings ....................................... 42
11.10 Third-Party Consents and Approvals ........................ 42
11.11 Financing ................................................. 43
12. Termination ..................................................... 43
13. Amendment and Waivers ........................................... 44
13.1 Amendments, Modifications, etc. ........................... 44
13.2 Waivers ................................................... 44
14. Survival of Representations and Warranties ...................... 45
15. Indemnification ................................................. 45
15.1 Indemnification by the Buyer .............................. 45
15.2 Indemnification by the Seller ............................. 45
15.3 Procedure for Indemnification with Respect to
Third-Party Claims ........................................ 46
15.4 Mutual Indemnification .................................... 47
16. Expenses ........................................................ 48
17. Notices ......................................................... 49
18. Assignment ...................................................... 50
19. Entire Agreement ................................................ 50
20. Specific Performance: Third-Party Beneficiaries ................ 50
21. Counterparts .................................................... 51
22. Section Headings ................................................ 51
23. Applicable Law .................................................. 51
24. Confidential Information ........................................ 51
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<PAGE>
INDEX TO EXHIBITS AND SCHEDULES
Schedules and Exhibits Section Reference Description
- ---------------------- ----------------- -----------
1.1 1.1 Included Assets
1.2 1.2 Excluded Assets
2.3(k) 2.3(k) Assumed Liabilities
5.2(b) 5.2(b) Seller's Conflicting
Laws, Agreements and
Orders
5.2(c) 5.2(c) Seller's Required
Approvals for Transaction
5.3 5.3 Financial Information
5.4 5.4 Material Adverse Changes
5.5 5.5 Liens and Encumbrances
on the Assets
5.6 5.6 Properties, Contracts
and other Data
5.7 5.7 Litigation
5.8 5.8 Employee Benefit Plans
5.9 5.9 Government Approvals
Required to Conduct the
Business
5.10 5.10 Insurance
5.11 5.11 Condition of the Assets
5.13 5.13 Defaults
5.14 5.14 Compliance with
Applicable Law
5.15 5.15 Absence of Undisclosed
Liabilities
5.18 5.18 Hazardous Substances
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Schedules and Exhibits Section Reference Description
- ---------------------- ----------------- -----------
5.19 5.19 Underground Storage
6.2(a) & (b) 6.2(a) & (b) Buyer's Conflicting
Agreements and Orders
6.2(c) 6.2(c) Buyer's Required
Governmental Approvals
7.3 7.3 Revenue Bonds
Exhibit A 2.3 Form of Assumption
Agreement
Exhibit B 3.1 Form of Bill of Sale and
Assignment Agreement
Exhibit C 10.6 Opinion of Counsel for
the Buyer
Exhibit D 11.6 Opinion of City Attorney
of the Seller
Exhibit E 11.6 Opinion of Special
Counsel for the Seller
Exhibit F 11.6 Opinion of Bond Counsel
for the Seller
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ASSET PURCHASE AGREEMENT
This Agreement ("Agreement"), dated as of October 20, 1998, is being
made and entered into by and between Alaska Communications Systems, Inc., a
Delaware corporation (the "Buyer"), and the Municipality of Anchorage, a
municipality located in the State of Alaska (the "Seller").
W I T N E S S E T H:
WHEREAS, the Anchorage Telephone Utility ("ATU") is a telephone
exchange provider owned by the Seller which provides a variety of
telecommunications services, including local exchange, interexchange, cellular
and other wireless services to customers in Alaska (the "Telephone Operations");
and
WHEREAS, the Seller directly or indirectly holds title to and
ownership of all real and personal property operated and managed as ATU; and
WHEREAS, the Seller wishes to sell to the Buyer, and the Buyer
wishes to purchase from the Seller, subject to the terms and conditions
hereinafter set forth, the assets, properties, rights and businesses operated or
managed as ATU, subject to all liabilities of or related to ATU (other than the
liabilities excluded pursuant to Section 2.4 hereof (the "Excluded
Liabilities")), as more particularly described herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. Assets to be Acquired.
1.1 Included Assets. At the Closing (as defined in Section 4.1
hereof) and subject to the terms and conditions hereinafter set forth, the
Seller shall sell, assign, convey, transfer and deliver, or cause to be sold,
assigned, conveyed, transferred and delivered, to the
<PAGE>
Buyer and its successors and assigns, and the Buyer shall purchase, all of the
assets, properties, rights and businesses of the Seller relating to the business
and operations managed as or by ATU or any of the subsidiaries listed in Item
(q) of Schedule 1.1 (the "Subsidiaries"), including without limitation the
assets, or categories thereof, set forth on Schedule 1.1 hereto (the "Assets"),
subject to Section 1.2 hereof.
1.2 Excluded Assets. Notwithstanding anything to the contrary
provided in Section 1.1 hereof, none of the assets set forth on Schedule 1.2
hereto (the "Excluded Assets") shall be included in the Assets to be purchased
and sold hereunder.
2. Purchase Price; Assumption of Liabilities.
2.1 Purchase Price. The aggregate purchase price for the Assets
to be transferred hereunder shall be (a) $295,000,000 subject to adjustment
as described in Section 2.5 hereof (the "Purchase Price"), and (b) the
assumption of the liabilities of ATU as provided in Section 2.3 hereof,
subject to the provisions of Section 2.4 hereof.
2.2 Payment of Purchase Price. The Purchase Price shall be payable
as follows:
(a) On or before 2:00 p.m., Anchorage, Alaska time, on or before the
date 30 days following the date on which the Municipal Assembly of the Seller
shall have accepted the Buyer's bid as contemplated by Sections 10.8 and 11.8
hereof, an amount equal to one percent (1%) of the Purchase Price (the "Down
Payment") shall be paid by the Buyer to the Seller by wire transfer of
immediately available funds to such bank account or accounts as may be
designated in writing by the Seller.
The Down Payment shall be held by the Seller and invested in a
manner mutually acceptable to the Buyer and the Seller. Any interest earned on
such investment shall accrue to
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<PAGE>
the benefit of the Seller; provided, however, that if and only if the Buyer
should terminate this Agreement pursuant to Section 12(d) hereof, then all such
interest theretofore accrued and accruing shall be paid to the Buyer.
The principal amount of the Down Payment shall be a credit against
the Purchase Price at the Closing. In the event this Agreement is terminated
without a Closing, the disposition of the principal amount of the Down Payment
shall be as follows:
(i) If this Agreement is terminated pursuant to Section 12(a), (d)
or (f) (other than in the circumstance described in clause (iii) below)
hereof, then the Seller shall return the principal amount of the Down
Payment to the Buyer.
(ii) If this Agreement is terminated pursuant to the provisions of
Section 12(e) hereof, the Seller may retain the principal amount of the
Down Payment.
(iii) If this Agreement is terminated pursuant to the provisions of
Section 12(c) hereof, or Section 12(f) hereof and, on the date of such
termination, the conditions described in Sections 10.4 and 11.4 shall not
have been satisfied, then the Seller may retain fifty percent (50%) of the
principal amount of the Down Payment and the Seller shall return the
balance of the principal amount of the Down Payment to the Buyer.
(b) At the Closing, the sum of $295,050,000, subject to the
adjustment described in Section 2.5, which represents the balance of the
Purchase Price, shall be paid by the Buyer to the Seller by wire transfer of
immediately available funds to such bank account or accounts as may be
designated in writing by the Seller.
2.3 Assumption of Liabilities. At the Closing, and as additional
consideration for the purchase of the Assets, the Buyer shall execute and
deliver to the Seller an assumption agreement, in substantially the form of the
Assumption Agreement attached hereto as Exhibit A,
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<PAGE>
pursuant to which the Buyer shall agree, subject to Section 2.4 hereof, to pay,
perform and discharge when due, to the extent the same are unpaid, unperformed
or undischarged on the Closing Date, all of the liabilities and obligations of
the Seller with respect to the use of the Assets and the Telephone Operations
(the "Liabilities"), including, without limitation:
(a) All liabilities and obligations reflected on the audited balance
sheet of ATU as of December 31, 1997 and the related audited statements of
revenues and expenses, retained earnings and changes in financial position for
the 12-month period then ended, including the notes thereto (the "1997 Financial
Statements") and not previously discharged;
(b) All liabilities and obligations incurred in the ordinary course
of business and consistent with past practices between January 1, 1998 and the
Closing Date;
(c) All liabilities and obligations consented to by the Buyer in
writing pursuant to this Agreement or otherwise;
(d) All liabilities and obligations which arise under the terms of
any contract, agreement, license, lease, sales order, purchase order or other
commitment which is assigned, or the benefits of which are to be provided, to
the Buyer hereunder;
(e) All liabilities and obligations incurred in the ordinary course
of business and consistent with past practices, whether occurring prior to, on
or after the Closing Date, which are not required to be reflected as liabilities
on the 1997 Financial Statements under generally accepted accounting principles,
consistently applied;
(f) All workers compensation, automobile and similar liabilities for
personal injuries, in each case to the extent such liability arises from an
injury, event or occurrence, whether occurring prior to, on or after the Closing
Date;
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(g) All insurance premiums or other amounts owing to maintain
insurance (including self-insurance), or retroactive assessments based upon
claims described in the preceding subsection (f);
(h) All liabilities and obligations arising out of litigation or
administrative proceedings, whether existing prior to, on or after the Closing
Date;
(i) All liabilities and obligations for sales, transfer or similar
taxes arising out of the transactions contemplated by this Agreement;
(j) All liabilities and obligations, whether asserted or unasserted,
known or unknown, (i) directly or indirectly arising out of or relating to any
claims or controversies pending or threatened, whether prior to, on or after the
Closing Date between the Seller and any of its employees, former employees,
employees' collective bargaining representatives or job applicants, or any
association or group of such persons, with respect to ATU (including, but not
limited to, claims or controversies asserted pursuant to any federal, state or
local constitution, statute, law, regulation, rule, collective bargaining
agreement or ordinance relating in whole or in part to the employment of labor
and equal employment opportunity) or (ii) directly or indirectly relating to any
action which the Seller took or failed to take with regard to such persons and
with respect to ATU, whether prior to, on or after the Closing Date; and
(k) The liability of Seller to the Alaska Public Employees'
Retirement System Plan ("PERS") resulting from the vesting of PERS benefits as a
result of the sale of the ATU as specified in Schedule 2.3(k) hereto.
2.4 Liabilities Not Assumed. Notwithstanding anything in this
Agreement or the Assumption Agreement to the contrary, the Buyer shall not
assume any, and the Seller shall retain and be responsible for all, of the
following liabilities and obligations of the Seller: (a) all
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liabilities and obligations arising under or in connection with all revenue
bonds issued by the Seller which are or were secured by a pledge of revenues
derived from the operation of the Assets, including, without limitation, all
liabilities and obligations incurred in connection with the issuance, defeasance
or redemption of such revenue bonds; (b) all liabilities and obligations of the
Seller for income-based taxes arising as a result of the sale by the Seller of
the Assets or the assumption by the Buyer of any liabilities in accordance with
this Agreement; (c) all liabilities and obligations of the Seller arising under
or in connection with any and all ATU Plans, as defined in Section 5.8 hereof,
and any and all Multiemployer Plans and Multiple Employer Plans, as defined in
Section 5.8 hereof, to which the Seller has made contributions; provided,
however, that the Buyer shall assume all, and the Seller shall not retain or be
responsible for any, liabilities and obligations of the Seller with respect to
medical, disability and group life benefits (other than benefits payable after
retirement) and the Multiple Employer Plans and Multiemployer Plans described in
Section 5.8(b)(iii) hereof, other than liabilities and obligations (i) under the
PERS (but excluding the Buyer's obligation to pay the amount specified in
Section 2.3(k) hereof), (ii) for penalties for the Seller's noncompliance with
applicable law, (iii) for contributions required to be made to such Multiple
Employer Plans and Multiemployer Plans prior to the Closing Date and (iv)
resulting from the full or partial withdrawal by the Seller from any Multiple
Employer Plan or Multiemployer Plan; (d) all liabilities and obligations of the
Seller required to be disclosed to the Buyer under the terms of this Agreement
of which the Seller has actual knowledge on the Closing Date but intentionally
decides not to disclose to the Buyer; (e) all liabilities and obligations of the
Seller arising in respect of or in connection with any of the assets listed on
Schedule 1.2 hereto; (f) all liabilities and obligations of the Seller, the
assumption of which by the Buyer would not be permitted by law because the
Seller is a
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governmental entity and the Buyer is not; (g) all liabilities and obligations of
the Seller for "Arbitrage payable," as such term is used in the 1997 Financial
Statements; and (h) all liabilities and obligations for all MUSA (as defined
herein) payments, the 1998 revenue distribution and the 1999 revenue
distribution (all of which the Seller is expected to pay prior to Closing). For
the purposes of this Section 2.4, the Seller shall be deemed to have actual
knowledge of a liability or obligation if, and only if, the Seller's Mayor, a
member of either the ATU Committee of Seller's Municipal Assembly or Executive
Committee, any official (elected or appointed) of the Seller with a rank of
director or higher, or any officer of ATU with the rank of division manager or
higher has actual knowledge of such liability or obligation.
2.5 Cash and Net Plant Adjustment. The Purchase Price shall be
adjusted upward (to the extent that the Cash and Net Plant Adjustment described
below is a negative number) or downward (to the extent that the Cash and Net
Plant Adjustment described below is a positive number). The Cash and Net Plant
Adjustment shall be calculated as of the Closing Date, and be equal to
$307,121,987 less the sum of (a) all cash and cash equivalents of ATU, MACtel,
Inc. ("MACtel") and ATU Long Distance, Inc. ("ATU-LD") included in the Assets as
described in item (m) of Schedule 1.1 hereto, but excluding all amounts in the
accounts of Sellers entitled "Revenue Bond Reserve Investment," and (b) the book
value of (i) "Net telephone plant" of ATU, as such term is used in the 1997
Financial Statements and the Interim Financial Statements (as defined herein),
(ii) "Property and equipment" less "accumulated depreciation" of MACtel, and
(iii) "Total Fixed Assets" of ATU-LD, in the case of (ii) and (iii) as such
terms are used in the Interim Financial Statements, included in the Assets
transferred pursuant hereto, computed in accordance with generally accepted
accounting principles applied on a consistent basis with the Interim Financial
Statements. At the Closing, the Seller shall provide to the Buyer a good faith
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estimate of the Cash and Net Plant Adjustment, certified by the Chief Financial
Officer of the Seller, and the payment on the Closing Date described in Section
2.2(b) shall be based on such good faith estimate. Within 5 days after the
Report (as defined in Section 2.6) becomes final and binding, the Seller shall
pay to the Buyer or the Buyer shall pay to the Seller without interest, the
amount of any differences between the estimated Cash and Net Plant Adjustment
and the Cash and Net Plant Adjustment as determined from the Report. Such
payment shall be by wire transfer of immediately available funds to a bank
account designated in writing by the recipient of such payment.
2.6 The Report. In order to perform the calculations required for
the adjustment called for in Section 2.5, within 30 days after the Closing Date,
the Buyer shall prepare and deliver to the Seller, or cause to be prepared and
delivered to the Seller, a report setting forth the sum of the items described
in Section 2.5(a) and (b) as of the Closing Date (the "Report"). The Report
shall be prepared in conformity with the accounting practices and procedures
used to prepare the 1997 Financial Statements and the Interim Financial
Statements (as defined in Section 5.3 hereof) and on the basis used in
calculating the Cash and Net Plant Adjustment pursuant to Section 2.5, and shall
be certified by the Chief Financial Officer of the Buyer. The Buyer shall give
the Seller and its employees and agents such assistance and access to the
assets, books and records of ATU during normal business hours as the Seller
shall reasonably request to enable the Seller to review and observe preparation
of the Report. The Seller and its employees and agents shall have the
opportunity to observe the taking of the inventory of ATU, and to examine the
work papers, schedules and other documents prepared by the Buyer, in connection
with the preparation of the Report. The Report shall be final and binding on the
Buyer and the Seller unless within 15 days after receiving such Report the
Seller
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delivers to the Buyer a written notice in reasonable detail of any objections to
such Report. If such a notice is delivered, and the Buyer and the Seller shall
negotiate in good faith with each other to resolve the objections, and if they
are able to resolve the objections, the Report shall be deemed final and binding
on the Buyer and the Seller upon such resolution. If the Buyer and the Seller
are unable to reach agreement within 30 days after such notice is delivered, the
dispute shall be resolved by a firm of independent accountants of nationally
recognized standing selected mutually by the Buyer and the Seller. The Buyer and
the Seller shall instruct such firm to resolve the dispute within 30 days, and
shall bear the fees and costs of such firm equally. The resolution of the
dispute by the firm of accountants shall be final and binding on the Buyer and
the Seller.
3. Transfer and Assignment of Assets; Liabilities.
3.1 Instruments of Conveyance and Transfer. The sale, assignment,
conveyance, transfer and delivery of the Assets shall be effected by the
Seller's execution and delivery to the Buyer, on the Closing Date, of a bill of
sale in substantially the form of the Assignment and Bill of Sale attached
hereto as Exhibit B, together with such other quitclaim deeds (or the local
equivalent thereof), bills of sale, endorsements, assignments and other
instruments of transfer and conveyance in form and substance sufficient to vest
in the Buyer all of the Seller's right, title and interest in and to the Assets
and as shall reasonably be required by the Buyer or its counsel. In addition, on
the Closing Date the Seller shall transfer to the Buyer, by wire transfer of
immediately available funds to such bank account or accounts as may be
designated in writing by the Buyer, all cash and cash equivalents included in
the Assets, including without limitation all amounts in the accounts of the
Seller entitled "Petty Cash," "Equity in General Cash Pool," and "Equity in
Construction Cash Pool" but excluding all
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amounts in the accounts of the Seller entitled "Revenue Bond Reserve
Investment," and any other amounts which the Buyer and the Seller agree should
be held in such bank account or accounts as reserves, which amounts will not be
considered in calculating the Cash and Net Plant Adjustment.
3.2 Assignment of Certain Contracts and Rights. The Seller shall use
its reasonable best efforts prior to and, if necessary, after the Closing Date
to obtain such consents or approvals as may be required for the assignment or
transfer of the contracts, agreements, leases, commitments and rights to be
transferred to the Buyer hereunder; provided, however, that the Seller shall not
be required to institute any litigation, or to pay or agree to pay any amount,
in order to obtain any such consent or approval. If any such consent or approval
is not obtained, the Seller and the Buyer agree to cooperate in any reasonable
arrangements (which may include, in the case of leased property, a sublease or
license thereof or operating agreement with respect thereto) designed to provide
for the Buyer all of the benefits (and to assure that the Seller will be
effectively relieved from related liabilities) under such contract, agreement,
lease, commitment or right. Nothing in this Agreement shall be construed as an
attempt or agreement to assign (a) any contract, agreement, lease, commitment or
right which is nonassignable without the consent of the other party or parties
thereto unless such consent shall have been given, or (b) any contract or claim
as to which all the remedies for the enforcement thereof would not pass to the
Buyer as an incident of the assignments provided for by this Agreement.
3.3 Further Assurances. The Seller agrees that, at any time and from
time to time on and after the Closing Date, it will, upon the request of the
Buyer and without further consideration, take any and all commercially
reasonable steps necessary to place the Buyer in possession and operating
control of the Assets, and will do, execute, acknowledge and deliver, or
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will cause to be done, executed, acknowledged and delivered, all such further
acts, deeds, assignments, conveyances, transfers, powers of attorney or
assurances as may be reasonably required in order fully to sell, assign, convey,
transfer, grant, assure and confirm to the Buyer, or to aid and assist in the
collection of or reducing to possession by the Buyer of, all of the Assets, or
to vest in the Buyer good, valid and marketable title, subject to the
encumbrances permitted by this Agreement, to the Assets. In addition, and in no
way limiting the foregoing, for a period of five years from the Closing, the
Seller, upon the request of the Buyer and without further consideration, will
take any and all commercially reasonable steps necessary to obtain for and
deliver to the Buyer the easements and rights-of-way reasonably necessary to the
Telephone Operations as of the Closing Date. The Buyer agrees that, at any time
and from time to time on and after the Closing Date, it will, upon the request
of the Seller and without further consideration, take any and all commercially
reasonable steps necessary to assume the liabilities and obligations of the
Seller with respect to the use of the Assets and the Telephone Operations in
accordance with Section 2.3 hereof, and will do, execute, acknowledge and
deliver, or will cause to be done, executed, acknowledged and delivered, all
such further acts, deeds, assignments, conveyances, transfers, powers of
attorney or assurances as may be reasonably required in order fully to assume
such liabilities and obligations.
4. Closing.
4.1 Closing Date and Time. The closing of the transactions provided
for herein (the "Closing"), shall take place at 10:00 a.m. Anchorage, Alaska
time on the date 15 business days following the date on which the last of the
conditions contained in Sections 10 and 11 hereof has been satisfied or waived,
other than such conditions that by their terms are to be satisfied on the
Closing Date, at the offices of the Seller, Office of the Mayor, City Hall,
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Anchorage, Alaska, or at such other date, time and place as the parties hereto
may mutually agree, but in no event later than 30 days following the date on
which the last of the conditions contained in Sections 10 and 11 hereof has been
satisfied or waived, other than such conditions that by their terms are to be
satisfied on the Closing Date. At the Closing, the Buyer and the Seller shall
deliver, or cause to be delivered, to the other party or parties, such
certificates, receipts or other documents or instruments, in addition to those
specifically provided for herein, as may reasonably be requested by such other
party. The date on which the Closing occurs is referred to herein as the
"Closing Date."
5. Representations and Warranties of the Seller. For purposes of
this Section 5, each reference to "ATU" shall be deemed, to the extent
appropriate, to refer as well to each of the Subsidiaries. The Seller hereby
represents and warrants to the Buyer as follows:
5.1 Standing and Power. The Seller has full power and authority to
own the Assets and is authorized to conduct the business of the Telephone
Operations.
5.2 Authority. (a) The Seller is not a party to any agreement,
arrangement or commitment which would render the Seller unable to comply with
its obligations hereunder.
(b) Except for the acceptance of the Buyer's bid by the Municipal
Assembly of the Seller as described in Sections 10.8 and 11.8 hereof, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Seller. This Agreement constitutes the legal, valid
and binding obligation of the Seller, enforceable in accordance with its terms.
Except as disclosed in Schedule 5.2(b) hereto, neither the execution nor the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, nor the compliance with or fulfillment of the terms and
provisions hereof, will (i) conflict with or result in a breach or
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violation of any of the terms, conditions or provisions of the Anchorage
Municipal Code or other governance documents of the Seller or ATU, or (ii)
result in a material breach or default under any provision of any agreement,
indenture, mortgage, lien, lease or other instrument or restriction of any kind
to which the Seller or ATU is a party or by which the Seller, ATU or any of the
Assets is otherwise bound or affected, or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Seller, ATU or
any of the Assets, which conflict, breach, default or violation, in any such
case, would have a material adverse effect on the Assets or the condition
(financial or other), business or operations of ATU, in each case taken as a
whole, or on the consummation of the transactions contemplated hereby, or would
result in any material liability of the Buyer, and which will not be cured,
waived or terminated prior to the Closing Date.
(c) Except as set forth in Schedule 5.2(c) hereto, no consent,
approval or authorization of, or filing or registration with, any governmental
or regulatory authority is required to be obtained by the Seller in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
5.3 Financial Information. Attached hereto as Schedule 5.3 are
complete and correct copies of (a) the 1997 Financial Statements and (b) the
unaudited balance sheets of ATU, MACtel and ATU-LD as at August 31, 1998 and the
related unaudited statements of revenues and expenses, retained earnings and
changes in financial position for the nine-month period then ended (the items
referred to in clause (b) being the "Interim Financial Statements"). The 1997
Financial Statements and the Interim Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods specified therein and fairly present the financial
condition and changes in financial
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position of ATU, as applicable, ATU-LD and MACtel, as of the dates specified
therein and the results of its operations for the periods specified therein,
except that the Interim Financial Statements do not contain the notes that might
otherwise be required by generally accepted accounting principles.
5.4 Absence of Certain Changes or Events. Except as otherwise set
forth in Schedule 5.4 hereto or expressly consented to in writing by the Buyer
pursuant to this Agreement or otherwise, since May 31, 1998:
(a) Neither the Assets nor the Telephone Operations have sustained
any damage, destruction or loss, whether by reason of fire, explosion,
earthquake, casualty, requisition or taking of property by any government or
agency thereof, windstorm, embargo, riot, strike, act of God or public enemy,
flood, accident, revocation of license or right to do business, total or partial
termination, suspension, default or modification of any contract, governmental
restriction or regulation or other calamity or other similar event materially
and adversely affecting the Assets or the condition (financial or other),
business or operations of ATU, in each case taken as a whole.
(b) There have been no changes in the Assets or the condition
(financial or other), business, operations, obligations or liabilities (fixed or
contingent) of the Telephone Operations that, in the aggregate, have had or may
be reasonably expected to have (whether prior to or after the Closing Date), a
material adverse effect on the Assets or the condition (financial or other),
business or operations of ATU, in each case taken as a whole.
(c) Neither the Seller nor ATU has incurred in respect of the
Telephone Operations additional debt for borrowed money (including, without
limitation, obligations under leases for real or personal property whether or
not required to be capitalized under generally
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accepted accounting principles), nor incurred or increased in respect of the
Telephone Operations any obligation or liability (fixed, contingent or other,
including, without limitation, liabilities as a guarantor or otherwise with
respect to obligations of others), nor has the Seller or ATU forgiven or
released, in respect of the Telephone Operations any debt or claim, given any
waiver of any right of material value or voluntarily suffered any extraordinary
loss, except in any such case (i) in the ordinary course of business, (ii)
consistent with past practices, and (iii) without causing a material adverse
effect on the Assets or the condition (financial or other), business or
operations of ATU, in each case taken as a whole.
(d) Neither the Seller nor ATU has made in respect of the Telephone
Operations any payment to discharge or satisfy any material Lien (as defined
below) or paid any material obligation or liability (fixed or contingent) other
than (i) current liabilities (including the current portion of any long-term
liabilities) included in the Interim Financial Statements and (ii) current
liabilities incurred or maturing since the date of the Interim Financial
Statements in the ordinary course of business (for purposes of this Agreement,
the phrase "in the ordinary course of business" shall be deemed to include the
phrase "and consistent with past practice").
(e) ATU has not declared or made any interfund transfer, equity
distribution or other transfer or distribution of cash or property to the Seller
such that such cash or property would no longer be considered part of the
Assets, other than as described in Section 7.2(a)(iii) hereof.
(f) Neither the Seller nor ATU has mortgaged, pledged, otherwise
encumbered or subjected to Lien any of the Assets nor committed itself to do any
of the foregoing, except for Liens permitted under Section 5.5 hereof.
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(g) Neither the Seller nor ATU has, except in the ordinary course of
business in each case for fair consideration, disposed of, or agreed to dispose
of, any of the Assets nor leased or licensed to others, or agreed so to lease or
license, any of the Assets.
(h) Neither the Seller nor ATU has entered into any transaction or
contract, or an amendment thereto, in respect of the Telephone Operations or
made any commitment to do the same, except (i) in the ordinary course of
business and not requiring the payment in any case of an amount in excess of
$1,000,000 in any one year or an amount in excess of $2,500,000 over the life of
the transaction or contract, or (ii) with respect to any excluded assets set
forth on Schedule 1.2 hereto.
(i) Neither the Seller nor ATU has made any material increases in
the compensation of the employees employed by ATU or materially changed any
personnel policies or employee benefits applicable to such employees, other than
in the ordinary course of business and consistent with past practices, or
increased the number of regular, full-time employees to a number in excess of
716.
(j) Neither the Seller nor ATU has changed any of the accounting
methods, policies or practices of ATU in any material respect or, after the date
hereof, as permitted by Section 7.2.
(k) Neither the Seller nor ATU has acquired any additional Assets
which would be material to the condition (financial or other), business or
operations of ATU, in each case taken as a whole, except for Assets acquired in
the ordinary course of business and consistent with past practices.
(l) Neither the Seller nor ATU has agreed or committed to do any of
the foregoing.
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5.5 Title to Properties; Absence of Liens. Except as set forth in
Schedule 5.5 hereto, the Seller has, and shall transfer and convey to the Buyer,
good and valid (and, in the case of the real property, good and marketable)
title to all of the Assets, in each case free and clear of all mortgages, liens,
pledges, claims, charges, security interests, easements, restrictive covenants,
rights-of-way, leases, purchase agreements, options and other restrictions,
title defects, encumbrances and agreements of any nature whatsoever ("Liens"),
other than (a) Liens imposed by law in the ordinary course of business securing
obligations which are not overdue, or, if overdue, are being contested in good
faith by appropriate proceedings, (b) Liens upon leases and contracts included
in the Assets or upon property subject to such leases and contracts included in
the Assets or upon property subject to such leases and contracts granted by
lessors or parties to such contracts other than ATU or the Seller, (c)
mechanics', carriers', workers', repairmen's or other like Liens arising or
incurred in the ordinary course of business, (d) purchase money Liens arising
out of the purchase of products or services in the ordinary course of business
and consistent with past practices, (e) other Liens which in the aggregate do
not materially and adversely affect the value of the Assets taken as a whole,
and (f) Liens securing liabilities to be assumed by the Buyer pursuant to
Section 2.3 hereof. Except as set forth in Schedule 5.5 hereto, all
rights-of-way, easements, leaseholds, leasehold interests, contract rights,
licenses, permits and other intangible Assets are owned directly by the Seller
and are (and when transferred and conveyed to the Buyer will be) valid,
subsisting and in full force and effect in accordance with their terms. The
leases of real property and all amendments thereto described in Schedule 5.6
hereto constitute the entire agreements between the parties thereto, and said
leases have not been further amended or modified except as described in such
Schedule 5.6.
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5.6 List of Properties, Contracts and Other Data. Schedule 5.6
hereto contains a list setting forth with respect to the Seller, as of the date
hereof, the following:
(a) All land and improvements thereon owned by the Seller or ATU
which are included in the Assets;
(b) All leases of real or personal property to which the Seller or
ATU is a party (the "Leases"), either as lessee or lessor, which are included in
the Assets; provided, however, that Schedule 5.6 hereto does not list any lease
of personal property under which the total remaining lease payments are less
than $100,000;
(c) (i) All patents, trademarks, trade names, copyrights and
servicemarks, and all registrations therefor unexpired as of the date hereof,
all applications pending therefor on said date and all other proprietary rights
included in the Assets (collectively, the "Intellectual Property"), and (ii) all
licenses granted by or to the Seller or ATU and all other agreements to which
the Seller or ATU is a party which relate, in whole or in part, to any items of
the categories mentioned in (c)(i) above or to other proprietary rights included
in the Assets;
(d) All contracts, understandings and commitments (including,
without limitation, mortgages, indentures, loan agreements, employment
agreements, collective bargaining agreements and other employment related
contracts and agreements) to which the Seller or ATU is a party relating to the
Assets or the Telephone Operations, or to which the Seller or ATU or any of the
Assets are subject and which are not specifically referred to in (b) or (c)
above; provided, however, that Schedule 5.6 hereto does not list any contracts,
understandings or commitments under purchase orders with customers, sales
contracts, supply contracts with suppliers and other such commitments incurred
in the ordinary course of business and consistent with past practices, other
than any such contract, understanding or commitment
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which (i) is a contract, understanding or commitment or group of related
contracts, understandings or commitments under which the total remaining
payments exceed $100,000 in aggregate amount, (ii) is a sales contract of an
open-ended or blanket nature, or (iii) cannot be performed in the normal course
within 180 days after the Closing Date or canceled within such period by the
Seller, or its assignee, without breach, penalty or liability; and
(e) All approvals, authorizations, consents, licenses, permits,
franchises, orders and other registrations of any federal, state or local court
or other governmental department, commission, board, bureau, agency or
instrumentality, held by the Seller and required to permit the Seller or ATU to
conduct the Telephone Operations as presently conducted.
The Seller has delivered to the Buyer a true copy of ATU's
Continuing Property Record ("CPR"), dated as of May 31, 1998. The CPR accurately
lists all items of property included in the Assets with a book value equal to or
greater than $100,000 as of that date.
Except as disclosed in Schedule 5.6 hereto, there has been no claim
that any Lease, license, patent or other proprietary right, agreement or
contract referred to in such Schedule 5.6, or any lease, license, patent or
other proprietary right, agreement or contract coming into existence after the
date hereof which, if in existence on the date hereof, would have been required
to be disclosed in such Schedule 5.6, is not valid and enforceable in accordance
with its terms for the periods stated therein, that there is under any such
Lease, license, patent or other proprietary right, agreement or contract any
existing default or event of default or event which with notice or lapse of time
or both would constitute such a default or event of default, and there is no
such existing default, event of default or event on the part of the Seller or
ATU, or, to the knowledge of the Seller, any other person.
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5.7 Litigation. Except as listed and described in Schedule 5.7
hereto, there are no actions, suits, proceedings, claims, investigations or
examinations pending or threatened which arise from the use of the Assets or the
conduct of the business of the Telephone Operations, including without
limitation actions, suits, proceedings, claims, investigations or examinations
pertaining to employment matters or labor agreements, or which question the
validity or seek to prevent the consummation of this Agreement or the
transactions contemplated hereby, whether at law or in equity, before or by any
federal, state or local court or other governmental department, commission,
board, bureau, agency or instrumentality, which, individually or in the
aggregate, if adversely determined, would result in any material adverse effect
on the condition (financial or other), business or operations of ATU, in each
case taken as a whole, or would prevent the consummation of this Agreement or
the transactions contemplated hereby.
5.8 Employee Benefit Plans. (a) A list of all ATU Plans (as defined
below) is set forth in Schedule 5.8 hereto.
(b) Except as disclosed in Schedule 5.8 hereto: (i) The ATU Plans
and any related trust agreements, group annuity contracts, insurance policies or
other agreements are in substantial compliance with the applicable provisions,
if any, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Internal Revenue Code of 1986, as amended (the "Code"), and other
applicable laws; (ii) All contributions due and payable on or before the Closing
Date in respect of the ATU Plans have been made or will be made before the
Closing Date; and (iii) The only Multiple Employer Plans and Multiemployer Plans
(as hereinafter defined in Section 5.8(c) hereof) to which ATU or the Seller
contributes or is obligated to contribute on behalf of the Employees are the
Public Employees' Retirement System
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Plan and any plans administered or sponsored by the International Brotherhood of
Electrical Workers, Local No. 1547 (the "IBEW"); provided, however, that the
representations made under this Section 5.8 are subject to any amendments to any
ATU Plan, Multiple Employer Plan or Multiemployer Plan required by any
applicable statute.
For the purposes hereof, the term "ATU Plan" means any "employee
benefit plan" (as that term is defined in Section 3(3) of ERISA), as well as any
other written or formal plan or contract involving direct or indirect
compensation under which ATU has any present or future obligations or liability
on behalf of employees or former employees of the Telephone Operations or their
dependents or beneficiaries; provided, however, that such term shall exclude any
"Multiemployer Plan" or "Multiple Employer Plan." For the purposes hereof, with
respect to any employer, the term "Multiemployer Plan" means a multiemployer
pension plan or multiemployer employee welfare benefit plan within the meaning
of Section 3(37) and 4001(a)(3) of ERISA under which such employer has any
present or future obligations or liability on behalf of its employees, and
"Multiple Employer Plan" means a multiple employer plan within the meaning of
Section 413(c) of the Code under which such employer has any present or future
obligations or liability on behalf of its employees.
5.9 Government Approvals. Except as set forth in Schedule 5.9
hereto, the Seller has all approvals, authorizations, consents, licenses,
permits, franchises, orders and other registrations of any federal, state or
local court or other governmental department, commission, board, bureau, agency
or instrumentality (collectively, the "Permits"), required to permit the Seller
to conduct the Telephone Operations as presently conducted, except where the
failure to have such Permits, individually or in the aggregate, does not have a
material adverse effect on
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the Assets or the condition (financial or other), business or operations of ATU,
in each case taken as a whole.
5.10 Insurance. Schedule 5.10 hereto contains a list of all policies
and binders of insurance and self-insurance arrangements covering any of the
Assets or the Telephone Operations. No policy listed has been canceled and each
policy listed will continue in effect until the earlier of its expiration date
or the Closing Date. On the Closing Date, each such policy listed and remaining
in force will be canceled as to ATU and the Seller will notify the insurance
carriers issuing such policies of the cancellations. The Seller will direct such
insurance carriers to audit such policies and to send to the Buyer any premiums
to be refunded under such policies. In addition, the Seller shall direct its
external actuaries to determine the amounts of the uninsured reserves held in
the Seller's insurance funds allocable to ATU as of the Closing Date and shall
forthwith transfer such amounts to the Buyer, by wire transfer of immediately
available funds to such bank account or accounts as may be designated in writing
by the Buyer; provided, such funds shall not be treated as cash or cash
equivalents for purposes of the Cash and Net Plant Adjustment.
5.11 Condition of Assets. To the knowledge of the Seller, except as
set forth in Schedule 5.11 hereto, all tangible personal property, fixtures and
equipment included in the Assets, and all tangible personal property, fixtures
and equipment leased under leases included in the Assets, are (a) in good
operating condition or otherwise suitable for their intended purpose, and (b)
adequate for the conduct of the Telephone Operations as currently being
conducted, except for the Assets which are not currently being used or which are
not individually and in the aggregate material to the condition (financial or
other), business or operations of ATU, in each case taken as a whole.
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5.12 Accounts Receivable and Accounts Payable. The accounts
receivable and the accounts payable of ATU shown on the 1997 Financial
Statements and the Interim Financial Statements arose from bona fide
transactions in the ordinary course of business and consistent with past
practices. The values at which accounts receivable are carried on the 1997
Financial Statements and the Interim Financial Statements reflect the accounts
receivable valuation policy of the Seller and ATU, which is consistent with past
practices and in accordance with generally accepted accounting principles
applied on a consistent basis.
5.13 No Defaults. Except as set forth in Schedule 5.13 hereto,
neither the Seller nor ATU is in violation of or in default with respect to any
contract, agreement, lease, mortgage, Permit or other instrument, or any
covenant or restriction affecting any of the real property included in the
Assets, or any order, writ or decree of any federal, state or local court or
other governmental department, commission, board, bureau, agency or
instrumentality, which violation or default, individually or in the aggregate,
would have a material adverse effect on the condition (financial or other),
business or operations of ATU, taken as a whole, or on the ability of the Seller
to perform its obligations hereunder, and there has not occurred any event
which, with notice or lapse of time or both, would constitute such a violation
or default.
5.14 Compliance with Applicable Law. Except as set forth in Schedule
5.14 hereto, the conduct of the Telephone Operations and the operation and
maintenance of the real property included in the Assets does not violate or
infringe upon any, and is in compliance with all federal, state or local
statutes, laws, regulations, rules or ordinances, except for such violations or
infringements or failures to comply which would not have a material adverse
effect on the Assets or on the condition (financial or other), business or
operations of ATU, in each case taken as a whole.
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5.15 Absence of Undisclosed Liabilities. Except to the extent
disclosed, reflected or reserved against in the 1997 Financial Statements or the
Interim Financial Statements or in Schedule 5.15 hereof, ATU had as at August
31, 1998 no liabilities or obligations of any nature, whether accrued, absolute,
contingent or other (including, without limitation, liabilities as guarantor or
otherwise with respect to obligations of others) and whether due or to become
due, including, without limitation, any liabilities for Taxes (as defined in
Section 5.16 hereof), for any period prior to such date or arising out of any
transaction entered into or any set of facts existing prior to such date, other
than those liabilities or obligations that either individually or in the
aggregate would not reasonably be expected to have a material adverse effect on
the Assets or the condition (financial or other), business or operations of ATU,
in each case taken as a whole. Except for those liabilities or obligations that
are fully disclosed, reflected or reserved against in the 1997 Financial
Statements or the Interim Financial Statements or on Schedule 5.15 hereto, to
the knowledge of the Seller, there is no reasonable basis for a determination by
any court, agency, authority, arbitration panel or other tribunal that the
Seller or ATU is liable with respect to any liabilities or obligations that
either individually or in the aggregate would reasonably be expected to be
materially adverse to the Assets or the condition (financial or other), business
or operations of ATU taken as a whole.
5.16 Taxes. All taxes, assessments, fees, imposts, levies and other
charges, including, without limitation, interest and penalties, upon the Seller
and ATU in respect of the Telephone Operations, whether on property, payroll,
sales, assets, revenues, income, net income, net worth, accumulated earnings,
items of tax preference or any other base, imposed by any taxing authority,
federal, state, local or foreign ("Taxes"), that have become due and payable
have been paid, other than those not yet delinquent. The Seller and ATU have
duly filed with the
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appropriate government agencies all returns and reports with respect to Taxes
required to be filed by them. No waiver of any statute of limitations relating
to Taxes has been executed or given by the Seller or ATU. The charges, accruals
and reserves shown in the 1997 Financial Statements and the Interim Financial
Statements are adequate to cover all liabilities for Taxes as of December 31,
1997 and August 31, 1998, respectively, except to the extent disclosed in notes
to such financial statements. The Seller has made available to the Buyer correct
and complete copies of all documents and materials relating to any pending
federal, state or local tax dispute concerning the Telephone Operations or in
any way affecting the Telephone Operations.
5.17 Brokers. Other than Donaldson, Lufkin & Jenrette Securities
Corporation which has been retained as financial advisor to the Seller pursuant
to a contract dated as of June 10, 1998 and whose fees and expenses will be paid
by the Buyer as specified in Section 16 hereof, neither the Seller nor any
officer, official (elected or appointed), director or employee of either, has
employed any finder, broker, investment banker or similar agent or other
intermediary on behalf of the Seller, ATU or the Buyer, or incurred on behalf of
the Seller, ATU or the Buyer any liability for any brokerage, finders' or
investment banking fees or commissions in connection with the negotiation or
consummation of the transactions contemplated hereby.
5.18 Hazardous Substances. Except as set forth in Schedule 5.18
hereto, the Seller and ATU have complied with respect to the Assets and the
Telephone Operations in all material respects with all Environmental Laws (as
hereinafter defined) in connection with the generation, handling, manufacturing,
processing, treatment, storage, use, transfer, release or disposal of hazardous
substances, hazardous wastes, hazardous waste constituents and reaction
byproducts, hazardous materials, pesticides, oil and other petroleum products,
and toxic substances, including asbestos and PCBs, as those terms are defined
pursuant to Environmental
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Laws (collectively "Hazardous Substances"). To the best of the Seller's
knowledge, the Assets do not contain any Hazardous Substances the presence of
which could have a material adverse effect on the condition (financial or
other), business or operations of ATU, in each case taken as a whole. For
purposes of this Section 5.18, "Environmental Laws" shall be all federal, state
and local laws, rules, regulations, ordinances, programs, permits, guidances,
orders and consent decrees relating to environmental matters, including without
limitation the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Toxic Substance Act,
the Clean Water Act, the Clean Air Act and state and federal environmental
cleanup programs.
5.19 Underground Storage. Except as set forth in Schedule 5.19
hereto, to the best of the Seller's knowledge the Assets do not contain any
underground storage or treatment tanks, active or abandoned water, gas or oil
wells, or any other underground improvements or structures, other than the
foundations, footings or other supports for the buildings included in the
Assets.
5.20 Exclusivity of Representations and Warranties. Except for the
representations and warranties contained herein, the Seller makes no other
representations or warranties, express or implied, and the Seller hereby
disclaims any such representations or warranties whether by the Seller, ATU or
any of their respective directors, officials (elected or appointed), officers,
employees, agents or representatives, or any other person, with respect to this
Agreement and the transactions contemplated hereby, notwithstanding the delivery
or disclosure to the Buyer or any of its directors, officers, employees, agents
or representatives, or any other person, of any documentation or other
information by the Seller or any of its directors,
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officials (elected or appointed), officers, employees, agents or
representatives, or any other person, with respect to the foregoing.
6. Representations and Warranties of the Buyer.
The Buyer hereby represents and warrants to the Seller as follows:
6.1 Organization and Standing. The Buyer is a corporation duly
organized and validly existing under the laws of its state of incorporation. The
Buyer has full corporate power and corporate authority to acquire, own, lease
and operate the Assets to be conveyed to it, and, subject to receipt of any
required consents, approvals, licenses, or permits of third parties, including
those referred to in Section 6.2 hereof, to carry on the Telephone Operations,
to enter into this Agreement and to perform all of its obligations hereunder.
6.2 Authority. (a) The Buyer is not a party to any agreement,
arrangement or commitment which would render the Buyer unable to comply with its
obligations hereunder.
(b) The execution and delivery by the Buyer of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of the Buyer. This
Agreement constitutes the legal, valid and binding obligation of the Buyer,
enforceable in accordance with its terms. Except as disclosed in Schedule 6.2(b)
hereto, neither the execution nor the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, nor the compliance with or
fulfillment of the terms and provisions hereof, will (i) conflict with or result
in a breach or violation of any of the terms, conditions or provisions of the
Articles of Incorporation or By-Laws of the Buyer, (ii) or result in a material
breach or default under any provision of, any agreement, indenture, mortgage,
lien, lease or other instrument or restriction of any kind to which the Buyer is
a party or by which the Buyer or any of its assets or properties is otherwise
bound or affected, or (iii)
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violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Buyer or any of its assets or properties, which conflict,
breach, default or violation, in any case, would have a material adverse effect
on the condition (financial or other) of the Buyer or the consummation of the
transactions contemplated hereby, or would result in any material liability of
the Seller, and which will not be cured, waived or terminated prior to the
Closing Date.
(c) Except as set forth in Schedule 6.2(c) hereto, no consent,
approval or authorization of, or filing or registration with, any governmental
or regulatory authority is required to be obtained by the Buyer in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby or thereby.
6.3 Financing. The Buyer has obtained financing commitments, in each
case as provided in the commitment letters delivered to Sellers on the date
hereof, for $77.5 million of equity and $240 million of debt (the "Debt
Commitment"), which are sufficient for the purchase of the Assets pursuant to
this Agreement and for the performance of its obligations hereunder and under
the other instruments and documents required or contemplated by this Agreement.
6.4 Brokers. Neither the Buyer, nor any officer, director or
employee of the Buyer, has employed any finder, broker, investment banker or
similar agent or other intermediary on behalf of the Buyer, or incurred on
behalf of the Buyer any liability for any brokerage, finders' or investment
banking fees or commissions, in connection with the negotiation or consummation
of the transactions contemplated hereby to whom or for which the Seller will be
responsible for payment.
7. Covenants of the Seller.
7.1 Access to Properties, Books and Records. Prior to the Closing
Date and subject to appropriate confidentiality arrangements, the Seller shall,
at the Buyer's request, afford
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or cause to be afforded to the agents, attorneys, accountants and other
authorized representatives of the Buyer, reasonable access, after prior
telephonic notice to ATU, during normal business hours to all employees,
properties, books and records relating to ATU, and shall permit such persons, at
the Buyer's expense and risk, to make copies of such books and records. In
particular, the Seller shall afford the Buyer and its authorized representatives
reasonable access to the real and tangible personal property included in the
Assets for the purpose of conducting investigations and examinations thereof,
except where contrary to law or contract and for preparation of surveys, making
appraisals and ascertaining the condition thereof and shall deliver to the Buyer
monthly financial statements of ATU, promptly after they become available. The
Seller shall cooperate with the Buyer and issue any consents and authorizations
reasonably requested by the Buyer in connection with the Buyer's examination of
governmental records pertaining to the real and personal property included in
the Assets. The Buyer will treat, and shall cause all of its agents, attorneys,
accountants and other authorized representatives to treat, all information
obtained pursuant to this Section 7.1 as confidential in accordance with Section
24 hereof. No investigation by the Buyer or any of its representatives pursuant
to this Section 7.1 shall affect any representation, warranty or closing
condition of any party hereto.
7.2 Conduct of Business. (a) Except as otherwise permitted by this
Agreement or with the prior written consent of the Buyer, prior to the Closing
Date, the Seller shall not, and the Seller shall cause ATU not to: (i) Incur in
respect of the Telephone Operations additional indebtedness (including, without
limitation, obligations under leases for real or personal property whether or
not required to be capitalized under generally accepted accounting principles);
nor incur or increase in respect of the Telephone Operations any obligation or
liability (fixed, contingent or other, including, without limitation,
liabilities as a guarantor or
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otherwise with respect to obligations of others), nor forgive or release in
respect of the Telephone Operations any debt or claim, give any waiver of any
right of material value or voluntarily suffer any extraordinary loss, except in
any such case (x) in the ordinary course of business, (y) consistent with past
practices, and (z) without causing a material adverse effect on the Assets or
the condition (financial or other), business or operations of ATU, in each case
taken as a whole, and, in the case of indebtedness, which is prepayable without
penalty upon reasonable notice; (ii) Make in respect of the Telephone Operations
any payment to discharge or satisfy any material lien or encumbrance or pay any
material obligation or liability (fixed or contingent) other than (x) current
liabilities (including the current portion of any long-term liabilities)
included in the Interim Financial Statements; and (y) current liabilities
incurred or maturing since the date of the Interim Financial Statements in the
ordinary course of business; (iii) Declare or make any interfund transfer,
equity distribution or other transfer or distribution of cash or Assets to the
Seller such that such cash or property would no longer be considered part of the
Assets, other than (x) all Municipal Utility Services Assessment ("MUSA")
payments, including, without limitation, the 1.25 percent gross receipts MUSA
payment, made in accordance with Section 9.5 hereof; (y) a 1998 revenue
distribution and a 1999 revenue distribution (which in the case of the 1999
revenue distribution will be made on the day immediately prior to the Closing
Date), each in an amount no greater than $7.5 million; and (z) all
intergovernmental charges incurred in the ordinary course of business and
consistent with past practices; (iv) Mortgage, pledge, otherwise encumber or
subject to lien any of the Assets or commit to do any of the foregoing, except
for Liens permitted under Section 5.5 hereof; (v) Except in the ordinary course
of business in each case for fair consideration, dispose of, or agree to dispose
of, any of the Assets or lease or license to others, or agree so to lease or
license, any of the Assets; (vi) Enter
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into any transaction or contract, or any amendment thereto, in respect of the
Telephone Operations or make any commitment to do the same, except (x) in the
ordinary course of business and not requiring total payments in any case of an
amount in excess of $1,000,000 in any one year or an amount in excess of
$2,500,000 over the life of the transaction or contract, or (y) with respect to
any excluded assets set forth on Schedule 1.2 hereto; (vii) Enter into any new
employment, severance, consulting or other compensation agreement with any
director, officer, employee, agent or representative or other person, except as
contemplated herein; (viii) Make any material increases in the compensation of
the employees employed by ATU or materially change any personnel policies or
employee benefits applicable to such employees, other than in the ordinary
course of business and consistent with past practices, or increase the number of
regular, full-time employees to a number in excess of 716; (ix) Use any
accounting methods, policies or practices not in conformity with generally
accepted accounting principles (x) Acquire any additional Assets which would be
material to the condition (financial or other), business or operations of ATU,
in each case taken as a whole, except for Assets acquired in the ordinary course
of business and consistent with past practices; (xi) Amend, renegotiate or enter
into any collective bargaining or similar agreement; (xii) Make any material
changes in rates for current services; or (xiii) Agree or commit to do any of
the foregoing.
(b) Except as otherwise permitted by this Agreement or with the
prior written consent of the Buyer, prior to the Closing Date, the Seller shall,
and the Seller shall cause ATU to: (i) Operate the Telephone Operations as
presently operated and only in the ordinary course of business and consistent
with past practices; (ii) Not cancel or change any material existing policy of
insurance (including self-insurance) or fidelity bond relating to the Assets or
the Telephone Operations, or any policy or bond providing substantially the same
coverage, unless replaced by
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a policy or bond providing substantially the same coverage or such cancellation
or change is effective only on the Closing Date, and not change in any material
respect the Seller's and ATU's currently existing policies and practices with
respect to the maintenance of self-insurance reserves allocable to ATU; (iii)
Advise the Buyer in writing of any material adverse change or any event,
occurrence or circumstance which is likely to cause a material adverse change in
the Assets or the condition (financial or other), business or operations of ATU;
(iv) Use all commercially reasonable efforts to maintain all of the tangible
Assets in good operating condition, reasonable wear and tear excepted,
consistent with past practices, and take all commercially reasonable steps
necessary to maintain the intangible Assets; and (v) Maintain, consistent with
past practices, all inventories, spare parts, office supplies and other
expendable items included in the Assets.
7.3 Defeasance. On or prior to the Closing Date, the Seller shall
take all actions necessary to retire or defease duly and validly, by the deposit
of securities in accordance with the relevant municipal ordinances, all revenue
bonds of the Seller outstanding as of the Closing Date and relating to the
Telephone Operations or the Assets, including without limitation the revenue
bonds listed on Schedule 7.3 hereto, using for such purpose the proceeds of the
Purchase Price received from the Buyer pursuant to this Agreement.
7.4 Consulting Agreement. Subject to any required regulatory
approvals, the Buyer and the Seller agree to work together in good faith to
negotiate and execute, as soon as possible and if possible within 30 days of the
date hereof, a consulting agreement with Buyer or a consultant mutually
acceptable by Buyer and Seller, on terms mutually agreeable to the parties for
the period until Closing.
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7.5 North Wire Center. Prior to the Closing Date, the Seller and the
Buyer shall negotiate and execute a mutually acceptable lease with respect to
the Central Office located at the North Wire Center.
8. Covenants of the Buyer.
8.1 Interconnection Agreements and Employees.
(a) Buyer agrees that it shall honor ATU's interconnection
agreements as in effect at the date of this Agreement and the Closing Date,
including any reopener or adjustment provisions in those agreements.
(b) Without limiting Section 2.3 hereof, the Buyer shall recognize
any labor organization which is currently certified as the lawful bargaining
agent for and representative of ATU's employees, to include recognizing the
current collective bargaining agreement until August, 1999, including reopener
or adjustment provisions in that agreement.
8.2 As Is. The Buyer agrees and acknowledges that, notwithstanding
any other provision of this Agreement, it is acquiring and shall accept the
Assets "As Is" and "Where Is", in their present condition (including, without
limitation, their environmental condition), and subject to wear, tear, natural
deterioration, and all hazards, vandalism, casualty or catastrophe, and changes
(if any) made or that may be made by the Seller or any of its agents,
consultants, or other representatives in accordance with the terms hereof or
with the Buyer's approval, and any other changes that are not material.
8.3 Cellular Licenses. To the extent required by applicable law, the
Buyer will use commercially reasonable efforts to divest or agree to divest (or
to cause its affiliates to divest or agree to divest), within the time period
required by law, one of the two, cellular licenses
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for cellular market 0315 Alaska 1-Wade Hampton, to the extent ownership of both
such licenses are prohibited from being owned by the same party and its
affiliates.
9. Covenants of the Seller and the Buyer.
9.1 Regulatory Approvals. The Seller and the Buyer, and their
respective Representatives (as hereinafter defined), shall cooperate and use all
reasonable efforts, in good faith, to make all registrations, filings and
applications and to give all notices and obtain all governmental and regulatory
consents, approvals, orders, qualifications and waivers necessary or desirable
for the consummation of the transactions contemplated hereby including, without
limitation, those consents, approvals, orders, qualifications and waivers set
forth in Schedules 5.2(c) and 6.2(c) hereto as soon as practicable following
execution of this Agreement. Buyer and Seller agree to each use diligent efforts
to consummate the transactions contemplated hereby within five months of the
date of this Agreement or as soon thereafter as all legal, administrative and
regulatory requirements have been fulfilled. For purposes of this Section 9.1,
with respect to the Seller, the term "Representatives" means the Municipal
Attorney of the Seller, the Seller's special counsel, LeBoeuf, Lamb, Greene &
MacRae, L.L.P., and such other counsel as shall be appointed by the Seller,
which shall represent the Seller in obtaining all approvals required by this
Section 9.1. For purposes of this Section 9.1, with respect to the Buyer, the
term "Representatives" means the attorney of the Buyer, the Buyer's counsel,
Birch, Horton, Bittner and Cherot, Hogan & Hartson LLP and Wachtell, Lipton,
Rosen & Katz, and such other counsel as shall be appointed by the Buyer, which
shall represent the Buyer in obtaining all approvals required by this Section
9.1. Without limiting the generality of the foregoing, (a) the Seller and the
Buyer shall, if required by law, make (or cause to be made on their behalf) all
required filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act")
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and each shall use its reasonable efforts, in good faith, promptly to provide
any additional information or documentary material that may be requested by
either the Federal Trade Commission or the Antitrust Division of the Department
of Justice pursuant to the HSR Act, except to the extent that such request, in
the opinion of such party's counsel, is improper, and (b) the Seller and the
Buyer, and their respective Representatives, each shall use its reasonable
efforts in good faith to obtain such consents, approvals, orders, qualifications
and waivers (including reaching separate agreements or entering stipulations
with intervenors or agency staffs), and take such other actions (whether or not
in connection with such consents, approvals, orders, qualifications and
waivers), as may be necessary or desirable to permit the Closing and the
consummation of the transactions contemplated hereunder or as may be required by
the public utility or other laws or regulations of the United States of America,
the State of Alaska, the APUC or the FCC, in each case to the extent applicable;
provided, however, that nothing contained in this Section 9.1(b) shall require
the Buyer to accept or agree to any condition to the issuance of any consent,
approval, order, qualification or waiver that is materially adverse to the Buyer
or its affiliates.
9.2 Inspection and Preservation of Records; Further Assistance. On
and after the Closing Date, the Buyer will permit the Seller and its agents,
attorneys, accountants and other representatives, at all reasonable times during
regular business hours, to inspect and copy, at the Seller's expense, the books,
files, records and accounts of ATU relating to periods prior to the Closing
Date, for any reasonable purpose or purposes including, without limitation, the
preparation, review or audit of any financial statements, governmental filings
or tax returns, providing appropriate verification of documents, or preparing
for, conducting or defending any legal proceeding against any party other than
the Buyer or any of its affiliates. The Buyer shall
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maintain and preserve all of such books, files, records and accounts of ATU;
provided, however, that the Buyer may dispose of any such books, files, records
and accounts at any time and from time to time if it first shall have afforded
the Seller the opportunity, upon 30 days' prior notice and at the Seller's
expense, to take possession thereof. On and after the Closing Date, the Seller
will permit the Buyer and its agents, attorneys, accountants and other
representatives, at all reasonable times during regular business hours, to
inspect and copy, at the Buyer's expense, the books, files, records and accounts
of the Seller not included in the Assets insofar as they relate to any of the
Assets, for any reasonable purpose or purposes including, without limitation,
the preparation, review or audit of any financial statements, governmental
filings or tax returns, providing appropriate verification of documents, or
preparing for, conducting or defending any legal proceeding against any party
other than the Seller. The Seller shall maintain and preserve all such books,
files, records and accounts; provided, however, that the Seller may dispose of
any such books, files, records and accounts at any time and from time to time if
it first shall have afforded the Buyer the opportunity, upon 30 days' prior
notice and at the Buyer's expense, to take possession thereof. The Buyer and the
Seller agree to render such assistance to the Seller and the Buyer,
respectively, including permitting such other party to have access to its
employees, as may be reasonably requested in connection with obtaining
information for the purposes set forth in the four preceding sentences. The
Buyer and the Seller will treat all information obtained pursuant to this
Section 9.2 as confidential except to the extent disclosure thereof is necessary
for attainment of the purpose or purposes for which such information was
obtained or as required by law. In addition, the Seller and the Buyer agree to
provide each other with such further assistance and cooperation as may be
reasonably requested by the other party for any proper purpose, including, by
way of illustration, assisting such other party in preparing
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for, conducting or defending any legal or regulatory proceeding against any
party other than the parties hereto and their affiliates, and in connection
therewith providing such documentary or physical evidence and expert or other
testimony as may be reasonably requested; provided, however, that in each such
case, the requesting party shall pay, or reimburse the other party for, any
out-of-pocket costs or expenses incurred by such other party in providing such
assistance.
9.3 Public Announcements. The Seller and the Buyer agree that, from
the date hereof through the Closing Date, they will provide each other with a
copy of each written public announcement or press release (other than public
advertisements) relating to the execution of this Agreement or any transactions
contemplated hereby promptly after the making thereof.
9.4 Intervention in Commission Hearings. The Buyer and the Seller
agree that, notwithstanding anything in this Agreement to the contrary, no part
of this Agreement (other than Section 9.1 hereof) shall be construed to limit at
any time before or after the Closing the Seller's and the Buyer's rights to
intervene in any hearing, proceeding or docket before the APUC or the FCC.
9.5 Taxes. The Buyer agrees and acknowledges that, following the
Closing, the Buyer shall be subject to real and personal property tax
assessments under state and local tax laws with respect to the Assets on the
same basis as any other private enterprise and the Seller agrees that the Buyer
shall not be subject to the MUSA currently paid by ATU to the Seller; provided,
however, that in the year of Closing ATU shall pay the MUSA prior to Closing for
the full year and the Buyer shall not be liable for real and personal property
tax assessments under state and local tax laws until the year following the
Closing.
9.6 Allocation of Purchase Price. The Seller and the Buyer shall
cooperate and use all reasonable efforts, in good faith, to reach agreement as
to the appropriate allocation of
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the aggregate purchase price among the various Assets, to the extent and in the
manner required by law, and shall report the transactions contemplated by the
Agreement to any relevant taxing authority in conformity with such allocation.
10. Conditions to Obligations of the Seller.
The obligations of the Seller to sell the Assets hereunder are
subject to the fulfillment or waiver by the Seller, on or before the Closing
Date, of each of the following conditions:
10.1 Compliance with Agreement. The Buyer shall have performed in
all material respects all obligations which it is required to perform on or
before the Closing Date under this Agreement.
10.2 Representations and Warranties. The representations and
warranties made by the Buyer herein shall be true and correct in all material
respects on and as of the Closing Date as though such representations and
warranties were made on and as of such date, except that any such
representations and warranties that are given as of a particular date prior to
the date hereof and relate solely to a particular date or period prior to the
date hereof shall be true as of such date or period.
10.3 Certificate of the Buyer. On the Closing Date, the Buyer shall
have delivered to the Seller a certificate, duly executed by an executive
officer of the Buyer, as to the fulfillment of the conditions set forth in
Sections 10.1 and 10.2 hereof.
10.4 Consents and Approvals. All authorizations, consents,
approvals, filings and registrations of or with domestic and foreign
governmental or regulatory authorities required to be obtained or made by the
Buyer or the Seller prior to the consummation of the transactions contemplated
hereby, including, without limitation, those authorizations, consents,
approvals,
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filings and registrations specifically referred to in Schedules 5.2(c) and
6.2(c) hereto and Section 9.1 hereof, shall have been obtained, approved or
permitted to go into effect, and shall be in effect on terms that are not
materially adverse to the Seller, and the waiting period under the HSR Act, if
applicable, shall have expired or been terminated.
10.5 All Proceedings to be Satisfactory. All corporate proceedings
to be taken by the Buyer in connection with the transactions contemplated hereby
and all documents incident thereto shall be reasonably satisfactory in form and
substance to the Seller and its counsel, and the Seller and its counsel shall
have received all such certified or other copies of such documents as it or they
may reasonably request.
10.6 Opinions of Counsel. The Seller shall have received the written
opinions of Wachtell, Lipton, Rosen & Katz, special outside counsel for the
Buyer, the Buyer's general counsel, Hogan & Hartson LLP, special counsel for the
Buyer as to matters under the Federal Communication Act, and Birch, Horton,
Bittner and Cherot, special counsel for the Buyer as to matters under the laws
of the State of Alaska, each dated as of the Closing Date, substantially to the
effect, when taken together, set forth on Exhibit C. In rendering the opinions
described in the preceding sentence, counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon the opinions of other
counsel, and as to matters of fact upon certificates of government officials and
of any officers of the Buyer.
10.7 Defeasance. The Seller shall not have been legally prevented
from duly and validly redeeming or defeasing on the Closing Date, by the deposit
of cash or securities or both in accordance with the terms thereof and the
relevant municipal ordinances, all revenue bonds of the Seller outstanding as of
the Closing Date and relating to the Telephone Operations or the Assets,
including without limitation the revenue bonds listed on Schedule 7.3 hereto and
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outstanding on the Closing Date, using for such purpose the proceeds of the
Purchase Price received from the Buyer pursuant to this Agreement.
10.8 Acceptance by the Municipal Assembly. The Municipal Assembly of
the Seller shall have accepted Buyer's bid as the highest responsive bid from a
responsible bidder for ATU as contemplated by AO 98-44(S-2) and AR 98-83.
10.9 Adverse Proceedings. No preliminary or permanent injunction or
other order or decree by any federal or state court which prevents the
consummation of the transactions contemplated by this Agreement shall have been
issued and remain in effect (the Seller agrees to use its reasonable efforts to
have any such injunction, order or decree lifted) and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which prohibits the consummation of the
transactions contemplated by this Agreement.
11. Conditions to Obligations of the Buyer.
The obligations of the Buyer to purchase the Assets hereunder are
subject to the fulfillment or waiver by the Buyer, on or before the Closing
Date, of each of the following conditions:
11.1 Compliance with Agreement. The Seller shall have performed in
all material respects all obligations which it is required to perform on or
before the Closing Date under this Agreement.
11.2 Representations and Warranties. The representations and
warranties made by the Seller herein shall be true and correct in all material
respects on and as of the Closing Date as though such representations and
warranties were made on and as of such time, except that any such
representations and warranties that are given as of a particular date prior to
the date hereof
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and relate solely to a particular date or period prior to the date hereof shall
be true as of such date or period.
11.3 Certificate of the Seller. On the Closing Date, the Seller
shall have delivered to the Buyer a certificate, duly executed by the Mayor or
another authorized representative of the Seller as to the fulfillment of the
conditions set forth in Sections 11.1 and 11.2 hereof.
11.4 Consents and Approvals. All authorizations, consents,
approvals, filings and registrations of or with domestic and foreign
governmental or regulatory authorities required to be obtained or made by the
Buyer or the Seller prior to the consummation of the transactions contemplated
hereby, including, without limitation, those authorizations, consents,
approvals, filings and registrations specifically referred to in Schedules
5.2(c) and 6.2(c) hereto and Section 9.1 hereof, shall have been obtained,
approved or permitted to go into effect on terms that are not materially adverse
to the Buyer and shall be in effect, and the waiting period under the HSR Act,
if applicable, shall have expired or been terminated.
11.5 All Proceedings to be Satisfactory. All Municipal and other
required proceedings to be taken by the Seller in connection with the
transactions contemplated hereby and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Buyer and its counsel, and
the Buyer and its counsel shall have received all such certified or other copies
of such documents as it or they may reasonably request.
11.6 Opinions of Counsel. The Buyer shall have received for the
benefit of the Buyer and, to the extent necessary, its financing sources the
written opinions of the Municipal Attorney of the Seller, LeBoeuf, Lamb, Greene
& MacRae, L.L.P., special counsel for the Seller, and Preston, Thorgrimson,
Ellis & Holman, bond counsel for the Seller, dated and delivered as of
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the Closing Date, substantially in the forms of Exhibits D, E and F,
respectively, hereto. In rendering such opinions, such counsel may rely, to the
extent each such counsel deems such reliance necessary or appropriate, upon the
opinions of other counsel, and as to matters of fact upon certificates of
government officials and of any officials (elected or appointed) of the Seller.
11.7 Defeasance. On the Closing Date the Seller shall have duly and
validly retired or defeased, by the deposit of securities in accordance with the
relevant municipal ordinances, all revenue bonds of the Seller outstanding as of
the Closing Date and relating to the Telephone Operations or the Assets,
including without limitation the revenue bonds listed on Schedule 7.3 hereto and
outstanding on the Closing Date, using for such purpose the proceeds of the
Purchase Price received from the Buyer pursuant to this Agreement.
11.8 Acceptance by the Municipal Assembly. The Municipal Assembly of
the Seller shall have accepted Buyer's bid as the highest responsive bid for ATU
as contemplated by AO 98-44(S-2) and AR 98-83.
11.9 Adverse Proceedings. No preliminary or permanent injunction or
other order or decree by any federal or state court which prevents the
consummation of the transactions contemplated by this Agreement shall have been
issued and remain in effect (the Buyer agrees, subject to the proviso to the
last sentence of Section 9.1, to use its reasonable efforts to have any such
injunction, order or decree lifted) and no statute, rule or regulation shall
have been enacted, by any state or federal government or governmental agency in
the United States which prohibits the consummation of the transactions
contemplated by this Agreement.
11.10 Third-Party Consents and Approvals. There shall have been
obtained all consents and approvals of third parties required to permit the
Buyer to acquire at the Closing all of the Seller's right, title and interest in
and to the Assets (without termination or acceleration)
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which are, in the Buyer's reasonable judgment, material, individually or in the
aggregate, to the Assets or to the conduct of the business of the Telephone
Operations by the Buyer, and such consents shall be in effect.
11.11 Financing. The Buyer shall have received the proceeds of the
required debt financing contemplated by the Debt Commitment.
12. Termination.
This Agreement may be terminated:
(a) by mutual written consent of the Buyer and the Seller; or
(b) by the Buyer, if the acceptance by the Municipal Assembly
described in Sections 10.8 and 11.8 hereof is not obtained on or before December
31, 1998; or
(c) by the Buyer, if any of the authorizations, consents, approvals,
filings or registrations described in Sections 10.4 and 11.4 hereof shall have
been denied, not permitted to go into effect or obtained on terms materially
adverse to the Buyer and all final appeals shall have been exhausted; or
(d) by the Buyer, if the Seller shall have breached any of its
obligations hereunder in any material respect; or
(e) by the Seller, if the Buyer shall have breached any of its
obligations hereunder in any material respect; or
(f) by either the Seller or the Buyer, by written notice to the
other party if the Closing shall not have occurred on or prior to December 31,
1999; provided, however, that the right to terminate this Agreement under this
Section 12(f) shall not be available to any party whose material breach of any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date.
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If either the Buyer or the Seller shall decide to terminate this
Agreement pursuant to this Section 12, such party shall promptly give written
notice to the other party to this Agreement of such decision. In the event of a
termination pursuant to this Section 12, the parties hereto shall be released
from all liabilities and obligations arising under this Agreement (other than
pursuant to Sections 2.2(a), 16 and 24 hereof) with respect to the matters
contemplated by this Agreement, other than for damages to the extent arising
from a prior breach of this Agreement; provided, however, that neither party
hereto shall be liable to the other party hereto as a result of any breach of a
representation or warranty contained in Sections 5 or 6. Any damages under this
paragraph of Section 12 for a breach of a representation or warranty of the
Seller shall be limited to the amount of the costs and expenses of the Seller
which the Buyer has paid or is obligated to pay under Section 16 hereof.
13. Amendment and Waivers.
13.1 Amendments, Modifications, etc. This Agreement may be amended,
modified or supplemented only by an instrument in writing executed and delivered
on behalf of each of the parties hereto, which instrument when so executed and
delivered shall thereupon become a part of this Agreement and the provisions
thereof shall be given effect as if contained in this Agreement as of the date
hereof.
13.2 Waivers. The representations, warranties, covenants or
conditions set forth in this Agreement may be waived only by a written
instrument executed by the party so waiving. The failure of any party at any
time or times to require performance of any provision hereof shall in no manner
affect the right of such party at a later time to enforce the same. No waiver by
any party of any condition, or breach of any term, covenant, agreement,
representation or warranty contained in this Agreement, in any one or more
instances, shall be deemed to be or
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construed as a waiver of any other condition or of the breach of any other term,
covenant, agreement, representation or warranty contained in this Agreement.
14. Survival of Representations and Warranties.
All representations, warranties and covenants of the parties hereto
contained in this Agreement or made pursuant hereto shall terminate on the
Closing Date, and no action or claim may be brought thereafter on the basis of
such representations, warranties and covenants, with the exception of the
covenants contained in Sections 3.2, 3.3, 6.4, 8.1, 8.2, 9.2, 9.5, 9.6, 15.1,
15.2, 15.3, 16, 18, 19, 20, 21, 22, 23 and 24 which shall survive until such
covenants have been performed.
15. Indemnification.
15.1 Indemnification by the Buyer. Subject to the terms and
conditions of this Section 15, the Buyer hereby agrees to indemnify and save
harmless the Seller and ATU and their respective affiliates, officials (elected
and appointed), directors, officers and employees (the "Seller's Indemnified
Parties") from, against, for and in respect of any and all losses, damages,
liabilities and obligations, whether absolute, accrued, contingent or otherwise
and whether a contractual, statutory, tax or any other type of liability or
obligation (including, without limitation, all reasonable costs and expenses,
including reasonable attorneys' fees, interest and penalties), suffered,
sustained, incurred or required to be paid by any of the Seller's Indemnified
Parties and arising from or relating to the use of the Assets or the conduct of
the Telephone Operations referred to herein, prior to, on or after the Closing
Date unless such liability or obligation is expressly not assumed by the Buyer
hereunder.
15.2 Indemnification by the Seller. Subject to the terms and
conditions of this Section 15, the Seller hereby agrees to indemnify and save
harmless the Buyer and, after the
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Closing Date, ATU, and their respective affiliates, directors, partners,
controlling stockholders, officers and employees (the "Buyer's Indemnified
Parties") from, against, for and in respect of any and all losses, damages,
liabilities and obligations, whether absolute, accrued, contingent or otherwise
and whether a contractual, statutory, tax or any other type of liability or
obligation (including, without limitation, all reasonable costs and expenses,
including reasonable attorneys' fees, interest and penalties), suffered,
sustained, incurred or required to be paid by any of the Buyer's Indemnified
Parties and arising from or relating to (i) any of the liabilities or
obligations described in Section 2.4 hereof, (ii) any of the Excluded Assets or
(iii) the Seller's failure to comply with any post-closing covenant.
15.3 Procedure for Indemnification with Respect to Third-Party
Claims. The liabilities and obligations of the party hereto against which
indemnification is sought hereunder (the "Indemnifying Party") with respect to
claims resulting from the assertion of liability or obligation by third parties
shall be subject to the following terms and conditions:
(a) Any Seller's Indemnified Party or Buyer's Indemnified Party
(collectively, the "Indemnified Parties") seeking indemnification hereunder
agrees to give prompt written notice to the Indemnifying Party of any claim by a
third party which might give rise to a claim based on the indemnity agreements
contained in Sections 15.1 and 15.2 hereof, stating the nature and basis of said
claim and the amount thereof, to the extent known. The Indemnifying Party shall
satisfy its obligation to indemnify the Indemnified Party under this Section 15
within 30 days after receipt of the foregoing notice unless the Indemnifying
Party shall have elected to defend in good faith such claim as provided in
subsection (b) hereof.
(b) In the event the Indemnified Party shall notify the Indemnifying
Party of any claim pursuant to subsection (a) hereof, the Indemnifying Party
shall have the right to elect
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to defend such claim (including all actions, suits, proceedings and all
proceedings on appeal or for review which counsel deem appropriate), with
counsel reasonably satisfactory to the Indemnified Party by written notice to
the Indemnified Party within 30 days after receipt of such notice. The
Indemnified Party shall make available to the Indemnifying Party and its
attorneys and accountants all books and records of the Indemnified Party
relating to such proceedings or litigation, and the parties hereto agree to
render to each other such assistance as they may reasonably require of each
other in order to ensure the proper and adequate defense of any such action,
suit or proceeding.
(c) So long as the Indemnifying Party is defending in good faith any
such claim, the Indemnified Party shall not compromise or settle such claim,
without the written consent of the Indemnifying Party. The Indemnifying Party
shall not, except with the consent of the Indemnified Party, enter into any
settlement or consent to entry of any judgment that provides for injunctive or
other non-monetary relief affecting the Indemnified Party or does not include as
an unconditional term thereof the giving by the person or persons asserting such
claim to all Indemnified Parties (i.e., the Seller's Indemnified Parties or the
Buyer's Indemnified Parties, as the case may be) of an unconditional release
from all liability with respect to such claim or consent to entry of any
judgment.
15.4 Mutual Indemnification. The Buyer and the Seller hereby agree
that if either the Buyer or the Seller takes any action opposing approval of the
transactions contemplated by this Agreement, either in a regulatory proceeding
relating to a consent required by Section 9.1 hereof or litigation arising
therefrom, the party hereto taking such action will indemnify the other party
hereto for all costs and expenses, including reasonable attorneys' fees,
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incurred by such party in connection with the transactions contemplated by this
Agreement, including all costs and expenses arising from such regulatory
proceeding or litigation.
16. Expenses.
Subject to the last sentence of this Section 16, the Buyer shall pay
its own expenses and the reasonable expenses of the Seller arising out of or
incidental to the transactions contemplated by this Agreement, whether or not
such transactions are consummated which shall not be materially in excess of
$1,500,000, including, without limitation, all reasonable out-of-pocket expenses
of the Seller in relation to the transactions contemplated by this Agreement,
including, but not limited to, costs of the Seller for legal, financial and
other advisors relating to solicitation of bids, contract negotiations,
regulatory approval and any litigation relating to or arising out of the
transactions contemplated by this Agreement. In addition, Buyer agrees that at
the Closing, it shall pay (i) the "Closing Fee" due to Donaldson, Lufkin &
Jenrette Securities Corporation pursuant to the contract dated as of June 10,
1998, between the Seller and Donaldson, Lufkin & Jenrette Securities Corporation
and (ii) any amount due to the PERS as a result of vesting of ATU employees in
PERS in connection with the sale of ATU to the Buyer. The Buyer shall pay the
expenses of the Seller that it is obligated to pay under the terms of this
Section 16 at the Closing or upon the earlier termination of this Agreement.
Notwithstanding the foregoing:
(a) If this Agreement is terminated pursuant to Section 12(b)
hereof, the Buyer shall not be obligated to pay any expenses of the Seller; and
(b) The Buyer shall not be obligated to pay expenses of the Seller
arising as a result of any breach by the Seller of any of the terms and
provisions of this Agreement.
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17. Notices.
All notices or other communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered by telex, telegram, telecopy or personally, or five days after mailing
if sent by registered or certified mail, postage prepaid, addressed as follows:
If to the Buyer:
Alaska Communications Systems, Inc..
100 W. 11th Street
Vancouver, WA 98660
Attn: James H. Huesgen
Telecopier No.: (360) 993-5156
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attn: Mitchell S. Presser
Telecopier No.: (212) 403-2273
If to the Seller:
Municipality of Anchorage
P.O. Box 196650
Anchorage, Alaska 99519-6650
Attn: Office of the Mayor
with a copy to:
William S. Lamb
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019-5389
Any party may change the address to which notices or other communications are to
be sent to it by giving written notice of such change in the manner provided
herein.
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18. Assignment.
This Agreement may not be assigned by any party hereto without the
prior written consent of the other party, except that the Buyer may assign its
rights and delegate its obligations hereunder to one or more direct or indirect
wholly owned subsidiaries of the Buyer or to affiliates of the Buyer, provided
that no such assignment or delegation shall relieve the Buyer of its obligations
hereunder, and provided further, that in the event of any such assignment or
delegation, the representations, warranties, covenants and agreements of the
Buyer hereunder shall be deemed, unless the context requires otherwise, to be
the representations, warranties, covenants and agreements of both the Buyer and
such subsidiary or subsidiaries or affiliates. Subject to the foregoing, this
Agreement shall bind and inure to the benefit only of the parties hereto and
their respective successors and permitted assigns.
19. Entire Agreement.
This Agreement, together with the Schedules and Exhibits hereto and
the other documents and instruments referred to herein, sets forth the entire
agreement and understanding of the parties hereto in respect of the transactions
contemplated hereby, and supersedes all prior agreements, arrangements and
understandings relating to the subject matter hereof.
20. Specific Performance: Third-Party Beneficiaries.
(a) The Buyer and the Seller recognize that any breach of the terms
of this Agreement by either party may give rise to irreparable harm for which
money damages would not be an adequate remedy, and accordingly agree that, in
addition to any other remedies to which the non-breaching party may be entitled
at law or in equity, but only to the extent permitted by law, the non-breaching
party shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and shall be entitled to enforce the terms of this Agreement
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by a decree of specific performance without the necessity of proving the
inadequacy as a remedy of money damages. If the non-breaching party is granted
relief as a result of an action brought pursuant to this Section 20, the
breaching party agrees to pay all reasonable expenses of the non-breaching party
arising out of or incidental to the bringing of such action, including without
limitation all reasonable attorneys' fees.
(b) Nothing in this Agreement is intended or shall be construed to
give any person any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein, other than the
parties hereto.
21. Counterparts.
This Agreement may be executed in any number of counterparts, all of
which together shall be considered to constitute one instrument.
22. Section Headings.
All section headings are inserted for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
23. Applicable Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Alaska.
24. Confidential Information.
Each party to this Agreement agrees and covenants with the other
party to this Agreement that it shall use, and shall cause its Representatives
(as hereinafter defined in this Section 24) to use, all Proprietary Information
(as hereinafter defined in this Section 24) relating to the other party (and, if
the first party is the Buyer, ATU), acquired by either of them in the course of
negotiations with or examination of the other party (and, if the first party is
the Buyer,
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ATU), only in connection with the transactions contemplated by this Agreement
and shall cause all Proprietary Information obtained by them in the course of
such negotiations and examinations to be treated as confidential.
If either the Buyer or the Seller shall terminate this Agreement
pursuant to Section 12 hereof, each party shall cause to be delivered to the
other (or, in the case of the summaries and work papers hereinafter referred to,
destroyed) all written and other tangible Proprietary Information obtained by
it, including, without limitation, all copies and summaries thereof and all work
papers based thereon and containing such Proprietary Information, whether so
obtained before or after the execution of this Agreement, and each party agrees
that it shall not itself, and shall cause its Representatives not to, use or
disclose, directly or indirectly, any Proprietary Information so obtained, and
that it shall have, and shall cause its Representatives to have, all Proprietary
Information kept confidential and not be used in any way which is detrimental to
the other party or ATU.
Notwithstanding anything in this Section 24 to the contrary, either
party may use and disclose any Proprietary Information which (a) is already in
its possession, provided that such information is not known by the party using
or disclosing such information (the "Disclosing Party") to be subject to a
confidentiality agreement with or other obligation of secrecy to the party not
using or disclosing such information (the "Non-Disclosing Party") in violation
of this Section 24, (b) becomes generally available to the public other than as
a result of a disclosure by the Disclosing Party, or (c) becomes available to
the Disclosing Party on a non-confidential basis from a source other than the
Non-Disclosing Party or any persons affiliated in any capacity with the
Non-Disclosing Party, provided that such source is not known by the Disclosing
Party to be
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bound by a confidentiality agreement with or other obligation of secrecy to the
Non-Disclosing Party or another party.
Except as otherwise provided herein, no representation or warranty
is made as to the accuracy or completeness of the Proprietary Information.
Neither party to this Agreement nor any of its respective
Representatives shall have any liability to the other party to this Agreement or
any of its respective Representatives arising from the use of the Proprietary
Information in accordance with this Agreement.
Without prejudice to the rights and remedies otherwise available to
either party to this Agreement, each party to this Agreement shall be entitled
to equitable relief by way of injunction if the other party to this Agreement or
any of its Representatives shall breach or threaten to breach any of the
provisions of this Section 24. In addition, each party to this Agreement agrees
to indemnify and hold harmless the other party to this Agreement from and
against any claims from third parties arising as a result of the party's
violation of this Section 24.
For the purposes of this Section 24, with respect to any person, the
term "Representative" shall mean such person's affiliates (as defined in the
Rules and Regulations promulgated under the Securities Act of 1933, as amended),
and the directors, officials (elected and appointed), officers, employees,
agents and other representatives of such person and such person's affiliates.
For the purposes of this Section 24, the term "Proprietary
Information" shall mean collectively all information which the Seller and ATU
have been, are and will be providing to the Buyer and its Representatives with
respect to the transactions contemplated by this Agreement and all information
which the Buyer has been, is and will be providing to the Seller and its
Representatives with respect to the transactions contemplated by this Agreement.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly
executed as of the date first above written.
ALASKA COMMUNICATIONS SYSTEMS, INC.
By: /s/ W. Dexter Paine, III
-------------------------------
Name: W. Dexter Paine, III
Title: Chairman
MUNICIPALITY OF ANCHORAGE
By: /s/ Rick Mystrom
-------------------------------
Name: Rick Mystrom
Title: Mayor
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Exhibit 3.1
State of Delaware
PAGE 1
Office of the Secretary of State
------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "ALEC ACQUISITION CORPORATION", CHANGING ITS NAME FROM "ALEC ACQUISITION
CORPORATION" TO "ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.", FILED IN THIS
OFFICE ON THE NINTH DAY OF APRIL, A.D. 1999, AT 4 O'CLOCK P.M.
/s/ Edward J. Freel
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
2918478 8100 AUTHENTICATION: 9725659
991177441 DATE: 05-05-99
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
ALEC Acquisition Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: setting forth a proposed amendment to the Certificate of
Incorporation of said corporation, declaring said amendment to be advisable and
calling a meeting of the stockholders of said corporation for consideration
thereof. The resolution setting forth the proposed amendment as follows: The
name of the corporation has been changed to Alaska Communications Systems
Holdings, Inc.
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
a special meeting of the stockholders of said corporation was duly called and
held, upon at which the necessary number of shares as required by statues were
voted in favor of the amendment.
THIRD: That said amendment duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, ALEC Acquisition Corporation has caused this
certificate to be signed by Deborah Johnson Harwood, its Vice President and
Corporate Secretary this 26th day of March 1999.
ALEC ACQUISITION CORPORATION
By: /s/ Deborah Johnson Harwood
-----------------------------
Title: Vice President & Secretary
--------------------------
Deborah Johnson Harwood
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:00 PM 04/09/1999
991140257 -- 2918478
<PAGE>
UNANIMOUS CONSENT OF DIRECTORS
PROPOSING AND DECLARING ADVISABLE
AN AMENDMENT OF THE
CERTIFICATE OF INCORPORATION
OF
ALEC ACQUISITION CORPORATION
WE, THE UNDERSIGNED, being all of the members of the board of directors of
ALEC Acquisition a corporation organized and existing under the laws of the
State of Delaware, DO HEREBY, pursuant to Sections 141 and 242 of the General
Corporation Law of the State of Delaware, propose and declare advisable the
following amendment to the Certificate of Incorporation: The name of the
corporation has been changed to Alaska Communications Systems Holdings, Inc. and
hereby authorize the proper officers of this corporation, if the stockholders
adopt said amendment, to file the necessary certificate effecting said amendment
with the Secretary of State of Delaware and to file with the proper state
official of any state I which this corporation is authorized to do business as a
foreign corporation such evidence of said amendment and/or any other instrument
as may be required by the laws of such state.
WITNESS our hands this 26th day of March.
ALEC ACQUISITION CORPORATION
By: /s/ W. Dexter Paine III
-------------------------------
Title: Director/W. Dexter Paine III
By: /s/ Sanjay Swani
-------------------------------
Title: Sanjay Swani/Director
<PAGE>
UNANIMOUS CONSENT OF SHAREHOLDER
PROPOSING AND DECLARING ADVISABLE
AN AMENDMENT OF THE
CERTIFICATE OF INCORPORATION
OF
ALEC ACQUISITION CORPORATION
WE, THE UNDERSIGNED, being the sole shareholder of ALEC Acquisition a
corporation organized and existing under the laws of the State of Delaware, DO
HEREBY, pursuant to Sections 141 and 242 of the General Corporation Law of the
State of Delaware, propose and declare advisable the following amendment to the
Certificate of Incorporation: The name of the corporation has been changed to
Alaska Communications Systems Holdings, Inc. and hereby authorize the proper
officers of this corporation, if the stockholders adopt said amendment, to file
the necessary certificate effecting said amendment with the Secretary of State
of Delaware and to file with the proper state official of any state I which this
corporation is authorized to do business as a foreign corporation such evidence
of said amendment and/or any other instrument as may be required by the laws of
such state.
WITNESS our hands this 26th day of March.
ALEC HOLDINGS, INC.
By: /s/ W. Dexter Paine III
-------------------------------
Title: Director/W. Dexter Paine III
By: /s/ Sanjay Swani
-------------------------------
Title: Sanjay Swani/Director
<PAGE>
Exhibit 3.2
State of Delaware
PAGE 1
Office of the Secretary of State
------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "ALEC ACQUISITION CORPORATION", FILED IN THIS OFFICE ON THE
SIXTEENTH DAY OF JULY, A.D. 1998, AT 12:30 O'CLOCK P.M.
/s/ Edward J. Freel
[SEAL] --------------------------------------
Edward J. Freel, Secretary of State
2918478 8100 AUTHENTICATION: 9725660
991177441 DATE: 05-05-99
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 12:30 PM 07/16/1998
981276571 - 2918478
CERTIFICATE OF INCORPORATION
OF
ALEC ACQUISITION CORPORATION
------------------------------
I, the undersigned, for the purpose of incorporating and organizing
a corporation under the General Corporation Law of the State of Delaware, do
hereby execute this Certificate of Incorporation and do hereby certify as
follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
ALEC Acquisition Corporation
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act
or activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE>
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 1000 shares
of capital stock, all of which shall be shares of Common Stock, $.01 par value
("Common Stock").
Section 2. Except as otherwise provided by law, the Common Stock
shall have the exclusive right to vote for the election of directors and for all
other purposes. Each share of Common Stock shall have one vote, and the Common
Stock shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
-2-
<PAGE>
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director
of the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and
-3-
<PAGE>
held harmless by the Corporation to the fullest extent authorized by the General
Corporation Law of the State of Delaware, as the same exists or may hereafter be
amended (but, in the case of any such amendment, to the fullest extent permitted
by law, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, amounts paid or to be paid in
settlement, and excise taxes or penalties arising under the Employee Retirement
Income Security Act of 1974) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
that, except as provided in paragraph (b) hereof, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in this Section shall be a contract right and shall include the right
to be paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that, if the
General Corporation Law of the State of Delaware requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a director
or officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it shall ultimately be determined that such director or officer
is not entitled to be indemnified under this Section or otherwise. The
Corporation may, by action of the Board,
-4-
<PAGE>
provide indemnification to employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a)
of this Section is not paid in full by the Corporation within thirty days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the General Corporation Law of the State
of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this
-5-
<PAGE>
Section shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-law, agreement, vote of stockholders or disinterested
directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
ARTICLE IX
The name and mailing address of the incorporator is Michael F.
Maslansky, Esq., c/o Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019
-6-
<PAGE>
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts hereinabove stated
are truly set forth and, accordingly, I have hereunto set my hand this 16th day
of July, 1998.
/s/ Michael F. Maslansky
------------------------
Michael F. Maslansky
Incorporator
-7-
<PAGE>
Exhibit 3.3
State of Delaware
PAGE 1
Office of the Secretary of State
------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "ALEC HOLDINGS, INC.", FILED IN THIS OFFICE ON THE THIRTEENTH
DAY OF OCTOBER, A.D. 1998, AT 10:30 O'CLOCK A.M.
/s/ Edward J. Freel
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
2954530 8100 AUTHENTICATION: 9725662
991177445 DATE: 05-05-99
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 10:30 AM 10/13/1998
981393953 - 2954530
CERTIFICATE OF INCORPORATION
OF
ALEC HOLDINGS, INC.
------------------------------
I, the undersigned, for the purpose of incorporating and organizing
a corporation under the General Corporation Law of the State of Delaware, do
hereby execute this Certificate of Incorporation and do hereby certify as
follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
ALEC Holdings, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act
or activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE>
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 1,000 shares
of capital stock, all of which shall be shares of Common Stock, $.01 par value
("Common Stock").
Section 2. Except as otherwise provided by law, the Common Stock
shall have the exclusive right to vote for the election of directors and for all
other purposes. Each share of Common Stock shall have one vote, and the Common
Stock shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
-2-
<PAGE>
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director
of the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and
-3-
<PAGE>
held harmless by the Corporation to the fullest extent authorized by the General
Corporation Law of the State of Delaware, as the same exists or may hereafter be
amended (but, in the case of any such amendment, to the fullest extent permitted
by law, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, amounts paid or to be paid in
settlement, and excise taxes or penalties arising under the Employee Retirement
Income Security Act of 1974) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
that, except as provided in paragraph (b) hereof, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in this Section shall be a contract right and shall include the right
to be paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that, if the
General Corporation Law of the State of Delaware requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a director
or officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it shall ultimately be determined that such director or officer
is not entitled to be indemnified under this Section or otherwise. The
Corporation may, by action of the Board,
-4-
<PAGE>
provide indemnification to employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a)
of this Section is not paid in full by the Corporation within thirty days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the General Corporation Law of the State
of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this
-5-
<PAGE>
Section shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-law, agreement, vote of stockholders or disinterested
directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
ARTICLE IX
The name and mailing address of the incorporator is Michael F.
Maslansky, Esq., c/o Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019.
-6-
<PAGE>
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts hereinabove stated
are truly set forth and, accordingly, I have hereunto set my hand this 13th day
of October, 1998.
/s/ Michael F. Maslansky
------------------------
Michael F. Maslansky
Incorporator
-7-
<PAGE>
Exhibit 3.4
BY-LAWS
OF
ALEC HOLDINGS, INC.
======================================
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of ALEC
Holdings, Inc. (the "Corporation") shall be established and maintained at the
office of The Corporation Trust Company at The Corporation Trust Center, 1209
Orange Street in the City of Wilmington, County of New Castle, State of
Delaware, and said Corporation Trust Company shall be the registered agent of
the Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for
the election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on the
next succeeding business day. At each annual meeting, the stockholders entitled
to vote shall elect a Board of Directors and they may transact such other
corporate business as shall be stated in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders
for any purpose or purposes may be called by the Chairman of the Board, the
President or the Secretary, or by resolution of the Board of Directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation of the Corporation and these
By-Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such
<PAGE>
proxy provides for a longer period. All elections for directors shall be decided
by plurality vote; all other questions shall be decided by majority vote except
as otherwise provided by the Certificate of Incorporation or the laws of the
State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at all
meetings of the stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted that might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat, at his
or her address as it appears on the records of the Corporation, not less than
ten nor more than sixty days before the date of the meeting. No business other
than that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by
the Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of stockholders may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
-2-
<PAGE>
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the
Corporation shall be managed under the direction of a Board of Directors. The
exact number of directors shall initially be three and may thereafter be fixed
from time to time by the Board of Directors. Directors shall be elected at the
annual meeting of stockholders and each director shall be elected to serve until
his or her successor shall be elected and shall qualify. A director need not be
a stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes
vacant, the remaining directors in the office, though less than a quorum, by a
majority vote, may appoint any qualified person to fill such vacancy, who shall
hold office for the unexpired term and until his or her successor shall be duly
chosen. If the office of any director becomes vacant and there are no remaining
directors, the stockholders, by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation, at a special
meeting called for such purpose, may appoint any qualified person to fill such
vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any director
or directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of the voting power entitled to
vote for the election of directors, at an annual meeting or a special meeting
called for the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares constituting a majority of
the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by resolution
or resolutions passed by a majority of the whole Board of Directors, designate
one or more committees, each committee to consist of one or more directors of
the Corporation.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it.
SECTION 6. MEETINGS -- The newly elected directors may hold their
first meeting for the purpose of organization and the transaction of business,
if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent of
all the Directors.
-3-
<PAGE>
Regular meetings of the Board of Directors may be held without
notice at such places and times as shall be determined from time to time by
resolution of the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President, or by the Secretary on the written
request of any director, on at least one day's notice to each director (except
that notice to any director may be waived in writing by such director) and shall
be held at such place or places as may be determined by the Board of Directors,
or as shall be stated in the call of the meeting.
Unless otherwise restricted by the Certificate of Incorporation of
the Corporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in any meeting
of the Board of Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned. The vote of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors unless the Certificate of Incorporation of the Corporation or these
By-Laws shall require the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board of Directors a fixed fee and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a written consent thereto is
signed by all members of the Board of Directors or of such committee, as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board of Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Vice Presidents, a Treasurer and
a Secretary, all of whom shall be elected by the Board of Directors and shall
hold office until their successors are
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<PAGE>
duly elected and qualified. In addition, the Board of Directors may elect such
Assistant Secretaries and Assistant Treasurers as they may deem proper. The
Board of Directors may appoint such other officers and agents as it may deem
advisable, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall
be the Chief Executive Officer of the Corporation. He or she shall preside at
all meetings of the Board of Directors and shall have and perform such other
duties as may be assigned to him or her by the Board of Directors. The Chairman
of the Board shall have the power to execute bonds, mortgages and other
contracts on behalf of the Corporation, and to cause the seal of the Corporation
to be affixed to any instrument requiring it, and when so affixed the seal shall
be attested to by the signature of the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer.
SECTION 3. PRESIDENT -- The President shall be the Chief Operating
Officer of the Corporation. He or she shall have the general powers and duties
of supervision and management usually vested in the office of President of a
corporation. The President shall have the power to execute bonds, mortgages and
other contracts on behalf of the Corporation, and to cause the seal to be
affixed to any instrument requiring it, and when so affixed the seal shall be
attested to by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 4. VICE PRESIDENTS -- Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him or her by the
Board of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial
Officer of the Corporation. He or she shall have the custody of the Corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He or she shall deposit all
moneys and other valuables in the name and to the credit of the Corporation in
such depositaries as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, the Chairman of the Board, or the President, taking proper vouchers
for such disbursements. He or she shall render to the Chairman of the Board, the
President and Board of Directors at the regular meetings of the Board of
Directors, or whenever they may request it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation. If
required by the Board of Directors, he or she shall give the Corporation a bond
for the faithful discharge of his or her duties in such amount and with such
surety as the Board of Directors shall prescribe.
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and of the Board of Directors and
all other notices required by law or by these By-Laws, and in case of his or her
absence or refusal or neglect so to do, any such notice may be given by any
person thereunto directed by the Chairman of the Board or the President, or by
the Board of Directors, upon whose request the meeting is called as provided in
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<PAGE>
these By-Laws. He or she shall record all the proceedings of the meetings of the
Board of Directors, any committees thereof and the stockholders of the
Corporation in a book to be kept for that purpose, and shall perform such other
duties as may be assigned to him or her by the Board of Directors, the Chairman
of the Board or the President. He or she shall have the custody of the seal of
the Corporation and shall affix the same to all instruments requiring it, when
authorized by the Board of Directors, the Chairman of the Board or the
President, and attest to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES --
Assistant Treasurers and Assistant Secretaries, if any, shall be elected and
shall have such powers and shall perform such duties as shall be assigned to
them, respectively, by the Board of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be
issued to each stockholder certifying the number of shares owned by such
stockholder in the Corporation. Certificates of stock of the Corporation shall
be of such form and device as the Board of Directors may from time to time
determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be
issued in the place of any certificate theretofore issued by the Corporation,
alleged to have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the
Corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the Corporation by
the delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Board of Directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date, which
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<PAGE>
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors and which record date: (1) in
the case of determination of stockholders entitled to vote at any meeting of
stockholders or adjournment thereof, shall, unless otherwise required by law,
not be more than sixty nor less than ten days before the date of such meeting;
(2) in the case of determination of stockholders entitled to express consent to
corporate action in writing without a meeting, shall not be more than ten days
from the date upon which the resolution fixing the record date is adopted by the
Board of Directors; and (3) in the case of any other action, shall not be more
than sixty days prior to such other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting when no prior action of
the Board of Directors is required by law, shall be the first day on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation in accordance with applicable law, or, if prior
action by the Board of Directors is required by law, shall be at the close of
business on the day on which the Board of Directors adopts the resolution taking
such prior action; and (3) the record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate
of Incorporation of the Corporation, the Board of Directors may, out of funds
legally available therefor at any regular or special meeting, declare dividends
upon stock of the Corporation as and when they deem appropriate. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of Directors
from time to time in their discretion deem proper for working capital or as a
reserve fund to meet contingencies or for equalizing dividends or for such other
purposes as the Board of Directors shall deem conducive to the interests of the
Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in
such form as shall be determined by resolution of the Board of Directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise imprinted upon the subject document or paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall
be determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or officers, or agent or agents,
of the Corporation, and in such manner as shall be determined from time to time
by resolution of the Board of Directors.
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<PAGE>
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required to be given under these By-Laws, personal notice is not required unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his or her address as it appears on
the records of the Corporation, and such notice shall be deemed to have been
given on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by law.
Whenever any notice is required to be given under the provisions of any law, or
under the provisions of the Certificate of Incorporation of the Corporation or
of these By-Laws, a waiver thereof, in writing and signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual
meeting of the stockholders (or at any special meeting thereof if notice of such
proposed alteration, amendment or repeal to be considered is contained in the
notice of such special meeting) by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation. Except as
otherwise provided in the Certificate of Incorporation of the Corporation, the
Board of Directors may by majority vote of those present at any meeting at which
a quorum is present alter, amend or repeal these By-Laws, or enact such other
By-Laws as in their judgment may be advisable for the regulation and conduct of
the affairs of the Corporation.
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<PAGE>
Exhibit 3.5
State of Delaware
PAGE 1
Office of the Secretary of State
------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "ALEC ACQUISITION SUB CORP.", FILED IN THIS OFFICE ON THE
TWENTIETH DAY OF AUGUST, A.D. 1998, AT 4 O'CLOCK P.M.
/s/ Edward J. Freel
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
2929995 8100 AUTHENTICATION: 9725661
991177443 DATE: 05-05-99
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:00 PM 08/20/1998
981327505 - 2929995
CERTIFICATE OF INCORPORATION
OF
ALEC ACQUISITION SUB CORP.
------------------------------
I, the undersigned, for the purpose of incorporating and organizing
a corporation under the General Corporation Law of the State of Delaware, do
hereby execute this Certificate of Incorporation and do hereby certify as
follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
ALEC Acquisition Sub Corp.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act
or activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE>
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 1000 shares
of capital stock, all of which shall be shares of Common Stock, $.01 par value
("Common Stock").
Section 2. Except as otherwise provided by law, the Common Stock
shall have the exclusive right to vote for the election of directors and for all
other purposes. Each share of Common Stock shall have one vote, and the Common
Stock shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
2
<PAGE>
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director
of the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and
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<PAGE>
held harmless by the Corporation to the fullest extent authorized by the General
Corporation Law of the State of Delaware, as the same exists or may hereafter be
amended (but, in the case of any such amendment, to the fullest extent permitted
by law, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, amounts paid or to be paid in
settlement, and excise taxes or penalties arising under the Employee Retirement
Income Security Act of 1974) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
that, except as provided in paragraph (b) hereof, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in this Section shall be a contract right and shall include the right
to be paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that, if the
General Corporation Law of the State of Delaware requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a director
or officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it shall ultimately be determined that such director or officer
is not entitled to be indemnified under this Section or otherwise. The
Corporation may, by action of the Board,
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<PAGE>
provide indemnification to employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a)
of this Section is not paid in full by the Corporation within thirty days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the General Corporation Law of the State
of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this
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<PAGE>
Section shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-law, agreement, vote of stockholders or disinterested
directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
ARTICLE IX
The name and mailing address of the incorporator is Michael F.
Maslansky, Esq., c/o Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019.
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<PAGE>
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts hereinabove stated
are truly set forth and, accordingly, I have hereunto set my hand this 20th day
of August, 1998.
/s/ Michael F. Maslansky
------------------------
Michael F. Maslansky
Incorporator
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<PAGE>
Exhibit 3.6
BY-LAWS
OF
ALEC ACQUISITION SUB CORP.
========================================================
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of ALEC
Acquisition Sub Corp. (the "Corporation") shall be established and maintained at
the office of The Corporation Trust Company at The Corporation Trust Center,
1209 Orange Street in the City of Wilmington, County of New Castle, State of
Delaware, and said Corporation Trust Company shall be the registered agent of
the Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for
the election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on the
next succeeding business day. At each annual meeting, the stockholders entitled
to vote shall elect a Board of Directors and they may transact such other
corporate business as shall be stated in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders
for any purpose or purposes may be called by the Chairman of the Board, the
President or the Secretary, or by resolution of the Board of Directors.
<PAGE>
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation of the Corporation and these
By-Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such proxy provides for a longer period. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at all
meetings of the stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted that might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat, at his
or her address as it appears on the records of the Corporation, not less than
ten nor more than sixty days before the date of the meeting. No business other
than that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by
the Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of stockholders may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
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<PAGE>
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the
Corporation shall be managed under the direction of a Board of Directors. The
exact number of directors shall initially be three and may thereafter be fixed
from time to time by the Board of Directors. Directors shall be elected at the
annual meeting of stockholders and each director shall be elected to serve until
his or her successor shall be elected and shall qualify. A director need not be
a stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes
vacant, the remaining directors in the office, though less than a quorum, by a
majority vote, may appoint any qualified person to fill such vacancy, who shall
hold office for the unexpired term and until his or her successor shall be duly
chosen. If the office of any director becomes vacant and there are no remaining
directors, the stockholders, by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation, at a special
meeting called for such purpose, may appoint any qualified person to fill such
vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any director
or directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of the voting power entitled to
vote for the election of directors, at an annual meeting or a special meeting
called for the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares constituting a majority of
the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by resolution
or resolutions passed by a majority of the whole Board of Directors, designate
one or more committees, each committee to consist of one or more directors of
the Corporation.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it.
SECTION 6. MEETINGS -- The newly elected directors may hold their
first meeting for the purpose of organization and the transaction of business,
if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent of
all the Directors.
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<PAGE>
Regular meetings of the Board of Directors may be held without
notice at such places and times as shall be determined from time to time by
resolution of the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President, or by the Secretary on the written
request of any director, on at least one day's notice to each director (except
that notice to any director may be waived in writing by such director) and shall
be held at such place or places as may be determined by the Board of Directors,
or as shall be stated in the call of the meeting.
Unless otherwise restricted by the Certificate of Incorporation of
the Corporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in any meeting
of the Board of Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned. The vote of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors unless the Certificate of Incorporation of the Corporation or these
By-Laws shall require the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board of Directors a fixed fee and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a written consent thereto is
signed by all members of the Board of Directors or of such committee, as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board of Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Vice Presidents, a Treasurer and
a Secretary, all of whom shall be elected by the Board of Directors and shall
hold office until their successors are
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<PAGE>
duly elected and qualified. In addition, the Board of Directors may elect such
Assistant Secretaries and Assistant Treasurers as they may deem proper. The
Board of Directors may appoint such other officers and agents as it may deem
advisable, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall
be the Chief Executive Officer of the Corporation. He or she shall preside at
all meetings of the Board of Directors and shall have and perform such other
duties as may be assigned to him or her by the Board of Directors. The Chairman
of the Board shall have the power to execute bonds, mortgages and other
contracts on behalf of the Corporation, and to cause the seal of the Corporation
to be affixed to any instrument requiring it, and when so affixed the seal shall
be attested to by the signature of the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer.
SECTION 3. PRESIDENT -- The President shall be the Chief Operating
Officer of the Corporation. He or she shall have the general powers and duties
of supervision and management usually vested in the office of President of a
corporation. The President shall have the power to execute bonds, mortgages and
other contracts on behalf of the Corporation, and to cause the seal to be
affixed to any instrument requiring it, and when so affixed the seal shall be
attested to by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 4. VICE PRESIDENTS -- Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him or her by the
Board of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial
Officer of the Corporation. He or she shall have the custody of the Corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He or she shall deposit all
moneys and other valuables in the name and to the credit of the Corporation in
such depositaries as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, the Chairman of the Board, or the President, taking proper vouchers
for such disbursements. He or she shall render to the Chairman of the Board, the
President and Board of Directors at the regular meetings of the Board of
Directors, or whenever they may request it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation. If
required by the Board of Directors, he or she shall give the Corporation a bond
for the faithful discharge of his or her duties in such amount and with such
surety as the Board of Directors shall prescribe.
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and of the Board of Directors and
all other notices required by law or by these By-Laws, and in case of his or her
absence or refusal or neglect so to do, any such notice may be given by any
person thereunto directed by the Chairman of the Board or the President, or by
the Board of Directors, upon whose request the meeting is called as provided in
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<PAGE>
these By-Laws. He or she shall record all the proceedings of the meetings of the
Board of Directors, any committees thereof and the stockholders of the
Corporation in a book to be kept for that purpose, and shall perform such other
duties as may be assigned to him or her by the Board of Directors, the Chairman
of the Board or the President. He or she shall have the custody of the seal of
the Corporation and shall affix the same to all instruments requiring it, when
authorized by the Board of Directors, the Chairman of the Board or the
President, and attest to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES --
Assistant Treasurers and Assistant Secretaries, if any, shall be elected and
shall have such powers and shall perform such duties as shall be assigned to
them, respectively, by the Board of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be
issued to each stockholder certifying the number of shares owned by such
stockholder in the Corporation. Certificates of stock of the Corporation shall
be of such form and device as the Board of Directors may from time to time
determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be
issued in the place of any certificate theretofore issued by the Corporation,
alleged to have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the
Corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the Corporation by
the delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Board of Directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date, which
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<PAGE>
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors and which record date: (1) in
the case of determination of stockholders entitled to vote at any meeting of
stockholders or adjournment thereof, shall, unless otherwise required by law,
not be more than sixty nor less than ten days before the date of such meeting;
(2) in the case of determination of stockholders entitled to express consent to
corporate action in writing without a meeting, shall not be more than ten days
from the date upon which the resolution fixing the record date is adopted by the
Board of Directors; and (3) in the case of any other action, shall not be more
than sixty days prior to such other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting when no prior action of
the Board of Directors is required by law, shall be the first day on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation in accordance with applicable law, or, if prior
action by the Board of Directors is required by law, shall be at the close of
business on the day on which the Board of Directors adopts the resolution taking
such prior action; and (3) the record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate
of Incorporation of the Corporation, the Board of Directors may, out of funds
legally available therefor at any regular or special meeting, declare dividends
upon stock of the Corporation as and when they deem appropriate. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of Directors
from time to time in their discretion deem proper for working capital or as a
reserve fund to meet contingencies or for equalizing dividends or for such other
purposes as the Board of Directors shall deem conducive to the interests of the
Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in
such form as shall be determined by resolution of the Board of Directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise imprinted upon the subject document or paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall
be determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or officers, or agent or agents,
of the Corporation, and in such manner as shall be determined from time to time
by resolution of the Board of Directors.
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<PAGE>
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required to be given under these By-Laws, personal notice is not required unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his or her address as it appears on
the records of the Corporation, and such notice shall be deemed to have been
given on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by law.
Whenever any notice is required to be given under the provisions of any law, or
under the provisions of the Certificate of Incorporation of the Corporation or
of these By-Laws, a waiver thereof, in writing and signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual
meeting of the stockholders (or at any special meeting thereof if notice of such
proposed alteration, amendment or repeal to be considered is contained in the
notice of such special meeting) by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation. Except as
otherwise provided in the Certificate of Incorporation of the Corporation, the
Board of Directors may by majority vote of those present at any meeting at which
a quorum is present alter, amend or repeal these By-Laws, or enact such other
By-Laws as in their judgment may be advisable for the regulation and conduct of
the affairs of the Corporation.
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<PAGE>
Exhibit 3.7
State of Delaware
PAGE 1
Office of the Secretary of State
------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "ALASKA COMMUNICATIONS SYSTEMS, INC.", FILED IN THIS OFFICE ON
THE THIRTEENTH DAY OF OCTOBER, A.D. 1998, AT 10:30 O'CLOCK A.M.
/s/ Edward J. Freel
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
2954028 8100 AUTHENTICATION: 9725657
991177438 DATE: 05-05-99
<PAGE>
CERTIFICATE OF INCORPORATION
OF
ALASKA COMMUNICATIONS SYSTEMS, INC.
------------------------------
I, the undersigned, for the purpose of incorporating and organizing
a corporation under the General Corporation Law of the State of Delaware, do
hereby execute this Certificate of Incorporation and do hereby certify as
follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
Alaska Communications Systems, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act
or activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 10:30 AM 10/13/1998
981393951 - 2954028
<PAGE>
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 1,000 shares
of capital stock, all of which shall be shares of Common Stock, $.01 par value
("Common Stock").
Section 2. Except as otherwise provided by law, the Common Stock
shall have the exclusive right to vote for the election of directors and for all
other purposes. Each share of Common Stock shall have one vote, and the Common
Stock shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
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<PAGE>
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director
of the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and
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<PAGE>
held harmless by the Corporation to the fullest extent authorized by the General
Corporation Law of the State of Delaware, as the same exists or may hereafter be
amended (but, in the case of any such amendment, to the fullest extent permitted
by law, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, amounts paid or to be paid in
settlement, and excise taxes or penalties arising under the Employee Retirement
Income Security Act of 1974) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
that, except as provided in paragraph (b) hereof, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board. The right to indemnification
conferred in this Section shall be a contract right and shall include the right
to be paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that, if the
General Corporation Law of the State of Delaware requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a director
or officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it shall ultimately be determined that such director or officer
is not entitled to be indemnified under this Section or otherwise. The
Corporation may, by action of the Board,
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<PAGE>
provide indemnification to employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a)
of this Section is not paid in full by the Corporation within thirty days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the General Corporation Law of the State
of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this
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<PAGE>
Section shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-law, agreement, vote of stockholders or disinterested
directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
ARTICLE IX
The name and mailing address of the incorporator is Michael F.
Maslansky, Esq., c/o Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019.
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<PAGE>
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts hereinabove stated
are truly set forth and, accordingly, I have hereunto set my hand this 13th day
of October, 1998.
/s/ Michael F. Maslansky
------------------------
Michael F. Maslansky
Incorporator
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<PAGE>
Exhibit 3.8
BY-LAWS
OF
ALASKA COMMUNICATIONS SYSTEMS, INC.
===================================
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of Alaska
Communications Systems, Inc. (the "Corporation") shall be established and
maintained at the office of The Corporation Trust Company at The Corporation
Trust Center, 1209 Orange Street in the City of Wilmington, County of New
Castle, State of Delaware, and said Corporation Trust Company shall be the
registered agent of the Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for
the election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on the
next succeeding business day. At each annual meeting, the stockholders entitled
to vote shall elect a Board of Directors and they may transact such other
corporate business as shall be stated in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders
for any purpose or purposes may be called by the Chairman of the Board, the
President or the Secretary, or by resolution of the Board of Directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation of the Corporation and these
By-Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such
<PAGE>
proxy provides for a longer period. All elections for directors shall be decided
by plurality vote; all other questions shall be decided by majority vote except
as otherwise provided by the Certificate of Incorporation or the laws of the
State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at all
meetings of the stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted that might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat, at his
or her address as it appears on the records of the Corporation, not less than
ten nor more than sixty days before the date of the meeting. No business other
than that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by
the Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of stockholders may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
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<PAGE>
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the
Corporation shall be managed under the direction of a Board of Directors. The
exact number of directors shall initially be three and may thereafter be fixed
from time to time by the Board of Directors. Directors shall be elected at the
annual meeting of stockholders and each director shall be elected to serve until
his or her successor shall be elected and shall qualify. A director need not be
a stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes
vacant, the remaining directors in the office, though less than a quorum, by a
majority vote, may appoint any qualified person to fill such vacancy, who shall
hold office for the unexpired term and until his or her successor shall be duly
chosen. If the office of any director becomes vacant and there are no remaining
directors, the stockholders, by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation, at a special
meeting called for such purpose, may appoint any qualified person to fill such
vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any director
or directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of the voting power entitled to
vote for the election of directors, at an annual meeting or a special meeting
called for the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares constituting a majority of
the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by resolution
or resolutions passed by a majority of the whole Board of Directors, designate
one or more committees, each committee to consist of one or more directors of
the Corporation.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it.
SECTION 6. MEETINGS -- The newly elected directors may hold their
first meeting for the purpose of organization and the transaction of business,
if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent of
all the Directors.
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<PAGE>
Regular meetings of the Board of Directors may be held without
notice at such places and times as shall be determined from time to time by
resolution of the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President, or by the Secretary on the written
request of any director, on at least one day's notice to each director (except
that notice to any director may be waived in writing by such director) and shall
be held at such place or places as may be determined by the Board of Directors,
or as shall be stated in the call of the meeting.
Unless otherwise restricted by the Certificate of Incorporation of
the Corporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in any meeting
of the Board of Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned. The vote of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors unless the Certificate of Incorporation of the Corporation or these
By-Laws shall require the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board of Directors a fixed fee and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a written consent thereto is
signed by all members of the Board of Directors or of such committee, as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board of Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Vice Presidents, a Treasurer and
a Secretary, all of whom shall be elected by the Board of Directors and shall
hold office until their successors are
-4-
<PAGE>
duly elected and qualified. In addition, the Board of Directors may elect such
Assistant Secretaries and Assistant Treasurers as they may deem proper. The
Board of Directors may appoint such other officers and agents as it may deem
advisable, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall
be the Chief Executive Officer of the Corporation. He or she shall preside at
all meetings of the Board of Directors and shall have and perform such other
duties as may be assigned to him or her by the Board of Directors. The Chairman
of the Board shall have the power to execute bonds, mortgages and other
contracts on behalf of the Corporation, and to cause the seal of the Corporation
to be affixed to any instrument requiring it, and when so affixed the seal shall
be attested to by the signature of the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer.
SECTION 3. PRESIDENT -- The President shall be the Chief Operating
Officer of the Corporation. He or she shall have the general powers and duties
of supervision and management usually vested in the office of President of a
corporation. The President shall have the power to execute bonds, mortgages and
other contracts on behalf of the Corporation, and to cause the seal to be
affixed to any instrument requiring it, and when so affixed the seal shall be
attested to by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 4. VICE PRESIDENTS -- Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him or her by the
Board of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial
Officer of the Corporation. He or she shall have the custody of the Corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He or she shall deposit all
moneys and other valuables in the name and to the credit of the Corporation in
such depositaries as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, the Chairman of the Board, or the President, taking proper vouchers
for such disbursements. He or she shall render to the Chairman of the Board, the
President and Board of Directors at the regular meetings of the Board of
Directors, or whenever they may request it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation. If
required by the Board of Directors, he or she shall give the Corporation a bond
for the faithful discharge of his or her duties in such amount and with such
surety as the Board of Directors shall prescribe.
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and of the Board of Directors and
all other notices required by law or by these By-Laws, and in case of his or her
absence or refusal or neglect so to do, any such notice may be given by any
person thereunto directed by the Chairman of the Board or the President, or by
the Board of Directors, upon whose request the meeting is called as provided in
-5-
<PAGE>
these By-Laws. He or she shall record all the proceedings of the meetings of the
Board of Directors, any committees thereof and the stockholders of the
Corporation in a book to be kept for that purpose, and shall perform such other
duties as may be assigned to him or her by the Board of Directors, the Chairman
of the Board or the President. He or she shall have the custody of the seal of
the Corporation and shall affix the same to all instruments requiring it, when
authorized by the Board of Directors, the Chairman of the Board or the
President, and attest to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES --
Assistant Treasurers and Assistant Secretaries, if any, shall be elected and
shall have such powers and shall perform such duties as shall be assigned to
them, respectively, by the Board of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be
issued to each stockholder certifying the number of shares owned by such
stockholder in the Corporation. Certificates of stock of the Corporation shall
be of such form and device as the Board of Directors may from time to time
determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be
issued in the place of any certificate theretofore issued by the Corporation,
alleged to have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the
Corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the Corporation by
the delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Board of Directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date, which
-6-
<PAGE>
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors and which record date: (1) in
the case of determination of stockholders entitled to vote at any meeting of
stockholders or adjournment thereof, shall, unless otherwise required by law,
not be more than sixty nor less than ten days before the date of such meeting;
(2) in the case of determination of stockholders entitled to express consent to
corporate action in writing without a meeting, shall not be more than ten days
from the date upon which the resolution fixing the record date is adopted by the
Board of Directors; and (3) in the case of any other action, shall not be more
than sixty days prior to such other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting when no prior action of
the Board of Directors is required by law, shall be the first day on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation in accordance with applicable law, or, if prior
action by the Board of Directors is required by law, shall be at the close of
business on the day on which the Board of Directors adopts the resolution taking
such prior action; and (3) the record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate
of Incorporation of the Corporation, the Board of Directors may, out of funds
legally available therefor at any regular or special meeting, declare dividends
upon stock of the Corporation as and when they deem appropriate. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of Directors
from time to time in their discretion deem proper for working capital or as a
reserve fund to meet contingencies or for equalizing dividends or for such other
purposes as the Board of Directors shall deem conducive to the interests of the
Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in
such form as shall be determined by resolution of the Board of Directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise imprinted upon the subject document or paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall
be determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or officers, or agent or agents,
of the Corporation, and in such manner as shall be determined from time to time
by resolution of the Board of Directors.
-7-
<PAGE>
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required to be given under these By-Laws, personal notice is not required unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his or her address as it appears on
the records of the Corporation, and such notice shall be deemed to have been
given on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by law.
Whenever any notice is required to be given under the provisions of any law, or
under the provisions of the Certificate of Incorporation of the Corporation or
of these By-Laws, a waiver thereof, in writing and signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual
meeting of the stockholders (or at any special meeting thereof if notice of such
proposed alteration, amendment or repeal to be considered is contained in the
notice of such special meeting) by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation. Except as
otherwise provided in the Certificate of Incorporation of the Corporation, the
Board of Directors may by majority vote of those present at any meeting at which
a quorum is present alter, amend or repeal these By-Laws, or enact such other
By-Laws as in their judgment may be advisable for the regulation and conduct of
the affairs of the Corporation.
-8-
<PAGE>
EXHIBIT 3.9
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
I certify that the attached 14 pages are true copies of records on file with the
Department of Commerce and Economic Development, Division of Banking,
Securities, and Corporations.
[SEAL] Deborah B. Sedwick
Commissioner
Certified by: /s/ Gina Markovich
--------------------
Date: May 6, 1999
---------------------------
================================================================================
<PAGE>
================================================================================
---------------
State of Alaska
---------------
-----------------------------------------------
Department of Commerce and Economic Development
-----------------------------------------------
Certificate
The undersigned, as Commissioner of Commerce and Economic Development of
the State of Alaska, hereby certifies that duplicate originals of Articles of
Consolidation, duly signed and verified pursuant to the provisions of the Alaska
Corporation Act, have been received in this office and are found to conform to
law.
ACCORDINGLY, the undersigned, as such Commissioner of Commerce and
Economic Development, and by virtue of the authority vested in him by law,
hereby issues this Certificate of Consolidation of
SITKA TELEPHONE COMPANY
AND
GLACIER STATE TELEPHONE COMPANY
forming a new corporation called
TELEPHONE UTILITIES OF THE NORTHLAND
and attaches hereto a duplicate original of the Articles of Consolidation.
[SEAL]
IN TESTIMONY WHEREOF, I execute this certificate and
affix the Great Seal of the State of Alaska on
30th day of April, A.D. 1986
/s/ Loren H. Lounsbury
LOREN H. LOUNSBURY
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
================================================================================
<PAGE>
FILED FOR RECORD
STATE OF ALASKA
APR 30 1986
DEPARTMENT OF COMMERCE
& ECONOMIC DEVELOPMENT
ARTICLES OF INCORPORATION
OF
TELEPHONE UTILITIES OF THE NORTHLAND, INC.
The undersigned, a natural person of the age of twenty-one years or more,
acting as incorporator under the Alaska Business Corporation Act, adopt the
following Articles of Incorporation for such corporation.
ARTICLE I
The name of the corporation is Telephone Utilities of the Northland, Inc.
ARTICLE II
The period of duration of the corporation is perpetual.
ARTICLE III
The purpose for which the corporation is organized is as follows:
1. To engage in any lawful business or activity for which corporations may
be organized under the Alaska Business Corporation Act.
ARTICLE IV
The aggregate number of shares which the corporation shall have authority
to issue is one hundred thousand (100,000) shares of no par value common stock.
<PAGE>
ARTICLE V
The corporation shall not commence business until consideration of the
value of at least One Thousand Dollars ($1,000.00) has been received by it for
the issuance of shares.
ARTICLE VI
The preemptive right of shareholders to acquire additional shares of the
corporation shall be denied.
ARTICLE VII
The internal affairs of the corporation shall be regulated in accordance
with the Bylaws adopted as provided in A.S. 10.05.135, as amended, and as it
may be amended.
ARTICLE VIII
The address of the initial registered office of the corporation shall be
Suite 800, 240 Main Street, Juneau, Alaska 99801, and the name of the registered
agent at such address is C T Corporation System.
ARTICLE IX
The number of the directors constituting the initial Board of Directors of
the corporation is three (3). The names and addresses of the persons who are to
serve as directors until the first annual meeting of the shareholders or until
their successors are elected and shall qualify are:
-2-
<PAGE>
Name Address
- ---- -------
Charles F. Robinson 805 Broadway
Vancouver, WA 98668
Charles F. Peterson 805 Broadway
Vancouver, WA 98668
Vern K. Dunham 805 Broadway
Vancouver, WA 98668
ARTICLE X
The name of the incorporator is Marilyn E. Bain and her address is 805
Broadway, P. 0. Box 9901, Vancouver, Washington 98668.
IN WITNESS WHEREOF, the incorporator has hereunto set her hand this 29th
day of April, 1986.
4-29-86 /s/ Marilyn E. Bain
- ----------------- -------------------
Date Incorporator
STATE OF WASHINGTON )
) ss.
COUNTY OF CLARK )
THIS IS TO CERTIFY that on the 29th day of April, 1986, before me, the
undersigned, a Notary Public in and for the State of Washington, duly
commissioned and sworn as such, personally appeared MARILYN E. BAIN, who, being
first duly sworn by me, declared that she is the person who signed the foregoing
document as incorporator, and that the statements contained therein are true.
WITNESS my hand and seal on the day and year first above written.
/s/ Jeannette M. Littlefield
---------------------------------
Notary Public in and for the
State of Washington
My commission expires: 1/02/90
-3-
<PAGE>
FILED FOR RECORD
STATE OF ALASKA
APR 30 1986
DEPARTMENT OF COMMERCE
& ECONOMIC DEVELOPMENT
ARTICLES OF CONSOLIDATION
OF
SITKA TELEPHONE COMPANY
AND
GLACIER STATE TELEPHONE COMPANY
Pursuant to the provisions of Section 10.05.396 and 10.05.399 of the
Alaska Business Corporation Act, SITKA TELEPHONE COMPANY, an Alaska corporation
(hereinafter referred to as "Sitka"), and GLACIER STATE TELEPHONE COMPANY, an
Alaska corporation (hereinafter referred to as "Glacier") hereby adopt the
following Articles of Consolidation for the purpose of consolidating Sitka and
Glacier into a new corporation, Telephone Utilities of the Northland, Inc.
ARTICLE I
The Plan of Consolidation is attached hereto and incorporated herein by
reference. The Plan of Consolidation was duly approved by the directors and
shareholders of both of the constituent corporations in the manner prescribed by
the Alaska Business Corporation Act.
ARTICLE II
There are 2,103 shares of Sitka issued and outstanding. All of such shares
are of the same class, and thus no shares are entitled to vote by class. There
are 18,850 shares of
<PAGE>
Glacier issued and outstanding. All of such shares are the same class, and thus
no shares are entitled to vote by class.
ARTICLE III
All 2,103 issued and outstanding shares of Sitka and all 18,850 issued and
outstanding shares of Glacier voted in favor of the Plan of Consolidation. No
shares of either corporation voted against the Plan of Consolidation.
IN WITNESS WHEREOF, the undersigned have executed these Articles of
Consolidation, this 28th day of April, 1986.
SITKA TELEPHONE COMPANY
By: /s/ C. E. Robinson
---------------------------------------
[Seal] President
Attest: /s/ Marilyn E. Bain
-----------------------------------
Assistant Secretary
GLACIER STATE TELEPHONE COMPANY
By: /s/ C. E. Robinson
---------------------------------------
[Seal] President
Attest: /s/ Marilyn E. Bain
-----------------------------------
Assistant Secretary
Articles of Consolidation - Page 2
<PAGE>
STATE OF WASHINGTON )
) ss.
COUNTY OF CLARK )
I, Jeannette M. Littlefield, a notary public, do hereby certify that on
this 28th day of April, 1986, personally appeared before me Charles E. Robinson
and Marilyn E. Bain, who being by me first duly sworn, declared that they are
the President and Assistant Secretary, respectively, of Sitka Telephone Company,
which is one of the corporations party to the foregoing consolidation, that they
signed the foregoing document as President and Assistant Secretary of the
corporation, and that the statements therein contained are true.
/s/ Jeannette M. Littlefield
---------------------------------
[Seal] Notary Public in and for the
State of Washington
My Commission expires: 1/02/90
STATE OF WASHINGTON )
) ss.
COUNTY OF CLARK )
I, Jeannette M. Littlefield, a notary public, do hereby certify that on
this 28th day of April, 1986, personally appeared before me Charles E. Robinson
and Marilyn E. Bain, who being by me first duly sworn, declared that they are
the President and Assistant Secretary, respectively, of Glacier State Telephone
Company, which is one of the corporations party to the foregoing consolidation,
that they signed the foregoing document as President and Assistant Secretary of
the corporation, and that the statements therein contained are true.
/s/ Jeannette M. Littlefield
---------------------------------
[Seal] Notary Public in and for the
State of Washington
My Commission expires: 1/02/90
Articles of Consolidation - Page 3
<PAGE>
FILED FOR RECORD
STATE OF ALASKA
APR 30 1986
DEPARTMENT OF COMMERCE
& ECONOMIC DEVELOPMENT
PLAN OF CONSOLIDATION
Plan of Consolidation dated April 28, 1986, by and between Sitka Telephone
Company, an Alaska corporation, herein sometimes referred to as "Sitka", and
Glacier State Telephone Company, an Alaska corporation, herein sometimes
referred to as "Glacier".
WHEREAS, Glacier is a corporation organized and existing under the laws of
the State of Alaska and having an authorized capital stock which consists of
100,000 shares of common stock of no par value; and
WHEREAS, Sitka is a corporation organized and existing under the laws of
the State of Alaska and having an authorized capital stock which consists of
3,000 shares of common stock of $100 par value; and
WHEREAS, Glacier and Sitka deem it advisable and in the best interests of
the corporations and their shareholder that they consolidate into a new
corporation under the laws of the State of Alaska, hereinafter referred to as
"the new corporation."
NOW, THEREFORE, it is hereby agreed that Glacier and Sitka shall
consolidate into a new corporation under the laws of the State of Alaska under
the following terms and conditions.
<PAGE>
1. Names of corporations proposing to consolidate: Sitka Telephone Company
and Glacier State Telephone Company.
Name of new corporation: Telephone Utilities of the Northland, Inc.
2. Terms and conditions. Upon this Plan of Consolidation becoming
effective:
(a) Sitka and Glacier (herein sometimes referred to as the
"constituent corporations") shall cease to exist separately and shall be
consolidated into Telephone Utilities of the Northland, Inc. (herein sometimes
referred to as the "new corporation") in accordance with the provisions of this
Agreement and in accordance with the provisions of the Alaska Business
Corporation Act.
(b) Telephone Utilities of the Northland, Inc. shall possess all the
rights, privileges, powers, franchises, and trust and fiduciary duties, powers,
and obligations, as well of a public as of a private nature, and be subject to
all the restrictions, disabilities and duties of each of the constituent
corporations, and all and singular, the rights, privileges, powers and
franchises, and trust and fiduciary rights, powers, duties and obligations, of
each of the constituent corporations; and all property, real, personal, and
mixed, and all debts due to either of the constituent corporations on whatever
account, as all other things in
-2-
<PAGE>
action and belonging to each of the constituent corporations shall be vested in
the new corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectally
the property of the new corporation as they were of the respective constituent
corporations; and the title to any real estate, whether vested by deed or
otherwise, in either of the constituent corporations shall not revert or be in
any way impaired by reason of the consolidation.
(c) The Board of Directors of the new corporation shall initially
consist of three directors, each of whom shall hold office until his successor
shall have been duly elected and shall have qualified, or until his earlier
death, resignation, or removal. The respective names and addresses of such
directors are as follows:
Name Address
---- -------
Charles E. Robinson 805 Broadway
Vancouver, WA 98668
Charles E. Peterson 805 Broadway
Vancouver, WA 98668
Vern K. Dunham 805 Broadway
Vancouver, WA 98668
The principal officers of the new corporation, each of whom shall hold
office until his successor shall have been duly elected or appointed and shall
have qualified
-3-
<PAGE>
or until his earlier death, resignation, or removal and their respective offices
and addresses, are as follows:
Office Name Address
- ------ ---- -------
President and Chief Charles E. Robinson 805 Broadway
Executive Officer Vancouver, WA 98668
Executive Vice President Charles E. Peterson 805 Broadway
Vancouver, WA 98668
Senior Vice President Vern K. Dunham 805 Broadway
Vancouver, WA 98668
Vice President and James P. Best 805 Broadway
Controller Vancouver, WA 98668
Vice President and John E. McGill 805 Broadway
Secretary Vancouver, WA 98668
Vice President and Brian M. Wirkkala 805 Broadway
Treasurer Vancouver, WA 98668
Vice President Bernadette Murray 3940 Arctic Blvd.
Anchorage, AK 99502
The new corporation may have such other officers as shall be
provided for in its Bylaws.
(d) The registered agent of the new corporation shall be C T
Corporation System located at Suite 800, 240 Main Street, Juneau, Alaska 99801.
(e) The duration of the new corporation shall be perpetual.
(f) The shareholder in each party to this Agreement shall surrender
its respective shares to the new corporation on or before July 1, 1986, and in
exchange
-4-
<PAGE>
therefor shall receive shares of the new corporation as hereinafter specified.
3. Manner and basis of converting the shares. Each of the 2,103 shares of
common stock of Sitka and each of the 18,850 shares of common stock of Glacier
outstanding on the effective date of the consolidation shall be converted into
one share of common stock of the new corporation with the voting powers,
restrictions and qualifications set forth in the Articles of Incorporation and
Bylaws of the new corporation.
4. Statements required to be set forth in Articles of Incorporation. The
proposed Articles of the new corporation are set forth at Attachment A which is
hereby made a part of this Plan.
5. Assignments. If at any time the new corporation shall deem or be
advised that any conveyances, assignments, assurances, deeds or other
instruments are necessary or desirable to vest, or to perfect or confirm of
record or otherwise, in the new corporation, the title to any property acquired
or to be acquired by reason of or as a result of the consolidation provided for
by this Plan of Consolidation, the proper officers and directors of the
constituent corporations shall and will execute and deliver all such proper
-5-
<PAGE>
conveyances, assignments, assurances, deeds or other instruments and will do all
things necessary or proper so to vest, perfect or confirm title to such property
in the new corporation and otherwise to carry out the purposes of this Plan of
Consolidation.
6. Abandonment. The consolidation provided for herein may be abandoned at
any time before this Plan of Consolidation becomes effective by vote of the
Board of Directors of the constituent corporations.
7. Effective date. This Plan of Consolidation shall be effective upon the
issuance of the Certificate of Consolidation by the Commissioner of Commerce and
Economic Development, State of Alaska.
IN WITNESS WHEREOF, the parties hereto have caused this Plan of
Consolidation to be duly executed as of the day and year first above written.
SITKA TELEPHONE COMPANY
Attest /s/ Marilyn E. Bain By: /s/ C. E. Robinson
-------------------------- -------------------------
Assistant Secretary
[Seal] Title: President
-----------------------
GLACIER STATE TELEPHONE COMPANY
Attest /s/ Marilyn E. Bain By: /s/ C. E. Robinson
-------------------------- -------------------------
Assistant Secretary
[Seal] Title: President
-----------------------
-6-
<PAGE>
FILED FOR RECORD
STATE OF ALASKA
APR 30 1986
DEPARTMENT OF COMMERCE
& ECONOMIC DEVELOPMENT
NOTICE
TO: Commissioner of Commerce and
Economic Development
Pursuant to A.S. 10.05.250, the following information is hereby submitted
in connection with the consolidation of Sitka Telephone Company and Glacier
State Telephone Company into Telephone Utilities of the Northland, Inc.
1. The following companies may be classified as alien affiliates of
Telephone Utilities of the Northland, Inc.:
a. Comunicacion Total Limitada
b. Cid Comunicaciones Limitada
c. Electricidad y Comunicaciones Limitada
2. No shares of Telephone Utilities of the Northland, Inc. are controlled
by any alien affiliate.
3. Telephone Utilities of the Northland, Inc. is a wholly owned subsidiary
of Pacific Telecom, Inc. The three above-listed alien affiliates (Comunicacion
Total Limitada, Cid Comunicaciones Limitada and Electricidad y Comunicaciones
Limitada) are 51% owned by T.U. International, Inc., an Oregon corporation; T.U.
International, Inc. is a wholly owned subsidiary of Pacific Telecom, Inc.
/s/ Charles E. Peterson
-----------------------
Dated: April 28, 1986 Charles E. Peterson
-------------- Executive Vice President
<PAGE>
Exhibit 3.10
AMENDED AND RESTATED BYLAWS
OF
TELEPHONE UTILITIES OF THE NORTHLAND, INC.
1. CORPORATE OFFICES
1.1 Business Office. The principal office of the corporation shall
be located at any place whether within or outside the State of Alaska as
designated in the corporation's most current Annual Report filed with the
Commissioner of Commerce. The corporation may have such other offices, either
within or without the State of Alaska as the board of directors may designate or
as the business of the corporation may require from time to time.
1.2 Registered Office. The registered office of the corporation,
required by A.S. 10.06.150, shall be 510 L Street, Suite 500, Anchorage, Alaska
99501. The address of the registered office may be changed from time to time.
2. SHAREHOLDERS
2.1 Annual Meeting. The annual meeting of the shareholders of the
corporation shall be held within sixty (60) days of the close of the
corporation's fiscal year, at a time and date as determined by the board of
directors, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting.
2.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, described in the meeting notice, may be called by the board
of directors or the president, and shall be called by the president at the
request of the holders of not less than ten percent (10%) of all outstanding
votes of entitled to be cast on any issue at the meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Alaska as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consents, which may be in the form, of waivers of notice or otherwise,
all shareholders entitled to vote at the meeting designate a different place,
whether within or without the State of Alaska, as the place for the holding of
such meeting. If no designation is made by either the directors or unanimous
action of the voting shareholders, the place of meeting shall be the principal
office of the corporation in the State of Alaska.
- --------------------------------------------------------------------------------
BYLAWS Page 1 of 8
<PAGE>
2.4 Notice of Meeting. Written notice stating the place, day, and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting was called, shall unless otherwise prescribed by statute
or waived by the shareholders, be delivered not less than ten (10) days before
the date of the meeting, either personally or confirmed by telecopy, by or at
the direction of the President, or the Secretary, or the persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least thirty (30) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders. If
the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
2.6 Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make a complete list of
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address and the number of
shares held by each. Such list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
2.7 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
- --------------------------------------------------------------------------------
BYLAWS Page 2 of 8
<PAGE>
2.8 Proxies. At all meetings of shareholders, a shareholder may vote
in person or by proxy executed in writing by the shareholder or his or her duly
authorized attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
six (6) months from the date of its execution, unless otherwise provided in the
proxy.
2.9 Voting of Shares. Subject to the provisions of the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders.
2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent, or proxy as the
bylaws of such corporation may prescribe or, in the absence of such provisions,
as the board of directors of such corporation may determine, or, in the absence
of such determination, by the president or chairman of such corporation.
2.11 Informal Action by Shareholders. Unless otherwise provided by
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
3. BOARD OF DIRECTORS
3.1 General Powers. The board of directors shall manage the property
and business of the corporation and shall have and may exercise all of the
powers of the corporation, except such as are reserved to or may be conferred
upon the shareholders of the corporation. The directors shall have the power to
make and change from time to time rules and regulations not inconsistent with
these bylaws for the management of the business and affairs of the corporation.
3.2 Number, Tenure and Qualifications. The number of directors shall
be four as of the date of the adoption of these bylaws, and thereafter shall not
be less than three unless all of the outstanding shares are owned, beneficially
and of record by less than three shareholders, in which event the number of
Directors shall not be less than the number of shareholders. Each director shall
hold office until the next annual meeting of shareholders and until his or her
successor shall have been elected and qualified. In the event of the death,
resignation, or removal of a director, his or her successor or replacement shall
be chosen at a special meeting or at the next annual meeting of the
shareholders. A chairman of the board of directors may be selected by the
directors.
- --------------------------------------------------------------------------------
BYLAWS Page 3 of 8
<PAGE>
3.3 Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than these Bylaws immediately after, and at
the same place as, the annual meeting of shareholders. The board of directors
may provide, by resolution, the time and place for the holding of additional
regular meetings without other notice than such resolution.
3.4 Special Meetings. Special meetings of the board of directors may
be called by any director, who may fix the place for holding any special meeting
of the board of directors called by him or her.
3.5 Notice. Notice of any special meeting shall be given at least
ten (10) days previously thereto by written notice delivered personally or by
telecopy to each director at his or her business address. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
3.6 Quorum. The quorum of the board of directors shall consist of a
majority of directors, and any resolution or other action taken at a meeting of
the board of directors shall be adopted by an affirmative vote of a majority of
the directors present, except as otherwise provided in the bylaws or the
Articles of Incorporation. Meetings of the board of directors may be held by
telephone conference calls.
3.7 Action Without a Meeting. Any action that may be taken by the
board of directors at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all the
directors.
3.8 Vacancies. Any vacancy occurring in the board of directors may
be filled by a person or persons elected at a special or annual meeting of the
shareholders. A director elected to fill a vacancy caused by death, resignation,
or removal, or by reason of an increase in the number of directors shall be
elected for the unexpired terms of his or her predecessor or other directors in
the office.
3.9 Compensation. By resolution of the board of directors, each
director may be paid his or her expenses, if any, of attendance at each meeting
of the board of directors, including reasonable travel expenses. Otherwise,
directors shall serve without compensation. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
3.10 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the
- --------------------------------------------------------------------------------
BYLAWS Page 4 of 8
<PAGE>
minutes of the meeting or unless he or she shall file his or her written dissent
to such action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
3.11 Removal. Any director may be removed with or without cause at
any time by the shareholders at a special meeting called for that purpose and
may be removed for cause by action of the board of directors.
4. OFFICERS
4.1 Number. The officers of the corporation may be a President, a
Senior Vice President, a Secretary and a Treasurer, each of whom shall be
appointed by the board of directors. Such other officers and assistant officers
as may be deemed necessary may be elected or appointed by the board of
directors.
4.2 Election and Term of Office. The officers of the corporation to
be elected by the board of directors shall be elected annually by the board of
directors at the first meeting of the board of directors held after each meeting
of the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her death or until he or she
shall resign or shall have been removed in the manner hereinafter provided.
4.3 Removal. Any officer may be removed at the discretion of the
board of directors.
4.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
4.5 President. The President shall be the principal executive
officer of the corporation and, subject to the control of the board of
directors, shall in general supervise and control all of the business and
affairs of the corporation. The President shall, when present, preside at all
meetings of the shareholders and of the board of directors. He or she may sign,
with the Secretary or any other proper officer of the corporation thereunto
authorized by the board of directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts or other instruments which
the board of directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these bylaws or the Articles of Incorporation or some other
officer or agent of the
- --------------------------------------------------------------------------------
BYLAWS Page 5 of 8
<PAGE>
corporation, or shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the board of directors from time to time.
4.6 Senior Vice President. In the event of the death of the
President or the inability of the President to serve, the Senior Vice President
shall perform the duties of the President until the succeeding President is
elected, and while so acting, shall have all the powers of and be subject to all
the restrictions upon the President. The Senior Vice President shall perform
such other duties as from time to time may be assigned to him or her by the
board of directors.
4.7 Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President, certificates
of shares of the corporation, the issuance of which shall have been authorized
by resolution of the board of directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the President or by the board of directors.
4.8 Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositaries as shall be selected by the board
of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him or her by the President or by the board of directors. If required by the
board of directors, the Treasurer shall give a bond for the faithful discharge
of his or her duties in such sum and with such surety or sureties as the board
of directors shall determine.
4.9 Salaries. The salaries of the officers shall be fixed from time
to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a director of
the corporation.
- --------------------------------------------------------------------------------
BYLAWS Page 6 of 8
<PAGE>
5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS
5.1 Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances or restricted by agreement, the
bylaws, or the Articles of Incorporation.
5.2 Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the board of directors. Such authority may be general or
confined to specific instances and, as limited by agreement, these bylaws, or
the Articles of Incorporation.
5.3 Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the corporation, shall be signed by such officer or officers, agent or agents
of the corporation and in such manner as shall from time to time be determined
by resolution of the board of directors.
5.4 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the board of directors may
select.
6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Certificates for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the board of
directors to do so, and sealed with the corporate seal. All certificates of
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
6.2 Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in
- --------------------------------------------------------------------------------
BYLAWS Page 7 of 8
<PAGE>
whose name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
7. FISCAL YEAR
7.1 The fiscal year of the corporation shall begin on the 1st day of
January and end on the 31st day of December of each year, unless the board of
directors, by resolution, establishes a different fiscal year.
8. DIVIDENDS
8.1 The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and the Articles of Incorporation.
9. WAIVER OF NOTICE
9.1 Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the corporation under the
provisions of these bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the Alaska Business Corporation Act, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated herein shall be deemed
equivalent to the giving of such notice.
10. AMENDMENTS
10.1 These bylaws may be altered, amended, or repealed and new
bylaws may be adopted by the board of directors at any regular or special
meeting of the board of directors.
11. CORPORATE SEAL
11.1 The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal".
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BYLAWS Page 8 of 8
<PAGE>
EXHIBIT 3.11
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
I certify that the attached 60 pages are true copies of records on file with the
Department of Commerce and Economic Development, Division of Banking,
Securities, and Corporations.
Deborah B. Sedwick
Commissioner
[SEAL] Certified by: /s/ Gina Markovich
---------------------------
Date: May 6, 1999
-----------------------------------
================================================================================
<PAGE>
================================================================================
---------------
State of Alaska
---------------
[SEAL]
-----------------------------------------------
Department of Commerce and Economic Development
-----------------------------------------------
Certificate
The undersigned, as Commissioner of Commerce and Economic Development, of
the State of Alaska, hereby certifies that duplicate originals of the Articles
of Incorporation of Telephone Utilities of Alaska, Inc.
duly signed and verified pursuant to the provisions of the Alaska Business
Corporation Act, have been received in this office and are found to conform to
law.
ACCORDINGLY the undersigned, as such Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law hereby issues
this Certificate of Incorporation of
Telephone Utilities of Alaska, Inc.
and attaches hereto a duplicate original of the Articles of Incorporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal,
at Juneau, the Capital, this 7th day of April A.D. 1980
[SEAL] /s/ Charles R. Webber
CHARLES R. WEBBER
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
================================================================================
<PAGE>
FILED FOR RECORD
APR 7, 1980
STATE OF ALASKA
DEPARTMENT OF COMMERCE
& ECONOMIC DEVELOPMENT
ARTICLES OF INCORPORATION
OF
TELEPHONE UTILITIES OF ALASKA, INC.
The undersigned natural person of the age of nineteen years or more,
acting as incorporator under the Alaska Business Corporation Act, adopts the
following Articles of Incorporation:
ARTICLE I
The name of the corporation is Telephone Utilities of Alaska, Inc.
and its duration shall be perpetual.
ARTICLE II
The purposes for which the corporation is organized are:
A. To engage in the business of providing and maintaining telephone
service through the operation of one or more telephone exchanges in the State of
Alaska.
B. To engage in any lawful activity for which corporations may be
organized under the Alaska Business Corporation Act.
ARTICLE III
The aggregate number of shares which the corporation shall have
authority to issue is 1,000 shares, without par value.
<PAGE>
ARTICLE IV
The address of the initial registered agent of the corporation is
200 National Bank of Alaska Building, c/o CT Corporation System, Juneau, Alaska,
99801 and the name of the initial registered agent at such address is CT
Corporation System.
ARTICLE V
The number of directors constituting the initial board of directors
of the corporation is three, and the names and addresses of the persons who are
to serve as directors until the first annual meeting of shareholders or until
their successors are elected and qualify are:
Name Address
---- -------
A.M. Gleason Suite 240, 1220 SW Morrison
Portland, Oregon 97205
Lewis C. Neace P.O. Box E
Ilwaco, Washington 98624
Vern K. Dunham P.O. Box E
Ilwaco, Washington 98624
ARTICLE VI
The name and address of each incorporator is:
Name Address
---- -------
John Detjens III Suite 2300, 900 SW Fifth Avenue
Portland, Oregon 97204
ARTICLE VII
No holder of any shares of any class of stock or other security of
the corporation now or hereafter authorized shall
2
<PAGE>
have any preemptive right or be entitled as a matter of right as such holder to
purchase, subscribe or otherwise acquire any shares of any stock of the
corporation of any class now or hereafter authorized or any securities
convertible into or exchangeable for any such shares, or any warrants or other
instruments evidencing rights or options to subscribe for, purchase or otherwise
acquire any such shares, whether such shares, securities, warrants or other
instruments are now or hereafter authorized or issued and thereafter acquired by
the corporation, other than such, if any, as may be determined from time to time
by the board of directors in its discretion.
ARTICLE VIII
The corporation has no affiliate which is a nonresident alien or a
corporation whose place of incorporation is outside the United States.
The undersigned incorporator declares under penalty of perjury that
he has examined the foregoing and to the best of his knowledge and belief, it is
true, correct and complete.
DATED; April 3, 1980.
/s/ John Detjens, III
---------------------------------
John Detjens, III
3
<PAGE>
STATE OF OREGON )
) ss.
County of Multnomah )
April 9, 1980.
Personally appeared the above named JOHN DETJENS, III and
acknowledged the foregoing instrument to be his voluntary act and deed. Before
me:
/s/ Gladys I. DeBoer
---------------------------------
Notary Public for Oregon
My Commission expires 2-18-82
4
<PAGE>
================================================================================
---------------
State of Alaska
---------------
[SEAL]
-----------------------------------------------
Department of Commerce and Economic Development
-----------------------------------------------
Certificate
The undersigned, as Commissioner of Commerce and Economic Development of
the State of Alaska, hereby certifies that duplicate originals of Articles of
Merger of Greatland Telephone Company, a domestic corporation and Telephone
Utilities of Alaska, Inc., a corporation, duly signed and verified pursuant to
the provisions of the Alaska Business Corporation Act, have been received in
this office and are found to conform to law.
ACCORDINGLY the undersigned, as such Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
this Certificate of Merger of
Greatland Telephone Company
into
Telephone Utilities of Alaska, Inc.
and attaches hereto a duplicate original of the Articles of Merger.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal,
at Juneau, the Capital, this 6th day of August A.D. 1980
[SEAL] /s/ Charles R. Webber
CHARLES R. WEBBER
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
================================================================================
<PAGE>
FILED FOR RECORD
AUG 6, 1980
STATE OF ALASKA
DEPARTMENT OF COMMERCE
& ECONOMIC DEVELOPMENT
ARTICLES OF MERGER
OF
GREATLAND TELEPHONE COMPANY (AN ALASKA CORPORATION)
WITH AND INTO
TELEPHONE UTILITIES OF ALASKA, INC. (AN ALASKA CORPORATION)
Pursuant to the provisions of the Alaska Business Corporation Act,
the undersigned corporations adopt the following Articles of Merger for the
purpose of merging Greatland Telephone Company, an Alaska corporation, with and
into Telephone Utilities of Alaska, Inc., an Alaska corporation.
1. The Agreement and Plan of Merger attached hereto, marked Exhibit A and
by this reference made a part hereof, was approved by the written consent of the
sole shareholder of Greatland Telephone Company and by the written consent of
the sole shareholder of Telephone Utilities of Alaska, Inc., in the manner
prescribed by the Alaska Business Corporation Act.
2. The number of shares of Greatland Telephone Company outstanding and
entitled to vote was 1,000 shares of Common Stock, all of which shares were
voted in favor of the Agreement and Plan of Merger by the written consent of the
sole shareholder of Greatland Telephone Company.
3. The number of shares of Telephone Utilities of Alaska, Inc. outstanding
and entitled to vote was 500 shares of Common Stock, all of which shares were
voted in favor of
<PAGE>
the Agreement and Plan of Merger by the written consent of the sole shareholder
of Telephone Utilities of Alaska, Inc.
DATED this 31st day of July, 1980.
GREATLAND TELEPHONE COMPANY
an Alaska corporation
By /s/ John M. Wetherington
-------------------------------------
John M. Wetherington, President
By /s/ Homer R. Gilchrist
-------------------------------------
Homer R. Gilchrist, Secretary
TELEPHONE UTILITIES OF ALASKA, INC.,
an Alaska corporation
By /s/ A. M. Gleason
-------------------------------------
A. M. Gleason, President
By /s/ Brian M. Wirkkala
-------------------------------------
Brian M. Wirkkala, Secretary
Each of the undersigned declares under penalty of perjury that he
has examined the foregoing Articles of Merger and to the best of his knowledge
and belief they are true, correct and complete.
/s/ John M. Wetherington
-----------------------------------------
John M. Wetherington
/s/ A. M. Gleason
-----------------------------------------
A. M. Gleason
-2-
<PAGE>
STATE OF Alaska )
) ss.
COUNTY OF [ILLEGIBLE] )
I, [ILLEGIBLE], a notary public, do hereby certify that on this 4 day of
Aug, 1980, personally appeared before me JOHN M. WETHERINGTON who being by me
first duly sworn declared that he is the President of GREATLAND TELEPHONE
COMPANY, which is one of the corporations to the foregoing merger, that he
signed the foregoing document as President of the corporation and that to the
best of his knowledge and belief it is true, correct and complete.
/s/ [ILLEGIBLE]
------------------------------------
Notary Public for Alaska
My Commission expires: 11-16-82
[SEAL]
STATE OF OREGON )
) ss.
COUNTY OF MULTNOMAH )
I, Jacqualene K. Christensen, a notary public, do hereby certify that on
this 28th day of July, 1980, personally appeared before me A. M. GLEASON who
being by me first duly sworn declared that he is the President of TELEPHONE
UTILITIES OF ALASKA, INC., which is one of the corporations to the foregoing
merger, that he signed the foregoing document as President of the corporation
and that to the best of his knowledge and belief it is true, correct and
complete.
/s/ Jacqualene K. Christensen
------------------------------------
Notary Public for Oregon
My Commission expires: 3-13-81
[SEAL]
<PAGE>
EXHIBIT A
FILED FOR RECORD
AUG 6, 1980
STATE OF ALASKA
DEPARTMENT OF COMMERCE
& ECONOMIC DEVELOPMENT
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 7th day of April 1980,
among (i) TELEPHONE UTILITIES OF ALASKA, INC., an Alaska Corporation
("TU-Alaska"), (ii) TELEPHONE UTILITIES, INC, a Washington corporation ("TU")
and the owner of all of the outstanding shares of TU-Alaska, (iii) GREATLAND
TELEPHONE COMPANY, an Alaska corporation ("Greatland"), and (iv) NEWBERY ENERGY
CORPORATION, an Arizona corporation ("Newbery").
In consideration of the mutual promises herein made and of the
mutual benefits to be derived therefrom, the parties hereto agree as follows:
ARTICLE I
Organization of TU-Alaska
TU-Alaska is a wholly owned subsidiary of TU, organized to acquire
Greatland in a statutory merger transaction under Section 368(a)(1)(A) and
Section 368(a)(2)(D) of the Internal Revenue Code of 1954, as amended. In
connection with the merger transaction TU agrees to transfer up to 122,000
shares of the voting Common Stock of TU to TU-Alaska as a contribution to
capital on or before the effective date of the merger, the number of such shares
to be determined by the requirements of Article VII hereof.
<PAGE>
ARTICLE II
Agreement for Merger of Greatland into TU-Alaska
As soon as practicable after the conditions set forth in Articles XV
and XVI of this Agreement and Plan of Merger (the "Agreement") have been
satisfied or waived the parties shall cause Greatland to be merged into
TU-Alaska. TU-Alaska shall be the surviving corporation (the "Surviving
Corporation") and upon the effective date of merger the separate existence of
Greatland shall cease. The merger shall become effective (the "Effective Date of
Merger") upon the filing with the Commissioner of Commerce of Alaska of Articles
of Merger in the form attached hereto as Exhibit A with a copy of the Agreement
attached as an exhibit thereto. The parties agree to execute and file Articles
of Merger in such form in duplicate as soon as is reasonably possible after all
of the conditions set forth in Articles XV and XVI hereof have been met. Each of
the parties agrees to use all reasonable efforts to cause the conditions set
forth in such Articles XV and XVI to be performed by it to be satisfied as
quickly as reasonably possible following execution of this Agreement.
ARTICLE III
Authorized Capital Stock of TU-Alaska and Greatland
The total authorized capital stock of TU-Alaska is presently 1000
shares of common stock without par value, of which 500 shares are issued and
outstanding.
2
<PAGE>
The total number of shares of capital stock which Greatland is
presently authorized to issue is 10,000 shares of common stock without par
value, of which 1,000 shares are issued and outstanding.
ARTICLE IV
Articles of Incorporation of Surviving Corporation
The Articles of Incorporation of TU-Alaska are as set forth in
Exhibit B attached hereto. Such Articles of Incorporation shall be the Articles
of Incorporation of the Surviving Corporation and no changes therein shall be
effected by the merger.
ARTICLE V
Bylaws of Surviving Corporation
The Bylaws of TU-Alaska, as in effect on the effective date of the
Agreement, shall be and become the Bylaws of the Surviving Corporation until
altered or amended as therein provided.
ARTICLE VI
Directors and Officers of the Surviving Corporation
The number of directors of the Surviving Corporation shall be as
specified in the Bylaws of the Surviving Corporation, and the names of the
directors of the Surviving Corporation, who shall hold office until their
respective successors are elected and duly qualified, shall be as follows:
A. M. Gleason
Lewis C. Neace
Vern K. Dunham
3
<PAGE>
The names of the officers of the Surviving Corporation, who shall
hold office until their respective successors are appointed and qualified, and
the office to be held by each, shall be as follows:
A. M. Gleason President
Lewis C. Neace Senior Vice President
Charles E. Peterson Vice President
Vern K. Dunham Vice President
Brian M. Wirkkala Secretary and Treasurer
ARTICLE VII
Conversion of Shares; Cash Consideration
7.1 On the Effective Date of Merger the 1,000 shares of issued and
outstanding common stock of Greatland shall be converted into 122,000 shares of
Common Stock of TU, unless:
(i) the average of the over-the-counter bid and asked price for TU
Common Stock for the ten business days preceding the Effective
Date of Merger is less than $11.50 per share, in which case
such common stock of Greatland shall be converted into 122,000
shares of Common Stock of TU and the shareholder of Greatland
shall receive an amount in cash equal to the difference
between $1,403,000 and such average price per share multiplied
by 122,000; or
(ii) the average of the over-the-counter bid and asked price for TU
Common Stock for the ten business days preceding the Effective
Date of Merger is more than $13.00 per share, in which case
such common stock of Greatland shall be converted into such
number of shares of Common Stock of TU as shall equal
$1,586,000 divided by such average price per share.
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Newbery, as the sole shareholder of Greatland, shall be entitled to
certificates representing shares of TU Common Stock and the cash specified in
(i) above upon surrender of its certificate or certificates representing shares
of common stock of Greatland.
7.2 In addition to the consideration for conversion of shares of Greatland
set forth under 7.1 above, Newbery, as the sole shareholder of Greatland, shall
be entitled to receive on the Effective Date of Merger $100,000 in cash plus, as
soon as calculated after the Effective Date of Merger, an amount in cash equal
to the increase in the net worth of Greatland, including Greatland's debt to its
sole stockholder, Newbery, between January 1, 1980 and the Effective Date of
Merger.
ARTICLE VIII
Employee Benefits to be Made Available by Surviving
Corporation to Employees of Greatland
TU-Alaska shall make available to employees of Greatland who
continue in the service of TU-Alaska such employee benefits currently available
and to be made available to employees of TU or TU-Alaska on a basis which is not
less favorable to the employees of Greatland than the benefits being provided to
the employees of TU or TU-Alaska on the Effective Date of Merger. In determining
benefits payable under the Surviving Corporation's retirement plan, services
rendered by Greatland's emp1oyee's to Greatland shall be
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treated as if such services had been rendered to the Surviving Corporation.
ARTICLE IX
Representations and Warranties of Greatland
Greatland represents and warrants to and agrees with TU-Alaska as
follows:
9.1 Greatland has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Alaska, with full
power and authority to own its properties and conduct its business, is not
qualified to do business as a foreign corporation in any other jurisdiction, and
has no subsidiaries.
9.2 The authorized capital stock of Greatland is as set forth in Article
III above and it has issued and outstanding only those shares of common stock as
set forth therein, all of which are owned by Newbery.
9.3 Financial statements attached hereto as Exhibit C consisting of a
statement of income for the six months ending December 31, 1979 and a balance
sheet dated December 31, 1979, are complete and correct in all material respects
and fairly present the financial position and the results of operations of
Greatland at the date and for the period to which they apply, except that such
financial statements do not include accruals for income taxes and interest on
inter-company debt and do not contain all disclosures required under generally
accepted accounting principles.
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9.4 Greatland has delivered to TU-Alaska complete, true and correct copies
of its Articles of Incorporation and Bylaws, in effect as of a recent date, and
no amendment to either is contemplated or will be made between such date and the
Effective Date of Merger.
9.5 No agreement exists restricting the sale or transfer of any shares of
Greatland, and on the effective date of merger all of said shares will be owned
by the shareholder of Greatland free and clear of all liens, charges,
encumbrances and assessments. On the Effective Date of Merger Greatland shall
have no indebtedness for borrowed money outstanding. Since December 31, 1979,
except as set forth in Exhibit D, Greatland has not:
9.5.1 Issued or delivered or agreed to issue or deliver any stock,
bonds or other corporate securities or debt instruments;
9.5.2 Granted or agreed to grant any options, warrants or other
rights calling for the issue or delivery of any stock, bonds or other corporate
securities, or borrowed or agreed to borrow any funds;
9.5.3 Discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent), other than current liabilities
shown on the balance sheet as of December 31, 1979 or incurred in the normal
course of business subsequent to such date;
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9.5.4 Declared or made or agreed to declare or make any payment of
dividends or distributions of any assets of any kind whatsoever to its
stockholder, or purchased or redeemed, or agreed to purchase or redeem, any of
its stock;
9.5.5 Mortgaged, pledged or subjected to lien, charge or any other
encumbrance, or agreed so to do, any of its assets, tangible or intangible,
except liens imposed by statute for the payment of obligations which are not
delinquent;
9.5.6 Sold or transferred or agreed to sell or transfer any of its
assets, tangible or intangible, including but not limited to any franchise,
patent, trademark, trade name or copyrights, or canceled or agreed to cancel any
debts or claims, except in each case in the ordinary course of business;
9.5.7 Suffered any extraordinary losses or waived any rights of
substantial value;
9.5.8 Entered into any transactions other than in the ordinary
course of business;
9.5.9 Increased the rate of compensation payable or to become
payable by it to any of its officers, employees or agents over the rate paid to
them on December 31, 1979, unless required by competitive conditions or union
contract;
9.5.10 Terminated any material contract, agreement, franchise,
license or other instrument to which it is a party;
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9.5.11 Through negotiation or otherwise made a commitment or
incurred any liability or obligation to any labor organization not binding and
enforceable against it at December 31, 1979;
9.5.12 Made or agreed to make any accrual or arrangement for payment
of bonuses or special compensation of any kind to any officer or employee or
agent, except as set forth in Exhibit D.
9.5.13 Directly or indirectly paid or made a commitment to pay any
severance or termination pay to any officer, employee or agent, except as set
forth in Exhibit D.
9.5.14 Introduced any significant new method of management,
operation or accounting in respect of its business or any of the assets,
properties or rights applicable thereto;
9.5.15 Reclassified its shares of capital stock into a different
number of shares;
9.5.16 Made capital expenditures or entered into commitments for
capital expenditures other than with the prior written consent of TU-Alaska or
other than in the ordinary course of business;
9.5.17 Expended for repairs and maintenance or entered into
commitments for those purposes amounts exceeding those amounts necessary in the
ordinary course of business.
9.6 All taxes imposed or which may be imposed or asserted by the United
States, the State of Alaska or any
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municipality, which are due or payable by Greatland through December 31, 1979,
have been paid in full or adequately provided for by the reserves shown in the
books and records of Greatland; and with respect to the fiscal period commencing
January 1, 1980 reserves have been established and shown in the books and
records of account of Greatland for all such tax claims which have accrued or
will accrue with respect to its operations during the period commencing on
January 1, 1980, which reserves are and will be fully adequate for the payment
of all such taxes and claims. Greatland has filed with all taxing authorities
having jurisdiction over it all tax returns and reports required to be filed by
it and no extension of time for the assessment of deficiencies or waiver of any
statute of limitations exists or is in effect as to any such year.
9.7 Greatland has good and marketable title to all its assets and
properties, real, personal and mixed (including those reflected on its balance
sheet as of December 31, 1979), free and clear of all liens, charges and
encumbrances whatsoever, except for the lien of current taxes not delinquent. No
such lien, charge or encumbrance interferes with the marketability of any
property or with the use thereof or with the practical realization of the
purposes for which said property was acquired or is utilized.
9.8 All leases pursuant to which Greatland leases real or personal
property (whether as lessor or as lessee) are
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described in Exhibit D attached hereto, and a copy of each such written lease
has been provided to TU-Alaska. All of said leases are in good standing and are
valid and effective in accordance with their respective terms and there is not
any existing default or any event which with notice or lapse of time would
constitute a default pursuant to such leases.
9.9 All real property to which Greatland has title or claims title is
described in Exhibit D. Greatland is not acquiring any real property pursuant to
any contract of purchase.
9.10 All currently used property, machinery, equipment and assets owned by
Greatland or in which it has an interest are substantially in good operating
condition and repair, subject only to ordinary wear and tear, are insured as set
forth in Exhibit D and no notice of any proposed condemnation, violation or
proposed change in zoning laws, building, fire or other laws, statutes or
ordinances and regulations relating to such property, machinery or equipment
and assets have been received.
9.11 All assets, property, machinery and equipment used or intended for
use in the business of Greatland are owned by it or leased to it under leases or
agreements listed on the attached Exhibit D.
9.12 Except as set forth on the balance sheet as of December 31, 1979 or
in Exhibit D attached hereto, Greatland is not a party to any written or oral
(i) contract other than
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is usual in a telephone business of the nature of Greatland's; (ii) contract
which, to the knowledge or belief of Greatland, will result in an abnormal loss
or will have a materially adverse effect on the financial condition or
operations of Greatland; (iii) power of attorney to any person, firm or
corporation for any purpose whatsoever; (iv) contract for the employment of any
officer or employee except oral contracts immediately terminable by Greatland;
(v) contract with any labor union or other organization of employees or any
agreement that contains severance or termination pay liability or obligations;
(vi) pension, savings, profit-sharing, deferred compensation, retirement,
retainer, consultant, bonus, insurance, stock options, stock purchase or other
incentive plan, arrangement or contract, or trust relating thereto, in effect
with respect to employees or others, and whether legally binding or not; (vii)
contracts with consultants, advisers, salesmen, sales representatives,
distributors, brokers or dealers; (viii) contracts for the purchase of
materials, supplies or equipment except in the ordinary course of business; or
(ix) leases or subleases of real or personal property under which it is lessee,
lessor or sublessor.
9.13 Greatland is not in default under any material contract to which it
is a party or by which it is bound, nor does any condition or state of facts
exist which, upon lapse of time, would constitute default thereunder, nor has
Greatland had any notice of any claim of default under any such contract.
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9.14 Except as set forth in Exhibit D, there are no actions, suits or
proceedings pending, or threatened against or affecting Greatland. Greatland is
not in default with respect to any judgment, order, writ, injunction, decree,
assessment or other command of any court or of any federal, state, municipal, or
other governmental department, commission, commissioner, board, bureau, agency
or instrumentality, domestic or foreign, having or asserting jurisdiction over
Greatland. Except as set forth in Exhibit D and except for events and conditions
relating to the telephone utility business and other business in general, there
is no event, condition or trend of any character pertaining to the business and
assets of Greatland that may reasonably be expected to substantially materially
and adversely affect such business and assets or prevent such business from
being carried on as heretofore.
9.15 Set forth in Exhibit D attached hereto is a list of all insurance
policies and bonds in force with respect to Greatland, any part of the premium
or consideration for which is paid by Greatland, and copies of all such
insurance policies and bonds are available to TU-Alaska for its inspection at
its request. All such policies and bonds will continue to be maintained or
renewed until the effective date of merger.
9.16 Set forth in Exhibit D attached hereto is a list of the names and
locations of all banks and other depositories
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in which Greatland maintains depository accounts, together with the names of
each person authorized to draw thereon.
9.17 Except as set forth in Exhibit D, no officer or director of Greatland
owns, directly or indirectly, an ownership interest in any business, firm or
corporation which is a party to, or in any property which is the subject of,
business arrangements or agreements with Greatland.
9.18 Greatland has in full force and effect a valid certificate of public
convenience and necessity and such other franchises, licenses and permits as are
necessary for it to conduct its business under all applicable laws and
regulations, none of which (other than the Alaska Business License and the North
Star Sales Tax License) will be terminated by the merger.
9.19 No broker or finder is entitled to any brokerage or finder's fee in
connection with the transaction contemplated by this Agreement.
9.20 No representation or warranty contained in this Agreement, nor any
document or certificate delivered to TU-Alaska pursuant to this Agreement or in
connection with the actions contemplated hereby, contains or shall contain any
untrue statement of a material fact or omits or shall omit to state a material
fact necessary to make the statements contained therein not misleading.
9.21 No consent of any creditor of Greatland or Newbery to this
transaction is required.
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9.22 No authorization or approval of any governmental authority, other
than the Alaska Public Utilities Commission, to the transactions contemplated by
the Agreement and Plan of Merger (other than the exchange of TU Common Stock),
is required.
ARTICLE X
Representations and Warranties of TU-Alaska
TU-Alaska represents and warrants to and agrees with Greatland as
follows:
10.1 TU-Alaska has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Alaska, with full
power and authority to own its properties and conduct its business, is not
qualified to do business as a foreign corporation in any other jurisdiction, and
has no subsidiaries.
10.2 The authorized capital stock of TU-Alaska is as set forth in Article
III above and it has issued and outstanding only those shares of common stock
set forth therein, all of which are owned by TU.
10.3 Financial statements of TU attached hereto as Exhibit E, consisting
of a statement of income for the year ending December 31, 1979 and a balance
sheet dated December 31, 1979, are complete and correct in all material respects
and fairly present the financial position and the results of operations of TU at
the date and for the period to which they apply.
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10.4 TU-Alaska has delivered to Greatland complete, true and correct
copies of its Articles of Incorporation and Bylaws as in effect as of a recent
date.
10.5 No representation or warranty contained in this Agreement nor any
document or certificate delivered to Greatland pursuant to this Agreement or in
connection with the actions contemplated hereby, contains or shall contain any
untrue statement of a material fact or omits or shall omit to state a material
fact necessary to make the statements contained therein not misleading. Since
December 31, 1979 there has been no material adverse change in the business,
operations or financial condition of TU or TU-Alaska, except as disclosed in
writing to Greatland or Newbery.
10.6 The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not violate any provision of the
Articles of Incorporation or Bylaws of TU or TU-Alaska or any provisions of any
agreement, order, arbitration award, judgment or decree to which TU or TU-Alaska
is a party or by which it is bound.
10.7 No consent of any creditor of TU or TU-Alaska to the transactions
contemplated hereby is required.
10.8 The shares of Common Stock of TU to be exchanged for shares of common
stock of Greatland hereunder will be owned by TU-Alaska free and clear of all
liens and encumbrances.
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ARTICLE XI
Covenants of Greatland
11.1 Greatland agrees that it will at all times subsequent to the date of
this Agreement and prior to the Effective Date of Merger, unless otherwise
authorized in writing by TU-Alaska, operate its business in a normal manner
consistent with past practice and Greatland will use its best efforts to cause
the representations and warranties contained in Article IX hereof to be true as
of the Effective Date of Merger.
11.2 Greatland will cooperate with TU-Alaska in the preparation of an
application to the Alaska Public Utilities Commission for approval of the
transaction contemplated hereby.
11.3 Prior to the Effective Date of Merger, Greatland will have converted,
with the consent of Newbery, any indebtedness of Greatland for borrowed money
outstanding to Newbery as of December 31, 1979, to capital stock of Greatland.
On the Effective Date of Merger Greatland will have repaid to Newbery any
indebtedness for borrowed money incurred by Greatland subsequent to December 31,
1979.
11.4 Between the date hereof and the Effective Date of Merger Greatland
will permit TU-Alaska to examine at any reasonable time its physical facilities
and books and records for the purpose of determining whether the representations
and warranties contained in Article IX are true and whether Greatland has
performed the obligations assumed by it hereunder.
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ARTICLE XII
Covenants of TU-Alaska
12.1 TU-Alaska will use its best efforts to cause the representations and
warranties contained in Article X to be true as of the effective date of the
merger.
12.2 As quickly as possible following the date hereof, TU-Alaska will
apply to the Alaska Public Utilities Commission for approval of the transactions
herein contemplated.
ARTICLE XIII
Undertakings of Newbery
Newbery represents and warrants to and agrees with TU and TU-Alaska
as follows:
13.1 The representations and warranties contained in Article IX of the
Agreement are true as of the date hereof and will be true on the Effective Date
of Merger.
13.2 Newbery will pay to TU or TU-Alaska as an indemnity the amount or
amounts of any material loss, liability or expense which TU or TU-Alaska may
sustain, including, without limiting the generality of the foregoing, attorneys'
fees incurred by TU or TU-Alaska by reason of the incorrectness of the
representations or breach of the warranties made by Newbery in Section 13.1
above. For the purpose of the foregoing, "material," in the event of any
misrepresentation or breach of warranty not involving fraud, shall mean losses,
liabilities or expenses in excess of $25,000 in the aggregate. Newbery's
liability pursuant to this paragraph shall cease
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two years after the Effective Date of Merger except as to claims asserted by TU
or TU-Alaska against Newbery in writing prior to such time.
13.3 Newbery warrants and represents that it is taking the shares of
common stock of Telephone Utilities, Inc. to be exchanged for Greatland common
stock pursuant to Article VII of the Agreement (the "TU Shares") for its own
account and for investment and not with a view to the resale or distribution
thereof. It is agreed that the certificates representing the TU Shares issued to
Newbery may bear substantially the following legend:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933. The shares may not be sold or
offered for sale except in compliance with the Agreement and Plan of
Merger dated _________ , 1980, between the registered owner hereof
and the Corporation, a copy of which is available at the office of
the Corporation."
13.4 Newbery agrees that it will not, directly or indirectly, offer or
sell, transfer or otherwise dispose of all or any portion of the TU Shares, or
solicit any offer to buy, purchase or otherwise acquire all or any portion of
the TU Shares except in the manner and to the extent described (1) in a
Registration Statement in effect under the Securities Act of 1933 covering the
TU Shares delivered to them pursuant to the Agreement and as to which a
prospectus meeting the requirements of the Act is available for delivery, and a
permit or permits, if applicable, shall have become effective
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under the Blue Sky Laws of those states having jurisdiction; or (2) in the
opinion of counsel of Newbery, which opinion is in form and substance
satisfactory to counsel to TU, or in the opinion of counsel to TU, to the
effect such proposed offer, sale, transfer or other disposition of the TU Shares
may be made without such registration and the availability of a prospectus
meeting the requirements of the Act.
13.5 Newbery grants to TU a right of first refusal to purchase the TU
Shares in the event Newbery desires to sell, transfer or otherwise dispose of
any or all of the TU Shares. Newbery shall give TU written notice of any such
intended sale, transfer or other disposition and the terms and conditions
thereof. Within 15 days of receipt of such notice, TU may, at its option, elect
to purchase the TU Shares referred to in the notice upon substantially the same
terms and conditions as are set forth in the notice. If TU does not elect to
purchase the TU Shares, and Newbery fails to make the transfer disclosed in the
notice within 30 days following the expiration of the time given to TU for its
election, then such TU Shares shall again be subject to this first right of
refusal.
13.6 Newbery also grants to TU an option to purchase the TU Shares should
Newbery exercise its registration rights in respect of the TU Shares under
Sections 14.3 and 14.4 of this Agreement. Within 15 days of receipt by TU of
written notice of such exercise from Newbery, TU may, at its option, purchase
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the TU Shares referred to in the notice for an amount in cash per share equal to
the average of the over-the-counter bid price for Common Stock of TU for the
90-day period preceding the date of receipt by TU of such notice.
ARTICLE XIV
Undertakings of TU
TU represents and warrants to and agrees with Newbery and Greatland
as follows:
14.1 The representations and warranties contained in Article X of the
Agreement are true as of the date hereof and will be true on the Effective Date
of Merger.
14.2 TU will pay to Newbery or Greatland as an indemnity the amount or
amounts of any material loss, liability or expense which Newbery or Greatland
may sustain, including, without limiting the generality of the foregoing,
attorneys' fees incurred by Newbery or Greatland by reason of the incorrectness
of the representations or breach of the warranties made by TU in Section 14.1
above. For the purpose of the foregoing, "material," in the event of any
misrepresentation or breach of warranty not involving fraud, shall mean losses,
liabilities or expenses in excess of $25,000 in the aggregate. TU's liability
pursuant to this paragraph shall cease two years after the Effective Date of
Merger except as to claims asserted by Newbery or Greatland against TU in
writing prior to such time.
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14.3 TU will give certain registration rights to Newbery in respect of the
shares of TU common stock received by Newbery pursuant to this agreement (the
TU Shares). If at any time within three (3) years following the Effective Date
of Merger TU receives written notice from Newbery stating that Newbery proposes
to offer and sell to the public all of the TU Shares then owned by Newbery
(adjusted for any stock dividends, stock splits, reverse stock splits or similar
transactions), TU will prepare and file with the Securities and Exchange
Commission ("SEC"), subject to the conditions hereinafter set forth, a
registration statement under the 1933 Act to cover the sale of the TU Shares to
be sold by Newbery. The obligation of TU to file a registration statement
pursuant to this Section 14.3 shall be subject to the following conditions:
(i) TU will be required to prepare and file not more than one such
registration statement.
(ii) TU shall not be required to file any registration statement if
as of the date upon which notice is first given to TU pursuant to this Section
14.3, less than six (6) months shall have elapsed since the effective date of
any other registration statement covering securities of TU in which Newbery has
been offered the opportunity to include the TU Shares;
(iii) TU shall have the right to require Newbery to postpone for a
reasonable period of time, not to exceed
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ninety (90) days, the offering for sale of the shares covered by such
registration statement if TU, at the time it receives the request for
registration, intends to make or is about to make an offering of its securities
and the investment banker for TU reasonably believes that such offering would be
materially adversely affected by the sale of such shares;
(iv) TU shall use its best efforts to cause the registration
statement filed pursuant to this Section 14.3 to become effective as soon as
reasonably possible after it receives written request therefor from Newbery and
to cause such registration statement to remain current and effective during the
period commencing with the initial effective date thereof, and ending on the
earlier of (1) the date on which the last of the shares of Newbery covered by
such registration statement is distributed, or (2) the expiration of 60 days
after the effective date of such registration. TU will use all reasonable
efforts to register or qualify the shares covered by such registration statement
pursuant to the securities or Blue Sky laws of such jurisdictions as Newbery (or
the underwriter in the case of a firm underwriting) shall reasonably request,
except that TU shall not for any such purpose be required to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified;
(v) Newbery shall pay (a) one-half of all costs and expenses
incurred in connection with the preparation, filing and processing of a
registration statement pursuant to
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this Section 14.3, including all SEC filing fees, attorney and accountant fees
of TU, Blue Sky filing fees and printing costs, and (b) all fees of counsel
separately retained by Newbery, brokerage fees, underwriting discounts and
expenses of underwriters, and transfer taxes.
14.4 In the event that at any time prior to the expiration of three (3)
years following the Effective Date of Merger, TU proposes to file with the SEC a
Registration Statement for the purpose of registering any of its securities
under the 1933 Act for sale on its own behalf in an underwritten public offering
for cash, TU shall give written notice of such intention to Newbery thirty (30)
days prior to filing. Newbery may request in writing delivered to TU within
fifteen (15) days after receipt of any such notice that its shares, or any of
them, be included for sale under such registration statement, which request
shall state the number of shares to be sold; provided, however, that TU shall in
its absolute discretion have the right to select any underwriters, including the
managing underwriters of any public offering of shares covered by this Section
14.4 and shall have the sole control over the filing, amending, withdrawing and
other dealing in and with any registration statement covered by this Section
14.4, and nothing herein shall be deemed to create any liability of TU to
Newbery if TU, in its sole discretion, should decide not to file such
registration statement or to withdraw such registration statement. Newbery shall
pay part
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of the expenses of any registration in which it has participated pursuant to
this Section 14.4 in accordance with the following provisions:
(a) Newbery shall pay its proportionate share (being such a portion
as the market value of the shares of Newbery being offered bears to the total
market value of all securities included in such registration statement, for
which purpose market value shall mean the public offering price) of the
registration fee of the SEC, of any fees of the National Association of Security
Dealers, Inc., underwriting discounts and expenses of underwriters, brokerage
fees and transfer taxes, and registration fees relating to state securities
registrations and other Blue Sky fees and expenses; and
(b) In addition, Newbery shall pay all fees and disbursements of its
counsel and accountants and of other persons retained by Newbery and fees of any
custodian or escrow agent holding the shares being offered by Newbery.
14.5 Newbery by its written request for the filing of or participation
under a registration statement pursuant to Section 14.3 or 14.4 hereof shall
agree to cooperate with TU in the preparation and filing of any registration
statement covered by Sections 14.3 or 14.4, including but not limited to, the
furnishing of such information and the execution and delivery of such documents
as TU or any proposed managing underwriter may reasonably request in order to
insure compliance with the 1933 Act, the Securities and Exchange Act of
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1934 and the rules and regulations of the SEC promulgated under each of such
Acts, and shall agree for the purposes of any offering pursuant to Section 14.4
to place their shares in custody or in escrow at the time of filing of the
registration statement.
14.6 In the event of any registration of shares of TU common stock
pursuant to this Agreement.
(a) TU will indemnify and hold harmless Newbery and each person, if
any, who controls Newbery within the meaning of the 1933 Act and any
underwriting or selling broker involved in the sale of such shares against any
losses, claims, damages or liabilities, joint or several, to which Newbery or
such controlling person may become subject, under the 1933 Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any such registration statement or
post-effective amendment, on its effective date, and any final prospectus
contained therein, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and will reimburse Newbery for any legal or other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability
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or action; provided, however, that TU will not be liable in any such event to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in said registration statement or post-effective
amendment, any final prospectus contained therein, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished by Newbery or a representative or agent of Newbery or any underwriter
for use in the preparation thereof; and provided further, however, that,
notwithstanding the foregoing, the obligation of TU to indemnify and hold
harmless Newbery shall be conditional to the extent necessary so as to comply
with paragraphs (a) and (b) of the Note to Rule 460 under the 1933 Act or with
provisions replacing or generally comparable to such paragraphs (a) and (b) as
they now exist. TU shall not be required to indemnify Newbery or any controlling
person for any payment made to any claimant in settlement of any suit or claim
unless such payment is approved by TU.
(b) Newbery by its written request for the filing of or
participation under a registration statement pursuant to Section 14.3 or 14.4
(or as a written undertaking which may be required by TU before acting
thereunder), will indemnify and hold harmless TU, each of its directors, each of
its officers who has signed any such registration statement or post-effective
amendment, each person, if any, who controls
27
<PAGE>
TU within the meaning of the 1933 Act and any underwriter or selling broker
involved in selling shares in any such registration, against any losses, claims,
damages or liabilities, joint or several, to which TU, its officers or
directors, or such controlling person may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in such registration statement or
post-effective amendment, any final prospectus contained therein, or amendment
or supplement thereto, or arise out of or are based upon the omission of or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, as such untrue statement or alleged untrue
statement or omission or alleged omission was made in such registration
statement or post-effective amendment, such final prospectus, or such amendment
or supplement, in reliance upon and in conformity with written information
furnished by Newbery or a representative or agent of Newbery or any underwriter
for use in the preparation thereof; and will reimburse any legal or other
expenses reasonably incurred by TU or any such director, officer or controlling
person in connection with investigating or defending any such loss, claim
damage, liability or action. Newbery shall not be required to indemnify TU or
its
28
<PAGE>
directors and officers for any payment made to any claimant in settlement of any
suit or claim unless such payment is approved by Newbery; and
(c) Any person obligated hereunder to indemnify and hold harmless
another shall be entitled to receive from the other person written notice of the
claim or demand, for which such person may have an indemnification obligation,
and shall have the right to participate with counsel of his choice in any action
or proceeding involving any such claim or demand so long as such participation
does not adversely affect the rights of the party principally defending the
matter.
14.7 The rights granted to Newbery under Sections 14.3 through 14.6 are
personal to Newbery and shall not be assignable or transferable, in whole or in
part, by operation of law or otherwise, to any person.
ARTICLE XV
Conditions to TU-Alaska's Obligations
The obligations of TU-Alaska under this Agreement are subject to the
satisfaction on or prior to the Effective Date of Merger of the following
conditions:
15.1 Greatland shall have furnished to TU-Alaska a certificate of
Greatland executed by the president or vice president of Greatland dated as of
the Effective Date of Merger to the effect that each of the representations and
warranties contained in Article IX herein are true as of the
29
<PAGE>
date of the certificate as fully as if made upon such date or if such
representations and warranties are not true as of such date, shall set forth the
facts with regard thereto and TU-Alaska shall have waived any failure of such
representations and warranties to be true as of such date.
15.2 The directors and stockholder of Greatland shall have authorized the
transactions contemplated herein in the manner required by law. Greatland shall
have furnished to TU-Alaska a copy of the resolutions of the directors and
stockholder of Greatland authorizing the transaction contemplated hereby
certified by the secretary of Greatland.
15.3 Greatland shall have performed all of the covenants and obligations
assumed by it hereunder and shall have furnished to TU-Alaska proof thereof in
such form as its counsel may reasonably require.
15.4 Greatland shall have furnished to TU-Alaska an opinion dated as of
the Effective Date of Merger of counsel for Greatland, in form and substance
satisfactory to counsel for TU-Alaska, to the effect that (i) Greatland is a
corporation duly organized, existing and in good standing under the laws of the
State of Alaska and has the corporate power to own or lease its properties and
to carry on its business as now being conducted; (ii) the authorized and issued
capital stock of Greatland is as represented herein; (iii) all issued and
outstanding shares of the capital stock of Greatland have been validly issued
and are fully paid and non-assessable and
30
<PAGE>
that such counsel have reviewed the minutes and corporate records of Greatland
and to the best of their knowledge there are no outstanding subscriptions,
options, warrants or other agreements or commitments obligating Greatland to
issue any additional shares of stock of any class or securities convertible into
shares of stock of any class; (iv) such counsel do not know of any defects in
the title of Greatland to its respective real or personal properties, except as
set forth in Exhibit D attached to the Agreement; (v) the Agreement has been
duly executed and is a legal, valid and binding obligation, enforceable in
accordance with its terms and when articles of merger in the form set forth in
Exhibit A with the Agreement attached have been duly filed, Greatland shall be
effectively merged into TU-Alaska; (vi) Greatland has in full force and effect a
valid certificate of public convenience and necessity and such other franchises,
licenses and permits as are necessary for it to conduct its business under all
applicable laws and regulations none of which will be terminated by the merger
(vii) the transactions contemplated by the Agreement (other than the exchange of
TU Common Stock) have been duly authorized by all necessary governmental
authorities including the Alaska Public Utilities Commission; and (viii)
Newbery, as the sole shareholder of Greatland, will be bound to indemnify TU and
TU-Alaska as provided in the Agreement for any material loss, as herein defined,
by reason of the incorrectness of any of the representations or
31
<PAGE>
breach of any warranty contained in the Agreement with respect to which
indemnity is provided.
15.5 All necessary approval of any governmental body to the transaction
herein contemplated, including approval of the Alaska Public Utilities
Commission, shall have been obtained.
15.6 The action entitled City of Fairbanks, dba Fairbanks Municipal
Utilities System vs. Alaska Public Utilities Commission and Wire Communications
Inc., dba Great Land Telephone ("WCI"), Alaska Supreme Court Case No. 3977,
shall have been finally decided in WCI's favor to the effect that WCI was
granted a valid certificate of public convenience and necessity for the service
area in which Greatland presently conducts its business, or such action and
subsequent proceedings shall have resulted in the grant to Greatland or
TU-Alaska of a valid certificate of public convenience and necessity for the
service area in which Greatland presently conducts its business (it being
understood that TU-Alaska shall have no affirmative obligation to seek to obtain
such a certificate in connection with this Section 15.6).
ARTICLE XVI
Conditions to Greatland's Obligations
The obligations of Greatland under the Agreement are subject to the
satisfaction on or prior to the Effective Date of Merger of the following
conditions:
16.1 TU-Alaska shall have furnished to Greatland certificate of TU-Alaska
executed by the president or vice
32
<PAGE>
president of TU-Alaska dated as of the Effective Date of Merger to the effect
that each of the representations and warranties contained in Article X herein
are true as of the date of the certificate as fully as if made upon such date or
if such representations and warranties are not true as of such date, shall set
forth the facts with regard thereto and Greatland shall have waived any failure
of such representation and warranties to be true as of such date.
16.2 The directors and stockholder of TU-Alaska shall have authorized the
transactions contemplated herein in the manner required by law. TU-Alaska shall
have furnished to Greatland a copy of the resolutions of the directors and
stockholder of TU-Alaska authorizing the transaction contemplated hereby
certified by the secretary of TU-Alaska.
16.3 TU-Alaska shall have performed all of the covenants and obligations
assumed by it hereunder and shall have furnished to Greatland proof thereof in
such form as its counsel may reasonably require.
16.4 TU-Alaska shall have furnished to Greatland an opinion dated as of
the effective date of the merger of counsel to TU-Alaska in form and substance
satisfactory to counsel for Greatland, to the effect that (i) TU-Alaska is a
corporation duly organized and validly existing under the laws of the State of
Alaska with full power and authority to own its properties and conduct its
business, (ii) the authorized and issued capital stock of TU-Alaska is as
represented
33
<PAGE>
herein, (iii) the Agreement has been duly authorized by the Board of Directors
and stockholder of TU-Alaska and the filing of Articles of Merger as provided
therein has been duly approved by both the directors and stockholder of
TU-Alaska, (iv) the agreements on the part of TU-Alaska to be performed as
provided in the Agreement are valid and binding upon TU-Alaska, and when
Articles of Merger are filed as provided in the Agreement, the Agreement and
Plan of Merger will have the effect set forth therein, (v) the exchange of
shares of Common Stock of TU contemplated hereby has been duly authorized by all
necessary governmental authorities. (vi) to the knowledge of counsel no consent
of any person to the transaction contemplated by the Agreement which has not
been obtained is required, and (vii) TU, as the sole shareholder of TU-Alaska,
will be bound to indemnify Newbery and Greatland as provided in the Agreement
for any material loss, as herein defined, by reason of the incorrectness of any
of the representations or breach of any warranty contained in the Agreement with
respect to which indemnity is provided.
16.5 All necessary approval of any governmental body to the transactions
herein contemplated, including approval of the Alaska Public Utilities
Commission, shall have been obtained.
34
<PAGE>
ARTICLE XVII
Termination of This Agreement
This Agreement and the transactions contemplated hereby may be
terminated at any time prior to the effective date of the merger:
(a) By the mutual consent of the Boards of Directors of Greatland and
TU-Alaska;
(b) By the Board of Directors of either TU-Alaska or Greatland if such
transaction shall not have been consummated by December 31, 1980 and if the
corporation wishing to terminate is not responsible for the failure to
consummate the transaction by such time;
(c) By the Board of Directors of TU-Alaska or Greatland if in the opinion
of either of such Boards there has been a material breach of the representations
and warranties of the other party set forth herein;
(d) By the Board of Directors of Greatland if the conditions provided in
Article XVI of the Agreement have not been met within a reasonable time and have
not been waived by Greatland;
(e) By the Board of Directors of TU-Alaska if the conditions provided in
Article XV of the Agreement have not been met within a reasonable time and have
not been waived by TU-Alaska;
35
<PAGE>
(f) By the Board of Directors of either TU-Alaska or Greatland if either
of such Boards shall determine, in its sole discretion, that the transactions
contemplated by the Agreement have become inadvisable or impracticable by reason
of any judgment, decree or order entered in any proceeding involving either
TU-Alaska or Greatland or by reason of the threat or institution by any state,
local or federal governmental authorities of any material litigation or
proceedings against any of the parties.
DATED as of the year and date above written.
TELEPHONE UTILITIES OF ALASKA, INC.
By /s/ A. M. Gleason
---------------------------------------
A. M. Gleason, President
TELEPHONE UTILITIES, INC.
By /s/ A. M. Gleason
---------------------------------------
A. M. Gleason, President
GREATLAND TELEPHONE COMPANY
By
---------------------------------------
President
NEWBERY ENERGY CORPORATION
By
---------------------------------------
36
<PAGE>
ARTICLES OF MERGER
OF
GREATLAND TELEPHONE COMPANY (AN ALASKA CORPORATION)
WITH AND INTO TELEPHONE UTILITIES OF ALASKA, INC. (AN ALASKA
CORPORATION), A WHOLLY OWNED SUBSIDIARY
OF TELEPHONE UTILITIES, INC. (A WASHINGTON CORPORATION)
Pursuant to the provisions of the Alaska Business Corporation Act,
the undersigned corporations adopt the following Articles of Merger for the
purpose of merging Greatland Telephone Company, an Alaska corporation, with and
into Telephone Utilities of Alaska, Inc., an Alaska corporation and a wholly
owned subsidiary of Telephone Utilities, Inc., a Washington corporation.
1. The Agreement and Plan of Merger attached hereto, marked Exhibit A and
by this reference made a part hereof, was approved by the shareholders of
Greatland Telephone Company and by the sole shareholder of Telephone Utilities
of Alaska, Inc., Telephone Utilities, Inc., in the manner prescribed by the
Alaska Business Corporation Act.
2. The number of shares of Greatland Telephone Company outstanding and
entitled to vote and the total number of shares voted for and against such plan
of merger were, respectively, as follows:
Number of Number of Number of
Shares Shares Shares
Outstanding Voted For Voted Against
----------- --------- -------------
1,000 1,000 None
3. The number of shares of Telephone Utilities of Alaska, Inc. outstanding
and entitled to vote and the total number of shares voted for and against such
plan of merger were, respectively, as follows:
<PAGE>
Number of Number of Number of
Shares Shares Shares
Outstanding Voted For Voted Against
----------- --------- -------------
500 500 None
DATED this day of , 1980.
GREATLAND TELEPHONE COMPANY,
an Alaska corporation
By
----------------------------------------
President
By
----------------------------------------
Secretary
TELEPHONE UTILITIES OF ALASKA, INC.,
an Alaska corporation
By
----------------------------------------
President
By
----------------------------------------
Secretary
TELEPHONE UTILITIES, INC.,
a Washington corporation
By
----------------------------------------
President
By
----------------------------------------
Secretary
Each of the undersigned declares under penalty of perjury that he
has examined the foregoing Articles of Merger and to the best of his knowledge
and belief they are true, correct and complete.
-------------------------------------------
-------------------------------------------
-------------------------------------------
2
<PAGE>
================================================================================
---------------
State of Alaska
---------------
-----------------------------------------------
Department of Commerce and Economic Development
-----------------------------------------------
Certificate
The undersigned, as Commissioner of Commerce and Economic Development of
the State of Alaska, hereby certifies that duplicate originals of Articles of
Merger, duly signed and verified pursuant to the provisions of the Alaska
Business Corporation Act, have been received in this office and are found to
conform to law.
ACCORDINGLY the undersigned, as such Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
this Certificate of Merger of
JUNEAU & DOUGLAS TELEPHONE COMPANY
INTO
TELEPHONE UTILITIES OF ALASKA, INC.
and attaches hereto a duplicate original of the Articles of Merger.
IN TESTIMONY WHEREOF, I execute this
Certificate and affix the Great Seal of the
State of Alaska this 22nd day of April, A.D.
1986
[SEAL] /s/ Loren H. Lounsbury
LOREN H. LOUNSBURY
COMMISSIONER OF COMMERCE AND
ECONOMIC DEVELOPMENT
================================================================================
<PAGE>
FILED FOR RECORD
STATE OF ALASKA
APR 22 1986
DEPARTMENT OF COMMERCE
& ECONOMIC DEVELOPMENT
ARTICLES OF MERGER
OF
JUNEAU AND DOUGLAS TELEPHONE COMPANY
INTO
TELEPHONE UTILITIES OF ALASKA, INC.
Pursuant to the provisions of Sections 10.05.396 and 10.05.399 of the
Alaska Business Corporation Act, JUNEAU AND DOUGLAS TELEPHONE COMPANY, an Alaska
corporation (hereinafter referred to as the "Merging Corporation") and TELEPHONE
UTILITIES OF ALASKA, INC., an Alaska corporation (hereinafter referred to as the
"Surviving Corporation") hereby adopt the following Articles of Merger for the
purpose of merging the Merging Corporation into the Surviving Corporation.
ARTICLE I
The Plan of Merger is attached hereto and incorporated herein by
reference. The Plan of Merger was duly approved by the directors and
shareholders of both the Merging and Surviving Corporations in the manner
prescribed by the Alaska Business Corporation Act.
ARTICLE II
As to the Merging Corporation, there are 4,570 shares issued and
outstanding. All of such shares are of the same class, and thus no shares are
entitled to vote by class. As to the Surviving Corporation, there are 500 shares
<PAGE>
issued and outstanding. All of such shares are of the same class, and thus no
shares are entitled to vote by class.
ARTICLE III
All 4,570 issued and outstanding shares of JUNEAU AND DOUGLAS TELEPHONE
COMPANY, the Merging Corporation, and all 500 issued and outstanding shares of
TELEPHONE UTILITIES OF ALASKA, INC., the Surviving Corporation, voted for in
favor of the Plan of Merger. No shares of either corporation voted against the
Plan of Merger.
IN WITNESS WHEREOF, the undersigned have executed these Articles of
Merger, this 28th day of April, 1986.
JUNEAU AND DOUGLAS TELEPHONE COMPANY
By: /s/ Charles E. Robinson
--------------------------------------
President
[Seal]
Attest /s/ Marilyn E. Bain
-----------------------------------
Assistant Secretary
TELEPHONE UTILITIES OF ALASKA, INC.
By: /s/ Charles E. Robinson
--------------------------------------
President
[Seal]
Attest /s/ Marilyn E. Bain
-----------------------------------
Assistant Secretary
Articles of Merger - Page 2
<PAGE>
STATE OF WASHINGTON )
) ss.
COUNTY OF CLARK )
I, Jeannette M. Littlefield, a notary public, do hereby certify that on
this 28th day of April, 1986, personally appeared before me Charles E. Robinson
and Marilyn E. Bain, who being by me first duly sworn, declared that they are
the President and Assistant Secretary, respectively, of Juneau and Douglas
Telephone Company, which is one of the corporations party to the foregoing
merger, that they signed the foregoing document as President and Assistant
Secretary of the corporation, and that the statements therein contained are
true.
/s/ Jeannette M. Littlefield
----------------------------------------
[Seal] Notary Public in and for the
State of Washington
My Commission expires: 1/02/90
STATE OF WASHINGTON )
) ss.
COUNTY OF CLARK )
I, Jeannette M. Littlefield, a notary public, do hereby certify that on
this 28th day of April, 1986, personally appeared before me Charles E. Robinson
and Marilyn E. Bain, who being by me first duly sworn, declared that they are
the President and Assistant Secretary, respectively, of Telephone Utilities of
Alaska, Inc., which is one of the corporations party to the foregoing merger,
that they signed the foregoing document as President and Assistant Secretary of
the corporation, and that the statements therein contained are true.
/s/ Jeannette M. Littlefield
----------------------------------------
[Seal] Notary Public in and for the
State of Washington
My Commission expires: 1/02/90
Articles of Merger - Page 3
<PAGE>
FILED FOR RECORD
STATE OF ALASKA
APR 22 1986
DEPARTMENT OF COMMERCE
& ECONOMIC DEVELOPMENT
PLAN OF MERGER
OF
JUNEAU AND DOUGLAS TELEPHONE COMPANY
INTO
TELEPHONE UTILITIES OF ALASKA, INC.
PLAN OF MERGER dated this 28th day of April, 1986, pursuant to the laws of
the State of Alaska, by and between JUNEAU AND DOUGLAS TELEPHONE COMPANY, an
Alaska corporation, and TELEPHONE UTILITIES OF ALASKA, INC., an Alaska
corporation.
1. Names of Corporation. The name of the corporation proposing to merge is
JUNEAU AND DOUGLAS TELEPHONE COMPANY (hereinafter sometimes designated the
"Merging Corporation") and the name of the corporation into which it proposes to
merge is TELEPHONE UTILITIES OF ALASKA, INC. (hereinafter sometimes designated
the "Surviving Corporation").
2. Terms and Conditions. Upon this Plan of Merger becoming effective:
(a) Juneau and Douglas Telephone Company (the Merging Corporation)
shall be merged into Telephone Utilities of Alaska, Inc. which shall be the
Surviving Corporation;
(b) The corporate existence of the Merging Corporation shall cease;
(c) The corporate existence of Telephone Utilities of Alaska, Inc.,
as the Surviving Corporation, shall continue;
<PAGE>
(d) The Articles of Incorporation and Bylaws in effect, and the
Officers and Directors in office in the Surviving Corporation immediately prior
to this Plan of Merger becoming effective shall remain the same; and
(e) The name of the Surviving Corporation shall remain Telephone
Utilities of Alaska, Inc.
3. Manner of Converting Shares.
(a) The capital stock of the Surviving Corporation consists of 1,000
shares of common stock without par value, of which 500 shares are issued and
outstanding (all of which are owned by Pacific Telecom, Inc., a Washington
corporation). The capital stock of the Merging Corporation consists of 10,000
shares of common stock of $10 par value, of which 4,570 shares are issued and
outstanding (all of which are owned by Pacific Telecom, Inc., a Washington
corporation).
(b) Upon this Plan of Merger becoming effective, the capital stock
of the Merging Corporation shall be completely cancelled, and the capital stock
of the Surviving Corporation shall remain the same.
4. Change in Articles of Incorporation. No change in the Articles of
Incorporation of Telephone Utilities of Alaska, Inc., the Surviving Corporation,
shall be effected by the merger.
-2-
<PAGE>
5. Assignments. If at any time the Surviving Corporation shall deem or be
advised that any conveyances, assignments, assurances, deeds or other
instruments are necessary or desirable to vest, or to perfect or confirm of
record or otherwise, in the Surviving Corporation the title to any property
acquired or to be acquired by reason of or as a result of the merger provided
for by this Plan of Merger, the proper Officers and Directors of the Merging
Corporation shall and will execute and deliver all such instruments and will do
all things necessary or proper so to vest, perfect, or confirm title to such
property in the Surviving Corporation and otherwise to carry out the purpose of
this Plan of Merger.
6. Abandonment. The merger provided for herein may be abandoned at any
time before this Plan of Merger becomes effective by vote of the Board of
Directors of the Merging Corporation or the Surviving Corporation.
7. Effective Date. This Plan of Merger shall be effective upon the
issuance of the Certificate of Merger by the Commissioner of Commerce and
Economic Development, State of Alaska.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger to
be duly executed as of the day and year first above written.
JUNEAU AND DOUGLAS TELEPHONE COMPANY
Attest: /s/ Marilyn E. Bain By: /s/ Charles E. Robinson
--------------------------- --------------------------------------
Assistant Secretary President
[SEAL]
TELEPHONE UTILITIES OF ALASKA, INC.
Attest: /s/ Marilyn E. Bain By: /s/ Charles E. Robinson
--------------------------- --------------------------------------
Assistant Secretary President
[SEAL]
-4-
<PAGE>
FILE NO.: 21537-D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
AMENDMENT
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that duplicate originals of Articles of
Amendment to the Articles of Incorporation, duly signed and verified pursuant to
the provisions of the Alaska Corporations Code, have been received in this
office and are found to conform to law.
ACCORDINGLY, the undersigned, as Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
this Certificate of Amendment to the Articles of Incorporation of
TELEPHONE UTILITIES OF ALASKA, INC.
and attaches hereto a duplicate original of the Articles of Amendment.
IN TESTIMONY WHEREOF, I execute this certificate
[SEAL] and affix the Great Seal of the State of Alaska
on December 30, 1991.
+
Dr. Glenn A. Olds
08-126A (Rev. 9/88) COMMISSIONER OF COMMERCE
5842M AND ECONOMIC DEVELOPMENT
Issued By: Corporations Section, P.O. Box D, Juneau, Alaska 99811,
Telephone (907) 465-2530
================================================================================
<PAGE>
Filed for Record
State of Alaska
DEC 30 1991
Department of Commerce
and Economic Development
ARTICLES OF AMENDMENT TO
THE ARTICLES OF INCORPORATION OF
TELEPHONE UTILITIES OF ALASKA, INC.
PURSUANT TO AS 10.06.502-.526, Article 7 of the Alaska Corporations Code,
the following Articles of Amendment are presented for filing:
FIRST: The name or the corporation is Telephone Utilities of Alaska, Inc.
SECOND: The amendment adopted is: Articles I through IX, being the entire
Articles of Incorporation, are deleted and the following provisions are adopted:
ARTICLE I
The name or this corporation is Telephone Utilities of Alaska, Inc.
ARTICLE II
The object and purposes for which this corporation is formed are as
follows:
(a) This corporation shall have all the powers to do and transact any and
all actions and have all of the powers mentioned and set forth directly or by
inference in the Alaska Statutes, Title 10, Chapter 6, including AS 10.06.010.
(b) Without in any manner intending to limit the powers specified in the
Alaska Statutes, this corporation, at its inception and as its main corporate
purpose, shall engage in the business of providing and maintaining
telecommunications in the State of Alaska.
ARTICLE III
The authorized capital stock of this corporation shall be 1,000 shares of
nonassessable common stock fully voting, fully participating, without par value.
<PAGE>
ARTICLE IV
To the extent available, both retained earnings and paid-in capital may be
used for the purchase and redemption of common stock issued by this corporation.
No holder of any stock of this corporation shall be entitled, as a matter
of right, to purchase, subscribe for or otherwise acquire any new or additional
shares of stock of the corporation of any class, or any options or warrants to
purchase, subscribe for or otherwise acquire any such new or additional shares,
or any shares, bonds, notes, debentures or other securities convertible into or
carrying options or warrants to purchase, subscribe for or otherwise acquire any
such new or additional shares.
ARTICLE V
To the full extent permitted by law and subject only to those limitations
expressly stated in AS 10.06.210 (1)(M), no director of this corporation shall
have any personal liability to the corporation or its shareholders for monetary
damages for the breach of fiduciary duty as a director. This provision shall
apply in addition to, and not in substitution for, indemnification provisions
contained in this corporation's Bylaws or provided by contract.
ARTICLE VI
The names and address of each alien affiliate of this corporation are:
TRT/FTC Communications Limited
13-19 Curtain Road
London EC2A 3LT
TRT Data Products Communications
Avenida Samuel Lewis
Apartado 6-5902
El Dorado, Panama
Republic de Panama
ARTICLE VII
The management of the affairs and concerns of this corporation is hereby
vested in its Board of Directors. The number of directors shall be fixed from
time to time by the Bylaws.
THIRD: The date of the approval of the amendment by the board and
outstanding shares is November 7, 1991.
<PAGE>
FOURTH: The number of shares outstanding, the number of shares entitled to
vote, and, if the shares of a class are entitled to vote as a class, the
designation and number of outstanding shares of each class entitled to vote are:
(a) The number of shares outstanding and entitled to vote is 500.
(b) The number of shares of a class entitled to vote as a class is none.
(c) The designation and number of outstanding shares of each class
entitled to vote is none.
FIFTH: The number of shares voted for and against the amendment and, if
the shares of a class are entitled to vote as a class, the number of shares of
each class voted for and against the amendment or, if shares have not been
issued, a statement to that effect:
(a) The number of shares voted for the amendment is 500.
(b) The number of shares voted against the amendment is 0.
SIXTH: The manner in which an exchange, reclassification, or cancellation
of issued shares is to be carried out if the amendment provides for an exchange,
reclassification, or cancellation of issued shares and is not set out in the
amendment: The amendment does not provide for an exchange, reclassification, or
cancellation of issued shares.
Executed this 19th day of December, 1991.
TELEPHONE UTILITIES OF ALASKA, INC.
By /s/ Theodore D. Berns
-----------------------------------
Theodore D. Berns
President & Chief Operating
Officer
and
By /s/ Donn T. Wonnell
-----------------------------------
Donn T. Wonnell
Vice President & Secretary
<PAGE>
VERIFICATION
STATE OF WASHINGTON )
) ss.
COUNTY OF CLARK )
I , Theodore D. Berns, say on oath or affirm that I have read the
foregoing Articles of Amendment to the Articles of Incorporation and believe all
statements made therein are true.
/s/ Theodore D. Berns
------------------------------------
Theodore D. Berns
President & Chief Operating
Officer
SUBSCRIBED AND SWORN TO or affirmed before me at Vancouver, Washington,
this 19th day of December, 1991.
/s/ [ILLEGIBLE]
------------------------------------
NOTARY PUBLIC in and for Washington
My Commission expires: 8-3-95
<PAGE>
Exhibit 3.12
AMENDED AND RESTATED BYLAWS
OF
TELEPHONE UTILITIES OF ALASKA, INC.
1. CORPORATE OFFICES
1.1 Business Office. The principal office of the corporation shall
be located at any place whether within or outside the State of Alaska as
designated in the corporation's most current Annual Report filed with the
Commissioner of Commerce. The corporation may have such other offices, either
within or without the State of Alaska as the board of directors may designate or
as the business of the corporation may require from time to time.
1.2 Registered Office. The registered office of the corporation,
required by A.S. 10.06.150, shall be 510 L Street, Suite 500, Anchorage, Alaska
99501. The address of the registered office may be changed from time to time.
2. SHAREHOLDERS
2.1 Annual Meeting. The annual meeting of the shareholders of the
corporation shall be held within sixty (60) days of the close of the
corporation's fiscal year, at a time and date as determined by the board of
directors, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting.
2.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, described in the meeting notice, may be called by the board
of directors or the president, and shall be called by the president at the
request of the holders of not less than ten percent (10%) of all outstanding
votes of entitled to be cast on any issue at the meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Alaska as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consents, which may be in the form, of waivers of notice or otherwise,
all shareholders entitled to vote at the meeting designate a different place,
whether within or without the State of Alaska, as the place for the holding of
such meeting. If no designation is made by either the directors or unanimous
action of the voting shareholders, the place of meeting shall be the principal
office of the corporation in the State of Alaska.
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<PAGE>
2.4 Notice of Meeting. Written notice stating the place, day, and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting was called, shall unless otherwise prescribed by statute
or waived by the shareholders, be delivered not less than ten (10) days before
the date of the meeting, either personally or confirmed by telecopy, by or at
the direction of the President, or the Secretary, or the persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least thirty (30) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders. If
the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
2.6 Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make a complete list of
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address and the number of
shares held by each. Such list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
2.7 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
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<PAGE>
2.8 Proxies. At all meetings of shareholders, a shareholder may vote
in person or by proxy executed in writing by the shareholder or his or her duly
authorized attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
six (6) months from the date of its execution, unless otherwise provided in the
proxy.
2.9 Voting of Shares. Subject to the provisions of the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders.
2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent, or proxy as the
bylaws of such corporation may prescribe or, in the absence of such provisions,
as the board of directors of such corporation may determine, or, in the absence
of such determination, by the president or chairman of such corporation.
2.11 Informal Action by Shareholders. Unless otherwise provided by
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
3. BOARD OF DIRECTORS
3.1 General Powers. The board of directors shall manage the property
and business of the corporation and shall have and may exercise all of the
powers of the corporation, except such as are reserved to or may be conferred
upon the shareholders of the corporation. The directors shall have the power to
make and change from time to time rules and regulations not inconsistent with
these bylaws for the management of the business and affairs of the corporation.
3.2 Number, Tenure and Qualifications. The number of directors shall
be four as of the date of the adoption of these bylaws, and thereafter shall not
be less than three unless all of the outstanding shares are owned, beneficially
and of record by less than three shareholders, in which event the number of
Directors shall not be less than the number of shareholders. Each director shall
hold office until the next annual meeting of shareholders and until his or her
successor shall have been elected and qualified. In the event of the death,
resignation, or removal of a director, his or her successor or replacement shall
be chosen at a special meeting or at the next annual meeting of the
shareholders. A chairman of the board of directors may be selected by the
directors.
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<PAGE>
3.3 Regular Meetings. A regular meeting of the board of directors shall be
held without other notice than these Bylaws immediately after, and at the same
place as, the annual meeting of shareholders. The board of directors may
provide, by resolution, the time and place for the holding of additional regular
meetings without other notice than such resolution.
3.4 Special Meetings. Special meetings of the board of directors may
be called by any director, who may fix the place for holding any special meeting
of the board of directors called by him or her.
3.5 Notice. Notice of any special meeting shall be given at least
ten (10) days previously thereto by written notice delivered personally or by
telecopy to each director at his or her business address. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
3.6 Quorum. The quorum of the board of directors shall consist of a
majority of directors, and any resolution or other action taken at a meeting of
the board of directors shall be adopted by an affirmative vote of a majority of
the directors present, except as otherwise provided in the bylaws or the
Articles of Incorporation. Meetings of the board of directors may be held by
telephone conference calls.
3.7 Action Without a Meeting. Any action that may be taken by the
board of directors at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all the
directors.
3.8 Vacancies. Any vacancy occurring in the board of directors may
be filled by a person or persons elected at a special or annual meeting of the
shareholders. A director elected to fill a vacancy caused by death, resignation,
or removal, or by reason of an increase in the number of directors shall be
elected for the unexpired terms of his or her predecessor or other directors in
the office.
3.9 Compensation. By resolution of the board of directors, each
director may be paid his or her expenses, if any, of attendance at each meeting
of the board of directors, including reasonable travel expenses. Otherwise,
directors shall serve without compensation. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
3.10 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the
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BYLAWS Page 4 of 8
<PAGE>
minutes of the meeting or unless he or she shall file his or her written dissent
to such action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
3.11 Removal. Any director may be removed with or without cause at
any time by the shareholders at a special meeting called for that purpose and
may be removed for cause by action of the board of directors.
4. OFFICERS
4.1 Number. The officers of the corporation may be a President, a
Senior Vice President, a Secretary and a Treasurer, each of whom shall be
appointed by the board of directors. Such other officers and assistant officers
as may be deemed necessary may be elected or appointed by the board of
directors.
4.2 Election and Term of Office. The officers of the corporation to
be elected by the board of directors shall be elected annually by the board of
directors at the first meeting of the board of directors held after each meeting
of the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her death or until he or she
shall resign or shall have been removed in the manner hereinafter provided.
4.3 Removal. Any officer may be removed at the discretion of the
board of directors.
4.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
4.5 President. The President shall be the principal executive
officer of the corporation and, subject to the control of the board of
directors, shall in general supervise and control all of the business and
affairs of the corporation. The President shall, when present, preside at all
meetings of the shareholders and of the board of directors. He or she may sign,
with the Secretary or any other proper officer of the corporation thereunto
authorized by the board of directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts or other instruments which
the board of directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these bylaws or the Articles of Incorporation or some other
officer or agent of the
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BYLAWS Page 5 of 8
<PAGE>
corporation, or shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the board of directors from time to time.
4.6 Senior Vice President. In the event of the death of the
President or the inability of the President to serve, the Senior Vice President
shall perform the duties of the President until the succeeding President is
elected, and while so acting, shall have all the powers of and be subject to all
the restrictions upon the President. The Senior Vice President shall perform
such other duties as from time to time may be assigned to him or her by the
board of directors.
4.7 Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President, certificates
of shares of the corporation, the issuance of which shall have been authorized
by resolution of the board of directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the President or by the board of directors.
4.8 Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositaries as shall be selected by the board
of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him or her by the President or by the board of directors. If required by the
board of directors, the Treasurer shall give a bond for the faithful discharge
of his or her duties in such sum and with such surety or sureties as the board
of directors shall determine.
4.9 Salaries. The salaries of the officers shall be fixed from time
to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a director of
the corporation.
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<PAGE>
5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS
5.1 Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances or restricted by agreement, the
bylaws, or the Articles of Incorporation.
5.2 Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the board of directors. Such authority may be general or
confined to specific instances and, as limited by agreement, these bylaws, or
the Articles of Incorporation.
5.3 Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the corporation, shall be signed by such officer or officers, agent or agents
of the corporation and in such manner as shall from time to time be determined
by resolution of the board of directors.
5.4 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the board of directors may
select.
6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Certificates for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the board of
directors to do so, and sealed with the corporate seal. All certificates of
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
6.2 Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in
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<PAGE>
whose name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
7. FISCAL YEAR
7.1 The fiscal year of the corporation shall begin on the 1st day of
January and end on the 31st day of December of each year, unless the board of
directors, by resolution, establishes a different fiscal year.
8. DIVIDENDS
8.1 The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and the Articles of Incorporation.
9. WAIVER OF NOTICE
9.1 Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the corporation under the
provisions of these bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the Alaska Business Corporation Act, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated herein shall be deemed
equivalent to the giving of such notice.
10. AMENDMENTS
10.1 These bylaws may be altered, amended, or repealed and new
bylaws may be adopted by the board of directors at any regular or special
meeting of the board of directors.
11. CORPORATE SEAL
11.1 The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal".
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<PAGE>
Exhibit 3.13
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
I certify that the attached 10 pages are true copies of records on file with the
Department of Commerce and Economic Development, Division of Banking,
Securities, and Corporations.
Deborah B. Sedwick
Commissioner
[SEAL]
Certified by: /s/ Gina Markovich
----------------------
Date: May 6, 1999
-----------------------------
================================================================================
<PAGE>
FILE NO.: 44931-D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
INCORPORATION
Business Corporation
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that duplicate originals of the Articles of
Incorporation of
PACIFIC TELECOM CELLULAR OF ALASKA, INC.
have been received in this office and are found to conform to law.
ACCORDINGLY, the undersigned, as such Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
the Certificate of Incorporation and attaches hereto a duplicate original of the
Articles of Incorporation.
IN TESTIMONY WHEREOF, I execute this certificate and affix the Great Seal of the
State of Alaska on December 5, 1989.
/s/ LARRY MERCULIEFF
[SEAL] LARRY MERCULIEFF
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
08-120B (Rev. 9/88)
5841M-2
Issued By: Corporations Section, P0. Box D, Juneau, Alaska 99811, Telephone
(907) 465-2530
================================================================================
<PAGE>
Filed for Record
State of Alaska
DEC 5 1989
Department of Commerce and
Economic Development
ARTICLES OF INCORPORATION
OF
PACIFIC TELECOM CELLULAR OF ALASKA, INC.
The undersigned natural person of the age of 18 years or more,
acting as incorporator under the Alaska Corporation Code, adopts the following
Articles of Incorporation:
ARTICLE I
The name of the corporation is Pacific Telecom Cellular of Alaska,
Inc. and its duration shall be perpetual.
ARTICLE II
The purposes for which the corporation is organized are: To engage
in any lawful activity for which corporations may be organized under the Alaska
Corporation Code.
ARTICLE III
The aggregate number of shares which the corporation shall have
authority to issue is 1,000 shares, without par value, of voting common stock.
ARTICLE IV
No holder of shares of securities of the corporation now or
hereafter authorized shall have any preemptive right or be entitled as of right
to subscribe for, purchase or receive any unissued or treasury shares of any
class, whether now or hereafter authorized, or any notes, bonds, debentures, or
other
1
<PAGE>
securities convertible into, or carrying options or warrants to purchase, shares
of any class; but all such unissued or treasury shares of any class, or notes,
bonds, debentures or other securities convertible into, or carrying options or
warrants to purchase, shares of any class may be issued or disposed of by the
Board of Directors to such persons and on such terms as it, in its absolute
discretion, may deem advisable.
ARTICLE V
At each election for directors, every shareholder entitled to vote
shall be entitled to cast cumulative votes, either by giving one candidate as
many votes as equals the number of directors to be elected, multiplied by the
number of the shareholder's shares, or by distributing such cumulative votes
among any number of such candidates.
ARTICLE VI
Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of a majority of the remaining directors, though less than a
quorum of the Board of Directors, or by a sole remaining director. Any
directorship to be filled by reason of an increase in the number of directors of
the corporation may be filled by the affirmative vote of a majority of the
number of directors fixed by the bylaws prior to such increase. Any such
directorship not so filled by the directors shall be filled by election at the
next annual meeting of shareholders or at a special meeting of shareholders
called for that purpose.
2
<PAGE>
ARTICLE VII
The corporation shall indemnify to the fullest extent not prohibited
by law any person who is made, or threatened to be made, a party to an action,
suit or proceeding, whether civil, criminal, administrative, investigative or
otherwise (including an action, suit or proceeding by or in the right of the
corporation) by reason of the fact that the person is or was a director or
officer of the corporation or a fiduciary within the meaning of the Employee
Retirement Income Security Act of 1974 with respect to any employee benefit plan
of the corporation, or serves or served at the request of the corporation as a
director or officer, or as a fiduciary of an employee benefit plan, of another
corporation, partnership, joint venture, trust or other enterprise. The right to
and amount of indemnification shall be determined in accordance with the
provisions of the Alaska Corporation Code in effect at the time of the
determination.
ARTICLE VIII
The corporation may purchase, either directly or indirectly, shares
of capital stock and evidences of indebtedness issued or created by the
corporation, to the extent of unreserved and unrestricted capital surplus
available therefor.
ARTICLE IX
The board of directors may from time to time distribute to the
corporation's shareholders, in partial liquidation, out of state capital or
capital surplus to the extent legally available
3
<PAGE>
therefor, a portion of the corporation's assets in cash or property.
ARTICLE X
The address of the initial registered office of the corporation is
Ste. 800, 240 Main Street, Juneau, Alaska 99801 and the name of its initial
registered agent at such address is C T Corporation System.
ARTICLE XI
The number of directors constituting the initial Board of Directors
of the corporation is five. The names and addresses of the persons who are to
serve as directors until the first annual meeting of shareholders and until
their successors are elected and shall qualify are:
Name Address
---- -------
Charles E. Robinson 805 Broadway, Vancouver, WA 93668
Charles E. Peterson 805 Broadway, Vancouver, WA 98668
Vein K. Dunham 805 Broadway, Vancouver, WA 98668
James H. Huesgen 805 Broadway. Vancouver, WA 98666
Theodore D. Berns 805 Broadway, Vancouver, WA 98668
ARTICLE XII
The mailing address for the corporation for notices is 805 Broadway,
Vancouver, WA 98668.
ARTICLE XIII
The corporation has no alien affiliates.
ARTICLE XIV
The name and address of the incorporator are:
Margaret N. Goudreau, 520 Pike Street, Seattle WA 98101
4
<PAGE>
I, the undersigned incorporator, declare under penalties of perjury
that I have examined the foregoing and that to the best of my knowledge and
belief, it is true, correct and complete.
Date: 12-4-89
/s/ Margaret M. Goudreau
----------------------------------
Margaret M. Goudreau, Incorporator
Witnessed this 4th day of December 1989.
By: /s/ J.P. Stuart Stout
---------------------
J.P. Stuart Stout
My commission expires February 29, 1989
5
<PAGE>
CONSENT TO USE OF NAME
PACIFIC TELECOM, INC., a corporation organized under the laws of
the State of Washington, hereby consents to the organization-qualification of
PACIFIC TELECOM CELLULAR OF ALASKA, INC. in the State of Alaska.
IN WITNESS WHEREOF, the said PACIFIC TELECOM, INC. has caused this
consent to be executed by its Vice President and Secretary under its corporate
seal this 28th day of November, 1989.
PACIFIC TELECOM, INC.
By /s/ Theodore D. Burns
----------------------------
Vice President and Secretary
Theodore D. Burns
<PAGE>
PACIFIC TELECOM CELLULAR OF ALASKA, INC.
The S.I.C. code which most closely describes the business activities is 4800.
<PAGE>
NOTICE OF CHANGE OF OFFICERS, DIRECTORS AND ALIEN AFFILIATES
PACIFIC TELECOM CELLULAR OF ALASKA, INC. - FILE NO. 44931 D
Pacific Telecom Cellular of Alaska, Inc.'s last Biannual Report was filed
with the State of Alaska in December 1990 for the period ending December 31,
1990. As required by Section 10.06.813 of the Alaska Corporations Code, changes
in officers, directors and alien affiliates within the first year of the current
biennial reporting period are submitted as follows:
DIRECTORS ADDRESS STATUS
- --------- ------- ------
Charles E. Peterson Retired
Vern K. Dunham Not Re-elected
OFFICERS ADDRESS STATUS
- -------- ------- ------
Charles E. Robinson 805 Broadway Change in Title
Chairman & Chief Vancouver, WA 98668
Executive Officer
Theodore D. Berns 805 Broadway Change in Title
President & Chief Vancouver, WA 98668
Operating Officer
James H. Huesgen 805 Broadway Change in Title
Executive Vice Vancouver, WA 98668
President
Donn T. Wonnell 805 Broadway Replaces
Vice President Vancouver, WA 98668 Theodore D. Berns
& Secretary
George S. Shaginaw 901 Kilbourn Ave. New
Executive Vice President Tomah, WI 54660
& General Manager
Patrick D. Connor 901 Kilbourn Ave. New
Vice President, Operations Tomah, WI 54660
& Engineering
Jeffrey Bunke 901 Kilbourn Ave. New
Vice President Tomah, WI 54660
Administration & Marketing
Filed for Record
State of Alaska
DEC 23 1991
Department of Commerce and
Economic Development
<PAGE>
Jeffrey W. Edgerton 901 Kilbourn Ave. New
Vice President, Finance Tomah, WI 54660
& Controller
Gary S. Christopherson 901 Kilbourn Ave. New
Vice President, Network Tomah, WI 54660
Services
ALIEN AFFILIATE ADDRESS STATUS
- --------------- ------- ------
Cidcom S.A. LOTA 2267-P1SO5-OF501 Sold 9-10-91
Casilla 16372-SECTOR 9
Santiago, Chile
/s/ Donn T. Wonnell
-----------------------------
Donn T. Wonnell
Vice President & Secretary
Dated: 16 Dec 91
-----------------------
<PAGE>
EXHIBIT 3.14
AMENDED AND RESTATED BYLAWS
OF
PACIFIC TELECOM CELLUAR OF ALASKA, INC.
1. CORPORATE OFFICES
1.1 Business Office. The principal office of the corporation shall
be located at any place whether within or outside the State of Alaska as
designated in the corporation's most current Annual Report filed with the
Commissioner of Commerce. The corporation may have such other offices, either
within or without the State of Alaska as the board of directors may designate or
as the business of the corporation may require from time to time.
1.2 Registered Office. The registered office of the corporation,
required by A.S. 10.06.150, shall be 510 L Street, Suite 500, Anchorage, Alaska
99501. The address of the registered office may be changed from time to time.
2. SHAREHOLDERS
2.1 Annual Meeting. The annual meeting of the shareholders of the
corporation shall be held within sixty (60) days of the close of the
corporation's fiscal year, at a time and date as determined by the board of
directors, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting.
2.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, described in the meeting notice, may be called by the board
of directors or the president, and shall be called by the president at the
request of the holders of not less than ten percent (10%) of all outstanding
votes of entitled to be cast on any issue at the meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Alaska as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consents, which may be in the form, of waivers of notice or otherwise,
all shareholders entitled to vote at the meeting designate a different place,
whether within or without the State of Alaska, as the place for the holding of
such meeting. If no designation is made by either the directors or unanimous
action of the voting shareholders, the place of meeting shall be the principal
office of the corporation in the State of Alaska.
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<PAGE>
2.4 Notice of Meeting. Written notice stating the place, day, and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting was called, shall unless otherwise prescribed by statute
or waived by the shareholders, be delivered not less than ten (10) days before
the date of the meeting, either personally or confirmed by telecopy, by or at
the direction of the President, or the Secretary, or the persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least thirty (30) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders. If
the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
2.6 Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make a complete list of
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address and the number of
shares held by each. Such list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
2.7 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
- --------------------------------------------------------------------------------
BYLAWS Page 2 of 8
<PAGE>
2.8 Proxies. At all meetings of shareholders, a shareholder may vote
in person or by proxy executed in writing by the shareholder or his or her duly
authorized attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
six (6) months from the date of its execution, unless otherwise provided in the
proxy.
2.9 Voting of Shares. Subject to the provisions of the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders.
2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent, or proxy as the
bylaws of such corporation may prescribe or, in the absence of such provisions,
as the board of directors of such corporation may determine, or, in the absence
of such determination, by the president or chairman of such corporation.
2.11 Informal Action by Shareholders. Unless otherwise provided by
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
3. BOARD OF DIRECTORS
3.1 General Powers. The board of directors shall manage the property
and business of the corporation and shall have and may exercise all of the
powers of the corporation, except such as are reserved to or may be conferred
upon the shareholders of the corporation. The directors shall have the power to
make and change from time to time rules and regulations not inconsistent with
these bylaws for the management of the business and affairs of the corporation.
3.2 Number, Tenure and Qualifications. The number of directors shall
be four as of the date of the adoption of these bylaws, and thereafter shall not
be less than three unless all of the outstanding shares are owned, beneficially
and of record by less than three shareholders, in which event the number of
Directors shall not be less than the number of shareholders. Each director shall
hold office until the next annual meeting of shareholders and until his or her
successor shall have been elected and qualified. In the event of the death,
resignation, or removal of a director, his or her successor or replacement shall
be chosen at a special meeting or at the next annual meeting of the
shareholders. A chairman of the board of directors may be selected by the
directors.
3.3 Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than these Bylaws immediately after, and at
the same place as, the
- --------------------------------------------------------------------------------
BYLAWS Page 3 of 8
<PAGE>
annual meeting of shareholders. The board of directors may provide, by
resolution, the time and place for the holding of additional regular meetings
without other notice than such resolution.
3.4 Special Meetings. Special meetings of the board of directors may
be called by any director, who may fix the place for holding any special meeting
of the board of directors called by him or her.
3.5 Notice. Notice of any special meeting shall be given at least
ten (10) days previously thereto by written notice delivered personally or by
telecopy to each director at his or her business address. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
3.6 Quorum. The quorum of the board of directors shall consist of a
majority of directors, and any resolution or other action taken at a meeting of
the board of directors shall be adopted by an affirmative vote of a majority of
the directors present, except as otherwise provided in the bylaws or the
Articles of Incorporation. Meetings of the board of directors may be held by
telephone conference calls.
3.7 Action Without a Meeting. Any action that may be taken by the
board of directors at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all the
directors.
3.8 Vacancies. Any vacancy occurring in the board of directors may
be filled by a person or persons elected at a special or annual meeting of the
shareholders. A director elected to fill a vacancy caused by death, resignation,
or removal, or by reason of an increase in the number of directors shall be
elected for the unexpired terms of his or her predecessor or other directors in
the office.
3.9 Compensation. By resolution of the board of directors, each
director may be paid his or her expenses, if any, of attendance at each meeting
of the board of directors, including reasonable travel expenses. Otherwise,
directors shall serve without compensation. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
3.10 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the minutes of the meeting or unless he
or she shall file his or her written dissent to such action with the person
acting as the secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the secretary of the corporation
immediately after the
- --------------------------------------------------------------------------------
BYLAWS Page 4 of 8
<PAGE>
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
3.11 Removal. Any director may be removed with or without cause at
any time by the shareholders at a special meeting called for that purpose and
may be removed for cause by action of the board of directors.
4. OFFICERS
4.1 Number. The officers of the corporation may be a President, a
Senior Vice President, a Secretary and a Treasurer, each of whom shall be
appointed by the board of directors. Such other officers and assistant officers
as may be deemed necessary may be elected or appointed by the board of
directors.
4.2 Election and Term of Office. The officers of the corporation to
be elected by the board of directors shall be elected annually by the board of
directors at the first meeting of the board of directors held after each meeting
of the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her death or until he or she
shall resign or shall have been removed in the manner hereinafter provided.
4.3 Removal. Any officer may be removed at the discretion of the
board of directors.
4.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
4.5 President. The President shall be the principal executive
officer of the corporation and, subject to the control of the board of
directors, shall in general supervise and control all of the business and
affairs of the corporation. The President shall, when present, preside at all
meetings of the shareholders and of the board of directors. He or she may sign,
with the Secretary or any other proper officer of the corporation thereunto
authorized by the board of directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts or other instruments which
the board of directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these bylaws or the Articles of Incorporation or some other
officer or agent of the corporation, or shall be required by law to be otherwise
signed or executed; and in general shall perform all duties incident to the
office of President and such other duties as may be prescribed by the board of
directors from time to time.
- --------------------------------------------------------------------------------
BYLAWS Page 5 of 8
<PAGE>
4.6 Senior Vice President. In the event of the death of the
President or the inability of the President to serve, the Senior Vice President
shall perform the duties of the President until the succeeding President is
elected, and while so acting, shall have all the powers of and be subject to all
the restrictions upon the President. The Senior Vice President shall perform
such other duties as from time to time may be assigned to him or her by the
board of directors.
4.7 Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President, certificates
of shares of the corporation, the issuance of which shall have been authorized
by resolution of the board of directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the President or by the board of directors.
4.8 Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositaries as shall be selected by the board
of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him or her by the President or by the board of directors. If required by the
board of directors, the Treasurer shall give a bond for the faithful discharge
of his or her duties in such sum and with such surety or sureties as the board
of directors shall determine.
4.9 Salaries. The salaries of the officers shall be fixed from time
to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a director of
the corporation.
5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS
5.1 Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of
- --------------------------------------------------------------------------------
BYLAWS Page 6 of 8
<PAGE>
and on behalf of the corporation, and such authority may be general or confined
to specific instances or restricted by agreement, the bylaws, or the Articles of
Incorporation.
5.2 Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the board of directors. Such authority may be general or
confined to specific instances and, as limited by agreement, these bylaws, or
the Articles of Incorporation.
5.3 Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the corporation, shall be signed by such officer or officers, agent or agents
of the corporation and in such manner as shall from time to time be determined
by resolution of the board of directors.
5.4 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the board of directors may
select.
6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Certificates for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the board of
directors to do so, and sealed with the corporate seal. All certificates of
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
6.2 Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
7. FISCAL YEAR
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BYLAWS Page 7 of 8
<PAGE>
7.1 The fiscal year of the corporation shall begin on the 1st day of
January and end on the 31st day of December of each year, unless the board of
directors, by resolution, establishes a different fiscal year.
8. DIVIDENDS
8.1 The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and the Articles of Incorporation.
9. WAIVER OF NOTICE
9.1 Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the corporation under the
provisions of these bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the Alaska Business Corporation Act, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated herein shall be deemed
equivalent to the giving of such notice.
10. AMENDMENTS
10.1 These bylaws may be altered, amended, or repealed and new
bylaws may be adopted by the board of directors at any regular or special
meeting of the board of directors.
11. CORPORATE SEAL
11.1 The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal".
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BYLAWS Page 8 of 8
<PAGE>
EXHIBIT 3.15
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
I certify that the attached 6 pages are true copies of records on file with the
Department of Commerce and Economic Development, Division of Banking,
Securities, and Corporations.
[SEAL] Deborah B. Sedwick
Commissioner
Certified by: /s/ Gina Markovich
------------------
Date: May 11, 1999
--------------------------
================================================================================
<PAGE>
File No 64557-D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
INCORPORATION
Business Corporation
[SEAL]
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that Articles of Incorporation of
PACIFIC TELECOM OF ALASKA PCS, INC.
have been received in this office and have been found to conform to law.
ACCORDINGLY, the undersigned, as Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
this Certificate of Incorporation and attaches hereto the original copy of the
Articles of Incorporation.
IN TESTIMONY WHEREOF, I execute this certificate
and affix the Great Seal of the State of Alaska on
August 14,1998
/s/ Deborah B. Sedwick
Deborah B. Sedwick
Commissioner of Commerce
and Economic Development
================================================================================
<PAGE>
================================================================================
(Please do not write in this space - for Department Use) FILING DATE:
================================================================================
Filed for Record
State of Alaska
AUG 14 1998
Department of Commerce
and Economic Development
ARTICLES OF INCORPORATION
(Domestic Business Corporation)
The undersigned natural person(s) of the age of 18 years or more, acting as
incorporator(s) of a corporation under the Alaska Corporation Code (AS 10.06)
adopt the following Articles of Incorporation:
PLEASE TYPE OR PRINT CLEARLY IN BLACK INK
ARTICLE I (See Number 1 of Instructions)
- --------------------------------------------------------------------------------
The name of the corporation is:
Pacific Telecom of Alaska PCS, Inc.
- --------------------------------------------------------------------------------
ARTICLE II (See Number 2 of Instructions)
- --------------------------------------------------------------------------------
The corporation is organized for the purpose of:
Telephone Communications
- --------------------------------------------------------------------------------
ARTICLE III (See Number 3 and 4 of Instructions)
- --------------------------------------------------------------------------------
The aggregate number of shares which the corporation shall have authority to
issue is: 1,000
1,000 common no series no par value
- ------------- ----------- ------------- ------------------------
NO. OF SHARES CLASS SERIES PAR VALUE (Optional)
- ------------- ----------- ------------- ------------------------
NO. OF SHARES CLASS SERIES PAR VALUE (Optional)
- ------------- ----------- ------------- ------------------------
NO. OF SHARES CLASS SERIES PAR VALUE (Optional)
- --------------------------------------------------------------------------------
08-400 (Rev. 12/96)
MM/dgl
(AK. - 2414 - 8/15/97)
<PAGE>
ARTICLE IV (See Number 5 of Instructions)
- --------------------------------------------------------------------------------
1. The name of the registered agent (only one registered agent may be given):
C T CORPORATION SYSTEM
--------------------------------------------------------------------------
2. The physical (street) address of the registered agent's office is:
No. and Street: c/o C T CORPORATION SYSTEM, 801 W. Tenth St., Suite 300
----------------------------------------------------------
City: Juneau, Alaska Zip Code: 99801
-------------- ----------------
3. Mailing (P.O. Box) address of the registered agent's office. If physical
and mailing addresses are the same, please state "N/A."
P.O. Box: N/A
----------------------------------------------------------------
City: _______________________, Alaska Zip Code: _______________________
- --------------------------------------------------------------------------------
ARTICLE V (See Number 6 of Instructions)
- --------------------------------------------------------------------------------
The name and address of each alien affiliate is: (If none, please indicate
"N/A.")
Name: Complete Residence or Business Address:
N/A
- ---------------------------- ____________________________________________
____________________________________________
____________________________________________
____________________________________________
- --------------------------------------------------------------------------------
08-400 (Rev. 12/96)
MM/dgl
(AK. - 2414)
<PAGE>
Attach additional pages for continuation of previous article and/or additional
articles. Please indicate which article you are continuing and/or insert any
desired additional provisions authorized by the code by adding additional
articles here (see optional provisions in the instructions). The PRINTED name
and SIGNATURE of each incorporator:
Signed by the incorporator or incorporators this 13th day of August, 1998.
Complete Resident or Business Address:
Name (Optional)
G. Robert Collier, Jr.
- -------------------------------- ------------------------------------------
/s/ G. Robert Collier
- -------------------------------- ------------------------------------------
- -------------------------------- ------------------------------------------
- -------------------------------- ------------------------------------------
THE SIGNATURE OF EACH INCORPORATOR MUST BE NOTARIZED.
G. Robert Collier, Jr. says on oath or affirms that he has read the foregoing
(or attached) document and believes all statements made in the document are
true.
SUBSCRIBED AND SWORN before me this 13th day of August, 1998.
/s/ Helen C. Greer
------------------------------------------
Notary Public Helen C. Greer
Seal My Commission Expires: Lifetime Commission
-------------------
08-400 (Rev. 12/96)
MM/dgl
(AK. - 2414)
<PAGE>
STATEMENT OF STANDARD INDUSTRIAL CODE (SIC)
The SIC which most clearly describe the initial activities of the corporation
are:
Primary: 4800 Secondary: Other:
------------- ------------- -------------
(AK. - 2414)
<PAGE>
[LETTERHEAD OF PACIFIC TELECOM]
August 14, 1998
Secretary of State
Corporations Division
State of Alaska
Subject: Consent to Incorporation of Pacific Telecom of Alaska PCS, Inc.
Dear Sir or Madam:
I serve as President of Pacific Telecom Cable, Inc., a Delaware
corporation, holder of a Certificate of Authority to transact business in the
State of Alaska.
Consent is hereby given by Pacific Telecom Cable, Inc. for the
incorporation of Pacific Telecom of Alaska PCS, Inc. in the State of Alaska.
Very truly yours,
/s/ Stephen E. Lovas
Stephen E. Lovas
President
<PAGE>
Exhibit 3.16
AMENDED AND RESTATED BYLAWS
OF
PACIFIC TELECOM CELLUAR OF ALASKA PCS, INC.
1. CORPORATE OFFICES
1.1 Business Office. The principal office of the corporation shall
be located at any place whether within or outside the State of Alaska as
designated in the corporation's most current Annual Report filed with the
Commissioner of Commerce. The corporation may have such other offices, either
within or without the State of Alaska as the board of directors may designate or
as the business of the corporation may require from time to time.
1.2 Registered Office. The registered office of the corporation,
required by A.S. 10.06.150, shall be 510 L Street, Suite 500, Anchorage, Alaska
99501. The address of the registered office may be changed from time to time.
2. SHAREHOLDERS
2.1 Annual Meeting. The annual meeting of the shareholders of the
corporation shall be held within sixty (60) days of the close of the
corporation's fiscal year, at a time and date as determined by the board of
directors, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting.
2.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, described in the meeting notice, may be called by the board
of directors or the president, and shall be called by the president at the
request of the holders of not less than ten percent (10%) of all outstanding
votes of entitled to be cast on any issue at the meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Alaska as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consents, which may be in the form, of waivers of notice or otherwise,
all shareholders entitled to vote at the meeting designate a different place,
whether within or without the State of Alaska, as the place for the holding of
such meeting. If no designation is made by either the directors or unanimous
action of the voting shareholders, the place of meeting shall be the principal
office of the corporation in the State of Alaska.
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BYLAWS Page 1 of 8
<PAGE>
2.4 Notice of Meeting. Written notice stating the place, day, and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting was called, shall unless otherwise prescribed by statute
or waived by the shareholders, be delivered not less than ten (10) days before
the date of the meeting, either personally or confirmed by telecopy, by or at
the direction of the President, or the Secretary, or the persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least thirty (30) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders. If
the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
2.6 Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make a complete list of
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address and the number of
shares held by each. Such list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
2.7 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
- --------------------------------------------------------------------------------
BYLAWS Page 2 of 8
<PAGE>
2.8 Proxies. At all meetings of shareholders, a shareholder may vote
in person or by proxy executed in writing by the shareholder or his or her duly
authorized attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
six (6) months from the date of its execution, unless otherwise provided in the
proxy.
2.9 Voting of Shares. Subject to the provisions of the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders.
2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent, or proxy as the
bylaws of such corporation may prescribe or, in the absence of such provisions,
as the board of directors of such corporation may determine, or, in the absence
of such determination, by the president or chairman of such corporation.
2.11 Informal Action by Shareholders. Unless otherwise provided by
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
3. BOARD OF DIRECTORS
3.1 General Powers. The board of directors shall manage the property
and business of the corporation and shall have and may exercise all of the
powers of the corporation, except such as are reserved to or may be conferred
upon the shareholders of the corporation. The directors shall have the power to
make and change from time to time rules and regulations not inconsistent with
these bylaws for the management of the business and affairs of the corporation.
3.2 Number, Tenure and Qualifications. The number of directors shall
be four as of the date of the adoption of these bylaws, and thereafter shall not
be less than three unless all of the outstanding shares are owned, beneficially
and of record by less than three shareholders, in which event the number of
Directors shall not be less than the number of shareholders. Each director shall
hold office until the next annual meeting of shareholders and until his or her
successor shall have been elected and qualified. In the event of the death,
resignation, or removal of a director, his or her successor or replacement shall
be chosen at a special meeting or at the next annual meeting of the
shareholders. A chairman of the board of directors may be selected by the
directors.
3.3 Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than these Bylaws immediately after, and at
the same place as, the
- --------------------------------------------------------------------------------
BYLAWS Page 3 of 8
<PAGE>
annual meeting of shareholders. The board of directors may provide, by
resolution, the time and place for the holding of additional regular meetings
without other notice than such resolution.
3.4 Special Meetings. Special meetings of the board of directors may
be called by any director, who may fix the place for holding any special meeting
of the board of directors called by him or her.
3.5 Notice. Notice of any special meeting shall be given at least
ten (10) days previously thereto by written notice delivered personally or by
telecopy to each director at his or her business address. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
3.6 Quorum. The quorum of the board of directors shall consist of a
majority of directors, and any resolution or other action taken at a meeting of
the board of directors shall be adopted by an affirmative vote of a majority of
the directors present, except as otherwise provided in the bylaws or the
Articles of Incorporation. Meetings of the board of directors may be held by
telephone conference calls.
3.7 Action Without a Meeting. Any action that may be taken by the
board of directors at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all the
directors.
3.8 Vacancies. Any vacancy occurring in the board of directors may
be filled by a person or persons elected at a special or annual meeting of the
shareholders. A director elected to fill a vacancy caused by death, resignation,
or removal, or by reason of an increase in the number of directors shall be
elected for the unexpired terms of his or her predecessor or other directors in
the office.
3.9 Compensation. By resolution of the board of directors, each
director may be paid his or her expenses, if any, of attendance at each meeting
of the board of directors, including reasonable travel expenses. Otherwise,
directors shall serve without compensation. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
3.10 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the minutes of the meeting or unless he
or she shall file his or her written dissent to such action with the person
acting as the secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the secretary of the corporation
immediately after the
- --------------------------------------------------------------------------------
BYLAWS Page 4 of 8
<PAGE>
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
3.11 Removal. Any director may be removed with or without cause at
any time by the shareholders at a special meeting called for that purpose and
may be removed for cause by action of the board of directors.
4. OFFICERS
4.1 Number. The officers of the corporation may be a President, a
Senior Vice President, a Secretary and a Treasurer, each of whom shall be
appointed by the board of directors. Such other officers and assistant officers
as may be deemed necessary may be elected or appointed by the board of
directors.
4.2 Election and Term of Office. The officers of the corporation to
be elected by the board of directors shall be elected annually by the board of
directors at the first meeting of the board of directors held after each meeting
of the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her death or until he or she
shall resign or shall have been removed in the manner hereinafter provided.
4.3 Removal. Any officer may be removed at the discretion of the
board of directors.
4.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
4.5 President. The President shall be the principal executive
officer of the corporation and, subject to the control of the board of
directors, shall in general supervise and control all of the business and
affairs of the corporation. The President shall, when present, preside at all
meetings of the shareholders and of the board of directors. He or she may sign,
with the Secretary or any other proper officer of the corporation thereunto
authorized by the board of directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts or other instruments which
the board of directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these bylaws or the Articles of Incorporation or some other
officer or agent of the corporation, or shall be required by law to be otherwise
signed or executed; and in general shall perform all duties incident to the
office of President and such other duties as may be prescribed by the board of
directors from time to time.
- --------------------------------------------------------------------------------
BYLAWS Page 5 of 8
<PAGE>
4.6 Senior Vice President. In the event of the death of the
President or the inability of the President to serve, the Senior Vice President
shall perform the duties of the President until the succeeding President is
elected, and while so acting, shall have all the powers of and be subject to all
the restrictions upon the President. The Senior Vice President shall perform
such other duties as from time to time may be assigned to him or her by the
board of directors.
4.7 Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President, certificates
of shares of the corporation, the issuance of which shall have been authorized
by resolution of the board of directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the President or by the board of directors.
4.8 Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositaries as shall be selected by the board
of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him or her by the President or by the board of directors. If required by the
board of directors, the Treasurer shall give a bond for the faithful discharge
of his or her duties in such sum and with such surety or sureties as the board
of directors shall determine.
4.9 Salaries. The salaries of the officers shall be fixed from time
to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a director of
the corporation.
5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS
5.1 Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of
- --------------------------------------------------------------------------------
BYLAWS Page 6 of 8
<PAGE>
and on behalf of the corporation, and such authority may be general or confined
to specific instances or restricted by agreement, the bylaws, or the Articles of
Incorporation.
5.2 Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the board of directors. Such authority may be general or
confined to specific instances and, as limited by agreement, these bylaws, or
the Articles of Incorporation.
5.3 Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the corporation, shall be signed by such officer or officers, agent or agents
of the corporation and in such manner as shall from time to time be determined
by resolution of the board of directors.
5.4 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the board of directors may
select.
6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Certificates for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the board of
directors to do so, and sealed with the corporate seal. All certificates of
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
6.2 Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
7. FISCAL YEAR
- --------------------------------------------------------------------------------
BYLAWS Page 7 of 8
<PAGE>
7.1 The fiscal year of the corporation shall begin on the 1st day of
January and end on the 31st day of December of each year, unless the board of
directors, by resolution, establishes a different fiscal year.
8. DIVIDENDS
8.1 The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and the Articles of Incorporation.
9. WAIVER OF NOTICE
9.1 Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the corporation under the
provisions of these bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the Alaska Business Corporation Act, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated herein shall be deemed
equivalent to the giving of such notice.
10. AMENDMENTS
10.1 These bylaws may be altered, amended, or repealed and new
bylaws may be adopted by the board of directors at any regular or special
meeting of the board of directors.
11. CORPORATE SEAL
11.1 The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal".
- --------------------------------------------------------------------------------
BYLAWS Page 8 of 8
<PAGE>
EXHIBIT 3.17
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
I certify that the attached 17 pages are true copies of records on file with the
Department of Commerce and Economic Development, Division of Banking,
Securities, and Corporations.
Deborah B. Sedwick
Commissioner
Certified by: /s/ Gina Markovich
[SEAL] ----------------------
Date: May 6, 1999
-----------------------------
================================================================================
<PAGE>
FILE NO.: 48287-D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
INCORPORATION
Business Corporation
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that duplicate originals of the Articles of
Incorporation of
PTI COMMUNICATIONS OF ALASKA, INC.
have been received in this office and are found to conform to law.
ACCORDINGLY, the undersigned, as such Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
the Certificate of Incorporation and attaches hereto a duplicate original of the
Articles of Incorporation.
IN TESTIMONY WHEREOF, I execute this certificate
and affix the Great Seal of the State of Alaska
on September 5, 1991.
[SEAL] /s/ Glenn A. Olds
Dr. Glenn A. Olds
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
08-120B (Rev. 9/88)
5841M-2
Issued By: Corporations Section, P.O. Box D, Juneau, Alaska 99811,
Telephone (907) 465-2530
================================================================================
<PAGE>
Filed for Record
State of Alaska
SEP - 3 1991
Department of Commerce
& Economic Development
ARTICLES OF INCORPORATION
OF
PTI COMMUNICATIONS OF ALASKA, INC.
- --------------------------------------------------------------------------------
KNOW ALL MEN BY THESE PRESENTS: That the undersigned, being over
eighteen years of age, has formed a business corporation under and pursuant to
the laws of the State of Alaska and does hereby certify:
ARTICLE I
The name of the corporation is PTI Communications of Alaska, Inc.
ARTICLE II
The object and purposes for which this corporation is formed are as
follows:
(a) This corporation shall have all the powers to do and transact
any and all actions and have all of the powers mentioned and set forth directly
or by inference in Alaska Statutes, Title 10, Chapter 6, including AS 10.06.010.
(b) Without in any manner intending to limit the powers specified in
the Alaska Statutes, this corporation, at its inception and as its main
corporate purpose, shall engage in the business of provisioning of
telecommunications services.
ARTICLE III
The authorized capital stock of this corporation shall be 1,000
shares of nonassessable common stock fully voting, fully participating.
There is no cumulative voting of shares.
ARTICLE IV
To the extent available, both retained earnings and paid-in capital
may be used for the purchase and redemption of common stock issued by this
corporation.
ARTICLE V
To the full extent permitted by law and subject only to those
limitations expressly stated in AS 10.06.210(1)(M), no
<PAGE>
director of this corporation shall have any personal liability to the
corporation or its shareholders for monetary damages for the breach of fiduciary
duty as a director. This provision shall apply in addition to, and not in
substitution for, indemnification provisions contained in this corporation's
Bylaws or provided by contract.
ARTICLE VI
There are no alien affiliates.
ARTICLE VII
The address of the corporation's initial registered office is:
CT Corporation System
240 Main Street, Suite 800
Juneau, Alaska 99801
The name of the corporation's initial registered agent is: CT
Corporation System.
ARTICLE VIII
The management of the affairs and concerns of this corporation is
hereby vested in its Board of Directors. The number of directors shall be fixed
from time to time by the Bylaws. The names and addresses of the initial Board of
Directors are:
Charles E. Robinson
805 Broadway
Vancouver, Washington 98668
Theodore D. Berns
805 Broadway
Vancouver, Washington 98668
James H. Huesgen
805 Broadway
Vancouver, Washington 98668
IN WITNESS WHEREOF, the undersigned, being the original incorporator
hereinabove named, has signed these Articles of Incorporation this 29th day of
August, 1991.
/s/ Theodore D. Berns
----------------------------
Theodore D. Berns
-2-
<PAGE>
VERIFICATION
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
I Theodore D. Berns, say on oath or affirm that I have read the
foregoing Articles of Incorporation and believe all statements made therein are
true.
/s/ Theodore D. Berns
----------------------------
Theodore D. Berns
SUBSCRIBED AND SWORN TO or affirmed before me at Anchorage, Alaska,
this 29th day of August, 1991.
/s/ [ILLEGIBLE]
----------------------------
NOTARY PUBLIC in and for Alaska
My Commission Expires: 1-16-95
-3-
<PAGE>
STANDARD INDUSTRIAL CLASSIFICATION (S.I.C.) CODE
PTI Communications of Alaska, Inc. selects S.I.C. 4810 as the
classification nearest to its business description.
<PAGE>
48267-D
Filed for Record
State of Alaska
DEC - 2 1991
Department of Commerce
& Economic Development
FIRST: The name of the corporation is PTI Communications of Alaska,
Inc..
SECOND:
The names and addresses of each alien affiliate
TRT/FTC COMMUNICATIONS LIMITED
13-19 Curtain Road
London EC2A 3LT
CIDCOM S.A.
LOTA 2267-PISO5-OF501
Casilla 15372-SECTOR 9
Santiago, Chile
TRT DATA PRODUCTS COMMUNICATIONS
Avenida Samuel Lewis
Apartado 6-5902
El Dorado, Panama
Republic De Panama
All of the above corporations are subsidiaries of Pacific Telecom, Inc., the
parent company of PTI Communications of Alaska, Inc. and do not own or control
any shares of PTI Communications of Alaska, Inc.
Executed this 11th day of October 1991.
/s/ Theodore D. Berns
----------------------------
Theodore D. Berns
President
<PAGE>
VERIFICATION
STATE OF WASHINGTON )
) ss.
CLARK COUNTY )
I, Theodore D. Berns, say on oath or affirm that I have read the
foregoing changes to the Articles of Incorporation and believe all statements
made therein are true.
/s/ Theodore D. Berns
--------------------------------------
Theodore D. Berns
President & Chief Operating
Officer
SUBSCRIBED AND SWORN TO or affirmed before me at Vancouver,
Washington, this 11th day of October, 1991.
/s/ Pamela R. Bradford
--------------------------------------
NOTARY PUBLIC in and for Washington
My Commission Expires: 10-15-91
-2-
<PAGE>
48287D
DISCLOSURE OF ALIEN AFFILIATES
The names and addresses of each affiliate of PTI COMMUNICATIONS OF ALASKA,
INC. which is a non-resident alien or a corporation whose place of incorporation
is outside the United states and the percentage of shares controlled by each
affiliate are:
TRT/FTC COMMUNICATIONS LIMITED
13-19 Curtain Road
London EC2A 3LT
TRT DATA PRODUCTS COMMUNICATIONS
Avenida Samuel Lewis
Apartado 6-5902
El Dorado, Panama
Republic De Panama
All of the above corporations are subsidiaries of Pacific Telecom, Inc.,
the parent company of PTI COMMUNICATIONS OF ALASKA, INC., and do not own or
control any shares of PTI COMMUNICATIONS OF ALASKA, INC.
<PAGE>
11-22-91
PTI COMMUNICATIONS OF ALASKA, INC.
805 Broadway
Vancouver, WA 98668
Directors: Charles E. Robinson
Theodore D. Berns
James H. Huesgen
Vern K. Dunham
Officers: Charles E. Robinson Chairman & Chief Executive
Officer
Theodore D. Berns President & Chief Operating
Officer
James H. Huesgen Executive Vice President
Vern K. Dunham Senior Vice President
Donn T. Wonnell Vice President & Secretary
Brian N. Wirkkala Vice President & Treasurer
Maureen Z. Christie Assistant Secretary
Date/State of
Incorporation: Alaska, 9/5/91
Authorized Shares: 1,000 shares common stock having no par value
Shareholder(s): 100% owned by Pacific Telecom, Inc.
100 shares issued to PTI
Registered Agent: CT Corporation System
<PAGE>
File No 48287-D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
MERGER
Business Corporation
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that Articles of Merger, duly signed and
verified pursuant to the provisions of the Alaska Corporations Code, have been
received in this office and have been found to conform to law.
ACCORDINGLY, the undersigned, as Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
this Certificate of Merger of
[SEAL]
POLARNET, INC.
into
PTI COMMUNICATIONS OF ALASKA, INC.
and attaches hereto the original copy of the Articles of Merger.
IN TESTIMONY WHEREOF, I execute this certificate
and affix the Great Seal of the State of Alaska on
DECEMBER 29, 1997.
/s/ Willis F. Kirkpatrick
Willis F. Kirkpatrick
Designee for the Commissioner of Commerce
and Economic Development
================================================================================
<PAGE>
Filed for Record
State of Alaska
DEC 29 1997
Dept. of Commerce &
Economic Development
ARTICLES OF MERGER
OF
POLARNET, INC.
AND
PTI COMMUNICATIONS OF ALASKA, INC.
Domestic Stock Corporations
Pursuant to the provisions of Sections 10.06.530, 10.06.532, 10.06.544 and
10.06.550 of the Alaska Corporations Code, PolarNet, Inc., an Alaska corporation
("Merging Corporation") and PTI Communications of Alaska, Inc., an Alaska
corporation ("Surviving Corporation"), hereby adopt the following Articles of
Merger for the purpose of merging the Merging Corporation into the Surviving
Corporation.
ARTICLE I
This Articles of Merger and the Plan of Merger, attached hereto as Exhibit
A, were duly approved by the directors and shareholders of both the Merging and
Surviving Corporations in the manner prescribed by the Alaska Corporations Code.
The Plan of Merger is incorporated herein by reference.
ARTICLE II
The Merging Corporation has 6,232 shares of capital stock without par
value, issued and outstanding. All of such shares are of the same class, and
thus no shares are entitled to vote by class. The Surviving Corporation has 100
shares of common stock without par value, issued and outstanding. All of such
shares are of the same class, and thus no shares are entitled to vote by class.
<PAGE>
ARTICLE III
All 6,232 issued and outstanding shares of PolarNet, Inc., the Merging
Corporation, and all 100 issued and outstanding shares of PTI Communications of
Alaska, Inc., the Surviving Corporation, voted for the Plan of Merger. No shares
of either corporation voted against the Plan of Merger.
IN WITNESS WHEREOF, the undersigned have executed these Articles of
Merger, this 16th day of December, 1997.
PolarNet, Inc.
[Seal] By: /s/ Murray H. Greer
--------------------------------
Murray H. Greer, Vice President
Attest: [ILLEGIBLE]
----------------------------
PTI Communications of Alaska, Inc.
[Seal] By: /s/ Murray H. Greer
--------------------------------
Murray H. Greer, Vice President
Attest: [ILLEGIBLE]
----------------------------
<PAGE>
STATE OF WASHINGTON )
) ss:
COUNTY OF CLARK )
THIS IS TO CERTIFY that on the 16th day of December, 1997, at Vancouver,
Washington, before me personally appeared Murray H. Greer; and that he
acknowledged to me that he executed the foregoing instrument for and on behalf
of PolarNet, Inc.; that he is Vice President of said corporation, and is
authorized to so execute; that he knew the contents thereof and that the same
was the free and voluntary act of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal.
[Seal] /s/ Pamela R. Bradford
-------------------------------
Notary Public for Washington
My Commission Expires: 11-15-99
STATE OF WASHINGTON )
) ss:
COUNTY OF CLARK )
THIS IS TO CERTIFY that on the 16th day of December,1997 at Vancouver,
Washington, before me personally appeared Murray H. Greer; and that he
acknowledged to me that he executed the foregoing instrument for and on behalf
of PTI Communications of Alaska, Inc.; that he is Vice President of said
corporation, and is authorized to so execute; that he knew the contents thereof
and that the same was the free and voluntary act of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal.
[Seal] /s/ Pamela R. Bradford
-------------------------------
Notary Public for Washington
My Commission Expires: 11-15-99
<PAGE>
Filed for Record
State of Alaska
DEC 29 1997
Dept. of Commerce &
Economic Development
PLAN OF MERGER
OF
POLARNET, INC.
AND
PTI COMMUNICATIONS OF ALASKA, INC.
This Plan of Merger is dated this 16th day of December, 1997, pursuant to
the laws of the State of Alaska, by and between PolarNet, Inc., an Alaska
corporation, and PTI Communications of Alaska, Inc., an Alaska corporation.
1. Names of Corporations. The name of the corporation proposing to merge is
PolarNet, Inc. (hereinafter referred to as the "Merging Corporation") and
the name of the corporation into which it proposes to merge is PTI
Communications of Alaska, Inc. (hereinafter referred to as the "Surviving
Corporation").
2. Terms and Conditions. Upon the effective date of this Plan of Merger, as
defined in Paragraph 7. below:
(a) PolarNet, Inc. (the Merging Corporation) shall be merged with and
into PTI Communications of Alaska, Inc., which shall be the
Surviving Corporation;
(b) The corporate existence of the Merging Corporation shall cease;
(c) The corporate existence of PTI Communications of Alaska, Inc., as
the Surviving Corporation, shall continue;
(d) From and after the effective date of this Plan of Merger, the
Articles of Incorporation and Bylaws of PTI Communications of
Alaska, Inc. in effect immediately prior to the Merger, shall
continue and remain in full force and
<PAGE>
effect as the Articles of Incorporation and Bylaws of the Surviving
Corporation until they shall be altered, amended or repealed as
provided by law.
(e) From and after the effective date of this Plan of Merger, the
persons who are the Directors and Officers, respectively, of the
Surviving Corporation shall hold office as provided for in the
Surviving Corporation until the next annual meeting of shareholders
and until their successors shall have been elected and qualified.
(f) The name of the Surviving Corporation shall remain PTI
Communications of Alaska, Inc.
3. Manner of Converting Shares.
(a) The capital stock of the Surviving Corporation consists of 1,000
shares of common stock without par value, of which 100 shares are
issued and outstanding (all of which are owned by Pacific Telecom,
Inc., a Washington corporation). The capital stock of the Merging
Corporation consists of 10,000 shares of common stock without par
value, of which 6,232 shares are issued and outstanding (all of
which are owned by Pacific Telecom, Inc., a Washington corporation).
(b) Upon the effective date of this Plan of Merger, the capital stock of
the Merging Corporation shall be canceled and retired, and the
capital stock of the Surviving Corporation shall remain issued and
outstanding.
2
<PAGE>
4. Changes in Articles of Incorporation. No changes in the Articles of
Incorporation of PTI Communications of Alaska, Inc., the Surviving
Corporation, shall be effected by the Merger.
5. Assignments. If at any time the Surviving Corporation shall deem or be
advised that any conveyances, assignments, assurances, deeds or other
instruments are necessary or desirable to vest, or to perfect or confirm
of record or otherwise, in the Surviving Corporation the title to any
property acquired or to be acquired by reason of or as a result of the
Merger provided for by this Plan of Merger, the proper officers and
directors of the Merging Corporation shall and will execute and deliver
all such instruments and will do all things necessary or proper so to
vest, perfect, or confirm title to such property in the Surviving
Corporation and otherwise to carry out the purpose of this Plan of Merger.
6. Abandonment. The merger provided for herein may be abandoned at any time
before this Plan of Merger becomes effective by vote of the Board of
Directors of the Merging Corporation or the Surviving Corporation.
7. Effective Date. This Plan of Merger shall be effective upon the issuance
of the Certificate of Merger by the Commissioner of Commerce and Economic
Development, State of Alaska,
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger to
be duly executed by their authorized officer and their corporate seal to be
affixed hereto and attested by their Secretary as of the day and year first
written above.
PolarNet, Inc.
Attest: /s/ [ILLEGIBLE] By /s/ Murray H. Greer
--------------------- ----------------------------------
Assistant Secretary Murray H. Greer, Vice President
[Seal]
PTI Communications of Alaska, Inc.
Attest: /s/ [ILLEGIBLE] By /s/ Murray H. Greer
--------------------- ----------------------------------
Assistant Secretary Murray H. Greer, Vice President
[Seal]
4
<PAGE>
EXHIBIT 3.18
AMENDED AND RESTATED BYLAWS
OF
PTI COMMUNICATIONS OF ALASKA, INC.
1. CORPORATE OFFICES
1.1 Business Office. The principal office of the corporation shall
be located at any place whether within or outside the State of Alaska as
designated in the corporation's most current Annual Report filed with the
Commissioner of Commerce. The corporation may have such other offices, either
within or without the State of Alaska as the board of directors may designate or
as the business of the corporation may require from time to time.
1.2 Registered Office. The registered office of the corporation,
required by A.S. 10.06.150, shall be 510 L Street, Suite 500, Anchorage, Alaska
99501. The address of the registered office may be changed from time to time.
2. SHAREHOLDERS
2.1 Annual Meeting. The annual meeting of the shareholders of the
corporation shall be held within sixty (60) days of the close of the
corporation's fiscal year, at a time and date as determined by the board of
directors, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting.
2.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, described in the meeting notice, may be called by the board
of directors or the president, and shall be called by the president at the
request of the holders of not less than ten percent (10%) of all outstanding
votes of entitled to be cast on any issue at the meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Alaska as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consents, which may be in the form, of waivers of notice or otherwise,
all shareholders entitled to vote at the meeting designate a different place,
whether within or without the State of Alaska, as the place for the holding of
such meeting. If no designation is made by either the directors or unanimous
action of the voting shareholders, the place of meeting shall be the principal
office of the corporation in the State of Alaska.
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BYLAWS Page 1 of 8
<PAGE>
2.4 Notice of Meeting. Written notice stating the place, day, and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting was called, shall unless otherwise prescribed by statute
or waived by the shareholders, be delivered not less than ten (10) days before
the date of the meeting, either personally or confirmed by telecopy, by or at
the direction of the President, or the Secretary, or the persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least thirty (30) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders. If
the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
2.6 Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make a complete list of
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address and the number of
shares held by each. Such list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
2.7 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
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<PAGE>
2.8 Proxies. At all meetings of shareholders, a shareholder may vote
in person or by proxy executed in writing by the shareholder or his or her duly
authorized attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
six (6) months from the date of its execution, unless otherwise provided in the
proxy.
2.9 Voting of Shares. Subject to the provisions of the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders.
2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent, or proxy as the
bylaws of such corporation may prescribe or, in the absence of such provisions,
as the board of directors of such corporation may determine, or, in the absence
of such determination, by the president or chairman of such corporation.
2.11 Informal Action by Shareholders. Unless otherwise provided by
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
3. BOARD OF DIRECTORS
3.1 General Powers. The board of directors shall manage the property
and business of the corporation and shall have and may exercise all of the
powers of the corporation, except such as are reserved to or may be conferred
upon the shareholders of the corporation. The directors shall have the power to
make and change from time to time rules and regulations not inconsistent with
these bylaws for the management of the business and affairs of the corporation.
3.2 Number, Tenure and Qualifications. The number of directors shall
be four as of the date of the adoption of these bylaws, and thereafter shall not
be less than three unless all of the outstanding shares are owned, beneficially
and of record by less than three shareholders, in which event the number of
Directors shall not be less than the number of shareholders. Each director shall
hold office until the next annual meeting of shareholders and until his or her
successor shall have been elected and qualified. In the event of the death,
resignation, or removal of a director, his or her successor or replacement shall
be chosen at a special meeting or at the next annual meeting of the
shareholders. A chairman of the board of directors may be selected by the
directors.
3.3 Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than these Bylaws immediately after, and at
the same place as, the
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<PAGE>
annual meeting of shareholders. The board of directors may provide, by
resolution, the time and place for the holding of additional regular meetings
without other notice than such resolution.
3.4 Special Meetings. Special meetings of the board of directors may
be called by any director, who may fix the place for holding any special meeting
of the board of directors called by him or her.
3.5 Notice. Notice of any special meeting shall be given at least
ten (10) days previously thereto by written notice delivered personally or by
telecopy to each director at his or her business address. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
3.6 Quorum. The quorum of the board of directors shall consist of a
majority of directors, and any resolution or other action taken at a meeting of
the board of directors shall be adopted by an affirmative vote of a majority of
the directors present, except as otherwise provided in the bylaws or the
Articles of Incorporation. Meetings of the board of directors may be held by
telephone conference calls.
3.7 Action Without a Meeting. Any action that may be taken by the
board of directors at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all the
directors.
3.8 Vacancies. Any vacancy occurring in the board of directors may
be filled by a person or persons elected at a special or annual meeting of the
shareholders. A director elected to fill a vacancy caused by death, resignation,
or removal, or by reason of an increase in the number of directors shall be
elected for the unexpired terms of his or her predecessor or other directors in
the office.
3.9 Compensation. By resolution of the board of directors, each
director may be paid his or her expenses, if any, of attendance at each meeting
of the board of directors, including reasonable travel expenses. Otherwise,
directors shall serve without compensation. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
3.10 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the minutes of the meeting or unless he
or she shall file his or her written dissent to such action with the person
acting as the secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the secretary of the corporation
immediately after the
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BYLAWS Page 4 of 8
<PAGE>
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
3.11 Removal. Any director may be removed with or without cause at
any time by the shareholders at a special meeting called for that purpose and
may be removed for cause by action of the board of directors.
4. OFFICERS
4.1 Number. The officers of the corporation may be a President, a
Senior Vice President, a Secretary and a Treasurer, each of whom shall be
appointed by the board of directors. Such other officers and assistant officers
as may be deemed necessary may be elected or appointed by the board of
directors.
4.2 Election and Term of Office. The officers of the corporation to
be elected by the board of directors shall be elected annually by the board of
directors at the first meeting of the board of directors held after each meeting
of the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her death or until he or she
shall resign or shall have been removed in the manner hereinafter provided.
4.3 Removal. Any officer may be removed at the discretion of the
board of directors.
4.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
4.5 President. The President shall be the principal executive
officer of the corporation and, subject to the control of the board of
directors, shall in general supervise and control all of the business and
affairs of the corporation. The President shall, when present, preside at all
meetings of the shareholders and of the board of directors. He or she may sign,
with the Secretary or any other proper officer of the corporation thereunto
authorized by the board of directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts or other instruments which
the board of directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these bylaws or the Articles of Incorporation or some other
officer or agent of the corporation, or shall be required by law to be otherwise
signed or executed; and in general shall perform all duties incident to the
office of President and such other duties as may be prescribed by the board of
directors from time to time.
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<PAGE>
4.6 Senior Vice President. In the event of the death of the
President or the inability of the President to serve, the Senior Vice President
shall perform the duties of the President until the succeeding President is
elected, and while so acting, shall have all the powers of and be subject to all
the restrictions upon the President. The Senior Vice President shall perform
such other duties as from time to time may be assigned to him or her by the
board of directors.
4.7 Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President, certificates
of shares of the corporation, the issuance of which shall have been authorized
by resolution of the board of directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the President or by the board of directors.
4.8 Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositaries as shall be selected by the board
of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him or her by the President or by the board of directors. If required by the
board of directors, the Treasurer shall give a bond for the faithful discharge
of his or her duties in such sum and with such surety or sureties as the board
of directors shall determine.
4.9 Salaries. The salaries of the officers shall be fixed from time
to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a director of
the corporation.
5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS
5.1 Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of
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BYLAWS Page 6 of 8
<PAGE>
and on behalf of the corporation, and such authority may be general or confined
to specific instances or restricted by agreement, the bylaws, or the Articles of
Incorporation.
5.2 Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the board of directors. Such authority may be general or
confined to specific instances and, as limited by agreement, these bylaws, or
the Articles of Incorporation.
5.3 Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the corporation, shall be signed by such officer or officers, agent or agents
of the corporation and in such manner as shall from time to time be determined
by resolution of the board of directors.
5.4 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the board of directors may
select.
6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Certificates for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the board of
directors to do so, and sealed with the corporate seal. All certificates of
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
6.2 Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
7. FISCAL YEAR
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<PAGE>
7.1 The fiscal year of the corporation shall begin on the 1st day of
January and end on the 31st day of December of each year, unless the board of
directors, by resolution, establishes a different fiscal year.
8. DIVIDENDS
8.1 The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and the Articles of Incorporation.
9. WAIVER OF NOTICE
9.1 Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the corporation under the
provisions of these bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the Alaska Business Corporation Act, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated herein shall be deemed
equivalent to the giving of such notice.
10. AMENDMENTS
10.1 These bylaws may be altered, amended, or repealed and new
bylaws may be adopted by the board of directors at any regular or special
meeting of the board of directors.
11. CORPORATE SEAL
11.1 The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal".
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BYLAWS Page 8 of 8
<PAGE>
EXHIBIT 3.19
File No 56468 D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
INCORPORATION
Business Corporation
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that Articles of Incorporation of
MACTEL INC.
have been received in this office and have been found to conform to law.
ACCORDINGLY, the undersigned, as Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
this Certificate of Incorporation and attaches hereto the original copy of the
Articles of Incorporation.
IN TESTIMONY WHEREOF, I execute this certificate
and affix the Great Seal of the State of Alaska on
July 31, 1995.
/s/ William L. Hensley
William L. Hensley
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
================================================================================
<PAGE>
Filed for Record
State of Alaska
JUL 31 1995
Department of Commerce
and Economic Development
ARTICLES OF INCORPORATION
OF
MACtel INC.
The undersigned natural person of the age of eighteen years or more,
acting as incorporator of the corporation under the Alaska Corporations Code (AS
10.06), adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation shall be MACtel Inc.
ARTICLE II
This corporation's duration shall be perpetual.
ARTICLE III
The purpose or purposes for which the corporation is organized are:
Section 1. To engage in the business of providing telecommunication
services, and services useful to the public.
Section 2. In general, to carry on any other lawful business whatsoever in
connection with the foregoing which is calculated, directly or indirectly, to
promote the interest of the corporation or to enhance the value of its
properties.
Section 3. To engage in and carry on any lawful business or trade and
exercise all powers granted to a corporation formed under the Alaska
Corporations Code, including any amendments thereto or successor statute that
may hereinafter be enacted.
ARTICLE IV
The aggregate number of shares which the corporation shall have the
authority to issue is 1,000 shares of common stock having a par value of one
dollar ($1.00) per share. There shall be no other class or shares of stock in
this corporation.
ARTICLE V
The owners of shares of stock of this corporation shall be entitled to
preemptive rights to subscribe for or purchase any part of new or additional
issues of stock or securities convertible into stock of any class whatsoever
whether now or hereafter authorized, and whether issued for cash, property,
service, by way of dividends, or otherwise.
Articles of Incorporation Page 1 of 4
MACtel Inc.
<PAGE>
ARTICLE VI
Each shareholder entitled to vote at any election for directors shall have
the right to vote, in person or by proxy, the number of shares owned by him for
as many persons as there are directors to be elected and for whose election he
has a right to vote by giving as many votes as the number of such directors
multiplied by the number of his share shall equal, or by distributing such votes
on the same principle among any number of candidates.
ARTICLE VII
Fifty-one percent of the outstanding shares of the corporation entitled
to vote, represented in person or by proxy, shall constitute a quorum of a
meeting of shareholders.
ARTICLE VIII
Section 1. The board of directors shall have full power to adopt, alter,
amend, or repeal the Bylaws or adopt new Bylaws. Nothing herein shall deny the
concurrent power of the shareholders to adopt, alter, amend, or repeal the
Bylaws.
Section 2. This corporation reserves the right to amend, alter, change or
repeal any provisions contained in its Articles of Incorporation in any manner
now or hereafter prescribed or permitted by statute. All rights of shareholders
of this corporation are granted subject to this reservation.
Section 3. Subject to the requirements of Anchorage Municipal Code
1.15.180, this corporation may enter into contracts and otherwise transact
business as vendor, purchaser, or otherwise, with its directors, officers, and
shareholder(s) and with corporations, associations, firms and entities in which
they are or may be or become interested as directors, officers, shareholders,
members, or otherwise.
ARTICLE IX
The address of the initial registered office of the corporation is 1350
Hillcrest Drive, Anchorage, Alaska 99503, and the name of its initial registered
agent at such address is Thomas M. Dillon.
ARTICLE X
The number, qualifications, terms of office, manner of election, time and
place of meetings, and powers and duties of the directors shall be prescribed in
the Bylaws, but the number of the first directors shall be five and they shall
serve until the first meeting of the shareholders and until their successors are
elected and qualified, and their names and post office address are as follows:
Articles of Incorporation Page 2 of 4
MACtel Inc.
<PAGE>
Dr. Alex Hills
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Bonnie Godfred
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Michael J. Burns
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Dr. Richard Ender
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Ronald C. Kerr
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
ARTICLE XI
The name and address of the incorporator is: F. Scott Davis, c/o
Municipality of Anchorage d/b/a MACtel Cellular System, 3900 Denali Street,
Anchorage, Alaska 99503.
ARTICLE XII
This corporation does not have an alien affiliate as defined in AS
10.06.730.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation in duplicate this 27th day of July, 1995.
/s/ F. Scott Davis
------------------
F. SCOTT DAVIS
Articles of Incorporation Page 3 of 4
MACtel Inc.
<PAGE>
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
0n this 27th day of July, 1995, before me, a Notary Public in and for the
State of Alaska, personally appeared F. Scott Davis, to me known to be the
individual described in and who executed the within and foregoing instrument,
and acknowledged that he signed the same as his free and voluntary act and deed
for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal
the day and year first above written.
- ------------------- /s/ Colleen M. Newguard
OFFICIAL SEAL -------------------------------
STATE OF ALASKA Notary Public in and for Alaska
COLLEEN M. NEWGUARD My Commission Expires 1/10/96
NOTARY PUBLIC -------
- -------------------
The S.I.C. code for Communication Services is 4899.
Articles of Incorporation Page 4 of 4
MACtel Inc.
<PAGE>
[LETTERHEAD OF MACtel CELLULAR SYSTEM]
July 21, 1995
Michael Monagle
Division of Corporation
Department of Commerce and Economic Development
P O Box 110808
Juneau Alaska 99811 - 0808
Re: Registration of MACtel Cellular System
Dear Mr. Monagle:
I authorize and consent to the use of the name MACtel Inc. by the corporation
recently submitted with me as the incorporator. After the corporation is formed,
the registration of MACtel Cellular System will be transferred to the
corporation.
Very Truly Yours,
/s/ F. Scott Davis
F. Scott Davis
General Manager
<PAGE>
EXHIBIT 3.20
AMENDED AND RESTATED BYLAWS
OF
MACTEL, INC.
1. CORPORATE OFFICES
1.1 Business Office. The principal office of the corporation shall
be located at any place whether within or outside the State of Alaska as
designated in the corporation's most current Annual Report filed with the
Commissioner of Commerce. The corporation may have such other offices, either
within or without the State of Alaska as the board of directors may designate or
as the business of the corporation may require from time to time.
1.2 Registered Office. The registered office of the corporation,
required by A.S. 10.06.150, shall be 510 L Street, Suite 500, Anchorage, Alaska
99501. The address of the registered office may be changed from time to time.
2. SHAREHOLDERS
2.1 Annual Meeting. The annual meeting of the shareholders of the
corporation shall be held within sixty (60) days of the close of the
corporation's fiscal year, at a time and date as determined by the board of
directors, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting.
2.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, described in the meeting notice, may be called by the board
of directors or the president, and shall be called by the president at the
request of the holders of not less than ten percent (10%) of all outstanding
votes of entitled to be cast on any issue at the meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Alaska as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consents, which may be in the form, of waivers of notice or otherwise,
all shareholders entitled to vote at the meeting designate a different place,
whether within or without the State of Alaska, as the place for the holding of
such meeting. If no designation is made by either the directors or unanimous
action of the voting shareholders, the place of meeting shall be the principal
office of the corporation in the State of Alaska.
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<PAGE>
2.4 Notice of Meeting. Written notice stating the place, day, and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting was called, shall unless otherwise prescribed by statute
or waived by the shareholders, be delivered not less than ten (10) days before
the date of the meeting, either personally or confirmed by telecopy, by or at
the direction of the President, or the Secretary, or the persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least thirty (30) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders. If
the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
2.6 Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make a complete list of
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address and the number of
shares held by each. Such list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
2.7 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
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<PAGE>
2.8 Proxies. At all meetings of shareholders, a shareholder may vote
in person or by proxy executed in writing by the shareholder or his or her duly
authorized attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
six (6) months from the date of its execution, unless otherwise provided in the
proxy.
2.9 Voting of Shares. Subject to the provisions of the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders.
2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent, or proxy as the
bylaws of such corporation may prescribe or, in the absence of such provisions,
as the board of directors of such corporation may determine, or, in the absence
of such determination, by the president or chairman of such corporation.
2.11 Informal Action by Shareholders. Unless otherwise provided by
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
3. BOARD OF DIRECTORS
3.1 General Powers. The board of directors shall manage the property
and business of the corporation and shall have and may exercise all of the
powers of the corporation, except such as are reserved to or may be conferred
upon the shareholders of the corporation. The directors shall have the power to
make and change from time to time rules and regulations not inconsistent with
these bylaws for the management of the business and affairs of the corporation.
3.2 Number, Tenure and Qualifications. The number of directors shall
be four as of the date of the adoption of these bylaws, and thereafter shall not
be less than three unless all of the outstanding shares are owned, beneficially
and of record by less than three shareholders, in which event the number of
Directors shall not be less than the number of shareholders. Each director shall
hold office until the next annual meeting of shareholders and until his or her
successor shall have been elected and qualified. In the event of the death,
resignation, or removal of a director, his or her successor or replacement shall
be chosen at a special meeting or at the next annual meeting of the
shareholders. A chairman of the board of directors may be selected by the
directors.
3.3 Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than these Bylaws immediately after, and at
the same place as, the
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<PAGE>
annual meeting of shareholders. The board of directors may provide, by
resolution, the time and place for the holding of additional regular meetings
without other notice than such resolution.
3.4 Special Meetings. Special meetings of the board of directors may
be called by any director, who may fix the place for holding any special meeting
of the board of directors called by him or her.
3.5 Notice. Notice of any special meeting shall be given at least
ten (10) days previously thereto by written notice delivered personally or by
telecopy to each director at his or her business address. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
3.6 Quorum. The quorum of the board of directors shall consist of a
majority of directors, and any resolution or other action taken at a meeting of
the board of directors shall be adopted by an affirmative vote of a majority of
the directors present, except as otherwise provided in the bylaws or the
Articles of Incorporation. Meetings of the board of directors may be held by
telephone conference calls.
3.7 Action Without a Meeting. Any action that may be taken by the
board of directors at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all the
directors.
3.8 Vacancies. Any vacancy occurring in the board of directors may
be filled by a person or persons elected at a special or annual meeting of the
shareholders. A director elected to fill a vacancy caused by death, resignation,
or removal, or by reason of an increase in the number of directors shall be
elected for the unexpired terms of his or her predecessor or other directors in
the office.
3.9 Compensation. By resolution of the board of directors, each
director may be paid his or her expenses, if any, of attendance at each meeting
of the board of directors, including reasonable travel expenses. Otherwise,
directors shall serve without compensation. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
3.10 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the minutes of the meeting or unless he
or she shall file his or her written dissent to such action with the person
acting as the secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the secretary of the corporation
immediately after the
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<PAGE>
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
3.11 Removal. Any director may be removed with or without cause at
any time by the shareholders at a special meeting called for that purpose and
may be removed for cause by action of the board of directors.
4. OFFICERS
4.1 Number. The officers of the corporation may be a President, a
Senior Vice President, a Secretary and a Treasurer, each of whom shall be
appointed by the board of directors. Such other officers and assistant officers
as may be deemed necessary may be elected or appointed by the board of
directors.
4.2 Election and Term of Office. The officers of the corporation to
be elected by the board of directors shall be elected annually by the board of
directors at the first meeting of the board of directors held after each meeting
of the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her death or until he or she
shall resign or shall have been removed in the manner hereinafter provided.
4.3 Removal. Any officer may be removed at the discretion of the
board of directors.
4.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
4.5 President. The President shall be the principal executive
officer of the corporation and, subject to the control of the board of
directors, shall in general supervise and control all of the business and
affairs of the corporation. The President shall, when present, preside at all
meetings of the shareholders and of the board of directors. He or she may sign,
with the Secretary or any other proper officer of the corporation thereunto
authorized by the board of directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts or other instruments which
the board of directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these bylaws or the Articles of Incorporation or some other
officer or agent of the corporation, or shall be required by law to be otherwise
signed or executed; and in general shall perform all duties incident to the
office of President and such other duties as may be prescribed by the board of
directors from time to time.
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BYLAWS Page 5 of 8
<PAGE>
4.6 Senior Vice President. In the event of the death of the
President or the inability of the President to serve, the Senior Vice President
shall perform the duties of the President until the succeeding President is
elected, and while so acting, shall have all the powers of and be subject to all
the restrictions upon the President. The Senior Vice President shall perform
such other duties as from time to time may be assigned to him or her by the
board of directors.
4.7 Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President, certificates
of shares of the corporation, the issuance of which shall have been authorized
by resolution of the board of directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the President or by the board of directors.
4.8 Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositaries as shall be selected by the board
of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him or her by the President or by the board of directors. If required by the
board of directors, the Treasurer shall give a bond for the faithful discharge
of his or her duties in such sum and with such surety or sureties as the board
of directors shall determine.
4.9 Salaries. The salaries of the officers shall be fixed from time
to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a director of
the corporation.
5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS
5.1 Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of
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BYLAWS Page 6 of 8
<PAGE>
and on behalf of the corporation, and such authority may be general or confined
to specific instances or restricted by agreement, the bylaws, or the Articles of
Incorporation.
5.2 Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the board of directors. Such authority may be general or
confined to specific instances and, as limited by agreement, these bylaws, or
the Articles of Incorporation.
5.3 Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the corporation, shall be signed by such officer or officers, agent or agents
of the corporation and in such manner as shall from time to time be determined
by resolution of the board of directors.
5.4 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the board of directors may
select.
6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Certificates for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the board of
directors to do so, and sealed with the corporate seal. All certificates of
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
6.2 Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
7. FISCAL YEAR
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<PAGE>
7.1 The fiscal year of the corporation shall begin on the 1st day of
January and end on the 31st day of December of each year, unless the board of
directors, by resolution, establishes a different fiscal year.
8. DIVIDENDS
8.1 The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and the Articles of Incorporation.
9. WAIVER OF NOTICE
9.1 Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the corporation under the
provisions of these bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the Alaska Business Corporation Act, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated herein shall be deemed
equivalent to the giving of such notice.
10. AMENDMENTS
10.1 These bylaws may be altered, amended, or repealed and new
bylaws may be adopted by the board of directors at any regular or special
meeting of the board of directors.
11. CORPORATE SEAL
11.1 The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal".
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<PAGE>
EXHIBIT 3.21
State of Delaware
PAGE 1
Office of the Secretary of State
------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "MACTEL LICENSE SUB, INC.", FILED IN THIS OFFICE ON THE SIXTH
DAY OF NOVEMBER, A.D. 1998, AT 11:45 O'CLOCK A.M.
/s/ Edward J. Freel
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
2963700 8100 AUTHENTICATION: 9725665
991177448 DATE: 05-05-99
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 11:45 AM 11/06/1998
981428014 -- 2963700
CERTIFICATE OF INCORPORATION
OF
MACTEL LICENSE SUB, INC.
===================================
I, the undersigned, for the purpose of incorporating and organizing
a corporation under the General Corporation Law of the State of Delaware, do
hereby execute this Certificate of Incorporation and do hereby certify as
follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
MACtel License Sub, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act
or activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE>
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 1,000 shares
of capital stock, all of which shall be shares of Common Stock, $.01 par value
("Common Stock").
Section 2. Except as otherwise provided by law, the Common Stock
shall have the exclusive right to vote for the election of directors and for all
other purposes. Each share of Common Stock shall have one vote, and the Common
Stock shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and
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<PAGE>
privileges of whatsoever nature conferred upon stockholders, directors or any
other persons whomsoever by and pursuant to this Certificate of Incorporation in
its present form or as hereafter amended are granted subject to the right
reserved in this Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director
of the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in
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<PAGE>
any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, to
the fullest extent permitted by law, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines,
amounts paid or to be paid in settlement, and excise taxes or penalties arising
under the Employee Retirement Income Security Act of 1974) reasonably incurred
or suffered by such person in connection therewith and such indemnification
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph (b)
hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the General Corporation Law of the State of Delaware requires,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not
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<PAGE>
entitled to be indemnified under this Section or otherwise. The Corporation may,
by action of the Board, provide indemnification to employees and agents of the
Corporation with the same scope and effect as the foregoing indemnification of
directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a)
of this Section is not paid in full by the Corporation within thirty days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the General Corporation Law of the State
of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
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<PAGE>
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
ARTICLE IX
The name and mailing address of the incorporator is Michael F.
Maslansky, Esq., c/o Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019.
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<PAGE>
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts hereinabove stated
are truly set forth and, accordingly, I have hereunto set my hand this 6th day
of November, 1998.
/s/ Michael F. Maslansky
------------------------
Michael F. Maslansky
Incorporator
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<PAGE>
EXHIBIT 3.22
BY-LAWS
OF
MACTEL LICENSE SUB, INC.
================================================================================
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of MACtel
License Sub, Inc. (the "Corporation") shall be established and maintained at the
office of The Corporation Trust Company at The Corporation Trust Center, 1209
Orange Street in the City of Wilmington, County of New Castle, State of
Delaware, and said Corporation Trust Company shall be the registered agent of
the Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for
the election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on the
next succeeding business day. At each annual meeting, the stockholders entitled
to vote shall elect a Board of Directors and they may transact such other
corporate business as shall be stated in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders
for any purpose or purposes may be called by the Chairman of the Board, the
President or the Secretary, or by resolution of the Board of Directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation of the Corporation and these
By-Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such proxy provides for a longer period. All
elections for directors shall be decided by plurality vote; all
<PAGE>
other questions shall be decided by majority vote except as otherwise provided
by the Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at all
meetings of the stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted that might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat, at his
or her address as it appears on the records of the Corporation, not less than
ten nor more than sixty days before the date of the meeting. No business other
than that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by
the Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of stockholders may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
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<PAGE>
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the
Corporation shall be managed under the direction of a Board of Directors. The
exact number of directors shall initially be three and may thereafter be fixed
from time to time by the Board of Directors. Directors shall be elected at the
annual meeting of stockholders and each director shall be elected to serve until
his or her successor shall be elected and shall qualify. A director need not be
a stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes
vacant, the remaining directors in the office, though less than a quorum, by a
majority vote, may appoint any qualified person to fill such vacancy, who shall
hold office for the unexpired term and until his or her successor shall be duly
chosen. If the office of any director becomes vacant and there are no remaining
directors, the stockholders, by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation, at a special
meeting called for such purpose, may appoint any qualified person to fill such
vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any director
or directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of the voting power entitled to
vote for the election of directors, at an annual meeting or a special meeting
called for the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares constituting a majority of
the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by resolution
or resolutions passed by a majority of the whole Board of Directors, designate
one or more committees, each committee to consist of one or more directors of
the Corporation.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it.
SECTION 6. MEETINGS -- The newly elected directors may hold their
first meeting for the purpose of organization and the transaction of business,
if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent of
all the Directors.
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<PAGE>
Regular meetings of the Board of Directors may be held without
notice at such places and times as shall be determined from time to time by
resolution of the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President, or by the Secretary on the written
request of any director, on at least one day's notice to each director (except
that notice to any director may be waived in writing by such director) and shall
be held at such place or places as may be determined by the Board of Directors,
or as shall be stated in the call of the meeting.
Unless otherwise restricted by the Certificate of Incorporation of
the Corporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in any meeting
of the Board of Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned. The vote of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors unless the Certificate of Incorporation of the Corporation or these
By-Laws shall require the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board of Directors a fixed fee and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a written consent thereto is
signed by all members of the Board of Directors or of such committee, as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board of Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a Chairman
of the Board, a President, one or more Vice Presidents, a Treasurer and a
Secretary, all of whom shall be elected by the Board of Directors and shall hold
office until their successors are duly elected and qualified. In addition, the
Board of Directors may elect such Assistant Secretaries and Assistant Treasurers
as they may deem proper. The Board of Directors may appoint such
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<PAGE>
other officers and agents as it may deem advisable, who shall hold their offices
for such terms and shall exercise such powers and perform such duties as shall
be determined from time to time by the Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall
be the Chief Executive Officer of the Corporation. He or she shall preside at
all meetings of the Board of Directors and shall have and perform such other
duties as may be assigned to him or her by the Board of Directors. The Chairman
of the Board shall have the power to execute bonds, mortgages and other
contracts on behalf of the Corporation, and to cause the seal of the Corporation
to be affixed to any instrument requiring it, and when so affixed the seal shall
be attested to by the signature of the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer.
SECTION 3. PRESIDENT -- The President shall be the Chief Operating
Officer of the Corporation. He or she shall have the general powers and duties
of supervision and management usually vested in the office of President of a
corporation. The President shall have the power to execute bonds, mortgages and
other contracts on behalf of the Corporation, and to cause the seal to be
affixed to any instrument requiring it, and when so affixed the seal shall be
attested to by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 4. VICE PRESIDENTS -- Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him or her by the
Board of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial
Officer of the Corporation. He or she shall have the custody of the Corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He or she shall deposit all
moneys and other valuables in the name and to the credit of the Corporation in
such depositaries as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, the Chairman of the Board, or the President, taking proper vouchers
for such disbursements. He or she shall render to the Chairman of the Board, the
President and Board of Directors at the regular meetings of the Board of
Directors, or whenever they may request it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation. If
required by the Board of Directors, he or she shall give the Corporation a bond
for the faithful discharge of his or her duties in such amount and with such
surety as the Board of Directors shall prescribe.
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and of the Board of Directors and
all other notices required by law or by these By-Laws, and in case of his or her
absence or refusal or neglect so to do, any such notice may be given by any
person thereunto directed by the Chairman of the Board or the President, or by
the Board of Directors, upon whose request the meeting is called as provided in
these By-Laws. He or she shall record all the proceedings of the meetings of the
Board of Directors, any committees thereof and the stockholders of the
Corporation in a book to be kept for that purpose, and shall perform such other
duties as may be assigned to him or her by the Board of Directors, the Chairman
of the Board or the President. He or she shall have the custody
-5-
<PAGE>
of the seal of the Corporation and shall affix the same to all instruments
requiring it, when authorized by the Board of Directors, the Chairman of the
Board or the President, and attest to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES --
Assistant Treasurers and Assistant Secretaries, if any, shall be elected and
shall have such powers and shall perform such duties as shall be assigned to
them, respectively, by the Board of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be
issued to each stockholder certifying the number of shares owned by such
stockholder in the Corporation. Certificates of stock of the Corporation shall
be of such form and device as the Board of Directors may from time to time
determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be
issued in the place of any certificate theretofore issued by the Corporation,
alleged to have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the
Corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the Corporation by
the delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Board of Directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors and which
record date: (1) in the case of determination of stockholders entitled to vote
at any meeting of stockholders or adjournment thereof, shall, unless otherwise
required by law, not be more than sixty nor less than ten days before the date
of such meeting; (2) in the case of determination of stockholders entitled to
express consent to corporate action in
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<PAGE>
writing without a meeting, shall not be more than ten days from the date upon
which the resolution fixing the record date is adopted by the Board of
Directors; and (3) in the case of any other action, shall not be more than sixty
days prior to such other action. If no record date is fixed: (1) the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (2) the record date
for determining stockholders entitled to express consent to corporate action in
writing without a meeting when no prior action of the Board of Directors is
required by law, shall be the first day on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation in accordance with applicable law, or, if prior action by the Board
of Directors is required by law, shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action; and
(3) the record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate
of Incorporation of the Corporation, the Board of Directors may, out of funds
legally available therefor at any regular or special meeting, declare dividends
upon stock of the Corporation as and when they deem appropriate. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of Directors
from time to time in their discretion deem proper for working capital or as a
reserve fund to meet contingencies or for equalizing dividends or for such other
purposes as the Board of Directors shall deem conducive to the interests of the
Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in
such form as shall be determined by resolution of the Board of Directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise imprinted upon the subject document or paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall
be determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or officers, or agent or agents,
of the Corporation, and in such manner as shall be determined from time to time
by resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required to be given under these By-Laws, personal notice is not required unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his or her address as it appears on
the records of the Corporation, and such notice shall be deemed to have been
given on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to
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<PAGE>
receive notice of any meetings except as otherwise provided by law. Whenever any
notice is required to be given under the provisions of any law, or under the
provisions of the Certificate of Incorporation of the Corporation or of these
By-Laws, a waiver thereof, in writing and signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual
meeting of the stockholders (or at any special meeting thereof if notice of such
proposed alteration, amendment or repeal to be considered is contained in the
notice of such special meeting) by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation. Except as
otherwise provided in the Certificate of Incorporation of the Corporation, the
Board of Directors may by majority vote of those present at any meeting at which
a quorum is present alter, amend or repeal these By-Laws, or enact such other
By-Laws as in their judgment may be advisable for the regulation and conduct of
the affairs of the Corporation.
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<PAGE>
EXHIBIT 3.23
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
I certify that the attached 6 pages are true copies of records on file with the
Department of Commerce and Economic Development, Division of Banking,
Securities, and Corporations.
Deborah B. Sedwick
Commissioner
[SEAL]
Certified by: /s/ Gina Markovich
--------------------
Date: May 6, 1999
----------------------------
================================================================================
<PAGE>
File No 61790-D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
INCORPORATION
Business Corporation
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that Articles of Incorporation of
MACTEL FAIRBANKS, INC.
have been received in this office and have been found to conform to law.
ACCORDINGLY, the undersigned, as Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
this Certificate of Incorporation and attaches hereto the original copy of the
Articles of Incorporation.
IN TESTIMONY WHEREOF, I execute this certificate and
affix the Great Seal of the State of Alaska on
August 29, 1997
/s/ William L. Hensley
William L. Hensley
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
================================================================================
<PAGE>
Filed for Record
State of Alaska
AUG 29 1997
Department of Commerce
and Economic Development
ARTICLES OF INCORPORATION
OF
MACtel Fairbanks, Inc.
The undersigned natural person of the age of eighteen years or more,
acting as incorporator of the corporation under the Alaska Corporations Code
(AS 10.06), adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation shall be MACtel Fairbanks, Inc.
ARTICLE II
This corporation's duration shall be perpetual.
ARTICLE III
The purpose or purposes for which the corporation is organized are:
Section 1. To engage in the business of providing telecommunication
services, and services useful to the telecommunications industry.
Section 2. In general, to carry on any other lawful business whatsoever in
connection with the foregoing which is calculated, directly or indirectly, to
promote the interest of the corporation or to enhance the value of its
properties.
Section 3. To engage in and carry on any lawful business or trade and
exercise all powers granted to a corporation formed under the Alaska
Corporations Code, including any amendments thereto or successor statute that
may hereinafter be enacted.
ARTICLE IV
The aggregate number of shares which the corporation shall have the
authority to issue is 1,000 shares of common stock having a par value of one
dollar ($1.00) per share. There shall be no other class or shares of stock in
this corporation.
ARTICLE V
The owners of shares of stock of this corporation shall be entitled to
preemptive rights to subscribe for or purchase any part of new or additional
issues of stock or securities convertible
Articles of Incorporation of MACtel Fairbanks, Inc. -- Page 1 of 4
<PAGE>
into stock of any class whatsoever whether now or hereafter authorized, and
whether issued for cash, property, service, by way of dividends, or otherwise.
ARTICLE VI
Each shareholder entitled to vote at any election for directors shall have
the right to vote, in person or by proxy, the number of shares owned by him for
as many persons as there are directors to be elected and for whose election he
has a right to vote by giving as many votes as the number of such directors
multiplied by the number of his share shall equal, or by distributing such votes
on the same principle among any number of candidates.
ARTICLE VII
Fifty-one percent of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum of a meeting
of shareholders.
ARTICLE VIII
Section 1. The board of directors shall have full power to adopt, alter,
amend, or repeal the Bylaws or adopt new Bylaws. Nothing herein shall deny the
concurrent power of the shareholders to adopt, alter, amend, or repeal the
Bylaws.
Section 2. This corporation reserves the right to amend, alter, change or
repeal any provisions contained in its Articles of Incorporation in any manner
now or hereafter prescribed or permitted by statute. All rights of shareholders
of this corporation are granted subject to this reservation.
Section 3. Subject to the requirements of Anchorage Municipal Code
1.15.180, this corporation may enter into contracts and otherwise transact
business as vendor, purchaser, or otherwise, with its directors, officers, and
shareholder(s) and with corporations, associations, firms and entities in which
they are or may be or become interested as directors, officers, shareholders,
members, or otherwise.
ARTICLE IX
The address of the initial registered office of the corporation is 1350
Hillcrest Drive, Anchorage, Alaska 99503, and the name of its initial registered
agent at such address is Thomas M. Dillon.
ARTICLE X
The number, qualifications, terms of office, manner of election, time and
place of meetings, and powers and duties of the directors shall be prescribed in
the Bylaws, but the
Articles of Incorporation of MACtel Fairbanks, Inc. -- Page 2 of 4
<PAGE>
number of the first directors shall be five and they shall serve until the first
meeting of the shareholders and until their successors are elected and
qualified, and their names and post office address are as follows:
R.G. Birkinshaw
c/o MACtel, Inc.
3900 Denali Street, Suite 101
Anchorage, Alaska 99503
Bonnie Godfred
c/o MACtel, Inc.
3900 Denali Street, Suite 101
Anchorage, Alaska 99503
Michael J. Burns
c/o MACtel, Inc.
3900 Denali Street, Suite 101
Anchorage, Alaska 99503
Dr. Richard Ender
c/o MACtel, Inc.
3900 Denali Street, Suite 101
Anchorage, Alaska 99503
Ronald C. Kerr
c/o MACtel, Inc.
3900 Denali Street, Suite 101
Anchorage, Alaska 99503
ARTICLE XI
No director shall be personally liable to the corporation or its
shareholders for any monetary damages for the breach of fiduciary duty as a
director, provided that this provision does not eliminate or limit the liability
of the director for (1) a breach of the director's duty of loyalty to the
corporation or its shareholders, (2) acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (3) willful or
negligent conduct involved in payment of dividends or repurchase of stock from
other than lawfully available funds, or (4) a transaction from which the
director derives an improper personal benefit.
ARTICLE XII
The name and address of the incorporator is: F. Scott Davis, MACtel, Inc.,
3900 Denali Street, Suite 101, Anchorage, Alaska 99503.
Articles of Incorporation of MACtel Fairbanks, Inc. -- Page 3 of 4
<PAGE>
This corporation does not have an alien affiliate as defined in
AS 10.06.730.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation in duplicate this 26th day of August, 1997.
/s/ F. Scott Davis
------------------------------
F. SCOTT DAVIS
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
On this 26th day of August, 1997, before me, a Notary Public in and for
the State of Alaska, personally appeared F. Scott Davis, to me known to be the
individual described in and who executed the within and foregoing instrument,
and acknowledged that he signed the same as his free and voluntary act and deed
for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year first above written.
/s/ Sharon J. Daiggu
------------------------------
Notary Public in and for Alaska
My Commission Expires 2.15.98
The S.I.C. code for Communication Services is 4899.
Articles of Incorporation of MACtel Fairbanks, Inc. -- Page 4 of 4
<PAGE>
[LETTERHEAD OF MACTEL]
Filed for Record
State of Alaska
AUG 29 1997
Department of Commerce
and Economic Development
August 25, 1997
Corporations Section
P.O. Box 110808
Juneau, Alaska 99811-0808
Gentlemen:
As President/CEO of MACtel, Inc., I consent to the use of the name "MACtel
Fairbanks, Inc." by the corporation whose Articles are enclosed. MACtel
Fairbanks, Inc., will be a wholly owned subsidiary of MACtel, Inc.
Yours,
/s/ F. Scott Davis
F. Scott Davis
President/CEO
<PAGE>
Exhibit 3.24
AMENDED AND RESTATED BYLAWS
OF
MACTEL FAIRBANKS, INC.
1. CORPORATE OFFICES
1.1 Business Office. The principal office of the corporation shall
be located at any place whether within or outside the State of Alaska as
designated in the corporation's most current Annual Report filed with the
Commissioner of Commerce. The corporation may have such other offices, either
within or without the State of Alaska as the board of directors may designate or
as the business of the corporation may require from time to time.
1.2 Registered Office. The registered office of the corporation,
required by A.S. 10.06.150, shall be 510 L Street, Suite 500, Anchorage, Alaska
99501. The address of the registered office may be changed from time to time.
2. SHAREHOLDERS
2.1 Annual Meeting. The annual meeting of the shareholders of the
corporation shall be held within sixty (60) days of the close of the
corporation's fiscal year, at a time and date as determined by the board of
directors, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting.
2.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, described in the meeting notice, may be called by the board
of directors or the president, and shall be called by the president at the
request of the holders of not less than ten percent (10%) of all outstanding
votes of entitled to be cast on any issue at the meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Alaska as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consents, which may be in the form, of waivers of notice or otherwise,
all shareholders entitled to vote at the meeting designate a different place,
whether within or without the State of Alaska, as the place for the holding of
such meeting. If no designation is made by either the directors or unanimous
action of the voting shareholders, the place of meeting shall be the principal
office of the corporation in the State of Alaska.
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BYLAWS Page 1 of 8
<PAGE>
2.4 Notice of Meeting. Written notice stating the place, day, and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting was called, shall unless otherwise prescribed by statute
or waived by the shareholders, be delivered not less than ten (10) days before
the date of the meeting, either personally or confirmed by telecopy, by or at
the direction of the President, or the Secretary, or the persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least thirty (30) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders. If
the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
2.6 Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make a complete list of
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address and the number of
shares held by each. Such list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
2.7 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
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BYLAWS Page 2 of 8
<PAGE>
2.8 Proxies. At all meetings of shareholders, a shareholder may vote
in person or by proxy executed in writing by the shareholder or his or her duly
authorized attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
six (6) months from the date of its execution, unless otherwise provided in the
proxy.
2.9 Voting of Shares. Subject to the provisions of the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders.
2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent, or proxy as the
bylaws of such corporation may prescribe or, in the absence of such provisions,
as the board of directors of such corporation may determine, or, in the absence
of such determination, by the president or chairman of such corporation.
2.11 Informal Action by Shareholders. Unless otherwise provided by
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
3. BOARD OF DIRECTORS
3.1 General Powers. The board of directors shall manage the property
and business of the corporation and shall have and may exercise all of the
powers of the corporation, except such as are reserved to or may be conferred
upon the shareholders of the corporation. The directors shall have the power to
make and change from time to time rules and regulations not inconsistent with
these bylaws for the management of the business and affairs of the corporation.
3.2 Number, Tenure and Qualifications. The number of directors shall
be four as of the date of the adoption of these bylaws, and thereafter shall not
be less than three unless all of the outstanding shares are owned, beneficially
and of record by less than three shareholders, in which event the number of
Directors shall not be less than the number of shareholders. Each director shall
hold office until the next annual meeting of shareholders and until his or her
successor shall have been elected and qualified. In the event of the death,
resignation, or removal of a director, his or her successor or replacement shall
be chosen at a special meeting or at the next annual meeting of the
shareholders. A chairman of the board of directors may be selected by the
directors.
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BYLAWS Page 3 of 8
<PAGE>
3.3 Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than these Bylaws immediately after, and at
the same place as, the annual meeting of shareholders. The board of directors
may provide, by resolution, the time and place for the holding of additional
regular meetings without other notice than such resolution.
3.4 Special Meetings. Special meetings of the board of directors may
be called by any director, who may fix the place for holding any special meeting
of the board of directors called by him or her.
3.5 Notice. Notice of any special meeting shall be given at least
ten (10) days previously thereto by written notice delivered personally or by
telecopy to each director at his or her business address. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
3.6 Quorum. The quorum of the board of directors shall consist of a
majority of directors, and any resolution or other action taken at a meeting of
the board of directors shall be adopted by an affirmative vote of a majority of
the directors present, except as otherwise provided in the bylaws or the
Articles of Incorporation. Meetings of the board of directors may be held by
telephone conference calls.
3.7 Action Without a Meeting. Any action that may be taken by the
board of directors at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all the
directors.
3.8 Vacancies. Any vacancy occurring in the board of directors may
be filled by a person or persons elected at a special or annual meeting of the
shareholders. A director elected to fill a vacancy caused by death, resignation,
or removal, or by reason of an increase in the number of directors shall be
elected for the unexpired terms of his or her predecessor or other directors in
the office.
3.9 Compensation. By resolution of the board of directors, each
director may be paid his or her expenses, if any, of attendance at each meeting
of the board of directors, including reasonable travel expenses. Otherwise,
directors shall serve without compensation. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
3.10 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the
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<PAGE>
minutes of the meeting or unless he or she shall file his or her written dissent
to such action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
3.11 Removal. Any director may be removed with or without cause at
any time by the shareholders at a special meeting called for that purpose and
may be removed for cause by action of the board of directors.
4. OFFICERS
4.1 Number. The officers of the corporation may be a President, a
Senior Vice President, a Secretary and a Treasurer, each of whom shall be
appointed by the board of directors. Such other officers and assistant officers
as may be deemed necessary may be elected or appointed by the board of
directors.
4.2 Election and Term of Office. The officers of the corporation to
be elected by the board of directors shall be elected annually by the board of
directors at the first meeting of the board of directors held after each meeting
of the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her death or until he or she
shall resign or shall have been removed in the manner hereinafter provided.
4.3 Removal. Any officer may be removed at the discretion of the
board of directors.
4.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
4.5 President. The President shall be the principal executive
officer of the corporation and, subject to the control of the board of
directors, shall in general supervise and control all of the business and
affairs of the corporation. The President shall, when present, preside at all
meetings of the shareholders and of the board of directors. He or she may sign,
with the Secretary or any other proper officer of the corporation thereunto
authorized by the board of directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts or other instruments which
the board of directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these bylaws or the Articles of Incorporation or some other
officer or agent of the
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<PAGE>
corporation, or shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the board of directors from time to time.
4.6 Senior Vice President. In the event of the death of the
President or the inability of the President to serve, the Senior Vice President
shall perform the duties of the President until the succeeding President is
elected, and while so acting, shall have all the powers of and be subject to all
the restrictions upon the President. The Senior Vice President shall perform
such other duties as from time to time may be assigned to him or her by the
board of directors.
4.7 Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President, certificates
of shares of the corporation, the issuance of which shall have been authorized
by resolution of the board of directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the President or by the board of directors.
4.8 Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositaries as shall be selected by the board
of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him or her by the President or by the board of directors. If required by the
board of directors, the Treasurer shall give a bond for the faithful discharge
of his or her duties in such sum and with such surety or sureties as the board
of directors shall determine.
4.9 Salaries. The salaries of the officers shall be fixed from time
to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a director of
the corporation.
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<PAGE>
5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS
5.1 Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances or restricted by agreement, the
bylaws, or the Articles of Incorporation.
5.2 Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the board of directors. Such authority may be general or
confined to specific instances and, as limited by agreement, these bylaws, or
the Articles of Incorporation.
5.3 Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the corporation, shall be signed by such officer or officers, agent or agents
of the corporation and in such manner as shall from time to time be determined
by resolution of the board of directors.
5.4 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the board of directors may
select.
6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Certificates for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the board of
directors to do so, and sealed with the corporate seal. All certificates of
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
6.2 Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in
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<PAGE>
whose name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
7. FISCAL YEAR
7.1 The fiscal year of the corporation shall begin on the 1st day of
January and end on the 31st day of December of each year, unless the board of
directors, by resolution, establishes a different fiscal year.
8. DIVIDENDS
8.1 The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and the Articles of Incorporation.
9. WAIVER OF NOTICE
9.1 Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the corporation under the
provisions of these bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the Alaska Business Corporation Act, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated herein shall be deemed
equivalent to the giving of such notice.
10. AMENDMENTS
10.1 These bylaws may be altered, amended, or repealed and new
bylaws may be adopted by the board of directors at any regular or special
meeting of the board of directors.
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BYLAWS Page 8 of 8
<PAGE>
11. CORPORATE SEAL
11.1 The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal".
ADOPTED as of the 14th day of May, 1999.
-----------------------------------
Charles E. Robinson
-----------------------------------
Michael E. Holmstrom
-----------------------------------
Wesley E. Carson
-----------------------------------
F. Scott Davis
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BYLAWS Page 9 of 8
<PAGE>
EXHIBIT 3.25
State of Delaware
PAGE 1
Office of the Secretary of State
------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "MACTEL FAIRBANKS LICENSE SUB, INC.", FILED IN THIS OFFICE ON
THE SIXTH DAY OF NOVEMBER, A.D. 1998, AT 11:45 O'CLOCK A.M.
/s/ Edward J. Freel
[SEAL] --------------------------------------
Edward J. Freel, Secretary of State
2963698 8100 AUTHENTICATION: 9725664
991177447 DATE: 05-05-99
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 11:45 AM 11/06/1998
981428009 -- 2963698
CERTIFICATE OF INCORPORATION
OF
MACTEL FAIRBANKS LICENSE SUB, INC.
========================================
I, the undersigned, for the purpose of incorporating and organizing
a corporation under the General Corporation Law of the State of Delaware, do
hereby execute this Certificate of Incorporation and do hereby certify as
follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
MACtel Fairbanks License Sub, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act
or activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE>
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 1,000 shares
of capital stock, all of which shall be shares of Common Stock, $.01 par value
("Common Stock").
Section 2. Except as otherwise provided by law, the Common Stock
shall have the exclusive right to vote for the election of directors and for all
other purposes. Each share of Common Stock shall have one vote, and the Common
Stock shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and
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<PAGE>
privileges of whatsoever nature conferred upon stockholders, directors or any
other persons whomsoever by and pursuant to this Certificate of Incorporation in
its present form or as hereafter amended are granted subject to the right
reserved in this Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director
of the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in
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<PAGE>
any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, to
the fullest extent permitted by law, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines,
amounts paid or to be paid in settlement, and excise taxes or penalties arising
under the Employee Retirement Income Security Act of 1974) reasonably incurred
or suffered by such person in connection therewith and such indemnification
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph (b)
hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the General Corporation Law of the State of Delaware requires,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not
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<PAGE>
entitled to be indemnified under this Section or otherwise. The Corporation may,
by action of the Board, provide indemnification to employees and agents of the
Corporation with the same scope and effect as the foregoing indemnification of
directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a)
of this Section is not paid in full by the Corporation within thirty days after
a written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the General Corporation Law of the State
of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
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<PAGE>
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
ARTICLE IX
The name and mailing address of the incorporator is Michael F.
Maslansky, Esq., c/o Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019.
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<PAGE>
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts hereinabove stated
are truly set forth and, accordingly, I have hereunto set my hand this 6th day
of November, 1998.
/s/ Michael F. Maslansky
--------------------------------
Michael F. Maslansky
Incorporator
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<PAGE>
Exhibit 3.26
BY-LAWS
OF
MACTEL FAIRBANKS LICENSE SUB INC.
=====================================
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of MACtel
Fairbanks License Sub, Inc. (the "Corporation") shall be established and
maintained at the office of The Corporation Trust Company at The Corporation
Trust Center, 1209 Orange Street in the City of Wilmington, County of New
Castle, State of Delaware, and said Corporation Trust Company shall be the
registered agent of the Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for
the election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on the
next succeeding business day. At each annual meeting, the stockholders entitled
to vote shall elect a Board of Directors and they may transact such other
corporate business as shall be stated in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders
for any purpose or purposes may be called by the Chairman of the Board, the
President or the Secretary, or by resolution of the Board of Directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation of the Corporation and these
By-Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such
<PAGE>
proxy provides for a longer period. All elections for directors shall be decided
by plurality vote; all other questions shall be decided by majority vote except
as otherwise provided by the Certificate of Incorporation or the laws of the
State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at all
meetings of the stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted that might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat, at his
or her address as it appears on the records of the Corporation, not less than
ten nor more than sixty days before the date of the meeting. No business other
than that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by
the Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of stockholders may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
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<PAGE>
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the
Corporation shall be managed under the direction of a Board of Directors. The
exact number of directors shall initially be three and may thereafter be fixed
from time to time by the Board of Directors. Directors shall be elected at the
annual meeting of stockholders and each director shall be elected to serve until
his or her successor shall be elected and shall qualify. A director need not be
a stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes
vacant, the remaining directors in the office, though less than a quorum, by a
majority vote, may appoint any qualified person to fill such vacancy, who shall
hold office for the unexpired term and until his or her successor shall be duly
chosen. If the office of any director becomes vacant and there are no remaining
directors, the stockholders, by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation, at a special
meeting called for such purpose, may appoint any qualified person to fill such
vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any director
or directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of the voting power entitled to
vote for the election of directors, at an annual meeting or a special meeting
called for the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares constituting a majority of
the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by resolution
or resolutions passed by a majority of the whole Board of Directors, designate
one or more committees, each committee to consist of one or more directors of
the Corporation.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it.
SECTION 6. MEETINGS -- The newly elected directors may hold their
first meeting for the purpose of organization and the transaction of business,
if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent of
all the Directors.
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<PAGE>
Regular meetings of the Board of Directors may be held without
notice at such places and times as shall be determined from time to time by
resolution of the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President, or by the Secretary on the written
request of any director, on at least one day's notice to each director (except
that notice to any director may be waived in writing by such director) and shall
be held at such place or places as may be determined by the Board of Directors,
or as shall be stated in the call of the meeting.
Unless otherwise restricted by the Certificate of Incorporation of
the Corporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in any meeting
of the Board of Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned. The vote of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors unless the Certificate of Incorporation of the Corporation or these
By-Laws shall require the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board of Directors a fixed fee and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a written consent thereto is
signed by all members of the Board of Directors or of such committee, as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board of Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Vice Presidents, a Treasurer and
a Secretary, all of whom shall be elected by the Board of Directors and shall
hold office until their successors are
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<PAGE>
duly elected and qualified. In addition, the Board of Directors may elect such
Assistant Secretaries and Assistant Treasurers as they may deem proper. The
Board of Directors may appoint such other officers and agents as it may deem
advisable, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall
be the Chief Executive Officer of the Corporation. He or she shall preside at
all meetings of the Board of Directors and shall have and perform such other
duties as may be assigned to him or her by the Board of Directors. The Chairman
of the Board shall have the power to execute bonds, mortgages and other
contracts on behalf of the Corporation, and to cause the seal of the Corporation
to be affixed to any instrument requiring it, and when so affixed the seal shall
be attested to by the signature of the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer.
SECTION 3. PRESIDENT -- The President shall be the Chief Operating
Officer of the Corporation. He or she shall have the general powers and duties
of supervision and management usually vested in the office of President of a
corporation. The President shall have the power to execute bonds, mortgages and
other contracts on behalf of the Corporation, and to cause the seal to be
affixed to any instrument requiring it, and when so affixed the seal shall be
attested to by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 4. VICE PRESIDENTS -- Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him or her by the
Board of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial
Officer of the Corporation. He or she shall have the custody of the Corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He or she shall deposit all
moneys and other valuables in the name and to the credit of the Corporation in
such depositaries as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, the Chairman of the Board, or the President, taking proper vouchers
for such disbursements. He or she shall render to the Chairman of the Board, the
President and Board of Directors at the regular meetings of the Board of
Directors, or whenever they may request it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation. If
required by the Board of Directors, he or she shall give the Corporation a bond
for the faithful discharge of his or her duties in such amount and with such
surety as the Board of Directors shall prescribe.
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and of the Board of Directors and
all other notices required by law or by these By-Laws, and in case of his or her
absence or refusal or neglect so to do, any such notice may be given by any
person thereunto directed by the Chairman of the Board or the President, or by
the Board of Directors, upon whose request the meeting is called as provided in
-5-
<PAGE>
these By-Laws. He or she shall record all the proceedings of the meetings of the
Board of Directors, any committees thereof and the stockholders of the
Corporation in a book to be kept for that purpose, and shall perform such other
duties as may be assigned to him or her by the Board of Directors, the Chairman
of the Board or the President. He or she shall have the custody of the seal of
the Corporation and shall affix the same to all instruments requiring it, when
authorized by the Board of Directors, the Chairman of the Board or the
President, and attest to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES --
Assistant Treasurers and Assistant Secretaries, if any, shall be elected and
shall have such powers and shall perform such duties as shall be assigned to
them, respectively, by the Board of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be
issued to each stockholder certifying the number of shares owned by such
stockholder in the Corporation. Certificates of stock of the Corporation shall
be of such form and device as the Board of Directors may from time to time
determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be
issued in the place of any certificate theretofore issued by the Corporation,
alleged to have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the
Corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the Corporation by
the delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Board of Directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date, which
-6-
<PAGE>
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors and which record date: (1) in
the case of determination of stockholders entitled to vote at any meeting of
stockholders or adjournment thereof, shall, unless otherwise required by law,
not be more than sixty nor less than ten days before the date of such meeting;
(2) in the case of determination of stockholders entitled to express consent to
corporate action in writing without a meeting, shall not be more than ten days
from the date upon which the resolution fixing the record date is adopted by the
Board of Directors; and (3) in the case of any other action, shall not be more
than sixty days prior to such other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting when no prior action of
the Board of Directors is required by law, shall be the first day on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation in accordance with applicable law, or, if prior
action by the Board of Directors is required by law, shall be at the close of
business on the day on which the Board of Directors adopts the resolution taking
such prior action; and (3) the record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate
of Incorporation of the Corporation, the Board of Directors may, out of funds
legally available therefor at any regular or special meeting, declare dividends
upon stock of the Corporation as and when they deem appropriate. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of Directors
from time to time in their discretion deem proper for working capital or as a
reserve fund to meet contingencies or for equalizing dividends or for such other
purposes as the Board of Directors shall deem conducive to the interests of the
Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in
such form as shall be determined by resolution of the Board of Directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise imprinted upon the subject document or paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall
be determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or officers, or agent or agents,
of the Corporation, and in such manner as shall be determined from time to time
by resolution of the Board of Directors.
-7-
<PAGE>
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required to be given under these By-Laws, personal notice is not required unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his or her address as it appears on
the records of the Corporation, and such notice shall be deemed to have been
given on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by law.
Whenever any notice is required to be given under the provisions of any law, or
under the provisions of the Certificate of Incorporation of the Corporation or
of these By-Laws, a waiver thereof, in writing and signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual
meeting of the stockholders (or at any special meeting thereof if notice of such
proposed alteration, amendment or repeal to be considered is contained in the
notice of such special meeting) by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation. Except as
otherwise provided in the Certificate of Incorporation of the Corporation, the
Board of Directors may by majority vote of those present at any meeting at which
a quorum is present alter, amend or repeal these By-Laws, or enact such other
By-Laws as in their judgment may be advisable for the regulation and conduct of
the affairs of the Corporation.
-8-
<PAGE>
EXHIBIT 3.27
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
I certify that the attached 5 pages are true copies of records on file with the
Department of Commerce and Economic Development, Division of Banking,
Securities, and Corporations.
[SEAL] Deborah B. Sedwick
Commissioner
Certified by: /s/ Gina Markovich
------------------
Date: May 6, 1999
--------------------------
================================================================================
<PAGE>
================================================================================
---------------
State of Alaska
---------------
[SEAL]
-----------------------------------------------
Department of Commerce and Economic Development
-----------------------------------------------
Certificate
The undersigned, as Commissioner of Commerce and Economic Development, of
the State of Alaska, hereby certifies that duplicate originals of the Articles
of Incorporation of PRUDHOE COMMUNICATIONS, INC.
duly signed and verified pursuant to the provisions of the Alaska Business
Corporation Act, have been received in this office and are found to conform to
law.
ACCORDINGLY, the undersigned, as such Commissioner of Commerce and
Economic Development, and by virtue of the authority vested in him by law hereby
issues this Certificate of Incorporation of
PRUDHOE COMMUNICATIONS, INC.
and attaches hereto a duplicate original of the Articles of Incorporation. IN
TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal, at
Juneau, the Capital, this 24th day of April, A.D. 1981
[SEAL] /s/ Charles R. Webber
CHARLES R. WEBBER
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
================================================================================
<PAGE>
[LETTERHEAD OF BAILY AND MASON]
May 26, 1981
State of Alaska
Department of Commerce
& Economic Development
Pouch D
Juneau, AK 99811
ATTN: Jean Thorsteinson
RE: PRUDHOE COMMUNICATIONS, INC.
Daer Ms. Thorsteinson:
The Standard Industrial Classification Code List For Prudhoe
Communications, Inc. is #4899, Communications Service, nec.
Very truly yours,
BAILY & MASON
/s/ Julian L. Mason
Julian L. Mason
JLM/nk
Enc.
- -----------------------
FEES REQUIRED
$
- -----------------------
[ILLEGIBLE]
$ 55.00
- -----------------------
CHECK
$10.48
- -----------------------
DATE
5-28-81
- -----------------------
CODE BY
05351-8 DP
- -----------------------
<PAGE>
FILED FOR RECORD
APR 24 1981
STATE OF ALASKA
DEPARTMENT OF COMMERCE
& ECONOMIC DEVELOPMENT
ARTICLES OF INCORPORATION
OF
PRUDHOE COMMUNICATIONS, INC.
I, the undersigned, a natural person over the age of 19 years, form
a business corporation pursuant to AS 10.05.252 et seq., and adopt the following
Articles of Incorporation:
I.
The name of the corporation shall be PRUDHOE COMMUNICATIONS, INC.
II.
The period of duration of this corporation shall be perpetual.
III.
The purposes for which this corporation is organized are:
A. To provide telecommunication services;
B. For any lawful purpose.
IV.
The aggregate number of shares which the corporation may issue shall
be 10,000 shares of one class having no par value.
V.
The initial registered office address of the corporation shall be
SRA Box 261-M, Anchorage, Alaska 99507, and the name of the initial registered
agent at that address shall be Joan T. Morris.
VI.
The Board of Directors until the first annual meeting of the
stockholders or until their successors are
<PAGE>
elected and qualified shall consist of two persons as follows:
Lloyd V. Morris
SRA Box 261-M
Anchorage, AK 99507
Joan T. Morris
SRA Box 261-M
Anchorage, AK 99507
VII.
The name and address of the incorporator is:
Lloyd V. Morris
SRA Box 261-M
Anchorage, AK 99507
VIII.
The Board of Directors shall have the power to adopt, alter, amend
or repeal the By-laws and such By-laws and amendments thereof shall be in full
force and effect as the By-laws of the corporation; and unless the stockholders
shall, at any regular or special meeting amend, alter or repeal such By-laws,
the By-laws shall remain in full force and effect. Any alteration, amendment, or
repeal of any provision of said By-laws by the stockholders shall not be subject
to subsequent alteration, amendment or repeal by the Board of Directors.
IX.
One-third of the shares entitled to vote shall constitute a quorum
of all meetings of the stockholders.
X.
The compensation of the Directors, if any, shall be fixed by the
Stockholders.
XI.
There are no affiliates of this Corporation who are non-resident
aliens or who are corporations whose place of incorporation is outside the
United States.
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<PAGE>
XII.
The shareholders shall have no preemptive right to acquire
additional or treasury shares of the Corporation.
DATED: 4/21/81
-------
/s/ Lloyd V. Morris
-------------------
Lloyd V. Morris
STATE OF ALASKA )
) ss:
THIRD JUDICIAL DISTRICT )
THIS IS TO CERTIFY that on the 21 day of April, 1981, before me the,
undersigned, a Notary Public in and for Alaska, duly commissioned and sworn as
such, personally appeared LLOYD V. MORRIS, known to me and to me known to be the
individual described in and who executed the foregoing instrument, and he
acknowledged to me that he signed and sealed the same freely and voluntarily for
the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal
the day and year first hereinabove written.
/s/ [ILLEGIBLE]
------------------------
NOTARY PUBLIC FOR ALASKA
My commission expires: [illegible]
-3-
<PAGE>
Exhibit 3.28
AMENDED AND RESTATED BYLAWS
OF
PRUDHOE COMMUNICATIONS, INC.
1. CORPORATE OFFICES
1.1 Business Office. The principal office of the corporation shall
be located at any place whether within or outside the State of Alaska as
designated in the corporation's most current Annual Report filed with the
Commissioner of Commerce. The corporation may have such other offices, either
within or without the State of Alaska as the board of directors may designate or
as the business of the corporation may require from time to time.
1.2 Registered Office. The registered office of the corporation,
required by A.S. 10.06.150, shall be 510 L Street, Suite 500, Anchorage, Alaska
99501. The address of the registered office may be changed from time to time.
2. SHAREHOLDERS
2.1 Annual Meeting. The annual meeting of the shareholders of the
corporation shall be held within sixty (60) days of the close of the
corporation's fiscal year, at a time and date as determined by the board of
directors, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting.
2.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, described in the meeting notice, may be called by the board
of directors or the president, and shall be called by the president at the
request of the holders of not less than ten percent (10%) of all outstanding
votes of entitled to be cast on any issue at the meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Alaska as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consents, which may be in the form, of waivers of notice or otherwise,
all shareholders entitled to vote at the meeting designate a different place,
whether within or without the State of Alaska, as the place for the holding of
such meeting. If no designation is made by either the directors or unanimous
action of the voting shareholders, the place of meeting shall be the principal
office of the corporation in the State of Alaska.
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BYLAWS Page 1 of 8
<PAGE>
2.4 Notice of Meeting. Written notice stating the place, day, and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting was called, shall unless otherwise prescribed by statute
or waived by the shareholders, be delivered not less than ten (10) days before
the date of the meeting, either personally or confirmed by telecopy, by or at
the direction of the President, or the Secretary, or the persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least thirty (30) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders. If
the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
2.6 Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make a complete list of
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address and the number of
shares held by each. Such list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
2.7 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
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BYLAWS Page 2 of 8
<PAGE>
2.8 Proxies. At all meetings of shareholders, a shareholder may vote
in person or by proxy executed in writing by the shareholder or his or her duly
authorized attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
six (6) months from the date of its execution, unless otherwise provided in the
proxy.
2.9 Voting of Shares. Subject to the provisions of the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders.
2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent, or proxy as the
bylaws of such corporation may prescribe or, in the absence of such provisions,
as the board of directors of such corporation may determine, or, in the absence
of such determination, by the president or chairman of such corporation.
2.11 Informal Action by Shareholders. Unless otherwise provided by
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
3. BOARD OF DIRECTORS
3.1 General Powers. The board of directors shall manage the property
and business of the corporation and shall have and may exercise all of the
powers of the corporation, except such as are reserved to or may be conferred
upon the shareholders of the corporation. The directors shall have the power to
make and change from time to time rules and regulations not inconsistent with
these bylaws for the management of the business and affairs of the corporation.
3.2 Number, Tenure and Qualifications. The number of directors shall
be four as of the date of adoption of these bylaws, and thereafter shall not be
less than three unless all of the outstanding shares are owned, beneficially and
of record by less than three shareholders, in which event the number of
Directors shall not be less than the number of shareholders. Each director shall
hold office until the next annual meeting of shareholders and until his or her
successor shall have been elected and qualified. In the event of the death,
resignation, or removal of a director, his or her successor or replacement shall
be chosen at a special meeting or at the next annual meeting of the
shareholders. A chairman of the board of directors may be selected by the
directors.
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BYLAWS Page 3 of 8
<PAGE>
3.3 Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than these Bylaws immediately after, and at
the same place as, the annual meeting of shareholders. The board of directors
may provide, by resolution, the time and place for the holding of additional
regular meetings without other notice than such resolution.
3.4 Special Meetings. Special meetings of the board of directors may
be called by any director, who may fix the place for holding any special meeting
of the board of directors called by him or her.
3.5 Notice. Notice of any special meeting shall be given at least
ten (10) days previously thereto by written notice delivered personally or by
telecopy to each director at his or her business address. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
3.6 Quorum. The quorum of the board of directors shall consist of a
majority of directors, and any resolution or other action taken at a meeting of
the board of directors shall be adopted by an affirmative vote of a majority of
the directors present, except as otherwise provided in the bylaws or the
Articles of Incorporation. Meetings of the board of directors may be held by
telephone conference calls.
3.7 Action Without a Meeting. Any action that may be taken by the
board of directors at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all the
directors.
3.8 Vacancies. Any vacancy occurring in the board of directors may
be filled by a person or persons elected at a special or annual meeting of the
shareholders. A director elected to fill a vacancy caused by death, resignation,
or removal, or by reason of an increase in the number of directors shall be
elected for the unexpired terms of his or her predecessor or other directors in
the office.
3.9 Compensation. By resolution of the board of directors, each
director may be paid his or her expenses, if any, of attendance at each meeting
of the board of directors, including reasonable travel expenses. Otherwise,
directors shall serve without compensation. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
3.10 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the
- --------------------------------------------------------------------------------
BYLAWS Page 4 of 8
<PAGE>
minutes of the meeting or unless he or she shall file his or her written dissent
to such action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
3.11 Removal. Any director may be removed with or without cause at
any time by the shareholders at a special meeting called for that purpose and
may be removed for cause by action of the board of directors.
4. OFFICERS
4.1 Number. The officers of the corporation may be a President, a
Senior Vice President, a Secretary and a Treasurer, each of whom shall be
appointed by the board of directors. Such other officers and assistant officers
as may be deemed necessary may be elected or appointed by the board of
directors.
4.2 Election and Term of Office. The officers of the corporation to
be elected by the board of directors shall be elected annually by the board of
directors at the first meeting of the board of directors held after each meeting
of the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her death or until he or she
shall resign or shall have been removed in the manner hereinafter provided.
4.3 Removal. Any officer may be removed at the discretion of the
board of directors.
4.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
4.5 President. The President shall be the principal executive
officer of the corporation and, subject to the control of the board of
directors, shall in general supervise and control all of the business and
affairs of the corporation. The President shall, when present, preside at all
meetings of the shareholders and of the board of directors. He or she may sign,
with the Secretary or any other proper officer of the corporation thereunto
authorized by the board of directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts or other instruments which
the board of directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these bylaws or the Articles of Incorporation or some other
officer or agent of the
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BYLAWS Page 5 of 8
<PAGE>
corporation, or shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the board of directors from time to time.
4.6 Executive Vice President. In the event of the death of the
President or the inability of the President to serve, the Executive Vice
President shall perform the duties of the President until the succeeding
President is elected, and while so acting, shall have all the powers of and be
subject to all the restrictions upon the President. The Executive Vice President
shall perform such other duties as from time to time may be assigned to him or
her by the board of directors.
4.7 Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President, certificates
of shares of the corporation, the issuance of which shall have been authorized
by resolution of the board of directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the President or by the board of directors.
4.8 Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositaries as shall be selected by the board
of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him or her by the President or by the board of directors. If required by the
board of directors, the Treasurer shall give a bond for the faithful discharge
of his or her duties in such sum and with such surety or sureties as the board
of directors shall determine.
4.9 Salaries. The salaries of the officers shall be fixed from time
to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a director of
the corporation.
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BYLAWS Page 6 of 8
<PAGE>
5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS
5.1 Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances or restricted by agreement, the
bylaws, or the Articles of Incorporation.
5.2 Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the board of directors. Such authority may be general or
confined to specific instances and, as limited by agreement, these bylaws, or
the Articles of Incorporation.
5.3 Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the corporation, shall be signed by such officer or officers, agent or agents
of the corporation and in such manner as shall from time to time be determined
by resolution of the board of directors.
5.4 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the board of directors may
select.
6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Certificates for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the board of
directors to do so, and sealed with the corporate seal. All certificates of
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
6.2 Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in
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<PAGE>
whose name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
7. FISCAL YEAR
7.1 The fiscal year of the corporation shall begin on the 1st day of
January and end on the 31st day of December of each year, unless the board of
directors, by resolution, establishes a different fiscal year.
8. DIVIDENDS
8.1 The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and the Articles of Incorporation.
9. WAIVER OF NOTICE
9.1 Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the corporation under the
provisions of these bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the Alaska Business Corporation Act, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated herein shall be deemed
equivalent to the giving of such notice.
10. AMENDMENTS
10.1 These bylaws may be altered, amended, or repealed and new
bylaws may be adopted by the board of directors at any regular
or special meeting of the board of directors.
11. CORPORATE SEAL
11.1 The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal".
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EXHIBIT 3.29
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
I certify that the attached 5 pages are true copies of records on file with the
Department of Commerce and Economic Development, Division of Banking,
Securities, and Corporations.
Deborah B. Sedwick
Commissioner
[SEAL]
Certified by: /s/ Gina Markovich
----------------------
Date: May 6, 1999
------------------------------
================================================================================
<PAGE>
FILE NO: 52437-D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
INCORPORATION
Business Corporation
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that duplicate originals of the Articles of
Incorporation of
ATU COMMUNICATIONS, INC.
have been received in this office and are found to conform to law.
ACCORDINGLY, the undersigned, as such Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
the Certificate of Incorporation and attaches hereto a duplicate original of the
Articles of Incorporation.
[SEAL] IN TESTIMONY WHEREOF, I execute this certificate and
affix the Great Seal of the State of Alaska on
October 7, 1993.
/s/ Paul Fuhs
Paul Fuhs
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
Issued By: Corporations Section, P.O. Box 110808, Juneau, Alaska 99811-0808,
Telephone (907) 465-2530
================================================================================
<PAGE>
Filed for Record
State of Alaska
OCT 07 1993
Department of Commerce
and Economic Development
ARTICLES OF INCORPORATION
OF
ATU COMMUNICATIONS, INC.
The undersigned natural person at the age of eighteen years or more,
acting as incorporator of the corporation under the Alaska Corporations Code
(AS10.06) adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation shall be ATU Communications, Inc.
ARTICLE II
This corporation's duration shall be perpetual.
ARTICLE III
The purpose or purposes for which the corporation is organized are:
Section 1. To engage in the business of providing telecommunication
services, and services useful to the telecommunications industry.
Section 2. In general, to carry on any other lawful business whatsoever in
connection with the foregoing which is calculated, directly or indirectly, to
promote the interest of the corporation or to enhance the value of its
properties.
Section 3. To engage in and carry on any lawful business or trade and
exercise all powers granted to a corporation formed under the Alaska
Corporations Code, including any amendments thereto or successor statute that
may hereinafter be enacted.
ARTICLE IV
The aggregate number of shares which the corporation shall have the
authority to issue is 1,000 shares of common stock having a par value of one
dollar ($1.00) per share. There shall be no other class or shares of stock in
this corporation.
Articles of Incorporation Page 1 of 4
ATU Communications, Inc.
<PAGE>
ARTICLE V
The owners of shares of stock of this corporation shall be entitled to
preemptive rights to subscribe for or purchase any part of new or additional
issues of stock or securities convertible into stock of any class whatsoever
whether now or hereafter authorized, and whether issued for cash, property,
service, by way of dividends, or otherwise.
ARTICLE VI
Each shareholder entitled to vote at any election for directors shall have
the right to vote, in person or by proxy, the number of shares owned by him for
as many persons as there are directors to be elected and for whose election he
has a right to vote by giving as many votes as the number of such directors
multiplied by the number of his shares shall equal, or by distributing such
votes on the same principle among any number of candidates.
ARTICLE VII
Fifty-one percent of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum of a meeting
of shareholders.
ARTICLE VIII
Section 1. The board of directors shall have full power to adopt, alter,
amend, or repeal the Bylaws or adopt new Bylaws. Nothing herein shall deny the
concurrent power of the shareholders to adopt, alter, amend, or repeal the
Bylaws.
Section 2. This corporation reserves the right to amend, alter, change or
repeal any provisions contained in its Articles of Incorporation in any manner
now or hereafter prescribed or permitted by statute. All rights of shareholders
of this corporation are granted subject to this reservation.
Section 3. Subject to the requirements of Anchorage Municipal Code
1.15.180, this corporation may enter into contracts and otherwise transact
business as vendor, purchaser, or otherwise, with its directors, officers, and
shareholder(s) and with corporations, associations, firms and entities in which
they are or may be or become interested as directors, officers, shareholders,
members, or otherwise.
Articles of Incorporation Page 2 of 4
ATU Communications, Inc.
<PAGE>
ARTICLE IX
The address of the initial registered office of the corporation is c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503 and
the name of its initial registered agent at such address is Robert L. Vasquez.
ARTICLE X
The number, qualifications, terms of office, manner of election, time and
place of meetings, and powers and duties of the directors shall be prescribed in
the Bylaws, but the number of the first directors shall be five and they shall
serve until the first meeting of the shareholders and until their successors are
elected and qualified, and their names and post office address are as follows:
Dr. Alex Hills
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Bonnie Godfred
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Michael J. Burns
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Dr. Richard Ender
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
B. John Shipe
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
ARTICLE XI
The name and address of the incorporator is: James G. Morrison, c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503.
Articles of Incorporation Page 3 of 4
ATU Communications, Inc.
<PAGE>
ARTICLE XII
This corporation does not have an alien affiliate as defined in
A.S. 10.06.730.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation in duplicate this __ day of September, 1993.
/s/ JAMES G. MORRISON
---------------------
JAMES G. MORRISON
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
On this 27th day of September, 1993, before me, a Notary Public in and
for the State of Alaska, personally appeared James G. Morrison, to me known to
be the individual described in and who executed the within and foregoing
instrument, and acknowledged that he signed the same as his free and voluntary
act and deed for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year first above written.
- -----------------
OFFICIAL SEAL /s/ Cynthia M. Brault
STATE OF ALASKA -------------------------------------
CYNTHIA M. BRAULT Notary Public in and for Alaska
NOTARY PUBLIC My commission expires: [ILLEGIBLE]
- -----------------
The S.I.C. code for Communication Services is 4899.
Articles of Incorporation Page 4 of 4
ATU Communications, Inc.
<PAGE>
Exhibit 3.30
AMENDED AND RESTATED BYLAWS
OF
ATU COMMUNICATIONS, INC.
1. CORPORATE OFFICES
1.1 Business Office. The principal office of the corporation shall
be located at any place whether within or outside the State of Alaska as
designated in the corporation's most current Annual Report filed with the
Commissioner of Commerce. The corporation may have such other offices, either
within or without the State of Alaska as the board of directors may designate or
as the business of the corporation may require from time to time.
1.2 Registered Office. The registered office of the corporation,
required by A.S. 10.06.150, shall be 510 L Street, Suite 500, Anchorage, Alaska
99501. The address of the registered office may be changed from time to time.
2. SHAREHOLDERS
2.1 Annual Meeting. The annual meeting of the shareholders of the
corporation shall be held within sixty (60) days of the close of the
corporation's fiscal year, at a time and date as determined by the board of
directors, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting.
2.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, described in the meeting notice, may be called by the board
of directors or the president, and shall be called by the president at the
request of the holders of not less than ten percent (10%) of all outstanding
votes of entitled to be cast on any issue at the meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Alaska as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consents, which may be in the form, of waivers of notice or otherwise,
all shareholders entitled to vote at the meeting designate a different place,
whether within or without the State of Alaska, as the place for the holding of
such meeting. If no designation is made by either the directors or unanimous
action of the voting shareholders, the place of meeting shall be the principal
office of the corporation in the State of Alaska.
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2.4 Notice of Meeting. Written notice stating the place, day, and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting was called, shall unless otherwise prescribed by statute
or waived by the shareholders, be delivered not less than ten (10) days before
the date of the meeting, either personally or confirmed by telecopy, by or at
the direction of the President, or the Secretary, or the persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least thirty (30) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders. If
the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
2.6 Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make a complete list of
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address and the number of
shares held by each. Such list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
2.7 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
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2.8 Proxies. At all meetings of shareholders, a shareholder may vote
in person or by proxy executed in writing by the shareholder or his or her duly
authorized attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
six (6) months from the date of its execution, unless otherwise provided in the
proxy.
2.9 Voting of Shares. Subject to the provisions of the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders.
2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent, or proxy as the
bylaws of such corporation may prescribe or, in the absence of such provisions,
as the board of directors of such corporation may determine, or, in the absence
of such determination, by the president or chairman of such corporation.
2.11 Informal Action by Shareholders. Unless otherwise provided by
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
3. BOARD OF DIRECTORS
3.1 General Powers. The board of directors shall manage the property
and business of the corporation and shall have and may exercise all of the
powers of the corporation, except such as are reserved to or may be conferred
upon the shareholders of the corporation. The directors shall have the power to
make and change from time to time rules and regulations not inconsistent with
these bylaws for the management of the business and affairs of the corporation.
3.2 Number, Tenure and Qualifications. The number of directors shall
be three as of the date of the adoption of these bylaws, and thereafter shall
not be less than three unless all of the outstanding shares are owned,
beneficially and of record by less than three shareholders, in which event the
number of Directors shall not be less than the number of shareholders. Each
director shall hold office until the next annual meeting of shareholders and
until his or her successor shall have been elected and qualified. In the event
of the death, resignation, or removal of a director, his or her successor or
replacement shall be chosen at a special meeting or at the next annual meeting
of the shareholders. A chairman of the board of directors may be selected by the
directors.
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3.3 Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than these Bylaws immediately after, and at
the same place as, the annual meeting of shareholders. The board of directors
may provide, by resolution, the time and place for the holding of additional
regular meetings without other notice than such resolution.
3.4 Special Meetings. Special meetings of the board of directors may
be called by any director, who may fix the place for holding any special meeting
of the board of directors called by him or her.
3.5 Notice. Notice of any special meeting shall be given at least
ten (10) days previously thereto by written notice delivered personally or by
telecopy to each director at his or her business address. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
3.6 Quorum. The quorum of the board of directors shall consist of a
majority of directors, and any resolution or other action taken at a meeting of
the board of directors shall be adopted by an affirmative vote of a majority of
the directors present, except as otherwise provided in the bylaws or the
Articles of Incorporation. Meetings of the board of directors may be held by
telephone conference calls.
3.7 Action Without a Meeting. Any action that may be taken by the
board of directors at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all the
directors.
3.8 Vacancies. Any vacancy occurring in the board of directors may
be filled by a person or persons elected at a special or annual meeting of the
shareholders. A director elected to fill a vacancy caused by death, resignation,
or removal, or by reason of an increase in the number of directors shall be
elected for the unexpired terms of his or her predecessor or other directors in
the office.
3.9 Compensation. By resolution of the board of directors, each
director may be paid his or her expenses, if any, of attendance at each meeting
of the board of directors, including reasonable travel expenses. Otherwise,
directors shall serve without compensation. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
3.10 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the
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minutes of the meeting or unless he or she shall file his or her written dissent
to such action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
3.11 Removal. Any director may be removed with or without cause at
any time by the shareholders at a special meeting called for that purpose and
may be removed for cause by action of the board of directors.
4. OFFICERS
4.1 Number. The officers of the corporation may be a President, a
Senior Vice President, a Secretary and a Treasurer, each of whom shall be
appointed by the board of directors. Such other officers and assistant officers
as may be deemed necessary may be elected or appointed by the board of
directors.
4.2 Election and Term of Office. The officers of the corporation to
be elected by the board of directors shall be elected annually by the board of
directors at the first meeting of the board of directors held after each meeting
of the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her death or until he or she
shall resign or shall have been removed in the manner hereinafter provided.
4.3 Removal. Any officer may be removed at the discretion of the
board of directors.
4.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
4.5 President. The President shall be the principal executive
officer of the corporation and, subject to the control of the board of
directors, shall in general supervise and control all of the business and
affairs of the corporation. The President shall, when present, preside at all
meetings of the shareholders and of the board of directors. He or she may sign,
with the Secretary or any other proper officer of the corporation thereunto
authorized by the board of directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts or other instruments which
the board of directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these bylaws or the Articles of Incorporation or some other
officer or agent of the
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corporation, or shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the board of directors from time to time.
4.6 Senior Vice President. In the event of the death of the
President or the inability of the President to serve, the Senior Vice President
shall perform the duties of the President until the succeeding President is
elected, and while so acting, shall have all the powers of and be subject to all
the restrictions upon the President. The Senior Vice President shall perform
such other duties as from time to time may be assigned to him or her by the
board of directors.
4.7 Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President, certificates
of shares of the corporation, the issuance of which shall have been authorized
by resolution of the board of directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the President or by the board of directors.
4.8 Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositaries as shall be selected by the board
of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him or her by the President or by the board of directors. If required by the
board of directors, the Treasurer shall give a bond for the faithful discharge
of his or her duties in such sum and with such surety or sureties as the board
of directors shall determine.
4.9 Salaries. The salaries of the officers shall be fixed from time
to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a director of
the corporation.
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5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS
5.1 Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances or restricted by agreement, the
bylaws, or the Articles of Incorporation.
5.2 Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the board of directors. Such authority may be general or
confined to specific instances and, as limited by agreement, these bylaws, or
the Articles of Incorporation.
5.3 Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the corporation, shall be signed by such officer or officers, agent or agents
of the corporation and in such manner as shall from time to time be determined
by resolution of the board of directors.
5.4 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the board of directors may
select.
6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Certificates for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the board of
directors to do so, and sealed with the corporate seal. All certificates of
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
6.2 Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in
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<PAGE>
whose name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
7. FISCAL YEAR
7.1 The fiscal year of the corporation shall begin on the 1st day of
January and end on the 31st day of December of each year, unless the board of
directors, by resolution, establishes a different fiscal year.
8. DIVIDENDS
8.1 The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and the Articles of Incorporation.
9. WAIVER OF NOTICE
9.1 Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the corporation under the
provisions of these bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the Alaska Business Corporation Act, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated herein shall be deemed
equivalent to the giving of such notice.
10. AMENDMENTS
10.1 These bylaws may be altered, amended, or repealed and new
bylaws may be adopted by the board of directors at any
regular or special meeting of the board of directors.
11. CORPORATE SEAL
11.1 The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal".
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BYLAWS Page 8 of 8
<PAGE>
EXHIBIT 3.31
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
I certify that the attached 13 pages are true copies of records on file with the
Department of Commerce and Economic Development, Division of Banking,
Securities, and Corporations.
[SEAL] Deborah B. Sedwick
Commissioner
Certified by: /s/ Gina Markovich
------------------
Date: May 11, 1999
--------------------------
================================================================================
<PAGE>
FILE NO.: 53555-D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
INCORPORATION
Business Corporation
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that duplicate originals of the Articles of
Incorporation of
ATU LONG DISTANCE INC.
have been received in this office and are found to conform to law.
ACCORDINGLY, the undersigned, as such Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
the Certificate of Incorporation and attaches hereto a duplicate original of the
Articles of Incorporation.
[SEAL] IN TESTIMONY WHEREOF, I execute this certificate
and affix the Great Seal of the State of Alaska on
August 05, 1994.
/s/ Paul Fuhs
Paul Fuhs
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
Issued By Corporations Section, P.O. Box 110808, Juneau, Alaska 99811-0808,
Telephone (907) 465-2530
================================================================================
<PAGE>
Filed for Record
State of Alaska
APR - 1994
Department of Commerce
and Economic Development
ARTICLES OF INCORPORATION
OF
ATU LONG DISTANCE INC.
The undersigned natural person of the age of eighteen years or more,
acting as incorporator of the corporation under the Alaska Corporations Code,
adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation shall be ATU Long Distance Inc.
ARTICLE II
This corporation's duration shall be perpetual.
ARTICLE III
The purpose or purposes for which the corporation is organized are:
Section 1. To engage in the business of providing telecommunication
services, and services useful to the telecommunications industry.
Section 2. In general, to carry on any other lawful business whatsoever in
connection with the foregoing which is calculated, directly or indirectly, to
promote the interest of the corporation or to enhance the value of its
properties.
Section 3. To engage in and carry on any lawful business or trade and
exercise all powers granted to a corporation formed under the Alaska
Corporations Code, including any amendments thereto or successor statute that
may hereinafter be enacted.
ARTICLE IV
The aggregate number of shares which the corporation shall have the
authority to issue is 1,000 shares of common stock having a par value of one
dollar ($1.00) per share. There shall be no other class or shares of stock in
this corporation.
Articles of Incorporation Page 1 of 4
ATU Long Distance Inc.
<PAGE>
ARTICLE V
The owners of shares of stock of this corporation shall be entitled to
preemptive rights to subscribe for or purchase any part of new or additional
issues of stock or securities convertible into stock of any class whatsoever
whether now or hereafter authorized, and whether issued for cash, property,
service, by way of dividends, or otherwise.
ARTICLE VI
Each shareholder entitled to vote at any election for directors shall have
the right to vote, in person or by proxy, the number of shares owned by him for
as many persons as there are directors to be elected and for whose election he
has a right to vote by giving as many votes as the number of such directors
multiplied by the number of his shares shall equal, or by distributing such
votes on the same principle among any number of candidates.
ARTICLE VII
Fifty-one percent of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum of a meeting
of shareholders.
ARTICLE VIII
Section 1. The board of directors shall have full power to adopt, alter,
amend, or repeal the Bylaws or adopt new Bylaws. Nothing herein shall deny the
concurrent power of the shareholders to adopt, alter, amend, or repeal the
Bylaws.
Section 2. This corporation reserves the right to amend, alter, change or
repeal any provisions contained in its Articles of Incorporation in any manner
now or hereafter prescribed or permitted by statute. All rights of shareholders
of this corporation are granted subject to this reservation.
Section 3. Subject to the requirements of Anchorage Municipal Code
1.15.180, this corporation may enter into contracts and otherwise transact
business as vendor, purchaser, or otherwise, with its directors, officers, and
shareholder(s) and with corporations, associations, firms and entities in which
they are or may be or become interested as directors, officers, shareholders,
members, or otherwise.
Articles of Incorporation Page 2 of 4
ATU Long Distance Inc.
<PAGE>
ARTICLE IX
The address of the initial registered office of the corporation is c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503 and
the name of its initial registered agent at such address is Robert L. Vasquez.
ARTICLE X
The number, qualifications, terms of office, manner of election, time and
place of meetings, and powers and duties of the directors shall be prescribed in
the Bylaws, but the number of the first directors shall be five and they shall
serve until the first meeting of the shareholders and until their successors are
elected and qualified, and their names and post office address are as follows:
Dr. Alex Hills
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Bonnie Godfred
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Michael J. Burns
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Dr. Richard Ender
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
B. John Shipe
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
ARTICLE XI
The name and address of the incorporator is: James G. Morrison, c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503.
Articles of Incorporation Page 3 of 4
ATU Long Distance Inc.
<PAGE>
ARTICLE XII
This corporation does not have an alien affiliate as defined in A.S.
10.06.730.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation in duplicate this 30th day of March, 1994.
/s/ James G. Morrison
---------------------
JAMES G. MORRISON
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
0n this 30th day of March, 1994, before me, a Notary Public in and for the
State of Alaska, personally appeared James G. Morrison, to me known to be the
individual described in and who executed the within and foregoing instrument,
and acknowledged that he signed the same as his free and voluntary act and deed
for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year first above written.
- -----------------
OFFICIAL SEAL /s/ Cynthia M. Brault
STATE OF ALASKA -------------------------------
CYNTHIA M. BRAULT Notary Public in and for Alaska
NOTARY PUBLIC My commission expires: 3/26/97
- -----------------
The S.I.C. code for ATU Long Distance Inc. is 4899.
Articles of Incorporation Page 4 of 4
ATU Long Distance Inc.
<PAGE>
FILE NO.: 52437-D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
INCORPORATION
Business Corporation
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that duplicate originals of the Articles of
Incorporation of
ATU COMMUNICATIONS, INC.
have been received in this office and are found to conform to law.
ACCORDINGLY, the undersigned, as such Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
the Certificate of Incorporation and attaches hereto a duplicate original of the
Articles of Incorporation.
[SEAL] IN TESTIMONY WHEREOF, I execute this certificate
and affix the Great Seal of the State of Alaska on
October 7, 1993.
/s/ Paul Fuhs
Paul Fuhs
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
Issued By Corporations Section, P.O. Box 110808, Juneau, Alaska 99811-0808,
Telephone (907) 465-2530
================================================================================
<PAGE>
Filed for Record
State of Alaska
OCT 07 1993
Department of Commerce
and Economic Development
ARTICLES OF INCORPORATION
OF
ATU COMMUNICATIONS, INC.
The undersigned natural person of the age of eighteen years or more,
acting as incorporator of the corporation under the Alaska Corporations Code (AS
10.06) adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation shall be ATU Communications, Inc.
ARTICLE II
This corporation's duration shall be perpetual.
ARTICLE III
The purpose or purposes for which the corporation is organized are:
Section 1. To engage in the business of providing telecommunication
services, and services useful to the telecommunications industry.
Section 2. In general, to carry on any other lawful business whatsoever in
connection with the foregoing which is calculated, directly or indirectly, to
promote the interest of the corporation or to enhance the value of its
properties.
Section 3. To engage in and carry on any lawful business or trade and
exercise all powers granted to a corporation formed under the Alaska
Corporations Code, including any amendments thereto or successor statute that
may hereinafter be enacted.
ARTICLE IV
The aggregate number of shares which the corporation shall have the
authority to issue is 1,000 shares of common stock having a par value of one
dollar ($1.00) per share. There shall be no other class or shares of stock in
this corporation.
Articles of Incorporation Page 1 of 4
ATU Communications, Inc.
<PAGE>
ARTICLE V
The owners of shares of stock of this corporation shall be entitled to
preemptive rights to subscribe for or purchase any part of new or additional
issues of stock or securities convertible into stock of any class whatsoever
whether now or hereafter authorized, and whether issued for cash, property,
service, by way of dividends, or otherwise.
ARTICLE VI
Each shareholder entitled to vote at any election for directors shall have
the right to vote, in person or by proxy, the number of shares owned by him for
as many persons as there are directors to be elected and for whose election he
has a right to vote by giving as many votes as the number of such directors
multiplied by the number of his shares shall equal, or by distributing such
votes on the same principle among any number of candidates.
ARTICLE VII
Fifty-one percent of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum of a meeting
of shareholders.
ARTICLE VIII
Section 1. The board of directors shall have full power to adopt, alter,
amend, or repeal the Bylaws or adopt new Bylaws. Nothing herein shall deny the
concurrent power of the shareholders to adopt, alter, amend, or repeal the
Bylaws.
Section 2. This corporation reserves the right to amend, alter, change or
repeal any provisions contained in its Articles of Incorporation in any manner
now or hereafter prescribed or permitted by statute. All rights of shareholders
of this corporation are granted subject to this reservation.
Section 3. Subject to the requirements of Anchorage Municipal Code
1.15.180, this corporation may enter into contracts and otherwise transact
business as vendor, purchaser, or otherwise, with its directors, officers, and
shareholder(s) and with corporations, associations, firms and entities in which
they are or may be or become interested as directors, officers, shareholders,
members, or otherwise.
Articles of Incorporation Page 2 of 4
ATU Communications, Inc.
<PAGE>
ARTICLE IX
The address of the initial registered office of the corporation is c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503 and
the name of its initial registered agent at such address is Robert L. Vasquez.
ARTICLE X
The number, qualifications, terms of office, manner of election, time and
place of meetings, and powers and duties of the directors shall be prescribed in
the Bylaws, but the number of the first directors shall be five and they shall
serve until the first meeting of the shareholders and until their successors are
elected and qualified, and their names and post office address are as follows:
Dr. Alex Hills
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Bonnie Godfred
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Michael J. Burns
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Dr. Richard Ender
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
B. John Shipe
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
ARTICLE XI
The name and address of the incorporator is: James G. Morrison, c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503.
Articles of Incorporation Page 3 of 4
ATU Communications, Inc.
<PAGE>
ARTICLE XII
This corporation does not have an alien affiliate as defined in A.S.
10.06.730.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation in duplicate this 27th day of September, 1993.
/s/ James G. Morrison
---------------------
JAMES G. MORRISON
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
0n this 27th day of September, 1993, before me, a Notary Public in and
for the State of Alaska, personally appeared James G. Morrison, to me known to
be the individual described in and who executed the within and foregoing
instrument, and acknowledged that he signed the same as his free and voluntary
act and deed for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year first above written.
- -----------------
OFFICIAL SEAL /s/ Cynthia M. Brault
STATE OF ALASKA -------------------------------
CYNTHIA M. BRAULT Notary Public in and for Alaska
NOTARY PUBLIC My commission expires: 3/26/97
- -----------------
The S.I.C. code for Communication Services is 4899.
Articles of Incorporation Page 4 of 4
ATU Communications, Inc.
<PAGE>
8a. Names and addresses of the directors:
Dr. Alex Mills
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Bonnie Godfried
c/o Anchorage Telephone Utility Filed for Record
600 Telephone Avenue State of Alaska
Anchorage, Alaska 99503
MAR 15 1994
Michael J. Burns
c/o Anchorage Telephone Utility Department of Commerce
600 Telephone Avenue and Economic Development
Anchorage, Alaska 99503
Dr. Richard Ender
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
B. John Shipe
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
<PAGE>
52437
ATU COMMUNICATIONS, INC.
600 Telephone Avenue
Anchorage, Alaska 99503-6091
(907) 564-1380
- --------------------------------------------------------------------------------
April 10, 1996
Filed for Record
State of Alaska
ARP 15 1996
Department of Commerce
& Economic Development
State of Alaska
Department of Commerce
and Economic Development
Division of Banking, Securities
and Corporations
P.O. Box 110808
Juneau, AK 99811-0808
Re: Notice of Change in Officers and Directors
Dear Sir or Madam:
This is to notify you of changes in officers and directors of ATU
Communications, Inc. The officers and directors of the corporation are as
follows:
0ffice Current Officer Replacing
- ------ --------------- ---------
President Thomas C. Edrington James G. Morrison
Secretary Melphine E. Reynolds
Treasurer Melphine E. Reynolds
Current Director Replacing
- --------------- ---------
Ronald D. Kerr B. John Shipe
c/o Anchorage Telephone Utility c/o Anchorage Telephone Utility
600 Telephone Avenue 600 Telephone Avenue
Anchorage, AK 99503 Anchorage, AK 99503
R G. Birkinshaw Dr. Alex Hills
c/o Anchorage Telephone Utility c/o Anchorage Telephone Utility
600 Telephone Avenue 600 Telephone Avenue
Anchorage, Alaska 99503 Anchorage, AK 99503
<PAGE>
Division of Corporations
April 10, 1996
Page 2
Current Director Replacing
- ---------------- ---------
Michael J. Burns Not Applicable
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, AK 99503
Dr. Richard L. Ender Not Applicable
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Bonnie Godfred Not Applicable
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
If you have any questions please feel free to call Robert Vasquez at (907)
564-1627.
Thank you.
Sincerely,
ATU COMMUNICATIONS
/s/ Thomas C. Edrington
Thomas C. Edrington
President/Chief Executive Officer
<PAGE>
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
I certify that the attached 13 pages are true copies of records on file with the
Department of Commerce and Economic Development, Division of Banking,
Securities, and Corporations.
[SEAL] Deborah B. Sedwick
Commissioner
Certified by: /s/ Gina Markovich
------------------
Date: May 6, 1999
--------------------------
================================================================================
<PAGE>
FILE NO.: 53555-D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
INCORPORATION
Business Corporation
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that duplicate originals of the Articles of
Incorporation of
ATU LONG DISTANCE INC.
have been received in this office and are found to conform to law.
ACCORDINGLY, the undersigned, as such Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
the Certificate of Incorporation and attaches hereto a duplicate original of the
Articles of Incorporation.
[SEAL] IN TESTIMONY WHEREOF, I execute this certificate
and affix the Great Seal of the State of Alaska on
April 05, 1994.
/s/ Paul Fuhs
Paul Fuhs
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
Issued By Corporations Section, P.O. Box 110808, Juneau, Alaska 99811 0808
Telephone (907) 465-2530
================================================================================
<PAGE>
Filed for Record
State of Alaska
APR [ILLEGIBLE] 1994
Department of Commerce
and Economic Development
ARTICLES OF INCORPORATION
OF
ATU LONG DISTANCE INC.
The undersigned natural person of the age of eighteen years or more,
acting as incorporator of the corporation under the Alaska Corporations Code,
adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation shall be ATU Long Distance Inc.
ARTICLE II
This corporation's duration shall be perpetual.
ARTICLE III
The purpose or purposes for which the corporation is organized are:
Section 1. To engage in the business of providing telecommunication
services, and services useful to the telecommunications industry.
Section 2. In general, to carry on any other lawful business whatsoever in
connection with the foregoing which is calculated, directly or indirectly, to
promote the interest of the corporation or to enhance the value of its
properties.
Section 3. To engage in and carry on any lawful business or trade and
exercise all powers granted to a corporation formed under the Alaska
Corporations Code, including any amendments thereto or successor statute that
may hereinafter be enacted.
ARTICLE IV
The aggregate number of shares which the corporation shall have the
authority to issue is 1,000 shares of common stock having a par value of one
dollar ($1.00) per share. There shall be no other class or shares of stock in
this corporation.
Articles of Incorporation Page 1 of 4
ATU Long Distance Inc.
<PAGE>
ARTICLE V
The owners of shares of stock of this corporation shall be entitled to
preemptive rights to subscribe for or purchase any part of new or additional
issues of stock or securities convertible into stock of any class whatsoever
whether now or hereafter authorized, and whether issued for cash, property,
service, by way of dividends, or otherwise.
ARTICLE VI
Each shareholder entitled to vote at any election for directors shall have
the right to vote, in person or by proxy, the number of shares owned by him for
as many persons as there are directors to be elected and for whose election he
has a right to vote by giving as many votes as the number of such directors
multiplied by the number of his shares shall equal, or by distributing such
votes on the same principle among any number of candidates.
ARTICLE VII
Fifty-one percent of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum of a meeting
of shareholders.
ARTICLE VIII
Section 1. The board of directors shall have full power to adopt, alter,
amend, or repeal the Bylaws or adopt new Bylaws. Nothing herein shall deny the
concurrent power of the shareholders to adopt, alter, amend, or repeal the
Bylaws.
Section 2. This corporation reserves the right to amend, alter, change or
repeal any provisions contained in its Articles of Incorporation in any manner
now or hereafter prescribed or permitted by statute. All rights of shareholders
of this corporation are granted subject to this reservation.
Section 3. Subject to the requirements of Anchorage Municipal Code
1.15.180, this corporation may enter into contracts and otherwise transact
business as vendor, purchaser, or otherwise, with its directors, officers, and
shareholder(s) and with corporations, associations, firms and entities in which
they are or may be or become interested as directors, officers, shareholders,
members, or otherwise.
Articles of Incorporation Page 2 of 4
ATU Long Distance Inc.
<PAGE>
ARTICLE IX
The address of the initial registered office of the corporation is c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503 and
the name of its initial registered agent at such address is Robert L. Vasquez.
ARTICLE X
The number, qualifications, terms of office, manner of election, time and
place of meetings, and powers and duties of the directors shall be prescribed in
the Bylaws, but the number of the first directors shall be five and they shall
serve until the first meeting of the shareholders and until their successors are
elected and qualified, and their names and post office address are as follows:
Dr. Alex Hills
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Bonnie Godfred
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Michael J. Burns
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Dr. Richard Ender
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
B. John Shipe
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
ARTICLE XI
The name and address of the incorporator is: James G. Morrison, c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503.
Articles of Incorporation Page 3 of 4
ATU Long Distance Inc.
<PAGE>
ARTICLE XII
This corporation does not have an alien affiliate as defined in A.S.
10.06.730.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation in duplicate this 30th day of March, 1994.
/s/ James G. Morrison
---------------------
JAMES G. MORRISON
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
0n this 30th day of March, 1994, before me, a Notary Public in and for the
State of Alaska, personally appeared James G. Morrison, to me known to be the
individual described in and who executed the within and foregoing instrument,
and acknowledged that he signed the same as his free and voluntary act and deed
for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year first above written.
- -----------------
OFFICIAL SEAL /s/ Cynthia M. Brault
STATE OF ALASKA -------------------------------
CYNTHIA M. BRAULT Notary Public in and for Alaska
NOTARY PUBLIC My commission expires: 3/26/97
- -----------------
The S.I.C. code ATU Long Distance Inc. is 4899.
Articles of Incorporation Page 4 of 4
ATU Long Distance Inc.
<PAGE>
FILE NO.: 52437-D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
INCORPORATION
Business Corporation
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that duplicate originals of the Articles of
Incorporation of
ATU COMMUNICATIONS, INC.
have been received in this office and are found to conform to law.
ACCORDINGLY, the undersigned, as such Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
the Certificate of Incorporation and attaches hereto a duplicate original of the
Articles of Incorporation.
[SEAL] IN TESTIMONY WHEREOF, I execute this certificate
and affix the Great Seal of the State of Alaska on
October 7, 1993.
/s/ Paul Fuhs
Paul Fuhs
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
Issued By Corporations Section, P.O. Box 110808, Juneau, Alaska 99811 0808
Telephone (907) 465-2530
================================================================================
<PAGE>
Filed for Record
State of Alaska
OCT 07 1993
Department of Commerce
and Economic Development
ARTICLES OF INCORPORATION
OF
ATU COMMUNICATIONS, INC.
The undersigned natural person of the age of eighteen years or more,
acting as incorporator of the corporation under the Alaska Corporations Code (AS
10.06) adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation shall be ATU Communications, Inc.
ARTICLE II
This corporation's duration shall be perpetual.
ARTICLE III
The purpose or purposes for which the corporation is organized are:
Section 1. To engage in the business of providing telecommunication
services, and services useful to the telecommunications industry.
Section 2. In general, to carry on any other lawful business whatsoever in
connection with the foregoing which is calculated, directly or indirectly, to
promote the interest of the corporation or to enhance the value of its
properties.
Section 3. To engage in and carry on any lawful business or trade and
exercise all powers granted to a corporation formed under the Alaska
Corporations Code, including any amendments thereto or successor statute that
may hereinafter be enacted.
ARTICLE IV
The aggregate number of shares which the corporation shall have the
authority to issue is 1,000 shares of common stock having a par value of one
dollar ($1.00) per share. There shall be no other class or shares of stock in
this corporation.
Articles of Incorporation Page 1 of 4
ATU Communications, Inc.
<PAGE>
ARTICLE V
The owners of shares of stock of this corporation shall be entitled to
preemptive rights to subscribe for or purchase any part of new or additional
issues of stock or securities convertible into stock of any class whatsoever
whether now or hereafter authorized, and whether issued for cash, property,
service, by way of dividends, or otherwise.
ARTICLE VI
Each shareholder entitled to vote at any election for directors shall have
the right to vote, in person or by proxy, the number of shares owned by him for
as many persons as there are directors to be elected and for whose election he
has a right to vote by giving as many votes as the number of such directors
multiplied by the number of his shares shall equal, or by distributing such
votes on the same principle among any number of candidates.
ARTICLE VII
Fifty-one percent of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum of a meeting
of shareholders.
ARTICLE VIII
Section 1. The board of directors shall have full power to adopt, alter,
amend, or repeal the Bylaws or adopt new Bylaws. Nothing herein shall deny the
concurrent power of the shareholders to adopt, alter, amend, or repeal the
Bylaws.
Section 2. This corporation reserves the right to amend, alter, change or
repeal any provisions contained in its Articles of Incorporation in any manner
now or hereafter prescribed or permitted by statute. All rights of shareholders
of this corporation are granted subject to this reservation.
Section 3. Subject to the requirements of Anchorage Municipal Code
1.15.180, this corporation may enter into contracts and otherwise transact
business as vendor, purchaser, or otherwise, with its directors, officers, and
shareholder(s) and with corporations, associations, firms and entities in which
they are or may be or become interested as directors, officers, shareholders,
members, or otherwise.
Articles of Incorporation Page 2 of 4
ATU Communications, Inc.
<PAGE>
ARTICLE IX
The address of the initial registered office of the corporation is c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503 and
the name of its initial registered agent at such address is Robert L. Vasquez.
ARTICLE X
The number, qualifications, terms of office, manner of election, time and
place of meetings, and powers and duties of the directors shall be prescribed in
the Bylaws, but the number of the first directors shall be five and they shall
serve until the first meeting of the shareholders and until their successors are
elected and qualified, and their names and post office address are as follows:
Dr. Alex Hills
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Bonnie Godfred
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Michael J. Burns
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Dr. Richard Ender
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
B. John Shipe
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
ARTICLE XI
The name and address of the incorporator is: James G. Morrison, c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503.
Articles of Incorporation Page 3 of 4
ATU Communications, Inc.
<PAGE>
ARTICLE XII
This corporation does not have an alien affiliate as defined in A.S.
10.06.730.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation in duplicate this 27th day of September, 1993.
/s/ James G. Morrison
---------------------
JAMES G. MORRISON
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
0n this 27th day of September, 1993, before me, a Notary Public in and
for the State of Alaska, personally appeared James G. Morrison, to me known to
be the individual described in and who executed the within and foregoing
instrument, and acknowledged that he signed the same as his free and voluntary
act and deed for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year first above written.
- -----------------
OFFICIAL SEAL /s/ Cynthia M. Brault
STATE OF ALASKA -------------------------------
CYNTHIA M. BRAULT Notary Public in and for Alaska
NOTARY PUBLIC My commission expires: 3/26/97
- -----------------
The S.I.C. code for Communication Services is 4899.
Articles of Incorporation Page 4 of 4
ATU Communications, Inc.
<PAGE>
8a. Names and addresses of the directors:
Dr. Alex Mills
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Bonnie Godfried
c/o Anchorage Telephone Utility Filed for Record
600 Telephone Avenue State of Alaska
Anchorage, Alaska 99503
MAR 15 1994
Michael J. Burns
c/o Anchorage Telephone Utility Department of Commerce
600 Telephone Avenue and Economic Development
Anchorage, Alaska 99503
Dr. Richard Ender
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
B. John Shipe
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
<PAGE>
52437
ATU COMMUNICATIONS, INC.
600 Telephone Avenue
Anchorage, Alaska 99503-6091
(907) 564-1380
- --------------------------------------------------------------------------------
April 10, 1996
Filed for Record
State of Alaska
APR 15 1996
Department of Commerce
& Economic Development
State of Alaska
Department of Commerce
and Economic Development
Division of Banking, Securities
and Corporations
P.O. Box 110808
Juneau, AK 99811-0808
Re: Notice of Change in Officers and Directors
Dear Sir or Madam:
This is to notify you of changes in officers and directors of ATU
Communications, Inc. The officers and directors of the corporation are as
follows:
0ffice Current Officer Replacing
- ------ --------------- ---------
President Thomas C. Edrington James G. Morrison
Secretary Melphine E. Reynolds
Treasurer Melphine E. Reynolds
Current Director Replacing
- ---------------- ---------
Ronald D. Kerr B. John Shipe
c/o Anchorage Telephone Utility c/o Anchorage Telephone Utility
600 Telephone Avenue 600 Telephone Avenue
Anchorage, AK 99503 Anchorage, AK 99503
R G. Birkinshaw Dr. Alex Hills
c/o Anchorage Telephone Utility c/o Anchorage Telephone Utility
600 Telephone Avenue 600 Telephone Avenue
Anchorage, Alaska 99503 Anchorage, AK 99503
<PAGE>
Division of Corporations
April 10, 1996
Page 2
Current Director Replacing
- ---------------- ---------
Michael J. Burns Not Applicable
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, AK 99503
Dr. Richard L. Ender Not Applicable
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Bonnie Godfred Not Applicable
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
If you have any questions please feel free to call Robert Vasquez at (907)
564-1627.
Thank you.
Sincerely,
ATU COMMUNICATIONS
/s/ Thomas C. Edrington
Thomas C. Edrington
President/Chief Executive Officer
<PAGE>
Exhibit 3.32
AMENDED AND RESTATED BYLAWS
OF
ATU LONG DISTANCE, INC.
1. CORPORATE OFFICES
1.1 Business Office. The principal office of the corporation shall
be located at any place whether within or outside the State of Alaska as
designated in the corporation's most current Annual Report filed with the
Commissioner of Commerce. The corporation may have such other offices, either
within or without the State of Alaska as the board of directors may designate or
as the business of the corporation may require from time to time.
1.2 Registered Office. The registered office of the corporation,
required by A.S. 10.06.150, shall be 510 L Street, Suite 500, Anchorage, Alaska
99501. The address of the registered office may be changed from time to time.
2. SHAREHOLDERS
2.1 Annual Meeting. The annual meeting of the shareholders of the
corporation shall be held within sixty (60) days of the close of the
corporation's fiscal year, at a time and date as determined by the board of
directors, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting.
2.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, described in the meeting notice, may be called by the board
of directors or the president, and shall be called by the president at the
request of the holders of not less than ten percent (10%) of all outstanding
votes of entitled to be cast on any issue at the meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Alaska as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consents, which may be in the form, of waivers of notice or otherwise,
all shareholders entitled to vote at the meeting designate a different place,
whether within or without the State of Alaska, as the place for the holding of
such meeting. If no designation is made by either the directors or unanimous
action of the voting shareholders, the place of meeting shall be the principal
office of the corporation in the State of Alaska.
- --------------------------------------------------------------------------------
BYLAWS Page 1 of 8
<PAGE>
2.4 Notice of Meeting. Written notice stating the place, day, and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting was called, shall unless otherwise prescribed by statute
or waived by the shareholders, be delivered not less than ten (10) days before
the date of the meeting, either personally or confirmed by telecopy, by or at
the direction of the President, or the Secretary, or the persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least thirty (30) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders. If
the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
2.6 Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make a complete list of
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address and the number of
shares held by each. Such list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
2.7 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
- --------------------------------------------------------------------------------
BYLAWS Page 2 of 8
<PAGE>
2.8 Proxies. At all meetings of shareholders, a shareholder may vote
in person or by proxy executed in writing by the shareholder or his or her duly
authorized attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
six (6) months from the date of its execution, unless otherwise provided in the
proxy.
2.9 Voting of Shares. Subject to the provisions of the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders.
2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent, or proxy as the
bylaws of such corporation may prescribe or, in the absence of such provisions,
as the board of directors of such corporation may determine, or, in the absence
of such determination, by the president or chairman of such corporation.
2.11 Informal Action by Shareholders. Unless otherwise provided by
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
3. BOARD OF DIRECTORS
3.1 General Powers. The board of directors shall manage the property
and business of the corporation and shall have and may exercise all of the
powers of the corporation, except such as are reserved to or may be conferred
upon the shareholders of the corporation. The directors shall have the power to
make and change from time to time rules and regulations not inconsistent with
these bylaws for the management of the business and affairs of the corporation.
3.2 Number, Tenure and Qualifications. The number of directors shall
be four as of the date of the adoption of these bylaws, and thereafter shall not
be less than three unless all of the outstanding shares are owned, beneficially
and of record by less than three shareholders, in which event the number of
Directors shall not be less than the number of shareholders. Each director shall
hold office until the next annual meeting of shareholders and until his or her
successor shall have been elected and qualified. In the event of the death,
resignation, or removal of a director, his or her successor or replacement shall
be chosen at a special meeting or at the next annual meeting of the
shareholders. A chairman of the board of directors may be selected by the
directors.
- --------------------------------------------------------------------------------
BYLAWS Page 3 of 8
<PAGE>
3.3 Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than these Bylaws immediately after, and at
the same place as, the annual meeting of shareholders. The board of directors
may provide, by resolution, the time and place for the holding of additional
regular meetings without other notice than such resolution.
3.4 Special Meetings. Special meetings of the board of directors may
be called by any director, who may fix the place for holding any special meeting
of the board of directors called by him or her.
3.5 Notice. Notice of any special meeting shall be given at least
ten (10) days previously thereto by written notice delivered personally or by
telecopy to each director at his or her business address. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
3.6 Quorum. The quorum of the board of directors shall consist of a
majority of directors, and any resolution or other action taken at a meeting of
the board of directors shall be adopted by an affirmative vote of a majority of
the directors present, except as otherwise provided in the bylaws or the
Articles of Incorporation. Meetings of the board of directors may be held by
telephone conference calls.
3.7 Action Without a Meeting. Any action that may be taken by the
board of directors at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all the
directors.
3.8 Vacancies. Any vacancy occurring in the board of directors may
be filled by a person or persons elected at a special or annual meeting of the
shareholders. A director elected to fill a vacancy caused by death, resignation,
or removal, or by reason of an increase in the number of directors shall be
elected for the unexpired terms of his or her predecessor or other directors in
the office.
3.9 Compensation. By resolution of the board of directors, each
director may be paid his or her expenses, if any, of attendance at each meeting
of the board of directors, including reasonable travel expenses. Otherwise,
directors shall serve without compensation. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
3.10 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the
- --------------------------------------------------------------------------------
BYLAWS Page 4 of 8
<PAGE>
minutes of the meeting or unless he or she shall file his or her written dissent
to such action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
3.11 Removal. Any director may be removed with or without cause at
any time by the shareholders at a special meeting called for that purpose and
may be removed for cause by action of the board of directors.
4. OFFICERS
4.1 Number. The officers of the corporation may be a President, a
Senior Vice President, a Secretary and a Treasurer, each of whom shall be
appointed by the board of directors. Such other officers and assistant officers
as may be deemed necessary may be elected or appointed by the board of
directors.
4.2 Election and Term of Office. The officers of the corporation to
be elected by the board of directors shall be elected annually by the board of
directors at the first meeting of the board of directors held after each meeting
of the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her death or until he or she
shall resign or shall have been removed in the manner hereinafter provided.
4.3 Removal. Any officer may be removed at the discretion of the
board of directors.
4.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
4.5 President. The President shall be the principal executive
officer of the corporation and, subject to the control of the board of
directors, shall in general supervise and control all of the business and
affairs of the corporation. The President shall, when present, preside at all
meetings of the shareholders and of the board of directors. He or she may sign,
with the Secretary or any other proper officer of the corporation thereunto
authorized by the board of directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts or other instruments which
the board of directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these bylaws or the Articles of Incorporation or some other
officer or agent of the
- --------------------------------------------------------------------------------
BYLAWS Page 5 of 8
<PAGE>
corporation, or shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the board of directors from time to time.
4.6 Senior Vice President. In the event of the death of the
President or the inability of the President to serve, the Senior Vice President
shall perform the duties of the President until the succeeding President is
elected, and while so acting, shall have all the powers of and be subject to all
the restrictions upon the President. The Senior Vice President shall perform
such other duties as from time to time may be assigned to him or her by the
board of directors.
4.7 Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President, certificates
of shares of the corporation, the issuance of which shall have been authorized
by resolution of the board of directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the President or by the board of directors.
4.8 Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositaries as shall be selected by the board
of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him or her by the President or by the board of directors. If required by the
board of directors, the Treasurer shall give a bond for the faithful discharge
of his or her duties in such sum and with such surety or sureties as the board
of directors shall determine.
4.9 Salaries. The salaries of the officers shall be fixed from time
to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a director of
the corporation.
- --------------------------------------------------------------------------------
BYLAWS Page 6 of 8
<PAGE>
5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS
5.1 Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances or restricted by agreement, the
bylaws, or the Articles of Incorporation.
5.2 Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the board of directors. Such authority may be general or
confined to specific instances and, as limited by agreement, these bylaws, or
the Articles of Incorporation.
5.3 Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the corporation, shall be signed by such officer or officers, agent or agents
of the corporation and in such manner as shall from time to time be determined
by resolution of the board of directors.
5.4 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the board of directors may
select.
6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Certificates for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the board of
directors to do so, and sealed with the corporate seal. All certificates of
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
6.2 Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in
- --------------------------------------------------------------------------------
BYLAWS Page 7 of 8
<PAGE>
whose name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
7. FISCAL YEAR
7.1 The fiscal year of the corporation shall begin on the 1st day of
January and end on the 31st day of December of each year, unless the board of
directors, by resolution, establishes a different fiscal year.
8. DIVIDENDS
8.1 The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and the Articles of Incorporation.
9. WAIVER OF NOTICE
9.1 Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the corporation under the
provisions of these bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the Alaska Business Corporation Act, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated herein shall be deemed
equivalent to the giving of such notice.
10. AMENDMENTS
10.1 These bylaws may be altered, amended, or repealed and new
bylaws may be adopted by the board of directors at any regular or
special meeting of the board of directors.
11. CORPORATE SEAL
11.1 The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal".
- --------------------------------------------------------------------------------
BYLAWS Page 8 of 8
<PAGE>
EXHIBIT 3.33
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
I certify that the attached 5 pages are true copies of records on file with the
Department of Commerce and Economic Development, Division of Banking,
Securities, and Corporations.
Deborah B. Sedwick
Commissioner
[SEAL]
Certified by: /s/ Gina Markovich
----------------------
Date: May 11, 1999
------------------------------
================================================================================
<PAGE>
FILE NO. 52439-D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
INCORPORATION
Business Corporation
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that duplicate originals of the Articles of
Incorporation of
PENINSULA CELLULAR SERVICES, INC.
have been received in this office and are found to conform to law.
ACCORDINGLY, the undersigned, as such Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
the Certificate of Incorporation and attaches hereto a duplicate original of the
Articles of Incorporation.
[SEAL] IN TESTIMONY WHEREOF, I execute this certificate and
affix the Great Seal of the State of Alaska on
October 7, 1993.
/s/ Paul Fuhs
Paul Fuhs
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
Issued By: Corporations Section, P.O. Box 110808, Juneau, Alaska 99811-0808,
Telephone (907) 465-2530
================================================================================
<PAGE>
Filed for Record
State of Alaska
OCT 07 1993
Department of Commerce
and Economic Development
ARTICLES OF INCORPORATION
OF
PENINSULA CELLULAR SERVICES, INC.
The undersigned natural person of the age of eighteen years or more,
acting as incorporator of the corporation under the Alaska Corporations Code
(AS 10.06) adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation shall be Peninsula Cellular Services, Inc.
ARTICLE II
This corporation's duration shall be perpetual.
ARTICLE III
The purpose or purposes for which the corporation is organized are:
Section 1. To engage in the business of providing telecommunication
services, and services useful to the telecommunications industry.
Section 2. In general, to carry on any other lawful business whatsoever in
connection with the foregoing which is calculated, directly or indirectly, to
promote the interest of the corporation or to enhance the value of its
properties.
Section 3. To engage in and carry on any lawful business or trade and
exercise all powers granted to a corporation formed under the Alaska
Corporations Code, including any amendments thereto or successor statute that
may hereinafter be enacted.
ARTICLE IV
The aggregate number of shares which the corporation shall have the
authority to issue is 1,000 shares of common stock having a par value of one
dollar ($1.00) per share. There shall be no other class or shares of stock in
this corporation.
Articles of Incorporation Page 1 of 4
Peninsula Cellular Services, Inc.
<PAGE>
ARTICLE V
The owners of shares of stock of this corporation shall be entitled to
preemptive rights to subscribe for or purchase any part of new or additional
issues of stock or securities convertible into stock of any class whatsoever
whether now or hereafter authorized, and whether issued for cash, property,
service, by way of dividends, or otherwise.
ARTICLE VI
Each shareholder entitled to vote at any election for directors shall have
the right to vote, in person or by proxy, the number of shares owned by him for
as many persons as there are directors to be elected and for whose election he
has a right to vote by giving as many votes as the number of such directors
multiplied by the number of his shares shall equal, or by distributing such
votes on the same principle among any number of candidates.
ARTICLE VII
Fifty-one percent of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum of a meeting
of shareholders.
ARTICLE VIII
Section 1. The board of directors shall have full power to adopt, alter,
amend, or repeal the Bylaws or adopt new Bylaws. Nothing herein shall deny the
concurrent power of the shareholders to adopt, alter, amend, or repeal the
Bylaws.
Section 2. This corporation reserves the right to amend, alter, change or
repeal any provisions contained in its Articles of Incorporation in any manner
now or hereafter prescribed or permitted by statute. All rights of shareholders
of this corporation are granted subject to this reservation.
Section 3. Subject to the requirements of Anchorage Municipal Code
1.15.180, this corporation may enter into contracts and otherwise transact
business as vendor, purchaser, or otherwise, with its directors, officers, and
shareholder(s) and with corporations, associations, firms and entities in which
they are or may be or become interested as directors, officers, shareholders,
members, or otherwise.
Articles of Incorporation Page 2 of 4
Peninsula Cellular Services, Inc.
<PAGE>
ARTICLE IX
The address of the initial registered office of the corporation is c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503 and
the name of its initial registered agent at such address is Robert L. Vasquez.
ARTICLE X
The number, qualifications, terms of office, manner of election, time and
place of meetings, and powers and duties of the directors shall be prescribed in
the Bylaws, but the number of the first directors shall be five and they shall
serve until the first meeting of the shareholders and until their successors are
elected and qualified, and their names and post office address are as follows:
Dr. Alex Hills
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Bonnie Godfred
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Michael J. Burns
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Dr. Richard Ender
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
B. John Shipe
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
ARTICLE XI
The name and address of the incorporator is: James G. Morrison, c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503.
Articles of Incorporation Page 3 of 4
Peninsula Cellular Services, Inc.
<PAGE>
ARTICLE XII
This corporation does not have an alien affiliate as defined in
A.S. 10.06.730.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation in duplicate this 27th day of September, 1993.
/s/ James G. Morrison
---------------------
JAMES G. MORRISON
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
On this 27th day of September, 1993, before me, a Notary Public in and for
the State of Alaska, personally appeared James G. Morrison, to me known to be
the individual described in and who executed the within and foregoing
instrument, and acknowledged that he signed the same as his free and voluntary
act and deed for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year first above written.
/s/ Cynthia M. Brault
----------------- -------------------------------------
OFFICIAL SEAL Notary Public in and for Alaska
STATE OF ALASKA My commission expires: 3/26/97
CYNTHIA M. BRAULT
NOTARY PUBLIC
-----------------
The S.I.C. code for Communication Services is 4899.
Articles of Incorporation Page 4 of 4
Peninsula Cellular Services, Inc.
<PAGE>
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
I certify that the attached 5 pages are true copies of records on file with the
Department of Commerce and Economic Development, Division of Banking,
Securities, and Corporations.
Deborah B. Sedwick
Commissioner
[SEAL]
Certified by: /s/ Gina Markovich
----------------------
Date: May 6, 1999
------------------------------
================================================================================
<PAGE>
FILE NO. 52439-D
================================================================================
State of Alaska
Department of Commerce and Economic Development
Division of Banking, Securities and Corporations
CERTIFICATE
OF
INCORPORATION
Business Corporation
The undersigned, as Commissioner of Commerce and Economic Development of the
State of Alaska, hereby certifies that duplicate originals of the Articles of
Incorporation of
PENINSULA CELLULAR SERVICES, INC.
have been received in this office and are found to conform to law.
ACCORDINGLY, the undersigned, as such Commissioner of Commerce and Economic
Development, and by virtue of the authority vested in him by law, hereby issues
the Certificate of Incorporation and attaches hereto a duplicate original of the
Articles of Incorporation.
[SEAL] IN TESTIMONY WHEREOF, I execute this certificate and
affix the Great Seal of the State of Alaska on
October 7, 1993.
/s/ Paul Fuhs
Paul Fuhs
COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT
Issued By: Corporations Section, P.O. Box 110808, Juneau, Alaska 99811-0808,
Telephone (907) 465-2530
================================================================================
<PAGE>
Filed for Record
State of Alaska
OCT 07 1993
Department of Commerce
and Economic Development
ARTICLES OF INCORPORATION
OF
PENINSULA CELLULAR SERVICES, INC.
The undersigned natural person of the age of eighteen years or more,
acting as incorporator of the corporation under the Alaska Corporations Code
(AS 10.06) adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation shall be Peninsula Cellular Services, Inc.
ARTICLE II
This corporation's duration shall be perpetual.
ARTICLE III
The purpose or purposes for which the corporation is organized are:
Section 1. To engage in the business of providing telecommunication
services, and services useful to the telecommunications industry.
Section 2. In general, to carry on any other lawful business whatsoever in
connection with the foregoing which is calculated, directly or indirectly, to
promote the interest of the corporation or to enhance the value of its
properties.
Section 3. To engage in and carry on any lawful business or trade and
exercise all powers granted to a corporation formed under the Alaska
Corporations Code, including any amendments thereto or successor statute that
may hereinafter be enacted.
ARTICLE IV
The aggregate number of shares which the corporation shall have the
authority to issue is 1,000 shares of common stock having a par value of one
dollar ($1.00) per share. There shall be no other class or shares of stock in
this corporation.
Articles of Incorporation Page 1 of 4
Peninsula Cellular Services, Inc.
<PAGE>
ARTICLE V
The owners of shares of stock of this corporation shall be entitled to
preemptive rights to subscribe for or purchase any part of new or additional
issues of stock or securities convertible into stock of any class whatsoever
whether now or hereafter authorized, and whether issued for cash, property,
service, by way of dividends, or otherwise.
ARTICLE VI
Each shareholder entitled to vote at any election for directors shall have
the right to vote, in person or by proxy, the number of shares owned by him for
as many persons as there are directors to be elected and for whose election he
has a right to vote by giving as many votes as the number of such directors
multiplied by the number of his shares shall equal, or by distributing such
votes on the same principle among any number of candidates.
ARTICLE VII
Fifty-one percent of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum of a meeting
of shareholders.
ARTICLE VIII
Section 1. The board of directors shall have full power to adopt, alter,
amend, or repeal the Bylaws or adopt new Bylaws. Nothing herein shall deny the
concurrent power of the shareholders to adopt, alter, amend, or repeal the
Bylaws.
Section 2. This corporation reserves the right to amend, alter, change or
repeal any provisions contained in its Articles of Incorporation in any manner
now or hereafter prescribed or permitted by statute. All rights of shareholders
of this corporation are granted subject to this reservation.
Section 3. Subject to the requirements of Anchorage Municipal Code
1.15.180, this corporation may enter into contracts and otherwise transact
business as vendor, purchaser, or otherwise, with its directors, officers, and
shareholder(s) and with corporations, associations, firms and entities in which
they are or may be or become interested as directors, officers, shareholders,
members, or otherwise.
Articles of Incorporation Page 2 of 4
Peninsula Cellular Services, Inc.
<PAGE>
ARTICLE IX
The address of the initial registered office of the corporation is c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503 and
the name of its initial registered agent at such address is Robert L. Vasquez.
ARTICLE X
The number, qualifications, terms of office, manner of election, time and
place of meetings, and powers and duties of the directors shall be prescribed in
the Bylaws, but the number of the first directors shall be five and they shall
serve until the first meeting of the shareholders and until their successors are
elected and qualified, and their names and post office address are as follows:
Dr. Alex Hills
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Bonnie Godfred
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Michael J. Burns
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
Dr. Richard Ender
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
B. John Shipe
c/o Anchorage Telephone Utility
600 Telephone Avenue
Anchorage, Alaska 99503
ARTICLE XI
The name and address of the incorporator is: James G. Morrison, c/o
Anchorage Telephone Utility, 600 Telephone Avenue, Anchorage, Alaska 99503.
Articles of Incorporation Page 3 of 4
Peninsula Cellular Services, Inc.
<PAGE>
ARTICLE XII
This corporation does not have an alien affiliate as defined in
A.S. 10.06.730.
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation in duplicate this 27th day of September, 1993.
/s/ James G. Morrison
---------------------
JAMES G. MORRISON
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
On this 27th day of September, 1993, before me, a Notary Public in and for
the State of Alaska, personally appeared James G. Morrison, to me known to be
the individual described in and who executed the within and foregoing
instrument, and acknowledged that he signed the same as his free and voluntary
act and deed for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day
and year first above written.
- ----------------- /s/ Cynthia M. Brault
OFFICIAL SEAL -------------------------------------
STATE OF ALASKA Notary Public in and for Alaska
CYNTHIA M. BRAULT My commission expires: 3/26/97
NOTARY PUBLIC
- -----------------
The S.I.C. code for Communication Services is 4899.
Articles of Incorporation Page 4 of 4
Peninsula Cellular Services, Inc.
<PAGE>
Exhibit 3.34
AMENDED AND RESTATED BYLAWS
OF
PENNISULA CELLULAR SERVICES, INC.
1. CORPORATE OFFICES
1.1 Business Office. The principal office of the corporation shall
be located at any place whether within or outside the State of Alaska as
designated in the corporation's most current Annual Report filed with the
Commissioner of Commerce. The corporation may have such other offices, either
within or without the State of Alaska as the board of directors may designate or
as the business of the corporation may require from time to time.
1.2 Registered Office. The registered office of the corporation,
required by A.S. 10.06.150, shall be 510 L Street, Suite 500, Anchorage, Alaska
99501. The address of the registered office may be changed from time to time.
2. SHAREHOLDERS
2.1 Annual Meeting. The annual meeting of the shareholders of the
corporation shall be held within sixty (60) days of the close of the
corporation's fiscal year, at a time and date as determined by the board of
directors, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting.
2.2 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, described in the meeting notice, may be called by the board
of directors or the president, and shall be called by the president at the
request of the holders of not less than ten percent (10%) of all outstanding
votes of entitled to be cast on any issue at the meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Alaska as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consents, which may be in the form, of waivers of notice or otherwise,
all shareholders entitled to vote at the meeting designate a different place,
whether within or without the State of Alaska, as the place for the holding of
such meeting. If no designation is made by either the directors or unanimous
action of the voting shareholders, the place of meeting shall be the principal
office of the corporation in the State of Alaska.
- --------------------------------------------------------------------------------
BYLAWS Page 1 of 8
<PAGE>
2.4 Notice of Meeting. Written notice stating the place, day, and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting was called, shall unless otherwise prescribed by statute
or waived by the shareholders, be delivered not less than ten (10) days before
the date of the meeting, either personally or confirmed by telecopy, by or at
the direction of the President, or the Secretary, or the persons calling the
meeting, to each shareholder of record entitled to vote at such meeting.
2.5 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed, in any case thirty (30) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least thirty (30) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders. If
the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof.
2.6 Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make a complete list of
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address and the number of
shares held by each. Such list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
2.7 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
- --------------------------------------------------------------------------------
BYLAWS Page 2 of 8
<PAGE>
2.8 Proxies. At all meetings of shareholders, a shareholder may vote
in person or by proxy executed in writing by the shareholder or his or her duly
authorized attorney in fact. Such proxy shall be filed with the secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
six (6) months from the date of its execution, unless otherwise provided in the
proxy.
2.9 Voting of Shares. Subject to the provisions of the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders.
2.10 Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent, or proxy as the
bylaws of such corporation may prescribe or, in the absence of such provisions,
as the board of directors of such corporation may determine, or, in the absence
of such determination, by the president or chairman of such corporation.
2.11 Informal Action by Shareholders. Unless otherwise provided by
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
3. BOARD OF DIRECTORS
3.1 General Powers. The board of directors shall manage the property
and business of the corporation and shall have and may exercise all of the
powers of the corporation, except such as are reserved to or may be conferred
upon the shareholders of the corporation. The directors shall have the power to
make and change from time to time rules and regulations not inconsistent with
these bylaws for the management of the business and affairs of the corporation.
3.2 Number, Tenure and Qualifications. The number of directors shall
be three as of the date of the adoption of these bylaws, and thereafter shall
not be less than three unless all of the outstanding shares are owned,
beneficially and of record by less than three shareholders, in which event the
number of Directors shall not be less than the number of shareholders. Each
director shall hold office until the next annual meeting of shareholders and
until his or her successor shall have been elected and qualified. In the event
of the death, resignation, or removal of a director, his or her successor or
replacement shall be chosen at a special meeting or at the next annual meeting
of the shareholders. A chairman of the board of directors may be selected by the
directors.
- --------------------------------------------------------------------------------
BYLAWS Page 3 of 8
<PAGE>
3.3 Regular Meetings. A regular meeting of the board of directors
shall be held without other notice than these Bylaws immediately after, and at
the same place as, the annual meeting of shareholders. The board of directors
may provide, by resolution, the time and place for the holding of additional
regular meetings without other notice than such resolution.
3.4 Special Meetings. Special meetings of the board of directors may
be called by any director, who may fix the place for holding any special meeting
of the board of directors called by him or her.
3.5 Notice. Notice of any special meeting shall be given at least
ten (10) days previously thereto by written notice delivered personally or by
telecopy to each director at his or her business address. Any director may waive
notice of any meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
3.6 Quorum. The quorum of the board of directors shall consist of a
majority of directors, and any resolution or other action taken at a meeting of
the board of directors shall be adopted by an affirmative vote of a majority of
the directors present, except as otherwise provided in the bylaws or the
Articles of Incorporation. Meetings of the board of directors may be held by
telephone conference calls.
3.7 Action Without a Meeting. Any action that may be taken by the
board of directors at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, shall be signed by all the
directors.
3.8 Vacancies. Any vacancy occurring in the board of directors may
be filled by a person or persons elected at a special or annual meeting of the
shareholders. A director elected to fill a vacancy caused by death, resignation,
or removal, or by reason of an increase in the number of directors shall be
elected for the unexpired terms of his or her predecessor or other directors in
the office.
3.9 Compensation. By resolution of the board of directors, each
director may be paid his or her expenses, if any, of attendance at each meeting
of the board of directors, including reasonable travel expenses. Otherwise,
directors shall serve without compensation. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
3.10 Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the
- --------------------------------------------------------------------------------
BYLAWS Page 4 of 8
<PAGE>
minutes of the meeting or unless he or she shall file his or her written dissent
to such action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
3.11 Removal. Any director may be removed with or without cause at
any time by the shareholders at a special meeting called for that purpose and
may be removed for cause by action of the board of directors.
4. OFFICERS
4.1 Number. The officers of the corporation may be a President, a
Senior Vice President, a Secretary and a Treasurer, each of whom shall be
appointed by the board of directors. Such other officers and assistant officers
as may be deemed necessary may be elected or appointed by the board of
directors.
4.2 Election and Term of Office. The officers of the corporation to
be elected by the board of directors shall be elected annually by the board of
directors at the first meeting of the board of directors held after each meeting
of the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may be.
Each officer shall hold office until his or her successor shall have been duly
elected and shall have qualified or until his or her death or until he or she
shall resign or shall have been removed in the manner hereinafter provided.
4.3 Removal. Any officer may be removed at the discretion of the
board of directors.
4.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, may be filled by the board
of directors for the unexpired portion of the term.
4.5 President. The President shall be the principal executive
officer of the corporation and, subject to the control of the board of
directors, shall in general supervise and control all of the business and
affairs of the corporation. The President shall, when present, preside at all
meetings of the shareholders and of the board of directors. He or she may sign,
with the Secretary or any other proper officer of the corporation thereunto
authorized by the board of directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts or other instruments which
the board of directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these bylaws or the Articles of Incorporation or some other
officer or agent of the
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BYLAWS Page 5 of 8
<PAGE>
corporation, or shall be required by law to be otherwise signed or executed; and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the board of directors from time to time.
4.6 Senior Vice President. In the event of the death of the
President or the inability of the President to serve, the Senior Vice President
shall perform the duties of the President until the succeeding President is
elected, and while so acting, shall have all the powers of and be subject to all
the restrictions upon the President. The Senior Vice President shall perform
such other duties as from time to time may be assigned to him or her by the
board of directors.
4.7 Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President, certificates
of shares of the corporation, the issuance of which shall have been authorized
by resolution of the board of directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the President or by the board of directors.
4.8 Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies, or other depositaries as shall be selected by the board
of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him or her by the President or by the board of directors. If required by the
board of directors, the Treasurer shall give a bond for the faithful discharge
of his or her duties in such sum and with such surety or sureties as the board
of directors shall determine.
4.9 Salaries. The salaries of the officers shall be fixed from time
to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he or she is also a director of
the corporation.
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BYLAWS Page 6 of 8
<PAGE>
5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS
5.1 Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances or restricted by agreement, the
bylaws, or the Articles of Incorporation.
5.2 Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the board of directors. Such authority may be general or
confined to specific instances and, as limited by agreement, these bylaws, or
the Articles of Incorporation.
5.3 Checks, Drafts, Etc. All checks, drafts or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the corporation, shall be signed by such officer or officers, agent or agents
of the corporation and in such manner as shall from time to time be determined
by resolution of the board of directors.
5.4 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the board of directors may
select.
6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Certificates for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the board of
directors to do so, and sealed with the corporate seal. All certificates of
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
6.2 Transfer of Shares. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his or her legal representative, who shall furnish proper
evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in
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BYLAWS Page 7 of 8
<PAGE>
whose name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
7. FISCAL YEAR
7.1 The fiscal year of the corporation shall begin on the 1st day of
January and end on the 31st day of December of each year, unless the board of
directors, by resolution, establishes a different fiscal year.
8. DIVIDENDS
8.1 The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and the Articles of Incorporation.
9. WAIVER OF NOTICE
9.1 Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the corporation under the
provisions of these bylaws or under the provisions of the Articles of
Incorporation or under the provisions of the Alaska Business Corporation Act, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated herein shall be deemed
equivalent to the giving of such notice.
10. AMENDMENTS
10.1 These bylaws may be altered, amended, or repealed and new
bylaws may be adopted by the board of directors at any regular or special
meeting of the board of directors.
11. CORPORATE SEAL
11.1 The board of directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate Seal".
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BYLAWS Page 8 of 8
<PAGE>
EXHIBIT 3.35
State of Delaware PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THAT "PTINET, INC." IS DULY INCORPORATED UNDER THE LAWS OF THE STATE OF
DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE NOT HAVING
BEEN CANCELLED OR DISSOLVED SO FAR AS THE RECORDS OF THIS OFFICE SHOW AND IS
DULY AUTHORIZED TO TRANSACT BUSINESS.
THE FOLLOWING DOCUMENTS HAVE BEEN FILED:
CERTIFICATE OF INCORPORATION, FILED THE SIXTH DAY OF NOVEMBER, A.D. 1998,
AT 11:45 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "ACS LICENSE SUB, INC."
TO "PTINET, INC.", FILED THE TENTH DAY OF MAY, A.D. 1999, AT 11:30 O'CLOCK A.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CERTIFICATES ARE THE
ONLY CERTIFICATES ON RECORD OF THE AFORESAID CORPORATION.
AND I DO HEREBY FURTHER CERTIFY THAT THE SAID "PTINET, INC." WAS
INCORPORATED ON THE SIXTH DAY OF NOVEMBER, A.D. 1998.
AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL REPORTS HAVE BEEN FILED TO
DATE.
AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE TAXES
[SEAL] /s/ Edward J. Freel
--------------------------------------
Edward J. Freel, Secretary of State
2963696 8310 AUTHENTICATION: 9739644
991188790 DATE: 05-12-99
<PAGE>
State of Delaware PAGE 2
Office of the Secretary of State
--------------------------------
HAVE BEEN PAID TO DATE.
[SEAL] /s/ Edward J. Freel
--------------------------------------
Edward J. Freel, Secretary of State
2963696 8310 AUTHENTICATION: 9739644
991188790 DATE: 05-12-99
<PAGE>
State of Delaware PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "ACS LICENSE SUB, INC.", CHANGING ITS NAME FROM "ACS LICENSE SUB, INC." TO
"PTINET, INC.", FILED IN THIS OFFICE ON THE TENTH DAY OF MAY, A.D. 1999, AT
11:30 O'CLOCK A.M.
[SEAL] /s/ Edward J. Freel
--------------------------------------
Edward J. Freel, Secretary of State
2963696 8100 AUTHENTICATION: 9739902
991188807 DATE: 05-12-99
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 11:30 AM 05/10/1999
991184848 -- 2963696
ACS LICENSE SUB, INC.
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
ACS License Sub, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That by unanimous written consent of the members of the Board
of Directors of the Corporation, resolutions were duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of the Corporation and
declaring said amendment to be advisable. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Corporation's Certificate of Incorporation
be amended in accordance with Section 242 of the General Corporation
Law of the State of Delaware to change the name of the Corporation
to "PTINet, Inc."
SECOND: That Article I of the Corporation's Certificate of
Incorporation is hereby amended to read in its entirety as follows:
"The name of the Corporation (which is hereinafter referred to as
the "Corporation") is:
PTINet, Inc."
THIRD: That in lieu of a meeting and vote of stockholders, the sole
stockholder of the Corporation has given its written consent to said amendments
and said amendments were duly adopted in accordance with the applicable
provisions of Sections 242 and 228 of the General Corporation Law of the State
of Delaware.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, said ACS License Sub, Inc. has caused this
certificate to be signed by its Secretary, this 7 day of May, 1999.
By: /s/ Deborah J. Harwood
-----------------------------
Name: Deborah J. Harwood
Title: Secretary
[SIGNATURE PAGE TO CERTIFICATE OF AMENDMENT]
<PAGE>
Exhibit 3.36
BY-LAWS
OF
ACS LICENSE SUB, INC.
===========================
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of ACS License
Sub, Inc. (the "Corporation") shall be established and maintained at the office
of The Corporation Trust Company at The Corporation Trust Center, 1209 Orange
Street in the City of Wilmington, County of New Castle, State of Delaware, and
said Corporation Trust Company shall be the registered agent of the Corporation
in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for
the election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on the
next succeeding business day. At each annual meeting, the stockholders entitled
to vote shall elect a Board of Directors and they may transact such other
corporate business as shall be stated in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders
for any purpose or purposes may be called by the Chairman of the Board, the
President or the Secretary, or by resolution of the Board of Directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation of the Corporation and these
By-Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such
<PAGE>
proxy provides for a longer period. All elections for directors shall be decided
by plurality vote; all other questions shall be decided by majority vote except
as otherwise provided by the Certificate of Incorporation or the laws of the
State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at all
meetings of the stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted that might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat, at his
or her address as it appears on the records of the Corporation, not less than
ten nor more than sixty days before the date of the meeting. No business other
than that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by
the Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of stockholders may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
-2-
<PAGE>
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the
Corporation shall be managed under the direction of a Board of Directors. The
exact number of directors shall initially be three and may thereafter be fixed
from time to time by the Board of Directors. Directors shall be elected at the
annual meeting of stockholders and each director shall be elected to serve until
his or her successor shall be elected and shall qualify. A director need not be
a stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes
vacant, the remaining directors in the office, though less than a quorum, by a
majority vote, may appoint any qualified person to fill such vacancy, who shall
hold office for the unexpired term and until his or her successor shall be duly
chosen. If the office of any director becomes vacant and there are no remaining
directors, the stockholders, by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation, at a special
meeting called for such purpose, may appoint any qualified person to fill such
vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any director
or directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of the voting power entitled to
vote for the election of directors, at an annual meeting or a special meeting
called for the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares constituting a majority of
the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by resolution
or resolutions passed by a majority of the whole Board of Directors, designate
one or more committees, each committee to consist of one or more directors of
the Corporation.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it.
SECTION 6. MEETINGS -- The newly elected directors may hold their
first meeting for the purpose of organization and the transaction of business,
if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent of
all the Directors.
-3-
<PAGE>
Regular meetings of the Board of Directors may be held without
notice at such places and times as shall be determined from time to time by
resolution of the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President, or by the Secretary on the written
request of any director, on at least one day's notice to each director (except
that notice to any director may be waived in writing by such director) and shall
be held at such place or places as may be determined by the Board of Directors,
or as shall be stated in the call of the meeting.
Unless otherwise restricted by the Certificate of Incorporation of
the Corporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in any meeting
of the Board of Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned. The vote of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors unless the Certificate of Incorporation of the Corporation or these
By-Laws shall require the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board of Directors a fixed fee and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a written consent thereto is
signed by all members of the Board of Directors or of such committee, as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board of Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Vice Presidents, a Treasurer and
a Secretary, all of whom shall be elected by the Board of Directors and shall
hold office until their successors are
-4-
<PAGE>
duly elected and qualified. In addition, the Board of Directors may elect such
Assistant Secretaries and Assistant Treasurers as they may deem proper. The
Board of Directors may appoint such other officers and agents as it may deem
advisable, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall
be the Chief Executive Officer of the Corporation. He or she shall preside at
all meetings of the Board of Directors and shall have and perform such other
duties as may be assigned to him or her by the Board of Directors. The Chairman
of the Board shall have the power to execute bonds, mortgages and other
contracts on behalf of the Corporation, and to cause the seal of the Corporation
to be affixed to any instrument requiring it, and when so affixed the seal shall
be attested to by the signature of the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer.
SECTION 3. PRESIDENT -- The President shall be the Chief Operating
Officer of the Corporation. He or she shall have the general powers and duties
of supervision and management usually vested in the office of President of a
corporation. The President shall have the power to execute bonds, mortgages and
other contracts on behalf of the Corporation, and to cause the seal to be
affixed to any instrument requiring it, and when so affixed the seal shall be
attested to by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 4. VICE PRESIDENTS -- Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him or her by the
Board of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial
Officer of the Corporation. He or she shall have the custody of the Corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He or she shall deposit all
moneys and other valuables in the name and to the credit of the Corporation in
such depositaries as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, the Chairman of the Board, or the President, taking proper vouchers
for such disbursements. He or she shall render to the Chairman of the Board, the
President and Board of Directors at the regular meetings of the Board of
Directors, or whenever they may request it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation. If
required by the Board of Directors, he or she shall give the Corporation a bond
for the faithful discharge of his or her duties in such amount and with such
surety as the Board of Directors shall prescribe.
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and of the Board of Directors and
all other notices required by law or by these By-Laws, and in case of his or her
absence or refusal or neglect so to do, any such notice may be given by any
person thereunto directed by the Chairman of the Board or the President, or by
the Board of Directors, upon whose request the meeting is called as provided in
-5-
<PAGE>
these By-Laws. He or she shall record all the proceedings of the meetings of the
Board of Directors, any committees thereof and the stockholders of the
Corporation in a book to be kept for that purpose, and shall perform such other
duties as may be assigned to him or her by the Board of Directors, the Chairman
of the Board or the President. He or she shall have the custody of the seal of
the Corporation and shall affix the same to all instruments requiring it, when
authorized by the Board of Directors, the Chairman of the Board or the
President, and attest to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES --
Assistant Treasurers and Assistant Secretaries, if any, shall be elected and
shall have such powers and shall perform such duties as shall be assigned to
them, respectively, by the Board of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be
issued to each stockholder certifying the number of shares owned by such
stockholder in the Corporation. Certificates of stock of the Corporation shall
be of such form and device as the Board of Directors may from time to time
determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be
issued in the place of any certificate theretofore issued by the Corporation,
alleged to have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the
Corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the Corporation by
the delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Board of Directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date, which
-6-
<PAGE>
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors and which record date: (1) in
the case of determination of stockholders entitled to vote at any meeting of
stockholders or adjournment thereof, shall, unless otherwise required by law,
not be more than sixty nor less than ten days before the date of such meeting;
(2) in the case of determination of stockholders entitled to express consent to
corporate action in writing without a meeting, shall not be more than ten days
from the date upon which the resolution fixing the record date is adopted by the
Board of Directors; and (3) in the case of any other action, shall not be more
than sixty days prior to such other action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting when no prior action of
the Board of Directors is required by law, shall be the first day on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation in accordance with applicable law, or, if prior
action by the Board of Directors is required by law, shall be at the close of
business on the day on which the Board of Directors adopts the resolution taking
such prior action; and (3) the record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate
of Incorporation of the Corporation, the Board of Directors may, out of funds
legally available therefor at any regular or special meeting, declare dividends
upon stock of the Corporation as and when they deem appropriate. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of Directors
from time to time in their discretion deem proper for working capital or as a
reserve fund to meet contingencies or for equalizing dividends or for such other
purposes as the Board of Directors shall deem conducive to the interests of the
Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in
such form as shall be determined by resolution of the Board of Directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise imprinted upon the subject document or paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall
be determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or officers, or agent or agents,
of the Corporation, and in such manner as shall be determined from time to time
by resolution of the Board of Directors.
-7-
<PAGE>
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required to be given under these By-Laws, personal notice is not required unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his or her address as it appears on
the records of the Corporation, and such notice shall be deemed to have been
given on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by law.
Whenever any notice is required to be given under the provisions of any law, or
under the provisions of the Certificate of Incorporation of the Corporation or
of these By-Laws, a waiver thereof, in writing and signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual
meeting of the stockholders (or at any special meeting thereof if notice of such
proposed alteration, amendment or repeal to be considered is contained in the
notice of such special meeting) by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation. Except as
otherwise provided in the Certificate of Incorporation of the Corporation, the
Board of Directors may by majority vote of those present at any meeting at which
a quorum is present alter, amend or repeal these By-Laws, or enact such other
By-Laws as in their judgment may be advisable for the regulation and conduct of
the affairs of the Corporation.
-8-
<PAGE>
Exhibit 4.1
EXECUTION COPY
================================================================================
ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
9 3/8% Senior Subordinated Notes due 2009
---------------
INDENTURE
Dated as of May 14, 1999
---------------
IBJ WHITEHALL BANK & TRUST COMPANY,
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions ................................................... 1
SECTION 1.02. Other Definitions ............................................. 23
SECTION 1.03. Incorporation by Reference of Trust Indenture Act ............. 24
SECTION 1.04. Rules of Construction ......................................... 24
ARTICLE II
The Securities
SECTION 2.01. Form and Dating ............................................... 25
SECTION 2.02. Execution and Authentication .................................. 25
SECTION 2.03. Registrar and Paying Agent .................................... 26
SECTION 2.04. Paying Agent To Hold Money in Trust ........................... 26
SECTION 2.05. Securityholder Lists .......................................... 27
SECTION 2.06. Transfer and Exchange ......................................... 27
SECTION 2.07. Replacement Securities ........................................ 27
SECTION 2.08. Outstanding Securities ........................................ 28
SECTION 2.09. Temporary Securities .......................................... 28
SECTION 2.10. Cancelation ................................................... 29
SECTION 2.11. Defaulted Interest ............................................ 29
SECTION 2.12. CUSIP Numbers ................................................. 29
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee ............................................ 29
SECTION 3.02. Selection of Securities To Be Redeemed ........................ 29
SECTION 3.03. Notice of Redemption .......................................... 30
SECTION 3.04. Effect of Notice of Redemption ................................ 30
SECTION 3.05. Deposit of Redemption Price ................................... 31
SECTION 3.06. Securities Redeemed in Part ................................... 31
<PAGE>
Page
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ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities ......................................... 31
SECTION 4.02. SEC Reports ................................................... 31
SECTION 4.03. Limitation on Indebtedness .................................... 32
SECTION 4.04. Limitation on Restricted Payments ............................. 34
SECTION 4.05. Limitation on Restrictions on Distributions from Restricted
Subsidiaries ................................................ 38
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock ............ 39
SECTION 4.07. Limitation on Transactions with Affiliates .................... 43
SECTION 4.08. Change of Control ............................................. 44
SECTION 4.09. Compliance Certificate ........................................ 46
SECTION 4.10. Further Instruments and Acts .................................. 46
SECTION 4.11. Future Guarantors ............................................. 46
SECTION 4.12. Limitation on Lines of Business ............................... 46
SECTION 4.13. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries ..................................... 46
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets ..................... 47
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default ............................................. 48
SECTION 6.02. Acceleration .................................................. 50
SECTION 6.03. Other Remedies ................................................ 51
SECTION 6.04. Waiver of Past Defaults ....................................... 51
SECTION 6.05. Control by Majority ........................................... 51
SECTION 6.06. Limitation on Suits ........................................... 51
SECTION 6.07. Rights of Holders to Receive Payment .......................... 52
SECTION 6.08. Collection Suit by Trustee .................................... 52
SECTION 6.09. Trustee May File Proofs of Claim .............................. 52
SECTION 6.10. Priorities .................................................... 52
SECTION 6.11. Undertaking for Costs ......................................... 53
SECTION 6.12. Waiver of Stay or Extension Laws .............................. 53
<PAGE>
Page
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ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee ............................................. 53
SECTION 7.02. Rights of Trustee ............................................. 54
SECTION 7.03. Individual Rights of Trustee .................................. 55
SECTION 7.04. Trustee's Disclaimer .......................................... 55
SECTION 7.05. Notice of Defaults ............................................ 55
SECTION 7.06. Reports by Trustee to Holders ................................. 55
SECTION 7.07. Compensation and Indemnity .................................... 56
SECTION 7.08. Replacement of Trustee ........................................ 56
SECTION 7.09. Successor Trustee by Merger ................................... 57
SECTION 7.10. Eligibility; Disqualification ................................. 58
SECTION 7.11. Preferential Collection of Claims Against Company ............. 58
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance .............. 58
SECTION 8.02. Conditions to Defeasance ...................................... 59
SECTION 8.03. Application of Trust Money .................................... 60
SECTION 8.04. Repayment to Company .......................................... 60
SECTION 8.05. Indemnity for Government Obligations .......................... 60
SECTION 8.06. Reinstatement ................................................. 60
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders .................................... 61
SECTION 9.02. With Consent of Holders ....................................... 62
SECTION 9.03. Compliance with Trust Indenture Act ........................... 63
SECTION 9.04. Revocation and Effect of Consents and Waivers ................. 63
SECTION 9.05. Notation on or Exchange of Securities ......................... 63
SECTION 9.06. Trustee To Sign Amendments .................................... 63
<PAGE>
Page
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ARTICLE X
Subordination
SECTION 10.01. Agreement To Subordinate ..................................... 64
SECTION 10.02. Liquidation, Dissolution, Bankruptcy ......................... 64
SECTION 10.03. Default on Senior Indebtedness ............................... 65
SECTION 10.04. Acceleration of Payment of Securities ........................ 66
SECTION 10.05. When Distribution Must Be Paid Over .......................... 66
SECTION 10.06. Subrogation .................................................. 66
SECTION 10.07. Relative Rights .............................................. 67
SECTION 10.08. Subordination May Not Be Impaired by Company ................. 67
SECTION 10.09. Rights of Trustee and Paying Agent ........................... 67
SECTION 10.10. Distribution or Notice to Representative ..................... 67
SECTION 10.11. Article X Not To Prevent Events of Default or Limit Right To
Accelerate ................................................. 67
SECTION 10.12. Trust Moneys Not Subordinated ................................ 67
SECTION 10.13. Trustee Entitled To Rely ..................................... 68
SECTION 10.14. Trustee To Effectuate Subordination .......................... 68
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness ..... 68
SECTION 10.16. Reliance by Holders of Senior Indebtedness on Subordination
Provisions ................................................. 68
SECTION 10.17. Trustee's Compensation Not Prejudiced ........................ 69
ARTICLE XI
Guarantees
SECTION 11.01. Guarantees ................................................... 69
SECTION 11.02. Limitation on Liability ...................................... 71
SECTION 11.03. Successors and Assigns ....................................... 71
SECTION 11.04. No Waiver .................................................... 72
SECTION 11.05. Modification ................................................. 72
SECTION 11.06. Execution of Supplemental Indenture for Future Guarantors .... 72
ARTICLE XII
Subordination of the Guarantees
SECTION 12.01. Agreement To Subordinate ..................................... 72
SECTION 12.02. Liquidation, Dissolution, Bankruptcy ......................... 72
SECTION 12.03. Default on Designated Senior Indebtedness of a Guarantor ..... 73
SECTION 12.04. Demand for Payment ........................................... 74
SECTION 12.05. When Distribution Must Be Paid Over .......................... 75
<PAGE>
Page
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SECTION 12.06. Subrogation .................................................. 75
SECTION 12.07. Relative Rights .............................................. 75
SECTION 12.08. Subordination May Not Be Impaired by a Guarantor ............. 75
SECTION 12.09. Rights of Trustee and Paying Agent ........................... 75
SECTION 12.10. Distribution or Notice to Representative ..................... 76
SECTION 12.11. Article XII Not To Prevent Events of Default or Effect Right T
Demand Payment ............................................. 76
SECTION 12.12. Trustee Entitled To Rely ..................................... 76
SECTION 12.13. Trustee To Effectuate Subordination .......................... 76
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness of a
Guarantor .................................................. 76
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a Guarantor on
Subordination Provisions ................................... 77
SECTION 12.16. Defeasance ................................................... 77
ARTICLE XIII
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls ................................. 77
SECTION 13.02. Notices ...................................................... 77
SECTION 13.03. Communication by Holders with Other Holders .................. 78
SECTION 13.04. Certificate and Opinion as to Conditions Precedent ........... 78
SECTION 13.05. Statements Required in Certificate or Opinion ................ 78
SECTION 13.06. When Securities Disregarded .................................. 79
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar ................. 79
SECTION 13.08. Legal Holidays ............................................... 79
SECTION 13.09. GOVERNING LAW ................................................ 79
SECTION 13.10. No Recourse Against Others ................................... 79
SECTION 13.11. Successors ................................................... 79
SECTION 13.12. Multiple Originals ........................................... 80
SECTION 13.13. Table of Contents; Headings .................................. 80
Appendix A - Provisions Relating to Original Securities, Private Exchange
Securities and Exchange Securities
Exhibit A - Form of Face of Original
Exhibit B - Form of Face of Exchange Security
Exhibit C - Form of Supplemental Indenture
Exhibit D - Form of Transferee Letter of Representation
<PAGE>
INDENTURE dated as of May 14, 1999, among ALASKA
COMMUNICATIONS SYSTEMS HOLDINGS, INC. (formerly known as
ALEC Acquisition Corporation), a Delaware corporation
(the "Company"), and each of (i) ALEC HOLDINGS, INC., a
Delaware corporation ("Holdings"), (ii) TELEPHONE
UTILITIES OF ALASKA, INC., TELEPHONE UTILITIES OF THE
NORTHLAND, INC., PTI COMMUNICATIONS OF ALASKA, INC.,
PACIFIC TELECOM OF ALASKA PCS, INC., PACIFIC TELECOM
CELLULAR OF ALASKA, INC., (iii) ATU COMMUNICATIONS,
INC., MACTEL, INC., MACTEL FAIRBANKS, INC., ATU LONG
DISTANCE, INC., PENINSULA CELLULAR SERVICES, INC.,
PRUDHOE COMMUNICATIONS, INC., (iv) ALASKA COMMUNICATIONS
SYSTEMS, INC., ALEC ACQUISITION SUB CORP., MACTEL
LICENSE SUB, INC., MACTEL FAIRBANKS LICENSE SUB, INC.
and PTINET, INC. (collectively, the "Guarantors"), as
guarantors, and IBJ WHITEHALL BANK & TRUST COMPANY, a
New York banking corporation, as trustee (the
"Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of (i) the Company's 9 3/8%
Senior Subordinated Notes due 2009 issued on the date hereof (the "Original
Securities"), (ii) if and when issued as provided in the Registration Agreement
(as defined in Appendix A hereto (the "Appendix")), the Company's 9 3/8% Senior
Subordinated Notes due 2009 issued in the Registered Exchange Offer (as defined
in the Appendix) in exchange for any Original Securities (the "Exchange
Securities") and (iii) if and when issued as provided in the Registration
Agreement, the Private Exchange Securities (as defined in the Appendix, and
together with the Original Securities and any Exchange Securities issued
hereunder, the "Securities") issued in the Private Exchange (as defined in the
Appendix). Except as otherwise provided herein, the Securities will be limited
to $150,000,000 in aggregate principal amount outstanding.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Additional Amounts" means any liquidated damages payable pursuant
to any exchange agreement, registration rights agreement or similar agreement
entered into in connection with the Indenture.
"Additional Assets" means:
(1) any property or assets (other than Indebtedness and Capital
Stock) to be used by the Company or a Restricted Subsidiary in a Related
Business;
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2
(2) the Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by the
Company or another Restricted Subsidiary; or
(3) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described in clauses (2)
or (3) above is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.06 and 4.07 only, "Affiliate" shall also mean any
beneficial owner of shares representing 5% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of Holdings or the Company or of
rights or warrants to purchase such Voting Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation, or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of:
(1) any shares of Capital Stock of a Restricted Subsidiary (other
than directors' qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Restricted Subsidiary);
(2) all or substantially all the assets of any division or line of
business of the Company or any Restricted Subsidiary; or
(3) any other assets of the Company or any Restricted Subsidiary
outside of the ordinary course of business of the Company or such
Restricted Subsidiary;
(other than, in the case of (1), (2) and (3) above:
(a) a disposition by a Restricted Subsidiary to the Company or by
the Company or a Restricted Subsidiary to a Wholly Owned Subsidiary;
(b) for purposes of Section 4.06 only, a disposition subject to
Section 4.04;
(c) a disposition of assets with a fair market value of less than
$100,000;
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3
(d) a disposition of Temporary Cash Investments or goods held for
sale in the ordinary course of business or obsolete equipment or other
obsolete assets in the course of business consistent with past practices
of the Company;
(e) the disposition of all or substantially all of the assets of the
Company in a manner permitted under Section 5.01 or any disposition that
constitutes a Change of Control under the Indenture; and
(f) the lease, assignment or sub-lease of any real or personal
property in the ordinary course of business).
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing:
(1) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment
of such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by
(2) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in
respect of the Credit Agreement, the notes issued pursuant thereto, the
guarantees thereof, the collateral documents relating thereto and any
Refinancing Indebtedness with respect thereto, as amended from time to time,
including principal, premium (if any), interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Company whether or not a claim for post-filing interest is allowed in
such proceedings), fees, charges, expenses, reimbursement obligations,
guarantees and all other amounts payable thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of the Board of Directors
of the Company.
"Business Day" means each day that is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
<PAGE>
4
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be prepaid by the lessee
without payment of a penalty.
"Change of Control" means the occurrence of any of the following
events:
(1) prior to the earlier to occur of (a) the first public offering
of common stock of Holdings or (b) the first public offering of common
stock of the Company, the Permitted Holders, taken together, cease to be
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of a majority in the aggregate of
the total voting power of the Voting Stock of Holdings or the Company,
whether as a result of issuance of securities of Holdings or the Company,
any merger, consolidation, liquidation or dissolution of Holdings or the
Company, any direct or indirect transfer of securities by any Permitted
Holder or otherwise (for purposes of this clause (1) and clause (2) below,
the Permitted Holders shall be deemed to beneficially own any Voting Stock
of an entity (the "specified entity") held by any other entity (the
"parent entity") so long as the Permitted Holders beneficially own,
directly or indirectly, in the aggregate a majority of the voting power of
the Voting Stock of the parent entity);
(2) (a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders, is
or becomes the beneficial owner (as defined in clause (1) above, except
that for purposes of this clause (2) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of Holdings or the Company and (b) the
Permitted Holders beneficially own (as defined in clause (1) above),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of Holdings or the Company than such
other person and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of the
Board of Directors of Holdings or the Company, as the case may be (for the
purposes of this clause (2), such other person shall be deemed to
beneficially own any Voting Stock of a specified entity held by a parent
entity, if such other person is the beneficial owner (as defined in this
clause (2)), directly or indirectly, of more than 35% of the voting power
of the Voting Stock of such parent entity and the Permitted Holders
beneficially own (as defined in clause (1) above), directly or indirectly,
in the aggregate a lesser percentage of the voting power of the Voting
Stock of such parent entity and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority
of the board of directors of such parent entity);
(3) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Company or Holdings, as the case may be (together with any new directors
(a) whose election by such Board of Directors of Holdings or the Company,
as the case may be, or whose nomination for election by the
<PAGE>
5
shareholders of Holdings or the Company, as the case may be, was approved
by a majority vote of the directors of Holdings or the Company, as the
case may be, then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved or (b) who are designees of the Permitted Holders
or were nominated by the Permitted Holders) cease for any reason to
constitute a majority of the Board of Directors of the Company or
Holdings, as the case may be, then in office;
(4) the adoption of a plan relating to the liquidation or
dissolution of Holdings or the Company;
(5) the merger or consolidation of Holdings or the Company with or
into another Person or the merger of another Person with or into Holdings
or the Company, or the sale of all or substantially all the assets of
Holdings or the Company to another Person (other than a Person that is
controlled by the Permitted Holders), and, in the case of any such merger
or consolidation, the securities of Holdings or the Company that are
outstanding immediately prior to such transaction and that represent 100%
of the aggregate voting power of the Voting Stock of Holdings or the
Company are changed into or exchanged for cash, securities or property,
unless pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of the
surviving Person or transferee that represent immediately after such
transaction, at least a majority of the aggregate voting power of the
Voting Stock of the surviving Person or transferee; or
(6) the Company ceases to be a Wholly Owned Subsidiary of Holdings.
"Closing Date" means the date of the Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Alaska Communications Systems Holdings, Inc., a
Delaware corporation formerly known as ALEC Acquisition Corporation.
"Consolidated Current Liabilities" as of the date of determination
means the aggregate amount of liabilities of the Company and its Consolidated
Restricted Subsidiaries which may properly be classified as current liabilities
(including taxes accrued as estimated), on a Consolidated basis, after
eliminating:
(1) all intercompany items between the Company and any Restricted
Subsidiary; and
(2) all current maturities of long-term Indebtedness, all as
determined in accordance with GAAP consistently applied.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its Consolidated Restricted Subsidiaries,
plus, to the extent Incurred by the
<PAGE>
6
Company and its Consolidated Restricted Subsidiaries in such period but not
included in such interest expense:
(1) interest expense attributable to Capitalized Lease Obligations
and the interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction;
(2) amortization of debt discount and debt issuance costs;
(3) capitalized interest;
(4) non-cash interest expense;
(5) commissions, discounts and other fees and charges attributable
to letters of credit and bankers' acceptance financing;
(6) interest accruing on any Indebtedness of any other Person to the
extent such Indebtedness is guaranteed by the Company or any Restricted
Subsidiary;
(7) amortization of net costs associated with Hedging Obligations
(including amortization of fees);
(8) dividends in respect of all Disqualified Stock of the Company
and all Preferred Stock of any of the Subsidiaries of the Company, to the
extent held by Persons other than the Company or a Wholly Owned
Subsidiary;
(9) interest Incurred in connection with investments in discontinued
operations; and
(10) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust.
"Consolidated Net Income" means, for any period, the net income of
the Company and its Consolidated Subsidiaries for such period; provided,
however, that there shall not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if such
Person is not a Restricted Subsidiary, except that:
(a) subject to the limitations contained in clause (4) below,
the Company's equity in the net income of any such Person for such
period shall be included in such Consolidated Net Income up to the
aggregate amount of cash or other assets actually distributed by
such Person during such period to the Company or a Restricted
Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution made to a Restricted Subsidiary,
to the limitations contained in clause (3) below); and
<PAGE>
7
(b) the Company's equity in a net loss of any such Person for
such period shall be included in determining such Consolidated Net
Income;
(2) any net income (or loss) of any Person acquired by the Company
or a Subsidiary of the Company in a pooling of interests transaction for
any period prior to the date of such acquisition;
(3) any net income of any Restricted Subsidiary to the extent that
the declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of its net income is not, at the date of
determination, permitted without any prior governmental approval (which
has not been obtained) or, directly or indirectly, by the operation of the
terms of its charter, or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, unless such restrictions with
respect to the payment of dividends or similar distributions have been
legally waived, except that the net loss of any such Restricted Subsidiary
for such period shall be included in determining such Consolidated Net
Income;
(4) any gain (but not loss) realized upon the sale or other
disposition of any asset of the Company or its Consolidated Subsidiaries
(including pursuant to any Sale/Leaseback Transaction) that is not sold or
otherwise disposed of in the ordinary course of business and any gain (but
not loss) realized upon the sale or other disposition of any Capital Stock
of any Person;
(5) any extraordinary or otherwise nonrecurring gain or loss; and
(6) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purpose of Section 4.04 only, there shall
be excluded from Consolidated Net Income any dividends, repayments of loans or
advances or other transfers of assets from Unrestricted Subsidiaries to the
Company or a Restricted Subsidiary to the extent such dividends, repayments or
transfers increase the amount of Restricted Payments permitted under clause
(1)(d)(iii)(E) of Section 4.04.
"Consolidated Net Tangible Assets" as of any date of determination,
means the total amount of assets (less accumulated depreciation and
amortization, allowances for doubtful receivables, other applicable reserves and
other properly deductible items) which would appear on a consolidated balance
sheet of the Company and its Consolidated Restricted Subsidiaries, determined on
a Consolidated basis in accordance with GAAP, and after giving effect to
purchase accounting and after deducting therefrom Consolidated Current
Liabilities and, to the extent otherwise included, the amounts of;
(1) minority interests in Consolidated Subsidiaries held by Persons
other than the Company or a Restricted Subsidiary;
(2) excess of cost over fair value of assets of businesses acquired,
as determined in good faith by the Board of Directors;
<PAGE>
8
(3) any revaluation or other write-up in book value of assets
subsequent to the Closing date as a result of a change in the method of
valuation in accordance with GAAP consistently applied;
(4) unamortized debt discount and expenses and other unamortized
deferred charges, goodwill, patents, trademarks, service marks, trade
names, copyrights, licenses, organization or developmental expenses and
other intangible items;
(5) treasury stock;
(6) cash set apart and held in a sinking or other analogous fund
established for the purpose of redemption or other retirement of Capital
Stock to the extent such obligation is not reflected in Consolidated
Current Liabilities; and
(7) Investments in and assets of Unrestricted Subsidiaries.
"Consolidation" means the consolidation of the amounts of each of
the Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" shall not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary shall
be accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Credit Agreement" means the credit agreement to be entered into
among the Company, Holdings, the financial institutions named therein, The Chase
Manhattan Bank, as Administrative Agent, Canadian Imperial Bank of Commerce, as
Syndication Agent and Credit Suisse First Boston, as Documentation Agent, as
amended, waived or otherwise modified from time to time (except to the extent
that any such amendment, waiver or other modification thereto would be
prohibited by the terms of this Indenture, unless otherwise agreed to by the
Holders of at least a majority in aggregate principal amount of Securities at
the time outstanding), including any such amendments or modifications (or any
other credit agreement or credit agreements) that replace, refund or refinance
any or a portion of the commitments or loans thereunder, up to a maximum
principal amount not to exceed $585,000,000.
"Currency Agreement" means, with respect to any Person, any foreign
exchange contract, currency swap agreements or other similar agreement or
arrangement to which such Person is a party or of which it is a beneficiary.
"Debt to EBITDA Ratio" as of any date of determination means the
ratio of:
(1) Total Consolidated Indebtedness as of the date of determination
to
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9
(2) EBITDA for the period of the most recent four consecutive fiscal
quarters ending at the end of the most recent fiscal quarter for which
financial statements are publicly available; provided, however, that:
(a) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case, other
than Indebtedness Incurred under any revolving credit facility
unless such Indebtedness has been permanently repaid and has not
been replaced) on the date of the transaction giving rise to the
need to calculate the Debt to EBITDA Ratio, EBITDA for such period
shall be calculated on a pro forma basis as if such discharge had
occurred on the first day of such period and as if the Company or
such Restricted Subsidiary has not earned the interest income
actually earned during such period in respect of cash or Temporary
Cash Investments used to repay, repurchase, defease or otherwise
discharge such Indebtedness;
(b) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the
EBITDA for such period shall be reduced by an amount equal to the
EBITDA (if positive) directly attributable to the assets that are
the subject of such Asset Disposition for such period or increased
by an amount equal to the EBITDA (if negative) directly attributable
thereto for such period;
(c) if since the beginning of such period, the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Person that is merged with or into the Company or
any Restricted Subsidiary (or any Person that becomes a Restricted
Subsidiary) or an acquisition of assets, including any acquisition
of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, EBITDA for
such period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period;
any such pro forma calculation may include adjustments appropriate
to reflect, without duplication (x) any such acquisition to the
extent such adjustments may be reflected in the preparation of pro
forma financial information in accordance with the requirements of
GAAP and Article XI of Regulation S-X under the Exchange Act; (y)
the annualized amount of operating expense reductions reasonably
expected to be realized in the six months following any such
acquisition made during any of the four fiscal quarters constituting
the four-quarter reference period prior to the date of
determination; and (z) the annualized amount of operating expense
reductions reasonably expected to be realized in the six months
following any such acquisition made by the Company during either of
the two fiscal quarters immediately preceding the four-quarter
reference period prior to the date of determination; provided that
in either case such adjustments are set forth in an Officers'
Certificate signed by the Company's chief executive officer and
chief financial officer which states (i) the
<PAGE>
10
amount of such adjustment or adjustments, (ii) that such adjustment
or adjustments are based on the reasonable good faith beliefs of the
officers executing such Officers' Certificate at the time of such
execution and (iii) that any related Incurrence of Indebtedness is
permitted pursuant to the Indenture; and
(d) if since the beginning of such period, any Person (that
subsequently became a Restricted Subsidiary or was merged with or
into the Company or any Restricted Subsidiary since the beginning of
such period) shall have made any Asset Disposition or any Investment
or acquisition of assets that would have required an adjustment
pursuant to clause (b) or (c) above if made by the Company or a
Restricted Subsidiary during such period, EBITDA for such period
shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition of assets occurred on
the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets and the amount of income or earnings relating thereto, the
pro forma calculations shall be determined in good faith by a responsible
financial or accounting Officer of the Company. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be calculated as if the rate in effect on the
date of determination had been the applicable rate for the entire period (taking
into account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term as at the date of determination in
excess of 12 months).
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Designated Senior Indebtedness" of the Company or a Guarantor
means:
(1) Bank Indebtedness; and
(2) any other Senior Indebtedness of the Company or such Guarantor
that, at the date of determination, has an aggregate principal amount
outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to at least $15,000,000 and is
specifically designated by the Company or such Guarantor in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable) or upon the
happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or Disqualified
Stock; or
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11
(3) is redeemable at the option of the holder thereof, in whole or
in part;
in each case on or prior to the first anniversary of the Stated Maturity of the
Securities; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Securities shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the provisions of Sections 4.06 and 4.08.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company
other than a Foreign Subsidiary.
"EBITDA" for any period means the Consolidated Net Income for such
period, plus the following to the extent deducted in calculating such
Consolidated Net Income:
(1) income tax expense of the Company and its Consolidated
Restricted Subsidiaries;
(2) Consolidated Interest Expense;
(3) depreciation expense of the Company and its Consolidated
Restricted Subsidiaries;
(4) amortization expense of the Company and its Consolidated
Restricted Subsidiaries (excluding amortization expense attributable to a
prepaid cash item that was paid in a prior period); and
(5) all other non-cash charges of the Company and its Consolidated
Restricted Subsidiaries (excluding any such non-cash charge to the extent
it represents an accrual of or reserve for cash expenditures in any future
period, but that will not be expensed in such future periods),
in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization and non-cash charges of, a
Restricted Subsidiary of the Company shall be added to Consolidated Net Income
to compute EBITDA only to the extent (and in the same proportion) that the net
income of such Restricted Subsidiary was included in calculating Consolidated
Net Income and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its stockholders.
<PAGE>
12
"Equity Offering" means any public or private sale of Capital Stock
(other than Disqualified Stock) of the Company or Holdings, other than offerings
of the Company or Holdings of the type that can be registered on Form S-8.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Foreign Subsidiary" means any Restricted Subsidiary of the Company
that is not organized under the laws of the United States of America or any
state thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including those set forth
in:
(1) the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants;
(2) statements and pronouncements of the Financial Accounting
Standards Board;
(3) such other statements by such other entities as approved by a
significant segment of the accounting profession; and
(4) the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the
Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the
SEC.
All ratios and computations based on GAAP contained in this Indenture shall be
computed in conformity with GAAP.
"guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and any obligation, direct or indirect, contingent or
otherwise, of any Person:
(1) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise);
or
(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in
part);
provided, however, that the term "guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "guarantee"
used as a verb has a
<PAGE>
13
corresponding meaning. The term "guarantor" shall mean any Person guaranteeing
any obligation.
"Guarantee" means each guarantee of the obligations with respect to
the Notes issued by a Guarantor pursuant to the terms of the Indenture.
"Guarantor" means Holdings, each of Telephone Utilities of Alaska,
Inc., Telephone Utilities of the Northland, Inc., PTI Communications of Alaska,
Inc., Pacific Telecom of Alaska PCS, Inc., Pacific Telecom Cellular of Alaska,
Inc., ATU Communications, Inc., MACtel, Inc., MACtel Fairbanks, Inc., ATU Long
Distance, Inc., Peninsula Cellular Services, Inc., Prudhoe Communications, Inc.,
Alaska Communications Systems, Inc., ALEC Acquisition Sub Corp., MACtel License
Sub, Inc. and MACtel Fairbanks License Sub, Inc., PTINet, Inc. and any other
Domestic Subsidiary of the Company that has provided a guarantee.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holdings" means ALEC Holdings, Inc., a Delaware corporation.
"Holdings Discount Debentures" means the discount debentures issued
by Holdings pursuant to the Holdings Discount Indenture for gross cash proceeds
of not less than $25,000,000.
"Holdings Discount Indenture" means the indenture to be entered into
between Holdings and The Bank of New York in connection with the issuance of the
Holdings Discount Debentures, together with all instruments and other agreements
entered into by Holdings in connection therewith.
"Incur" means issue, assume, guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person is merged or consolidated with the
Company or becomes a Subsidiary of the Company (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Person at the time of such merger or consolidation or at the time it becomes a
Subsidiary of the Company. The term "Incurrence" when used as a noun shall have
a correlative meaning. The accretion of principal of a non-interest bearing or
other discount security shall not be deemed the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal of and premium (if any) in respect of indebtedness
of such Person for borrowed money;
<PAGE>
14
(2) the principal of and premium (if any) in respect of obligations
of such Person evidenced by bonds, debentures, notes or other similar
instruments;
(3) all obligations of such Person in respect of letters of credit
or other similar instruments (including reimbursement obligations with
respect thereto);
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables and
contingent obligations to pay earn-outs), which purchase price is due more
than six months after the date of placing such property in service or
taking delivery and title thereto or the completion of such services;
(5) all Capitalized Lease Obligations and all Attributable Debt of
such Person;
(6) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, any Preferred Stock (but
excluding, in each case, any accrued dividends);
(7) all Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the amount of Indebtedness of such Person
shall be the lesser of:
(A) the fair market value of such asset at such date of
determination and
(B) the amount of such Indebtedness of such other Persons;
(8) to the extent not otherwise included in this definition, Hedging
Obligations of such Person; and
(9) all obligations of the type referred to in clauses (1) through
(8) above of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including by
means of any guarantee.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
<PAGE>
15
"Investment" in any Person means any, direct or indirect, advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts receivable on the balance sheet of the lender) or other
extension of credit (including by way of guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary" and Section 4.04:
(1) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of
the net assets of any Subsidiary of the Company at the time that such
Subsidiary is designated an Unrestricted Subsidiary; provided, however,
that, upon a redesignation of such Subsidiary as a Restricted Subsidiary,
the Company shall be deemed to continue to have a permanent "Investment"
in an Unrestricted Subsidiary in an amount (if positive) equal to:
(a) the Company's Investment in such Subsidiary at the time of
such redesignation, less
(b) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net
assets of such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its fair market value at the time of such transfer, in
each case, as determined in good faith by the Board of Directors.
"Legal Holiday" means a Saturday, Sunday or other day on which
banking institutions in the State of New York are authorized or required by law
to close.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Management Group" means the group consisting of current and former
directors and executive officers of the Company.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any securities received as consideration,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to the properties or assets that are the subject of such
Asset Disposition or received in any other non-cash form) therefrom, in each
case net of:
(1) all legal fees and expenses, title and recording tax expenses,
commissions and other fees and expenses incurred, and all federal, state,
provincial, foreign and local taxes
<PAGE>
16
required to be paid or accrued as a liability under GAAP, as a consequence
of such Asset Disposition;
(2) all payments, including any prepayment premiums or penalties,
made on any Indebtedness that is secured by any assets subject to such
Asset Disposition, in accordance with the terms of any Lien upon or other
security agreement of any kind with respect to such assets, or which must
by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law be repaid out of the proceeds from such
Asset Disposition;
(3) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Disposition; and
(4) appropriate amounts to be provided by the seller as a reserve,
in accordance with GAAP, against any liabilities associated with the
property or other assets disposed of in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees and expenses actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer, the President, any Vice President, the
Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel to
the Company or the Trustee.
"Permitted Holders" means Fox Paine Capital Fund, L.P., and its
Affiliates, FPC Investors, L.P., ALEC Coinvestment Fund I, LLC, ALEC
Coinvestment Fund II, LLC, ALEC Coinvestment Fund III, LLC, ALEC Coinvestment
Fund IV, LLC, ALEC Coinvestment Fund V, LLC, ALEC Coinvestment Fund VI, LLC, the
Management Group and any Person acting in the capacity of an underwriter in
connection with a public or private offering of Holdings' or the Company's
Capital Stock.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that will, upon
the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a
Related Business;
<PAGE>
17
(2) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, the Company or a Restricted
Subsidiary; provided, however, that such Person's primary business is a
Related Business;
(3) Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(6) any loans or advances to employees made in the ordinary course
of business consistent with past practices of the Company or such
Restricted Subsidiary and not exceeding, when aggregated with amounts
loaned or advanced under clause (2)(f)(iv) of Section 4.04, $5,000,000 in
the aggregate outstanding at any one time;
(7) stock, obligations or securities received in settlement of (or
foreclosure with respect to) debts created in the ordinary course of
business and owing to the Company or any Restricted Subsidiary or in
satisfaction of judgments;
(8) any Person to the extent such Investment represents the non-cash
or deemed cash portion of the consideration received for an Asset
Disposition that was made pursuant to and in compliance with Section 4.06;
(9) any Investment existing on the Closing Date;
(10) Hedging Obligations permitted under paragraph (2)(g) of Section
4.03;
(11) guarantees of Indebtedness permitted under Section 4.03;
(12) Investments which are made exclusively with Capital Stock of
Holdings or the Company (other than Disqualified Stock); and
(13) additional Investments having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause
(13) that are at the time outstanding, not to exceed $5,000,000 at the
time of such Investment (with the fair market value of each Investment
being measured at the time made and without giving effect to subsequent
changes in value).
<PAGE>
18
"Permitted Joint Venture Interests" means equity interests
representing at least 35% of the Voting Stock of a Person engaged in a business
in which the Company was engaged at the Closing Date or a Related Business.
"Permitted Junior Securities" means debt or equity securities of the
Company or any successor corporation issued pursuant to a plan of reorganization
or readjustment of the Company that are subordinated to the payment of all
then-outstanding Senior Indebtedness of the Company at least to the same extent
that the Notes are subordinated to the payment of all Senior Indebtedness of the
Company on the Closing Date, so long as to the extent that any Senior
Indebtedness of the Company outstanding on the date of consummation of any such
plan of reorganization or readjustment is not paid in full in cash or cash
equivalents on such date, the holders of any such Senior Indebtedness not so
paid in full in cash or cash equivalents have consented to the terms of such
plan of reorganization or readjustment.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"principal" of a Security means the principal of the Security plus
the premium, if any, payable on the Security that is due or overdue or is to
become due at the relevant time.
"Purchase Money Indebtedness" means Indebtedness:
(1) consisting of the deferred purchase price of an asset,
conditional sale obligations, obligations under any title retention
agreement and other purchase money obligations, in each case where the
maturity of such Indebtedness does not exceed the anticipated useful life
of the asset being financed; and
(2) incurred to finance the acquisition by the Company or a
Restricted Subsidiary of such asset, including additions and improvements;
provided, however, that such Indebtedness is incurred within 180 days
before or after the acquisition by the Company or such Restricted
Subsidiary of such asset.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, replace, prepay, redeem, defease or retire, or to
issue other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, repay, redeem, retire, renew, repay or extend
(including pursuant to any defeasance or discharge mechanism) any Indebtedness
of the Company or any Restricted
<PAGE>
19
Subsidiary existing on the Closing Date or Incurred in compliance with this
Indenture (including Indebtedness of the Company that Refinances Refinancing
Indebtedness); provided, however, that:
(1) other than with respect to Senior Indebtedness, the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of
the Indebtedness being Refinanced;
(2) other than with respect to Senior Indebtedness, the Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness
is Incurred that is equal to or greater than the Average Life of the
Indebtedness being refinanced;
(3) such Refinancing Indebtedness is Incurred in an aggregate
principal amount (or if issued with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount
(or if issued with original issue discount, the aggregate accreted value)
then outstanding of the Indebtedness being Refinanced; and
(4) if the Indebtedness being Refinanced is subordinated in right of
payment to the Securities, such Refinancing Indebtedness is subordinated
in right of payment to the Securities at least to the same extent as the
Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include:
(a) other than with respect to Senior Indebtedness, Indebtedness of
a Restricted Subsidiary that Refinances Indebtedness of the Company; or
(b) Indebtedness of the Company or a Restricted Subsidiary that
Refinances Indebtedness of an Unrestricted Subsidiary.
"Related Business" means any business related, ancillary or
complementary to the businesses of the Company and the Restricted Subsidiaries
on the Closing Date.
"Representative" means the trustee, agent or representative (if any)
for an issue of Senior Indebtedness.
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired by the Company or a Restricted
Subsidiary whereby the Company or a Restricted Subsidiary transfers such
property to a Person and the Company or such Restricted Subsidiary leases it
from such Person, other than leases between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
<PAGE>
20
"Secured Indebtedness" means any Indebtedness of the Company or any
Guarantor secured by a Lien.
"Senior Indebtedness" of the Company or any Guarantor means the
principal of, premium (if any) and accrued and unpaid interest on (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization of the Company or such Guarantor, regardless of whether or not a
claim for post-filing interest is allowed in such proceedings), and fees and
other amounts (including expenses, reimbursement obligations under letters of
credit and indemnities) owing in respect of, Bank Indebtedness and all other
Indebtedness of the Company or such Guarantor, whether outstanding on the
Closing Date or thereafter Incurred, unless in the instrument creating or
evidencing the same or pursuant to which the same is outstanding it is provided
that such obligations are not superior in right of payment to the Securities or
such Guarantor's Guarantee; provided, however, that Senior Indebtedness shall
not include:
(1) any obligation of the Company to Holdings or any Subsidiary of
the Company or of such Guarantor to the Company or Holdings or any
Subsidiary of the Company;
(2) any liability for federal, state, local or other taxes owed or
owing by the Company or such Guarantor;
(3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees thereof
or instruments evidencing such liabilities);
(4) any Indebtedness or obligation of the Company or such Guarantor
(and any accrued and unpaid interest in respect thereof) that is
subordinate or junior in any respect to any other Indebtedness or
obligation of the Company or such Guarantor, as applicable, including any
Senior Subordinated Indebtedness and any Subordinated Obligations;
(5) any obligations with respect to any Capital Stock; or
(6) any Indebtedness Incurred in violation of the Indenture.
If any Senior Indebtedness is disallowed, avoided or subordinated pursuant to
the provisions of Section 548 of Title 11 of the United States Bankruptcy Code
or any applicable state fraudulent conveyance law, such Senior Indebtedness
nevertheless will constitute Senior Indebtedness.
"Senior Subordinated Indebtedness" of the Company or any Guarantor
means the Securities or the Guarantees, as applicable, and any other
Indebtedness of the Company or such Guarantor that specifically provides that
such Indebtedness is to rank pari passu with the Securities or the Guarantees,
as applicable, in right of payment and is not subordinated by its terms in right
of payment to any Indebtedness or other obligation of the Company or such
Guarantor which is not Senior Indebtedness.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02
under Regulation S-X promulgated by the SEC.
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21
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the Company or
any Guarantor (whether outstanding on the Closing Date or thereafter Incurred)
that is subordinate or junior in right of payment to the Securities pursuant to
a written agreement.
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity:
(1) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power
or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held; or
(2) that is, as of such date, otherwise controlled by the parent or
one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
"Telecommunications Assets" means (1) assets used or useful in the
operating businesses of the Company at the Closing Date or in a Related Business
or (2) equity interests representing a majority of the Voting Stock of Persons
engaged in such businesses.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States of
America or any agency thereof or obligations guaranteed by the United
States of America or any agency thereof;
(2) investments in time deposit accounts, certificates of deposit
and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company that is organized
under the laws of the United States of America, any state thereof or any
foreign country recognized by the United States of America having capital,
surplus and undivided profits aggregating in excess of $250,000,000 (or
the foreign currency equivalent thereof) and whose long-term debt is rated
"A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in Rule
436 under the Securities Act);
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with a bank meeting the qualifications described in clause (2) above;
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22
(4) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United
States of America with a rating at the time as of which any investment
therein is made of "P-1" (or higher) according to Moody's Investors
Service, Inc. or "A-1" (or higher) according to Standard and Poor's
Ratings Service, a division of The McGraw-Hill Companies, Inc. ("S&P");
and
(5) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by S&P or "A" by Moody's Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the Closing Date.
"Total Consolidated Indebtedness" means, as of any date of
determination, an amount equal to the aggregate amount of all Indebtedness of
the Company and its Restricted Subsidiaries, determined on a Consolidated basis,
outstanding as of such date of determination, after giving effect to any
Incurrence of Indebtedness and the application of the proceeds therefrom giving
rise to such determination.
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or
any other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of Directors
in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary of the Company) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or owns or
<PAGE>
23
holds any Lien on any property of, the Company or any other Subsidiary of the
Company that is not a Subsidiary of the Subsidiary to be so designated;
provided, however, that either:
(1) the Subsidiary to be so designated has total Consolidated assets
of $1,000 or less; or
(2) if such Subsidiary has Consolidated assets greater than $1,000,
then such designation would be permitted under Section 4.04.
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after giving effect
to such designation:
(1) the Company could Incur $1.00 of additional Indebtedness under
paragraph (1) of Section 4.03 and
(2) no Default shall have occurred and be continuing.
Any such designation of a Subsidiary as a Restricted Subsidiary or Unrestricted
Subsidiary by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and that are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the
Company all the Capital Stock of which (other than directors' qualifying shares)
is owned by the Company or another Wholly Owned Subsidiary.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- -------
"Affiliate Transaction" .................................. 4.07(1)
"Bankruptcy Law" ......................................... 6.01
"Blockage Notice" ........................................ 10.03
"covenant defeasance option" ............................. 8.01(b)
"Custodian" .............................................. 6.01
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24
"Event of Default" ..................................... 6.01
"legal defeasance option" .............................. 8.01(b)
"Offer" ................................................ 4.06(2)
"Offer Amount" ......................................... 4.06(3)(b)
"Offer Period" ......................................... 4.06(3)(b)
"pay the Securities" ................................... 10.03
"Paying Agent" ......................................... 2.03
"Payment Blockage Period" .............................. 10.03
"protected purchaser" .................................. 2.07
"Registrar" ............................................ 2.03
"Successor Company" .................................... 5.01(a)
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities and the Guarantees.
"indenture security holder" means a Holder or Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, the
Guarantors and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
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25
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. Provisions relating to the Original
Securities, the Private Exchange Securities and the Exchange Securities are set
forth in the Appendix, which is hereby incorporated in and expressly made a part
of this Indenture. The (i) Original Securities and the Trustee's certificate of
authentication and (ii) Private Exchange Securities and the Trustee's
certificate of authentication shall each be substantially in the form of Exhibit
A hereto, which is hereby incorporated in and expressly made a part of this
Indenture. The Exchange Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B hereto, which is
hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company or any Guarantor is subject, if
any, or usage (provided that any such notation, legend or endorsement is in a
form acceptable to the Company). Each Security shall be dated the date of its
authentication. The Securities shall be issuable only in registered form without
interest coupons and only in denominations of $1,000 and integral multiples
thereof.
SECTION 2.02. Execution and Authentication. One or more Officers
shall sign the Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery
Securities as set forth in the Appendix.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Any such appointment
shall be evidenced by an instrument signed by a Trust Officer, a copy of which
shall be furnished to the Company. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities
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26
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent, and the
term "Registrar" includes any co-registrars. The Company initially appoints the
Trustee as (i) Registrar and Paying Agent in connection with the Securities and
(ii) the Securities Custodian (as defined in the Appendix) with respect to the
Global Securities (as defined in the Appendix).
The Company shall enter into an appropriate agency agreement with
any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the terms of the TIA. The agreement shall implement the provisions
of this Indenture that relate to such agent. The Company shall notify the
Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically organized Wholly Owned Subsidiaries may act
as Paying Agent or Registrar.
The Company may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided, however,
that no such removal shall become effective until (1) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by the Company and such successor Registrar or Paying Agent, as the case may be,
and delivered to the Trustee or (2) notification to the Trustee that the Trustee
shall serve as Registrar or Paying Agent until the appointment of a successor in
accordance with clause (1) above. The Registrar or Paying Agent may resign at
any time upon written notice; provided, however, that the Trustee may resign as
Paying Agent or Registrar only if the Trustee also resigns as Trustee in
accordance with Section 7.08.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due
date of the principal and interest on any Security, the Company shall deposit
with the Paying Agent (or if the Company or a Subsidiary is acting as Paying
Agent, segregate and hold in trust for the benefit of the Persons entitled
thereto) a sum sufficient to pay such principal and interest when so becoming
due. The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the Company
or a Subsidiary of the Company acts as Paying Agent, it shall segregate the
money held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee and to account for any funds disbursed by the Paying Agent. Upon
complying with this Section 2.04, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
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27
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish, or cause the Registrar to furnish, to the
Trustee, in writing at least five Business Days before each interest payment
date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be issued
in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer and in compliance with the Appendix. When
a Security is presented to the Registrar with a request to register a transfer,
the Registrar shall register the transfer as requested if the requirements of
Section 8-401(a)(l) of the Uniform Commercial Code are met. When Securities are
presented to the Registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's request. The Company
may require payment of a sum sufficient to pay all taxes, assessments or other
governmental charges in connection with any transfer or exchange pursuant to
this Section 2.06. The Company shall not be required to make and the Registrar
need not register transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part, the portion thereof
not to be redeemed) or any Securities for a period of 15 days before a selection
of Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Guarantors, the Trustee, the Paying Agent, and the
Registrar may deem and treat the Person in whose name a Security is registered
as the absolute owner of such Security for the purpose of receiving payment of
principal of and interest, if any, on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
any Guarantor, the Trustee, the Paying Agent, or the Registrar shall be affected
by notice to the contrary.
Any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interest in such Global Security
may be effected only through a book-entry system maintained by (i) the Holder of
such Global Security (or its agent) or (ii) any Holder of a beneficial interest
in such Global Security, and that ownership of a beneficial interest in such
Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i)
satisfies the Company or the Trustee within a reasonable time after he has
notice of
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28
such loss, destruction or wrongful taking and the Registrar does not register a
transfer prior to receiving such notification, (ii) makes such request to the
Company or the Trustee prior to the Security being acquired by a protected
purchaser as defined in Section 8-303 of the Uniform Commercial Code (a
"protected purchaser") and (iii) satisfies any other reasonable requirements of
the Trustee. If required by the Trustee or the Company, such Holder shall
furnish an indemnity bond sufficient in the judgment of the Trustee to protect
the Company, the Trustee, the Paying Agent and the Registrar from any loss that
any of them may suffer if a Security is replaced. The Company and the Trustee
may charge the Holder for their expenses in replacing a Security. In the event
any such mutilated, lost, destroyed or wrongfully taken Security has become or
is about to become due and payable, the Company in its discretion may pay such
Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the
Company.
The provisions of this Section 2.07 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancelation and those described in this Section
2.08 as not outstanding. Subject to Section 13.06, a Security does not cease to
be outstanding because the Company or an Affiliate of the Company holds the
Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a protected purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal and interest and Additional Amounts payable on that date with
respect to the Securities (or portions thereof) to be redeemed or maturing, as
the case may be, and the Paying Agent is not prohibited from paying such money
to the Securityholders on that date pursuant to the terms of this Indenture,
then on and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. In the event that Definitive
Securities (as defined in the Appendix) are to be issued under the terms of this
Indenture, until such Definitive Securities are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of Definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate Definitive Securities and deliver them in exchange for temporary
Securities upon surrender of such temporary Securities at the office or agency
of the Company, without charge to the Holder.
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29
SECTION 2.10. Cancelation. The Company at any time may deliver
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancelation and deliver canceled Securities to the Company pursuant to written
direction by an Officer. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancelation.
The Trustee shall not authenticate Securities in place of canceled Securities
other than pursuant to the terms of this Indenture.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the Persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail or cause to be
mailed to each Securityholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Company in issuing the Securities
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
Securities pursuant to paragraph (g) of Section 4.08 or paragraph 5 of the
Securities, it shall notify the Trustee in writing of the redemption date and
the principal amount of Securities to be redeemed.
The Company shall give each notice to the Trustee provided for in
this Section 3.01 at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein. If fewer than all the
Securities are to be redeemed, the record date relating to such redemption shall
be selected by the Company and given to the Trustee, which record date shall be
not fewer than 15 days after the date of notice to the Trustee. Any such notice
may be canceled at any time prior to notice of such redemption being mailed to
any Holder and shall thereby be void and of no effect.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by
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30
lot or by a method that complies with applicable legal and securities exchange
requirements, if any, and that the Trustee in its sole discretion shall deem to
be fair and appropriate and in accordance with methods generally used at the
time of selection by fiduciaries in similar circumstances. The Trustee shall
make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemption of Securities, the Company shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price and the amount of accrued interest to the
redemption date;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the certificate numbers and principal amounts of the particular Securities
to be redeemed;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on Securities (or
portion thereof) called for redemption ceases to accrue on and after the
redemption date;
(7) the CUSIP number, if any, printed on the Securities being
redeemed; and
(8) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section 3.03.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities
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31
shall be paid at the redemption price stated in the notice, plus accrued
interest and Additional Amounts, if any, to the redemption date; provided,
however, that if the redemption date is after a regular record date and on or
prior to the interest payment date, the accrued interest shall be payable to the
Securityholder of the redeemed Securities registered on the relevant record
date. Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to 10:00 a.m. on
the redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest and
Additional Amounts, if any, on all Securities to be redeemed on that date other
than Securities or portions of Securities called for redemption that have been
delivered by the Company to the Trustee for cancelation. On and after the
redemption date, interest will cease to accrue on Securities or portions thereof
called for redemption so long as the Company has deposited with the Paying Agent
funds sufficient to pay the principal of, plus accrued and unpaid interest and
Additional Amounts (if any) on, the Securities to be redeemed.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall promptly pay
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company may not
be subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the SEC, and provide the Trustee and
Securityholders and prospective Securityholders (upon request) within 15 days
after it files them with the SEC, copies of its annual report and the
information, documents and other reports that are specified in Section 13 and
15(d) of the Exchange Act. In addition, following an Equity Offering, the
Company shall furnish to the Trustee and the Securityholders, promptly upon
their becoming available, copies of the annual report to shareholders and any
other information provided by the Company or Holdings to its
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32
public shareholders generally. The Company also shall comply with the other
provisions of TIA ss. 314(a).
SECTION 4.03. Limitation on Indebtedness. (1) The Company shall not,
and shall not permit any Restricted Subsidiary to, Incur any Indebtedness;
provided, however, that the Company or any Restricted Subsidiary may Incur
Indebtedness if on the date of such Incurrence and after giving effect thereto
the Debt to EBITDA Ratio would be less than 7:1.
(2) Notwithstanding the foregoing paragraph (1), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(a) Bank Indebtedness in an aggregate principal amount not to exceed
$585,000,000 less the aggregate amount of all prepayments of principal
applied to permanently reduce any such Indebtedness;
(b) Indebtedness of the Company owed to and held by any Wholly Owned
Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by
the Company or any Wholly Owned Subsidiary; provided, however, that (i)
any subsequent issuance or transfer of any Capital Stock or any other
event that results in any such Wholly Owned Subsidiary ceasing to be a
Wholly Owned Subsidiary or any subsequent transfer of any such
Indebtedness (except to the Company or a Wholly Owned Subsidiary) shall be
deemed, in each case, to constitute the Incurrence of such Indebtedness by
the issuer thereof and (ii) if the Company is the obligor on such
Indebtedness, such Indebtedness is expressly subordinated to the prior
payment in full in cash of all obligations with respect to the Securities;
(c) Indebtedness (i) represented by the Securities and the
Guarantees, (ii) outstanding on the Closing Date (other than the
Indebtedness described in clauses (a) and (b) above), (iii) consisting of
Refinancing Indebtedness Incurred in respect of any Indebtedness described
in this clause (c) (including Indebtedness Refinancing Indebtedness) or
Section 4.03(1) or (iv) consisting of guarantees of any Indebtedness
permitted under clauses (a) and (b) of this paragraph (2);
(d)(i) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Restricted Subsidiary
was acquired by the Company (other than Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a
Subsidiary of, or was otherwise acquired by, the Company); provided,
however, that on the date that such Restricted Subsidiary is acquired by
the Company, the Company would have been able to Incur $1.00 of additional
Indebtedness pursuant to Section 4.03(1) after giving effect to the
Incurrence of such Indebtedness pursuant to this clause (d) and (ii)
Refinancing Indebtedness Incurred by the Company or a Restricted
Subsidiary in respect of Indebtedness Incurred pursuant to this clause
(d);
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33
(e) Indebtedness in respect of performance bonds, bankers'
acceptances, letters of credit and surety or appeal bonds provided by the
Company and the Restricted Subsidiaries in the ordinary course of their
business;
(f) Purchase Money Indebtedness and Capitalized Lease Obligations in
an aggregate principal amount not in excess of $20,000,000 at any time
outstanding;
(g) Hedging Obligations of the Company or any Guarantor directly
related to Indebtedness permitted to be Incurred by the Company or any
Guarantor pursuant to the Indenture for the purpose of fixing or hedging
interest rate risk or currency fluctuations;
(h)(i) Indebtedness of another Person Incurred and outstanding on or
prior to the date on which such Person consolidates with or merges with or
into the Company (other than Indebtedness Incurred as consideration in, or
to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to
which such Person consolidates with or merges with or into the Company);
provided, however, that on the date that such transaction is consummated,
the Company would have been able to Incur $1.00 of additional Indebtedness
pursuant to Section 4.03(1) after giving effect to the Incurrence of such
Indebtedness pursuant to this clause (h) and (ii) Refinancing Indebtedness
Incurred by the Company or the Successor Company in respect of
Indebtedness Incurred pursuant to subclause (i) of this clause (h); or
(i) Indebtedness (other than Indebtedness permitted to be Incurred
pursuant to Section 4.03(1) or any other clause of this Section 4.03(2))
in an aggregate principal amount on the date of Incurrence that, when
added to all other Indebtedness Incurred pursuant to this clause (i) and
then outstanding, shall not exceed $5,000,000.
(3) Notwithstanding the foregoing, the Company shall not Incur any
Indebtedness pursuant to Section 4.03(2) above if the proceeds thereof are used,
directly or indirectly, to repay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Obligations, unless such Indebtedness shall be
subordinated to the Securities to at least the same extent as such Subordinated
Obligations. The Company shall not Incur any Indebtedness if such Indebtedness
is subordinate or junior in ranking in any respect to any Senior Indebtedness
unless such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness. In
addition, the Company shall not Incur any Secured Indebtedness that is not
Senior Indebtedness unless contemporaneously therewith effective provision is
made to secure the Securities equally and ratably with (or on a senior basis to,
in the case of Indebtedness subordinated in right of payment to the Notes) such
Secured Indebtedness for so long as such Secured Indebtedness is secured by a
Lien. A Guarantor shall not Incur any Indebtedness if such Indebtedness is by
its terms expressly subordinate or junior in ranking in any respect to any
Senior Indebtedness of such Guarantor unless such Indebtedness is Senior
Subordinated Indebtedness of such Guarantor or is expressly subordinated in
right of payment to Senior Subordinated Indebtedness of such Guarantor. In
addition, a Guarantor shall not Incur any Secured Indebtedness that is not
Senior Indebtedness of such Guarantor unless contemporaneously therewith
effective provision is made to secure the Guarantee of such Guarantor equally
and ratably with (or on a senior basis to, in the case of Indebtedness
<PAGE>
34
subordinated in right of payment to such Guarantee) such Secured Indebtedness
for as long as such Secured Indebtedness is secured by a Lien.
(4) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that the Company or any Restricted Subsidiary may
Incur pursuant to this Section 4.03 shall not be deemed to be exceeded solely as
a result of fluctuations in the exchange rates of currencies. For purposes of
determining the outstanding principal amount of any particular Indebtedness
Incurred pursuant to this Section 4.03:
(a) Indebtedness Incurred pursuant to the Credit Agreement prior to
or on the Closing Date shall be treated as Incurred pursuant to Section
4.03(2)(a);
(b) Indebtedness permitted by this Section 4.03 need not be
permitted solely by reference to one provision permitting such
Indebtedness but may be permitted in part by one such provision and in
part by one or more other provisions of this Section 4.03 permitting such
Indebtedness; and
(c) in the event that Indebtedness meets the criteria of more than
one of the types of Indebtedness described in this Section 4.03, the
Company, in its sole discretion, shall classify such Indebtedness and only
be required to include the amount of such Indebtedness in one of such
clauses.
SECTION 4.04. Limitation on Restricted Payments. (1) The Company
shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to:
(a) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) or similar payment to the
holders of its Capital Stock except dividends or distributions payable
solely in its Capital Stock (other than Disqualified Stock) and except
dividends or distributions payable to the Company or another Restricted
Subsidiary (and, if such Restricted Subsidiary has shareholders other than
the Company or other Restricted Subsidiaries, to its other shareholders on
a pro rata basis);
(b) purchase, redeem, retire or otherwise acquire for value any
Capital Stock of Holdings, the Company or any Restricted Subsidiary held
by Persons other than the Company or another Restricted Subsidiary;
(c) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment any Subordinated Obligations (other than
the purchase, repurchase or other acquisition of Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case, due within one year
of the date of acquisition); or
(d) make any Investment (other than a Permitted Investment) in any
Person (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other
<PAGE>
35
acquisition, retirement or Investment being herein referred to as a
"Restricted Payment") if at the time the Company or such Restricted
Subsidiary makes such Restricted Payment:
(i) a Default shall have occurred and be continuing (or would
result therefrom);
(ii) the Company could not Incur at least $1.00 of additional
Indebtedness under Section 4.03(1); or
(iii) the aggregate amount of such Restricted Payment and all
other Restricted Payments (the amount so expended, if other than in
cash, to be determined in good faith by the Board of Directors,
whose determination shall be conclusive and evidenced by a
resolution of the Board of Directors) declared or made subsequent to
the Closing Date would exceed the sum of, without duplication:
(A) (i) 100% of EBITDA accrued during the period
(treated as one accounting period) from the beginning of the
fiscal quarter immediately following the fiscal quarter during
which the Closing Date occurs to the end of the most recent
fiscal quarter for which financial statements are publicly
available (or, in case such EBITDA will be a deficit, minus
100% of such deficit), minus
(ii) 140% of Consolidated Interest Expense accrued
during the period (treated as one accounting period) from the
beginning of the fiscal quarter immediately following the
fiscal quarter during which the Closing Date occurs to the end
of the most recent fiscal quarter for which financial
statements are publicly available; plus
(B) the aggregate Net Cash Proceeds received by the
Company from the issue or sale of its Capital Stock (other
than Disqualified Stock) subsequent to the Closing Date (other
than (x) an issuance or sale to a Subsidiary of the Company,
(y) an issuance or sale to an employee stock ownership plan or
other trust established by the Company or any of its
Subsidiaries or (z) to the extent used in accordance with
Section 4.04(2)(e)(ii) or Section 4.04(2)(f)(iii)(B); plus
(C) the aggregate Net Cash Proceeds received by the
Company from the sale or other disposition (other than to the
Company or a Restricted Subsidiary) of any Investments
previously made by the Company or a Restricted Subsidiary and
treated as a Restricted Payment; provided that the amount
added pursuant to this clause (C) shall not exceed the amount
treated as a Restricted Payment and not previously added
pursuant to this paragraph (iii); plus
(D) the amount by which Indebtedness of the Company or
its Restricted Subsidiaries is reduced on the Company's
balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the
<PAGE>
36
Closing Date of any Indebtedness of the Company or its
Restricted Subsidiaries issued after the Closing Date that is
convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any
cash or the fair market value of other property distributed by
the Company or any Restricted Subsidiary upon such conversion
or exchange); plus
(E) the amount equal to the net reduction in Investments
in Unrestricted Subsidiaries resulting from (i) payments of
dividends, repayments of the principal of loans or advances or
other transfers of assets to the Company or any Restricted
Subsidiary from Unrestricted Subsidiaries or (ii) the
redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued, in each case, as provided in the
definition of "Investment") not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously
made by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary, which amount was included in the
calculation of the amount of Restricted Payments; plus
(F) $5,000,000.
(2) The provisions of Section 4.04(1) shall not prohibit:
(a) any purchase, repurchase, retirement, defeasance or other
acquisition or retirement for value of Capital Stock or Subordinated
Obligations of the Company made by exchange for, or out of the proceeds
of, the substantially concurrent sale of, Capital Stock of the Company
(other than Disqualified Stock and other than Capital Stock issued or
sold to a Subsidiary of the Company or an employee stock ownership plan
or other trust established by the Company or any of its Subsidiaries);
provided, however, that:
(i) such Restricted Payment shall be excluded in the
calculation of the amount of Restricted Payments; and
(ii) the Net Cash Proceeds from such sale applied in the
manner set forth in this clause (a) shall be excluded from the
calculation of amounts under clause (iii)(B) of Section 4.04(1);
(b) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Indebtedness of the Company that is permitted to be
Incurred pursuant to Section 4.03(2); provided, however, that such
purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value shall be excluded in the calculation of the amount of
Restricted Payments;
(c) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by Section 4.06; provided, however,
that such purchase or redemption shall be excluded in the calculation of
the amount of Restricted Payments;
<PAGE>
37
(d) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with Section 4.04; provided, however, that such dividend shall be included
in the calculation of the amount of Restricted Payments;
(e) the repurchase or other acquisition of shares of, or options to
purchase shares of, common stock of the Company or any of its Subsidiaries
from employees, former employees, consultants, former consultants,
directors or former directors of the Company or any of its Subsidiaries
(or permitted transferees of such employees, former employees,
consultants, former consultants, directors or former directors), pursuant
to the terms of agreements (including employment agreements) or plans (or
amendments thereto) approved by the Board of Directors under which such
individuals purchase or sell, or are granted the option to purchase or
sell, shares of such common stock; provided, however, that the aggregate
amount of such repurchases, together with any amounts or other
distributions to Holdings under Section 4.04(2)(f)(iii), shall not exceed
in any calender year the sum of (i) $5,000,000 plus (ii) the Net Cash
Proceeds received (A) since the date of this Indenture by the Company or
received by Holdings and contributed to the Company from the sale of
Capital Stock to employees, consultants and directors of Holdings or the
Company and (B) not previously credited to any repurchase or other
acquisition of such shares or options to purchase shares of common stock
pursuant to this clause (2)(e)(ii) or clause (2)(f)(iii)(B) of Section
4.04; provided further, however, that such repurchases and other
acquisitions of shares, or options to purchase shares of common stock
shall be included in the calculation of the amount of Restricted Payments;
and
(f) payment of dividends, other distributions or other amounts by
the Company solely for the purposes set forth in clauses (i) through (iv)
below; provided, however, that such dividend, distribution or amount set
forth in clauses (i), (iii) and (iv) (but not clause (ii)) shall be
included in the calculation of the amount of Restricted Payments for the
purposes of Section 4.04(1):
(i) to Holdings in amounts equal to the amounts required for
Holdings to pay franchise taxes and other fees required to maintain
its corporate existence, and provide for other operating costs of up
to $7,500,000 per fiscal year;
(ii) to Holdings in amounts equal to amounts required for
Holdings to pay U.S. federal, state and local income taxes to the
extent such income taxes are attributable to the income of the
Company and its Restricted Subsidiaries (and, to the extent of
amounts actually received from its Unrestricted Subsidiaries, in
amounts required to pay such taxes to the extent attributable to the
income of such Unrestricted Subsidiaries);
(iii) to Holdings in amounts equal to amounts expended by
Holdings to repurchase or otherwise acquire shares of, or options to
purchase shares of, common stock of Holdings from employees, former
employees, consultants, former consultants, directors or former
directors of Holdings, the Company or any of the Company's
Subsidiaries (or permitted transferees of such employees,
<PAGE>
38
former employees, consultants, former consultants, directors or
former directors), pursuant to the terms of agreements (including
employment agreements) or plans (or amendments thereto) approved by
the Board of Directors of Holdings under which such individuals
purchase or sell, or are granted the option to purchase or sell,
shares of such common stock of Holdings; provided, however, that the
aggregate amount paid, loaned or advanced to Holdings pursuant to
this clause (iii), together with the amounts of any repurchases or
other acquisitions under Section 4.04(2)(e), shall not exceed in any
calender year the sum of (A) $5,000,000 plus (B) the Net Cash
Proceeds received (1) since the date of the Indenture by the Company
or received by Holdings and contributed to the Company from the sale
of Capital Stock to employees, consultants and directors of Holdings
or the Company and (2) not previously credited to any repurchase or
other acquisition of such shares or options to purchase shares of
common stock pursuant to this clause (2)(f)(iii)(B) or clause
(2)(e)(ii) of Section 4.04; and
(iv) to Holdings in amounts equal to amounts necessary for
Holdings to make loans or advances to employees in the ordinary
course of business in accordance with past practices of the Company,
but in any event not to exceed, when aggregated with amounts loaned
or advanced under clause (6) of the definition of "Permitted
Investments," $5,000,000 in the aggregate outstanding at any one
time.
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital
Stock or pay any Indebtedness or other obligations owed to the Company or
any of its Restricted Subsidiaries;
(2) make any loans or advances to the Company or any of its
Restricted Subsidiaries; or
(3) transfer any of its property or assets to the Company or any of
its Restricted Subsidiaries,
except:
(a) any encumbrance or restriction pursuant to applicable law
or an agreement in effect at or entered into on the Closing Date;
(b) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any
Indebtedness Incurred by such Restricted Subsidiary prior to the
date on which such Restricted Subsidiary was acquired by the Company
(other than Indebtedness Incurred as consideration in, in
contemplation of, or to provide all or any portion of the funds or
credit support
<PAGE>
39
utilized to consummate the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was otherwise acquired by the Company) and
outstanding on such date;
(c) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (a) or (b) of this Section 4.05 or
this clause (c) or contained in any amendment to an agreement
referred to in clause (a) or (b) of this Section 4.05 or this clause
(c); provided, however, that the encumbrances and restrictions
contained in any such Refinancing agreement or amendment are no less
favorable to the Securityholders than the encumbrances and
restrictions contained in such predecessor agreements;
(d) in the case of clause (3), any encumbrance or restriction:
(i) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is
subject to a lease, license or similar contract; or
(ii) contained in security agreements securing
Indebtedness of a Restricted Subsidiary to the extent such
encumbrance or restriction restricts the transfer of the
property subject to such security agreements;
(e) with respect to a Restricted Subsidiary, any restriction
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets
of such Restricted Subsidiary pending the closing of such sale or
disposition;
(f) any encumbrance or restriction relating to Purchase Money
Indebtedness or Capitalized Lease Obligations for property acquired
in the ordinary course of business that imposes restrictions on the
ability of the Company or a Restricted Subsidiary to sell, lease or
transfer the acquired property to the Company or its Restricted
Subsidiaries;
(g) restrictions on cash or other deposits imposed by
customers under contracts entered into in the ordinary course of
business; and
(h) any encumbrance or restriction contained in joint venture
agreements and other similar agreements entered into in the ordinary
course of business and customary for such types of agreements.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.
(1) The Company shall not, and shall not permit any Restricted Subsidiary to,
make any Asset Disposition unless:
(a) the Company or such Restricted Subsidiary receives consideration
(including by way of relief from, or by any other Person assuming sole
responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Disposition at least equal to
<PAGE>
40
the fair market value, as determined in good faith by the Board of
Directors, of the shares and assets subject to such Asset Disposition;
(b) at least 75% of the consideration thereof received by the
Company or such Restricted Subsidiary is in the form of cash; provided
that the following shall be deemed to be cash for purposes of this clause
(b): (i) the amount of any liabilities (as shown on the Company's, or such
Restricted Subsidiary's, most recent balance sheet or in the notes
thereto) of the Company or any Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Securities or the
Guarantees) that are assumed by the transferee of any such assets, (ii)
the amount of any securities received by the Company or such Restricted
Subsidiary from such transferee that are converted by the Company or such
Restricted Subsidiary into cash (to the extent of the cash received)
within 90 days following the closing of such Asset Disposition, (iii) the
fair market value of any Telecommunications Assets received by the Company
in such Asset Disposition and (iv) the fair market value of any Permitted
Joint Venture Interests received by the Company or any Restricted
Subsidiary in such Asset Disposition; provided that the aggregate fair
market value of all Permitted Joint Venture Interests received pursuant to
this clause (iv), valued, in each case, at the time of receipt, shall not
exceed 10% of Consolidated Net Tangible Assets,
(for purposes of this Section 4.06(1)(b), all determinations of fair
market value shall be made in good faith by the Board of Directors and
evidenced by an Officers' Certificate delivered to the Trustee); and
(c) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company (or such Restricted
Subsidiary, as the case may be):
(i) first, to the extent the Company elects (or is required by
the terms of any Indebtedness), to prepay, repay, redeem, purchase
or otherwise acquire Senior Indebtedness of the Company or
Indebtedness (other than any Disqualified Stock) of a Wholly Owned
Subsidiary (in each case, other than Indebtedness owed to the
Company or an Affiliate of the Company and other than Preferred
Stock) within 180 days of the later of the date of such Asset
Disposition or the receipt of such Net Available Cash;
(ii) second, to the extent of the balance of Net Available
Cash after application in accordance with clause (i) of this Section
4.06(1)(c), to the extent the Company or such Restricted Subsidiary
elects to or enters into a binding agreement to, reinvest in
Additional Assets (including by means of an Investment in Additional
Assets by a Restricted Subsidiary with cash in an amount equal to
the amount of Net Available Cash received by, or to be received by,
the Company or another Restricted Subsidiary) within 180 days of the
later of such Asset Disposition or the receipt of such Net Available
Cash; and
(iii) third, to the extent of the balance of such Net
Available Cash after application in accordance with clauses (i) and
(ii) of this Section 4.06(l)(c), to
<PAGE>
41
make an Offer to purchase Securities pursuant to and subject to the
conditions set forth in paragraph (2) below; provided, however,
that, if the Company elects (or is required by the terms of any
other Senior Subordinated Indebtedness), such Offer may be made
ratably to purchase the Securities and other Senior Subordinated
Indebtedness of the Company;
provided, however that, in connection with any prepayment, repayment
or purchase of Indebtedness pursuant to clause (i) or (iii) of this
Section 4.06(1)(c), the Company or such Restricted Subsidiary shall
retire such Indebtedness and shall cause the related loan commitment
(if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.
Upon completion of any Offer, the amount of Net Available Cash shall
be reset at zero and the Company shall be entitled to use any remaining proceeds
for any corporate purposes to the extent permitted under this Indenture.
Notwithstanding the foregoing provisions of this Section 4.06, the Company and
the Restricted Subsidiaries shall not be required to apply any Net Available
Cash in accordance with this Section 4.06(1) except to the extent that the
aggregate Net Available Cash from all Asset Dispositions that is not applied in
accordance with this Section 4.06(1) exceeds $10,000,000.
(2) In the event of an Asset Disposition that requires the purchase
of Securities pursuant to clause (c)(iii) of Section 4.06(1), the Company shall
be required to offer to purchase Securities tendered pursuant to an offer by the
Company for the Securities (an "Offer") at a purchase price of 100% of their
principal amount plus accrued and unpaid interest thereon, and Additional
Amounts in respect thereof, if any, to the date of purchase in accordance with
the procedures (including prorating in the event of oversubscription) set forth
in Section 4.06(3) and to purchase other Senior Subordinated Indebtedness on the
terms and to the extent contemplated thereby. The Company will not be required
to make an Offer for Securities (and other Senior Subordinated Indebtedness)
pursuant to this Section 4.06 if the Net Available Cash available therefor
(after application of the proceeds as provided in clauses (c)(i) and (c)(ii) of
Section 4.06(1)) is less than $10,000,000 for any particular Asset Disposition
(which lesser amount shall be carried forward for purposes of determining
whether an Offer is required with respect to the Net Available Cash from any
subsequent Asset Disposition).
(3)(a) Promptly, and in any event within 10 days after the Company
becomes obligated to make an Offer, the Company shall be obligated to deliver to
the Trustee and send, by first-class mail to each Holder, a written notice
stating that the Holder may elect to have his Securities purchased by the
Company either in whole or in part (subject to prorating as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain such information
concerning the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum shall
include (i) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form l0-Q and any Current Report on Form
8-K of the Company filed subsequent to such Quarterly Report, other than Current
Reports describing Asset Dispositions otherwise described in
<PAGE>
42
the offering materials (or corresponding successor reports), (ii) a description
of material developments in the Company's business subsequent to the date of the
latest of such reports, and (iii) if material, appropriate pro forma financial
information) and all instructions and materials necessary to tender Securities
pursuant to the Offer, together with the address referred to in clause (c).
(b) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, the Company shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(1). On such date, the
Company shall also irrevocably deposit with the Trustee or with a paying agent
(or, if the Company is acting as its own paying agent, segregate and hold in
trust) an amount equal to the Offer Amount to be invested in Temporary Cash
Investments and to be held for payment in accordance with the provisions of this
Section 4.06. Upon the expiration of the period for which the Offer remains open
(the "Offer Period"), the Company shall deliver to the Trustee for cancelation
the Securities or portions thereof that have been properly tendered to and are
to be accepted by the Company. The Trustee (or the Paying Agent, if not the
Trustee) shall, on the date of purchase, mail or deliver payment to each
tendering Holder in the amount of the purchase price. In the event that the
Offer Amount delivered by the Company to the Trustee is greater than the
purchase price of the Securities (and other Senior Subordinated Indebtedness)
tendered, the Trustee shall deliver the excess to the Company immediately after
the expiration of the Offer Period for application in accordance with this
Section 4.06.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the Purchase Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered by the Holder for purchase and a statement that such Holder is
withdrawing his election to have such Security purchased. If at the expiration
of the Offer Period the aggregate principal amount of Securities and any other
Senior Subordinated Indebtedness included in the Offer surrendered by holders
thereof exceeds the Offer Amount, the Company shall select the Securities and
other Senior Subordinated Indebtedness to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by the Company so that only
Securities and other Senior Subordinated Indebtedness in denominations of
$1,000, or integral multiples thereof, shall be purchased). Holders whose
Securities are purchased only in part will be issued new Securities equal in
principal amount to the unpurchased portion of the Securities surrendered.
(d) At the time the Company delivers Securities to the Trustee which
are to be accepted for purchase, the Company shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Section 4.06. A Security
shall be deemed to have been accepted for purchase at the time the Trustee,
directly or through an agent, mails or delivers payment therefor to the
surrendering Holder.
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43
(4) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.06. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.06, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section by virtue thereof.
SECTION 4.07. Limitation on Transactions with Affiliates. (1) The
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, enter into or conduct any transaction or series of related
transactions (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Company (an "Affiliate
Transaction") unless such Affiliate Transaction is on terms:
(a) that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could be obtained at the
time of such transaction in arms'-length dealings with a Person who is not
such an Affiliate;
(b) that, in the event such Affiliate Transaction involves an
aggregate amount in excess of $5,000,000:
(i) are set forth in writing; and
(ii) have been approved by a majority of the members of the
Board of Directors having no personal stake, other than as a holder
of Capital Stock of Holdings, the Company or such Restricted
Subsidiary, in such Affiliate Transaction; and
(c) that, in the event such Affiliate Transaction involves an amount
in excess of $15,000,000, have been determined by a nationally recognized
appraisal or investment banking firm to be fair, from a financial
standpoint, to the Company and its Restricted Subsidiaries.
(2) The provisions of Section 4.07(1) shall not prohibit:
(a) any Restricted Payment permitted to be paid pursuant to Section
4.04;
(b) any issuance of securities, or other payments, awards or grants
in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans approved
by the Board of Directors;
(c) the grant of stock options or similar rights to employees and
directors of the Company pursuant to plans approved by the Board of
Directors;
(d) loans or advances to employees in the ordinary course of
business in accordance with past practices of the Company, but in any
event not to exceed $10,000,000 in the aggregate outstanding at any one
time;
<PAGE>
44
(e) the payment of reasonable fees to directors of the Company and
its Subsidiaries who are not employees of the Company or its Subsidiaries;
(f) any transaction between the Company and a Restricted Subsidiary
or between Restricted Subsidiaries;
(g) customary indemnification and insurance arrangements in favor of
officers, directors, employees and consultants of Holdings, the Company or
any of the Restricted Subsidiaries;
(h) payments by the Company or any of its Restricted Subsidiaries to
Fox Paine and its Affiliates for any financial advisory, financing,
underwriting or other placement services or in respect of other investment
banking activities, including, without limitation, in connection with
acquisitions or divestitures which payments are approved by a majority of
the members of the Board of Directors referred to in clause (b)(ii) above
in good faith;
(i) the existence of, or the performance by the Company or any of
its Restricted Subsidiaries of the obligations under the terms of, any
stockholders agreements (including any registration rights agreement or
purchase agreement related thereto) to which it is a party as of the
Closing Date, as such agreements, may be amended from time to time
pursuant to the terms thereof; provided, however, that the terms of any
such amendment are no less favorable to the Holders than the terms of any
such agreements in effect as of the Closing Date; and
(j) the issuance of Capital Stock (other than Disqualified Stock) of
the Company for cash to any Permitted Holder.
SECTION 4.08. Change of Control. (a) Upon a Change of Control, each
Holder shall have the right to require that the Company repurchase all or any
part of such Holder's Securities at a purchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest and Additional
Amounts, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date), in accordance with the terms contemplated in Section
4.08(b); provided, however, that notwithstanding the occurrence of a Change of
Control, the Company shall not be obligated to purchase the Securities pursuant
to this Section 4.08 in the event that it has exercised its right to redeem all
the Securities under paragraph 5 of the Securities. In the event that at the
time of such Change of Control the terms of the Bank Indebtedness restrict or
prohibit the repurchase of Securities pursuant to this Section 4.08, then prior
to the mailing of the notice to Holders provided for in Section 4.08(b) below
but in any event within 30 days following any Change of Control, the Company
shall:
(1) repay in full all Bank Indebtedness or, if doing so will allow
the repurchase of the Securities, offer to repay in full all Bank
Indebtedness and repay the Bank Indebtedness of each lender who has
accepted such offer; or
<PAGE>
45
(2) obtain the requisite consent under the agreements governing the
Bank Indebtedness to permit the repurchase of the Securities as provided
for in Section 4.08(b).
(b) Within 30 days following any Change of Control (except as
provided in the proviso to the first sentence of Section 4.08(a)), the Company
shall mail a notice to each Holder with a copy to the Trustee (the "Change of
Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Company to purchase such Holder's Securities at a
purchase price in cash equal to 101% of the principal amount thereof, plus
accrued and unpaid interest thereon and Additional Amounts in respect
thereof, if any, to the date of purchase (subject to the right of Holders
of record on the relevant record date to receive interest on the relevant
interest payment date);
(2) the circumstances and relevant facts and financial information
regarding such Change of Control;
(3) the purchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with this
Section 4.08, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company
under this Section 4.08 shall be delivered to the Trustee for cancelation, and
the Company shall pay the purchase price plus accrued and unpaid interest, if
any, to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section 4.08,
the Company will not be required to make a Change of Control Offer upon a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in Section
4.08(b) applicable to a Change of Control Offer made by the Company and
purchases all Securities validly tendered and not withdrawn under such Change of
Control Offer.
(f) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.08. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.08, the Company shall
<PAGE>
46
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.08 by virtue
thereof.
(g) In the event that Holders of not less than 98% of the principal
amount of the outstanding Securities accept a Change of Control Offer and the
Company purchases all of the Securities held by such Holders, the Company shall
have the right, on not less than 30 nor more than 60 days' prior notice, given
not more than 30 days following the purchase pursuant to the Change of Control
Offer, to redeem all of the Securities that remain outstanding following such
purchase at the purchase price specified in the Change of Control Offer plus, to
the extent not included in the purchase price specified in the Change of Control
Offer, accrued and unpaid interest thereon and Additional Amounts in respect
thereof, if any, to the date of redemption (subject to the right of Holders of
record on the relevant record date to receive interest on the relevant interest
payment date). Any redemption of Securities pursuant to this paragraph (g) shall
be subject to, and made in accordance with, the provisions and requirements of
Article III
SECTION 4.09. Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with Section 314(a)(4) of
the TIA.
SECTION 4.10. Further Instruments and Acts. Upon request of the
Trustee, the Company shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.11. Future Guarantors. The Company shall cause each
Domestic Subsidiary that Incurs Indebtedness to become a Guarantor, and, if
applicable, execute and deliver to the Trustee a supplemental indenture
substantially in the form of Exhibit C pursuant to which such Domestic
Subsidiary will Guarantee payment of the Securities. Each Guarantee shall be
limited to an amount not to exceed the maximum amount that can be Guaranteed by
that Domestic Subsidiary without rendering the Guarantee, as it relates to such
Domestic Subsidiary, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.
SECTION 4.12. Limitation on Lines of Business. The Company shall
not, and shall not permit any Restricted Subsidiary to, engage in any business,
other than a Related Business.
SECTION 4.13. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries. The Company shall not sell or otherwise dispose of any
shares of Capital Stock of a Restricted Subsidiary, and shall not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise
dispose of any shares of its Capital Stock except:
(1) to the Company or a Wholly Owned Subsidiary;
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47
(2) if, immediately after giving effect to such issuance, sale or
other disposition, neither the Company nor any of its Subsidiaries own any
Capital Stock of such Restricted Subsidiary; or
(3) if immediately after giving effect to such issuance or sale,
such Restricted Subsidiary would no longer constitute a Restricted
Subsidiary and any Investment in such Person remaining after giving effect
thereto would have been permitted to be made under Section 4.04 if made on
the date of such issuance, sale or other disposition.
The proceeds of any sale of such Capital Stock permitted hereby shall be treated
as Net Available Cash from an Asset Disposition and shall be applied in
accordance with Section 4.06.
ARTICLE V
Successor Company
SECTION 5.01. (a) When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer or
lease all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation organized and existing under the laws of
the United States of America, any state thereof or the District of
Columbia, and the Successor Company (if not the Company) shall expressly
assume, by a supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of the
Company under the Securities and this Indenture;
(2) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(3) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(1);
(4) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture; and
(5) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders will not recognize income, gain or
loss for Federal income tax purposes as a result of such transaction and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
transaction had not occurred.
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48
Notwithstanding the foregoing clause (2) or (3), the Company may
merge with an Affiliate incorporated or formed solely for the purpose of
reincorporating the Company in another jurisdiction.
The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, this Company under the Indenture, but the
Company, in the case of a conveyance, transfer or lease of all or substantially
all its assets, shall not be released from the obligation to pay the principal
of and interest on the Securities.
(b) The Company shall not permit any Guarantor to consolidate with
or merge with or into, or convey, transfer or lease all or substantially all of
its assets to any Person unless:
(1) the resulting, surviving or transferee Person will be a
corporation organized and existing under the laws of the United States of
America, any state thereof or the District of Columbia, and such Person
(if not such Guarantor) shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of such Guarantor under its Guarantee;
(2) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the resulting,
surviving or transferee Person as a result of such transaction as having
been Incurred by such Person at the time of such transaction), no Default
shall have occurred and be continuing; and
(3) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
Notwithstanding the foregoing clause (2), any Restricted Subsidiary may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company or another Restricted Subsidiary.
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default, An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest on any Security
when the same becomes due and payable, whether or not such payment shall
be prohibited by Article X, and such default continues for a period of 30
days;
(2) the Company (i) defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity,
upon required redemption or repurchase, upon declaration or otherwise,
whether or not such payment shall be prohibited by Article X or (ii) fails
to redeem or purchase Securities when required
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49
pursuant to this Indenture or the Securities, whether or not such
redemption or purchase shall be prohibited by Article X;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05,
4.06, 4.07, 4.08, 4.11, 4.12, 4.13 (other than a failure to purchase
Securities when required under Section 4.06 or 4.08) and such failure
continues for 30 days after the notice to the Company specified below;
(5) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in (1), (2),
(3) or (4) above) and such failure continues for 60 days after the notice
to the Company specified below;
(6) Indebtedness of the Company or any Subsidiary (other than
Indebtedness owing to the Company or a Subsidiary of the Company) is not
paid within any applicable grace period after final maturity or the
acceleration of such Indebtedness by the holders thereof because of a
default and the total amount of such Indebtedness unpaid or accelerated
exceeds $5,000,000 or its foreign currency equivalent at the time and such
failure continues for 10 days after the notice to the Company specified
below;
(7) the Company or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors; or takes any comparable action under any foreign laws
relating to insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
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50
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess of
$5,000,000 or its foreign currency equivalent against the Company or any
Subsidiary of the Company, to the extent such judgment or decree is not
covered by insurance or is in excess of insurance coverage, and there is a
period of 60 days following the entry of such judgment or decree during
which such judgment or decree is not discharged, waived or the execution
thereof stayed; or
(10) any Guarantee ceases to be in full force and effect (except as
contemplated by the terms thereof) or any Guarantor or Person acting by or
on behalf of such Guarantor denies or disaffirms its obligations under
this Indenture or any Guarantee and such Default continues for 10 days
after the notice to the Company specified below.
The foregoing shall constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (4), (5) or (6) above is not an Event of
Default until the Trustee or the Holders of at least 25% in principal amount of
the outstanding Securities notify the Company of the Default and the Company
does not cure such Default within the time specified after receipt of such
notice. Such notice must specify the Default, demand that it be remedied and
state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount of the outstanding Securities by
notice to the Company, may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable. Upon such a declaration,
such principal and interest shall be due and payable immediately. If an Event of
Default specified in Section 6.01(7) or (8) with respect to the Company occurs,
the principal of and interest on all the Securities shall ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Securityholders. The Holders of a majority in principal
amount of the Securities by notice to the Trustee may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of
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51
Default have been cured or waived except nonpayment of principal or interest
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. Notwithstanding any other provision of
the Indenture, if an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of or interest
on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding in its own name and as trustee
of an express trust even if it does not possess any of the Securities or does
not produce any of them in the proceeding. A delay or omission by the Trustee or
any Securityholder in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security, (ii) a Default arising from the failure
to redeem or purchase any Security when required pursuant to the terms of this
Indenture or (iii) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Securityholder affected. When a
Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right to
receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder has previously given to the Trustee written notice
stating that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue the
remedy;
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52
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities
do not give the Trustee a direction inconsistent with the request during
such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and Additional Amounts and interest on the Securities
held by such Holder, on or after the respective due dates expressed in the
Securities, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, any Subsidiary or
Guarantor, their creditors or their property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness of the Company to the
extent required by Article X;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, and any Additional Amounts
without preference or priority
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53
of any kind, according to the amounts due and payable on the Securities
for principal, any Additional Amounts and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section 6.10. At least 15 days before such
record date, the Trustee shall mail to each Securityholder and the Company a
notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. Neither the Company
nor any Guarantor (to the extent it may lawfully do so) shall at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company and each Guarantor (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and shall not hinder, delay or impede the execution of any power herein
granted to the Trustee, but shall suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of
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54
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 7.01 and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
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55
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other paper or document or as to whether or not an Event of
Default shall have occurred unless requested in writing to do so by the Holders
of not less than a majority in principal amount of the Securities at the time
outstanding, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters or occurrence as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying
agent may do the same with like rights. However, the Trustee must comply with
Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication. The Trustee shall not be responsible
for any conduct or omission by the Company or the occurrence of any Event of
Default.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within the earlier of 90 days after it
occurs or 30 days after it is known to a trust officer. Except in the case of a
Default in payment of principal of or interest on any Security (including
payments pursuant to the mandatory redemption provisions of such Security, if
any), the Trustee may withhold the notice if and so long as a committee of its
Trust Officers in good faith determines that withholding the notice is in the
interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 that
complies with Section 313(a) of the TIA. The Trustee shall also comply with
Section 313(b) of the TIA.
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56
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof
SECTION 7.07. Compensation and Indemnity. The Company shall pay to
the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall immediately reimburse the Trustee
upon request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents (including agents that are
not full-time employees of the Trustee or are not regularly employed by the
Trustee), counsel, accountants and experts. For so long as IBJ Whitehall Bank &
Trust Company shall serve as Trustee under this Indenture, compensation shall be
paid to the Trustee in the amounts and at the times set forth in that certain
letter agreement dated May 6, 1999, between IBJ Whitehall Bank & Trust Company
and the Company. The Company and each Guarantor, jointly and severally shall
indemnify, defend and hold harmless the Trustee against any and all loss,
liability or expense (including reasonable attorneys' fees) incurred by or in
connection with the administration of this trust and the performance of its
duties hereunder. The Trustee shall notify the Company of any claim for which it
may seek indemnity promptly upon obtaining actual knowledge thereof; provided,
however, that any failure so to notify the Company shall not relieve the Company
or any Guarantor of its indemnity obligations hereunder. The Company shall
defend the claim and the indemnified party shall provide reasonable cooperation
at the Company's expense in the defense. Such indemnified parties may have
separate counsel and the Company and the Guarantors, as applicable, shall pay
the fees and expenses of such counsel; provided, however, that the Company shall
not be required to pay such fees and expenses if it assumes such indemnified
parties' defense and, in such indemnified parties' reasonable judgment, there is
no conflict of interest between the Company and the Guarantors, as applicable,
and such parties in connection with such defense. The Company need not reimburse
any expense or indemnify, defend or hold harmless against any loss, liability or
expense incurred by an indemnified party through such party's own wilful
misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest and any Additional Amounts on particular
Securities.
The Company's obligations pursuant to this Section 7.07 shall
survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. When the Trustee incurs expenses after the occurrence of
a Default specified in Section 6.01(7) or (8) with respect to the Company, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Company in writing in accordance with the provisions of
Section 13.02. Any
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57
resignation of the Trustee shall be effective immediately upon receipt by the
Company of such notice (unless such notice shall specify a later time as the
effective time of such resignation, in which case such later time shall be the
effective time), and the resignation of the Trustee shall not prejudice any
rights of the Trustee to receive any compensation, any reimbursement of any
expenses or any indemnity or right to being defended and held harmless under the
Indenture. The Holders of a majority in principal amount of the Securities may
remove the Trustee by so notifying the Trustee and may appoint a successor
Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders
of a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
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In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility: Disqualification. The Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have
a combined capital and surplus of at least $100,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply
with TIA ss. 310(b); provided, however, that there shall be excluded from the
operation of TIA ss. 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities
of the Company are outstanding if the requirements for such exclusion set
forth in TIA ss. 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
When (i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancelation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III hereof,
and the Company irrevocably deposits with the Trustee funds or U.S. Government
Obligations on which payment of principal and interest when due will be
sufficient to pay at maturity or upon redemption all outstanding Securities,
including interest thereon to maturity or such redemption date (other than
Securities replaced pursuant to Section 2.07), and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time
may terminate (i) all of its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.13 and the operation
of Section 5.01(a)(3), 5.01(a)(4), 6.01(4), 6.01(6), 6.01(7) (with respect to
Significant Subsidiaries of the Company only), 6.01(8) (with respect to
Significant Subsidiaries of
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59
the Company only) and 6.01(9) ("covenant defeasance option"). The Company may
exercise its legal defeasance option notwithstanding its prior exercise of its
covenant defeasance option. In the event that the Company terminates all of its
obligations under the Securities and this Indenture by exercising its legal
defeasance option, the obligations under the Guarantees shall each be terminated
simultaneously with the termination of such obligations.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Section 6.01(4),
6.01(6), 6.01(7) (with respect to Significant Subsidiaries of the Company only),
6.01(8) (with respect to Significant Subsidiaries of the Company only) or
6.01(9) or because of the failure of the Company to comply with clauses (3) and
(4) of Section 5.01(a).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07, 7.08 and in
this Article VIII shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02. Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal, premium (if
any) and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment in the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(7) or (8) with respect to the
Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article X;
(5) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment company under the Investment
Company Act of 1940;
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(6) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable Federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel shall confirm that, the
Securityholders will not recognize income, gain or loss for Federal income tax
purposes as a result of such defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the same times as would
have been the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for Federal income
tax purposes as a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred; and
(8) the Company delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
VIII have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article III.
SECTION 8.03. APPLICATION OF TRUST MONEY. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
Money and securities so held in trust are not subject to Article X.
SECTION 8.04. REPAYMENT TO COMPANY. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to
the Company for payment as general creditors.
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS. The Company shall
pay and shall indemnify, defend and hold harmless the Trustee against any
tax, fee or other charge imposed on or assessed against deposited U.S.
Government Obligations or the principal and interest received on such U.S.
Government Obligations.
SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority
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61
enjoining, restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to this Article VIII until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with this Article VIII; provided,
however, that, if the Company has made any payment of interest on or principal
of any Securities because of the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Securities to receive
such payment from the money or U.S. Government Obligations held by the Trustee
or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company, the
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article X or Article XII that would limit
or terminate the benefits available to any holder of Senior Indebtedness
(or Representatives therefor) under Article X or Article XII;
(5) to add additional Guarantees with respect to the Securities or
to secure the Securities;
(6) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(7) to comply with any requirement of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA;
(8) to make any change that does not adversely affect the rights of
any Securityholder; or
(9) to provide for the issuance of the Exchange Securities or
Private Exchange Securities which shall have terms substantially identical
in all material respects to the Original Securities (except that the
transfer restrictions contained in the Original
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62
Securities shall be modified or eliminated, as appropriate), and which
shall be treated, together with any outstanding Original Securities, as a
single issue of securities.
An amendment under this Section may not make any change that
adversely affects the rights under Article X or Article XII of any holder of
Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section 9.01 becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.01.
SECTION 9.02. With Consent of Holders. The Company, the Guarantors
and the Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange for the
Securities). However, without the consent of each Securityholder affected, an
amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest or
any Additional Amounts on any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption of any Security
or change the time at which any Security may be redeemed in accordance
with Article III;
(5) make any Security payable in money other than that stated in the
Security;
(6) make any change in Article X or Article XII that adversely
affects the rights of any Securityholder under Article X or Article XII;
(7) make any change in Section 6.04 or 6.07 or the second sentence
of this Section 9.02; or
(8) modify the Guarantees in any manner adverse to the Holders.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section 9.02 may not make any change that
adversely affects the rights under Article X or Article XII of any holder of
Senior Indebtedness then
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63
outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section 9.02 becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.02.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date on which the Trustee receives an Officers'
Certificate from the Company certifying that the requisite number of consents
have been received. After an amendment or waiver becomes effective, it shall
bind every Securityholder. An amendment or waiver becomes effective upon the (i)
receipt by the Company or the Trustee of the requisite number of consents, (ii)
satisfaction of conditions to effectiveness as set forth in this Indenture and
any indenture supplemental hereto containing such amendment or waiver and (iii)
execution of such amendment or waiver (or supplemental indenture) by the Company
and the Trustee.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
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upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture and that such amendment
is the legal, valid and binding obligation of the Company and the Guarantors
enforceable against them in accordance with its terms, subject to customary
exceptions, and complies with the provisions hereof (including Section 9.03).
ARTICLE X
Subordination
SECTION 10.01. Agreement To Subordinate. The Company agrees, and
each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities is subordinated in right of payment, to the extent
and in the manner provided in this Article X, to the prior payment in full of
all Senior Indebtedness of the Company and that the subordination is for the
benefit of and enforceable by the holders of such Senior Indebtedness. The
Securities shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of the Company and only Indebtedness of the Company
that is Senior Indebtedness of the Company shall rank senior to the Securities
in accordance with the provisions set forth herein. For purposes of this Article
X, the Indebtedness evidenced by the Securities shall be deemed to include the
Additional Amounts payable pursuant to the provisions set forth in the
Securities and the Registration Agreement. All provisions of this Article X
shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company upon a total or partial
liquidation or a total or partial dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property:
(1) holders of Senior Indebtedness of the Company shall be entitled
to receive payment in full in cash or cash equivalents of such Senior
Indebtedness (including interest accruing after, or that would accrue but
for, the commencement of such proceeding at the rate specified in the
applicable Senior Indebtedness, whether or not such claim for such
interest would be allowed) before the Securityholders are entitled to
receive any payment of principal or interest on the Securities; and
(2) until the Senior Indebtedness of the Company is paid in full in
cash or cash equivalents any payment or distribution to which
Securityholders would be entitled but for this Article X shall be made to
holders of such Senior Indebtedness as their interests may appear, except
that Holders may receive and retain:
(A) Permitted Junior Securities; and
(B) payments made from the trust described under Section 8.01
so long as, on the date or dates the respective amounts were paid
into the trust, such payments were made with respect to the
Securities without violating the subordination provisions described
herein.
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65
SECTION 10.03. Default on Senior Indebtedness. The Company may not
pay the principal of, premium (if any) or interest on (or Additional Amounts in
respect of), the Securities, or make any deposit pursuant to Section 8.01, and
may not otherwise purchase, redeem or otherwise retire any Securities
(collectively, "pay the Securities") if:
(1) a default in the payment of the principal of, premium, if any,
or interest on any Designated Senior Indebtedness of the Company occurs
and is continuing or any other amount owing in respect of any Designated
Senior Indebtedness of the Company is not paid when due; or
(2) any other default on Designated Senior Indebtedness of the
Company occurs and the maturity of such Designated Senior Indebtedness is
accelerated in accordance with its terms,
unless, in either case,
(a) the default has been cured or waived and any such acceleration
has been rescinded; or
(b) such Designated Senior Indebtedness has been paid in full in
cash or cash equivalents;
provided, however, that the Company may pay the Securities without regard to the
foregoing if the Company and the Trustee receive written notice approving such
payment from the Representative of such Designated Senior Indebtedness with
respect to which either of the events set forth in clause (1) or (2) of this
sentence has occurred and is continuing.
During the continuance of any default (other than a default
described in clause (1) or (2) of the preceding sentence) with respect to any
Designated Senior Indebtedness of the Company pursuant to which the maturity
thereof may be accelerated immediately without further notice (except such
notice as may be required to effect such acceleration) or the expiration of any
applicable grace periods, the Company may not pay the Securities for a period (a
"Payment Blockage Period") commencing upon the receipt by the Trustee (with a
copy to the Company) of written notice (a "Blockage Notice") of such default
from the Representative of such Designated Senior Indebtedness specifying an
election to effect a Payment Blockage Period and ending 179 days thereafter (or
earlier if such Payment Blockage Period is terminated:
(1) by written notice to the Trustee and the Company from the Person
or Persons who gave such Blockage Notice;
(2) by repayment in full in cash or cash equivalents of such
Designated Senior Indebtedness; or
(3) because the default giving rise to such Blockage Notice is no
longer continuing).
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Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the preceding paragraph and in the
immediately succeeding paragraph), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume payments
on the Securities after the end of such Payment Blockage Period.
Not more than one Blockage Notice may be given in any period of 360
consecutive days, irrespective of the number of defaults with respect to
Designated Senior Indebtedness during such period. However, if any Blockage
Notice within such 360-day period is given by or on behalf of any holders of
Designated Senior Indebtedness other than the Bank Indebtedness, the
Representative of the Bank Indebtedness may give another Blockage Notice within
such period. In no event, however, may the total number of days during which any
Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate
during any period of 360 consecutive days. For purposes of this Section 10.03,
no default or event of default that existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the Representative of such Designated Senior Indebtedness, whether or not within
a period of 360 consecutive days, unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
SECTION 10.04. Acceleration of Payment of Securities. If payment of
the Securities is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
of the Company (or their Representative) of the acceleration. If any Designated
Senior Indebtedness of the Company is outstanding, the Company may not pay the
Securities until five Business Days after such holders or the Representative of
such Designated Senior Indebtedness receive notice of such acceleration and,
thereafter, may pay the Securities only if this Article X otherwise permits
payment at that time.
SECTION 10.05. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article X should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness of the Company and pay
it over to them as their interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness of the
Company is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to Senior Indebtedness. A
distribution made under this Article X to holders of such Senior Indebtedness
which otherwise would have been made to Securityholders is not, as between the
Company and Securityholders, a payment by the Company on such Senior
Indebtedness.
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SECTION 10.07. Relative Rights. This Article X defines the relative
rights of Securityholders and holders of Senior Indebtedness of the Company.
Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on and Additional Amounts in respect of, the
Securities in accordance with their terms; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness of the Company to receive distributions otherwise
payable to Securityholders.
SECTION 10.08. Subordination May Not Be Impaired by Company. No
right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or by its failure to comply with
this Indenture.
SECTION 10.09. Rights of Trustee and Paving Agent. Notwithstanding
Section 10.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article X. The Company, the Registrar, the Paying Agent, a Representative or a
holder of Senior Indebtedness of the Company may give the notice; provided,
however, that, if an issue of Senior Indebtedness of the Company has a
Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of the Company with the same rights it would have if it were not
Trustee. The Registrar and the Paying Agent may do the same with like rights.
The Trustee shall be entitled to all the rights set forth in this Article X with
respect to any Senior Indebtedness of the Company which may at any time be held
by it, to the same extent as any other holder of such Senior Indebtedness; and
nothing in Article VII shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article X shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
SECTION 10.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of the Company, the distribution may be made and the notice given to their
Representative (if any).
SECTION 10.11. Article X Not To Prevent Defaults or Effect Right To
Accelerate. The failure to make a payment pursuant to the Securities by reason
of any provision in this Article X shall not be construed as preventing the
occurrence of a Default. Nothing in this Article X shall have any effect on the
right of the Securityholders or the Trustee to accelerate the maturity of the
Securities.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government
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Obligations held in trust under Article VIII by the Trustee for the payment of
principal of and interest on the Securities shall not be subordinated to the
prior payment of any Senior Indebtedness of the Company or subject to the
restrictions set forth in this Article X, and none of the Securityholders shall
be obligated to pay over any such amount to the Company or any holder of Senior
Indebtedness of the Company or any other creditor of the Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article X. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company to participate
in any payment or distribution pursuant to this Article X, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article X, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article X.
SECTION 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of the Company as provided in this Article X and appoints
the Trustee as attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of the Company and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to Securityholders or
the Company or any other Person, money or assets to which any holders of Senior
Indebtedness of the Company shall be entitled by virtue of this Article X or
otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of the Company, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
such Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
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SECTION 10.17. Trustee's Compensation Not Prejudiced. Nothing in
this Article shall apply to amounts due to the Trustee pursuant to other
sections of this Indenture.
ARTICLE XI
Guarantees
SECTION 11.01. Guarantees. Each Guarantor hereby jointly and
severally irrevocably and unconditionally guarantees, as a primary obligor and
not merely as a surety, to each Holder and to the Trustee and its successors and
assigns (a) the full and punctual payment when due, whether at Stated Maturity,
by acceleration, by redemption or otherwise, of all obligations of the Company
under this Indenture (including obligations to the Trustee) and the Securities,
whether for payment of principal of, interest on or Additional Amounts in
respect of the Securities and all other monetary obligations of the Company
under this Indenture and the Securities and (b) the full and punctual
performance within applicable grace periods of all other obligations of the
Company whether for expenses, indemnification or otherwise under this Indenture
and the Securities (all the foregoing being hereinafter collectively called the
"Guaranteed Obligations"). Each Guarantor further agrees that the Guaranteed
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from each such Guarantor, and that each such Guarantor shall
remain bound under this Article XI notwithstanding any extension or renewal of
any Guaranteed Obligation.
Each Guarantor waives presentation to, demand of, payment from and
protest to the Company of any of the Guaranteed Obligations and also waives
notice of protest for nonpayment. Each Guarantor waives notice of any default
under the Securities or the Guaranteed Obligations. The obligations of each
Guarantor hereunder shall not be affected by (a) the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any right or remedy
against the Company or any other Person under this Indenture, the Securities or
any other agreement or otherwise; (b) any extension or renewal of any thereof;
(c) any rescission, waiver, amendment or modification of any of the terms or
provisions of this Indenture, the Securities or any other agreement; (d) the
release of any security held by any Holder or the Trustee for the Guaranteed
Obligations or any of them; (e) the failure of any Holder or Trustee to exercise
any right or remedy against any other guarantor of the Guaranteed Obligations;
or (f) any change in the ownership of such Guarantor, except as provided in
Section 11.02(b).
Each Guarantor hereby waives any right to which it may be entitled
to have its obligations hereunder divided among the Guarantors, such that such
Guarantor's obligations would be less than the full amount claimed. Each
Guarantor hereby waives any right to which it may be entitled to have the assets
of the Company first be used and depleted as payment of the Company's or such
Guarantor's obligations hereunder prior to any amounts being claimed from or
paid by such Guarantor hereunder. Each Guarantor hereby waives any right to
which it may be entitled to require that the Company be sued prior to an action
being initiated against such Guarantor.
Each Guarantor further agrees that its Guarantee herein constitutes
a guarantee of payment, performance and compliance when due (and not a guarantee
of collection) and waives
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any right to require that any resort be had by any Holder or the Trustee to any
security held for payment of the Guaranteed Obligations.
The Guarantee of each Guarantor is, to the extent and in the manner
set forth in Article XII, subordinated and subject in right of payment to the
prior payment in full of the principal of and premium, if any, and interest on
all Senior Indebtedness of the relevant Guarantor and is made subject to such
provisions of this Indenture.
Except as expressly set forth in Sections 8.01(b), 11.02 and 11.06,
the obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Guaranteed Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under this Indenture, the
Securities or any other agreement, by any waiver or modification of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
any Guarantor or would otherwise operate as a discharge of any Guarantor as a
matter of law or equity.
Each Guarantor agrees that its Guarantee shall remain in full force
and effect until payment in full of all the Guaranteed Obligations. Each
Guarantor further agrees that its Guarantee herein shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal of or interest on any Guaranteed Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest on any Guaranteed Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Guaranteed Obligation, each Guarantor hereby
promises to and shall, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (i) the unpaid principal amount of such Guaranteed Obligations,
(ii) accrued and unpaid interest on such Guaranteed Obligations (but only to the
extent not prohibited by law) and (iii) all other monetary obligations of the
Company to the Holders and the Trustee.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any Guaranteed Obligations
guaranteed hereby until payment in full of all Guaranteed Obligations and all
obligations to which the Guaranteed Obligations are subordinated as provided in
Article XII. Each Guarantor further agrees that, as between it, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
Guaranteed Obligations guaranteed hereby may be accelerated as provided in
Article VI for the purposes of any Guarantee herein, notwithstanding any stay,
injunction or other prohibition preventing such
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acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (y)
in the event of any declaration of acceleration of such Guaranteed Obligations
as provided in Article VI, such Guaranteed Obligations (whether or not due and
payable) shall forthwith become due and payable by such Guarantor for the
purposes of this Section 11.01.
Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the Trustee or
any Holder in enforcing any rights under this Section 11.01.
Upon request of the Trustee, each Guarantor shall execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this Indenture.
SECTION 11.02. Limitation on Liability. (a) Any term or provision of
this Indenture to the contrary notwithstanding, the maximum, aggregate amount of
the Guaranteed Obligations guaranteed hereunder by any Guarantor shall not
exceed the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to such Guarantor, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
(b) A Guarantee as to any Guarantor shall terminate and be of no
further force or effect and such Guarantor shall be deemed to be released from
all obligations under this Article XI upon (i) (A) the merger or consolidation
of such Guarantor with or into any Person other than the Company or a Subsidiary
or Affiliate of the Company where such Guarantor is not the surviving entity of
such consolidation or merger or (B) the sale by the Company or any Subsidiary of
the Company (or any pledgee of the Company) of the Capital Stock, or all or
substantially all the assets, of any Guarantor that is a Subsidiary of the
Company, where, after such sale, such Guarantor is no longer a Subsidiary of the
Company; provided, however, that each such merger, consolidation or sale (or, in
the case of a sale by such a pledgee, the disposition of the proceeds of such
sale) shall comply with Section 4.06 and Section 5.01(b), (ii) the failure of
any Guarantor that is a Subsidiary of the Company to remain a Subsidiary of the
Company as a result of any foreclosure of any pledge or security interest
securing Bank Indebtedness or other exercise of remedies in respect thereof;
provided, however, that such Guarantor shall also be released from its
guarantees of the Credit Agreement and that all pledges and security interests
granted in connection with the Credit Agreement shall be terminated or (iii) the
release of any Guarantor from its guarantees of, and the termination of all
pledges and security interests granted in connection with, the Credit Agreement
and any other Indebtedness of the Company in respect of which such Guarantor has
provided a guarantee. At the request of the Company, the Trustee shall execute
and deliver an appropriate instrument evidencing such release.
SECTION 11.03. Successors and Assigns. This Article XI shall be
binding upon each Guarantor and its successors and assigns and shall inure to
the benefit of the successors and assigns of the Trustee and the Holders and, in
the event of any transfer or assignment of rights by any Holder or the Trustee,
the rights and privileges conferred upon that party in this Indenture and in the
Securities shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
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SECTION 11.04. No Waiver. Neither a failure nor a delay on the part
of either the Trustee or the Holders in exercising any right, power or privilege
under this Article XI shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article XI at law,
in equity, by statute or otherwise.
SECTION 11.05. Modification. No modification, amendment or waiver of
any provision of this Article XI, nor the consent to any departure by any
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in the same, similar or other
circumstances.
SECTION 11.06. Execution of Supplemental Indenture for Future
Guarantors. Each Subsidiary which is required to become a Guarantor pursuant to
Section 4.11 shall promptly execute and deliver to the Trustee a supplemental
indenture in the form of Exhibit C hereto pursuant to which such Subsidiary
shall become a Guarantor under this Article XI and shall guarantee the
Guaranteed Obligations. Concurrently with the execution and delivery of such
supplemental indenture, the Company shall deliver to the Trustee an Opinion of
Counsel and an Officers' Certificate to the effect that such supplemental
indenture has been duly authorized, executed and delivered by such Subsidiary
and that, subject to the application of bankruptcy, insolvency, moratorium,
fraudulent conveyance or transfer and other similar laws relating to creditors'
rights generally and to the principles of equity, whether considered in a
proceeding at law or in equity, the Guarantee of such Guarantor is a legal,
valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms.
ARTICLE XII
Subordination of the Guarantees
SECTION 12.01. Agreement To Subordinate. Each Guarantor agrees, and
each Securityholder by accepting a Security agrees, that the obligations of a
Guarantor hereunder are subordinated in right of payment, to the extent and in
the manner provided in this Article XII, to the prior payment in full of all
Senior Indebtedness of such Guarantor and that the subordination is for the
benefit of and enforceable by the holders of such Senior Indebtedness of such
Guarantor. The obligations hereunder with respect to a Guarantor shall in all
respects rank pari passu with all other Senior Subordinated Indebtedness of such
Guarantor and shall rank senior to all existing and future Subordinated
Obligations of such Guarantor; and only Indebtedness of such Guarantor that is
Senior Indebtedness of such Guarantor shall rank senior to the obligations of
such Guarantor in accordance with the provisions set forth herein.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of a Guarantor upon a total or partial
liquidation or a total or partial
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dissolution of such Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Guarantor or its property:
(1) holders of Senior Indebtedness of such Guarantor shall be
entitled to receive payment in full in cash or cash equivalents of such
Senior Indebtedness (including interest accruing after, or that would
accrue but for, the commencement of such proceeding at the rate specified
in the applicable Senior Indebtedness, whether or not such claim for such
interest would be allowed) before the Securityholders are entitled to
receive any payment pursuant to any Guaranteed Obligations of such
Guarantor; and
(2) until the Senior Indebtedness of such Guarantor is paid in full
in cash or cash equivalents any payment or distribution to which
Securityholders would be entitled but for this Article XII shall be made
to holders of such Senior Indebtedness as their respective interests may
appear, except that Securityholders may receive and retain:
(A) Permitted Junior Securities; and
(B) payments made from the trust described under Section 8.01
so long as, on the date or dates the respective amounts were paid
into the trust, such payments were made with respect to the
Securities without violating the subordination provisions described
herein.
SECTION 12.03. Default on Designated Senior Indebtedness of a
Guarantor. A Guarantor may not make any payment pursuant to any of the
Guaranteed Obligations or repurchase, redeem or otherwise retire any Securities
(collectively, "pay its Guarantee") if:
(1) a default in the payment of the principal of, premium, if any,
or interest on any Designated Senior Indebtedness of such Guarantor occurs
and is continuing or any other amount owing in respect of any Designated
Senior Indebtedness of such Guarantor is not paid when due; or
(2) any other default on Designated Senior Indebtedness of such
Guarantor occurs and the maturity of such Designated Senior Indebtedness
is accelerated in accordance with its terms,
unless, in either case,
(a) the default has been cured or waived and any such acceleration
has been rescinded; or
(b) such Designated Senior Indebtedness has been paid in full in
cash or cash equivalents;
provided, however, that such Guarantor may pay its Guarantee without regard to
the foregoing if such Guarantor and the Trustee receive written notice approving
such payment from the Representative of the holders of such Designated Senior
Indebtedness with respect to which either of the events set forth in clause (1)
or (2) of this sentence has occurred and is continuing.
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During the continuance of any default (other than a default
described in clause (1) or (2) of the preceding sentence) with respect to any
Designated Senior Indebtedness of a Guarantor pursuant to which the maturity
thereof may be accelerated immediately without further notice (except such
notice as may be required to effect such acceleration) or the expiration of any
applicable grace periods, such Guarantor may not pay its Guarantee for a period
(a "Payment Blockage Period") commencing upon the receipt by the Trustee (with a
copy to such Guarantor and the Company) of written notice (a "Blockage Notice")
of such default from the Representative of the holders of the Designated Senior
Indebtedness of such Guarantor specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated:
(1) by written notice to the Trustee (with a copy to such Guarantor
and the Company) from the Person or Persons who gave such Blockage Notice;
(2) by repayment in full in cash or cash equivalents of such
Designated Senior Indebtedness; or
(3) because the default giving rise to such Blockage Notice is no
longer continuing).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the preceding paragraph and in the
immediately succeeding paragraph), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, such Guarantor may resume
payments on its Guarantee after the end of such Payment Blockage Period.
Not more than one Blockage Notice may be given in any period of 360
consecutive days, irrespective of the number of defaults with respect to
Designated Senior Indebtedness of such Guarantor during such period. However, if
any Blockage Notice within such 360-day period is given by or on behalf of any
holders of Designated Senior Indebtedness other than the Bank Indebtedness, the
Representative of the Bank Indebtedness may give another Blockage Notice within
such period. In no event, however, may the total number of days during which any
Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate
during any period of 360 consecutive days. For purposes of this paragraph, no
default or event of default that existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the Representative of such Designated Senior Indebtedness, whether or not within
a period of 360 consecutive days, unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
SECTION 12.04. Demand for Payment. If payment of the Securities is
accelerated because of an Event of Default and a demand for payment is made on a
Guarantor pursuant to Article XI, the Trustee shall promptly notify the holders
of the Designated Senior Indebtedness of such Guarantor (or the Representative
of such holders) of such demand. If any Designated Senior Indebtedness of such
Guarantor is outstanding, such Guarantor may not pay its Guarantee until five
Business Days after such holders or the Representative of the holders of the
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Designated Senior Indebtedness of such Guarantor receive notice of such demand
and, thereafter, may pay its Guarantee only if this Article XII otherwise
permits payment at that time.
SECTION 12.05. When Distribution Must Be Paid Over. If a payment or
distribution is made to Securityholders that because of this Article XII should
not have been made to them, the Securityholders who receive the payment or
distribution shall hold such payment or distribution in trust for holders of the
Senior Indebtedness of the relevant Guarantor and pay it over to them as their
respective interests may appear.
SECTION 12.06. Subrogation. After all Senior Indebtedness of a
Guarantor is paid in full and until the Securities are paid in full in cash,
Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness of such Guarantor to receive distributions applicable to Designated
Senior Indebtedness of such Guarantor. A distribution made under this Article
XII to holders of Senior Indebtedness of such Guarantor which otherwise would
have been made to Securityholders is not, as between such Guarantor and
Securityholders, a payment by such Guarantor on Senior Indebtedness of such
Guarantor.
SECTION 12.07. Relative Rights. This Article XII defines the
relative rights of Securityholders and holders of Senior Indebtedness of a
Guarantor. Nothing in this Indenture shall:
(1) impair, as between a Guarantor and Securityholders, the
obligation of a Guarantor which is absolute and unconditional, to make
payments with respect to the Guaranteed Obligations to the extent set
forth in Article XI; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a default by a Guarantor under its obligations
with respect to the Guaranteed Obligations, subject to the rights of
holders of Senior Indebtedness of such Guarantor to receive distributions
otherwise payable to Securityholders.
SECTION 12.08. Subordination May Not Be Impaired by a Guarantor. No
right of any holder of Senior Indebtedness of a Guarantor to enforce the
subordination of the obligations of such Guarantor hereunder shall be impaired
by any act or failure to act by such Guarantor or by its failure to comply with
this Indenture.
SECTION 12.09. Rights of Trustee and Paying Agent. Notwithstanding
Section 12.03, the Trustee or the Paying Agent may continue to make payments on
the Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article XII. A Guarantor, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness of a Guarantor may give the
notice; provided, however, that if an issue of Senior Indebtedness of a
Guarantor has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of a Guarantor with the same rights it would have if it were not
Trustee. The Registrar and
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co-registrar and the Paying Agent may do the same with like rights. The Trustee
shall be entitled to all the rights set forth in this Article XII with respect
to any Senior Indebtedness of a Guarantor which may at any time be held by it,
to the same extent as any other holder of Senior Indebtedness of such Guarantor;
and nothing in Article VII shall deprive the Trustee of any of its rights as
such holder. Nothing in this Article XII shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 7.07.
SECTION 12.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of a Guarantor, the distribution may be made and the notice given to their
Representative (if any).
SECTION 12.11. Article XII Not To Prevent Defaults or Effect Right
To Demand Payment. The failure of a Guarantor to make a payment on any of its
obligations by reason of any provision in this Article XII shall not be
construed as preventing the occurrence of a default by such Guarantor under such
obligations. Nothing in this Article XII shall have any effect on the right of
the Securityholders or the Trustee to make a demand for payment on a Guarantor
pursuant to Article XI.
SECTION 12.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article XII, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of a Guarantor for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness of a Guarantor and other Indebtedness of a Guarantor, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article XII. In the event that
the Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness of a Guarantor to
participate in any payment or distribution pursuant to this Article XII, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness of such
Guarantor held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article XII, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment. The
provisions of Sections 7.01 and 7.02 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article XII.
SECTION 12.13. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
or her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Securityholders and the
holders of Senior Indebtedness of each of the Guarantors as provided in this
Article XII and appoints the Trustee as attorney-in-fact for any and all such
purposes.
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of a Guarantor. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of a Guarantor and shall
not be liable to any such holders if it shall mistakenly pay
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over or distribute to Securityholders or the relevant Guarantor or any other
Person, money or assets to which any holders of Senior Indebtedness of such
Guarantor shall be entitled by virtue of this Article XII or otherwise.
SECTION 12.15. Reliance by Holders of Senior Indebtedness of a
Guarantor on Subordination Provisions. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Senior Indebtedness of a Guarantor, whether such Senior Indebtedness was
created or acquired before or after the issuance of the Securities, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of Senior Indebtedness shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
SECTION 12.16. Defeasance. The terms of this Article XII shall not
apply to payments from money or the proceeds of U.S. Government Obligations held
in trust by the Trustee for the payment of principal of and interest on the
Securities pursuant to the provisions described in Section 8.03.
ARTICLE XIII
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Alaska Communications Systems Holdings, Inc.
510 L. Street
Suite 500
Anchorage, Alaska 99501
Attention of:
Michael E. Holmstrom
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if to the Trustee:
IBJ Whitehall Bank & Trust Company
1 State Street
New York, New York 10004
Attention of:
Corporate Trust Department
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. When Securities Disregarded. In determining whether
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company, any Guarantor or
by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any Guarantor shall be
disregarded and deemed not to be outstanding, except that, for the purpose of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee knows are so
owned shall be so disregarded. Subject to the foregoing, only Securities
outstanding at the time shall be considered in any such determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 13.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 13.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 13.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 13.11. Successors. All agreements of the Company and each
Guarantor in this Indenture and the Securities shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors.
<PAGE>
80
SECTION 13.12. Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 13.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
ALASKA COMMUNICATIONS SYSTEMS
HOLDINGS, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
ALEC HOLDINGS, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
TELEPHONE UTILITIES OF ALASKA, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
TELEPHONE UTILITIES OF THE NORTHLAND,
INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
<PAGE>
PTI COMMUNICATIONS OF ALASKA, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
PACIFIC TELECOM OF ALASKA PCS, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
PACIFIC TELECOM CELLULAR OF ALASKA,
INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
ATU COMMUNICATIONS, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
MACTEL, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
MACTEL FAIRBANKS, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
<PAGE>
ATU LONG DISTANCE, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
PENINSULA CELLULAR SERVICES, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
PRUDHOE COMMUNICATIONS, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
ALASKA COMMUNICATIONS SYSTEMS, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
ALEC ACQUISITION SUB CORP.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
MACTEL LICENSE SUB, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
<PAGE>
MACTEL FAIRBANKS LICENSE SUB, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
PTINET, INC.,
by /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President
IBJ WHITEHALL BANK & TRUST COMPANY, as
Trustee,
by /s/ Luis Perez
-------------------------------------
Name: Luis Perez
Title: Asst. Vice President
<PAGE>
APPENDIX A
PROVISIONS RELATING TO ORIGINAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. Definitions.
1.01. Definitions. For the purposes of this Appendix A the following
terms shall have the meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Regulation S Global Security or beneficial interest
therein, the rules and procedures of the Depositary for such Global Security,
Euroclear and Cedel, in each case to the extent applicable to such transaction
and as in effect from time to time.
"Cedel" means Cedel Bank, S.A., or any successor securities clearing
agency.
"Definitive Security" means a certificated Original Security or
Exchange Security (bearing the Restricted Securities Legend if the transfer of
such Security is restricted by applicable law) that does not include the Global
Securities Legend.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Euroclear" means the Euroclear Clearance System or any successor
securities clearing agency.
"Global Securities Legend" means the legend set forth under that
caption in Exhibit A to this Indenture.
"IAI" means an institutional "accredited investor" as described in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Initial Purchasers" means Chase Securities Inc., CIBC World Markets
Corp. and Credit Suisse First Boston Corporation.
"Private Exchange" means an offer by the Company, pursuant to the
Registration Agreement, to issue and deliver to certain purchasers, in exchange
for the Original Securities held by such purchasers as part of their initial
distribution, a like aggregate principal amount of Private Exchange Securities.
"Private Exchange Securities" means the Securities of the Company
issued in exchange for Original Securities pursuant to this Indenture in
connection with a Private Exchange pursuant to the Registration Agreement.
"Purchase Agreement" means the Purchase Agreement dated May 11,
1999, among the Company, ALEC Holdings, Inc., Alaska Communications Systems,
Inc., ALEC
<PAGE>
2
Acquisition Sub Corp., MACtel License Sub, Inc., MACtel Fairbanks License Sub,
Inc. and PTINet, Inc.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Registered Exchange Offer" means an offer by the Company, pursuant
to the Registration Agreement, to certain Holders of Original Securities, to
issue and deliver to such Holders, in exchange for their Original Securities, a
like aggregate principal amount of Exchange Securities registered under the
Securities Act.
"Registration Agreement" means the Exchange and Registration Rights
Agreement dated May 14, 1999, among the Company, the Guarantors and the Initial
Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Securities" means all Original Securities offered and
sold outside the United States in reliance on Regulation S.
"Restricted Period", with respect to any Securities, means the
period of 40 consecutive days beginning on and including the later of (i) the
day on which such Securities are first offered to persons other than
distributors (as defined in Regulation S under the Securities Act) in reliance
on Regulation S and (ii) the Issue Date with respect to such Securities.
"Restricted Securities Legend" means the legend set forth in Section
2.3(e)(i) herein.
"Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Securities" means all Original Securities offered and
sold to QIBs in reliance on Rule 144A.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depositary) or any successor person thereto, who
shall initially be the Trustee.
"Shelf Registration Statement" means a registration statement filed
by the Company in connection with the offer and sale of Original Securities
pursuant to the Registration Agreement.
"Transfer Restricted Securities" means Definitive Securities and any
other Securities that bear or are required to bear the Restricted Securities
Legend.
<PAGE>
3
1.02. Other Definitions.
Term: Defined in Section:
----- -------------------
"Agent Members" ............................................. 2.1(b)
"IAI Global Security" ....................................... 2.1(a)
"Global Security" ........................................... 2.1(a)
"Regulation S Global Security" .............................. 2.1(a)
"Rule 144A Global Security" ................................. 2.1(a)
2. The Securities.
2.01. Form and Dating. The Original Securities issued on the date
hereof will be (i) offered and sold by the Company pursuant to the Purchase
Agreement and (ii) resold, initially only to (A) QIBs in reliance on Rule 144A
and (B) Persons other than U.S. Persons (as defined in Regulation S) in reliance
on Regulation S. Such Original Securities may thereafter be transferred to,
among others, QIBs, purchasers in reliance on Regulation S and, except as set
forth below, IAIs in accordance with Rule 501.
(a) Global Securities. Rule 144A Securities shall be issued
initially in the form of one or more permanent global Securities in definitive,
fully registered form (collectively, the "Rule 144A Global Security") and
Regulation S Securities shall be issued initially in the form of one or more
global Securities (collectively, the "Regulation S Global Security"), in each
case without interest coupons and bearing the Global Securities Legend and
Restricted Securities Legend, which shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Securities Custodian,
and registered in the name of the Depositary or a nominee of the Depositary,
duly executed by the Company and authenticated by the Trustee as provided in
this Indenture. One or more global securities in definitive, fully registered
form without interest coupons and bearing the Global Securities Legend and the
Restricted Securities Legend (collectively, the "IAI Global Security") shall
also be issued on the Closing Date, deposited with the Securities Custodian, and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as provided in this
Indenture to accommodate transfers of beneficial interests in the Securities to
IAIs subsequent to the initial distribution. Beneficial ownership interests in
the Regulation S Global Security shall not be exchangeable for interests in the
Rule 144A Global Security, the IAI Global Security or any other Security without
a Restricted Securities Legend until the expiration of the Restricted Period.
The Rule 144A Global Security, the IAI Global Security and the Regulation S
Global Security are each referred to herein as a "Global Security" and are
collectively referred to herein as "Global Securities." The aggregate principal
amount of the Global Securities may from time to time be increased or decreased
by adjustments made on the records of the Trustee and the Depositary or its
nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b) and pursuant to an order of the Company, authenticate and
deliver initially one or
<PAGE>
4
more Global Securities that (a) shall be registered in the name of the
Depositary for such Global Security or Global Securities or the nominee of such
Depositary and (b) shall be delivered by the Trustee to such Depositary or
pursuant to such Depositary's instructions or held by the Trustee as Securities
Custodian.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depositary or by the Trustee as Securities Custodian
or under such Global Security, and the Depositary may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of such
Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.
(c) Definitive Securities. Except as provided in Section 2.3 or 2.4,
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities.
2.2. Authentication. The Trustee shall authenticate and make
available for delivery upon a written order of the Company signed by two
Officers (1) Original Securities for original issue on the date hereof in an
aggregate principal amount of $150,000,000, (2) the (A) Exchange Securities for
issue only in a Registered Exchange Offer and (B) Private Exchange Securities
for issue only in a Private Exchange, in the case of each of (A) and (B)
pursuant to the Registration Agreement and for a like principal amount of
Original Securities exchanged pursuant thereto. Such order shall specify the
amount of the Securities to be authenticated, the date on which the original
issue of Securities is to be authenticated and whether the Securities are to be
Original Securities, Exchange Securities or Private Exchange Securities. The
aggregate principal amount of Securities outstanding at any time may not exceed
$150,000,000 except as provided in Section 2.08 of this Indenture.
2.3. Transfer and Exchange. (a) Transfer and Exchange of Definitive
Securities. When Definitive Securities are presented to the Registrar with a
request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar,
duly executed by the Holder thereof or his attorney duly authorized in
writing; and
<PAGE>
5
(ii) are accompanied by the following additional information and
documents, as applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect
(in the form set forth on the reverse side of the Original
Security); or
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect (in the form set forth on
the reverse side of the Original Security); or
(C) if such Definitive Securities are being transferred
pursuant to an exemption from registration in accordance with Rule
144 under the Securities Act or in reliance upon another exemption
from the registration requirements of the Securities Act, (i) a
certification to that effect (in the form set forth on the reverse
side of the Original Security) and (ii) if the Company so requests,
an opinion of counsel or other evidence reasonably satisfactory to
it as to the compliance with the restrictions set forth in the
legend set forth in Section 2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar,
together with:
(i) certification (in the form set forth on the reverse side of the
Original Security) that such Definitive Security is being transferred (A)
to a QIB in accordance with Rule 144A, (B) to an IAI that has furnished to
the Trustee a signed letter substantially in the form of Exhibit D or (C)
outside the United States in an offshore transaction within the meaning of
Regulation S and in compliance with Rule 904 under the Securities Act; and
(ii) written instructions directing the Trustee to make, or to
direct the Securities Custodian to make, an adjustment on its books and
records with respect to such Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the
Depositary account to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased by the aggregate principal amount of the Definitive Security to be
exchanged and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Global Security
equal to the principal amount of the Definitive Security so canceled. If no
Global Securities are then outstanding and the Global Security has not been
previously exchanged for certificated securities pursuant to Section 2.4, the
Company shall issue and the Trustee shall authenticate, upon written order of
the
<PAGE>
6
Company in the form of an Officers' Certificate, a new Global Security in the
appropriate principal amount.
(c) Transfer and Exchange of Global Securities. (i) The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depositary therefor. A transferor of a beneficial interest in a Global Security
shall deliver a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in such Global Security or
another Global Security and such account shall be credited in accordance with
such order with a beneficial interest in the applicable Global Security and the
account of the Person making the transfer shall be debited by an amount equal to
the beneficial interest in the Global Security being transferred. Transfers by
an owner of a beneficial interest in the Rule 144A Global Security or the IAI
Global Security to a transferee who takes delivery of such interest through the
Regulation S Global Security, whether before or after the expiration of the
Restricted Period, shall be made only upon receipt by the Trustee of a
certification from the transferor to the effect that such transfer is being made
in accordance with Regulation S or (if available) Rule 144 under the Securities
Act and that, if such transfer is being made prior to the expiration of the
Restricted Period, the interest transferred shall be held immediately thereafter
through Euroclear or Cedel. In the case of a transfer of a beneficial interest
in either the Regulation S Global Security or the Rule 144A Global Security for
an interest in the IAI Global Security, the transferee must furnish a signed
letter substantially in the form of Exhibit D to the Trustee.
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Security to a beneficial interest in another Global Security, the
Registrar shall reflect on its books and records the date and an increase in the
principal amount of the Global Security to which such interest is being
transferred in an amount equal to the principal amount of the interest to be so
transferred, and the Registrar shall reflect on its books and records the date
and a corresponding decrease in the principal amount of Global Security from
which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4), a Global Security may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(iv) In the event that a Global Security is exchanged for Definitive
Securities pursuant to Section 2.4 prior to the consummation of the Registered
Exchange Offer or the effectiveness of a Shelf Registration Statement with
respect to such Securities, such Securities may be exchanged only in accordance
with such procedures as are substantially consistent with the provisions of this
Section 2.3 (including the certification requirements set forth on the reverse
of the Original Securities intended to ensure that such transfers comply with
Rule 144A, Regulation S or such other applicable exemption from registration
under the Securities Act, as the case may be) and such other procedures as may
from time to time be adopted by the Company.
<PAGE>
7
(d) Restrictions on Transfer of Regulation S Global Security. (i)
Prior to the expiration of the Restricted Period, interests in the Regulation S
Global Security may only be held through Euroclear or Cedel. During the
Restricted Period, beneficial ownership interests in the Regulation S Global
Security may only be sold, pledged or transferred through Euroclear or Cedel in
accordance with the Applicable Procedures and only (A) to the Company, (B) so
long as such security is eligible for resale pursuant to Rule 144A, to a person
whom the selling holder reasonably believes is a QIB that purchases for its own
account or for the account of a QIB to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A, (C) in an offshore
transaction in accordance with Regulation S, (D) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 (if applicable) under
the Securities Act, (E) to an IAI purchasing for its own account, or for the
account of such an IAI, in a minimum principal amount of Securities of $250,000
or (F) pursuant to an effective registration statement under the Securities Act,
in each case in accordance with any applicable securities laws of any state of
the United States. Prior to the expiration of the Restricted Period, transfers
by an owner of a beneficial interest in the Regulation S Global Security to a
transferee who takes delivery of such interest through the Rule 144A Global
Security or the IAI Global Security shall be made only in accordance with
Applicable Procedures and upon receipt by the Trustee of a written certification
from the transferor of the beneficial interest in the form provided on the
reverse of the Original Security to the effect that such transfer is being made
to (i) a person whom the transferor reasonably believes is a QIB within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or
(ii) an IAI purchasing for its own account, or for the account of such an IAI,
in a minimum principal amount of the Securities of $250,000. Such written
certification shall no longer be required after the expiration of the Restricted
Period. In the case of a transfer of a beneficial interest in the Regulation S
Global Security for an interest in the IAI Global Security, the transferee must
furnish a signed letter substantially in the form of Exhibit D to the Trustee.
(ii) Upon the expiration of the Restricted Period, beneficial
ownership interests in the Regulation S Global Security shall be transferable in
accordance with applicable law and the other terms of this Indenture.
(e) Legend. (i) Except as permitted by the following paragraphs
(ii), (iii) or (iv), each Security certificate evidencing the Global Securities
and the Definitive Securities (and all Securities issued in exchange therefor or
in substitution thereof) shall bear a legend in substantially the following form
(each defined term in the legend being defined as such for purposes of the
legend only):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
SUCH REGISTRATION.
"THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS
<PAGE>
8
TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR"
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF
$250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR
SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE."
Each Definitive Security shall bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security that does
not bear the legends set forth above and rescind any restriction on the transfer
of such Transfer Restricted Security if the Holder certifies in writing to the
Registrar that its request for such exchange was made in reliance on Rule 144
(such certification to be in the form set forth on the reverse of the Original
Security).
(iii) After a transfer of any Original Securities or Private
Exchange Securities during the period of the effectiveness of a Shelf
Registration Statement with respect to such Original
<PAGE>
9
Securities or Private Exchange Securities, as the case may be, all requirements
pertaining to the Restricted Securities Legend on such Original Securities or
such Private Exchange Securities shall cease to apply and the requirements that
any such Original Securities or such Private Exchange Securities be issued in
global form shall continue to apply.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Original Securities pursuant to which Holders of such Original or
Securities are offered Exchange Securities in exchange for their Original
Securities, all requirements pertaining to Original Securities that Original
Securities be issued in global form shall continue to apply, and Exchange
Securities in global form without the Restricted Securities Legend shall be
available to Holders that exchange such Original Securities in such Registered
Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to the
Original Securities pursuant to which Holders of such Original Securities are
offered Private Exchange Securities in exchange for their Original Securities,
all requirements pertaining to such Original Securities that Original Securities
be issued in global form shall continue to apply, and Private Exchange
Securities in global form with the Restricted Securities Legend shall be
available to Holders that exchange such Original Securities in such Private
Exchange.
(vi) Upon a sale or transfer after the expiration of the Restricted
Period of any Original Security acquired pursuant to Regulation S, all
requirements that such Original Security bear the Restricted Securities Legend
shall cease to apply and the requirements requiring any such Original Security
be issued in global form shall continue to apply.
(f) Cancelation or Adjustment of Global Security. At such time as
all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, transferred, redeemed, repurchased or canceled, such
Global Security shall be returned by the Depositary to the Trustee for
cancelation or retained and canceled by the Trustee. At any time prior to such
cancelation, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, transferred in exchange for an interest in another Global
Security, redeemed, repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of
Securities. (i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate, Definitive Securities and
Global Securities at the Registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable in
connection therewith (other than any such transfer taxes, assessments or similar
governmental charge payable upon exchange or transfer pursuant to Sections
3.06,4.06,4.08 and 9.05 of this Indenture).
(iii) Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent or the Registrar may
deem and treat the person in whose
<PAGE>
10
name a Security is registered as the absolute owner of such Security for the
purpose of receiving payment of principal of and interest on such Security and
for all other purposes whatsoever, whether or not such Security is overdue, and
none of the Company, the Trustee, the Paying Agent or the Registrar shall be
affected by notice to the contrary.
(iv) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be entitled
to the same benefits under this Indenture as the Securities surrendered upon
such transfer or exchange.
(h) No Obligation of the Trustee. (i) The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Security, a
member of, or a participant in the Depositary or any other Person with respect
to the accuracy of the records of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of any notice
(including any notice of redemption or repurchase) or the payment of any amount,
under or with respect to such Securities. All notices and communications to be
given to the Holders and all payments to be made to Holders under the Securities
shall be given or made only to the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the Depositary. The
Trustee may rely and shall be fully protected in relying upon information
furnished by the Depositary with respect to its members, participants and any
beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among Depositary
participants, members or beneficial owners in any Global Security) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
2.4. Definitive Securities. (a) A Global Security deposited with the
Depositary or with the Trustee as Securities Custodian pursuant to Section 2.1
shall be transferred to the beneficial owners thereof in the form of Definitive
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 and (i) the Depositary notifies the Company
that it is unwilling or unable to continue as a Depositary for such Global
Security or if at any time the Depositary ceases to be a "clearing agency"
registered under the Exchange Act, and a successor depositary is not appointed
by the Company within 90 days of such notice, or (ii) an Event of Default has
occurred and is continuing or (iii) the Company, in its sole discretion,
notifies the Trustee in writing that it elects to cause the issuance of
certificated Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depositary to the Trustee, to be so transferred, in whole or from time to time
in part, without charge, and the Trustee shall
<PAGE>
11
authenticate and deliver, upon such transfer of each portion of such Global
Security, an equal aggregate principal amount of Definitive Securities of
authorized denominations. Any portion of a Global Security transferred pursuant
to this Section 2.04 shall be executed, authenticated and delivered only in
denominations of $1,000 and any integral multiple thereof and registered in such
names as the Depositary shall direct. Any certificated Original Security in the
form of a Definitive Security delivered in exchange for an interest in the
Global Security shall, except as otherwise provided by Section 2.3(e), bear the
Restricted Securities Legend.
(c) Subject to the provisions of Section 2.4(b), the registered
Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of any of the events specified in
Section 2.4(a)(i), (ii) or (iii), the Company will promptly make available to
the Trustee a reasonable supply of Definitive Securities in fully registered
form without interest coupons.
<PAGE>
EXHIBIT A
FORM OF FACE OF ORIGINAL SECURITY
Global Securities Legend
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
Restricted Securities Legend
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
"THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN
<PAGE>
2
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF
THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR
FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE."
Each Definitive Security shall bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS."
<PAGE>
No. $______
9 3/8% Senior Subordinated Note due 2009
CUSIP No.______
ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC., a Delaware
corporation, promises to pay to Cede & Co., or registered assigns, the principal
sum listed on the Schedule of Increases or Decreases in Global Security attached
hereto on May 15, 2009.
Interest Payment Dates: May 15 and May 15.
Record Dates: May 1 and November 1.
<PAGE>
2
Additional provisions of this Security are set forth on the other
side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
ALASKA COMMUNICATIONS SYSTEMS
HOLDINGS, INC.,
by
_____________________________________
Name:
Title:
by
_____________________________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:_________________________________
Authorized Signatory
<PAGE>
FORM OF REVERSE SIDE OF ORIGINAL SECURITY
9 3/8% Senior Subordinated Note due 2009
1. Interest
(a) ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC., a Delaware
corporation (such corporation, and its successors and assigns under the
Indenture hereinafter referred to, being herein called the "Company"), promises
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Company shall pay interest semiannually on May 15 and November
15 of each year. Interest on the Securities shall accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from May
15, 1999. Interest shall be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay interest on overdue principal at the rate
borne by the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
(b) Additional Amounts. The holder of this Security is entitled to
the benefits of an Exchange and Registration Rights Agreement, dated May 14,
1999, among the Company and each of (i) ALEC Holdings, Inc., a Delaware
corporation, (ii) Telephone Utilities of Alaska, Inc., Telephone Utilities of
the Northland, Inc., PTI Communications of Alaska, Inc., Pacific Telecom
Cellular of Alaska PCS, Inc., Pacific Telecom Cellular of Alaska, Inc., (iii)
ATU Communications, Inc., MACtel, Inc., ATU Long Distance, Inc., Peninsula
Cellular Services, Inc., Prudhoe Communications, Inc. and (iv) Alaska
Communications Systems, Inc., ALEC Acquisition Sub Corp., MACtel License Sub,
Inc. and MACtel Fairbanks License Sub, Inc. (collectively, the "Guarantors") and
the Initial Purchasers named therein (the "Registration Agreement"). Capitalized
terms used in this paragraph (b) but not defined herein have the meanings
assigned to them in the Registration Agreement. If (i) the Shelf Registration
Statement or Exchange Offer Registration Statement, as applicable under the
Registration Agreement, is not filed with the Commission on or prior to 75 days
after the Issue Date, (ii) the Exchange Offer Registration Statement or the
Shelf Registration Statement, as the case may be, is not declared effective on
or prior to 150 days after the Issue Date, (iii) the Exchange Offer is not
consummated on or prior to 180 days after the Issue Date, or (iv) the Shelf
Registration Statement is filed and declared effective on or prior to 150 days
after the Issue Date but shall thereafter cease to be effective (at any time
that the Company and the Guarantors are obligated to maintain the effectiveness
thereof) without being succeeded within 45 days by an additional Registration
Statement filed and declared effective (each such event referred to in clauses
(i) through (iv), a "Registration Default"), the Company shall pay Additional
Amounts to each holder of Transfer Restricted Securities, during the period of
one or more such Registration Defaults, in an amount equal to $0.192 per week
per $1,000 principal amount of the Securities constituting Transfer Restricted
Securities held by such holder until the applicable Registration Statement is
filed or declared effective, the Registered Exchange Offer is consummated or the
Shelf Registration Statement again becomes effective, as the case may be. All
accrued Additional Amounts shall be paid to holders in the same manner as
interest payments on the Securities on semi-annual payment dates which
correspond to interest payment dates for the Securities. Following the cure of
all Registration Defaults, the accrual of Additional Amounts shall cease. The
Trustee shall have no responsibility with respect to the determination of the
amount of any such Additional Amounts.
<PAGE>
2
For purposes of the foregoing, "Transfer Restricted Securities" means (i) each
Original Security until the date on which such Original Security has been
exchanged for a freely transferable Exchange Security in the Registered Exchange
Offer, (ii) each Original Security or Private Exchange Security until the date
on which such Original Security or Private Exchange Security has been
effectively registered under the Securities Act and disposed of in accordance
with a Shelf Registration Statement or (iii) each Original Security or Private
Exchange Security until the date on which such Original Security or Private
Exchange Security is distributed to the public pursuant to Rule 144 under the
Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.
2. Method of Payment
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the May 1 or November 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company shall pay principal, premium, Additional
Amounts and interest in money of the United States of America that at the time
of payment is legal tender for payment of public and private debts. Payments in
respect of the Securities represented by a Global Security (including principal,
premium, Additional Amounts and interest) shall be made by wire transfer of
immediately available funds to the accounts specified by The Depository Trust
Company. The Company will make all payments in respect of a certificated
Security (including principal, premium, Additional Amounts and interest), by
mailing a check to the registered address of each Holder thereof; provided,
however, that payments on the Securities may also be made, in the case of a
Holder of at least $1,000,000 aggregate principal amount of Securities, by wire
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving written
notice to the Trustee or the Paying Agent to such effect designating such
account no later than 30 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).
3. Paving Agent and Registrar
Initially, IBJ WHITEHALL BANK & TRUST COMPANY, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of May
14, 1999 (the "Indenture"), among the Company, the Guarantors and the Trustee.
The terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss.77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all terms and provisions
of the
<PAGE>
3
Indenture, and Securityholders are referred to the Indenture and the TIA for a
statement of such terms and provisions.
The Securities are senior subordinated unsecured obligations of the
Company limited to $150,000,000 aggregate principal amount at any one time
outstanding (subject to Section 2.07 of the Indenture). This Security is one of
the Original Securities referred to in the Indenture. The Securities include the
Original Securities and any Exchange Securities and Private Exchange Securities
issued in exchange for Original Securities. The Original Securities, the
Exchange Securities and the Private Exchange Securities are treated as a single
class of securities under the Indenture. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, make certain Investments and other Restricted Payments, pay
dividends and other distributions, incur Indebtedness, enter into consensual
restrictions upon the payment of certain dividends and distributions by such
Restricted Subsidiaries, issue or sell shares of capital stock of such
Restricted Subsidiaries, enter into or permit certain transactions with
Affiliates and asset sales. The Indenture also imposes limitations on the
ability of the Company to consolidate or merge with or into any other Person or
convey, transfer or lease all or substantially all of the property of the
Company.
To guarantee the due and punctual payment of the principal and
interest on the Securities and all other amounts payable by the Company under
the Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of the
Securities and the Indenture, the Guarantors have jointly and severally
unconditionally guaranteed the Guaranteed Obligations on a senior subordinated
basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the following paragraph, the Securities shall
not be redeemable at the option of the Company prior to May 15, 2004.
Thereafter, the Securities shall be redeemable at the option of the Company, in
whole or in part, on not less than 30 nor more than 60 days prior notice, at the
following redemption prices (expressed as percentages of principal amount), plus
accrued and unpaid interest thereon, and Additional Amounts in respect thereof,
if any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the 12-month period commencing on May 15 of the years
set forth below:
Redemption
Year Price
---- -----
2004 ................................. 104.688%
2005 ................................. 103.125%
2006 ................................. 101.563%
2007 and thereafter .................. 100.000%
In addition, prior to May 15, 2002, the Company may redeem up to a
maximum of 35% of the original aggregate principal amount of the Securities with
the Net Cash Proceeds of one or more Equity Offerings (i) by the Company or (ii)
by Holdings to the extent the Net Cash Proceeds thereof are contributed to the
Company or used to purchase Capital Stock (other than
<PAGE>
4
Disqualified Stock) of the Company from the Company, at a redemption price equal
to 109 3/8% of the principal amount thereof, plus accrued and unpaid interest
on, and any Additional Amounts in respect of, the Securities, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that after giving effect to any such redemption, at least 65% of the original
aggregate principal amount of the Securities remains outstanding. Any such
redemption by the Company shall be made within 90 days of such related Equity
Offering by the Company or Holdings, as the case may be, and must be made upon
not less than 30 nor more than 60 days' notice mailed to each Holder of Notes
being redeemed and otherwise in accordance with the procedures set forth in the
Indenture.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at the registered address of such Holder. Securities
in denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued and unpaid interest and Additional Amounts, if any, on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied, on and after such date interest ceases to accrue on such
Securities (or such portions thereof) called for redemption.
8. Repurchase of Securities at the Option of Holders upon Change of Control
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest and Additional Amounts, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date that is on or prior to the date of purchase) as provided in, and subject to
the terms of, the Indenture.
9. Subordination
The Securities are subordinated to Senior Indebtedness, as defined
in the Indenture. To the extent provided in the Indenture, Senior Indebtedness
must be paid before the Securities may be paid. The Company and each Guarantor
agree, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
<PAGE>
5
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Securities, the Company and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article V of the
Indenture; (iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities; (iv) to add Guarantees with respect to the
Securities; (v) to secure the Securities; (vi) to add additional covenants or to
surrender rights and powers conferred on the Company; (vii) to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA; (viii) to make any change that does not adversely
affect the rights of any Securityholder; (ix) to make any change in the
subordination provisions of the Indenture that would limit or terminate the
benefits available to any holder of Senior Indebtedness of the Company (or any
<PAGE>
6
representative thereof) under such subordination provisions; or (x) to provide
for the issuance of the Exchange Securities or Private Exchange Securities.
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of the
Company) and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities may declare the principal of and
accrued but unpaid interest on all the Securities to be due and payable. If an
Event of Default relating to certain events of bankruptcy, insolvency or
reorganization of the Company occurs, the principal of and interest on all the
Securities shall become immediately due and payable without any declaration or
other act on the part of the Trustee or any Holders. Under certain
circumstances, the Holders of a majority in principal amount of the outstanding
Securities may rescind any such acceleration with respect to the Securities and
its consequences.
If an Event of Default occurs and is continuing, the Trustee shall
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Securities unless (i) such Holder
has previously given the Trustee notice that an Event of Default is continuing,
(ii) Holders of at least 25% in principal amount of the outstanding Securities
have requested the Trustee in writing to pursue the remedy, (iii) such Holders
have offered the Trustee reasonable security or indemnity against any loss,
liability or expense, (iv) the Trustee has not complied with such request within
60 days after the receipt of the request and the offer of security or indemnity
and (v) the Holders of a majority in principal amount of the outstanding
Securities have not given the Trustee a direction inconsistent with such request
within such 60-day period. Subject to certain restrictions, the Holders of a
majority in principal amount of the outstanding Securities are given the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any direction that conflicts
with law or the Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action under the Indenture, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
<PAGE>
7
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Guarantor shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ________ agent to transfer this Security on the books of
the Company. The agent may substitute another to act for him.
Date: _______________ Your Signature: _________________________________________
Sign exactly as your name appears on the
other side of this Security.
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER
RESTRICTED SECURITIES
This certificate relates to $__________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
|_| has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above);
|_| has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act, the undersigned confirms that such Securities
are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) |_| to the Company; or
(2) |_| pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) |_| inside the United States to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of
1933) that purchases for its own account or for the account of
a qualified institutional buyer to whom notice is given that
such transfer is being made in reliance on Rule 144A,
in each case pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
(4) |_| outside the United States in an offshore transaction within
the meaning of Regulation S under the Securities Act in
compliance with Rule 904 under the Securities Act of 1933; or
(5) |_| to an institutional "accredited investor" (as defined in
Rule 501(a)(l), (2), (3) or (7) under the Securities Act of
1933) that has furnished to the Trustee a signed letter
containing certain representations and agreements; or
(6) |_| pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
<PAGE>
2
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
Person other than the registered holder thereof; provided, however, that
if box (4), (5) or (6) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such
<PAGE>
3
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933.
________________________________________
Your Signature
Signature Guarantee:
Date: ______________________ ________________________________________
Signature must be guaranteed Signature of Signature Guarantee
by a participant in a
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
_______________________________________________________________
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated: ___________________ ______________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ].
The following increases or decreases in this Global Security have been made:
<TABLE>
<CAPTION>
Date of Amount of decrease in Amount of increase in Principal amount of this Signature of authorized
Exchange Principal Amount of this Principal Amount of this Global Security following signatory of Trustee or
Global Security Global Security such decrease or increase Securities Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the
Indenture, check the box:
Asset Sale |_| Change of Control |_|
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
$___________
Date: ____________ Your Signature: ___________________________________________
(Sign exactly as your name appears on the other side of the
Security)
Signature Guarantee: ___________________________________________________________
Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program or other
signature guarantor acceptable to the Trustee
<PAGE>
EXHIBIT B
FORM OF FACE OF EXCHANGE SECURITY
No. $______
9 3/8% Senior Subordinated Note due 2009
CUSIP No. ______
ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC., a Delaware
corporation, promises to pay to Cede & Co., or registered assigns, the principal
sum listed on the Schedule of Increases or Decreases in Global Security attached
hereto on May 15, 2009.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 15.
<PAGE>
2
Additional provisions of this Security are set forth on the other
side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
ALASKA COMMUNICATIONS SYSTEMS
HOLDINGS, INC.,
by ____________________________________
Name:
Title:
by ____________________________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
IBJ WHITEHALL BANK & TRUST COMPANY,
Trustee
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by _______________________________
Authorized Signatory
<PAGE>
FORM OF REVERSE SIDE OF EXCHANGE SECURITY
9 3/8% Senior Subordinated Note due 2009
1. Interest
ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC., a Delaware corporation
(such corporation, and its successors and assigns under the Indenture
hereinafter referred to, being herein called the "Company"), promises to pay
interest on the principal amount of this Security at the rate per annum shown
above. The Company shall pay interest semiannually on May 15 and November 15 of
each year. Interest on the Securities shall accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from May 15,
1999. Interest shall be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the May 1 or November 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company shall pay principal, premium and
interest in money of the United States of America that at the time of payment is
legal tender for payment of public and private debts. Payments in respect of the
Securities represented by a Global Security (including principal, premium and
interest) shall be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company. The Company will make all
payments in respect of a certificated Security (including principal, premium and
interest), by mailing a check to the registered address of each Holder thereof;
provided, however, that payments on the Securities may also be made, in the case
of a Holder of at least $1,000,000 aggregate principal amount of Securities, by
wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, IBJ WHITEHALL BANK & TRUST COMPANY, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
<PAGE>
2
4. Indenture
The Company issued the Securities under an Indenture dated as of
May 14, 1999 (the "Indenture"), among the Company, the Guarantors and the
Trustee. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act
of 1939 (15 U.S.C.. ss.ss. 77aaa-77bbbb) as in effect on the date of the
Indenture (the "TIA"). Terms defined in the Indenture and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are
subject to all terms and provisions of the Indenture, and Securityholders are
referred to the Indenture and the TIA for a statement of such terms and
provisions.
The Securities are senior subordinated unsecured obligations of the
Company limited to $150,000,000 aggregate principal amount at any one time
outstanding (subject to Section 2.07 of the Indenture). This Security is one of
the Exchange Securities referred to in the Indenture. The Securities include the
Original Securities and any Exchange Securities and Private Exchange Securities
issued in exchange for Original Securities. The Original Securities, the
Exchange Securities and the Private Exchange Securities are treated as a single
class of securities under the Indenture. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, make certain Investments and other Restricted Payments, pay
dividends and other distributions, incur Indebtedness, enter into consensual
restrictions upon the payment of certain dividends and distributions by such
Restricted Subsidiaries, issue or sell shares of capital stock of such
Restricted Subsidiaries, enter into or permit certain transactions with
Affiliates and make asset sales. The Indenture also imposes limitations on the
ability of the Company to consolidate or merge with or into any other Person or
convey, transfer or lease all or substantially all of the property of the
Company.
To guarantee the due and punctual payment of the principal and
interest on the Securities and all other amounts payable by the Company under
the Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of the
Securities and the Indenture, the Guarantors have jointly and severally
unconditionally guaranteed the Guaranteed Obligations on a senior subordinated
basis pursuant to the terms of the Indenture.
5. Optional Redemption
Except as set forth in the following paragraph, the Securities shall
not be redeemable at the option of the Company prior to May 15, 2004.
Thereafter, the Securities shall be redeemable at the option of the Company, in
whole or in part, on not less than 30 nor more than 60 days prior notice, at the
following redemption prices (expressed is percentages of principal amount), plus
accrued and unpaid interest thereon, and Additional Amounts in respect thereof,
if any, to the redemption date (subject to the right of Holders of record on the
relevant record date to
<PAGE>
3
receive interest due on the relevant interest payment date), if redeemed during
the 12-month period commencing on May 15 of the years set forth below:
Redemption
Year Price
--------------------------------------
2004 104.688%
2005 103.125%
2006 101.563%
2007 and thereafter 100.000%
In addition, prior to May 15, 2002, the Company may redeem up to a
maximum of 35% of the original aggregate principal amount of the Securities with
the Net Cash Proceeds of one or more Equity Offerings (i) by the Company or (ii)
by Holdings to the extent the Net Cash Proceeds thereof are contributed to the
Company or used to purchase Capital Stock (other than Disqualified Stock) of the
Company from the Company, at a redemption price equal to 109 3/8% of the
principal amount thereof, plus accrued and unpaid interest on, and any
Additional Amounts in respect of, the Securities, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that after giving effect to any such redemption, at least 65% of the original
aggregate principal amount of the Securities remains outstanding. Any such
redemption by the Company shall be made within 90 days of such related Equity
Offering by the Company or Holdings, as the case may be, and must be made upon
not less than 30 nor more than 60 days' notice mailed to each Holder of Notes
being redeemed and otherwise in accordance with the procedures set forth in the
Indenture.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at the registered address of such Holder. Securities
in denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued and unpaid interest and Additional Amounts, if any, on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied, on and after such date interest ceases to accrue on such
Securities (or such portions thereof) called for redemption.
8. Repurchase of Securities at the Option of Holders upon Change of Control
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest and Additional Amounts, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to
<PAGE>
4
receive interest due on the relevant interest payment date that is on or prior
to the date of purchase) as provided in, and subject to the terms of, the
Indenture.
9. Subordination
The Securities are subordinated to Senior Indebtedness, as defined
in the Indenture. To the extent provided in the Indenture, Senior Indebtedness
must be paid before the Securities may be paid. The Company and each Guarantor
agrees and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give it effect and appoints the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. Upon any transfer or
exchange, the Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay any
taxes required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent
<PAGE>
5
of the Holders of at least a majority in aggregate principal amount of the
outstanding Securities and (ii) any default or noncompliance with any provision
may be waived with the written consent of the Holders of at least a majority in
principal amount of the outstanding Securities. Subject to certain exceptions
set forth in the Indenture, without the consent of any Holder of Securities, the
Company and the Trustee may amend the Indenture or the Securities (i) to cure
any ambiguity, omission, defect or inconsistency; (ii) to comply with Article V
of the Indenture; (iii) to provide for uncertificated Securities in addition to
or in place of certificated Securities; (iv) to add Guarantees with respect to
the Securities; (v) to secure the Securities; (vi) to add additional covenants
or to surrender rights and powers conferred on the Company; (vii) to comply with
the requirements of the SEC in order to effect or maintain the qualification of
the Indenture under the TIA; (viii) to make any change that does not adversely
affect the rights of any Securityholder; (ix) to make any change in the
subordination provisions of the Indenture that would limit or terminate the
benefits available to any holder of Senior Indebtedness of the Company (or any
representative thereof) under such subordination provisions; or (x) to provide
for the issuance of the Exchange Securities or Private Exchange Securities.
15. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of the
Company) and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities may declare the principal of and
accrued but unpaid interest on all the Securities to be due and payable. If an
Event of Default relating to certain events of bankruptcy, insolvency or
reorganization of the Company occurs, the principal of and interest on all the
Securities shall become immediately due and payable without any declaration or
other act on the part of the Trustee or any Holders. Under certain
circumstances, the Holders of a majority in principal amount of the outstanding
Securities may rescind any such acceleration with respect to the Securities and
its consequences.
If an Event of Default occurs and is continuing, the Trustee shall
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Securities unless (i) such Holder
has previously given the Trustee notice that an Event of Default is continuing,
(ii) Holders of at least 25% in principal amount of the outstanding Securities
have requested the Trustee in writing to pursue the remedy, (iii) such Holders
have offered the Trustee reasonable security or indemnity against any loss,
liability or expense, (iv) the Trustee has not complied with such request within
60 days after the receipt of the request and the offer of security or indemnity
and (v) the Holders of a majority in principal amount of the outstanding
Securities have not given the Trustee a direction inconsistent with such request
within such 60-day period. Subject to certain restrictions, the Holders of a
majority in principal amount of the outstanding Securities are given the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any direction that conflicts
with law or the Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking
<PAGE>
6
any action under the Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Guarantor shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
21. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers
<PAGE>
7
either as printed on the Securities or as contained in any notice of redemption
and reliance may be placed only on the other identification numbers placed
thereon.
The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Date: ____________________ Your Signature: _____________________________________
Sign exactly as your name appears on
the other side of this Security.
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ]. The following
increases or decreases in this Global Security have been made:
<TABLE>
<CAPTION>
Date of Amount of decrease in Amount of increase in Principal amount of this Signature of authorized
Exchange Principal Amount of this Principal Amount of this Global Security following signatory of Trustee or
Global Security Global Security such decrease or increase Securities Custodian
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the
Indenture, check the box:
Asset Sale |_| Change of Control |_|
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
$_____________
Date: __________________ Your Signature: _______________________________________
(Sign exactly as your name appears on
the other side of the Security)
Signature Guarantee: ___________________________________________________________
Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program or other
signature guarantor acceptable to the Trustee
<PAGE>
EXHIBIT C
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture")
dated as of , among [GUARANTOR] (the "New Guarantor"), a
subsidiary of ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC. (or
its successor), a Delaware corporation (the "Company"),
[EXISTING GUARANTORS] and IBJ WHITEHALL BANK & TRUST COMPANY,
a New York banking corporation, as trustee under the indenture
referred to below (the "Trustee").
W I T N E S S E T H:
WHEREAS the Company and [OLD GUARANTORS] (the "Existing Guarantors")
has heretofore executed and delivered to the Trustee an Indenture (the
"Indenture") dated as of May 14, 1999, providing for the issuance of an
aggregate principal amount of up to $150,000,000 of 9 3/8% Senior Subordinated
Notes due 2009 (the "Securities");
WHEREAS Section 4.11 of the Indenture provides that under certain
circumstances the Company is required to cause the New Guarantor to execute and
deliver to the Trustee a supplemental indenture pursuant to which the New
Guarantor shall unconditionally guarantee all the Company's obligations under
the Securities pursuant to a Guarantee on the terms and conditions set forth
herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the
Company and the Existing Guarantors are authorized to execute and deliver this
Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor, the Company, the Existing Guarantors and the Trustee mutually
covenant and agree for the equal and ratable benefit of the holders of the
Securities as follows:
1. Agreement to Guarantee. The New Guarantor hereby agrees, jointly
and severally with all the Existing Guarantors, to unconditionally guarantee the
Company's obligations under the Securities on the terms and subject to the
conditions set forth in Article X of the Indenture and to be bound by all other
applicable provisions of the Indenture and the Securities.
2. Ratification of Indenture: Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.
<PAGE>
2
3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
4. Trustee Makes No Representation. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental Indenture.
5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
<PAGE>
3
6. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW GUARANTOR],
by _____________________________________
Name:
Title:
ALASKA COMMUNICATIONS SYSTEMS
HOLDINGS, INC.,
by _____________________________________
Name:
Title:
[EXISTING GUARANTORS],
by _____________________________________
Name:
Title:
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee,
by _____________________________________
Name:
Title:
<PAGE>
EXHIBIT D
Form of
Transferee Letter of Representation
Alaska Communications Systems Holdings, Inc.
510 L. Street
Suite 500
Anchorage, Alaska 99501
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $[ ] principal
amount of the 9 3/8% Senior Subordinated Notes due 2009 (the "Securities") of
Alaska Communications Systems Holdings, Inc. (the "Company").
Upon transfer, the Securities would be registered in the name of the new
beneficial owner as follows:
Name:___________________________
Address:________________________
Taxpayer ID Number: ____________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(l), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Securities, and we are acquiring the Securities not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we invest in or purchase securities similar to the Securities in the normal
course of our business. We, and any accounts for which we are acting, are each
able to bear the economic risk of our or its investment.
<PAGE>
2
2. We understand that the Securities have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Securities to offer, sell or otherwise
transfer such Securities prior to the date that is two years after the later of
the date of original issue and the last date on which the Company or any
affiliate of the Company was the owner of such Securities (or any predecessor
thereto) (the "Resale Restriction Termination Date") only (a) to the Company,
(b) pursuant to a registration statement that has been declared effective under
the Securities Act, (c) in a transaction complying with the requirements of Rule
144A under the Securities Act ("Rule 144A"), to a person we reasonably believe
is a qualified institutional buyer under Rule 144A (a "QIB") that is purchasing
for its own account or for the account of a QIB and to whom notice is given that
the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales that occur outside the United States within the meaning of Regulation S
under the Securities Act, (e) to an institutional "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is
purchasing for its own account or for the account of such an institutional
"accredited investor," in each case in a minimum principal amount of Securities
of $250,000, or (f) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of our property
or the property of such investor account or accounts be at all times within our
or their control and in compliance with any applicable state securities laws.
The foregoing restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date. If any resale or other transfer of the Securities
is proposed to be made pursuant to clause (e) above prior to the Resale
Restriction Termination Date, the transferor shall deliver a letter from the
transferee substantially in the form of this letter to the Company and the
Trustee, which shall provide, among other things, that the transferee is an
institutional "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act and that it is acquiring such Securities for
investment purposes and not for distribution in violation of the Securities Act.
Each purchaser acknowledges that the Company and the Trustee reserve the right
prior to the offer, sale or other transfer prior to the Resale Restriction
Termination Date of the Securities pursuant to clause (d), (e) or (f) above to
require the delivery of an opinion of counsel, certifications or other
information satisfactory to the Company and the Trustee.
TRANSFEREE:_________________________________,
by:_________________________________
<PAGE>
Exhibit 4.2
EXECUTION COPY
ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
$150,000,000
9 3/8% Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
May 11, 1999
Chase Securities Inc.
CIBC World Markets Corp.
Credit Suisse First Boston Corporation
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Alaska Communications Systems Holdings, Inc. (formerly known as ALEC
Acquisition Corporation), a Delaware corporation (the "Company"), proposes to
issue and sell $150,000,000 aggregate principal amount of its 9 3/8% Senior
Subordinated Notes due 2009 (the "Securities"). The Securities will be issued
pursuant to an Indenture to be dated as of May 14, 1999 (the "Indenture"), among
the Company, the Guarantors (as defined below) and IBJ Whitehall Bank & Trust
Company, as trustee (the "Trustee"). The Securities will be guaranteed on an
unsecured senior subordinated basis by (i) ALEC Holdings, Inc., a Delaware
corporation ("Holdings"), (ii) each of Telephone Utilities of Alaska, Inc.,
Telephone Utilities of the Northland, Inc., PTI Communications of Alaska, Inc.,
Pacific Telecom of Alaska PCS, Inc. and Pacific Telecom Cellular of Alaska, Inc.
(collectively, "PTI"), (iii) each of ATU Communications, Inc., MACtel, Inc.,
MACtel Fairbanks, Inc., ATU Long Distance, Inc., Peninsula Cellular Services,
Inc. and Prudhoe Communications, Inc. (collectively, "ATU") and (iv) each of
Alaska Communications Systems, Inc., a wholly owned subsidiary of the Company
("ACS"), ALEC Acquisition Sub Corp., a wholly owned subsidiary of the Company
("ALEC Sub"), MACtel License Sub, Inc., MACtel Fairbanks License Sub, Inc. and
PTINet, Inc. (collectively, the "Acquiring Guarantors", and, together with
Holdings, PTI and ATU, the "Guarantors"). The Company, Holdings and the
Acquiring Guarantors hereby confirm their agreement with Chase Securities Inc.
("CSI"), CIBC World Markets Corp. and Credit Suisse First Boston Corporation
(together with CSI, the "Initial Purchasers") concerning the purchase of the
Securities from the Company by the several Initial Purchasers.
<PAGE>
2
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption therefrom. The Company has
prepared a preliminary offering memorandum dated April 23, 1999 (the
"Preliminary Offering Memorandum") and will prepare an offering memorandum dated
the date hereof (the "Offering Memorandum") setting forth information concerning
the Company and the Securities. Copies of the Preliminary Offering Memorandum
have been, and copies of the Offering Memorandum will be, delivered by the
Company to the Initial Purchasers pursuant to the terms of this Agreement. Any
references herein to the Preliminary Offering Memorandum and the Offering
Memorandum shall be deemed to include all amendments and supplements thereto,
unless otherwise noted. The Company hereby confirms that it has authorized the
use of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering and resale of the Securities by the Initial
Purchasers in accordance with Section 2.
Holders of the Securities (including the Initial Purchasers and
their direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A (the "Registration Rights Agreement"), pursuant to which the
Company and the Guarantors will agree to file with the Securities and Exchange
Commission (the "Commission") (i) a registration statement under the Securities
Act (the "Exchange Offer Registration Statement") registering an issue of senior
subordinated notes of the Company (the "Exchange Securities") which are
identical in all material respects to the Securities (except that the Exchange
Securities will not contain terms with respect to transfer restrictions) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "Shelf Registration Statement").
The Securities are being offered in conjunction with the Company's
acquisition of (a) all the capital stock of each of the entities comprising PTI
for $408,500,000 (subject to certain adjustments) pursuant to the Purchase
Agreement (the "PTI Purchase Agreement") dated as of August 14, 1998, as amended
as of April 22, 1999, among ALEC Sub (as assignee of the Company), CenturyTel of
the Northwest, Inc. (formerly known as Pacific Telecom, Inc.) and CenturyTel
Wireless, Inc. (formerly known as Century Cellunet, Inc.) and (b) certain of the
assets and liabilities of the Anchorage Telephone Utility, all the capital stock
of each of the entities comprising ATU and certain minority interests in Alaska
Network Systems, Inc., Alaskan Choice Television, L.L.C. and Internet Alaska,
Inc. for $295,000,000 (subject to certain adjustments) pursuant to the Asset
Purchase Agreement (the "ATU Purchase Agreement") dated as of October 20, 1998,
between ACS and the Municipality of Anchorage.
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Company and the
Guarantors. The Company, Holdings and each of the Acquiring Guarantors represent
and warrant to, and agree with, the several Initial Purchasers on and as of the
date hereof that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date
(as defined in Section 3) the Offering Memorandum will not, contain any
untrue statement of a material
<PAGE>
3
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that
the Company, Holdings and the Acquiring Guarantors make no representation
or warranty as to information contained in or omitted from the Preliminary
Offering Memorandum or the Offering Memorandum in reliance upon and in
conformity with written information relating to the Initial Purchasers
furnished to the Company by or on behalf of any Initial Purchaser
specifically for use therein (the "Initial Purchasers' Information").
(b) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 2 and their compliance with
the agreements set forth therein, it is not necessary, in connection with
the issuance and sale of the Securities to the Initial Purchasers and the
offer, initial resale and delivery of the Securities by the Initial
Purchasers in the manner contemplated by this Agreement and the Offering
Memorandum, to register the Securities under the Securities Act or to
qualify the Indenture under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act").
(d) The Company and each of the Guarantors have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires
such qualification, and have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in which
they are engaged, except where the failure to so qualify or have such
power or authority could not, singularly or in the aggregate, be
reasonably expected to have a material adverse effect on the condition
(financial or otherwise), results of operations or business of the Company
and the Guarantors taken as a whole (a "Material Adverse Effect").
(e) As of the Closing Date, the Company will have an authorized
capitalization as set forth in the Offering Memorandum under the heading
"Capitalization"; all of the outstanding shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable; and the capital stock of the Company conforms in
all material respects to the description thereof contained in the Offering
Memorandum. All of the outstanding shares of capital stock of each of the
Guarantors have been duly and validly authorized and issued and are fully
paid and non-assessable; all of the shares of capital stock of the Company
are owned by Holdings, and Holdings engages in no business other than
holding the outstanding shares of capital stock of the Company; as of the
Closing Date, all of the shares of capital stock of each of the Guarantors
other than Holdings will be owned directly or indirectly by the Company,
free and clear of any lien, charge, encumbrance, security interest,
restriction upon voting or transfer (except for regulatory restrictions
created under the Communications Act of 1934,
<PAGE>
4
as amended by the Telecommunications Act of 1996, as amended (the
"Communications Act"), and the rules and regulations of the Federal
Communications Commission (the "FCC") and the Alaska Public Utilities
Commission) or any other claim of any third party, except as created
pursuant to the Credit Agreement (the "Credit Agreement") to be entered
into among Holdings, the Company, the lenders named therein, The Chase
Manhattan Bank, as Administrative Agent and Collateral Agent, Credit
Suisse First Boston Corporation, as Documentation Agent, and Canadian
Imperial Bank of Commerce, as Syndication Agent. As of the Closing Date,
the Company will have no subsidiaries other than those entities listed on
Exhibit A hereto.
(f) The Company, Holdings and each of the Acquiring Guarantors have
full right, power and authority to execute and deliver this Agreement, and
the Company, Holdings and each of the Guarantors have full power and
authority to execute and deliver the Indenture, the Registration Rights
Agreement, the Securities (in the case of the Company only), the PTI
Purchase Agreement, the ATU Purchase Agreement, the Credit Agreement and
related agreements and the Closing Date Letter Agreement (as defined in
Section 5(r)) (collectively, the "Transaction Documents") and to perform
their respective obligations hereunder and thereunder; and all corporate
action required to be taken for the due and proper authorization,
execution and delivery of each of the Transaction Documents and the
consummation of the transactions contemplated thereby have been, or, in
the case of the entities comprising PTI and ATU, will be as of the Closing
Date, duly and validly taken.
(g) This Agreement has been duly authorized, executed and delivered
by the Company, Holdings and each of the Acquiring Guarantors and
constitutes a valid and legally binding agreement of the Company, Holdings
and each of the Acquiring Guarantors, and, as of the Closing Date, will be
duly authorized by each of the entities comprising PTI and ATU, and will
constitute a valid and legally binding agreement of each of such entities
upon the execution and delivery of the Closing Date Letter Agreement.
(h) The Indenture has been duly authorized by the Company, Holdings
and each of the Acquiring Guarantors, and, as of the Closing Date will be
duly authorized by each of the entities comprising PTI and ATU, and, when
duly executed and delivered in accordance with its terms by each of the
parties thereto, will constitute a valid and legally binding agreement of
the Company and each of the Guarantors enforceable against the Company and
each of the Guarantors in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether considered
in a proceeding in equity or at law). On the Closing Date, the Indenture
will conform in all material respects to the requirements of the Trust
Indenture Act and the rules and regulations of the Commission applicable
to an indenture which is qualified thereunder.
(i) The Securities have been duly authorized by the Company,
Holdings and each of the Acquiring Guarantors, and, as of the Closing Date
will be duly authorized by each of the entities comprising PTI and ATU,
and, when duly executed, authenticated, issued
<PAGE>
5
and delivered as provided in the Indenture and paid for as provided
herein, will have been duly and validly issued and outstanding and will
constitute valid and legally binding obligations of the Company as issuer,
and each of the Guarantors, as guarantors, entitled to the benefits of the
Indenture and enforceable against the Company, as issuer, and each of the
Guarantors, as guarantors, in accordance with their terms, except as may
be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether considered
in a proceeding in equity or at law).
(j) The Registration Rights Agreement has been duly authorized by
the Company, Holdings and each of the Acquiring Guarantors, and, as of the
Closing Date will be duly authorized by each of the entities comprising
PTI and ATU, and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, will constitute a valid and legally
binding agreement of the Company and each of the Guarantors enforceable
against the Company and each of the Guarantors in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law) and except to the
extent that the indemnification or contribution provisions contained
therein may be unenforceable.
(k) The PTI Purchase Agreement and the ATU Purchase Agreement have
been duly authorized, executed and delivered by the Company and each of
the Guarantors party thereto and each such agreement constitutes a valid
and legally binding agreement of the Company and each of the Guarantors
party thereto, enforceable against the Company and each of the Guarantors
party thereto in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding in
equity or at law). The Credit Agreement and related agreements have been
duly authorized by the Company, Holdings and each of the Acquiring
Guarantors party thereto, and, as of the Closing Date, will be duly
authorized by each of the entities comprising PTI and ATU party thereto,
and, when duly executed and delivered in accordance with its terms by each
of the parties thereto, each such agreement will constitute a valid and
legally binding agreement of the Company and each of the Guarantors party
thereto, enforceable against the Company and each of the Guarantors party
thereto in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding in
equity or at law).
(l) The Closing Date Letter Agreement has been or, as of the Closing
Date, will be, duly authorized by each of the entities comprising PTI and
ATU and, when duly executed and delivered in accordance with its terms by
each of the parties thereto, will constitute a valid and legally binding
agreement of each of the entities comprising PTI and ATU enforceable
against each such entity in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general
<PAGE>
6
equitable principles (whether considered in a proceeding in equity or at
law) and except to the extent that the indemnification or contribution
provisions contained therein may be unenforceable.
(m) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(n) The execution, delivery and performance by the Company and each
of the Guarantors of each of the Transaction Documents to which each is a
party, the issuance, authentication, sale and delivery of the Securities
and compliance by the Company and each of the Guarantors with the terms
thereof and the consummation of the transactions contemplated by the
Transaction Documents will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, or, except as created pursuant to the Credit Agreement, result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Guarantors pursuant to any
material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which the Company or any of the
Guarantors is a party or by which the Company or any of the Guarantors is
bound or to which any of the property or assets of the Company or any of
the Guarantors is subject, nor will such actions result in any violation
of the provisions of the charter or by-laws of the Company or any of the
Guarantors or any statute or any judgment, order, decree, rule or
regulation of any court or arbitrator or governmental agency or body
having jurisdiction over the Company or any of the Guarantors or any of
their properties or assets; and no consent, approval, authorization or
order of, or filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery and
performance by the Company and each of the Guarantors of each of the
Transaction Documents to which each is a party, the issuance,
authentication, sale and delivery of the Securities and compliance by the
Company and each of the Guarantors with the terms thereof and the
consummation of the transactions contemplated by the Transaction
Documents, except for such consents, approvals, authorizations, filings,
registrations or qualifications (i) which shall have been obtained or made
prior to the Closing Date, (ii) as may be required to be obtained or made
under the Securities Act and applicable state securities laws as provided
in the Registration Rights Agreement and (iii) the failure of which to
obtain would not materially restrain, prevent or impose material
burdensome conditions on any of the transactions contemplated by any of
the Transaction Documents.
(o) Deloitte & Touche LLP are independent certified public
accountants with respect to the Company and the Guarantors within the
meaning of Rule 101 of the Code of Professional Conduct of the American
Institute of Certified Public Accountants (the "AICPA") and the
interpretations and rulings thereunder. The historical financial
statements (including the related notes) contained in the Offering
Memorandum comply in all material respects with the requirements
applicable to a registration statement on Form S-1 under the Securities
Act (except that certain supporting schedules are omitted); such financial
statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods covered
thereby and fairly present the financial position of the entities
purported to be covered thereby at the
<PAGE>
7
respective dates indicated and the results of their operations and their
cash flows for the respective periods indicated; and the financial
information contained in the Offering Memorandum under the headings
"Summary--Summary Pro Forma Combined Financial and Operating Data",
"Summary--Summary Combined Historical and Financial Data--PTI Alaska",
"Summary--Summary Historical Consolidated Financial Data--ATU", "Pro Forma
Combined Financial and Operating Data", "Selected Historical Combined
Financial Data--PTI Alaska", "Selected Historical Consolidated Financial
Data--ATU" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" are derived from the accounting
records of the Company, PTI and ATU and fairly present the information
purported to be shown thereby. The pro forma financial information
contained in the Offering Memorandum has been prepared on a basis
consistent with the historical financial statements contained in the
Offering Memorandum (except for the pro forma adjustments specified
therein), includes all material adjustments to the historical financial
information required by Rule 11-02 of Regulation S-X under the Securities
Act and the Securities Exchange Act of 1934 (the "Exchange Act") to
reflect the transactions described in the Offering Memorandum, gives
effect to assumptions made on a reasonable basis and fairly presents the
historical and proposed transactions contemplated by the Offering
Memorandum and the Transaction Documents; provided that no representation
is made with respect to the compliance of the calculation of "Adjusted
EBITDA" with the requirements of Rule 11-02 of Regulation S-X under the
Exchange Act. The other historical financial and statistical information
and data included in the Offering Memorandum are, in all material
respects, fairly presented in accordance with generally accepted
accounting principles.
(p) There are no legal or governmental proceedings pending to which
the Company or any of the Guarantors is a party or of which any property
or assets of the Company or any of the Guarantors is the subject which,
(i) except as disclosed in the Offering Memorandum, singularly or in the
aggregate, if determined adversely to the Company or any of the
Guarantors, could reasonably be expected to have a Material Adverse Effect
or (ii) question the validity or enforceability of any of the Transaction
Documents or any action taken or to be taken pursuant thereto; and to the
best knowledge of the Company, Holdings and the Acquiring Guarantors, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(q) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency or
body which prevents the issuance of the Securities or suspends the sale of
the Securities in any jurisdiction; no injunction, restraining order or
order of any nature by any federal or state court of competent
jurisdiction has been issued with respect to the Company or any of the
Guarantors which would prevent or suspend the issuance or sale of the
Securities or the use of the Preliminary Offering Memorandum or the
Offering Memorandum in any jurisdiction; no action, suit or proceeding is
pending against or, to the best knowledge of the Company, Holdings and
each of the Acquiring Guarantors, threatened against or affecting the
Company or any of the Guarantors before any court or arbitrator or any
governmental agency, body or official, domestic or foreign, which could
reasonably be expected to interfere with or adversely affect the issuance
of the Securities or in any manner draw into question the validity or
enforceability of any of the Transaction
<PAGE>
8
Documents or any action taken or to be taken pursuant thereto; and neither
the Company nor any of the Guarantors has received any requests by any
securities authority in any jurisdiction for additional information to be
included in the Preliminary Offering Memorandum and the Offering
Memorandum.
(r) Neither the Company nor any of the Guarantors is (i) in
violation of its charter or by-laws, (ii) in default in any respect, and
no event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its property or assets is
subject, other than any such default as would not, singularly or in the
aggregate, be reasonably expected to have a Material Adverse Effect or
(iii) in violation in any respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets are
be subject, other than any such violation as would not, singularly or in
the aggregate, be reasonably expected to have a Material Adverse Effect.
(s) The Company and each of the Guarantors possess all licenses,
certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate federal, state or foreign
regulatory agencies or bodies which are necessary or, in the reasonable
judgment of the Company, desirable for the ownership of their respective
properties or the conduct of their respective businesses as described in
the Offering Memorandum, except where the failure to possess or make the
same would not, singularly or in the aggregate, have a Material Adverse
Effect, and, except as disclosed in the Offering Memorandum, neither the
Company nor any of the Guarantors has received notification of any
revocation or modification of any such license, certificate, authorization
or permit or has any reason to believe that any such license, certificate,
authorization or permit will not be renewed in the ordinary course.
(t) The Company and each of the Guarantors have filed all federal,
state, local and foreign income and franchise tax returns required to be
filed through the date hereof and have paid all taxes due thereon (other
than those taxes being contested in good faith or those taxes currently
payable without penalty or interest, in each case for which adequate
reserves have been provided in accordance with generally accepted
accounting principles, and other than to the extent the failure to do so
could not reasonably be expected to result in a Material Adverse Effect),
and no tax deficiency has been determined adversely to the Company or any
of the Guarantors which has had (nor does the Company, Holdings or any of
the Acquiring Guarantors have any knowledge of any tax deficiency which,
if determined adversely to the Company or any of the Guarantors, could
reasonably be expected to have) a Material Adverse Effect.
(u) None of the Company or any of the Guarantors is (i) an
"investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules and regulations of the Commission
thereunder or (ii) a "holding company" or a "subsidiary company" of a
holding company or an "affiliate" thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
<PAGE>
9
(v) The Company and each of the Guarantors maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(w) The Company and each of the Guarantors have insurance covering
their respective properties, operations, personnel and businesses, which
insurance is in amounts and insures against such losses and risks as are,
in the reasonable judgment of the Company, adequate to protect the
Company, the Guarantors and their respective businesses. None of the
Company or any of the Guarantors has received notice from any insurer or
agent of such insurer that capital improvements or other expenditures are
required or necessary to be made in order to continue such insurance.
(x) The Company and each of the Guarantors own or possess adequate
rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses and know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of their
respective businesses; and the conduct of their respective businesses will
not conflict in any respect with, and the Company and the Guarantors have
not received any notice of any claim of conflict with, any such rights of
others which conflict, singularly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(y) The Company and each of the Guarantors have good and marketable
title in fee simple to, or have valid rights to lease or otherwise use,
all items of real and personal property which are material to the business
of the Company and the Guarantors, in each case free and clear of all
liens, encumbrances, claims and defects and imperfections of title except
such as (i) do not materially interfere with the use made and proposed to
be made of such property by the Company and the Guarantors, (ii) could not
reasonably be expected to have a Material Adverse Effect, (iii) arise
under the Credit Agreement or (iv) are permitted under the Indenture.
(z) No labor disturbance by or dispute with the employees of the
Company or any of the Guarantors exists or, to the best knowledge of the
Company, Holdings and the Acquiring Guarantors, is contemplated or
threatened.
(aa) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in
<PAGE>
10
Section 4043(b) of ERISA (other than events with respect to which the
30-day notice requirement under Section 4043 of ERISA has been waived) has
occurred with respect to any employee benefit plan of the Company or any
of the Guarantors which could reasonably be expected to have a Material
Adverse Effect; each such employee benefit plan is in compliance in all
material respects with applicable law, including ERISA and the Code; the
Company and each of the Guarantors have not incurred and do not expect to
incur liability under Title IV of ERISA with respect to the termination
of, or withdrawal from, any pension plan for which the Company or any of
the Guarantors would have any liability; and each such pension plan that
is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which could reasonably be expected to cause
the loss of such qualification.
(bb) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of any
kind of toxic or other wastes or other hazardous substances by, due to or
caused by the Company or any of the Guarantors (or, to the best knowledge
of the Company, Holdings and the Acquiring Guarantors, any other entity
(including any predecessor) for whose acts or omissions the Company or any
of the Guarantors is or could reasonably be expected to be liable) upon
any of the property now or previously owned or leased by the Company or
any of the Guarantors, or upon any other property, in violation of any
statute or any ordinance, rule, regulation, order, judgment, decree or
permit or which would, under any statute or any ordinance, rule (including
rule of common law), regulation, order, judgment, decree or permit, give
rise to any liability, except for any violation or liability that could
not reasonably be expected to have, singularly or in the aggregate with
all such violations and liabilities, a Material Adverse Effect; and there
has been no disposal, discharge, emission or other release of any kind
onto such property or into the environment surrounding such property of
any toxic or other wastes or other hazardous substances with respect to
which the Company, Holdings or any of the Acquiring Guarantors has
knowledge, except for any such disposal, discharge, emission or other
release of any kind which could not reasonably be expected to have,
singularly or in the aggregate with all such discharges and other
releases, a Material Adverse Effect.
(cc) None of the Company or, to the best knowledge of the Company,
Holdings and each of the Acquiring Guarantors, any director, officer,
agent, employee or other person associated with or acting on behalf of the
Company or any of the Guarantors has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any unlawful payment to any
foreign or domestic government official or employee from corporate funds;
(iii) violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or (iv) made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(dd) On and immediately after the Closing Date, the Company and each
of the Guarantors (after giving effect to the issuance of the Securities
and to the other transactions related thereto as described in the Offering
Memorandum) will be Solvent. As used in this paragraph, the term "Solvent"
means, with respect to a particular date, that
<PAGE>
11
on such date (i) the fair value and present fair saleable value of the
assets of the Company or such Guarantor, as the case may be, exceeds: (x)
the total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of the Company or such Guarantor, as the case
may be, and (y) the amount required to pay such liabilities as they become
absolute and matured in the normal course of business; (ii) the Company or
such Guarantor, as the case may be, has the ability to pay its debts and
liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) as they become absolute and matured in the
normal course of business; and (iii) neither the Company nor such
Guarantor, as the case may be, has an unreasonably small amount of capital
with which to conduct its business after giving due consideration to the
prevailing practice in the industry in which the Company or such
Guarantor, as the case may be, is engaged. In computing the amount of such
contingent liabilities at any time, it is intended that such liabilities
will be computed at the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
(ee) Except as described in the Offering Memorandum, there are no
outstanding subscriptions, rights, warrants, calls or options to acquire,
or instruments convertible into or exchangeable for, or agreements or
understandings with respect to the sale or issuance of, any shares of
capital stock of or other equity or other ownership interest in the
Company or any of the Guarantors other than those provided in the
agreement dated as of April 8, 1999, by and among Chamer Corporation, Fox
Paine & Company, LLC and Holdings, as amended.
(ff) None of the Company or any of the Guarantors owns any "margin
securities" as that term is defined in Regulation U of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the sale of the Securities will be used, directly
or indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry any margin security or for
any other purpose which would cause any of the Securities to be considered
a "purpose credit" within the meanings of Regulation T, U or X of the
Federal Reserve Board.
(gg) None of the Company or any of the Guarantors is a party to any
contract, agreement or understanding with any person that would give rise
to a valid claim against the Company, the Guarantors or the Initial
Purchasers for a brokerage commission, finder's fee or like payment in
connection with the offering and sale of the Securities.
(hh) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(ii) None of the Company, any of the Guarantors, any of their
respective affiliates or any person (other than the Initial Purchasers or
their affiliates) acting on its or their behalf has engaged or will engage
in any directed selling efforts (as such term is defined in Regulation S
under the Securities Act ("Regulation S")), and all such persons have
complied and will comply with the offering restrictions requirement of
Regulation S to the extent applicable.
<PAGE>
12
(jj) None of the Company, any of the Guarantors or any of their
respective affiliates has, directly or through any agent, sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as such term is defined in the Securities Act), which is or
will be integrated with the sale of the Securities in a manner that would
require registration of the Securities under the Securities Act.
(kk) None of the Company, any of the Guarantors or any of their
respective affiliates or any other person acting on its or their behalf
has engaged, in connection with the offering of the Securities, in any
form of general solicitation or general advertising within the meaning of
Rule 502(c) under the Securities Act.
(ll) There are no securities of the Company or the Guarantors
registered under the Exchange Act, or listed on a national securities
exchange or quoted in a U.S. automated inter-dealer quotation system.
(mm) None of the Company or any of the Guarantors has taken or will
take, directly or indirectly, any action prohibited by Regulation M under
the Exchange Act in connection with the offering of the Securities.
(nn) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act) contained in
the Preliminary Offering Memorandum or the Offering Memorandum has been
made or reaffirmed without a reasonable basis or has been disclosed other
than in good faith.
(oo) None of the Company or any of the Guarantors does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Florida Statutes Section 517.075.
(pp) The Company has conducted a complete systems assessment of the
risk that the computer hardware and software used by the Company and the
Guarantors may be unable to recognize and properly execute date-sensitive
functions involving certain dates prior to and any dates after December
31, 1999 (the "Year 2000 Problem"), and has determined that such risk will
be remedied by September 30, 1999 without material expense; and the
Company believes, after due inquiry, that each supplier, vendor, customer
or financial service organization used or serviced by the Company and the
Guarantors has remedied or will remedy on a timely basis the Year 2000
Problem, although the failure of any supplier, vendor, customer or
financial service organization that has a material relationship with the
Company to remedy the Year 2000 Problem on a timely basis could have a
Material Adverse Effect.
(qq) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (i) there has been no
material adverse change or any development involving a material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or management of the Company and the Guarantors, taken as
a whole, whether or not arising in the ordinary course of business, (ii)
the Company and the Guarantors, have not incurred any material liability
or obligation, direct or contingent, other than in the ordinary course of
business, (iii) the
<PAGE>
13
Company and the Guarantors, taken as a whole, have not entered into any
material transaction other than in the ordinary course of business and
(iv) there has not been any change in the capital stock or long-term debt
of the Company or any of the Guarantors, or any dividend or distribution
of any kind declared, paid or made by the Company or any of the Guarantors
on any class of their respective capital stock.
(rr) Except with respect to any matter that, singularly or in the
aggregate, could not reasonably be expected to result in a Material
Adverse Effect, none of the Company or any of the Guarantors (i) has
failed to comply with any law, rule, regulation, code, ordinance, order,
decree, judgment, injunction, notice or binding agreement issued,
promulgated or entered into by any governmental authority (including but
not limited to the FCC and the Alaskan Public Utilities Commission)
relating in any way to the offering or provision of communications
(collectively, "Communications Laws") or to obtain, maintain or comply
with any permit, license or other approval required under any
Communications Law, (ii) has become subject to any liability, contingent
or otherwise (including any liability for damages, costs, fines, penalties
or indemnities) directly or indirectly resulting from or based upon (w)
the violation of any Communications Law, (x) the generation or use of
communications, (y) exposure to communications or radio frequency
emissions or (z) any contract, agreement or other consensual agreement
pursuant to which liability is assumed or imposed with respect to any of
the foregoing (collectively, "Communication Liabilities"), (iii) has
received notice of any claim with respect to any Communication Liability
or (iv) knows of any basis for any Communication Liability.
2. Purchase and Resale of the Securities. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Company, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 1 hereto at a purchase price equal to 97% of the
principal amount thereof. The Company shall not be obligated to deliver any of
the Securities except upon payment for all of the Securities to be purchased as
provided herein.
(b) The Initial Purchasers have advised the Company that they
propose to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. Each Initial
Purchaser, severally and not jointly, represents, warrants and agrees that (i)
it is purchasing the Securities pursuant to a private sale exempt from
registration under the Securities Act, (ii) it has not solicited offers for, or
offered or sold, and will not solicit offers for, or offer or sell, the
Securities by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D under the Securities Act
("Regulation D") or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act and (iii) it has solicited and will
solicit offers for the Securities only from, and has offered or sold and will
offer, sell or deliver the Securities, as part of their initial offering, only
(A) within the United States to persons whom it reasonably believes to be
qualified institutional buyers ("Qualified Institutional Buyers"), as defined in
Rule 144A under the Securities Act ("Rule 144A"), or if any such person is
buying for one or more institutional accounts for which such person is acting as
fiduciary or agent, only when such person has
<PAGE>
14
represented to it that each such account is a Qualified Institutional Buyer to
whom notice has been given that such sale or delivery is being made in reliance
on Rule 144A and in each case, in transactions in accordance with Rule 144A and
(B) outside the United States to persons other than U.S. persons in reliance on
Regulation S.
(c) In connection with the offer and sale of Securities in reliance
on Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) the Securities have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except pursuant to an exemption from,
or in transactions not subject to, the registration requirements of the
Securities Act;
(ii) such Initial Purchaser has offered and sold the Securities, and
will offer and sell the Securities, (A) as part of their distribution at
any time and (B) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the Closing Date, only
in accordance with Regulation S or Rule 144A or any other available
exemption from registration under the Securities Act;
(iii) none of such Initial Purchasers or any of its affiliates or
any other person acting on its or their behalf has engaged or will engage
in any directed selling efforts with respect to the Securities, and all
such persons have complied and will comply with the offering restriction
requirements of Regulation S;
(iv) at or prior to the confirmation of sale of any Securities sold
in reliance on Regulation S, it will have sent to each distributor, dealer
or other person receiving a selling concession, fee or other remuneration
that purchases Securities from it during the restricted period a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering of the Securities and the
date of original issuance of the Securities, except in accordance
with Regulation S or Rule 144A or any other available exemption from
registration under the Securities Act. Terms used above have the
meanings given to them by Regulation S."; and
(v) it has not and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the Securities,
except with its affiliates or with the prior written consent of the
Company.
Terms used in this Section 2(c) have the meanings given to them by Regulation S.
(d) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it has not offered or sold and prior to the date
six months after the Closing Date will not offer or sell any Securities to
persons in the United Kingdom except to persons whose
<PAGE>
15
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (ii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 and the Public
Offers of Securities Regulations 1995 with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom;
and (iii) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
(e) Each Initial Purchaser, severally and not jointly, agrees that,
prior to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Securities purchased by such Initial
Purchaser from the Company pursuant hereto, such Initial Purchaser shall furnish
to that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that the Company shall have furnished to such Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Sections 5(d) and 5(e), counsel for the Company and for the Initial
Purchasers, respectively, may rely upon the accuracy of the representations and
warranties of the Initial Purchasers and their compliance with their agreements
contained in this Section 2, and each Initial Purchaser hereby consents to such
reliance.
(f) The Company, Holdings and each of the Acquiring Guarantors
acknowledges and agrees, and, as of the Closing Date, pursuant to the Closing
Date Letter Agreement, each of the entities comprising PTI and ATU acknowledges
and agrees, that the Initial Purchasers may sell Securities to any affiliate of
an Initial Purchaser and that any such affiliate may sell Securities purchased
by it to an Initial Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery of and
payment for the Securities shall be made at the offices of Wachtell, Lipton,
Rosen & Katz, New York, New York, or at such other place as shall be agreed upon
by the Initial Purchasers and the Company, at 10:00 a.m., New York City time, on
May 14, 1999, or at such other time or date, not later than seven full business
days thereafter, as shall be agreed upon by the Initial Purchasers and the
Company (such date and time of payment and delivery being referred to herein as
the "Closing Date").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior to
the Closing Date or by such other means as the parties hereto shall agree prior
to the Closing Date against delivery to the Initial Purchasers of the
certificates evidencing the Securities. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of the Initial Purchasers hereunder. Upon delivery,
the Securities shall be in global form, registered in such names and in such
denominations as CSI on behalf of the Initial Purchasers shall have requested in
writing not less than two full business days prior to the Closing Date. The
Company agrees to
<PAGE>
16
make one or more global certificates evidencing the Securities available for
inspection by CSI on behalf of the Initial Purchasers in New York, New York at
least 24 hours prior to the Closing Date.
4. Further Agreements of the Company and the Guarantors. The
Company, Holdings and each of the Acquiring Guarantors agree, and, as of the
Closing Date, pursuant to the Closing Date Letter Agreement, each of the
entities comprising PTI and ATU agrees, with each of the several Initial
Purchasers:
(a) at all times prior to completion of the resale of the Securities
by the Initial Purchasers, to advise the Initial Purchasers promptly and,
if reasonably requested, confirm such advice in writing, of the happening
of any event which makes any statement of a material fact made in the
Offering Memorandum untrue or which requires the making of any additions
to or changes in the Offering Memorandum (as amended or supplemented from
time to time) in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; to advise the
Initial Purchasers promptly of any order preventing or suspending the use
of the Preliminary Offering Memorandum or the Offering Memorandum, of any
suspension of the qualification of the Securities for offering or sale in
any jurisdiction and of the initiation or threatening of any proceeding
for any such purpose; and to use its reasonable best efforts to prevent
the issuance of any such order preventing or suspending the use of the
Preliminary Offering Memorandum or the Offering Memorandum or suspending
any such qualification and, if any such suspension is issued, to use its
reasonable best efforts to obtain the lifting thereof at the earliest
possible time;
(b) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers
and counsel for the Initial Purchasers and not to effect any such
amendment or supplement to which the Initial Purchasers shall reasonably
object by notice to the Company after a reasonable period to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for
the Initial Purchasers or counsel for the Company, to amend or supplement
the Offering Memorandum in order that the Offering Memorandum will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances existing at the time it is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, to promptly prepare such
amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
<PAGE>
17
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon request of
such holders or such prospective purchasers, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless
the Company is then subject to and in compliance with Section 13 or 15(d)
of the Exchange Act (the foregoing agreement being for the benefit of the
holders from time to time of the Securities and prospective purchasers of
the Securities designated by such holders);
(f) until such time as the Company becomes subject to Section 13 or
15(d) of the Exchange Act, to furnish to the Initial Purchasers copies of
any annual reports, quarterly reports and current reports filed by the
Company or Holdings with the Commission on Forms 10-K, 10-Q and 8-K, or
such other similar forms as may be designated by the Commission, and such
other documents, reports and information as shall be furnished by the
Company or Holdings to the Trustee or to the holders of the Securities
pursuant to the Indenture or the Exchange Act or any rule or regulation of
the Commission thereunder;
(g) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchasers may designate and to continue such qualifications
in effect for so long as required for the resale of the Securities; and to
arrange for the determination of the eligibility for investment of the
Securities under the laws of such jurisdictions as the Initial Purchasers
may reasonably request; provided that the Company and the Guarantors shall
not be obligated to qualify as foreign corporations in any jurisdiction in
which they are not so qualified or to file a general consent to service of
process in any jurisdiction;
(h) to provide such assistance as the Initial Purchasers may
reasonably request in arranging for the Securities to be designated
Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") Market securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers, Inc. ("NASD")
relating to trading in the PORTAL Market and for the Securities to be
eligible for clearance and settlement through The Depository Trust Company
("DTC");
(i) not to, and to cause its affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require
registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause its affiliates not to, and not to authorize
or knowingly permit any person acting on their behalf to, solicit any
offer to buy or offer to sell the Securities by means of any form of
general solicitation or general advertising within the meaning of
Regulation D or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and not to offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract or
disposition would
<PAGE>
18
cause the exemption afforded by Section 4(2) of the Securities Act to
cease to be applicable to the offering and sale of the Securities as
contemplated by this Agreement and the Offering Memorandum;
(k) for a period of 180 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement for,
or announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by the Company or any of the
Guarantors (other than the Securities, the Exchange Securities and the
Holdings Discount Debentures) without the prior written consent of the
Initial Purchasers;
(l) during the period from the Closing Date until two years after
the Closing Date, without the prior written consent of the Initial
Purchasers, not to, and not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Securities that
have been reacquired by them, except for Securities purchased by the
Company or any of its affiliates and resold in a transaction registered
under the Securities Act;
(m) not to, for so long as the Securities are outstanding, be or
become, or be or become owned by, an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the Investment Company Act, and to not
be or become, or be or become owned by, a closed-end investment company
required to be registered, but not registered thereunder;
(n) in connection with the offering of the Securities, until CSI on
behalf of the Initial Purchasers shall have notified the Company of the
completion of the resale of the Securities, not to, and to cause its
affiliated purchasers (as defined in Regulation M under the Exchange Act)
not to, either alone or with one or more other persons, bid for or
purchase, for any account in which it or any of its affiliated purchasers
has a beneficial interest, any Securities, or attempt to induce any person
to purchase any Securities; and not to, and to cause its affiliated
purchasers not to, make bids or purchase for the purpose of creating
actual, or apparent, active trading in or of raising the price of the
Securities;
(o) in connection with the offering of the Securities, to make its
officers, employees, independent accountants and legal counsel reasonably
available upon reasonable request by the Initial Purchasers;
(p) to furnish to each of the Initial Purchasers on the date hereof
a copy of each of the independent accountants' reports included in the
Offering Memorandum signed by the accountants rendering such report;
(q) to do and perform all things required to be done and performed
by it under this Agreement that are within its control prior to or after
the Closing Date, and to use its best efforts to satisfy all conditions
precedent on its part to the delivery of the Securities;
(r) not to take any action prior to the execution and delivery of
the Indenture which, if taken after such execution and delivery, would
have violated any of the covenants contained in the Indenture;
<PAGE>
19
(s) prior to the Closing Date, not to issue any press release or
other communication directly or indirectly or hold any press conference
with respect to the condition, financial or otherwise, or earnings,
business affairs or business prospects of the Company or the Guarantors,
as the case may be (except for routine oral marketing communications in
the ordinary course of business and consistent with the past practices of
the Company or the Guarantors, as the case may be, and of which the
Initial Purchasers are notified), without the prior written consent of the
Initial Purchasers, unless in the judgment of the Company or the
Guarantors and their counsel, and after notification to the Initial
Purchasers, such press release or communication is required by law; and
(t) to apply the net proceeds from the sale of the Securities as set
forth in the Offering Memorandum under the heading "Use of Proceeds".
5. Conditions of Initial Purchasers' Obligations. The respective
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company, Holdings and each of the
Acquiring Guarantors contained herein, to the accuracy, on and as of the Closing
Date, of the representations and warranties of each of the entities comprising
PTI and ATU contained in the Closing Date Letter Agreement, to the accuracy of
the statements of the Company and each of the Guarantors and their respective
officers made in any certificates delivered pursuant hereto, to the performance
by the Company and each of the Guarantors of their respective obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Company and the
Initial Purchasers may agree; and no stop order suspending the sale of the
Securities in any jurisdiction shall have been issued and no proceeding
for that purpose shall have been commenced or shall be pending or
threatened.
(b) None of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the Offering
Memorandum or any amendment or supplement thereto contains an untrue
statement of a fact which is material or omits to state any fact which is
material and is required to be stated therein or is necessary to make the
statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of the Transaction Documents
and the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall be
reasonably satisfactory in all material respects to the Initial
Purchasers, and the Company and the Guarantors shall have furnished to the
Initial Purchasers all documents and information that they or their
counsel may reasonably request to enable them to pass upon such matters.
(d) Wachtell, Lipton, Rosen & Katz shall have furnished to the
Initial Purchasers their written opinion, as counsel for the Company,
Holdings and the Acquiring Guarantors, addressed to the Initial Purchasers
and dated the Closing Date, in form and
<PAGE>
20
substance reasonably satisfactory to the Initial Purchasers, substantially
in the form set forth in Annex B-1 hereto. Birch, Horton, Bittner & Cherot
shall have furnished to the Initial Purchasers their written opinion, as
counsel for PTI and ATU, addressed to the Initial Purchasers and dated the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchasers, substantially in the form set forth in Annex B-2 hereto. Hogan
& Hartson, L.L.P. shall have furnished to the Initial Purchasers their
written opinion, as special FCC counsel for the Company and the
Guarantors, addressed to the Initial Purchasers and dated the Closing
Date, in form and substance reasonably satisfactory to the Initial
Purchasers, substantially in the form set forth in Annex B-3 hereto.
Deborah Harwood, Esq., shall have furnished to the Initial Purchasers her
written opinion, as General Counsel for the Company, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, substantially in the
form set forth in Annex B-4 hereto.
(e) The Initial Purchasers shall have received from Cravath, Swaine
& Moore, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Initial
Purchasers may reasonably require, and the Company and the Guarantors
shall have furnished to such counsel such documents and information as
they reasonably request for the purpose of enabling them to pass upon such
matters.
(f) The Company shall have furnished to the Initial Purchasers:
(i) a letter (the "D&T Initial Letter") of Deloitte & Touche,
LLP, addressed to the Initial Purchasers and dated the date hereof,
in form and substance reasonably satisfactory to the Initial
Purchasers, substantially in the form set forth in Annex C-1 hereto;
(ii) a letter (the "KPMG (Shreveport) Initial Letter") of KPMG
LLP, addressed to the Initial Purchasers and dated the date hereof,
in form and substance reasonably satisfactory to the Initial
Purchasers, substantially in the form set forth in Annex C-2 hereto;
and
(iii) a letter (the "KPMG (Anchorage) Initial Letter") of KPMG
LLP, addressed to the Initial Purchasers and dated the date hereof,
in form and substance reasonably satisfactory to the Initial
Purchasers, substantially in the form set forth in Annex C-3 hereto.
(g) The Company shall have furnished to the Initial Purchasers:
(i) a letter (the "D&T Bring-Down Letter") of Deloitte &
Touche, LLP, addressed to the Initial Purchasers and dated the
Closing Date (A) confirming that they are independent public
accountants with respect to (1) the Company, (2) PTI as of December
31, 1997 and for the year ended December 31, 1996, the eleven months
ended November 30, 1997 and the one month ended December 31, 1997
and (3) Telephone Fund of Fairbanks Municipal Utilities Services
(the "Fund") as of and for the period ending October 6, 1997 and for
the year ended December 31, 1996, in each case within the meaning of
Rule 101 of the Code of Professional
<PAGE>
21
Conduct of the AICPA and the interpretations and rulings thereunder,
(B) stating, as of the Closing Date (or, with respect to matters
involving changes or developments since the respective dates as of
which specified financial information is given in the Offering
Memorandum, as of a date not more than three business days prior to
the Closing Date), that the conclusions and findings of such
accountants with respect to the financial information and other
matters relating to the Company covered by the D&T Initial Letter
are accurate and (C) confirming in all material respects the
conclusions and findings set forth in the D&T Initial Letter;
(ii) a letter (the "KPMG (Shreveport) Bring-Down Letter") of
KPMG LLP, addressed to the Initial Purchasers and dated the Closing
Date (A) confirming that they are independent public accountants
with respect to PTI as of December 31, 1998 and for the year then
ended within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and the interpretations and rulings thereunder,
(B) stating, as of the Closing Date (or, with respect to matters
involving changes or developments since the respective dates as of
which specified financial information is given in the Offering
Memorandum, as of a date not more than three business days prior to
the Closing Date), that the conclusions and findings of such
accountants with respect to the financial information and other
matters covered by the KPMG (Shreveport) Initial Letter are accurate
and (C) confirming in all material respects the conclusions and
findings set forth in the KPMG (Shreveport) Initial Letter; and
(iii) a letter (the "KPMG (Anchorage) Bring-Down Letter") of
KPMG LLP, addressed to the Initial Purchasers and dated the Closing
Date (A) confirming that they are independent public accountants
with respect to ATU as of December 31, 1998 and 1997 and for each of
the years in the three-year period ended December 31, 1998 within
the meaning of Rule 101 of the Code of Professional Conduct of the
AICPA and the interpretations and rulings thereunder, (B) stating,
as of the Closing Date (or, with respect to matters involving
changes or developments since the respective dates as of which
specified financial information is given in the Offering Memorandum,
as of a date not more than three business days prior to the date of
the Closing Date), that the conclusions and findings of such
accountants with respect to the financial information and other
matters covered by the KPMG (Anchorage) Initial Letter are accurate
and (C) confirming in all material respects the conclusions and
findings set forth in the KPMG (Anchorage) Initial Letter.
(h) The representations and warranties of the Company, Holdings and
each of the Acquiring Guarantors contained herein shall be true and
correct as of the date of this Agreement and as of the Closing Date as
though made on the Closing Date. The Company and the Guarantors shall have
furnished to the Initial Purchasers a certificate, dated the Closing Date,
of the Company's Chief Executive Officer and Chief Financial Officer
stating that (i) such officers have carefully examined the Offering
Memorandum, (ii) in their opinion, the Offering Memorandum, as of its
date, did not include any untrue statement of a material fact and did not
omit to state a material fact required to be stated
<PAGE>
22
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and since
the date of the Offering Memorandum, no event has occurred which should
have been set forth in a supplement or amendment to the Offering
Memorandum so that the Offering Memorandum (as so amended or supplemented)
would not include any untrue statement of a material fact and would not
omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, (iii) as of the Closing Date,
the representations and warranties of the Company, Holdings and the
Acquiring Guarantors in this Agreement are true and correct in all
material respects as though such representations and warranties are made
as of the Closing Date, with the same effect as if made on the Closing
Date, the Company, Holdings and each of the Acquiring Guarantors have
complied with all agreements and satisfied all conditions on their part to
be performed or satisfied hereunder on or prior to the Closing Date and
(iv) subsequent to the date of the most recent financial statements
contained in the Offering Memorandum, there has been no material adverse
change in the financial position or results of operations of the Company
and the Guarantors, taken as a whole, or any material change, or any
material development, in or affecting the condition (financial or
otherwise), results of operations or business of the Company and the
Guarantors, taken as a whole.
(i) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of the Company and the Guarantors.
(j) The Indenture shall have been duly executed and delivered by the
Company, the Guarantors and the Trustee, and the Securities shall have
been duly executed and delivered by the Company and duly authenticated by
the Trustee.
(k) The Securities shall have been approved by the NASD for trading
in the PORTAL Market.
(l) If any event shall have occurred that requires the Company under
Section 4(d) to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have been given a reasonable opportunity to
comment thereon, and copies thereof shall have been delivered to the
Initial Purchasers reasonably in advance of the Closing Date.
(m) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment
thereof by the Commission which in the judgment of the Initial Purchasers
would materially impair the ability of the Initial Purchasers to purchase,
hold or effect resales of the Securities as contemplated hereby.
(n) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital
<PAGE>
23
stock or long-term debt or any change, or any development involving a
change, in or affecting the condition (financial or otherwise), results of
operations or business of the Company and the Guarantors taken as a whole,
the effect of which, in any such case described above, is, in the judgment
of the Initial Purchasers, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or delivery of the
Securities on the terms and in the manner contemplated by this Agreement
and the Offering Memorandum (exclusive of any amendment or supplement
thereto).
(o) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance
or sale of the Securities; and no injunction, restraining order or order
of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Securities.
(p) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Securities
or any other debt securities or preferred stock of the Company or Holdings
by any "nationally recognized statistical rating organization", as such
term is defined by the Commission for purposes of Rule 436(g)(2) of the
rules and regulations of the Commission under the Securities Act and (ii)
no such organization shall have publicly announced that it has under
surveillance or review (with negative implications), its rating of the
Securities or any other debt securities or preferred stock of the Company
or Holdings.
(q) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on any such exchange or market
by the Commission, by any such exchange or by any other regulatory body or
governmental authority having jurisdiction, or trading in any securities
of the Company or Holdings on any exchange or in the over-the-counter
market shall have been suspended or (ii) any moratorium on commercial
banking activities shall have been declared by federal or New York state
authorities or (iii) an outbreak or escalation of hostilities or a
declaration by the United States of a national emergency or war or (iv) a
material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) the effect of which, in the
case of this clause (iv), is, in the reasonable judgment of the Initial
Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or the delivery of the Securities on
the terms and in the manner contemplated by this Agreement and in the
Offering Memorandum (exclusive of any amendment or supplement thereto).
(r) Substantially simultaneously with the sale of the Securities
hereunder, (i) the acquisitions of PTI and ATU shall have been consummated
on the terms described in the Offering Memorandum, (ii) the Credit
Agreement shall have been executed and delivered and the initial
borrowings thereunder shall have been made, (iii) the Initial Purchasers
shall have received a counterpart of the letter agreement, substantially
in the form of
<PAGE>
24
Annex D attached hereto (the "Closing Date Letter Agreement") which shall
have been executed and delivered by a duly authorized officer of each of
the entities comprising PTI and ATU whereby, among other things, such
entities will become parties to this Agreement and be subject to all
obligations hereunder including, but not limited to, the obligations under
Section 4, 9, 10, 11, 12 and 13. All conditions precedent to the
consummation of the acquisitions of PTI and ATU, other than the payment of
the consideration therefore, shall have been satisfied or waived (any such
waiver only with the prior written consent of the Initial Purchasers),
prior to or on the Closing Date.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
6. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and payment for
the Securities if, prior to that time, any of the events described in Section
5(m), (n), (o), (p), (q) or (r) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for the
purchase of the Securities which such defaulting Initial Purchaser agreed but
failed to purchase by other persons satisfactory to the Company and the
non-defaulting Initial Purchasers, but if no such arrangements are made within
36 hours after such default, this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers or the Company, except that
the Company and the Guarantors will continue to be liable for the payment of
expenses to the extent set forth in Sections 8 and 12 and except that the
provisions of Sections 9 and 10 shall not terminate and shall remain in effect.
As used in this Agreement, the term "Initial Purchasers" includes, for all
purposes of this Agreement unless the context otherwise requires, any party not
listed in Schedule 1 hereto that, pursuant to this Section 7, purchases
Securities which a defaulting Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company or any non-defaulting
Initial Purchaser for damages caused by its default. If other persons are
obligated or agree to purchase the Securities of a defaulting Initial Purchaser,
either the non-defaulting Initial Purchasers or the Company may postpone the
Closing Date for up to seven full business days in order to effect any changes
that in the opinion of counsel for the Company or counsel for the Initial
Purchasers may be necessary in the Offering Memorandum or in any other document
or arrangement, and the Company agrees to promptly prepare any amendment or
supplement to the Offering Memorandum necessary to effect any such changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this
Agreement shall have been terminated pursuant to Section 6 or 7, (b) the Company
shall fail to tender the Securities for delivery to the Initial Purchasers for
any reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Securities for any reason permitted under this
Agreement, the Company and the Guarantors shall reimburse the Initial Purchasers
for such out-of-pocket expenses (including reasonable fees and disbursements of
counsel) as shall have
<PAGE>
25
been reasonably incurred by the Initial Purchasers in connection with this
Agreement and the proposed purchase and resale of the Securities. If this
Agreement is terminated pursuant to Section 7 by reason of the default of one or
more of the Initial Purchasers, the Company and the Guarantors shall not be
obligated to reimburse any defaulting Initial Purchaser on account of such
expenses.
9. Indemnification. (a) The Company and each of the Guarantors shall
jointly and severally indemnify and hold harmless each Initial Purchaser, its
affiliates, their respective officers, directors, employees, representatives and
agents, and each person, if any, who controls any Initial Purchaser within the
meaning of the Securities Act or the Exchange Act (collectively referred to for
purposes of this Section 9(a) and Section 10 as an "Initial Purchaser"), from
and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, without limitation, any loss, claim,
damage, liability or action relating to purchases and sales of the Securities),
to which that Initial Purchaser may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto or in any information provided by the Company
pursuant to Section 4(e) or (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and shall reimburse each Initial Purchaser promptly
upon demand for any legal or other expenses reasonably incurred by that Initial
Purchaser in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Company and the Guarantors shall not be liable in any such
case to any Initial Purchaser to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any Initial Purchasers'
Information furnished by that Initial Purchaser; and provided, further, that
with respect to any such untrue statement in or omission from the Preliminary
Offering Memorandum, the indemnity agreement contained in this Section 9(a)
shall not inure to the benefit of any Initial Purchaser to the extent that the
sale to the person asserting any such loss, claim, damage, liability or action
was an initial resale by such Initial Purchaser and any such loss, claim,
damage, liability or action of or with respect to such Initial Purchaser results
from the fact that both (i) a copy of the Offering Memorandum was not sent or
given to such person at or prior to the written confirmation of the sale of such
Securities to such person and (ii) the untrue statement in or omission from the
Preliminary Offering Memorandum was corrected in the Offering Memorandum unless,
in either case, such failure to deliver the Offering Memorandum was a result of
non-compliance by the Company with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company and the Guarantors, their affiliates,
their respective officers, directors, employees, representatives and agents, and
each person, if any, who controls the Company or any Guarantor within the
meaning of the Securities Act or the Exchange Act (collectively referred to for
purposes of this Section 9(b) and Section 10 as the "Company"), from and against
any loss,
<PAGE>
26
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company may become subject, whether commenced or threatened, under
the Securities Act, the Exchange Act, any other federal or state statutory law
or regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with any Initial Purchasers' Information furnished by
such Initial Purchaser, and shall reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such
expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 9(a) or 9(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 9 or otherwise except to
the extent that it has been materially prejudiced by such failure. If any such
claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (i)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (ii) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party,
(iii) a conflict or potential conflict exists (based upon advice of counsel to
the indemnified party) between the indemnified party and the indemnifying party
(in which case the indemnifying party will not have the right to direct the
defense of such action on behalf of the indemnified party) or (iv) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such
<PAGE>
27
indemnified party or parties. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 9(a) and 9(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding and does not include a statement
as to, or an admission of, fault, culpability or a failure to act, by or on
behalf of any indemnified party.
The obligations of the Company, the Guarantors and the Initial
Purchasers in this Section 9 and in Section 10 are in addition to any other
liability that the Company, the Guarantors or the Initial Purchasers, as the
case may be, may otherwise have, including in respect of any breaches of
representations, warranties and agreements made herein by any such party.
10. Contribution. If the indemnification provided for in Section 9
is unavailable or insufficient to hold harmless an indemnified party under
Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and the Guarantors on the
one hand and the Initial Purchasers on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Guarantors on the one hand and the Initial
Purchasers on the other with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantors on the one hand and the Initial
Purchasers on the other with respect to such offering shall be deemed to be in
the same proportion as the total net proceeds from the offering of the
Securities purchased under this Agreement (before deducting expenses) received
by or on behalf of the Company and the Guarantors, on the one hand, and the
total discounts and commissions received by the Initial Purchasers with respect
to the Securities purchased under this Agreement, on the other, bear to the
total gross proceeds from the sale of the Securities under this Agreement. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to the Company or information
supplied by the Company and the Guarantors on the one hand or to any Initial
Purchasers' Information on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company, the Guarantors and the Initial
Purchasers agree that it would not be just and equitable if contributions
pursuant to this Section 10 were to be determined by pro rata allocation (even
if the Initial Purchasers were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable
<PAGE>
28
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 10 shall be deemed to include, for
purposes of this Section 10, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending or
preparing to defend any such action or claim. Notwithstanding the provisions of
this Section 10, no Initial Purchaser shall be required to contribute any amount
in excess of the amount by which the total discounts and commissions received by
such Initial Purchaser with respect to the Securities purchased by it under this
Agreement exceeds the amount of any damages which such Initial Purchaser has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
as provided in this Section 10 are several in proportion to their respective
purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the Company,
the Guarantors and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 9 and 10 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Company, the
Guarantors and the Initial Purchasers and in Section 4(e) with respect to
holders and prospective purchasers of the Securities. Nothing in this Agreement
is intended or shall be construed to give any person, other than the persons
referred to in this Section 11, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
12. Expenses. The Company and the Guarantors agree with the Initial
Purchasers to pay (a) the costs incident to the authorization, issuance, sale,
preparation and delivery of the Securities and any taxes payable in that
connection; (b) the costs incident to the preparation, printing and distribution
of the Preliminary Offering Memorandum, the Offering Memorandum and any
amendments or supplements thereto; (c) the costs of reproducing and distributing
each of the Transaction Documents; (d) the costs incident to the preparation,
printing and delivery of the certificates evidencing the Securities, including
stamp duties and transfer taxes, if any, payable upon issuance of the
Securities; (e) the fees and expenses of the Company's counsel and independent
accountants; (f) the fees and expenses of qualifying the Securities under the
securities laws of the several jurisdictions as provided in Section 4(g) and of
preparing, printing and distributing Blue Sky Memoranda (including reasonable
fees and expenses of counsel for the Initial Purchasers); (g) any fees charged
by rating agencies for rating the Securities; (h) the fees and expenses of the
Trustee and any paying agent (including reasonable fees and expenses of any
counsel to such parties); (i) all expenses and application fees incurred in
connection with the application for the inclusion of the Securities on the
PORTAL Market and the approval of the Securities for book-entry transfer by DTC;
and (j) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement which are not otherwise
specifically provided for in this Section 12; provided, however, that except as
provided in this Section 12 and Section 8, the Initial Purchasers shall pay
their own costs and expenses.
13. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company, the Guarantors and
the Initial Purchasers contained in
<PAGE>
29
this Agreement or made by or on behalf of the Company, the Guarantors or the
Initial Purchasers pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the Securities and
shall remain in full force and effect, regardless of any termination or
cancelation of this Agreement or any investigation made by or on behalf of any
of them or any of their respective affiliates, officers, directors, employees,
representatives, agents or controlling persons.
14. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail
or telecopy transmission to Chase Securities Inc., 270 Park Avenue, New York,
New York 10017, Attention: David R. Haase (telecopier no.: (212) 270-0994); or
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to the address of the Company set forth in the Offering
Memorandum, Attention: Michael E. Holmstrom (telecopier no.: (907) 297-3050);
provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by CSI.
15. Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
16. Initial Purchasers' Information. The parties hereto acknowledge
and agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Offering Memorandum: the statements concerning the
Initial Purchasers contained in the third, fifth (but only the third sentence
thereof), sixth, ninth, tenth (but only the third and fourth sentences thereof)
and eleventh paragraphs under the heading "Plan of Distribution".
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
<PAGE>
30
19. Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
20. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company, the Guarantors
and the several Initial Purchasers in accordance with its terms.
Very truly yours,
ALASKA COMMUNICATIONS SYSTEMS
HOLDINGS, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
ALEC HOLDINGS, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
TELEPHONE UTILITIES OF ALASKA, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
TELEPHONE UTILITIES OF THE NORTHLAND, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
PTI COMMUNICATIONS OF ALASKA, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
PACIFIC TELECOM OF ALASKA PCS, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
PACIFIC TELECOM CELLULAR OF ALASKA, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
ATU COMMUNICATIONS, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
MACTEL, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
MACTEL FAIRBANKS, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
ATU LONG DISTANCE, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
PENINSULA CELLULAR SERVICES, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
PRUDHOE COMMUNICATIONS, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
ALASKA COMMUNICATIONS SYSTEMS, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
ALEC ACQUISITION SUB CORP.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
MACTEL LICENSE SUB, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
MACTEL FAIRBANKS LICENSE SUB, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
PTINET, INC.,
by /s/ Michael E. Holmstrom
----------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
Accepted:
CHASE SECURITIES INC.,
by /s/ Authorized Signatory
------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
CIBC WORLD MARKETS CORP.,
by
----------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
425 Lexington Avenue
New York, NY 10017
Attention: Legal Department
CREDIT SUISSE FIRST BOSTON CORPORATION,
by
----------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
11 Madison Avenue
New York, NY 10017-3629
Attention: Investment Banking Department Transactions Advisory Group
<PAGE>
Accepted:
CHASE SECURITIES INC.,
by
----------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
CIBC WORLD MARKETS CORP.
by /s/ Authorized Signatory
------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
425 Lexington Avenue
New York, NY 10017
Attention: Legal Department
CREDIT SUISSE FIRST BOSTON CORPORATION,
by
----------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
11 Madison Avenue
New York, NY 10017-3629
Attention: Investment Banking Department Transactions Advisory Group
<PAGE>
Accepted:
CHASE SECURITIES INC.,
by
----------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
CIBC WORLD MARKETS CORP.,
by
----------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
425 Lexington Avenue
New York, NY 10017
Attention: Legal Department
CREDIT SUISSE FIRST BOSTON CORPORATION,
by /s/ Authorized Signatory
------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
11 Madison Avenue
New York, NY 10017-3629
Attention: Investment Banking Department Transactions Advisory Group
<PAGE>
Exhibit 4.3
================================================================================
ALEC HOLDINGS, INC.
Senior Discount Debentures due 2011
---------
INDENTURE
Dated as of May 14, 1999
THE BANK OF NEW YORK
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions .................................................1
SECTION 1.02. Other Definitions ..........................................25
SECTION 1.03. Incorporation by Reference of Trust Indenture Act ..........25
SECTION 1.04. Rules of Construction ......................................26
ARTICLE II
The Securities
SECTION 2.01. Form and Dating ............................................27
SECTION 2.02. Execution and Authentication ...............................27
SECTION 2.03. Registrar and Paying Agent .................................27
SECTION 2.04. Paying Agent To Hold Money in Trust ........................28
SECTION 2.05. Securityholder Lists .......................................29
SECTION 2.06. Transfer and Exchange ......................................29
SECTION 2.07. Replacement Securities .....................................30
SECTION 2.08. Outstanding Securities .....................................30
SECTION 2.09. Temporary Securities .......................................31
SECTION 2.10. Cancellation ...............................................31
SECTION 2.11. Defaulted Interest .........................................31
SECTION 2.12. CUSIP Numbers ..............................................31
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee .........................................32
SECTION 3.02. Selection of Securities To Be Redeemed .....................32
SECTION 3.03. Notice of Redemption .......................................32
SECTION 3.04. Effect of Notice of Redemption .............................33
SECTION 3.05. Deposit of Redemption Price ................................34
SECTION 3.06. Securities Redeemed in Part ................................34
-i-
<PAGE>
Page
----
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities ......................................34
SECTION 4.02. SEC Reports ................................................34
SECTION 4.03. Limitation on Indebtedness .................................35
SECTION 4.04. Limitation on Restricted Payments ..........................37
SECTION 4.05. Limitation on Restrictions on Distributions
from Restricted Subsidiaries .............................41
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock .........43
SECTION 4.07. Limitation on Transactions with Affiliates .................47
SECTION 4.08. Change of Control ..........................................49
SECTION 4.09. Compliance Certificate .....................................51
SECTION 4.10. Further Instruments and Acts ...............................51
SECTION 4.11. Limitation on Lines of Business ............................51
SECTION 4.12. Limitation on the Sale or Issuance of Capital
Stock of Restricted Subsidiaries .........................51
SECTION 4.13. Calculation of Original Issue Discount .....................52
ARTICLE V
Successor Company
SECTION 5.01. When Holdings May Merge or Transfer Assets .................52
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default ..........................................53
SECTION 6.02. Acceleration ...............................................55
SECTION 6.03. Other Remedies .............................................56
SECTION 6.04. Waiver of Past Defaults ....................................56
SECTION 6.05. Control by Majority ........................................56
SECTION 6.06. Limitation on Suits ........................................56
SECTION 6.07. Rights of Holders to Receive Payment .......................57
SECTION 6.08. Collection Suit by Trustee .................................57
SECTION 6.09. Trustee May File Proofs of Claim ...........................57
SECTION 6.10. Priorities .................................................58
SECTION 6.11. Undertaking for Costs ......................................58
SECTION 6.12. Waiver of Stay or Extension Laws ...........................58
-ii-
<PAGE>
Page
----
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee ..........................................59
SECTION 7.02. Rights of Trustee ..........................................60
SECTION 7.03. Individual Rights of Trustee ...............................61
SECTION 7.04. Trustee's Disclaimer .......................................61
SECTION 7.05. Notice of Defaults .........................................61
SECTION 7.06. Reports by Trustee to Holders ..............................62
SECTION 7.07. Compensation and Indemnity .................................62
SECTION 7.08. Replacement of Trustee .....................................63
SECTION 7.09. Successor Trustee by Merger ................................64
SECTION 7.10. Eligibility; Disqualification ..............................64
SECTION 7.11. Preferential Collection of Claims Against Holdings .........65
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance ...........65
SECTION 8.02. Conditions to Defeasance ...................................66
SECTION 8.03. Application of Trust Money .................................67
SECTION 8.04. Repayment to Holdings ......................................67
SECTION 8.05. Indemnity for Government Obligations .......................67
SECTION 8.06. Reinstatement ..............................................67
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders .................................68
SECTION 9.02. With Consent of Holders ....................................69
SECTION 9.03. Compliance with Trust Indenture Act ........................70
SECTION 9.04. Revocation and Effect of Consents and Waivers ..............70
SECTION 9.05. Notation on or Exchange of Securities ......................70
SECTION 9.06. Trustee To Sign Amendments .................................70
SECTION 9.07. Payment for Consent ........................................71
-iii-
<PAGE>
Page
----
ARTICLE X
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls ...............................71
SECTION 10.02. Notices ....................................................71
SECTION 10.03. Communication by Holders with Other Holders ................72
SECTION 10.04. Certificate and Opinion as to Conditions Precedent .........72
SECTION 10.05. Statements Required in Certificate or Opinion ..............72
SECTION 10.06. When Securities Disregarded ................................73
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar ...............73
SECTION 10.08. Legal Holidays .............................................73
SECTION 10.09. GOVERNING LAW ..............................................73
SECTION 10.10. No Recourse Against Others .................................73
SECTION 10.11. Successors .................................................74
SECTION 10.12. Multiple Originals .........................................74
SECTION 10.13. Table of Contents; Headings ................................74
Appendix A -- Provisions Relating to Original Securities, Private
Exchange Securities and Exchange Securities
Exhibit A -- Form of Face of Original
Exhibit B -- Form of Face of Exchange Security
Exhibit C -- Form of Transferee Letter of Representation
-iv-
<PAGE>
INDENTURE dated as of May 14, 1999, between ALEC
HOLDINGS, INC., a Delaware corporation ("Holdings") and THE
BANK OF NEW YORK, a New York banking corporation, as trustee
(the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of (i) Holdings' Senior
Discount Debentures due 2011 issued on the date hereof (the "Original
Securities"), (ii) if and when issued as provided in the Registration Agreement
(as defined in Appendix A hereto (the "Appendix")), Holdings' Senior Discount
Debentures due 2011 issued in the Registered Exchange Offer (as defined in the
Appendix) in exchange for any Original Securities (the "Exchange Securities")
and (iii) if and when issued as provided in the Registration Agreement, the
Private Exchange Securities (as defined in the Appendix, and together with the
Original Securities and any Exchange Securities issued hereunder, the
"Securities") issued in the Private Exchange (as defined in the Appendix).
Except as otherwise provided herein, the Securities will be limited to
$46,928,435.00 in aggregate principal amount outstanding.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Accreted Value" means, for each $1,000 face amount of Securities,
as of any date of determination prior to May 14, 2004 the sum of (i) the initial
offering price of each Security and (ii) that portion of the excess of the
principal amount of each Security over such initial offering price which shall
have been accreted thereon through such date, such amount to be so accreted on a
daily basis and compounded semi-annually on each May 15 and November 15 at the
rate of 13% per annum from the date of issuance of the Securities through the
date of determination. The Accreted Value will cease to accrete on and after May
14, 2004.
"Additional Amounts" means any liquidated damages payable pursuant
to any exchange agreement, registration rights agreement or similar agreement
entered into in connection with the Indenture.
"Additional Assets" means:
(1) any property or assets (other than Indebtedness and Capital Stock)
to be used by Holdings or a Restricted Subsidiary in a Related
Business;
<PAGE>
-2-
(2) the Capital Stock of a Person that becomes a Restricted Subsidiary
as a result of the acquisition of such Capital Stock by Holdings or
another Restricted Subsidiary; or
(3) Capital Stock constituting a minority interest in any Person that at
such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described in clauses (2)
or (3) above is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.06 and 4.07 only, "Affiliate" shall also mean any
beneficial owner of shares representing 5% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of Holdings or the Company or of
rights or warrants to purchase such Voting Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
Holdings or any Restricted Subsidiary, including any disposition by means of a
merger, consolidation, or similar transaction (each referred to for the purposes
of this definition as a "disposition"), of:
(1) any shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Restricted
Subsidiary);
(2) all or substantially all the assets of any division or line of
business of Holdings or any Restricted Subsidiary; or
(3) any other assets of Holdings or any Restricted Subsidiary outside of
the ordinary course of business of Holdings or such Restricted
Subsidiary;
(other than, in the case of (1), (2) and (3) above:
(a) a disposition by a Restricted Subsidiary to Holdings or by
Holdings or a Restricted Subsidiary to a Wholly Owned
Subsidiary;
<PAGE>
-3-
(b) for purposes of Section 4.06 only, a disposition subject to
Section 4.04;
(c) a disposition of assets with a fair market value of less than
$100,000;
(d) a disposition of Temporary Cash Investments or goods held for
sale in the ordinary course of business or obsolete equipment
or other obsolete assets in the course of business consistent
with past practices of Holdings;
(e) the disposition of all or substantially all of the assets of
Holdings in a manner permitted under Section 5.01 or any
disposition that constitutes a Change of Control under the
Indenture; and
(f) the lease, assignment or sub-lease of any real or personal
property in the ordinary course of business).
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing:
(1) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal
payment of such Indebtedness or redemption or similar payment with
respect to such Preferred Stock multiplied by the amount of such
payment by
(2) the sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or in
respect of the Credit Agreement, the notes issued pursuant thereto, the
guarantees thereof, the collateral documents relating thereto and any
Refinancing Indebtedness with respect thereto, as amended from time to time,
including principal, premium (if any), interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization relating
to the Company whether or not a claim for post-filing interest is allowed in
such proceedings), fees, charges, expenses, reimbursement obligations,
guarantees and all other amounts payable thereunder or in respect thereof.
<PAGE>
-4-
"Board of Directors" means the Board of Directors of Holdings or any
committee thereof duly authorized to act on behalf of the Board of Directors of
Holdings.
"Business Day" means each day that is not a Legal Holiday.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be prepaid by the lessee
without payment of a penalty.
"Change of Control" means the occurrence of any of the following
events:
(1) prior to the first public offering of common stock of Holdings,
the Permitted Holders, taken together, cease to be the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of
the Voting Stock of Holdings, whether as a result of issuance of
securities of Holdings, any merger, consolidation, liquidation or
dissolution of Holdings, any direct or indirect transfer of securities by
any Permitted Holder or otherwise (for purposes of this clause (1) and
clause (2) below, the Permitted Holders shall be deemed to beneficially
own any Voting Stock of an entity (the "specified entity") held by any
other entity (the "parent entity") so long as the Permitted Holders
beneficially own, directly or indirectly, in the aggregate a majority of
the voting power of the Voting Stock of the parent entity);
(2) (a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders, is
or becomes the beneficial owner (as defined in clause (1) above, except
that for purposes of this clause (2) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of Holdings or the Company and (b) the
Permitted Holders beneficially own (as defined in clause (1) above),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of Holdings or
<PAGE>
-5-
the Company than such other person and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of Holdings or the Company, as the case
may be (for the purposes of this clause (2), such other person shall be
deemed to beneficially own any Voting Stock of a specified entity held by
a parent entity, if such other person is the beneficial owner (as defined
in this clause (2)), directly or indirectly, of more than 35% of the
voting power of the Voting Stock of such parent entity and the Permitted
Holders beneficially own (as defined in clause (1) above), directly or
indirectly, in the aggregate a lesser percentage of the voting power of
the Voting Stock of such parent entity and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of such parent entity);
(3) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of
Holdings or the Company, as the case may be (together with any new
directors (a) whose election by such Board of Directors of Holdings or the
Company, as the case may be, or whose nomination for election by the
shareholders of Holdings or the Company, as the case may be, was approved
by a majority vote of the directors of Holdings or the Company, as the
case may be, then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved or (b) who are designees of the Permitted Holders
or were nominated by the Permitted Holders) cease for any reason to
constitute a majority of the Board of Directors of Holdings or the
Company, as the case may be, then in office;
(4) the adoption of a plan relating to the liquidation or
dissolution of Holdings or the Company;
(5) the merger or consolidation of Holdings or the Company with or
into another Person or the merger of another Person with or into Holdings
or the Company, or the sale of all or substantially all the assets of
Holdings or the Company to another Person (other than a Person that is
controlled by the Permitted Holders), and, in the case of any such merger
or consolidation, the securities of Holdings or the Company that are
outstanding immediately prior to such transaction and that represent 100%
of the aggregate voting power of the Voting Stock of Holdings or the
Company are changed into or exchanged for cash, securities or property,
unless pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of the
surviving Person or transferee that represent immediately after such
transaction, at least a majority of the aggregate voting power of the
Voting Stock of the surviving Person or transferee; or
(6) the Company ceases to be a Wholly Owned Subsidiary of Holdings.
<PAGE>
-6-
"Closing Date" means the date of the Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Alaska Communications Systems Holdings, Inc., a
Delaware corporation formerly known as ALEC Acquisition Corporation.
"Company Indenture" means the Indenture for the Company's 9 3/8%
Senior Subordinated Notes due 2009.
"Company Refinancing Indebtedness" means Refinancing Indebtedness as
defined in the Company Indenture as in effect on the date hereof.
"Consolidated Current Liabilities" as of the date of determination
means the aggregate amount of liabilities of Holdings and its Consolidated
Restricted Subsidiaries which may properly be classified as current liabilities
(including taxes accrued as estimated), on a Consolidated basis, after
eliminating:
(1) all intercompany items between Holdings and any Restricted
Subsidiary; and
(2) all current maturities of long-term Indebtedness, all as determined
in accordance with GAAP consistently applied.
"Consolidated Interest Expense" means, for any period, the total
interest expense of Holdings and its Consolidated Restricted Subsidiaries, plus,
to the extent Incurred by Holdings and its Consolidated Restricted Subsidiaries
in such period but not included in such interest expense:
(1) interest expense attributable to Capitalized Lease Obligations and
the interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction;
(2) amortization of debt discount and debt issuance costs;
(3) capitalized interest;
(4) non-cash interest expense;
(5) commissions, discounts and other fees and charges attributable to
letters of credit and bankers' acceptance financing;
<PAGE>
-7-
(6) interest accruing on any Indebtedness of any other Person to the
extent such Indebtedness is guaranteed by Holdings or any Restricted
Subsidiary;
(7) amortization of net costs associated with Hedging Obligations
(including amortization of fees);
(8) dividends in respect of all Disqualified Stock of Holdings and all
Preferred Stock of any of the Subsidiaries of Holdings, to the
extent held by Persons other than Holdings or a Wholly Owned
Subsidiary;
(9) interest Incurred in connection with investments in discontinued
operations; and
(10) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan
or trust to pay interest or fees to any Person (other than the
Company) in connection with Indebtedness Incurred by such plan or
trust.
"Consolidated Net Income" means, for any period, the net income of
Holdings and its Consolidated Subsidiaries for such period; provided, however,
that there shall not be included in such Consolidated Net Income:
(1) any net income of any Person (other than Holdings) if such Person is
not a Restricted Subsidiary, except that:
(a) subject to the limitations contained in clause (4) below,
Holdings' equity in the net income of any such Person for such
period shall be included in such Consolidated Net Income up to
the aggregate amount of cash or other assets actually
distributed by such Person during such period to Holdings or a
Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution made
to a Restricted Subsidiary, to the limitations contained in
clause (3) below); and
(b) Holdings' equity in a net loss of any such Person for such
period shall be included in determining such Consolidated Net
Income;
(2) any net income (or loss) of any Person acquired by Holdings or a
Subsidiary of Holdings in a pooling of interests transaction for any
period prior to the date of such acquisition;
<PAGE>
-8-
(3) any net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of its net income is not, at the date of
determination, permitted without any prior governmental approval
(which has not been obtained) or, directly or indirectly, by the
operation of the terms of its charter, or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, unless
such restrictions with respect to the payment of dividends or
similar distributions have been legally waived; except that the net
loss of any such Restricted Subsidiary for such period shall be
included in determining such Consolidated Net Income;
(4) any gain (but not loss) realized upon the sale or other disposition
of any asset of Holdings or its Consolidated Subsidiaries (including
pursuant to any Sale/Leaseback Transaction) that is not sold or
otherwise disposed of in the ordinary course of business and any
gain (but not loss) realized upon the sale or other disposition of
any Capital Stock of any Person;
(5) any extraordinary or otherwise nonrecurring gain or loss; and
(6) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purpose of Section 4.04 only,
there shall be excluded from Consolidated Net Income any dividends, repayments
of loans or advances or other transfers of assets from Unrestricted Subsidiaries
to Holdings or a Restricted Subsidiary to the extent such dividends, repayments
or transfers increase the amount of Restricted Payments permitted under clause
(1)(d)(iii)(E) of Section 4.04.
"Consolidated Net Tangible Assets" as of any date of determination,
means the total amount of assets (less accumulated depreciation and
amortization, allowances for doubtful receivables, other applicable reserves and
other properly deductible items) which would appear on a consolidated balance
sheet of Holdings and its Consolidated Restricted Subsidiaries, determined on a
Consolidated basis in accordance with GAAP, and after giving effect to purchase
accounting and after deducting therefrom Consolidated Current Liabilities and,
to the extent otherwise included, the amounts of:
(1) minority interests in Consolidated Subsidiaries held by Persons
other than Holdings or a Restricted Subsidiary:
(2) excess of cost over fair value of assets of businesses acquired as
determined in good faith by the Board of Directors;
<PAGE>
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(3) any revaluation or other write-up in book value of assets subsequent
to the Closing Date as a result of a change in the method of
valuation in accordance with GAAP consistently applied;
(4) unamortized debt discount and expenses and other unamortized
deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights, licenses, organization or developmental
expenses and other intangible items;
(5) treasury stock;
(6) cash set apart and held in a sinking or other analogous fund
established for the purpose of redemption or other retirement of
Capital Stock to the extent such obligation is not reflected in
Consolidated Current Liabilities; and
(7) Investments in and assets of Unrestricted Subsidiaries.
"Consolidation" means the consolidation of the amounts of each of
the Restricted Subsidiaries with those of Holdings in accordance with GAAP
consistently applied; provided, however, that "Consolidation" shall not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of Holdings or any Restricted Subsidiary in an Unrestricted Subsidiary shall be
accounted for as an investment. The term "Consolidated" has a correlative
meaning.
"Credit Agreement" means the credit agreement dated as of May 14,
1999, among the Company, Holdings, the financial institutions named therein, The
Chase Manhattan Bank, as Administrative Agent, Canadian Imperial Bank of
Commerce, as Syndication Agent and Credit Suisse First Boston, as Documentation
Agent, as amended, waived or otherwise modified from time to time (except to the
extent that any such amendment, waiver or other modification thereto would be
prohibited by the terms of this Indenture, unless otherwise agreed to by the
Holders of at least a majority in aggregate principal amount of Securities at
the time outstanding), including any such amendments or modifications (or any
other credit agreement or credit agreements) that replace, refund or refinance
any or a portion of the commitments or loans thereunder, up to a maximum
principal amount not to exceed $585,000,000.
"Currency Agreement" means, with respect to any Person, any foreign
exchange contract, currency swap agreements or other similar agreement or
arrangement to which such Person is a party or of which it is a beneficiary.
"Debt to EBITDA Ratio" as of any date of determination means the
ratio of:
(1) Total Consolidated Indebtedness as of the date of determination to
<PAGE>
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(2) EBITDA for the period of the most recent four consecutive fiscal
quarters ending at the end of the most recent fiscal quarter for
which financial statements are publicly available; provided,
however, that:
(a) if Holdings or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness
since the beginning of such period or if any Indebtedness is
to be repaid, repurchased, defeased or otherwise discharged
(in each case, other than Indebtedness Incurred under any
revolving credit facility unless such Indebtedness has been
permanently repaid and has not been replaced) on the date of
the transaction giving rise to the need to calculate the Debt
to EBITDA Ratio, EBITDA for such period shall be calculated on
a pro forma basis as if such discharge had occurred on the
first day of such period and as if Holdings or such Restricted
Subsidiary has not earned the interest income actually earned
during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise
discharge such Indebtedness;
(b) if since the beginning of such period Holdings or any
Restricted Subsidiary shall have made any Asset Disposition,
the EBITDA for such period shall be reduced by an amount equal
to the EBITDA (if positive) directly attributable to the
assets that are the subject of such Asset Disposition for such
period or increased by an amount equal to the EBITDA (if
negative) directly attributable thereto for such period;
(c) if since the beginning of such period, Holdings or any
Restricted Subsidiary (by merger or otherwise) shall have made
an Investment in any Person that is merged with or into
Holdings or any Restricted Subsidiary (or any Person that
becomes a Restricted Subsidiary) or an acquisition of assets,
including any acquisition of assets occurring in connection
with a transaction causing a calculation to be made hereunder,
which constitutes all or substantially all of an operating
unit of a business, EBITDA for such period shall be calculated
after giving pro forma effect thereto (including the
Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period; any such
pro forma calculation may include adjustments appropriate to
reflect (x) any such acquisition to the extent such
adjustments may be reflected in the preparation of pro forma
financial information in accordance with the requirements of
GAAP and Article XI of Regulation S-X under the Exchange Act;
(y) the annualized amount of operating expense reductions
reasonably expected to be realized in the six months
<PAGE>
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following any such acquisition made during any of the four
fiscal quarters constituting the four-quarter reference period
prior to the date of determination; and (z) the annualized
amount of operating expense reductions reasonably expected to
be realized in the six months following any such acquisition
made by Holdings during either of the two fiscal quarters
immediately preceding the four-quarter reference period prior
to the date of determination; provided that in either case
such adjustments are set forth in an Officers' Certificate
signed by Holdings' chief executive officer and chief
financial officer which states (i) the amount of such
adjustment or adjustments, (ii) that such adjustment or
adjustments are based on the reasonable good faith beliefs of
the officers executing such Officers' Certificate at the time
of such execution and (iii) that any related Incurrence of
Indebtedness is permitted pursuant to the Indenture; and
(d) if since the beginning of such period, any Person (that
subsequently became a Restricted Subsidiary or was merged with
or into Holdings or any Restricted Subsidiary since the
beginning of such period) shall have made any Asset
Disposition or any Investment or acquisition of assets that
would have required an adjustment pursuant to clause (b) or
(c) above if made by Holdings or a Restricted Subsidiary
during such period, EBITDA for such period shall be calculated
after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition of assets occurred on
the first day of such period.
For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets and the amount of income or earnings relating
thereto, the pro forma calculations shall be determined in good faith by a
responsible financial or accounting Officer of Holdings. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term as at the date
of determination in excess of 12 months).
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable) or upon the
happening of any event:
<PAGE>
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(1) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or Disqualified
Stock; or
(3) is redeemable at the option of the holder thereof, in whole or in
part;
in each case on or prior to the first anniversary of the Stated Maturity of the
Securities; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Securities shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the provisions of Sections 4.06 and 4.08.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company
other than a Foreign Subsidiary.
"EBITDA" for any period means the Consolidated Net Income for such
period, plus the following to the extent deducted in calculating such
Consolidated Net Income:
(1) income tax expense of Holdings and its Consolidated Restricted
Subsidiaries;
(2) Consolidated Interest Expense;
(3) depreciation expense of Holdings and its Consolidated Restricted
Subsidiaries;
(4) amortization expense of Holdings and its Consolidated Restricted
Subsidiaries (excluding amortization expense attributable to a
prepaid cash item that was paid in a prior period); and
(5) all other non-cash charges of Holdings and its Consolidated
Restricted Subsidiaries (excluding any such non-cash charge to the
extent it represents an accrual of or reserve for cash expenditures
in any future period, but that will not be expensed in such future
periods),
in each case for such period.
Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depreciation and amortization and non-cash charges
of, a Restricted Subsidiary of Holdings shall be added to Consolidated Net
Income to compute EBITDA only to
<PAGE>
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the extent (and in the same proportion) that the net income of such Restricted
Subsidiary was included in calculating Consolidated Net Income and only if a
corresponding amount would be permitted at the date of determination to be
dividended to Holdings by such Restricted Subsidiary without prior approval
(that has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Restricted Subsidiary or its
stockholders.
"Equity Offering" means any public or private sale of Capital Stock
(other than Disqualified Stock) of Holdings, other than offerings of Holdings of
the type that can be registered on Form S-8.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Foreign Subsidiary" means any Restricted Subsidiary of Holdings
that is not organized under the laws of the United States of America or any
state thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including those set forth
in:
(1) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants;
(2) statements and pronouncements of the Financial Accounting Standards
Board;
(3) such other statements by such other entities as approved by a
significant segment of the accounting profession; and
(4) the rules and regulations of the SEC governing the inclusion of
financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the
Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the
accounting staff of the SEC.
All ratios and computations based on GAAP contained in this
Indenture shall be computed in conformity with GAAP.
"guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and any obligation, direct or indirect, contingent or
otherwise, of any Person:
<PAGE>
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(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other
Person (whether arising by virtue of partnership arrangements, or by
agreement to keep-well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement
conditions or otherwise); or
(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof
(in whole or in part);
provided, however, that the term "guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "guarantee"
used as a verb has a corresponding meaning. The term "guarantor" shall mean any
Person guaranteeing any obligation.
"Guarantee" means each guarantee of the obligations with respect to
the Notes issued by a Guarantor pursuant to the terms of the Company Indenture.
"Guarantor" means each of Telephone Utilities of Alaska, Inc.,
Telephone Utilities of the Northland, Inc., PTI Communications of Alaska, Inc.,
Pacific Telecom Cellular of Alaska PCS, Inc., Pacific Telecom Cellular of
Alaska, Inc., ATU Communications, Inc., MACtel, Inc., ATU Long Distance, Inc.,
Peninsula Cellular Services, Inc., Prudhoe Communications, Inc., Alaska
Communications Systems, Inc., ALEC Acquisition Sub Corp., MACtel License Sub,
Inc. and MACtel Fairbanks License Sub, Inc., and any other Domestic Subsidiary
of the Company.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holdings" means ALEC Holdings, Inc., a Delaware corporation.
"Incur" means issue, assume, guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person is merged or consolidated with Holdings
or becomes a Subsidiary of Holdings (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be Incurred by such Person at the
time of such merger or consolidation or at the time it becomes a Subsidiary of
Holdings. The term "Incurrence" when used as a noun shall have a correlative
meaning. The accretion of principal of a non-interest bearing or other discount
security shall not be deemed the Incurrence of Indebtedness.
<PAGE>
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"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal of and premium (if any) in respect of indebtedness of
such Person for borrowed money;
(2) the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments;
(3) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with
respect thereto);
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables and
contingent obligations to pay earn-outs), which purchase price is
due more than six months after the date of placing such property in
service or taking delivery and title thereto or the completion of
such services;
(5) all Capitalized Lease Obligations and all Attributable Debt of such
Person;
(6) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock
or, with respect to any Subsidiary of such Person, any Preferred
Stock (but excluding, in each case, any accrued dividends);
(7) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the amount of Indebtedness of such
Person shall be the lesser of:
(A) the fair market value of such asset at such date of
determination and
(B) the amount of such Indebtedness of such other Persons;
(8) to the extent not otherwise included in this definition, Hedging
Obligations of such Person; and
(9) all obligations of the type referred to in clauses (1) through (8)
above of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or
liable, directly or indirectly, as obligor, guarantor or otherwise,
including by means of any guarantee.
<PAGE>
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The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any, direct or indirect, advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts receivable on the balance sheet of the lender) or other
extension of credit (including by way of guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary" and Section 4.04:
(1) "Investment" shall include the portion (proportionate to Holdings'
equity interest in such Subsidiary) of the fair market value of the
net assets of any Subsidiary of Holdings at the time that such
Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that, upon a redesignation of such Subsidiary as a
Restricted Subsidiary, Holdings shall be deemed to continue to have
a permanent "Investment" in an Unrestricted Subsidiary in an amount
(if positive) equal to:
(a) Holdings' Investment in such Subsidiary at the time of such
redesignation less
(b) the portion (proportionate to Holdings' equity interest in
such Subsidiary) of the fair market value of the net assets of
such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall
be valued at its fair market value at the time of such transfer, in
each case, as determined in good faith by the Board of Directors.
<PAGE>
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"Legal Holiday" means a Saturday, Sunday or other day on which
banking institutions in the State of New York are authorized or required by law
to close.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Management Group" means the group consisting of current and former
directors and executive officers of the Company.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any securities received as consideration,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to the properties or assets that are the subject of such
Asset Disposition or received in any other non-cash form) therefrom, in each
case net of:
(1) all legal fees and expenses, title and recording tax expenses,
commissions and other fees and expenses incurred, and all federal,
state, provincial, foreign and local taxes required to be paid or
accrued as a liability under GAAP, as a consequence of such Asset
Disposition;
(2) all payments, including any prepayment premiums or penalties, made
on any Indebtedness that is secured by any assets subject to such
Asset Disposition in accordance with the terms of any Lien upon or
other security agreement of any kind with respect to such assets, or
which must by its terms, or in order to obtain a necessary consent
to such Asset Disposition, or by applicable law be repaid out of the
proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of
such Asset Disposition; and
(4) appropriate amounts to be provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the
property or other assets disposed of in such Asset Disposition and
retained by Holdings or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, un-
<PAGE>
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derwriters' or placement agents' fees, discounts or commissions and brokerage,
consultant and other fees and expenses actually incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof.
"Notes" means the 9 3/8% Senior Subordinated Notes due 2009 of the
Company.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer, the President, any Vice President, the
Treasurer or the Secretary of Holdings.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel to
Holdings or the Trustee.
"Pari Passu Indebtedness" of Holdings means the Securities,
Holdings' guarantee of the Bank Indebtedness, and any other Indebtedness of
Holdings that specifically provides that such Indebtedness is to rank pari passu
with the Securities, in right of payment and is not subordinated by its terms in
right of payment to any Indebtedness or other obligation of Holdings which is
not Pari Passu Indebtedness.
"Permitted Holders" means Fox Paine Capital Fund, L.P., and its
Affiliates, FPC Investors, L.P., ALEC Coinvestment Fund I, LLC, ALEC
Coinvestment Fund II, LLC, ALEC Coinvestment Fund III, LLC, ALEC Coinvestment
Fund IV, LLC, ALEC Coinvestment Fund V, LLC, ALEC Coinvestment Fund VI, LLC, the
Management Group and any Person acting in the capacity of an underwriter in
connection with a public or private offering of Holdings' Capital Stock.
"Permitted Investment" means an Investment by Holdings or any
Restricted Subsidiary in:
(1) Holdings, a Restricted Subsidiary or a Person that will, upon the
making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is
a Related Business;
(2) another Person if as a result of such Investment such other Person
is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, the Company or a Restricted
Subsidiary; provided, however, that such Person's primary business
is a Related Business;
<PAGE>
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(3) Temporary Cash Investments;
(4) receivables owing to Holdings or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such concessionary trade
terms as Holdings or any such Restricted Subsidiary deems reasonable
under the circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(6) any loans or advances to employees made in the ordinary course of
business consistent with past practices of Holdings or such
Restricted Subsidiary and not exceeding $5,000,000 in the aggregate
outstanding at any one time;
(7) stock, obligations or securities received in settlement of (or
foreclosure with respect to) debts created in the ordinary course of
business and owing to Holdings or any Restricted Subsidiary or in
satisfaction of judgments;
(8) any Person to the extent such Investment represents the non-cash or
deemed cash portion of the consideration received for an Asset
Disposition that was made pursuant to and in compliance with Section
4.06;
(9) any Investment existing on the Closing Date;
(10) Hedging Obligations permitted under paragraph (2)(g) of Section
4.03;
(11) guarantees of Indebtedness permitted under Section 4.03;
(12) Investments which are made exclusively with Capital Stock of
Holdings (other than Disqualified Stock); and
(13) additional Investments having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause
(13) that are at the time outstanding, not to exceed $5,000,000 at
the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect
to subsequent changes in value).
"Permitted Joint Venture Interests" means equity interests
representing at least 35% of the Voting Stock of a Person engaged in a business
in which Holdings was engaged at the Closing Date or a Related Business.
<PAGE>
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"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"principal" of a Security means, prior to May 14, 2004 the Accreted
Value and, from and after May 14, 2004, the principal of the Security plus
the premium, if any, payable on the Security that is due or overdue or is
to become due at the relevant time.
"Purchase Money Indebtedness" means Indebtedness:
(1) consisting of the deferred purchase price of an asset, conditional
sale obligations, obligations under any title retention agreement
and other purchase money obligations, in each case where the
maturity of such Indebtedness does not exceed the anticipated useful
life of the asset being financed; and
(2) incurred to finance the acquisition by Holdings or a Restricted
Subsidiary of such asset, including additions and improvements;
provided, however, that such Indebtedness is incurred within 180
days before or after the acquisition by Holdings or such Restricted
Subsidiary of such asset.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, replace, prepay, redeem, defease or retire, or to
issue other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that is Incurred to
refund, refinance, replace, repay, redeem, retire, renew, repay or extend
(including pursuant to any defeasance or discharge mechanism) any Indebtedness
of Holdings or any Restricted Subsidiary existing on the Closing Date or
Incurred in compliance with this Indenture (including Indebtedness of the
Company that Refinances Refinancing Indebtedness); provided, however, that:
(1) other than with respect to Bank Indebtedness or the Notes, the
Refinancing Indebtedness has a Stated Maturity no earlier than the
Stated Maturity of the Indebtedness being Refinanced;
(2) other than with respect to Bank Indebtedness or the Notes, the
Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is
<PAGE>
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Incurred that is equal to or greater than the Average Life of the
Indebtedness being refinanced;
(3) such Refinancing Indebtedness is Incurred in an aggregate principal
amount (or if issued with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal
amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being
Refinanced; and
(4) if the Indebtedness being Refinanced is subordinated in right of
payment to the Securities, such Refinancing Indebtedness is
subordinated in right of payment to the Securities at least to the
same extent as the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include:
(a) Indebtedness of a Restricted Subsidiary that Refinances
Indebtedness of Holdings; or
(b) Indebtedness of Holdings or a Restricted Subsidiary that
Refinances Indebtedness of an Unrestricted Subsidiary.
"Related Business" means any business related, ancillary or
complementary to the businesses of Holdings and the Restricted Subsidiaries on
the Closing Date.
"Restricted Subsidiary" means any Subsidiary of Holdings other than
an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired by Holdings or a Restricted Subsidiary
whereby Holdings or a Restricted Subsidiary transfers such property to a Person
and Holdings or such Restricted Subsidiary leases it from such Person, other
than leases between Holdings and a Wholly Owned Subsidiary or between Wholly
Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of Holdings secured by
a Lien.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "Significant Subsidiary" of Holdings within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
<PAGE>
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"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subordinated Obligation" means any Indebtedness of Holdings
(whether outstanding on the Closing Date or thereafter Incurred) that is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity:
(1) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power
or, in the case of a partnership, more than 50% of the general
partnership interests are, as of such date, owned, controlled or
held; or
(2) that is, as of such date, otherwise controlled by the parent or one
or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
"Telecommunications Assets" means (1) assets used or useful in the
operating businesses of the Company at the Closing Date or in a Related Business
or (2) equity interests representing a majority of the Voting Stock of Persons
engaged in such businesses.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States of America
or any agency thereof or obligations guaranteed by the United States
of America or any agency thereof;
(2) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company that is
organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United
<PAGE>
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States of America having capital, surplus and undivided profits
aggregating in excess of $250,000,000 (or the foreign currency
equivalent thereof) and whose long-term debt is rated "A" (or such
similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436
under the Securities Act);
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above
entered into with a bank meeting the qualifications described in
clause (2) above;
(4) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than
an Affiliate of the Company) organized and in existence under the
laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the time
as of which any investment therein is made of "P-1" (or higher)
according to Moody's Investors Service, Inc. or "A-1" (or higher)
according to Standard and Poor's Ratings Service, a division of The
McGraw-Hill Companies, Inc. ("S&P"); and
(5) investments in securities with maturities of six months or less from
the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at
least "A" by S&P or "A" by Moody's Investors Service, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the Closing Date.
"Total Consolidated Indebtedness" means, as of any date of
determination, an amount equal to the aggregate amount of all Indebtedness of
Holdings and its Restricted Subsidiaries, determined on a Consolidated basis,
outstanding as of such date of determination, after giving effect to any
Incurrence of Indebtedness and the application of the proceeds therefrom giving
rise to such determination.
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
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"Trust Officer" means any officer within the corporate trust
department of the Trustee, including any vice president, assistant vice
president, assistant secretary, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officer, respectively, or
to whom any corporate trust matter is referred because of such persons knowledge
of and familiarity with the particular subject and who shall have direct
responsibility for the administration of this Indenture.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of Holdings that at the time of determination shall
be designated an Unrestricted Subsidiary by the Board of Directors
in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of Holdings (including any
newly acquired or newly formed Subsidiary of Holdings) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital
Stock or Indebtedness of, or owns or holds any Lien on any property of the
Company or any other Subsidiary of Holdings that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either:
(1) the Subsidiary to be so designated has total Consolidated assets of
$1,000 or less; or
(2) if such Subsidiary has Consolidated assets greater than $1,000, then
such designation would be permitted under Section 4.04.
The Board of Directors may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; provided, however, that immediately after giving
effect to such designation:
(1) Holdings could Incur $1.00 of additional Indebtedness under
paragraph (1) of Section 4.03 and
(2) no Default shall have occurred and be continuing.
Any such designation of a Subsidiary as a Restricted Subsidiary or
Unrestricted Subsidiary by the Board of Directors shall be evidenced to the
Trustee by promptly filing with the Trustee a copy of the resolution of the
Board of Directors giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
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"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and that are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of Holdings
all the Capital Stock of which (other than directors' qualifying shares) is
owned by Holdings or another Wholly Owned Subsidiary.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Affiliate Transaction" .............................. 4.07(1)
"Bankruptcy Law" ..................................... 6.01
"covenant defeasance option" ......................... 8.01(b)
"Custodian" .......................................... 6.01
"Event of Default" ................................... 6.01
"legal defeasance option" ............................ 8.01(b)
"Offer" .............................................. 4.06(2)
"Offer Amount" ....................................... 4.06(3)(b)
"Offer Period" ....................................... 4.06(3)(b)
"Paying Agent" ....................................... 2.03
"protected purchaser" ................................ 2.07
"Registrar" .......................................... 2.03
"Successor Company" .................................. 5.01(a)
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
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"indenture security holder" means a Holder or Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means Holdings and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
<PAGE>
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ARTICLE II
The Securities
SECTION 2.01. Form and Dating. Provisions relating to the Original
Securities, the Private Exchange Securities and the Exchange Securities are set
forth in the Appendix, which is hereby incorporated in and expressly made a part
of this Indenture. The (i) Original Securities and the Trustee's certificate of
authentication and (ii) Private Exchange Securities and the Trustee's
certificate of authentication shall each be substantially in the form of Exhibit
A hereto, which is hereby incorporated in and expressly made a part of this
Indenture. The Exchange Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B hereto, which is
hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which Holdings is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to Holdings). Each Security shall be dated the date of its authentication. The
Securities shall be issuable only in registered form without interest coupons.
SECTION 2.02. Execution and Authentication. One or more Officers
shall sign the Securities for Holdings by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery
Securities as set forth in the Appendix.
The Trustee may appoint an authenticating agent reasonably
acceptable to Holdings to authenticate the Securities. Any such appointment
shall be evidenced by an instrument signed by a Trust Officer, a copy of which
shall be furnished to Holdings. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Securities whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as any
Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. Holdings shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange
<PAGE>
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(the "Registrar") and an office or agency where Securities may be presented for
payment (the "Paying Agent"). The Registrar shall keep a register of the
Securities and of their transfer and exchange. Holdings may have one or more
co-registrars and one or more additional paying agents. The term "Paying Agent"
includes any additional paying agent, and the term "Registrar" includes any
co-registrars. Holdings initially appoints the Trustee as (i) Registrar and
Paying Agent in connection with the Securities and (ii) the Securities Custodian
(as defined in the Appendix) with respect to the Global Securities (as defined
in the Appendix) and any definitive Securities.
Holdings shall enter into an appropriate agency agreement with any
Registrar or Paying Agent not a party to this Indenture, which shall incorporate
the terms of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such agent. Holdings shall notify the Trustee of the
name and address of any such agent. If Holdings fails to maintain a Registrar or
Paying Agent, the Trustee shall act as such and shall be entitled to appropriate
compensation therefor pursuant to Section 7.07. Holdings or any of its
domestically organized Wholly Owned Subsidiaries may act as Paying Agent or
Registrar.
Holdings may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided, however,
that no such removal shall become effective until (1) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by Holdings and such successor Registrar or Paying Agent, as the case may be,
and delivered to the Trustee or (2) notification to the Trustee that the Trustee
shall serve as Registrar or Paying Agent until the appointment of a successor in
accordance with clause (1) above. The Registrar or Paying Agent may resign at
any time upon written notice; provided, however, that the Trustee may resign as
Paying Agent or Registrar only if the Trustee also resigns as Trustee in
accordance with Section 7.08.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to 10:00
a.m. New York City time on each due date of principal or interest on any
Security, Holdings shall deposit with the Paying Agent (or if Holdings or a
Subsidiary is acting as Paying Agent, segregate and hold in trust for the
benefit of the Persons entitled thereto) a sum sufficient to pay such principal
and interest when so becoming due. Holdings shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by Holdings in making any such payment.
If Holdings or a Subsidiary of Holdings acts as Paying Agent, it shall segregate
the money held by it as Paying Agent and hold it as a separate trust fund.
Holdings at any time may require a Paying Agent to pay all money held by it to
the Trustee and to account for any funds disbursed by the Paying Agent. Upon
complying with this Section 2.04, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
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SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, Holdings shall furnish, or cause the Registrar to furnish, to the
Trustee, in writing at least five Business Days before each interest payment
date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be issued
in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer and in compliance with the Appendix. When
a Security is presented to the Registrar with a request to register a transfer,
the Registrar shall register the transfer as requested if the requirements of
Section 8-401(a) of the Uniform Commercial Code are met. When Securities are
presented to the Registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, Holdings shall execute and the Trustee
shall authenticate Securities at the Registrar's request. Holdings may require
payment of a sum sufficient to pay all taxes, assessments or other governmental
charges in connection with any transfer or exchange pursuant to this Section
2.06. Holdings shall not be required to make and the Registrar need not register
transfers or exchanges of Securities selected for redemption (except, in the
case of Securities to be redeemed in part, the portion thereof not to be
redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, Holdings, the Trustee, the Paying Agent, and the Registrar may deem
and treat the Person in whose name a Security is registered as the absolute
owner of such Security for the purpose of receiving payment of principal of and
interest, if any, on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of Holdings, the Trustee, the
Paying Agent, or the Registrar shall be affected by notice to the contrary.
Any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interest in such Global Security
may be effected only through a book-entry system maintained by (i) the Holder of
such Global Security (or its agent) or (ii) any Holder of a beneficial interest
in such Global Security, and that ownership of a beneficial interest in such
Global Security shall be required to be reflected in a book entry.
All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
<PAGE>
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SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, Holdings shall issue and
the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i)
satisfies Holdings or the Trustee within a reasonable time after he has notice
of such loss, destruction or wrongful taking and the Registrar does not register
a transfer prior to receiving such notification, (ii) makes such request to
Holdings or the Trustee prior to the Security being acquired by a protected
purchaser as defined in Section 8-303 of the Uniform Commercial Code (a
"protected purchaser") and (iii) satisfies any other reasonable requirements of
the Trustee. If required by the Trustee or Holdings, such Holder shall furnish
an indemnity bond sufficient in the judgment of the Trustee to protect Holdings,
the Trustee, the Paying Agent and the Registrar from any loss that any of them
may suffer if a Security is replaced. Holdings and the Trustee may charge the
Holder for their expenses in replacing a Security. In the event any such
mutilated, lost, destroyed or wrongfully taken Security has become or is about
to become due and payable, Holdings in its discretion may pay such Security
instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of Holdings.
The provisions of this Section 2.07 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section 2.08 as not outstanding. Subject to Section 13.06, a Security does not
cease to be outstanding because Holdings or an Affiliate of Holdings holds the
Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and Holdings receive proof satisfactory to them
that the replaced Security is held by a protected purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal of and interest and Additional Amounts payable on that date
with respect to the Securities (or portions thereof) to be redeemed or maturing,
as the case may be, and the Paying Agent is not prohibited from paying such
money to the Securityholders on that date pursuant to the terms of this
Indenture, then on and after that date such Securities (or portions thereof)
cease to be outstanding and interest on them ceases to accrue.
<PAGE>
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SECTION 2.09. Temporary Securities. In the event that Definitive
Securities (as defined in the Appendix) are to be issued under the terms of this
Indenture, until such Definitive Securities are ready for delivery, Holdings may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of Definitive Securities but may
have variations that Holdings considers appropriate for temporary Securities.
Without unreasonable delay, Holdings shall prepare and the Trustee shall
authenticate Definitive Securities and deliver them in exchange for temporary
Securities upon surrender of such temporary Securities at the office or agency
of Holdings, without charge to the Holder.
SECTION 2.10. Cancellation. Holdings at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and deliver canceled Securities to Holdings pursuant to written
direction by an Officer. Holdings may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancellation.
The Trustee shall not authenticate Securities in place of canceled Securities
other than pursuant to the terms of this Indenture.
SECTION 2.11. Defaulted Interest. If Holdings defaults in a payment
of interest on the Securities, Holdings shall pay the defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful manner.
Holdings may pay the defaulted interest to the Persons who are Securityholders
on a subsequent special record date. Holdings shall fix or cause to be fixed any
such special record date and payment date to the reasonable satisfaction of the
Trustee and shall promptly mail or cause to be mailed to each Securityholder a
notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. Holdings in issuing the Securities may
use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. Holdings will
promptly notify the Trustee of any change in the "CUSIP" numbers.
<PAGE>
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ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If Holdings elects to redeem
Securities pursuant to paragraph (g) of Section 4.08 or paragraph 5 of the
Securities, it shall notify the Trustee in writing of the redemption date and
the principal amount of Securities to be redeemed.
Holdings shall give each notice to the Trustee provided for in this
Section 3.01 at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from Holdings to the effect that such
redemption will comply with the conditions herein. If fewer than all the
Securities are to be redeemed, the record date relating to such redemption shall
be selected by Holdings and given to the Trustee, which record date shall be not
fewer than 15 days after the date of notice to the Trustee. Any such notice may
be canceled at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by a method that complies with applicable
legal and securities exchange requirements, if any, and that the Trustee in its
sole discretion shall deem to be fair and appropriate and in accordance with
methods generally used at the time of selection by fiduciaries in similar
circumstances. The Trustee shall make the selection from outstanding Securities
not previously called for redemption. The Trustee may select for redemption
portions of the principal amount of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify Holdings promptly of the Securities or portions of
Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemption of Securities, Holdings shall mail a
notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
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(2) the redemption price, stated as a percentage of Accreted Value
or principal amount (a "Redemption Price") and, in the case of
any redemption date on or after May 14, 2004, the amount of
accrued interest and unpaid interest to the redemption date;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the certificate numbers and Accreted Value or
principal amounts, as the case may be, of the particular
Securities to be redeemed;
(6) that, unless Holdings defaults in making such redemption
payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, Accreted
Value or interest on Securities (or portion thereof) called
for redemption ceases to accrete or accrue, as the case may
be, on and after the redemption date;
(7) the CUSIP number, if any, printed on the Securities being
redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or
printed on the Securities.
At Holdings' request, the Trustee shall give the notice of
redemption in Holdings' name and at Holdings' expense. In such event, Holdings
shall provide the Trustee with the information required by this Section 3.03.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the Redemption Price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the Redemption
Price stated in the notice and, after May 14, 2004, plus accrued and unpaid cash
interest and Additional Amounts, if any, to the redemption date; provided,
however, that if, after May 14, 2004, the redemption date is after a regular
record date and on or prior to the interest payment date, accrued and unpaid
cash interest shall be payable to the Securityholder of the redeemed Securities
registered on the relevant record date. Failure to give notice or any defect in
the notice to any Holder shall not affect the validity of the notice to any
other Holder.
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SECTION 3.05. Deposit of Redemption Price. Prior to 10:00 a.m. on
the redemption date, Holdings shall deposit with the Paying Agent (or, if
Holdings or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the Redemption Price, and after May 14, 2004, accrued
and unpaid cash interest and Additional Amounts, if any, on all Securities to be
redeemed on that date other than Securities or portions of Securities called for
redemption that have been delivered by Holdings to the Trustee for cancellation.
On and after the redemption date, Accreted Value will cease to accrete or, after
May 14, 2004, interest will cease to accrue, as the case may be, on Securities
or portions thereof called for redemption so long as Holdings has deposited with
the Paying Agent funds sufficient to pay the Redemption Price, and after May 14,
2004, unpaid cash interest and Additional Amounts, if any, on, the Securities to
be redeemed.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, Holdings shall execute and the Trustee shall
authenticate for the Holder (at Holdings' expense) a new Security equal in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. Holdings shall promptly pay the
principal, cash interest, Redemption Price and Additional Amounts, if any, on
the Securities on the dates and in the manner provided in the Securities and in
this Indenture. Principal and interest shall be considered paid on the date due
if on such date the Trustee or the Paying Agent holds in accordance with this
Indenture money sufficient to pay all principal and interest, then due and the
Trustee or the Paying Agent, as the case may be, is not prohibited from paying
such money to the Securityholders on that date pursuant to the terms of this
Indenture.
Holdings shall pay interest on overdue principal at the rate
specified therefor in the Securities, and, after May 14, 2004, it shall pay
interest on overdue installments of interest at the same rate to the extent
lawful.
SECTION 4.02. SEC Reports. Notwithstanding that Holdings may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, Holdings shall file with the SEC, and provide the Trustee and
Securityholders and prospective Securityholders (upon request) within 15 days
after it files them with the SEC, copies of its annual report and the
information, documents and other reports that are specified in Section 13 and
15(d) of the Exchange Act. In addition, following an Equity Offering, Holdings
shall furnish to the Trustee and the Securityholders, promptly upon their
becoming available, copies of the annual report to shareholders and any other
information provided by Holdings or the Com-
<PAGE>
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pany to its public shareholders generally. Holdings also shall comply with the
other provisions of TIA ss. 314(a). Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
Holdings' compliance with any of its covenants hereunder (as to which Trustee in
entitled to rely exclusively on Officers' Certificates).
SECTION 4.03. Limitation on Indebtedness.
(1) Holdings shall not, and shall not permit any Restricted
Subsidiary to, Incur any Indebtedness; provided, however, that Holdings or any
Restricted Subsidiary may Incur Indebtedness if on the date of such Incurrence
and after giving effect thereto the Debt to EBITDA Ratio would be less than
7.25:1.
(2) Notwithstanding the foregoing paragraph (1), Holdings and its
Restricted Subsidiaries may Incur the following Indebtedness:
(a) Bank Indebtedness in an aggregate principal amount not to exceed
$585,000,000 less the aggregate amount of all prepayments of
principal applied to permanently reduce any such Indebtedness;
(b) Indebtedness of the Company owed to and held by any Wholly Owned
Subsidiary or Indebtedness of a Restricted Subsidiary owed to and
held by the Company or any Wholly Owned Subsidiary; provided,
however, that any subsequent issuance or transfer of any Capital
Stock or any other event that results in any such Wholly Owned
Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent
transfer of any such Indebtedness (except to the Company or a Wholly
Owned Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the issuer thereof;
(c) Indebtedness (i) represented by the Securities, (ii) represented by
the Notes and the Guarantees, (iii) outstanding on the Closing Date
(other than the Indebtedness described in clauses (a) and (b)
above), (iv) consisting of Refinancing Indebtedness or Company
Refinancing Indebtedness Incurred in respect of any Indebtedness
described in this clause (c) (including Indebtedness Refinancing
Indebtedness) or Section 4.03(1) or (v) consisting of guarantees of
any Indebtedness permitted under clauses (a) and (b) of this
paragraph (2);
(d) (i) Indebtedness of a Restricted Subsidiary Incurred and outstanding
on or prior to the date on which such Restricted Subsidiary was
acquired by Holdings (other than Indebtedness Incurred as
consideration in, or to provide all or any
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portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Subsidiary of, or was otherwise
acquired by, Holdings); provided, however, that on the date that
such Restricted Subsidiary is acquired by Holdings, Holdings would
have been able to Incur $1.00 of additional Indebtedness pursuant to
Section 4.03(1) after giving effect to the Incurrence of such
Indebtedness pursuant to this clause (d) and (ii) Refinancing
Indebtedness Incurred by the Company or a Restricted Subsidiary in
respect of Indebtedness Incurred pursuant to this clause (d);
(e) Indebtedness in respect of performance bonds, bankers' acceptances,
letters of credit and surety or appeal bonds provided by Holdings
and the Restricted Subsidiaries in the ordinary course of their
business;
(f) Purchase Money Indebtedness and Capitalized Lease Obligations (in an
aggregate principal amount not in excess of $20,000,000 at any time
outstanding);
(g) Hedging Obligations of Holdings or any Restricted Subsidiary
directly related to Indebtedness permitted to be Incurred by
Holdings or any Restricted Subsidiary pursuant to the Indenture for
the purpose of fixing or hedging interest rate risk or currency
fluctuations;
(h) (i) Indebtedness of another Person Incurred and outstanding on or
prior to the date on which such Person consolidates with or merges
with or into Holdings or the Company (other than Indebtedness
Incurred as consideration in, or to provide all or any portion of
the funds or credit support utilized to consummate, the transaction
or series of related transactions pursuant to which such Person
consolidates with or merges with or into Holdings or the Company);
provided, however, that on the date that such transaction is
consummated, Holdings would have been able to Incur $1.00 of
additional Indebtedness pursuant to Section 4.03(1) after giving
effect to the Incurrence of such Indebtedness pursuant to this
clause (h) and (ii) Refinancing Indebtedness Incurred by Holdings or
the Company or the Successor Company in respect of Indebtedness
Incurred pursuant to subclause (i) of this clause (h); or
(i) Indebtedness (other than Indebtedness permitted to be Incurred
pursuant to Section 4.03(1) or any other clause of this Section
4.03(2)) in an aggregate principal amount on the date of Incurrence
that, when added to all other Indebtedness Incurred pursuant to this
clause (i) and then outstanding, shall not exceed $5,000,000.
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(3) Notwithstanding the foregoing, Holdings shall not Incur any
Indebtedness pursuant to Section 4.03(2) above if the proceeds thereof are used,
directly or indirectly, to repay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Obligations, unless such Indebtedness shall be
subordinated to the Securities to at least the same extent as such Subordinated
Obligations. In addition, Holdings shall not Incur any Secured Indebtedness that
is not Pari Passu Indebtedness, unless, contemporaneously therewith, effective
provision is made to secure the Securities equally and ratably with (or on a
senior basis to, in the case of Indebtedness subordinated in right of payment to
the Securities) such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
(4) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that Holdings or any Restricted Subsidiary may
Incur pursuant to this Section 4.03 shall not be deemed to be exceeded solely as
a result of fluctuations in the exchange rates of currencies. For purposes of
determining the outstanding principal amount of any particular Indebtedness
Incurred pursuant to this Section 4.03:
(a) Indebtedness Incurred pursuant to the Credit Agreement prior to or
on the Closing Date shall be treated as Incurred pursuant to Section
4.03(2)(a);
(b) Indebtedness permitted by this Section 4.03 need not be permitted
solely by reference to one provision permitting such Indebtedness
but may be permitted in part by one such provision and in part by
one or more other provisions of this Section 4.03 permitting such
Indebtedness; and
(c) in the event that Indebtedness meets the criteria of more than one
of the types of Indebtedness described in this Section 4.03,
Holdings, in its sole discretion, shall classify such Indebtedness
and only be required to include the amount of such Indebtedness in
one of such clauses.
SECTION 4.04. Limitation on Restricted Payments.
(1) Holdings shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to:
(a) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving Holdings) or similar payment to the
holders of its Capital Stock except dividends or distributions payable
solely in its Capital Stock (other than Disqualified Stock) and except
dividends or distributions payable to Holdings or another Restricted
Subsidiary (and, if such Restricted Subsidiary has shareholders other than
Holdings or other Restricted Subsidiaries, to its other shareholders on a
pro rata basis);
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(b) purchase, redeem, retire or otherwise acquire for value any
Capital Stock of Holdings or any Restricted Subsidiary held by Persons
other than Holdings or another Restricted Subsidiary;
(c) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment any Subordinated Obligations (other than
the purchase, repurchase or other acquisition of Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case, due within one year
of the date of acquisition); or
(d) make any Investment (other than a Permitted Investment) in any
Person
(any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Investment being herein
referred to as a "Restricted Payment") if at the time Holdings or such
Restricted Subsidiary makes such Restricted Payment:
(i) a Default shall have occurred and be continuing (or
would result therefrom);
(ii) Holdings could not Incur at least $1.00 of additional
Indebtedness under Section 4.03(1); or
(iii) the aggregate amount of such Restricted Payment and all
other Restricted Payments (the amount so expended, if
other than in cash, to be determined in good faith by
the Board of Directors, whose determination shall be
conclusive and evidenced by a resolution of the Board of
Directors) declared or made subsequent to the Closing
Date would exceed the sum of, without duplication:
(A) (i) 100% of EBITDA accrued during the period
(treated as one accounting period) from the
beginning of the fiscal quarter immediately
following the fiscal quarter during which the
Closing Date occurs to the end of the most
recent fiscal quarter for which financial
statements are publicly available (or, in
case such EBITDA will be a deficit, minus
100% of such deficit), minus
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(ii) 140% of Consolidated Interest Expense accrued
during the period (treated as one accounting
period) from the beginning of the fiscal
quarter immediately following the fiscal
quarter during which the Closing Date occurs
to the end of the most recent fiscal quarter
for which financial statements are publicly
available; plus
(B) the aggregate Net Cash Proceeds received by
Holdings from the issue or sale of its Capital
Stock (other than Disqualified Stock) subsequent
to the Closing Date (other than (x) an issuance or
sale to a Subsidiary of Holdings, (y) an issuance
or sale to an employee stock ownership plan or
other trust established by Holdings or any of its
Subsidiaries or (z) to the extent used in
accordance with Section 4.04(2)(e)(ii); plus
(C) the aggregate Net Cash Proceeds received by
Holdings from the sale or other disposition (other
than to Holdings or a Restricted Subsidiary) of
any Investments previously made by Holdings or a
Restricted Subsidiary and treated as a Restricted
Payment; provided that the amount added pursuant
to this clause (C) shall not exceed the amount
treated as a Restricted Payment and not previously
added pursuant to this paragraph (iii); plus
(D) the amount by which Indebtedness of Holdings or
its Restricted Subsidiaries is reduced on
Holdings' balance sheet upon the conversion or
exchange (other than by a Subsidiary of Holdings)
subsequent to the Closing Date of any Indebtedness
of Holdings or its Restricted Subsidiaries issued
after the Closing Date that is convertible or
exchangeable for Capital Stock (other than
Disqualified Stock) of Holdings (less the amount
of any cash or the fair market value of other
property distributed by Holdings or any Restricted
Subsidiary upon such conversion or exchange); plus
(E) the amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting
from (i) payments of dividends, repayments of the
principal of loans or ad-
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vances or other transfers of assets to the Company
or any Restricted Subsidiary from Unrestricted
Subsidiaries or (ii) the redesignation of
Unrestricted Subsidiaries as Restricted
Subsidiaries (valued, in each case, as provided in
the definition of "Investment") not to exceed, in
the case of any Unrestricted Subsidiary, the
amount of Investments previously made by Holdings
or any Restricted Subsidiary in such Unrestricted
Subsidiary, which amount was included in the
calculation of the amount of Restricted Payments;
plus
(F) $5,000,000.
(2) The provisions of Section 4.04(1) shall not prohibit:
(a) any purchase, repurchase, retirement, defeasance or other
acquisition or retirement for value of Capital Stock or Subordinated
Obligations of Holdings made by exchange for, or out of the proceeds
of the substantially concurrent sale of, Capital Stock of Holdings
(other than Disqualified Stock and other than Capital Stock issued
or sold to a Subsidiary of Holdings or an employee stock ownership
plan or other trust established by Holdings or any of its
Subsidiaries); provided, however, that:
(i) such Restricted Payment shall be excluded in the
calculation of the amount of Restricted Payments; and
(ii) the Net Cash Proceeds from such sale applied in the
manner set forth in this clause (a) shall be excluded
from the calculation of amounts under clause (d)(iii)(B)
of Section 4.04(1);
(b) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of
Holdings made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Indebtedness of Holdings that is
permitted to be Incurred pursuant to Section 4.03(2); provided,
however, that such purchase, repurchase, redemption, defeasance or
other acquisition or retirement for value shall be excluded in the
calculation of the amount of Restricted Payments;
(c) any purchase or redemption of Subordinated Obligations from Net
Available Cash to the extent permitted by Section 4.06; provided,
however, that such
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purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments;
(d) dividends paid within 60 days after the date of declaration thereof
if at such date of declaration such dividend would have complied
with Section 4.04; provided, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments;
and
(e) the repurchase or other acquisition of shares of, or options to
purchase shares of, common stock of Holdings or any of its
Subsidiaries from employees, former employees, consultants, former
consultants, directors or former directors of Holdings or any of its
Subsidiaries (or permitted transferees of such employees, former
employees, consultants, former consultants, directors or former
directors), pursuant to the terms of agreements (including
employment agreements) or plans (or amendments thereto) approved by
the Board of Directors under which such individuals purchase or
sell, or are granted the option to purchase or sell, shares of such
common stock; provided, however, that the aggregate amount of such
repurchases shall not exceed in any calendar year the sum of (i)
$5,000,000 plus (ii) the Net Cash Proceeds received since the date
of the Indenture and not previously credited to any repurchase or
other acquisition of such shares or options to purchase shares of
common stock pursuant to this clause (2)(e)(ii) of Section 4.04 by
Holdings from the sale of Capital Stock to employees, consultants
and directors of Holdings or the Company; provided, further,
however, that such repurchases and other acquisitions of shares, or
options to purchase shares of common stock shall be included in the
calculation of the amount of Restricted Payments.
Notwithstanding the foregoing, no cash dividends in excess of
$10,000,000 shall be paid by Holdings unless Holdings shall have set aside in an
escrow account an amount not less than the amount of accretion accrued from the
original issue date of the Securities.
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. Holdings shall not, and shall not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock
or pay any Indebtedness or other obligations owed to Holdings or any
of its Restricted Subsidiaries;
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(2) make any loans or advances to Holdings or any of its Restricted
Subsidiaries; or
(3) transfer any of its property or assets to Holdings or any of its
Restricted Subsidiaries,
except:
(a) any encumbrance or restriction pursuant to applicable law or
an agreement in effect at or entered into on the Closing Date;
(b) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any
Indebtedness Incurred by such Restricted Subsidiary prior to
the date on which such Restricted Subsidiary was acquired by
Holdings (other than Indebtedness Incurred as consideration
in, in contemplation of, or to provide all or any portion of
the funds or credit support utilized to consummate the
transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Restricted
Subsidiary or was otherwise acquired by Holdings) and
outstanding on such date;
(c) any encumbrance or restriction (x) pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to
an agreement referred to in clause (a) or (b) of this Section
4.05 or this clause (c) or (y) contained in any amendment to
an agreement referred to in clause (a) or (b) of this Section
4.05 or this clause (c) or (z) pursuant to any other agreement
regarding Indebtedness otherwise permitted by Section 4.03;
provided, however, that the encumbrances and restrictions
contained in any such Refinancing agreement, amendment or
other agreement are no less favorable to the Securityholders
than the encumbrances and restrictions contained in such
predecessor agreements or, with respect to agreements entered
into at or after the Closing Date, the most restrictive
agreement in existence at or prior to the Closing Date;
(d) in the case of clause (3), any encumbrance or restriction:
(i) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is
subject to a lease, license or similar contract; or
<PAGE>
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(ii) contained in security agreements securing Indebtedness
of a Restricted Subsidiary to the extent such
encumbrance or restriction restricts the transfer of the
property subject to such security agreements;
(e) with respect to a Restricted Subsidiary, any restriction
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or
assets of such Restricted Subsidiary pending the closing of
such sale or disposition;
(f) any encumbrance or restriction relating to Purchase Money
Indebtedness or Capitalized Lease Obligations for property
acquired in the ordinary course of business that imposes
restrictions on the ability of Holdings or a Restricted
Subsidiary to sell, lease or transfer the acquired property to
Holdings or its Restricted Subsidiaries;
(g) restrictions on cash or other deposits imposed by customers
under contracts entered into in the ordinary course of
business;
(h) any encumbrance or restriction contained in joint venture
agreements and other similar agreements entered into in the
ordinary course of business and customary for such types of
agreements; and
(i) any encumbrance or restriction pursuant to an agreement for
Indebtedness under Section (2)(e) and (2)(g) of Section 4.03.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.
(1) Holdings shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Disposition unless:
(a) Holdings or such Restricted Subsidiary receives consideration
(including by way of relief from, or by any other Person assuming
sole responsibility for, any liabilities, contingent or otherwise)
at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by the Board of Directors,
of the shares and assets subject to such Asset Disposition;
(b) at least 75% of the consideration thereof received by Holdings or
such Restricted Subsidiary is in the form of cash, provided that the
following shall be deemed to be cash for purposes of this clause
(b): (i) the amount of any liabilities (as shown on Holdings', or
such Restricted Subsidiary's, most recent balance sheet or in the
notes thereto) of Holdings or any Restricted Subsidiary
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(other than liabilities that are by their terms subordinated to the
Securities) that are assumed by the transferee of any such assets,
(ii) the amount of any securities received by Holdings or such
Restricted Subsidiary from such transferee that are converted by
Holdings or such Restricted Subsidiary into cash (to the extent of
the cash received) within 90 days following the closing of such
Asset Disposition, (iii) the fair market value of any
Telecommunications Assets received by Holdings or any Restricted
Subsidiary in such Asset Disposition and (iv) the fair market value
of any Permitted Joint Venture Interests received by Holdings or any
Restricted Subsidiary in such Asset Disposition; provided that the
aggregate fair market value of all Permitted Joint Venture Interests
received pursuant to this clause (iv), valued, in each case, at the
time of receipt, shall not exceed 10% of Consolidated Net Tangible
Assets,
(for purposes of this Section 4.06(1)(b), all determinations of fair
market value shall be made in good faith by the Board of Directors
and evidenced by an Officers' Certificate delivered to the Trustee);
and
(c) from and after the date on which neither the Bank Indebtedness or
the Notes (including any Refinancings thereof) are outstanding, an
amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by Holdings (or such Restricted Subsidiary,
as the case may be):
(i) first, to the extent Holdings elects (or is required by the
terms of any Indebtedness), to prepay, repay, redeem, purchase
or otherwise acquire Indebtedness (other than any Disqualified
Stock) of a Wholly Owned Subsidiary (in each case, other than
Indebtedness owed to Holdings or an Affiliate of Holdings and
other than Preferred Stock) within 180 days of the later of
the date of such Asset Disposition or the receipt of such Net
Available Cash;
(ii) second, to the extent of the balance of Net Available Cash
after application in accordance with clause (i) of this
Section 4.06(1)(c), to the extent Holdings or such Restricted
Subsidiary elects to, or enters into a binding agreement to,
reinvest in Additional Assets (including by means of an
Investment in Additional Assets by a Restricted Subsidiary
with cash in an amount equal to the amount of Net Available
Cash received by, or to be received by, Holdings or another
Restricted Subsidiary) within 180 days of the later of such
Asset Disposition or the receipt of such Net Available Cash;
and
<PAGE>
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(iii) third, to the extent of the balance of such Net Available Cash
after application in accordance with clauses (i) and (ii) of
this Section 4.06(1)(c), to make an Offer to purchase
Securities pursuant to and subject to the conditions set forth
in paragraph (2) below; provided, however, that, if Holdings
elects (or is required by the terms of any other Holdings
Indebtedness), such Offer may be made ratably to purchase the
Securities and other Pari Passu Indebtedness of Holdings;
provided, however that, in connection with any prepayment, repayment
or purchase of Indebtedness pursuant to clause (i) or (iii) of this
Section 4.06(1)(c), Holdings or such Restricted Subsidiary shall
retire such Indebtedness and shall cause the related loan commitment
(if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.
Upon completion of any Offer (as defined below), the amount of Net
Available Cash shall be reset at zero and Holdings shall be entitled to use any
remaining proceeds for any corporate purposes to the extent permitted under this
Indenture. Notwithstanding the foregoing provisions of this Section 4.06,
Holdings and the Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section 4.06 except to the extent that
the aggregate Net Available Cash from all Asset Dispositions that is not applied
in accordance with this Section 4.06 exceeds $10,000,000.
(2) In the event of an Asset Disposition that requires the purchase
of Securities pursuant to clause (1)(c)(iii) of this Section 4.06(1)(c),
Holdings shall be required to offer to purchase Securities tendered pursuant to
an offer by the Company for the Securities (an "Offer") at a purchase price of
100% of their Accreted Value (or, if after May 14, 2004, principal amount plus
accrued and unpaid interest thereon), and Additional Amounts in respect thereof,
if any, to the date of purchase in accordance with the procedures (including
prorating in the event of oversubscription) set forth in the Indenture and to
purchase other Pari Passu Indebtedness on the terms and to the extent
contemplated thereby. Holdings shall not be required to make an Offer for
Securities (and other Pari Passu Indebtedness) pursuant to this Section 4.06 if
the Net Available Cash available therefor (after application of the proceeds as
provided in clauses (1)(c)(i) and, (c)(ii) of this Section 4.06(1)(c)) is less
than $10,000,000 for any particular Asset Disposition (which lesser amount shall
be carried forward for purposes of determining whether an Offer is required with
respect to the Net Available Cash from any subsequent Asset Disposition).
(3)(a) Promptly, and in any event within 10 days after Holdings
becomes obligated to make an Offer, Holdings shall be obligated to deliver to
the Trustee and send, by first-class mail to each Holder, a written notice
stating that the Holder may elect to have his Securities purchased by Holdings
either in whole or in part (subject to prorating as hereinafter
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described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain such information
concerning the business of Holdings which Holdings in good faith believes will
enable such Holders to make an informed decision (which at a minimum shall
include (i) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of Holdings, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of Holdings filed subsequent to such Quarterly Report, other than Current
Reports describing Asset Dispositions otherwise described in the offering
materials (or corresponding successor reports), (ii) a description of material
developments in Holdings' business subsequent to the date of the latest of such
reports, and (iii) if material, appropriate pro forma financial information) and
all instructions and materials necessary to tender Securities pursuant to the
Offer, together with the address referred to in clause (c).
(b) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, Holdings shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(1). On such date,
Holdings shall also irrevocably deposit with the Trustee or with a paying agent
(or, if Holdings is acting as its own paying agent, segregate and hold in trust)
an amount equal to the Offer Amount to be invested pursuant to the specific
written directions of Holdings in Temporary Cash Investments and to be held for
payment in accordance with the provisions of this Section 4.06. Upon the
expiration of the period for which the Offer remains open (the "Offer Period"),
Holdings shall deliver to the Trustee for cancellation the Securities or
portions thereof that have been properly tendered to and are to be accepted by
Holdings. The Trustee (or the Paying Agent, if not the Trustee) shall, on the
date of purchase, mail or deliver payment to each tendering Holder in the amount
of the purchase price. In the event that the Offer Amount delivered by Holdings
to the Trustee is greater than the purchase price of the Securities tendered,
the Trustee shall deliver the excess to Holdings immediately after the
expiration of the Offer Period for application in accordance with this Section
4.06.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to Holdings
at the address specified in the notice at least three Business Days prior to the
Purchase Date. Holders shall be entitled to withdraw their election if the
Trustee or Holdings receives not later than one Business Day prior to the
Purchase Date, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security which was delivered by the Holder
for purchase and a statement that such Holder is withdrawing his election to
have such Secu-
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rity purchased. If at the expiration of the Offer Period the aggregate principal
amount of Securities and any other Senior Subordinated Indebtedness included in
the Offer surrendered by holders thereof exceeds the Offer Amount, Holdings
shall select the Securities and other Pari Passu Indebtedness to be purchased on
a pro rata basis (with such adjustments as may be deemed appropriate by
Holdings. Holders whose Securities are purchased only in part will be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(d) At the time Holdings delivers Securities to the Trustee which
are to be accepted for purchase, Holdings shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by Holdings pursuant
to and in accordance with the terms of this Section 4.06. A Security shall be
deemed to have been accepted for purchase at the time the Trustee, directly or
through an agent, mails or delivers payment therefor to the surrendering Holder.
(4) Holdings shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.06. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.06, Holdings shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.07. Limitation on Transactions with Affiliates.
(1) Holdings shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, enter into or conduct any transaction or
series of related transactions (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of Holdings
(an "Affiliate Transaction") unless such Affiliate Transaction is on terms:
(a) that are no less favorable to Holdings or such Restricted
Subsidiary, as the case may be, than those that could be obtained at
the time of such transaction in arms'-length dealings with a Person
who is not such an Affiliate;
(b) that, in the event such Affiliate Transaction involves an aggregate
amount in excess of $5,000,000:
(i) are set forth in writing, and
(ii) have been approved by a majority of the members of the Board
of Directors having no personal stake, other than as a holder
of Capital Stock
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of Holdings or such Restricted Subsidiary, in such Affiliate
Transaction; and
(c) that, in the event such Affiliate Transaction involves an amount in
excess of $15,000,000, have been determined by a nationally
recognized appraisal or investment banking firm to be fair, from a
financial standpoint, to Holdings and its Restricted Subsidiaries
(the opinion of such nationally recognized appraisal or investment
banking firm shall be delivered to the Trustee).
(2) The provisions of Section 4.07(1) shall not prohibit:
(a) any Restricted Payment permitted to be paid pursuant to Section
4.04;
(b) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans
approved by the Board of Directors;
(c) the grant of stock options or similar rights to employees and
directors of Holdings or the Company pursuant to plans approved by
the Board of Directors;
(d) loans or advances to employees in the ordinary course of business in
accordance with past practices of Holdings, but in any event not to
exceed $10,000,000 in the aggregate outstanding at any one time;
(e) the payment of reasonable fees to directors of Holdings and its
Subsidiaries who are not employees of Holdings or its Subsidiaries;
(f) any transaction between Holdings and a Restricted Subsidiary or
between Restricted Subsidiaries;
(g) customary indemnification and insurance arrangements in favor of
officers, directors, employees and consultants of Holdings or any of
the Restricted Subsidiaries;
(h) payments by Holdings or any of its Restricted Subsidiaries to Fox
Paine and its Affiliates for any financial advisory, financing,
underwriting or other placement services or in respect of other
investment banking activities, including, without limitation, in
connection with acquisitions or divestitures which payments are
approved by a majority of the Board of Directors in good faith;
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(i) the existence of, or the performance by Holdings or any of its
Restricted Subsidiaries of the obligations under the terms of, any
stockholders agreements (including any registration rights agreement
or purchase agreement related thereto) to which it is a party as of
the Closing Date, as such agreements may be amended from time to
time pursuant to the terms thereof; provided, however, that the
terms of any such amendment are no less favorable to the Holders
than the terms of any such agreements in effect as of the Closing
Date, and
(j) the issuance of Capital Stock (other than Disqualified Stock) of
Holdings for cash to any Permitted Holder.
SECTION 4.08. Change of Control. (a) Upon a Change of Control, each
Holder shall have the right to require that Holdings repurchase all or any part
of such Holder's Securities at a purchase price in cash equal to 101% of
Accreted Value (or, if after May 14, 2004, 101% of the principal amount thereof
plus accrued and unpaid interest thereon) and, in each case, Additional Amounts,
if any, to the date of purchase (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date), in accordance with the terms contemplated in Section 4.08(b);
provided, however, that notwithstanding the occurrence of a Change of Control,
Holdings shall not be obligated to purchase the Securities pursuant to this
Section 4.08 in the event that it has exercised its right to redeem all the
Securities under paragraph 5 of the Securities. In the event that at the time of
such Change of Control the terms of the Bank Indebtedness restrict or prohibit
the repurchase of Securities pursuant to this Section 4.08, then prior to the
mailing of the notice to Holders provided for in Section 4.08(b) below but in
any event within 30 days following any Change of Control, Holdings shall:
(1) repay in full all Bank Indebtedness or, if doing so will allow
the repurchase of the Securities, offer to repay in full all Bank
Indebtedness and repay the Bank Indebtedness of each lender who has
accepted such offer; or
(2) obtain the requisite consent under the agreements governing the
Bank Indebtedness to permit the repurchase of the Securities as provided
for in Section 4.08(b).
(b) Within 30 days following any Change of Control (except as
provided in the proviso to the first sentence of Section 4.08(a)), Holdings
shall mail a notice to each Holder with a copy to the Trustee (the "Change of
Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder has
the right to require Holdings to purchase such Holder's Securities at a
purchase price in cash equal to 101% of Accreted Value (or, if after May
14, 2004, 101% of the princi-
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pal amount thereof, plus accrued and unpaid interest thereon) and, in each
case, Additional Amounts, if any, in respect thereof, if any, to the date
of purchase (subject to the right of Holders of record on the relevant
record date to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts and financial information
regarding such Change of Control;
(3) the purchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the instructions determined by Holdings, consistent with this
Section 4.08, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to Holdings
at the address specified in the notice at least three Business Days prior to the
purchase date. Holders shall be entitled to withdraw their election if the
Trustee or Holdings receives not later than one Business Day prior to the
purchase date a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security which was delivered for purchase by
the Holder and a statement that such Holder is withdrawing his election to have
such Security purchased.
(d) On the purchase date, all Securities purchased by Holdings under
this Section 4.08 shall be delivered to the Trustee for cancellation, and
Holdings shall pay the purchase price plus accrued and unpaid interest, if any,
to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section 4.08,
Holdings will not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in Section
4.08(b) applicable to a Change of Control Offer made by Holdings and purchases
all Securities validly tendered and not withdrawn under such Change of Control
Offer.
(f) Holdings shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.08. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.08, Holdings shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section 4.08 by virtue thereof.
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(g) In the event that Holders of not less than 98% of the principal
amount of the outstanding Securities accept a Change of Control Offer and
Holdings purchases all of the Securities held by such Holders, Holdings shall
have the right, on not less than 30 nor more than 60 days' prior notice, to
redeem all of the Securities that remain outstanding following such purchase at
the purchase price specified in the Change of Control Offer plus, to the extent
not included in the purchase price specified in the Change of Control Offer,
accrued and unpaid interest thereon and Additional Amounts in respect thereof,
if any, to the date of redemption (subject to the right of Holders of record on
the relevant record date to receive interest on the relevant interest payment
date). Any redemption of Securities pursuant to this paragraph (g) shall be
subject to, and made in accordance with, the provisions and requirements of
Article III.
SECTION 4.09. Compliance Certificate. Holdings shall deliver to the
Trustee within 120 days after the end of each fiscal year of Holdings an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of Holdings they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action Holdings is taking or proposes to take with
respect thereto. Holdings also shall comply with Section 314(a)(4) of the TIA.
SECTION 4.10. Further Instruments and Acts. Upon request of the
Trustee, Holdings shall execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.11. Limitation on Lines of Business. Holdings shall not,
and shall not permit any Restricted Subsidiary to, engage in any business, other
than a Related Business.
SECTION 4.12. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries. Holdings shall not sell or otherwise dispose of any
shares of Capital Stock of a Restricted Subsidiary, and shall not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise
dispose of any shares of its Capital Stock except:
(1) to Holdings or a Wholly Owned Subsidiary;
(2) if, immediately after giving effect to such issuance, sale or
other disposition, neither Holdings nor any of its Subsidiaries own any
Capital Stock of such Restricted Subsidiary; or
(3) if, immediately after giving effect to such issuance or sale,
such Restricted Subsidiary would no longer constitute a Restricted
Subsidiary and any Invest-
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ment in such Person remaining after giving effect thereto would have been
permitted to be made under Section 4.04 if made on the date of such
issuance, sale or other disposition.
The proceeds of any sale of such Capital Stock permitted hereby
shall be treated as Net Available Cash from an Asset Disposition and shall be
applied in accordance with Section 4.06.
SECTION 4.13. Calculation of Original Issue Discount. Holdings shall
file with the Trustee promptly at the end of each calendar year through December
31, 2004 (i) a written notice specifying the amount of original issue discount
(including daily rates and accrual periods) accrued on outstanding Securities as
of the end of such year and (ii) such other specific information relating to
such original issue discount as may then be relevant under the Internal Revenue
Code of 1986, as amended from time to time.
ARTICLE V
Successor Company
SECTION 5.01. When Holdings May Merge or Transfer Assets. Holdings
shall not consolidate with or merge with or into, or convey, transfer or lease
all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "Successor
Company") shall be a corporation organized and existing under the laws of
the United States of America, any state thereof or the District of
Columbia, and the Successor Company (if not Holdings) shall expressly
assume, by a supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of
Holdings under the Securities and this Indenture;
(2) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(3) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(1);
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(4) Holdings shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture; and
(5) Holdings shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders will not recognize income, gain or
loss for Federal income tax purposes as a result of such transaction and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
transaction had not occurred.
Notwithstanding the foregoing clause (2) or (3), Holdings may merge
with an Affiliate incorporated or formed solely for the purpose of
reincorporating Holdings in another jurisdiction.
The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, Holdings under the Indenture, but
Holdings, in the case of a conveyance, transfer or lease of all or substantially
all its assets, shall not be released from the obligation to pay the principal
of and interest on the Securities.
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
(1) Holdings defaults in any payment of interest on any Security
when the same becomes due and payable and such default continues for a
period of 30 days;
(2) Holdings (i) defaults in the payment of Accreted Value or the
principal of any Security when the same becomes due and payable at its
Stated Maturity, upon required redemption or repurchase, upon declaration
or otherwise or (ii) fails to redeem or purchase Securities when required
pursuant to this Indenture or the Securities;
(3) Holdings fails to comply with Section 5.01;
(4) Holdings fails to comply with Section 4.02, 4.03, 4.04, 4.05,
4.06, 4.07, 4.08, 4.11, 4.12 or 4.13 (other than a failure to purchase
Securities when required under Section 4.06 or 4.08) and such failure
continues for 30 days after the notice to Holdings specified below;
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(5) Holdings fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in (1), (2),
(3) or (4) above) and such failure continues for 60 days after the notice
to Holdings specified below;
(6) Indebtedness of Holdings or any Subsidiary (other than
Indebtedness owing to Holdings or a Subsidiary of Holdings) is not paid
within any applicable grace period after final maturity or the
acceleration of such Indebtedness by the holders thereof because of a
default and the total amount of such Indebtedness unpaid or accelerated
exceeds $5,000,000 or its foreign currency equivalent at the time and such
failure continues for 10 days after the notice to Holdings specified
below;
(7) Holdings or any Significant Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against Holdings or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of Holdings or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of Holdings or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days; or
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(9) any judgment or decree for the payment of money in excess of
$5,000,000 or its foreign currency equivalent against Holdings or any
Subsidiary of Holdings, to the extent such judgment or decree is not
covered by insurance or is in excess of insurance coverage, and there is a
period of 60 days following the entry of such judgment or decree during
which such judgment or decree is not discharged, waived or the execution
thereof stayed.
The foregoing shall constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (4), (5) or (6) above is not an Event of
Default until the Trustee or the Holders of at least 25% in principal amount of
the outstanding Securities notify Holdings of the Default and Holdings does not
cure such Default within the time specified after receipt of such notice. Such
notice must specify the Default, demand that it be remedied and state that such
notice is a "Notice of Default".
Holdings shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action Holdings is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.01(7) or (8) with respect to Holdings)
occurs and is continuing, the Trustee by notice to Holdings, or the Holders of
at least 25% in principal amount of the outstanding Securities by notice to
Holdings, may declare the principal of and accrued but unpaid interest on, all
the Securities (or, if prior to May 14, 2004, the Accreted Value of all the
Securities) to be due and payable. Upon such a declaration, such Accreted Value
or principal and interest shall be due and payable immediately. If an Event of
Default specified in Section 6.01(7) or (8) with respect to Holdings occurs, the
principal of, and accrued and unpaid interest on all the Securities (if prior to
May 14, 2004, the Accreted Value of all the Securities) shall ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Securityholders. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing
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Events of Default have been cured or waived except nonpayment of Accreted Value
or principal or interest that has become due solely because of acceleration. No
such rescission shall affect any subsequent Default or impair any right
consequent thereto.
SECTION 6.03. Other Remedies. Notwithstanding any other provision of
the Indenture, if an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of or interest
on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding in its own name and as trustee
of an express trust even if it does not possess any of the Securities or does
not produce any of them in the proceeding. A delay or omission by the Trustee or
any Securityholder in exercising any right or remedy accruing upon an Event of
Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security, (ii) a Default arising from the failure
to redeem or purchase any Security when required pursuant to the terms of this
Indenture or (iii) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Securityholder affected. When a
Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right to
receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
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(1) the Holder has previously given to the Trustee written notice
stating that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities
do not give the Trustee a direction inconsistent with the request during
such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of Accreted Value or principal of, as the case may be, and Additional
Amounts and interest on the Securities held by such Holder, on or after the
respective due dates expressed in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against
Holdings for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to Holdings or any Subsidiary,
their creditors or their property and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses,
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disbursements and advances of the Trustee, its agents and its counsel, and any
other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, and any Additional Amounts
without preference or priority of any kind, according to the amounts due
and payable on the Securities for principal, any Additional Amounts and
interest, respectively; and
THIRD: to Holdings.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section 6.10. At least 15 days before such
record date, the Trustee shall mail to each Securityholder and Holdings a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. Holdings (to the
extent it may lawfully do so) agrees that it shall not at any time insist upon,
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
Holdings (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and shall not hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
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ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture (but
need not confirm or investigate the accuracy of mathematical calculations
or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
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(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with Holdings.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 7.01 and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively
rely and shall be protected in acting or refraining from acting upon any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of any agent or attorneys appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other paper or document or as to
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whether or not an Event of Default shall have occurred unless requested in
writing to do so by the Holders of not less than a majority in principal amount
of the Securities at the time outstanding, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters or
occurrence as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of Holdings, personally or by agent or attorney at the sole
cost of Holding and shall incur no liability or additional liability of any kind
by reason of such inquiry or investigation.
(g) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity reasonably satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction.
(h) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Trust Officer has actual knowledge thereof or unless
written notice of any event which is in fact such a default is received by the
Trustee at the Corporate Trust Office of the Trustee, and such notice references
the Securities and this Indenture.
(i) The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with Holdings or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Registrar or co-paying
agent may do the same with like rights. However, the Trustee must comply with
Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for Holdings use
of the proceeds from the Securities, and it shall not be responsible for any
statement in this Indenture or in any document issued in connection with the
sale of the Securities or in the Securities other than the Trustee's certificate
of authentication. The Trustee shall not be responsible for any conduct or
omission by Holdings or the occurrence of any Event of Default.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to a Trust Officer, the Trustee shall mail to each
Securityholder notice of the
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Default within 90 days after it occurs. Except in the case of a Default in
payment of principal or interest on any Security (including payments pursuant to
the mandatory redemption provisions of such Security, if any), the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 1 beginning with the May 1 following the date of this
Indenture, and in any event prior to July 15 in each year, the Trustee shall
mail to each Securityholder a brief report dated as of May 15 that complies with
Section 313(a) of the TIA. The Trustee shall also comply with Section 313(b) of
the TIA.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. Holdings agrees to notify promptly the Trustee whenever
the Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. Holdings shall pay to the
Trustee from time to time such compensation as Holdings and the Trustee shall,
from time to time, agree in writing for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. Holdings shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents (including agents that are not full-time employees of the
Trustee or are not regularly employed by the Trustee), counsel, accountants and
experts. Holdings, jointly and severally shall indemnify, defend and hold
harmless the Trustee or any predecessor Trustee and their Agents against any and
all loss, liability damage, claims or expense (including reasonable attorneys'
fees and expenses) incurred by or in connection with the acceptance or
administration of this trust including the costs and expenses of defending
itself against any claim (whether asserted by Holdings, any Holder or any other
Person) and the performance of its duties hereunder. The Trustee shall notify
Holdings of any claim for which it may seek indemnity promptly upon obtaining
actual knowledge thereof; provided, however, that any failure so to notify
Holdings shall not relieve Holdings of its indemnity obligations hereunder.
Holdings shall defend the claim and the indemnified party shall provide
reasonable cooperation at Holdings expense in the defense. Such indemnified
parties may have separate counsel and Holdings shall pay the fees and expenses
of such counsel; provided, however, that Holdings shall not be required to pay
such fees and expenses if it assumes such indemnified parties' defense and, in
such indemnified parties' reasonable judgment, there is no conflict of interest
between Holdings and such parties in connection with such defense. Holdings need
not reimburse any expense or indemnify, defend or hold harmless against any
loss, liability or expense
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incurred by an indemnified party through such party's own willful misconduct,
negligence or bad faith.
To secure Holdings' payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest and any Additional Amounts on particular Securities.
Holdings' payment obligations pursuant to this Section 7.07 shall
survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. When the Trustee incurs expenses after the occurrence of
a Default specified in Section 6.01(7) or (8) with respect to Holdings, the
expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
time by so notifying Holdings in writing in accordance with the provisions of
Section 13.02. Any resignation of the Trustee shall be effective immediately
upon receipt by Holdings of such notice (unless such notice shall specify a
later time as the effective time of such resignation, in which case such later
time shall be the effective time), and the resignation of the Trustee shall not
prejudice any rights of the Trustee to receive any compensation, any
reimbursement of any expenses or any indemnity under the Indenture. The Holders
of a majority in principal amount of the Securities may remove the Trustee by so
notifying the Trustee and may appoint a successor Trustee. Holdings shall remove
the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by Holdings or by the Holders of
a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), Holdings shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Holdings. Thereupon the resignation
or removal of the retiring Trustee
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shall become effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. The successor Trustee
shall mail a notice of its succession to Securityholders. The retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee, subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section 7.08, Holdings' obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA ss.310(a). The Trustee shall have a
combined capital and surplus of at least $100,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss.310(b); provided, however, that there shall be excluded from the operation of
TIA ss.310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of Holdings are
outstanding if the requirements for such exclusion set forth in TIA ss.310(b)(1)
are met.
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SECTION 7.11. Preferential Collection of Claims Against Holdings.
The Trustee shall comply with TIA ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss.311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
When (i) Holdings delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.07) for cancellation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III hereof,
and Holdings irrevocably deposits with the Trustee funds or U.S. Government
Obligations on which payment of principal and interest when due will be
sufficient to pay at maturity or upon redemption all outstanding Securities,
including Accreted Value or interest thereon to maturity or such redemption date
(other than Securities replaced pursuant to Section 2.07), and if in either case
Holdings pays all other sums payable hereunder by Holdings, then this Indenture
shall, subject to Section 8.01(c), cease to be of further effect. The Trustee
shall acknowledge satisfaction and discharge of this Indenture on demand of
Holdings accompanied by an Officers' Certificate and an Opinion of Counsel at
the cost and expense of Holdings.
(b) Subject to Sections 8.01(c) and 8.02, Holdings at any time may
terminate (i) all of its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.13 and the operation
of Section 5.01(a)(3), 5.01(a)(4), 6.01(4), 6.01(6), 6.01(7) (with respect to
Significant Subsidiaries of Holdings only), 6.01(8) (with respect to Significant
Subsidiaries of Holdings only) and 6.01(9) ("covenant defeasance option").
Holdings may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
If Holdings exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If Holdings
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Section 6.01(4),
6.01(6), 6.01(7) (with respect to Significant Subsidiaries of Holdings only),
6.01(8) (with respect to Significant Subsidiaries of Holdings only) or 6.01(9)
or because of the failure of Holdings to comply with clauses (3) and (4) of
Section 5.01(a).
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Upon satisfaction of the conditions set forth herein and upon the
written request of Holdings, the Trustee shall acknowledge in writing the
discharge of those obligations that Holdings terminates.
(c) Notwithstanding clauses (a) and (b) above, Holdings' obligations
in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07, 7.08 and in this Article
VIII shall survive until the Securities have been paid in full. Thereafter,
Holdings obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. Holdings may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) Holdings irrevocably deposits in trust with the Trustee money or
U.S. Government Obligations for the payment of principal, premium (if any)
and interest on the Securities to maturity or redemption, as the case may
be;
(2) Holdings delivers to the Trustee a certificate from a nationally
recognized firm of independent accountants expressing their opinion that
the payments of principal and interest when due and without reinvestment
on the deposited U.S. Government Obligations plus any deposited money
without investment will provide cash at such times and in such amounts as
will be sufficient to pay principal and interest when due on all the
Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(7) or (8) with respect to
Holdings occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on Holdings;
(5) Holdings delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment company under the Investment
Company Act of 1940;
(6) in the case of the legal defeasance option, Holdings shall have
delivered to the Trustee an Opinion of Counsel stating that (i) Holdings
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been
a change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Securityholders will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to
Federal in-
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come tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, Holdings shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for Federal income
tax purposes as a result of such covenant defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant defeasance had not
occurred; and
(8) Holdings delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
VIII have been complied with.
Before or after a deposit, Holdings may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Holdings. The Trustee and the Paying
Agent shall promptly turn over to Holdings upon the written request any excess
money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to Holdings upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to
Holdings for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. Holdings shall
pay and shall indemnify, defend and hold harmless the Trustee against any tax,
fee or other charge imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, Holdings
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obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to this Article VIII until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with this Article VIII; provided,
however, that, if Holdings has made any payment of interest on or principal of
any Securities because of the reinstatement of its obligations, Holdings shall
be subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. Holdings and the Trustee
may amend this Indenture or the Securities without notice to or consent of any
Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to secure the Securities;
(5) to add to the covenants of Holdings for the benefit of the
Holders or to surrender any right or power herein conferred upon Holdings;
(6) to comply with any requirement of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA;
(7) to make any change that does not adversely affect the rights of
any Securityholder; or
(8) to provide for the issuance of the Exchange Securities or
Private Exchange Securities which shall have terms substantially identical
in all material respects to the Original Securities (except that the
transfer restrictions contained in the Original Securities shall be
modified or eliminated, as appropriate), and which shall be treated,
together with any outstanding Original Securities, as a single issue of
securities.
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After an amendment under this Section 9.01 becomes effective,
Holdings shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.01.
SECTION 9.02. With Consent of Holders. Holdings and the Trustee may
amend this Indenture or the Securities without notice to any Securityholder but
with the written consent of the Holders of at least a majority in principal
amount of the Securities then outstanding (including consents obtained in
connection with a tender offer or exchange for the Securities). However, without
the consent of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest or
any Additional Amounts on any Security, or change or have the effect of
changing the definition of Accreted Value;
(3) reduce the Accreted Value or principal of or extend the Stated
Maturity of any Security;
(4) reduce the premium payable upon the redemption of any Security
or change the time at which any Security may be redeemed in accordance
with Article III;
(5) make any Security payable in money other than that stated in the
Security; or
(6) make any change in Section 6.04 or 6.07 or the second sentence
of this Section 9.02.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective,
Holdings shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.02.
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SECTION 9.03. Compliance with Trust Indenture Act. Every amendment
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date on which the Trustee receives an Officers'
Certificate from Holdings certifying that the requisite number of consents have
been received. After an amendment or waiver becomes effective, it shall bind
every Securityholder. An amendment or waiver becomes effective upon the (i)
receipt by Holdings or the Trustee of the requisite number of consents, (ii)
satisfaction of conditions to effectiveness as set forth in this Indenture and
any indenture supplemental hereto containing such amendment or waiver and (iii)
execution of such amendment or waiver (or supplemental indenture) by Holdings
and the Trustee.
Holdings may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if Holdings or the Trustee so determines, Holdings in
exchange for the Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture and that such amendment
is the legal, valid
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and binding obligation of Holdings enforceable against it in accordance with its
terms, subject to customary exceptions, and complies with the provisions hereof
(including Section 9.03).
SECTION 9.07. Payment for Consent. Neither Holdings nor any
Affiliate of Holdings shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 10.02. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to Holdings:
ALEC Holdings, Inc.
510 L. Street
Suite 500
Anchorage, Alaska 99501
Attention of:
Michael E. Holmstrom
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attention of:
Corporate Trust Trustee Administration
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Holdings or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it; provided,
however, that in the case of the Trustee a notice or communication is duly given
upon receipt.
SECTION 10.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss.312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. Holdings, the Trustee, the Registrar and anyone else shall have the
protection of TIA ss.312(c).
SECTION 10.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by Holdings to the Trustee to take or refrain
from taking any action under this Indenture, Holdings shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 10.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 10.06. When Securities Disregarded. In determining whether
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by Holdings or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with Holdings shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee actually knows are so owned shall be so
disregarded. Subject to the foregoing, only Securities outstanding at the time
shall be considered in any such determination.
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 10.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 10.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 10.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of Holdings shall not have any liability for
any obligations of Holdings under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
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SECTION 10.11. Successors. All agreements of Holdings in this
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 10.12. Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 10.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
ALEC HOLDINGS, INC.,
By: /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
THE BANK OF NEW YORK, as Trustee,
By: /s/ Michele L. Russo
-------------------------------------
Name: MICHELE L. RUSSO
Title: Assistant Treasurer
<PAGE>
APPENDIX A
PROVISIONS RELATING TO ORIGINAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. Definitions.
1.01. Definitions. For the purposes of this Appendix A the following
terms shall have the meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Regulation S Global Security or beneficial interest
therein, the rules and procedures of the Depositary for such Global Security,
Euroclear and Cedel, in each case to the extent applicable to such transaction
and as in effect from time to time.
"Cedel" means Cedel Bank, S.A., or any successor securities clearing
agency.
"Definitive Security" means a certificated Original Security or
Exchange Security (bearing the Restricted Securities Legend if the transfer of
such Security is restricted by applicable law) that does not include the Global
Securities Legend.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Euroclear" means the Euroclear Clearance System or any successor
securities clearing agency.
"Global Securities Legend" means the legend set forth under that
caption in Exhibit A to this Indenture.
"IAI" means an institutional "accredited investor" as described in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Initial Purchasers" means DLJ Investment Partners, L.P., DLJ
Investment Funding, Inc. and DLJ ESC II L.P.
"Private Exchange" means an offer by Holdings, pursuant to the
Registration Agreement, to issue and deliver to certain purchasers, in exchange
for the Original Securities held by such purchasers as part of their initial
distribution, a like aggregate principal amount of Private Exchange Securities.
<PAGE>
"Private Exchange Securities" means the Securities of Holdings
issued in exchange for Original Securities pursuant to this Indenture in
connection with a Private Exchange pursuant to the Registration Agreement.
"Purchase Agreement" means the Purchase Agreement dated May 11,
1999, between Holdings and the Initial Purchasers.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Registered Exchange Offer" means an offer by Holdings, pursuant to
the Registration Agreement, to certain Holders of Original Securities, to issue
and deliver to such Holders, in exchange for their Original Securities, a like
aggregate principal amount of Exchange Securities registered under the
Securities Act.
"Registration Agreement" means the Exchange and Registration Rights
Agreement dated May 14, 1999, between Holdings and the Initial Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Securities" means all Original Securities offered and
sold outside the United States in reliance on Regulation S.
"Restricted Period", with respect to any Securities, means the
period of 40 consecutive days beginning on and including the later of (i) the
day on which such Securities are first offered to persons other than
distributors (as defined in Regulation S under the Securities Act) in reliance
on Regulation S and (ii) the Issue Date with respect to such Securities.
"Restricted Securities Legend" means the legend set forth in Section
2.3(e)(i) herein.
"Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Securities" means all Original Securities offered and
sold to QIBs in reliance on Rule 144A.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depositary) or any successor person thereto, who
shall initially be the Trustee.
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"Shelf Registration Statement" means a registration statement filed
by Holdings in connection with the offer and sale of Original Securities
pursuant to the Registration Agreement.
"Transfer Restricted Securities" means Definitive Securities and any
other Securities that bear or are required to bear the Restricted Securities
Legend.
1.2. Other Definitions.
Term: Defined in Section:
- ----- -------------------
"Agent Members" ....................... 2.1(b)
"IAI Global Security" ................. 2.1(a)
"Global Security" ..................... 2.1(a)
"Regulation S Global Security" ........ 2.1(a)
"Rule 144A Global Security" ........... 2.1(a)
2. The Securities.
2.1. Form and Dating. The Original Securities issued on the date
hereof will be (i) offered and sold by Holdings pursuant to the Purchase
Agreement and (ii) resold, initially only to (A) QIBs in reliance on Rule 144A
and (B) Persons other than U.S. Persons (as defined in Regulation S) in reliance
on Regulation S. Such Original Securities may thereafter be transferred to,
among others, QIBs, purchasers in reliance on Regulation S and, except as set
forth below, IAIs in accordance with Rule 501.
(a) Global Securities. Rule 144A Securities may be issued in the
form of one or more permanent global Securities in definitive, fully registered
form (collectively, the "Rule 144A Global Security") and Regulation S Securities
shall be issued initially in the form of one or more global Securities
(collectively, the "Regulation S Global Security"), in each case without
interest coupons and bearing the Global Securities Legend and Restricted
Securities Legend, which shall be deposited on behalf of the purchasers of the
Securities represented thereby with the Securities Custodian, and registered in
the name of the Depositary or a nominee of the Depositary, duly executed by
Holdings and authenticated by the Trustee as provided in this Indenture. One or
more global securities in definitive, fully registered form without interest
coupons and bearing the Global Securities Legend and the Restricted Securities
Legend (collectively, the "IAI Global Security") may also be issued on the
Closing Date, deposited with the Securities Custodian, and registered in the
name of the Depositary or a nominee of the Depositary, duly executed by Holdings
and authenticated by the Trustee as provided in this Indenture to accommodate
transfers of beneficial interests in the Securities to IAIs subsequent to the
initial distribution. Beneficial ownership interests in the Regulation S Global
Security shall not be exchangeable for interests in the Rule 144A Global
Security, the IAI Global Security or any other Security without a Restricted
Securities Legend until the expiration of the Restricted Period. The Rule 144A
Global Security, the IAI Global Security
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and the Regulation S Global Security are each referred to herein as a "Global
Security" and are collectively referred to herein as "Global Securities." The
aggregate principal amount of the Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee and the
Depositary or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
Global Security deposited with or on behalf of the Depositary.
Holdings shall execute and the Trustee shall, in accordance with
this Section 2.1(b) and pursuant to a written order of Holdings, authenticate
and deliver initially one or more Global Securities that (a) shall be registered
in the name of the Depositary for such Global Security or Global Securities or
the nominee of such Depositary and (b) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions or held by the Trustee
as Securities Custodian.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depositary or by the Trustee as Securities Custodian
or under such Global Security, and the Depositary may be treated by Holdings,
the Trustee and any agent of Holdings or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent Holdings, the Trustee or any agent of Holdings or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices of such Depositary
governing the exercise of the rights of a holder of a beneficial interest in any
Global Security.
(c) Definitive Securities. Owners of beneficial interests in
Securities may initially elect to receive physical delivery of certificated
Securities.
2.2. Authentication. The Trustee shall authenticate and make
available for delivery upon a written order of Holdings signed by an Officer (1)
Original Securities for original issue on the date hereof in an aggregate
principal amount of $46,928,435.00, (2) the (A) Exchange Securities for issue
only in a Registered Exchange Offer and (B) Private Exchange Securities for
issue only in a Private Exchange, in the case of each of (A) and (B) pursuant to
the Registration Agreement and for a like principal amount of Original
Securities exchanged pursuant thereto. Such order shall specify the amount of
the Securities to be authenticated, the date on which the original issue of
Securities is to be authenticated and whether the Securities are to be Original
Securities, Exchange Securities or Private Exchange Securities. The aggregate
principal amount of Securities outstanding at any time may not exceed
$46,928,435.00 except as provided in Section 2.08 of this Indenture.
2.3. Transfer and Exchange. (a) Transfer and Exchange of Definitive
Securities. When Definitive Securities are presented to the Registrar with a
request:
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(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to Holdings and the Registrar,
duly executed by the Holder thereof or his attorney duly authorized in
writing; and
(ii) are accompanied by the following additional information and
documents, as applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect
(in the form set forth on the reverse side of the Original
Security); or
(B) if such Definitive Securities are being transferred to
Holdings, a certification to that effect (in the form set forth on
the reverse side of the Original Security); or
(C) if such Definitive Securities are being transferred
pursuant to an exemption from registration in accordance with Rule
144 under the Securities Act or in reliance upon another exemption
from the registration requirements of the Securities Act, (i) a
certification to that effect (in the form set forth on the reverse
side of the Original Security) and (ii) if Holdings or the Trustee
so requests, an opinion of counsel or other evidence reasonably
satisfactory to it as to the compliance with the restrictions set
forth in the legend set forth in Section 2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to Holdings and the Registrar, together
with:
(i) certification either (in the form set forth on the reverse side
of the Original Security) that such Definitive Security is being
transferred (A) to a QIB in accordance with Rule 144A, (B) to an IAI that
has furnished to the Trustee a signed
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letter substantially in the form of Exhibit D or (C) outside the United
States in an offshore transaction within the meaning of Regulation S and
in compliance with Rule 904 under the Securities Act or, will remain with
such Definitive Securityholder; and
(ii) written instructions directing the Trustee to make, or to
direct the Securities Custodian to make, an adjustment on its books and
records with respect to such Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the
Depositary account to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased by the aggregate principal amount of the Definitive Security to be
exchanged and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Global Security
equal to the principal amount of the Definitive Security so canceled. If no
Global Securities are then outstanding and the Global Security has not been
previously exchanged for certificated securities pursuant to Section 2.4,
Holdings shall issue and the Trustee shall authenticate, upon written order of
Holdings in the form of an Officers' Certificate, a new Global Security in the
appropriate principal amount.
(c) Transfer and Exchange of Global Securities. (i) The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depositary therefor. A transferor of a beneficial interest in a Global Security
shall deliver a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in such Global Security or
another Global Security and such account shall be credited in accordance with
such order with a beneficial interest in the applicable Global Security and the
account of the Person making the transfer shall be debited by an amount equal to
the beneficial interest in the Global Security being transferred. Transfers by
an owner of a beneficial interest in the Rule 144A Global Security or the IAI
Global Security to a transferee who takes delivery of such interest through the
Regulation S Global Security, whether before or after the expiration of the
Restricted Period, shall be made only upon receipt by the Trustee of a
certification from the transferor to the effect that such transfer is being made
in accordance with Regulation S or (if available) Rule 144 under the Securities
Act and that, if such transfer is being made prior to the expiration of the
Restricted Period, the interest transferred shall be held immediately thereafter
through Euroclear or Cedel. In the case of a transfer of a beneficial interest
in either the Regulation S Global Security or the Rule 144A Global Security for
an interest in the IAI Global Security, the transferee must furnish a signed
letter substantially in the form of Exhibit D to the Trustee.
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(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Security to a beneficial interest in another Global Security, the
Registrar shall reflect on its books and records the date and an increase in the
principal amount of the Global Security to which such interest is being
transferred in an amount equal to the principal amount of the interest to be so
transferred, and the Registrar shall reflect on its books and records the date
and a corresponding decrease in the principal amount of Global Security from
which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4), a Global Security may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(iv) In the event that a Global Security is exchanged for Definitive
Securities pursuant to Section 2.4 prior to the consummation of the Registered
Exchange Offer or the effectiveness of a Shelf Registration Statement with
respect to such Securities, such Securities may be exchanged only in accordance
with such procedures as are substantially consistent with the provisions of this
Section 2.3 (including the certification requirements set forth on the reverse
of the Original Securities intended to ensure that such transfers comply with
Rule 144A, Regulation S or such other applicable exemption from registration
under the Securities Act, as the case may be) and such other procedures as may
from time to time be adopted by Holdings.
(d) Restrictions on Transfer of Regulation S Global Security. (i)
Prior to the expiration of the Restricted Period, interests in the Regulation S
Global Security may only be held through Euroclear or Cedel. During the
Restricted Period, beneficial ownership interests in the Regulation S Global
Security may only be sold, pledged or transferred through Euroclear or Cedel in
accordance with the Applicable Procedures and only (A) to Holdings, (B) so long
as such security is eligible for resale pursuant to Rule 144A, to a person whom
the selling holder reasonably believes is a QIB that purchases for its own
account or for the account of a QIB to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A, (C) in an offshore
transaction in accordance with Regulation S, (D) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 (if applicable) under
the Securities Act, (E) to an IAI purchasing for its own account, or for the
account of such an IAI, in a minimum principal amount of Securities of $250,000
or (F) pursuant to an effective registration statement under the Securities Act,
in each case in accordance with any applicable securities laws of any state of
the United States. Prior to the expiration of the Restricted Period, transfers
by an owner of a beneficial interest in the Regulation S Global Security to a
transferee who takes delivery of such interest through the Rule 144A Global
Security or the IAI Global Security shall be made only in accordance with
Applicable Procedures and upon receipt by the Trustee of a written certification
from the transferor of the beneficial interest in the form provided on the
reverse of the Original Security to the effect that
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such transfer is being made to (i) a person whom the transferor reasonably
believes is a QIB within the meaning of Rule 144A in a transaction meeting the
requirements of Rule 144A or (ii) an IAI purchasing for its own account, or
for the account of such an IAI, in a minimum principal amount of the
Securities of $250,000. Such written certification shall no longer be
required after the expiration of the Restricted Period. In the case of a
transfer of a beneficial interest in the Regulation S Global Security for an
interest in the IAI Global Security, the transferee must furnish a signed
letter substantially in the form of Exhibit D to the Trustee.
(ii) Upon the expiration of the Restricted Period, beneficial ownership
interests in the Regulation S Global Security shall be transferable in
accordance with applicable law and the other terms of this Indenture.
(e) LEGEND. (i) Except as permitted by the following paragraphs (ii),
(iii) or (iv), each Security certificate evidencing the Global Securities and
the Definitive Securities (and all Securities issued in exchange therefor or
in substitution thereof) shall bear a legend in substantially the following
form (each defined term in the legend being defined as such for purposes of
the legend only):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE
OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, SUCH REGISTRATION.
"THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
HOLDINGS OR ANY AFFILIATE OF HOLDINGS WAS THE OWNER OF THIS SECURITY (OR
ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO HOLDINGS, (B) PURSUANT
TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
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WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO HOLDINGS' AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY
TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE."
Each Definitive Security shall bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS
SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Security that does
not bear the legends set forth above and rescind any restriction on the transfer
of such Transfer Restricted Security if the Holder certifies in writing to the
Registrar that its request for such exchange was made in reliance on Rule 144
(such certification to be in the form set forth on the reverse of the Original
Security).
(iii) After a transfer of any Original Securities or Private
Exchange Securities during the period of the effectiveness of a Shelf
Registration Statement with respect to such Original Securities or Private
Exchange Securities, as the case may be, all requirements pertaining to the
Restricted Securities Legend on such Original Securities or such Private
Exchange Securities shall cease to apply and the requirements that any such
Original Securities or such Private Exchange Securities be issued in global form
shall continue to apply.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Original Securities pursuant to which Holders of such Original or
Securities are offered Exchange Securities in exchange for their Original
Securities, all requirements pertaining to
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Original Securities that Original Securities be issued in global form shall
continue to apply, and Exchange Securities in global form without the Restricted
Securities Legend shall be available to Holders that exchange such Original
Securities in such Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to the
Original Securities pursuant to which Holders of such Original Securities are
offered Private Exchange Securities in exchange for their Original Securities,
all requirements pertaining to such Original Securities that Original Securities
be issued in global form shall continue to apply, and Private Exchange
Securities in global form with the Restricted Securities Legend shall be
available to Holders that exchange such Original Securities in such Private
Exchange.
(vi) Upon a sale or transfer after the expiration of the Restricted
Period of any Original Security acquired pursuant to Regulation S, all
requirements that such Original Security bear the Restricted Securities Legend
shall cease to apply and the requirements requiring any such Original Security
be issued in global form shall continue to apply.
(f) Cancellation or Adjustment of Global Security. At such time as
all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, transferred, redeemed, repurchased or canceled, such
Global Security shall be returned by the Depositary to the Trustee for
cancellation or retained and canceled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, transferred in exchange for an interest in another Global
Security, redeemed, repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of
Securities. (i) To permit registrations of transfers and exchanges, Holdings
shall execute and the Trustee shall authenticate, Definitive Securities and
Global Securities at the Registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but Holdings may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable in
connection therewith (other than any such transfer taxes, assessments or similar
governmental charge payable upon exchange or transfer pursuant to Sections 3.06,
4.06, 4.08 and 9.05 of this Indenture).
(iii) Prior to the due presentation for registration of transfer of
any Security, Holdings, the Trustee, the Paying Agent or the Registrar may deem
and treat the person in whose name a Security is registered as the absolute
owner of such Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever, whether or not
such Security is overdue, and none of Holdings, the Trustee, the Paying Agent or
the Registrar shall be affected by notice to the contrary.
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(iv) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be entitled
to the same benefits under this Indenture as the Securities surrendered upon
such transfer or exchange.
(h) No Obligation of the Trustee. (i) The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Security, a
member of, or a participant in the Depositary or any other Person with respect
to the accuracy of the records of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of any notice
(including any notice of redemption or repurchase) or the payment of any amount,
under or with respect to such Securities. All notices and communications to be
given to the Holders and all payments to be made to Holders under the Securities
shall be given or made only to the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the Depositary. The
Trustee may rely and shall be fully protected in relying upon information
furnished by the Depositary with respect to its members, participants and any
beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among Depositary
participants, members or beneficial owners in any Global Security) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
(iii) Each Holder of a Security agrees to indemnify Holdings and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Security in violation of any provision of this
Indenture and/or applicable United States Federal or state securities law.
2.4. Definitive Securities. (a) A Global Security deposited with the
Depositary or with the Trustee as Securities Custodian pursuant to Section 2.1
shall be transferred to the beneficial owners thereof in the form of Definitive
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 and (i) the Depositary notifies Holdings that
it is unwilling or unable to continue as a Depositary for such Global Security
or if at any time the Depositary ceases to be a "clearing agency" registered
under the Exchange Act, and a successor depositary is not appointed by Holdings
within 90 days of such notice, or (ii) an Event of Default has occurred and is
continuing or (iii) Holdings, in its sole discretion, no-
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tifies the Trustee in writing that it elects to cause the issuance of
certificated Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depositary to the Trustee, to be so transferred, in whole or from time to time
in part, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Security, an equal aggregate
principal amount of Definitive Securities of authorized denominations. Any
portion of a Global Security transferred pursuant to this Section 2.04 shall be
registered in such names as the Depositary shall direct. Any certificated
Original Security in the form of a Definitive Security delivered in exchange for
an interest in the Global Security shall, except as otherwise provided by
Section 2.3(e), bear the Restricted Securities Legend.
(c) Subject to the provisions of Section 2.4(b), the registered
Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of any of the events specified in
Section 2.4(a)(i), (ii) or (iii), Holdings will promptly make available to the
Trustee a reasonable supply of Definitive Securities in fully registered form
without interest coupons.
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EXHIBIT A
FORM OF FACE OF ORIGINAL SECURITY
Global Securities Legend
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO HOLDINGS OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
Restricted Securities Legend
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
"THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH HOLDINGS OR ANY AFFILIATE
OF HOLDINGS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH
SECURITY),
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ONLY (A) TO HOLDINGS, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL
ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO HOLDINGS'
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE."
Each Definitive Security shall bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS."
A-2
<PAGE>
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS
SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL
AMOUNT OF THIS SECURITY, (1) THE ISSUE PRICE IS $ ; (2) THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT IS $ ; (3) THE ISSUE DATE IS MAY 14, 1999; AND (4)
THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS %.
No. $_______
Senior Discount Debenture due 2011
[CUSIP No.______]
ALEC HOLDINGS, INC., a Delaware corporation, promises to pay to
[Cede & Co.], or registered assigns, the principal sum [of Dollars] listed
on the Schedule of Increases or Decreases in Global Security attached hereto on
May 14, 2011.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
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<PAGE>
Additional provisions of this Security are set forth on the other
side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
ALEC HOLDINGS, INC.,
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this is
one of the Securities referred to
in the Indenture.
By: _______________________________
Authorized Signatory
A-4
<PAGE>
FORM OF REVERSE SIDE OF ORIGINAL SECURITY
Senior Discount Debenture due 2011
1. INTEREST
(a) ALEC HOLDINGS, INC., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Holdings"), promises to pay cash interest on the
principal amount of this Security at the rate of 13% per annum. Cash interest
on the Securities shall accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from May 14, 1999. Holdings
shall pay cash interest in arrears semiannually on May 15 and November 15
of each year commencing November 15, 2004. Interest shall be computed on the
basis of a 360-day year of twelve 30-day months. Holdings shall pay interest
on overdue principal at the rate borne by the Securities plus 1% per annum,
and its shall pay interest on overdue installments of interest at the same
rate to the extent lawful.
(b) ADDITIONAL AMOUNTS. The holder of this Security is entitled
to the benefits of an Exchange and Registration Rights Agreement, dated
May 14, 1999, between Holdings and the Initial Purchasers named therein (the
"Registration Agreement"). Capitalized terms used in this paragraph (b) but
not defined herein have the meanings assigned to them in the Registration
Agreement. If (i) the Shelf Registration Statement or Exchange Offer
Registration Statement, as applicable under the Registration Agreement, is
not filed with the Commission on or prior to 75 days after the Issue Date,
(ii) the Exchange Offer Registration Statement or the Shelf Registration
Statement, as the case may be, is not declared effective on or prior to 150
days after the Issue Date, (iii) the Exchange Offer is not consummated on or
prior to 180 days after the Issue Date, or (iv) the Shelf Registration
Statement is filed and declared effective on or prior to 150 days after the
Issue Date but shall thereafter cease to be effective (at any time that
Holdings is obligated to maintain the effectiveness thereof) without being
succeeded within 45 days by an additional Registration Statement filed and
declared effective (each such event referred to in clauses (i) through (iv),
a "Registration Default"), Holdings shall pay Additional Amounts to each
holder of Transfer Restricted Securities, during the period of one or more
such Registration Defaults, in an amount equal to $0.192 per week per $1,000
Accreted Value of the Securities constituting Transfer Restricted Securities
held by such holder until the applicable Registration Statement is filed or
declared effective, the Registered Exchange Offer is consummated or the Shelf
Registration Statement again becomes effective, as the case may be. All
accrued Additional Amounts shall be paid to holders semi-annually on each
May 15 and November 15 of each year beginning with the first such date after
any Additional Amounts begin to accrue. Following the cure of all
Registration Defaults, the accrual of Additional Amounts shall cease. The
Trustee shall have no responsibility with respect to the determination of the
amount of any such Additional Amounts. For purposes of the foregoing,
"Transfer Restricted Securities" means (i) each Original Security until
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<PAGE>
the date on which such Original Security has been exchanged for a freely
transferable Exchange Security in the Registered Exchange Offer, (ii) each
Original Security or Private Exchange Security until the date on which such
Original Security or Private Exchange Security has been effectively registered
under the Securities Act and disposed of in accordance with a Shelf Registration
Statement or (iii) each Original Security or Private Exchange Security until the
date on which such Original Security or Private Exchange Security is distributed
to the public pursuant to Rule 144 under the Securities Act or is saleable
pursuant to Rule 144(k) under the Securities Act.
2. Method of Payment
Holdings shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the May 1 or November 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. Holdings shall pay principal, premium, Additional
Amounts and interest in money of the United States of America that at the time
of payment is legal tender for payment of public and private debts. Payments in
respect of the Securities represented by a Global Security (including principal,
premium, Additional Amounts and interest) shall be made by wire transfer of
immediately available funds to the accounts specified by The Depository Trust
Company. Holdings will make all payments in respect of a certificated Security
(including principal, premium, Additional Amounts and interest), by mailing a
check to the registered address of each Holder thereof; provided, however, that
payments on the Securities may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. Holdings may appoint and
change any Paying Agent, Registrar or co-registrar without notice. Holdings or
any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying
Agent, Registrar or co-registrar.
4. Indenture
Holdings issued the Securities under an Indenture dated as of May
14, 1999 (the "Indenture"), between Holdings and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss.77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms
defined in the Indenture and not defined herein have the meanings as-
A-6
<PAGE>
cribed thereto in the Indenture. The Securities are subject to all terms and
provisions of the Indenture, and Securityholders are referred to the Indenture
and the TIA for a statement of such terms and provisions.
The Securities are senior unsecured obligations of Holdings limited
to $46,928,435.00 aggregate principal amount at any one time outstanding
(subject to Section 2.07 of the Indenture). This Security is one of the Original
Securities referred to in the Indenture. The Securities include the Original
Securities and any Exchange Securities and Private Exchange Securities issued in
exchange for Original Securities. The Original Securities, the Exchange
Securities and the Private Exchange Securities are treated as a single class of
securities under the Indenture. The Indenture imposes certain limitations on the
ability of Holdings and its Restricted Subsidiaries to, among other things, make
certain Investments and other Restricted Payments, pay dividends and other
distributions, incur Indebtedness, enter into consensual restrictions upon the
payment of certain dividends and distributions by such Restricted Subsidiaries,
issue or sell shares of capital stock of such Restricted Subsidiaries, enter
into or permit certain transactions with Affiliates and asset sales. The
Indenture also imposes limitations on the ability of Holdings to consolidate or
merge with or into any other Person or convey, transfer or lease all or
substantially all of the property of Holdings.
5. Optional Redemption
Except as set forth in the following paragraph, the Securities shall
not be redeemable at the option of Holdings prior to May 15, 2004. Thereafter,
the Securities shall be redeemable at the option of Holdings, in whole or in
part, on not less than 30 nor more than 60 days prior notice, at the following
Redemption Prices (expressed as percentages of principal amount), plus accrued
and unpaid cash interest thereon, and Additional Amounts in respect thereof, if
any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the 12-month period commencing on May 15 of the years
set forth below:
Year Redemption Price
---- ----------------
2004 106.500%
2005 105.200%
2006 103.900%
2007 102.600%
2008 101.300%
2009 and thereafter 100.000%
In addition, prior to May 15, 2002, Holdings may redeem up to a
maximum of 35% of the original aggregate principal amount of the Securities with
the Net Cash Proceeds of one or more Equity Offerings by Holdings, at a
Redemption Price equal to 113% of the Accreted Value thereof, plus any
Additional Amounts in respect thereof to the redemption
A-7
<PAGE>
date; provided, however, that after giving effect to any such redemption, at
least 65% of the original aggregate principal amount of the Securities remains
outstanding. Any such redemption by Holdings shall be made within 90 days of
such related Equity Offering by Holdings, and must be made upon not less than 30
nor more than 60 days' notice mailed to each Holder of Notes being redeemed and
otherwise in accordance with the procedures set forth in the Indenture.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at the registered address of such Holder. Securities
in denominations larger than $1,000 may be redeemed in part. If money sufficient
to pay the Redemption Price of, and, after May 14, 2004 accrued and unpaid cash
interest on, and in each case Additional Amounts, if any, on all Securities (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date, Accreted Value will cease to accrete or
interest will cease to accrue, as the case may be, on such Securities (or such
portions thereof) called for redemption.
8. Repurchase of Securities at the Option of Holders upon Change of Control
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause
Holdings to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of Accreted Value (or, if after May 14, 2004, 101%
of the principal amount of the Securities to be repurchased plus accrued and
unpaid interest thereon) and, in each case, Additional Amounts, if any, to the
date of repurchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date that
is on or prior to the date of purchase) as provided in, and subject to the terms
of, the Indenture.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons. A Holder may
transfer or exchange Securities in accordance with the Indenture. Upon any
transfer or exchange, the Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements or transfer documents and to
pay any taxes required by law or permitted by the Indenture. The Registrar need
not register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed.
A-8
<PAGE>
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to Holdings
at its written request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
Holdings and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, Holdings at any time may terminate
some of or all its obligations under the Securities and the Indenture if
Holdings deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Securities, Holdings and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article V of the
Indenture; (iii) to provide for uncertificated Securities in addition to or in
place of certificated Securities; (iv) to secure the Securities; (v) to add
additional covenants or to surrender rights and powers conferred on Holdings;
(vi) to comply with the requirements of the SEC in order to effect or maintain
the qualification of the Indenture under the TIA; (vii) to make any change that
does not adversely affect the rights of any Securityholder; or (viii) to provide
for the issuance of the Exchange Securities or Private Exchange Securities.
14. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of
Holdings) and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities may declare the Accreted Value
of, or, if after May 14, 2004, the principal of and accrued but unpaid interest
on, all the Securities to be due and payable. If an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of Holdings occurs,
the Accreted Value of,
A-9
<PAGE>
or, if after May 14, 2004, the principal of and interest on all the Securities
shall become immediately due and payable without any declaration or other act on
the part of the Trustee or any Holders. Under certain circumstances, the Holders
of a majority in principal amount of the outstanding Securities may rescind any
such acceleration with respect to the Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Securities unless (i) such Holder
has previously given the Trustee notice that an Event of Default is continuing,
(ii) Holders of at least 25% in principal amount of the outstanding Securities
have requested the Trustee in writing to pursue the remedy, (iii) such Holders
have offered the Trustee reasonable security or indemnity against any loss,
liability or expense, (iv) the Trustee has not complied with such request within
60 days after the receipt of the request and the offer of security or indemnity
and (v) the Holders of a majority in principal amount of the outstanding
Securities have not given the Trustee a direction inconsistent with such request
within such 60-day period. Subject to certain restrictions, the Holders of a
majority in principal amount of the outstanding Securities are given the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any direction that conflicts
with law or the Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action under the Indenture, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
15. Trustee Dealings with Holdings
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by Holdings or its Affiliates and may otherwise deal with Holdings or its
Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of Holdings
shall not have any liability for any obligations of Holdings under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
A-10
<PAGE>
17. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Holdings will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.
A-11
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ____________ agent to transfer this Security on the
books of Holdings. The agent may substitute another to act for him.
Date: __________________ Your Signature: _____________________________________
Sign exactly as your name appears on
the other side of this Security
A-12
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER RESTRICTED SECURITIES
This certificate relates to $__________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
|_| has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above);
|_| has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act, the undersigned confirms that such Securities
are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) |_| to Holdings; or
(2) |_| pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) |_| inside the United States to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933)
that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that
such transfer is being made in reliance on Rule 144A, in each
case pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(4) |_| outside the United States in an offshore transaction within
the meaning of Regulation S under the Securities Act in
compliance with Rule 904 under the Securities Act of 1933; or
(5) |_| to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933)
that has furnished to the Trustee a signed letter containing
certain representations and agreements; or
A-13
<PAGE>
(6) |_| pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
Person other than the registered holder thereof; provided, however, that
if box (4), (5) or (6) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as Holdings has reasonably requested
to confirm that such transfer is being made pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the
Securities Act of 1933.
______________________________
Your Signature
Signature Guarantee:
Date: _____________________________ _____________________________________
Signature must be guaranteed Signature of Signature Guarantee
by a participant in a recognized
signature guaranty medallion
program or other signature
guarantor acceptable to the Trustee
__________________________________________________________
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding Holdings as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: _____________________ ______________________________________________
NOTICE: To be executed by an executive officer
A-14
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ].
The following increases or decreases in this Global Security have been made:
<TABLE>
<CAPTION>
Principal amount of
Amount of decrease in Amount of increase in this Global Security Signature of authorized
Principal Amount of Principal Amount of following such decrease signatory of Trustee or
Date of Exchange this Global Security this Global Security or increase Securities Custodian
- ---------------- --------------------- --------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
</TABLE>
A-15
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by Holdings
pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the
Indenture, check the box:
Asset Sale |_| Change of Control |_|
If you want to elect to have only part of this Security purchased by
Holdings pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
$______________
Date: ____________________ Your Signature: __________________________________
Sign exactly as your name appears
on the other side of this Security
Signature Guarantee: ___________________________________________________________
Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program or other
signature guarantor acceptable to the Trustee
A-16
<PAGE>
EXHIBIT B
FORM OF FACE OF EXCHANGE SECURITY
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS
SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL
AMOUNT OF THIS SECURITY, (1) THE ISSUE PRICE IS $ ; (2) THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT IS $ ; (3) THE ISSUE DATE IS MAY 14, 1999; AND (4)
THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS %.
No. $_________
Senior Discount Debenture due 2011
[CUSIP No. ______]
ALEC HOLDINGS, INC., a Delaware corporation, promises to pay to
[Cede & Co.], or registered assigns, the principal sum [of Dollars] listed
on the Schedule of Increases or Decreases in Global Security attached hereto on
May 14, 2011.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
B-1
<PAGE>
Additional provisions of this Security are set forth on the other side of
this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
ALEC HOLDINGS, INC.,
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies that this
is one of the Securities
referred to in the Indenture.
By: _________________________________
Authorized Signatory
B-2
<PAGE>
FORM OF REVERSE SIDE OF EXCHANGE SECURITY
Senior Discount Debenture due 2011
1. Interest
ALEC HOLDINGS, INC., a Delaware corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Holdings"), promises to pay cash interest on the principal
amount of this Security at the rate of 13% per annum. Cash interest on the
Securities shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from May 14, 1999. Holdings shall pay
interest semiannually on May 15 and November 15 of each year commencing November
15, 2004. Interest shall be computed on the basis of a 360-day year of twelve
30-day months. Holdings shall pay interest on overdue principal at the rate
borne by the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
Holdings shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the May 1 or November 1 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. Holdings shall pay principal, premium and interest
in money of the United States of America that at the time of payment is legal
tender for payment of public and private debts. Payments in respect of the
Securities represented by a Global Security (including principal, premium and
interest) shall be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company. Holdings will make all
payments in respect of a certificated Security (including principal, premium and
interest), by mailing a check to the registered address of each Holder thereof;
provided, however, that payments on the Securities may also be made, in the case
of a Holder of at least $1,000,000 aggregate principal amount of Securities, by
wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, THE BANK OF NEW YORK, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. Holdings may appoint and
change any Paying Agent, Registrar or co-registrar without notice. Holdings or
any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying
Agent, Registrar or co-registrar.
B-3
<PAGE>
4. Indenture
Holdings issued the Securities under an Indenture dated as of May
14, 1999 (the "Indenture"), between Holdings and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss.77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all terms and provisions
of the Indenture, and Securityholders are referred to the Indenture and the TIA
for a statement of such terms and provisions.
The Securities are senior unsecured obligations of Holdings limited
to $46,928,435.00 aggregate principal amount at any one time outstanding
(subject to Section 2.07 of the Indenture). This Security is one of the Exchange
Securities referred to in the Indenture. The Securities include the Original
Securities and any Exchange Securities and Private Exchange Securities issued in
exchange for Original Securities. The Original Securities, the Exchange
Securities and the Private Exchange Securities are treated as a single class of
securities under the Indenture. The Indenture imposes certain limitations on the
ability of Holdings and its Restricted Subsidiaries to, among other things, make
certain Investments and other Restricted Payments, pay dividends and other
distributions, incur Indebtedness, enter into consensual restrictions upon the
payment of certain dividends and distributions by such Restricted Subsidiaries,
issue or sell shares of capital stock of such Restricted Subsidiaries, enter
into or permit certain transactions with Affiliates and make asset sales. The
Indenture also imposes limitations on the ability of Holdings to consolidate or
merge with or into any other Person or convey, transfer or lease all or
substantially all of the property of Holdings.
5. Optional Redemption
Except as set forth in the following paragraph, the Securities shall
not be redeemable at the option of Holdings prior to May 15, 2004. Thereafter,
the Securities shall be redeemable at the option of Holdings, in whole or in
part, on not less than 30 nor more than 60 days prior notice, at the following
Redemption Prices (expressed as percentages of principal amount), plus accrued
and unpaid cash interest thereon, and Additional Amounts in respect thereof, if
any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the 12-month period commencing on May 15 of the years
set forth below:
B-4
<PAGE>
Year Redemption Price
---- ----------------
2004 106.500%
2005 105.200%
2006 103.900%
2207 102.600%
2008 101.300%
2009 and thereafter 100.000%
In addition, prior to May 15, 2002, Holdings may redeem up to a
maximum of 35% of the original aggregate principal amount of the Securities with
the Net Cash Proceeds of one or more Equity Offerings by Holdings, at a
Redemption Price equal to [ ]% of the Accreted Value thereof, plus any
Additional Amounts in respect thereof, the Securities, to the redemption date;
provided, however, that after giving effect to any such redemption, at least 65%
of the original aggregate principal amount of the Securities remains
outstanding. Any such redemption by Holdings shall be made within 90 days of
such related Equity Offering by Holdings, and must be made upon not less than 30
nor more than 60 days' notice mailed to each Holder of Notes being redeemed and
otherwise in accordance with the procedures set forth in the Indenture.
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at the registered address of such Holder. Securities
in denominations larger than $1,000 may be redeemed in part. If money sufficient
to pay the Redemption Price of and, after May 14, 2004, accrued and unpaid
interest and, in each case, Additional Amounts, if any, on all Securities (or
portions thereof) to be redeemed on the redemption date is deposited with the
Paying Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date, Accreted Value will cease to accrete or
accrue, as the case may be, on such Securities (or such portions thereof) called
for redemption.
8. Repurchase of Securities at the Option of Holders upon Change of Control
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause
Holdings to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of Accreted Value (or, if after May 14, 2004, 101%
of the principal amount of the Securities to be repurchased plus accrued and
unpaid interest thereon) and, in each case, Additional Amounts, if any, to the
date of repurchase (subject to the right of Holders of record on the relevant
record date to receive
B-5
<PAGE>
interest due on the relevant interest payment date that is on or prior to the
date of purchase) as provided in, and subject to the terms of, the Indenture.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons. A Holder may
transfer or exchange Securities in accordance with the Indenture. Upon any
transfer or exchange, the Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements or transfer documents and to
pay any taxes required by law or permitted by the Indenture. The Registrar need
not register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or to transfer or exchange any Securities for a
period of 15 days prior to a selection of Securities to be redeemed or 15 days
before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to Holdings
at its written request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
Holdings and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, Holdings at any time may terminate
some of or all its obligations under the Securities and the Indenture if
Holdings deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities and (ii)
any default or noncompliance with any provision may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder of Securities, Holdings and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article V of the
Indenture; (iii) to provide for uncertificated Securities in addition to or in
place of certificated
B-6
<PAGE>
Securities; (iv) to secure the Securities; (v) to add additional covenants or to
surrender rights and powers conferred on Holdings; (vi) to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA; (vii) to make any change that does not adversely affect
the rights of any Securityholder; or (viii) to provide for the issuance of the
Exchange Securities or Private Exchange Securities.
14. Defaults and Remedies
If an Event of Default occurs (other than an Event of Default
relating to certain events of bankruptcy, insolvency or reorganization of
Holdings) and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities may declare the Accreted Value
of, or, if after May 14, 2004, the principal of and accrued but unpaid interest
on all the Securities to be due and payable. If an Event of Default relating to
certain events of bankruptcy, insolvency or reorganization of Holdings occurs,
the Accredted Value of, or, if after May 14, 2004, the principal of and interest
on all the Securities shall become immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders. Under
certain circumstances, the Holders of a majority in principal amount of the
outstanding Securities may rescind any such acceleration with respect to the
Securities and its consequences.
If an Event of Default occurs and is continuing, the Trustee shall
be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no Holder may pursue any
remedy with respect to the Indenture or the Securities unless (i) such Holder
has previously given the Trustee notice that an Event of Default is continuing,
(ii) Holders of at least 25% in principal amount of the outstanding Securities
have requested the Trustee in writing to pursue the remedy, (iii) such Holders
have offered the Trustee reasonable security or indemnity against any loss,
liability or expense, (iv) the Trustee has not complied with such request within
60 days after the receipt of the request and the offer of security or indemnity
and (v) the Holders of a majority in principal amount of the outstanding
Securities have not given the Trustee a direction inconsistent with such request
within such 60-day period. Subject to certain restrictions, the Holders of a
majority in principal amount of the outstanding Securities are given the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee. The Trustee, however, may refuse to follow any direction that conflicts
with law or the Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action under the Indenture, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
B-7
<PAGE>
15. Trustee Dealings with Holdings
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by Holdings or its Affiliates and may otherwise deal with Holdings or its
Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of Holdings
shall not have any liability for any obligations of Holdings under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Holdings will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.
B-8
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ____________ agent to transfer this Security on the
books of Holdings. The agent may substitute another to act for him.
Date: __________________ Your Signature: _____________________________________
Sign exactly as your name appears on
the other side of this Security
B-9
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ].
The following increases or decreases in this Global Security have been made:
<TABLE>
<CAPTION>
Principal amount of
Amount of decrease in Amount of increase in this Global Security Signature of authorized
Principal Amount of Principal Amount of following such decrease signatory of Trustee or
Date of Exchange this Global Security this Global Security or increase Securities Custodian
- ---------------- --------------------- --------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
</TABLE>
B-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by Holdings
pursuant to Section 4.06 (Asset Sale) or 4.08 (Change of Control) of the
Indenture, check the box:
Asset Sale |_| Change of Control |_|
If you want to elect to have only part of this Security purchased by
Holdings pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
$______________
Date: ____________________ Your Signature: __________________________________
Sign exactly as your name appears
on the other side of this Security
Signature Guarantee: ___________________________________________________________
Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program or other
signature guarantor acceptable to the Trustee
B-11
<PAGE>
EXHIBIT C
Form of
Transferee Letter of Representation
ALEC Holdings, Inc.
510 L. Street
Suite 500
Anchorage, Alaska 99501
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $[ ]
principal amount of the Senior Discount Debentures due 2011 (the "Securities")
of ALEC Holdings, Inc. ("Holdings").
Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name:____________________________
Address:_________________________
Taxpayer ID Number:______________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Securities, and we are acquiring the Securities not with a view to, or for offer
or sale in connection with, any distribution in violation of the Securities Act.
We have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we invest in or purchase securities similar to the Securities in the normal
course of our business. We, and any accounts for which we are acting, are each
able to bear the economic risk of our or its investment.
2. We understand that the Securities have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf of
any investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the date that is
C-1
<PAGE>
two years after the later of the date of original issue and the last date on
which Holdings or any affiliate of Holdings was the owner of such Securities (or
any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to
Holdings, (b) pursuant to a registration statement that has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act ("Rule 144A"), to a person we
reasonably believe is a qualified institutional buyer under Rule 144A (a "QIB")
that is purchasing for its own account or for the account of a QIB and to whom
notice is given that the transfer is being made in reliance on Rule 144A, (d)
pursuant to offers and sales that occur outside the United States within the
meaning of Regulation S under the Securities Act, (e) to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act that is purchasing for its own account or for the
account of such an institutional "accredited investor," in each case in a
minimum principal amount of Securities of $250,000, or (f) pursuant to any other
available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or accounts
be at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Securities is proposed to be made pursuant to clause (e)
above prior to the Resale Restriction Termination Date, the transferor shall
deliver a letter from the transferee substantially in the form of this letter to
Holdings and the Trustee, which shall provide, among other things, that the
transferee is an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring
such Securities for investment purposes and not for distribution in violation of
the Securities Act. Each purchaser acknowledges that Holdings and the Trustee
reserve the right prior to the offer, sale or other transfer prior to the Resale
Restriction Termination Date of the Securities pursuant to clause (d), (e) or
(f) above to require the delivery of an opinion of counsel, certifications or
other information satisfactory to Holdings and the Trustee.
TRANSFEREE: ___________________,
By: _____________________________________
C-2
<PAGE>
Exhibit 4.4
ALEC HOLDINGS, INC.
$46,928,436.63
Senior Discount Debentures due 2011
and Warrants
PURCHASE AGREEMENT
May 11, 1999
DLJ Investment Partners, L.P.
DLJ Investment Funding, Inc.
DLJ ESC II, L.P.
c/o DLJ Investment Partners, Inc.
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
ALEC Holdings, Inc., a Delaware corporation ("Holdings"), proposes
to issue and sell $46,928,436.63 aggregate principal amount of its Senior
Discount Debentures due 2011 (the "Debentures") and warrants (the "Warrants,"
and together with the Debentures, the "Securities") to purchase at an exercise
price of $0.01, shares of common stock (the "Warrant Shares"), par value $0.01
per share of Holdings (the "Holdings Common Stock") representing an aggregate of
three and four tenths of one percent (3.40%) of the fully diluted Holdings
Common Stock as of the date hereof (after giving effect to the exercise of stock
purchase rights granted to (a) certain members of Alaska Communications Systems
Holdings, Inc.'s (formerly known as ALEC Acquisition Corporation) (the
"Company") management and (b) to Chamer Corporation under the Agreement dated
April 8, 1999, by and among Chamer Corporation, Fox Paine & Company, LLC and
Holdings, as amended (the "Chamer Agreement") and the exercise of any warrants
issued in connection with the Company's Senior Subordinated Notes (as defined)),
such Warrants to be in the form contained in the Warrant Agreement (the "Warrant
Agreement") attached hereto as Exhibit A and such Common Stock having the
rights, restrictions, privileges and preferences set forth in the Certificate of
Incorporation of Holdings in the form of Exhibit B attached hereto (the
"Certificate of Incorporation"). The Warrants will have the benefit of the
registration rights set forth in the Stockholders' Agreement, to be dated as of
May 14, 1999 by and among Holdings and the other signatories thereto (the
"Stockholders' Agreement") attached hereto as Exhibit C. The Debentures will be
issued pursuant to an Indenture to be dated as of May 14, 1999 (the
"Indenture"), between
<PAGE>
-2-
Holdings and The Bank of New York, as trustee (the "Trustee"). Holdings hereby
confirms its agreement with the parties named on the signature pages hereto (the
"Initial Purchasers") concerning the purchase of the Securities from Holdings by
the Initial Purchasers.
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon an exemption therefrom.
Holders of the Debentures (including the Initial Purchasers and
their direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Exhibit D (the "Registration Rights Agreement"), pursuant to which
Holdings will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of senior discount
debentures (the "Exchange Debentures") which are identical in all material
respects to the Debentures (except that the Exchange Debentures will not contain
terms with respect to transfer restrictions) and (ii) under certain
circumstances, a shelf registration statement pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement").
The Securities are being offered in conjunction with the Company's
acquisition of (a) all the capital stock of each of the entities comprising PTI
for $408,500,000 (subject to certain adjustments) pursuant to a Purchase
Agreement (the "PTI Purchase Agreement") dated as of August 14, 1998, as
amended, among ALEC Acquisition Sub Corp., a Delaware Corporation ("ALEC Sub")
(as assignee of the Company), CenturyTel of the Northwest, Inc. (formerly known
as Pacific Telecom, Inc.) and CenturyTel Wireless, Inc. (formerly known as
Century Cellunet, Inc.) and (b) certain of the assets and liabilities of the
Anchorage Telephone Utility, all the capital stock of each of the entities
comprising ATU and certain minority interests in Alaska Network Systems, Inc.,
Alaskan Choice Television, L.L.C. and Internet Alaska, Inc. for $295,000,000
(subject to certain adjustments) pursuant to an Asset Purchase Agreement (the
"ATU Purchase Agreement") dated as of October 20, 1998, between Alaska
Communications Systems, Inc., a wholly-owned subsidiary of the Company ("ACS")
and the Municipality of Anchorage. In connection with these transactions the
Company will (i) offer $150,000,000 senior subordinated notes due 2009 (the
"Senior Subordinated Notes") under an indenture (the "Senior Subordinated
Indenture") entitled to the benefits of certain registration rights pursuant to
a registration rights agreement (the Senior Subordinated Registration Rights
Agreement") and (ii) enter into a Credit Agreement (as defined). The initial
purchasers for the Senior Subordinated Notes are referred to herein collectively
as the "Senior Subordinated Notes Purchasers." The Company has prepared a
preliminary offering memorandum dated April 23, 1999 (the "Preliminary Offering
Memorandum") and will prepare an offering memorandum dated the date hereof (the
"Offering Memorandum") setting forth information concerning the Company and the
Senior Subordinated Notes. Any references herein to the
<PAGE>
-3-
Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to
include all amendments and supplements thereto, unless otherwise noted.
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Offering Memorandum.
The term "Designated Subsidiaries" as used herein refers to the
following: (i) the Company, (ii) each of Telephone Utilities of Alaska, Inc.,
Telephone Utilities of the Northland, Inc., PTI Communications of Alaska, Inc.,
Pacific Telecom Cellular of Alaska PCS, Inc. and Pacific Telecom Cellular of
Alaska, Inc. (collectively, "PTI"), (iii) each of ATU Communications, Inc.,
MACtel, Inc., ATU Long Distance, Inc., Peninsula Cellular Services, Inc. and
Prudhoe Communications, Inc. (collectively, "ATU") and (iv) each of ACS, ALEC
Sub, PTINet, Inc., MACtel License Sub, Inc. and MACtel Fairbanks License Sub,
Inc. (with the Company, collectively, the "Acquiring Subsidiaries").
1. Representations, Warranties and Agreements of Holdings. Holdings
represents and warrants to, and agrees with, the Initial Purchasers on and as of
the date hereof that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date
the Offering Memorandum will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided
that Holdings makes no representation or warranty as to information
contained in or omitted from the Preliminary Offering Memorandum or the
Offering Memorandum in reliance upon and in conformity with written
information relating to the Senior Subordinated Notes Purchasers furnished
to Holdings or the Company by or on behalf of any Senior Subordinated
Notes Initial Purchaser specifically for use therein (the "Senior
Subordinated Notes Purchasers' Information").
(b) Assuming the accuracy of the representations and warranties of
the Initial Purchasers contained in Section 2 and their compliance with
the agreements set forth therein, it is not necessary, in connection with
the issuance and sale of the Securities to the Initial Purchasers and the
offer, initial resale and delivery of the Securities by the Initial
Purchasers in the manner contemplated by this Agreement, to register the
Securities under the Securities Act or to qualify the Indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
(c) Holdings and the Designated Subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their
<PAGE>
-4-
respective jurisdictions of incorporation, are duly qualified to do
business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property or
the conduct of their respective businesses requires such qualification,
and have all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged, except
where the failure to so qualify or have such power or authority could not,
singularly or in the aggregate, be reasonably expected to have a material
adverse effect on the condition (financial or otherwise), results of
operations or business of Holdings and the Designated Subsidiaries taken
as a whole (a "Material Adverse Effect").
(d) As of the Closing Date, the Company will have an authorized
capitalization as set forth in the Offering Memorandum under the heading
"Capitalization" and Holdings will have an authorized capitalization set
forth in Exhibit F hereto; all of the outstanding shares of capital stock
of Holdings have been duly and validly authorized and issued and are fully
paid and non-assessable; and the capital stock of Holdings conforms in all
material respects to the description thereof contained in the Certificate
of Incorporation. All of the outstanding shares of capital stock of each
of the Designated Subsidiaries have been duly and validly authorized and
issued and are fully paid and non-assessable; all of the shares of capital
stock of the Company are owned by Holdings, and Holdings engages in no
business other than holding the outstanding shares of capital stock of the
Company; as of the Closing Date, all of the shares of capital stock of
each of the Designated Subsidiaries (other than the Company) will be owned
directly or indirectly by the Company, free and clear of any lien, charge,
encumbrance, security interest, restriction upon voting or transfer
(except for regulatory restrictions created under the Communications Act
of 1934, as amended by the Telecommunications Act of 1996, as amended (the
"Communications Act"), and the rules and regulations of the Federal
Communications Commission ("FCC") and the Alaska Public Utilities
Commission) or any other claim of any third party, except as created
pursuant to the Credit Agreement (the "Credit Agreement") to be entered
into among Holdings, the Company, the lenders named therein, The Chase
Manhattan Bank, as Administrative Agent and Collateral Agent, Credit
Suisse First Boston Corporation, as Documentation Agent, and Canadian
Imperial Bank of Commerce, as Syndication Agent. As of the Closing Date,
Holdings will have no subsidiaries other than those entities listed on
Exhibit E hereto.
(e) Holdings and the Designated Subsidiaries have full right, power
and authority to execute and deliver this Agreement (in the case of
Holdings only), the Indenture (in the case of Holdings only), the
Registration Rights Agreement (in the case of Holdings only), the Warrant
Agreement (in the case of Holdings only), the Debentures (in the case of
Holdings only), the Warrants (in the case of Holdings
<PAGE>
-5-
only) the Warrant Shares (in the case of Holdings only), the PTI Purchase
Agreement, the ATU Purchase Agreement, the Senior Subordinated Indenture,
the Senior Subordinated Notes, the Senior Subordinated Registration Rights
Agreement and the Credit Agreement and related agreements (collectively,
the "Transaction Documents") and to perform their respective obligations
hereunder and thereunder; and all corporate action required to be taken
for the due and proper authorization, execution and delivery of each of
the Transaction Documents and the consummation of the transactions
contemplated thereby have been duly and validly taken.
(f) This Agreement has been duly authorized, executed and delivered
by Holdings and constitutes a valid and legally binding agreement of
Holdings.
(g) The Indenture has been duly authorized by Holdings and, when
duly executed and delivered in accordance with its terms by Holdings, will
constitute a valid and legally binding agreement of Holdings enforceable
against Holdings in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding in
equity or at law). On the Closing Date, the Indenture will conform in all
material respects to the requirements of the Trust Indenture Act and the
rules and regulations of the Commission applicable to an indenture which
is qualified thereunder.
(h) The Debentures have been duly authorized by Holdings and, when
duly executed, authenticated, issued and delivered as provided in the
Indenture and paid for as provided herein, will have been duly and validly
issued and outstanding and will constitute valid and legally binding
obligations of Holdings as issuer, entitled to the benefits of the
Indenture and enforceable against Holdings, as issuer, in accordance with
their terms, except as may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law).
(i) The Warrant Agreement has been duly authorized by Holdings and,
when duly executed and delivered in accordance with its terms by Holdings,
will constitute a valid and legally binding agreement of Holdings,
enforceable against Holdings in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether considered
in a proceeding in equity or at law).
<PAGE>
-6-
(j) The Warrants have been duly and validly authorized by Holdings
and, when executed by Holdings in accordance with the provisions of the
Warrant Agreement, and delivered to and paid for by the Initial
Purchasers, will be entitled to the benefits of the Warrant Agreement and
will constitute valid and binding obligations of Holdings enforceable in
accordance with their terms, except as may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
or other similar laws affecting creditors' rights generally and by general
equitable principles whether considered in a proceeding in equity or at
law.
(k) When issued and paid for in accordance with the terms and
conditions contained in the Warrant Agreement upon exercise of the
Warrants, the Warrant Shares will be duly authorized, validly issued,
fully paid and non-assessable and will not be subject to any preemptive or
similar rights. The Warrant Shares have been duly reserved for issuance in
accordance with the terms of the Warrants and the Warrant Agreement.
(l) The Stockholders' Agreement has been duly authorized, executed
and delivered by Holdings and, when duly executed and delivered in
accordance with its terms by Holdings, will constitute a valid and legally
binding agreement of Holdings, enforceable against Holdings in accordance
with its terms, except as may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law).
(m) The Registration Rights Agreement has been duly authorized by
Holdings and, when duly executed and delivered in accordance with its
terms by Holdings, will constitute a valid and legally binding agreement
of Holdings enforceable against Holdings in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law) and except to the extent
that the indemnification or contribution provisions contained therein may
be unenforceable.
(n) The PTI Purchase Agreement and the ATU Purchase Agreement have
been duly authorized, executed and delivered by the Company and each of
the other Designated Subsidiaries party thereto and each such agreement
constitutes a valid and legally binding agreement of Company and each of
the other Designated Subsidiaries party thereto, enforceable against the
Company and each of the Designated Subsidiaries party thereto in
accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
<PAGE>
-7-
and other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in equity
or at law). The Credit Agreement and related agreements have been duly
authorized by Holdings and each of the Designated Subsidiaries party
thereto, and when duly executed and delivered in accordance with its terms
by each of the parties thereto, each such agreement will constitute a
valid and legally binding agreement of Holdings and each of the Designated
Subsidiaries party thereto, enforceable against Holdings and each of the
Designated Subsidiaries party thereto in accordance with its terms, except
as may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(o) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(p) The execution, delivery and performance by Holdings and each of
the Designated Subsidiaries of each of the Transaction Documents to which
each is a party, the issuance, authentication, sale and delivery of the
Securities and the Warrant Shares upon exercise of the Warrants and
compliance by Holdings and each of the Designated Subsidiaries with the
terms thereof and the consummation of the transactions contemplated by the
Transaction Documents will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, or, except as created pursuant to the Credit Agreement, result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of Holdings or any of the Designated Subsidiaries
pursuant to any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which Holdings or
any of the Designated Subsidiaries is a party or by which Holdings or any
of the Designated Subsidiaries is bound or to which any of the property or
assets of Holdings or any of the Designated Subsidiaries is subject, nor
will such actions result in any violation of the provisions of the charter
or by-laws of Holdings or any of the Designated Subsidiaries or any
statute or any judgment, order, decree, rule or regulation of any court or
arbitrator or governmental agency or body having jurisdiction over
Holdings or any of the Designated Subsidiaries or any of their properties
or assets; and no consent, approval, authorization or order of, or filing
or registration with, any such court or arbitrator or governmental agency
or body under any such statute, judgment, order, decree, rule or
regulation is required for the execution, delivery and performance by
Holdings and each of the Designated Subsidiaries of each of the
Transaction Documents to which each is a party, the issuance,
authentication, sale and delivery of the Securities and the Warrant Shares
upon exercise of the Warrants and compliance by Holdings and each of the
Designated
<PAGE>
-8-
Subsidiaries with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents, except for such
consents, approvals, authorizations, filings, registrations or
qualifications (i) which shall have been obtained or made prior to the
Closing Date, (ii) as may be required to be obtained or made under the
Securities Act and applicable state securities laws as provided in the
Registration Rights Agreement and (iii) the failure of which to obtain
would not materially restrain, prevent or impose material burdensome
conditions on any of the transactions contemplated by any of the
Transaction Documents.
(q) Deloitte & Touche LLP are independent certified public
accountants with respect to the Company and the other Designated
Subsidiaries within the meaning of Rule 101 of the Code of Professional
Conduct of the American Institute of Certified Public Accountants (the
"AICPA") and the interpretations and rulings thereunder. The historical
financial statements (including the related notes) contained in the
Offering Memorandum comply in all material respects with the requirements
applicable to a registration statement on Form S-1 under the Securities
Act (except that certain supporting schedules are omitted); such financial
statements have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods covered
thereby and fairly present the financial position of the entities
purported to be covered thereby at the respective dates indicated and the
results of their operations and their cash flows for the respective
periods indicated; and the financial information contained in the Offering
Memorandum under the headings "Summary--Summary Pro Forma Combined
Financial and Operating Data", "Summary--Summary Combined Historical and
Financial Data--PTI Alaska", "Summary--Summary Historical Consolidated
Financial Data--ATU", "Pro Forma Combined Financial and Operating Data",
"Selected Historical Combined Financial Data--PTI Alaska", "Selected
Historical Consolidated Financial Data--ATU" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" are derived
from the accounting records of the Company, PTI and ATU and fairly present
the information purported to be shown thereby. The pro forma financial
information contained in the Offering Memorandum has been prepared on a
basis consistent with the historical financial statements contained in the
Offering Memorandum (except for the pro forma adjustments specified
therein), includes all material adjustments to the historical financial
information required by Rule 11-02 of Regulation S-X under the Securities
Act and the Securities Exchange Act of 1934 (the "Exchange Act") to
reflect the transactions described in the Offering Memorandum, gives
effect to assumptions made on a reasonable basis and fairly presents the
historical and proposed transactions contemplated by the Offering
Memorandum and the Transaction Documents; provided that no representation
is made with respect to the compliance of the calculation of "Adjusted
EBITDA" with the requirements of
<PAGE>
-9-
Rule 11-02 of Regulation S-X under the Exchange Act. The other historical
financial and statistical information and data included in the Offering
Memorandum are, in all material respects, fairly presented in accordance
with generally accepted accounting principles.
(r) There are no legal or governmental proceedings pending to which
Holdings or any of the Designated Subsidiaries is a party or of which any
property or assets of Holdings or any of the Designated Subsidiaries is
the subject which, (i) except as disclosed in the Offering Memorandum,
singularly or in the aggregate, if determined adversely to Holdings or any
of the Designated Subsidiaries, could reasonably be expected to have a
Material Adverse Effect or (ii) question the validity or enforceability of
any of the Transaction Documents or any action taken or to be taken
pursuant thereto; and to the best knowledge of Holdings and the Designated
Subsidiaries, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(s) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency or
body which prevents the issuance of the Securities or the issuance of the
Warrant Shares upon exercise of the Warrants or suspends the sale of the
Securities or the issuance of the Warrant Shares upon exercise of the
Warrants in any jurisdiction; no injunction, restraining order or order of
any nature by any federal or state court of competent jurisdiction has
been issued with respect to Holdings or any of the Designated Subsidiaries
which would prevent or suspend the issuance or sale of the Securities or
the issuance of the Warrant Shares upon exercise of the Warrants or the
use of the Preliminary Offering Memorandum or the Offering Memorandum in
any jurisdiction; and no action, suit or proceeding is pending against or,
to the best knowledge of Holdings and each of the Designated Subsidiaries,
threatened against or affecting Holdings or any of the Designated
Subsidiaries before any court or arbitrator or any governmental agency,
body or official, domestic or foreign, which could reasonably be expected
to interfere with or adversely affect the issuance of the Securities or
the issuance of the Warrant Shares upon exercise of the Warrants or in any
manner draw into question the validity or enforceability of any of the
Transaction Documents or any action taken or to be taken pursuant thereto;
and neither Holdings nor any of the Designated Subsidiaries has received
any requests by any securities authority in any jurisdiction for
additional information to be included in the Preliminary Offering
Memorandum and the Offering Memorandum.
(t) Neither Holdings nor any of the Designated Subsidiaries is (i)
in violation of its charter or by-laws, (ii) in default in any respect,
and no event has occurred which, with notice or lapse of time or both,
would constitute such a default,
<PAGE>
-10-
in the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is
bound or to which any of its property or assets is subject, other than any
such default as would not, singularly or in the aggregate, be reasonably
expected to have a Material Adverse Effect or (iii) in violation in any
respect of any law, ordinance, governmental rule, regulation or court
decree to which it or its property or assets may be subject, other than
any such violation as would not, singularly or in the aggregate, be
reasonably expected to have a Material Adverse Effect.
(u) Holdings and each of the Designated Subsidiaries possess all
licenses, certificates, authorizations and permits issued by, and have
made all declarations and filings with, the appropriate federal, state or
foreign regulatory agencies or bodies which are necessary or, in the
reasonable judgment of Holdings, desirable for the ownership of their
respective properties or the conduct of their respective businesses,
except where the failure to possess or make the same would not, singularly
or in the aggregate, have a Material Adverse Effect, and neither Holdings
nor any of the Designated Subsidiaries has received notification of any
revocation or modification of any such license, certificate, authorization
or permit or has any reason to believe that any such license, certificate,
authorization or permit will not be renewed in the ordinary course.
(v) Holdings and each of the Designated Subsidiaries have filed all
federal, state, local and foreign income and franchise tax returns
required to be filed through the date hereof and have paid all taxes due
thereon (other than those taxes being contested in good faith or those
taxes currently payable without penalty or interest, in each case for
which adequate reserves have been provided, and other than to the extent
the failure to do so could not reasonably be expected to result in a
Material Adverse Effect), and no tax deficiency has been determined
adversely to Holdings or any of the Designated Subsidiaries which has had
(nor does Holdings or any of the Designated Subsidiaries have any
knowledge of any tax deficiency which, if determined adversely to Holdings
or any of the Designated Subsidiaries, could reasonably be expected to
have) a Material Adverse Effect.
(w) None of Holdings or any of the Designated Subsidiaries is (i) an
"investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules and regulations of the Commission
thereunder or (ii) a "holding company" or a "subsidiary company" of a
holding company or an "affiliate" thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
<PAGE>
-11-
(x) Holdings and each of the Designated Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(y) Holdings and each of the Designated Subsidiaries have insurance
covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such losses
and risks as are, in the reasonable judgment of Holdings, adequate to
protect Holdings and the Designated Subsidiaries and their respective
businesses. None of Holdings or any of the Designated Subsidiaries has
received notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to be made in
order to continue such insurance.
(z) Holdings and each of the Designated Subsidiaries own or possess
adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service
mark registrations, copyrights, licenses and know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct
of their respective businesses; and the conduct of their respective
businesses will not conflict in any respect with, and Holdings and the
Designated Subsidiaries have not received any notice of any claim of
conflict with, any such rights of others which conflict, singularly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(aa) Holdings and each of the Designated Subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property which are material
to the business of Holdings and the Designated Subsidiaries, in each case
free and clear of all liens, encumbrances, claims and defects and
imperfections of title except such as (i) do not materially interfere with
the use made and proposed to be made of such property by Holdings and the
Designated Subsidiaries, (ii) could not reasonably be expected to have a
Material Adverse Effect, (iii) arise under the Credit Agreement or (iv)
are permitted under the Indenture.
<PAGE>
-12-
(bb) No labor disturbance by or dispute with the employees of
Holdings or any of the Designated Subsidiaries exists or, to the best
knowledge of Holdings is contemplated or threatened.
(cc) No "prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan of Holdings or any of the Designated
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect; each such employee benefit plan is in compliance in all material
respects with applicable law, including ERISA and the Code; Holdings and
each of the Designated Subsidiaries have not incurred and do not expect to
incur liability under Title IV of ERISA with respect to the termination
of, or withdrawal from, any pension plan for which Holdings or any of the
Designated Subsidiaries would have any liability; and each such pension
plan that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which could reasonably be expected to cause
the loss of such qualification.
(dd) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release of any
kind of toxic or other wastes or other hazardous substances by, due to or
caused by Holdings or any of the Designated Subsidiaries (or, to the best
knowledge of Holdings, any other entity (including any predecessor) for
whose acts or omissions Holdings or any of the Designated Subsidiaries is
or could reasonably be expected to be liable) upon any of the property now
or previously owned or leased by Holdings or any of the Designated
Subsidiaries, or upon any other property, in violation of any statute or
any ordinance, rule, regulation, order, judgment, decree or permit or
which would, under any statute or any ordinance, rule (including rule of
common law), regulation, order, judgment, decree or permit, give rise to
any liability, except for any violation or liability that could not
reasonably be expected to have, singularly or in the aggregate with all
such violations and liabilities, a Material Adverse Effect; and there has
been no disposal, discharge, emission or other release of any kind onto
such property or into the environment surrounding such property of any
toxic or other wastes or other hazardous substances with respect to which
Holdings has knowledge, except for any such disposal, discharge, emission
or other release of any kind which could not reasonably
<PAGE>
-13-
be expected to have, singularly or in the aggregate with all such
discharges and other releases, a Material Adverse Effect.
(ee) None of Holdings or, to the best knowledge of Holdings, any
director, officer, agent, employee or other person associated with or
acting on behalf of Holdings or any of the Designated Subsidiaries has (i)
used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity;
(ii) made any unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977;
or (iv) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.
(ff) On and immediately after the Closing Date, Holdings and each of
the Designated Subsidiaries (after giving effect to the issuance of the
Securities and to the other transactions related thereto as described in
the Offering Memorandum) will be Solvent. As used in this paragraph, the
term "Solvent" means, with respect to a particular date, that on such date
(i) the fair value and present fair saleable value the assets of Holdings
or such Designated Subsidiaries, as the case may be, exceeds: (x) the
total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of Holdings or such Designated Subsidiaries, as
the case may be; and (y) the amount required to pay such liabilities as
they become absolute and matured in the normal course of business; (ii)
Holdings or such Designated Subsidiaries, as the case may be, has the
ability to pay its debts and liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) as they become
absolute and matured in the normal course of business; and (iii) neither
Holdings nor such Designated Subsidiaries, as the case may be, has an
unreasonably small amount of capital with which to conduct its business
after giving due consideration to the prevailing practice in the industry
in which Holdings or such Designated Subsidiaries, as the case may be, is
engaged. In computing the amount of such contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount
that, in the light of all the facts and circumstances existing at such
time, represents the amount that can reasonably be expected to become an
actual or matured liability.
(gg) Except as described in the Offering Memorandum, or as
contemplated by this Agreement there are no outstanding subscriptions,
rights, warrants, calls or options to acquire, or instruments convertible
into or exchangeable for, or agreements or understandings with respect to
the sale or issuance of, any shares of capital stock of or other equity or
other ownership interest in Holdings or any of the Designated Subsidiaries
other than those provided in the Chamer Agreement.
<PAGE>
-14-
(hh) None of Holdings or any of the Designated Subsidiaries owns any
"margin securities" as that term is defined in Regulation U of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"),
and none of the proceeds of the sale of the Securities will be used,
directly or indirectly, for the purpose of purchasing or carrying any
margin security, for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security or
for any other purpose which might cause any of the Securities to be
considered a "purpose credit" within the meanings of Regulation T, U or X
of the Federal Reserve Board.
(ii) None of Holdings or any of the Designated Subsidiaries is a
party to any contract, agreement or understanding with any person that
would give rise to a valid claim against Holdings, the Designated
Subsidiaries or the Initial Purchasers for a brokerage commission,
finder's fee or like payment in connection with the offering and sale of
the Securities or the issuance of the Warrant Shares upon exercise of the
Warrants.
(jj) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(kk) None of Holdings, any of the Designated Subsidiaries, any of
their respective affiliates or any person (other than the Initial
Purchasers or their affiliates) acting on its or their behalf has engaged
or will engage in any directed selling efforts (as such term is defined in
Regulation S under the Securities Act ("Regulation S")), and all such
persons have complied and will comply with the offering restrictions
requirement of Regulation S to the extent applicable.
(ll) None of Holdings, any of the Designated Subsidiaries or any of
their respective affiliates has, directly or through any agent, sold,
offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as such term is defined in the Securities Act),
which is or will be integrated with the sale of the Securities in a manner
that would require registration of the Securities under the Securities
Act.
(mm) None of Holdings, any of the Designated Subsidiaries or any of
their respective affiliates or any other person acting on its or their
behalf has engaged, in connection with the offering of the Securities, in
any form of general solicitation or general advertising within the meaning
of Rule 502(c) under the Securities Act.
<PAGE>
-15-
(nn) There are no securities of Holdings or the Designated
Subsidiaries registered under the Exchange Act, or listed on a national
securities exchange or quoted in a U.S. automated inter-dealer quotation
system.
(oo) None of Holdings or any of the Designated Subsidiaries has
taken or will take, directly or indirectly, any action prohibited by
Regulation M under the Exchange Act in connection with the offering of the
Securities.
(pp) No forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21 E of the Exchange Act) contained in
the Preliminary Offering Memorandum or the Offering Memorandum has been
made or reaffirmed without a reasonable basis or has been disclosed other
than in good faith.
(qq) None of Holdings or any of the Designated Subsidiaries does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Florida Statutes Section 517.075.
(rr) Holdings has conducted a complete systems assessment of the
risk that the computer hardware and software used by Holdings and the
Designated Subsidiaries may be unable to recognize and properly execute
date-sensitive functions involving certain dates prior to and any dates
after December 31, 1999 (the "Year 2000 Problem"), and have determined
that such risk will be remedied by September 30, 1999 without material
expense; and Holdings believes, after due inquiry, that each supplier,
vendor, customer or financial service organization used or serviced by
Holdings and the Designated Subsidiaries has remedied or will remedy on a
timely basis the Year 2000 Problem, although the failure of any supplier,
vendor, customer or financial service organization that has a material
relationship with Holdings to remedy the Year 2000 Problem on a timely
basis could have a Material Adverse Effect.
(ss) Since the date as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (i) there has been no
material adverse change or any development involving a material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or management of Holdings and the Designated
Subsidiaries, taken as a whole, whether or not arising in the ordinary
course of business, (ii) Holdings and the Designated Subsidiaries, have
not incurred any material liability or obligation, direct or contingent,
other than in the ordinary course of business, (iii) Holdings and the
Designated Subsidiaries, taken as a whole, have not entered into any
material transaction other than in the ordinary course of business and
(iv) there has not been any change in the capital stock or long-term debt
of Holdings or any of the Designated Subsidiaries, or any dividend or
distribution
<PAGE>
-16-
of any kind declared, paid or made by Holdings or any of the Designated
Subsidiaries on any class of their respective capital stock.
(tt) Except with respect to any matter that, singularly or in the
aggregate, could not reasonably be expected to result in a Material
Adverse Effect, none of Holdings or any of the Designated Subsidiaries (i)
has failed to comply with any law, rule, regulation, code, ordinance,
order, decree, judgment, injunction, notice or binding agreement issued,
promulgated or entered into by any governmental authority (including but
not limited to the FCC and the Alaskan Public Utilities Commission)
relating in any way to the offering or provision of communications
(collectively, "Communications Laws") or to obtain, maintain or comply
with any permit, license or other approval required under any
Communications Law, (ii) has become subject to any liability, contingent
or otherwise (including any liability for damages, costs, fines, penalties
or indemnities) directly or indirectly resulting from or based upon (w)
the violation of any Communications Law, (x) the generation or use of
communications, (y) exposure to communications or radio frequency
emissions or (z) any contract, agreement or other consensual agreement
pursuant to which liability is assumed or imposed with respect to any of
the foregoing (collectively, "Communication Liabilities"), (iii) has
received notice of any claim with respect to any Communication Liability
or (iv) knows of any basis for any Communication Liability.
2. Purchase and Resale of the Securities. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, Holdings agrees to issue and sell to each
of the Initial Purchasers, severally and not jointly, and the Initial
Purchasers, severally and not jointly agree to purchase from Holdings, the
Securities set forth opposite the name of such Initial Purchaser on Schedule 1
hereto at a purchase price equal to 100% of the amount set forth on Schedule 1.
Holdings and the Initial Purchasers agree to use the foregoing purchase prices
set forth on Schedule 1 in determining the issue prices for U.S. federal income
tax purposes. The Company shall not be obligated to deliver any of the
Securities except upon payment for all of the Securities to be purchased as
provided herein.
(b) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it is purchasing the Securities pursuant to a
private sale exempt from registration under the Securities Act, (ii) it has not
solicited offers for, or offered or sold, and will not solicit offers for, or
offer or sell, the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D under the
Securities Act ("Regulation D") or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (iii) it has
solicited and will solicit offers for the Securities only from, and has offered
or sold and will offer, sell or deliver the Securities, as part of their initial
offering, only (A) within the United States to persons whom it
<PAGE>
-17-
reasonably believes to be qualified institutional buyers ("Qualified
Institutional Buyers"), as defined in Rule 144A under the Securities Act ("Rule
144A"), or if any such person is buying for one or more institutional accounts
for which such person is acting as fiduciary or agent, only when such person has
represented to it that each such account is a Qualified Institutional Buyer to
whom notice has been given that such sale or delivery is being made in reliance
on Rule 144A and in each case, in transactions in accordance with Rule 144A and
(B) outside the United States to persons other than U.S. persons in reliance on
Regulation S.
(c) In connection with any offer and sale of Securities in reliance
on Regulation S, each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:
(i) the Securities have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except pursuant to an exemption from,
or in transactions not subject to, the registration requirements of the
Securities Act;
(ii) such Initial Purchaser will offer and sell the Securities, (A)
as part of their distribution at any time and (B) otherwise until 40 days
after the later of the commencement of the offering of the Securities and
the Closing Date, only in accordance with Regulation S or Rule 144A or any
other available exemption from registration under the Securities Act;
(iii) none of such Initial Purchasers or any of their affiliates or
any other person acting on its or their behalf has engaged or will engage
in any directed selling efforts with respect to the Securities, and all
such persons have complied and will comply with the offering restriction
requirements of Regulation S;
(iv) at or prior to the confirmation of sale of any Securities sold
in reliance on Regulation S, it will have sent to each distributor, dealer
or other person receiving a selling concession, fee or other remuneration
that purchases Securities from it during the restricted period a
confirmation or notice to substantially the following effect with respect
to the Debentures:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering of the Securities and the
date of original issuance of the Securities, except in accordance
with Regulation S or Rule 144A or any other
<PAGE>
-18-
available exemption from registration under the Securities Act.
Terms used above have the meanings given to them by Regulation S.";
and
to substantially the effect, with respect to the Warrants, of the
legend contained on the form of the warrant certificate for the
Warrants attached as an exhibit to the Warrant Agreement.
(v) it has not and will not enter into any contractual arrangement
with any distributor with respect to the distribution of the Securities,
except with its affiliates or with the prior written consent of the
Company.
Terms used in this Section 2(c) have the meanings given to them by Regulation S.
(d) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) it has not offered or sold and prior to the date
six months after the Closing Date will not offer or sell any Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 and the Public Offers
of Securities Regulations 1995 with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United Kingdom; and (iii)
it has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
(e) Each Initial Purchaser, severally and not jointly, agrees that,
prior to or simultaneously with the confirmation of sale by such Initial
Purchaser to any purchaser of any of the Securities purchased by such Initial
Purchaser from Holdings pursuant hereto, such Initial Purchaser shall furnish to
that purchaser a copy of the Offering Memorandum (and any amendment or
supplement thereto that Holdings shall have furnished to such Initial Purchaser
prior to the date of such confirmation of sale). In addition to the foregoing,
each Initial Purchaser acknowledges and agrees that Holdings and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Sections
5(d) and 5(e), counsel for Holdings and for the Initial Purchasers,
respectively, may rely upon the accuracy of the representations and warranties
of the Initial Purchasers and their compliance with their agreements contained
in this Section 2, and each Initial Purchaser hereby consents to such reliance.
<PAGE>
-19-
(f) Holdings and each of the Designated Subsidiaries acknowledges
and agrees that the Initial Purchasers may sell Securities to any affiliate of
an Initial Purchaser and that any such affiliate may sell Securities purchased
by it to an Initial Purchaser.
(g) Each Initial Purchaser hereby acknowledges and agrees that
nothing contained in this Agreement shall impose any obligation on
Holdings to provide any Initial Purchaser, or any other purchaser of
Securities, with an offering memorandum or similar document containing the
information which would be required to be provided to a prospective
purchaser pursuant to Rule 144A(d)(4) under the Securities Act.
(h) Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that (i) the Securities are being acquired in the
ordinary course of business, (ii) such Initial Purchaser has no
arrangement or understanding with any person to participate in the
distribution of the Securities within the meaning of the Securities Act
and (iii) such Initial Purchaser is not an affiliate of Holdings or, if it
is an affiliate, such Initial Purchaser will comply with the registration
and prospectus delivery requirements of the Securities Act to the extent
applicable.
3. Delivery of and Payment for the Securities. (a) Delivery of and
payment for the Securities shall be made at the offices of Wachtell, Lipton,
Rosen & Katz, New York, New York, or at such other place as shall be agreed upon
by the Initial Purchasers and Holdings, at 10:00 a.m., New York City time, on
May 14, 1999, or at such other time or date, not later than seven full business
days thereafter, as shall be agreed upon by the Initial Purchasers and Holdings
(such date and time of payment and delivery being referred to herein as the
"Closing Date").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to Holdings by wire or book-entry transfer of same-day
funds to such account or accounts as Holdings shall specify prior to the Closing
Date or by such other means as the parties hereto shall agree prior to the
Closing Date against delivery to the Initial Purchasers of the certificates
evidencing the Securities. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligations of the Initial Purchasers hereunder. Upon delivery, the
Securities shall be in global form, registered in such names and in such
denominations as the Initial Purchasers shall have requested in writing not less
than two full business days prior to the Closing Date. Holdings agrees to make
one or more global certificates evidencing the Securities available for
inspection by the Initial Purchasers in New York, New York at least 24 hours
prior to the Closing Date.
<PAGE>
-20-
4. Further Agreements of Holdings. Holdings agrees with each of the
several Initial Purchasers:
(a) at all times prior to completion of the resale of the Securities
by the Initial Purchasers, to advise the Initial Purchasers promptly and,
if reasonably requested, confirm such advice in writing, of the happening
of any event which makes any statement of a material fact made in the
Offering Memorandum untrue or which requires the making of any additions
to or changes in the Offering Memorandum (as amended or supplemented from
time to time) in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; to advise the
Initial Purchasers promptly of any order preventing or suspending the use
of the Preliminary Offering Memorandum or the Offering Memorandum, of any
suspension of the qualification of the Securities for offering or sale in
any jurisdiction and of the initiation or threatening of any proceeding
for any such purpose; and to use its reasonable best efforts to prevent
the issuance of any such order preventing or suspending the use of the
Preliminary Offering Memorandum or the Offering Memorandum or suspending
any such qualification and, if any such suspension is issued, to use its
reasonable best efforts to obtain the lifting thereof at the earliest
possible time;
(b) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and any
amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial Purchasers
and counsel for the Initial Purchasers and not to effect any such
amendment or supplement to which the Initial Purchasers shall reasonably
object by notice to Holdings after a reasonable period to review;
(d) until such time as Holdings becomes subject to Section 13 or
15(d) of the Exchange Act, to furnish to the Initial Purchasers copies of
any annual reports, quarterly reports and current reports filed by the
Company or Holdings with the Commission on Forms 10-K, 10-Q and 8-K, or
such other similar forms as may be designated by the Commission, and such
other documents, reports and information as shall be furnished by the
Company or Holdings to the Trustee or to the holders of the Securities
pursuant to the Indenture or the Exchange Act or any rule or regulation of
the Commission thereunder. In addition, so long as DLJ Investment
Partners, Inc. and its Affiliates hold Securities, Holdings shall furnish
DLJ Investment Partners, Inc. and its Affiliates with financial
information on a monthly basis each of DLJ Investment
<PAGE>
-21-
Partners, Inc. and its Affiliates agree to maintain the confidentiality of
such information, except that such information may be disclosed (a) to its
and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that
the Persons to whom such disclosure is made will be informed of the
confidential nature of such information and instructed to keep such
information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (d) in connection with the
exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or any other Transaction Document or the
enforcement of rights hereunder or thereunder, (e) with the consent of
Holdings or (f) to the extent such information (i) becomes publicly
available other than as a result of a breach of this Section or (ii)
becomes available to DLJ Investment Partners, Inc. or its Affiliates on a
nonconfidential basis from a source other than Holdings or any Designated
Subsidiary.
(e) to promptly take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Securities for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchasers may designate and to continue such qualifications
in effect for so long as required for the resale of the Securities; and to
arrange for the determination of the eligibility for investment of the
Securities under the laws of such jurisdictions as the Initial Purchasers
may reasonably request; provided that Holdings shall not be obligated to
qualify as foreign corporations in any jurisdiction in which it is not so
qualified or to file a general consent to service of process in any
jurisdiction;
<PAGE>
-22-
(f) provide such assistance as the Initial Purchasers may reasonably
request in arranging for the Securities to be designated Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL")
Market securities in accordance with the rules and regulations adopted by
the National Association of Securities Dealers, Inc. ("NASD") relating to
trading in the PORTAL Market and for the Securities to be eligible for
clearance and settlement through The Depository Trust Company ("DTC");
(g) not to, and to cause its affiliates not to, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as such term is defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require
registration of the Securities under the Securities Act;
(h) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause its affiliates not to, authorize or knowingly
permit any person acting on their behalf to, solicit any offer to buy or
offer to sell the Securities by means of any form of general solicitation
or general advertising within the meaning of Regulation D or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act; and not to offer, sell, contract to sell or otherwise
dispose of, directly or indirectly, any securities under circumstances
where such offer, sale, contract or disposition would cause the exemption
afforded by Section 4(2) of the Securities Act to cease to be applicable
to the offering and sale of the Securities as contemplated by this
Agreement;
(i) for a period of 90 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement for,
or announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by Holdings (other than the
Debentures, the Exchange Debentures and the Senior Subordinated Notes (and
any notes exchanged therefor pursuant to the Senior Subordinated
Registration Rights Agreement)) without the prior written consent of the
Initial Purchasers;
(j) during the period from the Closing Date until two years after
the Closing Date, without the prior written consent of the Initial
Purchasers, not to, and not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Securities that
have been reacquired by them, except for Securities purchased by Holdings
or any of its affiliates and resold in a transaction registered under the
Securities Act;
(k) not to, for so long as the Securities are outstanding, be or
become, or be or become owned by, an open-end investment company, unit
investment trust or face-
<PAGE>
-23-
amount certificate company that is or is required to be registered under
Section 8 of the Investment Company Act, and to not be or become, or be or
become owned by, a closed-end investment company required to be
registered, but not registered thereunder;
(l) to furnish to each of the Initial Purchasers on the date hereof
a copy of each of the independent accountants' reports included in the
Offering Memorandum signed by the accountants rendering such report;
(m) to do and perform all things required to be done and performed
by it under this Agreement that are within its control prior to or after
the Closing Date, and to use its best efforts to satisfy all conditions
precedent on its part to the delivery of the Securities;
(n) not to take any action prior to the execution and delivery of
the Indenture which, if taken after such execution and delivery, would
have violated any of the covenants contained in the Indenture;
(o) prior to the Closing Date, not to issue any press release or
other communication directly or indirectly or hold any press conference
with respect to the condition, financial or otherwise, or earnings,
business affairs or business prospects of Holdings or the Designated
Subsidiaries, as the case may be (except for routine oral marketing
communications in the ordinary course of business and consistent with the
past practices of Holdings or the Designated Subsidiaries, as the case may
be, and of which the Initial Purchasers are notified), without the prior
written consent of the Initial Purchasers, unless in the judgment of
Holdings or the Designated Subsidiaries and their counsel, and after
notification to the Initial Purchasers, such press release or
communication is required by law; and
(p) to apply the net proceeds from the sale of the Securities as set
forth in the Offering Memorandum under the heading "Use of Proceeds".
5. Conditions of Initial Purchasers' Obligations. The obligations of
the several Initial Purchasers hereunder are subject to the accuracy, on and as
of the date hereof and the Closing Date, of the representations and warranties
of Holdings contained herein, to the accuracy of the statements of Holdings and
its officers made in any certificates delivered pursuant hereto, to the
performance by Holdings of its respective obligations hereunder, and to each of
the following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as
<PAGE>
-24-
promptly as practicable on or following the date of this Agreement or at
such other date and time as to which Holdings and the Initial Purchasers
may agree; and no stop order suspending the sale of the Securities in any
jurisdiction shall have been issued and no proceeding for that purpose
shall have been commenced or shall be pending or threatened.
(b) All corporate proceedings and other legal matters incident to
the authorization, form and validity of each of the Transaction Documents
and all other legal matters relating to the Transaction Documents and the
transactions contemplated thereby, shall be reasonably satisfactory in all
material respects to the Initial Purchasers, and Holdings shall have
furnished to the Initial Purchasers all documents and information that
they or their counsel may reasonably request to enable them to pass upon
such matters.
(c) Wachtell, Lipton, Rosen & Katz shall have furnished to the
Initial Purchasers their written opinion, as counsel for Holdings and the
Acquiring Subsidiaries, addressed to the Initial Purchasers and dated the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchasers, substantially to the effect set forth in Annex B-1 hereto.
Birch, Horton, Bittner & Cherot shall have furnished to the Initial
Purchasers their written opinion, as counsel for PTI and ATU, addressed to
the Initial Purchasers and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, substantially to the
effect set forth in Annex B-2 hereto. Hogan & Hartson, L.L.P. shall have
furnished to the Initial Purchasers their written opinion, as special FCC
counsel for Holdings and the Designated Subsidiaries, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, substantially to the
effect set forth in Annex B-3 hereto.
(d) Fox, Paine & Company, LLC, its affiliates, members of the
Company's management and certain equity co-investors shall have purchased
for cash, Holdings Common Stock of not less than $120.0 million, of which
at least $100.0 million of such Holdings Common Stock shall have been
purchased by Fox, Paine & Company, LLC, its affiliates and members of the
Company's management. The terms and conditions of the Senior Subordinated
Notes shall be reasonably satisfactory in all respects to the Initial
Purchasers. Holdings, PTI, ATU and each of their respective subsidiaries
(the "Credit Group") shall have no indebtedness for borrowed money other
than borrowings pursuant to the Credit Agreement, the Debentures and other
limited indebtedness agreed upon by the Initial Purchasers, including up
to $7.5 million of capital leases. The corporate tax, capital and
ownership structure (including certificates or articles of incorporation
and by-laws), shareholders agreements and management of each member of the
Credit Group after the transactions contemplated
<PAGE>
-25-
by the PTI Agreement and the ATU Purchase Agreement and related
transactions shall be satisfactory to the Initial Purchasers in all
material respects;
(e) The Initial Purchasers shall have received a consolidated pro
forma balance sheet of the Credit Group as of March 31, 1999, giving
effect to the Transaction and reflecting transaction related accounting
adjustments, and consolidated financial statements as are customarily
required for a public sale of securities of the Credit Group, prepared by
independent public accountants of recognized national standing in
conformity with GAAP;
(f) All loan documentation and other documentation relating to the
Credit Agreement and the Senior Subordinated Notes shall be in form and
substance reasonably satisfactory to the Initial Purchasers and its
counsel and in compliance with all applicable laws and regulations;
(g) The Initial Purchasers shall not have discovered or otherwise
become aware of any information not previously disclosed to it that it
reasonably believes to be inconsistent in a material and adverse manner
with its understanding, based on the information provided to it prior to
the date hereof, of the business, assets, results of operations,
properties or condition (financial or otherwise) of ATU or PTI and their
respective subsidiaries, taken as a whole, since December 31, 1998;
(h) The Initial Purchasers shall have received for each of ATU and
PTI; (1) audited financial statements for the number of fiscal years that
would be required for registration under the Securities Act of 1933, as
amended, (2) independent solvency letters dated as of the Closing Date,
addressed to the Initial Purchasers, and (3) environmental assessments in
each case, in form and substance reasonably satisfactory to Initial
Purchasers;
(i) All fees and expenses due to the Initial Purchasers in
connection with the execution and funding of the Initial Purchasers'
purchase of the Securities shall have been paid in full;
(j) The consolidated revenues and EBITDA of the Company and its
subsidiaries for the twelve month period ending on the latest quarter
ended prior to the date of the consummation of the acquisition of PTI and
ATU by the Company shall equal or exceed such revenues and EBITDA for the
twelve month period ending at the end of the same quarter of the prior
fiscal year;
(k) Holdings shall have furnished to the Initial Purchasers:
<PAGE>
-26-
(i) a letter (the "D&T Initial Letter") of Deloitte & Touche,
LLP, addressed to the Initial Purchasers and dated the date hereof,
in form and substance reasonably satisfactory to the Initial
Purchasers, substantially to the effect set forth in Annex C-1
hereto;
(ii) a letter (the "KPMG (Shreveport) Initial Letter") of KPMG
LLP, addressed to the Initial Purchasers and dated the date hereof,
in form and substance reasonably satisfactory to the Initial
Purchasers, substantially to the effect set forth in Annex C-2
hereto; and
(iii) a letter (the "KPMG (Anchorage) Initial Letter") of KPMG
LLP, addressed to the Initial Purchasers and dated the date hereof,
in form and substance reasonably satisfactory to the Initial
Purchasers, substantially to the effect set forth in Annex C-3
hereto.
(l) Holdings shall have furnished to the Initial Purchasers:
(i) a letter (the "D&T Bring-Down Letter") of Deloitte &
Touche, LLP, addressed to the Initial Purchasers and dated the
Closing Date (A) confirming that they are independent public
accountants with respect to (1) the Company, (2) PTI as of December
31, 1997 and for the year ended December 31, 1996, the eleven months
ended November 30, 1997 and the one month ended December 31, 1997
and (3) Telephone Fund of Fairbanks Municipal Utilities Services
(the "Fund") as of and for the period ending October 6, 1997 and for
the year ended December 31, 1996, in each case within the meaning of
Rule 101 of the Code of Professional Conduct of the AICPA and the
interpretations and rulings thereunder, (B) stating, as of the
Closing Date (or, with respect to matters involving changes or
developments since the respective dates as of which specified
financial information is given in the Offering Memorandum, as of a
date not more than three business days prior to the Closing Date),
that the conclusions and findings of such accountants with respect
to the financial information and other matters relating to the
Company covered by the D&T Initial Letter are accurate and (C)
confirming in all material respects the conclusions and findings set
forth in the D&T Initial Letter;
(ii) a letter (the "KPMG (Shreveport) Bring-Down Letter") of
KPMG LLP, addressed to the Initial Purchasers and dated the Closing
Date (A) confirming that they are independent public accountants
with respect to PTI as of December 31, 1998 and for the year then
ended within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and the interpretations and rulings thereunder,
(B) stating, as of the Closing Date (or, with respect to
<PAGE>
-27-
matters involving changes or developments since the respective dates
as of which specified financial information is given in the Offering
Memorandum, as of a date not more than three business days prior to
the Closing Date), that the conclusions and findings of such
accountants with respect to the financial information and other
matters covered by the KPMG (Shreveport) Initial Letter are accurate
and (C) confirming in all material respects the conclusions and
findings set forth in the KPMG (Shreveport) Initial Letter; and
(iii) a letter (the "KPMG (Anchorage) Bring-Down Letter") of
KPMG LLP, addressed to the Initial Purchasers and dated the Closing
Date (A) confirming that they are independent public accountants
with respect to ATU as of December 31, 1998 and 1997 and for each of
the years in the three-year period ended December 31, 1998 within
the meaning of Rule 101 of the Code of Professional Conduct of the
AICPA and the interpretations and rulings thereunder, (B) stating,
as of the Closing Date (or, with respect to matters involving
changes or developments since the respective dates as of which
specified financial information is given in the Offering Memorandum,
as of a date not more than three business days prior to the Closing
Date), that the conclusions and findings of such accountants with
respect to the financial information and other matters covered by
the KPMG (Anchorage) Initial Letter are accurate and (C) confirming
in all material respects the conclusions and findings set forth in
the KPMG (Anchorage) Initial Letter.
(m) The representations and warranties of Holdings contained herein
shall be true and correct as of the date of this Agreement and as of the
Closing Date as though made on the Closing Date. Holdings shall have
furnished to the Initial Purchasers a certificate, dated the Closing Date,
of Holdings' Chief Executive Officer and Chief Financial Officer stating
that (i) such officers have carefully examined the Offering Memorandum,
(ii) in their opinion, the Offering Memorandum, as of its date, did not
include any untrue statement of a material fact and did not omit to state
a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, and since the date of the Offering
Memorandum, no event has occurred which should have been set forth in a
supplement or amendment to the Offering Memorandum so that the Offering
Memorandum (as so amended or supplemented) would not include any untrue
statement of a material fact and would not omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, (iii) as of the Closing Date, the representations and
warranties of Holdings in this Agreement are true and correct in all
material respects as though such representations and warranties
<PAGE>
-28-
are made as of the Closing Date, with the same effect as if made on the
Closing Date, Holdings complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder on or prior
to the Closing Date and (iv) subsequent to the date of the most recent
financial statements contained in the Offering Memorandum, there has been
no material adverse change in the financial position or results of
operations of Holdings and the Designated Subsidiaries, taken as a whole,
or any material change, or any material development, in or affecting the
condition (financial or otherwise), results of operations or business of
Holdings and the Designated Subsidiaries, taken as a whole.
(n) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of Holdings.
(o) The Indenture shall have been duly executed and delivered by
Holdings and the Trustee, and the Debentures shall have been duly executed
and delivered by Holdings and duly authenticated by the Trustee.
(p) The Warrant Agreement and the Warrants shall each have been duly
executed and delivered by Holdings.
(q) The Stockholders' Agreement shall have been duly executed and
delivered by Holdings and each of the other parties thereto.
(r) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital stock or long-term debt or any
change, or any development involving a change, in or affecting the
condition (financial or otherwise), results of operations or business of
Holdings and the Designated Subsidiaries taken as a whole, the effect of
which, in any such case described above, is, in the judgment of the
Initial Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Securities on the
terms and in the manner contemplated by this Agreement.
(s) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance
or sale of the Securities; and no injunction, restraining order or order
of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Securities.
<PAGE>
-29-
(t) Substantially simultaneously with the sale of the Securities
hereunder, the acquisitions of PTI and ATU shall have been consummated on
the terms described in the Offering Memorandum and the Credit Agreement
shall have been executed and delivered and the initial borrowings
thereunder shall have been made and the Senior Subordinated Notes shall
have been issued. All conditions precedent to the consummation of the
acquisitions of PTI and ATU, other than the payment of the consideration
therefore, shall have been satisfied or waived (any such waiver only with
the prior written consent of the Initial Purchasers), prior to or on the
Closing Date.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
6. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by Holdings prior to delivery of and payment for
the Securities if, prior to that time, any of the events described in Section
5(g), (r), (s) or (t) shall have occurred and be continuing.
7. Reimbursement of Initial Purchasers' Expenses. If (a) this
Agreement shall have been terminated pursuant to Section 6, (b) Holdings shall
fail to tender the Securities for delivery to the Initial Purchasers for any
reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Securities for any reason permitted under this
Agreement, Holdings shall reimburse the Initial Purchasers for such
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
as shall have been reasonably incurred by the Initial Purchasers in connection
with this Agreement and the proposed purchase and resale of the Securities.
8. Indemnification. (a) Holdings shall indemnify and hold harmless
each Initial Purchaser, its affiliates, their respective officers, directors,
employees, representatives and agents, and each person, if any, who controls any
Initial Purchaser within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 8(a) and Section 9 as an
"Initial Purchaser"), from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases
and sales of the Securities), to which that Initial Purchaser may become
subject, whether commenced or threatened, under the Securities Act, the Exchange
Act, any other federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Offering
Memorandum or in any amendment or supplement thereto or in any information
provided by Holdings pursuant to
<PAGE>
-30-
Section 4(e) or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and shall reimburse each Initial Purchaser promptly upon
demand for any legal or other expenses reasonably incurred by that Initial
Purchaser in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that Holdings shall not be liable in any such case to any Initial
Purchaser to the extent that any such loss, claim, damage, liability or action
arises out of, or is based upon, an untrue statement or alleged untrue statement
in or omission or alleged omission from any of such documents in reliance upon
and in conformity with any Senior Subordinated Notes Purchasers' Information
furnished by that Senior Subordinated Notes Purchaser; and provided, further,
that with respect to any such untrue statement in or omission from the
Preliminary Offering Memorandum, the indemnity agreement contained in this
Section 8(a) shall not inure to the benefit of any Initial Purchaser to the
extent that the sale to the person asserting any such loss, claim, damage,
liability or action was an initial resale by such Initial Purchaser and any such
loss, claim, damage, liability or action of or with respect to such Initial
Purchaser results from the fact that both (i) a copy of the Offering Memorandum
was not sent or given to such person at or prior to the written confirmation of
the sale of such Securities to such person and (ii) the untrue statement in or
omission from the Preliminary Offering Memorandum was corrected in the Offering
Memorandum unless, in either case, such failure to deliver the Offering
Memorandum was a result of non-compliance by Holdings with Section 4(b).
(b) [Intentionally Omitted].
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 8(a), notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 or otherwise except to the
extent that it has been materially prejudiced by such failure. If any such claim
or action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
<PAGE>
-31-
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (i)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (ii) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party,
(iii) a conflict or potential conflict exists (based upon advice of counsel to
the indemnified party) between the indemnified party and the indemnifying party
(in which case the indemnifying party will not have the right to direct the
defense of such action on behalf of the indemnified party) or (iv) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 8(a), shall use all reasonable efforts to cooperate with
the indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party (which consent shall
not be unreasonably withheld), effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding and does not include a statement as to, or an admission of,
fault, culpability or a failure to act, by or on behalf of any indemnified
party.
The obligations of Holdings and the Initial Purchasers in this
Section 8 and in Section 9 are in addition to any other liability that Holdings,
or the Initial Purchasers, as the case may be, may otherwise have, including in
respect of any breaches of representations, warranties and agreements made
herein by any such party.
9. Contribution. If the indemnification provided for in Section 8 is
unavailable or insufficient to hold harmless an indemnified party under Section
8(a), then each
<PAGE>
-32-
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, in such
proportion as is appropriate to reflect the relative fault of Holdings on the
one hand and the Initial Purchasers on the other with respect to the statements
or omissions that resulted in such loss, claim, damage or liability, or action
in respect thereof, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to Holdings or information
supplied by Holdings on the one hand or to any information provided by the
Initial Purchasers on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. Holdings and the Initial Purchasers agree that it
would not be just and equitable if contributions pursuant to this Section 9 were
to be determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to above in
this Section 9 shall be deemed to include, for purposes of this Section 9, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
The Initial Purchasers' obligations to contribute as provided in
this Section 9 are several in proportion to their respective purchase
obligations and not joint.
10. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, Holdings and
their respective successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only Holdings and the Initial Purchasers and in
Section 4(e) with respect to holders and prospective purchasers of the
Securities. Nothing in this Agreement is intended or shall be construed to give
any person, other than the persons referred to in this Section 10, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
11. Expenses. Holdings agrees with the Initial Purchasers to pay (a)
the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and distribution of the Preliminary
Offering Memorandum, the Offering Memorandum and any amendments or supplements
thereto; (c) the costs of reproducing and distributing each of the Transaction
Documents; (d) the costs incident to the preparation, printing and delivery of
the
<PAGE>
-33-
certificates evidencing the Securities, including stamp duties and transfer
taxes, if any, payable upon issuance of the Securities; (e) the fees and
expenses of Holding's and the Company's counsel and independent accountants; (f)
the fees and expenses of qualifying the Securities under the securities laws of
the several jurisdictions as provided in Section 4(g) and of preparing, printing
and distributing Blue Sky Memoranda (including reasonable fees and expenses of
counsel for the Initial Purchasers); (g) any fees charged by rating agencies for
rating the Securities; (h) the fees and expenses of the Trustee and any paying
agent (including reasonable fees and expenses of any counsel to such parties);
(i) all expenses and application fees incurred in connection with the
application for the inclusion of the Securities on the PORTAL Market and the
approval of the Securities for book-entry transfer by DTC; (j) the fees and
expenses of the Initial Purchasers in connection with the purchase of the
Securities (including reasonable fees and expenses of Cahill Gordon & Reindel,
as counsel) and (k) all other costs and expenses incident to the performance of
the obligations of Holdings under this Agreement which are not otherwise
specifically provided for in this Section 11.
12. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of Holdings and the Initial
Purchasers contained in this Agreement or made by or on behalf of Holdings or
the Initial Purchasers pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the Securities and
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
of them or any of their respective affiliates, officers, directors, employees,
representatives, agents or controlling persons.
13. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail
or telecopy transmission to DLJ Investment Partners, Inc., 277 Park Avenue, New
York, New York 10172, Attention: Doug Ladden (telecopier no.: (212) 892-7272);
or
(b) if to Holdings, shall be delivered or sent by mail or telecopy
transmission to 510 L. Street, Suite 500, Anchorage, Alaska 99501, Attention:
Michael E. Holmstrom (telecopier no.: (907) 297-3050).
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
14. Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities
<PAGE>
-34-
Act and (c) except where otherwise expressly provided, the term "affiliate" has
the meaning set forth in Rule 405 under the Securities Act.
15. Senior Subordinated Notes Purchasers' and Initial Purchasers'
Information. The parties hereto acknowledge and agree that, for all purposes of
this Agreement, the Senior Subordinated Notes Purchasers' Information consists
solely of the following information in the Preliminary Offering Memorandum and
the Offering Memorandum: the statements concerning the Senior Subordinated Notes
Purchasers contained in the third, fifth (but only the third sentence thereof),
sixth, ninth, tenth (but only the third and fourth sentences thereof) and
eleventh paragraphs under the heading "Plan of Distribution". The parties hereto
further acknowledge and agree that, for all purposes of this Agreement, the
Initial Purchasers have provided no information in the Preliminary Offering
Memorandum and the Offering Memorandum.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
17. Counterparts. This Agreement may be executed in one or more
counterparts (which may include counterparts delivered by telecopier) and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
18. Amendments. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
<PAGE>
-35-
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between Holdings and the Initial
Purchasers in accordance with its terms.
Very truly yours,
ALEC HOLDINGS, INC.,
By: /s/ Michael E. Holmstrom
--------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
Accepted:
DLJ INVESTMENT PARTNERS, L.P.,
By: DLJ INVESTMENT PARTNERS, INC.
General Partner
By: /s/ Ivy Dodes
----------------------------------
Name: Ivy Dodes
Title: Vice President
<PAGE>
Accepted:
DLJ INVESTMENT FUNDING, INC.
By: /s/ Ivy Dodes
----------------------------------
Name: Ivy Dodes
Title: Vice President
<PAGE>
Accepted:
DLJ ESC, L.P.,
By: DLJ LBO PLANS MANAGEMENT CORPORATION,
its General Partner
By: /s/ Ivy Dodes
----------------------------------
Name: Ivy Dodes
Title: Vice President
<PAGE>
SCHEDULE 1
Principal Amount of Debentures
------------------------------
Initial Purchaser
- -----------------
DLJ Investment Partners, L.P. $37,921,968.99 (Purchase Price of
Debentures: $16,089,695.97)
Warrants
--------
669,302 Warrants, par value $0.01 per
share of Holdings (Purchase Price per
Warrant: $6.14), representing 669,302
Warrant Shares.
Principal Amount of Debentures
------------------------------
DLJ Investment Funding, Inc. $5,403,880.58 (Purchase Price of
Debentures: $2,292,781.67)
Warrants
--------
95,375 Warrants, par value $0.01 per
share of Holdings (Purchase Price per
Warrant: $6.14), representing 95,375
Warrant Shares.
<PAGE>
Principal Amount of Debentures
------------------------------
DLJ ESC II, L.P. $3,602,587.06 (Purchase Price of
Debentures: $1,528,521.12)
Warrants
--------
63,584 Warrants, par value $0.01 per
share of Holdings (Purchase Price per
Warrant: $6.14), representing 63,584
Warrant Shares.
-2-
<PAGE>
EXHIBIT 5.1
July , 1999
ALEC Holdings, Inc.
510 L. Street, Suite 500
Anchorage, Alaska 99501
Ladies and Gentlemen:
We have acted as counsel for ALEC Holdings, Inc., a Delaware corporation
(the "Company"), in connection with the preparation of the Registration
Statement on Form S-4 of the Company (the "Registration Statement"), to be filed
with the Securities and Exchange Commission on July , 1999, relating to an
offer to exchange (the "Exchange Offer") 13% Senior Discount Debentures due 2011
of the Company (the "Exchange Debentures") which will have been registered under
the Securities Act of 1933, as amended, for an equal principal amount of the
Company's outstanding 13% Senior Discount Debentures due 2011 (the "Old
Debentures").
The Exchange Debentures will be issued under an Indenture dated as of May
14, 1999 (the "Indenture"), among the Company and The Bank of New York, as
trustee (the "Trustee").
As counsel, we have examined the Registration Statement, the Indenture, the
form of the Exchange Debentures, the form of the Old Debentures and such other
documents, records and other matters as we have deemed necessary or appropriate
in order to give the opinions set forth herein.
In giving the opinions contained herein, we have, with your approval, relied
upon representations of officers of the Company and certificates of public
officials with respect to the accuracy of the material factual matters addressed
by such representations and certificates. We have, with your approval, assumed
the genuineness of all signatures or instruments submitted to us, and the
conformity or certified copies submitted to us with the original documents to
which such certified copies relate.
We are members of the bar of the State of New York and we express no opinion
as to the laws of any jurisdiction other than the federal laws of the United
States and the laws of the State of New York.
Based upon and subject to the foregoing, assuming that the Indenture has
been duly authorized, executed and delivered by, and represents the valid and
binding obligations of, the Trustee, it is our opinion that:
(1) the Indenture has been duly executed and delivered by, and constitutes
the legal, valid and binding obligation of, the Company, enforceable
against the Company in accordance with its terms; and
(2) the Exchange Debentures, when duly executed and delivered by the Company
upon the terms set forth in the Exchange Offer, will constitute legal,
valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms;
subject in each case to (a) bankruptcy, insolvency, moratorium, reorganization
and other laws of general applicability relating to or affecting creditors'
rights from time to time in effect and (b) application of general principles of
equity (regardless of whether considered in proceedings in equity or at law).
The opinions expressed above are subject to (i) standards of commercial
reasonableness and good faith, (ii) public policy and (iii) other applicable
laws, rules, regulations, court decisions and constitutional requirements in and
of the State of New York or the United States of America limiting or affecting
the exercise of remedies under the Indenture and the Exchange Debentures,
provided that any limitations imposed by such other applicable laws, rules,
regulations, court decisions, and constitutional requirements will not, in our
opinion, materially interfere with the realization by the holders of the
Exchange Debentures of the practical benefits intended to be conferred by the
Exchange
<PAGE>
ALEC Holdings, Inc.
July , 1999
Page 2
Debentures and the Indenture, although they may result in a delay thereof (and
we express no opinion with respect to the economic consequence of any such
delay).
We express no opinion with respect to: (i) the enforceability of provisions
in the Indenture relating to delay or omission of enforcement of rights or
remedies, or waivers of defenses, or waivers of benefits of usury, appraisement,
valuation, stay, extension, moratorium, redemption, statutes of limitation, or
other non-waivable benefits bestowed by operation of law; or (ii) the lawfulness
or enforceability of exculpation clauses, clauses relating to releases of
unmatured claims, clauses purporting to waive unmatured rights, severability
clauses, and clauses similar in substance or nature to those expressed in the
foregoing clause (i) and this clause (ii), insofar as any of the foregoing are
contained in the Indenture. In addition, we express no opinion as to whether a
federal or state court outside of the State of New York would give effect to the
choice of New York law provided for in the Indenture.
We consent to the use of this opinion as an Exhibit to the Registration
Statement and to the reference to our firm in the Prospectus that is a part of
the Registration Statement. In giving such consent, we do not hereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933.
Very truly yours,
Wachtell, Lipton, Rosen & Katz
<PAGE>
Exhibit 10.1
EXECUTION COPY
ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
$150,000,000
9 3/8% Senior Subordinated Notes due 2009
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
May 14, 1999
Chase Securities Inc.
CIBC World Markets Corp.
Credit Suisse First Boston Corporation
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Alaska Communications Systems Holdings, Inc. (formerly known as ALEC
Acquisition Corporation), a Delaware corporation (the "Company"), proposes to
issue and sell to Chase Securities Inc. ("CSI"), CIBC World Markets Corp., and
Credit Suisse First Boston Corporation (together with CSI, the "Initial
Purchasers"), upon the terms and subject to the conditions set forth in a
purchase agreement dated May 11, 1999 (the "Purchase Agreement"), $150,000,000
aggregate principal amount of its 9 3/8% Senior Subordinated Notes due 2009 (the
"Securities") to be jointly and severally guaranteed on a senior subordinated
basis by certain of the Company's subsidiaries signatory hereto (the "Subsidiary
Guarantors") and ALEC Holdings, Inc. ("Holdings", together with the Subsidiary
Guarantors, the "Guarantors"). Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Purchase Agreement.
As an inducement to the Initial Purchasers to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of the
Initial Purchasers thereunder, the Company and the Guarantors agree with the
Initial Purchasers, for the benefit of the holders (including the Initial
Purchasers) of the Securities, the Exchange Securities (as defined in Section 1)
and the Private Exchange Securities (as defined in Section 1) (collectively, the
"Holders"), as follows:
<PAGE>
2
1. Registered Exchange Offer. The Company and the Guarantors shall
(i) prepare and, not later than 75 days following the date of original issuance
of the Securities (the "Issue Date"), file with the Commission a registration
statement (the "Exchange Offer Registration Statement") on an appropriate form
under the Securities Act with respect to a proposed offer to the Holders of the
Securities (the "Registered Exchange Offer") to issue and deliver to such
Holders, in exchange for the Securities, a like aggregate principal amount of
debt securities of the Company (the "Exchange Securities") that are identical in
all material respects to the Securities, except for the transfer restrictions
relating to the Securities, (ii) use their reasonable best efforts to cause the
Exchange Offer Registration Statement to become effective under the Securities
Act no later than 150 days after the Issue Date and the Registered Exchange
Offer to be consummated no later than 180 days after the Issue Date and (iii)
keep the Exchange Offer Registration Statement effective for not less than 30
days (or longer, if required by applicable law) after the date on which notice
of the Registered Exchange Offer is mailed to the Holders (such period being
called the "Exchange Offer Registration Period"). The Exchange Securities will
be issued under the Indenture or an indenture (the "Exchange Securities
Indenture") between the Company, the Guarantors and the Trustee or such other
bank or trust company that is reasonably satisfactory to the Initial Purchasers,
as trustee (the "Exchange Securities Trustee"), such indenture to be identical
in all material respects to the Indenture, except for the transfer restrictions
relating to the Securities (as described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Securities for Exchange Securities (assuming that such Holder (a) is
not an affiliate of the Company or an Exchanging Dealer (as defined below) not
complying with the requirements of the next sentence, (b) is not an Initial
Purchaser holding Securities that have, or that are reasonably likely to have,
the status of an unsold allotment in an initial distribution, (c) acquires the
Exchange Securities in the ordinary course of such Holder's business and (d) has
no arrangements or understandings with any person to participate in the
distribution of the Exchange Securities) and to trade such Exchange Securities
from and after their receipt without any limitations or restrictions under the
Securities Act and without material restrictions under the securities laws of
the several states of the United States. The Company, the Guarantors, the
Initial Purchasers and each Exchanging Dealer acknowledge that, pursuant to
current interpretations by the Commission's staff of Section 5 of the Securities
Act, (i) each Holder that is a broker-dealer electing to exchange Securities,
acquired for its own account as a result of market-making activities or other
trading activities, for Exchange Securities (an "Exchanging Dealer"), is
required to deliver a prospectus containing substantially the information set
forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in Annex
C hereto in the "Plan of Distribution" section of such prospectus in connection
with a sale of any such Exchange Securities received by such Exchanging Dealer
pursuant to the Registered Exchange Offer and (ii) if any Initial Purchaser
elects to sell Exchange Securities acquired in exchange for Securities
constituting any portion of an unsold allotment, such Initial Purchaser will be
required to deliver a prospectus containing the information required by Items
507 and 508 of Regulation S-K under the Securities Act, as applicable, in
connection with such sale.
If, prior to the consummation of the Registered Exchange Offer, any
Holder holds any Securities acquired by it that have, or that are reasonably
likely to be determined to have, the
<PAGE>
3
status of an unsold allotment in an initial distribution, or any Holder is not
entitled to participate in the Registered Exchange Offer, the Company shall,
upon the request of any such Holder, simultaneously with the delivery of the
Exchange Securities in the Registered Exchange Offer, issue and deliver to any
such Holder, in exchange for the Securities held by such Holder (the "Private
Exchange"), a like aggregate principal amount of debt securities of the Company
(the "Private Exchange Securities") that are identical in all material respects
to the Exchange Securities, except for the transfer restrictions relating to
such Private Exchange Securities. The Private Exchange Securities will be issued
under the same indenture as the Exchange Securities, and the Company shall use
its reasonable best efforts to cause the Private Exchange Securities to bear the
same CUSIP number as the Exchange Securities.
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30
days (or longer, if required by applicable law) after the date on which
notice of the Registered Exchange Offer is mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York City time, on the last business day on
which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all material respects with all laws that are
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer and any Private Exchange, as the case may be, the Company shall:
(a) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
(b) deliver to the Trustee for cancelation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder, Exchange
Securities or Private Exchange Securities, as the case may be, equal in
principal amount to the Securities of such Holder so accepted for
exchange.
The Company and the Guarantors shall use their reasonable best
efforts to keep the Exchange Offer Registration Statement effective and to amend
and supplement the prospectus
<PAGE>
4
contained therein in order to permit such prospectus to be used by all persons
subject to the prospectus delivery requirements of the Securities Act for such
period of time as such persons must comply with such requirements in order to
resell the Exchange Securities; provided that (i) in the case where such
prospectus and any amendment or supplement thereto must be delivered by an
Exchanging Dealer, such period shall be the period beginning on the date on
which the Exchange Offer Registration Statement is declared effective and ending
on the earlier to occur of (x) the date that is 180 days after the date on which
the Exchange Offer Registration Statement is declared effective and (y) the date
on which all Exchanging Dealers have sold all Exchange Securities held by them
and (ii) the Company shall make such prospectus and any amendment or supplement
thereto available to any broker-dealer for use in connection with any resale of
any Exchange Securities for a period of not less than 90 days after the
consummation of the Registered Exchange Offer.
The Indenture or the Exchange Securities Indenture, as the case may
be, shall provide that the Securities, the Exchange Securities and the Private
Exchange Securities shall vote and consent together on all matters as one class
and that none of the Securities, the Exchange Securities or the Private Exchange
Securities will have the right to vote or consent as a separate class on any
matter.
Interest on each Exchange Security and Private Exchange Security
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date on which interest was paid on
the Securities surrendered in exchange therefor or, if no interest has been paid
on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act and (iii) such Holder is not an affiliate of the Company or,
if it is such an affiliate, such Holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Company and the
Guarantors will ensure that (i) any Exchange Offer Registration Statement and
any amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any Exchange Offer
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Exchange
Offer Registration Statement, and any supplement to such prospectus, does not,
as of the consummation of the Registered Exchange Offer, include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
2. Shelf Registration. If (i) because of any change in law or the
applicable interpretations thereof by the Commission's staff the Company is not
permitted to effect the
<PAGE>
5
Registered Exchange Offer as contemplated by Section 1 hereof, or (ii) any
Securities validly tendered pursuant to the Registered Exchange Offer are not
exchanged for Exchange Securities on or prior to 180 days after the Issue Date,
or (iii) any Initial Purchaser so requests on or prior to the 20th business day
following the date on which the Registered Exchange Offer is consummated with
respect to Securities or Private Exchange Securities not eligible to be
exchanged for Exchange Securities in the Registered Exchange Offer and held by
it following the consummation of the Registered Exchange Offer, or (iv) any law
or the applicable interpretations thereof by the Commission's staff do not
permit any Holder to participate in the Registered Exchange Offer, or (v) any
Holder that participates in the Registered Exchange Offer and does not receive
freely transferable Exchange Securities in exchange for tendered Securities so
requests with respect to such Securities on or prior to the 20th business day
following the date on which the Registered Exchange Offer is consummated, or
(vi) the Company so elects, then the following provisions shall apply:
(a) The Company and the Guarantors shall use their reasonable best
efforts to file as promptly as practicable (but in no event more than 45
days after so required or requested pursuant to this Section 2) with the
Commission, and thereafter shall use their reasonable best efforts to
cause to be declared effective, a shelf registration statement on an
appropriate form under the Securities Act relating to the offer and sale
of the Transfer Restricted Securities (as defined in Section 3(a)) by the
Holders thereof from time to time in accordance with the methods of
distribution set forth in such registration statement (hereafter, a "Shelf
Registration Statement" and, together with any Exchange Offer Registration
Statement, a "Registration Statement"); provided that no Holder (other
than each Initial Purchaser) shall be entitled to have any Securities held
by such Holder covered by such Shelf Registration Statement unless such
Holder agrees in writing to be bound by the provisions of this Agreement
applicable to such Holder.
(b) The Company and the Guarantors shall use their reasonable best
efforts to keep the Shelf Registration Statement continuously effective in
order to permit the prospectus forming part thereof to be used by Holders
of Transfer Restricted Securities for a period ending on the earlier of
(i) two years from the Issue Date or such shorter period that will
terminate when all the Transfer Restricted Securities covered by the Shelf
Registration Statement have been sold pursuant thereto and (ii) the date
on which the Securities become eligible for resale without volume
restrictions pursuant to Rule 144 under the Securities Act (in any such
case, such period being called the "Shelf Registration Period"). The
Company and the Guarantors shall be deemed not to have used their
reasonable best efforts to keep the Shelf Registration Statement effective
during the requisite period if any of them voluntarily take any action
that results in Holders of Transfer Restricted Securities covered thereby
not being able to offer and sell such Transfer Restricted Securities
during that period, unless (i) such action is required by law or the
applicable interpretations thereof by the Commission's staff or (ii) such
action is taken by the Company and the Guarantors in good faith and for
valid business reasons (not including avoidance of their obligations
hereunder), provided that the Company and the Guarantors on or prior to 60
days thereafter comply with the requirements of Section 4(j) hereof. Any
such period during which the Company and Guarantors fail to keep the Shelf
Registration Statement effective and usable for offers and sales of
Securities, Private Exchange Securities and Exchange Securities is
referred to as a "Suspension Period". A
<PAGE>
6
Suspension Period shall commence on and include the date the Company and
the Guarantors give notice that the Shelf Registration Statement is no
longer effective or the prospectus included therein is no longer usable
for offers and sales of Securities, Private Exchange Securities and
Exchange Securities and shall end on the date when each Holder of
Securities, Private Exchange Securities and Exchange Securities covered by
such Shelf Registration Statement either receives copies of the
supplemented or amended prospectus or other document contemplated by
Section 4(j) hereof or is advised in writing by the Company and the
Guarantors that use of the prospectus may be resumed. If more than one
Suspension Period occurs during any period of 360 consecutive days, then
the Company and the Guarantors will be jointly and severally obligated to
pay Additional Amounts (as defined in Section 3(a)), in accordance with
the provisions of Section 3, to each Holder of Transfer Restricted
Securities during each such Suspension Period in an amount equal to $0.192
per week per $1,000 principal amount of Transfer Restricted Securities
held by such Holder. If one or more Suspension Periods occur, the two-year
time period referenced in the first sentence of this Section 2(b) shall be
extended by the number of days included in each such Suspension Period.
(c) Notwithstanding any other provisions hereof, the Company and the
Guarantors will ensure that (i) any Shelf Registration Statement and any
amendment thereto and any prospectus forming part thereof and any
supplement thereto complies in all material respects with the Securities
Act and the rules and regulations of the Commission thereunder, (ii) any
Shelf Registration Statement and any amendment thereto (in either case,
other than with respect to information included therein in reliance upon
or in conformity with written information furnished to the Company by or
on behalf of any Holder specifically for use therein (the "Holders'
Information")) does not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading and (iii) any prospectus
forming part of any Shelf Registration Statement, and any supplement to
such prospectus (in either case, other than with respect to Holders'
Information), does not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
3. Liquidated Damages. (a) The parties hereto agree that the Holders
of Transfer Restricted Securities will suffer damages if the Company and the
Guarantors fail to fulfill their obligations under Section 1 or Section 2, as
applicable, and that it would not be feasible to ascertain the extent of such
damages. Accordingly, if (i) the applicable Registration Statement is not filed
with the Commission on or prior to 75 days after the Issue Date, (ii) the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
the case may be, is not declared effective on or prior to 150 days after the
Issue Date (or in the ease of a Shelf Registration Statement required to be
filed in response to a change in law or the applicable interpretations of
Commission's staff, if later, on or prior to 60 days after publication of the
change in law or interpretation), (iii) the Registered Exchange Offer is not
consummated on or prior to 180 days after the Issue Date, or (iv) the Shelf
Registration Statement is filed and declared effective on or prior to 150 days
after the Issue Date (or in the case of a Shelf Registration Statement required
to be filed in response to a change in law or the applicable interpretations of
Commission's staff, if later, on or prior to 60 days after publication of the
change in law or interpretation) but shall
<PAGE>
7
thereafter cease to be effective (at any time that the Company and the
Guarantors are obligated to maintain the effectiveness thereof) without being
succeeded within 45 days by an additional Registration Statement filed and
declared effective (each such event referred to in clauses (i) through (iv), a
"Registration Default"), the Company and the Guarantors will be jointly and
severally obligated to pay liquidated damages (collectively referred to herein
as "Additional Amounts") to each Holder of Transfer Restricted Securities,
during the period of one or more such Registration Defaults, in an amount equal
to $ 0.192 per week per $1,000 principal amount of Transfer Restricted
Securities held by such Holder until (i) the applicable Registration Statement
is filed, (ii) the Exchange Offer Registration Statement is declared effective
and the Registered Exchange Offer is consummated, (iii) the Shelf Registration
Statement is declared effective or (iv) the Shelf Registration Statement again
becomes effective, as the case may be. Following the cure of all Registration
Defaults, the accrual of Additional Amounts will cease. As used herein, the term
"Transfer Restricted Securities" means (i) each Security until the date on which
such Security has been exchanged for a freely transferable Exchange Security in
the Registered Exchange Offer, (ii) each Security or Private Exchange Security
until the date on which it has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or (iii)
each Security or Private Exchange Security until the date on which it is
distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act. Notwithstanding
anything to the contrary in this Section 3(a), the Company and the Guarantors
shall not be required to pay Additional Amounts to a Holder of Transfer
Restricted Securities if such Holder failed to comply with its obligations to
make the representations set forth in the second to last paragraph of Section 1
or failed to provide the information required to be provided by it, if any,
pursuant to Section 4(n).
(b) The Company shall notify the Trustee and the Paying Agent under
the Indenture immediately upon the happening of each and every Registration
Default. The Company and the Guarantors shall pay the Additional Amounts due on
the Transfer Restricted Securities by depositing with the Paying Agent (which
may not be the Company for these purposes), in trust, for the benefit of the
Holders thereof, prior to 10:00 a.m., New York City time, on the next interest
payment date specified by the Indenture and the Securities, sums sufficient to
pay the Additional Amounts then due. The Additional Amounts due shall be payable
on each interest payment date specified by the Indenture and the Securities to
the record holder entitled to receive the interest payment to be made on such
date. Each obligation to pay Additional Amounts shall be deemed to accrue from
and including the date of the applicable Registration Default.
(c) The parties hereto agree that the Additional Amounts provided
for in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to remain effective or (iii) the Exchange Offer
Registration Statement to be declared effective and the Registered Exchange
Offer to be consummated, in each case to the extent required by this Agreement.
<PAGE>
8
4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior
to the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and shall use its reasonable best efforts to
reflect in each such document, when so filed with the Commission, such
comments as any Initial Purchaser may reasonably propose; (ii) include the
information set forth in Annex A hereto on the cover, in Annex B hereto in
the "Exchange Offer Procedures" section and the "Purpose of the Exchange
Offer" section and in Annex C hereto in the "Plan of Distribution" section
of the prospectus forming a part of the Exchange Offer Registration
Statement, and include the information set forth in Annex D hereto in the
Letter of Transmittal delivered pursuant to the Registered Exchange Offer;
and (iii) if requested by any Initial Purchaser, include the information
required by Items 507 or 508 of Regulation S-K, as applicable, in the
prospectus forming a part of the Exchange Offer Registration Statement.
(b) The Company shall advise each Initial Purchaser, each Exchanging
Dealer and the Holders (if applicable) and, if requested by any such
person, confirm such advice in writing (which advice pursuant to clauses
(ii)-(v) hereof shall be accompanied by an instruction to suspend the use
of the prospectus until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto
has been filed with the Commission and when such Registration
Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities,
the Exchange Securities or the Private Exchange Securities for sale
in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event that requires the making of
any changes in any Registration Statement so that (A) the
Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or (B) any
prospectus forming part of any Registration Statement, and any
supplement to such prospectus, does not include an untrue statement
of a material fact or omit to
<PAGE>
9
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.
(c) The Company and the Guarantors will use their reasonable best
efforts to obtain the withdrawal at the earliest possible time of any
order suspending the effectiveness of any Registration Statement.
(d) The Company will furnish to each Holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one conformed copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules and, if any such Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).
(e) The Company will, during the Shelf Registration Period, promptly
deliver to each Holder of Transfer Restricted Securities included within
the coverage of any Shelf Registration Statement, without charge, as many
copies of the prospectus (including each preliminary prospectus) included
in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and the Company consents to
the use of such prospectus or any amendment or supplement thereto by each
of the selling Holders of Transfer Restricted Securities in connection
with the offer and sale of the Transfer Restricted Securities covered by
such prospectus or any amendment or supplement thereto.
(f) The Company will furnish to each Initial Purchaser and each
Exchanging Dealer, and to any other Holder who so requests, without
charge, at least one conformed copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules and, if any Initial Purchaser or Exchanging
Dealer or any such Holder so requests in writing, all exhibits thereto
(including those, if any, incorporated by reference).
(g) The Company will, during the Exchange Offer Registration Period
or the Shelf Registration Period, as applicable, promptly deliver to each
Initial Purchaser, each Exchanging Dealer and such other persons that are
required to deliver a prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus included in the
Exchange Offer Registration Statement or the Shelf Registration Statement
and any amendment or supplement thereto as such Initial Purchaser,
Exchanging Dealer or other persons may reasonably request; and the Company
and the Guarantors consent to the use of such prospectus or any amendment
or supplement thereto by any such Initial Purchaser, Exchanging Dealer or
other persons, as applicable, as aforesaid.
(h) Prior to the effective date of any Registration Statement, the
Company and the Guarantors will use their reasonable best efforts to
register or qualify, or cooperate with the Holders of Securities, Exchange
Securities or Private Exchange Securities included therein and their
respective counsel in connection with the registration or qualification
of, such Securities, Exchange Securities or Private Exchange Securities
for offer and sale
<PAGE>
10
under the securities or blue sky laws of such jurisdictions as any such
Holder reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such
jurisdictions of the Securities, Exchange Securities or Private Exchange
Securities covered by such Registration Statement; provided that the
Company and the Guarantors will not be required to qualify generally to do
business in any jurisdiction where they are not then so qualified or to
take any action which would subject them to general service of process or
to taxation in any such jurisdiction where they are not then so subject.
(i) The Company and the Guarantors will cooperate with the Holders
of Securities, Exchange Securities or Private Exchange Securities to
facilitate the timely preparation and delivery of certificates
representing Securities, Exchange Securities or Private Exchange
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names
as the Holders thereof may request in writing prior to sales of
Securities, Exchange Securities or Private Exchange Securities pursuant to
such Registration Statement.
(j) If any event contemplated by Section 4(b)(ii) through (v) occurs
during the period for which the Company and the Guarantors are required to
maintain an effective Registration Statement, the Company and the
Guarantors will promptly prepare and file with the Commission a
post-effective amendment to the Registration Statement or a supplement to
the related prospectus or file any other required document so that, as
thereafter delivered to purchasers of the Securities, Exchange Securities
or Private Exchange Securities from a Holder, the prospectus will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(k) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Securities, the
Exchange Securities and the Private Exchange Securities, as the case may
be, and provide the applicable trustee with printed certificates for the
Securities, the Exchange Securities or the Private Exchange Securities, as
the case may be, in a form eligible for deposit with The Depository Trust
Company.
(l) The Company and the Guarantors will comply in all material
respects with all applicable rules and regulations of the Commission and
the Company will make generally available to its security holders as soon
as practicable after the effective date of the applicable Registration
Statement an earning statement satisfying the provisions of Section 11(a)
of the Securities Act; provided that in no event shall such earning
statement be delivered later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter commencing after the
effective date of the applicable Registration Statement, which statement
shall cover such 12-month period.
(m) The Company and the Guarantors will cause the Indenture or the
Exchange Securities Indenture, as the case may be, to be qualified under
the Trust Indenture Act as required by applicable law in a timely manner.
<PAGE>
11
(n) The Company may require each Holder of Transfer Restricted
Securities to be registered pursuant to any Shelf Registration Statement
to furnish to the Company such information concerning the Holder and the
distribution of such Transfer Restricted Securities as the Company may
from time to time reasonably require for inclusion in such Shelf
Registration Statement, and the Company may exclude from such registration
the Transfer Restricted Securities of any Holder that fails to furnish
such information within a reasonable time after receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of
any notice from the Company pursuant to Section 4(b)(ii) through (v), such
Holder will discontinue disposition of such Transfer Restricted Securities
until such Holder's receipt of copies of the supplemental or amended
prospectus or other document contemplated by Section 4(j) or until advised
in writing (the "Advice") by the Company that the use of the applicable
prospectus may be resumed. If the Company shall give any notice under
Section 4(b)(ii) through (v) during the period that the Company is
required to maintain an effective Registration Statement (the
"Effectiveness Period"), such Effectiveness Period shall be extended by
the number of days during such period from and including the date of the
giving of such notice to and including the date when each seller of
Transfer Restricted Securities covered by such Registration Statement
shall have received (x) the copies of the supplemental or amended
prospectus or other document contemplated by Section 4(j) (if an amended
or supplemental prospectus or other document is required) or (y) the
Advice (if no amended or supplemental prospectus or other document is
required).
(p) In the case of a Shelf Registration Statement, the Company and
the Guarantors shall enter into such customary agreements (including, if
requested, an underwriting agreement in customary form) and take all such
other action, if any, as Holders of a majority in aggregate principal
amount of the Securities, Exchange Securities and Private Exchange
Securities being sold or the managing underwriters (if any) shall
reasonably request in order to facilitate any disposition of Securities,
Exchange Securities or Private Exchange Securities pursuant to such Shelf
Registration Statement.
(q) In the case of a Shelf Registration Statement, the Company shall
(i) make reasonably available for inspection by a representative of, and
Special Counsel (as defined in Section 5) acting for, Holders of a
majority in aggregate principal amount of the Securities, Exchange
Securities and Private Exchange Securities being sold and any underwriter
participating in any disposition of Securities, Exchange Securities or
Private Exchange Securities pursuant to such Shelf Registration Statement,
all relevant financial and other records, pertinent corporate documents
and properties of the Company and the Guarantors and (ii) use its
reasonable best efforts to have its officers, directors, employees,
accountants and counsel supply all relevant information reasonably
requested by such representative, Special Counsel or any such underwriter
(an "Inspector") in connection with such Shelf Registration Statement, in
either case to the extent reasonably requested by such representative,
Special Counsel or underwriter for the purpose of conducting customary due
diligence with respect to the Company and the Guarantors.
<PAGE>
12
(r) In the case of a Shelf Registration Statement, the Company
shall, if requested by Holders of a majority in aggregate principal amount
of the Securities, Exchange Securities and Private Exchange Securities
being sold, their Special Counsel or the managing underwriters (if any) in
connection with such Shelf Registration Statement, use its reasonable best
efforts to cause (i) its counsel to deliver an opinion relating to the
Shelf Registration Statement and the Securities, Exchange Securities or
Private Exchange Securities, as applicable, in customary form, (ii) its
officers to execute and deliver all customary documents and certificates
requested by Holders of a majority in aggregate principal amount of the
Securities, Exchange Securities and Private Exchange Securities being
sold, their Special Counsel or the managing underwriters (if any) and
(iii) its independent public accountants to provide a comfort letter or
letters in customary form, subject to receipt of appropriate documentation
as contemplated, and only if permitted, by Statement of Auditing Standards
No. 72.
5. Registration Expenses. The Company and the Guarantors will
jointly and severally bear all expenses incurred in connection with the
performance of its obligations under Sections 1, 2, 3 and 4 and the Company will
reimburse the Initial Purchasers and the Holders for the reasonable fees and
disbursements of one firm of attorneys (in addition to any local counsel) chosen
by the Holders of a majority in aggregate principal amount of the Securities,
the Exchange Securities and the Private Exchange Securities to be sold pursuant
to each Registration Statement (the "Special Counsel") acting for the Initial
Purchasers or Holders in connection therewith.
6. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Initial Purchaser or Exchanging Dealer, as
applicable, the Company and the Guarantors shall jointly and severally indemnify
and hold harmless each Holder (including, without limitation, any such Initial
Purchaser or Exchanging Dealer), its affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any, who
controls such Holder within the meaning of the Securities Act or the Exchange
Act (collectively referred to for purposes of this Section 6 and Section 7 as a
Holder) from and against any loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, without limitation, any loss,
claim, damage, liability or action relating to purchases and sales of
Securities, Exchange Securities or Private Exchange Securities), to which that
Holder may become subject, whether commenced or threatened, under the Securities
Act, the Exchange Act, any other federal or state statutory law or regulation,
at common law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any such Registration Statement
or any prospectus forming part thereof or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse each Holder promptly upon demand for any legal
or other expenses reasonably incurred by that Holder in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company and
the Guarantors shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, an
untrue statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with any Holders'
Information;
<PAGE>
13
and provided, further, that with respect to any such untrue statement in or
omission from any related preliminary prospectus, the indemnity agreement
contained in this Section 6(a) shall not inure to the benefit of any Holder from
whom the person asserting any such loss, claim, damage, liability or action
received Securities, Exchange Securities or Private Exchange Securities to the
extent that such loss, claim, damage, liability or action of or with respect to
such Holder results from the fact that both (A) a copy of the final prospectus
was not sent or given to such person at or prior to the written confirmation of
the sale of such Securities, Exchange Securities or Private Exchange Securities
to such person and (B) the untrue statement in or omission from the related
preliminary prospectus was corrected in the final prospectus unless, in either
case, such failure to deliver the final prospectus was a result of
non-compliance by the Company with Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each Holder
shall indemnify and hold harmless the Company and the Guarantors, their
affiliates, their respective officers, directors, employees, representatives and
agents, and each person, if any, who controls the Company or any Guarantor
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 6(b) and Section 7 as the "Company"),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any
Holders' Information furnished to the Company by such Holder, and shall
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that no such Holder shall be liable for any indemnity claims hereunder
in excess of the amount of net proceeds received by such Holder from the sale of
Securities, Exchange Securities or Private Exchange Securities pursuant to such
Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 6 or otherwise except to
the extent that it has been materially prejudiced by such failure. If any such
claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its
<PAGE>
14
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 6 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than the reasonable costs of investigation;
provided, however, that an indemnified party shall have the right to employ its
own counsel in any such action, but the fees, expenses and other charges of such
counsel for the indemnified party will be at the expense of such indemnified
party unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based upon advice of counsel to the indemnified party)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based upon advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 6(a) and 6(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding and does not include a statement as to, or an admission of,
fault, culpability or failure to act, by or on behalf of any indemnified party.
7. Contribution. If the indemnification provided for in Section 6 is
unavailable or insufficient to hold harmless an indemnified party under Section
6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company from the initial offering and sale of the
Securities, on the one hand, and by a Holder from receiving Securities, Exchange
Securities or Private Exchange Securities, as applicable, registered under the
Securities Act, on the other, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Guarantors, on the one hand, and
such Holder, on the other, with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or
<PAGE>
15
action in respect thereof, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to the
Company and the Guarantors or information supplied by the Company and the
Guarantors, on the one hand, or to any Holders' Information supplied by such
Holder, on the other, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this Section 7 were to be determined by
pro rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 7
shall be deemed to include, for purposes of this Section 7, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 7, an indemnifying party that is
a Holder of Securities, Exchange Securities or Private Exchange Securities shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Securities, Exchange Securities or Private Exchange
Securities sold by such indemnifying party to any purchaser exceeds the amount
of any damages which such indemnifying party has otherwise paid or become liable
to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. Rules 144 and 144A. The Company shall use its reasonable best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the written request of any Holder
of Transfer Restricted Securities, make publicly available other information so
long as necessary to permit sales of such Holder's securities pursuant to Rules
144 and 144A. The Company and the Guarantors covenant that they will take such
further action as any Holder of Transfer Restricted Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Transfer Restricted Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rules 144 and 144A
(including, without limitation, the requirements of Rule 144A(d)(4)). Upon the
written request of any Holder of Transfer Restricted Securities, the Company and
the Guarantors shall deliver to such Holder a written statement as to whether
they have complied with such requirements. Notwithstanding the foregoing,
nothing in this Section 8 shall be deemed to require the Company to register any
of its securities pursuant to the Exchange Act.
9. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount of such Transfer Restricted Securities
included in such offering, subject to the consent of the Company (which shall
not be unreasonably withheld or delayed), and such Holders shall be responsible
for all underwriting commissions and discounts in connection therewith.
<PAGE>
16
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The provisions of
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities, taken as a single class. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders whose Securities, Exchange
Securities or Private Exchange Securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities being sold by such Holders pursuant to such Registration
Statement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 10(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy
in like manner to Chase Securities Inc., CIBC World Markets Corp. and
Credit Suisse First Boston Corporation;
(2) if to an Initial Purchaser, initially at its address set forth
in the Purchase Agreement; and
(3) if to the Company, initially at the address of the Company set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) Successors And Assigns. This Agreement shall be binding upon the
Company, the Guarantors and their respective successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
<PAGE>
17
(e) Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(h) Remedies. In the event of a breach by the Company, any Guarantor
or by any Holder of any of their obligations under this Agreement, each Holder,
the Company or any Guarantor, as the case may be, in addition to being entitled
to exercise all rights granted by law, including recovery of damages (other than
the recovery of damages for a breach by the Company or any Guarantor of its
obligations under Sections 1 or 2 hereof for which Additional Amounts have been
paid pursuant to Section 3 hereof), will be entitled to specific performance of
its rights under this Agreement. The Company, the Guarantors and each Holder
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by each such person of any of the provisions of
this Agreement and hereby further agree that, in the event of any action for
specific performance in respect of such breach, each such person shall waive the
defense that a remedy at law would be adequate.
(i) No Inconsistent Agreements. The Company and each Guarantor
represents, warrants and agrees that (i) it has not entered into, and shall not
on or after the date of this Agreement, enter into any agreement that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof, (ii) it has not previously
entered into any agreement which remains in effect granting any registration
rights with respect to any of its debt securities to any person and (iii) (with
respect to the Company) without limiting the generality of the foregoing,
without the written consent of the Holders of a majority in aggregate principal
amount of the then outstanding Transfer Restricted Securities, it shall not
grant to any person the right to request the Company to register any debt
securities of the Company under the Securities Act unless the rights so granted
are not in conflict or inconsistent with the provisions of this Agreement.
(j) No Piggyback on Registrations. Neither the Company nor any of
its security holders (other than the Holders of Transfer Restricted Securities
in such capacity) shall have the right to include any securities of the Company
in any Shelf Registration or Registered Exchange Offer other than Transfer
Restricted Securities.
(k) Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
<PAGE>
18
the parties hereto shall use their reasonable best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Guarantors and the Initial Purchasers.
Very truly yours,
ALASKA COMMUNICATIONS SYSTEMS
HOLDINGS, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
ALEC HOLDINGS, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
TELEPHONE UTILITIES OF ALASKA, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
TELEPHONE UTILITIES OF THE NORTHLAND,
INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
PTI COMMUNICATIONS OF ALASKA, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
PACIFIC TELECOM OF ALASKA PCS, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
PACIFIC TELECOM CELLULAR OF ALASKA,
INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
ATU COMMUNICATIONS, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
MACTEL, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
MACTEL FAIRBANKS, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
ATU LONG DISTANCE, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
PENINSULA CELLULAR SERVICES, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
PRUDHOE COMMUNICATIONS, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
ALASKA COMMUNICATIONS SYSTEMS, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
ALEC ACQUISITION SUB CORP.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
MACTEL LICENSE SUB, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
MACTEL FAIRBANKS LICENSE SUB, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
PTINET, INC.,
by /s/ Michael E. Holmstrom
-------------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
Accepted:
CHASE SECURITIES INC.
by /s/ Authorized Signatory
-----------------------------
Authorized Signatory
CIBC WORLD MARKETS CORP.
by /s/ Authorized Signatory
-----------------------------
Authorized Signatory
CREDIT SUISSE FIRST BOSTON CORPORATION
by
-----------------------------
Authorized Signatory
<PAGE>
Accepted:
CHASE SECURITIES INC.
by
-----------------------------
Authorized Signatory
CIBC WORLD MARKETS CORP.
by
-----------------------------
Authorized Signatory
CREDIT SUISSE FIRST BOSTON CORPORATION
by /s/ Authorized Signatory
-----------------------------
Authorized Signatory
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the consummation of the Registered Exchange
Offer, it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution".
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution".
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the consummation of the Registered
Exchange Offer, it will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until August 13, 1999, all dealers effecting transactions in the
Exchange Securities may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Securities and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the consummation of the Registered
Exchange Offer the Company will promptly send additional copies of this
Prospectus and any amendment or supplement to this Prospectus to any
broker-dealer that requests such documents in the Letter of Transmittal. The
Company has agreed to pay all expenses incident to the Registered Exchange Offer
(including the expenses of one counsel for the Holders of the Securities) other
than commissions or concessions of any broker-dealers and will indemnify the
Holders of the Securities (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
<PAGE>
ANNEX D
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE>
Exhibit 10.2
ALEC HOLDINGS, INC.
$46,928,435.00
Senior Discount Debentures due 2011
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
May 14, 1999
DLJ Investment Partners, L.P.
DLJ Investment Funding, Inc.
DLJ ESC II L.P.
c/o DLJ Investment Partners, Inc.
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
ALEC Holdings, Inc., a Delaware corporation (the "Holdings"),
proposes to issue and sell to DLJ Investment Partners, L.P., DLJ Investment
Funding, Inc. and DLJ ESC II L.P. (together, the "Initial Purchasers"), upon the
terms and subject to the conditions set forth in a purchase agreement dated May
11, 1999 (the "Purchase Agreement"), $46,928,435.00 aggregate principal amount
of its Senior Discount Debentures due 2011 (the "Debentures"). Capitalized terms
used but not defined herein shall have the meanings given to such terms in the
Purchase Agreement.
As an inducement to the Initial Purchasers to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of the
Initial Purchasers thereunder, Holdings agrees with the Initial Purchasers, for
the benefit of the holders (including the Initial Purchasers) of the Debentures,
the Exchange Debentures (as defined herein) and the Private Exchange Debentures
(as defined herein) (collectively, the "Holders"), as follows:
1. Registered Exchange Offer. Holdings shall (i) prepare and, not
later than 75 days following the date of original issuance of the Debentures
(the "Issue Date"), file with the Commission a registration statement (the
"Exchange Offer Registration Statement") on an appropriate form under the
Securities Act with respect to a proposed offer to the Holders of the Debentures
(the "Registered Exchange Offer") to issue and deliver to such Holders, in
exchange for the Debentures, a like aggregate principal amount of deben-
<PAGE>
-2-
tures of Holdings (the "Exchange Debentures") that are identical in all material
respects to the Debentures, except for the transfer restrictions relating to the
Debentures, (ii) use their reasonable best efforts to cause the Exchange Offer
Registration Statement to become effective under the Securities Act no later
than 150 days after the Issue Date and the Registered Exchange Offer to be
consummated no later than 180 days after the Issue Date and (iii) keep the
Exchange Offer Registration Statement effective for not less than 30 days (or
longer, if required by applicable law) after the date on which notice of the
Registered Exchange Offer is mailed to the Holders (such period being called the
"Exchange Offer Registration Period"). The Exchange Debentures will be issued
under the Indenture or an indenture (the "Exchange Debentures Indenture")
between Holdings and the Trustee or such other bank or trust company that is
reasonably satisfactory to the Initial Purchasers, as trustee (the "Exchange
Debentures Trustee"), such indenture to be identical in all material respects to
the Indenture, except for the transfer restrictions relating to the Debentures
(as described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
Holdings shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Debentures for Exchange Debentures (assuming that such Holder (a) is
not an affiliate of Holdings or an Exchanging Dealer (as defined herein) not
complying with the requirements of the next sentence, (b) is not an Initial
Purchaser holding Debentures that have, or that are reasonably likely to have,
the status of an unsold allotment in an initial distribution, (c) acquires the
Exchange Debentures in the ordinary course of such Holder's business and (d) has
no arrangements or understandings with any person to participate in the
distribution of the Exchange Debentures) and to trade such Exchange Debentures
from and after their receipt without any limitations or restrictions under the
Securities Act and without material restrictions under the securities laws of
the several states of the United States. Holdings, the Initial Purchasers and
each Exchanging Dealer acknowledge that, pursuant to current interpretations by
the Commission's staff of Section 5 of the Securities Act, (i) each Holder that
is a broker-dealer electing to exchange Debentures acquired for its own account
as a result of market-making activities or other trading activities, for
Exchange Debentures (an "Exchanging Dealer"), is required to deliver a
prospectus containing substantially the information set forth in Annex A hereto
on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and
the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan
of Distribution" section of such prospectus in connection with a sale of any
such Exchange Debentures received by such Exchanging Dealer pursuant to the
Registered Exchange Offer and (ii) if the Initial Purchasers elect to sell
Exchange Debentures acquired in exchange for Debentures constituting any portion
of an unsold allotment, the Initial Purchasers will be required to deliver a
prospectus containing the information required
<PAGE>
-3-
by Items 507 and 508 of Regulation S-K under the Securities Act, as applicable,
in connection with such sale.
If, prior to the consummation of the Registered Exchange Offer, any
Holder holds any Debentures acquired by it that have, or that are reasonably
likely to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Registered
Exchange Offer, Holdings shall, upon the request of any such Holder,
simultaneously with the delivery of the Exchange Debentures in the Registered
Exchange Offer, issue and deliver to any such Holder, in exchange for the
Debentures held by such Holder (the "Private Exchange"), a like aggregate
principal amount of debentures of Holdings (the "Private Exchange Debentures")
that are identical in all material respects to the Exchange Debentures, except
for the transfer restrictions relating to such Private Exchange Debentures. The
Private Exchange Debentures will be issued under the same indenture as the
Exchange Debentures, and Holdings shall use its reasonable best efforts to cause
the Private Exchange Debentures to bear the same CUSIP number as the Exchange
Debentures.
In connection with the Registered Exchange Offer, Holdings shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30
days (or longer, if required by applicable law) after the date on which
notice of the Registered Exchange Offer is mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Debentures at any time prior
to the close of business, New York City time, on the last business day on
which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all material respects with all laws that are
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer and any Private Exchange, as the case may be, Holdings shall:
(a) accept for exchange all Debentures tendered and not validly
withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
<PAGE>
-4-
(b) deliver to the Trustee for cancellation all Debentures so
accepted for exchange; and
(c) cause the Trustee or the Exchange Debentures Trustee, as the
case may be, promptly to authenticate and deliver to each Holder, Exchange
Debentures or Private Exchange Debentures, as the case may be, equal in
principal amount to the Debentures of such Holder so accepted for
exchange.
Holdings shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
prospectus contained therein in order to permit such prospectus to be used by
all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Debentures; provided that (i) in the case where
such prospectus and any amendment or supplement thereto must be delivered by an
Exchanging Dealer, such period shall be the period beginning on the date on
which the Exchange Offer Registration Statement is declared effective and ending
on the earlier to occur of (x) the date that is 180 days after the date on which
the Exchange Offer Registration Statement is declared effective and (y) the date
on which all Exchanging Dealers have sold all Exchange Debentures held by them
and (ii) Holdings shall make such prospectus and any amendment or supplement
thereto available to any broker-dealer for use in connection with any resale of
any Exchange Debentures for a period of not less than 90 days after the
consummation of the Registered Exchange Offer.
The Indenture or the Exchange Debentures Indenture, as the case may
be, shall provide that the Debentures, the Exchange Debentures and the Private
Exchange Debentures shall vote and consent together on all matters as one class
and that none of the Debentures, the Exchange Debentures or the Private Exchange
Debentures will have the right to vote or consent as a separate class on any
matter.
Interest on each Exchange Debenture and Private Exchange Debenture
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date on which interest was paid on
the Debentures surrendered in exchange therefor or, if no interest has been paid
on the Debentures, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to Holdings that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Debentures received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Debentures or the Exchange Debentures within the meaning of
the Securities Act and (iii) such Holder is not an affiliate of Holdings
<PAGE>
-5-
or, if it is such an affiliate, such Holder will comply with the registration
and prospectus delivery requirements of the Securities Act to the extent
applicable.
Notwithstanding any other provisions hereof, Holdings will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not, as of the consummation of the
Registered Exchange Offer, include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
2. Shelf Registration. If (i) because of any change in law or the
applicable interpretations thereof by the Commission's staff Holdings is not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, or (ii) any Debentures validly tendered pursuant to the Registered
Exchange Offer are not exchanged for Exchange Debentures on or prior to 180 days
after the Issue Date, or (iii) an Initial Purchaser so requests on or prior to
the 20th business day following the date on which the Registered Exchange Offer
is consummated with respect to Debentures or Private Exchange Debentures not
eligible to be exchanged for Exchange Debentures in the Registered Exchange
Offer and held by it following the consummation of the Registered Exchange
Offer, or (iv) any law or the applicable interpretations thereof by the
Commission's staff do not permit any Holder to participate in the Registered
Exchange Offer, or (v) any Holder who holds at least $1 million in principal
amount of Debentures that participates in the Registered Exchange Offer and does
not receive freely transferable Exchange Debentures in exchange for tendered
Debentures on or prior to the 20th business day following the date on which the
Registered Exchange Offer is consummated, or (vi) Holdings so elects, then the
following provisions shall apply:
(a) Holdings shall use its reasonable best efforts to file as
promptly as practicable (but in no event more than 45 days after so
required or requested pursuant to this Section 2) with the Commission, and
thereafter shall use its reasonable best efforts to cause to be declared
effective, a shelf registration statement on an appropriate form under the
Securities Act relating to the offer and sale of the Transfer Restricted
Debentures (as defined below) by the Holders thereof from time to time in
accordance with the methods of distribution set forth in such registration
statement (hereafter, a "Shelf Registration Statement" and, together with
any Exchange
<PAGE>
-6-
Offer Registration Statement, a "Registration Statement"); provided that
no Holder (other than the Initial Purchasers) shall be entitled to have
any Debentures held by such Holder covered by such Shelf Registration
Statement unless such Holder agrees in writing to be bound by the
provisions of this Agreement applicable to such Holder.
(b) Holdings shall use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be used by Holders of Transfer
Restricted Debentures for a period ending on the earlier of (i) two years
from the Issue Date or such shorter period that will terminate when all
the Transfer Restricted Debentures covered by the Shelf Registration
Statement have been sold pursuant thereto and (ii) the date on which the
Debentures become eligible for resale without volume restrictions pursuant
to Rule 144 under the Securities Act (in any such case, such period being
called the "Shelf Registration Period"). Holdings shall be deemed not to
have used its reasonable best efforts to keep the Shelf Registration
Statement effective during the requisite period if any of them voluntarily
take any action that results in Holders of Transfer Restricted Debentures
covered thereby not being able to offer and sell such Transfer Restricted
Debentures during that period, unless (i) such action is required by law
or the applicable interpretations thereof by the Commission's staff or
(ii) such action is taken by Holdings in good faith and for valid business
reasons (not including avoidance of their obligations hereunder), provided
that Holdings on or prior to 60 days thereafter comply with the
requirements of Section 4(j) hereof. Any such period during which Holdings
fails to keep the Shelf Registration Statement effective and usable for
offers and sales of Debentures, Private Exchange Debentures and Exchange
Debentures is referred to as a "Suspension Period". A Suspension Period
shall commence on and include the date Holdings gives notice that the
Shelf Registration Statement is no longer effective or the prospectus
included therein is no longer usable for offers and sales of Debentures,
Private Exchange Debentures and Exchange Debentures and shall end on the
date when each Holder of Debentures, Private Exchange Debentures and
Exchange Debentures covered by such Shelf Registration Statement either
receives copies of the supplemented or amended prospectus or other
document contemplated by Section 4(j) hereof or is advised in writing by
Holdings that use of the prospectus may be resumed. If more than one
Suspension Period occurs during any period of 360 consecutive days, then
Holdings will be obligated to pay Additional Amounts (as defined below),
in accordance with the provisions of Section 3, to each Holder of Transfer
Restricted Securities during each such Suspension Period in an amount
equal to $0.192 per week per $1,000 Accreted Value (as defined in the
Indenture) of Transfer Restricted Securities held by such Holder. If one
or more Suspension Periods occur, the two-year time period refer-
<PAGE>
-7-
enced above shall be extended by the number of days included in each such
Suspension Period.
(c) Notwithstanding any other provisions hereof, Holdings will
ensure that (i) any Shelf Registration Statement and any amendment thereto
and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules
and regulations of the Commission thereunder, (ii) any Shelf Registration
Statement and any amendment thereto (in either case, other than with
respect to information included therein in reliance upon or in conformity
with written information furnished to Holdings by or on behalf of any
Holder specifically for use therein (the "Holders' Information")) does not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Shelf
Registration Statement, and any supplement to such prospectus (in either
case, other than with respect to Holders' Information), does not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. Liquidated Damages. (a) The parties hereto agree that the Holders
of Transfer Restricted Debentures will suffer damages if Holdings fails to
fulfill its obligations under Section 1 or Section 2, as applicable, and that it
would not be feasible to ascertain the extent of such damages. Accordingly, if
(i) the applicable Registration Statement is not filed with the Commission on or
prior to 75 days after the Issue Date, (ii) the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, is not
declared effective on or prior to 150 days after the Issue Date (or in the case
of a Shelf Registration Statement required to be filed in response to a change
in law or the applicable interpretations of Commission's staff, if later, on or
prior to 60 days after publication of the change in law or interpretation),
(iii) the Registered Exchange Offer is not consummated on or prior to 180 days
after the Issue Date, or (iv) the Shelf Registration Statement is filed and
declared effective on or prior to 150 days after the Issue Date (or in the case
of a Shelf Registration Statement required to be filed in response to a change
in law or the applicable interpretations of Commission's staff, if later, on or
prior to 60 days after publication of the change in law or interpretation) but
shall thereafter cease to be effective (at any time that Holdings is obligated
to maintain the effectiveness thereof) without being succeeded within 45 days by
an additional Registration Statement filed and declared effective (each such
event referred to in clauses (i) through (iv), a "Registration Default"),
Holdings will be obligated to pay liquidated damages (collectively referred to
herein as "Additional Amounts") to each Holder of Transfer Restricted
Debentures, during the period of one or more such Registration Defaults, in an
amount equal to $ 0.192 per week per $1,000 Accreted Value
<PAGE>
-8-
of Transfer Restricted Debentures held by such Holder until (i) the applicable
Registration Statement is filed, (ii) the Exchange Offer Registration Statement
is declared effective and the Registered Exchange Offer is consummated, (iii)
the Shelf Registration Statement is declared effective or (iv) the Shelf
Registration Statement again becomes effective, as the case may be. Following
the cure of all Registration Defaults, the accrual of Additional Amounts will
cease. As used herein, the term "Transfer Restricted Debentures" means (i) each
Debenture until the date on which such Debenture has been exchanged for a freely
transferable Exchange Debenture in the Registered Exchange Offer, (ii) each
Debenture or Private Exchange Debenture until the date on which it has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iii) each Debenture or Private
Exchange Debenture until the date on which it is distributed to the public
pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule
144(k) under the Securities Act. Notwithstanding anything to the contrary in
this Section 3(a), Holdings shall not be required to pay Additional Amounts to a
Holder of Transfer Restricted Debentures if such Holder failed to comply with
its obligations to make the representations set forth in the second to last
paragraph of Section 1 or failed to provide the information required to be
provided by it, if any, pursuant to Section 4(n).
(b) Holdings shall notify the Trustee and the Paying Agent under the
Indenture immediately upon the happening of each and every Registration Default.
Holdings shall pay the Additional Amounts due on the Transfer Restricted
Debentures by depositing with the Paying Agent (which may not be Holdings for
these purposes), in trust, for the benefit of the Holders thereof, prior to
10:00 a.m., New York City time, on the next interest payment date specified by
the Indenture and the Debentures, sums sufficient to pay the Additional Amounts
then due. The Additional Amounts due shall be payable on each interest payment
date specified by the Indenture and the Debentures to the record holder entitled
to receive the interest payment to be made on such date. Each obligation to pay
Additional Amounts shall be deemed to accrue from and including the date of the
applicable Registration Default.
(c) The parties hereto agree that the Additional Amounts provided
for in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Transfer
Restricted Debentures by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to remain effective or (iii) the Exchange Offer
Registration Statement to be declared effective and the Registered Exchange
Offer to be consummated, in each case to the extent required by this Agreement.
4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
<PAGE>
-9-
(a) Holdings shall (i) furnish to the Initial Purchasers, prior to
the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and shall use its reasonable best efforts to
reflect in each such document, when so filed with the Commission, such
comments as the Initial Purchasers may reasonably propose; (ii) include
the information set forth in Annex A hereto on the cover, in Annex B
hereto in the "Exchange Offer Procedures" section and the "Purpose of the
Exchange Offer" section and in Annex C hereto in the "Plan of
Distribution" section of the prospectus forming a part of the Exchange
Offer Registration Statement, and include the information set forth in
Annex D hereto in the Letter of Transmittal delivered pursuant to the
Registered Exchange Offer; and (iii) if requested by any Initial
Purchaser, include the information required by Items 507 or 508 of
Regulation S-K, as applicable, in the prospectus forming a part of the
Exchange Offer Registration Statement.
(b) Holdings shall advise the Initial Purchasers, each Exchanging
Dealer and the Holders (if applicable) and, if requested by any such
person, confirm such advice in writing (which advice pursuant to clauses
(ii)-(v) hereof shall be accompanied by an instruction to suspend the use
of the prospectus until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto
has been filed with the Commission and when such Registration
Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by Holdings of any notification with
respect to the suspension of the qualification of the Debentures,
the Exchange Debentures or the Private Exchange Debentures for sale
in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event that requires the making of
any changes in any Registration Statement so that (A) the
Registration Statement and any amendment thereto does not, when it
becomes effective, contain an
<PAGE>
-10-
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or (B) any prospectus forming part of any
Registration Statement, and any supplement to such prospectus, does
not include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(c) Holdings will use its reasonable best efforts to obtain the
withdrawal at the earliest possible time of any order suspending the
effectiveness of any Registration Statement.
(d) Holdings will furnish to each Holder of Transfer Restricted
Debentures included within the coverage of any Shelf Registration
Statement, without charge, at least one conformed copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules and, if any such Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).
(e) Holdings will, during the Shelf Registration Period, promptly
deliver to each Holder of Transfer Restricted Debentures included within
the coverage of any Shelf Registration Statement, without charge, as many
copies of the prospectus (including each preliminary prospectus) included
in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and Holdings consents to
the use of such prospectus or any amendment or supplement thereto by each
of the selling Holders of Transfer Restricted Debentures in connection
with the offer and sale of the Transfer Restricted Debentures covered by
such prospectus or any amendment or supplement thereto.
(f) Holdings will furnish to each Initial Purchaser and each
Exchanging Dealer, and to any other Holder who so requests, without
charge, at least one conformed copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules and, if any Initial Purchaser or Exchanging
Dealer or any such Holder so requests in writing, all exhibits thereto
(including those, if any, incorporated by reference).
(g) Holdings will, during the Exchange Offer Registration Period or
the Shelf Registration Period, as applicable, promptly deliver to each
Initial Purchaser, each Exchanging Dealer and such other persons that are
required to deliver a prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus included in the
Exchange Offer Registration Statement or the
<PAGE>
-11-
Shelf Registration Statement and any amendment or supplement thereto as
such Initial Purchaser, Exchanging Dealer or other persons may reasonably
request; and Holdings consents to the use of such prospectus or any
amendment or supplement thereto by any such Initial Purchaser, Exchanging
Dealer or other persons, as applicable, as aforesaid.
(h) Prior to the effective date of any Registration Statement,
Holdings will use its reasonable best efforts to register or qualify, or
cooperate with the Holders of Debentures, Exchange Debentures or Private
Exchange Debentures included therein and their respective counsel in
connection with the registration or qualification of, such Debentures,
Exchange Debentures or Private Exchange Debentures for offer and sale
under the Debentures or blue sky laws of such jurisdictions as any such
Holder reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such
jurisdictions of the Debentures, Exchange Debentures or Private Exchange
Debentures covered by such Registration Statement; provided that Holdings
will not be required to qualify generally to do business in any
jurisdiction where they are not then so qualified or to take any action
which would subject them to general service of process or to taxation in
any such jurisdiction where they are not then so subject.
(i) Holdings will cooperate with the Holders of Debentures, Exchange
Debentures or Private Exchange Debentures to facilitate the timely
preparation and delivery of certificates representing Debentures, Exchange
Debentures or Private Exchange Debentures to be sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders thereof may
request in writing prior to sales of Debentures, Exchange Debentures or
Private Exchange Debentures pursuant to such Registration Statement.
(j) If any event contemplated by Section 4(b)(ii) through (v) occurs
during the period for which Holdings is required to maintain an effective
Registration Statement, Holdings will promptly prepare and file with the
Commission a post-effective amendment to the Registration Statement or a
supplement to the related prospectus or file any other required document
so that, as thereafter delivered to purchasers of the Debentures, Exchange
Debentures or Private Exchange Debentures from a Holder, the prospectus
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(k) Not later than the effective date of the applicable Registration
Statement, Holdings will provide a CUSIP number for the Debentures, the
Exchange
<PAGE>
-12-
Debentures and the Private Exchange Debentures, as the case may be, and
provide the applicable trustee with printed certificates for the
Debentures, the Exchange Debentures or the Private Exchange Debentures, as
the case may be, in a form eligible for deposit with The Depository Trust
Company.
(l) Holdings will comply in all material respects with all
applicable rules and regulations of the Commission and Holdings will make
generally available to its security holders as soon as practicable after
the effective date of the applicable Registration Statement an earning
statement satisfying the provisions of Section 11(a) of the Securities
Act; provided that in no event shall such earning statement be delivered
later than 45 days after the end of a 12-month period (or 90 days, if such
period is a fiscal year) beginning with the first month of Holdings's
first fiscal quarter commencing after the effective date of the applicable
Registration Statement, which statement shall cover such 12-month period.
(m) Holdings will cause the Indenture or the Exchange Debentures
Indenture, as the case may be, to be qualified under the Trust Indenture
Act as required by applicable law in a timely manner.
(n) Holdings may require each Holder of Transfer Restricted
Debentures to be registered pursuant to any Shelf Registration Statement
to furnish to Holdings such information concerning the Holder and the
distribution of such Transfer Restricted Debentures as Holdings may from
time to time reasonably require for inclusion in such Shelf Registration
Statement, and Holdings may exclude from such registration the Transfer
Restricted Debentures of any Holder that fails to furnish such information
within a reasonable time after receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Debentures to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Debentures that, upon receipt of
any notice from Holdings pursuant to Section 4(b)(ii) through (v), such
Holder will discontinue disposition of such Transfer Restricted Debentures
until such Holder's receipt of copies of the supplemental or amended
prospectus or other document contemplated by Section 4(j) or until advised
in writing (the "Advice") by Holdings that the use of the applicable
prospectus may be resumed. If Holdings shall give any notice under Section
4(b)(ii) through (v) during the period that Holdings is required to
maintain an effective Registration Statement (the "Effectiveness Period"),
such Effectiveness Period shall be extended by the number of days during
such period from and including the date of the giving of such notice to
and including the date when each seller of Transfer Restricted Debentures
covered by such Registration Statement shall have received (x) the copies
of the supplemental or amended prospectus or other document con-
<PAGE>
-13-
templated by Section 4(j) (if an amended or supplemental prospectus or
other document is required) or (y) the Advice (if no amended or
supplemental prospectus or other document is required).
(p) In the case of a Shelf Registration Statement, Holdings shall
enter into such customary agreements (including, if requested, an
underwriting agreement in customary form) and take all such other action,
if any, as Holders of a majority in aggregate principal amount of the
Debentures, Exchange Debentures and Private Exchange Debentures being sold
or the managing underwriters (if any) shall reasonably request in order to
facilitate any disposition of Debentures, Exchange Debentures or Private
Exchange Debentures pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, Holdings shall
(i) make reasonably available for inspection by a representative of, and
Special Counsel (as defined below) acting for, Holders of a majority in
aggregate principal amount of the Debentures, Exchange Debentures and
Private Exchange Debentures being sold and any underwriter participating
in any disposition of Debentures, Exchange Debentures or Private Exchange
Debentures pursuant to such Shelf Registration Statement, all relevant
financial and other records, pertinent corporate documents and properties
of Holdings and the Designated Subsidiaries and (ii) use its reasonable
best efforts to have its officers, directors, employees, accountants and
counsel supply all relevant information reasonably requested by such
representative, Special Counsel or any such underwriter (an "Inspector")
in connection with such Shelf Registration Statement, in either case to
the extent reasonably requested by such representative, Special Counsel or
underwriter for the purpose of conducting customary due diligence with
respect to Holdings and the Designated Subsidiaries.
(r) In the case of a Shelf Registration Statement, Holdings shall,
if requested by Holders of a majority in aggregate principal amount of the
Debentures, Exchange Debentures and Private Exchange Debentures being
sold, their Special Counsel or the managing underwriters (if any) in
connection with such Shelf Registration Statement, use its reasonable best
efforts to cause (i) its counsel to deliver an opinion relating to the
Shelf Registration Statement and the Debentures, Exchange Debentures or
Private Exchange Debentures, as applicable, in customary form, (ii) its
officers to execute and deliver all customary documents and certificates
requested by Holders of a majority in aggregate principal amount of the
Debentures, Exchange Debentures and Private Exchange Debentures being
sold, their Special Counsel or the managing underwriters (if any) and
(iii) its independent public accountants to provide a comfort letter or
letters in customary form, subject to receipt of appropri-
<PAGE>
-14-
ate documentation as contemplated, and only if permitted, by Statement of
Auditing Standards No. 72.
5. Registration Expenses. Holdings will bear all expenses incurred
in connection with the performance of its obligations under Sections 1, 2, 3 and
4 and Holdings will reimburse the Initial Purchasers and the Holders for the
reasonable fees and disbursements of one firm of attorneys (in addition to any
local counsel) chosen by the Holders of a majority in aggregate principal amount
of the Debentures, the Exchange Debentures and the Private Exchange Debentures
to be sold pursuant to each Registration Statement (the "Special Counsel")
acting for the Initial Purchasers or Holders in connection therewith.
6. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Initial Purchaser or Exchanging Dealer, as
applicable, Holdings shall indemnify and hold harmless each Holder (including,
without limitation, any such Initial Purchaser or Exchanging Dealer), its
affiliates, their respective officers, directors, employees, representatives and
agents, and each person, if any, who controls such Holder within the meaning of
the Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 6 and Section 7 as a Holder) from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, without limitation, any loss, claim, damage, liability or action
relating to purchases and sales of Debentures, Exchange Debentures or Private
Exchange Debentures), to which that Holder may become subject, whether commenced
or threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained in
any such Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and shall reimburse each Holder promptly
upon demand for any legal or other expenses reasonably incurred by that Holder
in connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that Holdings shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, an
untrue statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with any Holders'
Information; and provided, further, that with respect to any such untrue
statement in or omission from any related preliminary prospectus, the indemnity
agreement contained in this Section 6(a) shall not inure to the benefit of any
Holder from whom the person asserting
<PAGE>
-15-
any such loss, claim, damage, liability or action received Debentures, Exchange
Debentures or Private Exchange Debentures to the extent that such loss, claim,
damage, liability or action of or with respect to such Holder results from the
fact that both (A) a copy of the final prospectus was not sent or given to such
person at or prior to the written confirmation of the sale of such Debentures,
Exchange Debentures or Private Exchange Debentures to such person and (B) the
untrue statement in or omission from the related preliminary prospectus was
corrected in the final prospectus unless, in either case, such failure to
deliver the final prospectus was a result of non-compliance by Holdings with
Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each Holder
shall indemnify and hold harmless Holdings, its affiliates, its officers,
directors, employees, representatives and agents, and each person, if any, who
controls Holdings within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 6(b) and Section 7 as
"Holdings"), from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which Holdings may become subject,
whether commenced or threatened, under the Securities Act, the Exchange Act, any
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any
Holders' Information furnished to Holdings by such Holder, and shall reimburse
Holdings for any legal or other expenses reasonably incurred by Holdings in
connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that no such Holder shall be liable for any indemnity claims hereunder in excess
of the amount of net proceeds received by such Holder from the sale of
Debentures, Exchange Debentures or Private Exchange Debentures pursuant to such
Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 6 or otherwise except to
the extent that it has been materially prejudiced by such failure. If any such
claim or action
<PAGE>
-16-
shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 6(a) and 6(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of
<PAGE>
-17-
such proceeding and does not include a statement as to, or an admission of,
fault, culpability or failure to act, by or on behalf of any indemnified party.
7. Contribution. If the indemnification provided for in Section 6 is
unavailable or insufficient to hold harmless an indemnified party under Section
6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, in such proportion as is appropriate to reflect the relative fault of
Holdings, on the one hand, and such Holder, on the other, with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to Holdings
or information supplied by Holdings, on the one hand, or to any Holders'
Information supplied by such Holder, on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section 7 were
to be determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to above in
this Section 7 shall be deemed to include, for purposes of this Section 7, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 7, an
indemnifying party that is a Holder of Debentures, Exchange Debentures or
Private Exchange Debentures shall not be required to contribute any amount in
excess of the amount by which the total price at which the Debentures, Exchange
Debentures or Private Exchange Debentures sold by such indemnifying party to any
purchaser exceeds the amount of any damages which such indemnifying party has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
8. Rules 144 and 144A. Holdings shall use its reasonable best
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time Holdings is not
required to file such reports, it will, upon the written request of any Holder
of Transfer Restricted Debentures, make publicly available other information so
long as necessary to permit sales of such Holder's Debentures pursuant to Rules
144 and 144A. Holdings covenants that it will take such further action as
<PAGE>
-18-
any Holder of Transfer Restricted Debentures may reasonably request, all to the
extent required from time to time to enable such Holder to sell Transfer
Restricted Debentures without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including, without
limitation, the requirements of Rule 144A(d)(4)). Upon the written request of
any Holder of Transfer Restricted Debentures, Holdings shall deliver to such
Holder a written statement as to whether they have complied with such
requirements. Notwithstanding the foregoing, nothing in this Section 8 shall be
deemed to require Holdings to register any of its Debentures pursuant to the
Exchange Act.
9. Underwritten Registrations. If any of the Transfer Restricted
Debentures covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount of such Transfer Restricted Debentures
included in such offering, subject to the consent of Holdings (which shall not
be unreasonably withheld or delayed), and such Holders shall be responsible for
all underwriting commissions and discounts in connection therewith.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Debentures on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The provisions of
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless
Holdings has obtained the written consent of Holders of a majority in aggregate
principal amount of the Debentures, the Exchange Debentures and the Private
Exchange Debentures, taken as a single class. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders whose Debentures, Exchange
Debentures or Private Exchange Debentures are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in aggregate
principal amount of the Debentures, the Exchange Debentures and the Private
Exchange Debentures being sold by such Holders pursuant to such Registration
Statement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:
<PAGE>
-19-
(1) if to a Holder, at the most current address given by such
Holder to Holdings in accordance with the provisions of this Section
10(b), which address initially is, with respect to each Holder, the
address of such Holder maintained by the Registrar under the
Indenture, with a copy in like manner to DLJ Investment Partners,
Inc.;
(2) if to the Initial Purchasers, initially at the address set
forth in the Purchase Agreement; and
(3) if to Holdings, initially at the address of Holdings set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(b) Successors And Assigns. This Agreement shall be binding upon
Holdings and its respective successors and assigns.
(c) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(d) Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(g) Remedies. In the event of a breach by Holdings by any Holder of
any of their obligations under this Agreement, each Holder or Holdings, as the
case may be, in addition to being entitled to exercise all rights granted by
law, including recovery of damages (other than the recovery of damages for a
breach by Holdings of its obligations under
<PAGE>
-20-
Sections 1 or 2 hereof for which Additional Amounts have been paid pursuant to
Section 3 hereof), will be entitled to specific performance of its rights under
this Agreement. Holdings and each Holder agree that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by each
such person of any of the provisions of this Agreement and hereby further agree
that, in the event of any action for specific performance in respect of such
breach, each such person shall waive the defense that a remedy at law would be
adequate.
(h) No Inconsistent Agreements. Holdings represents, warrants and
agrees that (i) it has not entered into, and shall not on or after the date of
this Agreement, enter into any agreement that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof, (ii) it has not previously entered into any agreement which
remains in effect granting any registration rights with respect to any of its
debt securities to any person and (iii) (with respect to Holdings) without
limiting the generality of the foregoing, without the written consent of the
Holders of a majority in aggregate principal amount of the then outstanding
Transfer Restricted Debentures, it shall not grant to any person the right to
request Holdings to register any debt securities of Holdings under the
Securities Act unless the rights so granted are not in conflict or inconsistent
with the provisions of this Agreement.
(i) No Piggyback on Registrations. Neither Holdings nor any of its
security holders (other than the Holders of Transfer Restricted Debentures in
such capacity) shall have the right to include any securities of Holdings in any
Shelf Registration or Registered Exchange Offer other than Transfer Restricted
Debentures.
(j) Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
<PAGE>
-21-
Please confirm that the foregoing correctly sets forth the agreement
between Holdings and the Initial Purchasers.
Very truly yours,
ALEC HOLDINGS, INC.,
By: /s/ Michael E. Holmstrom
-----------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
Accepted:
DLJ INVESTMENT PARTNERS, L.P.,
By: DLJ INVESTMENT PARTNERS, INC.
General Partner
BY: /s/ Ivy Dodes
---------------------------------
Name: Ivy Dodes
Title: Vice President
<PAGE>
Accepted:
DLJ INVESTMENT FUNDING, INC.
BY: /s/ Ivy Dodes
---------------------------------
Name: Ivy Dodes
Title: Vice President
<PAGE>
Accepted:
DLJ ESC, L.P.,
By: DLJ LBO PLANS MANAGEMENT CORPORATION,
its General Partner
BY: /s/ Ivy Dodes
---------------------------------
Name: Ivy Dodes
Title: Vice President
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Debentures for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Debentures.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Debentures received in exchange for
Debentures where such Debentures were acquired by such broker-dealer as a result
of market-making activities or other trading activities. Holdings has agreed
that, for a period of 180 days after the consummation of the Registered Exchange
Offer, it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution".
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Debentures for its own
account in exchange for Debentures, where such Debentures were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Debentures. See "Plan of Distribution".
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Debentures for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Debentures.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Debentures
received in exchange for Debentures where such Debentures were acquired as a
result of market-making activities or other trading activities. Holdings has
agreed that, for a period of 180 days after the consummation of the Registered
Exchange Offer, it will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until August 13, 1999, all dealers effecting transactions in the
Exchange Debentures may be required to deliver a prospectus.
Holdings will not receive any proceeds from any sale of Exchange
Debentures by broker-dealers. Exchange Debentures received by broker-dealers for
their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Debentures or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Debentures. Any broker-dealer that resells
Exchange Debentures that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Debentures may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Debentures and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the consummation of the Registered
Exchange Offer, Holdings will promptly send additional copies of this Prospectus
and any amendment or supplement to this Prospectus to any broker-dealer that
requests such documents in the Letter of Transmittal. Holdings has agreed to pay
all expenses incident to the Registered
<PAGE>
-2-
Exchange Offer (including the expenses of one counsel for the Holders of the
Debentures) other than commissions or concessions of any broker-dealers and will
indemnify the Holders of the Debentures (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
<PAGE>
ANNEX D
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name:
Address:
If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Debentures. If the undersigned is a broker-dealer that
will receive Exchange Debentures for its own account in exchange for Debentures
that were acquired as a result of market-making activities or other trading
activities, it acknowledges that it will deliver a prospectus in connection with
any resale of such Exchange Debentures; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
<PAGE>
Exhibit 10.3
EXECUTION COPY
================================================================================
CREDIT AGREEMENT
dated as of
May 14, 1999,
among
ALEC Holdings, Inc.,
Alaska Communications Systems Holdings, Inc.
(formerly ALEC Acquisition Corporation),
The Lenders Party Hereto,
THE CHASE MANHATTAN BANK,
as Administrative Agent
and Collateral Agent,
CANADIAN IMPERIAL BANK OF COMMERCE,
as Syndication Agent,
and
CREDIT SUISSE FIRST BOSTON,
as Documentation Agent
------------------------
CHASE SECURITIES INC.,
as Arranger
================================================================================
<PAGE>
3
Page
----
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness; Certain Equity Securities ................. 103
SECTION 6.02. Liens ................................................... 104
SECTION 6.03. Fundamental Changes ..................................... 106
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions .......................................... 107
SECTION 6.05. Asset Sales ............................................. 109
SECTION 6.06. Sale and Leaseback Transactions ......................... 110
SECTION 6.07. Hedging Agreements ...................................... 110
SECTION 6.08. Restricted Payments; Certain Payments of
Indebtedness .......................................... 110
SECTION 6.09. Transactions with Affiliates ............................ 112
SECTION 6.10. Restrictive Agreements .................................. 113
SECTION 6.11. Amendment of Material Documents ......................... 114
SECTION 6.12. Interest Coverage Ratio ................................. 114
SECTION 6.13. Leverage Ratio .......................................... 117
SECTION 6.14. Capital Expenditures .................................... 119
SECTION 6.15. Fiscal Year ............................................. 120
ARTICLE VII
Events of Default ....................... 121
ARTICLE VIII
The Administrative Agent .................... 124
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices ................................................. 127
SECTION 9.02. Waivers; Amendments ..................................... 128
SECTION 9.03. Expenses; Indemnity; Damage Waiver ...................... 130
SECTION 9.04. Successors and Assigns .................................. 132
SECTION 9.05. Survival ................................................ 135
SECTION 9.06. Counterparts; Integration; Effectiveness ................ 136
SECTION 9.07. Severability ............................................ 136
SECTION 9.08. Right of Setoff ......................................... 136
SECTION 9.09. Governing Law; Jurisdiction; Consent to
Service of Process .................................... 137
SECTION 9.10. WAIVER OF JURY TRIAL .................................... 138
<PAGE>
4
Page
----
SECTION 9.11. Headings ................................................ 138
SECTION 9.12. Confidentiality ......................................... 138
SECTION 9.13. Interest Rate Limitation ................................ 139
SECTION 9.14. Notice of Lenders' Right to Sue ......................... 140
SCHEDULES:
Schedule 1.01 -- Mortgaged Property
Schedule 2.01 -- Commitments
Schedule 3.05(b) -- Operating Licenses
Schedule 3.05(c) -- Owned and Leased Real Property
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Subsidiaries
Schedule 3.13 -- Insurance
Schedule 3.18(d) -- Mortgage Filing Offices
Schedule 4.02(i) -- Outstanding FCC Appeal Periods
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.04 -- Investments
Schedule 6.10 -- Existing Restrictions
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Opinion of Borrower's Counsels
Exhibit C -- Form of Perfection Certificate
Exhibit D -- Form of Parent Guarantee Agreement
Exhibit E -- Form of Subsidiary Guarantee Agreement
Exhibit F -- Form of Indemnity, Subrogation and Contribution Agreement
Exhibit G -- Form of Pledge Agreement
Exhibit H -- Form of Security Agreement
<PAGE>
CREDIT AGREEMENT dated as of May 14, 1999, among ALEC
HOLDINGS, INC., ALASKA COMMUNICATIONS SYSTEMS HOLDINGS, INC.
(formerly ALEC ACQUISITION CORPORATION), the LENDERS party
hereto, THE CHASE MANHATTAN BANK, as Administrative Agent,
CANADIAN IMPERIAL BANK OF COMMERCE, as Syndication Agent and
CREDIT SUISSE FIRST BOSTON CORPORATION, as Documentation
Agent.
In connection with the transactions contemplated by (a) the PTI
Purchase Agreement (such term and each other capitalized term used but not
defined in this introductory statement having the meaning assigned to such term
in Article I) and (b) the ATU Purchase Agreement, (i) the Sponsor will make the
Sponsor Equity Contribution (as provided herein), (ii) Holdings will issue or
have previously issued, as applicable, the Holdings Discount Debentures in a
private placement to DLJ Investment Partners, L.P., its investment affiliates or
other institutional investors, (iii) the Management Investors will make the
Management Equity Contribution, (iv) certain third-party investors reasonably
acceptable to the Administrative Agent may make the Investor Equity
Contribution, (v) Holdings will make the Holdings Contribution and (vi) (A) ALEC
Acquisition or other Wholly-Owned Subsidiaries will consummate the PTI
Acquisition for the PTI Purchase Price and (B) ACS or other Wholly-Owned
Subsidiaries will consummate the ATU Acquisition for the ATU Purchase Price.
Immediately prior to the Acquisitions, all of the outstanding capital stock of
Pacific Telecom Cellular of Alaska RSA #1, Inc., which owns a Fairbanks, Alaska
cellular system license, will be distributed to the Sellers.
The Acquisitions may be consummated simultaneously or on different
dates. If the Acquisitions are consummated simultaneously, then the Acquisitions
will be partially financed on the Closing Date with the proceeds of (a) (i)
$435,000,000 in aggregate principal amount of Term Loans and (ii) up to
$75,000,000 in aggregate principal amount of Revolving Loans and (b) the Senior
Subordinated Notes in an aggregate principal amount of not less than
$115,000,000.
If the Acquisitions are consummated on different dates and the First
Acquisition is the PTI Acquisition, then such Acquisition will be partially
financed on the Initial Closing Date with the proceeds of (a) (i) $90,000,000 in
aggregate principal amount of the Tranche A Term Loans, (ii) $85,000,000 in
aggregate principal amount of the
<PAGE>
2
Tranche B Term Loans, (iii) $90,000,000 in aggregate principal amount of the
Tranche C Term Loans and (iv) up to $50,000,000 (subject to the limitations
described in Section 5.11) in aggregate principal amount of Revolving Loans and
(b) the net proceeds of the Senior Subordinated Notes in an aggregate principal
amount of not less than $115,000,000. If the Acquisitions are consummated on
different dates and the First Acquisition is the ATU Acquisition, then such
Acquisition will be partially financed on the Initial Closing Date with the
proceeds of (a) $60,000,000 in aggregate principal amount of the Tranche A Term
Loans, (b) $65,000,000 in aggregate principal amount of the Tranche B Term
Loans, (c) $70,000,000 in aggregate principal amount of the Tranche C Term Loans
and (d) up to $50,000,000 (subject to the limitations described in Section 5.11)
in aggregate principal amount of Revolving Loans.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Acquired EBITDA" shall mean, with respect to any Acquired Entity or
Business or any Sold Entity or Business for any period, the Consolidated EBITDA
of such Entity or Business.
"Acquired Entity or Business" has the meaning assigned to such term
in the definition of the term Adjusted Consolidated EBITDA.
"Acquisitions" means the PTI Acquisition and the ATU Acquisition.
"Acquisition Documents" means the PTI Purchase Agreement, the ATU
Purchase Agreement and the other agreements and documents entered into pursuant
thereto or in connection therewith (other than the Loan Documents and the
Subordinated Debt Documents).
<PAGE>
3
"ACS" means Alaska Communications Systems, Inc., a Delaware
corporation and a wholly owned subsidiary of the Borrower.
"Additional Equity Contribution" means a cash equity contribution by
Holdings to the Borrower in addition to the Holdings Contribution and in an
amount that will result in the percentage of the Borrower's total capitalization
(excluding cash on hand) represented by equity, determined on a pro forma basis
as of the Initial Closing Date, being not less than the percentage specified by
the Administrative Agent (which percentage will not be more than 35%), provided
that a percentage to be agreed upon of the Additional Equity Contribution will
be funded with the proceeds of common equity contributions to Holdings in
addition to the Sponsor Equity Contribution, Management Equity Contribution and
Investor Equity Contribution and the remainder of the Additional Equity
Contribution will be funded with the proceeds of the issuance of Holdings
Discount Debentures in addition to the Holdings Discount Debentures issued on
the Start Date or the Second Closing Date.
"Adjusted Consolidated EBITDA" shall mean, for any Person for any
period, Consolidated EBITDA of such Person for such period, calculated by (a)
including in the determination thereof the Acquired EBITDA of any Person,
property, business or asset acquired during such period pursuant to a
transaction permitted under Section 6.04 and not subsequently sold, transferred
or otherwise disposed of during such period to the extent acquired by the
Borrower or any Subsidiary during such period (each such Person, property,
business or asset acquired and not subsequently so disposed of, an "Acquired
Entity or Business"), based on the actual Acquired EBITDA of such Acquired
Entity or Business for such period (including the portion thereof occurring
prior to such acquisition) and (b) excluding in the determination thereof the
Acquired EBITDA of any Person, property, business or asset sold, transferred or
otherwise disposed of by the Borrower or any Subsidiary during such period (each
such Person, property, business or asset so sold or disposed of, a "Sold Entity
or Business") based on the actual Acquired EBITDA of such Sold Entity or
Business for such period (including the portion thereof occurring prior to such
sale, transfer or disposition).
"Adjusted Leverage Ratio" shall mean, on any date, the ratio of (a)
Total Debt as of such date to (b) Adjusted Consolidated EBITDA for the period of
four consecutive fiscal quarters of the Borrower most recently ended as of
<PAGE>
4
such date, all determined on a consolidated basis in accordance with GAAP.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its
capacity as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Agents" means the Administrative Agent, the Syndication Agent, the
Collateral Agent and the Documentation Agent.
"ALEC Acquisition" means ALEC Acquisition Sub. Corp., a Delaware
corporation and a wholly owned subsidiary of the Borrower.
"Alaska Entities" means Telephone Utilities of Alaska, Inc.,
Telephone Utilities of the Northland, Inc., PTI Communications of Alaska, Inc.,
Pacific Telecom Cellular of Alaska PCS, Inc. and Pacific Telecom Cellular of
Alaska, Inc.
"Alternate Base Rate" means, for any day, a rate per annum equal to
the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate
in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Revolving Lender,
the percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or
<PAGE>
5
expired, the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"Applicable Rate" means, for any day (a) with respect to any Tranche
B Term Loan, the applicable Tranche B Rate, (b) with respect to any Tranche C
Term Loan, the applicable Tranche C Rate and (c) with respect to any ABR Loan or
Eurodollar Loan that is a Revolving Loan or a Tranche A Term Loan, or with
respect to the commitment fees payable hereunder, as the case may be, the
applicable rate per annum set forth below (i) if the Closing Date or the Second
Closing Date has occurred, on the table under the heading "Combined Table" or
(ii) if neither the Closing Date nor the Second Closing Date has occurred and
the PTI Acquisition is the First Acquisition, on the table under the heading
"PTI Acquisition", or (iii) if neither the Closing Date nor the Second Closing
Date has occurred and the ATU Acquisition is the First Acquisition, on the table
under the heading "ATU Acquisition", in each case under the caption "ABR
Spread", "Eurodollar Spread" or "Commitment Fee Rate", as the case may be, based
upon the Leverage Ratio as of the most recent determination date, provided that
until 180 days after the Start Date, the "Applicable Rate" for purposes of
clause (c) shall be the applicable rate per annum set forth below in Category 1:
Combined Table
ABR Eurodollar Commitment Fee
Leverage Ratio: Spread Spread Rate
--------------- ------ ------ ----
Category 1 1.75% 2.75% 0.50%
----------
Greater than or equal to
5.50 to 1.00
Category 2
----------
Less than 5.50 to 1.00 1.50% 2.50% 0.50%
but greater than or equal
to 5.00 to 1.00
Category 3
----------
Less than 5.00 to 1.00 1.25% 2.25% 0.375%
but greater than or equal
to 4.50 to 1.00
Category 4 1.00% 2.00% 0.375%
----------
Less than 4.50 to 1.00
<PAGE>
6
ATU Acquisition
ABR Eurodollar Commitment Fee
Leverage Ratio: Spread Spread Rate
--------------- ------ ------ ----
Category 1
----------
Greater than or equal to 1.75% 2.75% 0.50%
4.25 to 1.00
Category 2
----------
Less than 4.25 to 1.00
but greater than or equal 1.50% 2.50% 0.50%
to 3.75 to 1.00
Category 3
----------
Less than 3.75 to 1.00
but greater than or equal 1.25% 2.25% 0.375%
to 3.25 to 1.00
Category 4 1.00% 2.00% 0.375%
----------
Less than 3.25 to 1.00
PTI Acquisition
ABR Eurodollar Commitment Fee
Leverage Ratio: Spread Spread Rate
--------------- ------ ------ ----
Category 1
----------
Greater than or equal to 1.75% 2.75% 0.50%
6.50 to 1.00
Category 2
----------
Less than 6.50 to 1.00
but greater than or equal 1.50% 2.50% 0.50%
to 5.50 to 1.00
Category 3
----------
Less than 5.50 to 1.00
but greater than or equal 1.25% 2.25% 0.375%
to 4.50 to 1.00
Category 4
----------
Less than 4.50 to 1.00 1.00% 2.00% 0.375%
For purposes of the foregoing, (i) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of the Borrower's fiscal year
based upon the Borrower's consolidated financial statements delivered pursuant
to Section 5.01(a) or (b) and (ii) each change in the Applicable Rate resulting
from a change in the Leverage Ratio shall be effective during the period
commencing on and including the date of delivery to the Administrative Agent of
such consolidated financial statements indicating such change and ending on the
date immediately preceding the effective date of the next such change; provided
that the Leverage Ratio shall be deemed to be in Category 1 (A) at any time that
an Event of Default has occurred and is continuing or (B) at the option of the
Administrative Agent or at the request of the Required Lenders if the Borrower
fails to deliver the consolidated financial statements required to be delivered
by it pursuant to Section 5.01(a) or (b), during the period from the expiration
of the time
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7
for delivery thereof until such consolidated financial statements are delivered.
"APUC" means the Alaska Public Utilities Commission.
"Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"ATU Acquisition" means the acquisition by ACS or other Wholly-Owned
Subsidiaries of the Borrower from the Municipality of the ATU Business in
accordance with the ATU Purchase Agreement.
"ATU Business" means (x) the assets of Anchorage Telephone Utility
(also known as ATU Telecommunications) used in its business as a local exchange
carrier, (y) the outstanding capital stock of ATU Communications, Inc., MACtel,
Inc., ATU Long Distance, Inc. and Peninsula Cellular Services, Inc. and (z) the
ATU Minority Interests, in each case to be acquired by ACS pursuant to (and as
specified in) the ATU Purchase Agreement.
"ATU Minority Interests" means the minority interests in Alaska
Network Systems, Inc., Alaska Choice Television, L.L.C., Internet Alaska, Inc.,
and Security One, L.L.C.
"ATU Purchase Agreement" means the Asset Purchase Agreement, dated
as of October 20, 1998, by and between ACS and the Municipality.
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8
"ATU Purchase Price" means an aggregate cash purchase price equal to
$295,000,000 (subject to certain purchase price adjustments in accordance with
the ATU Purchase Agreement).
"ATU Term Facilities Indebtedness" means the Tranche A Term Loans,
Tranche B Term Loans and Tranche C Term Loans drawn on the closing date of the
ATU Acquisition.
"Authorizations" means all applications, filings, reports,
documents, recordings and registrations with, and all validations, exemptions,
franchises, waivers, approvals, orders or authorizations, consents, licenses,
certificates and permits from any Governmental Authority.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD
Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrower" means Alaska Communications Systems Holdings, Inc.
(formerly ALEC Acquisition Corporation), a Delaware corporation.
"Borrowing" means (a) Loans of the same Class and Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect, or (b) a Swingline Loan.
"Borrowing Request" means a request by the Borrower for a Borrowing
in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City or Alaska are authorized or
required by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Capital Expenditures" means, for any period, (a) the additions to
property, plant and equipment and other capital expenditures of the Borrower and
its consolidated Subsidiaries that are (or would be) set forth in a consolidated
statement of cash flows of the Borrower for such period prepared in accordance
with GAAP and (b) Capital Lease Obligations incurred by the Borrower and its
consolidated Subsidiaries during such period.
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9
"Capital Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of ownership, directly
or indirectly, beneficially or of record, by any Person other than Holdings of
any Equity Interest in the Borrower; (b) prior to an IPO, the failure by the
Sponsor to own, directly or indirectly, beneficially and of record, Equity
Interests in Holdings representing at least a majority of each of the aggregate
ordinary voting power and aggregate equity value represented by the issued and
outstanding Equity Interests in Holdings; (c) after an IPO, the failure by the
Sponsor to own, directly or indirectly, beneficially and of record, Equity
Interests in Holdings representing at least 35% of each of the aggregate
ordinary voting power and the aggregate equity value represented by the issued
and outstanding Equity Interests in Holdings; (d) after an IPO, the acquisition
of ownership, directly or indirectly, beneficially or of record, by any Person
or group (within the meaning of the Securities Exchange Act of 1934 and the
rules of the Securities and Exchange Commission thereunder as in effect on the
date hereof) other than the Sponsor, of Equity Interests representing more than
35% of either the aggregate ordinary voting power or the aggregate equity value
represented by the issued and outstanding Equity Interests in Holdings; (e)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of Holdings by Persons who were neither (i) nominated by the board of
directors of Holdings, (ii) appointed by directors so nominated nor (iii)
designated or nominated by the Sponsor; (f) the acquisition of direct or
indirect Control of Holdings by any Person or group other than the Sponsor; or
(g) the occurrence of a "Change of Control", as defined in the Subordinated Debt
Documents or the Holdings Discount Indenture.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
the Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of
such Lender or by
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10
such Lender's or the Issuing Bank's holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans or Swingline
Loans and, when used in reference to any Commitment, refers to whether such
Commitment is a Revolving Commitment, Tranche A Commitment, Tranche B Commitment
or Tranche C Commitment.
"Closing Date" means the date on which (a) the conditions specified
in Section 4.02 are satisfied (or waived in accordance with Section 9.02) and
(b) the drawing of the Term Facilities and the simultaneous consummation of the
Acquisitions occur.
"CNI" means CenturyTel of the Northwest, Inc., formerly known as
Pacific Telecom, Inc., a Washington corporation.
"CWI" means CenturyTel Wireless, Inc., formerly known as Century
Cellunet, Inc., a Louisiana corporation.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" means any and all "Collateral", as defined in any
applicable Security Document.
"Collateral Account" means a collateral account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, which shall be established pursuant to documentation
reasonably satisfactory to the Administrative Agent.
"Collateral Agent" shall have the meaning given such term in the
Security Agreement.
"Combined Purchase Price" means the PTI Purchase Price and the ATU
Purchase Price.
"Commitment" means a Revolving Commitment, Tranche A Commitment,
Tranche B Commitment or Tranche C Commitment, or any combination thereof (as the
context requires).
<PAGE>
11
"Communications Law" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority
(including but not limited to the FCC and the APUC), relating in any way to the
offering or provision of communications.
"Communication Liability" means any liability, contingent or
otherwise (including any liability for damages, costs, fines, penalties or
indemnities), of Holdings, the Borrower or any Subsidiary directly or indirectly
resulting from or based upon (a) the violation of any Communications Law, (b)
the generation or use of communications, (c) exposure to communications or radio
frequency emissions or (d) any contract, agreement or other consensual agreement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Consolidated Cash Interest Expense" means, for any period,
Consolidated Interest Expense less the sum for such period of (a) non-cash
expenses for interest payable in kind, (b) to the extent included in
Consolidated Interest Expense, the amortization of fees paid by Holdings, the
Borrower or their Subsidiaries on or prior to the earlier of the Closing Date,
the Second Closing Date or December 31, 1999, in connection with the
Transactions and (c) the amortization of debt discounts, if any, or fees in
respect of Hedging Agreements, provided that there shall be included or
excluded, as applicable, in determining Consolidated Cash Interest Expense for
any period the cash interest expense (calculated in the same manner as
Consolidated Cash Interest Expense is calculated) for such period (including the
portion thereof accruing prior to the applicable acquisition or sale) of any
Acquired Entity or Business or Sold Entity or Business acquired or sold, as
applicable, during such period assuming any Indebtedness incurred or repaid in
connection with the acquisition or sale had been incurred or repaid on the first
day of such period.
"Consolidated EBIT" means, for any Person for any period,
Consolidated Net Income of such Person, before total interest expense (whether
cash or non-cash) and provisions for taxes based on income, and determined
without giving effect to any extraordinary gains included in determining
Consolidated Net Income for such Person for such period.
"Consolidated EBITDA" means, for any Person for any period,
Consolidated EBIT of such Person, adjusted by adding thereto, without
duplication, the amount of all
<PAGE>
12
depreciation expense, amortization expense and other non-cash charges that were
deducted in determining Consolidated EBIT for such Person for such period.
"Consolidated Interest Expense" means, for any period, total
interest expense (including that attributable to Capital Lease Obligations in
accordance with GAAP), whether cash or non-cash, of Holdings, the Borrower and
the Subsidiaries determined on a consolidated basis with respect to all
outstanding Indebtedness of Holdings, the Borrower and the Subsidiaries,
including, without limitation, (a) all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (b) amortization of the net costs or benefits under Hedging
Agreements and amortization of the (c) interest-equivalent costs that are
associated with any payments made to obtain any Hedging Agreement, deferred
financing costs and any interest expense on deferred compensation arrangements
and any other non-cash interest to the extent included in total interest
expense.
"Consolidated Net Income" means, for any Person for any period, the
net income (or loss) after provision for taxes and before any pay-in-kind or
non-cash accumulating dividend on preferred stock of such Person and its
subsidiaries on a consolidated basis for such period taken as a single
accounting period, provided that there shall be excluded from such net income
(or loss) the income of any Person in which any other Person or Persons (other
than the Borrower or any Subsidiary or any director holding qualifying shares in
compliance with applicable law) owns or own aggregate Equity Interests
representing more than 50% of the outstanding Equity Interests in such Person
except to the extent of the amount of dividends or other distributions actually
paid to the Borrower or any of the Subsidiaries by such Person during such
period.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any event or condition that constitutes an Event of
Default or that upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
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13
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"Disqualified Stock" means, with respect to any Person, any Equity
Interest that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable) or upon the
happening of any event: (a) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise; (b) is convertible or exchangeable for
Indebtedness or Disqualified Stock; or (c) is redeemable at the option of the
holder thereof, in whole or in part, in each case on or prior to the first
anniversary of the Tranche C Maturity Date; provided, however, that any Equity
Interests that would not constitute Disqualified Stock but for the provisions
thereof giving holders thereof the right to require such Person to repurchase or
redeem such Equity Interests upon the occurrence of an "asset sale" or "Change
of Control" occurring prior to the first anniversary of the Tranche C Maturity
Date shall not constitute Disqualified Stock if the "asset sale" or "Change of
Control" provisions applicable to such Equity Interests are not more favorable
to the holders of such Equity Interests than the "asset sale" provisions and the
"Change of Control", provisions, respectively, contained in the Subordinated
Debt Documents.
"Documentation Agent" means Credit Suisse First Boston, in its
capacity as documentation agent for the Lenders hereunder.
"dollars" or "$" refers to lawful money of the United States of
America.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, Release or threatened Release of any
Hazardous Material or to public health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
investigation and remediation, natural resource damages, fines, penalties or
indemnities), of Holdings, the Borrower or any Subsidiary directly or indirectly
resulting from or based upon (a) any actual or alleged violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or
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14
disposal of any Hazardous Materials, (c) any actual or alleged exposure to any
Hazardous Materials, (d) the Release or threatened Release of any Hazardous
Materials or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Equity Contributions" means, collectively, the Sponsor Equity
Contribution, the Management Equity Contribution, the Investor Equity
Contribution and the Holdings Contribution in respect of the Holdings Financing
Amount.
"Equity Contribution Date" means the earlier of (a) the date of
termination of or the failure of a condition to closing under the PTI Purchase
Agreement or (b) August 10, 1999.
"Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person and any
options warrants or other rights to acquire such Equity Interests, but excluding
any debt securities convertible into such Equity Interests.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan;
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15
(f) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article
VII.
"Excess Cash Flow" means, for any fiscal year, the sum (without
duplication) of:
(a) the consolidated net income (or loss) of Holdings, the Borrower
and its consolidated Subsidiaries for such fiscal year, after provision
for taxes, adjusted to exclude any gains or losses attributable to
Prepayment Events; plus
(b) depreciation, amortization and other non-cash charges or losses
deducted in determining such consolidated net income (or loss) for such
fiscal year; plus
(c) the sum of (i) the amount, if any, by which Net Working Capital
decreased during such period plus (ii) the net amount, if any, by which
the consolidated deferred revenues of Holdings, the Borrower and its
consolidated Subsidiaries increased during such period plus (iii) the
aggregate principal amount of Capital Lease Obligations and other
Indebtedness incurred during such period to finance Capital Expenditures,
to the extent that mandatory principal payments in respect of such
Indebtedness would, pursuant to clause (f) below, be deducted in
determining Excess Cash Flow when made; minus
(d) the sum of (i) any non-cash gains included in determining such
consolidated net income (or loss) for such fiscal year plus (ii) the
amount, if any, by which Net Working Capital increased during such fiscal
year plus (iii) the amount, if any, by which the consolidated deferred
revenues of Holdings, the Borrower and
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16
its consolidated Subsidiaries decreased during such fiscal year; minus
(e) Capital Expenditures for such period, except to the extent such
Capital Expenditures are financed with the proceeds of asset dispositions
(including casualty and condemnation events) or with the proceeds of the
sale of equity by, or the contribution of equity to, Holdings, the
Borrower or any Subsidiary (other than to or by Holdings, the Borrower or
any Subsidiary); minus
(f) the aggregate principal amount of Indebtedness repaid or prepaid
by Holdings, the Borrower and its consolidated Subsidiaries during such
period, excluding (i) Indebtedness in respect of Revolving Loans,
Swing-line Loans and Letters of Credit (unless accompanied by a permanent
reduction of the Revolving Commitments), (ii) Term Loans prepaid pursuant
to Section 2.11(a), 2.11(c) or (d), (iii) repayments or prepayments of
Indebtedness financed by incurring other Indebtedness, to the extent that
mandatory principal payments in respect of such other Indebtedness would,
pursuant to this clause (f), be deducted in determining Excess Cash Flow
when made and (iv) Indebtedness referred to in clauses (iv) and (v) of
Section 6.01(a).
"Excluded Taxes" means, with respect to the Administrative Agent,
any Lender, the Issuing Bank or any other recipient of any payment to be made by
or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction described in clause (a) above and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 2.19(b)), any withholding tax that (i) is in effect and would
apply to amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office), except
to the extent that such Foreign Lender (or its assignor, if any) was entitled,
at the time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to any withholding tax
pursuant to Section 2.17(a), or (ii) is attributable to such Foreign Lender's
failure to comply with Section 2.17.
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17
"FCC" means the United States Federal Communications Commission or
any successor agency thereof.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.
"First Acquisition" means, if the Acquisitions are consummated on
different dates, the first of the Acquisitions to be consummated and the
transactions related thereto.
"First Acquisition Indebtedness" means, if the Acquisitions are
consummated on different dates, whichever of the PTI Term Facilities
Indebtedness and the ATU Term Facilities Indebtedness is incurred first.
"First Acquisition Loan Parties" means Holdings, the Borrower and
the First Acquisition Subsidiary Loan Parties.
"First Acquisition Mortgaged Property" means any Mortgaged Property
owned by a First Acquisition Loan Party and acquired, directly or indirectly, in
connection with the First Acquisition.
"First Acquisition Subsidiary Loan Parties" means each Subsidiary
(a) in existence prior to the First Acquisition or (b) acquired, directly or
indirectly, by the Borrower in connection with the First Acquisition, in each
case that is not a Foreign Subsidiary.
"Foreign Lender" means any Lender that is organized under the laws
of a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and
<PAGE>
18
the District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized under
the laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Guarantee Agreements" means the Parent Guarantee Agreement and the
Subsidiary Guarantee Agreement.
"Hazardous Materials" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious
<PAGE>
19
or medical wastes, and all substances or wastes of any nature regulated pursuant
to any Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Holdings" means ALEC Holdings, Inc., a Delaware corporation.
"Holdings Contribution" means the purchase by Holdings of all the
newly issued and outstanding common stock of the Borrower for an amount in cash
paid to the Borrower equal to the aggregate amount of the Equity Contributions
plus the Holdings Financing Amount.
"Holdings Discount Debentures" means the discount debentures issued
by Holdings in connection with the Acquisitions pursuant to the Holdings
Discount Indenture for gross cash proceeds of not less than $25,000,000 in
accordance with Section 4.02(p) or 4.03(o), as applicable.
"Holdings Discount Indenture" means the indenture to be entered into
by Holdings in connection with the issuance of the Holdings Discount Debentures,
together with all instruments and other agreements entered into by Holdings in
connection therewith, all in form and substance satisfactory to the
Administrative Agent.
"Holdings Financing Amount" means an amount of not less than
$25,000,000.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid (excluding current accounts
payable and accrued expenses incurred in the ordinary course of business), (d)
all obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding current accounts payable and accrued expenses incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured
<PAGE>
20
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person
of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes and Other
Taxes.
"Indemnity, Subrogation and Contribution Agreement" means the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit F, among the Borrower, the Subsidiary Loan Parties and the
Administrative Agent.
"Information Memorandum" means the Confidential Information
Memorandum dated February 9, 1999, as updated by the Memorandum dated April 27,
1999, relating to the Borrower and the Transactions.
"Initial Closing Date" means, if the Acquisitions are consummated on
different dates, the date on which (a) the conditions specified in Section 4.02
are satisfied (or waived in accordance with Section 9.02) and (b) the initial
drawing of the Term Facilities and the consummation of the First Acquisition
occur.
"Interest Coverage Ratio" shall have the meaning set forth in
Section 6.12.
"Interest Election Request" means a request by the Borrower to
convert or continue a Revolving Borrowing or Term Borrowing in accordance with
Section 2.07.
"Interest Payment Date" means (a) with respect to any ABR Loan
(other than a Swingline Loan), the last day of each March, June, September and
December, (b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior
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21
to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period, and (c) with
respect to any Swingline Loan, the day that such Loan is required to be repaid.
"Interest Period" means, with respect to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower may elect; provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Investor Equity Contribution" means the contribution of up to an
aggregate amount not to exceed $30,000,000 in cash to Holdings as common equity.
"IPO" means an underwritten public offering by Holdings of Equity
Interests of Holdings pursuant to a registration statement filed with the
Securities and Exchange Commission in accordance with the Securities Act of
1933, as amended.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as
the issuer of Letters of Credit hereunder, and its successors in such capacity
as provided in Section 2.05(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"LC Disbursement" means a payment made by the Issuing Bank pursuant
to a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of all
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22
LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time. The LC Exposure of any Revolving Lender at any time shall
be its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lender.
"Letter of Credit" means any letter of credit issued pursuant to
this Agreement.
"Leverage Ratio" means, on any date, the ratio of (x) Total Debt on
such date to (y) Consolidated EBITDA for the period of four consecutive fiscal
quarters of the Borrower most recently ended as of such date, all determined on
a consolidated basis in accordance with GAAP.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"License Subsidiary" means a Subsidiary of the Borrower, the sole
purpose of which shall be to hold a single Operating License and to perform
functions incidental thereto.
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23
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement and the Security Documents.
"Loan Parties" means Holdings, the Borrower and the Subsidiary Loan
Parties.
"Loans" means the loans made by the Lenders to the Borrower pursuant
to this Agreement.
"Management Equity Contribution" means a contribution by the
Management Investors of an aggregate amount not to exceed $5,000,000 in cash to
Holdings as common equity.
"Management Investors" means Charles E. Robinson and Wesley E.
Carson.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations or condition, financial or otherwise, of Holdings,
the Borrower and the Subsidiaries taken as a whole, (b) the ability of any Loan
Party to perform any of its obligations under any Loan Document or (c) the
rights of or benefits available to the Lenders under any Loan Document.
"Material Indebtedness" means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of Holdings, the Borrower and the Subsidiaries in an
aggregate principal amount exceeding $5,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of Holdings,
the Borrower or any Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that Holdings, the Borrower or such Subsidiary would be required to pay if such
Hedging Agreement were terminated at such time.
"Moody's" means Moody's Investors Service, Inc.
<PAGE>
24
"Mortgage" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations. Each Mortgage shall be
satisfactory in form and substance to the Collateral Agent.
"Mortgaged Property" means, initially, each parcel of real property
and the improvements thereto owned by a Loan Party and identified on Schedule
1.01, and includes each other parcel of real property and improvements thereto
with respect to which a Mortgage is granted pursuant to Section 5.12 or 5.13.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001 (a) (3) of ERISA.
"Municipality" means the Municipality of Anchorage, a municipality
located in the State of Alaska.
"Net Cash Amount" means the amount of cash and cash equivalents
included in the Assets (as defined in the ATU Purchase Agreement).
"Net Plant Amount" means the amount equal to the increase, if any,
in the ATU Purchase Price pursuant to Section 2.5(b) of the ATU Purchase
Agreement.
"Net Proceeds" means, with respect to any event, (a) the cash
proceeds received in respect of such event, including (i) any cash received in
respect of any non-cash proceeds, but only as and when received, (ii) in the
case of a casualty, insurance proceeds and (iii) in the case of a condemnation
or similar event, condemnation awards and similar payments, net of (b) the sum
of (i) all reasonable fees and out-of-pocket expenses paid by Holdings, the
Borrower and the Subsidiaries to third parties in connection with such event,
(ii) in the case of a sale, transfer or other disposition of an asset (including
pursuant to a sale and leaseback transaction or a casualty or a condemnation or
similar proceeding), the amount of all payments required to be made by Holdings,
the Borrower and the Subsidiaries as a result of such event to repay
Indebtedness (other than Loans) secured by such asset or otherwise subject to
mandatory prepayment as a result of such event, and (iii) the amount of all
taxes paid (or reasonably estimated to be payable) by Holdings, the Borrower and
the Subsidiaries, and the amount of any reserves established by Holdings, the
Borrower and the Subsidiaries to fund contingent liabilities reasonably
estimated to be payable, in each case during the year that such event occurred
or the next succeeding year and that are directly attributable to such event (as
deter-
<PAGE>
25
mined reasonably and in good faith by the chief financial officer of the
Borrower).
"Net Working Capital" means, at any date, (a) the consolidated
current assets of Holdings, the Borrower and its consolidated Subsidiaries as of
such date (excluding cash and Permitted Investments) minus (b) the consolidated
current liabilities of Holdings, the Borrower and its consolidated Subsidiaries
as of such date (excluding current liabilities in respect of Indebtedness). Net
Working Capital at any date may be a positive or negative number. Net Working
Capital increases when it becomes more positive or less negative and decreases
when it becomes less positive or more negative.
"Obligations" has the meaning assigned to such term in (a) the
Security Agreement, (b) the Pledge Agreement and (c) the Guarantee Agreements.
"Operating Licenses" means all material licenses, permits and other
approvals issued by the FCC or APUC to the ATU Business, the Alaska Entities,
the Borrower or any Subsidiary, including any paging, mobile telephone,
specialized mobile radio, microwave or other license.
"Other Taxes" means any and all present or future recording stamp,
documentary, excise, transfer, sales, property or similar taxes, charges or
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"Parent Guarantee Agreement" means the Parent Guarantee Agreement,
substantially in the form of Exhibit D, made by Holdings in favor of the
Administrative Agent for the benefit of the Secured Parties.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" means a certificate in the form of Exhibit
C or any other form approved by the Collateral Agent.
"Permitted Acquisition" means any acquisition, to the extent such
acquisition occurs after the earlier of the Closing Date, the Second Closing
Date and December 31, 1999, of all or substantially all the assets of, or shares
or other Equity Interests in, a Person or division or line of business of a
Person that is engaged in a reasonably related
<PAGE>
26
(ancillary or complementary) line of business or lines of business, as
reasonably determined by the Board of Directors of the Borrower (or any
subsequent investment made in a previously acquired Permitted Acquisition), that
was not preceded by an unsolicited tender offer for such Person, if immediately
after giving effect thereto (a) no Default or Event of Default shall have
occurred and be continuing or would result therefrom, (b) all transactions
related thereto shall be consummated in accordance with applicable law, (c) 100%
of the Equity Interest of any acquired or newly formed corporation, partnership,
association or other business entity are owned directly by the Borrower or a
domestic Wholly Owned Subsidiary and all actions required to be taken, if any,
with respect to such acquired or newly formed subsidiary under Section 5.12
shall have been taken, and (d) (i) Holdings, the Borrower and the Subsidiaries
shall be in compliance, on a pro forma basis after giving effect to such
acquisition or formation, with the covenants contained in Sections 6.12 and 6.13
recomputed as at the last day of the most recently ended fiscal quarter of
Holdings, the Borrower and the Subsidiaries as if such acquisition had occurred
on the first day of each relevant period for testing such compliance, and the
Borrower shall have delivered to the Administrative Agent an officers'
certificate to such effect, together with all relevant financial information for
such subsidiary or assets, and (ii) any acquired or newly formed subsidiary
shall not be liable for any Indebtedness (except for Indebtedness permitted by
6.01).
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.05;
(b) carriers', warehousemen' s, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by more
than 30 days or are being contested in compliance with Section 5.05;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obliga-
<PAGE>
27
tions of a like nature, in each case in the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of Holdings, the Borrower or any
Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in
each case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of
not less than $250,000,000 or a foreign bank that has a combined capital
and surplus and undivided profits of not less than $125,000,000; and
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered
into with a financial institution satisfying the criteria described in
clause (c) above.
<PAGE>
28
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" means the Pledge Agreement, substantially in the
form of Exhibit G, among Holdings, the Borrower, the other Subsidiaries party
thereto and the Collateral Agent for the benefit of the Secured Parties.
"Prepayment Event" means:
(a) any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of Holdings, the
Borrower or any Subsidiary, other than (i) dispositions described in
clauses (a), (b) and (c) of Section 6.05 and (ii) other dispositions
resulting in aggregate Net Proceeds not exceeding $5,000,000 during any
fiscal year of the Borrower; or
(b) any casualty or other insured damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of, any
property or asset of Holdings, the Borrower or any Subsidiary, but only to
the extent that the Net Proceeds therefrom have not been applied to
repair, restore or replace such property or asset within one year after
such event; or
(c) the issuance by the Borrower of Equity Interests pursuant to the
Additional Equity Contribution, or the receipt by the Borrower of any
capital contribution pursuant to the Additional Equity Contribution; or
(d) the incurrence by Holdings, the Borrower or any Subsidiary of
any Indebtedness, other than Indebtedness permitted pursuant to Section
6.01.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be effec-
<PAGE>
29
tive from and including the date such change is publicly announced as being
effective.
"PTI Acquisition" means the acquisition by ALEC Acquisition or any
other Wholly Owned Subsidiary from the Sellers of all of the outstanding capital
stock of the Alaska Entities in accordance with the PTI Purchase Agreement.
"PTI Adjustment Amount" means the amount equal to the sum, if
positive, of the Adjustment Amount plus the Additional Amount (in each case as
defined in Section 2.2(b) of the PTI Purchase Agreement).
"PTI Purchase Agreement" means the Purchase Agreement, dated as of
August 14, 1998, by and among the Borrower and the Sellers.
"PTI Purchase Price" means an aggregate cash purchase price equal to
$408,500,000 (subject to certain purchase price adjustments in accordance with
the PTI Purchase Agreement).
"PTI Term Facilities Indebtedness" means the Tranche A Term Loans,
Tranche B Term Loans and Tranche C Term Loans drawn on the closing date of the
PTI Acquisition.
"Purchase Agreements" means the PTI Purchase Agreement and the ATU
Purchase Agreement.
"Register" has the meaning set forth in Section 9.04(c).
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Release" means any release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.
"Required Lenders" means, at any time, Lenders having Revolving
Exposures, Term Loans and unused Commitments representing more than 50% of the
sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at such time.
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30
"Related Fund" means, with respect to any Lender that is a fund or
trust that makes, buys or invests in commercial loans, any other fund or trust
that makes, buys or invests in commercial loans and is managed by the same
investment advisor as such Lender.
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interests in Holdings, the Borrower or any Subsidiary, or any payment (whether
in cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancelation or termination of any Equity Interests in Holdings, the Borrower or
any Subsidiary or any option, warrant or other right to acquire any such Equity
Interests in Holdings, the Borrower or any Subsidiary.
"Revolving Availability Period" means the period from and including
the Start Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.
"Revolving Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit and Swingline Loans hereunder, expressed as
an amount representing the maximum aggregate amount of such Lender's Revolving
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender's Revolving Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders' Revolving Commitments is $75,000,000.
"Revolving Exposure" means, with respect to any Lender at any time,
the sum of the outstanding principal amount of such Lender's Revolving Loans and
its LC Exposure and Swingline Exposure at such time.
"Revolving Lender" means a Lender with a Revolving Commitment or, if
the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"Revolving Loan" means a Loan made pursuant to clause (a) (iv) or
(b) (vii) of Section 2.01.
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31
"Revolving Maturity Date" means the date that is seven years after
the Start Date or the first Business Day thereafter, if such date is not a
Business Day.
"S&P" means Standard & Poor's Ratings Service.
"Second Acquisition" means, if the Acquisitions are consummated on
different dates, the second of the Acquisitions to be consummated and the
Transactions related thereto.
"Second Acquisition Indebtedness" means whichever of the PTI Term
Facilities Indebtedness and the ATU Term Facilities Indebtedness is incurred
second.
"Second Acquisition Loan Parties" means Holdings, the Borrower and
the Second Acquisition Subsidiary Loan Parties.
"Second Acquisition Mortgaged Property" means any Mortgaged Property
owned by a Second Acquisition Loan Party and acquired, directly or indirectly,
in connection with the Second Acquisition.
"Second Acquisition Subsidiary Loan Parties" means each Subsidiary
acquired, directly or indirectly, by the Borrower in connection with the Second
Acquisition that is not a Foreign Subsidiary.
"Second Closing Date" means, if the Acquisitions are consummated on
different dates, the date on which (a) the conditions specified in Section 4.03
are satisfied (or waived in accordance with Section 9.02) and (b) the second
drawing of the Term Facilities and the consummation of the Second Acquisition
occur.
"Secured Parties" shall have the meaning given such term in the
Security Agreement.
"Security Agreement" means the Security Agreement, substantially in
the form of Exhibit H, among the Borrower, Holdings, the Subsidiary Loan Parties
and the Collateral Agent for the benefit of the Secured Parties.
"Security Documents" means the Security Agreement, the Guarantee
Agreements, the Pledge Agreement, the Indemnity, Subrogation and Contribution
Agreement, the Mortgages and each other security agreement or other instrument
or document executed and delivered pursuant to Section 5.12 or 5.13 to secure
any of the Obligations.
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32
"Sellers" means CNI and CWI.
"Senior Subordinated Notes" means the $150,000,000 in aggregate
principal amount of senior subordinated notes issued by the Borrower pursuant to
the Subordinated Debt Documents.
"Sold Entity or Business" has the meaning assigned to such term in
the definition of the term Adjusted Consolidated EBITDA.
"Sponsor" means Fox Paine Capital Fund L.P. and its Affiliates
(other than Affiliates that are operating companies or controlled by operating
companies).
"Sponsor Equity Contribution" means a contribution of an aggregate
amount of not less than $120,000,000 (less the aggregate amount of the
Management Equity Contribution and the Investor Equity Contribution) in cash to
Holdings as common equity.
"Start Date" means the first to occur of the Initial Closing Date
and the Closing Date.
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subordinated Debt Documents" means the indenture or other agreement
under which the Senior Subordinated Notes are issued and all other instruments,
agreements and other documents evidencing or governing the Senior Subordinated
<PAGE>
33
Notes or providing for any Guarantee or other right in respect thereof.
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or, in the case
of a partnership, more than 50% of the general partnership interests are, as of
such date, owned, controlled or held, by the parent or one or more subsidiaries
of the parent or by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower. For purposes of
the representations and warranties made herein on (and the conditions to
borrowing on) the Closing Date, the Initial Closing Date or the Second Closing
Date, as applicable, the term "Subsidiary" includes, if the ATU Acquisition is
to occur on such date, each of (a) ATU Communications, Inc., MACtel, Inc., ATU
Long Distance, Inc. and Peninsula Cellular Services, Inc. and (b) the entity or
entities containing the assets of ATU Telecommunications and, if the PTI
Acquisition is to occur on such date, each of the Alaska Entities and their
respective subsidiaries.
"Subsidiary Guarantee Agreement" means the Subsidiary Guarantee
Agreement, substantially in the form of Exhibit E, made by the Subsidiary Loan
Parties in favor of the Administrative Agent for the benefit of the Secured
Parties.
"Subsidiary Loan Party" means any Subsidiary that is not a Foreign
Subsidiary.
"Swingline Exposure" means, at any time, the aggregate principal
amount of all Swingline Loans outstanding at such time. The Swingline Exposure
of any Lender at any time shall be its Applicable Percentage of the total
Swingline Exposure at such time.
"Swingline Lender" means The Chase Manhattan Bank, in its capacity
as lender of Swingline Loans hereunder.
"Swingline Loan" means a Loan made pursuant to Section 2.04.
<PAGE>
34
"Syndication Agent" means the Canadian Imperial Bank of Commerce, in
its capacity as syndication agent for the Lenders hereunder.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Loan Commitments" means Tranche A Commitments, Tranche B
Commitments and Tranche C Commitments.
"Term Loans" means Tranche A Term Loans, Tranche B Term Loans and
Tranche C Term Loans.
"Test Period" means, for any determination made on a specific date,
the period of four consecutive fiscal quarters of the Borrower most recently
ended as of such date (taken as one accounting period).
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15 (519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Total Debt" means, with respect to Holdings, the Borrower and the
Subsidiaries on a consolidated basis at any time (without duplication), all
Indebtedness consisting of Capital Lease Obligations, Indebtedness for borrowed
money and Indebtedness in respect of the deferred purchase price of property or
services of Holdings, the Borrower and the Subsidiaries on a consolidated basis
at such time.
"Tranche A Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Tranche A Term Loans hereunder on the
Start Date and Second Closing Date, if any, expressed as an amount representing
the maximum aggregate principal amount of the Tranche A Term Loans to be made by
such Lender hereunder, as such commit-
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35
ment may be (a) reduced from time to time pursuant to Section 2.08 and (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial amount of each Lender's Tranche A
Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Tranche A Commitment, as
applicable. The initial aggregate amount of the Lenders' Tranche A Commitments
is $150,000,000.
"Tranche A Lender" means a Lender with a Tranche A Commitment or an
outstanding Tranche A Term Loan.
"Tranche A Maturity Date" means the date that is seven and one-half
years after the Start Date or the first Business Day thereafter, if such date is
not a Business Day.
"Tranche A Term Loan" means a Loan made pursuant to clause (a) (i),
(b) (i) or (b) (ii) of Section 2.01.
"Tranche B Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Tranche B Term Loans hereunder on the
Start Date and Second Closing Date, if any, expressed as an amount representing
the maximum aggregate principal amount of the Tranche B Term Loans to be made by
such Lender hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender's Tranche B Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Tranche B Commitment, as applicable. The initial aggregate amount of the
Lenders' Tranche B Commitments is $150,000,000.
"Tranche B Lender" means a Lender with a Tranche B Commitment or an
outstanding Tranche B Term Loan.
"Tranche B Maturity Date" means the date that is eight and one-half
years after the Start Date or the first Business Day thereafter, if such date is
not a Business Day.
"Tranche B Rate" means, with respect to any Tranche B Term Loan, (a)
2.00% per annum, in the case of an ABR Loan, or (b) 3.00% per annum, in the case
of a Eurodollar Loan.
"Tranche B Term Loan" means a Loan made pursuant to clause (a) (ii),
(b) (iii) or (b) (iv) of Section 2.01.
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36
"Tranche C Term Loan" means a Loan made pursuant to clause (a)
(iii), (b) (v) or (b) (vi) of Section 2.01.
"Tranche C Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Tranche C Term Loans hereunder on the
Start Date and Second Closing Date, if any, expressed as an amount representing
the maximum aggregate principal amount of the Tranche C Term Loans to be made by
such Lender hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender's Tranche C Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Tranche C Commitment, as applicable. The initial aggregate amount of the
Lenders' Tranche C Commitments is $135,000,000.
"Tranche C Lender" means a Lender with a Tranche C Commitment or an
outstanding Tranche C Term Loan.
"Tranche C Maturity Date" means the date that is nine years after
the Start Date or the first Business Day thereafter, if such date is not a
Business Day.
"Tranche C Rate" means, with respect to any Tranche C Term Loan, (a)
2.25% per annum, in the case of an ABR Loan, or (b) 3.25% per annum, in the case
of a Eurodollar Loan.
"Transaction Costs" means the fees and expenses incurred by
Holdings, the Borrower or any Subsidiary in connection with the Transactions.
"Transactions" means, collectively, the transactions described in
the preamble of this Agreement, including but not limited to the Acquisitions
and the borrowings under this Credit Agreement.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Wholly Owned Subsidiary" means a Subsidiary all the Equity Interest
of which (other than directors' qualifying shares) is owned by the Borrower or
another Wholly Owned Subsidiary.
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37
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes
of this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time, provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the
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38
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions set
forth herein, each Lender agrees:
(a) if the Acquisitions are consummated simultaneously, (i) to make
a Tranche A Term Loan to the Borrower on the Start Date in a principal
amount not exceeding its Tranche A Commitment, (ii) to make a Tranche B
Term Loan to the Borrower on the Start Date in a principal amount not
exceeding its Tranche B Commitment, (iii) to make a Tranche C Term Loan to
the Borrower on the Start Date in a principal amount not exceeding its
Tranche C Commitment and (iv) to make Revolving Loans to the Borrower on
the Start Date and from time to time during the Revolving Availability
Period in an aggregate principal amount that will not result in such
Lender's Revolving Exposure exceeding such Lender's Revolving Commitment;
(b) if the Acquisitions are consummated on different dates, (i) to
make a Tranche A Term Loan to the Borrower on the Start Date in a
principal amount not to exceed the lesser of its Tranche A Commitment and
its pro rata share (based on the Tranche A Commitments of all the Lenders)
of (A) $90,000,000, if the PTI Acquisition is the First Acquisition, or
(B) $60,000,000 (subject to reduction as provided in Section 2.10(g)
(iii), if the ATU Acquisition is the First Acquisition, (ii) to make a
Tranche A Term Loan to the Borrower on the Second Closing Date, if any, in
a principal amount not to exceed its remaining unused Tranche A
Commitment, (iii) to make a Tranche B Term Loan to the Borrower on the
Start Date in a principal amount not to exceed the lesser of its Tranche B
Commitment and its pro rata share (based on the Tranche B Commitments of
all the Lenders) of (A) $85,000,000, if the PTI Acquisition is the First
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39
Acquisition, or (B) $65,000,000 (subject to reduction as provided in
Section 2.10(g) (iii)), if the ATU Acquisition is the First Acquisition,
(iv) to make a Tranche B Term Loan to the Borrower on the Second Closing
Date, if any, in a principal amount not to exceed its remaining unused
Tranche B Commitment, (v) to make a Tranche C Term Loan to the Borrower on
the Start Date in a principal amount not to exceed the lesser of its
Tranche C Commitment and its pro rata share (based on the Tranche C
Commitments of all the Lenders) of (A) $90,000,000, if the PTI Acquisition
is the First Acquisition, or (B) $70,000,000 (subject to reduction as
provided in Section 2.10(g) (iii)), if the ATU Acquisition is the First
Acquisition, (vi) to make a Tranche C Term Loan to the Borrower on the
Second Closing Date, if any, in a principal amount not to exceed its
remaining unused Tranche C Commitment and (vii) to make Revolving Loans to
the Borrower on the Start Date and the Second Closing Date and from time
to time during the Revolving Availability Period in an aggregate principal
amount that will not result in such Lender's Revolving Exposure exceeding
(x) the lesser of such Lender's Revolving Commitment and such Lender's
Applicable Percentage of $50,000,000, at any time prior to the Second
Closing Date (if any), and (B) such Lender's Revolving Commitment, at any
time on or after the Second Closing Date (if any).
Within the foregoing limits and subject to the terms and conditions
set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
Amounts repaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than a
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder, provided that the Commitments of the Lenders are
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.
(b) Subject to Section 2.14, each Revolving Borrowing and Term
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the
Borrower may request in accordance herewith, provided that all Borrowings made
on the Start Date must be made as ABR Borrowings. Each Swingline Loan shall be
an ABR Loan. Each Lender at its option may make any Eurodollar Loan by causing
any domestic or
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40
foreign branch or Affiliate of such Lender to make such Loan, provided that any
exercise of such option shall not affect the obligation of the Borrower to repay
such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $1,000,000 and not less than $5,000,000, provided
that an ABR Revolving Borrowing may be in an aggregate amount that is equal to
the entire unused balance of the total Revolving Commitments or that is required
to finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e). Each Swingline Loan shall be in an amount that is an integral multiple
of $500,000 and not less than $500,000. Borrowings of more than one Type and
Class may be outstanding at the same time, provided that there shall not at any
time be more than a total of fifteen Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Revolving Maturity Date, the Tranche A Maturity Date, the Tranche B
Maturity Date or the Tranche C Maturity Date, as applicable.
SECTION 2.03. Requests for Borrowings. To request a Revolving
Borrowing or Term Borrowing, the Borrower shall notify the Administrative Agent
of such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., New York City time, three Business Days before the date
of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than
11:00 a.m., New York City time, one Business Day before the date of the proposed
Borrowing, provided that any such notice of an ABR Revolving Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., New York City time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by
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41
the Borrower. Each such telephonic and written Borrowing Request shall specify
the following information in compliance with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving Borrowing,
Tranche A Term Borrowing, Tranche B Term Borrowing or Tranche C Term
Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period"; and
(vi) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.06.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall
be deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Swingline Loans. (a) Subject to the terms and
conditions set forth herein, the Swingline Lender agrees to make Swingline Loans
to the Borrower from time to time during the Revolving Availability Period, in
an aggregate principal amount at any time outstanding that will not result in
(i) the aggregate principal amount of outstanding Swingline Loans exceeding
$10,000,000 or (ii) the sum of the total Revolving Exposures exceeding (A) if
the Acquisitions are consummated simultaneously, the total Revolving Commitments
and (B) if the Acquisitions are consummated on different dates, (x) the lesser
of the total Revolving Commitments and $50,000,000, at any time prior to the
Second Closing Date (if any), and (y) the total Revolving Commitments, at any
time on or after the Second Closing Date (if any). Within the foregoing limits
and
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42
subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Swingline Loans.
(b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon, New York City time, on the day of a proposed Swingline
Loan. Each such notice shall be irrevocable and shall specify the requested date
(which shall be a Business Day) and amount of the requested Swingline Loan. The
Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower. The Swingline Lender shall make each
Swingline Loan available to the Borrower by means of a credit to the general
deposit account of the Borrower with the Swingline Lender (or, in the case of a
Swingline Loan made to finance the reimbursement of an LC Disbursement as
provided in Section 2.05(e), by remittance to the Issuing Bank) by 3:00 p.m.,
New York City time, on the requested date of such Swingline Loan.
(c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 12:00 noon, New York City time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of the Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Revolving Lender, specifying in such notice
such Lender's Applicable Percentage of such Swingline Loan or Swingline Loans.
Each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt
of notice as provided above, to pay to the Administrative Agent, for the account
of the Swingline Lender, such Lender's Applicable Percentage of such Swingline
Loan or Swingline Loans. Each Revolving Lender acknowledges and agrees that its
obligation to acquire participations in Swingline Loans pursuant to this
paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever. Each
Revolving Lender shall comply with its obligation under this paragraph by wire
transfer of immediately available funds, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
and the Administrative Agent shall promptly pay to the Swingline Lender the
amounts so received by it from the Revolving Lenders. The Administrative Agent
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43
shall notify the Borrower of any participations in any Swingline Loan acquired
pursuant to this paragraph, and thereafter payments in respect of such Swingline
Loan shall be made to the Administrative Agent and not to the Swingline Lender.
Any amounts received by the Swingline Lender from the Borrower (or other party
on behalf of the Borrower) in respect of a Swingline Loan after receipt by the
Swingline Lender of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts received by the
Administrative Agent shall be promptly remitted by the Administrative Agent to
the Revolving Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear. The
purchase of participations in a Swingline Loan pursuant to this paragraph shall
not relieve the Borrower of any default in the payment thereof.
SECTION 2.05. Letters of Credit. (a) General. Subject to the terms
and conditions set forth herein, the Borrower may request the issuance of
Letters of Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Revolving Availability Period. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of any form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) a notice requesting the issuance
of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or
extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such Letter of Credit, the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or
extend such Letter of Credit. If requested by the Issuing Bank, the Borrower
also shall submit a letter of credit application on the Issuing Bank's standard
form in
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44
connection with any request for a Letter of Credit. A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension (i) the LC Exposure shall not exceed $25,000,000 and (ii)
the total Revolving Exposures shall not exceed (A) if the Acquisitions are
consummated simultaneously, the total Revolving Commitments and (B) if the
Acquisitions are consummated on different dates, (A) the lesser of the total
Revolving Commitments and $50,000,000, at any time prior to the Second Closing
Date (if any), and (B) the total Revolving Commitments, at any time on or after
the Second Closing Date (if any).
(c) Expiration Date. Each Letter of Credit shall expire at or prior
to the close of business on the earlier of (i) the date one year after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Lender acknowledges and agrees that its obligation
to acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
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45
(e) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such
LC Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 3:00 p.m., New York City time, on the date that such
LC Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 3:00 p.m., New York City time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to 10:00
a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to 10:00 a.m., New York City time on the day of
receipt, provided that, if such LC Disbursement is not less than $5,000,000, the
Borrower may, subject to the conditions to borrowing set forth herein, request
in accordance with Section 2.03 or 2.04 that such payment be financed with an
ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the
extent so financed, the Borrower's obligation to make such payment shall be
discharged and replaced by the resulting ABR Revolving Borrowing or Swingline
Loan. If the Borrower fails to make such payment when due, the Administrative
Agent shall notify each Revolving Lender of the applicable LC Disbursement, the
payment then due from the Borrower in respect thereof and such Lender's
Applicable Percentage thereof. Promptly following receipt of such notice, each
Revolving Lender shall pay to the Administrative Agent its Applicable Percentage
of the payment then due from the Borrower, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from the Revolving Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Revolving Lenders have made payments pursuant to
this paragraph to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Revolving
Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan
as contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement (other than with
respect to
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46
the timing of such reimbursement obligation as set forth in Section 2.05(e)).
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower's obligations hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank, provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrower to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered by
the Borrower that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented that appear on their
face to be in substantial
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47
compliance with the terms of a Letter of Credit, the Issuing Bank may, in its
sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder, provided that any failure to give or
delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC
Disbursement (other than with respect to the timing of such reimbursement
obligation as set forth in Section 2.05(e)).
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans,
provided that, if the Borrower fails to reimburse such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of the
Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.12(b). From and after the effective date of
any such replacement, (i) the successor Issuing Bank shall have all the rights
and obligations of the Issuing Bank under this Agreement with respect to Letters
of Credit
<PAGE>
48
to be issued thereafter and (ii) references herein to the term "Issuing Bank"
shall be deemed to refer to such successor or to any previous Issuing Bank, or
to such successor and all previous Issuing Banks, as the context shall require.
After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank
shall remain a party hereto and shall continue to have all the rights and
obligations of an Issuing Bank under this Agreement with respect to Letters of
Credit issued by it prior to such replacement, but shall not be required to
issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and
be continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the LC Exposure as of such
date plus any accrued and unpaid interest thereon, provided that the obligation
to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other notice
of any kind, upon the occurrence of any Event of Default with respect to the
Borrower described in clause (h) or (i) of Article VII. Each such deposit shall
be held by the Administrative Agent as collateral for the payment and
performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be Permitted
Investments, made at the option and sole discretion of the Administrative Agent
and at the Borrower's risk and expense, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account and shall be the Borrower's property held by the Collateral Agent as
collateral for the payment and performance of the Obligations in accordance with
the Security Agreement. Moneys in such account shall be applied by the
Administrative Agent to reimburse the Issuing Bank for LC Disbursements for
which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrower for
the LC Exposure at such time or, if the maturity of the Loans has been
accelerated (but subject to the consent of Revolving Lenders with LC Exposure
<PAGE>
49
representing greater than 50% of the total LC Exposure), be applied to satisfy
other obligations of the Borrower under this Agreement. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount plus any accrued interest or
realized profits on account of such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after
all Events of Default have been cured or waived. If the Borrower is required to
provide an amount of cash collateral hereunder pursuant to Section 2.11(b), such
amount plus any accrued interest or realized profits on account of such amount
(to the extent not applied as aforesaid) shall be returned to the Borrower as
and to the extent that, after giving effect to such return, the Borrower would
remain in compliance with Section 2.11(b) and no Default shall have occurred and
be continuing.
SECTION 2.06. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders, provided that Swingline Loans shall be made as provided
in Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request,
provided that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e) shall be remitted by the
Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from
a Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the
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50
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation or
(ii) in the case of the Borrower, the interest rate applicable to ABR Loans.
If such Lender pays such amount to the Administrative Agent, then such amount
shall constitute such Lender's Loan included in such Borrowing.
SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing
and Term Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter,
the Borrower may elect to convert such Borrowing to a different Type or to
continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among
the Lenders holding the Loans comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Borrowing. This
Section shall not apply to Swingline Borrowings, which may not be converted
or continued.
(b) To make an election pursuant to this Section, the Borrower
shall notify the Administrative Agent of such election by telephone by the
time that a Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Revolving Borrowing of the Type resulting from
such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent
of a written Interest Election Request in a form approved by the
Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and
paragraph (f) of this Section:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each
resulting Borrowing (in which case the information to be specified
purusant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
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51
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
(f) A Borrowing of any Class may not be converted to or continued as
a Eurodollar Borrowing if after giving effect thereto (i) the Interest Period
therefor would commence before and end after a date on which any principal of
the Loans of such Class is scheduled to be repaid and (ii) the sum of the
aggregate principal amount of outstanding Eurodollar Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date plus
the aggregate principal amount of outstanding ABR Borrowings of such Class would
be less than the aggregate principal amount of Loans of such Class required to
be repaid on such scheduled repayment date.
<PAGE>
52
SECTION 2.08. Termination and Reduction of Commitments. (a) Unless
previously terminated, (i) the Tranche A Commitments, Tranche B Commitments and
Tranche C Commitments shall terminate at 5:00 p.m., New York City time, (A) if
the Acquisitions are consummated simultaneously, on the Closing Date or (B) if
the Acquisitions are consummated on different dates, on the earlier of the
Second Closing Date and December 31, 1999, and (ii) the Revolving Commitments
shall (A) terminate on the Revolving Maturity Date and (B) if the Acquisitions
are consummated on different dates, be permanently reduced by $25,000,000 at
5:00 p.m., New York City time, on December 31, 1999, if the Second Acquisition
has not been consummated at or before such time.
(b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments of any Class, provided that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not
terminate or reduce the Revolving Commitments if, after giving effect to any
concurrent prepayment of the Revolving Loans in accordance with Section 2.11,
the sum of the Revolving Exposures would exceed the total Revolving Commitments.
(c) The Tranche A Commitments, Tranche B Commitments and Tranche C
Commitments shall be automatically and permanently reduced by any amounts
required to be applied for such purpose under paragraph (c) or (d) of Section
2.11 prior to the earlier of the Second Closing Date and December 31, 1999.
(d) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) or (d) of
this Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable, provided that a notice
of termination of the Revolving Commitments delivered by the Borrower may state
that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments of
any Class shall be permanent. Each reduction of the Commitments of any Class
shall be made ratably among the
<PAGE>
53
Lenders in accordance with their respective Commitments of such Class.
SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Revolving Loan
of such Lender on the Revolving Maturity Date, (ii) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each Term
Loan of such Lender as provided in Section 2.10 and (iii) to the Swingline
Lender the then unpaid principal amount of each Swingline Loan on the earlier
of the Revolving Maturity Date and the first date after such Swingline Loan is
made that is the 15th or last day of a calendar month and is at least two
Business Days after such Swingline Loan is made, provided that on each date that
a Revolving Borrowing is made, the Borrower shall repay all Swingline Loans then
outstanding.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein, provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it be
evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Admin-
<PAGE>
54
istrative Agent. Thereafter, the Loans evidenced by such promissory note and
interest thereon shall at all times (including after assignment pursuant to
Section 9.04) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory note is
a registered note, to such payee and its registered assigns).
SECTION 2.10. Amortization of Term Loans. (a) Subject to adjustment
pursuant to paragraph (e) of this Section, the Borrower shall repay Tranche A
Term Borrowings on each date set forth below in the amounts equal to the
percentages of the aggregate principal amount of the Tranche A Term Borrowings
outstanding on the earlier of Closing Date, Second Closing Date (after giving
effect to all Tranche A Term Borrowings on the Second Closing Date) and December
31, 1999, set forth opposite such date:
Number of Years After Annual Repayment
the Start Date Percentage
-------------- ----------
3 1%
4 1%
5 1%
6 1%
7 1%
(b) Subject to adjustment pursuant to paragraph (e) of this Section,
the Borrower shall repay Tranche B Term Borrowings on each date set forth below
in the amounts equal to the percentages of the aggregate principal amount of the
Tranche B Term Borrowings outstanding on the earlier of the Closing Date, the
Second Closing Date (after giving effect to all Tranche B Term Borrowings on the
Second Closing Date) and December 31, 1999, set forth opposite such date:
Number of Years After Annual Repayment
the Start Date Percentage
-------------- ----------
3 1%
4 1%
5 1%
6 1%
7 1%
8 1%
(c) Subject to adjustment pursuant to paragraph (e) of this Section,
the Borrower shall repay Tranche C Term Borrowings on each date set forth below
in
<PAGE>
55
the amounts equal to the percentages of the aggregate principal amount of the
Tranche C Term Borrowings outstanding on the earlier of Closing Date, Second
Closing Date (after giving effect to all Tranche C Term Borrowings on the Second
Closing Date) and December 31, 1999 set forth opposite such date:
Number of Years After Annual Repayment
the Start Date Percentage
-------------- ----------
3 1%
4 1%
5 1%
6 1%
7 1%
8 1%
(d) To the extent not previously paid, (i) all Tranche A Term Loans
shall be due and payable on the Tranche A Maturity Date, (ii) all Tranche B Term
Loans shall be due and payable on the Tranche B Maturity Date and (iii) all
Tranche C Term Loans shall be due and payable on the Tranche C Maturity Date.
(e) Any prepayment of a Term Loan of any Class, and any reduction of
a Term Loan Commitment of any Class, shall be applied to reduce the subsequent
scheduled repayments of the Term Loans of such Class to be made pursuant to this
Section ratably.
(f) Except as set forth in paragraphs (g) and (i) below, (i) all Net
Proceeds (other than pursuant to the Additional Equity Contribution) and Excess
Cash Flow to be applied at any time to prepay Term Borrowings and, if
applicable, to reduce Tranche A Commitments, Tranche B Commitments or Tranche C
Commitments pursuant to Sections 2.11 and 2.08(c), respectively, shall be
applied as follows: (A) a portion of such Net Proceeds and/or Excess Cash Flow
equal to (l) the amount of such Net Proceeds and/or Excess Cash Flow multiplied
by (2) a fraction, the numerator of which is the sum of the outstanding
principal amount of Tranche A Term Borrowings at such time and the aggregate
unused Tranche A Commitments at such time and the denominator of which is the
sum of the outstanding principal amount of all Term Borrowings at such time and
the aggregate unused Term Loan Commitments at such time, shall be applied,
first, to prepay Tranche A Term Borrowings and, after all outstanding Tranche A
Term Borrowings have been prepaid, to reduce Tranche A Commitments with the
Borrower retaining such proceeds; (B) a portion of such Net Proceeds and/or
<PAGE>
56
Excess Cash Flow equal to (l) the amount of such Net Proceeds and/or Excess Cash
Flow multiplied by (2) a fraction, the numerator of which is the sum of the
outstanding principal amount of Tranche B Term Borrowings at such time and the
aggregate unused Tranche B Commitments at such time and the denominator of which
is the sum of the outstanding principal amount of all Term Borrowings at such
time and the aggregate unused Term Loan Commitments at such time, shall be
applied, first, to prepay Tranche B Term Borrowings and, after all outstanding
Tranche B Term Borrowings have been prepaid, to reduce Tranche B Commitments
(with the Borrower retaining the proceeds); and (C) a portion of such Net
Proceeds and/or Excess Cash Flow equal to (1) the amount of such Net Proceeds
and/or Excess Cash Flow multiplied by (2) a fraction, the numerator of which is
the sum of the outstanding principal amount of Tranche C Term Borrowings at such
time and the aggregate unused Tranche C Commitments at such time and the
denominator of which is the sum of the outstanding principal amount of all Term
Borrowings at such time and the aggregate unused Term Loan Commitments at such
time, shall be applied, first, to prepay Tranche C Term Borrowings and, after
all outstanding Tranche C Term Borrowings have been prepaid, to reduce Tranche C
Commitments (with the Borrower retaining the proceeds); and
(ii) The Net Proceeds of any Additional Equity Contribution to be
applied pursuant to Section 2.11 shall be applied, (A) first, to reduce up to
$7,700,000 of outstanding Revolving Loans (without reduction of the Revolving
Commitments), (B) second, to reduce outstanding Revolving Loans (without
reduction of the Revolving Commitments) to the extent such borrowings are
attributable to the increase, if any, in the Net Plant Amount, (C) third, to
reduce outstanding Tranche C Term Loans and, after all outstanding Tranche C
Term Loans have been prepaid, the aggregate unused Tranche C Commitments (with
the Borrower retaining the proceeds) and (D) fourth, to the extent of any
remaining Net Proceeds, to reduce Tranche A Term Loans and Tranche B Term Loans,
respectively, as follows: (l) a portion of such remaining Net Proceeds equal to
(x) the amount of such Net Proceeds multiplied by (y) a fraction, the numerator
of which is the sum of the outstanding principal amount of Tranche A Term Loans
at such time and the aggregate unused Tranche A Commitments at such time and the
denominator of which is the sum of the outstanding principal amount of Tranche A
Term Loans and Tranche B Term Loans and the aggregate unused Tranche A
Commitments and Tranche B Commitments at such time, shall be applied to prepay
Tranche A Term Loans and, after all outstanding Tranche A Term Loans have been
prepaid, to reduce Tranche A
<PAGE>
57
Commitments (with the Borrower retaining the proceeds) and (2) a portion of such
remaining Net Proceeds equal to (x) the amount of such Net Proceeds multiplied
by (y) a fraction, the numerator of which is the sum of the outstanding
principal amount of Tranche B Term Loans and the aggregate unused Tranche B
Commitments at such time and the denominator of which is the sum of the
outstanding principal amount of Tranche A Term Loans and Tranche B Term Loans
and the aggregate unused Tranche A Commitments at such time, shall be applied to
prepay Tranche B Term Loans and, after all outstanding Tranche B Term Loans have
been prepaid, to reduce Tranche B Commitments (with the Borrower retaining the
proceeds).
Each payment of Borrowings pursuant to this Section 2.10 shall be
accompanied by accrued interest on the principal amount paid to but excluding
the date of payment.
(g) Notwithstanding the provisions of paragraph (f) above, (i) if
any Net Proceeds result from the occurrence of the RSA #1 Sale after the Start
Date, then such Net Proceeds shall be used (A) first, to repay outstanding
Revolving Borrowings (without any reduction of the Revolving Commitments) and
(B) second, to the extent of any remaining portion of such Net Proceeds, to
repay Term Borrowings (and reduce Term Loan Commitments) as provided in
paragraph (f) above; (ii) if the Acquisitions are consummated on different dates
and any Net Proceeds are received after the Initial Closing Date and prior to
the earlier of the termination of the Term Loan Commitments and the Second
Closing Date, if applicable, then (A) if the PTI Acquisition is not the First
Acquisition and such Net Proceeds arise from the issuance of Senior Subordinated
Notes, all such Net Proceeds shall be retained by the Borrower in a Collateral
Account pending the use of such Net Proceeds to finance the Second Acquisition
on the Second Closing Date (at which time, the portion of such amounts in excess
of $119,500,000 shall be used (l) first, to reduce up to $15,000,000 of
Revolving Borrowings on the Second Closing Date, (2) second, to reduce Revolving
Borrowings, if any, on the Second Closing Date to the extent such Borrowings
would be attributable to (x) the increase, if any, in the Net Plant Amount or
(y) at the option of the Borrower, up to $5,000,000 of the PTI Adjustment
Amount, (3) third, to reduce Tranche C Borrowings (and the Tranche C
Commitments) on the Second Closing Date and (4) fourth, to the extent of any
remaining Net Proceeds, to reduce Tranche A Borrowings (and the Tranche A
Commitments) and Tranche B Borrowings (and the Tranche B Commitments) on the
Second Closing Date on a pro rata basis), and (B) all other Net Proceeds
allocable to the undrawn portion of the Term Facilities may
<PAGE>
58
be retained by the Borrower and applied to reduce the unused Term Loan
Commitments as described in paragraph (f) above; and (iii) notwithstanding
anything to the contrary in clause (ii) (A), if the Acquisitions are consummated
on different dates and the PTI Acquisition is not the First Acquisition and is
not consummated on or before the Equity Contribution Date, and (A) Senior
Subordinated Notes have been issued and the proceeds thereof are being held in a
Collateral Account or (B) Senior Subordinated Notes are issued after the Equity
Contribution Date, the Net Proceeds resulting from the issuance of such Senior
Subordinated Notes shall be applied in the following manner: (A) a percentage
(such percentage to equal the percentage of the total capitalization (excluding
cash on hand) of the Borrower represented by common equity immediately prior to
the issuance of the Senior Subordinated Notes) of the Net Proceeds resulting
from the issuance of the Senior Subordinated Notes shall be used to repurchase
common equity (the "Equity Clawback") of Holdings, except to the extent that (x)
after giving effect to such application of proceeds, common equity would
represent less than 25% of the total capitalization (excluding cash on hand) of
the Borrower determined on a pro forma basis as of the Initial Closing Date or
(y) the aggregate amount of the Sponsor Equity Contribution, the Management
Equity Contribution and the Investor Equity Contribution minus the amount of the
Equity Clawback would represent less than 17.5% of the total capitalization
(excluding cash on hand) of the Borrower determined on a pro forma basis as of
the Initial Closing Date, and (B) to the extent of any remaining portion of such
Net Proceeds, pro rata among the Term Facilities based on the then outstanding
principal amount of the term loans under each Term Facility. Notwithstanding the
foregoing, if there are undrawn commitments under the Term Facilities
immediately prior to 5:00 p.m., New York City time, on December 31, 1999, then
any Net Proceeds retained in the Collateral Account or applied to reduce the
Lenders' commitments under the Term Facilities as described above shall be
applied at such time to prepay the then-outstanding principal amount of loans
under the Term Facilities on a pro rata basis among the Term Facilities.
(h) Prior to any repayment of any Term Borrowings of any Class
hereunder, the Borrower shall select the Borrowing or Borrowings of the
applicable Class to be repaid and shall notify the Administrative Agent by
telephone (confirmed by telecopy) of such selection not later than 11:00 a.m.,
New York City time, three Business Days before the scheduled date of such
repayment. Each repayment of a Borrowing shall be applied ratably to the Loans
included in
<PAGE>
59
the repaid Borrowing. Repayments of Term Borrowings shall be accompanied by
accrued interest on the amount repaid.
(i) Any Lender holding Tranche B Term Loans or Tranche C Term Loans
may elect on not less than one Business Day's prior written notice to the
Administrative Agent with respect to any mandatory prepayment to be made
pursuant to Section 2.11(c) or (d), not to have such prepayment applied to such
Lender's Tranche B Term Loans or Tranche C Term Loans, in which case the amount
not so applied shall be applied to prepay Tranche A Term Borrowings and, after
all outstanding Tranche A Term Borrowings have been prepaid, shall be retained
by the Borrower.
SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section.
(b) In the event that and on each occasion on which the sum of the
Revolving Exposures exceeds the total Revolving Commitments, the Borrower shall
prepay Revolving Borrowings or Swingline Borrowings (or, if no such Borrowings
are outstanding, deposit cash collateral in an account with the Administrative
Agent pursuant to Section 2.05(j)) in an aggregate amount equal to such excess.
(c) In the event that and on each occasion on which any Net Proceeds
are received by or on behalf of Holdings, the Borrower or any Subsidiary in
respect of any Prepayment Event, the Borrower shall, within three Business Days
after such Net Proceeds are received, prepay Term Borrowings (or Term Loan
Commitments shall be reduced if such receipt occurs on or after the Start Date
through and including the earlier of the Second Closing Date and December 31,
1999) in an aggregate amount equal to such Net Proceeds in accordance with
Sections 2.10(f), (g), (h) and (i), provided that, in the case of any event
described in clause (a) of the definition of the term Prepayment Event, if the
Borrower shall deliver to the Administrative Agent a certificate of a Financial
Officer to the effect that the Borrower and the Subsidiaries intend to apply the
Net Proceeds from such event, within 360 days after receipt of such Net
Proceeds, to acquire real property, equipment or other tangible assets to be
used in the business of the Borrower and the Subsidiaries or all of the
outstanding capital stock of an entity owning such assets, and certifying that
no Default has occurred and is continuing, then no prepayment shall be required
pursuant to this paragraph in respect of such event except to the extent of any
Net Proceeds therefrom that have not been so applied by
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the end of such 360-day period, at which time a prepayment shall be required in
an amount equal to the Net Proceeds that have not been so applied.
(d) Following the end of each fiscal year of the Borrower,
commencing with the fiscal year ending December 31, 2000, the Borrower shall
prepay Term Borrowings (or Term Loan Commitments shall be reduced if such
receipt occurs on or after the Start Date through and including the earlier of
the Second Closing Date and December 31, 1999) in an aggregate amount equal to
the excess, if any, of (i) 50% of Excess Cash Flow for such fiscal year over
(ii) the aggregate principal amount of Term Borrowings prepaid during such
fiscal year pursuant to Section 2.11(a), in accordance with Sections 2.10(f) and
(g). Each prepayment pursuant to this paragraph shall be made on or before the
date on which financial statements are delivered pursuant to Section 5.01 with
respect to the fiscal year for which Excess Cash Flow is being calculated (and
in any event within 90 days after the end of such fiscal year).
(e) In the event that any portion of the Revolving Borrowings on the
Start Date or the Second Closing Date is attributable to the PTI Adjustment
Amount (to the extent attributable to cash or cash equivalents) and/or the Net
Cash Amount, the Borrower shall repay Revolving Borrowings in an aggregate
principal amount equal to such portion of such Revolving Borrowings within one
Business Day after the Start Date or the Second Closing Date, as applicable.
(f) If the aggregate principal amount of Revolving Borrowings
outstanding on the date that is two Business Days after the Closing Date exceeds
$35,000,000 then on such date the Borrower will repay Revolving Borrowings in an
aggregate principal amount at least equal to such excess.
(g) The Borrower shall notify the Administrative Agent (and, in the
case of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City
time, one Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan, not later than 12:00 noon, New York City time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid and, in the case of a mandatory
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prepayment, a reasonably detailed calculation of the amount of such prepayment,
provided that, if a notice of optional prepayment is given in connection with a
conditional notice of termination of the Revolving Commitments as contemplated
by Section 2.08, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.08. Promptly following
receipt of any such notice (other than a notice relating solely to Swingline
Loans), the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02, except as necessary to apply fully the required amount
of a mandatory prepayment. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.13.
SECTION 2.12. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the Applicable Rate on the average daily unused amount of each
Commitment of such Lender during the period from and including the Start Date to
but excluding the date on which such Commitment terminates. Accrued commitment
fees shall be payable in arrears (i) in the case of commitment fees in respect
of the Revolving Commitments, on the last day of March, June, September and
December of each year and on the date on which the Revolving Commitments
terminate, commencing on the first such date to occur after the date hereof, and
(ii) in the case of commitment fees in respect of the Tranche A Commitments,
Tranche B Commitments and Tranche C Commitments, on December 31, 1999, or any
earlier date on which such Commitments terminate. All commitment fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day). For
purposes of computing commitment fees with respect to Revolving Commitments, a
Revolving Commitment of a Lender shall be deemed to be used to the extent of the
outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline
Exposure of such Lender shall be disregarded for such purpose).
(b) The Borrower agrees to pay (i) to the Administrative Agent for
the account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate as interest on Eurodollar Revolving Loans on the average daily amount of
such Lender's LC Exposure (excluding any portion thereof attributable to
unreimbursed LC
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Disbursements) during the period from and including the Start Date to but
excluding the later of the date on which such Lender's Revolving Commitment
terminates and the date on which such Lender ceases to have any LC Exposure, and
(ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of 0.25%
per annum on the average daily amount of the LC Exposure (excluding any portion
thereof attributable to unreimbursed LC Disbursements) during the period from
and including the Start Date to but excluding the later of the date of
termination of the Revolving Commitments and the date on which there ceases to
be any LC Exposure, as well as the Issuing Bank's standard fees with respect to
the issuance, amendment, renewal or extension of any Letter of Credit or
processing of drawings thereunder. Participation fees and fronting fees accrued
through and including the last day of March, June, September and December of
each year shall be payable on the third Business Day following such last day,
commencing on the first such date to occur after the Start Date, provided that
all such fees shall be payable on the date on which the Revolving Commitments
terminate and any such fees accruing after the date on which the Revolving
Commitments terminate shall be payable on demand. Any other fees payable to the
Issuing Bank pursuant to this paragraph shall be payable within 10 days after
demand. All participation fees and fronting fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
(including each Swingline Loan) shall bear interest at the Alternate Base Rate
plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
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(c) Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Revolving Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Revolving Commitments, provided that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Revolving Loan prior to the end of the Revolving
Availability Period), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.14. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall
be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate for such Interest
Period; or
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(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for such
Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.15. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit
or similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), in each
case by an amount deemed material by such Lender, then in accordance with clause
(c) below, the Borrower will pay to such Lender or the Issuing Bank, as the case
may be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank, as the case may be, for such additional costs incurred or
reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in
Law regarding capital requirements has or
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would have the effect of reducing the rate of return on such Lender's or the
Issuing Bank's capital or on the capital of such Lender's or the Issuing Bank's
holding company, if any, as a consequence of this Agreement or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender's or the Issuing Bank's holding company could
have achieved but for such Change in Law (taking into consideration such
Lender's or the Issuing Bank's policies and the policies of such Lender's or the
Issuing Bank's holding company with respect to capital adequacy), in each case
by an amount deemed material by such Lender, then in accordance with clause (c)
below, the Borrower will pay to such Lender or the Issuing Bank, as the case may
be, such additional amount or amounts as will compensate such Lender or the
Issuing Bank or such Lender's or the Issuing Bank's holding company for any such
reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank
to demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation, provided
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.16. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other
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than on the last day of the Interest Period applicable thereto, (c) the failure
to borrow, convert, continue or prepay any Revolving Loan or Term Loan on the
date specified in any notice delivered pursuant hereto (regardless of whether
such notice may be revoked under Section 2.11(f) and is revoked in accordance
therewith), or (d) the assignment of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto as a result of a request by the
Borrower pursuant to Section 2.19, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the
principal amount of such Loan had such event not occurred, at the Adjusted LIBO
Rate that would have been applicable to such Loan, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement of
such period, for dollar deposits of a comparable amount and period from other
banks in the eurodollar market. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.
SECTION 2.17. Taxes. (a) Any and all payments by or on account of
any obligation of the Borrower hereunder or under any other Loan Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes, provided that if the Borrower shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, Lender or Issuing Bank (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
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(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each
Lender and the Issuing Bank, within 10 Business Days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent, such Lender or the Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate, provided that such Foreign Lender
has received written notice from the Borrower advising it of the availability of
such exemption or reduction and supplying all applicable documentation.
(f) If the Administrative Agent or a Lender (or Transferee)
determines, in its sole discretion, that it has received a refund of any Taxes
or Other Taxes as to which it
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has been indemnified by the Borrower or with respect to which the Borrower has
paid additional amounts pursuant to this Section 2.17, it shall pay over such
refund to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.17 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender (or Transferee) and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund); provided, however, that the Borrower, upon the
request of the Administrative Agent or such Lender (or Transferee), agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender (or Transferee) in the event the
Administrative Agent or such Lender (or Transferee) is required to repay such
refund to such Governmental Authority. Nothing contained in this Section 2.17(f)
shall require the Administrative Agent or any Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.
SECTION 2.18. Payments Generally; Pro Rata Treatment: Sharing of
Setoffs. (a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest, fees
or reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) on or before the time expressly required hereunder
or under such other Loan Document for such payment (or, if no such time is
expressly required, prior to 12:00 noon, New York City time), on the date when
due, in immediately available funds, without setoff or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New
York, New York, except payments to be made directly to the Issuing Bank or
Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons
entitled thereto and payments pursuant to other Loan Documents shall be made to
the Persons specified therein. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment under
any Loan Document shall be due on a day that is not a Business Day, the date for
payment shall be extended
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to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, unreimbursed
LC Disbursements, interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, towards payment of
principal and unreimbursed LC Disbursements then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans, Term Loans or participations in LC
Disbursements or Swingline Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Revolving Loans, Term Loans
and participations in LC Disbursements and Swingline Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Revolving Loans, Term Loans and participations in LC
Disbursements and Swingline Loans of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Loans, Term Loans and participations in LC
Disbursements and Swingline Loans, provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any
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Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set off and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of
the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders or the Issuing Bank, as the case may be, the amount due. In such
event, if the Borrower has not in fact made such payment, then each of the
Lenders or the Issuing Bank, as the case may be, severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to
such Lender or Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date
of payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.18(d) or
9.03(c), then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to
satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
SECTION 2.19. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS. (a)
Prior to any Lender requesting compensation under Section 2.15, or the
Borrower paying any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, such Lender
shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if,
in the reasonable judgment of such Lender, such designation or assignment (i)
would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17,
as the case may be, and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to
such Lender. The Borrower hereby agrees to pay all reason-
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able costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) If any Lender requests compensation under Section 2.15, or if
the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent (and,
if a Revolving Commitment is being assigned, the Issuing Bank and Swingline
Lender), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and participations in LC Disbursements and Swingline Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.15 or payments required to be made pursuant to Section 2.17, such
assignment will result in a material reduction in such compensation or payments.
A Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
ARTICLE III
Representations and Warranties
Each of Holdings and the Borrower represents and warrants to the
Lenders that:
SECTION 3.01. Organization: Powers. Each of Holdings, the Borrower
and the Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and as proposed to be
conducted and, except where
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the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required, except where the failure to be so qualified could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.02. Authorization; Enforceability. The Transactions to be
entered into by each Loan Party are within such Loan Party's corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by each
of Holdings and the Borrower and constitutes, and each other Loan Document to
which any Loan Party is to be a party, when executed and delivered by such Loan
Party, will constitute, a legal, valid and binding obligation of Holdings, the
Borrower or such Loan Party (as the case may be), enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by or before, any Governmental Authority, except such as have
been obtained or made and are in full force and effect and except filings
necessary to perfect Liens created under the Loan Documents, (b) will not
violate any applicable law or regulation or the terms of the charter, by-laws or
other organizational documents of Holdings, the Borrower or any of the
Subsidiaries, or the terms of any of the Authorizations, or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon Holdings, the Borrower or
any of the Subsidiaries or any of their assets, or give rise to a right
thereunder to require any payment to be made by Holdings, the Borrower or any of
the Subsidiaries, except where the aggregate amount of all such required
payments is less than $5,000,000 and where such default could not reasonably be
expected to result in a Material Adverse Effect, and (d) will not result in the
creation or imposition of any Lien on any asset of Holdings, the Borrower or any
of the Subsidiaries, except Liens created under the Loan Documents, provided
that, if the Acquisitions are consummated on different dates, on the Initial
Closing Date the term "Transactions" as referred to above is deemed to include
only the transactions described
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in the preamble to this Agreement that are supposed to occur on the Initial
Closing Date.
SECTION 3.04. Financial Condition; No Material Adverse Effect. (a)
The Borrower has heretofore furnished to the Lenders (i) audited consolidated
and consolidating balance sheets and related statements of income, stockholder's
equity and cash flows of the Alaska Entities and the ATU Business for the 1998
fiscal year, in each case prepared by a nationally recognized accounting firm
reasonably acceptable to the Administrative Agent, and (ii) unaudited
consolidated and consolidating balance sheets and related statements of income,
stockholder's equity and cash flows of (A) the ATU Business and (B) the Alaska
Entities for (1) each subsequent fiscal quarter ended at least 45 days before
the Start Date and (2) each fiscal month after the most recent 1999 fiscal
quarter for which financial statements were received by the Lenders as described
above and ended at least 45 days before the Start Date. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Alaska Entities or ATU Business, as
applicable, and their consolidated Subsidiaries as of such dates and for such
periods in accordance with GAAP, subject to year-end audit adjustments and the
absence of footnotes in the case of the statements referred to in clause (ii)
above.
(b) The Borrower has heretofore furnished to the Lenders its pro
forma consolidated balance sheet as of the end of the most recently completed
fiscal quarter of the Borrower that is at least 45 days prior to the Start Date,
prepared giving effect to the Transactions as if the Transactions had occurred
on such date, provided that, if the Acquisitions are consummated on different
dates, on the Initial Closing Date the term "Transactions" as referred to in
this paragraph (b) is deemed to include only the transactions described in the
preamble to this Agreement that are contemplated to occur on the Initial Closing
Date. Such pro forma consolidated balance sheet (i) has been prepared in good
faith based on the same assumptions used to prepare the pro forma financial
statements included in the Information Memorandum (which assumptions are
believed by Holdings and the Borrower to be reasonable), (ii) is based on the
best information available to Holdings and the Borrower after due inquiry, (iii)
accurately reflects all adjustments necessary to give effect to the Transactions
and (iv) presents fairly, in all material respects, the pro forma financial
position of the Borrower and its consolidated Subsidiaries as of the end of the
most recently completed fiscal quarter of the Borrower that is at least 45 days
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prior to the Start Date, as if the Transactions had occurred on such date.
(c) Except as disclosed in the financial statements referred to
above or the notes thereto or in the Information Memorandum and except for the
Disclosed Matters, after giving effect to the Transactions, none of Holdings,
the Borrower or the Subsidiaries has, as of the Start Date or the Second Closing
Date (if any), any material contingent liabilities, unusual long-term
commitments or unrealized losses.
(d) Since December 31, 1998, there has been no material adverse
effect on the business, assets, results of operations, properties or financial
condition of the Alaska Entities and their respective subsidiaries, taken as a
whole, and since December 31, 1998, there has been no material adverse effect on
the assets, properties, condition (financial and other), business, operations or
liabilities (fixed or contingent) of the ATU Business, taken as a whole.
SECTION 3.05. Properties. (a) Each of Holdings, the Borrower and the
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties), except for such defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each of Holdings, the Borrower and the Subsidiaries owns, or is
licensed to use, all trademarks, trade names, copyrights, patents and other
intellectual property material to its business, and the use thereof by Holdings,
the Borrower and the Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. Schedule 3.05(b) accurately and completely lists as of the Start Date
and Second Closing Date (if any) (after giving effect to the Transactions to
occur on such date), all Operating Licenses granted or assigned to the Borrower
or any of the Subsidiaries, or under which the Borrower and the Subsidiaries
will have the right to operate their respective businesses.
(c) Schedule 3.05(c) sets forth the address of each real property
that is owned or leased by Holdings, the Borrower or any of the Subsidiaries as
of the Start Date and the Second Closing Date (if any) after giving effect to
the Transactions to occur on such date.
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(d) As of the Start Date and the Second Closing Date (if any),
neither Holdings, the Borrower nor any of the Subsidiaries has received notice
of, or has knowledge of, any pending or contemplated condemnation proceeding
affecting any Mortgaged Property or any sale or disposition thereof in lieu of
condemnation. Neither any Mortgaged Property nor any interest therein is subject
to any right of first refusal, option or other contractual right to purchase
such Mortgaged Property or interest therein.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Holdings or the Borrower,
threatened against or affecting Holdings, the Borrower or any of the
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve any of the Loan Documents or
the Transactions.
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither Holdings, the Borrower
nor any of the Subsidiaries (i) has failed to comply with any Environmental Law
or to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has become subject to any
Environmental Liability, (iii) has received notice of any claim with respect to
any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in
the status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of Holdings,
the Borrower and the Subsidiaries is in compliance with all laws, regulations
and orders (including any Environmental Law or Communication Law, margin
regulations, FCC and APUC regulations and ERISA) of any Governmental Authority
applicable to it or its property and all indentures, agreements and other
instruments binding upon it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be
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expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status. Neither
Holdings, the Borrower nor any of the Subsidiaries is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of Holdings, the Borrower and the
Subsidiaries has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes required
to have been paid by it, except (a) any Taxes that are being contested in good
faith by appropriate proceedings and for which Holdings, the Borrower or such
Subsidiary, as applicable, has set aside on its books reserves in accordance
with GAAP or (b) failures to file or cause to be filed or pay or cause to be
paid that would not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability to the Borrower or the Subsidiaries is reasonably expected to
occur, could reasonably be expected to result in a Material Adverse Effect. The
present value of all accumulated benefit obligations under each Plan (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts exceed by more than $5,000,000 the fair market value of
the assets of such Plan, and the present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $10,000,000 the fair market value of the assets of all such underfunded
Plans.
SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to which
Holdings, the Borrower or any of the Subsidiaries is subject, and all other
matters known to any of them, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. Neither the
Information Memorandum nor any of the other reports, financial statements,
certificates or other information furnished by or on behalf of any
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Loan Party to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or any other Loan Document or delivered hereunder
or thereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, provided that, with respect to
projected financial information, Holdings and the Borrower represent only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time such projections were prepared and delivered to the
Administrative Agent.
SECTION 3.12. Subsidiaries. Holdings does not have any subsidiaries
other than the Borrower and the Subsidiaries. Schedule 3.12 sets forth the name
of, and the ownership interest of the Borrower in, each Subsidiary and
identifies each Subsidiary that is a Subsidiary Loan Party, in each case as of
the Start Date and, if and when it occurs, the Second Closing Date.
SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of
all insurance maintained by or on behalf of the Borrower and the Subsidiaries as
of the Start Date and the Second Closing Date, as applicable. As of the Start
Date and the Second Closing Date, as applicable, all premiums in respect of such
insurance have been paid. Holdings and the Borrower believe that the insurance
maintained by or on behalf of the Borrower and the Subsidiaries is adequate with
respect to the Borrower's and the Subsidiaries' businesses.
SECTION 3.14. Labor Matters. As of the Start Date and the Second
Closing Date, as applicable, there are no strikes, lockouts or slowdowns against
Holdings, the Borrower or any Subsidiary pending or, to the knowledge of
Holdings or the Borrower, threatened. The hours worked by and payments made to
employees of Holdings, the Borrower and the Subsidiaries have not been in
material violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters. All payments due
from Holdings, the Borrower or any Subsidiary, or for which any claim may be
made against Holdings, the Borrower or any Subsidiary, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of Holdings, the Borrower or such
Subsidiary. The consummation of the Transactions will not give rise to any right
of termination or right of renegotiation on the part of any union under any
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collective bargaining agreement to which Holdings, the Borrower or any
Subsidiary is bound.
SECTION 3.15. Solvency. Immediately after the consummation of the
Transactions to occur on the Start Date and the Second Closing Date, if any, as
applicable, and immediately following the making of each Loan made on the Start
Date and the Second Closing Date, if any, as applicable, and after giving effect
to the application of the proceeds of such Loans, (a) the fair value of the
assets of each Loan Party, at a fair valuation, will exceed its debts and
liabilities, subordinated, contingent or otherwise; (b) the present fair
saleable value of the property of each Loan Party will be greater than the
amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) each Loan Party will be able
to pay its debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (d) each Loan Party will
not have unreasonably small capital with which to conduct the business in which
it is engaged as such business is now conducted and is proposed to be conducted
following the Start Date.
SECTION 3.16. Senior Indebtedness. The Obligations constitute
"Senior Indebtedness" under and as defined in the Subordinated Debt Documents.
SECTION 3.17. Year 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (a) the computer systems
of Holdings, the Borrower and the Subsidiaries and (b) equipment containing
embedded microchips (including systems and equipment supplied by others or with
which Holdings's, the Borrower's or the Subsidiaries' systems interface) and the
testing of all such systems and equipment, as so reprogrammed, will be completed
by September 30, 1999. The cost to Holdings, the Borrower and the Subsidiaries
of such reprogramming and testing and of the reasonably foreseeable consequences
of the occurrence of the year 2000 to Holdings, the Borrower and the
Subsidiaries (including reprogramming errors and the failure of others' systems
or equipment) will not result in a Default or a Material Adverse Effect. Except
for the reprogramming referred to in the preceding sentence as may be necessary,
the computer and management information systems of Holdings, the Borrower and
the Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient to permit Holdings,
the Borrower and the Subsidiaries to conduct their businesses without Material
Adverse Effect.
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SECTION 3.18. Security Interests. (a) When executed and delivered,
the Pledge Agreement will be effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral (as defined in the Pledge
Agreement) and, when the portion of the Collateral constituting certificated
securities (as defined in the Uniform Commercial Code) is delivered to the
Administrative Agent, such security interest shall constitute a fully perfected
first priority Lien on, and security interest in, all right, title and interest
of the pledgor thereunder in such Collateral, in each case prior and superior in
right to any other Person.
(b) The Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified on Schedule 6 to each of the Perfection Certificates, the
Security Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the grantors thereunder in such
Collateral to the extent perfection can be obtained by filing Uniform Commercial
Code financing statements, other than the Intellectual Property (as defined in
the Security Agreement), in which a security interest may be perfected by
filing, recording or registering a security agreement, financing statement or
analogous document in the United States Patent and Trademark Office or the
United States Copyright Office, as applicable, in each case prior and superior
in right to any other Person to the extent perfection can be obtained by filing
Uniform Commercial Code financing statements, other than with respect to the
rights of Persons pursuant to Liens expressly permitted by Section 6.02.
(c) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office, the security
interest created thereunder shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Intellectual Property (as defined in the Security Agreement) in which a security
interest may be perfected by filing, recording or registering a security
agreement, financing statement or analogous document in the United States Patent
and Trademark Office or the United States Copyright Office, as applicable, in
each case prior and superior in right to any other Person, other than with
respect to the rights of Persons pursuant to Liens expressly permitted by
Section 6.02 (it being understood
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that subsequent recordings in the United States Patent and Trademark Office and
the United States Copyright Office may be necessary to perfect a lien on
registered trademarks, trademark applications and copyrights acquired by the
Loan Parties after the date hereof).
(d) The Mortgages are effective to create, subject to the exceptions
listed in each title insurance policy covering such Mortgage, in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid
and enforceable Lien on all of the Loan Parties' right, title and interest in
and to the Mortgaged Properties thereunder and the proceeds thereof, and when
the Mortgages are filed in the offices specified on Schedule 3.18(d), the
Mortgages shall constitute a Lien on, and security interest in, all right, title
and interest of the Loan Parties in such Mortgaged Properties and the proceeds
thereof, in each case prior and superior in right to any other Person, other
than with respect to the rights of Persons pursuant to Liens expressly permitted
by Section 6.02.
SECTION 3.19. Regulatory Matters. Except for the Disclosed Matters
and except with respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither Holdings, the Borrower, nor any of the Subsidiaries (a) has
failed to comply with any Communications Law or to obtain, maintain or comply
with any permit, license or other approval required under any Communications
Law, (b) has become subject to any Communication Liability, (c) has received
notice of any claim with respect to any Communication Liability or (d) knows of
any basis for any Communication Liability.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans and of the Issuing Bank
to issue Letters of Credit hereunder shall not become effective until the date
on which each of the following conditions is satisfied (or waived in accordance
with Section 9.02):
SECTION 4.01. Each Credit Event. The obligation of each Lender to
make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue,
amend, renew or
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extend any Letter of Credit, is subject to receipt of the request therefor in
accordance herewith and to the satisfaction of the following conditions:
(a) The representations and warranties of each Loan Party set forth
in the Loan Documents shall be true and correct on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of
such Letter of Credit, as applicable.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be
continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by Holdings
and the Borrower on the date thereof as to the matters specified in paragraphs
(a) and (b) of this Section.
SECTION 4.02. First Credit Event-Start Date. On the Start Date:
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed
on behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart
of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated
the Start Date) of each of (i) Wachtell, Lipton, Rosen & Katz, counsel for
Holdings and the Borrower, substantially in the form of Exhibit B-1, (ii)
Deborah Harwood, Washington counsel for Holdings and the Borrower,
substantially in the form of Exhibit B-2, (iii) Hogan & Hartson, LLP, FCC
counsel for Holdings and the Borrower, substantially in the form of
Exhibit B-3, (iii) Birch, Horton, Bittner & Cherot, Alaskan regulatory
counsel for Holdings and the Borrower, substantially in the form of
Exhibit B-3, (iv) Darby & Darby, intellectual property counsel for
Holdings and the Borrower, substantially in the form of Exhibit B-4, (v)
Lemle & Kelleher L.L.P., Louisiana counsel for Holdings and the Borrower,
substantially in the form of
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Exhibit B-5, and (vi) local counsel in each jurisdiction where, if the
Start Date is the Initial Closing Date, a First Acquisition Mortgaged
Property is located or, if the Start Date is the Closing Date, a Mortgaged
Property is located, substantially in the form of Exhibit B-6, and in the
case of each such opinion required by this paragraph, covering such other
matters relating to the Loan Parties, the Loan Documents or the
Transactions as the Required Lenders shall reasonably request. The
Borrower hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of each
Loan Party, the authorization of the Transactions to occur on the Start
Date and any other legal matters relating to the Loan Parties, the Loan
Documents or such Transactions all in form and substance satisfactory to
the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate,
dated the Start Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.01.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Start Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses
(including fees, charges and disbursements of counsel) required to be
reimbursed or paid by any Loan Party hereunder or under any other Loan
Document.
(f) The Administrative Agent shall have received counterparts of the
Security Agreement, the Pledge Agreement and the Indemnity, Subrogation
and Contribution Agreement, each signed on behalf of the Borrower,
Holdings and each Subsidiary Loan Party, if the Acquisitions are
consummated simultaneously, or First Acquisition Subsidiary Loan Party if
the Acquisitions are consummated on different dates, together with the
following:
(i) stock certificates representing all the outstanding shares
of capital stock of the Borrower and each Subsidiary owned by or on
behalf of any Loan Party as of the Start Date after giving effect to
the First Acquisition or the
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Transactions, as applicable (except that stock certificates
representing shares of common stock of a Foreign Subsidiary may be
limited to 65% of the outstanding shares of common stock of such
Foreign Subsidiary), promissory notes evidencing all intercompany
Indebtedness owed to any Loan Party by Holdings, the Borrower or any
Subsidiary as of the Start Date after giving effect to the First
Acquisition or the Transactions, as applicable, and stock powers and
instruments of transfer, endorsed in blank, with respect to such
stock certificates and promissory notes;
(ii) all documents and instruments, including Uniform
Commercial Code financing statements, required by law or reasonably
requested by the Administrative Agent to be filed, registered or
recorded to create or perfect the Liens on the Collateral owned or
to be acquired on or before the Start Date and intended to be
created under the Security Agreement; and
(iii) a completed Perfection Certificate dated the Start Date
and signed by an executive officer or Financial Officer of the
Borrower, together with all attachments contemplated thereby,
including the results of a search of the Uniform Commercial Code (or
equivalent) filings made with respect to the Loan Parties, if the
Acquisitions are consummated simultaneously, or the First
Acquisition Loan Parties, if the Acquisitions are consummated on
different dates, in the jurisdictions contemplated by the Perfection
Certificate and copies of the financing statements (or similar
documents) disclosed by such search and evidence reasonably
satisfactory to the Administrative Agent that the Liens indicated by
such financing statements (or similar documents) are permitted by
Section 6.02 or have been released.
(g) The Administrative Agent shall have received (i) counterparts of
a Mortgage with respect to each Mortgaged Property owned or to be acquired
by the Borrower or any Subsidiary on the Start Date, signed on behalf of
the record owner of such Mortgaged Property, (ii) a policy or policies of
title insurance issued by a nationally recognized title insurance company,
insuring the Lien of each such Mortgage as a valid first Lien on the
Mortgaged Property described therein, free of any other Liens except as
permitted by Section 6.02, together with such endorsements, coinsur-
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ance and reinsurance as the Collateral Agent or the Required Lenders may
reasonably request.
(h) The Administrative Agent shall have received evidence that the
insurance required by Section 5.07 and the Security Documents is in
effect.
(i) All consents and approvals required to be obtained from any
Governmental Authority or other Person (including the final consents,
approvals or non-objection of the FCC or the APUC) in connection with the
Acquisitions or, if the Acquisitions are consummated on different dates,
the First Acquisition shall have been obtained, and all applicable waiting
periods and appeal periods shall have expired (other than any appeal
period of the consents and approvals required by the APUC to assign the
Operating Licenses of the State of Alaska and the appeal periods of the
FCC Operating Licenses listed on Schedule 4.02(i)). in each case without
the imposition of any conditions reasonably expected to have a Material
Adverse Effect or to affect the rights or security of the Lenders
hereunder.
(j) The Lenders shall have received a pro forma consolidated balance
sheet of Holdings as of the end of the most recently completed fiscal
quarter of the Borrower that is at least 45 days prior to the Start Date,
reflecting all pro forma adjustments as if the First Acquisition or, if
the Acquisitions occur simultaneously, the Transactions, had been
consummated on such date, and such pro forma consolidated balance sheet
shall be consistent in all material respects with the forecasts and other
information previously provided to the Lenders.
(k) The Administrative Agent shall have received a solvency letter,
in form and substance satisfactory to the Lenders, from Murray, Devine &
Co., Inc., with respect to the solvency of the First Acquisition Loan
Parties or, if the Acquisitions are consummated simultaneously, with
respect to the solvency of all the Loan Parties, each after giving effect
to the First Acquisition or the Transactions, as applicable.
(l) The tax position and contingent tax and other liabilities of
Holdings, the Borrower and the Subsidiaries after giving effect to the
First Acquisition or, if the Acquisitions are consummated simultaneously,
the Transactions shall be satisfactory to the Administrative Agent and the
Lenders.
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(m) Each of the Guarantee Agreements of (i) the First Acquisition
Loan Parties (other than the Borrower) or, (ii) if the Acquisitions are
consummated simultaneously, the Loan Parties (other than the Borrower)
shall have been duly executed by the parties thereto and delivered to the
Collateral Agent and shall be in full force and effect.
(n) (i) If the Start Date is the Closing Date, each of the
Acquisitions shall be consummated simultaneously with the Start Date in
accordance with applicable law, the PTI Purchase Agreement or the ATU
Purchase Agreement, as applicable (without giving effect to any amendments
or waivers to the PTI Purchase Agreement or the ATU Purchase Agreement
that are adverse to the Lenders and not reasonably satisfactory to the
Lenders), and all other related documentation satisfactory to the Lenders,
and all the Equity Contributions shall have been made, or (ii) if the
Start Date is the Initial Closing Date, the First Acquisition shall have
been consummated in accordance with applicable law, the PTI Purchase
Agreement or the ATU Purchase Agreement, as applicable (without giving
effect to any amendments or waivers to the PTI Purchase Agreement or the
ATU Purchase Agreement that are adverse to the Lenders and not reasonably
satisfactory to the Lenders), and all other related documentation
satisfactory to the Lenders, and (A) if the PTI Acquisition is the First
Acquisition, the Borrower shall receive or shall have previously received
$65,000,000 of the proceeds from the Equity Contributions as of the Start
Date and (B) if the ATU Acquisition is the First Acquisition, the Borrower
shall receive or shall have previously received $80,000,000 of the
proceeds from the Equity Contributions as of the Start Date, and the
Lenders shall (x) be satisfied with the capitalization, structure and
equity ownership of Holdings and the Borrower after giving effect to the
Transactions to occur on or before such date (it being agreed that the
capitalization, structure and equity ownership of Holdings and the
Borrower to the extent described elsewhere in this Agreement are
satisfactory to the Lenders) and (y) be satisfied that the Transaction
Costs, whether incurred or paid on or before the earlier of the Closing
Date and the Second Closing Date, as applicable, shall not exceed
$50,000,000. The Administrative Agent shall have received copies of the
applicable Acquisition Documents and all certificates, opinions and other
documents delivered thereunder, certified by a Financial Officer as
complete and correct.
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(o) After giving effect to the First Acquisition or the
Transactions, as applicable, and the other transactions contemplated
hereby to occur on or before such date, Holdings and its subsidiaries
shall have outstanding no Indebtedness or preferred stock other than (a)
the loans and other extensions of credit hereunder, (b) the Senior
Subordinated Notes, (c) if the ATU Acquisition is consummated, the
Holdings Discount Debentures, and (d) other Indebtedness permitted under
Sections 6.01(a) (i) through (v).
(p) If the ATU Acquisition is consummated, the terms and conditions
of the Holdings Discount Debentures (including but not limited to terms
and conditions relating to the interest rate, payment-in-kind features and
redemption) shall be satisfactory in all respects to the Lenders.
(q) The Lenders shall have received (i) audited consolidated and
consolidating balance sheets and related statements of income,
stockholder's equity and cash flows of the Alaska Entities and the ATU
Business for the 1998 fiscal year, in each case prepared by a nationally
recognized accounting firm reasonably acceptable to the Agent, and (ii)
unaudited consolidated and consolidating balance sheets and related
statements of income, stockholder's equity and cash flows of (A) the ATU
Business and (B) the Alaska Entities for (1) each subsequent fiscal
quarter ended at least 45 days before the Start Date and (2) each fiscal
month after the most recent 1999 fiscal quarter for which financial
statements were received by the Lenders as described above and ended at
least 45 days before the Start Date.
(r) In the case of borrowings on the Start Date to finance the ATU
Acquisition, the Lenders shall be reasonably satisfied as to the amount
and nature of any environmental and employee health and safety exposures
to which the ATU Business may be subject after giving effect to the
Transactions, and with the plans of the Borrower with respect thereto, and
the Lenders shall have received environmental assessments (including Phase
I and Phase II reports) satisfactory to the Administrative Agent from an
environmental consulting firm satisfactory to the Administrative Agent.
(s) In the case of borrowings on the Start Date to finance the ATU
Acquisition, after giving effect to the First Acquisition and the other
transactions contemplated hereby to occur on or before such date,
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87
the Administrative Agent shall be reasonably satisfied (i) with the
resolution of the Year 1999 problem with respect to the computer,
financial and other information systems of the ATU Business and (ii) that
the measures taken and proposed to be taken by the Borrower to address any
potential Year 2000 problems with respect to the computer, financial and
other information systems of the ATU Business will be sufficient to insure
that the ATU Business does not suffer any material adverse consequences as
a result of such problems.
(t) In the case of borrowings on the Start Date to finance the PTI
Acquisition, the Borrower shall have received not less than $115,000,000
in gross cash proceeds from the issuance of the Senior Subordinated Notes
in a public offering or in a Rule 144A offering or other private placement
to one or more holders satisfactory to the Agent. The terms and conditions
of the Senior Subordinated Notes shall be reasonably satisfactory to the
Administrative Agent.
(u) If the Acquisitions are consummated on different dates and the
PTI Acquisition is not the First Acquisition, the Sponsor shall have
entered into a written agreement with the Borrower, in form and substance
satisfactory to the Administrative Agent, that provides for the making of
the Additional Equity Contribution as required by Section 5.17.
The Administrative Agent shall notify the Borrower and the Lenders of the Start
Date, and such notice shall be conclusive and binding. Notwithstanding the
foregoing, the obligations of the Lenders to make Loans and of the Issuing Bank
to issue Letters of Credit hereunder shall not become effective unless each of
the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or
prior to 5:00 p.m., New York City time, on December 31, 1999 (and, in the event
such conditions are not so satisfied or waived at or prior to such time, the
Commitments shall terminate at such time).
SECTION 4.03. Second Closing Date. On the Second Closing Date, if
any:
(a) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated
the Second Closing Date) of each of (i) Wachtell, Lipton, Rosen & Katz,
counsel for Holdings and the Borrower, substantially in the form of
Exhibit B-1, (ii) Deborah
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88
Harwood, Washington counsel for Holdings and the Borrower, substantially
in the form of Exhibit B-2, (iii) Hogan & Hartson, LLP, FCC counsel for
Holdings and the Borrower, substantially in the form of Exhibit B-3, (iii)
Birch, Horton, Bittner & Cherot, Alaskan regulatory counsel for Holdings
and the Borrower, substantially in the form of Exhibit B-3, (iv) Darby &
Darby, intellectual property counsel for Holdings and the Borrower,
substantially in the form of Exhibit B-4, (v) Lemle & Kelleher L.L.P.,
Louisiana counsel for Holdings and the Borrower, substantially in the form
of Exhibit B-5, and (vi) local counsel in each jurisdiction where, if the
Start Date is the Initial Closing Date, a First Acquisition Mortgaged
Property is located or, if the Start Date is the Closing Date, a Mortgaged
Property is located, substantially in the form of Exhibit B-6, and, in the
case of each such opinion required by this paragraph, covering such other
matters relating to the Loan Parties, the Loan Documents or the
Transactions as the Required Lenders shall reasonably request. The
Borrower hereby requests such counsel to deliver such opinions.
(b) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of each
Loan Party, the authorization of the Second Acquisition and any other
legal matters relating to the Loan Parties, the Loan Documents or the
Second Acquisition, all in form and substance satisfactory to the
Administrative Agent and its counsel.
(c) The Administrative Agent shall have received a certificate,
dated the Second Closing Date and signed by the President, a Vice
President or a Financial Officer of the Borrower, confirming compliance
with the conditions set forth in paragraphs (a) and (b) of Section 4.01.
(d) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Second Closing Date, including,
to the extent invoiced, reimbursement or payment of all out-of-pocket
expenses (including fees, charges and disbursements of counsel) required
to be reimbursed or paid by any Loan Party hereunder or under any other
Loan Document.
(e) The Administrative Agent shall have received counterparts of the
Security Agreement, the Pledge Agreement and the Indemnity, Subrogation
and Contribu-
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tion Agreement, each previously signed on behalf of the Borrower and
Holdings and signed by each Second Acquisition Subsidiary Loan Party,
together with the following:
(i) stock certificates representing all the outstanding shares
of capital stock of each Subsidiary owned by or on behalf of any
Loan Party and acquired on the Second Closing Date (except that
stock certificates representing shares of common stock of a Foreign
Subsidiary may be limited to 65% of the outstanding shares of common
stock of such Foreign Subsidiary), promissory notes evidencing all
intercompany Indebtedness owed to any Loan Party by any Subsidiary
acquired on the Second Closing Date and stock powers and instruments
of transfer, endorsed in blank, with respect to such stock
certificates and promissory notes;
(ii) all documents and instruments, including Uniform
Commercial Code financing statements, required by law or reasonably
requested by the Administrative Agent to be filed, registered or
recorded to create or perfect the Liens intended to be created under
the Security Agreement; and
(iii) a completed Perfection Certificate dated the Second
Closing Date and signed by an executive officer or Financial Officer
of the Borrower, together with all attachments contemplated thereby,
including the results of a search of the Uniform Commercial Code (or
equivalent) filings made with respect to the Loan Parties acquired
on the Second Closing Date in the jurisdictions contemplated by the
Perfection Certificate and copies of the financing statements (or
similar documents) disclosed by such search and evidence reasonably
satisfactory to the Administrative Agent that the Liens indicated by
such financing statements (or similar documents) are permitted by
Section 6.02 or have been released.
(f) The Administrative Agent shall have received (i) counterparts of
a Mortgage with respect to each Second Acquisition Mortgaged Property
signed on behalf of the record owner of such Second Acquisition Mortgaged
Property, (ii) a policy or policies of title insurance issued by a
nationally recognized title insurance company, insuring the Lien of each
such Mortgage as a valid first Lien on the Second Acqui-
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90
sition Mortgaged Property described therein, free of any other Liens
except as permitted by Section 6.02, together with such endorsements,
coinsurance and reinsurance as the Collateral Agent or the Required
Lenders may reasonably request, and (iii) such surveys, abstracts and
appraisals as may be required pursuant to such Mortgages or as the
Administrative Agent or the Required Lenders may reasonably request.
(g) The Administrative Agent shall have received evidence that
the insurance required by Section 5.07 and the Security Documents is in
effect.
(h) All consents and approvals required to be obtained from any
Governmental Authority or other Person (including the final consents,
approvals or non-objection of the FCC or the APUC) in connection with
the Second Acquisition shall have been obtained, and all applicable
waiting periods and appeal periods shall have expired (other than any
appeal period of the consents and approvals required by the APUC to
assign the Operating Licenses of the State of Alaska and the appeal
periods of the FCC Operating Licenses listed on Schedule 4.02(i)), in
each case without the imposition of any conditions reasonably expected
to have a Material Adverse Effect or to affect the rights or security
of the Lenders hereunder.
(i) The Lenders shall have received a pro forma consolidated
balance sheet of Holdings as of the end of the most recently completed
fiscal quarter of the Borrower that is at least 45 days prior to the
Second Closing Date, reflecting all pro forma adjustments as if the
Transactions had been consummated on such date, and such pro forma
consolidated balance sheet shall be consistent in all material respects
with the forecasts and other information previously provided to the
Lenders.
(j) The Administrative Agent shall have received a solvency
letter, in form and substance satisfactory to the Lenders, from Murray,
Devine & Co., Inc., with respect to the solvency of the Loan Parties
after giving effect to the Second Acquisition.
(k) The tax position and contingent tax and other liabilities of
Holdings, the Borrower and the Subsidiaries after giving effect to the
Second Acquisition shall be satisfactory to the Administrative Agent
and the Lenders.
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91
(l) Each of the Guarantee Agreements of the Second Acquisition Loan
Parties shall have been duly executed by the parties thereto and delivered
to the Collateral Agent and shall be in full force and effect.
(m) The Second Acquisition shall have been consummated in accordance
with applicable law, the PTI Purchase Agreement or the ATU Purchase
Agreement, as applicable (without giving effect to any amendments or
waivers to the PTI Purchase Agreement or the ATU Purchase Agreement that
are adverse to the Lenders and not reasonably satisfactory to the
Lenders), and all other related documentation satisfactory to the Lenders,
and the Borrower shall receive or shall have previously received the
Equity Contributions, and the Lenders shall (x) be satisfied with the
capitalization, structure and equity ownership of Holdings and the
Borrower after giving effect to the Transactions to occur on or before the
Second Closing Date (it being agreed that the capitalization, structure
and equity ownership of Holdings and the Borrower to the extent described
elsewhere in this Agreement are satisfactory to the Lenders) and (y) be
satisfied that the Transaction Costs as incurred or paid on or before the
Second Closing Date shall not exceed $50,000,000. The Administrative Agent
shall have received copies of the Acquisition Documents and all
certificates, opinions and other documents delivered thereunder, certified
by a Financial Officer as complete and correct.
(n) After giving effect to the Second Acquisition and the other
transactions contemplated hereby to occur on or before the Second Closing
Date, Holdings and its subsidiaries shall have outstanding no Indebtedness
or preferred stock other than (a) the loans and other extensions of credit
hereunder, (b) the Senior Subordinated Notes, (c) the Holdings Discount
Debentures and (d) other Indebtedness permitted under Section 6.01.
(o) The terms and conditions of the Holdings Discount Debentures
(including but not limited to terms and conditions relating to the
interest rate, payment-in-kind features and redemption) shall be
satisfactory in all respects to the Lenders.
(p) The Lenders shall have received (i) audited consolidated and
consolidating balance sheets and related statements of income,
stockholder's equity and cash flows of the Alaska Entities and ATU for the
1998 fiscal year, in each case prepared by a nationally
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92
recognized accounting firm reasonably acceptable to the Agent, and (ii)
unaudited consolidated and consolidating balance sheets and related
statements of income, stockholder's equity and cash flows of (A) ATU and
(B) the Alaska Entities for (l) each subsequent fiscal quarter ended at
least 45 days before the Second Closing Date and (2) each fiscal month
after the most recent 1999 fiscal quarter for which financial statements
were received by the Lenders as described above and ended at least 45 days
before the Second Closing Date.
(q) In the case of borrowings on the Second Closing Date to finance
the ATU Acquisition, the Lenders shall be reasonably satisfied as to the
amount and nature of any environmental and employee health and safety
exposures to which the ATU Business may be subject after giving effect to
the Transactions, and with the plans of the Borrower with respect thereto,
and the Lenders shall have received environmental assessments (including
Phase I and Phase II reports) satisfactory to the Agent from an
environmental consulting firm satisfactory to the Agent.
(r) In the case of borrowings on the Second Closing Date to finance
the ATU Acquisition, after giving effect to the Transactions and the other
transactions contemplated hereby to occur on or before such date, the
Agent shall be reasonably satisfied (i) with the resolution of the Year
1999 problem with respect to the computer, financial and other information
systems of the ATU Business and (ii) that the measures taken and proposed
to be taken by the Borrower to address any potential Year 2000 problems
with respect to the computer, financial and other information systems of
the ATU Business will be sufficient to insure that the ATU Business does
not suffer any material adverse consequences as a result of such problems.
(s) In the case of borrowings on the Second Closing Date to finance
the PTI Acquisition, the Borrower shall have received not less than
$115,000,000 in gross cash proceeds from the issuance of the Senior
Subordinated Notes in a public offering or in a Rule 144A offering or
other private placement to one or more holders satisfactory to the Agent.
The terms and conditions of the Senior Subordinated Notes shall be
reasonably satisfactory to the Agent.
The Administrative Agent shall notify the Borrower and the Lenders of the Second
Closing Date, if any, and such notice
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93
shall be conclusive and binding. Notwithstanding the foregoing, the obligations
of the Lenders to make Loans on the Second Closing Date and of the Issuing Bank
to issue Letters of Credit hereunder on such date shall not become effective
unless each of the foregoing conditions is satisfied (or waived pursuant to
Section 9.02) at or prior to 5:00 p.m., New York City time, on December 31, 1999
(and, in the event such conditions are not so satisfied or waived at or prior to
such time, the Commitments shall terminate at such time).
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and all Letters of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, each of Holdings and the
Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the
Borrower, Holdings's audited consolidated and unaudited consolidating
balance sheet and related statements of operations, stockholders' equity
and cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all
reported on by Deloitte & Touche LLP or other independent public
accountants of recognized national standing (without a "going concern" or
like qualification or exception and without any qualification or exception
as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of Holdings and its consolidated
subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, Holdings's consolidated and
consolidating balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such fiscal
quarter and the then elapsed
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94
portion of the fiscal year, setting forth in each case in comparative form
the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of
Holdings and its consolidated subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes;
(c) within 30 days after the end of each of the first two fiscal
months of each fiscal quarter of the Borrower, Holdings's consolidated
balance sheet and related statements of operations, stockholders' equity
and cash flows as of the end of and for such fiscal month and the then
elapsed portion of the fiscal year, all certified by one of its Financial
Officers as presenting in all material respects the financial condition
and results of operations of Holdings and its consolidated subsidiaries on
a consolidated basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments and the absence of footnotes;
(d) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Sections
6.12, 6.13 and 6.14 and (iii) stating whether any change in GAAP or in the
application thereof has occurred since the date of the Borrower's audited
financial statements referred to in Section 3.04 and, if any such change
has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(e) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether they obtained knowledge during
the course of their examination of such financial statements of any
Default (which certificate may be limited to the extent required by
accounting rules or guidelines);
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95
(g) at least 30 days prior to the commencement of each fiscal year
of the Borrower, a detailed consolidated budget for such fiscal year
(including a projected consolidated balance sheet and related statements
of projected operations and cash flow as of the end of and for such fiscal
year and setting forth the assumptions used for purposes of preparing such
budget) and, promptly when available, any significant revisions of such
budget;
(h) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings, the Borrower or any Subsidiary with the Securities and Exchange
Commission, the FCC or the APUC, or any Governmental Authority succeeding
to any or all of the functions of said Commission, the FCC or the APUC, as
applicable, or with any national securities exchange, or distributed by
Holdings to its shareholders generally, as the case may be; and
(i) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of
Holdings, the Borrower or any Subsidiary, or compliance with the terms of
any Loan Document, as the Administrative Agent or any Lender may
reasonably request in connection with the Loan Documents.
SECTION 5.02. Notices of Material Events. Holdings and the Borrower
will furnish to the Administrative Agent and each Lender prompt written notice
of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting
Holdings, the Borrower or any Affiliate thereof that, if adversely
determined, could reasonably be expected to result in a Material Adverse
Effect;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of Holdings, the Borrower and the Subsidiaries in an
aggregate amount exceeding $3,000,000;
(d) the commencement of any proceeding by or before any Governmental
Authority seeking the cancela-
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96
tion, termination (including by means of non-renewal), limitation, adverse
modification or adverse conditioning of any Authorization or Operating
License; and
(e) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Information Regarding Collateral. (a) The Borrower
will furnish to the Administrative Agent prompt written notice of any change (i)
in any Loan Party's corporate name or in any trade name used to identify it in
the conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in any Loan Party's identity or corporate structure or (iv) in any Loan
Party's Federal Taxpayer Identification Number. Holdings and the Borrower agree
not to effect or permit any change referred to in the preceding sentence unless
all filings have been made under the Uniform Commercial Code or otherwise that
are required in order for the Administrative Agent to continue at all times
following such change to have a valid, legal and perfected security interest in
all the Collateral. Holdings and the Borrower also agree promptly to notify the
Administrative Agent if any material portion of the Collateral is damaged or
destroyed.
(b) Each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to clause (a) of
Section 5.01, the Borrower shall deliver to the Administrative Agent a
certificate of a Financial Officer and the chief legal officer of the Borrower
(i) setting forth the information required pursuant to the Perfection
Certificate or confirming that there has been no change in such information
since the date of the Perfection Certificate delivered on the Start Date, the
Second Closing Date, if any, or the date of the most recent certificate
delivered pursuant to this Section and (ii) certifying that all Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations,
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97
including all refilings, rerecordings and reregistrations, containing a
description of the Collateral have been filed of record in each governmental,
municipal or other appropriate office in each jurisdiction identified pursuant
to clause (i) above to the extent necessary to protect and perfect the security
interests under the Collateral Agreement for a period of not less than 18 months
after the date of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period).
SECTION 5.04. Existence; Conduct of Business. Each of Holdings and
the Borrower will, and will cause each of the Subsidiaries to, do or cause to be
done all things necessary to preserve, renew or replace and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges,
franchises, patents, copyrights, trademarks and trade names material to the
conduct of its business, including the renewal and maintenance of all
Authorizations, except for those the failure to maintain, preserve or keep in
full force and effect would not reasonably be expected to have a Material
Adverse Effect, and Operating Licenses, provided that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 6.03.
SECTION 5.05. Payment of Obligations. Each of Holdings and the
Borrower will, and will cause each of the Subsidiaries to, pay its Indebtedness
and other obligations, including Tax liabilities, before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) Holdings, the
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP, (c) such contest effectively suspends
collection of the contested obligation and the enforcement of any Lien securing
such obligation and (d) the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.06. Maintenance of Properties. Each of Holdings and the
Borrower will, and will cause each of the Subsidiaries to, keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and are and will be in compliance
with all terms and conditions of the Operating Licenses and Authorizations and
all Communications Laws, including all standards or rules imposed by the FCC and
APUC or as imposed under any agreements with telephone companies and customers,
except where the failure to do so could not
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reasonably be expected to result in a Material Adverse Effect.
SECTION 5.07. Insurance. Each of Holdings and the Borrower will, and
will cause each of the Subsidiaries to, maintain, with financially sound and
reputable insurance companies or associations (a) insurance in such amounts
(with no greater risk retention) and against such risks as are customarily
maintained by companies of established repute engaged in the same or similar
businesses operating in the same or similar locations and (b) all insurance
required to be maintained pursuant to the Security Documents. The Borrower will
furnish to the Lenders, upon request of the Administrative Agent, information in
reasonable detail as to the insurance so maintained.
SECTION 5.08. Casualty and Condemnation. (a) The Borrower (a) will
furnish to the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to any material portion of the Collateral or
the commencement of any action or proceeding for the taking of any Collateral or
any part thereof or interest therein under power of eminent domain or by
condemnation or similar proceeding and (b) will ensure that the Net Proceeds of
any such event (whether in the form of insurance proceeds, condemnation awards
or otherwise) are collected and applied in accordance with the applicable
provisions of the Security Documents.
SECTION 5.09. Books and Records; Inspection and Audit Rights. Each
of Holdings and the Borrower will, and will cause each of the Subsidiaries to,
keep proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. Each of Holdings and the Borrower will, and will cause each of the
Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
SECTION 5.10. Compliance with Laws. Each of Holdings and the
Borrower will, and will cause each of the Subsidiaries to, comply with all laws,
rules, regulations and orders, including Environmental Laws, of any Governmental
Authority applicable to it or its property, including the payment of any
regulatory fees required by the FCC and APUC, any fees associated with the
Operating Licenses or
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will the aggregate principal amount of outstanding Revolving Borrowings on (a)
the Initial Closing Date exceed $50,000,000 and (b) the Second Closing Date
exceed $70,000,000.
(iii) If the Acquisitions are consummated on different dates and the
PTI Acquisition is the First Acquisition, then (A) on the Initial Closing
Date, the proceeds of the PTI Term Facilities Indebtedness will be used by
the Borrower, together with (1) $65,000,000 of the proceeds from the
Equity Contributions, (2) the net proceeds of the issuance of the Senior
Subordinated Notes and (3) Revolving Borrowings in an aggregate principal
amount not to exceed the amount, if positive, of the PTI Adjustment
Amount, to (x) pay the PTI Purchase Price, (y) repay the existing debt of
the Alaska Entities and (z) pay a portion of the Transaction Costs not to
exceed $25,000,000 and (B) on the Second Closing Date, the proceeds of the
ATU Term Facilities Indebtedness will be used by the Borrower, together
with (1) the proceeds from the Equity Contributions (less any portion of
the Equity Contributions made in connection with the PTI Acquisition) and
(2) Revolving Borrowings in an aggregate principal amount not to exceed
$7,700,000 plus the sum of the Net Plant Amount and the Net Cash Amount,
to (I) pay the ATU Purchase Price and (II) pay the portion of the
Transaction Costs not paid prior to the Second Closing Date.
Notwithstanding the foregoing, if the PTI Acquisition is the First
Acquisition, in no event will the aggregate principal amount of
outstanding Revolving Borrowings on (a) the Initial Closing Date exceed
$20,000,000 and (b) the Second Closing Date exceed $70,000,000.
(b) The proceeds of Revolving Loans, other than those referred to in
paragraph (a) above, will be used by the Borrower for general corporate
purposes, including, at any time after the earlier of the Closing Date, the
Second Closing Date and December 31, 1999, Permitted Acquisitions.
(c) Letters of credit will be used by the Borrower for general
corporate purposes.
(d) No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations G, U and X.
SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary
is formed or acquired after the Start
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Date, the Borrower will notify the Administrative Agent thereof and (a) if such
Subsidiary is a Subsidiary Loan Party, the Borrower will cause such Subsidiary
to become a party to the Subsidiary Guarantee Agreement, the Indemnity,
Subrogation and Contribution Agreement and each other applicable Security
Document within ten Business Days after such Subsidiary is formed or acquired,
and, within fifteen Business Days after such Subsidiary is formed or acquired,
take such actions to create and perfect Liens on such Subsidiary's assets to
secure the Obligations as the Administrative Agent or the Required Lenders shall
reasonably request and (b) if any Equity Interest in or Indebtedness of such
Subsidiary are owned by or on behalf of any Loan Party, the Borrower will cause
such Equity Interests and promissory notes evidencing such Indebtedness to be
pledged pursuant to the Pledge Agreement within ten Business Days after such
Subsidiary is formed or acquired (except that, if such Subsidiary is a Foreign
Subsidiary, shares of common stock of such Subsidiary to be pledged pursuant to
the Pledge Agreement may be limited to 65% of the outstanding shares of common
stock of such Subsidiary).
SECTION 5.13. Further Assurances. (a) Each of Holdings and the
Borrower will, and will cause each Subsidiary Loan Party to, execute any and all
further documents, financing statements, agreements and instruments, and take
all such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents),
which may be required under any applicable law, or which the Administrative
Agent or the Required Lenders may reasonably request, to effectuate the
transactions contemplated by the Loan Documents or to grant, preserve, protect
or perfect the Liens created or intended to be created by the Security Documents
or the validity or priority of any such Lien, all at the expense of the Loan
Parties. Holdings and the Borrower also agree to provide to the Administrative
Agent, from time to time upon request, evidence reasonably satisfactory to the
Administrative Agent as to the perfection and priority of the Liens created or
intended to be created by the Security Documents.
(b) If any material assets (including any real property or
improvements thereto or any interest therein) are acquired by the Borrower or
any Subsidiary Loan Party after the Start Date or Second Closing Date, as
applicable (other than assets constituting Security under the Security Agreement
that become subject to the Lien of the Security Agreement upon acquisition
thereof), the Borrower will notify the Administrative Agent and the Lenders
thereof, and, if requested by the Administrative Agent or the Required Lenders,
the Borrower will cause such assets to be
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subjected to a Lien securing the Obligations and will take, and cause the
Subsidiary Loan Parties to take, such actions as shall be necessary or
reasonably requested by the Administrative Agent to grant and perfect such
Liens, including actions described in paragraph (a) of this Section, all at the
expense of the Loan Parties.
(c) Upon the request of the Administrative Agent, to the extent
permitted by applicable law at the time of such request, grant or cause the
applicable Subsidiaries to grant, to the Administrative Agent, a direct security
interest in the Operating Licenses within 30 days after receipt of such request,
provided that to the extent FCC or APUC consent shall be required in connection
with granting such security interest, such consent shall be requested within 30
days after receipt of such request and upon receipt of such FCC or APUC consent,
such security interest shall be granted within 10 Business Days thereof.
SECTION 5.14. Interest Rate Protection. As promptly as practicable,
and in any event within 120 days after the Start Date and the Second Closing
Date, if any, the Borrower will enter into, and thereafter for a period of not
less than three years will maintain in effect, one or more interest rate
protection agreements on such terms and with such parties as shall be reasonably
satisfactory to the Administrative Agent, the effect of which shall be to fix or
limit the interest cost to the Borrower with respect to at least 50% of the
outstanding Term Loans.
SECTION 5.15. Operating Licenses. Holdings and the Borrower agree to
take all actions necessary or desirable to cause, not later than 60 days after
the Start Date (or 60 days after the Second Closing Date, in the case of
Operating Licenses to be acquired pursuant to the Second Acquisition on the
Second Closing Date) each Operating License acquired on or before such date to
be issued in the name of, or validly assigned to, a License Subsidiary, and
thereafter to cause all Title III authorizations issued by the FCC and all other
Operating Licenses to continue to be held by License Subsidiaries.
SECTION 5.16. After-Acquired Licenses. Unless the Borrower and the
Administrative Agent shall otherwise agree, cause each after-acquired Operating
License to be held in a separate License Subsidiary, provided that to the extent
the Borrower shall not have received FCC or APUC approval with respect to the
foregoing at the scheduled closing of the acquisition of such Operating License,
the Borrower shall comply with the foregoing requirement as soon
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as practicable following such acquisition (but in any event within 60 days after
such acquisition).
SECTION 5.17. Obtain Additional Equity Contribution. If the
Acquisitions are consummated on different dates and the PTI Acquisition is not
the First Acquisition and is not consummated on or before the Equity
Contribution Date, then, subject to the provisions of Section 2.10(g) (iii), the
Borrower will obtain from the Sponsor the Additional Equity Contribution.
SECTION 5.18. Second Acquisition. If the Acquisitions are
consummated on different dates, then the Borrower will effect the Second
Acquisition as soon as reasonably practicable after the Initial Closing Date and
on the same date as the second drawing under the Term Facilities.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal
of and interest on each Loan and all fees payable hereunder have been paid in
full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, each of Holdings and the Borrower
covenants and agrees with the Lenders that:
SECTION 6.01. Indebtedness: Certain Equity Securities. (a) Holdings
and the Borrower will not, and will not permit any Subsidiary to, create, incur,
assume or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) the Senior Subordinated Notes in an aggregate principal amount
not to exceed $200,000,000 and the Holdings Discount Debentures in an
aggregate principal amount at maturity not to exceed $49,000,000;
(iii) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof
or result in an earlier maturity date or decreased weighted average life
thereof;
(iv) Indebtedness of the Borrower to any Wholly-Owned Subsidiary and
of any Wholly-Owned Subsidiary
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(other than a License Subsidiary) to the Borrower or any other
Wholly-Owned Subsidiary, provided that Indebtedness of any Wholly-Owned
Subsidiary that is not a Loan Party to the Borrower or any Wholly-Owned
Subsidiary Loan Party shall be subject to Section 6.04;
(v) Guarantees by the Borrower of Indebtedness of any Subsidiary and
by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary,
provided that Guarantees by the Borrower or any Subsidiary Loan Party of
Indebtedness of any Subsidiary that is not a Loan Party shall be subject
to Section 6.04;
(vi) Indebtedness of the Borrower or any Subsidiary (other than a
License Subsidiary) incurred to finance the acquisition, construction or
improvement of any fixed or capital assets, including Capital Lease
Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, provided that such Indebtedness is
incurred prior to or within 90 days after such acquisition or the
completion of such construction or improvement, and extensions, renewals
and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof provided that the aggregate principal
amount of Indebtedness permitted by this clause (vi) shall not exceed
$20,000,000 at any time outstanding;
(vii) Indebtedness of any Person that becomes a Subsidiary after the
date hereof, provided that (A) such Indebtedness exists at the time such
Person becomes a Subsidiary and is not created in contemplation of or in
connection with such Person becoming a Subsidiary and (B) the aggregate
principal amount of Indebtedness permitted by this clause (vii) shall not
exceed $10,000,000 at any time outstanding;
(viii) other unsecured Indebtedness of the Borrower or any
Subsidiary (other than a License Subsidiary) in an aggregate principal
amount not exceeding $5,000,000 at any time outstanding;
(ix) Indebtedness in respect of Hedging Agreements permitted by
Section 6.07; and
(x) Indebtedness incurred by the Borrower or any of the Subsidiaries
constituting reimbursement obligations with respect to letters of credit
issued in the ordinary course of business, including letters of
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credit in respect of workers' compensation claims or self-insurance.
(b) Holdings will not create, incur, assume or permit to exist any
Indebtedness except (i) the Holdings Discount Debentures, (ii) the Guarantees of
the Senior Subordinated Notes and (iii) Indebtedness created under the Loan
Documents.
(c) Neither Holdings nor the Borrower will, nor will they permit any
Subsidiary to, issue any preferred stock or other preferred Equity Interests.
SECTION 6.02. Liens. (a) Holdings and the Borrower will not, and
will not permit any Subsidiary to, create, incur, assume or permit to exist any
Lien on any property or asset now owned or hereafter acquired by it, or assign
or sell any income or revenues (including accounts receivable) or rights in
respect of any thereof, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02,
provided that (i) such Lien shall not apply to any other property or asset
of Holdings, the Borrower or any Subsidiary and (ii) such Lien shall
secure only those obligations that it secures on the date hereof and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
(iv) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary (other than a
License Subsidiary) after the date hereof prior to the time such Person
becomes a Subsidiary, provided that (A) such Lien is not created in
contemplation of or in connection with such acquisition or such Person
becoming a Subsidiary, as the case may be, (B) such Lien shall not apply
to any other property or assets of the Borrower or any Subsidiary and (C)
such Lien shall secure only those obligations that it secures on the date
of such acquisition or the date such Person becomes a Subsidiary, as the
case may be and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof; and
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(v) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary, (other than a License
Subsidiary), provided that (A) such security interests secure Indebtedness
permitted by clause (vi) of Section 6.01(a), (B) such security interests
and the Indebtedness secured thereby are incurred prior to or within 90
days after such acquisition or the completion of such construction or
improvement, (C) the Indebtedness secured thereby does not exceed 80% of
the cost of acquiring, constructing or improving such fixed or capital
assets and (D) such security interests shall not apply to any other
property or assets of the Borrower or any Subsidiary;
(b) Holdings will not create, incur, assume or permit to exist any
Lien on any property or asset now owned or hereafter acquired by it, or assign
or sell any income or revenues (including accounts receivable) or rights in
respect thereof, except Liens created under the Pledge Agreement and Permitted
Encumbrances.
SECTION 6.03. Fundamental Changes. (a) Neither Holdings nor the
Borrower will, nor will they permit any Subsidiary to, merge into or consolidate
with any other Person, or permit any other Person to merge into or consolidate
with it, or liquidate or dissolve, except that, if at the time thereof and
immediately after giving effect thereto no Default shall have occurred and be
continuing (i) any Subsidiary (other than a License Subsidiary) may merge into
the Borrower in a transaction in which the Borrower is the surviving
corporation, (ii) any Person (other than a License Subsidiary) may merge with or
into or consolidate with any Subsidiary (other than a License Subsidiary) in a
transaction in which the surviving entity the surviving entity is a Subsidiary
and (if any party to such merger is a Subsidiary Loan Party) the surviving
entity is a Subsidiary Loan Party, (iii) any Subsidiary may merge into or
consolidate with any other Person or permit any other Person to merge into or
consolidate with it in any sale or other disposition permitted under Section
6.05., (iv) any Subsidiary (other than a License Subsidiary or other Subsidiary
Loan Party) may liquidate or dissolve if the Borrower determines in good faith
that such liquidation or dissolution is in the best interests of the Borrower
and is not materially disadvantageous to the Lenders and (v) the Borrower may
merge with an Affiliate incorporated solely for the purpose of reincorporating
the Borrower in another jurisdiction, provided that Holdings pledges the stock
of the surviving entity to the Collateral Agent as security for the Obligations
and, in connection with such merger, Holdings and its subsidiaries execute such
other documents as are
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reasonably requested by the Administrative Agent to the effect the purposes of
this Agreement and the other Loan Documents, provided further that any such
merger or consolidation involving a Person that is not a Wholly Owned Subsidiary
immediately prior to such merger or consolidation shall not be permitted unless
also permitted by Sections 6.04 and 6.08.
(b) The Borrower will not, and will not permit any of the
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and the Subsidiaries on the
date of execution of this Agreement and businesses reasonably related thereto.
(c) Holdings will not engage in any business or activity other than
the ownership of all the outstanding shares of capital stock of the Borrower,
the issuance of the Holdings Discount Debentures and activities incidental
thereto, including rental payments, computer services, professional and
consultant services, investment services, printing, travel and other
miscellaneous services. Holdings will not own or acquire any assets (other than
shares of capital stock of the Borrower, cash and Permitted Investments) or
incur any liabilities (other than liabilities under the Loan Documents,
liabilities imposed by law, including tax liabilities, liabilities under the
Holdings Discount Debentures and other liabilities incidental to its existence
and permitted business and activities).
(d) No License Subsidiary will engage in any business or activity
other than holding the applicable Operating License and activities incidental
thereto.
(e) No License Subsidiary will sell, transfer, lease or otherwise
dispose of any Operating License or any Authorization.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. The Borrower will not, and will not permit any of the Subsidiaries
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Subsidiary prior to such merger) any Equity
Interests in or evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, Guarantee any obligations of, or make
or permit to exist any investment or any other
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interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit, except:
(a) the Acquisitions;
(b) Permitted Investments;
(c) Investments permitted pursuant to Section 2.11(c);
(d) investments existing on the date hereof and set forth on
Schedule 6.04;
(e) investments by the Borrower and the Subsidiaries in Equity
Interests in their respective Subsidiaries, provided that (i) any such
Equity Interests held by a Loan Party shall be pledged pursuant to the
Pledge Agreement (subject to the limitations applicable to common stock of
a Foreign Subsidiary referred to in Section 5.12) and (ii) the aggregate
amount of investments by Loan Partes in, and loans and advances by Loan
Parties to, and Guarantees by Loan Parties of Indebtedness of,
Subsidiaries that are not Loan Parties (including all such investments,
loans, advances and Guarantees existing on the Start Date) shall not
exceed $25,000,000 (based on cost and net of any cash distributed by such
Subsidiaries that are not Loan Parties to Loan Parties that represent a
return of paid-in capital or repayment of principal) at any time
outstanding;
(f) loans or advances made by the Borrower to any Subsidiary and
made by any Subsidiary to the Borrower or any other Subsidiary, provided
that (i) any such loans and advances made by a Loan Party shall be
evidenced by a promissory note pledged pursuant to the Pledge Agreement
and (ii) the amount of such loans and advances made by Loan Parties to
Subsidiaries that are not Loan Parties shall be subject to the limitation
set forth in clause (d) above;
(g) Guarantees constituting Indebtedness permitted by Section 6.01,
provided that (i) neither Holdings nor any Subsidiary shall Guarantee the
Senior Subordinated Notes unless (A) Holdings or such Subsidiary, as
applicable, also has Guaranteed the Obligations pursuant to a Guarantee
Agreement, (B) such Guarantee of the Senior Subordinated Notes is
subordinated to such Guarantee of the Obligations on terms no less
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(o) other investments in an aggregate amount not to exceed
$5,000,000.
SECTION 6.05. Asset Sales. The Borrower will not, and will not
permit any of the Subsidiaries to, sell, transfer, lease or otherwise dispose of
any asset, including any Equity Interest owned by it, nor will the Borrower
permit any of the Subsidiaries to issue any additional Equity Interest in such
Subsidiary, except:
(a) sales of inventory, used or surplus equipment and Permitted
Investments in the ordinary course of business;
(b) sales, transfers and dispositions to the Borrower or a
Wholly-Owned Subsidiary, provided that any such sales, transfers or
dispositions involving a Subsidiary that is not a Loan Party shall be made
in compliance with Section 6.09; and
(c) sales, transfers and other dispositions of assets (other than
Equity Interests in a Subsidiary) that are not permitted by any other
clause of this Section, provided that the aggregate fair market value of
all assets sold, transferred or otherwise disposed of in reliance upon
this clause (c) shall not exceed $15,000,000 during any fiscal year of the
Borrower or $50,000,000 in the aggregate during the term of this Agreement
provided however that assets with an aggregate book value of less than
$100,000 sold, transferred or otherwise disposed of in a single
transaction or a series of related transactions shall not be included in
the determination of the aggregate fair market value of assets sold,
transferred or otherwise disposed of in reliance upon this clause (c);
provided that all sales, transfers, leases and other dispositions permitted
hereby (other than those permitted by clause (b) above) shall be made for fair
value and (other than those permitted by clause (b) above) shall be made for at
least 50% cash consideration.
SECTION 6.06. Sale and Leaseback Transactions. The Borrower will
not, and will not permit any of the Subsidiaries to, enter into any arrangement,
directly or indirectly, whereby it shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereinafter
acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
sold or transferred, except for any such sale of any
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fixed or capital assets that is made for cash consideration in an amount not
less than the cost of such fixed or capital asset and is consummated within 90
days after the Borrower or such Subsidiary acquires or completes the
construction of such fixed or capital asset.
SECTION 6.07. Hedging Agreements. The Borrower will not, and will
not permit any of the Subsidiaries to, enter into any Hedging Agreement, other
than (a) Hedging Agreements required by Section 5.14 and (b) Hedging Agreements
entered into in the ordinary course of business to hedge or mitigate risks to
which the Borrower or any Subsidiary is exposed in the conduct of its business
or the management of its liabilities.
SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness.
(a) Neither Holdings nor the Borrower will, nor will they permit any Subsidiary
to, declare or make, or agree to pay or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except (i) Holdings may declare and pay dividends with respect to its capital
stock payable solely in additional shares of its common stock, (ii) Subsidiaries
may declare and pay dividends ratably with respect to their capital stock, (iii)
the Borrower may pay dividends to Holdings in amounts equal to amounts expended
by Holdings to repurchase or otherwise acquire shares of, or options to purchase
shares of, common stock of Holdings from employees, former employees,
consultants, former consultants, directors or former directors of Holdings, the
Borrower or any Subsidiary (or permitted transferees of such employees, former
employees, consultants, former consultants, directors or former directors),
pursuant to the terms of agreements (including employment agreements) or plans
(or amendments thereto) approved by the Board of Directors of Holdings under
which such individuals purchase or sell, or are granted the option to purchase
or sell, shares of such common stock of Holdings, provided, however, that the
aggregate amount paid to Holdings pursuant to this clause (iii) shall not exceed
in any calender year the sum of (x) $5,000,000 plus (y) the Net Proceeds
received since the date of this Agreement and not previously credited to any
repurchase or other acquisition of such shares or options to purchase shares of
common stock pursuant to this clause (iii) received by Holdings and contributed
to the Borrower from the sale of Equity Interests to employees, consultants and
directors of Holdings, the Borrower or any Subsidiary; (iv) the Borrower may pay
dividends to Holdings at such times and in such amounts equal to the amounts
required for Holdings to pay taxes, franchise fees and other fees required to
maintain its corporate existence and
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provide for other operating costs of up to $7,500,000 during any fiscal year
(other than liabilities in respect of the Holdings Discount Debentures); (v) the
Borrower may pay dividends to Holdings in amounts equal to amounts necessary for
Holdings to make loans or advances to employees in the ordinary course of
business in accordance with past practices of the Borrower, but in any event not
to exceed, when aggregated with amounts loaned or advanced under Section
6.04(j), $5,000,000 in the aggregate outstanding at any one time; (vi) any
purchase, repurchase, retirement, defeasance or other acquisition or retirement
for value of Equity Interests of Holdings made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Equity Interests of Holdings
(other than Disqualified Stock and other than Equity Interests issued or sold to
the Borrower or a Subsidiary or an employee stock ownership plan or other trust
established by the Borrower or any of the Subsidiaries); (vii) the Borrower may
pay dividends to Holdings as shall be necessary to permit Holdings to, and
Holdings may, effect the Equity Clawback in accordance with Section 2.10(g), and
(viii) the Borrower may during any fiscal year, provided that no Default or
Event of Default has occurred and is continuing or will occur as a result of
such payment and to the extent permitted by the Subordinated Debt Documents as
in effect on the date hereof, pay dividends to Holdings when and to the extent
necessary to fund payments of interest accrued during such year on the Holdings
Discount Debentures.
(b) Neither Holdings nor the Borrower will, nor will they permit any
Subsidiary to, make or agree to pay or make, directly or indirectly, any payment
or other distribution (whether in cash, securities or other property) of or in
respect of principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancelation or termination of any Indebtedness, except:
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest and principal payments
as and when due in respect of any Indebtedness, other than payments in
respect of the Senior Subordinated Notes prohibited by the subordination
provisions thereof;
(iii) refinancings of Indebtedness to the extent permitted by
Section 6.01;
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(iv) payment of secured Indebtedness that becomes due as a result of
the voluntary sale or transfer of the property or assets securing such
Indebtedness;
(v) payment of indebtedness of the Alaska Entities existing on (i)
the Closing Date, if the Acquisitions are consummated simultaneously, (ii)
the Initial Closing Date, if the Acquisitions are consummated on different
dates and the PTI Acquisition is the First Acquisition or (iii) the Second
Closing Date, if the Acquisitions are consummated on different dates and
the PTI Acquisition is the Second Acquisition.
SECTION 6.09. Transactions with Affiliates. Neither Holdings nor the
Borrower will, nor will they permit any Subsidiary to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) transactions in the ordinary course of business
that do not involve Holdings and are at prices and on terms and conditions not
less favorable to the Borrower or such Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (b) transactions between or
among the Borrower and the Subsidiary Loan Parties not involving any other
Affiliate (c) any Restricted Payment permitted by Section 6.08, (d) any issuance
by Holdings of Securities or by the Borrower of debt securities, or other
payments, awards or grants in cash, securities (other than, in respect of the
Borrower, Equity Interests) or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans approved by the
Board of Directors of the Borrower, (e) the grant of stock options or similar
rights in respect of Equity Interests in Holdings to employees and directors of
the Borrower pursuant to plans approved by the Board of Directors of the
Borrower, (g) customary indemnification and insurance arrangements in favor of
officers, directors, employees and consultants of Holdings, the Borrower or any
Subsidiary, (h) the payment of management fees by the Borrower or any Subsidiary
of up to an aggregate amount per annum equal to 1% of the Consolidated EBITDA of
Holdings for the fiscal year most recently ended, provided that no Default or
Event of Default has occurred and is continuing, (i) the existence of, or the
performance by Holdings, the Borrower or any Subsidiary of the obligations under
the terms of, any stockholders agreements (including any registration rights
agreement or purchase agreement related thereto) to which it is a party as of
the earlier of the Closing Date and the Initial Closing Date, which agreements
are listed on Schedule 6.O8(h), as such agreement may be amended on terms
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reasonably satisfactory to the Administrative Agent from time to time pursuant
to the terms thereof, provided, however, that the terms of any such amendment
are no less favorable to the Lenders than the terms of any such agreements in
effect as of the earlier of the Closing Date and the Initial Closing Date,
respectively, and (j) the issuance of Equity Interests (other than Disqualified
Stock) of Holdings for cash to Fox Paine or senior management.
SECTION 6.10. Restrictive Agreements. Neither Holdings nor the
Borrower will, nor will they permit any Subsidiary to, directly or indirectly,
enter into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of Holdings,
the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon
any of its property or assets or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital stock
or to make or repay loans or advances to the Borrower or any other Subsidiary or
to Guarantee Indebtedness of the Borrower or any other Subsidiary, provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by any Loan Document or Subordinated Debt Document, (ii) the foregoing shall
not apply to restrictions and conditions existing on the date hereof identified
on Schedule 6.10 (but shall apply to any extension or renewal of, or any
amendment or modification expanding the scope of, any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause
(a) of the foregoing shall not apply to restrictions or conditions imposed by
any agreement relating to secured Indebtedness permitted by this Agreement if
such restrictions or conditions apply only to the property or assets securing
such Indebtedness, (v) clause (a) of the foregoing shall not apply to customary
provisions in leases and other contracts restricting the assignment thereof (vi)
clause (a) of the foregoing shall not apply to restrictions on cash or other
deposits imposed by customers under contracts entered into in the ordinary
course of business on the parties to such contracts, and (vii) clause (a) of the
foregoing shall not apply to any encumbrance or restriction on the assets of any
joint venture that is (A) contained in any joint venture agreement or other
similar agreement with respect to such joint venture that was entered into in
the ordinary course of business and (B) customary for such types of agreements.
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SECTION 6.11. Amendment of Material Documents. Neither Holdings nor
the Borrower will, nor will they permit any Subsidiary to, amend, modify or
waive any of its rights under (a) any Subordinated Debt Document, (b) its
certificate of incorporation, by-laws or other organizational documents, (c) the
Holdings Discount Indenture or (d) any other material document or agreement in
each case in any manner that would impair in any material respect the value of
the interests or rights of the Borrower thereunder or that would impair in any
material respect the rights or interests of any Agent or any Lender.
SECTION 6.12. Interest Coverage Ratio. The Borrower will not permit
the ratio (the "Interest Coverage Ratio") of Adjusted Consolidated EBITDA to
Consolidated Cash Interest Expense for (a) the fiscal quarter period ended as of
September 30, 1999, to be less than (i) 1.75 to 1.00, if the Closing Date or the
Second Closing Date has occurred, (ii) 1.50 to 1.00, if neither the Closing Date
nor the Second Closing Date has occurred and the PTI Acquisition is the First
Acquisition or (iii) 2.25 to 1.00, if neither the Closing Date nor the Second
Closing Date has occurred and the ATU Acquisition is the First Acquisition, (b)
the two fiscal quarter period ended as of December 31, 1999 to be less than (i)
1.75 to 1.00 if the Closing Date or the Second Closing Date has occurred, (ii)
1.50 to 1.00, if neither the Closing Date nor the Second Closing Date has
occurred and the PTI Acquisition is the First Acquisition or (iii) 2.25 to 1.00,
if neither the Closing Date nor the Second Closing Date has occurred and the ATU
Acquisition is the First Acquisition, (c) the three fiscal quarter period ended
as of March 31, 2000, to be less than (i) 1.75 to 1.00, if the Closing Date or
the Second Closing Date has occurred, (ii) 1.50 to 1.00, if neither the Closing
Date nor the Second Closing Date has occurred and the PTI Acquisition is the
First Acquisition or (iii) 2.25 to 1.00, if neither the Closing Date nor the
Second Closing Date has occurred and the ATU Acquisition is the First
Acquisition, or (d) any Test Period ending on the last day of any fiscal quarter
included in any period (or ending on any date) set forth below (i) if the
Closing Date or the Second Closing Date has occurred, on the table under the
heading "Combined Table" or (ii) if neither the Closing Date nor the Second
Closing Date has occurred and the PTI Acquisition is the First Acquisition, on
the table under the heading "PTI Acquisition" or (iii) if neither the Closing
Date nor the Second Closing Date has occurred and the ATU Acquisition is the
First
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Acquisition, on the table under the heading "ATU Acquisition", to be less than
the ratio set forth opposite such period or date:
Combined Table
Period: Ratio:
- ------- ------
April 1, 2000 to 1.75 to 1.00
June 30, 2000
July 1, 2000 to 1.80 to 1.00
September 30, 2001
October 1, 2001 to 1.85 to 1.00
March 31, 2002
April 1, 2002 to 1.95 to 1.00
December 31, 2002
January 1, 2003 to 2.05 to 1.00
September 30, 2003
October 1, 2003 to 2.15 to 1.00
September 30, 2004
October 1, 2004 to 2.25 to 1.00
September 30, 2005
October 1, 2005 to 2.35 to 1.00
September 30, 2006
October 1, 2006 to 2.45 to 1.00
September 30, 2007
October 1, 2007 and 2.70 to 1.00
thereafter
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PTI Acquisition
Period: Ratio:
- ------- ------
April 1, 2000 to 1.50 to 1.00
September 30, 2000
October 1, 2000 to 1.60 to 1.00
September 30, 2001
October 1, 2001 to 1.65 to 1.00
September 30, 2002
October 1, 2002 to 1.75 to 1.00
September 30, 2003
October 1, 2003 to 1.85 to 1.00
September 30, 2004
October 1, 2004 to 1.95 to 1.00
September 30, 2005
October 1, 2005 to 2.05 to 1.00
September 30, 2006
October 1, 2006 and 2.20 to 1.00
thereafter
ATU Acquisition
Period: Ratio:
- ------- ------
April 1, 2000 to 2.25 to 1.00
September 30, 2000
October 1, 2000 to 2.35 to 1.00
September 30, 2001
October 1, 2001 to 2.45 to 1.00
September 30, 2002
October 1, 2002 to 2.65 to 1.00
September 30, 2003
October 1, 2003 to 2.85 to 1.00
September 30, 2004
October 1, 2004 to 3.05 to 1.00
September 30, 2005
October 1, 2005 to 3.25 to 1.00
September 30, 2006
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Period: Ratio:
- ------- ------
October 1, 2006 and 3.45 to 1.00
thereafter
SECTION 6.13. Leverage Ratio. The Borrower will not permit the
Adjusted Leverage Ratio as of the last day of any fiscal quarter included in any
period (or ending on any date) set forth below (i) if the Closing Date or the
Second Closing Date has occurred, on the table under the heading "Combined
Table" or (ii) if neither the Closing Date nor the Second Closing Date has
occurred and the PTI Acquisition is the First Acquisition, on the table under
the heading "PTI Acquisition" or (iii) if neither the Closing Date nor the
Second Closing Date has occurred and the ATU Acquisition is the First
Acquisition, on the table under the heading "ATU Acquisition", to be more than
the ratio set forth opposite such period or date, provided that for purposes of
this Section 6.13, Adjusted Consolidated EBITDA for the four quarter period
ending on (x) September 30, 1999, shall be deemed to be Adjusted Consolidated
EBITDA for the fiscal quarter ending on such date, multiplied by four, (y)
December 31, 1999, shall be deemed to be Adjusted Consolidated EBITDA for the
two fiscal quarter period ending on December 31, 1999, multiplied by two and (z)
March 31, 2000, shall be deemed to be Adjusted Consolidated EBITDA for the three
fiscal quarter period ending on March 31, 2000, multiplied by 4/3:
Combined Table
Period: Ratio:
- ------- ------
Closing Date to 6.75 to 1.00
June 30, 2000
July 1, 2000 to 6.50 to 1.00
June 30, 2001
July 1, 2001 to 6.00 to 1.00
March 31, 2002
April 1, 2002 to 5.75 to 1.00
December 31, 2002
January 1, 2003 to 5.50 to 1.00
September 30, 2003
October 1, 2003 to 5.20 to 1.00
September 30, 2004
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119
Period: Ratio:
- ------- ------
October 1, 2004 to 5.25 to 1.00
September 30, 2005
October 1, 2005 to 5.00 to 1.00
September 30, 2006
October 1, 2006 and 4.75 to 1.00
thereafter
PTI Acquisition
Period: Ratio:
- ------- ------
First Closing Date to 7.50 to 1.00
September 30, 2000
October 1, 2000 to 7.25 to 1.00
September 30, 2001
October 1, 2001 to 7.00 to 1.00
September 30, 2002
October 1, 2002 to 6.75 to 1.00
September 30, 2003
October 1, 2003 to 6.50 to 1.00
September 30, 2004
October 1, 2004 to 6.25 to 1.00
September 30, 2005
October 1, 2005 to 6.00 to 1.00
September 30, 2006
October 1, 2006 and 5.50 to 1.00
thereafter
ATU Acquisition
Period: Ratio:
- ------- ------
First Closing Date to 5.50 to 1.00
September 30, 2000
October 1, 2000 to 5.25 to 1.00
September 30, 2001
October 1, 2001 to 5.00 to 1.00
September 30, 2002
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Period: Ratio:
- ------- ------
October 1, 2002 to 4.75 to 1.00
September 30, 2003
October 1, 2003 to 4.50 to 1.00
September 30, 2004
October 1, 2004 to 4.25 to 1.00
September 30, 2005
October 1, 2005 to 4.00 to 1.00
September 30, 2006
October 1, 2006 and 3.75 to 1.00
thereafter
SECTION 6.14. Capital Expenditures. (a) Holdings and the Borrower
will not, and will not permit any of the Subsidiaries to, make any Capital
Expenditures that would cause the aggregate amount of such Capital Expenditures
made by the Borrower and the Subsidiaries in any fiscal year of the Borrower (i)
(A) ending on or before December 31, 1999, to exceed $65,000,000 and (B) ending
thereafter to exceed $70,000,000 if both Acquisitions are consummated by
December 31, 1999, (ii) to exceed $30,000,000 in any fiscal year if the ATU
Acquisition is not consummated by December 31, 1999, or (iii) to exceed (A)
$35,000,000 in any fiscal year ending on or before December 31, 2001 and (B)
$37,500,000 in any fiscal year ending thereafter if the PTI Acquisition is not
consummated by December 31, 1999, provided that (x) expenditures made in
connection with the replacement, substitution or restoration of assets (i) to
the extent financed from insurance proceeds paid on account of the loss of or
damage to the assets being replaced or restored or (ii) with awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced, (y) the purchase price of equipment that is purchased
simultaneously with the trade-in of existing equipment to the extent that the
gross amount of such purchase price is reduced by the credit granted by the
seller of such equipment for the equipment being traded in at such time and (z)
the purchase price of plant, property or equipment made within one year of the
sale of any asset to the extent purchased for an aggregate amount not in excess
of the amount of the net cash proceeds of such sale shall not be included in the
calculation of Capital Expenditures pursuant to this Section 6.14.
(b) Notwithstanding the foregoing, the Borrower may in any fiscal
year, upon written notice to the Admin-
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istrative Agent, increase the amount of Capital Expenditures permitted to be
made during such fiscal year pursuant to this Section 6.14 by an amount equal to
the lesser of (i) the total unused amount of Capital Expenditures permitted to
be made pursuant to this Section 6.14 for the immediately preceding fiscal year
(minus the amount of any unused Capital Expenditures permitted to be made
pursuant to this Section 6.14 that were carried forward to such preceding fiscal
year pursuant to this paragraph (b)) and (ii) 50% of the amount of Capital
Expenditures permitted to be made pursuant to this Section 6.14 for the
immediately preceding fiscal year (minus the amount of any unused Capital
Expenditures permitted to be made pursuant to this Section 6.14 that were
carried forward to such preceding fiscal year pursuant to this paragraph (b)).
SECTION 6.15. Fiscal Year. Holdings and the Borrower will not, and
will not permit the Subsidiaries to, change the financial reporting convention
by which Holdings, the Borrower and the Subsidiaries determine the dates on
which their fiscal years and fiscal quarters will end.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement or any other Loan Document,
when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made by or on
behalf of Holdings, the Borrower or any Subsidiary in or in connection
with any Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Loan Document or
any amendment or
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122
modification thereof or waiver thereunder, shall prove to have been
incorrect in any material respect when made or deemed made;
(d) Holdings or the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02, 5.04 (with
respect to the existence of Holdings or the Borrower) 5.13(c), 5.15 or
5.16 or in Article VI;
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent to the Borrower (which notice will be given
at the request of any Lender);
(f) Holdings, the Borrower or any Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall become
due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity, provided that this clause (g)
shall not apply to secured Indebtedness that becomes due as a result of
the voluntary sale or transfer of the property or assets securing such
Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of Holdings, the Borrower or any Subsidiary or its
debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for Holdings, the
Borrower or any Subsidiary or for a substantial part of its assets, and,
in any such case, such proceeding or petition
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123
shall continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
(i) Holdings, the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or petition described in clause (h)
of this Article, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for Holdings, the Borrower or any Subsidiary or for a substantial
part of its assets, (iv) file an answer admitting the material allegations
of a petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) Holdings, the Borrower or any Subsidiary shall become unable,
admit in writing its inability or fail generally to pay its debts as they
become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $5,000,000 (after giving effect to insurance payments,
if any) shall be rendered against Holdings, the Borrower, any Subsidiary
or any combination thereof and the same shall remain undischarged for a
period of 30 consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of Holdings, the Borrower or
any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events for
which liability of the Borrower or the Subsidiaries is reasonably expected
to occur, could reasonably be expected to result in liability of the
Borrower and the Subsidiaries in an aggregate amount exceeding (i)
$5,000,000 in any year or (ii) $15,000,000 for all periods;
(m) (i) any Lien purported to be created under any Security Document
shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and
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124
perfected Lien on any Collateral, having a value in excess of $10,000,000,
with the priority required by the applicable Security Document, except (A)
as a result of the sale or other disposition of the applicable Collateral
in a transaction permitted under the Loan Documents or (B) as a result of
the Administrative Agent's failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it under
the Security Agreement or (ii) the Obligations of the Borrower, or the
obligations of Holdings or any Subsidiaries pursuant to a Guarantee
Agreement shall cease to constitute senior indebtedness under the
subordination provisions of any document or instrument evidencing any
permitted subordinated Indebtedness or such subordination provisions shall
be invalidated or otherwise cease to be legal, valid and binding
obligations of the parties thereto, enforceable in accordance with their
terms;
(n) a Change in Control shall occur; or
(o) any of the Operating Licenses or Authorizations shall have been
(i) revoked, rescinded, suspended, modified in an adverse manner or not
renewed in the ordinary course for a full term or (ii) subject to any
decision by a Governmental Authority that designates a hearing with
respect to any applications for renewal of any of the Operating Licenses
or Authorizations or that could result in the Government Authority taking
any of the actions described in clause (i), above, and such decision or
such revocation, rescission, suspension, modification or nonrenewal (i)
has, or could reasonably be expected to have, a Material Adverse Effect,
or (ii) adversely affects the legal or character qualifications of
Holdings, the Borrower or any of the Subsidiaries to hold any of the
Operating Licenses or Authorizations;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal
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125
of the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in clause (h) or (i)
of this Article, the Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
The Administrative Agent
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto. For purposes of this
Article VIII, all references to the Administrative Agent are deemed to include
the Collateral Agent.
The bank serving as the Administrative Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Administrative Agent, and such
bank and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with Holdings, the Borrower or any Subsidiary or
any Affiliate of any of the foregoing as if it were not the Administrative Agent
hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth in the Loan Documents. Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such
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other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02), and (c) except as expressly set
forth in the Loan Documents, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to Holdings, the Borrower or any of the Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity. The Administrative Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 9.02) or in the
absence of its own gross negligence or wilful misconduct. The Administrative
Agent shall not be deemed to have knowledge of any Default unless and until
written notice thereof is given to the Administrative Agent by Holdings, the
Borrower or a Lender, and the Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered thereunder or in
connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. The Administrative Agent may consult with legal
counsel (who may be counsel for the Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.
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127
The Administrative Agent may perform any of and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Bank and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor. If no successor shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent which
shall be a bank with an office in New York, New York, or an Affiliate of any
such bank. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from
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128
time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to Holdings or the Borrower, to it at 510 L Street, Suite
500, Anchorage, Alaska, 99501, Attention of Michael E. Holstrom (Fax No.
(907) 297-3050);
(b) if to the Administrative Agent, to The Chase Manhattan Bank,
Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New
York, New York 10081, Attention of Gloria Havier (Telecopy No. (212)
552-5700), with a copy to The Chase Manhattan Bank, 270 Park Avenue, New
York, New York 10017, Attention of Ed DeForrest (Telecopy No. (212) 270-
1063);
(c) if to the Issuing Bank, to it at 270 Park Avenue, 10th Floor,
New York, New York 10017, Attention of Peter Eckstein (Telecopy No. (212)
270-3090);
(d) if to the Swingline Lender, to it at 270 Park Avenue, 10th
Floor, New York, New York 10017, Attention of Gloria Havier (Telecopy No.
(212) 552-5700); and
(e) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
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129
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Bank and the Lenders hereunder and under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of any Loan Document or consent to any departure by
any Loan Party therefrom shall in any event be effective unless the same shall
be permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender or the
Issuing Bank may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by Holdings, the Borrower and the Required Lenders or, in the case
of any other Loan Document, pursuant to an agreement or agreements in writing
entered into by the Administrative Agent and the Loan Party or Loan Parties that
are parties thereto, in each case with the consent of the Required Lenders,
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the date of any scheduled payment of the principal
amount of any Loan or LC Disbursement, or any interest thereon, or any fees
payable hereunder, or reduce the amount of, waive or excuse any such scheduled
payment, or postpone the scheduled date of expiration of any Commitment, without
the written consent of each Lender affected thereby, (iv) change Section 2.18(b)
or (c) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender, (v) change any of the
provisions of this Section or the definition of "Required Lenders" or any other
provision of any Loan Document specifying the number or percentage of
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130
Lenders (or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender (or each Lender of such Class, as the case
may be), (vi) release Holdings or any material Subsidiary Loan Party from its
Guarantee under the applicable Guarantee Agreement (except as expressly provided
in such Guarantee Agreement), or limit its liability in respect of such
Guarantee, without the written consent of each Lender, (vii) release all or
substantially all of the Collateral from the Liens of the Security Documents,
without the written consent of each Lender (except as expressly provided in such
Security Documents), (viii) change any provisions of any Loan Document in a
manner that by its terms adversely affects the rights in respect of payments due
to Lenders holding Loans of any Class differently than those holding Loans of
any other Class, without the written consent of Lenders holding a majority in
interest of the outstanding Loans and unused Commitments of each affected Class
or (ix) change the rights of the Tranche B Lenders or Tranche C Lenders to
decline mandatory prepayments as provided in Section 2.11, without the written
consent of Tranche B Lenders or Tranche C Lenders, as applicable, holding a
majority of the outstanding Tranche B Term Loans or Tranche C Term Loans, as
applicable; provided further that (A) no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent, the Issuing
Bank or the Swingline Lender without the prior written consent of the
Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may
be, and (B) any waiver, amendment or modification of this Agreement that by its
terms affects the rights or duties under this Agreement of the Revolving Lenders
(but not the Tranche A Lenders, Tranche B Lenders and Tranche C Lenders), the
Tranche A Lenders (but not the Revolving Lenders, Tranche B Lenders and Tranche
C Lenders), the Tranche B Lenders (but not the Revolving Lenders, Tranche A
Lenders and Tranche C Lenders) or the Tranche C Lenders (but not the Revolving
Lenders, the Tranche A Lenders and the Tranche B Lenders) may be effected by an
agreement or agreements in writing entered into by Holdings, the Borrower and
requisite percentage in interest of the affected Class of Lenders.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of the Loan Documents or any amendments, modifications or
<PAGE>
131
waivers of the provisions thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder and (iii) all out-of-pocket expenses incurred by the
Administrative Agent, the Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with the Loan Documents, including its rights under
this Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.
(b) The Borrower shall indemnify the Administrative Agent, the
Issuing Bank and each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the fees, charges and disbursements of any counsel
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of (i) the execution or delivery of any
Loan Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective obligations
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by the Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence, Release or threatened Release of
Hazardous Materials on or from any Mortgaged Property or any other property
currently or formerly owned or operated by the Borrower or any of its
Subsidiaries, or any Environmental Liability related in any way to the Borrower
or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto, provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that (i) such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of
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132
such Indemnitee or (ii) such losses, claims, damages, liabilities or related
expenses of a Lender result from disputes among such Lender and one or more
other Lenders.
(C) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent, the Issuing Bank or the Swingline
Lender under paragraph (a) or (b) of this Section, each Lender severally agrees
to pay to the Administrative Agent, the Issuing Bank or the Swingline Lender, as
the case may be, such Lender's pro rata share (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount, provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent, the Issuing Bank or the Swingline
Lender in its capacity as such. For purposes hereof, a Lender's "pro rata share"
shall be determined based upon its share of the sum of the total Revolving
Exposures, outstanding Term Loans and unused Commitments at the time.
(d) To the extent permitted by applicable law, neither Holdings nor
the Borrower shall assert, and each hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable not later
than ten days after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit) and, to the extent expressly contemplated
<PAGE>
133
hereby, the Related Parties of each of the Administrative Agent, the Issuing
Bank and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b) Any Lender may assign to one or more additional banks or other
financial institutions (or such other entity as consented to by the Borrower and
the Administrative Agent), all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it) provided that (i) except in the case of an assignment to a
Lender or an Affiliate of a Lender or Related Fund of any Lender, each of the
Borrower and the Administrative Agent (and, in the case of an assignment of all
or a portion of a Revolving Commitment or any Lender's obligations in respect of
its LC Exposure or Swingline Exposure, the Issuing Bank and the Swingline
Lender) must give their prior written consent to such assignment (which consent
shall not be unreasonably withheld it being understood that, without limitation,
the Borrowers shall have the right to withhold its consent to any assignment if
(x) increased costs would result therefrom or (y) if in order for such
assignment to comply with applicable law, the Borrower would be required to
obtain the consent of, or make any filing or registration with, any Governmental
Authority), (ii) except in the case of an assignment to a Lender or an Affiliate
or Related Fund of a Lender or an assignment of the entire remaining amount of
the assigning Lender's Commitment or Loans, the amount of the Commitment or
Loans of the assigning Lender subject to each such assignment (determined as of
the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 unless
each of the Borrower and the Administrative Agent otherwise consent, (iii) each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lender's rights and obligations under this Agreement, except that
this clause (iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender's rights and obligations in
respect of one Class of Commitments or Loans, (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500, or, if
to a Lender, an Affiliate of a Lender or a Related Fund, $1,000 and (v) the
assignee, if it shall not be a Lender, shall deliver to the Administrative Agent
an Administrative Questionnaire; and provided further that any consent of the
Borrower otherwise required under this paragraph shall not be required if an
Event of Default under clause (h) or (i) of Article VII has occurred and is
contin-
<PAGE>
134
uing. Subject to acceptance and recording thereof pursuant to paragraph (d) of
this Section, from and after the effective date specified in each Assignment and
Acceptance the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.15,
2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e) of
this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and Holdings, the Borrower, the Administrative
Agent, the Issuing Bank and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower, the Issuing Bank and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
<PAGE>
135
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, the Issuing Bank or the Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it),
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) Holdings, the Borrower,
the Administrative Agent, the Issuing Bank and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce the Loan Documents and to approve
any amendment, modification or waiver of any provision of the Loan Documents,
provided that such agreement or instrument may provide that such Lender will
not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. Subject to paragraph (f) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 2.15,
2.16 and 2.17 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 9.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.18(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.15 or 2.17 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.17 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.17(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to
<PAGE>
136
any such pledge or assignment of a security interest, provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
(h) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPV"), identified as such in writing from time to time by the Granting Lender
to the Administrative Agent and the Borrower, the option to provide to the
Borrower all or any part of any Loan that such Granting Lender would otherwise
be obligated to make to the Borrower pursuant to this Agreement; provided that
(i) nothing herein shall constitute a commitment by any SPV to make any Loan and
(ii) if an SPV elects not to exercise such option or otherwise fails to provide
all or any part of such Loan, the Granting Lender shall be obligated to make
such Loan pursuant to the terms hereof. The making of a Loan by an SPV hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPV shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPV, it will not institute
against, or join any other person in instituting against, such SPV any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the Unites Sates or any State thereof. In addition,
notwithstanding anything to the contrary in this Section 9.04, any SPV may (i)
with notice to, but without the prior written consent of, the Borrower and the
Administrative Agent and without paying any processing fee therefor, assign all
or a portion of its interests in any Loans to the Granting Lender or to any
financial institutions (consented to by the Borrower and the Administrative
Agent) providing liquidity and/or credit support to or for the account of such
SPV to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPV. As this Section 9.04 (h) applies to
any particular SPV, this section may not be amended without the written consent
of such SPV.
<PAGE>
138
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such invalidity, illegality or unenforceability without affecting the
validity, legality and enforceability of the remaining provisions hereof; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each of Holdings and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, the Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
or any other Loan Document against Holdings,
<PAGE>
139
the Borrower or its properties in the courts of any jurisdiction.
(c) Each of Holdings and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in paragraph (b) of this
Section. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the
<PAGE>
140
confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extend requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies hereunder or
any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to
a written agreement containing provisions substantially the same as those of
this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach
of this Section or (ii) becomes available to the Administrative Agent, the
Issuing Bank or any Lender on a nonconfidential basis from a source other
than Holdings or the Borrower. For the purposes of this Section,
"INFORMATION" means all information received from Holdings or the Borrower
relating to Holdings or the Borrower or its business, other than any such
information that was made available to the Administrative Agent, the Issuing
Bank or any Lender on a nonconfidential basis prior to disclosure by Holdings
or the Borrower. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised customary
procedures for handling confidential information of the same nature as the
Information in accordance with safe and sound banking practices.
SECTION 9.13. INTEREST RATE LIMITATION. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "CHARGES"), shall
exceed the maximum lawful rate (the "MAXIMUM RATE") which may be contracted
for, charged, taken, received or reserved by the Lender holding such Loan
in accordance with applicable law, the rate of interest payable in respect of
such Loan hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest
and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and
the interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor)
<PAGE>
141
until such cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of REPAYMENT, shall have been received by such
Lender.
SECTION 9.14. Notice of Lenders' Right to Sue. The mortgagor or
trustor (borrower) is personally obligated and fully liable for the amount due
under this Agreement. The mortgagee or beneficiary (lender) has the right to sue
on this Agreement and obtain a personal judgment against the mortgagor or
trustor for satisfaction of the amount due under this Agreement either before or
after a judicial foreclosure of the mortgage or deed of trust under AS ss.
09.45.170 - 09.45.220.
<PAGE>
142
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
ALEC HOLDINGS, INC.,
by /s/ Michael E. Holmstrom
-----------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
ALASKA COMMUNICATIONS SYSTEMS
HOLDINGS, INC.,
by /s/ Michael E. Holmstrom
-----------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent and
Collateral Agent,
by /s/ LBR
-----------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
individually and as
Documentation Agent,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
<PAGE>
142
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
ALEC HOLDINGS, INC.,
by
-----------------------------------
Name:
Title:
ALASKA COMMUNICATIONS SYSTEMS
HOLDINGS, INC.,
by
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent and
Collateral Agent,
by
-----------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
individually and as
Documentation Agent,
by /s/ Todd C. Morgan
-----------------------------------
Name: TODD C. MORGAN
Title: DIRECTOR
by /s/ Kristin Lepri
-----------------------------------
Name: KRISTIN LEPRI
Title: ASSOCIATE
<PAGE>
ALLSTATE INSURANCE
COMPANY,
By /s/ Jerry D. Zinkula
-----------------------------------
Name: JERRY D. ZINKULA
Title: AUTHORIZED SIGNATORY
By /s/ Patricia W. Wilson
-----------------------------------
Name: PATRICIA W. WILSON
Title: AUTHORIZED SIGNATORY
<PAGE>
CIBC INC.
By /s/ Laura Hom
----------------------------------------
Name: Laura Hom
Title: Executive Director
CIBC World Markets Corp. As Agent
<PAGE>
FIRST NATIONAL BANK OF
ANCHORAGE,
By /s/ William P. Inscho
-----------------------------------
Name: William P. Inscho
Title: Vice President
<PAGE>
KZH CRESCENT LLC.
By /s/ Virginia Conway
-----------------------------------
Name: Virginia Conway
Title: Authorized Agent
<PAGE>
METROPOLITAN LIFE
INSURANCE COMPANY,
By /s/ James R. Dingler
-----------------------------------
Name: James R. Dingler
Title: Director
<PAGE>
MORGAN STANLEY DEAN
WITTER PRIME INCOME
TRUST,
By /s/ Sheila A. Finnerty
-----------------------------------
Name: SHEILA A. FINNERTY
Title: VICE PRESIDENT
<PAGE>
NATIONAL BANK OF ALASKA, a national banking association
/s/ Larry J. Cooper
- --------------------------------------
By: Larry J. Cooper
Its: Vice President
<PAGE>
NATIONSBANK, N.A.,
By /s/ Ed Hamilton
-----------------------------------
Name: ED HAMILTON
Title: SVP
<PAGE>
RURAL TELEPHONE FINANCE
COOPERATIVE,
By /s/ Kenneth A. Fried
------------------------------------------
Name: Kenneth A. Fried
Title: Assistant Secretary-Treasurer
By /s/ Lawrence Zawalick
------------------------------------------
Name: Lawrence Zawalick
Title: Vice President Business Development
and Administrative Coordinator
<PAGE>
SEQUILS I, LTD
By: TCW Advisers, Inc. as its
Collateral Manager
By /s/ Justin L. Driscoll
-----------------------------------
Name: JUSTIN L. DRISCOLL
Title: Senior Vice President
By /s/ Jonathan R. Insull
-----------------------------------
Name: JONATHAN R. INSULL
Title: VICE PRESIDENT
<PAGE>
SRF TRADING, INC.,
By /s/ Kelly C. Walker
-----------------------------------
Name: KELLY C. WALKER
Title: VICE PRESIDENT
<PAGE>
STEIN ROE FLOATING RATE
LIMITED LIABILITY COMPANY,
By /s/ Brian W. Good
------------------------------------------------
Name: Brian W. Good
Title: Vice President,
Stein Roe & Farnham Incorporated,
as Advisor to the Stein Roe Floating Rate
Limited Liability Company
<PAGE>
THE INDUSTRIAL BANK OF
JAPAN, LIMITED, NEW YORK
BRANCH,
By /s/ William Kennedy
-----------------------------------
Name: William Kennedy
Title: SVP
<PAGE>
TORONTO DOMINION (NEW
YORK), INC.,
By /s/ Jorge A. Garcia
-----------------------------------
Name: JORGE A. GARCIA
Title: VICE PRESIDENT
<PAGE>
U.S. BANK NATIONAL
ASSOCIATION,
By /s/ Thomas G. Gunder
-----------------------------------
Name: Thomas G. Gunder
Title: Vice President
<PAGE>
VAN KAMPEN PRIME RATE
INCOME TRUST,
By /s/ Lisa M. Mincheski
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Name: LISA M. MINCHESKI
Title: VICE PRESIDENT
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Exhibit 10.4
STOCKHOLDERS' AGREEMENT,
DATED AS OF
MAY 14, 1999
BY AND AMONG
ALEC HOLDINGS, INC.
AND
THE INVESTORS LISTED
ON THE SIGNATURE PAGES HERETO
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS................................................. 2
ARTICLE II RESTRICTIONS ON TRANSFERS OF STOCK.......................... 7
2.1 General Limitation on Transfers............................. 7
2.1.1 Transfers Generally.................................. 7
2.1.2 Recordation.......................................... 7
2.1.3 Obligations of Transferees........................... 7
2.1.4 Transfers to Competitors............................. 7
2.2 Compliance with Securities Laws............................. 8
2.3 Permitted Transfers......................................... 8
2.3.1 FPC Transfers........................................ 8
2.3.2 Management Investors................................. 8
2.3.3 Permitted Transferees................................ 9
2.3.4 Transfer by Permitted Transferees.................... 9
2.3.5 Other Transfer Restrictions.......................... 9
2.4 Tag-Along Rights............................................ 9
2.4.1 Sale Notice.......................................... 9
2.4.2 Tag-Along Election................................... 10
2.4.3 Seller's Rights to Transfer.......................... 10
2.5 Drag-Along Right............................................ 11
2.5.1 Exercise............................................. 11
2.5.2 Sale Agreement....................................... 11
2.5.3 No Liability......................................... 12
2.6 Additional Provisions Relating to Restrictions on Transfers 12
2.6.1 Legends.............................................. 12
2.6.2 Copy of Agreement.................................... 13
2.6.3 Termination of Restrictions.......................... 13
ARTICLE III REGISTRATION RIGHTS......................................... 13
3.1 Piggyback and Demand Registrations.......................... 13
3.1.1 Piggyback Registrations.............................. 13
3.1.2 Demand Registrations................................. 14
3.1.3 Expenses............................................. 15
3.1.4 Priority in Piggyback and Demand Registrations....... 15
3.1.5 Underwriting Requirements............................ 15
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3.2 Registration Procedures..................................... 16
3.3 Indemnification............................................. 18
3.4 Holdback Agreement.......................................... 22
3.5 Deferral.................................................... 23
ARTICLE IV MANAGEMENT INVESTORS' PUTS AND CALLS........................ 23
4.1 Call Rights................................................. 23
4.2 Put Rights.................................................. 24
ARTICLE V MISCELLANEOUS............................................... 25
5.1 Effectiveness; Term......................................... 25
5.2 No Voting or Conflicting Agreements......................... 25
5.3 Composition of the Board of Directors....................... 26
5.4 Approval of Stock Incentive Plan by Stockholders............ 26
5.5 Specific Performance........................................ 26
5.6 Notices..................................................... 26
5.7 Successors and Assigns...................................... 26
5.8 Recapitalizations and Exchanges Affecting Common Stock...... 27
5.9 Governing Law............................................... 27
5.10 Descriptive Headings, Etc................................... 27
5.11 Amendment................................................... 27
5.12 Severability................................................ 27
5.13 Further Assurances.......................................... 28
5.14 Complete Agreement; Counterparts............................ 28
5.15 Approval of Management Agreement by Stockholders............ 28
5.16 Certain Transactions........................................ 28
5.17 No Third Party Beneficiaries................................ 28
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STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, dated as of May 14, 1999 (the "Agreement"),
by and among ALEC HOLDINGS, INC., a Delaware corporation (the "Company"), FOX
PAINE CAPITAL FUND, L.P., a Delaware limited partnership (the "Fund"), FPC
INVESTORS, L.P., a Delaware limited partnership ("FPC Investors" and, together
with the Fund and the Co-Investors, "FPC"), ALEC COINVESTMENT FUND I, LLC, a
Delaware limited liability company ("Fund I"), ALEC COINVESTMENT FUND II, LLC, a
Delaware limited liability company ("Fund II"), ALEC COINVESTMENT FUND III, LLC,
a Delaware limited liability company ("Fund III"), ALEC COINVESTMENT FUND IV,
LLC, a Delaware limited liability company ("Fund IV"), ALEC COINVESTMENT FUND V,
LLC, a Delaware limited liability company ("Fund V"), ALEC COINVESTMENT FUND VI,
LLC, a Delaware limited liability company ("Fund VI" and together with Fund I,
Fund II, Fund III, Fund IV and Fund I, the "Co-Investors"), DLJ INVESTMENT
PARTNERS, L.P., DLJ INVESTMENT FUNDING, INC., DLJ ESC II L.P., (collectively,
"DLJ"), CHAMER CORPORATION, an Alaska corporation, Charles E. Robinson, James H.
Huesgen, Michael E. Holmstrom, Wayne P. Graham and Wesley E. Carson (such
individuals together with any additional individuals listed as such on the
signature page hereto, collectively, being the "Management Investors", and,
together with DLJ, the "Other Investors"). Employees, directors, consultants and
certain other Persons (as defined below) having significant business
relationships with the Company and its Affiliates (as defined below) may be
issued shares of Common Stock (as defined below) (or other equity securities of
the Company) or securities convertible into or exchangeable for Common Stock (or
other equity securities of the Company) subject to the terms of this Agreement
and, if so issued, the Company, without the consent of any other party hereto,
may amend this Agreement to allow any such Person the Company so chooses to
become an additional Management Investor hereunder, subject to such Person
becoming a signatory to this Agreement. The parties hereto (other than the
Company) and any other Person who shall hereafter acquire shares of Common Stock
of the Company (or other equity securities of the Company) or securities
convertible into or exchangeable for Common Stock (or other equity securities of
the Company) pursuant to the provisions of, and/or subject to the restrictions
and rights set forth in, this Agreement (including through participation in
certain Company stock or option plans) are sometimes hereinafter referred to
individually as a "Stockholder" or collectively as the "Stockholders."
RECITALS
WHEREAS, the Company, as of the Effective Date (as defined herein),
will have an authorized capital stock consisting of 40,000,000 shares of Common
Stock, par value $0.01 per share (the "Common Stock"), each share of which is
entitled to one vote on all stockholder matters as more specifically provided in
the certificate of incorporation of the Company (the "Certificate"), and of
which 20,082,871 shares will be issued and outstanding immediately after the
Effective Date. In addition, the Company will have reserved, as of the Effective
Date, 3,410,486 shares of Common Stock for issuance pursuant to the Company's
1999 Stock Incentive Plan (the "Stock Incentive Plan") and 828,261 shares of
Common Stock for issuance
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upon exercise of Warrants (as defined below) pursuant to the Warrant Agreement
(as defined below).
WHEREAS, CenturyTel of the Northwest, Inc. and CenturyTel Wireless,
Inc. and ALEC Acquisition Corporation, a subsidiary of the Company ("ALEC"),
have entered into the Purchase Agreement, dated as of August 14, 1998, as
amended (the "Century Purchase Agreement"), pursuant to which ALEC has agreed to
acquire 100% of the outstanding capital stock (the "Century Acquisition") of
Telephone Utilities of Alaska, Inc., Telephone Utilities of the Northland, Inc.,
PTI Communications of Alaska, Inc., Pacific Telecom Cellular of Alaska, Inc. and
Pacific Telecom Cellular of Alaska PCS, Inc.
WHEREAS, the Municipality of Anchorage and Alaska Communications
Systems, Inc., a subsidiary of the Company ("ACS"), have entered into an Asset
Purchase Agreement, dated as of October 20, 1998 (the "ATU Purchase Agreement"
and together with the Century Purchase Agreement, the "Acquisition Agreements"),
pursuant to which ACS, has agreed to acquire the assets and certain of the
liabilities of the Anchorage Telephone Utility (the "ATU Acquisition" and,
together with the Century Acquisition, the "Acquisitions").
WHEREAS, in connection with the Acquisitions, the Company entered
into employment agreements (the "Employment Agreements") and/or option
agreements ("Option Agreements") with certain Management Investors, that provide
for, among other things, the grant of Options to such Management Investors.
WHEREAS, in connection with the issuance by the Company of its
Discount Debentures due 2011, the Company has entered into a warrant agreement
with DLJ (the "Warrant Agreement") that provides for, among other things, the
issuance of Warrants (as defined herein) to DLJ.
WHEREAS, the parties hereto desire to restrict the sale, assignment,
transfer, encumbrance or other disposition of the Common Stock which the parties
hereto own or may hereafter acquire, and to provide for certain rights and
obligations in respect thereof as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and of the terms
and conditions contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings ascribed to them below:
"Acquisition Agreements" shall have the meaning ascribed to it in
the Recitals hereof.
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"Affected Holders" shall have the meaning ascribed to it in Section
5.11 hereof.
"Affiliate" of a Person shall mean a Person directly or indirectly
controlled by, controlling or under common control with such Person.
"Agreement" shall have the meaning ascribed to it in the
Introduction hereof.
"ATU Acquisition" shall have the meaning ascribed to it in the
Recitals hereof.
"ATU Purchase Agreement" shall have the meaning ascribed to it in
the Recitals hereof.
"Board" shall mean the Board of Directors of the Company.
"Buy-Out Note" shall mean an unsecured promissory note of the
Company, or a direct or indirect subsidiary thereof, which shall have a stated
maturity of (a) five (5) years or (b) if at the end of such period there exists,
or payment of such note would result in, an event of default (or an event which
with notice or lapse of time or both would constitute an event of default) under
any of the agreements relating to the financing of the transactions contemplated
by the Acquisition Agreements (or any refinancing thereof), the first date on
which such event of default ceases to exist, shall accrue interest at seven (7)
percent per annum, shall be prepayable at the option of the Company or such
subsidiary at any time, in whole or in part, at its principal amount plus any
accrued and unpaid interest, shall provide for the reimbursement of reasonable
expenses incurred by the holder to enforce the note and shall accelerate upon
the earlier of a Change of Control or the consummation of an IPO.
"By-Laws" shall have the meaning ascribed to it in Section 5.13
hereof.
"Century Acquisition" shall have the meaning ascribed to it in the
Recitals hereof.
"Century Purchase Agreement" shall have the meaning ascribed to it
in the Recitals hereof.
"Certificate" shall have the meaning ascribed to it in the Recitals
hereof.
"Change of Control" shall mean (1) the acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) other than FPC and its Affiliates of a majority of the
outstanding voting stock of the Company or (2) the sale of or other disposition
(other than by way of merger or consolidation) of all or substantially all of
the assets of the Company and its subsidiaries taken as a whole to any Person or
group of Persons, other than to a Person (or group of Persons) a majority of the
outstanding voting stock (or other interests) of which are beneficially owned by
FPC and its Affiliates.
"Claims" shall mean losses, claims, damages or liabilities, joint or
several, actions or proceedings (whether commenced or threatened).
"Co-Investors" shall have the meaning ascribed to it in the
Introduction hereof.
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"Common Stock" shall have the meaning ascribed to it in the Recitals
hereof.
"Company" shall have the meaning ascribed to it in the Introduction
hereof.
"Cost Per Share" shall mean $6.1542; provided that, with respect to
any shares of Common Stock (i) issued or sold by the Company following the
Effective Date, the Cost Per Share shall be equal to the actual cost paid for
such shares or (ii) granted as Restricted Stock or otherwise for non-cash
consideration, the Cost Per Share shall be an amount agreed upon between the
acquiring stockholder and the Company as of the date of such grant.
"Demand Registration" shall have the meaning ascribed to it in
Section 3.1.2 hereof.
"DLJ" shall have the meaning ascribed to it in the Introduction
hereof.
"Drag-Along Right" shall have the meaning ascribed to it in Section
2.5.1 hereof.
"Drag-Along Seller" shall have the meaning ascribed to it in Section
2.5.2 hereof.
"Effective Date" shall have the meaning ascribed to it in Section
5.1(a) hereof.
"Employment Agreements" shall have the meaning ascribed to it in
the Recitals hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean fair value as reasonably determined
by the Board in light of all circumstances.
"Fox Paine" shall have the meaning defined in Section 5.15.
"FPC" shall have the meaning ascribed to it in the Introduction
hereof.
"FPC Investors" shall have the meaning ascribed to it in the
Introduction hereof.
"IPO" shall mean an underwritten initial public offering or public
offerings (on a cumulative basis) of shares of Common Stock pursuant to a
registration statement or registration statements under the Securities Act with
aggregate gross proceeds to the Company of at least $50 million.
"Management Investors" shall have the meaning ascribed to it in
the Introduction hereof.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"Nasdaq" shall mean The Nasdaq Stock Market, Inc.
"Offer Shares" shall have the meaning ascribed to it in Section
2.4.1.
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"Offeree Stockholders" shall have the meaning ascribed to it in
Section 2.4.1.
"Options" shall mean options to purchase shares of Common Stock from
the Company, whether granted pursuant to the Stock Incentive Plan or otherwise.
"Option Agreement" shall have the meaning ascribed to it in the
recitals hereof.
"Other Investors" shall have the meaning ascribed to it in the
Introduction hereof.
"Permitted Transferee" shall have the meaning ascribed to it in
Sections 2.3.3 and 2.3.4 hereof.
"Person" shall mean an individual, corporation, limited liability
company, partnership, joint venture, trust, unincorporated organization,
government (or any department or agency thereof) or other entity.
"Piggyback Notice" shall have the meaning ascribed to it in Section
3.1.1 hereof.
"Piggyback Registration" shall have the meaning ascribed to it in
Section 3.1.1 hereof.
"Proposed Transferee" means a Person or group as defined in Section
13(d)(3) of the Exchange Act, other than any of the Stockholders or their
Affiliates (whether any such Affiliate is such prior to or upon consummation of
the proposed Transfer, but not solely by virtue of becoming a party to this
Agreement), to whom Common Stock is proposed to be Transferred pursuant to the
terms of Section 2.4.3(a) or 2.5 of this Agreement.
"Registrable Securities" shall mean the shares of Common Stock;
provided, however, as to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (i) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (ii) such securities shall
have been sold pursuant to Rule 144 (or any successor provision) under the
Securities Act, (iii) such securities shall have been otherwise transferred and
new certificates for such securities not bearing a legend restricting further
transfer shall have been delivered by the Company, (iv) such securities shall
have ceased to be outstanding (and, in the case of shares of Common Stock
underlying Options granted under the Stock Incentive Plan, underlying Warrants
granted under the Warrant Agreement, or underlying Options or Warrants granted
otherwise, such shares of Common Stock shall have ceased to be outstanding after
issuance pursuant to the exercise of such options or warrants), or (v) in the
case of shares of Common Stock held by a Management Investor, such securities
shall have been transferred to any Person other than a Management Investor or a
Permitted Transferee.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance with Article III of this Agreement, including
without limitation, (i) all SEC and stock exchange or the NASD registration and
filing fees, (ii) all fees and expenses of complying
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with securities or "blue sky" laws (including reasonable fees and disbursements
of counsel for the underwriters in connection with "blue sky" qualifications of
the Registrable Securities), (iii) all printing, messenger and delivery
expenses, (iv) the fees and disbursements of counsel for the Company and of the
Company's independent public accountants, including the expenses of any special
audits and/or "cold comfort" letters required by or incident to such performance
and compliance, (v) the reasonable fees and disbursements of one counsel
retained by the Stockholders (if FPC is one of the selling Stockholders, such
counsel to be selected by FPC) as a group in connection with each such
registration, (vi) any fees and disbursements of underwriters customarily paid
by issuers or sellers of securities and the reasonable fees and expenses of any
special experts retained in connection with the requested registration,
including any fee payable to a qualified independent underwriter within the
meaning of the rules of the NASD, but excluding underwriting discounts and
commissions and transfer taxes, if any, (vii) internal expenses of the Company
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties) and (viii) securities acts
liability insurance (if the Company elects to obtain such insurance).
"Restricted Stock" shall have the meaning ascribed to it in the
Stock Incentive Plan.
"Rule 144" shall mean Rule 144 under the Securities Act.
"Sale Notice" shall have the meaning ascribed to it is Section
2.4.1.
"SEC" shall mean the Securities and Exchange Commission.
"Section 3.1 Sale Number" shall have the meaning ascribed to it in
Section 3.1.4 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock Incentive Plan" shall have the meaning ascribed to it in the
Recitals hereof.
"Subsidiary Dividend" shall have the meaning ascribed to it in
Section 4.1 hereof.
"Tag-Along Right" shall have the meaning ascribed to it in Section
2.4.3(a) hereof.
"Tag-Along Seller" shall have the meaning ascribed to it in Section
2.4.3(b) hereof.
"Tag-Along Shares" shall have the meaning ascribed to it in Section
2.4.2 hereof.
"Transfer" shall mean to sell, assign, pledge or encumber or
otherwise transfer or convey, directly or indirectly, whether or not for
consideration.
"Transferee" shall mean any Person to whom a Transfer is made,
regardless of the method of Transfer.
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"Transferor" shall mean any Person by whom a Transfer is made,
regardless of the method of Transfer.
"Violation" shall have the meaning ascribed to it in Section 3.3(a)
hereof.
"Warrant Agreement" shall have the meaning ascribed to it in the
recitals hereof.
"Warrants" shall mean warrants to purchase shares of Common Stock
from the Company, whether granted pursuant to the Warrant Agreement or
otherwise.
ARTICLE II
RESTRICTIONS ON TRANSFERS OF STOCK
2.1 General Limitation on Transfers.
2.1.1 Transfers Generally. (a) Any Management Investor may, at any
time prior to an IPO, Transfer any shares of Common Stock in accordance with
Section 2.3, 2.4 or 2.5 or pursuant to a Piggyback Registration and only in
accordance with such provisions and any Transfer by any Management Investor of
any shares of Common Stock owned as of the date hereof or hereafter acquired not
in accordance with such provisions shall be null and void.
(b) As used in this Agreement, Common Stock shall include any shares
of Restricted Stock of the Company granted to Management Investors; provided,
however, that to the extent the Transfer thereof is otherwise prohibited or
restricted, no rights to Transfer, including pursuant to Section 2.4 or Article
III, shall be granted hereunder.
2.1.2 Recordation. The Company shall not record upon its books any
Transfer of shares of Common Stock held or owned by any of the Other Investors
to any other Person except Transfers in accordance with this Agreement.
2.1.3 Obligations of Transferees. No Transfer of shares of Common
Stock by an Other Investor otherwise permitted pursuant to this Agreement (other
than pursuant to a Piggyback Registration or pursuant to a Tag-Along Right or
Drag-Along Right) shall be effective unless (x) the Transferee (including a
Permitted Transferee pursuant to Section 2.3) shall have executed an appropriate
document in form and substance reasonably satisfactory to the Company confirming
that (i) the Transferee takes such shares subject to all the terms and
conditions of this Agreement to the same extent as its Transferor was bound by
and entitled to the benefits of such provisions and (ii) the shares shall bear
legends, substantially in the forms required by Section 2.6, and (y) such
document shall have been delivered to and approved by the Company prior to such
Transferee's acquisition of shares of Common Stock.
2.1.4 Transfers to Competitors. Notwithstanding anything to the
contrary in this Agreement, no Other Investor shall, at any time, directly or
indirectly, Transfer any shares of Common Stock to any Person who is a
competitor of the Company or any of its Affiliates or to any Affiliate of such a
competitor (other than Transfers to the Company and its Affiliates), unless
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such Transfer (i) is made in connection with the exercise of a Tag-Along Right
pursuant to Section 2.4 or in connection with the exercise of a Drag-Along Right
pursuant to Section 2.5, in which event such sale may be effected only in
accordance with such Section 2.4 or Section 2.5, as applicable, or (ii) is made
in accordance with the terms of this Agreement and is made pursuant to a widely
distributed, underwritten public offering registered under the Securities Act
(or an underwritten offering pursuant to the exercise of such Other Investor's
piggyback registration rights pursuant to Section 3.1(a) hereof) or pursuant to
a sale effected through an open market, nondirected broker's transaction
pursuant to Rule 144 in which the seller does not know that the buyer is a
competitor. For purposes of this provision, the good faith determination of a
majority of the entire Board that a proposed Transferee is a "competitor," made
within thirty (30) days of written notice to the Board of the proposed Transfer,
shall in all respects be conclusive.
2.2 Compliance with Securities Laws. No Other Investor shall
Transfer any shares of Common Stock unless the Transfer is made in accordance
with the terms of this Agreement and (i) the Transfer is pursuant to an
effective registration statement under the Securities Act and in compliance with
any other applicable federal securities laws and state securities or "blue sky"
laws or (ii) such Other Investor shall have furnished: (x) the Company with an
opinion of counsel, if reasonably requested by the Company, which opinion and
counsel shall be reasonably satisfactory to the Company, to the effect that no
such registration is required because of the availability of an exemption from
registration under the Securities Act and that the Transfer otherwise complies
with this Agreement and any other applicable federal securities laws; and (y)
such representations and covenants of such Other Investor as are reasonably
requested by the Company.
2.3 Permitted Transfers.
2.3.1 FPC Transfers. (a) FPC and any Affiliate of FPC shall be free
to Transfer shares of Common Stock to any Person, in whole at any time, or in
part from time to time; provided, however, that if such Person is not Affiliate
of FPC, such Transfer shall be subject to Section 2.4 and Section 2.5 hereof.
(b) No Transfer of shares of Common Stock by FPC or an Affiliate of
FPC otherwise permitted pursuant to this Section 2.3.1 shall be effective unless
the Transferee (whether or not an Affiliate of FPC) shall have executed an
appropriate document in form and substance reasonably satisfactory to the
Company confirming that the Transferee takes such shares subject to all the
terms and conditions of this Agreement to the same extent as its Transferor was
bound by and entitled to the benefits of such provisions.
2.3.2 Management Investors. The following Transfers by Management
Investors of shares of Common Stock shall be deemed permitted pursuant to
Section 2.1.1: (i) to or among such Management Investor's spouse, children,
grandchildren or other living descendants, or to a trust or family partnership
of which there are no principal (i.e., corpus) beneficiaries or partners other
than the grantor or one or more of such Management Investor, spouse or described
relatives, and provided, in the case of a trust, that the existing beneficiaries
and/or trustee(s)
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and/or grantor(s) of such trust have the power to act with respect to the
trust's assets without court approval and, in the case of a family partnership,
that the partners thereof have the power to act with respect to the
partnership's assets without court approval and the partnership is not permitted
to (x) distribute assets to Persons who are not among the relatives listed above
or (y) have partners who are not among the relatives listed above, and, in any
case, all the partners agree, for the benefit of the Company and FPC, not to
amend such provisions; (ii) to a legal representative of such Management
Investor in the event such Management Investor becomes mentally incompetent or
to such Management Investor's personal representative following the death of
such Management Investor; and (iii) with the prior written approval of the
Company, which approval may be granted or withheld by the Board in its sole and
absolute discretion.
2.3.3 Permitted Transferees. Transferees to whom Transfers are
permitted pursuant to clauses (i), (ii) and (iii) of Section 2.3.2 are referred
to herein as "Permitted Transferees." Any such permitted Transfer shall be
subject to the terms of this Agreement, including compliance with Section 2.1.3.
2.3.4 Transfer by Permitted Transferees. The restrictions contained
in Section 2.1.1 of this Agreement with respect to Transfers by Management
Investors of shares of Common Stock shall not apply to any Transfer by a
Permitted Transferee of a Management Investor to such Management Investor or to
another Permitted Transferee of such Management Investor, and any such
Transferee shall also be a "Permitted Transferee," subject to the provisions of
Section 2.3.3.
2.3.5 Other Transfer Restrictions. (a) DLJ agrees that, prior to the
consummation of an IPO, no Transfer of Warrants (or shares of Common Stock
issued upon exercise thereof) shall be effective if, following such Transfer,
there are more than 10 holders of Warrants (or Common Stock issued upon exercise
thereof), which securities are required to bear the legend provided in Section
2.6.1(a), without the consent of the Company or Fox Paine.
(b) The restrictions contained in Sections 2.1.1, 2.4 and 2.5 hereof
and the provisions regarding Permitted Transferees contained in this Section 2.3
shall be in addition to and not in lieu or limitation of any restrictions on the
ownership or Transfer of shares of Common Stock (including with respect to any
Restricted Stock) contained in any stock subscription agreement or employment
agreement or any analogous provision of any employment, compensation or benefit
agreement or arrangement or other agreement between the Company or any of its
Affiliates and any Stockholder; provided, however, that upon the termination of
any such agreement or arrangement or lapsing of such restrictions, the
restrictions and provisions contained herein shall continue in full force and
effect pursuant to this Agreement.
2.4 Tag-Along Rights.
2.4.1 Sale Notice. If FPC proposes to sell any of the Common Stock
owned by it, other than (a) to an Affiliate of FPC, (b) pursuant to the exercise
of a Drag-Along Right pursuant to Section 2.5 of this Agreement, (c) pursuant to
a Demand Registration (which affords piggyback registration rights pursuant to
Section 3.1) or Piggyback Registration, or (d) following
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an IPO, sales effected through open market, nondirected broker's transactions
pursuant to Rule 144, then FPC shall first give written notice (the "Sale
Notice") to the Company and to each of the Other Investors (such Other
Investors, being referred to herein as the "Offeree Stockholders"), stating that
FPC desires to make such sale, referring to Section 2.4 of this Agreement,
specifying the number of shares of Common Stock proposed to be sold by FPC
pursuant to the offer (the "Offer Shares"), and specifying the price, the form
of consideration and the material terms pursuant to which such sale is proposed
to be made.
2.4.2 Tag-Along Election. Within seven (7) days of the date of
receipt of the Sale Notice, each Offeree Stockholder, other than FPC, shall
deliver to FPC and to the Company a written notice stating whether the Offeree
Stockholder elects to sell a pro rata portion of its Common Stock (equal to (A)
the total number of shares of Common Stock owned by such Offeree Stockholder,
plus the total number of shares of Common Stock then issuable upon exercise of
vested Options or Warrants then exercisable by such Offeree Stockholder,
multiplied by (B) a fraction, (i) the numerator of which is the number of Offer
Shares and (ii) the denominator of which is the total number of shares of Common
Stock held by FPC plus the total number of shares of Common Stock then issuable
upon exercise or conversion of any convertible securities, if applicable, then
exercisable or convertible by FPC) to such Proposed Transferee on the same terms
and conditions as FPC (with respect to each Offeree Stockholder, its "Tag-Along
Shares"). An election pursuant to the first sentence of this Section 2.4.2 shall
constitute an irrevocable commitment by the Offeree Stockholder making such
election to sell such Common Stock to the Proposed Transferee if the sale of
Offer Shares to the Proposed Transferee occurs on the terms contemplated hereby.
2.4.3 Seller's Rights to Transfer.
(a) Third Party Sale; Tag-Along Buyer. A sale to a Proposed
Transferee pursuant to Section 2.4 shall only be consummated if the Proposed
Transferee shall purchase, within 120 days of the date of the Sale Notice,
concurrently with and on the same terms and conditions and at the same price as
the Offer Shares, all of each Offeree Stockholder's Tag-Along Shares with
respect to such sale, in accordance with their elections pursuant to Section
2.4.2 (the "Tag-Along Right").
(b) Sale Agreement. Each Offeree Stockholder electing to sell
Tag-Along Shares (a "Tag-Along Seller") agrees to cooperate in consummating such
a sale, including, without limitation, by becoming a party to the sales
agreement and all other appropriate related agreements, delivering at the
consummation of such sale, stock certificates and other instruments for such
Common Stock duly endorsed for transfer, free and clear of all liens and
encumbrances, and voting or consenting in favor of such transaction (to the
extent a vote or consent is required) and taking any other necessary or
appropriate action in furtherance thereof, including the execution and delivery
of any other appropriate agreements, certificates, instruments and other
documents. The foregoing notwithstanding, in connection with such sale, a
Tag-Along Seller, as such, shall not be required to make any representations and
warranties with respect to the Company or the Company's business or with respect
to any other seller. In addition, each Tag-Along Seller shall be severally
responsible for its proportionate share of the expenses of sale
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incurred by the sellers in connection with such sale and the obligations and
liabilities incurred by the sellers in connection with such sale. Such
obligations and liabilities shall include (to the extent such obligations are
incurred) obligations and liabilities for indemnification (including for (x)
breaches of representations and warranties made in connection with such sale by
the Company or any other seller with respect to the Company or the Company's
business, (y) breaches of covenants and (z) other matters), and shall also
include amounts paid into escrow or subject to holdbacks, and amounts subject to
post-closing purchase price adjustments. The foregoing notwithstanding, (1)
without the written consent of a Tag-Along Seller, the amount of such
obligations and liabilities for which such Tag-Along Seller shall be responsible
shall not exceed the gross proceeds received by such Tag-Along Seller in such
sale and (2) a Tag-Along Seller shall not be responsible for the fraud of any
other seller or for any indemnification obligations and liabilities for breaches
of representations and warranties made by any other seller with respect to such
other seller's (i) ownership of and title to shares of capital stock of the
Company, (ii) organization, (iii) authority and (iv) conflicts and consents.
(c) No Liability. Notwithstanding any other provision contained in
this Section 2.4.3, there shall be no liability on the part of the Company or
FPC in the event that the sale pursuant to this Section 2.4.3 is not consummated
for any reason whatsoever. The decision whether to effect a Transfer pursuant to
this Section 2.4.3 shall be in the sole and absolute discretion of FPC.
2.5 Drag-Along Right.
2.5.1 Exercise. If FPC proposes to make a bona fide sale of all of
its shares of Common Stock to a Proposed Transferee, pursuant to a stock sale,
merger, business combination, recapitalization, consolidation, reorganization,
restructuring or similar transaction, FPC shall have the right (a "Drag-Along
Right"), exercisable upon fifteen (15) days' prior written notice to the other
Stockholders, to require the other Stockholders to sell all of their shares of
Common Stock and, at the election of FPC, Options or Warrants (in each case,
whether vested or unvested) to the Proposed Transferee on the same terms and
conditions and at the same price (in the case of Options or Warrants the
purchase price of each Option or Warrant, respectively, shall be equal to the
purchase price attributable to the number of shares of Common Stock issuable
upon exercise of such Option or Warrant less the exercise price thereof) as FPC.
2.5.2 Sale Agreement. Each Stockholder selling shares of Common
Stock pursuant to a transaction contemplated by this Section 2.5 (a "Drag-Along
Seller") agrees to cooperate in consummating such a sale, including, without
limitation, by becoming a party to the sales agreement and all other appropriate
related agreements, delivering at the consummation of such sale, stock
certificates and other instruments for such shares of Common Stock duly endorsed
for transfer, free and clear of all liens and encumbrances, and voting or
consenting in favor of such transaction (to the extent a vote or consent is
required) and taking any other necessary or appropriate action in furtherance
thereof, including the execution and delivery of any other appropriate
agreements, certificates, instruments and other documents. The foregoing
notwithstanding, in connection with such sale, a Drag-Along Seller, as such,
shall not be required to make any representations and warranties with respect to
the Company or the Company's
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business or with respect to any other seller. In addition, each Drag-Along
Seller shall be severally responsible for its proportionate share of the
expenses of sale incurred by FPC in connection with such sale. Such obligations
and liabilities shall include (to the extent such obligations are incurred)
obligations and liabilities for indemnification (including for (x) breaches of
representations and warranties made in connection with such sale by the Company
or any other seller with respect to the Company or the Company's business, (y)
breaches of covenants and (z) other matters), and shall also include amounts
paid into escrow or subject to holdbacks, and amounts subject to post-closing
purchase price adjustments. The foregoing notwithstanding, (1) without the
written consent of a Drag-Along Seller, the amount of such obligations and
liabilities for which such Drag-Along Seller shall be responsible shall not
exceed the gross proceeds received by such Drag-Along Seller in such sale and
(2) a Drag-Along Seller shall not be responsible for the fraud of any other
seller or any indemnification obligations and liabilities for breaches of
representations and warranties made by any other seller with respect to such
other seller's (i) ownership of and title to shares of capital stock of the
Company, (ii) organization, (iii) authority and (iv) conflicts and consents.
2.5.3 No Liability. Notwithstanding any other provision contained in
this Section 2.5, there shall be no liability on the part of the Company or FPC
in the event that the sale pursuant to this Section 2.5 is not consummated for
any reason whatsoever. The decision whether to effect a Transfer pursuant to
this Section 2.5 shall be in the sole and absolute discretion of FPC.
2.6 Additional Provisions Relating to Restrictions on Transfers.
2.6.1 Legends. Each of the Stockholders hereby agrees that each
outstanding certificate representing shares of Common Stock held or owned by
such Stockholder or its Transferee, including any certificate representing
shares of Common Stock and any certificates representing shares of Common Stock
issued upon exercise of Options or Warrants, in any case, subject to the
provisions of this Agreement and issued prior to the date when the applicable
restrictions are terminated pursuant to Section 2.6.3, shall bear endorsements
reading substantially as follows:
(a) The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under the securities
laws of any state and may not be transferred, sold or otherwise disposed of
except pursuant to an effective registration statement or pursuant to an
exemption from registration under said Act and applicable state securities laws.
(b) The securities represented by this certificate are subject to
the terms and conditions set forth in a Stockholders' Agreement, dated as of May
14, 1999, as amended from time to time, copies of which may be obtained from the
issuer or from the holder of this security. No transfer of such securities will
be made on the books of the issuer unless accompanied by evidence of compliance
with the terms of such agreement.
Each outstanding certificate representing shares of Common Stock
shall also bear any legend required by the terms of any subscription agreement,
the Employment Agreements,
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the Stock Incentive Plan, the Warrant Agreement or as the Company may otherwise
deem appropriate.
2.6.2 Copy of Agreement. A copy of this Agreement shall be filed
with the corporate secretary of the Company and kept with the records of the
Company and shall be made available for inspection by any stockholder of the
Company at the principal executive offices of the Company.
2.6.3 Termination of Restrictions. The restriction referred to in
the endorsement required pursuant to Section 2.6.1(a) shall cease and terminate
as to any particular shares of Common Stock when, in the reasonable opinion of
counsel for the Company, such restriction is no longer required in order to
assure compliance with the Securities Act. The Company or the Company's counsel,
at their election, may request from any Stockholder a certificate or an opinion
of such Stockholder's counsel with respect to any relevant matters in connection
with the removal of the endorsement set forth in Section 2.6.1(a) from such
Stockholder's stock certificates, any such certificate or opinion of counsel to
be reasonably satisfactory to the Company and its counsel. The restrictions
referred to in Section 2.6.1(b) shall cease and terminate as to any particular
shares of Common Stock when, in the reasonable opinion of counsel for the
Company, the provisions of this Agreement are no longer applicable to such
shares or this Agreement shall have terminated in accordance with its terms. Any
other restrictions referred to in any other legends required pursuant to Section
2.6.1 shall cease and terminate when, in the reasonable opinion of counsel for
the Company, such restrictions are no longer applicable. Whenever such
restrictions shall cease and terminate as to any shares of Common Stock, the
Stockholder holding such shares shall be entitled to receive from the Company,
without expense (other than applicable transfer taxes, if any, if such
unlegended shares are being delivered and transferred to any Person other than
the registered holder thereof), new certificates for a like number of shares of
Common Stock not bearing the relevant legend(s) set forth or referred to in
Section 2.6.1.
ARTICLE III
REGISTRATION RIGHTS
3.1 Piggyback and Demand Registrations.
3.1.1 Piggyback Registrations. If at any time the Company proposes
to register for sale by the Company under the Securities Act any of its equity
securities (other than a registration on Form S-4 or Form S-8, or any successor
or similar forms), or any shares pursuant to a Demand Registration under Section
3.1.2, in a manner that would permit registration of Registrable Securities for
sale to the public under the Securities Act and in an underwritten offering, the
Company will each such time promptly give written notice to all Stockholders who
beneficially own any Registrable Securities of its intention to do so, of the
registration form of the SEC that has been selected by the Company and of such
holders' rights under this Section 3.1 (the "Piggyback Notice"). The Company
will use its reasonable best efforts to include, and to cause the underwriter or
underwriters to include, in the proposed offering, on the same terms and
conditions as the securities of the Company included in such offering, all
Registrable Securities
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that the Company has been requested in writing, within fifteen (15) calendar
days after the Piggyback Notice is given, to register by the Stockholders
thereof (each such registration pursuant to this Section 3.1.1, a "Piggyback
Registration"); provided, however, that (i) if, at any time after giving a
Piggyback Notice and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register such equity securities (or, in the case of a Demand
Registration (as defined below), FPC or DLJ (whichever has initiated such Demand
Registration), so determines), the Company may, at its election (or, in the case
of a Demand Registration where FPC or DLJ (whichever has initiated such Demand
Registration), so determines, the Company shall), give written notice of such
determination to all Stockholders who beneficially own any Registrable
Securities and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such abandoned registration, and (ii)
in case of a determination by the Company to delay registration of its equity
securities (or, in the case of a Demand Registration, FPC or DLJ (whichever has
initiated such Demand Registration), so determines), the Company shall be
permitted to (or, in the case of a Demand Registration where FPC or DLJ
(whichever has initiated such Demand Registration), so determines, the Company
shall) delay the registration of such Registrable Securities for the same period
as the delay in registering such other equity securities (provided that clauses
(i) and (ii) shall not relieve the Company of its obligations under Section
3.1.2). In the case of any registration of Registrable Securities in an
underwritten offering pursuant to this Section 3.1.1, all Stockholders proposing
to distribute their securities pursuant to this Section 3.1.1 shall, at the
request of the Company (or, in the case of a Demand Registration, FPC or DLJ
(whichever has initiated such Demand Registration)), enter into an agreement in
customary form with the underwriter or underwriters. Notwithstanding the
foregoing, following an IPO, the Company shall not be obligated to effect
registration of Registrable Securities for which Piggyback Registration is
requested by an Other Investor if, at the time of such request, all such
Registrable Securities are eligible for sale to the public by the requesting
Other Investor without registration under Rule 144 under the Securities Act,
with such sale not being limited by either the timing or volume restrictions
thereunder.
3.1.2 Demand Registrations. The Company, (i) upon the reasonable
request of FPC, from time to time, or (ii) following the consummation of an IPO,
upon the reasonable request of DLJ (by the holders of at least 25% of the shares
of Common Stock issued or issuable upon exercise of the Warrants) (each such
party being an "Initiating Party"), shall use its reasonable best efforts to
register under the Securities Act any reasonable portion of Registrable
Securities held by the Initiating Party (including, at the election of such
Initiating Party, in an underwritten offering) and bear all expenses in
connection with such offering in a manner consistent with Section 3.1.3 below
and shall enter into such other agreements in furtherance thereof (each such
registration pursuant to this Section 3.1.2, a "Demand Registration"), and the
Company shall provide customary indemnifications in such instances (in a manner
consistent with the indemnification provisions of this Article III) to the
Initiating Party and any such underwriters. FPC shall have the right to initiate
up to six (6) Demand Registrations pursuant to this Section 3.1.2. DLJ shall
have the right to initiate one (1) Demand Registration pursuant to this Section
3.1.2; provided, that the Company shall not be obligated to effect a Demand
Registration on behalf of DLJ within nine (9) months of the effectiveness of
another registration under this Section 3.1. A registration shall not count as a
Demand Registration unless and until
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the registration statement relating thereto has been declared effective by the
SEC and not withdrawn. If any Demand Registration requested by FPC is in the
form of an underwritten offering, FPC shall designate the underwriter or
underwriters to be utilized in connection such offering. If the Demand
Registration requested by DLJ is in the form of an underwritten offering, the
Company shall designate an underwriter or underwriters to be utilized in
connection such offering, which selection shall be reasonably acceptable to DLJ.
3.1.3 Expenses. The Company shall pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 3.1; provided, however, that each Stockholder shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Stockholder's Registrable Securities pursuant to
a registration statement effected pursuant to this Section 3.1.
3.1.4 Priority in Piggyback and Demand Registrations. If the
managing underwriter for a registration pursuant to this Section 3.1 shall
advise the Company in writing that, in its opinion, the number of securities
requested to be included in such registration exceeds the number (the "Section
3.1 Sale Number") that can be sold in an orderly manner in such offering within
a price range acceptable to the Company (or, in the case of a Demand
Registration, to the Initiating Party), the Company shall include in such
offering (i) first, all the securities the Company proposes to register for its
own sale, and (ii) second, to the extent that the securities the Company
proposes to register are less than the Section 3.1 Sale Number, all Registrable
Securities requested to be included by all Stockholders; provided, however, that
if the number of such Registrable Securities exceeds (x) the Section 3.1 Sale
Number less (y) the number of securities included pursuant to clause (i) hereof,
then the number of such Registrable Securities included in such registration
shall be allocated pro rata among all requesting Stockholders, on the basis of
the relative number of shares of such Registrable Securities each such
Stockholder then holds. If there is any reduction or exclusion of Registrable
Securities pursuant to this Section 3.1.4 in connection with a Demand
Registration, such registration shall not be deemed to be a Demand Registration
for purposes of determining the maximum number of Demand Registrations the
Company is obligated to effect pursuant to Section 3.1.2 hereof; provided that
the Company shall not be obligated to effect a Demand Registration if, at the
time of such request, all such Registrable Securities are eligible for sale to
the public by the Initiating Party without registration under Rule 144 under the
Securities Act, with such sale not being limited by either the timing or volume
restrictions thereunder.
3.1.5 Underwriting Requirements. In connection with any offering
involving any underwriting of securities in a Piggyback Registration, the
Company shall not be required to include any Stockholder's Registrable
Securities in such underwriting unless such Stockholder accepts the terms of the
underwriting as agreed upon between the Company and the underwriters as to the
quantity, and terms and conditions of inclusion of, such securities as set forth
in Section 3.1.1 hereof, and such Stockholders agrees to sell such Stockholder's
securities on the basis provided therein and completes and/or executes all
questionnaires, indemnities, lock-ups, underwriting agreements and other
documents (including powers of attorney and custody arrangements) required
generally of all selling Stockholders, in each case in customary form and
substance, which are requested to be executed in connection therewith.
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3.2 Registration Procedures. If and whenever the Company is required
to use its reasonable best efforts to effect or cause the registration of any
Registrable Securities under the Securities Act as provided in this Article III,
the Company will, as soon as practicable:
(a) prepare and file with the SEC the requisite registration
statement with respect to such Registrable Securities and use its reasonable
best efforts to cause such registration statement to become and remain
effective;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for such period
as the Company shall deem appropriate and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all securities
covered by such registration statement during such period;
(c) furnish to each seller of such Registrable Securities and each
underwriter such number of copies of such registration statement and of each
amendment and supplement thereto (in each case including all exhibits), such
number of copies of the prospectus included in such registration statement
(including each preliminary prospectus and summary prospectus), in conformity
with the requirements of the Securities Act, and such other documents as such
seller may reasonably request;
(d) promptly notify each Stockholder that holds Registrable
Securities covered by such registration statement, (i) when such registration
statement or any post-effective amendment or supplement thereto becomes
effective, (ii) of the issuance by the SEC or any state securities authority of
any stop order, injunction or other order or requirement suspending the
effectiveness of such registration statement (and take all reasonable action to
prevent the entry of such stop order or to remove it if entered, or the
initiation of any proceedings for that purpose), or (iii) of the happening of
any event as a result of which the registration statement, as then in effect,
the prospectus related thereto or any document included therein by reference
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were made and
promptly file such amendments and supplements which may be required on account
of such event and use its reasonable best efforts to cause each such amendment
and supplement to become effective;
(e) promptly furnish counsel for each underwriter, if any, and for
the selling Stockholders of Registrable Securities copies of any written request
by the SEC or any state securities authority for amendments or supplements to a
registration statement and prospectus or for additional information;
(f) use reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of a registration statement at the earliest
possible time;
(g) use its best efforts to cause all such Registrable Securities
covered by such registration statement to be listed on the principal securities
exchange, or authorized for quotation on Nasdaq, on which similar equity
securities issued by the Company are then listed or
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authorized for quotation, or eligible for listing or quotation, if the listing
or authorization for quotation of such securities is then permitted under the
rules of such exchange or the NASD;
(h) enter into an underwriting agreement with the underwriter of
such offering in the form customary for such underwriter for similar offerings,
including such representations and warranties by the Company, provisions
regarding the delivery of opinions of counsel for the Company and accountants'
letters, provisions regarding indemnification and contribution, and such other
terms and conditions as are at the time customarily contained in such
underwriter's underwriting agreements for similar offerings (the sellers of
Registrable Securities which are to be distributed by such underwriter(s) may,
at their option, require that any or all of the representations and warranties
by, and the other agreements on the part of, the Company to and for the benefit
of such underwriter(s) shall also be made to and for the benefit of such sellers
of Registrable Securities);
(i) make available for inspection by representatives of the selling
Stockholders who hold Registrable Securities and any underwriters participating
in any disposition pursuant hereto and any counsel or accountant retained by
such Stockholders or underwriters, all relevant financial and other records,
pertinent corporate documents and properties of the Company and cause the
respective officers, directors and employees of the Company to supply all
information reasonably requested by any such representative, underwriter,
counsel or accountant in connection with a registration pursuant hereto;
provided, however, that, with respect to records, documents or information which
the Company determines, in good faith, to be confidential and as to which the
Company notifies such representatives, underwriters, counsel or accountants in
writing of such confidentiality, such representatives, underwriters, counsel or
accountants shall not disclose such records, documents or information unless (i)
the release of such records, documents or information is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, (ii) such
records, documents or information have previously been generally made available
to the public, or (iii) the disclosure of such records, documents or information
is necessary, in the written opinion of outside legal counsel, to avoid or
correct a material misstatement or omission in the registration statement and
then only after reasonable request has been made to the Company to make such
disclosure and the Company has denied such request. Each selling Stockholder of
such Registrable Securities agrees that information obtained by it as a result
of such inspections shall be deemed confidential and shall not be used by it as
the basis for any market transactions in the securities of the Company or its
Affiliates (or for such Stockholder's business purposes or for any reason other
than in connection with a registration hereunder) unless and until such
information is made generally available (other than by such Stockholder or where
such Stockholder knows that such information became publicly available as a
result of a breach of any confidentiality arrangement) to the public. Each
selling Stockholder of such Registrable Securities further agrees that it will,
upon learning that disclosure of such records is sought, give notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of the records deemed confidential;
(j) permit any beneficial owner of Registrable Securities who, in
the sole judgment, exercised in good faith, of such holder, might be deemed to
be a controlling person of
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the Company, to participate in the preparation of such registration or
comparable statement and to require the insertion therein of material, furnished
to the Company in writing, that in the judgment of such holder, as aforesaid,
should be included; and
(k) make reasonably available its employees and personnel and
otherwise provide reasonable assistance to the underwriters (taking into account
the needs of the Company's businesses and the requirements of the marketing
process) in the marketing of Registrable Securities in any underwritten
offering.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing. The Company shall not be
required to register or qualify any Registrable Securities covered by such
registration statement under any state securities, or "blue sky," laws of such
jurisdictions other than as it deems necessary in connection with the chosen
method of distribution or to take any other actions or do any other things other
than those it deems necessary or advisable to consummate such distribution, and
the Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would not
otherwise be obligated to be so qualified, to subject itself to taxation in any
such jurisdiction or to consent to general service of process in any such
jurisdiction.
Each beneficial owner of Registrable Securities agrees that upon
receipt of any notice from the Company of the happening of any event of the kind
described in subclauses (ii) and (iii) of clause (d) of this Section 3.2, such
beneficial owner will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such beneficial owner's receipt of the copies of the
supplemented or amended prospectus contemplated by clause (d) of this Section
3.2, and, if so directed by the Company, such beneficial owner will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in such beneficial owner's possession, of the prospectus covering
such Registrable Securities that was in effect prior to such amendment or
supplement.
3.3 Indemnification.
(a) In the event of any registration of any Registrable Securities
pursuant to this Article III, the Company will, and hereby does, indemnify and
hold harmless, to the fullest extent permitted by law, the seller of any
Registrable Securities covered by such registration statement, its directors,
officers, fiduciaries, employees and stockholders, members or general and
limited partners (and the directors, officers, fiduciaries, employees and
stockholders, members or general and limited partners thereof), each other
Person who participates as an underwriter or a qualified independent
underwriter, if any, in the offering or sale of such securities, each director,
officer, fiduciary, employee and stockholder or general and limited partner of
such underwriter or qualified independent underwriter, and each other Person
(including any such Person's directors, officers, fiduciaries, employees and
stockholders, members or general and limited partners), if
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any, who controls such seller or any such underwriter or qualified independent
underwriter, within the meaning of the Securities Act, against any and all
Claims in respect thereof and expenses (including reasonable fees and expenses
of counsel and any amounts paid in any settlement effected with the Company's
consent, which consent shall not be unreasonably withheld or delayed) to which
each such indemnified party may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such Claims or expenses arise out of or
are based upon any of the following actual or alleged statements, omissions or
violations (each, a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in any registration statement under which
such securities were registered pursuant to this Agreement under the Securities
Act or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus or any amendment or supplement thereto,
together with the documents incorporated by reference therein, or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (iii) any violation
by the Company of any federal, state or common law rule or regulation applicable
to the Company and relating to action required of or inaction by the Company in
connection with any such registration, and the Company will reimburse any such
indemnified party for any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such Claim
as such expenses are incurred; provided, that the Company shall not be liable to
any such indemnified party in any such case to the extent such Claim or expense
arises out of or is based upon any Violation which occurs in reliance upon and
in conformity with written information furnished to the Company or its
representatives by or on behalf of such indemnified party expressly stating that
such information is for use therein.
(b) Each holder of Registrable Securities that are included in the
securities as to which any Demand Registration or Piggyback Registration is
being effected (and, if the Company requires as a condition to including any
Registrable Securities in any registration statement filed in connection with
any Demand Registration or Piggyback Registration, any underwriter and qualified
independent underwriter, if any) shall, severally and not jointly, indemnify and
hold harmless (in the same manner and to the same extent as set forth in
paragraph (a) of this Section 3.3), to the extent permitted by law, the Company,
its directors, officers, fiduciaries, employees and stockholders (and the
directors, officers, fiduciaries, employees and stockholders or general and
limited partners thereof) and each Person (including any such Person's
directors, officers, fiduciaries, employees and stockholders or general and
limited partners), if any, controlling the Company within the meaning of the
Securities Act and all other prospective sellers and their directors, officers,
fiduciaries, employees and stockholders, members or general and limited partners
and respective controlling Persons (including any such Person's directors,
officers, fiduciaries, employees and stockholders, members or general and
limited partners) against any and all Claims and expenses (including reasonable
fees and expenses of counsel and any amounts paid in any settlement effected
with the consent of the indemnifying party, which consent shall not be
unreasonably withheld or delayed) to which each such indemnified party may
become subject under the Securities Act, the Exchange Act or
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otherwise, insofar as such Claims or expenses arise out of or are based upon any
Violation which occurs in reliance upon and in conformity with written
information furnished to the Company or its representatives by or on behalf of
such holder or underwriter or qualified independent underwriter, if any,
expressly stating that such information is for use in connection with any
registration statement, preliminary, final or summary prospectus or amendment or
supplement or document incorporated by reference into any of the foregoing;
provided, however, that the aggregate amount which any such holder, underwriter
or qualified independent underwriter shall be required to pay pursuant to this
Section 3.3(b) and Sections 3.3(c) and (e) shall be limited to (x) in the case
of any such holder, the amount of the gross proceeds received by such holder
upon the sale of the Registrable Securities pursuant to the registration
statement giving rise to such claim and (y) in the case of any such underwriter
or qualified independent underwriter, the amount of the total sales price of the
Registrable Securities sold through or by it pursuant to the registration
statement giving rise to such claim.
(c) Indemnification similar to that specified in the preceding
paragraphs (a) and (b) of this Section 3.3 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities (and, if
the Company requires as a condition to including any Registrable Securities in
any registration statement filed in connection with any Demand Registration or
Piggyback Registration, any underwriter and qualified independent underwriter,
if any) with respect to any required registration or other qualification of
securities under any state securities and "blue sky" laws.
(d) Any Person entitled to indemnification under this Agreement
shall notify promptly the indemnifying party in writing of the commencement of
any action or proceeding with respect to which a claim for indemnification may
be made pursuant to this Section 3.3, but the failure of any indemnified party
to provide such notice shall not relieve the indemnifying party of its
obligations under this Section 3.3, except to the extent the indemnifying party
is prejudiced thereby and shall not relieve the indemnifying party from any
liability which it may have to any indemnified party otherwise than under this
Section 3.3. In case any action or proceeding is brought against an indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, unless in
the reasonable opinion of outside counsel to the indemnified party a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, to assume the defense thereof jointly with any other indemnifying
party similarly notified, to the extent that it chooses, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party that it so chooses, the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
(i) if the indemnifying party fails to take reasonable steps necessary to defend
diligently the action or proceeding within twenty (20) days after receiving
notice from such indemnified party that the indemnified party believes it has
failed to do so; or (ii) if such indemnified party who is a defendant in any
action or proceeding which is also brought against the indemnifying party
reasonably shall have concluded that there may be one or more legal defenses
available to such indemnified party which are not available to the indemnifying
party; or (iii) if representation of both parties by the same counsel is
otherwise
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inappropriate under applicable standards of professional conduct, then, in any
such case, the indemnified party shall have the right to assume or continue its
own defense as set forth above (but with no more than one firm of counsel for
all indemnified parties in each jurisdiction, except to the extent any
indemnified party or parties reasonably shall have concluded that there may be
legal defenses available to such party or parties which are not available to the
other indemnified parties or to the extent representation of all indemnified
parties by the same counsel is otherwise inappropriate under applicable
standards of professional conduct) and the indemnifying party shall be liable
for any expenses therefor. No indemnifying party shall, without the written
consent of the indemnified party, which consent shall not be unreasonably
withheld, effect the settlement or compromise of, or consent to the entry of any
judgment with respect to, any pending or threatened action or claim in respect
of which indemnification or contribution may be sought hereunder (whether or not
the indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (A) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (B) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(e) If for any reason the foregoing indemnity is unavailable or is
insufficient to hold harmless an indemnified party under Section 3.3(a), (b) or
(c), then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of any Claim in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and the indemnified party on the other from the relevant offering of
securities. If, however, the allocation provided in the immediately preceding
sentence is not permitted by applicable law, or if the indemnified party failed
to give the notice required by Section 3.3(d) above and the indemnifying party
is prejudiced thereby, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative fault of but also the relative
benefits received by the indemnifying party, on the one hand, and the
indemnified party, on the other hand, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the Violation relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
Violation. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 3.3(e) were to be determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the preceding sentences of this
Section 3.3(e). The amount paid or payable in respect of any Claim shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such Claim.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Notwithstanding
anything in this Section 3.3(e) to the contrary, no indemnifying party (other
than the Company) shall be required pursuant to this Section 3.3(e) to
contribute any amount in excess of (x) in the case of an indemnifying party that
is a holder of Registrable Securities, the gross proceeds received by such
indemnifying party from the sale of Registrable Securities in the offering to
which the losses, claims, damages or liabilities of the indemnified parties
relate, or (y) in the case of an indemnifying party that is an
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underwriter or a qualified independent underwriter, the amount of the total
sales price of the Registrable Securities sold through or by it in the offering
to which the losses, claims, damages or liabilities of the indemnified parties
relate, less, in any such case referred to in (x) and (y), the amount of all
indemnification and contribution payments made pursuant to Sections 3.3(b) and
(c) and this Section 3.3(e), as the case may be, in connection with such
offering.
(f) The indemnity agreements contained herein shall be in addition
to any other rights to indemnification or contribution which any indemnified
party may have pursuant to law or contract and shall remain operative and in
full force and effect regardless of any investigation made or omitted by or on
behalf of any indemnified party and shall survive the transfer of the
Registrable Securities by any such party.
(g) The indemnification and contribution required by this Section
3.3 shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or expense,
loss, damage or liability is incurred.
(h) In connection with underwritten offerings, the Company will use
reasonable best efforts to negotiate terms of indemnification that are
reasonably favorable to the various sellers pursuant thereto, as appropriate
under the circumstances.
3.4 Holdback Agreement.
(a) If requested in writing by the Company or the underwriter, if
any, of any offering affording Stockholders registration rights pursuant to
Section 3.1 (whether or not some or all of such Stockholder's Registrable
Securities are subject to a cutback pursuant to Section 3.1.4 of this
Agreement), including without limitation an IPO, each Stockholder agrees not to
effect any public sale or distribution, including any sale pursuant to Rule 144,
of any Registrable Securities or any other equity security of the Company or of
any security convertible into or exchangeable or exercisable for any equity
security of the Company (in each case, other than as part of such underwritten
public offering) within fourteen (14) days before or 180 days after the
effective date of a registration statement affording Stockholders registration
rights pursuant to Section 3.1 (including where subject to a cutback pursuant to
Section 3.1.4 of this Agreement).
(b) If requested in writing by the underwriter of any offering in
connection with a Demand Registration, the Company agrees not to effect any
public sale or distribution (other than public sales or distributions solely by
and for the account of the Company of securities issued (x) pursuant to any
employee or director benefit or similar plan or any dividend reinvestment plan
or (y) in any acquisition by the Company) of any Registrable Securities or any
other equity security of the Company or of any security convertible into or
exchangeable or exercisable for any equity security of the Company (in each
case, other than as part of such underwritten public offering), within fourteen
(14) days before or 180 days after the effective date of a registration
statement filed in connection with a Demand Registration, or for such shorter
period as the sole or lead managing underwriter shall request, in any such case,
unless consented to by such underwriter.
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3.5 Deferral. Notwithstanding anything to the contrary contained
herein, the Company shall not be obligated to prepare and file, or cause to
become effective, any registration statement pursuant to Section 3.1.2 hereof at
any time when, in the good faith judgment of the Board, the filing thereof at
the time requested or the effectiveness thereof after filing should be delayed
to permit the Company to include in the registration statement the Company's
financial statements (and any required audit opinion thereon) for the then
immediately preceding fiscal year or fiscal quarter, as the case may be. The
filing of a registration statement by the Company cannot be deferred pursuant to
the provisions of the immediately preceding sentence beyond the time that such
financial statements (or any required audit opinion thereon) would be required
to be filed with the SEC as part of the Company's Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, as the case may be, if the Company were then
obligated to file such reports. Notwithstanding anything to the contrary
contained herein, the Company shall not be obligated to file a registration
statement, or cause a registration statement previously filed pursuant to
Section 3.1 to become effective, and may suspend sales by the holders of
Registrable Securities under any registration that has previously become
effective, at any time when, in the good faith judgment of the Board, it
reasonably believes that the effectiveness of such registration statement or the
offering of securities pursuant thereto would materially adversely affect a
pending or proposed acquisition, merger, recapitalization, consolidation,
reorganization or similar transaction or negotiations, discussions or pending
proposals with respect thereto; provided that deferrals pursuant to this
sentence shall not exceed, in the aggregate, 180 days in any calendar year. The
filing of a registration statement, or any amendment or supplement thereto, by
the Company cannot be deferred, and the rights of holders of Registrable
Securities to make sales pursuant to an effective registration statement cannot
be suspended, pursuant to the provisions of the immediately preceding sentence
for more than 15 days after the abandonment or 30 days after the consummation of
any of the foregoing proposals or transactions, unless invoked under new
circumstances.
ARTICLE IV
MANAGEMENT INVESTORS' PUTS AND CALLS
4.1 Call Rights. If, prior to the consummation of an IPO, a
Management Investor dies or the Management Investor's employment by the Company
terminates for any reason (including due to a Disability, as defined in such
Management Investor's Employment Agreement or any analogous provision of any
employment, compensation or benefit agreement or arrangement, if any, and if not
so defined, upon the good faith determination of the Board of such disability),
the Company shall have the right, at its election, to purchase all (but not less
than all) of the Management Investor's shares of Common Stock (including any
shares held by its Permitted Transferees) within six (6) months after such
termination, or fifteen (15) months after such termination in the case of death
of the Management Investor (with respect to any shares of Common Stock acquired
after such termination or death upon the exercise of Options held by the
Management Investor, such period to run from the date of exercise) at a price
equal to (A) in the case of any termination other than by the Company for Cause
(as defined in such Management
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Investor's Employment Agreement or any analogous provision of any employment,
compensation or benefit agreement or arrangement, if any, and if not so defined,
upon the good faith determination of the Board of such cause), the aggregate
Fair Market Value of such Common Stock determined as of, in all cases other than
the death of the Management Investor, the date such termination is effective
and, in the case of the Management Investor's death, as of the date of death,
and (B) in the case of termination by the Company for Cause, the lower of (1)
the aggregate Fair Market Value of such Common Stock as of the date the
termination is effective and (2) the product of (x) the number of shares of
Common Stock and (y) the Cost Per Share (subject to adjustment to reflect any
adjustments to the Common Stock made to reflect any merger, reorganization,
consolidation, recapitalization, spinoff, stock dividend, stock split,
extraordinary distribution with respect to the Common Stock or other change in
corporate structure affecting the Common Stock, as the Company reasonably shall
deem fair and appropriate). The Company shall pay the purchase price in cash to
the extent that (x) subsidiaries of the Company are permitted to dividend the
funds for such purchase to the Company (a "Subsidiary Dividend") (under both
applicable law and the indebtedness of the Company and its Affiliates) and (y)
the Company is permitted to purchase such shares for cash (under both applicable
law and such indebtedness). The Company shall fund any amount not permitted to
be funded through a Subsidiary Dividend or to be used to purchase such shares
with a Buy-Out Note. The Board may, in its discretion, assign the rights and
obligations of the Company under this Section 4.1 to any other Person, but no
such assignment shall relieve the Company of its obligations hereunder to the
extent not satisfied by such assignee.
4.2 Put Rights. Subject to any waiver of the rights provided in this
Section 4.2 contained in the Employment Agreement of any Management Investor, if
prior to the consummation of an IPO, a Management Investor dies or the
Management Investor's employment by the Company is terminated by the Company for
any reason (including due to a Disability, as defined in such Management
Investor's Employment Agreement or any analogous provision of any employment,
compensation or benefit agreement or arrangement, if any, and if not so defined,
upon the good faith determination of the Board of such disability), the
Management Investor or the Management Investor's legal representative or
trustee, as the case may be, shall have the right, within three (3) months after
such termination is effective (or one year after the date of death in the case
of the Management Investor's death), to require the Company to purchase all (but
not less than all) of the Management Investor's Common Stock (including any
shares held by its Permitted Transferees) at a price equal to (A) in the case of
termination by reason of death or Disability, the Fair Market Value thereof
determined as of the date of death (in the case of termination due to death) or
the date such other termination is effective and (B) in the case of termination
by the Company for any other reason, the lower of (1) the aggregate Fair Market
Value of such Common Stock and (2) the product of (x) the number of shares of
Common Stock and (y) the Cost Per Share (subject to adjustment to reflect any
adjustments to the Common Stock made to reflect any merger, reorganization,
consolidation, recapitalization, spinoff, stock dividend, stock split,
extraordinary distribution with respect to the Common Stock or other change in
corporate structure affecting the Common Stock, as the Company reasonably shall
deem fair and appropriate). To the extent the funds for such purchase are
permitted under the indebtedness of the Company and its Affiliates and
applicable law to be funded through a Subsidiary Dividend and to be used to
purchase such shares, the Company shall
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pay the purchase price in cash. The Company shall pay any amount not permitted
to be funded through a Subsidiary Dividend or to be used to purchase such shares
with a Buy-Out Note. The Board may, in its discretion, assign the rights and
obligations of the Company under this Section 4.2 to any other Person, but no
such assignment shall relieve the Company of its obligations hereunder to the
extent not satisfied by such assignee.
ARTICLE V
MISCELLANEOUS
5.1 Effectiveness; Term. (a) This Agreement shall become effective
(the "Effective Date") simultaneously with the closing of the first of the
Acquisitions.
(b) The rights and obligations of, and restrictions on, the
Stockholders under Article II of this Agreement shall terminate when (i) FPC and
its Affiliates no longer hold in the aggregate at least 20% of the fully diluted
shares of Common Stock then outstanding or (ii) with respect to any Warrants or
shares of Common Stock issued upon exercise thereof only, following consummation
of an IPO, such Warrants or shares of Common Stock issued upon exercise thereof
are no longer required to, and do not, bear the legend provided in Section
2.6.1(a). Notwithstanding the foregoing, in the event the Company enters into
any agreement to merge with or into any other Person or adopts any other plan of
recapitalization, consolidation, reorganization or other restructuring
transaction as a result of which the Stockholders and their respective Permitted
Transferees (including FPC and any Affiliates thereof) shall own less than a
majority of the outstanding voting power of the entity surviving such
transaction, this Agreement shall terminate.
(c) Notwithstanding anything in Section 5.1(b) to the contrary, the
provisions contained in Article III hereof shall continue to remain in full
force and effect until the earlier to occur of the twentieth anniversary of the
date hereof and the date on which there are no longer any Registrable Securities
outstanding or issuable or thereafter available for or subject to issuance to
any Stockholder upon exercise or conversion of any options, warrants, rights or
other convertible securities; provided, however, that the provisions of Section
3.3 hereof shall survive termination pursuant to Section 5.1(b) or (c) of this
Agreement.
5.2 No Voting or Conflicting Agreements. Prior to an IPO, no Other
Investor shall grant any proxy or enter into or agree to be bound by any voting
trust with respect to the Common Stock nor, at any time, shall any Other
Investor enter into any stockholder agreements or arrangements of any kind with
any Person with respect to the Common Stock inconsistent with the provisions of
this Agreement (whether or not such agreements and arrangements are with other
Other Investors or holders of Common Stock that are not parties to this
Agreement). The foregoing prohibition includes, but is not limited to,
agreements or arrangements with respect to the acquisition, disposition or
voting of shares of Common Stock inconsistent with the provisions of this
Agreement. No Other Investor shall act, at any time, for any reason, as a member
of a group or in concert with any other Persons in connection with the
acquisition, disposition or voting of shares of Common Stock in any manner which
is inconsistent with the provisions of this Agreement.
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5.3 Composition of the Board of Directors. (a) Immediately following
the Effective Date, the Board shall consist of four (4) members, three (3) of
which shall be designated by FPC. The parties recognize that following the
Effective Date, as owner of more than a majority of the Common Stock, FPC has
the power to alter the composition of the Board in accordance with the Company's
By-Laws. In addition, for as long as FPC owns any of the Common Stock of the
Company, it shall be entitled to designate such percentages of the members of
the Board as shall, as nearly as possible, equal its percentage ownership of the
voting stock of the Company, but in any case, at least one member of the Board
shall be designated by FPC. Each of the Stockholders other than FPC entitled to
vote in the election of directors to the Board agrees that it shall vote its
Common Stock or execute consents, as the case may be, and take all other
necessary action (including causing the Issuer to call a special meeting of
Stockholders) in order to ensure that the composition of the Board is as set
forth in this Section 5.3.
5.4 Approval of Stock Incentive Plan by Stockholders. The
Stockholders by their execution of this Agreement, hereby approve the Stock
Incentive Plan, a copy of which is attached hereto as Exhibit A.
5.5 Specific Performance. The parties hereto acknowledge that there
would be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that each party, in addition to any
other remedy to which it may be entitled at law or in equity, shall be entitled
to compel specific performance of the obligations of any other party under this
Agreement in accordance with the terms and conditions of this Agreement. Any
remedy under this Section 5.5 is subject to certain equitable defenses and to
the discretion of the court before which any proceedings therefor may be
brought.
5.6 Notices. All notices, statements, instructions or other
documents required to be given hereunder shall be in writing and shall be given
either personally or by mailing the same in a sealed envelope, by overnight
courier or by first-class mail, postage prepaid and either certified or
registered, in either case, return receipt requested, or by telecopy, addressed
to the Company at its principal offices and to the other parties at their
addresses reflected on the signature pages hereto. Each party hereto, by written
notice given to the other parties hereto in accordance with this Section 5.6,
may change the address to which notices, statements, instructions or other
documents are to be sent to such party. All notices, statements, instructions
and other documents hereunder that are mailed or telecopied shall be deemed to
have been given on the date of mailing or, in the case of telecopying, upon
confirmation of receipt.
5.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties, and their respective successors and
assigns. If any Stockholder or any Affiliate thereof or any Transferee of any
Stockholder shall acquire any shares of Common Stock in any manner, whether by
operation of law or otherwise, such shares shall be held subject to all of the
terms of this Agreement, and by taking and holding such shares such Person shall
be conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement.
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5.8 Recapitalizations and Exchanges Affecting Common Stock. The
provisions of this Agreement shall apply, to the full extent set forth herein
with respect to Common Stock, to any and all shares of capital stock or equity
securities of the Company or any successor or assign of the Company (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for, or in substitution of, the Common Stock, or which
may be issued by reason of any stock dividend, stock split, reverse stock split,
combination, recapitalization, reclassification or otherwise. Upon the
occurrence of any of such events, numbers of shares and amounts hereunder and
any other appropriate terms shall be appropriately adjusted, as determined in
good faith by the Board.
5.9 Governing Law. This Agreement shall be governed and construed
and enforced in accordance with the laws of the State of New York, without
regard to the principles of conflicts of law thereof.
5.10 Descriptive Headings, Etc. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Agreement
otherwise requires, references to "hereof," "herein," "hereby," "hereunder" and
similar terms shall refer to this entire Agreement.
5.11 Amendment. This Agreement may not be amended or supplemented
except by an instrument in writing signed by the Company and by Stockholders
holding a majority of the then outstanding shares of Common Stock held by all
Stockholders; provided that any amendment, supplement or modification of this
Agreement which adversely affects the rights and obligations of any Stockholder
or group of Stockholders (the "Affected Holders") differently than those of the
other Stockholders shall also require the approval of Affected Holders holding a
majority of the outstanding shares of Common Stock held by all such Affected
Holders; provided further, the foregoing proviso notwithstanding, any amendment,
supplement or modification of this Agreement that adversely affects the Other
Investors (or a group thereof, including the Management Investors, as a group,
and DLJ, as a group) as a class may be approved by Other Investors (or members
of such group, as the case may be) holding Common Stock, Options or Warrants,
which together represent a majority of the sum of the total number of (x) the
shares of such Common Stock and (y) the shares of Common Stock issuable upon
exercise of such Options or Warrants held by all the Other Investors (or such
group, as the case may be). The foregoing notwithstanding, (i) the Company,
without the consent of any other party hereto, may amend Schedule I and the
signature pages hereto, in order to add any Other Investor or any other party
that becomes a holder of Common Stock or securities convertible into or
exercisable for Common Stock and (ii) FPC and the Company may amend Article III
of this Agreement (other than in a manner that would materially reduce the Other
Investors' rights or materially increase the Other Investors' obligations with
respect to Piggyback Registrations) without the agreement or consent of any
Other Investor.
5.12 Severability. If any term or provision of this Agreement shall
to any extent be invalid or unenforceable, the remainder of this Agreement shall
not be affected thereby, and each term and provision of this Agreement shall be
valid and enforceable to the fullest extent permitted by law. Upon the
determination that any term or other provision is invalid, illegal or
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incapable of being enforced, the parties shall negotiate in good faith to modify
this Agreement so as to effect their original intent as closely as possible in
an acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
5.13 Further Assurances. The parties hereto shall from time to time
execute and deliver all such further documents and do all acts and things as the
other parties may reasonably require to effectively carry out or better evidence
or perfect the full intent and meaning of this Agreement, including, to the
extent necessary or appropriate, using all reasonable efforts to cause the
amendment of the Certificate or the by-laws of the Corporation (the "By-Laws")
in order to provide for the enforcement of this Agreement in accordance with its
terms. In furtherance and not in limitation of the foregoing, in the event of
any amendment, modification or termination of this Agreement in accordance with
its terms, the Stockholders shall cause the Board to meet within thirty (30)
days following such amendment, modification or termination or as soon thereafter
as is practicable for the purpose of amending the Certificate and By-Laws, as
may be required as a result of such amendment, modification or termination, and,
to the extent required by law, proposing such amendments to the stockholders of
the Company entitled to vote thereon, and such action shall be the first action
to be taken at such meeting.
5.14 Complete Agreement; Counterparts. This Agreement (together with
the Acquisition Agreements, the Stock Incentive Plan, the Warrant Agreement, the
Subscription Agreements, the Employment Agreements, the Management Agreement and
the other agreements referred to herein and therein) constitutes the entire
agreement and supersedes all other agreements and understandings, both written
and oral, among the parties or any of them, with respect to the subject matter
hereof. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
5.15 Approval of Management Agreement by Stockholders. The
Stockholders by their execution of this Agreement, hereby (i) approve the
payment by the Company to Fox Paine & Company, LLC ("Fox Paine") of certain fees
in connection with the consummation of each of the Acquisitions and certain fees
in connection with the provision of ongoing services to the Company, and (ii)
approve and adopt the Management Agreement to be entered into by and between the
Company and Fox Paine.
5.16 Certain Transactions. The parties hereto agree that Fox Paine
shall have the exclusive right to perform all consulting, financing and
investment banking and similar services for the Company and its subsidiaries,
for customary compensation and on other terms that are customary for similar
engagements with unaffiliated third parties, and neither the Company nor its
subsidiaries shall engage any other Person to perform such services during the
term of this Agreement except to the extent that Fox Paine shall consent thereto
or shall decline, at its sole election, to perform such services.
5.17 No Third Party Beneficiaries. The provisions of this Agreement
shall be only for the benefit of the parties to this Agreement, and no other
Person (other than any
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indemnified party with respect to Section 3.3) shall have any third party
beneficiary or other right hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be duly executed on the date first written above.
ALEC HOLDINGS, INC.
By:/s/ Michael E. Holmstrom
-------------------------------
Name: Michael E. Holmstrom
Title: Senior Vice President and Chief
Financial Officer
FOX PAINE CAPITAL FUND, L.P.,
By Fox Paine Capital Fund, LLC, its
General Partner
By:/s/ W. Dexter Paine, III
-------------------------------
Name: W. Dexter Paine, III
Title: President
FPC INVESTORS, L.P.,
By Fox Paine Capital, LLC, its General
Partner
By:/s/ W. Dexter Paine, III
-------------------------------
Name: W. Dexter Paine, III
Title: President
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ALEC COINVESTMENT FUND I, LLC,
By Fox Paine Capital, LLC, its Manager
By:/s/ W. Dexter Paine, III
-------------------------------
Name: W. Dexter Paine, III
Title: President
ALEC COINVESTMENT FUND II, LLC,
By Fox Paine Capital, LLC, its Manager
By:/s/ W. Dexter Paine, III
-------------------------------
Name: W. Dexter Paine, III
Title: President
ALEC COINVESTMENT FUND III, LLC,
By Fox Paine Capital, LLC, its Manager
By:/s/ W. Dexter Paine, III
-------------------------------
Name: W. Dexter Paine, III
Title: President
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ALEC COINVESTMENT FUND IV, LLC,
By Fox Paine Capital, LLC, its Manager
By:/s/ W. Dexter Paine, III
-------------------------------
Name: W. Dexter Paine, III
Title: President
ALEC COINVESTMENT FUND V, LLC,
By Fox Paine Capital, LLC, its Manager
By:/s/ W. Dexter Paine, III
-------------------------------
Name: W. Dexter Paine, III
Title: President
ALEC COINVESTMENT FUND VI, LLC,
By Fox Paine Capital, LLC, its Manager
By:/s/ W. Dexter Paine, III
-------------------------------
Name: W. Dexter Paine, III
Title: President
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DLJ INVESTMENT PARTNERS, L.P.,
By DLJ Investment Partners, Inc.,
Managing General Partner
By:/s/ Ivy Dodes
-------------------------------
Name: Ivy Dodes
Title: Vice President
DLJ INVESTMENT FUNDING, INC.
By:/s/ Ivy Dodes
-------------------------------
Name: Ivy Dodes
Title: Vice President
DLJ ESC II L.P.
By: DLJ LBO Plans Management
Corporation, its General Partner
By:/s/ Ivy Dodes
-------------------------------
Name: Ivy Dodes
Title: Vice President
CHAMER CORPORATION
By:
-------------------------------
Name:
Title:
-33-
<PAGE>
/s/ Charles E. Robinson
-------------------------------
Charles Robinson
Management Investor
29417 N.W. 11th Avenue
Ridgefield, Washington 98642
/s/ James H. Huesgen
-------------------------------
James H. Huesgen
Management Investor
10933 NE 42nd Avenue
Vancouver, Washington 98686
/s/ Wesley E. Carson
-------------------------------
Wesley E. Carson
Management Investor
1311 NW 86th Street
Vancouver, Washington 98665
/s/ Michael E. Holmstrom
-------------------------------
Michael E. Holmstrom
Management Investor
/s/ Wayne Graham
-------------------------------
Wayne Graham
Management Investor
3449 Chelan Drive
West Linn, Oregon 97068
-34-
<PAGE>
CHAMER COMPANY, INC.
(the correct name of Chamer Corporation),
as an Other Investor
By:/s/ William H. Bittner
-------------------------------
Name: William H. Bittner
Title: President
-35-
<PAGE>
EXHIBIT 10.5
STRICTLY CONFIDENTIAL
ALEC HOLDINGS, INC.
100 W. 11TH STREET
VANCOUVER, WA 98660
March 12, 1999
Mr. Charles E. Robinson
29417 N.W. 11th Avenue
Ridgefield, Washington 98642
Re: Employment Agreement
Dear Mr. Robinson:
This letter agreement (this "Agreement") sets forth the terms and
conditions of your employment with ALEC Holdings, Inc. ("Holdings") and its
wholly-owned subsidiary, ALEC Acquisition Corporation ("the Subsidiary"),
effective as of the first to occur of the date of consummation of (a) the
transactions contemplated by the Purchase Agreement, by and among the
Subsidiary, CenturyTel of the Northwest, Inc. and CenturyTel Wireless, Inc.
("Century"), dated as of August 14, 1998 and (b) the transactions contemplated
by the Asset Purchase Agreement, by and among Alaska Communications Systems,
Inc. ("ACS") and the Municipality of Anchorage, dated as of October 20, 1998
(the "Effective Date"); provided that, if neither transaction is consummated,
this Agreement shall be void ab initio. For purposes of this Agreement, and
except where the term "Holdings" or "Subsidiary" is specifically used, Holdings
and the Subsidiary shall be collectively referred to as the "Company" and all
obligations of the Company as set forth herein shall be the joint and several
obligations of Holdings and the Subsidiary.
1. Employment and Services. Holdings hereby employs you as Chairman of the
Board, President and Chief Executive Officer of Holdings and Subsidiary hereby
employs you as Chairman of the Board, President and Chief Executive Officer of
Subsidiary, for the period beginning on the Effective Date and ending upon
termination pursuant to paragraph 4 (the "Employment Period"). During the
Employment Period, you shall render such services to the Company and its
affiliates and subsidiaries as the Boards of Directors of Holdings and the
Subsidiary shall reasonably designate from time to time, and you shall devote
your best efforts and full time and attention to the business of the Company.
Holdings acknowledges that the Subsidiary has entered into a side letter, dated
August 14, 1998 with Century (the "Side Letter") and Holdings hereby affirms
that you shall not be required to undertake any obligations in connection with
acquisitions inconsistent with the restrictions of such Side Letter. Holdings
further agrees that you may provide consulting services to Century, as provided
in your Consulting Agreement, dated December 1, 1997; provided that you hereby
represent that the provision of such services shall not interfere with your
fulfillment of your obligations and duties hereunder.
March 12, 1999 Original Number 2 of 3
Page 1
<PAGE>
2. Compensation. The Company shall pay you an annual base salary ("Annual
Base Salary") of $500,000 during the first year of the Employment Period,
subject to annual review in each year of the Employment Period thereafter (for
any partial year during the Employment Period, the Annual Base Salary shall be
prorated based on the number of days during such year on which you are employed
by the Company). Your Annual Base Salary may be increased in years following the
first year of employment but may not be decreased. As used herein, the term
"Annual Base Salary" refers to the Annual Base Salary as so increased. Such
Annual Base Salary shall be payable in installments in accordance with the
Company's regular payroll practices.
In addition, you will be eligible to receive an annual bonus to be
awarded ninety (90) days after the end of each fiscal year, to be paid as soon
as practicable but not later than one hundred twenty (120) days after the end of
the fiscal year. In order to determine the amount of such bonus, the Company,
acting in good faith, shall determine appropriate business targets for each
fiscal year and your annual bonus shall be based upon attainment of such
targets. As a benchmark for such bonuses, the Company agrees that if the Company
attains the mutually determined business targets, you shall receive a bonus
equal to one hundred percent (100%) of your Annual Base Salary as in effect with
respect to any such fiscal year, and in the event that the Company exceeds or
does not exceed the business targets, there shall be appropriate adjustments in
the amount of your annual bonus. In no event, however, shall your annual bonus
be less than $200,000. The determination of appropriate business targets shall
take place not later than sixty (60) days subsequent to the commencement of the
Company's fiscal year.
3. Benefits. During the Employment Period, you shall be entitled to
participate in the Company's fringe benefit plans, subject to and in accordance
with applicable eligibility requirements, such as life and disability insurance
plans and all other benefit plans (other than severance plans or arrangements)
generally available to the Company's executive officers, including relocation of
personal residence benefits to the extent such relocation request would
otherwise constitute Good Reason within the meaning of paragraph 4, in
accordance with the terms of any such plans or policies as in effect from time
to time during the Employment Period. In addition, the Company will reimburse
your reasonable out-of-pocket expenses incurred in connection with the
performance of your services hereunder, in each case consistent with Company
policy. In addition, during the Employment Period, you shall be entitled to
annual vacation of not less than two (2) weeks.
4. Termination and Severance. The Employment Period shall terminate on the
first to occur of (i) ninety (90) days following written notice by you to the
Company of your resignation without Good Reason, (it being understood that you
will continue to perform your services hereunder during such ninety (90) day
period), (ii) thirty (30) days following written notice by you to the Company of
your resignation with Good Reason during the Employment Period or following a
Change in Control (it being understood that you will continue to perform your
services hereunder during such thirty (30) day period), (iii) your death or
Disability, (iv) a vote of the Board of Holdings or the Subsidiary directing
such termination for Cause, (v) a vote of the Board of Holdings or the
Subsidiary directing such termination without Cause, or (vi) the third
anniversary or the Effective Date (the "Scheduled Expiration Date"); provided,
however,
March 12, 1999 Original Number 2 of 3
Page 2
<PAGE>
that the Scheduled Expiration Date shall be automatically extended for
successive one-year periods unless, at least ninety (90) days prior to the
then-current Scheduled Expiration Date, either the Company or you shall give
written notice to the other of an intention not to extend the Employment Period.
In the event of termination of the Employment Period pursuant to clause (ii) or
(v) above, the Company shall concurrently with such termination make a lump-sum
payment to you equal to the sum of (x) one times your Annual Base Salary plus
(y) one times your most recent annual bonus payment paid pursuant to paragraph 2
hereof, and, notwithstanding anything to the contrary in the Holdings' 1999
Stock Incentive Plan or any other plan or agreement pursuant to which you have
been granted options to purchase shares of Holdings common stock, upon such
termination, such number of then-unvested options shall vest as are necessary to
vest at least one-third of all options granted to you on or following the
Effective Date. In addition, you shall be entitled to reimbursement of the cost
of continuing your health insurance coverage under COBRA for the twelve (12)
month period following such a termination. Except as otherwise set forth in this
paragraph 4 or pursuant to the terms of employee benefit plans in which you
participate pursuant to paragraph 3, you shall not be entitled to any
compensation or other payment from the Company in connection with termination of
your employment hereunder; however, in the event that the Company shall give you
notice of its intention not to extend the Employment Period, you shall receive
twelve (12) months of your Annual Base Salary plus one times your most recent
annual bonus payment paid pursuant to paragraph 2 hereof, as well as
reimbursement for the cost of continuing your health insurance coverage under
COBRA for such period, in a lump sum within thirty (30) days of the expiration
of the then Employment Period.
For purposes of this agreement, the following definitions will
apply: (a) "Good Reason" shall mean: (i) the assignment of you by the Company to
any duties materially inconsistent with, or a material diminution of, your
position, including duties, title, offices, or responsibilities; or (ii) the
transfer, without your concurrence, of your principal place of employment to a
geographic location more than 100 miles from both your current personal
residence and from the location of your current principal place of employment;
(b) "Cause" shall mean: (i) your willful failure to comply with lawful
directions of the Boards of the Company after written notice; (ii) fraud,
misappropriation or embezzlement by you; or (iii) a material breach of this
Agreement (other than due to physical or mental illness) that is not cured
within thirty (30) days after receiving written notice from either the Board of
Holdings or of the Subsidiary of your specific failure to perform your duties;
(c) "Change in Control" shall mean: (i) the acquisition by any person or group
(as that term is used in Regulation 13D under the Securities Exchange Act of
l934, as amended), other than Fox Paine & Company, LLC or any of its affiliates,
of beneficial ownership of a majority or more of the Company's outstanding
voting securities: or (ii) any sale, lease, exchange or other transfer in one
transaction or a series of selected transactions, other than a transfer to an
entity which is majority controlled by Fox Paine & Company, LLC or any affiliate
thereof or an entity with substantially the same equity holders as immediately
prior to such transfer, of all or substantially all of the assets of the Company
or its operating subsidiaries (taken together), or any plan for the liquidation
or dissolution of the Company; and (d) "Disability" shall mean that for a period
of six (6) consecutive months in any twelve (12) month period you are incapable
of substantially fulfilling the duties of your positions as set forth in
paragraph 1 because of physical, mental or emotional incapacity resulting from
injury, sickness or disease. Any
March 12, 1999 Original Number 2 of 3
Page 3
<PAGE>
question as to the existence or extent of the Disability upon which you and the
Company cannot agree shall be determined by a qualified, independent physician
selected by the Company. The determination of any such physician shall be final
and conclusive for all purposes; provided, however, that you or your legal
representatives shall have the right to present to such physician such
information as to such Disability as you or they may deem appropriate, including
the opinion of your personal physician.
5. Confidential Information. You acknowledge that information obtained by
you while employed by the Company or any affiliate thereof (including as a
consultant to Fox Paine & Company, LLC or as an employee of LEC Consulting
Corporation) concerning the business or affairs of (i) the Company, its
affiliates and subsidiaries or (ii) any enterprise which is the subject of an
actual or potential transaction, including, without limitation, the proposed
divestitures by GTE Corp. and US West, Inc. (a "Potential Transaction"),
considered, evaluated, reviewed or otherwise made known to Fox Paine & Company,
LLC, the Company, its affiliates or subsidiaries, or you ("Confidential
Information") is the property of the Company. You shall not, without the prior
written consent of the Boards of the Company, disclose to any person or use for
your own account any Confidential Information except (i) in the normal course of
performance of your duties hereunder, (ii) to the extent necessary to comply
with applicable laws (provided that you shall give the Company prompt notice
prior to any such disclosure), or (iii) to the extent that such information
becomes generally known to and available for use by the public other than as a
result of your acts or omissions to act. Upon termination of your employment or
at the request of the Board of Holdings or of the Subsidiary at any time, you
shall deliver to the respective Boards all documents containing Confidential
Information or relating to the business or affairs of the Company that you may
then possess or have under your control.
6. Non-Competition; Non-Solicitation.
a. Non-Competition. You acknowledge that you are and will be in
possession of Confidential Information and that your services are of unique and
great value to the Company. Accordingly, from the Effective Date until the
expiration of the period ending twelve (12) months from the effective date of
the termination of your employment with the Company or its affiliated companies
(the "Non-Compete Period"), you shall not, without the prior written consent of
the Board of Holdings, directly or indirectly own, invest (equity or debt) in,
manage, control, participate in, consult with, advise, render services to, or in
any manner engage in, or be connected as an employee, officer, partner,
director, consultant or otherwise with, (i) any enterprise engaged in the
provision of local exchange or wireless telecommunications services in any state
in which (A) the Company, its affiliates or subsidiaries, or (B) any entity
which is a party to an acquisition agreement with the Company, its affiliates or
subsidiaries, is engaged in the provision of local exchange or wireless
telecommunications services, or (ii) any enterprise which is the subject of a
Potential Transaction made known to the Company, its affiliates or subsidiaries,
or you during or at any time prior to the termination of this Agreement, is
engaged in the provision of local exchange or wireless telecommunications
services, (a "Competitive Business"). Nothing herein shall prohibit you from
being a passive owner of not more than one percent (1%) of any publicly-traded
class of capital stock of any entity engaged in a Competitive Business.
March 12,1999 Original Number 2 of 3
Page 4
<PAGE>
b. Non-Solicitation. During the Non-Compete Period, you shall not
directly or indirectly induce or attempt to induce any employee of the Company
or its affiliates or subsidiaries to terminate, or in any way interfere with,
the relationship between the Company or its affiliates or subsidiaries and any
employee thereof, nor shall you directly or indirectly solicit or attempt to
solicit business from any customer or supplier of the Company or its affiliates
or subsidiaries.
c. Scope of Restriction. If, at the time of enforcement of this
paragraph 6, a court shall hold that the duration, scope or area restrictions
stated herein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area.
7. Survival. Any termination of your employment or of this Agreement shall
have no effect on the continuing operation of paragraph 5 or 6 for the periods
specified therein.
8. Indemnification. The Company agrees to indemnify you and hold you
harmless from, any and all claims arising from or relating to your status as an
employee, officer, director or agent of the Company, its affiliates, or
subsidiaries, to the fullest extent permitted by Delaware law other than claims
arising from your gross negligence.
9. Waiver of Claims. You agree as a condition to your receipt of any
termination or severance benefits pursuant to paragraph 4 hereof, you will agree
to waive, discharge and release any and all claims, demands and causes of
action, whether known or unknown, against the Company, its affiliates and
subsidiaries, and their respective current and former directors, officers,
employees, attorneys and agents arising out of, connected with or incidental to
your employment or other dealings with the Company, its affiliates or
subsidiaries, which you or anyone acting on your behalf might otherwise have had
or asserted and any claim to any compensation or benefits from your employment
with the Company or its affiliates (other than employee benefits to be provided
pursuant to the terms of paragraph 4 hereof or of any employee benefit plans set
forth in paragraph 3 hereof). Notwithstanding anything contained herein to the
contrary, no termination or severance payments shall be made under this
Agreement or otherwise until such time as you have delivered an executed release
of claims and any applicable revocation periods under state or federal law have
expired.
10. Governing Law, This Agreement and all questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
and determined in accordance with the internal law, and not the law of
conflicts, of the State of Delaware.
11. Notices. All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given, if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address set forth herein, or such other address as may
hereafter be furnished to the other party by like notice. Notice or
communication hereunder shall be deemed to have been received on the date
delivered to or received at the premises of the addressee if delivered other
than by mail, and in the case of
March 12, 1999 Original Number 2 of 3
Page 5
<PAGE>
mail, upon the depositing of the same in the United States mail as above stated
(as evidenced, in the case of registered or certified mail, by the date noted on
the return receipt). Notices shall be addressed as follows:
If to the Executive: Mr. Charles E. Robinson
29417 N.W. 11th Avenue
Ridgefield, Washington 98642
If to the Company: ALEC Holdings, Inc.
100 W. 11th Street
Vancouver, WA 98660
Attention: Secretary
with a copy to: Fox Paine & Company, LLC
950 Tower Lane
Suite 1950
Foster City, CA 94404
Attention: W. Dexter Paine
12. Separability Clause. Any part, provision, representation or warranty
of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
13. Successors and Assigns; Assignment of Agreement. This Agreement shall
bind and inure to the benefit of and be enforceable by the parties hereto and
the respective successors and assigns of the parties hereto. As used in this
Agreement, "Company," "Holdings" and the "Subsidiary" shall mean the Company,
Holdings and the Subsidiary as hereinbefore defined and any successors to their
businesses and/or assets as aforesaid which assume and agree to perform this
Agreement by operation of law, or otherwise. This Agreement is personal to you
and without the prior written consent of the Company shall not be assignable by
you otherwise than by will or the laws of descent and distribution.
14. Waiver. The failure of any party to insist upon strict performance of
a covenant hereunder or of any obligation hereunder, irrespective of the length
of time for which such failure continues, shall not be a waiver of such party's
right to demand strict compliance in the future. No consent or waiver, express
or implied, to or of any breach or default in the performance of any obligation
hereunder, shall constitute a consent or waiver to or of any other breach or
default in the performance of the same or any other obligation hereunder. No
term or provision of the Agreement may be waived unless such waiver is in
writing and signed by the party against whom such waiver is sought to be
enforced.
15. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties hereto with respect to the subject matter contemplated
herein and supersedes all prior
March 12, 1999 Original Number 2 of 3
Page 6
<PAGE>
agreements, whether written or oral, between the parties, relating to the
subject matter hereof. This Agreement shall not be modified except in writing
executed by all parties hereto.
16. Captions. Titles or captions of paragraphs contained in this Agreement
are inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provision hereof.
17. Counterparts. For the purpose of facilitating proving this Agreement,
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts. Each counterpart shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
date first above written.
Please execute the extra copy of this letter Agreement in the space
below and return it to the undersigned at the address set forth above to confirm
your understanding and acceptance of the agreements contained herein.
Very truly yours,
ALEC HOLDINGS, INC.
By: /s/ Wesley E. Carson
------------------------------------
Name: Wesley E. Carson
Title: Executive Vice President
ALEC ACQUISITION CORPORATION
By: /s/ Wesley E. Carson
------------------------------------
Name: Wesley E. Carson
Title: Executive Vice President
Accepted and agreed to:
/s/ Charles E. Robinson
- --------------------------
Charles E. Robinson
March 12, 1999 Original Number 2 of 3
Page 7
<PAGE>
EXHIBIT 10.6
STRICTLY CONFIDENTIAL
ALEC HOLDINGS, INC.
100 W. 11TH STREET
VANCOUVER, WA 98660
March 12, 1999
Mr. Wesley E. Carson
1311 NW 86th Street
Vancouver, Washington 98665
Re: Employment Agreement
Dear Mr. Carson:
This letter agreement (this "Agreement") sets forth the terms and
conditions of your employment with ALEC Holdings, Inc. ("Holdings") and its
wholly-owned subsidiary, ALEC Acquisition Corporation ("the Subsidiary"),
effective as of the first to occur of the date of consummation of (a) the
transactions contemplated by the Purchase Agreement, by and among the
Subsidiary, CenturyTel of the Northwest, Inc. and CenturyTel Wireless, Inc.,
dated as of August 14, 1998 and (b) the transactions contemplated by the Asset
Purchase Agreement, by and among Alaska Communications Systems, Inc. ("ACS") and
the Municipality of Anchorage, dated as of October 20, 1998 (the "Effective
Date"); provided that, if neither transaction is consummated, this Agreement
shall be void ab initio. For purposes of this Agreement, and except where the
term "Holdings" or "Subsidiary" is specifically used, Holdings and the
Subsidiary shall be collectively referred to as the "Company" and all
obligations of the Company as set forth herein shall be the joint and several
obligations of Holdings and the Subsidiary.
1. Employment and Services. Holdings hereby employs you as Executive Vice
President of Holdings and Subsidiary hereby employs you as Executive Vice
President of Subsidiary, for the period beginning on the Effective Date and
ending upon termination pursuant to paragraph 4 (the "Employment Period").
During the Employment Period, you shall render such services to the Company and
its affiliates and subsidiaries as the Boards of Directors of Holdings and the
Subsidiary shall reasonably designate from time to time, and you shall devote
your best efforts and full time and attention to the business of the Company.
2. Compensation. The Company shall pay you an annual base salary ("Annual
Base Salary") of $200,000 during the first year of the Employment Period,
subject to annual review in each year of the Employment Period thereafter (for
any partial year during the Employment Period, the Annual Base Salary shall be
prorated based on the number of days during such year on which you are employed
by the Company). Your Annual Base Salary may be increased in years following the
first year of employment but may not be decreased. As used herein, the term
"Annual Base Salary" refers to the Annual Base Salary as so increased. Such
Annual Base Salary shall be payable in installments in accordance with the
Company's regular payroll practices.
March 12, 1999 Original Number 2 of 3
Page 1
<PAGE>
In addition, you will be eligible to receive an annual bonus to be
awarded ninety (90) days after the end of each fiscal year, to be paid as soon
as practicable but not later than one hundred twenty (120) days after the end of
the fiscal year. In order to determine the amount of such bonus, the Company,
acting in good faith, shall determine appropriate business targets for each
fiscal year and your annual bonus shall be based upon attainment of such
targets. As a benchmark for such bonuses, the Company agrees that if the Company
attains the mutually determined business targets, you shall receive a bonus
equal to one hundred percent (100%) of your Annual Base Salary as in effect with
respect to any such fiscal year, and in the event that the Company exceeds or
does not exceed the business targets, there shall be appropriate adjustments in
the amount of your annual bonus. The determination of appropriate business
targets shall take place not later than sixty (60) days subsequent to the
commencement of the Company's fiscal year.
3. Benefits. During the Employment Period, you shall be entitled to
participate in the Company's fringe benefit plans, subject to and in accordance
with applicable eligibility requirements, such as life and disability insurance
plans and all other benefit plans (other than severance plans or arrangements)
generally available to the Company's executive officers, including relocation of
personal residence benefits to the extent such relocation request would
otherwise constitute Good Reason within the meaning of paragraph 4, in
accordance with the terms of any such plans or policies as in effect from time
to time during the Employment Period. In addition, the Company will reimburse
your reasonable out-of-pocket expenses incurred in connection with the
performance of your services hereunder, in each case consistent with Company
policy. In addition, during the Employment Period, you shall be entitled to
annual vacation of not less than two (2) weeks.
4. Termination and Severance. The Employment Period shall terminate on the
first to occur of (i) ninety (90) days following written notice by you to the
Company of your resignation without Good Reason, (it being understood that you
will continue to perform your services hereunder during such ninety (90) day
period), (ii) thirty (30) days following written notice by you to the Company of
your resignation with Good Reason during the Employment Period or following a
Change in Control (it being understood that you will continue to perform your
services hereunder during such thirty (30) day period), (iii) your death or
Disability, (iv) a vote of the Board of Holdings or the Subsidiary directing
such termination for Cause, (v) a vote of the Board of Holdings or the
Subsidiary directing such termination without Cause, or (vi) the second
anniversary of the Effective Date (the "Scheduled Expiration Date"); provided,
however, that the Scheduled Expiration Date shall be automatically extended for
successive one-year periods unless, at least ninety (90) days prior to the
then-current Scheduled Expiration Date, either the Company or you shall give
written notice to the other of an intention not to extend the Employment Period.
In the event of termination of the Employment Period pursuant to clause (ii) or
(v) above, the Company shall concurrently with such termination make a lump-sum
payment to you equal to the sum of (x) one times your Annual Base Salary plus
(y) in the event such termination occurs on or after December 31, 1999, one
times your most recent annual bonus payment paid pursuant to paragraph 2 hereof.
In addition, you shall be entitled to reimbursement of the cost of continuing
your health insurance coverage under COBRA for the twelve (12) month
March 12, 1999 Original Number 2 of 3
Page 2
<PAGE>
period following such a termination. Except as otherwise set forth in this
paragraph 4 or pursuant to the terms of employee benefit plans in which you
participate pursuant to paragraph 3, you shall not be entitled to any
compensation or other payment from the Company in connection with termination of
your employment hereunder; however, in the event that the Company shall give you
notice of its intention not to extend the Employment Period, you shall receive
twelve (12) months of your Annual Base Salary, as well as reimbursement for the
cost of continuing your health insurance coverage under COBRA for such period,
in a lump sum within thirty (30) days of the expiration of the then Employment
Period.
For purposes of this agreement, the following definitions will
apply: (a) "Good Reason" shall mean: (i) the assignment of you by the Company to
any duties materially inconsistent with, or a material diminution of, your
position, including duties, title, offices, or responsibilities; or (ii) the
transfer, without your concurrence, of your principal place of employment to a
geographic location more than 100 miles from both your current personal
residence and from the location of your current principal place of employment
(but shall not include any transfer to Anchorage, Alaska after December 31,
1999); (b) "Cause" shall mean: (i) your willful failure to comply with lawful
directions of the Boards of the Company after written notice; (ii) fraud,
misappropriation or embezzlement by you; or (iii) a material breach of this
Agreement (other than due to physical or mental illness) that is not cured
within thirty (30) days after receiving written notice from either the Board of
Holdings or of the Subsidiary of your specific failure to perform your duties;
(c) "Change in Control" shall mean: (i) the acquisition by any person or group
(as that term is used in Regulation 13D under the Securities Exchange Act of
1934, as amended), other than Fox Paine & Company, LLC or any of its affiliates,
of beneficial ownership of a majority or more of the Company's outstanding
voting securities; or (ii) any sale, lease, exchange or other transfer in one
transaction or a series of selected transactions, other than a transfer to an
entity which is majority controlled by Fox Paine & Company, LLC or any affiliate
thereof or an entity with substantially the same equity holders as immediately
prior to such transfer, of all or substantially all of the assets of the Company
or its operating subsidiaries (taken together), or any plan for the liquidation
or dissolution of the Company; and (d) "Disability" shall mean that for a period
of six (6) consecutive months in any twelve (12) month period you are incapable
of substantially fulfilling the duties of your positions as set forth in
paragraph 1 because of physical, mental or emotional incapacity resulting from
injury, sickness or disease. Any question as to the existence or extent of the
Disability upon which you and the Company cannot agree shall be determined by a
qualified, independent physician selected by the Company. The determination of
any such physician shall be final and conclusive for all purposes; provided,
however, that you or your legal representatives shall have the right to present
to such physician such information as to such Disability as you or they may deem
appropriate, including the opinion of your personal physician.
5. Confidential Information. You acknowledge that information obtained by
you while employed by the Company or any affiliate thereof (including as a
consultant to Fox Paine & Company, LLC or as an employee of LEC Consulting
Corporation) concerning the business or affairs of (i) the Company, its
affiliates and subsidiaries or (ii) any enterprise which is the subject of an
actual or potential transaction, including, without limitation, the proposed
divestitures by
March 12, 1999 Original Number 2 of 3
Page 3
<PAGE>
GTE Corp. and US West, Inc. (a "Potential Transaction"), considered, evaluated,
reviewed or otherwise made known to Fox Paine & Company, LLC, the Company, its
affiliates or subsidiaries, or you ("Confidential Information") is the property
of the Company. You shall not, without the prior written consent of the Boards
of the Company, disclose to any person or use for your own account any
Confidential Information except (i) in the normal course of performance of your
duties hereunder, (ii) to the extent necessary to comply with applicable laws
(provided that you shall give the Company prompt notice prior to any such
disclosure), or (iii) to the extent that such information becomes generally
known to and available for use by the public other than as a result of your acts
or omissions to act. Upon termination of your employment or at the request of
the Board of Holdings or of the Subsidiary at any time, you shall deliver to the
respective Boards all documents containing Confidential Information or relating
to the business or affairs of the Company that you may then possess or have
under your control.
6. Non-Competition; Non-Solicitation.
a. Non-Competition. You acknowledge that you are and will be in
possession of Confidential Information and that your services are of unique and
great value to the Company. Accordingly, from the Effective Date until the
expiration of the period ending twelve (12) months from the effective date of
the termination of your employment with the Company or its affiliated companies
(the "Non-Compete Period"), you shall not, without the prior written consent of
the Board of Holdings, directly or indirectly own, invest (equity or debt) in,
manage, control, participate in, consult with, advise, render services to, or in
any manner engage in, or be connected as an employee, officer, partner,
director, consultant or otherwise with, (i) any enterprise engaged in the
provision of local exchange or wireless telecommunications services in any state
in which (A) the Company, its affiliates or subsidiaries, or (B) any entity
which is a party to an acquisition agreement with the Company, its affiliates or
subsidiaries, is engaged in the provision of local exchange or wireless
telecommunications services, or (ii) any enterprise which is the subject of a
Potential Transaction made known to the Company, its affiliates or subsidiaries,
or you during or at any time prior to the termination of this Agreement, is
engaged in the provision of local exchange or wireless telecommunications
services, (a "Competitive Business"). Nothing herein shall prohibit you from
being a passive owner of not more than one percent (1%) of any publicly-traded
class of capital stock of any entity engaged in a Competitive Business.
b. Non-Solicitation. During the Non-Compete Period, you shall not
directly or indirectly induce or attempt to induce any employee of the Company
or its affiliates or subsidiaries to terminate, or in any way interfere with,
the relationship between the Company or its affiliates or subsidiaries and any
employee thereof, nor shall you directly or indirectly solicit or attempt to
solicit business from any customer or supplier of the Company or its affiliates
or subsidiaries.
c. Scope of Restriction. If, at the time of enforcement of this
paragraph 6, a court shall hold that the duration, scope or area restrictions
stated herein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area.
March 12, 1999 Original Number 2 of 3
Page 4
<PAGE>
7. Survival. Any termination of your employment or of this Agreement shall
have no effect on the continuing operation of paragraph 5 or 6 for the periods
specified therein.
8. Indemnification. The Company agrees to indemnify you and hold you
harmless from, any and all claims arising from or relating to your status as an
employee, officer, director or agent of the Company, its affiliates, or
subsidiaries, to the fullest extent permitted by Delaware law other than claims
arising from your gross negligence.
9. Waiver of Claims. You agree as a condition to your receipt of any
termination or severance benefits pursuant to paragraph 4 hereof, you will agree
to waive, discharge and release any and all claims, demands and causes of
action, whether known or unknown, against the Company, its affiliates and
subsidiaries, and their respective current and former directors, officers,
employees, attorneys and agents arising out of, connected with or incidental to
your employment or other dealings with the Company, its affiliates or
subsidiaries, which you or anyone acting on your behalf might otherwise have had
or asserted and any claim to any compensation or benefits from your employment
with the Company or its affiliates (other than employee benefits to be provided
pursuant to the terms of paragraph 4 hereof or of any employee benefit plans set
forth in paragraph 3 hereof). Notwithstanding anything contained herein to the
contrary, no termination or severance payments shall be made under this
Agreement or otherwise until such time as you have delivered an executed release
of claims and any applicable revocation periods under state or federal law have
expired.
10. Governing Law. This Agreement and all questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
and determined in accordance with the internal law, and not the law of
conflicts, of the State of Delaware.
11. Notices. All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given, if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address set forth herein, or such other address as may
hereafter be furnished to the other party by like notice. Notice or
communication hereunder shall be deemed to have been received on the date
delivered to or received at the premises of the addressee if delivered other
than by mail, and in the case of mail, upon the depositing of the same in the
United States mail as above stated (as evidenced, in the case of registered or
certified mail, by the date noted on the return receipt). Notices shall be
addressed as follows:
If to the Executive: Mr. Wesley E. Carson
1311 NW 86th Street
Vancouver, Washington 98665
If to the Company: ALEC Holdings, Inc.
100 W. 11th Street
Vancouver, WA 98660
Attention: Chairman of the Board
March 12, 1999 Original Number 2 of 3
Page 5
<PAGE>
with a copy to: Fox Paine & Company, LLC
950 Tower Lane
Suite 1950
Foster City, CA 94404
Attention: W. Dexter Paine
12. Separability Clause. Any part, provision, representation or warranty
of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
13. Successors and Assigns; Assignment of Agreement. This Agreement shall
bind and inure to the benefit of and be enforceable by the parties hereto and
the respective successors and assigns of the parties hereto. As used in this
Agreement, "Company," "Holdings" and the "Subsidiary" shall mean the Company,
Holdings and the Subsidiary as hereinbefore defined and any successors to their
businesses and/or assets as aforesaid which assume and agree to perform this
Agreement by operation of law, or otherwise. This Agreement is personal to you
and without the prior written consent of the Company shall not be assignable by
you otherwise than by will or the laws of descent and distribution.
14. Waiver. The failure of any party to insist upon strict performance of
a covenant hereunder or of any obligation hereunder, irrespective of the length
of time for which such failure continues, shall not be a waiver of such party's
right to demand strict compliance in the future. No consent or waiver, express
or implied, to or of any breach or default in the performance of any obligation
hereunder, shall constitute a consent or waiver to or of any other breach or
default in the performance of the same or any other obligation hereunder. No
term or provision of the Agreement may be waived unless such waiver is in
writing and signed by the party against whom such waiver is sought to be
enforced.
15. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties hereto with respect to the subject matter contemplated
herein and supersedes all prior agreements, whether written or oral, between the
parties, relating to the subject matter hereof. This Agreement shall not be
modified except in writing executed by all parties hereto.
16. Captions. Titles or captions of paragraphs contained in this Agreement
are inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provision hereof.
17. Counterparts. For the purpose of facilitating proving this Agreement,
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts. Each counterpart shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.
March 12, 1999 Original Number 2 of 3
Page 6
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
date first above written.
Please execute the extra copy of this letter Agreement in the space
below and return it to the undersigned at the address set forth above to confirm
your understanding and acceptance of the agreements contained herein.
Very truly yours,
ALEC HOLDINGS, INC.
By: /s/ Charles E. Robinson
--------------------------------------
Name: Charles E. Robinson
Title: Chairman, President & CEO
ALEC ACQUISITION CORPORATION
By: /s/ Charles E. Robinson
--------------------------------------
Name: Charles E. Robinson
Title: Chairman, President & CEO
Accepted and agreed to
/s/ Wesley E. Carson
- ----------------------------
Wesley E. Carson
March 12, 1999 Original Number 2 of 3
Page 7
<PAGE>
EXHIBIT 10.7
STRICTLY CONFIDENTIAL
ALEC HOLDINGS, INC.
510 L STREET, SUITE 500
ANCHORAGE, AK 99501
April 10, 1999
Mr. Michael E. Holmstrom
510 L Street, Suite 500
Anchorage, Alaska 99501
Re: Employment Agreement
Dear Mr. Holmstrom:
This letter agreement (this "Agreement") sets forth the terms and
conditions of your employment with ALEC Holdings, Inc. ("Holdings") and its
wholly-owned subsidiary, Alaska Communications Systems Holdings, Inc.
("Subsidiary"), effective as of the first to occur of the date of consummation
of (a) the transactions contemplated by the Purchase Agreement, by and among the
Subsidiary, CenturyTel of the Northwest, Inc. and CenturyTel Wireless, Inc.,
dated as of August 14, 1998 and (b) the transactions contemplated by the Asset
Purchase Agreement, by and among Alaska Communications Systems, Inc. and the
Municipality of Anchorage, dated as of October 20, 1998 (the "Effective Date");
provided that, if neither transaction is consummated, this Agreement shall be
void ab initio. For purposes of this Agreement, and except where the term
"Holdings" or "Subsidiary" is specifically used, Holdings and the Subsidiary
shall be collectively referred to as the "Company" and all obligations of the
Company as set forth herein shall be the joint and several obligations of
Holdings and the Subsidiary.
1. Employment and Services. Holdings hereby employs you as Senior Vice
President and Chief Financial Officer of Holdings and Subsidiary hereby employs
you as Senior Vice President and Chief Financial Officer of Subsidiary, for the
period beginning on the Effective Date and ending upon termination pursuant to
paragraph 4 (the "Employment Period"). During the Employment Period, you shall
render such services to the Company and its affiliates and subsidiaries as the
Boards of Directors of Holdings and the Subsidiary shall reasonably designate
from time to time, and you shall devote your best efforts and full time and
attention to the business of the Company.
2. Compensation. The Company shall pay you an annual base salary ("Annual
Base Salary") of $200,000 during the first year of the Employment Period,
subject to annual review in each year of the Employment Period thereafter (for
any partial year during the Employment Period, the Annual Base Salary shall be
prorated based on the number of days during such year on which you are employed
by the Company). Your Annual Base Salary may be increased in years following the
first year of employment but may not be decreased. As used herein, the term
"Annual Base Salary" refers to the Annual Base Salary as so increased. Such
Annual Base Salary shall be payable in installments in accordance with the
Company's regular
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payroll practices.
In addition, you will be eligible to receive an annual bonus to be
awarded ninety (90) days after the end of each fiscal year, to be paid as soon
as practicable but not later than one hundred twenty (120) days after the end of
the fiscal year. In order to determine the amount of such bonus, the Company,
acting in good faith, shall determine appropriate business targets for each
fiscal year and your annual bonus shall be based upon attainment of such
targets. As a benchmark for such bonuses, the Company agrees that if the Company
attains the mutually determined business targets, you shall receive a bonus
equal to fifty (50%) of your Annual Base Salary as in effect with respect to any
such fiscal year; and in the event that the Company exceeds or does not exceed
the business targets, there shall be appropriate adjustments in the amount of
your annual bonus. The determination of appropriate business targets shall take
place not later than sixty (60) days subsequent to the commencement of the
Company's fiscal year.
3. Benefits. During the Employment Period, you shall be entitled to
participate in the Company's fringe benefit plans, subject to and in accordance
with applicable eligibility requirements, such as life and disability insurance
plans and all other benefit plans (other than severance plans or arrangements)
generally available to the Company's executive officers, including relocation of
personal residence benefits to the extent such relocation request would
otherwise constitute Good Reason within the meaning of Section 4, in accordance
with the terms of any such plans or policies as in effect from time to time
during the Employment Period. In addition, the Company will reimburse your
reasonable out-of-pocket expenses incurred in connection with the performance of
your services hereunder, in each case consistent with Company policy. In
addition, during the Employment Period, you shall be entitled to annual vacation
of not less than two (2) weeks.
4. Termination and Severance. The Employment Period shall terminate on the
first to occur of (i) ninety (90) days following written notice by you to the
Company of your resignation without Good Reason, (it being understood that you
will continue to perform your services hereunder during such ninety (90) day
period), (ii) thirty (30) days following written notice by you to the Company of
your resignation with Good Reason during the Employment Period or following a
Change in Control (it being understood that you will continue to perform your
services hereunder during such thirty (30) day period), (iii) your death or
Disability, (iv) a vote of the Board of Holdings or the Subsidiary directing
such termination for Cause, (v) a vote of the Board of Holdings or the
Subsidiary directing such termination without Cause, or (vi) the second
anniversary of the Effective Date (the "Scheduled Expiration Date"); provided,
however, that the Scheduled Expiration Date shall be automatically extended for
successive one-year periods unless, at least ninety (90) days prior to the
then-current Scheduled Expiration Date, either the Company or you shall give
written notice to the other of an intention not to extend the Employment Period.
In the event of termination of the Employment Period pursuant to clause (ii) or
(v) above, the Company shall concurrently with such termination make a lump-sum
payment to you equal to the sum of (x) one times your Annual Base Salary plus
(y) in the event such termination occurs on or after December 31, 1999, one
times your most recent annual bonus payment, if any, paid pursuant to Section 2
hereof. In addition, you shall be entitled to reimbursement of the cost of
continuing your health insurance coverage under COBRA for the twelve (12) month
period following such a termination. Except as otherwise set forth in this
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<PAGE>
paragraph 4 or pursuant to the terms of employee benefit plans in which you
participate pursuant to paragraph 3, you shall not be entitled to any
compensation or other payment from the Company in connection with termination of
your employment hereunder; however, in the event that the Company shall give you
notice of its intention not to extend the Employment Period, you shall receive
twelve (12) months of your Annual Base Salary, as well as reimbursement for the
cost of continuing your health insurance coverage under COBRA for such period,
in a lump sum within thirty (30) days of the expiration of the then Employment
Period.
For purpose of this agreement, the following definitions will apply:
(a) "Good Reason" shall mean: (i) the assignment of you by the Company to any
duties materially inconsistent with, or a material diminution of, your position,
including duties, title, offices, or responsibilities; or (ii) the transfer,
without your concurrence, of your principal place of employment to a geographic
location more than 100 miles from both your current personal residence and from
the location of your current principal place of employment (but shall not
include any transfer to Anchorage, Alaska after December 31, 1999); (b) "Cause"
shall mean: (i) your willful failure to comply with lawful directions of the
Boards of the Company after written notice; (ii) fraud, misappropriation or
embezzlement by you; or (iii) a material breach of this Agreement (other than
due to physical or mental illness) that is not cured within thirty (30) days
after receiving written notice from either the Board of the Company or of the
Subsidiary of your specific failure to perform your duties; (c) "Change in
Control" shall mean: (i) the acquisition by any person or group (as that term is
used in Regulation 13D under the Securities Exchange Act of 1934, as amended),
other than Fox Paine & Company, LLC or any of its affiliates, of beneficial
ownership of a majority or more of the Company's outstanding voting securities;
or (ii) any sale, lease, exchange or other transfer in one transaction or a
series of selected transactions, other than a transfer to an entity which is
majority controlled by Fox Paine & Company, LLC or any affiliate thereof or an
entity with substantially the same equity holders as immediately prior to such
transfer, of all or substantially all of the assets of the Company or its
operating subsidiaries (taken together), or any plan for the liquidation or
dissolution of the Company; and (d) "Disability" shall mean that for a period of
six (6) consecutive months in any twelve (12) month period you are incapable of
substantially fulfilling the duties of your positions as set forth in paragraph
1 because of physical, mental or emotional incapacity resulting from injury,
sickness or disease. Any question as to the existence or extent of the
Disability upon which you and the Company cannot agree shall be determined by a
qualified, independent physician selected by the Company. The determination of
any such physician shall be final and conclusive for all purposes; provided,
however, that you or your legal representatives shall have the right to present
to such physician such information as to such Disability as you or they may deem
appropriate, including the opinion of your personal physician.
5. Confidential Information. You acknowledge that information obtained by
you while employed by the Company or any affiliate thereof (including as a
consultant to Fox Paine & Company, LLC or as an employee of LEC Consulting
Corporation) concerning the business or affairs of (i) the Company, its
affiliates and subsidiaries or (ii) any enterprise which is the subject of an
actual or potential transaction, including, without limitation, the proposed
divestitures by GTE Corp. and US West, Inc. (a "Potential Transaction"),
considered, evaluated, reviewed or otherwise made known to Fox Paine & Company,
LLC, the Company, its affiliates or subsidiaries, or you ("Confidential
Information") is the property of the Company. You shall not, without the
3
<PAGE>
prior written consent of the Boards of the Company, disclose to any person or
use for your own account any Confidential Information except (i) in the normal
course of performance of your duties hereunder, (ii) to the extent necessary to
comply with applicable laws, or (iii) to the extent that such information
becomes generally known to and available for use by the public other than as a
result of your acts or omissions to act. Upon termination of your employment or
at the request of the Board of the Company or of the Subsidiary at any time, you
shall deliver to the respective Boards all documents containing Confidential
Information or relating to the business or affairs of the Company that you may
then possess or have under your control.
6. Non-Competition; Non-Solicitation.
a. Non-Competition. You acknowledge that you are and will be in
possession of Confidential Information and that your services are of unique and
great value to the Company. Accordingly, from the Effective Date until the
expiration of the period ending twelve (12) months from the effective date of
the termination of your employment with the Company or its affiliated companies
(the "Non-Compete Period"), you shall not directly or indirectly own, invest
(equity or debt) in, manage, control, participate in, consult with, advise,
render services to, or in any manner engage in, or be connected as an employee,
officer, partner, director, consultant or otherwise with, (i) any enterprise
engaged in the provision of local exchange or wireless telecommunications
services in any state in which (A) the Company, or (B) any entity which is a
party to an acquisition agreement with the Company, is engaged in the provision
of local exchange or wireless telecommunications services, or (ii) any
enterprise which is the subject of a Potential Transaction made known to the
Company, or you during or at any time prior to the termination of this
Agreement, is engaged in the provision of local exchange or wireless
telecommunications services, (a "Competitive Business"). Nothing herein shall
prohibit you from being a passive owner of not more than one percent (1%) of any
publicly-traded class of capital stock of any entity engaged in a Competitive
Business.
b. Non-Solicitation. During the Non-Compete Period, you shall not
directly or indirectly induce or attempt to induce any employee of the Company
or its affiliates or subsidiaries to terminate, or in any way interfere with,
the relationship between the Company or its affiliates or subsidiaries and any
employee thereof, nor shall you directly or indirectly solicit or attempt to
solicit business from any customer or supplier of the Company or its affiliates
or subsidiaries.
c. Scope of Restriction. If, at the time of enforcement of this
paragraph 6, a court shall hold that the duration, scope or area restrictions
stated herein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area.
7. Survival. Any termination of your employment or of this Agreement shall
have no effect on the continuing operation of Section 5 or 6 for the periods
specified therein.
8. Indemnification. The Company agrees to indemnify you and hold you
harmless from, any and all claims arising from or relating to your status as an
employee, officer,
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director or agent of the Company, its affiliates, or subsidiaries, to the
fullest extent permitted by Delaware law other than claims arising from your
gross negligence.
9. Waiver of Claims. You agree as a condition to your receipt of any
termination or severance benefits pursuant to Section 4 hereof, you will agree
to waive, discharge and release any and all claims, demands and causes of
action, whether known or unknown, against the Company, its affiliates and
subsidiaries, and their respective current and former directors, officers,
employees, attorneys and agents arising out of, connected with or incidental to
your employment or other dealings with the Company, its affiliates or
subsidiaries, which you or anyone acting on your behalf might otherwise have had
or asserted and any claim to any compensation or benefits from your employment
with the Company or its affiliates (other than pursuant to the terms of this
Agreement or of any employee benefit plans set forth in paragraph 3 hereof).
10. Governing Law. This Agreement and all questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
and determined in accordance with the internal law, and not the law of
conflicts, of the State of Delaware.
11. Notices, All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given, if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address set forth herein, or such other address as may
hereafter be furnished to the other party by like notice. Notice or
communication hereunder shall be deemed to have been received on the date
delivered to or received at the premises of the addressee if delivered other
than by mail, and in the case of mail, upon the depositing of the same in the
United States mail as above stated (as evidenced, in the case of registered or
certified mail, by the date noted on the return receipt.) Notices shall be
addressed as follows:
If to the Executive: Mr. Michael E. Holmstrom
510 L Street, Suite 500
Anchorage, AK 99501
If to the Company: ALEC Holdings, Inc.
510 L Street, Suite 500
Anchorage, AK 99501
Attention: Chairman of the Board
with a copy to: Fox Paine & Company, LLC
950 Tower Lane
Suite 1950
Foster City, CA 94404
Attention: W. Dexter Paine
12. Separability Clause. Any part, provision, representation or warranty
of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
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13. Successors and Assigns; Assignment of Agreement. This Agreement shall
bind and inure to the benefit of and be enforceable by the parties hereto and
the respective successors and assigns of the parties hereto. As used in this
Agreement, "Company," "Holdings" and the "Subsidiary" shall mean the Company,
Holdings and the Subsidiary as hereinbefore defined and any successors to their
businesses and/or assets as aforesaid which assume and agree to perform this
Agreement by operation of law, or otherwise. This Agreement is personal to you
and without the prior written consent of the Company shall not be assignable by
you otherwise than by will or the laws of descent and distribution.
14. Waiver. The failure of any party to insist upon strict performance of
a covenant hereunder or of any obligation hereunder, irrespective of the length
of time for which such failure continues, shall not be a waiver of such party's
right to demand strict compliance in the future. No consent or waiver, express
or implied, to or of any breach or default in the performance of any obligation
hereunder, shall constitute a consent or waiver to or of any other breach or
default in the performance of the same or any other obligation hereunder. No
term or provision of the Agreement may be waived unless such waiver is in
writing and signed by the party against whom such waiver is sought to be
enforced.
15. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties hereto with respect to the subject matter contemplated
herein and supersedes all prior agreements, whether written or oral, between the
parties, relating to the subject matter hereof. This Agreement shall not be
modified except in writing executed by all parties hereto.
16. Captions. Titles or captions of paragraphs contained in this Agreement
are inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provision hereof.
17. Counterparts. For the purpose of facilitating proving this Agreement,
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts. Each counterpart shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
date first above written.
Please execute the extra copy of this letter Agreement in the space
below and return it to the undersigned at the address set forth above to confirm
your understanding and acceptance of the agreements contained herein.
Very truly yours,
ALEC HOLDINGS, INC.
By: /s/ Wesley E. Carson
-------------------------------------
Name: Wesley E. Carson
Title: Executive Vice President
ALASKA COMMUNICATIONS SYSTEMS
HOLDINGS, INC.
By: /s/ Wesley E. Carson
-------------------------------------
Name: Wesley E. Carson
Title: Executive Vice President
Accepted and agreed to:
/s/ Michael E. Holmstrom
- ----------------------------
Michael E. Holmstrom
7
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ADDENDUM
The letter dated January 14, 1999 to you from Wesley E. Carson, offering
you employment with Alaska Communications Systems, Inc. (the "Offer Letter"), is
superseded by the Employment Agreement. In order to preserve certain benefits
and obligations that were set forth in the Offer Letter, this Addendum hereby
incorporates the following provisions in the Employment Agreement:
1. You will be eligible to participate in Holdings' stock option grant
program. Subject to closing of the transactions referenced in the Employment
Agreements and approval of the Board of Directors, you will be granted options
for approximately 200,000 shares of stock, assuming a strike price of $6.00.
2. Your relocation benefits will include temporary use of a Company leased
apartment in Anchorage, per diem while in temporary living status, reasonable
travel to and from the Virgin Islands prior to relocation to attend to personal
business, movement of household goods and personal effects, and home purchase
assistance. Further, in the event you are obligated to make lease payments on
housing in the Virgin Islands after June 30, 1999, Holdings will reimburse you
for your actual lease costs to a maximum of $7,500.
3. In connection with the special lump-sum bonus which was paid to you in
the gross amount of $50,000, you agree that if you voluntarily resign from your
position prior to completing 12 months of employment, you will promptly repay
the Company an amount equal to $50,000 less $4,167 for each full month of
employment.
8
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EXHIBIT 10.8
STRICTLY CONFIDENTIAL
ALEC ACQUISITION CORPORATION
100 W. 11Th STREET
VANCOUVER, WA 98660
February 6, 1999
Mr. Michael L. Schuh
215 NE 299th Street
Ridgefield, Washington 98642
Re: Employment Agreement
Dear Mr. Schuh:
This letter agreement (this "Agreement") sets forth the terms and
conditions of your employment with ALEC Acquisition Corporation ("ALEC" or the
"Company"), effective as of the first to occur of the date of consummation of
(a) the transactions contemplated by the Purchase Agreement, by and among ALEC
Acquisition Sub Corp, which is a subsidiary of ALEC, CenturyTel of the
Northwest, Inc. and CenturyTel Wireless, Inc., dated as of August 14, 1998 and
(b) the transactions contemplated by the Asset Purchase Agreement, by and among
Alaska Communications Systems, Inc. ("ACS") and the Municipality of Anchorage,
dated as of October 20, 1998 (the "Effective Date"); provided that, if neither
transaction is consummated, this Agreement shall be void ab initio
1. Employment and Services. ALEC hereby employs you as Vice President of
Information Technology and Chief Information Officer, for the period beginning
on the Effective Date and ending upon termination pursuant to paragraph 4 (the
"Employment Period"). During the Employment Period, you shall render such
services to the Company and its affiliates and subsidiaries as the Boards of
Directors of ALEC shall reasonably designate from time to time, and you shall
devote your best efforts and full time and attention to the business of the
Company.
2. Compensation. The Company shall pay you an annual base salary ("Annual
Base Salary") of $130,000 during the first year of the Employment Period,
subject to annual review in each year of the Employment Period thereafter (for
any partial year during the Employment Period, the Annual Base Salary shall be
prorated based on the number of days during such year on which you are employed
by the Company). Your Annual Base Salary may be increased in years following the
first year of employment but may not be decreased. As used herein, the term
"Annual Base Salary" refers to the Annual Base Salary as so increased. Such
Annual Base Salary shall be payable in installments in accordance with the
Company's regular payroll practices.
In addition, you will be eligible to receive an annual bonus to be
awarded ninety (90) days after the end of each fiscal year, to be paid as soon
as practicable but not later than one hundred twenty (120) days after the end of
the fiscal year. In order to determine the amount of such bonus, the Company,
acting in good faith, shall determine appropriate business targets for each
fiscal year and your annual bonus shall be based upon attainment of such
targets. As a
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benchmark for such bonuses, the Company agrees that if the Company attains the
mutually determined business targets, you shall receive a bonus equal to forty
percent (40%) of your Annual Base Salary as in effect with respect to any such
fiscal year, and in the event that the Company exceeds or does not exceed the
business targets, there shall be appropriate adjustments in the amount of your
annual bonus. The determination of appropriate business targets shall take place
not later than sixty (60) days subsequent to the commencement of the Company's
fiscal year.
The Company, acting in good faith, shall also establish a special bonus
program for you based upon milestones and timeframes ("Implementation
Timelines") for the scheduled installation of the information technology systems
set forth on Schedule A, attached hereto. You will be paid the bonus amount
established for each milestone after satisfying the acceptance criteria
associated with the Implementation Timelines, within thirty (30) days following
acceptance by the Company.
3. Benefits. During the Employment Period, you shall be entitled to
participate in the Company's fringe benefit plans, subject to and in accordance
with applicable eligibility requirements, such as life and disability insurance
plans and all other benefit plans (other than severance plans or arrangements)
generally available to the Company's executive officers, including relocation of
personal residence benefits and stock options plan, in accordance with the terms
of any such plans or policies as in effect from time to time during the
Employment Period. In addition, the Company will reimburse your reasonable
out-of-pocket expenses incurred in connection with the performance of your
services hereunder, in each case consistent with Company policy. In addition,
during the Employment Period, you shall be entitled to annual vacation of not
less than two (2) weeks.
In lieu of relocation benefits under the applicable policy, you may
elect to have company-paid housing provided in Anchorage, Alaska during the
Employment Period. The selection of such housing shall be subject to Company
approval and will be consistent with housing provided to others similarly
situated.
4. Termination and Severance. The Employment Period shall terminate on the
first to occur of (i) ninety (90) days following written notice by you to the
Company of your resignation without Good Reason, (it being understood that you
will continue to perform your services hereunder during such ninety (90) day
period), (ii) thirty (30) days following written notice by you to the Company of
your resignation with Goad Reason during the Employment Period or following a
Change in Control (it being understood that you will continue to perform your
services hereunder during such thirty (30) day period), (iii) your death or
Disability, (iv) a vote of the Board of ALEC directing such termination for
Cause, (v) a vote of the Board of ALEC directing such termination without Cause,
or (vi) the second anniversary of the Effective Date (the "Scheduled Expiration
Date"); provided, however, that if termination of employment has not been
effected on or before the Scheduled Expiration Date, employment shall thereafter
continue at will ("At-will Period").
In the event of termination of the Employment Period pursuant to
clause (ii) or (v) above, the Company shall concurrently with such termination
make a lump-sum payment to you equal to the sum of (x) one times your Annual
Base Salary plus (y) in the event such termination
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occurs on or after December 31, 1999, one times your most recent annual bonus
payment, if any, paid pursuant to paragraph 2 hereof. In addition, you shall be
entitled to reimbursement of the cost of continuing your health insurance
coverage under COBRA for the twelve (12) month period following such a
termination. Except as otherwise set forth in this paragraph 4 or pursuant to
the terms of employee benefit plans in which you participate pursuant to
paragraph 3, you shall not be entitled to any compensation or other payment from
the Company in connection with termination of your employment hereunder.
However, in the event you elect to resign effective as of the Scheduled
Expiration Date, after having given not less than thirty (30) days written
notice, or, if after you successfully meet the Implementation Timelines set
forth in Schedule A you resign upon ninety (90) days written notice, you shall
receive six (6) months of your Annual Base Salary, as well as reimbursement for
the cost of continuing your health insurance coverage under COBRA for such
period, in a lump sum within thirty (30) days after your termination from
employment. If you elect to relocate to the lower 48 states in connection with
such voluntary resignation, or following a termination of employment pursuant to
clause (ii) or (v), the Company will also provide for relocation of personal and
household goods, subject to applicable limits set forth in the Company's
relocation policy, and travel for you and your household to your new residence
in the lower 48 states.
For purpose of this agreement, the following definitions will apply:
(a) "Good Reason" shall mean: (i) the assignment of you by the Company to any
duties materially inconsistent with, or a material diminution of, your position,
including duties, title, offices, or responsibilities; or (ii) the transfer,
without your concurrence, of your principal place of employment to a geographic
location more than 100 miles from both your current personal residence and from
the location of your current principal place of employment (but shall not
include any transfer to Anchorage, Alaska); (b) "Cause" shall mean: (i) your
willful failure to comply with lawful directions of the Boards of the Company
after written notice; (ii) fraud, misappropriation or embezzlement by you; or
(iii) a material breach of this Agreement (other than due to physical or mental
illness) that is not cured within thirty (30) days after receiving written
notice from either the Board of the Company or of the Subsidiary of your
specific failure to perform your duties; (c) "Change in Control" shall mean: (i)
the acquisition by any person or group (as that term is used in Regulation 13D
under the Securities Exchange Act of 1934, as amended), other than Fox Paine &
Company, LLC or any of its affiliates, of beneficial ownership of a majority or
more of the Company's outstanding voting securities; or (ii) any sale, lease,
exchange or other transfer in one transaction or a series of selected
transactions, other than a transfer to an entity which is majority controlled by
Fox Paine & Company, LLC or any affiliate thereof or an entity with
substantially the same equity holders as immediately prior to such transfer, of
all or substantially all of the assets of the Company or its operating
subsidiaries (taken together), or any plan for the liquidation or dissolution of
the Company; and (d) "Disability" shall mean that for a period of six (6)
consecutive months in any twelve (12) month period you are incapable of
substantially fulfilling the duties of your positions as set forth in paragraph
1 because of physical, mental or emotional incapacity resulting from injury,
sickness or disease. Any question as to the existence or extent of the
Disability upon which you and the Company cannot agree shall be determined by a
qualified, independent physician selected by the Company. The determination of
any such physician shall be final and conclusive for all purposes; provided,
however, that you or your legal representatives shall have the right to present
to such physician
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<PAGE>
such information as to such Disability as you or they may deem appropriate,
including the opinion of your personal physician.
5. Confidential Information. You acknowledge that information obtained by
you while employed by the Company or any affiliate thereof (including as a
consultant to Fox Paine & Company, LLC or as an employee of LEC Consulting
Corporation) concerning the business or affairs of (i) the Company, its
affiliates and subsidiaries or (ii) any enterprise which is the subject of an
actual or potential transaction (e.g., merger, acquisition, joint venture),
including, without limitation, the proposed divestitures by GTE Corp. and US
West, Inc. (a "Potential Transaction"), considered, evaluated, reviewed or
otherwise made known to Fox Paine & Company, LLC, the Company, its affiliates or
subsidiaries, or you ("Confidential Information") is the property of the
Company. You shall not, without the prior written consent of the Boards of the
Company, disclose to any person or use for your own account any Confidential
Information except (i) in the normal course of performance of your duties
hereunder, (ii) to the extent necessary to comply with applicable laws, or (iii)
to the extent that such information becomes generally known to and available for
use by the public other than as a result of your acts or omissions to act. Upon
termination of your employment or at the request of the Board of the Company or
of the Subsidiary at any time, you shall deliver to the respective Boards all
documents containing Confidential Information or relating to the business or
affairs of the Company that you may then possess or have under your control.
6. Non-Competition; Non-Solicitation.
a. Non-Competition. You acknowledge that you are and will be in
possession of Confidential Information and that your services are of unique and
great value to the Company. Accordingly, from the Effective Date until the
expiration of the period ending twelve (12) months form the effective date of
the termination of your employment with the Company or its affiliated companies
(the "Non-Compete Period"), you shall not, without the prior written consent of
the Company, directly or indirectly own, invest (equity or debt) in, manage,
control, participate in, consult with, advise, render services to, or in any
manner engage in, or be connected as an employee, officer, partner, director,
consultant or otherwise with, (i) any enterprise engaged in the provision of
telecommunications services in the State of Alasks, or (ii) any entity which is
engaged in the provision of local exchange or wireless telecommunications
services in competition with the Company in any of the Company's service
territories (a "Competitive Business"). Nothing herein shall prohibit you from
being a passive owner of not more than one percent (1%) of any publicly-traded
class of capital stock of any entity engaged in a Competitive Business.
b. Non-Solicitation. During the Non-Compete Period, you shall not
directly or indirectly induce or attempt to induce any employee of the Company
or its affiliates or subsidiaries to terminate, or in any way interfere with,
the relationship between the Company or its affiliates or subsidiaries and any
employee thereof, nor shall you directly or indirectly solicit or attempt to
solicit business from any customer of the Company or its affiliates or
subsidiaries. For purposes of this paragraph, a "customer" shall mean an entity
to which the Company provides products or services in the State of Alaska or in
any other service territory of the Company, and
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"business" is limited to the provision of products and services within Alaska or
such other service territory of the Company.
c. Scope of Restriction. If, at the time of enforcement of this
paragraph 6, a court shall hold that the duration, scope or area restrictions
stated herein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area.
7. Survival. Any termination of your employment or of this Agreement shall
have no effect on the continuing operation of Section 5 or 6 for the periods
specified therein.
8. Indemnification. The Company agrees to indemnify you and hold you
harmless from, any and all claims arising from or relating to your status as an
employee, officer, director or agent of the Company, its affiliates, or
subsidiaries, to the fullest extent permitted by Delaware law other than claims
arising from your gross negligence.
9. Waiver of Claims. You agree as a condition to your receipt of any
termination or severance benefits pursuant to Section 4 hereof, you will agree
to waive, discharge and release any and all claims, demands and causes of
action, whether know or unknown, against the Company, its affiliates and
subsidiaries, and their respective current and former directors, officers,
employees, attorneys and agents arising out of, connected with or incidental to
your employment or other dealings with the Company, its affiliates or
subsidiaries, which you or anyone acting on your behalf might otherwise have had
or asserted and any claim to any compensation or benefits from your employment
with the Company or its affiliates (other than pursuant to the terms of this
Agreement or of any employee benefit plans set forth in paragraph 3 hereof).
10. Governing Law. This Agreement and all questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
and determined in accordance with the internal law, and not the law of
conflicts, of the State of Delaware. If any action at law or in equity is
commenced to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover reasonable attorney's fees, costs and
disbursements from the non-prevailing party, in addition to any other relief to
which the prevailing party may be entitled, as determined by the court.
11. Notices. All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given, if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address set forth herein, or such other address as may
hereafter be furnished to the other party by like notice. Notice or
communication hereunder shall be deemed to have been received on the date
delivered to or received at the premises of the addressee if delivered other
than by mail, and in the case of mail, upon the depositing of the same in the
United States mail as above stated (as evidenced, in the case of registered or
certified mail, by the date noted on the return receipt.) Notices shall be
addressed as follows:
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If to the Executive: Mr. Michael L. Schuh
215 NE 299th Street
Ridgefield, Washington 98642
If to the Company: ALEC Acquisition Corporation
100 W. 11th Street
Vancouver, WA 98660
Attention: Vice President, Human
Resources
12. Separability Clause. Any part, provision, representation or warranty
of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
13. Successors and Assigns; Assignment of Agreement. This Agreement shall
bind and inure to the benefit of and be enforceable by the parties hereto and
the respective successors and assigns of the parties hereto. As used in this
Agreement, "Company," shall mean the Company, its parent corporation ALEC
Holdings, Inc., and its subsidiaries, and any successors to their businesses
and/or assets as aforesaid which assume and agree to perform this Agreement by
operation of law, or otherwise. This Agreement is personal to you and without
the prior written consent of the Company shall not be assignable by you
otherwise than by will or the laws of descent and distribution.
14. Waiver. The failure of any party to insist upon strict performance of
a covenant hereunder or of any obligation hereunder, irrespective of the length
of time for which such failure continues, shall not be a waiver of such party's
right to demand strict compliance in the future. No consent or waiver, express
or implied, to or of any breach or default in the performance of any obligation
hereunder, shall constitute a consent or waiver to or of any other breach or
default in the performance of the same or any other obligation hereunder. No
term or provision of the Agreement may be waived unless such waiver is in
writing and signed by the party against whom such waiver is sought to be
enforced.
15. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties hereto with respect to the subject matter contemplated
herein and supersedes all prior agreements, whether written or oral, between the
parties, relating to the subject matter hereof. This Agreement shall not be
modified except in writing executed by all parties hereto.
16. Captions. Titles or captions of paragraphs contained in this Agreement
are inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provision hereof.
17. Counterparts. For the purpose of facilitating proving this Agreement,
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts. Each counterpart shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
date first above written.
Please execute the extra copy of this letter Agreement in the space
below and return it to the undersigned at the address set forth above to confirm
your understanding and acceptance of the agreements contained herein.
Very truly yours,
ALEC ACQUISITION CORPORATION
By: /s/ Wesley E. Carson
-------------------------------------
Name: Wesley E. Carson
Title: Executive Vice President
Accepted and agreed to:
/s/ Michael L. Schuh
- -----------------------
Michael L. Schuh
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<PAGE>
SCHEDULE A
Implementation Timelines
Systems to Be Installed & Conditions for Acceptance Deadline Bonus Amount
- --------------------------------------------------- -------- ------------
1. SAP Financial Suite for ATU 03/31/99 $50,000
o Complete transition of Financial Systems support from legacy ATU
environment (FMS) to SAP. FMS system is used only for backup, parallel
processing verifications, and/or incidental functionality.
2. Saville Billing Platform for ATU 06/30/99 $50,000
o Implemented in production such that customer service order processing is
performed, end user customer bills are rendered and payments are supplied
to the new system.
3. Platinum Financial Suite for PTI Alaska Properties 06/30/99 $25,000
o Complete transition of financial systems support from legacy CenturyTel
environment to Platinum SQL. CenturyTel systems are used only for backup,
parallel processing verifications, and/or incidental functionality.
4. Saville Billing Platform for PTI Alaska Properties 08/31/99 $25,000
o Implemented in production such that customer service order processing is
performed, end user customer bills are rendered and payments are supplied
to the new system.
5. New AMA Processing Platform for PTI and ATU 08/31/99 $25,000
o Existing PTI and ATU AMA processing environments are replaced with a
common, Year 2000 compliant solution.
6. New Carrier Access Billing Platform for PTI and ATU 08/31/99 $25,000
o Existing PTI and ATU CABS processing environments are replaced with a
common, Year 2000 compliant solution.
7. Convert MARTENS for PTI to ATU Platform 08/31/99 $25,000
o MARTENS processing for PTI has been transitioned to the ATU operating
platform such that PTI no longer requires CenturyTel transition services.
8. Special Completion Bonus 08/31/99 $100,000
o Successful and timely completion of deliverables set forth in 1 through 7
above.
9. Consolidation of PTI and ATU Financial Systems 123/31/99 $75,000
o Complete transition of ATU and PTI accounting and finance functions to a
common system.
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(a) The Company agrees to work with you in good faith to modify the dates
and/or description of the deliverables set forth above in the event your ability
to meet such dates and/or deliverables is significantly compromised as a result
of (i) conditions imposed by the Alaska Public Utilities Commission in
connection with required approvals to close the transactions, (ii) delayed
closing of one or both of the transactions, or (iii) a failure on the part of
the Company to provide reasonable resources.
(b) Notwithstanding anything in paragraph 4 of this Employment Agreement
to the contrary, if prior to August 31, 1999 or such other date as may be
established for the Special Completion Bonus pursuant to paragraph (a) above,
you resign with Good Reason pursuant to clause (ii) or your employment is
terminated by a vote of the Board of ALEC directing such termination without
Cause pursuant to clause (v), then you shall received, in addition to any
severance due you under paragraph 4, a lump-sum payment in the gross amount of
$75,000. Such payment shall be made within thirty (30) days following your
separation from employment.
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SCHEDULE B
Employment Letter
This shall confirm the Company's commitment with regard to the level of
your participation in regard to the stock options plan, as set forth in your
offer letter.
10
<PAGE>
[LETTERHEAD OF LEC CONSULTING CORPORATION]
November 19, 1998
Michael L. Schuh
215 NE 299th Street
Ridgefield, WA 98642
Dear Michael:
I am pleased to offer you the position of Vice President, Information Technology
& Chief Information Officer with LEC Consulting Corporation ("LEC Consulting")
at an annual salary of $130,000. As a LEC Consulting employee you will also have
a target annual bonus equal to 40 percent of your annual base salary. Your bonus
for 1998 performance will be prorated based on 1998 service. In this position,
you will report directly to James H. Huesgen. The effective date of your
employment is November 1, 1998.
As you are aware, your primary work location will be in Anchorage, Alaska. The
Company will provide you with temporary accommodations in Anchorage and cover
reasonable expenses until such time as you relocate. You will be eligible for
the Company's executive relocation benefits in connection with your move to
Alaska.
At this time, you are eligible to participate in LEC Consulting's medical,
dental, vision, life and AD&D insurance and disability income replacement plans.
You will also be considered eligible for future benefits as adopted in
accordance with the provisions of the respective plans.
A subsidiary of ALEC Aquisition Corporation ("ALEC") has entered into an
agreement to purchase the Alaska Operations of Century Telephone and an
affiliated subsidiary was recently selected as the successful bidder for
Anchorage Telephone Utility. It is anticipated that one or both of these
transactions will close during the first quarter of 1999. Your employment will
be transferred to ALEC upon closing of the first transaction. At that time,
elements of your compensation and benefits package that are subject to ALEC
Board of Director's approval may be reviewed and, if appropriate, amended to
coincide with ALEC programs. While compensation and benefits programs do change
from time to time, ALEC will strive to give you reasonable notice of any
impending change.
As an officer of ALEC, you will be eligible to participate in a stock option
program, which is being presented to the board of directors for approval.
Although certain features of the plan are still being finalized, you can assume
that at a strike price of $6.06 per share, your grant of options will be not
less than 50,000 shares. In addition, in recognition of the strategic importance
to the company of developing the information technology infrastructure, we will
ask the board to approve a special bonus plan to reward you for the completion
of key project milestones. We will communicate to you with regard to both the
stock options and the special bonus plan as soon as we have final board
approval.
As you know, there are always uncertainties associated with starting a business
and, though we have confidence in our ability to succeed, there are no
guarantees with respect to your employment, e.g. business falters, performance
is not satisfactory, etc. As a result, I feel a responsibility to advise you
that both LEC Consulting and ALEC are "at will" employers. This means either you
or the company may terminate the employment relationship, with or without cause.
<PAGE>
Michael L. Schuh
November 19, 1998 Offer Letter
Page 2
All that being said, we appreciate your willingness to embark on this business
venture with us. Our business plans are challenging and exciting, and the next
several months will be especially demanding on all of us. We need your
creativity, energy and professionalism to help us build this business. We look
forward to having you join the team!
Please indicate your acceptance of these terms by signing below and returning
one copy of this letter to me. I may be reached at (360) 993-5150 if you have
any questions.
Sincerely,
/s/ Priscilla B. Andres
Priscilla B. Andres
Director, Human Resources
Cc: J. H. Huesgen
W. E. Carson
Employee File
Accepted: /s/ Michael Schuh Date: 11/18/98
---------------------------------------- ------------------
<PAGE>
EXHIBIT 10.9
STRICTLY CONFIDENTIAL
ALASKA COMMUNICATIONS SYSTEMS
HOLDINGS, INC.
510 L. STREET, SUITE 500
ANCHORAGE, AK 99501
April 8, 1999
Mr. Dean A. Ryland
311 Monterey Way
Vancouver, Washington 98661
Re: Employment Agreement
Dear Mr. Ryland:
This letter agreement (this "Agreement") sets forth the terms and
conditions of your employment with Alaska Communications Systems Holdings, Inc.
("ACSHI" or the "Company"), a wholly-owned subsidiary of ALEC Holdings, Inc.
("Holdings"), effective as of the first to occur of the date of consummation of
(a) the transactions contemplated by the Purchase Agreement, by and among ALEC
Acquisition Sub Corp, which is a subsidiary of ACSHI, CenturyTel of the
Northwest, Inc. and CenturyTel Wireless, Inc., dated as of August 14, 1998 and
(b) the transactions contemplated by the Asset Purchase Agreement, by and among
Alaska Communications Systems, Inc. ("ACS") and the Municipality of Anchorage,
dated as of October 20, 1998 (the "Effective Date"), provided that, if neither
transaction is consummated, this Agreement shall be void ab initio.
1. Employment and Services. ACSHI hereby employs you as Vice President and
Controller, for the period beginning on the Effective Date and ending upon
termination pursuant to paragraph 4 (the "Employment Period"). During the
Employment Period, you shall render such services to the Company and its
affiliates and subsidiaries as the Board of Directors of ACSHI shall reasonably
designate from time to time, and you shall devote your best efforts and full
time and attention to the business of the Company.
2. Compensation. The Company shall pay you an annual base salary ("Annual
Base Salary") of $130,000 during the first year of the Employment Period,
subject to annual review in each year of the Employment Period thereafter (for
any partial year during the Employment Period, the Annual Base Salary shall be
prorated based on the number of days during such year on which you are employed
by the Company). Your Annual Base Salary may be increased in years following the
first year of employment but may not be decreased. As used herein, the term
"Annual Base Salary" refers to the Annual Base Salary as so increased. Such
Annual Base Salary shall be payable in installments in accordance with the
Company's regular payroll practices.
In addition, you will be eligible to receive an annual bonus to be
awarded ninety (90) days after the end of each fiscal year, to be paid as soon
as practicable but not later than one
1
<PAGE>
hundred twenty (120) days after the end of the fiscal year. In order to
determine the amount of such bonus, the Company, acting in good faith, shall
determine appropriate business targets for each fiscal year and your annual
bonus shall be based upon attainment of such targets. As a benchmark for such
bonuses, the Company agrees that if the Company attains the mutually determined
business targets, you shall receive a bonus equal to thirty percent (30%) of
your Annual Base Salary as in effect with respect to any such fiscal year, and
in the event that the Company exceeds or does not exceed the business targets,
there shall be appropriate adjustments in the amount of your annual bonus. The
determination of appropriate business targets shall take place not later than
sixty (60) days subsequent to the commencement of the Company's fiscal year.
The Company, acting in good faith, shall also establish milestones
and timeframes ("Implementation Timelines") for the successful installation of a
suite of finance and accounting systems for each of the transactions referenced
above, and for a subsequent consolidation of these systems, as set forth in
Schedule A attached hereto. You will be paid the bonus amount established for
each milestone pursuant to Schedule A after satisfying the acceptance criteria
associated with the Implementation Timelines within thirty (30) days following
acceptance by the Company.
3. Benefits. During the Employment Period, you shall be entitled to
participate in the Company's fringe benefit plans, subject to and in accordance
with applicable eligibility requirements, such as life and disability insurance
plans and all other benefit plans (other than severance plans or arrangements)
generally available to the Company's executive officers, including relocation of
personal residence benefits and stock option plans, in accordance with the terms
of any such plans or policies as in effect from time to time during the
Employment Period. In addition, the Company will reimburse your reasonable
out-of-pocket expenses incurred in connection with the performance of your
services hereunder, in each case consistent with Company policy. In addition,
during the Employment Period, you shall be entitled to annual vacation of not
less than two (2) weeks.
In lieu of relocation benefits under the applicable policy, you may
elect to have company-paid housing provided in Anchorage, Alaska during the
Employment Period. The selection of such housing shall be subject to Company
approval and will be consistent with housing provided to others similarly
situated.
4. Termination and Severance. The Employment Period shall terminate on the
first to occur of (i) sixty (60) days following written notice by you to the
Company of your resignation without Good Reason, (it being understood that you
will continue to perform your services hereunder during such sixty (60) day
period), (ii) thirty (30) days following written notice by you to the Company of
your resignation with Good Reason during the Employment Period or following a
Change in Control (it being understood that you will continue to perform your
services hereunder during such thirty (30) day period), (iii) your death or
Disability, (iv) a vote of the Board of ACSHI directing such termination for
Cause, (v) a vote of the Board of ACSHI directing such termination without
Cause, or (vi) the second anniversary of the Effective Date (the "Scheduled
Expiration Date"); provided, however, that if termination of employment has not
been
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<PAGE>
effected on or before the Scheduled Expiration Date, employment thereafter shall
continue at will ("At-Will Period").
In the event of termination of the Employment Period pursuant to
clause (ii) or (v) above, the Company shall concurrently with such termination
make a lump-sum payment to you equal to the sum of (x) one times your Annual
Base Salary plus (y) in the event such termination occurs on or after December
31, 1999, one times the most recent annual bonus payment, if any, paid pursuant
to paragraph 2 hereof. In addition, you shall be entitled to reimbursement of
the cost of continuing your health insurance coverage under COBRA for the twelve
(12) month period following such a termination. Except as otherwise set forth in
this paragraph 4 or pursuant to the terms of employee benefit plans in which you
participate pursuant to paragraph 3, you shall not be entitled to any
compensation or other payment from the Company in connection with termination of
your employment hereunder. However, in the event you elect to resign effective
as of the Scheduled Expiration Date, after having given not less than thirty
(30) days written notice, or, if after you successfully meet the Implementation
Timelines set forth in paragraph 2, you resign upon ninety (90) days written
notice, you shall receive six (6) months of your Annual Base Salary; as well as
reimbursement for the cost of continuing your health insurance coverage under
COBRA for such period, in a lump sum within thirty (30) days after your
termination from employment. If you elect to relocate to the lower 48 states in
connection with such a voluntary resignation, or following a termination of
employment pursuant to clause (ii) or (v), the Company will provide for
relocation of personal and household goods, subject to applicable limits set
forth in the Company's relocation policy, and travel for you and your household
to your new residence in the lower 48 states.
For purpose of this agreement, the following definitions will apply:
(a) "Good Reason" shall mean: (i) the assignment of you by the Company to any
duties materially inconsistent with, or a material diminution of, your position,
including duties, title, offices, or responsibilities; or (ii) the transfer,
without your concurrence, of your principal place of employment to a geographic
location more than 100 miles from both your current personal residence and from
the location of your current principal place of employment (but shall not
include any transfer to Anchorage, Alaska); (b) "Cause" shall mean: (i) your
willful failure to comply with lawful directions of the Boards of the Company
after written notice; (ii) fraud, misappropriation or embezzlement by you; or
(iii) a material breach of this Agreement (other than due to physical or mental
illness) that is not cured within thirty (30) days after receiving written
notice from either the Board of the Company or of the Subsidiary of your
specific failure to perform your duties; (c) "Change in Control" shall mean: (i)
the acquisition by any person or group (as that term is used in Regulation 13D
under the Securities Exchange Act of 1934, as amended), other than Fox Paine &
Company, LLC or any of its affiliates, of beneficial ownership of a majority or
more of the Company's outstanding voting securities; or (ii) any sale, lease,
exchange or other transfer in one transaction or a series of selected
transactions, other than a transfer to an entity which is majority controlled by
Fox Paine & Company, LLC or any affiliate thereof or an entity with
substantially the same equity holders as immediately prior to such transfer, of
all or substantially all of the assets of the Company or its operating
subsidiaries (taken together), or any plan for the liquidation or dissolution of
the Company; and (d) "Disability" shall mean that for a period of six (6)
consecutive months in any twelve (12) month period you are incapable of
substantially fulfilling the duties of your positions as set forth in paragraph
1 because
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of physical, mental or emotional incapacity resulting from injury, sickness or
disease. Any question as to the existence or extent of the Disability upon which
you and the Company cannot agree shall be determined by a qualified, independent
physician selected by the Company. The determination of any such physician shall
be final and conclusive for all purposes; provided, however, that you or your
legal representatives shall have the right to present to such physician such
information as to such Disability as you or they may deem appropriate, including
the opinion of your personal physician.
5. Confidential Information. You acknowledge that information obtained by
you while employed by the Company or any affiliate thereof (including as a
consultant to Fox Paine & Company, LLC or as an employee of LEC Consulting
Corporation) concerning the business or affairs of (i) the Company, its
affiliates and subsidiaries or (ii) any enterprise which is the subject of an
actual or potential transaction, including, without limitation, the proposed
divestitures by GTE Corp. and US West, Inc. (a "Potential Transaction"),
considered, evaluated, reviewed or otherwise made known to Fox Paine & Company,
LLC, the Company, its affiliates or subsidiaries, or you ("Confidential
Information") is the property of the Company. You shall not, without the prior
written consent of the Boards of the Company, disclose to any person or use for
your own account any Confidential Information except (i) in the normal course of
performance of your duties hereunder, (ii) to the extent necessary to comply
with applicable laws, or (iii) to the extent that such information becomes
generally known to and available for use by the public other than as a result of
your acts or omissions to act. Upon termination of your employment or at the
request of the Board of the Company or of the Subsidiary at any time, you shall
deliver to the respective Boards all documents containing Confidential
Information or relating to the business or affairs of the Company that you may
then possess or have under your control.
6. Non-Competition; Non-Solicitation.
a. Non-Competition. You acknowledge that you are and will be in
possession of Confidential Information and that your services are of unique and
great value to the Company. Accordingly, from the Effective Date until the
expiration of the period ending twelve (12) months from the effective date of
the termination of your employment with the Company or its affiliated companies
(the "Non-Compete Period"), you shall not directly or indirectly own, invest
(equity or debt) in, manage, control, participate in, consult with, advise,
render services to, or in any manner engage in, or be connected as an employee,
officer, partner, director, consultant or otherwise with, (i) any enterprise
engaged in the provision of local exchange or wireless telecommunications
services in the State of Alaska as of the effective date of termination of your
employment, or (ii) any enterprise which is engaged in the provision of local
exchange or wireless telecommunications services in competition with the Company
in any of the Company's service territories as of the effective date of
termination of your employment (a "Competitive Business"). Nothing herein shall
prohibit you from being a passive owner of not more than one percent (1%) of any
publicly-traded class of capital stock of any entity engaged in a Competitive
Business.
b. Non-Solicitation. During the Non-Compete Period, you shall not
directly or indirectly induce or attempt to induce any employee of the Company
or its affiliates or subsidiaries to terminate, or in any way interfere with,
the relationship between the Company or its affiliates or subsidiaries and any
employee thereof, nor shall you directly or indirectly solicit or
4
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attempt to solicit business from any customer or supplier of the Company or its
affiliates or subsidiaries. For purposes of this paragraph, a "customer" shall
mean an entity to which, as of the effective date of termination of your
employment, the Company provides products or services in the State of Alaska or
in any other service territory of the Company, and "business" is limited to the
provision of products and services within Alaska or such other service territory
of the Company.
c. Scope of Restriction. If, at the time of enforcement of this
paragraph 6, a court shall hold that the duration, scope or area restrictions
stated herein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area.
7. Survival. Any termination of your employment or of this Agreement shall
have no effect on the continuing operation of Section 5 or 6 for the periods
specified therein.
8. Indemnification. The Company agrees to indemnify you and hold you
harmless from, any and all claims arising from or relating to your status as an
employee, officer, director or agent of the Company, its affiliates, or
subsidiaries, to the fullest extent permitted by Delaware law other than claims
arising from your gross negligence.
9. Waiver of Claims. You agree as a condition to your receipt of any
termination or severance benefits pursuant to Section 4 hereof, you will agree
to waive, discharge and release any and all claims, demands and causes of
action, whether known or unknown, against the Company, its affiliates and
subsidiaries, and their respective current and former directors, officers,
employees, attorneys and agents arising out of, connected with or incidental to
your employment or other dealings with the Company, its affiliates or
subsidiaries, which you or anyone acting on your behalf might otherwise have had
or asserted and any claim to any compensation or benefits from your employment
with the Company or its affiliates (other than pursuant to the terms of this
Agreement or of any employee benefit plans and stock option plans set forth in
paragraph 3 hereof).
10. Governing Law. This Agreement and all questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
and determined in accordance with the internal law, and not the law of
conflicts, of the State of Delaware. If any action at law or in equity is
commenced to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover reasonable attorney's fees, costs and
disbursements from the non-prevailing party, in addition to any other relief to
which the prevailing party may be entitled, as determined by the court.
11. Notices. All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given, if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address set forth herein, or such other address as may
hereafter be furnished to the other party by like notice. Notice or
communication hereunder shall be deemed to have been received on the date
delivered to or received at the premises of the addressee if delivered other
than by mail, and in the case of mail, upon the depositing of the same in the
United States mail as above stated (as evidenced, in
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attempt to solicit business from any customer or supplier of the Company or its
affiliates or subsidiaries. For purposes of this paragraph, a "customer" shall
mean an entity to which, as of the effective date of termination of your
employment, the Company provides products or services in the State of Alaska or
in any other service territory of the Company, and "business" is limited to the
provision of products and services within Alaska or such other service territory
of the Company.
c. Scope of Restriction. If, at the time of enforcement of this
paragraph 6, a court shall hold that the duration, scope or area restrictions
stated herein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or area.
7. Survival. Any termination of your employment or of this Agreement shall
have no effect on the continuing operation of Section 5 or 6 for the periods
specified therein.
8. Indemnification. The Company agrees to indemnify you and hold you
harmless from, any and all claims arising from or relating to your status as an
employee, officer, director or agent of the Company, its affiliates, or
subsidiaries, to the fullest extent permitted by Delaware law other than claims
arising from your gross negligence.
9. Waiver of Claims. You agree as a condition to your receipt of any
termination or severance benefits pursuant to Section 4 hereof, you will agree
to waive, discharge and release any and all claims, demands and causes of
action, whether know or unknown, against the Company, its affiliates and
subsidiaries, and their respective current and former directors, officers,
employees, attorneys and agents arising out of, connected with or incidental to
your employment or other dealings with the Company, its affiliates or
subsidiaries, which you or anyone acting on your behalf might otherwise have had
or asserted and any claim to any compensation or benefits from your employment
with the Company or its affiliates (other than pursuant to the terms of this
Agreement or of any employee benefit plans and stock option plans set forth in
paragraph 3 hereof).
10. Governing Law. This Agreement and all questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
and determined in accordance with the internal law, and not the law of
conflicts, of the State of Delaware. If any action at law or in equity is
commenced to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to recover reasonable attorney's fees, costs and
disbursements from the non-prevailing party, in addition to any other relief to
which the prevailing party may be entitled, as determined by the court.
11. Notices. All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given, if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address set forth herein, or such other address as may
hereafter be furnished to the other party by like notice. Notice or
communication hereunder shall be deemed to have been received on the date
delivered to or received at the premises of the addressee if delivered other
than by mail, and in the case of mail, upon the depositing of the same in the
United States mail as above stated (as evidenced, in
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the case of registered or certified mail, by the date noted on the return
receipt.) Notices shall be addressed as follows:
If to the Executive: Mr. Dean A. Ryland
311 Monterey Way
Vancouver, Washington 98661
If to the Company: Alaska Communications Systems
510 L Street, Suite 500
Anchorage, AK 99501
Attention: Vice President, Human
Resources
12. Separability Clause. Any part, provision, representation or warranty
of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.
13. Successors and Assigns; Assignment of Agreement. This Agreement shall
bind and inure to the benefit of and be enforceable by the parties hereto and
the respective successors and assigns of the parties hereto. As used in this
Agreement, "Company," "Holdings" and the "Subsidiary" shall mean the Company,
Holdings and the Subsidiary as hereinbefore defined and any successors to their
businesses and/or assets as aforesaid which assume and agree to perform this
Agreement by operation of law, or otherwise. This Agreement is personal to you
and without the prior written consent of the Company shall not be assignable by
you otherwise than by will or the laws of descent and distribution.
14. Waiver. The failure of any party to insist upon strict performance of
a covenant hereunder or of any obligation hereunder, irrespective of the length
of time for which such failure continues, shall not be a waiver of such party's
right to demand strict compliance in the future. No consent or waiver, express
or implied, to or of any breach or default in the performance of any obligation
hereunder, shall constitute a consent or waiver to or of any other breach or
default in the performance of the same or any other obligation hereunder. No
term or provision of the Agreement may be waived unless such waiver is in
writing and signed by the party against whom such waiver is sought to be
enforced.
15. Entire Agreement. This Agreement, including Schedules A and B attached
hereto, constitutes the entire Agreement between the parties hereto with respect
to the subject matter contemplated herein and supersedes all prior agreements,
whether written or oral, between the parties, relating to the subject matter
hereof. This Agreement shall not be modified except in writing executed by all
parties hereto.
16. Captions. Titles or captions of paragraphs contained in this Agreement
are inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provision hereof.
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17. Counterparts. For the purpose of facilitating proving this Agreement,
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts. Each counterpart shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have caused their names to be signed
hereto by their respective officers thereunto duly authorized as of the date
first above written.
Please execute the extra copy of this letter Agreement in the space
below and return it to the undersigned at the address set forth above to confirm
your understanding and acceptance of the agreements contained herein.
Very truly yours,
ALASKA COMMUNICATIONS SYSTEMS
HOLDINGS, INC.
By: /s/ Wesley E. Carson
---------------------------------
Name: Wesley E. Carson
Title: Executive Vice President
Accepted and agreed to:
/s/ Dean A. Ryland
- --------------------------
Dean A. Ryland
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Schedule A
Implementation Timelines
Systems to be Installed and Conditions for Acceptance Deadline Bonus Amount
- ----------------------------------------------------- -------- ------------
1. SAP Financial Suite for ATU 03/31/99 $10,000
o Complete transition of financial systems support from legacy ATU
environment (FMS) to SAP. FMS system is used only for backup, parallel
processing verifications, and/or incidental functionality.
2. ADP Payroll Processing for ACS/PTI Employees 06/30/99 $20,000
o An integrated time collection and payroll process which properly
accumulates time and attendance, calculates, prepares and timely produces
paychecks.
3. Platinum Financial Suite For PTI Properties 06/30/99 $20,000
o Complete transition of financial systems support from legacy CenturyTel
environment to Platinum SQL. CenturyTel systems are used only for backup,
parallel processing verifications, and/or incidental functionality.
4. Saville Billing Platform for PTI Properties 08/31/99 $20,000
o Implemented in production such that customer service order processing is
performed, end user customer bills are rendered and payments are supplied
to the new system.
5. Consolidation of PTI and ATU Financial Systems 12/31/00 $40,000
Complete transition of ATU and PTI accounting and finance functions to a common
system.
6. Special Completion Bonus 12/31/99 $10,000
o Successful and timely completion of deliverables set forth in 1 through 4
above.
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(a) The Company agrees to work with you in good faith to modify the dates
and/or description of the deliverables set forth above in the event your ability
to meet such dates and/or deliverables is significantly compromised as a result
of (i) conditions imposed by the Alaska Public Utilities Commission in
connection with required approvals to close the transactions, (ii) delayed
closing of one or both of the transactions, (iii) a failure on the part of the
Company to provide reasonable resources, or (iv) the failure of vendor to
deliver an acceptable product.
(b) Notwithstanding anything in paragraph 4 of this Employment Agreement
to the contrary, if prior to December 31, 1999 or such other date as may be
established for the Special Completion Bonus pursuant to paragraph (a) above,
you resign with Good Reason pursuant to clause (ii) or your employment is
terminated by a vote of the Board of ACSHI directing such termination without
Cause pursuant to clause (v), then you shall receive, in addition to any
severance due you under paragraph 4, a lump-sum payment in the gross amount of
$20,000. Such payment shall be made within thirty (30) days following your
separation from employment.
(c) In addition to any other bonus program or opportunity described in
this Employment Agreement, the Company shall pay to you, on or before January
31, 2000, a "stay" bonus in the gross amount of $60,000 if you remain
continuously employed with the Company from the Effective Date of the Employment
Period until December 31, 1999, or in the event your employment is terminated
prior to December 31, 1999 for the reasons set forth in subparagraph (b) of this
Schedule A.
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Schedule B
This Schedule B to the Employment Agreement confirms the Company's
commitment with regard to your participation in the Company's stock option
incentive plan, as set forth in your offer letter dated November 19, 1998. You
shall receive a grant of options for 35,000 shares of common stock under the
plan. This grant of options is based on an assumed "strike price" of $6.00 per
share. The actual number of shares granted will be adjusted to reflect
approximately the same face value in the event the strike price is other than
$6.00 per share.
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Exhibit 10.10
ALEC HOLDINGS, INC.
1999 STOCK INCENTIVE PLAN
SECTION 1. Purpose; Definitions
The purpose of the Plan is to give ALEC Holdings, Inc. (the
"Company") and its Affiliates (as defined below) a competitive advantage in
attracting, retaining and motivating officers, employees, non-employee directors
and consultants, and to provide the Company and its subsidiaries or Affiliates
with a stock plan providing incentives linked to the financial results of the
Company's businesses and increases in shareholder value.
For purposes of the Plan, the following terms are defined as set
forth below:
"Affiliate" of a Person means a Person directly or indirectly
controlled by, controlling or under common control with such Person.
"Award" means a Stock Appreciation Right, Stock Option or Restricted
Stock.
"Award Agreement" means a Restricted Stock Agreement or Option
Agreement. An Award Agreement may consist of provisions of an employment
agreement.
"Board" means the Board of Directors of the Company.
"Change in Control" shall mean (1) the acquisition by any person or
group (as that term is defined within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) other than FPC (as defined in the Stockholders'
Agreement) or any of its Affiliates of beneficial ownership of a majority of the
outstanding voting stock of the Company, (2) any sale, lease, exchange or other
transfer in one transaction or a series of selected transactions, other than to
an entity that is majority controlled by FPC or any Affiliate thereof, of all or
substantially all of the assets of the Company and its operating subsidiaries,
or (3) any plan for the liquidation or dissolution of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
"Committee" means (a) before an IPO, the Executive Committee of the
Board, or such other committee of the Board as the Board may designate for such
purpose under the Plan, and (b) after an IPO, such committee of the Board as the
Board may designate, which shall be composed of not less than two Non-Employee
Directors, each of whom shall be appointed by and serve at the pleasure of the
Board.
"Common Stock" means the Common Stock, par value $0.01 per share,
of the Company.
"Company" means ALEC Holdings, Inc., a Delaware corporation.
<PAGE>
"Effective Date" has the meaning set forth in Section 13 hereof.
"Employment" means, unless otherwise defined in an applicable
Restricted Stock Agreement, Option Agreement or employment agreement, employment
with, or service as a director of, or as a consultant to, the Company or any of
its Affiliates.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
"Fair Market Value" of the Common Stock means, as of any given date,
the mean between the highest and lowest reported sales prices of the Common
Stock on the New York Stock Exchange or, if not listed on such exchange, on any
other national securities exchange on which the Common Stock is listed or, if
not so listed, on the Nasdaq National Market. If such sales prices are not so
available, the Fair Market Value of the Common Stock shall be determined by the
Committee in good faith.
"IPO" means the consummation of a registered underwritten public
offering or offerings of Common Stock with gross proceeds to the Company in the
aggregate of at least $50 million.
"Incentive Stock Option" means any Stock Option designated as, and
qualified as, an "incentive stock option" within the meaning of Section 422 of
the Code.
"Nasdaq" means The Nasdaq Stock Market, Inc.
"Non-Employee Director" means a member of the Board who qualifies as
a Non-Employee Director as defined in Rule 16b-3(b)(3), as promulgated by the
SEC under the Exchange Act, or any successor definition adopted by the SEC.
"Nonqualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option Agreement" means an agreement setting forth the terms and
conditions of an Award of Stock Options and, if applicable, Stock Appreciation
Rights.
"Participant" has the meaning set forth in Section 4.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization, government
(or any department or agency thereof) or other entity.
"Plan" means the ALEC Holdings, Inc. 1999 Stock Incentive Plan,
as set forth herein and as hereinafter amended from time to time.
"Plan Shares" has the meaning set forth in Section 12(b).
"Restricted Stock" means an Award granted under Section 7.
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"Restricted Stock Agreement" means an agreement setting forth the
terms and conditions of an Award of Restricted Stock.
"Rule 13d-3" means Rule 13d-3, as promulgated by the SEC under the
Exchange Act, as amended from time to time.
"SEC" means the Securities and Exchange Commission or any successor
agency.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor thereto.
"Stock Appreciation Right" means a right granted under Section 6.
"Stock Option" means an option granted under Section 5.
"Stockholders' Agreement" has the meaning as set forth in Section
12(a).
In addition, certain other terms used herein have definitions
otherwise ascribed to them herein.
SECTION 2. Administration
The Plan shall be administered by the Committee, or, if no Committee
has been designated or appointed, by the Board (in which case all references
herein to the Committee shall include the Board).
Among other things, the Committee shall have the authority, subject
to the terms of the Plan, to:
(a) select the Participants to whom Awards may from time to time be
granted;
(b) determine whether and to what extent Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights and Restricted Stock or
any combination thereof are to be granted hereunder;
(c) determine the number of shares of Common Stock to be covered by
each Award granted hereunder;
(d) determine the terms and conditions of any Award granted
hereunder (including, but not limited to, the option price, any vesting
conditions, restrictions or limitations (which may be related to the performance
of the Participant, the Company or any of its Affiliates)) and any acceleration
of vesting or waiver or forfeiture regarding any Award and the shares of Common
Stock relating thereto, based on such factors as the Committee shall determine;
(e) modify, amend or adjust the terms and conditions of any Award,
at any time or from time to time;
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(f) determine to what extent and under what circumstances Common
Stock and other amounts payable with respect to an Award shall be deferred;
(g) determine under what circumstances an Award may be settled in
cash or Common Stock under Sections 5(g) and 6(b)(ii);
(h) adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan as it shall from time to time deem advisable;
(i) interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any agreement relating thereto); and
(j) otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in
office, except that the members thereof may authorize any one or more of their
number or any officer of the Company to execute and deliver documents on behalf
of the Committee.
Any dispute or disagreement which may arise under, or as a result
of, or in any way relate to, the interpretation, construction or application of
the Plan or an Award (or related Award Agreement) granted hereunder shall be
determined by the Committee. Any determination made by the Committee pursuant to
the provisions of the Plan with respect to the Plan, any Award or Award
Agreement shall be made in the sole discretion of the Committee and, with
respect to an Award, at the time of the grant of the Award or, unless in
contravention of any express term of the Plan, at any time thereafter. All
decisions made by the Committee shall be final and binding on all persons,
including the Company and the Participants.
SECTION 3. Common Stock Subject to Plan
The total number of shares of Common Stock reserved and available
for grant under the Plan shall be 3,410,486. Shares subject to an Award under
the Plan may be authorized and unissued shares or may be treasury shares.
If any shares of Restricted Stock are forfeited or if any Stock
Option (and related Stock Appreciation Right, if any) terminates without being
exercised, or if any Stock Appreciation Right is exercised for or settled cash,
the shares subject to such Awards shall again be available for distribution in
connection with Awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, spinoff, stock dividend, stock split, reverse stock split,
extraordinary distribution with respect to the Common Stock or other change in
corporate structure affecting the Common Stock, the Committee or the Board may
make such substitution or adjustment in the aggregate number and kind of shares
or other property reserved for issuance under the Plan, in the number, kind and
Exercise Price (as defined herein) of shares or other property subject to
outstanding Stock Options and Stock Appreciation Rights, in the number and kind
of shares or other property subject to Restricted Stock Awards, and/or such
other equitable substitution or adjustments as it may de-
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termine to be fair and appropriate in its sole discretion, provided however,
that the number of shares subject to an Award shall always be a whole number.
Any such adjusted Exercise Price shall also be used to determine the amount
payable by the Company upon the exercise of any Stock Appreciation Right
associated with any Stock Option.
SECTION 4. Participants
Officers, employees, consultants and non-employee directors of the
Company and its Affiliates who are responsible for or contribute to the
management, growth and profitability of the business of the Company and its
Affiliates shall be "Participants" eligible to be granted Awards under the Plan.
SECTION 5. Stock Options
The Committee shall have the authority to grant any Participant
Incentive Stock Options, Nonqualified Stock Options or both types of Stock
Options (in each case with or without Stock Appreciation Rights). Incentive
Stock Options may be granted only to employees of the Company and its
subsidiaries (within the meaning of Section 424(f) of the Code). To the extent
that any Stock Option is not designated as an Incentive Stock Option or even if
so designated does not qualify as an Incentive Stock Option, it shall constitute
a Nonqualified Stock Option.
Stock Options shall be evidenced by Option Agreements, which shall
include such terms and provisions as the Committee may determine from time to
time. An Option Agreement shall expressly indicate whether it is intended to be
an agreement for an Incentive Stock Option or a Nonqualified Stock Option. The
grant of a Stock Option shall occur on the date the Committee by resolution
selects an individual to be a Participant in any grant of a Stock Option,
determines the number of shares of Common Stock to be subject to such Stock
Option to be granted to such individual and specifies the terms and provisions
of the Stock Option, or on such other date as the Committee may determine. The
Company shall notify a Participant of any grant of a Stock Option, and a written
Option Agreement shall be duly executed and delivered by the Company to the
Participant. Subject to Section 12(a), such agreement shall become effective
upon execution by the Company and the Participant.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any Incentive
Stock Option under such Section 422.
Stock Options shall be subject to the following terms and conditions
and shall contain such additional terms and conditions as the Committee shall
deem desirable:
(a) Exercise Price. The price per share of Common Stock purchasable
under a Stock Option shall be (i) with respect to Stock Options granted made as
of the Effective Date, the Cost Per Share (as defined in the Stockholders'
Agreement) and (ii) with respect to all
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subsequent grants of Stock Options, as such price may be determined by the
Committee and set forth in the Option Agreement (the "Exercise Price").
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee. Absent any such term being fixed by the Committee, pursuant to an
Option Agreement or otherwise, such term shall be ten years.
(c) Exercisability. Except as otherwise provided herein, Stock
Options shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee provides
that any Stock Option is exercisable only in installments, the Committee may at
any time waive such installment exercise provisions, in whole or in part, based
on such factors as the Committee may determine. In addition, the Committee may
at any time accelerate the exercisability of any Stock Option.
(d) Method of Exercise. Subject to the provisions of this Section 5,
vested Stock Options may be exercised, in whole or in part, at any time during
the option term by giving written notice of exercise to the Company specifying
the number of shares of Common Stock subject to the Stock Option to be
purchased.
Such notice shall be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the Company may
accept. If approved by the Committee, payment, in full or in part, may also be
made in the form of unrestricted Common Stock already owned by the Participant
of the same class as the Common Stock subject to the Stock Option (based on the
Fair Market Value of the Common Stock on the date the Stock Option is
exercised); provided, however, that, in the case of an Incentive Stock Option
the right to make a payment in the form of already owned shares of Common Stock
of the same class as the Common Stock subject to the Stock Option may be
authorized only at the time the Stock Option is granted.
In the discretion of the Committee, after an IPO, payment for any
shares subject to a Stock Option may also be made by delivering a properly
executed exercise notice to the Company, together with a copy of irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds to pay the purchase price, and, if requested by the Company,
the amount of any federal, state, local or foreign withholding taxes. To
facilitate the foregoing, the Company may enter into agreements for coordinated
procedures with one or more brokerage firms.
In addition, in the discretion of the Committee, payment for any
shares subject to a Stock Option may also be made by instructing the Committee
to withhold a number of such shares having a Fair Market Value on the date of
exercise equal to the aggregate Exercise Price of such Stock Option, or in
accordance with such other payment methods as may be permitted by the Committee
or its sole discretion.
No shares of Common Stock shall be issued until full payment
therefor has been made. Except as otherwise provided in the Stockholders'
Agreement or the applicable Option Agreement, subject to a Participant's
compliance with Section 12(a) hereof, a Participant shall
6
<PAGE>
have all of the rights of a stockholder of the Company holding the class or
series of Common Stock that is subject to such Stock Option (including, if
applicable, the right to vote the shares and the right to receive dividends and
distributions), when the Participant has given written notice of exercise, has
paid in full for such shares and, if requested, has given the representations
referred to in Section 12(c).
(e) Nontransferability of Stock Options. No Stock Option shall be
transferable by the Participant other than (i) by will or by the laws of descent
and distribution or (ii) in the case of a Nonqualified Stock Option, as
otherwise expressly permitted under the applicable Option Agreement including,
if so permitted, pursuant to a qualified domestic relations order (as defined in
the Code) or pursuant to a gift to such Participant's spouse, children,
grandchildren or other living descendants, whether directly or indirectly or by
means of a trust, partnership, limited liability company or otherwise. All Stock
Options shall be exercisable, subject to the terms of this Plan, during the
Participant's lifetime, only by the Participant or any person to whom such Stock
Option is transferred pursuant to the preceding sentence, including such
Participant's guardian, legal representative and other transferee. The term
"Participant" includes the estate of the Participant or the legal representative
of the Participant named in the Option Agreement and any person to whom an
Option is otherwise transferred in accordance with this Section 5(e), by will or
the laws of descent and distribution; provided, however, that references herein
to Employment of a Participant or termination of Employment of a Participant
shall continue to refer to the Employment or termination of Employment of the
applicable grantee of an Award hereunder.
(f) Termination of Employment. Except as otherwise provided by the
Committee or in the applicable Option Agreement, upon the Participant's death or
when the Participant's Employment is terminated for any reason, the Participant:
a. shall forfeit all Stock Options that have not previously vested;
b. shall have three months to exercise the Participant's vested
Stock Options that are vested on the date of the Participant's termination of
Employment if such termination is for any reason other than the Participant's
death; and
c. shall have one year to exercise the Participant's vested Stock
Options that are vested on the date of death if the Participant's termination of
Employment is due to the Participant's death.
Any vested Stock Options not exercised within the permissible period
of time shall be forfeited by the Participant. Notwithstanding any of the
foregoing, the Participant shall not be permitted to exercise any Stock Option
at a time beyond the initial option term.
(g) Cashing Out of Stock Option. On receipt of written notice of
exercise, the Committee may elect to cash out all or any portion of the shares
of Common Stock for which a Stock Option is being exercised by paying the
Participant an amount, in cash or Common Stock, equal to the excess of the Fair
Market Value of one share of Common Stock over the Exercise
7
<PAGE>
Price per share times the number of shares of Common Stock having such Exercise
Price for which the Option is being exercised on the effective date of such
cash-out.
SECTION 6. Stock Appreciation Rights
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Nonqualified Stock Option, such rights may be granted either at or
after the time of grant of such Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of grant of such Stock
Option. A Stock Appreciation Right shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option. In either case,
the terms and conditions of a Stock Appreciation Right shall be set forth in the
Option Agreement for the related Stock Option or an amendment thereto.
A Stock Appreciation Right may be exercised by a Participant in
accordance with Section 6(b) by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the Committee.
Upon such exercise and surrender, the Participant shall be entitled to receive
an amount determined in the manner prescribed in Section 6(b). Stock Options
which have been so surrendered shall no longer be exercisable to the extent the
related Stock Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject
to such terms and conditions as shall be determined by the Committee, including
the following:
(i) Stock Appreciation Rights shall be exercisable only at such time
or times and to the extent that the Stock Options to which they relate are
exercisable in accordance with the provisions of Section 5 and this Section 6;
(ii) upon the exercise of a Stock Appreciation Right, a Participant
shall be entitled to receive an amount equal to the product of (a) the excess of
the Fair Market Value of one share of Common Stock over the Exercise Price per
share specified in the related Stock Option times (b) the number of shares in
respect of which the Stock Appreciation Right shall have been exercised, in
cash, shares of Common Stock or both, with the Committee having the right to
determine the form of payment;
(iii) Stock Appreciation Rights shall be transferable only with the
related Stock Option in accordance with Section 5(e); and
(iv) upon the exercise of a Stock Appreciation Right (other than an
exercise for cash), the Stock Option or part thereof to which such Stock
Appreciation Right is related shall be deemed to have been exercised for the
purpose of the limitation set forth in Section 3 on the number of shares of
Common Stock to be issued under the Plan, but only to the extent of the number
of shares covered by the Stock Appreciation Right at the time of exercise.
8
<PAGE>
SECTION 7. Restricted Stock
The Committee shall determine the Participants to whom and the time
or times at which grants of Restricted Stock will be awarded, the number of
shares to be awarded to any Participant, the conditions for vesting, the time or
times within which such Awards may be subject to forfeiture and restrictions on
transfer and any other terms and conditions of the Awards (including provisions
(i) relating to placing legends on certificates representing shares of
Restricted Stock, (ii) permitting the Company to require that shares of
Restricted Stock be held in custody by the Company with a stock power from the
owner thereof until restrictions lapse and (iii) relating to any rights to
purchase the Restricted Stock on the part of the Company and its Affiliates), in
addition to those contained in the Stockholders' Agreement. The terms and
conditions of Restricted Stock Awards shall be set forth in a Restricted Stock
Agreement, which shall include such terms and provisions as the Committee may
determine from time to time. Except as provided in this Section 7, the
Restricted Stock Agreement, the Stockholders' Agreement and any other relevant
agreements, the Participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a stockholder of the Company holding the class or
series of Common Stock that is the subject of the Restricted Stock Award,
including, if applicable, the right to vote the shares and, subject to the
following sentence, the right to receive any cash dividends or distributions
(but, subject to the third paragraph of Section 3, not the right to receive
non-cash dividends or distributions). If so determined by the Committee in the
applicable Restricted Stock Agreement, cash dividends and distributions on the
class or series of Common Stock that is the subject of the Restricted Stock
Award shall be automatically deferred and reinvested in additional Restricted
Stock, held subject to the vesting of the underlying Restricted Stock, or held
subject to meeting conditions applicable only to dividends and distributions.
SECTION 8. Tax Offset Bonuses
At the time an Award is made hereunder or at any time thereafter,
the Committee may grant to the Participant receiving such Award the right to
receive a cash payment in an amount specified by the Committee, to be paid at
such time or times (if ever) as the Award results in compensation income to the
Participant, for the purpose of assisting the Participant to pay the resulting
taxes, all as determined by the Committee, and on such other terms and
conditions as the Committee shall determine.
SECTION 9. Change in Control Provisions
Notwithstanding any other provision of the Plan to the contrary,
unless otherwise provided in the applicable Award Agreement or the Stockholders'
Agreement, in the event of a Change in Control:
(a) immediately prior to the occurrence of a Change in Control, all
Stock Options and Stock Appreciation Rights outstanding as of such date, and
which are not then exercisable and vested, shall become fully exercisable and
vested to the full extent of the original grant; and
9
<PAGE>
(b) the restrictions and deferral limitations applicable to any
Restricted Stock (and any dividends or distributions in respect of Restricted
Stock) shall lapse, and such Restricted Stock (and any dividends or
distributions in respect of Restricted Stock) shall become free of all
restrictions, fully vested and transferable to the full extent of the not
theretofore forfeited portion of the original grant.
SECTION 10. Term, Amendment and Termination
The Plan will terminate ten years after the Effective Date of the
Plan. Awards outstanding as of such date shall not be affected or impaired by
the termination of the Plan.
The Board may amend, alter, or discontinue the Plan, prospectively
or retroactively, but no amendment, alteration or discontinuation shall be made
which would impair the rights of any Participant under an Award theretofore
granted without the Participant's consent.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall be made which would
impair the rights of any Participant thereunder without the Participant's
consent.
SECTION 11. Unfunded Status of Plan
It is presently intended that the Plan constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or make payments; provided, however, that
unless the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 12. General Provisions
(a) Stockholders' Agreement. Notwithstanding anything in this Plan
to the contrary, unless the Committee determines otherwise, it shall be a
condition to receiving any Award under the Plan or transferring any Option in
accordance with Section 5(e) or any other transfer permitted under the terms of
an Award Agreement or otherwise, that a Participant (or transferee in the case
of such transfer) shall become a party to the Stockholders' Agreement, dated as
of May 14, 1999, among the Company and certain stockholders of the Company, as
amended from time to time (the "Stockholders' Agreement"), and such Participant
(or transferee in the case of such transfer) shall become a "Management
Investor" thereunder (or such transferee shall become a "Permitted Transferee"
of a "Management Investor" thereunder).
(b) Awards and Certificates. Shares of Restricted Stock and shares
of Common Stock issuable upon the exercise of a Stock Option or Stock
Appreciation Right (together, "Plan Shares") shall be evidenced in such manner
as the Committee may deem appropriate, including book-entry registration or
issuance of one or more stock certificates. Any certificate issued in respect of
Plan Shares shall be registered in the name of such Participant and shall bear
10
<PAGE>
appropriate legends referring to the terms, conditions, and restrictions
applicable to such Award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms, conditions and
restrictions (including forfeiture) of the ALEC Holdings, Inc. 1999
Stock Incentive Plan and a Restricted Stock Agreement and/or an
Option Agreement, as the case may be, between the issuer and the
registered holder hereof. Copies of such Plan and Agreement are on
file at the offices of ALEC Holdings, Inc., 510 L Street, Suite 500,
Anchorage, Alaska 99501."
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
the securities laws of any state, and may not be sold or otherwise
disposed of except pursuant to an effective registration statement
under said Act and applicable state securities laws or an applicable
exemption to the registration requirements of such Act and laws."
Such Plan Shares may bear other legends to the extent the Committee
or the Board determines it to be necessary or appropriate, including any
required by the Stockholders' Agreement or pursuant to any applicable Restricted
Stock Agreement or Option Agreement. If and when all restrictions expire without
a prior forfeiture of the Plan Shares theretofore subject to such restrictions,
upon surrender of legended certificates representing such shares, new
certificates for such shares shall be delivered to the Participant without the
first legend listed above.
The Committee may require that any certificates evidencing Plan
Shares be held in custody by the Company until the restrictions thereon shall
have lapsed and that the Participant deliver a stock power, endorsed in blank,
relating to the Plan Shares.
(c) Representations and Warranties. The Committee may require each
person purchasing or receiving Plan Shares to (i) represent to and agree with
the Company in writing that such person is acquiring the shares without a view
to the distribution thereof and (ii) make any other representations and
warranties that the Committee deems appropriate.
(d) Additional Compensation. Nothing contained in the Plan shall
prevent the Company or any of its Affiliates from adopting other or additional
compensation arrangements for its employees.
(e) No Right of Employment. Adoption of the Plan or grant of any
Award shall not confer upon any employee any right to continued Employment, nor
shall it interfere in any way with the right of the Company or any of its
Affiliate thereof to terminate the Employment of any employee at any time.
(f) Withholding Taxes. No later than the date as of which an amount
first becomes includible in the gross income of a Participant for federal income
tax purposes with respect to any Award under the Plan, such Participant shall
pay to the Company or, if
11
<PAGE>
appropriate, any of its Affiliates, or make arrangements satisfactory to the
Committee regarding the payment of, any federal, state, local or foreign taxes
of any kind required by law to be withheld with respect to such amount. If
approved by the Committee, withholding obligations may be settled with Common
Stock, including Common Stock that is part of the Award that gives rise to the
withholding requirement. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and its Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the Participant. The Committee may establish
such procedures as it deems appropriate, including making irrevocable elections,
for the settlement of withholding obligations with Common Stock.
(g) Beneficiaries. The Committee shall establish such procedures as
it deems appropriate for a Participant to designate a beneficiary to whom any
amounts payable in the event of the Participant's death are to be paid or by
whom any rights of the Participant, after the Participant's death, may be
exercised.
(h) Pooling of Interests. Notwithstanding any other provision of
this Plan, if any right (or the exercise of such right) granted pursuant to this
Plan would make a Change in Control transaction ineligible for
pooling-of-interests accounting under APB No. 16 that but for the nature of such
grant or grants would otherwise be eligible for such accounting treatment, the
Committee shall have the ability to substitute for the cash payable pursuant to
such grant or grants Common Stock with a Fair Market Value equal to the cash
that would otherwise be payable hereunder, or make any other appropriate
adjustment, including elimination or suspension of such rights.
(i) Governing Law. The Plan and all Awards made and actions taken
thereunder shall be governed by and construed and enforced in accordance with
the laws of the State of New York without regard to the principles of conflicts
of law thereof.
(j) Compliance with Laws. If any law or any regulation of any
commission or agency having jurisdiction shall require the Company or a
Participant seeking to exercise Stock Options or Stock Appreciation Rights to
take any action with respect to the Plan Shares to be issued upon the exercise
of Stock Options or Stock Appreciation Rights then the date upon which the
Company shall issue or cause to be issued the certificate or certificates for
the Plan Shares shall be postponed until full compliance has been made with all
such requirements of law or regulation; provided, that the Company shall use its
reasonable efforts to take all necessary action to comply with such requirements
of law or regulation. Moreover, in the event that the Company shall determine
that, in compliance with the Securities Act or other applicable statutes or
regulations, it is necessary to register any of the Plan Shares with respect to
which an exercise of a Stock Option or Stock Appreciation Right has been made,
or to qualify any such Plan Shares for exemption from any of the requirements of
the Securities Act or any other applicable statute or regulation, no Stock
Options or Stock Appreciation Rights may be exercised and no Plan Shares shall
be issued to the exercising Participant until the required action has been
completed; provided, that the Company shall use its reasonable efforts to take
all necessary action to comply with such requirements of law or regulation.
Notwithstanding anything to the contrary contained
12
<PAGE>
herein, neither the Board nor the members of the Committee owes a fiduciary duty
to any Participant in his or her capacity as such.
SECTION 13. Effective Date of Plan
The Plan shall be effective as of the date it is approved by the
holders of a majority of the outstanding shares of Common Stock, which approval
is evidenced by Section 5.4 under the Stockholders' Agreement (the "Effective
Date").
13
<PAGE>
EXHIBIT 12.1
ALEC HOLDINGS, INC.
COMPUTATION OF RATIOS
<TABLE>
<CAPTION>
DECEMBER 31, 1998 MARCH 31, 1999
----------------- --------------
<S> <C> <C>
EARNINGS TO FIXED CHARGES:
EARNINGS:
Income before taxes........................................................... $ (18,868) $ (3,721)
Add: Fixed Charges............................................................ 57,529 14,380
-------- -------
Earnings as adjusted........................................................ 38,661 10,659
COMPUTATION OF FIXED CHARGES
Interest Expense.............................................................. 56,948 14,238
Interest Portion of Rent Expense.............................................. 581 142
-------- -------
Total Fixed Charges......................................................... 57,529 14,380
-------- -------
Excess of fixed charges over earnings......................................... $ 18,868 $ 3,721
-------- -------
-------- -------
</TABLE>
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF ALEC HOLDINGS, INC.
<TABLE>
<CAPTION>
STATE OF
NAME INCORPORATION
- -------------------------------------------------------------------------------------------- --------------------
<S> <C>
Alaska Communications Systems Holdings, Inc................................................. Delaware
ALEC Acquisition Sub Corp................................................................... Delaware
Alaska Communications Systems, Inc.......................................................... Delaware
Telephone Utilities of the Northland, Inc................................................... Alaska
Telephone Utilities of Alaska, Inc.......................................................... Alaska
PTI Communications of Alaska, Inc........................................................... Alaska
Pacific Telecom Cellular of Alaska, Inc..................................................... Alaska
Pacific Telecom of Alaska PCS, Inc.......................................................... Alaska
MACtel, Inc................................................................................. Alaska
ATU Long Distance, Inc...................................................................... Alaska
ATU Communications, Inc..................................................................... Alaska
MACtel License Sub, Inc..................................................................... Delaware
MACtel Fairbanks, Inc....................................................................... Alaska
MACtel Fairbanks License Sub, Inc........................................................... Delaware
Prudhoe Communications, Inc................................................................. Alaska
Peninsula Cellular Services, Inc............................................................ Alaska
PTINet, Inc................................................................................. Delaware
</TABLE>
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of ALEC Holdings, Inc.
on Form S-4 of our reports dated March 24, 1999, March 25, 1999 and June 28,
1999 appearing in the Prospectus, which is part of this Registration Statement,
and to the reference to us under the heading "Experts" in such Prospectus
DELOITTE & TOUCHE LLP
Portland, Oregon
July 2, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
CenturyTel, Inc.:
We consent to the use of our report dated February 26, 1999, on CenturyTel's
Alaska Properties as of and for the year ended December 31, 1998 included herein
and to the references to our firm under the heading "Experts" in this
registration statement and related prospectus.
KPMG LLP
Shreveport, Louisiana
July 6, 1999
<PAGE>
Exhibit 23.5
The Honorable Mayor and Member of the Assembly
Municipality of Anchorage Telephone Utility Fund
We consent to the use of our report dated February 19, 1999 on the balance sheet
of the Municipality of Anchorage Telephone Utility Fund as of December 31, 1998
and 1997, and the related statements of revenues, expenses and changes in
retained earnings, and cash flows for each of the years in the three-year period
ended December 31, 1998, included herein and to the reference to our firm under
the heading "Experts" in the prospectus. Our report contains a paragraph which
emphasizes that the financial statements represent the financial position and
results of operations of the Municipality of Anchorage, Alaska, Telephone
Utility Fund and not the Municipality of Anchorage, Alaska taken as a whole. Our
report also contains a paragraph that refers to supplementary information
regarding the year 2000 required by the Governmental Accounting Standards Board,
which we did not audit and about which we express no opinion.
KPMG LLP
Anchorage, Alaska
June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) / /
------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
ONE WALL STREET, NEW YORK, N.Y. 10286
(Address of principal executive offices) (Zip code)
</TABLE>
------------------------
ALEC HOLDINGS, INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 52-2126573
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
510 L. STREET, SUITE 500 99501
Anchorage, Alaska (Zip code)
(Address of principal executive offices)
</TABLE>
------------------------
13% SENIOR DISCOUNT DEBENTURES DUE 2011
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
1. GENERAL INFORMATION.
Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
<TABLE>
<CAPTION>
NAME ADDRESS
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of New York 2 Rector Street, New York, N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29
UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise corporate
trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 22nd day of June, 1999.
<TABLE>
<S> <C> <C>
THE BANK OF NEW YORK
By: /s/ ILIANA A. ARCIPRETE
-----------------------------------------
Name: Iliana A. Arciprete
Title: ASSISTANT TREASURER
</TABLE>
<PAGE>
CONSOLIDATED REPORT OF CONDITION OF
THE BANK OF NEW YORK
OF ONE WALL STREET, NEW YORK, N.Y. 10286
AND FOREIGN AND DOMESTIC SUBSIDIARIES,
a member of the Federal Reserve System, at the close of business March 31, 1999,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
IN THOUSANDS
--------------
<S> <C> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.............................. $ 4,508,742
Interest-bearing balances....................................................... 4,425,071
Securities:
Held-to-maturity securities..................................................... 836,304
Available-for-sale securities................................................... 4,047,851
Federal funds sold and Securities purchased under agreements to resell............ 1,743,269
Loans and lease financing receivables:
Loans and leases, net of unearned income........................................ 39,349,679
LESS: Allowance for loan and lease losses....................................... 603,025
LESS: Allocated transfer risk reserve........................................... 15,906
Loans and leases, net of unearned income, allowance, and reserve................ 38,730,748
Trading Assets.................................................................... 1,571,372
Premises and fixed assets (including capitalized leases).......................... 685,674
Other real estate owned........................................................... 10,331
Investments in unconsolidated subsidiaries and associated companies............... 182,449
Customers' liability to this bank on acceptances outstanding...................... 1,184,822
Intangible assets................................................................. 1,129,636
Other assets...................................................................... 2,632,309
--------------
Total assets...................................................................... $ 61,688,578
--------------
--------------
LIABILITIES
Deposits:
In domestic offices............................................................. $ 25,731,036
Noninterest-bearing............................................................. 10,252,589
Interest-bearing................................................................ 15,478,447
In foreign offices, Edge and Agreement subsidiaries, and IBFs................... 18,756,302
Noninterest-bearing............................................................. 111,386
Interest-bearing................................................................ 18,644,916
Federal funds purchased and Securities sold under agreements to repurchase........ 3,276,362
Demand notes issued to the U.S.Treasury........................................... 230,671
Trading liabilities............................................................... 1,554,493
Other borrowed money:
With remaining maturity of one year or less..................................... 1,154,502
With remaining maturity of more than one year through three years............... 465
With remaining maturity of more than three years................................ 31,080
Bank's liability on acceptances executed and outstanding.......................... 1,185,364
Subordinated notes and debentures................................................. 1,308,000
Other liabilities................................................................. 2,743,590
--------------
Total liabilities................................................................. 55,971,865
--------------
--------------
<PAGE>
</TABLE>
CONSOLIDATED REPORT OF CONDITION OF
THE BANK OF NEW YORK
OF ONE WALL STREET, NEW YORK, N.Y. 10286
AND FOREIGN AND DOMESTIC SUBSIDIARIES,
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
IN THOUSANDS
--------------
EQUITY CAPITAL
<S> <C> <C>
Common stock...................................................................... 1,135,284
Surplus........................................................................... 764,443
Undivided profits and capital reserves............................................ 3,807,697
Net unrealized holding gains (losses) on available-for-sale securities............ 44,106
Cumulative foreign currency translation adjustments............................... (34,817)
--------------
Total equity capital.............................................................. 5,716,713
--------------
Total liabilities and equity capital.............................................. $ 61,688,578
--------------
--------------
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Directors
Thomas A. Reyni
Alan R. Griffith
Gerald L. Hassell
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
LETTER OF TRANSMITTAL
ALEC HOLDINGS, INC.
OFFER TO EXCHANGE
13% SENIOR DISCOUNT DEBENTURES DUE 2011
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
FOR ALL OF ITS OUTSTANDING
13% SENIOR DISCOUNT DEBENTURES DUE 2011
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1999, UNLESS THE OFFER IS EXTENDED.
TO: THE BANK OF NEW YORK (AS "EXCHANGE AGENT")
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY OVERNIGHT COURIER OR BY HAND:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
Floor 7 East Ground Level
New York, New York 10286 Corporate Trust Services Window
Attention: Reorganization Section New York, New York 10286
Attention: Reorganization Section
</TABLE>
BY FACSIMILE (FOR ELIGIBLE INSTITUTIONS ONLY):
212-815-6339
CONFIRM BY TELEPHONE:
212-815-2824
Delivery of this instrument to an address other than as set forth above or
transmission of instructions via a facsimile number other than the ones listed
above will not constitute a valid delivery. The instructions accompanying this
Letter of Transmittal should be read carefully before this Letter of Transmittal
is completed.
The undersigned hereby acknowledges receipt of the Prospectus dated ,
1999 (the "Prospectus") of ALEC Holdings, Inc. ("Holdings") and this Letter of
Transmittal, which together constitute Holdings' offer (the "Exchange Offer") to
exchange $1,000 principal amount of its 13% Senior Discount Debentures due 2011
(the "Exchange Debentures"), which have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement
of which the Prospectus is a part, for each $1,000 principal amount of its
outstanding 13% Senior Discount Debentures due 2011 (the "Debentures"),
respectively. The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on , 1999, unless Holdings, in its reasonable judgment,
extends the Exchange Offer, in which case the term shall mean the latest date
and time to which the Exchange Offer is extended. Capitalized terms used but not
defined herein have the meaning given to them in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS
INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND
REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS
LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
<PAGE>
List below the notes to which this Letter of Transmittal relates. If the
space indicated below is inadequate, the Certificate or Registration Numbers and
Principal Amounts should be listed on a separately signed schedule affixed
hereto.
<TABLE>
<CAPTION>
DESCRIPTION OF 13% SENIOR DISCOUNT DEBENTURES DUE 2011 TENDERED HEREBY
AGGREGATE
CERTIFICATE PRINCIPAL
OR AMOUNT PRINCIPAL
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) REGISTRATION REPRESENTED AMOUNT
(PLEASE FILL IN) NUMBERS* BY DEBENTURES TENDERED**
<S> <C> <C> <C>
Total
- --------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered the
full aggregate principal amount represented by such Debentures. All
tenders must be in integral multiples of $1,000.
- --------------------------------------------------------------------------------
This Letter of Transmittal is to be used (i) if certificates of Debentures
are to be forwarded herewith, (ii) if delivery of Debentures is to be made by
book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company (the "Depository") pursuant to the procedures set forth
in "The Exchange Offer--Procedures for tendering" in the Prospectus or (iii) if
tender of the Debentures is to be made according to the guaranteed delivery
procedures described in the Prospectus under the caption "The Exchange
Offer--Guaranteed delivery procedures." See Instruction 2. Delivery of documents
to a book-entry transfer facility does not constitute delivery to the Exchange
Agent.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Debentures are registered on the books of Holdings or any other
person who has obtained a properly completed bond power from the registered
holder. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Debentures must complete
this letter in its entirety.
<TABLE>
<C> <S>
/ / CHECK HERE IF TENDERED DEBENTURES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DEPOSITORY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution
Account Number
Transaction Code Number
</TABLE>
Holders whose Debentures are not immediately available or who cannot deliver
their Debentures and all other documents required hereby to the Exchange Agent
on or prior to the Expiration Date must tender their Debentures according to the
guaranteed delivery procedure set forth in the Prospectus under the caption "The
Exchange Offer--Guaranteed delivery procedures." See Instruction 2.
2
<PAGE>
/ / CHECK HERE IF TENDERED DEBENTURES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s) __________________________________________
Name of Eligible Institution that Guaranteed Delivery _________________
IF DELIVERY BY BOOK-ENTRY TRANSFER:
Account Number __________________________________________________________
Transaction Code Number _________________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name __________________________________________________________________
Address _______________________________________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to Holdings the principal amount of the Debentures
indicated above. Subject to, and effective upon, the acceptance for exchange of
such Debentures tendered hereby, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, Holdings all right, title and interest in
and to such Debentures as are being tendered hereby, including all rights to
accrued and unpaid interest thereon as of the Expiration Date. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent the true and
lawful agent and attorney-in-fact of the undersigned (with full knowledge that
said Exchange Agent acts as the agent of Holdings in connection with the
Exchange Offer) to cause the Debentures to be assigned, transferred and
exchanged. The undersigned represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Debentures and to acquire
Exchange Debentures issuable upon the exchange of such tendered Debentures, and
that when the same are accepted for exchange, Holdings will acquire good and
unencumbered title to the tendered Debentures, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim.
The undersigned represents to Holdings that (i) the Exchange Debentures
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving such Exchange Debentures, whether or
not such person is the undersigned, and (ii) neither the undersigned nor any
such other person is engaged or intends to engage in, or has an arrangement or
understanding with any person to participate in, the distribution of such
Exchange Debentures. If the undersigned or the person receiving the Exchange
Debentures covered hereby is a broker-dealer that is receiving the Exchange
Debentures for its own account in exchange for Debentures that were acquired as
a result of market-making activities or other trading activities, the
undersigned acknowledges that it or such other person will deliver a prospectus
in connection with any resale of such Exchange Debentures; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The undersigned and any such other person acknowledge that, if they are
participating in the Exchange Offer for the purpose of distributing the Exchange
Debentures, (i) they cannot rely on the position of the staff of the Securities
and Exchange Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION
(available April 13, 1989), MORGAN STANLEY & CO., INC. (available June 5, 1991)
or similar no-action letters and, in the absence of an exemption therefrom, must
comply with the registration and prospectus delivery requirements of the
Securities Act in
3
<PAGE>
connection with the resale transaction and (ii) failure to comply with such
requirements in such instance could result in the undersigned or any such other
person incurring liability under the Securities Act for which such persons are
not indemnified by Holdings. If the undersigned or the person receiving the
Exchange Debentures covered by this letter is an affiliate (as defined under
Rule 405 of the Securities Act) of Holdings, the undersigned represents to
Holdings that the undersigned understands and acknowledges that such Exchange
Debentures may not be offered for resale, resold or otherwise transferred by the
undersigned or such other person without registration under the Securities Act
or an exemption therefrom.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or Holdings to be
necessary or desirable to complete the exchange, assignment and transfer of
tendered Debentures or transfer ownership of such Debentures on the account
books maintained by a book-entry transfer facility. The undersigned further
agrees that acceptance of any tendered Debentures by Holdings and the issuance
of Exchange Debentures in exchange therefor shall constitute performance in full
by Holdings of its obligations under the Registration Rights Agreement and that
Holdings shall have no further obligations or liabilities thereunder for the
registration of the Debentures or the Exchange Debentures.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer--Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by Holdings), as more particularly set forth in the Prospectus,
Holdings may not be required to exchange any of the Debentures tendered hereby
and, in such event, the Debentures not exchanged will be returned to the
undersigned at the address shown below the signature of the undersigned.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tendered Debentures may be withdrawn at any time
prior to the Expiration Date.
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this Letter
of Transmittal, certificates for all Exchange Debentures delivered in exchange
for tendered Debentures, and any Debentures delivered herewith but not
exchanged, will be registered in the name of the undersigned and shall be
delivered to the undersigned at the address shown below the signature of the
undersigned. If an Exchange Debenture is to be issued to a person other than the
person(s) signing this Letter of Transmittal, or if an Exchange Debenture is to
be mailed to someone other than the person(s) signing this Letter of Transmittal
or to the person(s) signing this Letter of Transmittal at an address different
than the address shown on this Letter of Transmittal, the appropriate boxes of
this Letter of Transmittal should be completed. If Debentures are surrendered by
Holder(s) that have completed either the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this Letter
of Transmittal, signature(s) on this Letter of Transmittal must be guaranteed by
an Eligible Institution (defined in Instruction 2).
4
<PAGE>
- --------------------------------------------------------------------------------
- -------------------------------------------
SPECIAL REGISTRATION INSTRUCTIONS
To be completed ONLY if the Exchange Debentures are to be issued in the
name of someone other than the undersigned.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
Book-Entry Transfer Facility Account:
____________________________________________________________________________
Employer Identification or Social Security Number:
____________________________________________________________________________
(Please print or type)
- -------------------------------------------
- -------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if the Exchange Debentures are to be sent to
someone other than the undersigned, or to the undersigned at an address
other than that shown under "Description of Debentures Tendered Hereby."
Name: ______________________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
Employer Identification or Social Security Number:
____________________________________________________________________________
(Please print or type)
- ------------------------------------------
REGISTERED HOLDER(S) OF DEBENTURES SIGN HERE
(IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW)
X ____________________________________________________________________________
X ____________________________________________________________________________
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Debentures or on a security position listing as the owner or the Debentures or
by person(s) authorized to become registered holder(s) by properly completed
bond powers transmitted herewith. If signature is by attorney-in-fact,
trustee, executor, administrator, guardian, officer of a corporation or other
person acting in a fiduciary capacity, please provide the following
information (Please print or type:)
<TABLE>
<S> <C>
Name and Capacity (full title)
SIGNATURE GUARANTEE
(IF REQUIRED--SEE INSTRUCTION 4)
Address (including zip code) (Signature of Representative of Signature
Guarantor)
(Area Code and Telephone Number) (Name and Title)
(Taxpayer Identification or Social Security (Name of Plan)
No.)
(Area Code and Telephone Number)
Dated: , 19 Dated: , 19
</TABLE>
5
<PAGE>
PAYOR'S NAME: ALEC HOLDINGS, INC.
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED. Please provide your
social security number on the following Substitute Form W-9 and certify therein
that you are subject to backup withholding.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN IN THE
FORM W-9 BOX AT THE RIGHT AND CERTIFY BY SIGNING
DEPARTMENT OF THE TREASURY AND DATING BELOW. For all accounts, Social Security Number
INTERNAL REVENUE SERVICE enter TIN in the box at right. (For
most individuals, this is your social OR
security number. If you do not have a Employer Identification Number
number, see enclosed Guidelines for
Certification of Taxpayer (If awaiting TIN write
Identification Number on Substitute "Applied For")
Form W-9.) Certify by signing and
dating below.
------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART II--For Payees exempt from backup withholding, see the enclosed
IDENTIFICATION NUMBER (TIN) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 and complete as instructed therein.
- ------------------------------------------------------------------------------------------------------------------
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number or a Taxpayer Identification Number
has not been issued to me and either (a) I have mailed or delivered an application to receive a Taxpayer
Identification Number to the appropriate Internal Revenue Service ("IRS") Center or Social Security
Administration Office or (b) I intend to mail or deliver an application in the near future; and
(2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, (b) I have not
been notified by the IRS that I am subject to backup withholding as a result of failure to report all interest
or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are
subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you received another notification from the IRS
that you are no longer subject to backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
- ------------------------------------------------------------------------------------------------------------------
The IRS does not require your consent to any provision of this document other than the certifications required to
avoid backup withholding.
- ------------------------------------------------------------------------------------------------------------------
SIGNATURE DATE , 199
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU ON ACCOUNT OF THE EXCHANGE DEBENTURES.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
6
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATION IF YOU WROTE "APPLIED FOR" INSTEAD
OF A TIN IN THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld until I provide a number, but
will be refunded if I provide a certified taxpayer identification number within
60 days.
<TABLE>
<S> <C>
Signature Dated:
</TABLE>
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. All physically
delivered Debentures or confirmation of any book-entry transfer to the Exchange
Agent's account at a book-entry transfer facility of Debentures tendered by
book-entry transfer, as well as a properly completed and duly executed copy of
this Letter of Transmittal or facsimile thereof, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein on or prior to expiration of the Exchange Offer
(the "Expiration Date"). The method of delivery of this Letter of Transmittal,
the Debentures and any other required documents is at the election and risk of
the Holder, and except as otherwise provided below, the delivery will be deemed
made only when actually received by the Exchange Agent. If such delivery is by
mail, it is suggested that registered mail with return receipt requested,
properly insured, be used.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Debentures for exchange.
Delivery to an address other than as set forth herein, or instructions via a
facsimile number other than the ones set forth herein, will not constitute a
valid delivery.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their
Debentures, but whose Debentures are not immediately available and thus cannot
deliver their Debentures, the Letter of Transmittal or any other required
documents to the Exchange Agent (or comply with the procedures for book-entry
transfer) prior to the Expiration Date, may effect a tender if:
(a) the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent
in the United States or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution");
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the registration number(s)
of such Debentures and the principal amount of Debentures tendered, stating
that the tender is being made thereby and guaranteeing that, within three
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof), together with the Debentures (or a
confirmation of book-entry transfer of such Debentures into the Exchange
Agent's account at the Depository) and any other documents required by the
Letter of Transmittal, will be deposited by the Eligible Institution with
the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Debentures in proper form for
transfer (or a confirmation of book-entry transfer of such Debentures into
the Exchange Agent's account at the Depository) and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within three New York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Debentures according to the guaranteed
delivery procedures set forth above. Any Holder who wishes to tender Debentures
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery relating to such
Debentures prior to the Expiration Date. Failure to comply with the guaranteed
delivery procedures
8
<PAGE>
outlined above will not, of itself, affect the validity or effect a revocation
of any Letter of Transmittal form properly completed and executed by a Holder
who attempted to use the guaranteed delivery procedures.
3. PARTIAL TENDERS; WITHDRAWALS. If less than the entire principal amount
of Debentures evidenced by a submitted certificate is tendered, the tendering
Holder should fill in the principal amount tendered in the column entitled
"Principal Amount Tendered" in the box entitled "Description of Debentures
Tendered Hereby." A newly issued Debenture for the principal amount of
Debentures submitted but not tendered will be sent to such Holder as soon as
practicable after the Expiration Date. All Debentures delivered to the Exchange
Agent will be deemed to have been tendered in full unless otherwise indicated.
Debentures tendered pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date, after which tenders of Debentures are
irrevocable. To be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must be timely received by the Exchange Agent. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Debentures to be withdrawn (the "Depositor"), (ii) identify the Debentures
to be withdrawn (including the registration number(s) and principal amount of
such Debentures, or, in the case of Debentures transferred by book-entry
transfer, the name and number of the account at the Depository to be credited),
(iii) be signed by the Holder in the same manner as the original signature on
this Letter of Transmittal (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee with respect
to the Debentures register the transfer of such Debentures into the name of the
person withdrawing the tender and (iv) specify the name in which any such
Debentures are to be registered, if different from that of the Depositor. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by Holdings, whose determination shall be
final and binding on all parties. Any Debentures so withdrawn will be deemed not
to have been validly tendered for purposes of the Exchange Offer and no Exchange
Debentures will be issued with respect thereto unless the Debentures so
withdrawn are validly retendered. Any Debentures which have been tendered but
which are not accepted for exchange will be returned to the Holder thereof
without cost to such Holder as soon as practicable after withdrawal, rejection
of tender or termination of Exchange Offer.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered Holder(s) of the Debentures tendered hereby, the signature
must correspond with the name(s) as written on the face of the certificates
without alteration or enlargement or any change whatsoever. If this Letter of
Transmittal is signed by a participant in the Depository, the signature must
correspond with the name as it appears on the security position listing as the
owner of the Debentures.
If any of the Debentures tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Debentures registered in different names are tendered, it
will be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal as there are different registrations of Debentures.
Signatures of this Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution unless the Debentures
tendered hereby are tendered (i) by a registered Holder who has not completed
the box entitled "Special Registration Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution.
If this Letter of Transmittal is signed by the registered Holder or Holders
of Debentures (which term, for the purposes described herein, shall include a
participant in the Depository whose name appears on a security listing as the
owner of the Debentures) listed and tendered hereby, no endorsements of the
tendered Debentures or separate written instruments of transfer or exchange are
required. In any other case, the registered Holder (or acting Holder) must
either properly endorse the Debentures or transmit properly completed bond
powers with this Letter of Transmittal (in either case, executed exactly as the
9
<PAGE>
name(s) of the registered Holder(s) appear(s) on the Debentures, and, with
respect to a participant in the Depository whose name appears on a security
position listing as the owner of Debentures, exactly as the name of the
participant appears on such security position listing), with the signature on
the Debentures or bond power guaranteed by an Eligible Institution (except where
the Debentures are tendered for the account of an Eligible Institution).
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by Holdings, proper evidence
satisfactory to Holdings of their authority so to act must be submitted.
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering Holders
should indicate, in the applicable box, the name and address (or account at the
Depository) in which the Exchange Debentures or substitute Debentures for
principal amounts not tendered or not accepted for exchange are to be issued (or
deposited), if different from the names and addresses or accounts of the person
signing this Letter of Transmittal. In the case of issuance in a different name,
the employer identification number or social security number of the person named
must also be indicated and the tendering Holder should complete the applicable
box.
If no instructions are given, the Exchange Debentures (and any Debentures
not tendered or not accepted) will be issued in the name of and sent to the
acting Holder of the Debentures or deposited at such Holder's account at the
Depository.
6. TRANSFER TAXES. Holdings shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Debentures to it or its order
pursuant to the Exchange Offer. If a transfer tax is imposed for any reason
other than the transfer and exchange of Debentures to Holdings or its order
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered Holder or any other person) will be payable by the
tendering Holder. If satisfactory evidence of payment of such taxes or exception
therefrom is not submitted herewith, the amount of such transfer taxes will be
collected from the tendering Holder by the Exchange Agent.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the Debentures listed in this Letter of
Transmittal.
7. WAIVER OF CONDITIONS. Holdings reserves the right, in its reasonable
judgment, to waive, in whole or in part, any of the conditions to the Exchange
Offer set forth in the Prospectus.
8. MUTILATED, LOST, STOLEN OR DESTROYED DEBENTURES. Any Holder whose
Debentures have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated above for further instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent
at the address and telephone number(s) set forth above. In addition, all
questions relating to the Exchange Offer, as well as requests for assistance or
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to ALEC Holdings, Inc., 510 L. Street, Anchorage, Alaska 99501,
Attention: Corporate Secretary; telephone (907) 297-3000.
10. VALIDITY AND FORM. All questions as to the validity, form, eligibility
(including time of receipt), acceptance of tendered Debentures and withdrawal of
tendered Debentures will be determined by Holdings in its sole discretion, which
determination will be final and binding. Holdings reserves the absolute right to
reject any and all Debentures not properly tendered or any Debentures Holdings'
acceptance of which would, in the opinion of counsel for Holdings, be unlawful.
Holdings also reserves the right, in its reasonable judgment, to waive any
defects, irregularities or conditions of tender as to particular
10
<PAGE>
Debentures. Holdings' interpretation of the terms and conditions of the Exchange
Offer (including the instructions in this Letter of Transmittal) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Debentures must be cured within such time as ACS
shall determine. Although Holdings intends to notify Holders of defects or
irregularities with respect to tenders of Debentures, neither Holdings, the
Exchange Agent nor any other person shall incur any liability for failure to
give such notification. Tenders of Debentures will not be deemed to have been
made until such defects or irregularities have been cured or waived. Any
Debentures received by the Exchange Agent that are not properly tendered and as
to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holder as soon as practicable
following the Expiration Date.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Debentures is required to
provide the Exchange Agent with such Holder's correct TIN on Substitute Form W-9
above. If such Holder is an individual, the TIN is the Holder's social security
number. The Certificate of Awaiting Taxpayer Identification Number should be
completed if the tendering Holder has not been issued a TIN and has applied for
a number or intends to apply for a number in the near future. If the Exchange
Agent is not provided with the correct TIN, the Holder may be subject to a $50
penalty imposed by the IRS. In addition, payments that are made to such Holder
with respect to tendered Debentures may be subject to backup withholding.
Certain Holders (including, among others, all domestic corporations and
certain foreign individuals and foreign entities) are not subject to these
backup withholding and reporting requirements. Such a Holder who satisfies one
or more of the conditions set forth in Part 2 of the Substitute Form W-9 should
execute the certification following such Part 2. In order for a foreign Holder
to qualify as an exempt recipient, that Holder must submit to the Exchange Agent
a properly completed Internal Revenue Service Form W-9, signed under penalties
of perjury, attesting to that Holder's exempt status. Such forms can be obtained
from the Exchange Agent.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any amounts otherwise payable to the Holder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.
PURPOSE OF SUBSTITUTE FORM W-9. To prevent backup withholding on payments
that are made to a Holder with respect to Debentures tendered for exchange, the
Holder is required to notify the Exchange Agent of his or her correct TIN by
completing the form herein certifying that the TIN provided on Substitute Form
W-9 is correct (or that such Holder is awaiting a TIN) and that (i) such Holder
is exempt, (ii) such Holder has not been notified by the IRS that he or she is
subject to backup withholding as a result of failure to report all interest or
dividends or (iii) the IRS has notified such Holder that he or she is no longer
subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT. Each Holder is required to give the
Exchange Agent the social security number or employer identification number of
the record Holder(s) of the Debentures. If Debentures are in more than one name
or are not in the name of the actual Holder, consult the instructions on IRS
Form W-9, which may be obtained from the Exchange Agent, for additional guidance
on which number to report.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER. If the tendering
Holder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future, write "Applied For" in the space for the
TIN on Substitute Form W-9, sign and date the form and the Certificate of
Awaiting Taxpayer Identification Number and return them to the Exchange Agent.
If such certificate is completed
11
<PAGE>
and the Exchange Agent is not provided with the TIN within 60 days, the Exchange
Agent will withhold 31% of all payments made thereafter until a TIN is provided
to the Exchange Agent.
IMPORTANT: This Letter of Transmittal or a facsimile thereof (together with
Debentures or confirmation of book-entry transfer and all other required
documents) or a Notice of Guaranteed Delivery must be received by the Exchange
Agent on or prior to the Expiration Date.
PLEASE REVIEW INSTRUCTION 11 FOR ADDITIONAL DETAILS.
12
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
13% SENIOR DISCOUNT DEBENTURES DUE 2011
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
ALEC HOLDINGS, INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of ALEC Holdings, Inc. ("Holdings") made pursuant to the
Prospectus, dated (the "Prospectus"), if certificates for the
outstanding 13% Senior Discount Debentures due 2011 of Holdings (the "Old
Debentures") are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Exchange Agent prior to 5:00 p.m., New York City
time, on , 1999 (the "Expiration Date"). Such form may be delivered or
transmitted by telegram, telex, facsimile transmission, mail or hand delivery to
The Bank of New York (the "Exchange Agent") as set forth below. In addition, in
order to utilize the guaranteed delivery procedure to tender Old Debentures
pursuant to the Exchange Offer, a completed, signed and dated Letter of
Transmittal (or facsimile thereof) must also be received by the Exchange Agent
prior to 5:00 p.m., New York City time, on the Expiration Date. Capitalized
terms not defined herein are defined in the Prospectus.
THE BANK OF NEW YORK, EXCHANGE AGENT.
BY REGISTERED OR CERTIFIED MAIL:
The Bank of New York
101 Barclay Street
Floor 7 East
New York, New York 10286
Attention: Reorganization Section
BY OVERNIGHT COURIER OR BY HAND:
The Bank of New York
101 Barclay Street
Ground Level
Corporate Trust Services Window
New York, New York 10286
Attention: Reorganization Section
BY FACSIMILE (FOR ELIGIBLE INSTITUTIONS ONLY):
212-815-6339
CONFIRM BY TELEPHONE:
212-815-2824
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
THIS INSTRUMENT IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE
ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE
INSTITUTION (AS DEFINED IN THE PROSPECTUS), SUCH SIGNATURE GUARANTEE MUST APPEAR
IN THE APPLICABLE SPACE PROVIDED ON THE LETTER OF TRANSMITTAL FOR GUARANTEE OF
SIGNATURES.
<PAGE>
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to Holdings
the principal amount of Old Debentures set forth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer-- Guaranteed
delivery procedures" section of the Prospectus.
Principal Amount of Old Debentures Tendered:*
$_______________________________________________________________________________
Certificate Nos. (if available):
________________________________________________________________________________
Total Principal Amount Represented by Certificate(s):
$_______________________________________________________________________________
*Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
________________________________________________________________________________
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
________________________________________________________________________________
PLEASE SIGN HERE
<TABLE>
<S> <C>
X
SIGNATURE(S) OF OWNER(S) DATE
OR AUTHORIZED SIGNATORY
Area Code and Telephone Number:
</TABLE>
Must be signed by the holder(s) of Old Debentures as their name(s) appear(s)
on certificates for Old Debentures or on a security position listing, or by
person(s) authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below. If Old Debentures will be delivered by
book-entry transfer to The Depository Trust Company, provide account number.
<PAGE>
PLEASE PRINT NAME(S) AND ADDRESS(ES)
<TABLE>
<S> <C>
NAME(S):
CAPACITY:
ADDRESS(ES):
ACCOUNT NUMBER:
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the undersigned will deliver to the Exchange Agent the certificates
representing the Old Debentures being tendered hereby or confirmation of
book-entry transfer of such Old Debentures into the Exchange Agent's account at
The Depository Trust Company, in proper form for transfer, together with any
other documents required by the Letter of Transmittal within three New York
Stock Exchange trading days after the Expiration Date.
NAME OF FIRM ___________________________________________________________________
ADDRESS_________________________________________________________________________
__________________________________________________________________________
AREA CODE AND TELEPHONE NUMBER _________________________________________________
AUTHORIZED SIGNATURE ___________________________________________________________
NAME____________________________________________________________________________
(PLEASE TYPE OR PRINT)
TITLE __________________________________________________________________________
DATE ___________________________________________________________________________
NOTE: DO NOT SEND CERTIFICATES OF OLD DEBENTURES WITH THIS FORM. CERTIFICATES
OF OLD DEBENTURES SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY
EXECUTED LETTER OF TRANSMITTAL.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE
(YOU) TO GIVE THE PAYER.--Social security numbers have nine digits separated by
two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payer. All "Section" references are to the
Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
GIVE THE SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ---------------------------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first individual
on the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under state law
5. Sole proprietorship The owner(3)
- ---------------------------------------------------------------
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: INDENTIFICATION NUMBER OF--
<S> <C>
- ---------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or The legal entity(4)
pension trust
8. Corporate The corporation
9. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt organization
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the Department The public entity
of Agriculture in the name of
a public entity (such as a
State or local government,
school district, or prison)
that receives agricultural
program payments(1)
</TABLE>
- ---------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your social security number
or your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME LISTED, THE NUMBER
WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
- ---------------------------------------------------------------
OBTAINING A NUMBER
If you don't have a taxpayer identification number, obtain Form SS-5,
Application for a Social Security Card, at the local Social Security
Administration office, or Form SS-4, Application for Employer Identification
Number, by calling 1 (800) TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
PAYEES SPECIFICALLY EXEMPTED FROM WITHHOLDING INCLUDE:
- - An organization exempt from tax under Section 501(a), an individual retirement
account (IRA), or a custodial account under Section 403(b)(7), if the account
satisfies the requirements of Section 401(f)(2).
- - The United States or a state thereof, the District of Columbia, a possession
of the United States, or a political subdivision or wholly-owned agency or
instrumentality of any one or more of the foregoing.
- - An international organization or any agency or instrumentality thereof.
- - A foreign government and any political subdivision, agency or instrumentality
thereof.
PAYEES THAT MAY BE EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
- - A corporation.
- - A financial institution.
- - A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under Section 584(a).
- - An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- - A middleman known in the investment community as a nominee or who is listed in
the most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List.
- - A futures commission merchant registered with the Commodity Futures Trading
Commission.
- - A foreign central bank of issue.
PAYMENTS OF DIVIDENDS AND PATRONAGE DIVIDENDS GENERALLY EXEMPT FROM BACKUP
WITHHOLDING INCLUDE:
- - Payments to nonresident aliens subject to withholding under Section 1441.
- - Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
- - Section 404(k) payments made by an ESOP.
PAYMENTS OF INTEREST GENERALLY EXEMPT FROM BACKUP WITHHOLDING INCLUDE:
- - Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- - Payments described in Section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under Section 1451.
- - Payments made by certain foreign organizations.
CERTAIN PAYMENTS, OTHER THAN PAYMENTS OF INTEREST, DIVIDENDS, AND PATRONAGE
DIVIDENDS, THAT ARE EXEMPT FROM INFORMATION REPORTING ARE ALSO EXEMPT FROM
BACKUP WITHHOLDING. FOR DETAILS, SEE SECTIONS 6041, 6041A, 6042, 6044, 6045,
6049, 6050A AND 6050N AND THE REGULATIONS THEREUNDER.
EXEMPT PAYEES SHOULD COMPLETE A SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT"
IN PART II OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
PRIVACY ACT NOTICE.--Section 6109 requires you to provide your correct taxpayer
identification number to payers who must report the payments to the IRS. The IRS
uses the numbers for identification purposes and to help verify the accuracy of
your return and may also provide this information to various government agencies
for tax enforcement or litigation purposes. Payers must be given the numbers
whether or not recipients are required to file tax returns. Payers must
generally withhold 31% of taxable interest, dividend, and certain other payments
to a payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish
your taxpayer identification number to a payer, you are subject to a penalty of
$50 for each such failure unless your failure is due to reasonable cause and not
to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
ALEC HOLDINGS, INC.
OFFER TO EXCHANGE
13% SENIOR DISCOUNT DEBENTURES DUE 2011
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ALL OF ITS OUTSTANDING
13% SENIOR DISCOUNT DEBENTURES DUE 2011
THAT WERE ISSUED AND SOLD IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT
To Securities Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Enclosed for your consideration is a Prospectus dated , 1999 (as the
same may be amended or supplemented from time to time, the "Prospectus") and a
form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by ALEC Holdings, Inc. ("Holdings") to exchange up
to $46,928,435 in aggregate principal amount of its 13% Senior Discount
Debentures due 2011 which have been registered under the Securities Act, as
amended (the "Exchange Debentures"), for up to $46,928,435 in aggregate
principal amount of its outstanding 13% Senior Discount Debentures due 2011 that
were issued and sold in a transaction exempt from registration under the
Securities Act of 1933, as amended (the "Old Debentures").
We are asking you to contact your clients for whom you hold Old Debentures
registered in your name or in the name of your nominee. In addition, we ask you
to contact your clients who, to your knowledge, hold Old Debentures registered
in their old name. Holdings will not pay any fees or commissions to any broker,
dealer or other person in connection with the solicitation of tenders pursuant
to the Exchange Offer. You will, however, be reimbursed by Holdings for
customary mailing and handling expenses incurred by you for forwarding any of
the enclosed materials to your clients. Holdings will pay all transfer taxes, if
any, applicable to the tender of Old Debentures to it or its order, except as
otherwise provided in the Prospectus and the Letter of Transmittal.
Enclosed are copies of the following documents:
1. the Prospectus;
2. a Letter of Transmittal for your use in connection with the exchange of
Old Debentures and for the information of your clients (facsimile copies of the
Letter of Transmittal may be used to exchange Old Debentures);
3. a form of letter that may be sent to your clients for whose accounts you
hold Old Debentures registered in your name or the name of your nominee, with
space provided for obtaining the clients' instructions with regard to the
Exchange Offer;
4. a Notice of Guaranteed Delivery;
5. guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9; and
6. a return envelope addressed to The Bank of New York, the Exchange Agent.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED (THE "EXPIRATION
DATE"). OLD DEBENTURES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN,
SUBJECT TO THE PROCEDURES DESCRIBED IN THE PROSPECTUS, AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
To tender Old Debentures, certificates for Old Debentures or a book-entry
confirmation (see "The Exchange Offer" in the Prospectus), a duly executed and
properly completed Letter of Transmittal or a
<PAGE>
facsimile thereof, and any other required documents, must be received by the
Exchange Agent as provided in the Prospectus and the Letter of Transmittal.
Questions and requests for assistance with respect to the Exchange Offer or
requests for additional copies of the enclosed material may be directed to the
Exchange Agent at its address set forth in the Prospectus or at (212)-815-2824.
Very truly yours,
ALEC HOLDINGS, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF HOLDINGS OR THE EXCHANGE AGENT, OR ANY
AFFILIATE THEREOF, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS
OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER,
EXCEPT FOR THE ENCLOSED DOCUMENTS AND THE STATEMENTS EXPRESSLY MADE IN THE
PROSPECTUS AND THE LETTER OF TRANSMITTAL.
2
<PAGE>
ALEC HOLDINGS, INC.
OFFER TO EXCHANGE
13% SENIOR DISCOUNT DEBENTURES DUE 2011
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ALL OF ITS OUTSTANDING
13% SENIOR DISCOUNT DEBENTURES DUE 2011
THAT WERE ISSUED AND SOLD IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
To Our Clients:
Enclosed for your consideration is a Prospectus dated , 1999 (as the
same may be amended or supplemented from time to time, the "Prospectus") and a
form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by ALEC Holdings, Inc. ("Holdings") to exchange up
to $46,928,435 aggregate principal amount of its 13% Senior Discount Debentures
due 2011 which has been registered under the Securities Act of 1933, as amended
(the "Exchange Debentures"), for up to $46,928,435 aggregate principal amount of
its outstanding 13% Senior Discount Debentures due 2011 that were issued and
sold in a transaction exempt from registration under the Securities Act of 1933,
as amended (the "Old Debentures").
The material is being forwarded to you as the beneficial owner of Old
Debentures carried by us for your account or benefit but not registered in your
name. A tender of any Old Debentures may be made only by us as the registered
holder and pursuant to your instructions. Therefore, Holdings urges beneficial
owners of Old Debentures registered in the name of a broker, dealer, commercial
bank, trust company or other nominee to contact such registered holder promptly
if they wish to tender Old Debentures in the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to tender any
or all of the Old Debentures held by us for your account, pursuant to the terms
and conditions set forth in the Prospectus and Letter of Transmittal. We urge
you to read carefully the Prospectus and the Letter of Transmittal before
instructing us to tender your Old Debentures.
Your instructions to us should be forwarded as promptly as possible in order
to permit us to tender Old Debentures on your behalf in accordance with the
provisions of the Exchange Offer. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED (THE "EXPIRATION DATE").
Old Debentures tendered pursuant to the Exchange Offer may be withdrawn, subject
to the procedures described in the Prospectus, at any time prior to the
Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for the exchange of $1,000 principal amount at
maturity of the Exchange Debentures for each $1,000 principal amount at
maturity of the Old Debentures, of which $46,928,435 aggregate principal
amount of the Old Debentures was outstanding as of , 1999. The terms
of the Exchange Debentures are substantially identical (including principal
amount, interest rate, maturity, security and ranking) to the terms of the
Old Debentures, except that the Exchange Debentures (i) are freely
transferable by holders thereof (except as provided in the Prospectus) and
(ii) are not entitled to certain registration rights and certain additional
interest provisions which are applicable to the Old Debentures under an
exchange and registration rights agreement to which Holdings is party.
2. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE "THE
EXCHANGE OFFER--CONDITIONS" IN THE PROSPECTUS.
3. The Exchange Offer and withdrawal rights will expire at 5:00 p.m.,
New York City time, on , 1999, unless extended.
<PAGE>
4. Holdings has agreed to pay the expenses of the Exchange Offer except
as provided in the Prospectus and the Letter of Transmittal.
5. Any transfer taxes incident to the transfer of Old Debentures from
the tendering Holder to Holdings will be paid by Holdings, except as
provided in the Prospectus and the Letter of Transmittal.
The Exchange Offer is not being made to nor will exchange be accepted from
or on behalf of holders of Old Debentures in any jurisdiction in which the
making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction.
If you wish to have us tender any or all of your Old Debentures held by us
for your account or benefit, please so instruct us by completing, executing and
returning to us the instruction form that appears below. THE ACCOMPANYING LETTER
OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATIONAL PURPOSES ONLY AND MAY NOT
BE USED BY YOU TO TENDER OLD DEBENTURES HELD BY US AND REGISTERED IN OUR NAME
FOR YOUR ACCOUNT OR BENEFIT.
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein in connection with the Exchange Offer of ALEC
Holdings, Inc. relating to $46,928,435 aggregate principal amount of its 13%
Senior Discount Debentures due 2011, including the Prospectus and the Letter of
Transmittal.
This form will instruct you to exchange the aggregate principal amount of
Old Debentures indicated below (or, if no aggregate principal amount is
indicated below, all Old Debentures) held by you for the account or benefit of
the undersigned, pursuant to the terms and conditions set forth in the
Prospectus and Letter of Transmittal.
- --------------------------------------------------------------------------------
AGGREGATE PRINCIPAL AMOUNT OF OLD DEBENTURES TO BE EXCHANGED
$ *
2
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
*I (we) understand that if I (we) sign these
instruction forms without indicating an -------------------------------------------
aggregate principal amount of Old Debentures -------------------------------------------
in the space above, all Old Debentures held Signature(s)
by you for my (our) account will be -------------------------------------------
exchanged. Capacity (full title), if signing in a
fiduciary or representative capacity
-------------------------------------------
-------------------------------------------
-------------------------------------------
Name(s) and address, including zip code
Date: -------------------------------------
-------------------------------------------
Area Code and Telephone Number
-------------------------------------------
Taxpayer Identification or Social Security
Number
</TABLE>
3
